Tasja Sdn Bhd

[2011] 1 MLRA v. Golden Approach Sdn Bhd i

TASJA SDN BHD

v.
GOLDEN APPROACH SDN BHD
[2011] 1 MLRA 135

Federal Court, Putrajaya

Arifin Zakaria CJ Malaya, Zulkefli Makinudin, James Foong FCJJ
[Civil Appeal No: 02(F)-2-2010(W)]
27 January 2011

Civil Procedure: Action — Limitation of action — Contract — Striking out — Claim

for payment under construction works contract — Whether claim time-barred —
Whether defence of limitation must be pleaded — Whether limitation period to claim a
monetary debt against a company may be postponed whilst company is under a winding
up order

Limitation: Contract — Limitation of action — Striking out — Claim for payment

under construction works contract — Whether claim time-barred — Whether defence
of limitation must be pleaded — Whether limitation period to claim a monetary debt
against a company may be postponed whilst company is under a winding up order

The defendant engaged the plaintiff to undertake construction works under

a construction contract. Under the contract, the defendant had to pay to
the plaintiff within 30 days after the consultant issued an interim valuation
certificate certifying the work completed and the amount due. The claims
were not paid by the defendant resulting in the plaintiff having to stop work.
The defendant was wound-up on 12 June 2000 and in 2005 the Court of
Appeal allowed the defendant's appeal for a permanent stay of the winding up
order. The plaintiff filed this action on 31 May 2005 claiming a total sum of
RM3,212,688.78. On 12 August 2005, after the plaintiff's statement of claim
was served on the defendant, the defendant filed an application to strike out
the plaintiff's claim on ground that the plaintiff's claim was statute-barred
under s 6(1)(a) of the Limitation Act, 1953 ('LA'). The High Court allowed
the application and stated that the requirement for the defence of limitation
to be pleaded could be exempted in an application for striking out. The Court
of Appeal dismissed the plaintiff's appeal. The plaintiff thus appealed to the
Federal Court.

Held (allowing the plaintiff ’s appeal):

(1) In a situation where limitation is not absolute, like in a case under the LA,
an application for striking out should not be allowed until and unless limitation
is pleaded as required under s 4 of the LA. (paras 25-28)

(2) When a winding up order is made or a provisional liquidator appointed,

no action or proceeding shall be proceeded with or commenced against the
company except with leave of court and in accordance with such terms as the
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ii v. Golden Approach Sdn Bhd [2011] 1 MLRA

court imposes. (s 226(3) of the Companies Act 1965). But when a stay of the
winding order is granted, it amounts to a total discontinuance or termination of
the winding up proceedings. This may prejudice the plaintiff where limitation
has set in after the granting of the order for stay. There is no provision of law
to prevent such prejudice. There is no provision of law to permit the court to
disregard time from running under the LA. The plaintiff should have applied
for leave under s 226(3) of the Companies Act 1965 to institute an action
against the defendant, rather than leaving it to a later date. (paras 35-39)

Case(s) referred to:

BSN Commercial Bank (Malaysia) Bhd v. River View Properties Sdn Bhd And Another
Action [1996] 4 MLRH 485; [1996] 1 MLJ 872; [1996] 1 AMR 1144 (refd)
Commonwealth of Australia v. Mewett [1995] 59 FCR 391 (refd)
Hj Hussin Hj Ali & Ors v. Datuk Hj Mohamed Yaacob & Ors & Other Cases [1983] 1
MLRA 42; [1983] 2 MLJ 227; [1983] CLJ (Rep) 165 (refd)
In Re Donald Kenyon [1956] 1 WLR 1397 (refd)
In Re General Rolling Stock Company [1872] 7 Ch App 646 (refd)
Kerajaan Malaysia & Ors v. Lay Kee Tee & Ors [2008] 2 MLRA 735; [2009] 1 MLJ 1;
[2009] 1 CLJ 663 (refd)
Krextile Holdings Pty Ltd v. Widdows [1974] VR 689 (refd)
Kuan Hip Peng v. Yap Yin & Anor [1964] 1 MLRA 727; [1965] 3 MLJ 252 (refd)
Re Chop Cheong Tuck of Ipoh [1938] FMSLR 19 (refd)
Re Delta Homes Pty Ltd [1972] 2 NSWLR 22 (refd)
Re South Barrule Slate Quarry Co [1969] LR 8 Eq 688 (refd)
Ting Yuk Kiong v. Mawar Biru Sdn Bhd [1995] 2 MLRH 146; [1995] 2 MLJ 700;
[1995] 3 CLJ 136 (refd)
Vijayalakshmi Devi Nadchatiram v. Jegadevan Nadchatiram & Ors [1995] 1 MLRA
203; [1995] 1 MLJ 830; [1995] 2 CLJ 392; [1995] 2 AMR 2076 (refd)

Legislation(s) referred to:

Civil Law Act, s 7(5)
Companies Act 1965, ss 226(3)(a), 243(2)
Companies Act of 1862 [UK], s 98
Limitation Act 1953, ss 4, 6(1)(a), 26(2)
Public Authorities Protection Act 1948, s 2(a)
Rules of High Court, O 18 r 19(1)(b), (c) and (d)
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[2011] 1 MLRA v. Golden Approach Sdn Bhd iii

Counsel:
For the appellant: Ambiga Sreenevasan (together with Gobind Singh Deo, Robyn Choy,
Marisa Regina); M/s Aris Rizal Christopher Fernando & Co M/s
Sreenevasan
For the respondent: Wong Kian Kheong (together with Low Eu Thuan, Karen Lee
Foong Voon); M/s Cheong Wai Meng & Van BuerleM/s Wong
Kian Kheong
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iv V. Golden Approach Sdn Bhd [2011] 1 MLRA

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Tasja Sdn Bhd
[2011] 1 MLRA v. Golden Approach Sdn Bhd 135

JUDGMENT

James Foong FCJ:

Introduction

[1] This appeal involves the striking out of the plaintiff ’s action under O 18 r
19(1)(b), (c) and (d) of the Rules of High Court (RHC) on the ground that it
was instituted after the limitation period stipulated by the Limitation Act 1953
(Limitation Act).

Background

[2] The pleaded case of the plaintiff is basically this. The plaintiff was engaged
by the defendant to undertake certain construction works in a particular project.
This appointment was in writing which we shall refer to as the “construction
contract”. Under this contract, a firm of engineers was appointed as the
consultant. It is a term in this construction contract that the defendant would
have to pay to the plaintiff within 30 days after the consultant has issued to the
plaintiff an interim valuation certificate certifying the work completed and the
amount due. There were five such certificates dated 20 March 1997, 29 April
1997, 10 September 1997, 6 November 1997 and 12 February 1998 respectively
amounting RM1,316,783.76. The plaintiff claims that this was not paid and
gave the following particulars in its statement of claim:-

Value of approved works: RM3,795,241.85

Value of materials on site: RM 82,802.54
Variation: RM 202,458.37
Total paid: RM1,726,300.00
Deduct land value: RM1,037,419 RM2,763,719.00
RM1,316,783.76

[3] The plaintiff alleged that the defendant had admitted to the amount
outstanding in a letter dated 24 March 1998, but due to financial constraint
was unable to satisfy this debt resulting in the plaintiff having to stop work.

[4] The statement of claim then proceeded to say that due to the defendant’s
breach of contract and the defendant’s declaration of its financial predicament
they were finally forced to stop work on the project and on 7 August 1998
forwarded to the defendant another claim for RM1,895,905.02. Particulars of
this are as follows:-
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136 v. Golden Approach Sdn Bhd [2011] 1 MLRA

Value of work done to project: RM6,222,983.26

Value of materials supplied: RM 249,956.77
Variation: RM 214,854.99
RM6,687,805.02
Total amount as certified: RM4,791,900.00
Balance: RM1,895,905.02

[5] In para 11 of the statement of claim, the plaintiff asserted that the defendant
was wound-up on 12 June 2000 and it was only in 2005 that the Court of
Appeal allowed the defendant’s appeal for a permanent stay of the winding up
order For this reason the plaintiff was only able to file this action on 31 May
2005 claiming a total sum of RM3,212,688.78 with interest and costs.

[6] On 12 August 2005, after the plaintiff ’s statement of claim was served
on the defendant, the defendant filed an application by way of summons-in-
chamber to strike out the plaintiff ’s claim under O 18 r 19(1)(b), (c) and (d)
RHC on ground that the plaintiff ’s claim is statute barred under s 6(1)(a) of the
Limitation Act.

[7] The plaintiff in its affidavits opposing the application disclosed that
subsequent to the non-payment following the issuance of the interim valuation
certificates, the parties entered into a written agreement terminating the
construction contract. We shall refer to this agreement as the “termination
agreement”. It provides inter alia for the plaintiff ’s completed works on the
project to be inspected and assessed within a specific time and the amount due
shall be settled by the defendant by way of monthly installments of RM100,000
each commencing from 1 February 1998. There is also a provision for the
defendant to contra part of the outstanding amount by transferring to the
plaintiff, certain number of the defendant’s bungalow lots in the project valued
at RM1 million. Though there were certain payments made by the defendant
and that the bungalow lots were transferred to the plaintiff, they only occurred
in 1988. Further, since the defendant had renegaded on certain installment
payments, this action was brought. As for this application, the plaintiff asserted
that the defendant is not entitled to claim limitation since the defendant has not
filed its defence pleading limitation as required by s 4 of the Limitation Act.

[8] The High Court allowed the defendant’s application principally on the
ground that the plaintiff ’s claim is statute-barred since it is based on the non-
payment of the interim valuation certificates and the plaintiff ’s letter dated 7
August 1998 terminating the construction contract and not on the termination
agreement. Though s 4 of the Limitation Act requires the defence of limitation
to be pleaded this can be exempted in an application for striking out. In support,
the case of Hj Hussin Hj Ali & Ors v. Datuk Hj Mohamed Yaacob & Ors & Other
Cases [1983] 1 MLRA 42; [1983] 2 MLJ 227; [1983] CLJ (Rep) 165 was cited.
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[2011] 1 MLRA v. Golden Approach Sdn Bhd 137

[9] Dissatisfied with this decision, the plaintiff appealed to the Court of Appeal.
The Court of Appeal in dismissing the plaintiff ’s appeal supported much
of what was stated by the High Court particularly in rejecting the plaintiff ’s
explanation contained in its affidavits about the termination agreement. The
Court of Appeal held that these assertions contained in the plaintiff ’s affidavits
are not the pleaded case of the plaintiff and therefore cannot be taken into
consideration and neither can they be accepted as an amendment to the
plaintiff ’s statement of claim.

[10] With regard to the requirement to plead the defence of limitation under s
4 of the Limitation Act before it can be applied, the Court of Appeal has this
to say:-

We agree with the submission of the learned counsel for the defence
that the provision was not relevant for the purpose of the defendant’s
application as the defendant was applying to strike out the plaintiff ’s
claim under O 18 r 19 Rules of High Court as such the defendant did
not have to file its defence at that stage (see Kuan Hip Peng v. Yap Yin &
Anor [1964] 1 MLRA 727; [1965] 3 MLJ 252.)

[11] Aside from this, the case of Hj Hussin Hj Ali & Ors v. Datuk Hj Mohamed
Yaacob & Ors (supra) was also cited in support of this proposition.

[12] Regrettably, the Court of Appeal did not touch on the plaintiff ’s handicap
in not being able to bring this action against the defendant due to the winding
up order made against the defendant.

Questions Posed

[13] Five questions were posed to us. They are:-

1. Whether a defence of limitation under s 4 of the Limitation Act

1953 must be pleaded before a claim can be dismissed on the ground
that it is time-barred.

2. Whether defence of limitation under s 4 of the Limitation Act 1953

must be pleaded before a court may consider the said defence in a
case where a claim is made based on a settlement agreement wherein
limitation commences upon breach of a condition in the settlement
agreement.

3. Whether a judge should consider evidence adduced through

affidavits showing that an action is not barred by limitation where
an application is made to strike out under O 18 r 19(1) Rules of High
Court 1980 where no defence has been filed.

4. Whether the decision in the case of Overseas-Chinese Banking

Corporation Ltd v. Philip Wee Kee Puan [1984] 1 MLRA 161; [1984] 2
MLJ 1; [1984] 1 CLJ (Rep) 25 and KEP Mohamed Ali v. KEP Mohamed
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138 v. Golden Approach Sdn Bhd [2011] 1 MLRA

Ismail [1980] 1 MLRA 226; [1981] 2 MLJ 10 which are Privy

Council and Federal Court decisions that decided the failure to plead
“acknowledgment of debt” as a basis of claim in the statement of
claim did not affect the claim and still exist as good and binding law.

5. Whether the limitation period to bring a civil claim against a

company for monetary debt is postponed whilst the company is being
wound up pursuant to a court order under the Companies Act 1965.

Questions 1: Whether The Defence Of Limitation Under s 4 Of The

Limitation Act 1953 Must Be Pleaded Before A Claim Can Be Dismissed
On The Ground That It Is Time-barred

[14] We shall start by setting out s 4 of the Limitation Act:-

Limitation not to operate as a bar unless specially pleaded (4) Nothing

in this Act shall operate as a bar to an action unless this Act has been
expressly pleaded as a defence thereto in any case where under any
written law relating to civil procedure for the time being in force such
a defence is required to be so pleaded.

[15] It is trite as early as 1938 (see Re Chop Cheong Tuck of Ipoh [1938] FMSLR
19) that unless limitation is pleaded as a defence, it shall not operate as a bar
to an action. One of the rationales for this is that the defendant may elect to
waive this as a defence - see Commonwealth of Australia v. Mewett [1995] 59 FCR
391. Such waiver by the defendant will entitle the plaintiff to proceed with
his claim even though time as provided by the statute has run against him.
The other reason is that this defence of limitation is not absolute. There are
exceptions provided under the Limitation Act. So unless it is expressly pleaded
by the defendant, the plaintiff may not be able to set out his grounds to justify
the exemption.

[16] Though this is the law but in a situation where the defendant applies to
strike out the plaintiff ’s claim under O 18 r 19(1) RHC before a defence is
filed on the grounds that the claim is statute barred, can such an application
be entertained? Both the High Court and the Court of Appeal have answered
this in the positive and cited various cases in support. These cases have allowed
striking out the plaintiff ’s claim on the grounds that limitation has set in even
though defence has yet to be filed containing such a plea. Briefly stated, they
have ruled that it is not necessary in an application for striking out based
on limitation to comply with s 4 of the Limitation Act. For this reason, it is
necessary for us to examine the cases cited.

[17] The first is Hj Hussin Ali & Ors v. Datuk Hj Mohamed Yaacob & Ors [1983] 1
MLRA 42; [1983] 2 MLJ 227; [1983] CLJ (Rep) 165. In this case, 157 persons
claiming to be Penghulus of Kampong filed a suit against the Menteri Besar, the
State Secretary and the State Government of Kelantan opposing their dismissal
from their positions as Penghulus and sought reinstatement. The defendants
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[2011] 1 MLRA v. Golden Approach Sdn Bhd 139

did not file a defence but instead applied under O 18 r 19 of the Rules of the
High Court 1980 to strike out the plaintiffs’ claim on the grounds that: (a) it
discloses no reasonable cause of action; (b) it is frivolous, vexatious, irregular,
null and void, and (c) it is otherwise an abuse of the process of court. In the
affidavit in support of this application, the Legal Adviser of Kelantan, counsel
for the defendants, averred that since the acts of dismissing these Penghulus of
Kampong were done in the execution of their public duties in accordance with
the authority provided by the relevant regulations and since all the plaintiffs
had filed their respective actions too late they were statute barred by s 2(a)
of the Public Authorities Protection Act 1948. But the plaintiffs argued that
limitation had to be pleaded. Towards this, the Federal Court declared:-

We need not go further than to refer to the judgment of this Court in

Tio Chee Hing & Ors v. Government of Sabah [1980] 1 MLRA 73; [1981]
1 MLJ 207 where this Court referred to the Court of Appeal decision
in Riches v. Director of Public Prosecutions [1973] 2 All ER 935 which
decided that where it is clear that the defendant was going to rely on
the statute of limitations and there was nothing before the Court to
suggest that the plaintiffs could escape from it, the claim would be
struck out. An extract from the judgment of Davies LJ at p 939 is
relevant:-

In the light of those more recent authorities I think, as I say, that

perhaps the observations of this Court in Dismore v. Milton went too
far I do not want to state definitely that, in a case where it is merely
alleged that the Statement of Claim discloses no cause of action, the
limitation objection should or would prevail. In principle, I cannot see
why not. If there is any room for an escape from the statute, well and
good; it can be shown. But in the absence of that, it is difficult to see
why a defendant should be called on to pay large sums of money and
a plaintiff be permitted to waste large sums of his own or somebody
else’s money in an attempt to pursue a cause of action which has
already been barred by the statute of limitations and must fail.

That indeed was the answer of the learned Legal Adviser We agree
with him.

[18] In a more recent decision of this court Kerajaan Malaysia & Ors v. Lay Kee
Tee & Ors [2008] 2 MLRA 735; [2009] 1 MLJ 1; [2009] 1 CLJ 663, a similar
ruling was made in support of exempting the requirement to file a defence of
limitation in an application to strike out the plaintiff ’s claim under O 18 r 19(1)
RHC. After citing Tio Chee Hing & Ors v. Government of Sabah (supra), this court
went on to say:-

Likewise, in the present action, it was clear that the appellants were
going to rely on limitation and there was no way that the respondents
could have escaped from it. Thus, a defendant on an application to
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140 v. Golden Approach Sdn Bhd [2011] 1 MLRA

strike out pleadings and endorsements under O 18 r 19(1) of the RHC

is entitled to raise limitation of action without pleading a defence and
filing it to that effect. Similarly, in the present case, the appellants were
entitled to do the same, and since the respondents’ action was clearly
statute-barred, the action was therefore properly struck out.

[19] But it was argued before us that the defences in these two cases were under,
the Public Authorities Protection Act 1948 (PAPA) which has a provision that
differs from that of s 4 of the Limitation Act. Section 2(a) of PAPA states:-

Where, after the coming into force of this Act, any suit, action,
prosecution or other proceeding is commenced in the Federation
against any person for any act done in pursuance or execution
or intended execution of any written law or of any public duty or
authority or in respect of any alleged neglect or default in the execution
of any such written law, duty or authority the following provisions
shall have effect - (a) the suit, action, prosecution or proceeding shall
not lie or be instituted unless it is commenced within thirty-six months
next after the act, neglect or default complained of or, in the case of a
continuance of injury or damage, within thirty-six months next after
the ceasing thereof.

[20] It was also pointed out to us by the plaintiff ’s counsel that an almost
similar provision (as s 2 of PAPA) exists in s 7(5) of Civil Law Act which says:-

(5) Not more than one action shall be brought for and in respect of
the same subject matter of complaint, and every such action shall be
brought within three years after the death of the person deceased.

[21] This, according to Dato’ Ambiga, counsel for the plaintiff, creates a
distinction between a limitation that is conditional and one which is absolute.
She then stressed that in both s 2(1) of PAPA and s 7(5) of the Civil Law Act,
the respective limitation period stated therein is absolute and therefore it is
reasonable in application where limitation is used as ground for striking out
to waive this plea but, not in a claim for limitation under the Limitation Act
which is not absolute.

[22] We are of the view that this submission is best explained in the Federal
Court case of Kuan Hip Peng v. Yap Yin & Anor [1964] 1 MLRA 727; [1965] 3
MLJ 252.

[23] The facts of this case are these: The plaintiff an infant was suing by his
friend under s 7 of the Civil Law Act claiming compensation for the death of
his father due to a motor accident caused by the 2nd defendant while driving
a motor vehicle belonging to the 1st defendant. Before defence was filed, the
defendants took out an application to strike out the plaintiff ’s claim for being
frivolous and vexatious and an abuse of the courts process since it was not
brought within three years of the deceased’s death. The High Court allowed
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the application for striking out and this was affirmed by the Federal Court on
appeal. The rationale for this is as follows:-

[24] Generally, one cannot strike out a claim without pleading limitation for
reason that the plaintiff may be able to show that he is entitled to bring the
action notwithstanding the limitation period has set in by reason of one of
the exceptions set out in the Limitation Act. The statute of limitation is not
absolute. With the exceptions, there may be situation where limitation would
otherwise apply. And until the statute is pleaded there is no opportunity for the
plaintiff to raise this point. But then Federal Court proceeded to say:-

But that is not the position in the present case. The terms of s 7(5)
of the Civil Law Ordinance are absolute and contain no exceptions.
They are that “such action shall be brought within three years after the
death of the deceased person”. It is true that, as Goddard LJ, said with
reference to the corresponding section of the English Act, the section
“merely prescribes a period of Limitation” (Lubovsky v. Snelling) and
that it does not contain a condition precedent or anything of the sort.
Nevertheless the period is absolute. There is no room for doubt as to
when it begins to run. It runs from the death of the person of whose
support the plaintiff has been deprived. The cause of action arises
on death (see Seward v. “Vera Cruz”). There are none of the saving
provisions in favour of a plaintiff that were found in the Statute of
James I and are to be found today in the English Limitation Act of
1939 or our own Limitation Ordinance of 1953. There is no question
of infancy or disability or anything of the sort or of acknowledgment.
The only way in which the consequences of the section could be
avoided would be if there had been some agreement not to plead the
statute and this would constitute a new cause of action (Lubovsky v.
Snelling, supra) and would require to be set out in the statement of
claim.

Finally there can be no question of importing into the matter any of

the saving provisions of the Limitation Ordinance by any process of
construction for by s 3 of that Ordinance it “shall not apply to any
action... for which a period of limitation is prescribed by any other
written law.”

It is true that an application such as was made in the present case must
be most carefully scrutinized and the powers of the court under O 25
r 4 must be exercised with the greatest care. As was said by Lindley LJ
in the case of Kellaway v. Bury:-

That is a very strong power, and should only be exercised in cases

which are clear and beyond all doubt. It is not because the statement
of claim is demurrable from a pleader’s point of view that the court
is justified in stamping the action out. It must be only be demurrable,
but the court must see that the plaintiff has got no case at all, either as
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disclosed in the statement of claim, or in such affidavits as he may file

with a view to amendment.

Nevertheless in my view the present case was a proper case for the
exercise of these powers. Counsel has suggested no ground on which
the consequences of limitation could be avoided. I trust it is not
unkind to suppose that what his argument amounted to was that he
was entitled to time to think of something. For myself I have been
able to think of nothing and can see no grounds for supporting any
prolongation of counsels’ intellectual labours would produce more
substantial result.

I would dismiss the appeal with costs.

[25] After scrutinizing the authorities above we agree with the submission of
the plaintiff that in an application for striking out under O 18 r 19(1) RHC
on the ground of limitation to bring an action, a distinction must be made
as to which provision of the law is used to ground such application. If it is
based on s 2(a) of PAPA or s 7(5) of the Civil Law Act, where the period of
limitation is absolute then in a clear and obvious case such application should
be granted without having to plead such a defence. However, in a situation
where limitation is not absolute, like in a case under the Limitation Act, such
application for striking out should not be allowed until and unless limitation
is pleaded as required under s 4 of the Limitation Act. Our reasons are these:-

[26]Section 4 of the Limitation Act is explicit when it declares that “nothing

in this Act shall operate as a bar to an action unless this Act has been expressly
pleaded...”. This phase is clear and unambiguous. It demands the defendant
to expressly state this as a defence before it can become effective. This differs
from s 2(a) of PAPA which said that no suit, action, prosecution or proceeding
“shall not lie or be instituted unless” it is commenced within a certain specified
time. The same applies to s 7(5) of the Civil Law Act which says “such action
shall be brought within three years after the death of the deceased’s person”.
This is absolute and as Thomson LP in Kuan Hip Peng v. Yap Yin & Anor (supra)
said it “gives no room for doubt as to when it begins to run”. And on top of
this there are exceptions provided in the Limitation Act as well as the option
for the defendant to waive this defence. These are absent in both the PAPA and
the Civil Law Act. Thus, to allow a defendant’s application to strike out the
plaintiff ’s case even before such events have occurred and deprive the plaintiff
an opportunity to explain why limitation does not apply would cause injustice
to the plaintiff. Further, it is against the express provision of the law (s 4 of the
Limitation Act) which requires a defence of limitation to be pleaded before it
can be effected. When such a defence of limitation under the Limitation Act is
not absolute and is required by law to be pleaded before it can be considered,
then a defendant’s application for striking based on this Act should not be
allowed.
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[27] We must stress that we are not departing from the previous decisions
decided by this court. The case of Kuan Hip Peng v. Yap Yin & Anor (supra) is
distinguished on the ground that the striking out application was based on an
absolute limitation of s 7(5) of the Civil Act. And in the Kerajaan Malaysia &
Ors v. Lay Kee Tee & Ors (supra) and Tio Chee Hing & Ors v. Government of Sabah
(supra), both were based on the limitation set out in PAPA. In those types of
cases, striking out without the need to plead limitation can be entertained but
not, and we repeat, not in a situation where limitation is grounded on the
Limitation Act.

[28] Our answer to the 1st question posed is therefore in the positive.

Question 2: Whether Defence Of Limitation Under s 4 Of The Limitation

Act 1953 Must Be Pleaded Before A Court May Consider The Said Defence
In A Case Where A Claim Is Made Based On A Settlement Agreement
Wherein Limitation Commences Upon Breach Of A Condition In The
Settlement Agreement

[29] This 2nd question is based on the assumption that the plaintiff has pleaded
in his statement of claim the termination agreement. But as found by the High
Court, this is not the pleaded case of the plaintiff. The plaintiff ’s claim is
grounded on the construction contract. For this reason, we cannot answer this
question against the finding of the trial judge on an issue much contested by
the defendant.

Question 3: Whether A Judge Should Consider Evidence Adduced Through

Affidavits Showing That An Action Is Not Barred By Limitation Where An
Application Is Made To Strike Out Under O 18 r 19(1) Rules Of High Court
1980 Where No Defence Has Been Filed

[30] Since we have answered question 1 in the positive and differentiated the
treatment to be applied when considering statutory limitation as a ground for
striking out, this 3rd question is academic in the circumstances of this case. As
such, it does not warrant us to answer it.

Question 4: Whether The Decision In The Case Of OCBC Ltd v. Philip

Wee Kee Puan [1984] 1 MLRA 161; [1984] 2 MLJ 1; [1984] 1 CLJ (Rep)
25 And KEP Mohamed Ali v. KEP Mohamed Ismail [1980] 1 MLRA 226;
[1981] 2 MLJ 10 Which Are Privy Council And Federal Court Decisions
That Decided The Failure To Plead “Acknowledgment Of Debt” As A Basis
Of Claim In The Statement Of Claim Still Exist As Good And Binding Law

[31] We are of the view that this 4th question is premised on the likelihood that
the defendant’s application to strike out the plaintiff ’s claim on the grounds
of limitation without the need to initially plead it as defence is successful,
prompting the plaintiff to raise the acknowledgment of debt as an exception to
overcome this bar
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[32] Once again this issue is academic. Unless the defendant has raised the
defence of limitation in their pleading there is no necessity for the plaintiff
to provide any explanation as to why such limitation is not applicable. As we
have expressed earlier, the defence of limitation under the Limitation Act is
not absolute. The defendant may choose to waive it. And if it is pleaded, the
plaintiff can raise the acknowledgment of a debt under s 26(2) of the Limitation
Act as an exemption. For this reason we choose not to answer this question.

Question 5: Whether The Limitation Period To Bring A Civil Claim Against

A Company For Monetary Debt Is Postponed Whilst The Company Is Being
Wound Up Pursuant To A Court Order Under The Companies Act 1965

[33] It is the contention of the plaintiff that the delay in filing this action against
the defendant was due to the winding up order made against the defendant on
12 June 2000. This disability caused by the winding up order continued until
a permanent stay was allowed on 8 July 2002. With a winding up order, the
plaintiff ’s right as a creditor was restricted to filing a proof of debt and the
right to file a suit against the company could only be possible with leave of the
court. And when the winding up order was stayed, which was years later and
before the liquidator has distributed any payment to creditors out of the assets
of the defendant, the plaintiff found its action could be statute barred. This has
prejudiced the plaintiff. In support, a passage from the judgment of Melish LJ
In Re General Rolling Stock Company [1872] 7 Ch App 646 was cited:-

In these cases the rule is that everybody who had a subsisting claim at
the time of adjudication, the insolvency, the creation of the trust for
creditors, or the administration decree, as the case may be, is entitled
to participate in the assets, and that the Statute of Limitations does not
run against the claim, but, as long as assets remain unadministered he
is at liberty to come in and prove his claim, not disturbing any former
dividend.

[34] Further, according to Dato’ Ambiga, unless time for the purpose of
limitation under the Limitation Act is stopped or postponed, there is nothing to
prevent a company from taking advantage of being wound up for the purpose
of defeating its creditors with limitation and subsequently applying for a stay
after this objective is achieved.

[35] Undeniably, under s 226(3) of the Companies Act 1965 (Companies

Act), when a winding up order is made or a provisional liquidator appointed,
no action or proceeding shall be proceeded with or commenced against the
company except with leave of court and in accordance with such terms as
the court imposes. Creditors of the company would have to file proof of debt
with the appointed liquidator and if their debt is proved, they would be paid
depending on the sufficiency of funds in the wound up company. But when
a stay of the winding order is granted, it amounts to a total discontinuance
or termination of the winding up proceedings (unless with terms) - see
Vijayalakshmi Devi Nadchatiram v. Jegadevan Nadchatiram & Ors [1995] 1 MLRA
Tasja Sdn Bhd
[2011] 1 MLRA v. Golden Approach Sdn Bhd 145

203; [1995] 1 MLJ 830; [1995] 2 CLJ 392; [1995] 2 AMR 2076 and BSN
Commercial Bank (Malaysia) Bhd v. River View Properties Sdn Bhd And Another
Action [1996] 4 MLRH 485; [1996] 1 MLJ 872; [1996] 1 AMR 1144. And in
the words of the author in ’McPherson The Law of Company Liquidation’ 4th edn
at p 657, it is like “the winding up process comes to an end-the whole effect
of the winding up ceases and the company can thereupon resumes conduct of
its business and affairs as if no winding up existed”. This may prejudice the
plaintiff since limitation has set in after the granting of the order for stay and
when the liquidator had not settled any company’s debts before the stay. But
the question is by what provision of the law can it be prevented?

[36] In our opinion there is no provision of the law to allow us to do so; neither
in the Limitation Act nor the Companies Act. In such a situation the protection
offered to creditors who were not paid by the liquidator is to voice their concern
during the application for a stay of the winding up order

Under s 243(2) of the Companies Act, various factors are required to be

considered by the court at such hearing wherein the court may “require the
liquidator to furnish a report with respect to any facts or matters which are in
his opinion is relevant”. This report would contain information on whether
creditors are paid or settled. This is vital particularly when a winding up order
was initiated on a creditor’s petition - see Krextile Holdings Pty Ltd v. Widdows
[1974] VR 689, 694 andRe Delta Homes Pty Ltd [1972] 2 NSWLR 22, 26. And
creditors have to be informed of such an application - see Re South Barrule Slate
Quarry Co [1969] LR 8 Eq 688 followed in Ting Yuk Kiong v. Mawar Biru Sdn
Bhd [1995] 2 MLRH 146; [1995] 2 MLJ 700; [1995] 3 CLJ 136. If any of them
is dissatisfied with such an application, he can oppose it and give his view or
demand his debt (particularly if it is proved before the liquidator) to be first
paid as a condition for stay. And since the final decision of whether to grant
or refuse such an application rests with the court, the court can set terms and
conditions in the stay order Another option open to the creditor is to seek leave
from the court under s 226(3)(a) of the Companies Act to determine the issue
of liability between him and the wound up company. Support for this is found
in Re General Rolling Stock Company (supra) where James LJ said:-

After a winding up order has been made, no action is to be brought

by a creditor except by the special leave of the Court, and it cannot
have been the intention of the Legislature that special leave to bring
an action should be given merely in order to get rid of the Statute
of Limitations. It must have been intended that such leave should be
given only in cases where the Court thought that an action was the
most proper means of determining the question of the liability of the
company.

[37] Before we depart from this issue, we would like to comment on the two
cases, one of which was cited by the plaintiff in support of its argument. The
first is In Re Donald Kenyon [1956] 1 WLR 1397, 1401 where Roxburgh J said:-
Tasja Sdn Bhd
146 v. Golden Approach Sdn Bhd [2011] 1 MLRA

and it seems to me that, when a company has been dissolved and

therefore nobody can sue it without getting it restored to the register,
it is only common fairness that, if the contributories for the purposes
of their own, want to get it restored to the register years afterwards,
the period between the dissolution and the restoration to the register
should be disregarded for the purposes of the Statute of Limitation.

[38] If one were to examine the facts of this case, this statement was made at
the stage when the application for stay of the winding up order or such like was
made; not as a general proposition for disregarding the period of limitation
from time of the winding up order to the stay of such order in an action for
monetary debt.

[39] The other case is In Re General Stock Discount Company (supra) where we
have disclosed the statement made by Mellish LJ earlier This is not a case
where the limitation period should be disregarded between the time of the
winding up order to the time when the stay of such order was granted for the
purpose of bringing an action against the company. It concerns the late filing
of a proof of debt by a creditor to the liquidator which was made out of time.
The rationale given here is that since the company has assets and there being
no other creditors prejudiced, limitation should be waived. Much of what was
decided is based on s 98 of the English Companies Act of 1862 which provides:
“As soon as may be after the making an order for winding up the company, the
court shall settle a list of contributors, with power to rectify the register of
members in all cases where such rectification is required in pursuance of this
Act, and shall cause the assets of the company to be collected, and applied in
discharge of its liabilities”. But here we are not talking about whether there
are excess funds in the company but rather about the issue of liability. On this
issue there is no provision of law to permit us to disregard time from running
under the Limitation Act. In fact, on such a matter, as discussed, the plaintiff
should have applied for leave under s 226(3) of the Companies Act to institute
an action against the defendant rather than leaving it to a later date. For this
reason, we answer this 5th question in the negative.

Conclusion

[40] In view of our reasoning we allow this appeal with costs here and below.
The orders of the High Court and Court of Appeal are set aside. The case be
remitted to the High Court.