Gopal Sri Ram JCA:

[1] This appeal has been brought against the decision of the High Court at Kuala Lumpur granting the respondent (whom we shall refer to as "the plaintiff') certain relief, including a declaration that "the plaintiff as executor of the estate of Loo Cheng Ghee, ("Loo") is entitled to the sum of RM3,500,000 presently held in an interest bearing escrow account in the name of Messrs Nahappan, Dorairaj & Danker as stakeholders". The appellant (whom we shall refer to as "the defendant") has argued that the judge should have refused the declaratory relief sought and dismissed the plaintiff's originating summons.

[2] When the appeal was called on, counsel on both sides informed us that the only point at issue before us was one of limitation. However, in order to appreciate the context in which the point arose, it is necessary to hearken to the factual background against which this appeal rests. There is a long history to the controversy before us. But there is not much dispute about the facts.

[3] The defendant, at all material times, was a licensed commodity broker. It bought and sold all sorts of commodities in the futures market on the floor of the Kuala Lumpur Commodity Exchange ("KLCE"). It was a member of the KLCE. It was also a member of the Kuala Lumpur Clearing House ("KLCCH"). Supervision and regulation of commodity futures trading was in the hands of the Commodity Trading Council ("CTC"). Contracts for the sale and purchase of commodities were governed by the rules and regulations of the KLCE and the KLCCH.

[4] Loo was a client of the defendant. He placed orders with the defendant to buy and sell palm oil in the commodity futures market. Each time Loo placed an order, the defendant entered into a contract with one or more of the other brokers on the floor of the KLCE. The primary obligation of the buyer was to accept delivery of the agreed quantity of palm oil at some future date fixed for performance by the particular contract. If there was default on the part of the seller, then the obligation to make physical delivery was replaced by an obligation to compensate the buyer. The rules and regulations under which commodities were traded provided a mechanism for the settlement of the contracts made on the floor of the KLCE. The mechanism included the payment of compensation to the aggrieved parties out of monies that were deposited with the KLCCH.

[5] At some point in 1984, it became clear that several of the contracts entered into on the floor of the KLCE could not be fulfilled. There were numerous defaults. It transpired that Loo had used several brokers to enter into the palm oil futures contracts upon which default had taken place. The mechanism for the settlement of contracts was activated.

[6] On 24 November 1984, M/s Shook Lin & Bok who were solicitors for KLCCH wrote to M/s Shearn, Delamore & Co who were the solicitors then representing the defendant. In it they gave an account of the monies belonging to the defendant that were being held by their client. Including interest, it amounted to RM20,579,150.45. Out of this sum, RM13,272,929.23 was sent under cover of this letter. The balance of RM7,306,221.22 was retained by KLCCH to meet claims for compensation.

[7] Two days later, on 26 November 1984, Loo wrote a letter to the defendant. He said that in consideration of the defendant releasing the sum of RM13,272,929.23 to him, he would pay all commissions and interest due to the defendant, subject to verification of the defendant's claim by a named third party. About a month later, on 27 November 1984, the third party verified that a sum of RM833,492.17 was due as commissions and interest to the defendant.

[8] Later, disputes then arose over the entitlement to and the amount of compensation. Litigation followed. There were numerous suits. Both Loo and the defendant laid claim to part of the compensation monies. The CTC issued an order freezing payment of the compensation claimed by the defendant and L