Hashim Mohd Ali

- vs -

Mirandah

Judgment

Abdul Aziz Mohamad J

1. The plaintiffs entered into an agreement with the defendant for the sale by the plaintiffs to the defendant of their shares in Ventana Technologies (M) Sdn Bhd ("Ventana"). By the sale, the defendant would become the controlling shareholder in Ventana. By the agreement, the defendant undertook and covenanted with the plaintiffs that he would cause Ventana, of which he would be in control as a result of the sale, to pay a certain sum to each of the plaintiffs as directors' fees. The agreement provided for the payment of interest by the defendant in the event of failure to pay the directors' fees.

2. On an application under Order 81 r 1(1)(a) for summary judgment on the plaintiffs' claim for specific performance of the agreement, on August 11, 1999, I made orders as sought by the plaintiffs, that is to say, I ordered the defendant to purchase the plaintiffs' shares and I ordered the defendant to cause Ventana to pay to the plaintiffs the directors' fees and interest thereon within fourteen days from the date of judgment, and, in the event of default in payment by Ventana, to himself pay the sums to the plaintiffs. I believe that the rationale for the default order that the plaintiffs sought was that, since the defendant had covenanted to cause Ventana to pay and since he would be in control of Ventana, then if Ventana failed to pay, he must be blamed for the default and must be made to pay.

3. On September 9, 1999, at the request of the solicitors for the plaintiffs and after hearing argument on both sides, I made certain variations to the order that I had made on August 11, which had not yet been drawn up. The variations, which were as sought by, the plaintiffs, spelt out what the defendant actually had to do in order to cause Ventana to pay the directors' fees and the interest thereon. By the variations, the defendant was required, within thirty days of September 9, to convene an extraordinary general meeting of Ventana to be held within twenty-one days for the purpose of making a resolution approving the payment of the directors' fees and interest, and if payment was not made by Ventana within fourteen days of the resolution, the defendant shall immediately pay the directors' fees and interest. To go by the terms of the order, the last day on which the meeting should be held would be October 30. If the meeting was held on October 30, and approved the payment, but Ventana did not pay by November 14, the defendant himself would have to pay on November 14.

4. The sealed order was served on November 24, on the defendants' solicitors and not on the defendant personally. The sealed order, and therefore the copy served, was not endorsed with the penal notice required by Order 45 r 7(4)(a).

5. The extraordinary general meeting was not held by October 30, 1999. It was held on November 30, 1999 and it approved payment of the directors' fees and interest. But no payment has been made by Ventana. So if one were to construe the order by going by the actual meeting date of November 30, by the order the defendant should have himself made payment on December 14. But he has not done so.

6. On January 4, 2000 the plaintiffs' solicitors wrote to the defendant asking for payment, saying that, in default, "execution proceedings" would be initiated against him.

7. The plaintiffs, desiring to obtain an order of committal against the defendant for his failure to make payment and realising that the penal notice has not been endorsed on the order, now applies for leave to amend the order to include the penal notice.

8. I turn now to the law that has a bearing on this application.

9. Order 45 r 5(1) lays down the situations in which a judgment or order may be enforced by an order of committal. The situation under paragraph (a) of r 5(1) is one "where a person required by a judgment or order to do an act within a time specified in the judgment or order refuses or neglects to do it within that time...". There are two aspects to the situation. One is the requirement to do an act within a time specified. The other is failure or neglect to do it within that time.

10. Order 45 r 7(2) lays down certain conditions that must be fulfilled for the enforcement under r 5 of an order, that's to say, enforcement by an order of committal. The conditions are in paragraphs (a) and (b). In the case of a person required to do an act, the conditions are that "a copy of the order has been served personally" on him [paragraph (a)] and that "the copy has been so served before the expiration of the time within which he was required to do the act" [paragraph (b)]. If those conditions or either of them are not met, the order, says Order 45 r 7(2), "shall not be enforced under r 5" that is to say, shall not been forced by an order of committal. Order 45 r 7(4)(a) further lays down that "there must be indorsed on the copy of the order served under this rule a notice in Form 87 informing the person on whom the copy is served" that "if he neglects to obey the order within the time specified therein ... he is liable to process of execution to compel him to obey it".

11. That is the penal notice that by this application the plaintiffs now seek to have endorsed on the order in this case. The endorsement is sought by way of amendment of the order under the slip rule, that is Order 20 r 11, which provides as follows:

    Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court by summons without an appeal.

12. The rule is about correcting mistakes and errors in judgments or orders. The amendment that is now sought is not to correct any mistake or error in the order that I made on August 11, 1999 and varied on September 9. The failure to endorse the penal notice on the order that was drawn up and sealed is not a mistake or error in the order that I made. The question of endorsing the penal notice was not a matter that ought to have formed part of the order that I made. It was an exterior matter, one that did not necessitate an order, to be taken care of primarily by the solicitors for the plaintiffs when drawing up the order if it was intended to enforce the order by an order of committal. The amendment sought to be made does not, therefore, fall under Order 20 r 11, but I suppose, if it is necessary to prevent injustice, I could order the endorsement by virtue of Order 92 r 4.

13. But I do not think I ought to order the amendment, because in my opinion the order cannot, or cannot now, be enforced by an order of committal.

14. As has been seen, the order required-the defendant to immediately ("serta-merta" is the word in the order) pay the directors' fees and interest if payment is not made by Ventana within fourteen days of Ventana's resolution to pay. Taking the word "serta-merta" literally, it means that the defendant was not given time within which to pay. As I said, one aspect of the situation under paragraph (a) of Order 45 r 5(1) in which a judgment or order may be enforced by an order of committal is the requirement "to do an act within a time specified in the judgment or order". Since no time was specified in the order in this case within which the defendant was to make payment, the requirement being to pay immediately, the situation in this case is not one in which the order may be enforced by an order of committal.

15. Alternatively, the order may be viewed as requiring the defendant to make payment within fourteen days of Ventana's resolution approving payment. Because the premise was that the defendant had the power to make Ventana effect payment within fourteen days of the resolution, the requirement that the defendant should immediately pay at the end of the fourteen days in default of payment by Ventana meant, in effect, that the defendant had fourteen days within which to ready himself to make payment in case Ventana did not pay within that time. It was in effect an order to the defendant to make payment within the fourteen days unless within that time he secured that Ventana made the payment.

16. Going by that interpretation, and interpreting the order strictly, the time within which the defendant was required to do the act of paying expired on November 14, 1999. Alternatively, interpreting the order according to the date when the extraordinary general meeting was actually held, the time expired on December 14, 1999.

17. As has been seen, a copy of the order must have been served personally on the defendant before the expiration of the time within which he was required to do the act of paying, that is, even taking the alternative date, before December 14, 1999, otherwise the order "shall not be enforced" by an order of committal. As the order in this case was not served personally on the defendant before December 14, 1999, it cannot now be enforced by an order of committal. Amending the order now to include the penal notice will not, therefore, serve any purpose. Were the defendant to be served personally now with the order as amended to include the penal notice, it would not enable the order to be enforced by an order of committal because service must have been done before December 14, 1999.

18. For those reasons I dismiss this application with costs.

Legislations

Rules of the High Court 1980: Ord. 20 r 11, Ord. 45 rr 5(1), 7(2), (4)(a), Ord. 81 r 1(1), Ord. 92 r 4, Form 87

Representation

Norhafiza Mohd Said (lza Ng Yeoh & Kit) for Plaintiffs

Navamalar Ganesan (Siva, Ram & Associates) for Defendant

Notes:-

This decision is also reported at [2000] 4 AMR 4699