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2011 MarsdenLR 577
HIGH COURT MALAYA, KUALA LUMPUR
AM FINANCE BERHAD – Appellant
Versus
TURBO AGE SDN BHD & ORS – Respondent
[Suit No: D1-22-1615-2004]
A claim is time-barred if not initiated within the stipulated limitation period, affecting both the principal debtor and guarantors.
Headnote:(A) Limitation Act - Time-barred claim - The plaintiff filed a claim against the 1st defendant for outstanding payments of RM5,185,723.13 related to floor stocking facilities. The limitation period set in before the plaintiff filed the suit, thus rendering the claim time-barred. (Paras 5, 6, 11)
(B) Status of Guarantors - The 2nd and 3rd defendants, being guarantors, are entitled to the same defense of limitation as the principal debtor. (Paras 1, 6, 10)
Facts of the case:
The plaintiff granted floor stocking facilities amounting to RM20 million. The sole issue was whether the claim was barred by limitation, as repayments and demands for payment were disputed.
Findings of Court:
The court agreed that the plaintiff's claim was time barred and thus dismissed the suit against the 1st defendant.
Issues: The main issue revolved around whether the plaintiff's claim was timely, considering repayment dates and limitations.
Ratio Decidendi: The court applied the principle from prior cases stating that the limitation begins upon the first default of payment and ruled that the claim was time-barred due to the plaintiff’s failure to act within the statutory period.
Result: Plaintiff's suit dismissed with costs.
| Table of Content |
|---|
| 1. plaintiff's claim for outstanding sums. (Para 2 , 4) |
| 2. ruling on statute of limitations. (Para 3 , 7) |
| 3. 1st defendant argues claim is time barred. (Para 5 , 6 , 9) |
| 4. court agrees plaintiff's action dismissed. (Para 8 , 11) |
| 5. 1st defendant's submission against plaintiff's claims (Para 10) |
JUDGMENT
[1] This is my JUDGMENT in respect of the plaintiff's claim for facilities granted to the 1st defendant.
[2] The learned counsel for the 1st defendant has set out a brief history of the proceeding in this matter and it reads as follows:
"(a) Plaintiff filed this claim against the 1st Defendant for the sum RM5,185,723.13 plus interest and cost being outstanding sums due pursuant to floor stocking facilities granted by the Plaintiff to the 1st Defendant.
(b) Both the 2nd and 3rd Defendants being directors of the 1st Defendant are Guarantors to the said facility.
(c) Plaintiff obtained summary Judgment before the Senior Assistant Registrar against all three (3) Defendants on 5.7.2007.
(d) All three (3) Defendants then appealed to Judge in Chambers and their Appeal was dismissed.
(e) Thereafter all the Defendants appealed to the Count of Appeal against the decision of the High Court Judge. The Court of Appeal dismissed the 2nd and 3rd Defendants (Guarantors) Appeal on 24.2.2011. However the Court of Appeal allowed the 1st Defendant's appeal and ordered that the Plaintiff's Claim against the 1st Defendant to be tried on the issue of limitation.
(f) Although the 2nd and 3rd Defendants (Guarantors) raised the same defence of limitation as raised by the 1st Defendant, yet the Court of Appeal dismissed the 2nd and 3rd Defendants' appeal.
(g) Subsequently both the 2nd and 3rd Defendants (Guarantors) applied for leave to appeal to the Federal Court against the Court of Appeal's decision. On 27.6.2011, the Federal Court decided that there was merit in the 2nd and 3rd Defendants (Guarantors) submission that they are entitled to the defence of limitation raised by the 1st Defendant and ordered that the 2nd and 3rd Defendants' (Guarantors) leave application to the Federal Court stayed pending the outcome of the trial against the 1st Defendant in the High Court.
(h) The Federal Court also considered and noted the development in the law by the Indian Supreme Court in the case of Syndicate Bank v. Channaveerappa Beleri and Others [2006] 11 SCC 506 wherein it was held:
'When the demand is made by the creditor on the guarantor, under a guarantee which requires a demand, as a condition precedent for the liability of the guarantor, such demand should be for payment of a sum which is legally due and recoverable from the principal debtor. If the debt had already become time-barred against the principal debtor, the question of creditor demanding payment thereafter, for the first time against the guarantor would not arise.'
(i) It is not disputed that notice of demand against both the 2nd and 3rd Defendants (Guarantors) was issued on 19.7.2004 (pages 69-71 in enclosure 53). The earliest time the Plaintiff could have commenced the action against the 1st Defendant was on 11.11.1997, 14.11.1997 and 23.1.1998 and limitation would have set in on 10.11.2003, 13.11.2003 and 22.1.2004, the Plaintiff's notice of demand was only issued on 19.7.2004 after the expiry of the cause of action. Therefore based on the Indian Supreme Court's decision in Syndicate Bank, the Plaintiff's claim against the 2nd and 3rd Defendants (Guarantors) too would be time barred.
(j) At the same time the Federal Court also stayed the execution of the Summary Judgment dated 5.7.2007 obtained by the Plaintiff against the 2nd and 3rd Defendants (Guarantors). The letter from the Federal Court's Registry confirming that the 2nd and 3rd Defendants (Guarantors) application for leave was stayed is produced at pages 45-46 of the 1st Defendant's Bundle of Authorities."
[3] The parties have relied on the following cases: Yamaha Motor Co Ltd v. Yamaha Malaysia Sdn Bhd; [1983] CLJ (Rep) 428 [1983] 1 C
