The statute of limitation for fraud claims begins when the plaintiff suspects wrongdoing, not necessarily when fraud is fully established.

Mohd Zawawi Salleh JCA:

Introduction

[1] For convenience, in this judgment, we will refer to the parties in the manner they were referred to in the High Court.

[2] There are two interrelated appeals before us, arising from the common judgment of the High Court at Kota Kinabalu, which allowed the plaintiff's claim for:

(i) rescission of the settlement agreements dated 22 December 2006, 14 February 2007 and 4 June 2007;

(ii) transfer of lands held under CL015489040, TL010509065, CL015375505 and CL017544857 to the plaintiff at the defendants' costs and expense;

(iii) repayment of the debt due from the 4th defendant to the plaintiff in the sum of RM52 million less any sums already paid or set off; and

(iv) damages in the sum of RM7,215,231.80.

Background

[3] These cases have had a chequered history. Therefore, it is necessary to narrate the facts at some length to appreciate and decide the legal issues arising in these appeals.

[4] The genesis of the dispute between the parties may be traced back to the event which occurred in 1992, when the plaintiff and one Siti Zabaidah binti Haji Omar started Satcom Engineering in Brunei. The 1st defendant was an employee in the said business. Subsequently, the plaintiff and one Chang Kok Chung set up a company under the name of CH & Sons Realty Sdn Bhd, which was later renamed as GLF Properties Sdn Bhd ("the 4th defendant"). Satcom Engineering provided most of the funding for the expansion of the 4th defendant's business.

[5] In 2004, disputes arose between the plaintiff and Mr Chang and both decided to terminate their business partnership by entering into a deed of settlement. Pursuant to the said deed of settlement, the plaintiff would take over the management of the 4th defendant together with certain assets and Mr Chang would take over two other companies, namely, CH & Sons Holdings Sdn Bhd and CH & Sons Development Sdn Bhd Mr Chang then resigned as a director of the 4th defendant.

[6] As at 10 December 2004, Mr Chang held 3,600,000 of the issued shares in the 4th defendant whilst the plaintiff held 2,400,000 shares. As part of the settlement and at the plaintiff's behest, Mr Chang transferred 1,200,000 of his shares in the 4th defendant to the plaintiff and the balance 2,400,000 to 1st defendant. Thus, the plaintiff and 1st defendant became the only shareholders of the 4th defendant.

[7] At the material time, the 4th defendant owed the plaintiff a sum of RM52 million for the cash which the plaintiff had advanced to the company.

[8] On 10 December 2004, the 1st defendant was appointed as a director and the 2nd defendant, who was a chartered accountant by profession, was appointed as the company secretary.

[9] On 26 January 2005, the 5th defendant, ("GLF Corporation Sdn Bhd") was incorporated. 80% of the ordinary shares were held by the 1st and 3rd defendants. The 2nd defendant was issued 20% ordinary shares.

[10] In early February 2005, the plaintiff resigned as director of the 4th defendant. On 11 February 2005, the 2nd and 3rd defendants were appointed as directors of the 4th defendant.

[11] On 11 February 2005, the plaintiff and the 1st defendant transferred all their ordinary shares in the 4th defendant to the 5th defendant. In exchange for their ordinary shares, the plaintiff and the 1st defendant were issued preference shares which would only entitle them to preferential dividends.

[12] On 3 June 2005, the plaintiff executed a Power of Attorney ("the PA") in favour of the 1st defendant to deal with the plaintiff's shares and properties in Malaysia.

[13] Subsequently, the plaintiff dema