Raja Azlan Shah FJ:

This appeal raises points of intricacy and commercial importance. The action was in respect of a claim for damages based on a wrongful dishonour of a cheque drawn by the respondent on the partnership account with the appellant bank ('the bank'). In the Court below the respondent was the plaintiff and the bank the defendants. The trial Judge, after hearing the evidence awarded a sum of $1,000 by way of damages for breach of contract. However, he declared that the action founded on libel was statute-barred by virtue of item 11 of the Schedule to the Sabah Limitation Ordinance (Cap. 72).

The following facts were either proved or not in dispute. The partnership firm of Wing Kwong Brothers, Sandakan, trading as general importers and exporters, was formed immediately after the liberation in 1946. The, original partners consisted of three brothers - the respondent, Yong Kee and Yong Cheong. After Yong Cheong's death his share was transmitted to his son Yong Kah Lam. The partnership opened an account with the bank. The respondent and Yong Kee were the only partners authorised to sign cheques for and on behalf of the firm. In 1948 the bank attempted to regularise the position when they requested the respondent and Yong Kee to sign a standard form. It would appear that there was no specimen signature of the respondent. Apparently he was in Hongkong at that time. Yong Kee alone signed a mandate on 13 April 1948 on behalf of the firm.

It is pertinent to reproduce the mandate:

We, the undersigned (1) Yong Chan and (2) Yong Kee, of Sandakan, British North Borneo, in co-partnership as General Importers and Exporters under the name and style of Wing Kwong Brothers hereby request you to open a Current Deposit Account for us in the name of the said firm of Wing Kwong Brothers and, until written notice from us to the contrary, to regard us as partners and to honour our respective signatures on behalf of the said firm as under.

We agree to be jointly and severally liable on the said account and to comply with, and to be bound by, the rules of the bank for the time being. Kindly provide us with a pass-book and a book of cheque forms for our use.

Yours faithfully,

for WING KWONG BROTHERS

Mr. Yong Chan will sign thus ... (Yong Chan)

Mr. Yong Kee will sign thus... (Yong Kee).'

Due to differences between the two brothers the firm was dissolved on February 14, 1966. Since then it ceased to do business as a going concern. At the time of dissolution the partners were the respondent, brother Yong Kee and nephew Yong Kah Lam. The firm had a credit balance of $85,849.34 with the bank. One of the terms of dissolution was that the respondent was given authority to wind up the partnership business, such as retaining a solicitor to collect outstanding debts and signing cheques connected with the winding-up. He in fact continued to operate the partnership account.

Yong Kee left the firm. Two years had passed and there was still no sign of getting his share of the money in the bank. He thought the money should be distributed instead of lying idle. So on 29 July 1968 he unilaterally wrote to the bank stopping all withdrawals from the partnership account unless authorised by all three partners, until such time that negotiations have been effected to sort out the accounts." There was no mention of dissolution.

The following day the bank notified the respondent of the new mandate and advised him that no further withdrawals would be allowed without the authority of the three partners.

The respondent took objection to that letter. On 1 August 1968 he wrote to the bank stating that the partnership was dissolved on 30 June 1966 and that he had authority to wind up the partnership business. He challenged Yong Kee's authority to act on behalf of the dissolved partnership.

On 26 August 1968 the respondent again wrote to the bank reiterating the fact that he was still carrying on with the winding-up of the partnership affairs. He als