Siti Norma Yaakob CJ (Malaya):

The initial proceedings in this appeal were commenced by one NVJ Menon (";Menon";) since deceased, who sued the appellant for commissions due to him from the sale of a group insurance scheme by an agent introduced by him to the appellant. When he died on 26 November, 2002, his daughter, the respondent before us, was substituted a party in the proceedings and she continued the action on behalf of his estate.

Menon was also an agent of the appellant having joined the appellant as long ago as 1965 and he rose to the level of a Divisional Sales Officer within the appellant's heiraracy. In both capacities he earned commissions from the life insurance policies he sold for the appellant and he was also entitled to overriding commission in respect of sales of group insurance schemes made by agents introduced by him to the appellant. It is in respect of this overriding commission that the instant appeal is founded.

It is not disputed that Menon executed a number of agency agreements to regulate his relationship with the appellant and at the material time the following three contracts are most relevant.

(1) The Agency Agreement dated 8 July 1986, and the Schedule of Commissions attached to it which regulates Menon's entitlement to commissions as an agent.

(2) The Supplementary Agreement also dated 8 July 1986, containing terms and conditions relating to Menon's appointment as a Divisional Sales Officer (";DSO";) and attached to it is the Schedule of Remuneration identifying the different types of commission that Menon was entitled to as a DSO.

(3) The Circular No. 2/1987/GIS (GS) dated 27 October 1987, regulating Menon's entitlement to overriding commissions on group insurance schemes effective from 1 January 1987. This Circular was issued pursuant to cl. 18 of the Agency Agreement and formed part of the latter.

During his agency with the Appellant, Menon recruited a number of subordinate agents in his unit. One of them was Indrani Subramaniam (";Indrani";) whom Menon recruited in 1984.

In 1986, Indrani procured a group insurance scheme for the appellant and it is in respect of the overriding commission payable that Menon had made a claim on the appellant, which denied liability on the ground that the entitlement under the Circular had not become due. This is so as the Circular specifying the entitlement became effective only on 1 January 1987 and that claims before that date did not qualify. Since Indrani procured the group insurance scheme in 1986, the appellant refused payment and this was formally indicated by its letter dated 16 July 1990.

Menon filed a suit against the appellant on 8 April 1993, pleading a number of prayers but at the hearing confined them to a declaration that he was entitled to the full benefit of all the business conducted by Indrani ie, payment of overriding commission as well as an account of all the transactions conducted by Indrani or in the alternative damages.

The appellant's defence was two fold.

(1) That Menon was not entitled to the commission claimed under the Circular.

(2) That his claim was time barred.

The High Court dismissed Menon's claim based on the following findings.

(1) That his claim for overriding commission for the period prior to 8 April 1987, is time barred.

(2) If not time barred, there is no provision for overriding commission in the Agency and Supplementary Agreements.

(3) His claim for overriding commission after 8 April 1987, cannot be maintained as he did not assist Indrani in securing and servicing the group insurance schemes procured by Indrani.

(4) The appellant had not committed any breach of contract based on convention, custom and practice in the insurance trade to entitle Menon to claim damages against the appellant.

Menon took his case to the Court of Appeal which allowed his appeal and reversed the decision of the High Court after arriving at the following conclusions.

(1) That the Circular entitled him to claim overriding commissio