The limitation period for an action filed in court is paused upon filing, even if the action is subsequently stayed for arbitration.

JUDGMENT

Che Mohd Ruzima Ghazali JCA:

Introduction

[1] The sole issue to be determined in this appeal is whether, when an action filed in court is stayed under s 10 of the Arbitration Act 2005 ( AA 2005) for the disputes to be referred to arbitration, the computation of limitation period stop at the time when the action is filed in court or ceases when the notice of arbitration is served thereafter?

[2] The issue arose from an action filed by SH Builders & Marketing Sdn Bhd (plaintiff/respondent) against Bongsor Bina Sdn Bhd (defendant/ appellant) at Kuala Lumpur Sessions court via suit No WA-B52(NCvC)-350-08/2019 (the KLSC suit 350). It is an undisputed fact that the cause action was still within the limitation period when the KLSC suit 350 was filed in court, but limitation had set in when the notice of arbitration was served after the court action has been stayed.

[3] For ease of reference, parties will be referred to as they were in the High court, the plaintiff and the defendant.

Facts Of The Case

[4] The relevant background facts of this case have been set out in the Grounds of Decision (the GOD) of the learned High court Judge (the LHCJ) dated 2 December 2022, from which the current appeal arises. For the purpose of this appeal, a brief summary, largely derived from the GOD, is provided below.

[5] The Defendant is the main contractor appointed by LB Development Sdn Bhd to construct and complete the project described as "Cadangan Membina 12 Unit Banglo 1 Tingkat Yang Mengandungi Type A - 6 Unit dan Type B - 6 Unit Berserta 1 Unit Substation di Atas Lot 2512, Seksyen 36 Poskod 40470 Shah Alam" (the said Project).

[6] By a letter of award dated 26 June 2012 (LOA) which included an arbitration agreement, the defendant appointed the plaintiff as its subcontractor for the said Project. The commencement date and completion date for the said Project, as per the LOA, were set as 26 June 2012 and 25 June 2013, respectively.

[7] The construction and completion of the said Project by the plaintiff pursuant to the LOA was delayed and the plaintiff sought for an extension of time which the defendant did not respond to. As the result, the plaintiff on 26 August 2013 issued its Final Progress Claim (no 14) amounting to RM430,030.78 and thereafter on 22 October 2013 notified to the defendant of its intention to terminate the contract under the LOA.

[8] The defendant responded on 18 March 2014 and again on 5 March 2015 rejecting the plaintiff's unilateral termination of contract. Consequently, the plaintiff on 6 August 2019 instituted the KLSC suit 350 to claim for the unpaid sum of RM430,030.78.

[9] In response, the defendant filed an application to stay the KLSC suit 350 for the dispute between the parties be referred to arbitration. Albeit the plaintiff resisted the stay application, the learned Sessions court Judge (LSCJ) on 31 October 2019 allowed the stay application of the defendant. The plaintiff did not appeal against the stay order and accordingly on 1 July 2020 served its Notice of Arbitration on the defendant to commence the arbitration proceeding.

[10] In a letter dated 30 July 2020 from its solicitors, the defendant replied, stating their agreement to refer the matter to arbitration. However, the defendant stressed that limitation has set in pursuant to s 30 of the Limitation Act 1953 ( LA 1953) read together with s 6 of the same Act. The parties thereafter commenced the arbitration proceeding.

[11] The matter was referred to Asian International Arbitration Centre and Sivabalan A/L N.P Subramaniam was appointed as the Arbitrator. Before the Arbitrator, a preliminary issue on statutory limitation was raised. With the consent of the Arbitrator, on 15 March 2022 the plaintiff made an application to the High court pursuant to s 41 of the AA 2005 to determine the following questions of law:

(a) In the context of s 6 of the Limitation Act 1953 , whether time already stops when the Plaintiff/Applicant filed the Writ Summons and Statem