Considering a scenario where you are caught up in a Court dispute and a Judgment was obtained against you and you, being dissatisfied with the decision, have filed an appeal in an attempt to overturn the subordinate court’s decision, would you still be required to comply with the said Judgment? Unfortunately, you are still obligated to adhere to the said Judgment despite the existence of an ongoing appeal suit unless a stay of execution is obtained, your Judgment Creditor has the rights to enforce the Judgment against you.

Stay of execution

A “stay of execution” operates as a temporary restraint on the enforcement of the Judgement pending the disposal of the Appeal; In other words, it is a pause in the execution of the Judgment. Hence, in the event a stay of execution is granted, your Judgment Creditor would not be able to enforce the said Judgment against you until the disposal of your appeal.

However, this “pause” is not granted as a right and merely filing of an appeal does not automatically result in a stay of execution. Therefore, it is prudent for you to file an application to the court, supported by an affidavit, seeking for a grant of stay of execution.

Whether or not a stay would be granted lies at the discretion of the Court. The Court, in exercising its discretion, is guided by the test of “special circumstances”. The Applicant must satisfy the Honourable Court, vide its affidavit, that there are special circumstances[1] and “not ordinary, common or usual circumstances” [2] to justify a grant of stay of execution. If the Court is satisfied that special circumstances exist, a stay of execution would be granted.

Although the granting of a stay of execution lies solely at the discretion of the Court, Courts are generally reluctant to grant a stay of execution, especially if the judgment is monetary in nature. This is because it would deprive the successful litigant from its fruits of litigation, such as the Judgment Sum or whatever was awarded.

You may wonder why the Court is more reluctant when it comes to a stay for monetary judgments. The main rationale behind this reluctance, coupled with not wanting to deprive the successful litigants from its fruits of litigation, is that monies paid pursuant to the judgment can be refunded and reimbursed if the appeal is successful. Nevertheless, if the Court is satisfied that there are special circumstances to warrant the stay, even if it is a monetary judgment, a stay may still be granted.

What then amounts to Special Circumstance?

The list of what may constitute “special circumstances” is non-exhaustive and is determined on a case-by-case basis. The most common example of a “special circumstance,” and in fact the most important consideration, would be whether the appeal would be rendered meaningless if a stay of execution is not granted.

Imagine this: the judgment you are appealing against concerns the disposal of a piece of land with special usage and high sentimental value to you. If the land were to be disposed of, you would not be adequately compensated with just monetary compensation. If a stay is not granted, the land would have already been disposed of before the disposal of the appeal, and even if you were successful in the appeal suit, you would not be able to recover the land. Another example would be a situation where the other party is insolvent or if the judgment sum, if paid, would be sent to a foreign jurisdiction. In other words, recovering the judgment sum would be extremely difficult. These are a few examples of situations where the Court might possibly find that there are special circumstances, as the appeal would be rendered meaningless if a stay is not granted. However, what qualifies as special circumstances is ultimately at the Court’s discretion, and the Honourable Court may decide otherwise even if you believe there is a “special circumstance.”

Now, you may ask what does not amount to special circumstances? An example of this would be the “merits of the appeal” as mentioned in the case of Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 380. However, this does not mean that the merits of the appeal should not be considered at all; It can be, arguably, taken into consideration when combined with other circumstances, such as the aforementioned nugatory circumstance.[3]

What if the Court does not find circumstances special?

Of course, if the Court is not satisfied that there are special circumstances warranting a stay of execution, a stay will not be granted, and you would be required to comply with the Judgment despite an ongoing appeal suit.

 However, there are situations where, even without special circumstances, a conditional stay of execution has been granted after considering all relevant factors and balancing the “competing rights, interests, needs, and concerns of the parties”[4]. If the Court deems “a conditional stay as a fair, just and equitable solution to the parties”[5], it may be granted even without special circumstances.

So, when might a conditional stay of execution be granted? An example would be a situation where the Judgment Sum is excessive and substantial, in which case the Court may order a conditional stay of execution. The Judgment Sum could then be deposited with the Court, held by the parties’ solicitors in shares, or dealt with in alternative ways as determined by the Honourable Court, which are deemed appropriate and fair. However, it is important to note that the granting of a conditional stay is at the Court’s discretion and will be decided on a case-by-case basis, with no guarantee that it will be granted.

Conclusion

In any case, if a judgment has been obtained against you and you are dissatisfied and have filed an appeal, you should always apply for a stay of execution to temporarily prevent the enforcement of the judgment against you. If you can convince the Court that there are special circumstances that justify a stay of execution, although it may be difficult, an absolute stay will be granted, which will ensure your safety until the disposal of your appeal. However, if the event the Honourable Court finds that there are no special circumstances to warrant a grant of stay of execution, there is still a possibility that a conditional stay may be granted, meaning that the judgment will be stayed only if certain conditions are met.

[1] Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1.

[2] Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 380.

[3] RHB Bank Berhad v Datuk Keramat Holding Berhad [2004] MLJU 308.

[4] Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd & Anor and Another Appeal [2022] 8 CLJ 817.

[5] Tan Tien Seng v Grobina Resorts Sdn Bhd [2006] 6 CLJ 654.

Zovy Tan Song Yue & Suzanne Arockiaraj