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2012 MarsdenLR 821
COURT OF APPEAL PUTRAJAYA
YEE WENG KAI – Appellant
Versus
YAM KONG SENG & ORS – Respondent
[Civil Appeal No: W-02-2935-2010]
Acknowledgment of debt requires clear, signed written evidence; SMS alone insufficient; directors are not liable for corporate debts without explicit personal guarantees.
Headnote:(A) Limitation Act 1953 - Sections 6(1), 26(2), and 27(1) - Contractual debt - Acknowledgment of debt via SMS insufficient to satisfy statutory requirements for acknowledgment; must be in writing and signed. (Paras 8, 18, 20, and 28)
(B) Corporations - Directors' liability - Directors not personally liable for their company’s debts without clear evidence of personal endorsement or guarantee. (Paras 21, 25, and 30)
Facts of the case:
The respondents claimed RM589,055.61 against the appellant, alleging contract-based debts after engaging the 1st defendant for factory construction, which the appellant directed.
Findings of Court:
The SMS sent did not constitute a valid acknowledgment; consequently, the claim was time-barred.
Issues: The court addressed whether the statute of limitations was breached and if the appellant had personally guaranteed the debt owed by the company.
Ratio Decidendi: The court held that acknowledgment must be explicit and written, declaring the appellant free from personal liability due to insufficient evidence of debt acknowledgment.
Result: Appeal allowed; judgment against the appellant set aside.
| Table of Content |
|---|
| 1. overview of respondents' claim and trial. (Para 1 , 1 , 2 , 3 , 4 , 5 , 6) |
| 2. analysis of limitations regarding the acknowledgment of debt. (Para 7 , 20) |
| 3. examination of statutory provisions on acknowledgment under limitation act. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 4. discussion on corporate liability and separation of legal entities. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27) |
| 5. clarification on conditions for lifting the corporate veil. (Para 28 , 29 , 30) |
[1] This is an appeal against the whole decision of the learned High Court Judge, dated 22 September 2010 allowing the respondents' claim against the appellant with costs after full trial. The appellant was the 2nd defendant at the Court below.
Respondents' Claim
[2] The respondents commenced an action in the High Court against the appellant and the 1st defendant for debt owing to them. The respondents' claim was that they had engaged the 1st defendant (a company where the Appellant was a director at the material time) through the appellant to build a factory on a piece of land bearing the postal address of Lot 6486, No 2 Jalan PJS 3/2 Taman Medan, Mukim Petaling off Old Klang Road, 46000 Petaling Jaya, Selangor.
[3] The respondents claimed they had placed certain amounts of monies in the name of the 1st defendant to be withdrawn for progress payments for the construction of the said factory. The said factory was completed and the respondents asked for the return of the outstanding sum of RM589,055.61.
[4] In their statement of claim, the respondents sought the following remedies, namely:
(a) the sum of RM1,531,583.93 due and payable to the respondents as at 31 December 2007;
(b) the interest of 1% per month on the outstanding sum of RM589,055.61 as agreed compensation for the loss and/or damage suffered by the respondents from 1 January 2008 until the date of full settlement;
(c) costs on a full indemnity solicitor-client basis; and
(d) any other further orders and/or reliefs that the Court deems fit and proper.
[5] The matter went for full trial before the learned High Court Judge. The respondents led evidence by calling three witnesses and the appellant by calling one witness. As against the appellant (the 2nd defendant in the suit) judgment was entered in favour of the respondents and the appellant was ordered to pay the judgment sum of RM589,055.61 with simple interest of 1% per month.
[6] Dissatisfied with the said judgment, the appellant filed a notice of appeal. Hence the present appeal before us.
Our Findings
[7] The first issue raised by the appellant at the High Court as well as before us, was the issue of limitation under the Limitation Act 1953 . The appellant contended that the cause of action first arose either on 7 July 1999 (when the factory was completed and handed over to Bryong Sdn Bhd's tenant) or on 17 December 1999 when the 1st defendant issued a letter together with the statement of account (as at 30 November 1999). The writ and the statement of claim in the present action was filed on 7 March 2008, ie eight years and three months later, which clearly is outside the prescribed period of six years under s 6(1) of the . The six years period would have lapsed on 16 December 2005.
[8] The learned High Court Judge agreed with the respondents and found that there was an acknowledgment of debt. She relied on the short messaging service (SMS) that the appellant had sent to PW1 on 5 September 2006. The learned judge concluded that the SMS amount to a fresh acknowledgement of the debt and therefore time started to run afresh from that date (5 September 2006). Therefore the learned judge concluded that the defence of limitation as raised by the appellant does not have any merit at all.
[9] The respondents' claim against the appellant in the present action basically is based on contract which must be filed in Court within the period of six years from the date of the cause of action as provided for under s 6(1) of the Limitation Act 19
