Stay of Execution Pending Appeal and its Development

Written By: Moy Jo Yin

Written On: 22nd January 2022.
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Abstract

Upon obtaining judgment, the judgment creditor is at liberty to execute the judgment by
demanding the judgment sum from the judgment debtor. It is trite law that a successful litigant
should not be deprived of the fruits of a judgment obtained in his favour, unless there are special
circumstances (or special grounds) that justify a stay of execution to be granted.1 However, the
judgment debtor might not want such judgment to be enforced yet as they wish to appeal the
judgment to a higher court in whole or in part. As such, the party will have to apply to Court
for a stay of execution pending appeal. As we all know, the issue of stay of execution is solely
under the discretion of the Court. So, under what circumstances will the Court allow such
application ? What is the development so far for the stay of execution pending appeal in
Malaysia ? This Article is aimed to reward the readers with a basic understanding of the topic
of stay of execution pending appeal and its development.

Keywords: Stay of Execution, Stay of Execution Pending Appeal, Stay of Execution’s

Development, ‘Special Circumstances’ Approach, ‘Nugatoriness’ Approach, ‘Flexible and
Open’ Approach, Discretion of the Court

What is “Stay of Execution” ?

The Merriam-Webster’s Unabridged Dictionary defines “stay of execution” as “an order

that temporarily stops an execution”.2 While the Black’s Law Dictionary defines “the stay of
execution” as “the hold that is put on the carryout of an order or judgment of a court”.3

1
See Ming Ann Holdings Sdb bhd v Danaharta Urus Sdn Bhd [2002] 3 MLJ 49
2
See Ismail bin Suid & Anor v Wan Nadzim bin Wan Mohd Nori & Anor [2021] MLJU 417
3
Supra No. 2

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

The Legislation

Power of Court to grant a stay of execution can be seen under Order 45 Rule 11 of the Rules
of Court 2012 that reads:

“Matters occurring after judgment: Stay of execution (O. 45, r. 11)

Without prejudice to Order 47, rule 1, a party against whom a judgment has been
given or an order made may apply to the Court for a stay of execution of the
judgment or order or other relief on the ground of matters which have occurred
since the date of the judgment or order, and the Court may by order grant such
relief, and on such terms, as it thinks fit.”

However, it will be granted simply because there is an appeal as stipulated under Section 73
of the Courts of Judicature Act 1964 :-

“73 Appeal not to operate as stay of execution

An appeal shall not operate as a stay of execution or of proceedings under the
decision appealed from unless the court below or the Court of Appeal so orders
and no intermediate act or proceeding shall be invalidated except so far as the
Court of Appeal may direct.”

Section 13 of the Rules of the Court of Appeal 1994 also provides that :

“13. Stay of proceedings on appeal.

An appeal shall not operate as a stay of execution or of proceedings under the
decision appealed from unless the High Court or the Court so orders and no
intermediate act or proceeding shall be invalidated except so far as the Court may
direct.”

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

As for the appeal from subordinate courts to High Court, Order 55 Rule 16 of the Rules of
Court 2012 reads :-

“(1) An appeal shall not operate as a stay of execution under the decision appealed
against...
(2) The Court appealed from or the High Court may grant an order of stay of
execution on such terms as it thinks fit”

The Case Law and its Development

The principle governing stay of execution pending appeal goes back to many years ago as can
be seen in the case of Monk v Bartram wherein the Court of Appeal held that where a stay of
execution has been refused by the trial Court an application made in a Court of Appeal for a
stay pending appeal must be supported by special circumstances and allegations that there has
been misdirection or that the verdict or judgment was against the weight of evidence, or that
there was no evidence to support the verdict or judgment are not special circumstances. 4 The
Court had recognised the ‘special circumstances’ approach in deciding the same.

In the English case of Metropolitan Real and General Property Trust Ltd5. In that case, the
Court had granted the stay pending appeal on the basis that the execution of the order will
destroy the basis of the appeal / substratum of the appeal. The Court recognised and affirmed
the principle that an appeal does not operate as a stay execution and one of the circumstances
to consider whether or not to grant a stay is: Whether the substratum of appeal would be
destroyed if the stay is not granted. This case has been frequently referred by Malaysian Court
in determining the issue of granting a stay pending appeal. The Court tend to suggest the
‘nugatoriness’ approach in deciding the same.

4
Monk v Bartram [1891] 1 QB 346
5
Metropolitan Real and General Property Trust Ltd v Slaters and Bodega Ltd; Regal Property Trust Ltd
v Slaters and Bodega Ltd; Freehold and Leasehold Investment Co Ltd v Slaters and Bodega Ltd [1941] 1
All ER 310

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

In the case of Serangoon Garden Estate Ltd6, the Court was of the view that merit for the
appeal may be a factor to be taken into considering whether or not to grant a stay. The judgment
of the Court can be summarised as follows :-

1. granting a stay pending appeal is an exercise of discretion;

2. there is no rule of practice limiting the exercise of the discretion
3. it is a clear principle that the Court will not deprive a successful party of the fruits of
his litigation until the appeal is determined unless there are special circumstances;
4. the ground that, if the defendant is successful in his appeal, he cannot be restored to the
same position as before, standing alone, is not a sufficient ground on which to grant a
stay, however, it is an ‘important factor’ to take into consideration, is there are other
grounds, for example, merit of the appeal. Both grounds, together, may well amount to
‘special circumstances’.7

Later on, in the case of Ming Ann Holdings, the Court had applied the ‘special circumstances’
approach and defined it as “The special circumstances must be special, not ordinary, common
or usual circumstances and that go to the execution of the judgment and not to the validity or
correctness of the judgment (or merits of the appeal).” 8 Furthermore, the Court in Ming Ann
Holdings held that a Court hearing an application for a stay of execution should not make a
finding that the appeal is doomed to failure or even that there are no merits in the appeal. The
court that sits to hear the stay application, it is only constituted to hear the stay application, not
the appeal. The Court also agreed that the appeal, if successful, would be rendered nugatory is
the paramount consideration and all the relevant factors should be considered. The Court tend
to suggest that nugatoriness is one of the special circumstances that will warrant a stay. The
Court went on the held that when the judgement is a monetary judgment, the winding-up
proceeding that would be taken against the judgement debtor will not be a ground to warrant a
stay as the Court view it as :-

6
Serangoon Garden Estate Ltd v Ang Keng [1953] MLJ 116
7
See also Supra No. 1
8
Supra No. 1

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

 “… nothing more than 'fear of losing'; fear of losing business, fear of losing
customers, fear of losing suppliers, fear of losing goodwill, fear of not being able
to collect its debts from third parties, in case the appellant company is wound up.
All that the applicant has to do to avoid such 'fears' is to settle the judgment debt.

The winding up petition is still pending. The applicant still has every opportunity
to contest it. Whatever it is, those factors are not 'special circumstances' (if we
want to use the term) nor do they show that the appeal, if successful, will be
rendered nugatory (if we prefer that term). They are nothing unusual. Execution is
a natural process after obtaining a judgment and winding up is one of them.”

Refer to the case of Bank Bumiputra Malaysia Berhad9, the Court in considering whether to
grant a stay held that:-

1. The Applicant must satisfy the Court that the continuance of the execution would be
injustice because or would be oppressive or vexatious to him or would be an abuse of
the process of the Court.
2. Secondly, the stay must not cause injustice to the judgment creditor.
3. The Applicant bears the burden of proof on both requirements.

The Court had in fact applied a ‘flexible and open’ approach in deciding whether or not to grant
a stay of execution.

As there has been a long debate in Malaysia on the test to be applied in considering whether or
to grant a stay of execution. This has been settled in the Federal Court case of Kosma Palm
Oil Mills10 wherein the apex Court in Malaysia held that:-

“[14] The resultant matter for determination are the factors or reasons that may
constitute special circumstances. Generally stated, they are circumstances which

9
Bank Bumiputra Malaysia Berhad & Anor v Lorrain Esme Osman [1987] 1 CLJ 572
10
Kosma Palm Oil Mills Sdn Bhd v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

go to the enforcement of the judgment (see Sarwari a/p Ainuddin v Abdul Aziz a/l
Ainuddin [2000] 5 MLJ 391). With regard to the specific factors that constitute
special circumstances, I refer again to Government of Malaysia v Datuk Haji Kadir
Mohamad Mastan and another application where Ian Chin JC (as he then was)
said at pp 520–521:

What, then, constitute special circumstances? It was said in Mohamad

Mustafa v Kandasami (No 2) [1979] 2 MLJ 126, at p 127, that:

‘One of the determining factors that calls for consideration is whether

by not making an order of stay of the execution it would make the
appeal if successful, nugatory in that it would deprive an appellant
of the results of the appeal. How pertinent that factor would be may
vary according to the circumstances of each particular case.’
…
[18] Halsbury’s Laws of England (4th Ed) Vol 17 at para 455 cites the following
authorities as examples of special circumstances: that an appeal would be
nugatory if stay was refused, by reason of the respondent’s poverty (Wilson v
Church (No 2) (1879) 12 Ch D 454 (CA)); or if payment of a judgment debt
destroys the substratum of the appeal (Metropolitan Real and General Property
Trust Ltd v Slaters and Bodega Ltd [1941] 1 All ER 310 (CA)); … It is therefore
clear beyond doubt that there are many factors that may constitute special
circumstances and the fact that an appeal would be rendered nugatory if stay was
refused is the most common one. It is an example of special circumstances. In other
words, special circumstances is the genus of which nugatoriness is a species. If it
has been shown that an appeal would be rendered nugatory if stay was refused
what it means is that a special circumstance has been established. Thus, they
cannot be treated as separate heads and one cannot be an alternative to the other.
Neither can one be accepted or rejected in favour of the other as they are inter-
related.”

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

Here are the keys take away:-

1. In considering whether or not to grant a stay of execution, the Court will only consider
matters relating to the enforcement of the judgment and thus, merit of the case is
irrelevant.
2. The Court in considering the matter would ask: whether by not making an order of stay
of the execution it would make the appeal if successful, nugatory in that it would
deprive an appellant of the results of the appeal ?
3. The Apex Court had recognised the test of ‘special circumstances’ to be the test in
determining whether to grant a stay of execution and nugatoriness is just an example of
‘special circumstances’.
4. Examples of ‘special circumstances’ includes: respondent’s poverty, payment of
judgment debt would destroy the substratum of appeal, etc. There is no complete list of
what constituted ‘special circumstances’ that would warrant a stay as it develops within
time.
5. The onus was on the Applicant to demonstrate the existence of special circumstances
to justify the grant of a stay of execution and the reasons must relate to the enforcement
of the Judgement of the appeal.11
6. As the applicants had not put forward reasons that related to the enforcement of the
judgment of the appeal but instead had focused on the problems that the applicants
would encounter if the motion were not successful, they failed to raise special
circumstances which warrant a stay of execution.12

Furthermore, in the case of MBT (M) Sdn Bhd, the Court held that since the judgement debt
has been settled, the appeal has been spent and thus the Court had struck out the Appellant’s
appeal. The Court in considering whether the substratum of the appeal still exist rely on:
Whether the judgment had been satisfied ? The Court was of the view that the crux of the
appeal yet to be determined was irrelevant in comparison to the dissipation of the substratum

11
See also Ismail bin Suid & Anor v Wan Nadzim bin Wan Mohd Nori & Anor [2021] MLJU 417
12
Supra No. 8

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

of the appeal when full payment was made. Once the debt was paid before the appeal was heard,
that appeal became spent. 13

Notwithstanding the above, the case of Institut Teknologi Federal Sdn Bhd provides that the
Court would generally grant a stay of execution when the subject matter concerned is land. The
Court was of the view that the land ought to be preserved pending the appeal as the land has a
special value and it would render nugatory the decision of the Court of Appeal if a stay was
refused.14

Referring to the case of Mahsurimas Sdn Bhd, the Court further held that there is no reason
to grant a stay of execution merely because the party alleged that the said judgment had been
wrongly given. The Court would not entertain such ground of application. However, the Court
suggested that it would consider the application if there is a complete lack of jurisdiction where
the judgement given is a nullity or that the findings of facts are patently perverse. 15

It is gainful to refer the case of Ismail bin Suid16 wherein the Court tend to apply a more liberal
approach in granting a stay of execution pending appeal and held that:-

“The law relating to the granting of a stay of proceedings is settled. The court
must exercise its discretion as to what is the fairest mode, after taking into
consideration all the relevant matters, which exist between the parties. Put
differently, the court may exercise its discretion whenever it is just and reasonable
to do so, so as to ensure that justice is done to both the parties. It is entirely an
exercise of discretion, pure and simple. These principles of law are reflected in
Halsbury’s Laws of England, 4th edition, reissue, vol. 37 at p. 290 at para. 926 :

In general a stay of proceedings arises under an order of the court

which puts a stop or ‘stay’ on the further conduct of the proceedings in

13
MBT (M) Sdn Bhd v Syarikat Perniagaan Mesra Sdn Bhd [2004] 1 MLJ 676
14
Institut Teknologi Federal Sdn Bhd v IIUM Education Sdn Bhd [2005] 3 MLJ 221
15
Mahsurimas Sdn Bhd v Ravinder Singh a/l Shangara Singh & Ors [2019] MLJU 1130
16
Supra No. 1

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

 that court at the stage which they have then reached, so that the parties
are precluded thereafter from taking any further step in the
proceedings. The object of the order is to avoid the trial or hearing of
the claim taking place, where the court thinks it is just and convenient
to make the order, to prevent undue prejudice being occasioned to
the opposite party or to prevent the abuse of process. The order is
made generally in the exercise of the court’s discretionary jurisdiction,
and by way of summary process, that is without a trial on the
substantive merits of the case, and, at any rate in the exercise of its
inherent jurisdiction, an order for the stay of proceedings is made very
sparingly and only in exceptional circumstances.”

Conclusion

Based on the foregoing, the development of the principle governing the stay of execution can
be summarised as follows:-

1. Generally, stay of execution pending appeal is not readily available to the Applicant,
and more often the Court is reluctant to grant such a stay.
2. There are a few approaches so far such as :- special circumstances approach,
nugatoriness approach, and flexible and open approach.
3. The burden of proof is on the Applicant to prove to the satisfaction of the Court.
4. It has been settled that ‘special circumstances’ approach is the most applied approach
by the Court and nugatoriness of which is a factor to be considered in deciding whether
there are special circumstances to grant a stay of execution.
5. There is no complete list on what constituted ‘special circumstances’ that will warrant
a stay as it will defeat the discretion of the Court, hence the Court will decide each
application based on the circumstances of each case.
6. As for the ‘flexible and open’ approach, the Court in applying this approach will
consider every relevant factor between the parties to ensure that it is just, reasonable,
and fair to exercise its discretion to grant a stay of execution.

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245

7. There is no rigid rule except the principle of stare decisis on the application of
approaches in deciding the issue as it is the discretion of the Court in determining which
approach to be used.

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Stay of Execution Pending Appeal and its Development
Moy Jo Yin
LLB (Hons) Bachelor of Law, Multimedia University, Malaysia

Electronic copy available at: https://ssrn.com/abstract=4052245