Sulaiman Daud JCA

The respondent (plaintiff in the court below) is a well known and respected figure from the royal family of the State of Pahang. The appellant (defendant in the court below) is a company registered in Hong Kong and is and was at all material times a wholly owned subsidiary of the Bank of the Phillipine Islands.

On 20 August 2003 the respondent issued the present writ against the appellant claiming, inter alia, for an order that the appellant fully indemnifies the respondent for such sum which the respondent is liable to pay to the members and/or Raintree Development Bhd under the Kuala Lumpur High Court Suit No C22–204 of 1986, and/or any other loss directly or indirectly related to it.

By summons in chambers dated 15 November 2005, the appellant applied to strike out the said writ and statement of claim pursuant to O 18 r 19(1)(b) or c of the Rules of the High Court 1980(‘RHC’) on the ground that the statement of claim had set up causes of action which were barred by the Limitation Act 1953 (‘the Act’).

The striking out application was allowed by the senior assistant registrar (‘SAR’). On appeal to the judge in chambers, the learned judge allowed the appeal and reversed the decision of the SAR. Hence the appellant’s appeal to this court.

After hearing submissions of counsel for both parties, we allowed the appeal with costs. We now give our reasons.

BACKGROUND FACT

The facts as set out in the statement of claim can be briefly stated as follows. In 1979 the respondent entered into a memorandum of understanding (‘MOU’) with the appellant for the development and operation of a proprietary club in Malaysia (‘the club’).

Pursuant to the terms of the MOU, a company called Raintree Development Sdn Bhd (‘RDB’) was acquired in 1979. In May 1980 another company called Allied Capital Sdn Bhd (‘Allied’) was incorporated. Both RDB and Allied have common shareholders and directors which include the respondent.

RDB owned the land on which the club premises were to be built. On 31 January 1981 Allied purchased the entire paid up shares of RDB, and on 9 May 1981 RDB appointed Allied as the contractor to build the club’s premises.

Before that on 4 May 1981, the Board of Directors of RDB passed a resolution to alter its share structure by proposing to issue 1540 class A shares and 660 class B shares, both for RM10,000,000 each to be sold to the public.

On 21 October 1981 the respondent was elected as the president of the Protem Committee of the club. At its meeting on 3 June 1982, the committee resolved that the entire issued and paid up capital of RDB was to be purchased by the club from Allied for the sum of RM47m (‘the share sale’). Thereafter on 24 August 1982 a share acquisition agreement was concluded between the club and Allied.

Subsequently the members of the club, by way of Kuala Lumpur High Court Suit No C22–204 of 1986, commenced a representative action against the respondent and office bearers of the club for damages for breach of fiduciary duties and the duty of care under the MOU in connection with the share acquisition agreement. The High Court allowed the claim and ordered damages to be assessed. The members also succeeded in their counterclaim against Allied vide Suit No C23–1084 of 1986 for the sum of RM16,571,734, being over payment in the share sale together with interest of RM556.752 (both the suits collectively referred to as ‘the said suits’).

The respondent then commenced the present action against the appellant alleging that it had breached its undertaking and representation under the MOU or alternatively its duty of care pursuant thereto.

The appellant in its defence denied the alleged breach of contract or that it owed any duty of care to the respondent in the execution and performance of the MOU. Further the appellant pleaded that the claims herein were statue barred under the Act.

DECISION OF THE HIGH COURT

The learned judge in allowing the respondent’s appeal found that limitation has not set in as he is of the v