Continuum of Time in the Civil Suit and the Arbitral Regime:
The Case of Bongsor Bina Sdn Bhd v SH Builders & Marketing Sdn Bhd
Time is regarded as an abstract and fluid concept – so real to the human mind, yet beyond human intervention. However, this may not be the case in the jurisprudence of law on limitation where time is said to stop running, as it is often anthropomorphically described by judges, when a suit is filed.
​
The term ‘Time’, which can be viewed as an analogy in law, has been adopted by the law lords to describe the intervals between each ticking of the clock. On the other hand, the parliamentary draftsmen adopted a more tangible expression, e.g., 6 years or 12 years from an event, to prescribe the limited period within which litigants can enforce their rights or litigate their grievances. It is a public policy timeline. In the eyes of the law, if a certain type of grievances is left unattended for more than 6 years, a griever will be deemed as ‘sleeping on his/her right of action’. Consequently, a sleeping griever shall thereafter be, with the remedies to his/her grievances forever lost in a dream unrecognised by the law of the land. In the legalese of the law lords, once you are deemed to be sleeping on your right of action, you are ‘time-barred’.
​
‘Time-barred’, is the exact expression used by Bongsor Bina Sdn Bhd as a defence against SH Builders & Marketing Sdn Bhd’s claims in arbitration, in arguing that SH Builders & Marketing Sdn Bhd was out of time when the fresh arbitration proceeding was instituted (which was done after a stay was granted by the Sessions Court). Conversely, SH Builders & Marketing Sdn Bhd counterargued that the ‘Time’ has stopped when it first filed the Civil Suit in the Sessions Court, notwithstanding that the Civil Suit was later stayed by Bongsor Bina Sdn Bhd pursuant to Section 10 of the Arbitration Act (2005) pending reference to arbitration.
​
This legal question was first brought before the attention of the sole presiding Arbitrator, who then prudently allowed the parties to refer the issue to the High Court through Section 41 of the Arbitration Act (2005), and it landed before His Lordship YA Dato’ Lim Chong Fong. On a first principle’s basis, His Lordship in referring to the Federal Court case of Tan Kok Cheng & Sons Realty Co Sdn Bhd v Lim Ah Pat [1996] 1 CLJ 231, propounded that ‘the limitation stops … when the court action is commenced even though the dispute is subsequently referred to arbitration as a result of a successful stay application’. This legal proposition, on the law of limitation, was predicated on the Federal Court’s cognisance of the unfettered jurisdiction of the Court to hear and determine disputes already referred to arbitration. Since the Court retains jurisdiction to hear matters susceptible to being stayed pending arbitration, the filing of a civil suit in Court prior to the expiration of the limitation period, as an independent event, will stop the limitation clock from ticking further.
​
Judiciously, His Lordship considered the argument of Bongsor Bina Sdn Bhd regarding the interplay between Section 30 of the Limitation Act (1950), which requires a Notice of Arbitration to be served to stop the ticking of time, and Section 23 of the Arbitration Act (2005), which stipulates that an arbitral proceeding commences only on the date the respondent receives the request in writing to refer the dispute to arbitration. Notwithstanding the argument, His Lordship qualified the synergistic effect of both Section 30 of the Limitation Act (1950) and Section 23 of the Arbitration Act (2005) to only applies to disputes that are referred to arbitration directly or exclusively, or in His Lordship’s words, ab initio, without a prior court action filed and stayed pending arbitration.
​
Dissatisfied with the High Court’s decision, Bongsor Bina Sdn Bhd proceeded to appeal to the Court of Appeal, where a panel of three judges were assigned to rehear the legal issue and reconsider the High Court’s decision. In unison, Her Ladyship Datuk Hanipah Farikullah, Dato’ Che Mohd Ruzima Ghazali, and Dato’ Azizul Azmi Adnan affirmed the High Court’s decision and further explained in detail the rationale behind the law of limitation and multiple other reasons that led to the Court of Appeal’s affirmative judgment.
​
The Court of Appeal in summarising the doctrine of limitation states that:
​
'In short, the doctrine of limitation law is promulgated primarily to prevent plaintiffs from sleeping on their actions. The limitation of action is justified since long dormant claims have more of cruelty than justice in them and the defendant might have lost the evidence to disprove a stale claim. The doctrine surely encourages person with good cause of action to pursue it with reasonable diligence.'
On that basis, and with the judicial recognition of the harshness of limitation law in effectively taking away the plaintiff’s right to act against the defendant, the Court of Appeal adopted a liberal or reasonable approach in interpreting the statute on the law of limitation. The Court of Appeal also aptly relied on two legal maxims, ‘in dubiis benigniora praeferenda sunt’ (in doubtful cases, the more liberal constructions are to be preferred) and ‘ut res magis valeat quam pereat’ (so that the subject matter may prevail and have effect rather than fail or to be made void), to underpin its decision to adopt a liberal approach and to avoid constructions of law that lead to absurd results.
​
This position taken by the Court of Appeal, coupled with the jurisprudence on the jurisdiction of the Courts to deal with all civil matters, sheds light on the limitation clock in the legal context, where it runs in a linear manner from the accrual of the right of action. For instance, upon the accrual of a right of action, ‘Time’ begins to run until either a civil suit is filed in Court, which stops the passage of time, or a Notice of Arbitration is served and received by the respondent, as required by Section 30 of the Limitation Act (1950) and Section 23 of the Arbitration Act (2005). There are no parallel timelines that run concurrently upon the accrual of the same right of action for different proceedings.
​
To put it graphically, ‘Time’, in the context of the law of limitation, starts running like the sand in an hourglass, flowing at a constant rate from the upper chamber to the lower chamber. It is viewed as a reduction in seconds rather than an increment from the first to the final year for the limitation period to set in. In essence, instead of viewing the passage of time as an accumulation of years leading up to the limitation period, it represents a window of opportunity that has a time-line limitation. The focus is on the upper chamber, not the lower chamber. This perception aligns with the express term ‘expiration’ as adopted in the Limitation Act (1950), indicating that the judicial expression of ‘Time’ runs not incrementally, but in a reductive manner.
​
And the same set of ‘Time’ will apply irrespective of whether the litigant intends to initiate the action in the Civil Court first, directly proceed to Arbitration, or seek a stay order pending arbitral proceeding as in the case of Bongsor Bina Sdn Bhd v SH Builders & Marketing Sdn Bhd. This is because, according to the Court of Appeal’s analysis of the jurisprudence on the jurisdiction of the courts, the court retains jurisdiction to deal with all civil matters despite the mandatory stay as required by Section 10 of the Arbitration Act (2005). While respecting the parties’ autonomy to resolve their dispute through Arbitration and maintaining the courts’ jurisdiction over all civil cases, the Court of Appeal and the High Court ruled that, since the Notice of Arbitration was issued by SH Builders as a consequence of the stay order granted by the Sessions Court, the Arbitral Proceeding must be viewed as a continuation of the Civil Suit in the Sessions Court. Thus, the filing of a Civil Suit in the Sessions Court stops ‘Time’ from running further due to the courts’ retained jurisdiction, while allowing the parties to exercise their right to refer the matter to Arbitration for adjudication. In essence, to stop the flow of sand, one may clog the funnel with a Writ of Summons, an Originating Summons, or a Notice of Arbitration.
​
On the 1st of October 2024, the Federal Court denied Bongsor Bina Sdn Bhd’s motion for leave to appeal against this perception of ‘Time’ on the ground that it was rather fact-centric, and therefore does not meet the leave threshold set by Section 96(a) of the Courts of Judicature Act (1964) (see Terengganu Forest Products Sdn Bhd v Cosco Container Lines Co Ltd & Anor [2011] 1 CLJ 51). As such, the Court of Appeal’s decision is presently the latest pronouncement on the limitation period issue concerning the interplay between the Civil Court and the arbitral arena. Until and unless a similar situation arises for the Court of Appeal and/or the Federal Court’s redetermination in the future, ‘Time’ is linear and unparallel as far as the courts are concerned in the inter-play of the Civil and Arbitral platforms.
​
​Copyright © Liow & Co. All rights reserved.
​
This article is intended for general informational purposes only and does not constitute legal advice. It should not be relied upon as guidance for any specific situation or set of circumstances.