Lin Wen-Chih v Pacific Forest Industries Sdn Bhd (S-02(W)-1466-07/2018)

LIN WEN - CHIH (Taiwanese Passport No. 314784401)

LIN WEN - CHUAN (Taiwanese Passport No. 309638448) ...APPELLANTS

PACIFIC FOREST INDUSTRIES SDN BHD (Co. No. 206899 - P)

DUTALAND BERHAD (formerly known as MYCOM BERHAD) (Co. No. 7296 - V) …RESPONDENTS [In the High Court in Sabah and Sarawak at Tawau Civil Suit No. TWU - 22 - 18/5 - 2013

Between Lin Wen - Chih (Taiwanese Passport No. 314784401)

Lin Wen - Chuan (Taiwanese Passport No. 309638448) ….Plaintiffs And

Pacific Forest Industries Sdn Bhd (Co. No. 206899 - P)

Dutaland Berhad (formerly known as MYCOM BERHAD) (Co. No. 7296 - V) …Defendants] [2] CORAM: LAU BEE LAN JCA S. NANTHA BALAN JCA SUPANG LIAN JCA JUDGMENT OF THE COURT Introduction [1] This is an appeal by the plaintiffs against the decision of the learned Judge of the High Court (“the Judge”) dated 11 June 2018 dismissing their claim (after a full trial) in Civil Suit No. TWU - 22 - 18/5 - 2013 (“the 2013 suit”). The 2013 suit was filed on 10 May 2013 and has been deliberately described as such so as to distinguish it from an earlier suit, which was registered as High Court at Tawau Civil Suit No: T-22-12 of 1997 (“the 1997 suit”) involving the same parties and which dealt with the same subject matter. The Judge’s decision in the 2013 suit is reported as Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2018] MLJU 1948; [2019] 9 MLJ 227; [2018] 1 LNS 2022; [2018] AMEJ 1768 HC. [2] For convenience and brevity, we shall refer to the parties according to their respective capacities in the High Court. Hence, the 1st and 2nd appellants shall be referred to individually as “1st plaintiff” and “2nd plaintiff” respectively, and collectively as “the plaintiffs”. The 1st and 2nd respondents shall be referred to individually as “1st defendant” and “2nd defendant” respectively, and collectively as “the defendants”. [3] [3] The plaintiffs’ claim in the 2013 suit was for the sum of RM16,859,186.65 (RM6,223,241.00 + RM10,635,945.65) (as at 10 May 2013) against the 1st defendant based on the 1st defendant’s letter of acknowledgement dated 12 November 1996 and against the 2nd defendant, as guarantor based on the 2nd defendant’s letter of undertaking dated 12 November 1996. [4] In their defence, the defendants raised, inter alia, the issue of limitation and res judicata. According to the defendants, the Judge ought to have ruled that the 2013 suit was barred by limitation and res judicata. However, the Judge ruled against the defendants on both these issues. The Judge found against the plaintiffs on almost all the other issues. Hence, the end result was that the plaintiffs’ claim (per the 2013 suit) was dismissed. But the defendants nevertheless proceeded to lodge a Notice of Cross-Appeal dated 3 September 2018 (“the cross-appeal”) on the issue of limitation and res judicata. [5] The defendants’ plea of res judicata was predicated on the fact that the plaintiffs had previously filed the 1997 suit and that the issues raised in the 2013 suit were either raised or subsumed in the 1997 suit or at any rate, were issues which could have been, but were not raised in the earlier action. As for limitation it was contended that even if the plaintiffs are entitled to sue for the balance of the outstanding sum either on the basis of breach of a written contract or unjust enrichment, these cause(s) of action are time-barred as the limitation period for the cause of action based on a breach of a contract in writing or for unjust enrichment is 6 years. [4] [6] Thus, it was argued that on the facts here, the plaintiffs’ action was time-barred either by October 2003 or latest, by 9 November 2003. The significance of these dates are elaborated in the later part of this judgment. [7] We heard the plaintiffs’ appeal (and defendants’ cross-appeal) on 23 October 2020. We agreed with some of the Judge’s findings. However, we disagreed with the Judge’s findings on the issue of limitation and res judicata. In the result, the defendants’ cross-appeal was allowed, and the plaintiffs’ appeal was dismissed. These are the reasons for our decision. The background [8] The 1st defendant is a private limited company incorporated in Malaysia and operated a sawmill. The 1st defendant was formerly known as Veramex Sdn Bhd. The plaintiffs are brothers of Taiwanese nationality. The plaintiffs and their two other brothers were previously the shareholders of the 1st defendant. The plaintiffs were also directors of the 1st defendant. The 2nd defendant was a shareholder of the 1st defendant. The plaintiffs ceased to be directors of the 1st defendant on 12 February 1997. [9] By a share sale agreement dated 12 November 1996 (“the SSA”), the plaintiffs sold and transferred their shares in the 1st defendant to Liu Ho Thien who is said to be the representative and nominee of the 2nd defendant. [5] [10] At all material times, the 1st defendant was indebted to the plaintiffs. The sum which was due and owing by the 1st defendant to the plaintiffs as at 28 August 1996 was RM10,134,000.00 (“the outstanding sum”). The 1st defendant is not a party to the SSA. However, the parties to the SSA agreed per Clause 8.0 thereof, that the outstanding sum is due and owing by the 1st defendant to the plaintiffs. [11] Clause 8.0 of the SSA reads as follows:-

8.0

8.1 The Vendors and the Purchaser hereby acknowledge that a sum of RINGGIT MALAYSIA TEN MILLION ONE HUNDRED AND THIRTY FOUR THOUSAND (RM10,134,000.00) only (hereinafter called “the outstanding sum”) is presently owing by the Company to the following persons (hereinafter jointly called “the Lin Brothers”) in the amount appearing next to their respective names and that the Company shall pay interest on the outstanding sum or the balance thereof outstanding from time to time on monthly rests at the rate of ELEVEN per centum (11%) per annum calculated day to day from the date of this Agreement to the date of full payment thereof (hereinafter called “the Agreed Interest”):-

8.1.1 LIN WEN-CHUAN - RINGGIT MALAYSIA FIVE MILLION ONE HUNDRED AND THIRTY FOUR THOUSAND (RM5,134,000.00) only and

8.1.2 LIN WEN-CHIH - RINGGIT MALAYSIA FIVE MILLION (RM5,000,000.00) only. [6] [12] The outstanding sum was also stated in a letter of confirmation dated 28 August 1996 which was signed by the plaintiffs and confirmed by the 2nd defendant. The letter of confirmation reads as follows:- We, the undersigned hereby confirm that the Total Net Balance due to Lin Wen Chuan and Lin Wen Chih ("The Lins") from Veramax Sdn. Bhd. as of current date is RM10,134,000 to be accounted for in the books as follows:

Due to Mr Lin Wen Chuan - RM5,134,000

Due to Mr Lin Wen Chih - RM5,000,000 There are no other claims whatsoever from The Lins and their related companies against Veramax Sdn. Bhd. other than the sum stated above. Dated this 28th day of August 1996 ... Lin Wen Chuan Lin Wen Chih Confirmed by: MYCOM BERHAD [13] The next document is critical. Indeed, the 2013 suit (and previously, the 1997 suit) were predicated on, inter alia, the 1st defendant’s letter of acknowledgement dated 12 November 1996 (“letter of acknowledgement”), whereby the 1st defendant acknowledged and admitted to owing the plaintiffs the outstanding sum and interest thereon at 11% p.a. and undertook to pay the debt by way of supply of timber products within a period of ten months from the date of the letter of acknowledgement i.e. by 11 September 1997. [7] [14] The letter of acknowledgement which was signed by Bobby Yeap (Managing Director of the 1st defendant) reads as follows:- 12 November 1996 Our Ref: FIN/96/L/0080 To: Lin Wen-Chuan & Lin Wen-Chih both of KM9, Jalan Apas Tawau, Sabah Dear Sirs, Re: Outstanding sum of RM 10,134,000.00 and Provision for taxation of RM 3,295,453.00 We refer to the above and hereby acknowledge that a sum of RM10,134,000.00 ("the Outstanding Sum") as agreed on 28/8/96 is presently owing by us to you in the following proportion: - 1) Lin Wen-Chuan - RM5,134,000.00 and 2) Lin Wen-Chih - RM5,000,000.00 We hereby confirm and undertake with you as follows: -

we shall pay you interest on the Outstanding Sum or the balance thereof outstanding from time to time on monthly rests at the rate of eleven per centum (11%) per annum calculated day to day from today to the date of full payment thereof ("the Agreed Interest"); 2) we shall sell and you shall purchase timber products manufactured by us ("the Timber Products") at a price consistent with the prevailing market price and costing the same amount as the Outstanding Sum plus the Agreed Interest ("the Timber Products Price") from us over a period of ten (10) months from today and to be delivered over four (4) shipments; 3) the Timber Products Price shall be deducted from and set-off against the Outstanding Sum and the Agreed Interest. 4) subject to item 5 hereinafter contained, the Outstanding Sum and the Agreed Interest shall be repaid by us to you only by way of deduction from and set-off against the Timber Products Price. [8] 5) in the event that we shall fail, refuse and/or neglect to supply any of the Timber Products ordered by you or if any of the Timber Products supplied by us shall not be in accordance with the specifications stated in your purchase order(s), you shall be entitled, after giving us thirty (30) days' notice in writing to supply the Timber Products or replace the defective Timber Products and we have failed to do so, to cancel the order for such Timber Products or reject such Timber Products. Upon the order for such Timber Products being cancelled or such Timber Products being rejected and returned to us, we shall then pay cash in lieu of such Timber Products to you and such cash payment shall be deducted from and set-off against the Outstanding Sum and the Agreed Interest; and 6) in the event that the final amount of income tax payable by us as assessed and raised by the Director General of Inland Revenue for the period up to and including the 30th day of September, 1995 shall be less than the provision for taxation in our accounts i.e. RINGGIT MALAYSIA THREE MILLION TWO HUNDRED AND NINETY-FIVE THOUSAND FOUR HUNDRED AND FIFTY THREE (RM3,295,453.00) only, we shall pay the difference thereof to you within FOURTEEN (14) days of receipt of the final notice of assessment from the Director General of Inland Revenue for the appropriate tax relief/rebate within THIRTY (30) days after completion of the Share Sale Agreement dated 12/11/96 between yourselves, Lin Wen-Fu and Lin Wen-Cheng jointly and severally of the one part and Liu Ho-Tien of the other part and keep you informed of such application from time to time… [Emphasis added] [15] The next significant document is the 2nd defendant’s letter of undertaking dated 12 November 1996 (“the letter of undertaking”) whereby they guaranteed the payment of the outstanding sum that was to be made by the 1st defendant together with the agreed interest. [16] The letter of undertaking reads as follows:- 12 November 1996 Lin Wen Chuan & Lin Wen Chih both of KM 9 Jalan Apas Tawau, Sabah [9] Dear Sirs Re: Outstanding sum of RM10,134,000 payable to you by Pacific Forest Industries Sdn Bhd (formerly known as Veramax Sdn Bhd) ("The Company") In consideration of you selling your 7,500,000 ordinary shares fully paid up in the Company to Liu Ho-Tien ("Purchaser") and for this purpose to enter into a Share Sale Agreement with the Purchaser upon such terms and conditions as are therein contained, we hereby guarantee the payment of the Timber Products Price and The Agreed Interest by the Company to you within the time stipulated in the letter of even date from the Company to you ("the Company's Letter"). In the event that the Company shall fail to pay you the Timber Products Price and/or The Agreed Interest in full by the time stipulated in the Company's Letter, we shall pay you the same or any balance thereof then outstanding within fourteen (14) days from our receipt of written notice from you to do so. Words and expression used herein shall have the same meaning and intent as in the Company's Letter. Yours faithfully MYCOM BERHAD DATO' YAP YONG SEONG Group Managing Director [17] Thus, based on the confirmation letter dated 28 August 1996, Clause 8.0 of the SSA, the letter of acknowledgement and the letter of undertaking, it is clear and indisputable that there was a debt in the sum of RM 10,134,000.00 which was due and owing by the 1st defendant to the plaintiffs and the payment of which had been guaranteed by the 2nd defendant. From a plain reading of the letter of acknowledgement, there was an admission that the outstanding sum was due and owing by the 1st defendant to the plaintiffs. There was also an agreed set-off/contra arrangement between the plaintiffs and the 1st defendant (per the letter of acknowledgement) whereby the outstanding sum was to be paid or settled, in-kind (viz. timber-products). [10] [18] Thus, pursuant to the arrangement, the cost of the timber products sold was to be deducted from and set-off against the outstanding sum and interest which had been agreed upon. Hence, what the parties agreed to was that the debt (outstanding sum) was to be set-off via a contra against the supply of the 1st defendant's timber products to the plaintiffs. The price of timber to be supplied was to be at “a price consistent with the prevailing market price". [19] If, however, the timber products were not supplied according to the terms as stated in the letter of acknowledgement, then the 1st defendant undertook to pay cash in lieu of the timber products. The contra/set-off arrangement was to be done via 4 shipments of timber products and this was to be completed within a period of 10 months from the date of the letter of acknowledgement i.e. between 12 November 1996 to 11 September 1997 (“the set-off period”). [20] It is common ground that during the set-off period, there was a reduction of the outstanding sum when the plaintiffs placed an order for a shipment of wooden laminated board, and which was duly delivered by the 1st defendant. This was done pursuant to a sale transaction dated 6 September 1997. There was consequently a balance of the outstanding sum which in itself is in dispute between the parties. [21] The plaintiffs put the balance of the outstanding sum as at 27 October 1997 to be RM6,223,241.00 whilst the 1st defendant gives the figure of RM5,431,454.87 as at 15 September 1997. The dispute in this regard can be gleaned from the following correspondence. [11] [22] The first letter is the letter of demand dated 15 September 1997 issued by Messrs Shim, Pang & Co. (on behalf of the plaintiffs) to the 1st defendant. The letter reads as follows:- 15th September 1997 Pacific Forest Industries Sdn Bhd (formerly known as Veramax Sdn Bhd) P.O. Box 60720 91017 Tawau,Sabah Re: Letter of Undertaking dated 12th November 1996 Outstanding sum of RM10,134,000.00 We act for Lim Wen Chih and Lim Wen Chuan and refer to the above matter. We are instructed by our client that pursuant to the abovementioned letter of undertaking, the outstanding sum (as at 15th September 1997) owe by you to our client is RM6,144,489.00. Take Notice that unless you pay the said sum of RM6,144,489.00 to us within thirty (30) days from the date hereof, legal proceedings shall be commence against you with costs and interest without further reference to you. We trust such an extreme action will not be necessary. Yours faithfully, [23] Next is the letter by Messrs Shim, Pang & Co. dated 27 October 1997 to the 2nd defendant which reads as follows:- 27th October 1997 Mycom Bhd (Co. No. 7296V) Level 23, Plaza Raja Chulan 8, Jalan Raja Chulan 50200 Kuala Lumpur Dear Sirs RE:Your Outstanding Account With Mr Lin Wen-Chin & Mr Lin Wen-Chuan Letter of Guarantee for Pacific Forest Industries Sdn Bhd _____________________________________________ We act for Mr Lin Wen-Chin and Mr Lin Wen-Chuan of Taiwan. [12] We are instructed to demand from you the sum of RM6,223,241.00 as at 27th October 1997 as guarantor to Pacific Forest Industries Sdn Bhd (formerly known as Veramax Sdn Bhd) being outstanding balance owing by the said Pacific Forest Industries Sdn Bhd and you as guarantor to our clients. Take Notice that unless the said sum of RM6,223,241.00 is paid direct into our office as solicitors for our clients within fourteen

(b) there was no negotiation for repayment of the debt after expiry of the set-off period, (c) that the debt was discharged by omission of the plaintiffs to make purchase orders for the timber products within the set-off period and (d) the 1st defendant’s liability to pay cash only arises if any order for the timber products were cancelled or rejected (per Clause 5 of the letter of acknowledgement). [31] On 29 July 2000, the plaintiffs’ claim in the 1997 suit was dismissed. The trial judge was Justice Richard Malanjum (as he then was) (“the trial judge”). He found that the plaintiffs’ action was “premature” as they had only concluded one order for the timber products with the 1st defendant out of “four orders” as contemplated under the letter of acknowledgement. The decision of the High Court in the 1997 suit is reported as Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2000] MLJU 533; [2001] 5 CLJ 519; [2001] 1 AMR 988 HC. [15] [32] The High Court found that the whole of the plaintiffs’ claim was premature as the terms in the letter of acknowledgement for the 1st defendant to pay cash were not satisfied. The 2nd defendant was found not liable for the guarantee in the letter of undertaking. The letter of acknowledgement is referred to in the judgment as “Exh. P2”. [33] The relevant parts of the judgment of the High Court in the 1997 suit are reproduced (at p. 530-532 CLJ) below:- Hence, at the outset it is necessary to consider whether there was an admission arising from the documents executed by the parties. In this case there are the exh. P1, exh. P2 and exh. P6 (A and B) to consider. Now, there is no denial that exh. P1 itself demonstrates that indeed there is an admission of the outstanding sum being due and confirmed by the 2nd defendant. However, there is exh. P2 to note. Although it was also an admission by the 1st defendant of the outstanding sum, there were certain terms imposed. As to the effectiveness of those terms it is a matter of interpretation of the document by this court. In the case of Malayan Banking Bhd v. PK Rajamani [1994]2CLJ25 it was held that the law will always look beyond the terminology of the document to the actual facts of the situation and it is no longer a question of words but substance. Having heard the evidence including the events leading to its issuance and having considered the contents in so far as exh. P2 is concerned I do not think there is any dispute as to the meanings and implications of the words used therein. There is also no doubt that it was issued by the 1st defendant. And the plaintiffs accepted it and in fact went on to attempt to observe the terms therein. That can even be seen from the submissions of their learned counsel who asserted that orders were placed pursuant to the said document by way of various enquiries. Unfortunately, such a stand is not consonant with the evidence of the plaintiffs who both testified that there was only one order placed while many enquiries were made. Hence, the true position is that the plaintiffs proceeded to observe the terms of exh. P2 and the result is that there was only one order made out of the four orders contemplated. [16] In fact the 1st plaintiff (PW1) said that there was no other order made since the price could not be agreed upon. I am therefore quite surprised when learned counsel for the plaintiffs remained adamant that orders were made and thus taking that position to argue that exh. P2 could be enforced as an admission. I would have thought it might have been more beneficial to consider whether the debt is still due regardless of the non-compliance of the terms in exh. P2. Accordingly, I find that the parties considered themselves bound by the terms as stated in exh. P2 and in fact acted upon them. And although PW1 said that they had no choice but to agree since they were eager for the payment, nevertheless, I am of the view that having taken that position it would have been a matter of observing the terms therein. Nothing could have prevented them from placing their orders and waiting for the 1st defendant to meet them. As such I do not think it can be summarily dismissed the notion that exh. P2 formed the basis of an agreement of the parties pertaining to the settlement of the outstanding sum. Indeed, I would say that exh. P2 may be an admission on the part of the 1st defendant but it was subject to certain conditions which the plaintiffs subsequently accepted, if not in writing then through their conduct. Hence, I am inclined to agree with the contention of the learned counsel for the 1st defendant that since the plaintiffs failed to comply with the terms stipulated in exh. P2 within the time specified or within a reasonable time after the expiry and since it was not shown that the events that could have triggered the payment of cash had arisen the claim should therefore be taken as premature. [34] The plaintiffs were dissatisfied with the decision of the High Court. On 21 August 2000, the plaintiffs filed an appeal against the High Court’s order in the 1997 suit. The plaintiffs’ appeal was allowed on 28 May 2008. The Court of Appeal reversed the decision of the High Court. According to the Court of Appeal since the parties could not agree on the price of the timber products and as there was no provision in the letter of acknowledgement to settle such disagreement, the letter of acknowledgement (described as “the agreement”) was discharged by “frustration”. [17] [35] Therefore, the Court of Appeal allowed the plaintiffs’ appeal and set aside the High Court’s order and entered judgment in favour of the plaintiffs. The Court of Appeal’s decision is reported as Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2008] 6 MLJ 89; [2008] 5 CLJ 29; [2009] 3 AMR 205 CA. [36] In summary, the Court of Appeal’s findings (p.30 CLJ) were as follows:- It was not in dispute that the 1st respondent had acknowledged indebtedness of the sum of RM10,134,000 to the appellants which, however, was to be repaid by way of a set-off according to the manner as spelled out in exh. P2. Out of a total of four attempts to purchase the 1st respondent's timber products, only one transaction was concluded for the purpose of this set-off due to the parties' failure to agree on the price. According to the appellants, the prices quoted by the 1st respondent were too high and were inconsistent with those prevailing in the market at the material time. This was the price agreed upon by the parties under exh. P2. When the parties disagreed on this fundamental term and there was no provision in the agreement to settle this, then the agreement was frustrated. When the price could not be agreed upon, then naturally there could be no purchase of the 1st respondent's timber products for the purpose of set-off. Under such circumstances, both ss. 57(2) and 33 of the Contracts Act 1950 applied. Further, the High Court's opinion that the appellants' claim was premature due to their failure to conclude the remaining transactions for the purpose of set-off was erroneous in this respect: that any further attempts to transact between the parties would again fail on the issue of price. It was futile for the parties to continue with the contract since this matter would never be settled. (paras 12, 13 & 14) When the agreement was discharged by frustration, s. 15 of the Civil Law Act 1956 applied to the appellants' claim. It was thus concluded that what the appellants were claiming was within the provision of the law since they had debited the value of the timber products from the only transaction between the parties from the total debt. (paras 15 & 16). [18] [37] The defendants obtained leave of the Federal Court and lodged an appeal to the Federal Court. On 7 September 2009, the Federal Court allowed the defendants’ appeal and reinstated the High Court’s decision. The Federal Court ruled that the Court of Appeal ought not to have considered the issue of frustration as it was not pleaded by the plaintiffs. [38] The decision of the Federal Court is reported as Pacific Forest Industries Sdn Bhd & Anor v Lin Wen-Chih & Anor [2009] 6 MLJ 293; [2009] 6 CLJ 430; [2009] 1 LNS 825 FC. The opinion of the Federal Court (p. 431 CLJ) may be summarised as follows:-

(a) The letter of acknowledgement is dated 12 November 1996.

(b) The set-off period expired on 11 September 1997.

(c) 1st defendant’s letter dated 10 November 1997 where they admitted that they owed the plaintiffs a sum of RM 5,431,454.87.

(d) The 1997 suit was filed on 24 November 1997.

(e) The 1997 suit was dismissed on 29 July 2000. [20]

(f) On 28 May 2008, the Court of Appeal allowed the plaintiffs’ appeal.

(g) On 7 September 2009, the Federal Court allowed the defendants’ appeal and reinstated the High Court’s decision in the 1997 suit. The 2013 suit [42] Ordinarily the dust of conflict (per the 1997 suit) should have settled in light of the decision of the Federal Court dated 7 September

After a hiatus of about 3 years, the claim was resurrected by way of the issuance of a fresh order dated 23 October 2012 (“the fresh order”) to the 1st defendant for timber products. [43] It is not without significance that the fresh order was issued approximately 15 years (11 September 1997 – 23 October 2012) after the expiry of the set-off period. The fresh order was purportedly issued pursuant to the letter of acknowledgement. There was no reply from the defendants and there was also no supply of the timber products pursuant to the fresh order. As a result, the plaintiffs issued a notice dated 31 October 2012 to the 1st defendant requesting the 1st defendant to ship the timber products as ordered, within 30 days from the date of the said notice. The 30 days period lapsed. The 1st defendant did not ship any timber products. [21] [44] As such the plaintiffs issued the letter dated 5 December 2012 to cancel the purchase order and demanded the immediate cash payment of the debt of RM6,223,241.00. The plaintiffs also sent a letter of demand to the 2nd defendant via a letter dated 11 December 2012 apparently to trigger the 2nd defendant’s liability under the letter of undertaking. [45] On 10 May 2013, the plaintiffs filed the 2013 suit for the balance of the outstanding sum of RM16,859,186.65 on grounds that there was an admission of the debt, that there was a self-induced frustration, that the 1st defendants had a primary obligation to sell timber products, the fresh order had been issued and that there was in any event, unjust enrichment. The 2nd defendant was sued as guarantor of the 1st defendant. [46] The defendants filed their defence on 24 June 2013. [47] In the defence the 1st defendant admitted receipt of the fresh order (per letter dated 23 October 2012) and the notice dated 31 October 2012 for shipment to be made within 30 days. [48] The 1st defendant also admitted receipt of the subsequent cancellation of the fresh order and the demand for payment of cash in lieu of the timber products via letter dated 5 December 2012. The 2nd defendant also admitted receipt of the letter of demand dated 11 December 2012. [49] However, the defendants denied liability. [22] [50] The defendants raised the plea of limitation. They also asserted that the 4 orders had to be placed within the set-off period and that the fresh order is a sham as the plaintiffs knew that since July 1998, the 1st defendant no longer operated a sawmill. The defendants also claimed that the 2013 suit was barred by res judicata. The plaintiffs filed a Reply to Defence on 8 July 2013 denying limitation and res judicata. [51] On 20 August 2013, the defendants applied to strike out the 2013 suit on grounds (a) the fresh order was a sham as it seeks to trigger and/or revive a cause of action for cash payment of the outstanding sum which was no longer possible at that point in time,(b) that the action was barred by res judicata because a similar claim had already been adjudicated in the 1997 suit and (c) that the action was time barred pursuant to the Limitation Ordinance 1952 (Sabah Cap. 72). The plaintiffs opposed the striking out order on the basis that res judicata does not apply as the merits were never considered in the 1997 suit and that the 1997 suit was found to be premature. Further, the plaintiffs argued that limitation does not apply because they had been actively pursuing the claim (per the 1997 suit) without delay. On 11 March 2014 the High Court allowed the defendants’ striking out application. The 2013 suit was struck out and dismissed. [52] On 14 March 2014, the plaintiffs filed an appeal to the Court of Appeal via Court of Appeal Civil Appeal No. S-02-656-04/2014. The plaintiffs’ appeal was allowed on 20 September 2016. The 2013 suit was therefore reinstated. [23] [53] On 17 October 2016, the defendants filed an application for leave to appeal to the Federal Court against the Court of Appeal’s decision. The defendants’ application for leave was dismissed on 10 November 2017. Thereafter, the defendants filed an application to review the decision of the Federal Court under r. 137 Rules of the Federal Court 1995, but the application was later withdrawn by the defendants. [54] The 2013 suit then proceeded to trial. [55] On 11 June 2018, the Judge dismissed the plaintiffs’ claim. High Court’s findings (the 2013 suit) [56] The High Court’s findings were as follows. [57] On the issue of whether the 2013 suit is caught by the doctrine of res judicata, the Judge ruled that based on the principle of stare decisis, the plaintiffs’ claim per their Amended Statement of Claim dated 15 May 2017, is not caught by the doctrine of res judicata. According to the Judge, he was bound by stare decisis since the Court of Appeal had allowed the plaintiffs’ appeal in relation to the striking out application and reinstated the 2013 suit. Later, the Federal Court dismissed the defendants’ application for leave. [24] [58] As such, the Judge held the view that the Court of Appeal and Federal Court had determined that res judicata had no application in this case and that he was bound by the outcome of the appeal in the Court of Appeal and the leave application in the Federal Court. [59] On the question whether the plaintiffs’ claim is time-barred under the provision of the Limitation Ordinance 1952 (Sabah Cap 72), the Judge accepted the position that was articulated by plaintiffs’ counsel that the 2013 suit is not time-barred as parties were actively involved during the process of litigation in the 1997 suit until it was finally decided by the Federal Court. [60] Essentially, although not specifically articulated in the judgment, the Judge seems to have taken the view that the period from 24 November 1997 (when the 1997 suit was filed) until 7 September 2009 (when the Federal Court allowed the defendants’ appeal and reinstated the High Court’s decision dismissing the 1997 suit) is to be “excluded” from the computation of time on the basis that time (during that period) was “suspended”. [61] The next issue is whether based on the letter of acknowledgement and letter of undertaking, the 1st and 2nd defendants are liable to pay the balance of the outstanding sum in circumstances where only one sale was completed. [25] [62] In this regard, the Judge (without specifically identifying the exact quantum) found that although the debt was admitted, the mechanism for the payment thereof was based on the agreed term as per the letter of acknowledgement i.e. by way of contra and set-off against the purchase price of the sale and supply of timber products over the period of 10 months. And based on the available evidence, the Judge came to the conclusion that the defendants could not be liable to pay the balance of the outstanding sum as only one sale was concluded during the set-off period. [63] The next issue is whether during the set-off period, there were in fact 3 other orders which had been placed by the plaintiffs in addition to the one concluded sale which had not materialised either because the 1st defendant refused to sell the timber products or the 1st defendant quoted a price that was not consistent with the prevailing market price. [64] It was submitted for the plaintiffs that the reason why the parties could not proceed and conclude the sales was because of the 1st defendant’s persistent refusal to sell and/or offering to sell at a price which was too high, i.e. at a price which was not consistent with the prevailing market price. [65] Here the Judge found that several enquiries were made by the plaintiffs for quotation of the price for the timber products from the 1st defendant but these cannot be considered as a formal offer by the plaintiffs to purchase the timber products because an offer to purchase can only be made once the parties have agreed on the pricing pursuant to the terms of the letter of acknowledgement. [26] [66] The Judge made a finding that although the purported offer to purchase the timber products as shown by the documentary evidence were admitted as exhibits, it did not relieve the plaintiffs from the burden of proving its contents to the satisfaction of the Court. [67] On the issue of documentary evidence, the Judge ruled that the documents were mere copies and the originals themselves were not produced during the trial and the contents were handwritten with Chinese characters and were illegible. [68] The Judge also held that the documents were not verified by the makers. [69] On the issue of self-induced frustration, the Judge was of the view the plaintiffs’ complaint about the 1st defendant’s failure to fulfil the 3 remaining orders for timber products can only be considered if it is first proven that there were indeed 3 further orders to purchase timber products from the 1st defendant. [70] On the evidence that was adduced at trial, the Judge found first that there is no evidence that there were 3 other orders. Further, there was no evidence that the 1st defendant refused to sell timber product and/or that they had quoted a price which was not consistent with the prevailing market price. [27] [71] There was also no evidence of any notices that had been given by the plaintiffs pursuant to Clause 5 of the letter of acknowledgement. Thus, the Judge concluded that the 1st defendant cannot be said to have failed to fulfil the plaintiffs’ remaining orders. Hence, the judge concluded that the plaintiffs’ allegation of self-induced frustration must fail. [72] Next, the Judge had to deal with the question whether the fresh order was a sham order? In this regard, the Judge concluded that the fresh order was a sham order as it purportedly utilised the term under Clause 5 of the letter of acknowledgement as a “tactical manoeuvre” to claim for cash payment despite the fact that it was made beyond the timeline (i.e. after the expiry of the set-off period) and despite the plaintiffs being aware that at that point in time when the fresh order was issued the 1st defendant’s sawmill factory had already closed down. [73] The Judge also opined that in order to support their claim for cash payment of the outstanding debt pursuant to Clause 5 of the letter of acknowledgement, the plaintiffs should have, but did not, exhibit the letter dated 23 October 2012 (i.e. the fresh order) and the notice dated 31 October 2012 for shipment to be made within 30 days. [74] According to the judge, the other document which ought to have been produced was the plaintiffs’ subsequent cancellation of the fresh order and demand for payment of cash in lieu of the timber products via letter dated 5 December 2012. [28] [75] Lastly, the Judge opined that the plaintiffs ought to have also produced the letter of demand dated 11 December 2012 which was issued to the 2nd defendant. [76] The next issue that the Judge dealt with is whether Clause 2 of the letter of acknowledgement required the 1st defendant to first offer timber products for sale and then for the plaintiffs to purchase the timber products. This issue comes under the rubric of reciprocal obligations arising under the letter of acknowledgement. [77] Essentially, the plaintiffs took the position that in light of the fact that the debt was expressly stated in the SSA and in the letter of confirmation dated 28 August 1996 and finally in the letter of acknowledgement, the 1st defendant had a pre-eminent obligation to give priority to sell timber products to the plaintiffs so as to settle the debt and in this context, the 1st defendant was to make the first move and make an offer to sell timber products to the plaintiffs, which the latter was to consider and agree to, subject to timber specifications, price etc. [78] On the other hand, according to the 1st defendant’s interpretation, the orders had to be first made by the plaintiffs before the 1st defendant can supply the timber products otherwise the 1st defendant would not be in a position to know what type of timber products or quantities that were required or needed by the plaintiffs at any particular point of time. As such, the 1st defendant said that the onus was on the plaintiffs to place/confirm the order after making the necessary enquiries. [29] [79] The next issue is whether the 1st and 2nd defendants were unjustly enriched by reason of their non-payment of the monies which had been admitted to be due to the plaintiffs per the letter of acknowledgement. The Judge rejected the claim based on unjust enrichment as he held that the nature of the claim was based on an admitted debt which was payable by way of contra payment and set off against the sale and supply of the timber products by the 1st defendant. The judge concluded that there was no payment by the 1st defendant because there was no sale of timber products which had been concluded between the 1st defendant and the plaintiffs. There was no act or delivery of thing that could be said to have been done by the plaintiffs which were not intended to be done gratuitously that had benefitted the 1st defendant. [80] In so far as the dispute as to the actual amount which was outstanding, the Judge said that there was no evidence to show that all expenses had been cleared or deducted before 12 November 1996. This seemed to imply that the Judge was not inclined to accept that the deductions which had been by the 1st defendant per the statement of account annexed to their letter dated November 1997, was lawful. [81] At any rate, the Judge took the view that since the plaintiffs’ claim could not be sustained, the issue on whether the balance of the outstanding sums due from the 1st defendant was RM6,223,241.00 or the reduced sum of RM5431,545.87, was inconsequential. [30] The plaintiffs’ grounds of appeal [82] The plaintiffs raised the following grounds in their amended memorandum of appeal (“AMOA”). The AMOA reads (verbatim) as:- Amended Memorandum Of Appeal

The learned Judge erred in fact and in law when he failed to consider that the 1st Respondent had an admitted debt in a letter dated 12.11.1996 (“said Letter”) of RM10,134,000.00 (“said Debt”) to the Appellants. The 2nd Respondent had guaranteed the payment of the said Debt by a guarantee dated 12.11.1996 (“said Guarantee”). The said Debt was for monies owing to the Appellants as former directors prior to the sale of share agreement dated 12.11.1996 (“said Agreement”) between the Appellants and Liu Ho Tien. The said Agreement was for the purchase of 35% shares of 8,750,000 in the 1st Respondent company (then known as Veramax Sdn Bhd) (“said Company”). By reason thereof, the learned Judge misdirected himself on the 1st Respondent’s pre-existing liability and prior duty in the said Agreement to complete the timber sales in the said Letter. Hence, the said Letter cannot be read in isolation.

The learned Judge erred in fact and law when he misdirected himself to dismiss as inconsequential the pleaded admission of the 1st Respondent and the said Guarantee by the 2nd Respondent on the said Debt as follows: “[148] As the Plaintiff’s claim could not have been sustained for the reasons I have mentioned above, the issue on whether the outstanding debts due from 1st Defendant is in the sum of RM6,223,241 or on a reduced sum of RM5,431,454.87 can be considered to be inconsequential.” In particular, the learned Judge failed to consider that the pleaded admission by the 1st Respondent after the expiry of the 10 months period on 11.09.1997 was fatal to and inconsistent with his Lordship’s finding that the issue of the said Debt is inconsequential. [31]

The learned Judge erred in fact and law when he directed himself to be bound by the confines of the said Letter as follows: “[155] This is the position that I am holding tight and it remains so although there is nothing in the terms of the agreement to say that the said liability towards the outstanding debt shall be extinguished if there are insufficient orders made within the said 10 months’ period.” In particular, the learned Judge simply disregarded the live issue of whether the said Debt of the 1st Respondent can be extinguished even though he was aware of this live issue.

The learned Judge erred in fact and in law when he failed to consider the effect of the said Agreement on the issue of whether Clause 2 of the said Letter requires the 1st Respondent to first offer for sale and then for the Appellants to purchase the timber products. In particular, his Lordship’s finding that “[126] I am more inclined to agree with the learned counsel for the Defendants’ interpretation that orders have to be made first by the Plaintiffs before the 1st Defendant can supply the timber products …” is inconsistent with the contra proferentum rule and the factual matrix of the pre-existing liability of the 1st Respondent. By reason thereof, the learned Judge had misapplied the law to the facts and this requires appellate intervention.

The learned Judge misdirected himself in fact and law when he failed to consider that clauses 2 and 5 of the said Letter are to be read together and not in isolation in the context of the pre-existing liability of the 1st Respondent in the said Agreement. The learned Judge misdirected himself when he preferred to read clause 5 of the said Letter that “…supply any of the timber products ordered by you or… …order for such timber products being cancelled or…” requires the Appellants to first make orders for timber products. The learned Judge had ignored the 1st Respondent’s prior duty in clause 2 to “…we shall sell and you shall purchase timber products…” and which prior duty to sell precedes the Appellants’ duty to purchase. [32] In particular, the learned Judge failed to consider the lacunae in Clauses 2 and 5 of the said Letter as regards failure or refusal by the 1st Respondent to sell the timber products. By reason thereof, the learned Judge misdirected himself that the reciprocal duty of the parties and the natural construction of clauses 2 and 5 of the said Letter requires the 1st Respondent to first make the offer to sell timber products and not for the Appellants to first make the order to purchase.

The learned Judge failed to consider that the 1st Respondent had unjustly enriched themselves by having already obtained the control and ownership of shares in the 1st Respondent under the said Agreement but ignoring the admitted pre-existing liability of the 1st Respondent to the Appellants in the said Letter. In particular, his Lordship simply disregarded the undisputed fact that the 1st Respondent had obtained control of the said Company and obtained the benefit of the 1st Respondent’s factory producing the timber products as follows:- “[133] I agree with the learned counsel for the Defendants that the Plaintiffs could not have succeeded in their claim based on the equitable principle of unjust enrichment as the nature of the claim in the present suit is different”. By reason thereof, the learned Judge misdirected himself in law on the Appellants’ cause of action for unjust enrichment.

The learned Judge erred in fact and in law when he failed to consider that the totality of the 1st Respondent’s evidence at the trial did not support their pleaded defence. In this respect, the 1st Respondent’s witnesses were giving hearsay evidence and did not have first hand knowledge of the events stated in the documents. The authors of the documents did not attend trial to give evidence. By reason thereof, the learned Judge misdirected himself in law when he failed to consider that there was no evidence to support the Defence of the 1st Respondent.

The learned Judge erred in fact and in law when he held that “[62] Likewise, although the Plaintiffs’ statement of claim was amended to include “frustration” to enable the Plaintiffs to adduce evidence regarding the alleged 3 further orders which were rejected by the 1st Defendant due to self-induced frustration, they are still matters within the purview of the 1997 suit …” [33] The learned Judge had erred in excluding from the Suit No. TWU-22-18/5-2013 (“said Suit 2013”) the evidence adduced in the 1997 suit regarding three orders for timber products made by the Appellants but rejected because that the 1st Respondent had taken active steps to self-frustrate the performance of the said Letter for timber shipments by quoting very high prices inconsistent with the prevailing market rate, declining to quote prices because of no stock due to prior sales to other parties or that unfinished products are not allowed for export. By reason thereof, the learned Judge failed to consider that the evidence in the 1997 suit shows that the 1st Respondent ignored their prior duty to sell and this evidence has to be read together with the evidence in the said Suit 2013. 5(a). The learned Judge misdirected himself that the pre-existing liability of the 1st Respondent requires that the 1st Respondent first sells timber products at the same price as to their other customers. Further, that first preference for sale of timber products be given to the Appellants and that there is no restriction on export of unfinished products to the Appellants. By reason thereof, the learned Judge failed to consider that the 1st Respondent cannot just wait for the 10 months period to expire and must take active steps to fulfil their prior obligation to sell timber products to the Appellants. 5(b). The learned Judge erred in fact and law when he failed to consider that the 1st Respondent chose to shut down the timber sawmill in July 1998 to deliberately disable themselves from performing their prior obligation in the said Letter. By reason thereof, the learned Judge failed to direct himself to consider that the 1st Respondent had caused self-induced frustration to the performance of the said Letter.

The learned Judge erred in fact and law when he failed to consider that the 2nd Respondent had breached the terms of the said Guarantee to pay the balance of the said Debt together with accrued interest to the Appellants. [34] The Cross-Appeal [83] The defendants raised the following grounds in the Notice of Cross-Appeal:- a) The Learned Judicial Commissioner erred in law and in fact in making a finding against the 1st and 2nd Respondent on the issue of res judicata raised by the 1st and 2nd Respondents on the reasons that the issue had been adjudicated or decided by the Court of Appeal and the Federal Court in favour of the 1st and 2nd Appellants when allowing their appeal against the decision of the High Court in allowing the action to be struck out under Order 18 rule 19 of the Rules of Court 2012 grounded on, amongst others, the issue of res judicata when the decisions of the said Court of Appeal and the Federal Court are clearly irrelevant and should not have been taken into consideration when adjudicating the issue in a full trial or trial proper; b) The Learned Judicial Commissioner also erred in law and in fact in making a finding that the action filed by the 1st and 2nd Appellants against the 1st and 2nd Respondents is not caught by limitation under the provisions of the Sabah Limitation Ordinance as raised by the 1st and 2nd Respondents on the ground that the parties were in active litigation when such ground clearly could not in law suspend, adjourn or postpone the operation of the limitation period and does not fall within any one of the saving proviso or exceptions provided under Sections 4 to 24 of the Sabah Limitation Ordinance; c) The Learned Judicial Commissioner in considering the available evidence and submissions made by the parties in respect of the issues of res judicata and limitation raised by the 1st and 2nd Respondents during the trial ought to have ruled in favour of the 1st and 2nd Respondents on those issues; and d) … [35] Our Findings [84] This is indeed a unique case where the Judge in the 2013 suit had to consider and evaluate, not only the evidence that was presented in the trial before him but he also had to take a peek at the evidence that was adduced in the 1997 suit. There were a multitude of issues that the Judge had to deal with. Unfortunately, parties were not able to come up with common issues to be tried. But, in any event, the Judge did the best he could and marshalled the issues and addressed them accordingly. [85] The plaintiffs say that the Judge had got the sequencing of issues all wrong and that this had resulted in the Judge making erroneous conclusions. For our part, we see no substance in the complaint about a purported wrong sequencing of issues. Indeed, other than for chronological orderliness and structure of the judgment, we are not even certain why and whether sequencing of issues even matters. [86] In our view, the multitude of issues which were raised had obfuscated matters. Ultimately, we felt that the appeal pivots on some crucial issues and the resolution of these issues would dispose of the appeal. Hence, we do not propose to deal with the multifarious issues that were canvassed during the trial and in the hearing of the appeal before us. [36] [87] The starting point is that plaintiffs’ claim per the 2013 suit is obviously for the balance of the outstanding sum, i.e. the sum of RM16,859,186.65 (RM6,223,241.00 + RM10,635,945.65) (as at 10 May 2013). There is no dispute as to the computation. However, there is a fundamental dispute as to whether the 1st defendant’s deductions (as explained below) ought to be taken into account. The plaintiffs contend that the deductions ought not to come into the mix of the computation. The defendants say otherwise. [88] At any rate, there is no dispute that at all material times the 1st defendant owed the plaintiffs the outstanding sum, i.e. RM10,134,000.00. This is in fact admitted via the 1st defendant’s letter of acknowledgement. The outstanding sum was to be settled as per the terms as stated therein and it was to be done within 10 months i.e. by 11 September 1997. [89] The arrangement for payment in-kind gave the 1st defendant a “window of opportunity” and a soft-landing to pay in the form of timber products. But the problem was in the details such as specification of timber and pricing. It seems quite apparent that the intention behind the letter of acknowledgement was to facilitate payment to the plaintiffs without placing too much of a burden on the 1st defendant’s cash flow. [90] Hence, instead of paying in the form of hard cash, all that the 1st defendant had to do was to utilize their available stock of timber and meet the plaintiffs’ requirements as and when they arose during the set-off period. [37] [91] Essentially parties had agreed that there was to be payment in-kind by way of contra in the form of 4 shipments of timber products which were to be sold by 1st defendant (and purchased by plaintiffs) for an amount equivalent to the outstanding sum. In this regard, it is not unfair to say that the 1st defendant did not keep up with their side of the bargain per the letter of acknowledgement. [92] The plaintiffs did not clinch any sale transactions with the 1st defendant other than the sale transaction dated 6 September 1997

(b) the enrichment must be gained at the claimant’s expense, (c) that the retention of the benefit was unjust, and (d) there must be no defence available to extinguish or reduce the party’s liability to make restitution.” [181] As opined by the Judge, the claim that was presented in the 2013 suit is for payment of the balance of the outstanding sum. The plaintiffs’ claim does not in our view, satisfy the elements for a cause of action for unjust enrichment. In any event, even if we were to entertain the (highly doubtful) possibility that the plaintiffs could validly mount a claim for unjust enrichment, the plaintiff would still be thwarted by reason of the expiry of the 6 years limitation period. [182] In our view, given that the High Court in the 1997 suit had dismissed the plaintiffs’ claim as premature and since the contra arrangement had failed, there was a debt which was still due and owing and which could be pursued in the form of a fresh suit. As for the computation of time, we are of the view that in the circumstances of this case, taking it at its highest, the latest date is 10 November 1997 (which is the 1st defendant’s letter in reply to the plaintiffs’ solicitor) and on this basis the claim was time-barred by 9 November 2003. However, in this case, the 2013 suit was filed on 10 May 2013 which is almost 10 years after the action was time-barred. [62] [183] We had earlier opined that the limitation period was not suspended pursuant to s.14. And further, s.3 of the Limitation Ordinance 1952 (Sabah Cap.72) provides that “Subject to sections 4 to 24, every suit instituted after the period of limitation prescribed therefor by the schedule shall be dismissed: Provided that limitation has been set up as a defence”. [184] As such, it is clear that the defendants’ plea of limitation ought to have succeeded as the plaintiffs’ present suit was filed about 10 years after the action was already time-barred. In the circumstances and for the reasons that we have articulated, we are inclined to agree with the respondents’ cross-appeal vis-à-vis the limitation point. [185] The next issue which we will deal with has to do with the fact that the defendants had previously applied to strike out on the grounds of, inter alia, limitation and res judicata which was allowed by the High Court and the 2013 suit was accordingly struck out. On appeal by the plaintiffs, the Court of Appeal allowed the plaintiffs’ appeal and reinstated the 2013 suit. The defendants’ application for leave to appeal was subsequently dismissed by the Federal Court. The Judge took the view that he was bound by stare decisis and that he was bound by the decision of the Federal Court which had dismissed the defendants’ application of leave and thereby upholding the dismissal of the application to strike out. [63] [186] The Judge declined to consider the issue of res judicata which had been raised in the striking out application and which had not been abandoned. In fact the plea of res judicata was clearly extant, alive and quite central to the defendants’ position in opposing the 2013 suit. [187] The Judge seemed to think that since the striking out application had failed previously, therefore the issue(s) is/are barred by res judicata. In our view, the correct principle is that interlocutory decisions generally do not give rise to res judicata. (see: the decision of Justice Azizah Nawawi in Code Brilliant Sdn Bhd (Dalam Penerimaan Dan Likuidasi) & Ors v Heng Ji Keng & Ors [2012] 1 LNS 873; [2013] 9 MLJ 212 HC). [188] We also have in mind the important decision of Justice Edgar Joseph Jr in Cheng Hang Guan & Ors v Perumahan Farlim (PG) Sdn Bhd & Ors [1988] 1 CLJ 435 (Rep); [1988] 2 CLJ 35; [1988] 3 MLJ 90 where the principle of res judicata was discussed. In that case, the court held that issues raised at the interlocutory (injunction) stage are not res judicata and may be subsequently taken up at the substantive stage. At page 93 Justice Edgar stated:- "Firstly, it is trite law that for a judicial decision to operate as res judicata it must be final in the sense that it leaves nothing to be judicially determined or ascertained thereafter in order to render it effective and capable of execution, and is absolute, complete, and certain, and when it is not lawfully subject to subsequent rescission, review or modification by the tribunal which pronounced it. The true test of res judicata in its wider sense or issue estoppel may be stated thus: has there been a final determination of the issue? That is the crucial factor. [64] [189] Of course, exceptionally in certain circumstances, a decision in an interlocutory matter could give rise to res judicata. In this regard, we have not lost sight of the seminal decision of Gopal Sri Ram JCA (as he then was) in Hartecon JV Sdn Bhd & Anor v Hartela Contractors Ltd [1996] 2 MLJ 57; [1997] 2 CLJ 104; [1996] 2 AMR 1457 CA. [190] In Hartecon, the respondent filed proceedings to set aside the arbitrator’s award. The appellant filed an application via a Motion for certain declarations in regard to the arbitration award. The respondent raised a preliminary objection (“the PO”). The PO was that the appellant ought to have filed a substantive Originating Summons or Writ to obtain the declarations and the Motion is not the proper route. The judge dismissed the PO. When the Motion came up for hearing (on merits), the respondent resurrected the PO and invited the Judge to re-visit the issue. The judge did so and this time decided to allow the PO. The appellant appealed to the Court of Appeal and contended that res judicata applied in regard to the judge’s first decision to dismiss the PO. [191] Speaking for the Court of Appeal, Justice Gopal Sri Ram said that once a judge makes a ruling, substantive or procedural, final, or interlocutory, it must be adhered to and may not be reopened. In amplification, it was enunciated that although the first decision was made on an interlocutory matter which was purely procedural in nature, it was nevertheless binding on the court and on all parties to the lis until its reversal on appeal. The decision of the judge overruling the respondent's preliminary objection rendered the point taken res judicata. [65] [192] We accept the correctness of the decision in Hartecon. But we feel compelled to state that that the Hartecon jurisprudence does not apply to a decision which is devoid of any finality, such as the dismissal of the striking out application. This is because the dismissal of a striking out application does not mean that the issue which is the subject matter of the application has been determined with “finality”. In fact nothing has been decided. Indeed, what can be gleaned or inferred from the dismissal of the striking out application is that it is not a clear-cut case for striking out and the court is not able to determine the issue summarily on affidavits and that the matter (for whatever reason) may require viva-voce evidence or the issue is one which warrants further argument or mature consideration at a trial. [193] Indeed, the position in this regard was stated with clarity by the Federal Court in Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1; [2016] 1 LNS 39; [2016] MLJU 12; [2016] 2 MLRA 263 FC (per Ramly Ali FCJ) where it was posited [27], “…A striking out order should not be made summarily by the court if there is issue of law that requires lengthy argument and mature consideration. It should also not be made if there is issue of fact that is capable of resolution only after taking viva voce evidence during trial…” [194] Finally, it is necessary to refer to the Federal Court’s decision in Syarikat Kemajuan Timbermine Sdn Bhd v Kerajaan Negeri Kelantan Darul Naim [2015] 2 CLJ 1037; [2015] 3 MLJ 609; [2015] 2 AMR 124 FC in relation to the issue of res judicata. [66] [195] In that case, the defendant raised the plea of limitation in the defence. They then applied to strike out the suit. The application went before the registrar, who dismissed the application to strike out. The defendant did not appeal against the registrar’s decision. At the trial the plaintiff asserted that the defendant was “precluded” from relying on limitation. The issue before the Federal Court was whether the issue of limitation was res judicata because there was no appeal from the decision of the registrar in dismissing the defendant's application to strike out the claim on the ground that it was time-barred. [196] The Federal Court referred to Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189; [1995] 3 CLJ 783; [1995] 1 MLRA 611; [1995] 3 AMR 2559 SC and restated that as a matter of general principle when a matter has been adjudged by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth. [197] The Federal Court then quoted from the decision of the Court of Appeal which held that, “… the fact that the application was refused does not necessarily imply that the application was refused because the appellant failed to prove the defence of limitation. It is conceivable that the application was refused because the learned registrar was of the opinion that there had to be a trial of the action before the court could determine whether the respondent's claim was defeated by limitation…”. [67] [198] Ultimately, the Federal Court agreed with the Court of Appeal and held that the defendant was not precluded from relying on the defence of limitation. [199] It is therefore clear that the defendants’ application to strike the 2013 suit (which was predicated on inter alia, res judicata) which was eventually dismissed, did not preclude the issue of res judicata from being ventilated at the trial. The Judge said that the decision of the Court of Appeal which allowed the plaintiffs’ appeal and which reinstated the suit and the decision of the Federal Court disallowing the 1st defendant’s application for leave to appeal were “binding” on him and that based on “stare decisis” he could not go against the ruling of the Court of Appeal and Federal Court. On that premise he felt bound to dismiss the plea of res judicata as being inapplicable. [200] Thus, for the purposes of the defendants’ plea of res judicata, we undertook a careful examination of the grounds of judgment of the 1997 suit and it was clear that all issues in dispute in the 1997 suit were considered by the trial judge in that suit. The High Court had considered, inter alia, whether the defendants were liable under the letter of acknowledgement and the letter of undertaking respectively. [68] [201] This may be gleaned from the judgment of the trial judge which reads, “I have also considered the other points raised by the respective counsel for the parties but I am of the view that my findings on them will not change the conclusion that I have arrived at herein. Accordingly, as it is my finding that the claim of the Plaintiffs is premature in the light of the contents of Exh P2 (which is the said letter of acknowledgement) the inevitable conclusion is that this claim against both the Defendants must be dismissed with costs to be taxed unless agreed”. [202] We noted that the cause of actions in both suit are exactly the same, which was based on the letter of acknowledgement against the 1st defendant and the letter of undertaking as against the 2nd defendant. The subject matter in the 1997 and the 2013 suit are exactly the same i.e. the alleged outstanding sum of RM6,223,241.00 due under the said letter of acknowledgement except for the accruing interest claimed in the 2013 suit. [203] It is quite obvious that the facts and evidence adduced by the plaintiffs in the 2013 suit are substantially similar to what was produced or adduced in the 1997 suit. The issues raised by the plaintiffs in the 2013 suit are also substantially the same with those that have been raised in the 1997 suit. [69] [204] No doubt, “new issues” were raised by the plaintiffs in the 2013 suit, namely, that (i) they are relieved of their obligations under the letter of acknowledgement upon the expiry of the set-off period on account of self-induced frustration whereupon the defendants shall immediately become liable to value of the timber products; (ii) the arrangement for payment of the outstanding debt based on the letter of acknowledgement is void or voidable; and (iii) the plaintiffs should be compensated based on the principle of unjust enrichment. To the extent that any issues are to be considered as “new” issues, then these are issues which could have been, but were not raised in the 1997 suit. As such, such the so-called “new” issues are also caught by the doctrine of res judicata in its wider sense. (see: Superintendent of Pudu Prison & Ors v Sim Kie Chon [1986] 1 CLJ 548; [1986] 1 MLJ 494; [1986] 1 MLRA 131 SC.) [205] In the result, we do not agree with the Judge that res judicata does not apply. [206] In our view, res judicata applies in respect of the multitude of issues which had been raised in the 2013 suit which are identical or bear a striking similarity to the issues which were raised in the 1997 suit. And, in so far as the so-called new issues are concerned, those are barred by res judicata in the wider sense. [70] [207] As such, we take the view that the plaintiffs’ claim in the 2013 suit (save for the fresh order which has been held to be a sham) are based on claims or issues which had either been raised and/or which could have been, but were not raised in the 1997 suit. In the circumstances, the filing of the 2013 suit is a clear manifestation of litigation by instalment and is an abuse of process. [208] As such, for the reasons as discussed above, we are impelled to the view that there is merit in the respondents’ cross-appeal vis-à- vis the issue of limitation and res judicata. The cross-appeal is hereby allowed and consequently the plaintiffs’ appeal is dismissed with costs of RM20,000.00 subject to allocator. In the result, the plaintiffs’ claim in the High Court stands dismissed albeit on the grounds as stated above. Order accordingly. S. Nantha Balan Judge Court of Appeal Malaysia Dated: 23 October 2020 [71] Legal Representation For the appellants Cheng Ho Wah @ Roland Michelle Yee Fui Shin Henry Lim Ken Fui Messrs Roland Cheng & Co, Advocates and Solicitors Nos. 10 & 11, 8th Floor, Menara Jubilee, No. 53, Jalan Gaya, 88000 Kota Kinabalu, Sabah, Malaysia. Tel: 088- 235480 (016-8336572) Email: rclitigation@yahoo.com Ref: RC/L/L.W.C.(A)/1288/18mc For the Respondents Datuk Alex Decena Leslie Chaw Cheng Yung Messrs Poh & Victor Chong, No.1, 1st Floor, Jalan Merdeka, Kg Air, 88000 Kota Kinabalu, Sabah, Malaysia. Tel: 088 - 217486 (Mobile 011 25307779) Email: pohvictorchong@yahoo.com Email: vtlchong@gmail.com Ref: PP/1574-17/(D71) LET/c Statutes: Section 3 Limitation Ordinance 1952 (Sabah Cap 72) Section 14 Limitation Ordinance 1952 (Sabah Cap 72) Item 95 Schedule - Limitation Ordinance 1952 (Sabah Cap 72) Item 97 Schedule - Limitation Ordinance 1952 (Sabah Cap 72) [72] Cases: Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2018] MLJU 1948; [2019] 9 MLJ 227; [2018] 1 LNS 2022; [2018] AMEJ 1768 HC Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2000] MLJU 533; [2001] 5 CLJ 519; [2001] 1 AMR 988 HC Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2008] 6 MLJ 89; [2008] 5 CLJ 29; [2009] 3 AMR 205 CA Pacific Forest Industries Sdn Bhd & Anor v Lin Wen-Chih & Anor [2009] 6 MLJ 293; [2009] 6 CLJ 430; [2009] 1 LNS 825 FC The Pacific Bank Bhd v Chan Peng Leong [1998] 2 MLJ 613; [1998] 2 CLJ 440; [1998] 1 MLRA 81; [1998] 2 AMR 1895 CA Alfred Templeton & Ors v Low Yat Holdings Sdn Bhd & Anor [1989] 2 MLJ 202; [1989] 1 CLJ Rep 219; [1989] 1 CLJ 693 HC Capital One Ltd v EC Corporate Management Inc & Ors [2013] 1 LNS 817; [2013] 6 AMR 639 HC Mohd Sari Bin Datuk Okk Hj Nuar And Others v Asia General Equipment And Supplies Sdn Bhd And Others [2010] 5 MLJ 766; [2010] MLJU 287 CA Ong Ah Bee v Hii Chung Siong, Robin [1364] MD 2; [1993] 1 CLJ 504; [1992] 3 MLRH 428 HC Cartledge (Widow and Administratrix of The Estate of Fred Hector Cartledge (deceased)) and others v E Jopling & Sons, Ltd [1963] 1 All ER 341 HL Dato' Ahmad Johari Tun Abdul Razak v A Santamil Selvi Alau Malay & Ors And Other Appeals [2020] 7 CLJ 588; [2020] MLJU 562; [2020] AMEJ 0409 CA Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 AMR 601; [2015] AMEJ 319; [2015] 2 MLJ 441; [2015] 2 CLJ 453 FC Code Brilliant Sdn Bhd (Dalam Penerimaan Dan Likuidasi) & Ors v Heng Ji Keng & Ors [2012] 1 LNS 873; [2013] 9 MLJ 212; [2012] MLRHU 1690 HC [73] Cheng Hang Guan & Ors v Perumahan Farlim (PG) Sdn Bhd & Ors [1988] 1 CLJ 435 (Rep); [1988] 2 CLJ 35; [1988] 3 MLJ 90 HC Hartecon JV Sdn Bhd & Anor v Hartela Contractors Ltd [1996] 2 MLJ 57; [1997] 2 CLJ 104; [1996] 2 AMR 1457 CA Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1; [2016] 1 LNS 39; [2016] MLJU 12; [2016] 2 MLRA 263 FC Syarikat Kemajuan Timbermine Sdn Bhd v Kerajaan Negeri Kelantan Darul Naim [2015] 2 CLJ 1037; [2015] 3 MLJ 609; [2015] 2 AMR 124 FC Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189; [1995] 3 CLJ 783; [1995] 1 MLRA 611; [1995] 3 AMR 2559 SC Superintendent of Pudu Prison & Ors v Sim Kie Chon [1986] 1 CLJ 548; [1986] 1 MLJ 494; [1986] 1 MLRA 131 SC