Image Credit: Ron Embleton (1972), available at https://bookpalace.com/acatalog/info_RE0586.html
Destroying the substratum of an appeal by paying the Judgment debt
A very interesting decision was very recently (15.02.2023) released by the Federal Court in See Teow Koon v Kian Joo Can Factory Berhad [Civil Review No.: 08(RS)-12-09/2019(W)].
It is a decision that will have reverberations for practitioners.
In preparing this article, I have taken the liberty of carrying out a file-search on the substantive FC Motion and Appeal, both of which were struck-out. The Civil Review was premised upon the FC’s decision to strike.
The background facts
On 04.11.2015, the HC allowed P’s (See Teow Koon) claim for ~RM8.8m against D (Kian Joo Can). An appeal was lodged.
On appeal, P threatened execution. D applied to the CA for a stay. The CA ordered D to deposit the Judgment Sum with their solicitors. D did so.
On 14.02.2017, the CA then partially allowed D’s appeal by reducing the sum owed to ~RM2.5m.
On 23.02.2017, D had proceeded to pay the sum of ~RM2.5m to P. P received the money (all transfers made and received through solicitors).
On 13.03.2017, P then lodged a Notice of Motion for leave to appeal to the FC. On 03.05.2018, leave was granted by the Federal Court.
P proceeded to file all Records of Appeal.
D then took-out a Notice of Motion to strike the appeal and to further rescind the grant of leave.
D’s argument: The receipt of the payment rendered the substratum of the appeal academic
D’s core argument was that the receipt of the payment by P on 23.02.2017 had rendered the appeal academic. The substratum of the appeal was gone.
D substantiated this argument by reliance on Kosma Palm Oil v Koperasi Serbausaha Makmur [2004] 1 MLJ 257, where the FC made a comment that the payment of a judgment debt may destroy the substratum of the appeal (paragraphs 17 and 18).
The Federal Court’s decision
The Federal Court, despite having granted leave and the matter being ready for full trial, allowed D’s Notice of Motion. The entire matter was struck and the leave to appeal was rescinded on 12.03.2019 (see Sri Kelangkota v Arab Malaysian Prima Realty [2003] 3 MLJ 257, where the FC held that it could revisit a grant of leave).
The Federal Court did not release its Grounds of Judgment (which would have been immensely useful).
The Civil Review application
P, being dissatisfied with the decision of the Federal Court, filed a review application. The Federal Court dismissed P’s review application. The Review Panel correctly noted that their purpose was not to investigate the correctness of the previous panel’s decision:
[25] With respect, we disagree. Bearing in mind that in the exercise of our discretion under rule 137 of the Rules of the Federal Court 1995, this Court does not sit as if on appeal over the earlier decision, the correctness of the earlier decision, whether on the facts or on the law, is not under scrutiny as both are matters of evaluation and opinion. On the issue of law, this Court is not here to determine whether or not the earlier panel had interpreted or applied the law correctly. An illustration was given in Asean Security Paper Mills Sdn Bhd as to what or when the Federal Court will review its own judgment in the same case on a question of law, and that is where the Court had applied a statutory provision that has been repealed. As can be seen, review if at all allowed, is only in an extremely limited circumstance.
Commentary for practitioners
Albeit one having to look at it in a rather roundabout fashion (with the initial decision of the FC to strike the motion lacking Grounds), this decision is of utmost importance for practitioners.
The payment of a Judgment Debt must be handled with the greatest of care to ensure that one’s client’s rights are kept safeguarded on appeal. A similar situation may be seen in the CA decision of Telekom Cellular v Kabalect [2000] 3 MLJ 254, where a majority panel concluded that the substratum of the appeal was not destroyed by payment of the full judgment sum.
This ratio was distinguished by Suriyadi J (retired FCJ) in MBT v Syarikat Perniagaan Mesra [2004] 1 MLJ 676, with His Lordship holding that payment rendered an appeal academic.
Conclusion
Practitioners would do well to carefully consider issuing and receiving payment on Judgment Sums. Your covering letter could very well be the distinction between one’s appeal being rendered academic.
As a safeguard, it would be prudent to state on one’s covering letter that “the payment of the Judgment Sum herein is without prejudice to our Clients’ rights to prosecute their appeal to the fullest, said rights being absolutely reserved”. If one is receiving payment, it would be reasonable for a similar letter to be issued upon receipt of the monies.
GAVIN JAYAPAL
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