Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd & Anor and another appeal [2022] 6 MLJ 58

Court  of Appeal (Putrajaya)

Application of stay of execution

1. ADM Ventures (M) Sdn Bhd (‘ADM’) initiated an originating summons under section 181 of the Companies Act 1965 against GT Global Race (M) Sdn Bhd (‘GTG’), a company jointly owned by ADM and Renew Capital (M) Sdn Bhd (‘Renew’), each holding an equal 50% stake. 
2. The High Court found ADM’s allegations of oppression to be proven and ordered that GTG be wound up. The High Court also directed Renew to pay ADM RM22,666,195.16 as well as a global costs order of RM500,000.00.
3. Dissatisfied with parts of the decision arising from several consolidated suits, Renew filed appeals against the High Court’s decisions and subsequently filed two stay applications which were NU 4 and NU 5. 
4. NU 4 sought a stay of execution of the monetary judgment pending the outcome of their appeal to the Court of Appeal. NU 5 concerned a separate application for a stay of the RM100,000.00 costs order made against them in other inter-related suits, which had also been appealed.

Whether there were special circumstances to justify an unconditional stay of execution of a judgment debt, and if not, whether the Court could rely on other relevant factors to grant a conditional stay of all or part of the judgment sum pending appeal.

Whether there were special circumstances to justify an unconditional stay of execution of a judgment debt, and if not, whether the Court could rely on other relevant factors to grant a conditional stay of all or part of the judgment sum pending appeal

1. The Court of Appeal began by stating that the statutory basis for the Court’s discretion to stay execution of a judgment for the payment of money is found in order 47 rule 1(1) of the Rules of Court 2012 (“ROC 2012”). Under this provision, a Court may stay execution where the judgment debtor demonstrates either that there are special circumstances rendering enforcement inexpedient or that the applicant is unable to pay the money. This power is further reinforced by sections 73 and 44 of the Courts of Judicature Act 1964 (“CJA”), which provide that an appeal does not automatically operate as a stay of execution, but that the High Court or Court of Appeal may grant such a stay to preserve the status quo or prevent prejudice to the parties pending the appeal. The discretion to grant a stay is thus a judicial discretion that must be exercised according to established principles, rather than arbitrarily.
2. The Court then acknowledges a practical problem that arises whenever a losing party seeks a stay of execution. A judgment debtor cannot be expected to produce concrete proof that the judgment creditor will dissipate the judgment sum in the future, because dissipation is an event that may or may not occur. Evidence of past conduct offers only limited insight and cannot conclusively show what might happen once a much larger amount is paid.
3. Despite the lack of evidence of past misappropriation by ADM, the Court considered the broader context in which ADM’s financial position was unstable and the company’s structure allowed its two directors, who held a two-thirds majority to deal with company assets with minimal restraint. These factors created a genuine risk that, if the Appellants later succeeded in their appeal, substantial sums paid now might be difficult or impossible to recover. The Court noted that mere assurances by ADM were insufficient, because “words are cheap,” and protection must come in the form of tangible safeguards.
4. At the same time, the Court recognised that both sides had legitimate interests. A successful litigant is ordinarily entitled to enjoy the fruits of judgment, while a judgment debtor should not be exposed to an irreversible financial loss before its appeal is heard. The Court therefore had to strike a balance that would not unfairly prejudice either party.
5. In determining the appropriate safeguards, the Court relied on established principles concerning undertakings and the enforcement of such obligations. The Court referred to the long-standing recognition that undertakings given to the Court carry the sanction of contempt for breach, as seen in cases such as GS Gill Sdn Bhd v Descente Ltd [2010] 4 MLJ 609 (FC), Tan Poh Lee v Tan Boon Thien [2022] 3 MLJ 177 (FC), and the English authority F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295. These authorities reinforce the proposition that the Court can require and enforce undertakings to ensure the protection and recoverability of disputed funds pending appeal.
6. Given this framework, the Court examined the judgment sum of approximately RM22 million and took into account that RM13 million of it was already subject to a separate stay between City Neon Contract Sdn Bhd and GTG. Using this as a starting point, the Court determined that RM10 million should be paid pending appeal. It then decided that half of that sum (RM5 million) should be released to ADM in order for the company could continue meeting legitimate expenses, but only on the condition that ADM and both directors provide personal undertakings to repay the amount that the Court of Appeal may ultimately order after the appeal is disposed of. This mechanism ensured a fair balance between immediate access and future accountability.
7. The remaining RM5 million was to be held by ADM’s solicitors as stakeholders in an interest-bearing fixed-deposit account, to be released only after the outcome of the appeal. By imposing these terms, the Court sought to mitigate the risk of dissipation while also allowing ADM to enjoy part of the judgment sum in a controlled manner.
8. Furthermore, the Court rejected Renew’s argument that requiring personal undertakings improperly converted a corporate debt into a personal liability. It reaffirmed that companies can only act through their directors, and where the directors have full control of corporate funds, personal undertakings are appropriate safeguards in the public interest.
9. The Court also reaffirmed that the size of a judgment sum alone does not constitute a ‘special circumstance’ (Wu Shu Chen (sole executrix of the estate of Goh Keng How, deceased) v Raja Zainal Abidin bin Raja Hussin & Anor [1995] 3 MLJ 224 (HC)) and distinguished Wilson v Church (No 2) (1879) 12 Ch D 454. Nevertheless, the Court accepted that ADM’s precarious financial position and corporate control raised legitimate concerns of irrecoverability, justifying a conditional stay to prevent the appeal from being rendered nugatory 
10. Finally, while granting a conditional stay over the main judgment sum, the Court declined to stay the related costs order of RM100,000.00, finding no “special circumstances” to justify delaying payment of costs incurred in the High Court.

1. The Court granted a conditional stay of execution in NU4 in respect of the judgment sum (excluding costs). Renew were ordered to pay RM10 million within 60 days, of which RM5 million was to be released to ADM subject to undertakings by ADM and its two directors to repay the sum if allowed on appeal, while the remaining RM5 million was to be held by ADM’s solicitors as stakeholders in an interest-bearing fixed deposit pending the disposal of the appeal. The balance of the judgment sum and interest was stayed, but failure to pay the RM10 million within the stipulated time would result in no stay. No stay was granted for costs, and no order as to costs was made for NU4.
2. As for NU5, the Court found no special circumstances to justify a stay of payment of costs in the related suits and dismissed the application with costs of RM10,000.00 to the Respondents, subject to allocation.

The Court of Appeal clarified that even if strict special circumstances are not proven to justify a full stay, the Court may still grant a conditional stay if the facts show a real risk of injustice to either party. The Court is allowed to look at practical realities, not only rigid legal tests.