On 28.01.2026, the Shah Alam High Court, before Yang Arif Dr Seow Hock Peng, dismissed the Defendants’ Applications to Stay further proceedings, allowing our Client to proceed with its assessment of damages notwithstanding the Defendants’ pending appeal to the Court of Appeal.
In practical terms, the Stay sought would have stopped our Client’s case in its tracks until the Defendants’ appeal was heard and decided.
The Plaintiff was represented by Mr Jonathan K.
Background
The dispute arose from a commercial action mounted by our Client, a Construction and Interior Design firm, against its former employees and associated Vendors. Our Client’s claims concerned, inter alia, breach of confidentiality obligations, unlawful interference with trade, and conspiracy, arising from the alleged misuse and disclosure of our Client’s Confidential Information following the cessation of the parties’ working relationships.
Given the nature of the allegations and the inter-relationship between the Defendants, the proceedings involved extensive documentary issues. In that context, we successfully applied for Discovery to ‘compel’ the Defendants to produce documents relevant to the pleaded claims.
On 24.09.2025, the High Court granted our Client’s application to strike out the Defendants’ Statement of Defence for failure to comply with the Court’s Discovery Order. Following the Striking-Out Order, the Defendants filed an appeal to the Court of Appeal.
For legal colleagues who may be interested, a brief report of the decision is available at [2025] MLJU 3453.
The High Court’s Focus: ‘Nugatoriness’ and the Principle of ‘Clean Hands’
All Defendants argued that continuing the proceedings before the High Court would render their appeal at the Court of Appeal ‘nugatory’.
In opposing the Stay, the Plaintiff confined its case to the proper meaning of ‘nugatoriness’, as recognised under trite principles, and further relied on the requirement of ‘clean hands’, arguing that the Defendants, having failed to comply with the Discovery Order, did not come to Court with ‘clean hands’ and as such, were not entitled to this equitable relief.
The Plaintiff’s position was straightforward:-
Nugatoriness is not determined by the label and/or form of the relief sought, but by whether the party seeking the Stay can be restored to its former position if the appeal succeeds; and
Where the party seeking a Stay has failed to comply with a Discovery Order, it does not come before the Court with ‘Clean Hands’ and is not entitled to invoke the Court’s equitable discretion.
The High Court accepted this principled approach. Most importantly, the Defendants’ Affidavits-in-Support of the Stay did not explain:-
- How the specific reliefs sought would create an irreversible state of affairs;
- Why the Defendants could not be restored by costs; or
- How the assessment of damages and/or account of profits would permanently defeat the appeal.
Bare assertions that the appeal would be rendered “academic” and/or “nugatory”, without a pleaded factual basis, were found to be insufficient, particularly where the Defendants’ predicament arose from their own non-compliance with the Court Order.
Why the Stay Was Refused
In dismissing both Stay applications, the High Court was satisfied, inter alia, that:
- The Defendants, having failed to comply with Court-ordered Discovery and having caused their own predicament, were not entitled to invoke the High Court’s equitable discretion to seek a Stay.
- Monetary reliefs, including Damages and Account of Profits, are inherently reversible;
- Injunctive reliefs relating to the use and/or disclosure of ‘specified’ Confidential Information operate as restraints and do not effect irreversible transfers of property.
The High Court further took into account the trite principle that a successful litigant ought not to be lightly deprived of the fruits of litigation, particularly where the party seeking a Stay had ‘contributed’ to the procedural impasse through its own non-compliance.
Practical Significance of the Decision
This decision provides useful guidance on the operation of Stay Applications pending appeal, particularly in cases involving non-monetary reliefs, which reinforces several important points:-
- Nugatoriness is about restorability, not whether reliefs are labelled “injunctive” and/or “non-monetary”;
- Stay Applications must be pleaded with precision;
- An appeal is not an automatic shield (trite);
- Procedural compliance matters. Parties who disregard Court-ordered obligations may find it difficult to invoke equitable discretion in their favour.
Note: This article is provided solely for educational purposes and does not constitute legal advice
