Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 MarsdenLR 5737

S Nantha Balan, JCA, Lau Bee Lan, J, Supang Lian, J
Lin Wen â Chih & Anor – Appellant
Versus
Pacific Forest Industries Sdn Bhd & Anor – Respondent

Advocates:
For the Appellants/Petitioners: Not Specified
For the Respondents: Not Specified

A claim based on a debt acknowledgment is barred by the statute of limitations and res judicata when previously adjudicated claims had been dismissed for similar issues, reinforcing that the failure to pursue enforced obligations within agreed terms results in loss of entitlement to seek remedies.

Headnote:(A) Limitation Ordinance 1952 (Sabah Cap. 72) - Section 3 - Res Judicata - Claim based on letter of acknowledgement and letter of undertaking for outstanding sum of RM16,859,186.65 and RM10,134,000.00 due to plaintiffs from the defendants - Previously dismissed 1997 suit on grounds of prematurity and res judicata ruled applicable in the present suit. (Paras 4, 7, 87, 206)

(B) Claim Dismissal - High Court found the plaintiffs' claim was barred by limitation and the lawsuit was deemed a manifestation of litigation by instalment. The fresh order issued by plaintiffs after expiry of the set-off period and failure to comply with previous terms meant defendants' obligations under the agreement were void. (Paras 10, 168, 210)

Facts of the case:
Appeals stemmed from the plaintiffs' claim for outstanding debts based on a letter of acknowledgement. The defendants raised limitations and res judicata based on an earlier suit involving the same parties and issues regarding the same debt. (Paras 1-3, 50)

Findings of Court:
The appeal was dismissed as plaintiffs were unable to prove that their claim was not barred by the limitation period or that the res judicata did not apply. (Paras 184, 206)

Issues: Main issues included whether the plaintiffs' claim was time-barred, whether res judicata applied, and whether the fresh order was valid or a sham. (Paras 5, 15)

Ratio Decidendi: The agreement required compliance with terms set forth for a valid claim; plaintiffs failed to demonstrate adherence to conditions for debt recovery and were also barred under the Limitation Ordinance. (Paras 90, 175)

Result: Plaintiffs' appeal dismissed, claim dismissed with costs. (Paras 210)

Judgement Key Points

Key Points: - The plaintiff's claim was dismissed because they failed to comply with the set-off period terms in the letter of acknowledgement (!) (!) (!) . - The defendant's obligations under the agreement were void due to the plaintiff's failure to make purchases within the set-off period (!) (!) (!) . - The doctrine of res judicata applied to bar the 2013 suit as the same issues had been previously decided (!) (!) (!) .

What is the effect of failure to comply with the set-off period terms in a debt acknowledgment agreement?

What are the rights of a creditor when a debtor fails to perform contractual obligations under a set-off arrangement?

Does the doctrine of res judicata apply to dismiss a subsequent suit based on the same cause of action after a prior suit has been decided?

Table of Content
1. introduction of the case and parties involved (Para 1 , 2 , 3)
2. issues raised regarding limitation and res judicata in trial (Para 4 , 5 , 6)
3. court's initial findings on limitation and res judicata (Para 7 , 18 , 34)
4. background of the parties and claim (Para 8 , 9 , 10)
5. details of transactions and obligations (Para 19 , 20)
6. evidence of communications related to the claim (Para 21 , 22 , 23)
7. outcomes of previous suit and findings of liabilities (Para 28 , 29 , 30)
8. discussion on limitation and the relevance of past decisions (Para 38 , 45 , 48 , 52)
9. findings from high court regarding claims and obligations (Para 56 , 57 , 62 , 63)
10. final remarks and conclusion on appeal outcomes (Para 85 , 207)
11. disputes over calculations and acknowledgment of debt (Para 93 , 94 , 100)

S Nantha Balan JCA:

JUDGMENT OF THE COURT

Introduction

[1]This is an appeal by the plaintiffs against the decision of the learned Judge of the High Court (the Judge) dated 11 June 2018 dismissing their claim (after a full trial) in Civil Suit No. TWU - 22 - 18/5 - 2013 (the 2013 suit). The 2013 suit was filed on 10 May 2013 and has been deliberately described as such so as to distinguish it from an earlier suit, which was registered as High Court at Tawau Civil Suit No: T-22-12 of 1997 (the 1997 suit) involving the same parties and which dealt with the same subject matter. The Judges decision in the 2013 suit is reported as Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2018] MLJU 1948[2019] 9 MLJ 227

[2]For convenience and brevity, we shall refer to the parties according to their respective capacities in the High Court. Hence, the 1st and 2nd appellants shall be referred to individually as 1st plaintiff and 2nd plaintiff respectively, and collectively as the plaintiffs. The 1st and 2nd respondents shall be referred to individually as 1st defendant and 2nd defendant respectively, and collectively as the defendants.

[3]The plaintiffs claim in the 2013 suit was for the sum of RM16,859,186.65 (RM6,223,241.00 + RM10,635,945.65) (as at 10 May 2013) against the 1st defendant based on the 1st defendants letter of acknowledgement dated 12 November 1996 and against the 2nd defendant, as guarantor based on the 2nd defendants letter of undertaking dated 12 November 1996.

[4]In their defence, the defendants raised, inter alia, the issue of limitation and res judicata. According to the defendants, the Judge ought to have ruled that the 2013 suit was barred by limitation and res judicata. However, the Judge ruled against the defendants on both these issues. The Judge found against the plaintiffs on almost all the other issues. Hence, the end result was that the plaintiffs claim (per the 2013 suit) was dismissed. But the defendants nevertheless proceeded to lodge a Notice of Cross-Appeal dated 3 September 2018 (the cross-appeal) on the issue of limitation and res judicata.

[5]The defendants plea of res judicata was predicated on the fact that the plaintiffs had previously filed the 1997 suit and that the issues raised in the 2013 suit were either raised or subsumed in the 1997 suit or at any rate, were issues which could have been, but were not raised in the earlier action. As for limitation it was contended that even if the plaintiffs are entitled to sue for the balance of the outstanding sum either on the basis of breach of a written contract or unjust enrichment, these cause(s) of action are time-barred as the limitation period for the cause of action based on a breach of a contract in writing or for unjust enrichment is 6 years.

[6]Thus, it was argued that on the facts here, the plaintiffs action was time-barred either by October 2003 or latest, by 9 November 2003. The significance of these dates are elaborated in the later part of this judgment.

[7]We heard the plaintiffs appeal (and defendants cross-appeal) on 23 October 2020. We agreed with some of the Judges findings. However, we disagreed with the Judges findings on the issue

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