Oversea Chinese Banking Corporation Ltd

- vs -

Philip Wee

Judgment

Mohamed Zahir J

1. The plaintiff sued the defendant for $44,250.72 being the amount due and payable to the plaintiff on a current account. The defendant was on or about 2 October 1963 granted overdraft facilities by the plaintiff bank and the amount then granted to the defendant was up to $25,000.

2. The account became dormant since 1965 and interest at the rate of 10.8% per annum began to accumulate. The overdraft was secured by a charge executed by the defendant’s father, since deceased, of a piece of land up to the limit of $25,000 and interest.

3. On 26 September 1974 the plaintiff obtained an order for sale of the properties charged. On 15 June 1975 the plaintiff filed these proceedings against the defendant for the balance of the amount due after deducting the amount due from the estate of the defendant’s father, the guarantor. The estate of the guarantor was administered by the Official Administrator and in compliance with the order of court aforesaid the Official Administrator paid on 13 November 1975 to the plaintiff the sum of $25,000 being the principal guaranteed on the charge and on 23 February 1976 a further sum of $8,562 being the interest due. These payments were made after the issue of the writ by the plaintiff against the defendant.

4. The amount claimed by the plaintiff being the balance due to the plaintiff has been agreed by both parties and the issue before me is whether the plaintiff’s claim is statute-barred. The earlier plea of res judicata was abandoned by the defendant.

5. The plaintiff’s counsel argued that time starts running from the date of demand i.e. on 3 January 1973 when the plaintiff sent a notice to the defendant demanding the repayment of the amount due. He quoted Halsbury’s Laws of England, 3rd Ed, page 217 which referred to the case of Joachimson v Swiss Bank Corp [1921] 3 KB 110 where in that case the customer had a credit balance to the bank, it was held that a previous demand was necessary before an action could be maintained and it was held that action in that case was not statute-barred. Counsel argued that applying the principle of that case in reverse, the bank’s cause of action will only accrue after demand.

6. However, it appears that in the case of a loan by the bank it is being treated as any other loan and time starts running after such loan is granted (see Bradford Old Bank v Sutcliffe [1918] 2 KB 833 and Parr’s Banking Co Ltd v Yates [1898] 2 KB 460. On the other hand, it would appear that the amount in the credit account of a bank customer cannot be treated as a loan as the customer never intended to hand the money to the bank (see also Bian Chiang Bank Bhd v Kwong Hing Cheong [1978] 2 MLJ 193).

7. Counsel for the plaintiff also submitted the case of The Kwong Aik (Selangor) Banking Corp Ltd v Malayan Daily Express (1926) Ltd [1933] MLJ 198 where it was held that time does not run against a guarantor until demand is made by the bank. That case is distinguished from the Parr’s Banking case as there was a deed of guarantee executed where the guarantor undertakes to pay “of all moneys which may at any time be due to you from the firm on the general balance of its account with you”. In the instant case the defendant had not executed any agreement that advances are payable on demand. Counsel’s submission on this point therefore fails.

8. He, however, submitted the alternative if time runs from default then there was acknowledgment on the part of the defendant vide the defendant’s letter dated 14 January 1974. The letter is addressed to the plaintiff’s solicitors written and signed by the defendant with the heading of Originating Summons No 109/73 and the parties consisting of the plaintiff and the beneficiaries of the guarantor in which the defendant was one of them. The letter reads as follows:—

   I am one of the respondents abovenamed. I write to request for a postponement of the application to a date sometime in the middle of March 1974 so as to enable me to raise as initial payment to OCBC Ltd Kota Bharu a sum of about $25,000 from the sale of a rubber estate amounting to about 29 acres. I hope to arrange to sell the property comprised in the charge and from the proceeds thereof the official administrator will be able to pay the balance owing to OCBC Ltd. I shall be able to disclose to the court at the next date of hearing as to whether the sale of the property could be finalized.

9. I am in agreement with counsel that the defendant’s letter dated 14 January 1974 revives the time for suing by the plaintiff and starts time to run afresh. Section 26(2) of the Limitation Ordinance reads as follows:

   Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein and the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment.

10. “Acknowledgment” is not defined by the Limitation Ordinance. It merely states “acknowledges the claim”. Michael Franks on Limitation of Actions at page 218 says as follows:—

    With regard to liquidated claims the defendant must expressly or by implication admit that the claim is at that time existing, due and unpaid, but it is not necessary that the acknowledgment should actually name the sum, if the debt can be connected with the acknowledgment by positive evidence or inference.

11. Counsel for the defendant replied that the defendant wrote the letter as a beneficiary of the deceased guarantor and it concerned foreclosure proceedings against the properties of the deceased guarantor.

12. This could very well be the case. But I am of the opinion that the defendant in this context cannot have a split personality. He is in fact both a beneficiary of the estate of the deceased as well as the operator of the accounts. He even promised in his letter that he hoped to arrange to sell the properties in the charge and to pay the balance owing to the plaintiff. This is not merely an implication to pay but a clear unequivocal promise to pay. It was not his business to write the letter as at that time there was an administrator appointed, that was the Official Administrator and it relates to his account. He is clearly “the person accountable therefor ....” under s 26(2) of the Ordinance. Again, I am of the opinion that the defendant cannot claim to be acting on behalf of the estate of his father as there was an administrator already appointed.

13. All that is necessary for an acknowledgment which takes the case out of the statute is that the debtor should recognise the existence of the debt, or that the person who might rely on the statute should recognise the rights against himself (see Wright v Pepin [1954] 2 All ER 52). The acknowledgment need not even contain a promise to pay and it is immaterial that the amount of the debt is not expressed in the acknowledgment or that the correctness of the amount claimed is disputed in the acknowledgment (see Halsbury’s Laws of England, 3rd Ed, page 300).

14. The words “the person liable or accountable therefor” means generally anyone who is entitled to tender the money and whose tender the creditor is bound to accept. In this case if the defendant were to tender the money, even if he were to state that he did so in his capacity as a beneficiary of the estate of his father, the plaintiff must accept his tender because it was the defendant’s own debt. In the case of Lewin v Wilson (1886) 11 AC 639. Lord Hobhouse stated as follows at page 646:

    In this case their Lordships think it sufficient to say that payments made by a person who under the terms of the contract is entitled to make a tender, and from whom the mortgagee is bound to accept a tender, of money for the defeasance or redemption of the mortgage, are payments which by s 30 give a new starting point for the lapse of time.

15. The principle of the above case is followed by Re Lord Clifden [1900] 1 Ch 774.

16. In Harlock v Ashberry, (1882) 19 ChD 539 Jessel MR at page 546 stated as follows:

    Therefore on principle and on authority I think that the payment to take the case out of the statute must be a payment by a person who is bound to pay the principal or interest of the mortgage money.

17. By way of analogy, even though the instant case did not involve any payment, the defendant is the person who is bound to pay towards the principal and interest and the fact that he had made such promise to pay revives the cause of action so as to start running afresh from the date of acknowledgment.

18. I therefore enter judgment for the agreed sum of $44,250.72 with interest thereon at 10.8% with monthly rests as from 26 December 1972 to date of realisation and costs to be taxed.

Cases

Joachimson v Swiss Bank Corp [1921] 3 KB 110; Bradford Old Bank v Sutcliffe [1918] 2 KB 833; Parr’s Banking Co Ltd v Yates (1898) 2 KB 460; Bian Chiang Bank Bhd v Kwong Hing Cheong [1978] 2 MLJ 193; The Kwong Yik (Selangor) Banking Corp Ltd v Malayan Daily Express (1926) Ltd [1933] MLJ 198; Wright v Pepin [1954] 2 All ER 52; Lewin v Wilson (1886) 11 AC 639; Re Lord Clifden [1900] 1 Ch 774; Harlock v Ashberry [1882] 19 ChD 539

Legislations

Limitation Ordinance: s.26

Authors and other references

Michael Franks on Limitation of Actions

Halsbury’s Laws of England, 3rd Ed

Representations

SG Foo for the plaintiff.

MS Nayagam for the defendant.