JUDGMENT

William Douglas (delivering the Judgment of the Board):

This is an appeal by the appellant from two orders made in the Federal Court of Malaya (Suffin L.P., Raja Azlan Shah Ag. CJ (Malaya), Wan Suleiman F.J.):

(i) an order dated 27 February 1979 wherein the Federal Court dismissed the appellant's notice of motion dated 13 October 1978, in which the appellant had moved to dismiss the respondents' appeal from two orders of Harun J. both dated 28 June 1978 on the ground that the respondents had not obtained leave from a judge of the High Court or from the Federal Court in compliance with s. 68(2) of the Courts of Judicature Act 1964;

(ii) an order dated 16 May 1979, which

(a) allowed the respondents' appeal from the order of Harun J. dated June 28, 1978 giving the appellant judgment against the respondents in the sum of RM4,186,224 together with interest thereon and costs;

(b) gave directions in the third party proceedings brought by the appellant against the respondents;

(c) gave the respondents unconditional leave to defend in the said third party proceedings; and

(d) ordered the consolidation of the said third party proceedings with proceedings brought by the appellant against the respondents in the Kuala Lumpur High Court in Suit No. 2323 of 1976.

By an agreement in writing dated 7 December 1974 the respondents, a public limited company incorporated in Malaysia, agreed to sell to the appellant, a businessman and a company director, 1,400,000 fully paid up RM1 shares in a public company known as United Holdings Berhad (hereinafter referred to as "U.H.") at RM8 per share and at a total purchase price of RM511,200,000. The purchase price was paid on or about 22 January 1975 and the respondents delivered to the appellant share certificates for the 1,400,000 shares in U.H. including a share certificate numbered 0227 for 523,278 shares, in relation to which the appellant received from the respondents a memorandum of transfer signed by a certain Dr. Chong Kim Choy.

On 12 March 1975 the appellant sold on to a company called Syarikat Seri Padu Sdn. Bhd. (hereinafter referred to as "S.S.P.") 560,000 of the shares in U.H. which he had acquired from the respondents for the sum of RM4,480,000. The appellant delivered the share certificates for these shares to S.S.P. and included among them the share certificate numbered 0227 and the memorandum of transfer relating to it. The transfer of shares was registered by U.H. in favour of S.S.P. but, that notwithstanding, on 18 March 1975 the Secretary of U.H. Mr. Yap Ping Kon, wrote to Dr. Chong Kim Choy in these terms: -

I refer to the transfer form signed by you to cover certificate no. 0227 for 523,278 shares of United Holdings Bhd. and return herewith the said form for your cancellation.

As you are aware these shares were sold to Central Securities and subsequently to Mr. Koh Kim Chai. The transfer form executed by you is invalid as the transferee, International Holdings Pte. Ltd. has been inserted in the transfer form. As such 1 enclose herewith a new transfer form for your execution. Kindly sign on both sides of the transfer form marked by a pencil cross. On completion I shall be glad if you will return this to me immediately.

Your kind attention to this matter is greatly appreciated.

On 22 April 1975, Mr. Yap addressed another letter to Dr. Chong enclosing a copy of a transfer form for Dr. Chong's signature. Dr. Chong's reply is dated April 25, 1975, and is as follows -

I acknowledge with thanks your registered letter dated 22nd instant. This share certificate was held by us in trust for International Holdings (Pte.) Ltd., and 1 had already transferred the same back to them without any monetary consideration 1 am therefore returning the original transfer form signed by me (transferee being I.H.P.L.) to you. It is only proper that you transfer the shares to I.H.P.L. and get them to transfer the shares to whoever are the present legal owners. I regret that I cannot in good faith declare that I have