Jaks Island Circle Sdn Bhd

238 v. Star Media Group Bhd & Anor [2020] 2 MLRH

JAKS ISLAND CIRCLE SDN BHD

v.
STAR MEDIA GROUP BHD & ANOR

High Court Malaya, Kuala Lumpur

Lee Swee Seng J
[Originating Summons Nos: WA-24C(ARB)-11-02-2018 & WA-24C(ARB)-12
-02-2018]
6 September 2019

Civil Procedure: Injunction — Damages — Application to assess damages —

Whether there was a need to determine that injunctions were wrongly granted —
Whether application for assessment of damages should be postponed until final
outcome of arbitration — Special circumstances that justified postponement of
assessment of damages — Whether application for assessment of damages premature

In February 2018, the plaintiff (“Jaks Island”) commenced two separate

actions against Star Media Group Bhd (“Star Media”) to restrain the latter
from receiving payments under two bank guarantees in the sum of RM25
million each (“Bank Guarantees”). To obtain the injunctions, Jaks Island
undertook to pay damages to Star Media arising in the event the injunctions
were wrongly granted. The High Court granted Jaks Island temporary
injunctions pending the resolution of the actions in the High Court. On 6
March 2018, Jaks Island submitted its Notice of Arbitration alleging that
Star Media breached a sale and purchase agreement between the parties.
However, the arbitration had not progressed beyond Jaks Island’s proposed
nomination of an arbitrator due to Star Media’s lack of response. In July
2018, both of the Jaks Island’s actions in the High Court were dismissed.
Dissatisfied with the decision, Jaks Island appealed to the Court of Appeal,
whilst simultaneously applying to the High Court for injunctions to restrain
Star Media from receiving the payments under the Bank Guarantees
pending the disposal of the appeals. Following Jaks Island’s unsuccessful
attempts to restrain Star Media from receiving the payments under the
Bank Guarantees, Star Media applied for an inquiry of damages that
Jaks Island had undertaken to pay in order to obtain the injunctions. Jaks
Island argued, amongst others, that the inquiry of damages was premature,
given the pending arbitration between the parties. The issues that arose for
determination were, inter alia, whether the assessment of damages should
wait until the outcome of the arbitration.

Held (allowing application for assessment of damages):

(1) There were no merits in Jaks Island’s argument that Star Media could not
move this court for Jaks Island’s undertaking to pay damages to be enforced
merely because Star Media had not applied for the ad interim injunction to
be set aside. The whole purpose of the undertaking given by Jaks Island was
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 239

because the application could not be heard immediately and Jaks Island itself
had asked for an ad interim injunction against its undertaking to pay damages for
any losses that Star Media might suffer arising out of the ad interim injunction.
(para 58)

(2) There was no need for the court to make a finding that the ad interim
injunction and ad interim Erinford were wrongly or incorrectly granted.
That was because of the very nature of the ad interim orders which were
given pending the hearing proper of the applications for the injunctions, to
preserve status quo and without delving into the merits of the applications
as yet. It could not be just because the ad interim injunctions were granted
by the court, then Jaks Island could not be made to honour its undertaking
in paying damages to Star Media. To hold otherwise would require a party
like Star Media here to have to appeal against the ad interim injunction
whilst awaiting the inter partes hearing of the applications for the injunctions.
Such a proposition needed to be dismissed for its absolute absurdity and
impracticability. (paras 60, 62 & 63)

(3) Whilst the court would retain its discretion with respect to when the
assessment should be done, in the absence of special circumstances there
was no cogent reason to refuse the assessment. Here, it had been established
through every tier of appeal that the injunction applications dismissed by the
High Court was rightly decided and the decision was affirmed in the Court of
Appeal and by the Federal Court when it dismissed the leave application. It
was an affirmation that the ad interim injunction and the ad interim Erinford
injunction ought not to have been granted in the first place. There was thus
nothing premature but everything proper for Star Media to apply for assessment
of damages pursuant to the Jaks Island’s undertaking given to the High Court.
Therefore, there was no justification for postponing the assessment of damages
until the outcome of the arbitration. The fact that the final outcome of the
arbitration might very well be in favour of Jaks Island would not qualify it to
be a special circumstance that justified the postponement of the assessment of
damages. (paras 72, 74, 77, 82 & 83)

Case(s) referred to:

Cheltenham and Gluocester Building Society v. Ricketts and Others [1993] 4 All ER
276 (refd)
Clough Engineering Limited v. Oil and Natural Gas Corporation Limited [2008]
FCAFC 136 (refd)
F Hoffmann-La Roche & Co AG and others v. Secretary of State for Trade and Industry
[1974] 2 All ER 1128 (refd)
Goo Sing Kar v. Dato’ Lim Ah Chap & Ors [2013] 3 MLRA 311 (refd)
GS Gill Sdn Bhd v. Descente Ltd [2010] 1 MLRA 483 (refd)
Gumusut-Kakap Semi-Floating Production System (L) Ltd v. Sabah Shell Petroleum
Company Limited [2017] MLRHU 702 (refd)
 Jaks Island Circle Sdn Bhd
240 v. Star Media Group Bhd & Anor [2020] 2 MLRH

Jones and Others v. Secretary of State for Energy and Climate Change and Another
[2014] 3 All ER 956 (refd)
Kenwood Electronics (M) Sdn Bhd & Anor v. Profile Spec (M) Sdn Bhd & Ors [2007]
1 MLRH 606 (refd)
Les Laboratoires Servier and Another v. Apotex Inc and Others (No 2) [2009] IP & T
600 (refd)
Middy Industries Sdn Bhd & Ors v. Arensi-Marley (M) Sdn Bhd [2013] 3 MLRA 114
(refd)
P Aker Flowerbulbs Pty Ltd v. Coulter [2004] 212 ALR 606 (refd)
RIH Services (M) Sdn Bhd v. Tanjung Tuan Hotel Sdn Bhd [2002] 1 MLRA 493 (refd)
SmithKline Beecham plc and Others v. Apotex Europe Ltd and Others [2006] 4 All ER
1078 (refd)
Soo Boon Siong v. Saw Fatt Seong & Ors [2007] 2 MLRA 784 (refd)

Legislation referred to:

Arbitration Act 2005, s 11
Rules of Court 2012, O 29 r 1(2A)(d), (e)

Counsel:
For the plaintiff: Wong Rhen Yen (Sharon Chong with him); M/s Dennis Nik &
Wong
For the 1st defendant: Wong Guo Bin (Izzuddin Zahidi with him); M/s Izral
Partnership

JUDGMENT

Lee Swee Seng J:

Parties And Disputes

[1] The key issue in these two related applications by the defendants for
assessment of damages arising out of an undertaking by the plaintiff to pay
damages in the event the injunctions applied for are set aside is whether the
undertaking applied when the interim injunctions and Erinford injunctions
were granted by the courts though finally set aside and decisions of which
were affirmed by the Federal Court in that leave to further appeal to it was
dismissed.

[2] Related to that is whether the assessment of damages should wait until
the outcome of the arbitration which had hardly started beyond a notice to
arbitration issued by the plaintiff.

[3] The subsidiary issue is the rate at which the interest should be imposed
for the period in which the Bank Guarantees sum could not be released by
the banks as the injunctions were in place either as ad interim or Erinford
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 241

injunctions depending on the point in time and period of time when either
injunctions were operative.
[4] For ease of reference, the 1st defendant, Star Media Group Berhad, in both
Originating Summons No: WA-24C(ARB)-11-02-2018 (“OS 11”) and WA-
24C(ARB)-12-02-2018 (“OS 12”) (collectively referred to as “OSs”) will be
referred to as “Star Media” or the “defendant”. The 2nd defendant in OS 11
and OS 12 shall be referred to as AmBank and UOB respectively.
[5] The plaintiff, Jaks Island Circle Sdn Bhd (“Jaks”) had opposed both the
applications for assessment of damages by Star Media. The applications are
in encl 62 for the AmBank Guarantee in OS 11 and encl 55 for the UOB
Guarantee with respect to OS 12.
Previous Determinations
[6] The defining milestones in the chronology of events have been culled from
the plaintiff ’s narration in its written submissions filed.
[7] On 23 February 2018, the plaintiff initiated proceedings herein to restrain
Star Media from receiving the Bank Guarantees in the sum of RM 25,000,000.00
each from AmBank and UOB.
[8] It is admitted that the plaintiff had given its undertaking as to damages
that Star Media may suffer arising out of the injunction applied for, in its
affidavits-in-support of the injunction applications dated 23 February 2018.
[9] On 26 February 2018, the High Court granted the plaintiff an ad interim
injunction (“ad interim HC injunction”) pending disposal of the OSs.
[10] Learned counsel for the plaintiff said it is pertinent to note that Star Media
did not file any application to set-aside the ad interim injunction in the OSs.
[11] On 12 July 2018, the plaintiff ’s OSs were dismissed with costs (“High
Court Order”).
[12] It was further highlighted that the High Court did not make any orders
enforcing the plaintiff ’s undertaking as to damages.
[13] Dissatisfied with the decision of the High Court, the plaintiff on 13 July
2018 appealed against the High Court Order vide Court of Appeal Civil Appeal
No: W-02(C)(A)-1477-07-2018 and Civil Appeal No: W-02(C)(A)-1478-07-
2018 (collectively referred to as “the Civil Appeals”).
[14] Star Media also filed a cross-appeal on the ground that the High Court
ought to have ordered the plaintiff to make good on its undertaking as to
damages. The cross-appeal was subsequently withdrawn at the hearing of
the appeal. Learned counsel for Star Media said the withdrawal was on the
understanding given by the plaintiff that it may proceed with an application
for assessment of damages in the High Court if the plaintiff ’s appeal to the
Court of Appeal was unsuccessful.
 Jaks Island Circle Sdn Bhd
242 v. Star Media Group Bhd & Anor [2020] 2 MLRH

[15] Pending the hearing of the plaintiff ’s Civil Appeals, the plaintiff
applied for an Erinford Injunction before the High Court to restrain Star
Media from receiving payment under the Bank Guarantees pending the
disposal of the Civil Appeals (“HC Erinford”).

[16] On 17 July 2018, at the first case management for the HC Erinford, the
High Court granted an ad interim HC Erinford injunction pending the disposal
of the inter partes hearing.

[17] On 23 July 2018, the HC Erinford was heard and dismissed by the High
Court with costs.

[18] This did not deter the plaintiff and with dogged determination it applied
on 25 July 2018 to the Court of Appeal for a similar Erinford Injunction
pending disposal of the Civil Appeals (“COA Erinford”).

[19] On 27 July 2018, the Court of Appeal dismissed the COA Erinford with
costs.

[20] As endurance is often regarded as a virtue against the setbacks in life, the
plaintiff pommels itself to pursue further and exhaust all avenues of appeal.

[21] On 29 July 2018, the plaintiff filed a motion for leave to appeal to the
Federal Court against the Court of Appeal’s decision in dismissing the COA
Erinford vide Federal Court Civil Application Nos: W-08(i)-391-07-2018 and
W-08(i)-392-07-2018 (collectively referred to as “FC Civil Leave Erinford
Applications 391 and 392”).

[22] To prevent as it were the horse from bolting, the plaintiff applied for an
Erinford Injunction at the Federal Court to restrain Star Media from receiving
payment under the Bank Guarantees pending disposal of Civil Applications
391 and 392.

[23] The Civil Appeals were heard on 14 November 2018. The Court of
Appeal dismissed the plaintiff ’s Civil Appeals and affirmed the High Court
Order dated 12 July 2018 (“COA Order”).

[24] The plaintiff then made an oral application for a fresh Erinford Injunction
pending its leave to appeal to the Federal Court. This was dismissed by the
Court of Appeal.

[25] Dissatisfied with the decision of the Court of Appeal, the plaintiff on
16 November 2018 filed a motion for leave to appeal to the Federal Court
against the COA Order in dismissing the Civil Appeals vide Federal Court
Civil Application Nos: W-08(f)-569-11-2018 and W-08(f)-571-11-2018.
(collectively referred to as “FC Civil Injunction Leave Applications 569 and
571”).
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 243

[26] Having filed Civil Applications 569 and 571 in the Federal Court, the
FC Civil Leave Erinford Applications 391 and 392 in relation to the COA’s
refusal to grant Erinford Injunction became redundant and was withdrawn on
19 November 2018.

[27] The plaintiff thereafter obtained an interim injunction from the Federal
Court pending the disposal of Civil Applications 569 and 571.

[28] On 7 January 2019, the Federal Court dismissed the plaintiff ’s Civil
Applications 569 and 571 with costs (“FC Order”).

[29] Truly it is a case where no stones had been left unturned and having
exhausted all avenues, the curtain must finally fall with the caption “The End”;
a cryptic reminder that the most important thing in life is not to have won but
to have fought well.

[30] Reality sank in and with no impediments even over the horizon, the Bank
Guarantees in the sum of RM 25,000,000.00 each was subsequently released
to the Star Media on 9 January 2018 by AmBank and UOB following the FC
Order.

Principles And Deliberations

[31] It was argued by the plaintiff that the High Court when dismissing its
application for the injunction did not specifically make an order for damages
to be assessed.

[32] The assessment of damages was pursuant to the undertaking given to

the court by the plaintiff and unless the court had ordered that there be no
assessment of damages for reasons that it would invariably give, Star Media is
entitled to hold the plaintiff to its undertaking and to pray that it should make
good its undertaking to pay damages arising from the loss suffered by Star
Media because of the ad interim orders.

[33] Acting on an abundance of caution, Star Media had in fact cross-

appealed to the Court of Appeal on enforcing the undertaking as to damages
and that cross-appeal was withdrawn only upon the consent and agreement
of the plaintiff that Star Media is entitled to file an application to enforce the
undertaking given by the plaintiff. This is reflected in para (e) of the COA
Order dated 14 November 2018.

[34] Given that plaintiff had already acknowledged by way of the COA Order
of the Star Media’s right to file the application herein despite not filing any
application to set aside the interim injunctions, I agree with Star Media that
the plaintiff is barred and estopped from raising any dispute as to the propriety
or validity of the application to enforce the undertaking pursuant to the COA
Order.
 Jaks Island Circle Sdn Bhd
244 v. Star Media Group Bhd & Anor [2020] 2 MLRH

[35] The further arguments would be explored below with respect to the need
to file an application to set aside the ad interim injunction.

[36] In Kenwood Electronics (M) Sdn Bhd & Anor v. Profile Spec (M) Sdn Bhd & Ors
[2007] 1 MLRH 606, it was held as follows:
“[12] Since the order granting the injunction is specifically based upon a
plaintiff obtaining the injunction undertaking to abide by any order made as
to damages in the event the plaintiff ’s claim fails, no further order need to
be made at trial as to whether an assessment of damages is necessary. In
the ordinary course, a party acting in good faith should be able to agree to
reasonable damages, and no formal application or order from the court is
necessary.”

[Emphasis Added]

[37] Here the two OSs had been disposed of with finality as all avenues of
appeal have been exhausted. There is no good reason to bar Star Media from
making these applications for assessment of damages.

Whether The Undertaking As To Damages Ought To Be Enforced When

There Was No Application By Star Media To Set Aside The Ad Interim
Injunction?

[38] The undertaking as to damages was given by the plaintiff to the court
when it applied for an injunction and until the hearing of the application, an
ad interim injunction was granted to preserve the status quo. The undertaking
given by the plaintiff is to pay the 1st defendant here, Star Media, damages in
the event that Star Media would have suffered because of the injunction.

[39] The requirement of an undertaking is a deterrent against any applicant

perfunctorily obtaining one either ex parte or by way of an ad interim order
pending the hearing of the inter partes application or as in here, until the OSs
are heard or in some cases, until the writ action or arbitration is heard.

[40] Often times the facts would not have been ascertained yet but the
applicant is contending that it would suffer irreparable harm which cannot be
compensated by money in the event that it should prove to be successful at the
inter partes hearing or at the trial or arbitration. It is a way of addressing the
competing interest of the parties in the meanwhile in a way that would be fair
and reasonable to the parties.

[41] Peter Gibson LJ in Cheltenham and Gluocester Building Society v. Ricketts and
Others [1993] 4 All ER 276 explained the requirement of an undertaking in the
context of an injunction application as follows:
“The practice of requiring an undertaking in damages from the applicant
for such an injunction as the price for its grant was originated by the
court of Chancery as an adjunct to the equitable remedy of an injunction.
There is an obvious risk of unfairness to a respondent against whom an
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 245

interlocutory injunction is ordered at a time when the issues have not been
fully determined and when usually all the facts have not been ascertained.
The order might subsequently prove to have been wrongly made but in the
meantime the respondent by reason of compliance with the injunction may
have suffered serious loss from which he will not be compensated by the
relief sought in the proceedings. The risk of such injustice is the greater when
the interlocutory injunction has been granted ex parte. The risk is particularly
great with Mareva injunctions, granted as they are almost invariably ex parte,
and frequently imposing severe restrictions on the respondents’ right to spend
their money or otherwise dispose of their assets: such injunctions can have the
effect of ruining a thriving business or of otherwise causing substantial loss to
the respondent and were vividly described by Donaldson LJ in Bank Mellat v.
Nikpour [1985] 2 FSR 87 at 92 as being, with the Anton Piller order, one of the
law’s ‘two nuclear weapons’. The courts are properly concerned lest these
weapons are used inappropriately and the undertaking in damages provides
a salutary potential deterrent against their misuse.

The usual form of undertaking (which was in substance that given by the
building society in the present case) is - ‘to abide by any order which this court
may make as to damages in case this court shall be of the opinion that the
respondent shall have suffered any by reason of this order which the applicant
ought to pay’.

The form of the undertaking indicates that the court has a discretion whether
to enforce it at all and that discretion is not limited in any way. The power to
enforce the undertaking being incidental to the power to grant an injunction
(see Re Hailstone [1910] 12 LT 877 at 880), the discretion will be exercised in
accordance with ordinary equitable principles (see, for example, Spry Equitable
Remedies (4 edn 1990) pp 638-645). The undertaking is given to the court and
not the respondent, who can ask the court to enforce it but has no right to
its enforcement or any right to damages until the discretion is exercised in
his favour and damages are awarded.

The law was stated by Lloyd LJ (with whom Stocker LJ and Sir George
Waller agreed) in Financiera Avenida v. Shiblaq [1990] CA Transcript 973 thus:

“Two questions arise whenever there is an application by a defendant to

enforce a cross-undertaking in damages. The first question is whether
the undertaking ought to be enforced at all. This depends on the
circumstances in which the injunction was obtained, the success or
otherwise of the plaintiff at the trial, the subsequent conduct of the
defendant and all the other circumstances of the case. It is essentially
a question of discretion. The discretion is usually exercised by the
trial judge since he is bound to know more of the facts of the case than
anyone else. If the first question is answered in favour of the defendant,
the second question is whether the defendant has suffered any damage
by reason of the granting of the injunction. Here ordinary principles
of the law of contract apply both as to causation and as to quantum (per
Lord Diplock in F Hoffmann-La Roche & Co AG v. Secretary of State for Trade
and Industry [1974] 2 All ER 1128 at 1150, [1975] AC 295 at 361) ...
In a simple case the trial judge may be able to deal with causation and
quantum himself as soon as he has exercised his discretion. But in a more
 Jaks Island Circle Sdn Bhd
246 v. Star Media Group Bhd & Anor [2020] 2 MLRH

complicated case it may be necessary for him to order an inquiry as to

damages either before himself, or before some other judge or before the
master or registrar. Very occasionally he may find it necessary to leave
over the exercise of the discretion’.”

[Emphasis Added]

[42] The above principle was adopted and applied by the Federal Court in GS
Gill Sdn Bhd v. Descente Ltd [2010] 1 MLRA 483.

[43] Whilst I accept the fact that the undertaking as to damages was given to
the court and not to Star Media and so the court retains the absolute discretion
whether or not to enforce the undertaking, the plaintiff has not shown why its
undertaking given to the court should not be enforced. Bearing in mind that
a breach of the undertaking attracts the remedy available for contempt, it has
not been shown here how it would be inequitable for the undertaking not to be
enforced.

[44] In F Hoffmann-La Roche & Co AG and others v. Secretary of State for Trade and
Industry [1974] 2 All ER 1128, Lord Diplock stated:
“The court has no power to compel an applicant for an interim injunction
to furnish an undertaking as to damages. All that it can do is to refuse that
application if he declines to do so. The undertaking is not given to the
defendant but to the court itself. Non-performance of it is contempt of court,
not breach of contract, and attracts the remedies available for contempt;
but the court exacts the undertaking for the defendant’s benefit. It retains a
discretion not to enforce the undertaking if it considers that the conduct of
the defendant in relation to the obtaining or continuing of the injunction or
the enforcement of the undertaking makes it inequitable to do so...”

[Emphasis Added]

[45] Seeing that the undertaking as to damages from the applicant of an

injunction is the “price the applicant must pay” for the granting of such
injunction, there is no cogent reason shown as to why the applicant here
should not be held to its undertaking. See: SmithKline Beecham Plc and Others v.
Apotex Europe Ltd and Others [2006] 4 All ER 1078. After all the purpose of the
undertaking as explained by the Federal Court in GS Gill Sdn Bhd v. Descente
Ltd [2010] 1 MLRA 483 is to mitigate the “obvious risk of unfairness to the
respondent against whom an interlocutory injunction is ordered at a time when
the issues have not been fully determined and when usually all the facts have
not been ascertained”.

[46] The relevant dates for the undertaking would be when the ad interim
injunction was in force from 26 February 2018 until 12 July 2018 and the ad
interim Erinford from 17 July 2018 till 23 July 2018.

[47] The plaintiff submitted that the enforcement of its undertaking as to

damages ought not to be enforced because the ad interim injunction and the
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 247

ad interim Erinford were correctly granted. The ad interim injunction and ad

interim Erinford had lapsed or terminated upon the dismissal of the OSs and
the dismissal of the inter parte Erinford. There were no findings by the High
Court that the injunction was wrongly granted.
[48] It must be remembered that in the present case there was no ex parte
application made but rather an ad interim injunction pending its hearing
inter partes in the OSs. In RIH Services (M) Sdn Bhd v. Tanjung Tuan Hotel Sdn
Bhd [2002] 1 MLRA 493, the Court of Appeal was dealing with an ex parte
injunction that had not been applied to be set aside. It observed as follows:
“However, if the defendant wants to set aside the ex parte order, the defendant
is at liberty to file an application for that purpose. It is at the hearing of that
application that the court should decide whether to set it aside or not, if it
has not lapsed. If, in the meantime, the ex parte order has lapsed, the court
should nevertheless hear the application, not for the purpose of setting
it aside or not, because it has lapsed, but for the purpose of determining
whether that ex parte order should or should not have been made in the first
place. This is necessary in order to determine whether damages should be
awarded or not ...
The learned judge also made an order that the appellant makes good its
undertaking as to damages. Again, with respect, for the same reasons given
in the preceding paragraph, such an order should not have been made. The
fact that an ex parte order lapses automatically after 21 days does not mean that
the defendant is automatically entitled to damages. The question is should the
ex parte order have been made at all? Only if it should not, then the order for
assessment of damages should be made. That has not been decided. There
was not even an application for that purpose."
[Emphasis Added]

[49] Therefore the principle of having to set aside an ex parte injunction first
before an assessment of damages may be made has no application in the
present case.
[50] Likewise the Court of Appeal in Middy Industries Sdn Bhd & Ors v. Arensi-
Marley (M) Sdn Bhd [2013] 3 MLRA 114 followed the same approach as follows:
“[22] In order to enforce the said undertaking as to damages, the ex parte
order in question must first be discharged or set aside by the court. The
appellants should have made an application to that effect to the court. Such
an application is essential for the purpose of determining whether the said
ex parte order should or should not have been made in the first place. If the
answer is in the negative, then such determination is essential to determine
the issue of assessment of damages to be awarded to the other party who
has suffered such damages. The appellants, without putting forward any
application to discharge or set aside the ex parte order must have accepted
that the said order was properly taken out. When this is so, they must be
excluded from claiming damages for the period when it existed (see Elias
Mooin & Anor v. Dato’ Zainal Abidin Johari [1997] 2 MLRH 843).
 Jaks Island Circle Sdn Bhd
248 v. Star Media Group Bhd & Anor [2020] 2 MLRH

[23] Learned counsel for the appellants complained that it took almost a year
since the respondent (the plaintiff) obtained the ex parte injunction order on
14 May 2002 till the time when the inter parte application for injunction was
finally dismissed on 28 April 2003; and it would be a serious miscarriage
of justice if the appellants (the defendants) upon being victorious in the
interlocutory inter parte injunction stage as well as the trial proper, is
prohibited from enforcing the undertaking given by the respondent (the
plaintiff).

[24] The question of ‘serious miscarriage of justice’ does not arise if the
appellants (the defendants) had taken the correct steps in enforcing the said
undertaking as to damages as stated in the earlier ex parte order on the ground
that the ex parte order was wrongly granted or it should not have been granted
at all in the first place.”

[Emphasis Added]

[51] See also the Court of Appeal case of Soo Boon Siong v. Saw Fatt Seong & Ors
[2007] 2 MLRA 784. Learned counsel for the plaintiff said that the principle
applicable by extension is that Star Media should have applied for the ad interim
injunction and the ad interim Erinford granted to be set aside.

[52] However there is a flaw in that reasoning as the whole purpose of ad-
interim injunction and an ad interim Erinford is to maintain the status quo until
the injunction application may be heard after the parties have exhausted their
affidavits. Imagine for a moment that Star Media must apply to set aside the
ad interim injunction, that would entail the application to be heard first and
before that could be heard, another ad interim injunction would have to be
granted to preserve the status quo.

[53] The arguments and applications for an ad interim injunction would go

on ad nauseam if the Star Media consented to the application on ground of
expediency as administratively the affidavits could not be exhausted in a day,
then it could not be seen to be applying to set aside the ad interim injunction and
if it objected to it, then Star Media would be seen to be unduly difficult and in
any event the court would for expediency grant it subject to the undertaking
of the plaintiff until the application is heard inter partes. It would be a case of
“head I win” and “tail you lose’ kind of argument! The same would apply to
an ad interim Erinford injunction.

[54] The fact that the court grants the ad interim injunction is precisely because
the application cannot be heard immediately as both parties would need to file
their affidavits; the Star Media in opposition and the plaintiff in reply.

[55] It must not be forgotten for a moment that when the ad interim injunction
was granted the merits of the application had not been considered yet - it is
only for maintaining the status quo pending the hearing proper inter partes of
the injunction application.
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 249

[56] It is precisely for this reason that the undertaking is exacted of the
plaintiff so that any losses suffered by Star Media may be made good by the
plaintiff who had asked for the ad interim order until the opportune time to
hear the OSs on the merits.

[57] In RIH Services (M) Sdn Bhd v. Tanjung Tuan Hotel Sdn Bhd (supra), the Court
of Appeal observed as follows with respect to an application for an ex parte
injunction which had not been heard inter partes yet:
“Bear in mind that the application was still before him, alive and pending.
He clearly had the jurisdiction to consider whether or not to grant an ad
interim injunction pending the hearing inter partes of the application. From
my own experience, quite often parties would agree to such an order or the
defendant would give an undertaking to maintain the status quo pending
the hearing of the application inter partes. But even if they do not agree, the
court has the jurisdiction to make such an order.”

[Emphasis Added]

[58] I find no merits in the plaintiff ’s argument that Star Media cannot move
this court for the plaintiff ’s undertaking to pay damages to be enforced merely
because Star Media had not applied for the ad interim injunction to be set aside.
The whole purpose of the undertaking given by the plaintiff is precisely because
the application cannot be heard immediately and the plaintiff itself had asked
for an ad interim injunction against its undertaking to pay damages for any
losses that Star Media may suffer arising out of the ad interim injunction.

[59] To interpret otherwise would be to render the undertaking ineffectual and

toothless as invariably the court would grant an ad interim injunction until the
matter can be heard inter partes and if the plaintiff ’s argument is correct, then it
would be a carte-blanche for the plaintiff to do so with impunity and immunity
against any and all claims for damages when the injunction application is
finally dismissed on the OSs applications as here!

Whether There Is A Need For A Finding From The Court That The Ad
Interim Injunction Was Wrongly Granted?

[60] There is no need for the court to make a finding that the ad interim
injunction and ad interim Erinford was wrongly or incorrectly granted. That is
because of the very nature of the ad interim Orders which were given pending
the hearing proper of the applications for the injunctions, to preserve status quo
and without delving into the merits of the applications as yet.

[61] It is different from an ex parte application where the requirements of a

full and frank disclosure as well as any facts that may cause the court not to
grant the injunction has to be clearly set out as required under O 29 r 1(2A)
of the Rules of Court 2012. The plaintiff applicant is required to state “any
answer by the other party (or which he is likely to assert) to the claim or
application” by reason of O 29 r 1(2A)(d) of the Rules of Court 2012. The
 Jaks Island Circle Sdn Bhd
250 v. Star Media Group Bhd & Anor [2020] 2 MLRH

plaintiff should also disclose to the court “any facts which may lead the court
to not granting the application ex parte or at alf” by reason of O 29 r 1(2A)(e)
of the Rules of Court 2012.

[62] It cannot be just because the ad interim injunctions were granted by the
court then the plaintiff cannot be made to honour its undertaking in paying
damages to Star Media.

[63] To hold otherwise would require a party like the defendants here to
have to appeal against the ad interim injunction whilst awaiting the inter partes
hearing of the applications for the injunction and the Erinford injunctions.
Such a proposition only needs to be stated to be dismissed for its absolute
absurdity and impracticability.

Whether The Applications For Assessment Of Damages Pursuant To The

Undertaking Given By The Plaintiff Is Premature?

[64] The plaintiff submitted that on 6 March 2018, its previous solicitors had
issued a Notice of Arbitration to Star Media. Star Media vide its solicitors
had then replied on 8 March 2018. However to date the arbitration has not
progressed beyond the plaintiff ’s proposal of the names of arbitrators to
constitute the arbitration tribunal.

[65] The plaintiff further submitted that the delay was because Star Media
has not responded to its proposed arbitrators named. Surely that cannot be a
good reason for not proceeding with all due diligence with the arbitration for
another party’s lack of response cannot effectively stall an arbitration unless
the agreement to arbitrate is so vague as to fail to provide for the relevant rules
under which the arbitration is to be held.

[66] Granted that the OSs herein were initiated pursuant to s 11 of the
Arbitration Act 2005, which allows the parties to apply for any interim measure
at the High Court. The courts at all levels had decided that in respect of the
issue of the call on the Bank Guarantees, there is nothing unconscionable
about it.

[67] In the absence of fraud or unconscionability the demand on the Bank

Guarantees must be allowed for otherwise the instrument of a Bank Guarantee
would be meaningless and not worth the paper it is written on where commercial
certainty is concerned.

[68] It is true that the courts did not make any decision on the underlying
dispute between the parties vis-a-vis whether there was a breach of the Sale and
Purchase Agreement dated 19 August 2011 (“SPA”). That is because that issue
is not relevant for the purpose of determining the validity of the call on the
Bank Guarantees. That issue would have to be decided at the arbitration but in
the meanwhile if the plaintiff has not shown unconscionable conduct on the
part of Star Media, then the demand on the Bank Guarantees is valid and the
sum guaranteed would have to be released.
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 251

[69] It has often been said that the instrument of an irrevocable, unconditional
on-demand Bank Guarantee is a method that the parties have agreed with
respect to apportioning risk when a dispute should arise as it has invariably
arisen in this case under the SPA. This vehicle of an unconditional on-demand
Bond as an instrument of risk allocation was observed in the Australian case
of Clough Engineering Limited v. Oil and Natural Gas Corporation Limited [2008]
FCAFC 136 as follows:
“57. His Honour considered that a commercial object of the performance
bank guarantees under the Contract was to allocate the risk of a party
being out of pocket pending the resolution of a dispute and that ONGC was
entitled to call upon them even where a genuine dispute existed as to whether
or not Clough was in breach and whether or not damage had been suffered ...

...

76. Reference was made in Wood Hall Ltd 141 CLR 443 to the commercial
purpose of the guarantees, which in that case was that they be equivalent to
cash: see Barwick CJ (at 445); Gibbs J (at 453); Stephen J (at 457-458).

As Stephen J observed, to introduce a qualification on the entitlement of

the owner to call upon the performance guarantees (at 457): ... would be to
deprive them of the quality which gives them commercial currency.

....

79. In Fletcher Construction [1998] 3 VR 812, Charles JA at 821 and Callaway

JA at 826 recognised that there are generally two commercial reasons why
a beneficiary of a performance guarantee may have stipulated for such an
entitlement. One is to provide security for a valid claim against the contractor.
The second, which is additional to the first, is to allocate the risk between
the parties as to who shall be out of pocket pending the resolution of a
dispute between them. Callaway JA went on to observe that it is a question
of construction of the underlying contract whether the guarantee is provided
solely by way of security or also as risk allocation device. He went on to say
(at 827):

Remembering that we are speaking of guarantees in the sense of standby

letters of credit, performance bonds, guarantees in lieu of retention
moneys and the like, the latter purpose is often present and commercial
practice plays a large part in construing the contract. No implication may
be made that is inconsistent with an agreed allocation of risk as to who
shall be out of pocket pending resolution of a dispute and clauses in
the contract that do not expressly inhibit the beneficiary from calling
upon the security should not be too readily construed to have that
effect. As I have already indicated, they may simply refer to the kind of
default which, if it is alleged in good faith, enables the beneficiary to have
recourse to the security or its proceeds. It seems to us that his Honour’s
reference to a default “alleged in good faith” was intended to embrace
the first exception we have set out above. That is to say, the breach relied
upon to support a call on the performance guarantee must not be asserted
fraudulently because the Court will enjoin a party from so acting. Thus,
 Jaks Island Circle Sdn Bhd
252 v. Star Media Group Bhd & Anor [2020] 2 MLRH

subject to the exceptions of fraud and unconscionability, the beneficiary

of a performance guarantee granted in its favour as a risk allocation
device, will be entitled to call upon the guarantee even if it turns out,
ultimately, that the other party was not in default: Fletcher Construction
[1998] 3 VR at 827.”

[Emphasis Added]

[70] See generally Gumusut-Kakap Semi-Floating Production System (L) Ltd v.

Sabah Shell Petroleum Company Limited [2017] MLRHU 702.

[71] It is for the parties to sort out the final accounting at the arbitration where
all issues in the dispute would be fully ventilated. The sum of RM50,000,000.00
would have to be accounted for in the final accounting taking into consideration
the arbitration tribunal’s final award on the respective heads of claims and
counterclaims of the parties.

[72] There is no justification for postponing the assessment of damages until

the outcome of the arbitration is realised for to do so would set a dangerous
precedent that there is no pain in providing an undertaking to make good losses
suffered by the defendant until the final outcome is realised.

[73] That can only embolden the party applying for an injunction to painlessly
proffer the undertaking knowing that for all practical purposes the Court would
buy the argument that the assessment should wait.

[74] Whilst the court would retain its discretion with respect to when the
assessment should be done, in the absence of special circumstances there is
no cogent reason to refuse the assessment when the plaintiff has taken the
defendants from the High Court to the Court of Appeal and right up to the apex
Federal Court over the issue of payment to be made pursuant to a demand for
payment on an irrevocable, unconditional and on-demand Bank Guarantees.

[75] The Federal Court in GS Gill (supra) gave some guidance on the exercise of
discretion with respect to assessment of damages pursuant to an undertaking
to pay damages in a case where the applicant had failed to obtain the injunction
as follows:
“[32] Based on these authorities, it is our considered opinion that whether
an inquiry as to damages should be ordered lies with the discretion of the
trial judge. It is not for the defendant to insist that such inquiry should be
made. The undertaking to damages for an interlocutory injunction is given
to the court and not to the defendant. The trial judge is the best equipped
to decide on whether to order an inquiry as to damages since he has an
adequate knowledge of the facts of the case. He is even allowed to defer the
exercise of this discretion until the end of the trial - see Financiers Avendia v.
Shiblaq (unreported, 7 November 1990). As a general rule, if an interlocutory
injunction is wrongly granted, the trial judge should make an order for inquiry
to damages on the undertaking given by the plaintiff for the interlocutory
injunction. But if there are special circumstances, the trial judge can exercise
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 253

his discretion to refuse ordering such inquiry. The special circumstances

disclosed by Sir Peter Gibson LJ in Cheltenham & Gloucester Building Society v.
Ricketts can be adopted as a guide but these are not exhaustive. Much depends
on the facts and circumstances of each case.”

[76] There are no special circumstances here and if at all, only circumstances
justifying an assessment of damages based on the conservative method of the
interest which Star Media would have earned if the Bank Guarantees sum had
been obtained soon after the call on the Banks to pay until after the plaintiff
had exhausted all avenues of appeal and the Guarantee sum was then released
to Star Media.

[77] The fact that the final outcome of the arbitration may very well be in favour
of the plaintiff where Star Media is ordered to repay back the Bank Guarantees
sum it had earlier received, would not qualify to be a special circumstance.

[78] Going by the above test that the plaintiff sought to prevail upon and
persuade this court, there would effectively be no assessment of damages until
the disposal of the arbitration. That would not engender confidence of the
business community in relying on Bank Guarantee as an instrument to allocate
risks in the event of a dispute.

[79] In future the party affected might as well insist on cash payment or retention
for a bird in the hand would be worth two in the bush! The instrument of a
Bank Guarantee was agreed upon by the parties as a half-way house where the
beneficiary of the Bank Guarantee has the assurance of payment for default
by the obligor and at the same time the obligor performing the works has the
requisite cash flow from the works done.

[80] The plaintiff was pursuing its appeals through every tier of the appellate
process and the parties had agreed that any assessment should be after all
avenues of appeal has been exhausted. That should not now be stretched to
until the disposal of the arbitration.

[81] Star Media is within its legal right to apply for assessment of damages
without waiting for the outcome of the arbitration, acting as it did within the
guidelines provided by the Court of Appeal in Goo Sing Kar v. Dato’ Lim Ah
Chap & Ors [2013] 3 MLRA 311 as follows:
“[15] And according to Plowman J in Ushers Brewery Ltd v. PS King & Co
(Finance) Ltd [1972] Ch 148 at p 154C, the undertaking becomes enforceable
by way of an inquiry as to damages in the following sets of circumstances:

(a) when the plaintiff has failed on the merits at the trial; or

(b) when it is established before trial that the injunction ought not to
have been granted in the first place; or
 Jaks Island Circle Sdn Bhd
254 v. Star Media Group Bhd & Anor [2020] 2 MLRH

(c) when it is established, after trial, by an unsuccessful defendant, that

the injunction ought not to have been given.”

[Emphasis Added]

[82] Here it has been established through every tier of appeal that the injunction
applications in the OSs dismissed by the High Court was rightly decided and
the decision was affirmed in the Court of Appeal and by the Federal Court
when it dismissed the leave application. It is an affirmation that the ad interim
injunction and the ad interim Erinford injunction ought not to have been granted
in the first place.

[83] There is thus nothing premature but everything proper for Star Media to
apply for assessment of damages pursuant to the plaintiff ’s undertaking given
to the High Court.

Whether Star Media Had Proven Any Losses Arising Out Of The Ad Interim
Injunction And Ad Interim Erinford Orders?

[84] The plaintiff submitted that the interim injunction and interim Erinford
were sought in good faith to maintain status quo and to preserve the substratum
of the OSs and the appeals that has been filed. It was not intended to prejudice
or cause any hardship on Star Media.

[85] Whilst that may be so, the unintended consequences clearly apparent
to the plaintiff, would be that Star Media had been deprived of the use of a
substantial sum of RM50,000,000.00. Surely it cannot be seriously argued that
it is no loss to the defendant if the said substantial sum is released a year later
but that if it had been released earlier at the point when the injunction was first
refused in the High Court, the plaintiff would suffer loss.

[86] Somehow the equation does not add up; the fact that the Bank
Guarantees sum of RM50,000,000.00 is not released would mean that the
plaintiff does not have to service any interest in the said sum until it is
released and the fact that Star Media had been prevented from receiving
the said sum would mean that it would be deprived of the interest which
it could have earned had it received the said sum and put the same in fixed
deposit at least. The plaintiff ’s gain is the Star Media’s loss; one is the
flip side of the other. Thus the plaintiff cannot be flippant about the Star
Media’s loss but be fastidious when it comes to its own gain.

[87] It is only too obvious that the plaintiff ’s gain in saving on interest on the
said sum not released would be the Star Media’s loss in being deprived of
the interest which it could have earned. Of course the interest rates would
differ depending on the Banks involved and the security that was put up by the
plaintiff for the issuance of the Bank Guarantees.

[88] Star Media is not claiming for what it could have gained had it put the
said substantial sum into some investments. In any event it had not given the
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 255

plaintiff notice that it was going to do so to alert the plaintiff as to the loss that
it would suffer for which the plaintiff would be held liable.

[89] Rather Star Media is claiming merely based on what it would conservatively
have earned from interest for the said sum in its accustomed rates with its
banks.

[90] I see no good reason why Star Media should be deprived of this use of the
said sum that it is entitled to have been paid some one year earlier had it not
been for the ad interim injunction and the ad interim Erinford injunction. After
all interest is paid for precisely the reason of delay in getting the sum that one is
legally entitled. In P Aker Flowerbulbs Pty Ltd v. Coulter [2004] 212 ALR 606 the
Federal Court of Australia held that there is no reason why a judgment creditor
should be deprived of interest that would otherwise automatically accrue from
the time that judgment was entered merely because the judgment debtor has
been granted a stay of execution.

[91] By the same token there is no good reason why the Star Media should be
deprived of interest that it would otherwise have earned had it not been for the
ad interim injunction and the ad interim Erinford injunction.

[92] In Jones and Others v. Secretary of State for Energy and Climate Change and
Another [2014] 3 All ER 956 the Court of Appeal in UK held that the payment
of interest was contingent on the claim being successful and thus the liability
to pay interest crystallised when the claim was successful. Here Star Media
had been successful at the hearing of the OSs to show to the High Court that
the Bank Guarantee sum ought to be released and this had been affirmed by
the Court of Appeal and by the Federal Court as further leave to appeal to the
Federal Court had been refused by the Federal Court.

[93] Star Media’s practice with respect to prudent stewardship of huge sum
received, as stated in its affidavit is that it would be put in cash funds account
schemes with RHB Bank Berhad.

[94] Star Media had affirmed an affidavit to state and show how finally when
the sum of RM50,000,000.00 is received it had placed the sum in two tranches
of RM807,593.94 with RHB Cash Management Fund 1 with RHB Bank and
RM 788,735.71 with RHB Bank Islamic Cash Management Fund and earning
interest at the rate of 3.74 % per annum and 3.66 % per annum respectively.

[95] Clearly the assessment of damages here based on the interest that Star
Media would have earned is neither too far-fetched nor fanciful but every bit
foreseeable and fair.

[96] Even in cases where calculation of damages would be more difficult

to be carried out with certainty and precision, “the damages for the lost
opportunity were assessable” as evidenced in the case of Les Laboratoires
Servier and Another v. Apotex Inc and Others (No 2) [2009] IP & T 600, where the
High Court dealt with an application to enforce the undertaking given by the
 Jaks Island Circle Sdn Bhd
256 v. Star Media Group Bhd & Anor [2020] 2 MLRH

plaintiff in obtaining an injunction to prevent the defendant from entering a

new market for the sale of generic medicine. The UK High Court observed
as follows:
“The fact that certainty or precision is not possible does not mean that a
principled approach cannot be attempted. The profits that Apotex would
have made from its exploitation of the opportunity to sell generic perindopril
depend in part upon the hypothetical actions of third parties (other potential
market participants) and in part upon Servier’s response to them. A principled
approach in such circumstances requires Apotex first to establish on the
balance of probabilities that the chance of making a profit was real and not
fanciful: if that threshold is crossed then the second stage of the inquiry is
to evaluate that substantial chance (see Allied Maples Group Ltd v. Simmons
& Simmons [1995] 4 All ER 907, [1995] 1 WLR 1602). As Lord Diplock
explained in Mallett v. McMonagle [1969] 2 All ER 178 at 191, [1970] AC 166
at 176:
‘... in assessing damages which depend on its view as to what... would
have happened in the future if something had not happened in the past,
the court must make an estimate as to what are the chances that a
particular thing... would have happened and reflect those chances,
whether they are more or less than even, in the amount of damages
which it awards.’”
[Emphasis Added]

Pronouncement And Decision

[97] The plaintiff said the rate of interest, if this court is not with it, should be
the Maybank’s rate of 3.15% per annum which is its fixed deposit rate whereas
Star Media said it should be based on its RHB better rates because of the type
of instrument in its normal course of business called the cash management
fund that attracted a rate of 3.74% per annum.
[98] The court noted that the parties had left to the court to exercise its
discretion with respect to the interest rate to be used. The court applied the rate
of 3.5% per annum as reasonable in the circumstances of the case.
[99] Here there is no ex parte injunction applied for but there was ad interim
injunction granted on 26 February 2018 and extended until the disposal of the
OSs.
[100] The relevant period is 28 February 2018 which is the date that the banks
would have paid under the Bank Guarantees after the calls were made on 15
February 2018.
[101] I had therefore allowed the period from 28 February 2018 (the date Star
Media would have received the Guarantees sum if not for the injunction) to
9 January 2019 (the date after the dismissal of leave by the Federal Court to
appeal to it, ie 7 January 2019 and the latter date being the date Star Media
actually received the monies) as the relevant period for the calculation of the
interest.
 Jaks Island Circle Sdn Bhd
[2020] 2 MLRH v. Star Media Group Bhd & Anor 257

[102] The amount calculated for the sum of RM25,000,000.00 for the relevant
period is RM757,534.25 for each of OS 11 and OS 12.

[103] I also ordered costs of RM5,000.00 per application to the defendant Star
Media.