Misc Berhad v 1. ) Arwin Shant A/L Murali Krishnan (WA-A72NCvC-5626-11/2024)

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VIGNESWARY A/P SIMMACHALAM S. VIJAYALACHEMY A/P R. SUBRAMANIAM …DEFENDANTS

A. Background and Procedural History This is an application by the Defendants under Order 18 rule 19(1)(b) and (d) of the Rules of Court 2012 to strike out the Plaintiff’s Statement of Claim on grounds that it is frivolous, vexatious, discloses no reasonable cause of action and constitutes an abuse of process. The primary contention is that the suit is statute-barred under section 6(1)(a) of the Limitation Act 1953.

The Plaintiff and First Defendant entered into a Cadet Training Agreement whereby the Plaintiff funded the First Defendant’s maritime training in return for a binding service commitment. The Second and Third Defendants executed the same as guarantors. Clause 7.3 provides that in the event of breach, the Defendants are liable to reimburse the training cost, such payment to be made “upon demand by the Company.”

It is common ground that the First Defendant failed to report for duty on 17 October 2017. The Plaintiff elected not to pursue repayment immediately. A 29/10/2025 11:32:16 WA-A72NCvC-5626-11/2024 Kand. 69 Letter of Demand was instead issued on 2 January 2024, invoking clause 7.3. With no payment forthcoming, the Plaintiff commenced this action in November

The Defendants thereafter filed the present striking-out application.

B. Submissions of the Parties The Defendants argue that the limitation began to run in October 2017 when the First Defendant failed to report, and therefore the claim filed in 2024 is out of time. They further contend that the Plaintiff’s affidavit in reply was filed contrary to the Court’s direction.

The Plaintiff maintains that its affidavit was filed pursuant to directions issued by this Court and that the Defendants themselves adopted parts of it in their submissions, foreclosing any procedural challenge.

On limitation, the Plaintiff submits that clause 7.3 creates a contingent liability, such that the cause of action arises only upon demand. As demand was made on 2 January 2024 and proceedings commenced within the six-year window, the claim is in time.

C. Court’s Consideration and Findings Having examined the e-filing record, the Court is satisfied that the Plaintiff’s affidavit in reply was filed pursuant to the direction given on 25 April 2025. Moreover, the Defendants’ own reliance on portions of that affidavit constitutes an adoption of its contents and a waiver of objection. Any delay, if at all, is technical and causes no prejudice. Pursuant to Order 1A and Order 92 rule 4 of the Rules of Court 2012, the Court will not permit procedural formalism to defeat substantive justice. The objection is dismissed.

The substantive issue concerns accrual of the cause of action. Section 6(1)(a) of the Limitation Act requires actions founded on contract to be filed within six years of accrual. Clause 7.3 stipulates that repayment is due only “upon demand.” That wording is not incidental; it is a contractual condition precedent. No enforceable right to sue arises until demand is made.

This interpretation accords with authority. In The Pacific Bank Bhd (sued as guarantor) v Kerajaan Negeri Sarawak [2013] MLJU 1564, the Federal Court held that where liability arises only upon demand, the cause of action accrues at the point of demand. That ratio binds this Court. The same principle was affirmed in Eng Lian Concrete Sdn Bhd v Mustapha bin Nagoor [2021] 8 MLJ

582.

Most significantly, in MISC Berhad v Anandaraj a/l S Thavaraj & Ors [2024] MLJU 3389, the High Court considered an identical MISC Cadetship Agreement and held that liability only arises, and time begins to run, when a demand is issued. The Court expressly corrected the lower court which had erroneously treated the date of breach as the accrual point.

That approach was recently reaffirmed in MISC Berhad v Mohd Kamarul Nizam bin Idris & Ors [2025] MLJU 1019, where the High Court again held that under the MISC cadetship scheme, the cause of action accrues only upon demand and not upon the initial breach.

The Plaintiff issued its demand on 2 January 2024. The writ filed in November 2024 is therefore within time. The Defendants’ submission that the limitation began in 2017 would require ignoring both the express contractual language and binding precedent, which this Court is not entitled to do.

Further, the limitation issue in this case raises questions of fact, including whether and when demand was made and received. Such issues cannot be conclusively determined at this interlocutory stage. As emphasised in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corp Bhd [1993] 3 MLJ 36 and Ng Hee Thoong & Anor v Public Bank Bhd [1995] 1 MLJ 281, striking out is reserved for plain and obvious cases, and where factual disputes arise, the matter must proceed to trial.

In the circumstances, this is plainly not a case where the claim is obviously unsustainable on the face of the pleadings. The Court reiterates that summary dismissal is a narrow and exceptional jurisdiction. Given the contractual construction issues and factual contest on demand, the Plaintiff’s claim merits full ventilation at trial.

D. Conclusion For these reasons, the Court finds that the Plaintiff’s affidavit in reply is properly filed; that liability under clause 7.3 is contingent upon demand; that the cause of action accrued on 2 January 2024; and that the action filed in November 2024 is within the six-year limitation period.

The Defendants’ application to strike out the Statement of Claim is therefore dismissed with costs of RM500 to the Plaintiff.

Before leaving the matter, the Court reiterates that the striking-out jurisdiction is not lightly invoked. Where parties have deliberately structured their contractual rights and obligations, and where legal issues are supported by authority, the demands of justice are best served by allowing those issues to be ventilated fully at trial.