Borneo Marble Limited v Datuk Yong Teck Lee (S-02(NCVC)(W)-107-01/2018)

AND DATUK YONG TECK LEE … 1ST RESPONDENT

DATIN STELLA KONG YIN KIUN … 2ND RESPONDENT [In the matter of Suit No.BKI-22NCVC-107/10-2015 (HC1) in the High Court in Sabah and Sarawak at Kota Kinabalu Between Borneo Marble Limited (Company No. 243074) … Plaintiff

And Datuk Yong Teck Lee … 1st Defendant

Datin Stella Kong Yin Kiun … 2nd Defendant And Yong Tet On @ Paul … Third Party HEARD TOGETHER WITH

BETWEEN DATUK YONG TECK LEE … 1ST APPELLANT

DATIN STELLA KONG YIN KIUN … 2ND APPELLANT AND BORNEO MARBLE LIMITED … RESPONDENT] 2 CORAM ABDUL RAHMAN SEBLI, JCA MARY LIM THIAM SUAN, JCA HASNAH DATO’ MOHAMMED HASHIM, JCA JUDGMENT OF THE COURT [1] There were two appeals before us. Borneo Marble Limited (“Borneo Marble”) was the appellant in Civil Appeal No. S-02(NCVC)(W)-107- 01/2018 whilst Datuk Yong Teck Lee (“Datuk Yong”) and Datin Stella Kong Yin Kiun (“Datin Stella”) were the respondents. In Civil Appeal No. S-02(NCVC)(W)-149-01/2018, it was the reverse. Datuk Yong and Datin Stella were the appellants whilst Borneo Marble was the respondent. [2] Borneo Marble’s appeal in Civil Appeal No. S-02(NCVC)(W)-107- 01/2018 was against that part of the judgment dismissing the rest of its claim and allowing only a sum of Hong Kong Dollar $100,000.00. Its case was that it was entitled to the whole of the sum claimed, which was an aggregate sum of HK$3,289,994.97, and not just the sum of HK$100,000.00 that the High Court allowed. [3] Datuk Yong’s and Datin Stella’s appeal on the other hand was against that part of the judgment allowing Borneo Marble’s claim in part in the sum of HK$100,000.00. Their contention was that Borneo Marble was entitled to nothing. [4] After hearing arguments by both sides, we allowed Borneo Marble’s appeal but only to the extent of HK$1,261,280.00 with interest at the rate of 5% per annum from the date of judgment to the date of full realisation. We made no order as to costs. 3 [5] As for Datuk Yong’s and Datin Stella’s appeal, we also allowed their appeal. We set aside the award of HK$100,000.00 in favour of Borneo Marble as it was conceded by learned counsel in the course of argument that Borneo Marble’s failure to call Paul Yong as a witness had left a gap in its claim against Datuk Yong and Datin Stella. [6] Consequently Borneo Marble’s claim for the cash monies, including the HK$100,000.00 that the High Court awarded was not proved. Learned counsel then focused his argument on Borneo Marble’s claim for the TT funds in the sum of HK$1,261,280.00 which, as we mentioned, we allowed. We now provide the grounds of our decision. [7] The background facts had been laid out, accurately in our view, by learned counsel for Borneo Marble and they are as follows. The 1st respondent Datuk Yong is a former Chief Minister of Sabah whilst the 2nd respondent Datin Stella is his wife. [8] In 2006, Borneo Marble entered into a 5 year agreement with a company called Orient Paramount Sdn Bhd (“OPSB”) whereby Borneo Marble was appointed the sole distributor of OPSB’s products (marble slabs and tiles). There was no dispute that OPSB was a company controlled by Datuk Yong. [9] Datuk Yong’s contention was that Borneo Marble was a company that was controlled by his elder brother, Paul Yong who at the trial was joined as a third party by Datuk Yong and Datin Stella. He did not enter appearance, nor did he file any defence to the Third Party Notice. Judgment in default was accordingly entered against him. 4 [10] In 2011, the distributorship agreement between Borneo Marble and OPSB was renewed for a further 5 years. By 2014 however, the relationship between the parties had turned sour. [11] In 2015, Borneo Marble filed a law suit against OPSB, claiming OPSB owed Borneo Marble various monies (“the corporate law suit”). The corporate law suit proceeded to trial at the conclusion of which judgment was entered in favour of Borneo Marble. Concurrent with the filing of the corporate law suit, Borneo Marble filed the present suit against Datuk Yong and Datin Stella. [12] Borneo Marble’s claim against Datuk Yong and Datin Stella in the present suit was in two parts. According to Borneo Marble, it had deposited by telegraphic transfer the following funds into Datuk Yong’s and Datin Stella’s joint account at HSBC UK (“the TT funds”) as follows: Date Amount (Hong Kong Dollar) May 26, 2006 645,000.00 May 18, 2010 72,480.00 December 29, 2010 108,180.00 July 6, 2011 62,450.00 December 30, 2011 123,000.00 February 8, 2012 61,860.00 August 27, 2012 75,000.00 September 14, 2012 113,310.00 _________ HK$1,261,280.00 5 [13] This was the first part of Borneo Marble’s claim, which was wholly dismissed by the learned trial judge. The second part was that it had handed over the following funds in cash to Datuk Yong in Hong Kong or China (“the cash monies”): Date Amount August 13, 2006 30,000.00 August 15, 2006 178,650.00 October 4, 2006 112,089.17 December 28, 2006 123,590.00 April 19, 2007 256,844.00 July 9, 2007 118,434.60 December 27, 2007 262,462.20 May 5, 2008 129,106.00 January 5, 2009 100,000.00 May 13, 2009 80,000.00 September 5, 2009 150,000.00 January 23, 2010 80,000.00 January 12, 2011 100,000.00 July 25, 2011 30,000.00 January 6, 2012 40,000.00 November 17, 2012 100,000.00 September 21, 2013 68,139.00 December 2, 2013 20,000.00 December 13, 2013 49,000.00 _________ HK$2,028,714.97 6 [14] It was Borneo Marble’s contention that the TT funds and cash monies were deposited or handed over, as the case may be, to Datuk Yong upon an agreement between the parties that the funds/monies would be repaid when demanded by Borneo Marble. [15] It was pointed out that Datuk Yong and Datin Stella had, in their original defence, flatly denied receiving any of the TT funds or the cash monies. Borneo Marble admitted that it did not have any document signed by Datuk Yong to prove receipt of the cash monies. However, it had copies of bank documents with regard to the TT funds and they were produced as evidence at the trial. [16] Subsequently, Datuk Yong and Datin Stella amended their defence to admit receipt of the TT funds but pleaded that the funds were ‘personal and voluntary gifts’ from Paul Yong, whom they claimed was the person in control of Borneo Marble. They denied that the TT funds were meant to be repaid upon demand by Borneo Marble. They also pleaded limitation, in the following terms: “4. The Defendants state that the alleged monies purportedly lent or deposited and/ or the cause of action pleaded under paragraphs 4 and 5 of the Amended Statement of Claim is time-barred under the Sabah Limitation Ordinance (Cap. 72) and did not arise within three

years before the commencement of this action. The Defendants will rely on the relevant provisions of the Sabah Limitation Ordinance (Cap. 72) at the trial or other interlocutory application in this action.” [17] Datuk Yong’s and Datin Stella’s response to Borneo Marble’s comment on their decision to amend their defence was to return fire with fire. It was pointed out that Borneo Marble too had amended its pleadings in that it had originally pleaded that the advances were monies lent to the 7 defendants, but upon application by Datuk Yong and Datin Stella to strike out certain paragraphs of its claim which were caught by limitation, it applied to amend the term “lent to” to the term “deposited with” both in paragraphs 4 and 6 of its statement of claim. [18] Datuk Yong and Datin Stella lamented that despite their objection, the amendment was allowed by the learned judge. It was submitted that if the monies were purportedly “lent” to them, as Borneo Marble originally pleaded in paragraphs 4 and 6 of its statement of claim, then the purported monies remitted by TT would be caught by Item 39 of the Schedule to the Limitation Ordinance (Sabah Cap 72) (“the SLO”), which prescribes a limitation period of three years for Borneo Marble to file its claim, to be measured from the time the monies were lent. [19] It was submitted that the amendment by Borneo Marble to paragraphs 4 and 6 of its statement of claim was designed to escape the provisions of the SLO, more particularly Item 39 of the Schedule. [20] The thrust of the argument was that the amendment was to defeat Datuk Yong and Datin Stella’s defence that Borneo Marble’s claim was statute barred. This according to Datuk Yong and Datin Stella was highly prejudicial to their case. [21] We shall deal with the issue right away. The parties’ attack on each other’s amendments to their respective pleadings was disingenious to say the least. The amendments had been allowed by the learned judge and both sides did not appeal against the decisions, which means they accepted the decisions. 8 [22] To now raise the issue would be akin to flogging a dead horse. Once the amendments were allowed, the original pleaded facts must be disregarded by the court, as if they were never pleaded. To hold otherwise would be to defeat the whole purpose of the amendments. [23] It was therefore untenable for Datuk Yong and Datin Stella to advance the following argument, which they did: “[3] In the original statement of claim, the plaintiff pleaded that it lent various amounts of monies to the defendants which were transmitted via telegraphic transfer. However, before the trial commenced, the plaintiff successfully amended “loan” to “deposit” in the statement of claim. The issue of whether the monies of a “loan” or a “deposit” is crucial in this case as the claim would be barred by Sabah limitation law if the monies were a “loan”.” [24] The same goes to Borneo Marble’s reference to Datuk Yong’s and Datin Stella’s originally pleaded defence that they never received any of the TT funds and cash monies. [25] The case must be decided strictly on the amended pleadings and not on pleaded facts before the amendments were allowed. Indeed, as can be seen from the Agreed Issues to be tried, they were based on the amended pleadings and not on the original pleadings. The Agreed Issues were as follows: “1. Whether the monies remitted by TTs were monies from the Plaintiff to the Defendants upon the agreement between the Plaintiff and the Defendants that the monies would be repaid when demanded by the Plaintiff, as the Plaintiff contends, or whether these monies were monies from Paul Yong to the 9 Defendants as a “personal and voluntary gift”, as the Defendants contend.

Whether further sums in cash were handed over to the 1st Defendant upon the agreement between the Plaintiff and the 1st defendant that the monies would be repaid when demanded by the Plaintiff, as contended by the Plaintiff but as denied by the 1st Defendant.

Whether in any event, the Plaintiff’s claims are time-barred, in whole or in part.” [26] At the conclusion of the trial, the learned trial judge found in favour of Borneo Marble in respect of Issue No.1 (the TT funds). We reproduce below the learned judge’s finding and reasoning (page 18 of the Supplementary Record of Appeal): “[26] For all the above reasons, it is my finding that the monies in question were not a personal and voluntary gift from Paul Yong to his brother, the 1st Defendant. It is also my finding that monies were transmitted to the account of the defendants upon an implied agreement that they must be repaid when demanded by the plaintiff. My reason is that the monies were advances transmitted by the plaintiff in order to maintain a business relationship between the companies owned by the 1st Defendant. As the monies were not an outright gift but were advances that were requested by the 1st Defendant, it is implicit that they must be refunded upon demand.” (emphasis added) [27] It was a clear finding by the learned judge that there in fact existed an agreement between Borneo Marble and Datuk Yong that the monies were to be repaid upon demand by Borneo Marble and that the purpose 10 of the advances was to maintain the business relationship between the companies owned by Datuk Yong. [28] This finding of fact undermined the whole substratum of Datuk Yong’s and Datin Stella’s pleaded defence (as amended) that the TT funds amounting to HK$1,261,280.00 was an outright personal gift by Paul Yong to Datuk Yong. Datuk Yong and Datin Stella could have appealed against the finding but they did not. [29] Having decided not to appeal against the finding, they cannot now be heard to say that the finding was wrong. Thus, the proved fact was that the TT funds were to be repaid by Datuk Yong upon demand by Borneo Marble as agreed by the parties. [30] In respect of Issue No.2 (the cash monies), the learned judge held that apart from the HK$100,000.00 which was allowed, Borneo Marble failed to prove the rest of the cash handovers on the balance of probabilities. [31] As for Issue No.3 (limitation), the learned judge’s view was that Borneo Marble’s claim for the TT funds in the sum of HK$1,261,280.00 was statute-barred, for the following reasons: “[41] Item 42 refers to money deposited under the agreement that it shall be payable on demand. P.W. 1 never said in his evidence that his company, i.e. the plaintiff remitted monies to the HCBC UK account of the defendants as deposits under an agreement that it shall be repayable upon demand. In the remittance form for one transaction, i.e. the sum of HKD645,000 that transferred to the said account on 26th May 2006, the purpose of the remittance is stated as “work done”… During cross-examination, P.W. 1 said that it is a “loan”… 11 P.W. 1 told the court that there was an agreement that the defendants would repay the monies upon demand. But he gave no details of the agreement save to say that the monies were advanced upon the request of the 1st defendant in order to maintain the good business relationship between the plaintiff and the companies owned by the 1st defendant. He also gave no reason why the plaintiff company that is based in Hong Kong would want to deposit monies with individuals without any written agreement. None of the remittance slips indicate that the payments were deposits. The plaintiff did not exhibit any audited financial statement that shows that the monies were assets of the company in the form of money deposits either. It is also crucial to note that the “advances” were made at the instance of the 1st defendant and not at the instance of the payer, i.e. the plaintiff. This is one of the distinguishing characteristics between a loan and a deposit (see The Limitation Act 1963 by B.B. Mitra (22nd Edition). For all the above reasons, on a balance of probabilities, I find that the remittances were advances or loans given to the defendants at the request of the 1st defendant in order to maintain a business relationship and therefore did not constitute a “deposit under agreement”.” [32] This finding appears, on the face of it, to be in conflict with His Lordship’s earlier finding in paragraph 26 of his grounds of judgment that the monies were to be repaid upon demand by Borneo Marble. To recapitulate, this is what the learned judge had said: “It is also my finding that monies were transmitted to the account of the defendants upon an implied agreement that they must be repaid when demanded by the plaintiff.” [33] Borneo Marble’s main ground of appeal before us was that the learned trial judge erred in law in holding that its claim for the TT funds in the sum of HK$1,261,280.00 was statute-barred. [34] What the court had to consider in relation to the issue of limitation was whether the transactions relating to the TT funds fell under Item 41 or under Item 42 of the SLO. We reproduce below Items 41 and 42 of the SLO: 12 Description of Suit Period of Time from which Limitation Period begins to

For money lent Three years When the loan is made under an agreement that it shall be payable on demand

For money deposited Three years When the demand under an Agreement is made that it shall be payable on demand [35] The operative words in Item 41 are “money lent” whereas the operative words in Item 42 are “money deposited”. Thus, for money lent under Item 41, the three year limitation period begins to run from the time the loan is made whereas under Item 42 the three year limitation period for the money deposited only begins to run when the demand for payment is actually made. [36] If the transfers of the TT funds fall under Item 41, Borneo Marble’s claim would be statute-barred as the limitation period would have begun to run from the date the transfers were made, but if the transfers fall under Item 42, i.e. that it was money deposited under an agreement that it shall be payable on demand, Borneo Marble’s claim would not be statute-barred as the limitation period would only begin to run when Borneo Marble made the actual demand for payment. [37] In this regard, it was not disputed that Borneo Marble made the demand in 2014 and the present suit was commenced in 2015, well within 13 the limitation period if the transfers of the TT funds fall under Item 42 of the Schedule. [38] The SLO is modelled on the Indian Limitation Act 1963, of which Articles 59 and 60 of the Schedule to the Act are in pari materia with Items 41 and 42 respectively of the Schedule to the SLO. Therefore, cases that emanate from India which deal with Articles 59 and 60 of the Indian Limitation Act 1963 are of persuasive authority in dealing with Items 41 and 42 of the Schedule to the SLO. [39] The leading Indian authority on the point is the Privy Council case of Md. Akbar Khan v Attar Singh AIR 1936 PC 171 (B) where Lord Atkin delivering the judgment of the Judicial Committee said at page 172: “The articles of the Limitation Act which are relevant are:

For money lent under an agreement that it shall be payable on demand: Three years from the time when the loan was made.

For money deposited under an agreement that it shall be payable on demand, including money of a customer in the hands of his banker so payable: Three years from the time when the demand is made. To which should be added article 120. Suit for which no period of limitation is provided elsewhere than in this schedule: Six years from the time when the right to sue accrues. It is therefore necessary to determine whether this was money lent by the plaintiff to the defendants; or whether it was deposited under an agreement that it should be payable on demand… Was this then a loan or was it a deposit payable on demand? It should be remembered that the two terms are not mutually exclusive. A deposit of money is not confined to a bailment of specific currency to be returned in specie. As in the case of a deposit with a banker it does not necessarily involve the creation of a trust, but may involve only the creation of the relation of debtor and creditor, a loan under conditions. The distinction which is perhaps the most obvious is that the deposit not for a fixed term does not seem to impose an immediate obligation on the depositee to seek out the depositor and repay him. He is to keep the money till asked for it. A demand by the depositer would therefore seem to be normal condition of the obligation of the depositee to repay.” 14 [40] Md. Akbar Khan was followed in another Privy Council case of Suleman Haji Ahmed Umer v Haji Abdulla Haji Rahimtulla AIR 1940 PC 132 (C). After quoting the last paragraph of the above passage in Md. Akbar Khan, the Privy Council went on to say at page 133: “The trial Court concluded that the respondent handed these moneys to the appellant not as a deposit but as a loan, but founded this decision principally on its inability to accept the evidence of the respondent where in conflict with that of the appellant, and nowhere applied the test laid down in the case just cited, so as to ascertain whether on the admitted facts in the case there was an obligation on the appellant to “seek out” the respondent and repay him, or whether he was to keep the moneys till the respondent asked for them.” [41] As for the distinction between a loan and a deposit, it was explained in the following terms by the court in Jagannath v Ram Dularey AIR 1956 All 63 after citing Lord Atkin’s pronouncement in Md. Akbar Khan (supra): “It appears to us that the main difference between a loan and a deposit consists in this. If the intention of the person paying the amount is that the person to whom the amount is paid should keep the amount with him and pay it to the person only when he asks for its payment and not otherwise, then it is a deposit. If on the other hand, the intention is that the amount is to be paid by the payee without the payer asking for its return then it is a loan. The crucial test is whether it was intended that the amount should remain with the payee indefinitely or not; or this may be put in other words, whether it was intended that the payee was to seek the payer for the payment of the amount paid or whether he was not to seek the payer, and the payer was to demand the amount from the payee before the amount became payable. If the amount paid is intended to be retained by the payee, so long as a demand for payment is not made, it is obvious that the amount does not become payable unless the demand is made and the period of limitation does not begin to run unless the demand is made and is refused. On the other hand in the case of a loan payable on demand, no demand is 15 necessary and the amount becomes payable forthwith and the period of limitation begins to run as soon as the advance is made. The word “demand” in the phrase “on demand” when used in connection with a loan, does not really mean that the amount becomes payable only when the payment is demanded. It merely means that the loan is not for any fixed term and is payable forthwith. On the other hand, the words “on demand” when used in connection with a “deposit really mean what they say, that is that the deposit” is to be paid when it is demanded.” [42] In another Indian case, Syndicate Bank v Channaveerappa Beleri & Ors AIR 2006 SC 1875, the Supreme Court of India explained the difference in the meaning of the term “on demand” in Article 21 with Article 22 of the Indian Limitation Act, 1963: “12. We will examine the meaning of the words ‘on demand’. As noticed above, the High Court was of the view that the words ‘on demand’ in law have a special meaning and when an agreement states that an amount is payable on demand, it implies that it is always payable, that is payable forthwith and a demand is not a condition precedent for the amount to become payable. The meaning attached to the expression ‘on demand’ as ‘always payable’ or ‘payable forthwith without demand’ is not one of universal application. The said meaning applies only in certain circumstances. The said meaning is normally applied to promissory notes or bills of exchange payable on demand. We may refer to Articles 21 and 22 in this behalf. Article 21 provides that for the money lent under an agreement that it shall be payable on demand, the period of limitation (3 years) begins to run when the loan is made. On the other hand, the very same words ‘payable on demand’ have a different meaning in Article 22 which provides that for money deposited under an agreement that it shall be payable on demand, the period of limitation (3 years) will begin to run when the demand is made. Thus, the words ‘payable on demand’ have been given different meaning when applied with reference to ‘money lent’ and ‘money deposited’. In the context of Article 21, the meaning and effect of those words is ‘always payable’ or payable from the moment when the loan is made, whereas in the context of Article 22, the meaning is ‘payable when actually a demand for payment is made’.” [43] On the issue of when were the TT funds supposed to be repaid to Borneo Marble, we have reproduced in paragraph 26 above the learned 16 judge’s finding at paragraph 26 of his grounds of judgment that there was an implied agreement that the monies must be repaid by Datuk Yong when demanded by Borneo Marble. [44] Such being the trial court’s finding of fact and having regard to the decision of the Privy Council in Md. Akbar Khan, we accepted Borneo Marble’s argument that the transfer of the TT funds falls under Item 42 of the Schedule to the SLO and not under Item 41 as held by the learned trial judge. Therefore the limitation period only began to run upon actual demand for repayment by Borneo Marble, which was in 2014. [45] With due respect to the learned judge, given the factual matrix of the case, we were unable to accede to his finding that it is Item 41 and not Item 42 of the Schedule to the SLO that governed the transfer of the TT funds to Datuk Yong and Datin Stella. [46] Whether the transfer was a ‘loan’, an ‘advance’, or a ‘deposit’ is not to be determined by how the parties described the transfer. As the Privy Council said in Md. Akbar Khan, a ‘deposit’ can also be a ‘loan’ (and vice versa), with the key distinguishing factor being when were the funds to be repaid, whether forthwith without actual demand with the transferee having to seek out the transferor, or only upon actual demand. [47] In the present case, Datuk Yong denied that the TT funds were ‘deposited’ but conceded that the funds were ‘placed’ in his HSBC UK account, which was another way of saying that they were deposited into that account. 17 [48] It was strenuously argued by learned counsel for Datuk Yong and Datin Stella that the monies were loans and therefore caught by Item 39 of the Schedule to the SLO which prescribes a limitation period of three years from the time the monies were lent. Reference was made to the following observations by the learned trial judge: “[36] In the instant case, the remittances to the UK HSBC account of the defendants were made between 26th May 2006 and 14th September 2012. The instant action was instituted on 2nd October 2015. In the premises, the claim for return of the remittances would be barred by limitation law if the said remittances constituted a loan from the plaintiff to the defendants. However, if the remittances constituted a “deposit under agreement”, under item 42 of the Sabah Limitation Ordinance (Cap. 72) the three-year limitation period would only run from the time the demand was made and thus the action for return of the monies remitted to the HSBC account of the defendants would not be statute barred.” [49] It was submitted that on the facts of the case, the monies paid were gifts and were neither loans, advance nor deposits and were not intended by the parties to be repaid. It was further submitted that in any event no evidence was laid by Borneo Marble of any communication, negotiation or discussion between Borneo Marble and Datuk Yong, nor was any term of the agreement set out or given in evidence by Borneo Marble. According to learned counsel, it remained a bare assertion devoid of any evidence either by way of testimony or other documentary evidence. [50] With due respect to learned counsel, we found no substance to the argument. At the risk of being repetitive, it needs to be reiterated that the learned trial judge had made a finding of fact that the monies were not personal and voluntary gifts from Paul Yong to Datuk Yong but were monies transmitted to Datuk Yong’s and Datin Stella’s HSBC UK account upon an implied agreement that they were to be repaid when demanded by Borneo Marble, which finding was not challenged by way of an appeal. 18 [51] In any event, it was not Datuk Yong’s and Datin Stella’s case that the finding was perverse or was plainly wrong, in the sense that no reasonable tribunal properly appraised of the facts and the law would come to the finding that the learned trial judge arrived at. In our view, on the evidence before him, the learned trial judge was perfectly entitled to come to such finding of fact. [52] It was for all the reasons aforesaid that we allowed the parties’ respective appeals to the extent that we mentioned. Signed ABDUL RAHMAN SEBLI Judge Court of Appeal Malaysia Dated: 2 October 2019 For the Appellant: Alex Siew of Messrs Alex Siew & Co. For the Respondents: Jeyan T M Marimuttu of Messrs J Marimuttu & Partners.