IN THE COURT OF APPEAL OF MALAYSIA

AT PUTRAJAYA

[APPELLATE JURISDICTION]
CIVIL APPEAL NO. W-02-1933-2011

Between

RHB BANK BERHAD

(menggantikan Kwong Yik Bank Berhad
menurut Perintah bertarikh 6-7-2006) … APPELLANT

And

KWAN CHEW HOLDINGS SDN BHD … RESPONDENT

[In the matter of High Court of Malaya at Kuala Lumpur,

Civil Suit No. D5-22-245-1996

Between
RHB BANK BERHAD
(menggantikan Kwong Yik Bank Berhad
Menurut Perintah bertarikh 6.7.2006) … Plaintif

And

KWAN CHEW HOLDINGS SDN. BHD. … Defendant]

CORAM:
Abdul Wahab Patail, JCA
Balia Yusof Haji Wahi, JCA
Tengku Maimun Tuan Mat, JCA

Date of Judgment: 22nd May 2013

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 GROUNDS OF JUDGMENT

1. The Appellant RHB Bank Berhad appealed to this Court

against the dismissal of its claim against the Respondent Kwan

Chew Holdings Sdn. Bhd. to recover inter alia the total

outstanding amount from the Facility of RM1,932,816.83 due as

at 29.2.1996.

2. The Respondent cross-appealed, seeking to vary the order of

the High Court as follows:

a. That part of the judgment allowing the

Appellant’s/Plaintiff’s claim against the Respondent/

Defendant for RM 2,000.00 with interest at the rate of

8% per annum from the date of judgment to date of

realisation be set aside.

b. That in addition to dismissal of the

Appellant’s/Plaintiff's claim on the ground that the

claim was time-barred under Section 6(1) Limitation

Act 1953, the High Court ought to have held that the

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 Appellant’s/Plaintiff's claim was also time-barred

arising from the letter dated 6.2.1985 which

constituted a notice of demand and accordingly, the

Plaintiff's cause of action against the Defendant arose

at that time and the writ which was filed on 5.4.1996

was statute barred.

3. Having heard the parties on their respective appeal and

cross-appeal, this Court -

a. Allowed the appeal and set aside the order of the High

Court;

b. Entered judgement in terms of prayers a-c in the

Statement of Claim;

c. Dismissed the cross-appeal;

d. Fixed costs RM20,000.00 here and below; and

e. Ordered the deposit be refunded.

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4. The reasons follow below.

5. The primary issue before the High Court and on appeal was

whether the Appellant's claim is statute barred under section 6(1)

of the Limitation Act 1953, in that the action has been brought

after the expiration of six years from which the cause of action

accrued.

6. A secondary issue was whether any expiry of the limitation

period (if any, which was denied by the Plaintiff) has been revived

by the Defendant's subsequent acceptance of further funds from

the Plaintiff and by the Defendant's acceptance of the 5th letter of

offer dated 19.4.1990 on 8.5.1990.

7. Section 6(1) of the Limitation Act 1953 (Revised 1981) Act

254 provides:

"(1) Save as hereinafter provided the following actions shall not

be brought after the expiration of six years from the date

on which the cause of action accrued, that is to say -

(a) actions founded on a contract or on tort;

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 (b) ... "

8. In this case, the subject matter concerns outstanding sums

for overdraft facilities granted to finance a housing project.

9. The writ was filed on 5.4.1996. The filing of the writ gave

occasion for submissions in this case, not as to liability or

quantum, but as to whether the action is time-barred.

10. For the Appellant, it was submitted that time began to run

from 19.4.1990 for the reason that –

a. the letter of 28.12.1983 to the Appellant was an

approval for an overdraft facility on the condition of

repayment by redemption sum of RM10,000.00 per

unit on the 40 units charged or to be fully settled

within 2 years whichever is the earlier; and

b. the letter of 19.4.1990 to the Appellant was for further

bridging finance of RM45,000.00 to secure Certificate

of Fitness for Occupation and the redemption sum is

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 the sale and purchase price of the relevant housing

unit.

11. For the Respondent, it was submitted that time began to

run from 28.12.1985. From that, the submission went on to refer

to paragraph 8 of the Statement of Claim that the Respondent

was given notices of default in 1985 (RR3:224) and 1986

(RR3:234). The latter giving notice that if the excess of

RM113,248.38 as at 23.2.1986 were not settled within 7 days,

the Appellant would not hesitate to institute appropriate legal

action. The submission pursued with the argument that the letter

of 19.4.1990 for further bridging finance of RM45,000.00 to

secure Certificate of Fitness for Occupation had referred to the

release of RM2,000.00 having been made on 8.12.1989, and

provided for the release of RM43,000.00 subject to conditions but

the conditions imposed upon the Respondent was never met.

Though it was accepted on 18.5.1990 and a copy returned with

signature, the conditions were never met by the Respondent.

Thus, it was submitted that time ran from 8.12.1989, and

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 "6.2 It is also to be noted that the Plaintiff's letter of

November 5,1987 referred to in the said 5th letter of

offer does not refer to the Defendant alone but

companies in the Defendant's group of companies and

the financing arrangements that those companies had

with the Plaintiff (RR 395-396)."

12. The Respondent's cross-appeal is based upon the argument

that time ran from 8.12.1989.

Consideration and Conclusion

13. The cross-appeal seeking to set aside the order for the

Respondent to pay the Appellant RM2,000.00 with interest at the

rate of 8% per annum from the date of judgment to date of

realisation be set aside may be dealt with shortly by reference to

RHB Bank Berhad v Kwan Chew Holdings Sdn Bhd [2010] 1

CLJ 665 FC not brought to our attention by the Respondent but

by the Appellant. At paragraph [45] of the judgment, the Federal

Court held on the failure to release the full RM45,000.00:

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 "[45] It is not in dispute that the respondent did not

comply with this. If this is the case then the appellant

was not at fault for refusing to release the full amount.

For this reason, we find no merit in this ground."

14. The second part of the cross-appeal was that the High Court

ought to have held not only that the Appellant's civil suit was

time-barred under Section 6(1) Limitation Act 1953, but also that

the Appellant's claim was time-barred arising from the letter

dated 6.2.1985 which constituted a notice of demand and

accordingly the Plaintiff's cause of action against the Defendant

arose at that time and the writ which was filed on 5.4.1996 was

statute barred.

15. We deal with the second part of the Respondent's cross-

appeal together with the Appellant's appeal as both concerns the

Limitation Act.

16. The Limitation Act restricts the maximum time within which

legal proceedings may be instituted. That maximum time is

calculated from the time the cause of action accrued. It is trite

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that a cause of action accrues at the earliest time when all the

necessary or material facts that make up the elements of the

cause have occurred or are in place. See Tan Kong Min v

Malaysian National Insurance Sdn. Bhd. [2006] 1 MLJ 601;

Credit Corporation (M) Bhd v Fong Tak Sin [1991] 1 MLJ 409;

Nasri v Mesah [1971] 1 MLJ 32. Even if a person has a valid

claim, that claim can no longer be validly filed once the period of

limitation has passed. If one aspect of the principle of justice is

that a person with a valid claim is entitled to litigate, the other

aspect of the same principle is that there must be a limit to the

time within which a person is exposed to the risk of being sued.

But it is not intended to tie down the hands of parties that the

only way to recover loss is by litigation, as that would defeat the

benefit of the Limitation Act to reduce claims under litigation

before the courts. Hence, understanding the accrual of a cause of

action is key to the fair and just application of the principle.

17. A cause of action does not accrue the moment a loan

amount or part thereof is received by the borrower or paid out on

his account, although that is the amount he eventually has to

pay back with interest and costs as applicable under the terms of
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the loan. It does not accrue because there is a breach or default

unless the agreement specifies that it accrues from the point of

time of breach or default. But even so, if the parties mutually

discuss and negotiate, it implicitly means that they are extending

the date when payment becomes due and the cause of action

accrues. There is no statutory or equitable limit within which a

party can negotiate or to extend further any facilities. If parties

are mutually willing to negotiate and to extend facilities

notwithstanding a breach or default, it is a misapplication of the

Limitation Act to limit the time for negotiations or to extend

further facilities to the time allowed to file civil proceedings under

the Act.

18. The High Court, in this case, allowed itself to be led by the

submissions on accrual of cause of action from the issue of the

notice(s) of demand. The High Court failed to appreciate -

a. Although there were defaults, parties continued to deal

with each other;

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 b. Banks do not hand out offers of facilities as

businessmen hand out business cards or salesmen

hand out sales promotion leaflets, but that the offers of

facilities are issued after consideration of and in

response to applications for facilities or further

facilities by an applicant or borrower;

c. The exchange of letters and issue of offers of facilities

testify to ongoing negotiations as to settlement and

extension of further facilities;

d. It would be inequitable therefore to allow the

respondent to turn around and to rely upon the

defaults that led to further offers of facilities as the

date of accrual of the cause of action for the purposes

of limitation.

19. With respect, the error led the High Court to a decision it

would not have made had it not been for the error. It was

therefore a fit and proper case within the meaning of section 72

of the Courts of Judicature Act 1964 demanding appellate

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intervention to correct the injustice. That being the case, the

cross-appeal necessarily fails.

20. Accordingly, we allowed the appeal and dismissed the cross-

appeal on terms as above set out at paragraph 3.

Signed

(DATUK ABDUL WAHAB BIN PATAIL)

Judge
Court of Appeal of Malaysia
Putrajaya

Dated: 26th January 2015

Counsels/Solicitors

For the Appellant: Mr. Lim Koon Huan &

Ms Shaleni Sangaran
Messrs Skrine
Wisma UOA Damansara
No. 50, Jalan Dungun
Damansara Heights
50490 KUALA LUMPUR

For the Respondent: Mr. Ramdas Tikamdas

Messrs Siva Ram & Kong
No. A-12-2, Level 12
Menara UOA Bangsar
No. 5, Jalan Bangsar Utama 1
59000 KUALA LUMPUR

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