Mohd Ghazali JCA (delivering the judgment of the court)

There are two appeals before us. These appeals arose out of the same suit. The appellants in the first appeal (the second and third defendants in the court below) are the Director of Forestry and the Government of the State of Sabah, respectively and the appellant in the second appeal (the first defendant in the court below) is the Board of Trustees of Yayayan Sabah. In this judgment, for ease of reference, I will refer to the appellants as they were in the court below.

The respondents in these two appeals are the plaintiffs in the court below. They are Mau Kam Tong and Mau Kim Siong who are the executors of the estate of Mau Ming, deceased (‘the deceased’) and Tang Yiu Chi (‘TYC’).

The deceased and TYC, prior to the demise of the deceased on 10 December 1989, were partners in two business enterprise named ‘Syarikat Lama’ and ‘Tung Lee Contractor’. With regards to this, it would be appropriate to mention here that the evidence does not show that Syarikat Lama and Tung Lee Contractors are companies incorporated under the Companies Act 1965Section 22(4)Companies Act

A private company shall have the word ‘Sendirian’ or the abbreviation ‘Sdn’. as part of its name, inserted immediately before the word ‘Berhad’ or before the abbreviation ‘Bhd.’ or in the case of an unlimited company, at the end of its name.

A company incorporated by registration under the Companies Act is regarded by the law as a person separate and distinct from the other persons who are its members and directors, ie, it is a separate legal entity. This is the fundamental principle of company law. In the instant case, it is my view that it would have been more appropriate in the course of proceedings in the court below if the parties had referred to Syarikat Lama and Tung Lee Contractor as Mau Ming and Tang Yiu Chi (ie the deceased and TYC) ‘trading as Syarikat Lama’ or ‘trading as Tung Lee Contractor’ instead of referring to the two business enterprise by their business names as if they were companies or separate legal entities.

In the court below, the deceased and TYC claimed against the first defendant damages for conversion of 3,008 logs (‘the said 3,008 logs’) which they claimed belonged to them. As against the second and third defendants, the plaintiffs claimed damages for gross negligence for suffering or permitting the first defendant to convert the said 3,008 logs after the second and third defendants took possession of or seized the same. Linton Albert J the trial judge allowed the plaintiffs’ claim and hence, these appeals.

This court in a unanimous judgment had on 26 November 2008 allowed the appeals by the defendants with costs here and below. The reasons for doing so follows.

THE BACKGROUND LEADING TO THE ACTION

This case revolves around two licences to take forest produce issued under the Forest Rules 1969, namely, Licence No FOLK 27/79 (‘Licence 27/79’) and Licence No FOLK 7/80 (‘Licence 7/80’).

Licence 27/79

Licence 27/79 (‘exh P5’) was issued on 4 July 1979 by the second defendant to ‘Encik Charles Edmund and four others’. The following persons were named as the licencees, namely:

(a)Charles G Edmund;

(b)George J Mojuntin;

(c)Fredoline Edmund;

(d)Roland Labunda; and

(e)Jintol Mogunting

(‘the licencees of Licence 27/79’).

Licence 27/79 authorised the licencees to take timber only from approximately 3,167.5 acres of land in the Malua Forest Reserve, District of Lamag as delineated in the plan attached to the licence. The licence expired on 31 December 1979. The licence was subsequently renewed by the second defendant from time to time. It finally expired on 31 December 1986. It would be pertinent to note the following certification appearing at the end of the licence, namely:

Certificate

I/We certify that the terms and conditions of this licence have been fully explained to me by the District Forest Officer and I/we agree to abide by them. I/We also certify that the boundaries of the licenced area have been demarc