Future Growth Sdn Bhd & Ors v.

[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 937

A FUTURE GROWTH SDN BHD & ORS

v.

KOPERASI PEMBANGUNAN DESA & ORS

B COURT OF APPEAL, PUTRAJAYA
RAMLY ALI JCA
CLEMENT SKINNER JCA
ABDUL AZIZ RAHIM JCA
[CIVIL APPEAL NO: S-01-137-2011]
C 20 DECEMBER 2013

CONTRACT: Specific performance - Breach of undertaking -

Application for - Alienation of land - Sabah Limitation Ordinance,
Sch. Item 95 - Whether action time-barred - Whether period of limitation
D extended by acknowledgements - Whether continuing breach of contract -
Whether dividends payable could be set off against claim for compensation
for breach of undertaking which was time-barred - Sabah Limitation
Ordinance, s. 19

CIVIL PROCEDURE: Action - Limitation of action - Application for

E
specific performance - Breach of undertaking - Alienation of land - Sabah
Limitation Ordinance, Sch. Item 95 - Whether action time-barred -
Whether period of limitation extended by acknowledgements - Whether
continuing breach of contract - Whether dividends payable could be set off
against claim for compensation for breach of undertaking which was time-
F
barred - Sabah Limitation Ordinance, s. 19

The first appellant was a subsidiary of the second appellant while

the third appellant was originally wholly-owned by the first
respondent. In 1994, the third appellant owned 20,000 acres of
G agriculture land. The third appellant ran into financial difficulties
and approached the second appellant for assistance. A
restructuring of the third appellant was proposed whereby the first
appellant agreed to purchase 70% of the shares in the third
appellant. On 17 April 1995, the first appellant and the first
H respondent entered into a sale of shares agreement whereby
cl. 3(i)(b) makes it a condition precedent that the first respondent
would procure an irrevocable and unconditional undertaking from
the Sabah Government to alienate, within three years from the
date of the sale of shares agreement, 15,000 acres of land to a
I company Newco (later to be the third appellant) for oil palm
cultivation. On 2 August 1995, the second respondent issued a
letter of undertaking addressed to the first appellant. On
938 Current Law Journal [2014] 5 CLJ

7 September 2004, the first appellant transferred its 70% shares A

in the third appellant to the second appellant. The Sabah State
Government, however, did not alienate the 15,000 acres of land
to the first appellant. On 17 March 2010, the first and second
appellants commenced this action by way of an originating
summons. The third appellant and the third respondent were B
joined as parties. The appellants’ claim was for specific
performance of the letter of undertaking and damages flowing from
the respondents’ breaches including loss of profit, opportunistic
losses and loss of interest. The respondents resisted the appellants’
claim on the ground that the appellants’ action was time-barred C
under Item 95 of the Schedule to the Sabah Limitation Ordinance.
The first respondent also made a counter-claim in the sum of
RM36,148,575 payable to it by way of dividends declared in the
third appellant. The High Court found that the appellants’ action
was time-barred as it was not brought within six years from the D
date on which the 15,000 acres of land was to be alienated ie, by
17 April 2004. The High Court had, however, allowed the first
respondent’s counter-claim as he found that the first and second
appellants had no right to set-off the dividends payable to the first
respondent against a claim for compensation for breach of E
undertaking which was already time-barred. Dissatisfied with the
said decision, the appellants appealed. The issues that arose were,
inter alia, (i) whether limitation had set in; (ii) whether the first
respondent was an agent of the second and third respondents for
the purposes of s. 19 of the Sabah Limitation Ordinance; F
(iii) whether the first respondent’s counter-claim should succeed or
the appellants may exercise their right to set-off and (iv) whether
the first respondent ought to indemnify the appellants.

Held (dismissing appeal) G

Per Clement Skinner JCA delivering the judgment of the
court:

(1) The fact that the appellants were informed on 3 December

2007 that the third respondent would definitely not be
H
alienating the 15,000 acres did not retract in any way from
the fact that the third respondent had undertaken to do so
on or before 17 April 1998. Therefore, the third respondent
was in breach of that undertaking from 17 April 1998 when it
failed to alienate the land as promised. Thus, the date on
I
which limitation would set in was 17 April 2004. The
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 939

A appellants’ action was thus time-barred as it was not brought

within six years from the date on which the land was to be
alienated. (paras 13 & 17)

(2) The appellants had relied on s. 19 of the Sabah Limitation

B Ordinance to submit that there were acknowledegments made
by the first respondent as the agent for the second and third
respondents, and by the third respondent itself of the third
respondent’s liability under the letter of undertaking, which
had the effect of extending the period of limitation. The
C appellants had referred to letters and minutes of meetings
dated before and after 17 April 2004. Under s.19 of the
Sabah Limitation Ordinance, however, the acknowledgement
must be in writing and made before the expiry of the limitation
period. Thus, since some of the letters were written after
D 17 April 2004, they could not amount to acknowledgements
within the meaning of s. 19 of the Sabah Limitation
Ordinance. (paras 22 & 25)

(3) The first respondent was a statutory body created by the

Koperasi Pembangunan Desa Enactment 1981 and being a
E
statutory body was a different entity from and did not form
part of nor represents the government. The first respondent
was a party to the sale of shares agreement. The acts of the
first respondent were equivocal and could not be attributed
only to wanting to acknowledge the liability of the second and
F
third respondent under the letter of undertaking. There was
nothing in what the first respondent was said to have done
which suggested that the first respondent had been ‘duly
authorised in this behalf’ by the second and third appellants.
Thus, the first respondent was not an agent of the second
G
and third respondents within the meaning of s. 19 of the
Sabah Limitation Ordinance. (paras 33 & 37)

(4) The appellants could not refer to s. 23 of the Sabah

Limitation Ordinance and claim that their suit was not caught
H by limitation. Section 23 of the Sabah Limitation Ordinance
provides that where there is a continuing breach of contract,
a fresh period of limitation begins to run at every moment of
time during which the breach continues. However, this was
not a case where the third respondent had promised to
I perform a continuous act. The third respondent had only
promised to perform one act, namely, the alienation of 15,000
940 Current Law Journal [2014] 5 CLJ

acres of land by a certain date. When the third respondent A

failed to do so, it was in breach of its promise to perform that
one act. There was accordingly no continuing breach of
contract as alleged by the appellants. (paras 30 & 31)

(5) At the material time when the dividend in the third respondent B
was declared, the liability under the letter of undertaking was
already statute-barred and so there were no liabilities which
could be set off (United Malayan Banking Corporation Bhd v.
PTL Marketing Services Sdn Bhd & Ors; refd). The appellants
and the respondents had not agreed nor quantified the amount C
of compensation to be paid for the alleged liability under the
letter of undertaking. Once the dividend was validly declared
by the third appellant, it was a debt owed by the company to
its members and immediately payable unless it was stipulated
in the declaration that the dividend would be payable at a D
later date. The Judicial Commissioner was correct to grant the
first respondent judgment for that sum. (paras 39 & 40)

(6) The 15,000 acres was never alienated to the third appellant
or Newco, thus it could not be regarded as an asset of the
E
company. The first respondent’s only obligation with regard to
the letter of undertaking was to secure the same from the
State Government of Sabah, which it had done. There was
no provision in the sale of shares agreement which required
the first respondent to ensure that the State Government not
F
only issue the letter of undertakings but also ensured that the
State Government fulfil its undertaking. There was no basis in
law for the indemnity claimed by the appellants. (paras 43 &
44)

Bahasa Malaysia Translation Of Headnotes G

Perayu adalah anak syarikat perayu kedua manakala perayu ketiga

pada asalnya dimiliki penuh oleh responden pertama. Pada tahun
1994, perayu ketiga memiliki 20 ekar tanah pertanian. Perayu
ketiga menghadapi masalah kewangan dan telah berjumpa dengan H
perayu kedua untuk meminta bantuan. Penyusunan semula perayu
ketiga telah dicadangkan di mana perayu pertama telah bersetuju
untuk membeli 70% saham dalam perayu ketiga. Pada 17 April
1995, perayu pertama dan responden pertama telah memasuki satu
perjanjian jualan saham di mana kl. 3(i)(b) menjadikannya suatu I
syarat terdahulu bahawa responden pertama akan memperolehi
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 941

A akujanji yang muktamad dan mutlak daripada Kerajaan Negeri

Sabah untuk untuk memberi milik, dalam tempoh tiga tahun dari
tarikh perjanjian jualan saham, 15,000 ekar tanah kepada syarikat
Newco (yang kemudiannya adalah perayu ketiga) untuk penanaman
kelapa sawit. Pada 2 Ogos 1995, responden kedua telah
B mengeluarkan surat akujanji yang dialamatkan kepada perayu
pertama. Pada 7 September 2004, perayu pertama telah memindah
milik 70% saham dalam perayu ketiga kepada perayu kedua.
Kerajaan Negeri Sabah, walau bagaimanapun, tidak memberi milik
15,000 ekar tanah tersebut kepada perayu pertama. Pada 17 Mac
C 2010, perayu pertama dan kedua memulakan tindakan ini melalui
saman pemula. Perayu ketiga dan responden ketiga telah dijadikan
pihak-pihak yang terlibat. Tuntutan perayu adalah untuk
pelaksanaan spesifik surat akujanji dan ganti rugi yang berpunca
dari pelanggaran responden termasuk kerugian keuntungan,
D kerugian peluang dan kerugian faedah. Responden menentang
tuntutan perayu atas alasan bahawa tindakan perayu adalah
dihadkan oleh masa di bawah Item 95 Jadual kepada Ordinan Had
Masa Sabah. Responden pertama juga membuat tuntutan balas
dalam jumlah RM36,148,575 yang perlu dibayarnya melalui dividen
E yang diisytiharkan dalam perayu ketiga. Mahkamah Tinggi
mendapati bahawa tindakan perayu adalah dihadkan oleh masa
kerana tidak dilaksanakan dalam tempoh enam tahun dari tarikh di
mana 15,000 tanah ekar sepatutnya diberi milik iaitu sebelum 17
April 2004. Mahkamah Tinggi, walau bagaimanapun, telah
F membenarkan tuntutan balas responden pertama kerana ia
mendapati bahawa perayu pertama dan kedua tidak mempunyai
hak untuk menolak dividen yang perlu dibayar kepada responden
pertama terhadap tuntutan untuk ganti rugi bagi pelanggaran
akujanji yang sudah dihadkan masa. Tidak berpuas hati dengan
G keputusan tersebut, perayu-perayu merayu. Isu-isu yang timbul
adalah, antara lain: (i) sama ada had masa telah ditetapkan;
(ii) sama ada responden pertama adalah ejen untuk responden
kedua dan ketiga bagi tujuan s. 19 Ordinan Had Masa Sabah;
(iii) sama ada tuntutan balas responden pertama harus berjaya atau
H perayu boleh melaksanakan penolakan dividen; dan (iv) sama ada
responden pertama patut menanggung rugi perayu-perayu.

I
942 Current Law Journal [2014] 5 CLJ

Diputuskan (menolak rayuan) A

Oleh Clement Skinner HMR menyampaikan penghakiman
mahkamah:

(1) Fakta bahawa perayu telah dimaklumkan, pada 3 Disember

2007, bahawa responden ketiga tidak akan memberi milik B
15,000 ekar tidak menjejaskan dalam apa cara sekalipun fakta
bahawa responden ketiga telah berjanji untuk berbuat demikian
sebelum atau pada 17 April 1998. Oleh itu, responden ketiga
telah melanggar akujanji tersebut dari 17 April 1998 apabila ia
gagal memberi milik tanah seperti yang dijanjikan. Oleh itu, C
tarikh had masa bermula adalah 17 April 2004. Tindakan
perayu adalah dihadkan oleh masa kerana ia tidak dilaksanakan
dalam tempoh enam tahun dari tarikh tanah itu sepatutnya
diberi milik.
D
(2) Perayu-perayu telah merujuk kepada s. 19 Ordinan Had Masa
Sabah untuk menghujahkan bahawa terdapat pengakuan
dibuat oleh responden pertama sebagai ejen responden kedua
dan ketiga, dan oleh responden ketiga sendiri berkenaan liabiliti
pihaknya di bawah surat akujanji, yang mempunyai kesan
E
melanjutkan tempoh had masa. Perayu-perayu telah merujuk
kepada surat-surat dan minit mesyuarat yang bertarikh sebelum
dan selepas 17 April 2004. Di bawah s. 19 Ordinan Had
Masa Sabah, walau bagaimanapun, pengakuan harus dibuat
secara bertulis dan dibuat sebelum tamat tempoh had masa.
F
Oleh kerana sebahagian daripada surat telah ditulis selepas
17 April 2004, ia tidak terjumlah kepada pengakuan dalam
maksud s. 19 Ordinan Had Masa Sabah.

(3) Responden pertama adalah badan statutori yang dibentuk oleh

Enakmen Koperasi Pembangunan Desa 1981 dan sebagai G
badan statutori, adalah entiti yang berbeza dan tidak menjadi
sebahagian daripada serta tidak mewakili kerajaan. Responden
pertama adalah pihak kepada perjanjian jualan saham. Tindakan
responden pertama mengandungi beberapa makna dan tidak
boleh dikaitkan dengan hanya mahu mengakui liabiliti H
responden kedua dan ketiga di bawah surat akujanji. Tiada apa
yang telah dilakukan oleh responden pertama yang menyatakan
bahawa responden pertama telah ‘diberi kuasa untuk bertindak
bagi pihaknya’ oleh perayu kedua dan ketiga. Oleh itu,
responden pertama bukan ejen responden kedua dan ketiga I
dalam maksud s. 19 Ordinan Had Masa Sabah.
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 943

A (4) Perayu-perayu tidak boleh merujuk kepada s. 23 Ordinan Had

Masa Sabah dan mendakwa guamannya tidak dihadkan oleh
masa. Seksyen 23 Ordinan Had Masa Sabah memperuntukkan
bahawa di mana terdapat kemungkiran kontrak yang
berterusan, tempoh baru had masa bermula setiap masa di
B mana pelanggaran berterusan. Walau bagaimanapun, ini bukan
kes di mana responden ketiga telah berjanji untuk melakukan
tindakan berterusan. Responden ketiga hanya berjanji untuk
melakukan satu tindakan, iaitu, pemberian milikan 15,000 ekar
tanah sebelum tarikh yang telah ditetapkan. Apabila responden
C ketiga gagal berbuat demikian, ia telah melanggar perjanjiannya
untuk melaksanakan satu tindakan itu. Oleh itu, tiada
pelanggaran berterusan kontrak seperti yang didakwa oleh
perayu-perayu.

D (5) Pada waktu material apabila dividen dalam responden ketiga

telah diisytiharkan, liabiliti di bawah surat akujanji adalah
dihadkan oleh statut dan oleh itu tiada liabiliti yang boleh
ditolak (United Malayan Banking Corporation Bhd v. PTL
Marketing Services Sdn Bhd & Ors; dirujuk). Perayu dan
E responden tidak bersetuju dan tidak menjumlahkan amaun
pampasan yang harus dibayar untuk liabiliti yang didakwa di
bawah surat penguasaan. Apabila dividen itu telah secara sah
diisytiharkan oleh perayu ketiga, ia adalah hutang yang
terhutang oleh syarikat kepada ahli-ahlinya dan harus segera
F dibayar melainkan jika ia telah ditetapkan dalam pengisytiharan
bahawa dividen harus dibayar pada tarikh yang akan datang.
Pesuruhjaya Kehakiman adalah betul apabila memberi
responden pertama penghakiman bagi jumlah itu.

(6) Tanah 15,000 ekar tidak diberi milik kepada perayu ketiga atau
G
Newco, oleh itu ia tidak boleh dianggap sebagai aset syarikat.
Tanggungjawab responden pertama berkenaan surat akujanji
hanyalah untuk menjamin yang sama daripada Kerajaan Negeri
Sabah, yang telahpun dilakukannya. Tiada peruntukan dalam
perjanjian jualan saham yang memerlukan responden pertama
H
memastikan bahawa Kerajaan Negeri Sabah bukan hanya
mengeluarkan surat akujanji tetapi untuk memastikan Kerajaan
Negeri Sabah memenuhi akujanjinya. Tiada asas undang-
undang untuk tanggung rugi yang dituntut oleh perayu-perayu.
I
944 Current Law Journal [2014] 5 CLJ

Case(s) referred to: A

KEP Mohamed Ali v. KEP Mohamed Ismail [1980] 1 LNS 169 FC (refd)
KGN Jaya Sdn Bhd v. Pan Reliance Sdn Bhd [1996] 2 CLJ 611 CA (refd)
Padu Ehsan Sdn Bhd v. Binaan Johanesa Sdn Bhd and Perbadanan
Kemajuan Negeri Melaka (Garnishee) [1994] 2 CLJ 69 HC (refd)
Sakapp Commodities (M) Sdn Bhd v. Cecil Abraham [1998] 4 CLJ 812 CA
B
(refd)
United Malayan Banking Corporation Bhd v. PTL Marketing Services Sdn
Bhd & Ors [2004] 2 CLJ 152 HC (refd)
Wright v. Pepin [1954] 1 WLR 635 (refd)

Legislation referred to: C

Limitation Ordinance 1953, s. 26(2)
Sabah Limitation Ordinance, ss. 19, 23, Schedule Item 95, Item 112

Other source(s) referred to:

Walter Woon, Company Law, 2nd edn, 1997, p 614
D
For the appellants - Douglas Lind (Christopher Chong with him); M/s Lind,
Willie, Wong & Chin
For the respondents - Richard Barnes (Hassan Murtasa with him); M/s Shelley
Yap

Reported by Suhainah Wahiduddin E

JUDGMENT

Clement Skinner JCA: F

Introduction

[1] We had earlier heard the appeal of Future Growth Sdn Bhd
(“the first appellant”), IOI Corporation Berhad (“the second
appellant”) and Permodalan Plantation Sdn Bhd (“the third G

appellant”) against the decision of the Kota Kinabalu High Court

given on the 28 January 2011. The High Court had dismissed the
appellants’ action against Koperasi Pembangunan Desa (“the first
respondent”), the Ministry of Agriculture and Food Industry
H
(formerly known as the Ministry of Agriculture and Fisheries) (“the
second respondent”) and the State Government of Sabah (“the
third respondent”).

[2] The High Court had also allowed the counter-claim of the
first respondent in the action. I

[3] After hearing the appeal, we dismissed it. These are our
reasons for doing so.
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 945

A The Facts

[4] The first appellant is a subsidiary of the second appellant.

The third appellant was originally wholly owned by the first
respondent.
B
[5] In about the year 1994 the third appellant owned some
20,000 acres of agriculture land of which some 10,000 acres were
planted with cocoa crops. The third appellant ran into financial
difficulties and approached the second appellant for assistance. A
restructuring of the third appellant was proposed whereby the first
C
appellant agreed to purchase 70% of the shares in the third
appellant. By a letter dated 8 March 1995 the first respondent
informed the first appellant that the Sabah State Government had
approved the restructuring. On 17 April 1995 the first appellant
and the first respondent entered into a sale of shares agreement
D
for the above purposes.

[6] Clause 3(i)(b) of the sale of shares agreement makes it a

condition precedent that the first respondent would procure an
irrevocable and unconditional undertaking from the Sabah
E Government to alienate, within three years from the date of the
sale of shares agreement, 15,000 acres of land to a new company
identified as NEWCO (but later to be the third appellant) for oil
palm cultivation.

F [7] On 2 August 1995 the permanent secretary of the second

respondent issued a letter of undertaking addressed to the first
appellant in the following terms (translated into English):
2. With this, the State Government of Sabah gives an
unconditional and irrevocable undertaking to alienate at least
G 15,000 acres of land suitable for the cultivation of oil palm in the
State of Sabah to NEWCO or PPSB (3rd Appellant) within the
period of three (3) years starting from 17.4.95.

[8] Subsequently, on 7 September 2004 the first appellant

H transferred its 70% shares in the third appellant to the second
appellant.

[9] It is an undisputed fact that the Sabah State Government

did not alienate the 15,000 acres of land to the first appellant.
I [10] On 17 March 2010 the first and second appellants
commenced this action by way of an originating summons. The
third appellant and third respondent were joined as parties on
9 August 2010. The appellant’ claim is for specific performance of
946 Current Law Journal [2014] 5 CLJ

the letter of undertaking and damages flowing from the A

respondents’ breaches including loss of profit, opportunistic losses
and loss of interest.

[11] The respondents resisted the appellants’ claim on two main

grounds, namely: (a) lack of locus standi of the first and second B
appellants to bring this action; (b) the appellants’ action was time
barred under Item 95 of the Schedule to the Sabah Limitation
Ordinance. The first respondent also made a counter-claim for the
sum of RM36,148,575 payable to it by way of dividends declared
in the third appellant. C

The High Court Decision

[12] The learned Judicial Commissioner did not make any specific
finding on the locus standi issue but said in the course of his
judgment that: “The third defendant’ failure to alienate the land D
to either Newco or the third plaintiff by that date was a breach
of that promise which would entitle the plaintiffs and or Newco
to sue”.

[13] On the limitation issue the learned Judicial Commissioner E

found that the appellants’ action was time-barred as it was not
brought within six years from the date on which the 15,000 acres
of land was to be alienated ie, by 17 April 2004.

[14] With regard to the first respondent’ counter-claim, the

F
learned Judicial Commissioner allowed it as he found that the first
and second appellants had no right to set-off the dividends
payable to the first respondent against a claim for compensation
for breach of undertaking which was already time-barred.

This Appeal G

[15] The appellants raised four main grounds in their appeal: (a)
the locus standi point; (b) whether limitation had set in; (c) whether
the first respondent’s counter-claim should succeed or the
appellants may exercise their right to set-off; and (d) whether the H
first respondent ought to indemnify the appellants.

The Locus Standi Point

[16] In our view the locus standi point is a non-issue as the

respondents did not file any cross-appeal against what the learned I
Judicial Commissioner had said regarding the appellants and
Newco’s entitlement to sue on the third respondent’s failure to
alienate the 15,000 acres.
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 947

A Whether Limitation Had Set In?

[17] According to the appellants the limitation point was a non-

starter as this was a case of “omission” in that there was an
omission by the third appellant to alienate the land it had
B undertaken to. It was contended by the appellants that it was
only on 3 December 2007 that they were informed by the first
respondent that the third respondent was unable to provide the
15,000 acres of land. It is from this date that time began to run.
We do not agree. In our view the fact that the appellants were
C informed on 3 December 2007 that the third respondent would
definitely not be alienating the 15,000 acres does not detract in
any way from the fact that the third respondent had undertaken
to do so on or before 17 April 1998 and therefore the third
respondent was in breach of that undertaking from the 17 April
D 1998 when it failed to alienate the land as promised.

[18] The appellants also contended that Item 95 of the Sabah

Limitation Ordinance is not relevant as Item 112 is the relevant
section. Item 112 states that “For possession of immovable
property or any interest therein not hereby specifically provided
E
for”, the limitation period is 12 years from “when the possession
of the defendant becomes adverse to the plaintiff”.

[19] We find no merit in this submission. It is clear to us that

Item 112 only applies where there is physical land in existence of
F which possession is being claimed because time begins to run from
when the possession of the defendant becomes “adverse” to the
plaintiff. There can be no adverse possession of land if it does not
exist which is the case here.

G [20] It was next contended by the appellants that since the

respondents had requested for more time to obtain the 15,000
acres of land, time was enlarged and it would be unconscionable
and inequitable to now allow the respondents to assert limitation.
The appellants say the respondents should be estopped from
H raising limitation (see Sakapp Commodities (M) Sdn Bhd v. Cecil
Abraham [1998] 4 CLJ 812; [1998] 4 MLJ 651.

[21] We do not agree with the appellants’ submissions. Each case

is to be decided on its own facts. The evidence shows that the
respondents were trying to get the 15,000 acres alienated to
I
Newco. We do not think that their trying to do so can be
characterised as unconscionable or inequitable conduct. It has not
been demonstrated that during the time the respondents were
948 Current Law Journal [2014] 5 CLJ

doing so they had indicated to the appellants that they were not A
going to insist on their strict legal rights under the Sabah
Limitation Ordinance. Accordingly we do not think that estoppel
would apply on the facts of this case against the respondents.

[22] The appellants next relied on s. 19 of the Sabah Limitation B

Ordinance to submit that there were acknowledgements made by
the first respondent as agent of the second and third respondents,
and by the third respondent itself of the third respondent’s liability
under the letter of undertaking, which had the effect of extending
the period of limitation. C

[23] The appellants have referred us to letters and minutes of

meetings dated before and after 17 April 2004 (the date on which
limitation would set in) where the first, second and third
respondents have allegedly acknowledged the third respondent’s
D
liability.

[24] We do not agree with the appellants’ submissions. The

learned Judicial Commissioner devoted a major part of his judgment
on this point. A reading of his judgment shows that the learned
Judicial Commissioner had correctly identified that under s. 19 of E
the Sabah Limitation Ordinance the acknowledgement must be in
writing and made before the expiry of the limitation period.

[25] The learned Judicial Commissioner also identified the relevant

period for acknowledgements to be between 17 April 1998 and F
prior to 17 April 2004. As far as the second respondent was
concerned the learned Judicial Commissioner said the first
response from the second respondent was dated 28 July 2008 and
subsequently there were several letters dealing with the
compensation to be paid to the appellants which were to be set- G
off against the dividends payable to the first respondent, but the
learned Judicial Commissioner said that since these letters were
written after 17 April 2004, ie, after the limitation period had set
in they could not amount to acknowledgements within the meaning
of s. 19 of the Sabah Limitation Ordinance. We find no error in H
what the learned Judicial Commissioner said. We agree with him
that for an acknowledgement to come within the meaning of s. 19,
it must be made before the 17 April 2004.

[26] With regard to the appellants’ contention that there were

I
“numerous” acknowledgements and admission made by the first
respondent as an agent of the second and third respondents, the
learned Judicial Commissioner proceeded to consider the
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 949

A appellants’ submissions on the basis that assuming for the sake of

argument only that the first respondent was an agent of the
second and third respondents, the learned Judicial Commissioner
looked at all the letters written between 17 April 1998 and 17 April
2004. During that period the learned Judicial Commissioner found:
B
(a) two letters dated 8 July 1998 and 14 July 1998 from the third
appellant to the Chief Minister of Sabah;

(b) a letter dated 27 July 1998 from the Chief Minister’s office to
the Pejabat Hasil Bumi;
C
(c) a letter dated 4 July 2001 from the third appellant to the
Chief Minister of Sabah;

(d) a minutes of meeting of the third appellant dated 9 December

D 2003.

Referring to these items the learned Judicial Commissioner found

that none of these letters or documents were from the first
respondent. The learned Judicial Commissioner said that the other
documents were outside the relevant dates of 17 April 1998 to
E
17 April 2004 and were not material. We see no error in these
findings of fact made by the learned Judicial Commissioner. Neither
has it been demonstrated to us that what the learned Judicial
Commissioner had said was plainly wrong.
F [27] As far as the letters written by the first respondent were
concerned, the learned Judicial Commissioner found that there
were such letters written during the relevant period between 17 April
1998 and 17 April 2004. They were:

G (a) a letter dated 22 February 2000 which was addressed to the

third appellant and which the learned Judicial Commissioner
said had described how the first respondent had tried applying
without success for the 15,000 acres of land from the State
Government between 1998 and 1999, even though certain
H verbal assurances were given by JTU on the matter;

(b) a letter dated 4 July 2000 addressed to the second appellant

advising that the first respondent had been requested to
prepare a cabinet paper for consideration on what would
happen to the first respondent’s shares in the third appellant
I
if the State Government failed to alienate the land;
950 Current Law Journal [2014] 5 CLJ

(c) a letter dated 18 September 2003 addressed to the second A

appellant, requesting the second appellant to furnish the first
respondent with tables A, B and C referred to in the second
appellant’s letter of 20 May 2003 so as to enable the first
respondent to prepare the cabinet papers.
B
[28] The learned Judicial Commissioner found that none of the
letters written by the first respondent amounted to an unequivocal
acknowledgement or an admission of the liability of the third
respondent within the meaning of s. 19 of the Sabah Limitation
Ordinance. C

[29] We again find no error in what the learned Judicial

Commissioner said. His findings were based on the evidence led
before him and it was not demonstrated to us that the learned
Judicial Commissioner’s appreciation of the evidence was flawed in
D
any way. We should also point out that the last letter written by
the first respondent between 17 April 1998 and 17 April 2004 is
the letter dated 18 September 2003. Therefore even if the three
letters referred to by the learned Judicial Commissioner can be
regarded as an unequivocal acknowledgement of the third
E
respondent’s liability under the letter of undertaking, it would have
extended the limitation period from the date of the last letter ie,
from 18 September 2003 until 18 September 2009. This action
was filed on 17 March 2010 which was still outside the last date
to do so on 18 September 2009.
F
[30] The appellants next contended that their suit was not caught
by limitation as s. 23 of the Sabah Limitation Ordinance provides
that where there is a continuing breach of contract, a fresh period
of limitation begins to run at every moment of time during which
the breach continues. According to the appellants the failure of G
the third respondent to alienate the 15,000 acres of land
constitutes a continuing breach.

[31] We do not agree. In our view this is not a case where the
third respondent had promised to perform a continuous act. Here H
the third respondent only promised to perform one act, namely,
the alienation of 15,000 acres of land by 17 April 1995. When the
third respondent failed to do so, it was in breach of its promise
to perform that one act. There was accordingly no continuing
breach of contract as alleged by the appellants. I
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 951

A [32] The respondents also contended that there were events

which extended the period of limitation, such as the first
respondent informing the appellants in the first respondent’s letter
of 3 December 2007 about the setting up of an ad hoc committee
by the respondents to study the appellants’ claim and consideration
B of other alternatives for an amicable settlement. The appellants
relied on the case of KEP Mohamed Ali v. KEP Mohamed Ismail
[1980] 1 LNS 169; [1981] 2 MLJ 10 as the authority for this
proposition. We find no merit in this contention. The case of KEP
Mohamed Ali was a case concerning s. 26(2) of the West Malaysian
C Limitation Ordinance 1953 which allows an acknowledgement to
be made even after limitation has set in, whereas under s. 19 of
the Sabah Limitation Ordinance, the acknowledgement must be
made before limitation has set in. As the learned Judicial
Commissioner pointed out in his judgment, such letters were
D written by the respondents after 17 April 2004.

Was The First Respondent An “Agent”

[33] Reverting now to the question whether the first respondent

was an agent of the second and third respondents for the
E
purposes of s. 19 of the Sabah Limitation Ordinance, the learned
Judicial Commissioner found that the first respondent was not, as
the first respondent was a statutory body created by the Koperasi
Pembangunan Desa Sabah Enactment 1981 and being a statutory
body was a different entity from and does not form part of nor
F
represent the government. The learned Judicial Commissioner
found the first respondent as neither a servant nor agent of the
second or third respondent. The learned Judicial Commissioner
relied on several case law on the point including Padu Ehsan Sdn
Bhd v. Binaan Johanesa Sdn Bhd and Perbadanan Kemajuan Negeri
G
Melaka (Garnishee) [1994] 2 CLJ 69.

[34] The appellants contended that the first respondent was an

agent of the second and third respondents and that it is not
necessary that there should be a formal appointment in writing of
H the first respondent as “agent” as the appointment may be implied
or inferred from conduct and the surrounding circumstances (see
KGN Jaya Sdn Bhd v. Pan Reliance Sdn Bhd [1996] 2 CLJ 611;
[1996] 1 MLJ 233 and Wright v. Pepin [1954] 1 WLR 635).

I [35] We agree with the appellants that there does not need to
be a formal appointment in writing of the first respondent to
constitute the first respondent as agent of the second and third
respondents, but explanation 2 of s. 19 of the Sabah Limitation
952 Current Law Journal [2014] 5 CLJ

Ordinance makes it clear that for the purposes of the section the A
agent must be “duly authorized in that behalf”. The question is,
was the first respondent duly authorised in that behalf?

[36] The appellants say it was as the sale of shares agreement

dated 17 April 1995 recognises the material role played by the first B
respondent in the submission of a cabinet paper to the third
respondent on the restructuring; that it was the first respondent
who conveyed to the first appellant the third respondent’s
approval of the restructuring, and the first respondent had written
letters such as that of 23 July 1996 to the second respondent in C
which a letter dated 17 July 1996 was attached. The attached
letter dated 17 July 1996 was from the first respondent to the
Chief Minister, Sabah requesting the latter’s assistance to have the
15,000 acres of land transferred in fulfilment of the condition of
the agreement and attaching two maps for that purpose. D
According to the appellants this shows that the first respondent is
not only the agent of the third respondent but had in fact
synchronised the third respondent’s obligation in the letter of
undertaking and the first respondent’s obligation in the sale of
shares agreement as one. E

[37] We do not agree with the appellants’ contention. It must

not be overlooked that the first respondent was a party to the
sale of shares agreement. In our view the fact that the first
respondent had done all the things pointed out by the appellants
F
shows a definite keenness or desire on its part to give effect to
the agreement and to see it succeed. In the circumstances the
acts of the first respondent are equivocal and cannot be attributed
only to wanting to acknowledge the liability of the second and
third respondents under the letter of undertaking. Even further
G
still, in our view, there is nothing in what the first respondent is
said to have done which suggests that the first respondent had
been “duly authorized in this behalf” by the second or third
appellant. As we indicated earlier, the first respondent was doing
what it did as a signatory to the sale of shares agreement. We
H
accordingly agree with the learned Judicial Commissioner that the
first respondent was not an agent of the second and third
respondents within the meaning of s. 19 of the Sabah Limitation
Ordinance.
I
 Future Growth Sdn Bhd & Ors v.
[2014] 5 CLJ Koperasi Pembangunan Desa & Ors 953

A The First Respondent’s Counter-claim

[38] The appellants contended that given the fact that the 15,000
acres of land had not been alienated to Newco or the third
appellant, it was not unreasonable for the appellants to propose
B that any dividend payable to the first respondent from the profits
of the third appellant be set-off against the obligation due
under the letter of undertaking of the second respondent. The
appellants contended that since the first and second
respondents agreed to this they are now estopped from making
C their counter-claim.

[39] We do not agree. The learned Judicial Commissioner found

that at the material time in 2008 when the dividend in the third
respondent was declared, the liability under the letter of
undertaking was already statute barred and so there were no
D
liabilities which could be set-off (see United Malayan Banking
Corporation Bhd v. PTL Marketing Services Sdn Bhd & Ors [2004]
2 CLJ 152). Even further still, the learned Judicial Commissioner
held that at the material time, the appellants and the respondents
had not agreed nor quantified the amount of compensation to be
E
paid for the alleged liability under the letter of undertaking.

[40] We agree with the findings of the learned Judicial

Commissioner. We see no error in what he held. In our view once
the dividend was validly declared by the third appellant, it is a
F debt owed by the company to its members and immediately
payable unless it was stipulated in the declaration that the dividend
will be payable at a later date (see Walter Woon, Company Law,
2nd edn 1997, at p. 614). The learned Judicial Commissioner was
correct to grant the first respondent judgment for that sum.
G
Whether The First Respondent Ought To Indemnify The
Appellants

[41] The appellants contended that under cl. 8(iii) of the sale of
shares agreement, the first respondent had agreed to keep the first
H
and third appellants fully and effectively indemnified:

(i) against any depletion and diminution of the assets of the third
appellant; and

I (ii) any loss or damage which the first appellant may directly or
indirectly suffer as a result of or in connection with any
misrepresentation contained in or any breach of any of the
warranties and undertakings set out in the agreement.
954 Current Law Journal [2014] 5 CLJ

[42] It is the appellants’ submission that there was a depletion of A

the third appellant’s assets when the 15,000 acres of land was not
alienated to it which in turn constitutes a breach of the
undertaking for which the appellants would be entitled to be paid
compensation for which the first respondent must now indemnify
the appellants in respect of. B

[43] We do not agree. In the first place the 15,000 acres was
never alienated to the third appellant or Newco, so we do not see
how it can be regarded as an asset of the company. In the
second place, it is our view that the first respondent’s only C
obligation with regard to the letter of undertaking was to secure
the same from the State Government of Sabah, which it has done.
We can see no provision in the sale of shares agreement which
requires the first respondent to ensure that the State Government
not only issues the letter of undertakings but also ensures that the D
State Government fulfils its undertaking.

[44] We accordingly find no basis in law for the indemnity

claimed by the appellants.

[45] It was for all the above reasons that we dismissed the E
appeal of the appellants and affirmed the decision of the High
Court, with costs of RM30,000. The deposit was to be refunded.