The Limitation Act 1953 does not apply to Proofs of Debt accepted by Liquidators without formal rejection, and Liquidators cannot impose interest unilaterally outside contractual provisions.

[1] The appeal raised questions of some significance relating to the duties and powers of a Liquidator in respect of proof of debts lodged by creditors.

[2] On 26 April 2022, this Court granted the Appellant leave to appeal in respect to the following questions of law:

Question 1

Can the Limitation Act 1953 apply to Proof of Debt which is accepted and not formally rejected by a Liquidator?

Question 2

Can the Liquidators unilaterally impose interest on the basis of a commercial decision and at a rate unilaterally decided by them despite the absence of any contractual provision and/or agreement by the Appellant?

The Factual Background

[3] The facts are not complicated and mainly, undisputed. However, it is necessary to set out the material facts to appreciate the issues argued in this appeal. By a Shareholders' Agreement dated 2 November 1993 UEM Group Berhad formerly known as United Engineers (Malaysia) Berhad (UEM) and Genisys Integrated Engineers Pte Ltd (GIE) agreed to form UEM Genisys Sdn Bhd (UEG). UEM and GIE as shareholders held 51% and 49% of its shareholding respectively. GIE is also a contributory and creditor of UEG.

[4] Gammon Construction Limited (Gammon) and Road Builder (M) Sdn Bhd, established an unincorporated joint venture known as Gammon-Road Builder Joint Venture (GRBJV). GRBJV entered into an agreement with Vietnam-Malaysia Joint Venture Company Limited (Vimas) to perform works, described as the construction, completion and maintenance of an international class hotel in Hanoi, Vietnam (Main Contract). By an agreement dated 24 May 1996 GRBJV appointed UEG to undertake works under the Main Contract, in particular, to supply and install mechanical and electrical works (the M&E Contract). UEG subcontracted the works under the M&E contract to GIE (Subcontract).

[5] In December 1996, GRBJV with the consent of Vimas, novated all its rights and obligations under the Main Contract to Gammon-CC1 Construction Co, Ltd (Gammon-CC1). Subsequently by a written agreement dated 20 August 1997, GRBJV with the consent of UEG, novated all its rights and obligations under the M&E Contract to Gammon-CC1. Pursuant to a guarantee also dated 20 August 1997, Gammon guaranteed Gammon-CC1's performance in respect of the M&E Contract (Guarantee).

[6] On 13 April 1998, by an agreement between Vimas and Gammon-CC1, Gammon-CC1 ceased all their works on the Hanoi Sheraton Hotel Project and instructed their sub-contractors, including UEG, to cease works. GDP Architects Sdn Bhd issued a Certificate of Payment dated 6 November 2000 (the Certificate of Payment) certifying, inter alia, the final M&E Contract sum and the final payment due and payable by the Main Contractor to UEG.

[7] However, Gammon-CC1 failed to make payment pursuant to the Certificate of Payment. UEG then commenced an action against Gammon pursuant to the Guarantee to claim for the outstanding sum of USD995,879.39 which is the outstanding M&E contract sum vide Kuala Lumpur High Court Suit No D2-22-1556-2006 (Suit 1556).

[8] UEG was subsequently wound up on 20 October 2005. The 2nd and 3rd Respondents (collectively referred to as Liquidators) were appointed as UEG's liquidators.

[9] GIE lodged a Proof of Debt (POD) dated 28 March 2011 with the Liquidators to claim the sum of USD997,750.70 which includes the outstanding sum of USD995,879.39. The POD sets out the claims as follows:

(i) RM306,511.99

(ii) GBP4533.63

(iii) SGD345,487.87

(iv) USD997,750.70

[10] At a creditors meeting held on 30 March 2012 with GIE, the Liquidators notified the creditors that they were contemplating withdrawing Suit 1556 as the entitlement is only 3% of the procurement fees and that the claim may be barred