Zavarco PLC v Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir [2026] EWHC 338 (Ch)

[2026] EWHC 338 (Ch)Case No BL-2018-002192
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 23 February 2026
Before
MASTER BRIGHTWELL
Between
ZAVARCO PLCClaimantTAN SRI SYED MOHD YUSOF BIN TUN SYED NASIRDefendant
Patrick Lawrence KC and Glenn Campbell (instructed by Needle Partners Limited) for ClaimantRobert-Jan Temmink KC and Tom Nixon (instructed by Teacher Stern LLP) for DefendantHearing Hearing date: 30 October 2025
Approved JudgmentCrown Copyright ©
[1]The claimant, Zavarco plc (“Zavarco”), issued an application for summary judgment as long ago as 15 May 2019. The reason why it has taken so long to come on for hearing is that the question raised by an earlier application, whether the claim for payment in this case had merged with a declaratory judgment of the court in November 2017, has been litigated up to the Supreme Court. By their judgment handed down on 19 February 2025 ([2025] UKSC 5), the Supreme Court determined that the doctrine by which a cause of action merges with a judgment does not apply to a declaratory judgment.[2]The claimant’s 2019 application was subsequently listed to be heard. Then, on 7 October 2025, the defendant, Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir (“Mr Nasir”) issued a counter application seeking reverse summary judgment on the grounds of limitation. It is that issue with which this judgment is principally concerned.[3]The factual background to the claim is summarised in the opinion of Lord Hodge JSC (with which the other Justices agreed). He said:
‘2. This appeal is the latest stage of a long-running dispute between Tan Sri Nasir, a Malaysian citizen (“the appellant”) and the respondent, Zavarco plc (“Zavarco”), as to whether the appellant was obliged to pay €36 million for shares which he acquired in Zavarco. 3. Zavarco is a public limited company incorporated in England and Wales. On its incorporation on 29 June 2011, the appellant subscribed to the memorandum of association and became the holder of 360 million €0.10 shares in Zavarco. The subscription amounted to a commitment to invest €36 million out of a total subscription of €120 million. The appellant then transferred to Zavarco the shares in a Malaysian company, Zavarco Berhad (“ZB”), which became Zavarco’s subsidiary. The appellant did not pay in cash for his 360 million shares in Zavarco. The appellant’s position was that he had provided consideration in the form of the ZB shares. Zavarco considered that he was obliged to pay for the shares notwithstanding the transfer of the shares in ZB. 4. On 5 June 2015 Zavarco served a call notice on the appellant for payment of €36 million in cash for the shares. After the appellant did not pay the sum demanded, Zavarco served a Notice of Intended Forfeiture on 15 June 2016. Litigation followed. 5. First, on 9 September 2016, the appellant commenced proceedings in the High Court seeking a declaration that he was entitled to vote as the registered holder of the shares. In his witness statement he asserted that the shares were fully paid as the transfer of the shares in ZB amounted to good consideration. Three days later, on 12 September 2016, Zavarco commenced proceedings in the High Court seeking declarations (i) that the shares were unpaid, (ii) that the Notice of Intended Forfeiture complied with Zavarco’s articles of association, and (iii) that it was entitled to forfeit the shares. Zavarco’s particulars of claim also asked for “further or other relief as appropriate” in the usual way but no request was made for any such relief and the matter proceeded as a claim for declarations. 6. The two claims were tried together in a four-day trial before Martin Griffiths QC, acting as a Deputy High Court Judge. The central issue in the trial was whether the shares were unpaid. The appellant argued that the transfer of the ZB shares was a valid arrangement for alternative consideration under section 594 of the Companies Act 2006 (“the 2006 Act”), and that, if it was not, he was entitled to relief under section 606 of the 2006 Act. In a judgment dated 14 November 2017 ([2017] EWHC 2877 (Ch)) Mr Griffiths found in favour of Zavarco, and he granted the relief sought by it, making the declarations by order dated 28 November 2017 that: (1) The shares held by Mr Nasir in [Zavarco], namely 360 million ordinary shares … are unpaid. (2) [Zavarco], having taken the steps required under the Articles of Association and Mr Nasir having failed to pay for the same is entitled to forfeit the shares.” Mr Griffiths stayed the effect of the order pending any application to appeal to the Court of Appeal. The appellant did not receive permission to appeal, and on 11 June 2018 Zavarco forfeited the appellant’s shares. 7. Under articles 75.3 and 77 of Zavarco’s articles of association a person whose shares have been forfeited remains liable to pay for the unpaid shares and has a right to credit for the proceeds of any sale by Zavarco of the forfeited shares. 8. On 11 October 2018 Zavarco commenced the proceedings which are the subject of this appeal. Zavarco’s claim is for payment of €36 million as a debt following Mr Griffiths’ judgment and interest thereon. 9. The appellant applied to set aside the service of the claim form or to strike out the proceedings on the grounds (i) that the claim for payment had merged into Mr Griffiths’ declaratory judgment and had been extinguished as a matter of law, and (ii) alternatively, that the proceedings should be struck out as an abuse of process, applying the principles in Henderson v Henderson (1843) 3 Hare 100 and subsequent case law. The Henderson v Henderson abuse of process argument is no longer live and the remaining issue is the scope of the doctrine of merger. 10. In a judgment dated 17 July 2019 ([2019] EWHC 1837 (Ch)) the Chief Master (Marsh) held that the cause of action determined by Mr Griffiths’ judgment was identical to that relied upon by Zavarco in the present claim, had merged with that judgment and had been extinguished by operation of law. 11. Zavarco appealed, and in a judgment dated 20 March 2020 ([2020] EWHC 629 (Ch); [2020] Ch 651) Birss J allowed Zavarco’s appeal. …. 12. There was a dispute about the basis on which Birss J had determined the question of the scope of the doctrine of merger, and the appellant was given permission for a second appeal to the Court of Appeal. 13. In a judgment dated 5 August 2021 ([2021] EWCA Civ 1217; [2022] Ch 105) the Court of Appeal (Henderson, Warby LJJ and Sir David Richards) dismissed the appeal. ….’
[4]Following the dismissal of Mr Nasir’s appeal, Zavarco sought the listing of its 2019 summary judgment application. After it had been listed, on 7 October 2025 Mr Nasir issued a counter application, seeking reverse summary judgment in his favour on grounds that the claim is time barred by virtue of the Limitation Act 1980.

The present claim and limitation

[5]As noted above, the claim was issued on 11 October 2018, after Mr Griffiths’ judgment had been handed down, giving declaratory relief to Zavarco as to its right to forfeit the 360 million unpaid shares, and Mr Nasir’s application for permission to appeal had been dismissed. The claim form and particulars of claim seek judgment in debt in the sum of €36,000,000, plus interest.[6]The particulars of claim plead at paragraphs 11 to 13:
‘11. In accordance with Article 69 of the [company’s] Articles, the Claimant and its directors sent a call notice to the Defendant dated 5 June 2015 (“the Call Notice”), in respect of the amount unpaid on the Shares, amounting to a call on those shares, and requiring him to pay the outstanding sum of €36,000,000 within 16 days (“the Call Amount”). 12. By a further letter dated 30 May 2016, the Claimant allowed the Defendant a further extension of time of 7 days to 7 June 2016 in which to make payment of the Call Amount. 13. The Defendant failed to pay the Call Amount specified in the Call Notice, or any part thereof, within the specified time or the further extension, and the Claimant issued proceedings for a declaration that the Shares were unpaid in Claim No: HC-2016-002599 (“the Declaration Proceedings”).’
[7]Zavarco then relies on the terms of the Order made by Mr Griffiths, claiming that despite the Order and further demands the Call Amount remains unpaid. It relies also on a notice of intended forfeiture sent to the Defendant on 15 June 2016, pleading that, despite what is alleged to be a typographical error in the date specified for forfeiture (28, rather than 29, June 2016), the notice complied with article 73 of Zavarco’s articles.[8]In a draft defence and counterclaim, which has not been filed but was included in the hearing bundle, Mr Nasir contends that the claim in debt is time barred, and also that the pursuit by Zavarco of the claim constitutes the furtherance of a fraudulent scheme and should not be enforced on grounds of public policy. The draft document intimates an additional claim against two additional individual parties. For the purposes of Mr Nasir’s summary judgment application I am concerned only with the arguments on limitation.

The articles of association

[9]I can take the discussion of the relevant articles from the judgment of Chief Master Marsh at [9] to [13]:
‘9. Article 69.1 permits the directors to send a “call notice” to a member requiring the member to pay a specified sum (“the call”), subject to the restriction in Article 69.2 limiting the amount of the call to the sum unpaid on the member’s shares. Article 69.3 specifies that a member must comply with the requirements of a call notice save there is no liability to pay any sum claimed before 14 days after service of the call notice have passed. 10. Article 72 describes the “automatic consequences” if there is a failure to comply with a call notice. The failure to pay the call sum triggers an entitlement to issue a “notice of intended forfeiture” of the shares. The formal requirements for a notice of intended forfeiture, which are not of concern, are set out in Article 73. 11. Article 74 gives the directors power to forfeit shares if the notice of intended forfeiture is not complied with before the date for payment of the call that is specified in the notice. 12. Under the Articles there are distinct steps that must be followed. The service of a call notice equates to a demand for payment and is a pre-requisite for a claim by the company to seek payment of the call. Shares cannot be forfeited without two prior steps; first the service of a call notice and secondly the service of a notice of intended forfeiture. How these steps, that are specified by the Articles, are part of a cause of action giving rise to a claim is a matter that requires further analysis because at common law, if shares are forfeited, the company’s right to receive payment for the shares is extinguished. By virtue of the forfeiture, the company holds the shares and is free to allot them to other persons. Absent saving provisions in the Articles, the directors must elect between forfeiting the shares, or pursuing payment. However, it is common for the Articles to contain provisions that abrogate the common law position and that is the case with the claimant. 13. Article 75 provides that forfeiture extinguishes all interests in the share and all other rights relating to them. It goes on: “75.3 If a person’s shares have been forfeited: … 75.3.4 that person remains liable to the Company for all sums payable by that person under the Articles at the date of forfeiture in respect of those shares, including any interest (whether accrued before or after the date of forfeiture) in the same manner in all respects as if those shares had not been forfeited, and to satisfy all (if any) claims, demands and liabilities which the Company might have enforced in respect of the shares at the time of forfeiture:”’
[10]Mr Temmink also drew my attention to Article 76, whose wording substantiates the position that, absent continuing liability between company and (former) shareholder as expressly provided for in the articles, the shareholder is absolved from any liability to the company:
‘76 The forfeiture of a share shall involve the extinction at the time of forfeiture of all interest in and all claims and demands against the Company in respect of the share and all other rights and liabilities incidental to the share as between the holder whose share is forfeited and the Company, except only such of those rights and liabilities as are by these Articles expressly saved, or as are by the statutes given or imposed in the case of past members.’

The nature of the subscriber’s liability to the company

[11]Mr Nasir relies on the decision of the Court of Appeal in related proceedings, Zavarco plc v Sidhu [2022] EWCA Civ 1040, in which Mr Temmink and Mr Lawrence also appeared for the parties. The defendant to those proceedings, Mr Sidhu, was the subscriber to the balance of the initial share capital in Zavarco. He was a signatory to the memorandum of association and subscribed for 840 million shares with a par value of €84 million, but had made no payment. I note that this claim was issued by Zavarco on 8 June 2017, just within six years of the date of the company’s incorporation.[12]Snowden LJ held that Mr Sidhu became liable to pay for the 840 million shares when he took them on incorporation, by virtue of section 584 of the Companies Act 2006. In doing so, the judge explained the nature of a subscriber’s undertaking to take shares in a public company, setting out the differences in the statutory scheme of the 2006 Act as compared to the Companies Act 1985.[13]In particular, section 8 of the 2006 Act provides for a more limited form of memorandum of association than in the earlier Companies Acts (see at [75]), in which the subscribers state that they agree to become members of the company and, in the case of a company that is to have a share capital, to take at least one share each. Section 10 then makes provision concerning the statement of capital and initial shareholdings, with information about the shares subscribed for by the subscribers to the memorandum, which was previously set out in the memorandum itself, to be provided to the registrar in the statement of capital and initial shareholdings (see [78] to [81]).[14]Snowden LJ then explained the effect of this statutory structure as follows:
‘81. The effect of registration of a company upon the subscribers to the memorandum is set out in section 112(1) of the 2006 Act, “The subscribers of a company's memorandum are deemed to have agreed to become members of the company, and on its registration become members and must be entered as such in its register of members.” (my emphasis) The underlined words are new, and represent a change from section 22 of the 1985 Act. Previously, the subscribers were deemed to have agreed to become members of the company but did not actually become members until their name was placed upon the register. Now, as paragraph 239 of the Explanatory Notes to the 2006 Act confirms, the subscribers become members of the company automatically on registration, even if the company fails to enter their names on the register of members. 82. In similar vein, and importantly, sections 16(1) and (5) of the 2006 Act are new provisions which state as follows, “(1) The registration of a company has the following effects as from the date of incorporation. … (5) In the case of a company having a share capital, the subscribers to the memorandum become holders of the shares specified in the statement of capital and initial shareholdings.” 83. As I see it, this new legislative framework under the 2006 Act envisages that a subscriber will automatically become a member of the company as and when it is registered, and will from that time be the holder of the number of shares specified in the statement of capital and initial shareholdings. Under the 2006 Act, the only agreement under which the subscriber gives consent to take shares in the company is that contained in his undertaking in the memorandum. The 2006 Act also does not envisage that any subsequent allotment or issue of shares by the company should take place after registration in order to constitute the subscriber the holder of the number of shares specified in the statement of capital and initial shareholdings.’
[15]Then, at [91] to [92]:
‘91. Section 584 contains an express requirement that shares taken by a subscriber in pursuance of his undertaking in the memorandum must be paid up in cash. Mr. Temmink submitted that section 584 did not create any civil liability at all and contrasted its wording with the provisions of section 585(2), 587(2) and 587(4) which create an express liability for contravention of sections 585(1), 587(1) and 587(3) to pay the nominal value of the shares, plus any share premium and interest. He suggested that if Parliament had wished to impose a civil liability upon the subscriber in section 584, it would have chosen to use the same formula as in those other sections. 92. I do not agree. Section 584 prescribes how a subscriber who has undertaken a contractual obligation to pay for shares in a public company must discharge that contractual obligation. Section 584 thereby operates directly on an existing contractual obligation and there is simply no need to create a separate civil liability over and above the existing contractual one. …’
[16]Mr Temmink accordingly submits that the cause of action relied on by the claimant is in contract, and that the relevant contractual obligation accrued on the date of subscription, 29 June 2011, when Mr Nasir signed the memorandum of association and agreed to pay €36 million for the shares he was to acquire in Zavarco and which he did acquire on registration.[17]Section 5 of the Limitation Act 1980 provides that, ‘An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued’. Likewise, and if it should apply instead, section 9 of the 1980 Act provides that ‘An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued.’[18]Mr Nasir’s position is therefore that time started to run in 2011 and that, as this claim was not issued until 2018, the six-year period of limitation expired in 2017 such that the claim is time-barred and should be dismissed now.[19]Mr Lawrence accepted the claim is one in contract and that a six-year period of limitation applies, but he submitted that the period had not expired when the claim form was issued. Zavarco’s primary case in response is that the cause of action accrued only when Mr Nasir’s shares were forfeited by Zavarco after the 2017 declaratory judgment had been delivered. That forfeiture took place on 11 June 2018, after the court had declared that Zavarco was entitled to forfeit shares, it ‘having taken the steps required under the Articles of Association and Mr Nasir having failed to pay for the same’. Zavarco’s secondary position is that time does not begin to run until a demand is made, and that such demand was constituted by the call notice issued in 2015.

Judicial statements regarding the cause of action

[20]It is material in this context to bear in mind the definition of a cause of action. The Supreme Court on appeal in the present proceedings on the question of merger, referred to Diplock LJ’s classic definition of a “cause of action”:
‘35. …. [I]n Letang v Cooper [1965] 1 QB 232, 242–243 (“Letang”) in an often-cited passage Diplock LJ defined a “cause of action” as: “simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person.” This definition covers both the factual situation and the entitlement to obtain a remedy from the court. ….’
[21]Mr Temmink places particular reliance on judicial statements within the earlier stages of these proceedings, on the question of merger of the cause of action with a declaratory judgment. Even though the issue raised by the present application did not then fall to be decided, it was part of Mr Nasir’s case in relation to the merger issue that the cause of action pursued following forfeiture was the same cause of action that arose in relation to the contractual debt arising from subscription to the company’s memorandum. This was not the basis on which the merger issue was decided.[22]Chief Master Marsh said this in his judgment ([2019] EWHC 1837 (Ch) at [59] to [60]):
‘59. I consider that it is not appropriate to strive to find differences between the facts that form the cause of action in two claims. It is right, as in The Indian Grace, to look at the substance of the claims and to consider whether they arise from the same breach. It is not an oversimplification to say that the claim arises from the defendant's failure to pay for his shares. €36 million was due when the 2016 proceedings were issued. At that time the defendant was a contributor. After forfeiture of his shares, his relationship with the claimant changed although the sum that was due to be paid remained the same. It seems to me that, with respect to the editors of Palmer, by virtue of section 33(2) of the Companies Act 2006, the payment that was due to be made for the shares was always a contractual debt. It is not right to see a liability of a contributor as being converted to a different liability. 60. The defendant was liable to pay for his shares and a valid call notice was served pursuant to Article 69. Article 75.3.4 provides that following forfeiture of the shares the defendant remained liable to pay that sum. In other words, the basis of liability was preserved by virtue of the consensual arrangement that is reflected in the [a]rticles; but it is the same liability as before. Preservation of liability following forfeiture does not create a new liability. It follows, in my judgment, that although some additional facts are pleaded in this claim, they are merely part of the narrative explaining how the claim came into being and not new facts signifying a new cause of action.’
[23]On first appeal, Birss J (as he was) then said this ([2020] Ch 663 at [33] to [34]), making clear that, given the basis on which he allowed the appeal, the point did not fall to be decided:
‘33. The second ground of appeal was another occasion in which the Chief Master differed from statement in a textbook which had been made without citing authority. The question is whether, on the standard provisions on forfeiture of shares in the Articles of Association, the effect of forfeiture of a member’s shares creates a new obligation owed by that person, as a debtor, to the company as compared to the old pre-forfeiture obligation as a contributor. This mattered for the merger point because if the obligation Mr Nasir owes Zavarco today is a new one compared to the one he owed before the forfeiture took place, then since forfeiture only happened after the first judgment, the new right can hardly have merged into or been extinguished by that judgment. The Chief Master noted in paragraph 15 that the commentary on these standard provisions in Palmer’s Company Law expresses the view that the forfeiture prevents the company suing the shareholder for past calls, but that the provisions, by which the shareholder remains liable for all sums payable for the shares at the date of forfeiture with interest, creates a new obligation as a debtor. His decision on this was within paragraph 59: “It seems to me that, with respect to the editors of Palmer, by virtue of section 33(2) of the Companies Act 2006, the payment that was due to be made for the shares was always a contractual debt. It is not right to see a liability of a contributor as being converted to a different liability.” 34. Since it is not necessary for me to decide this issue, all I will say is that I see the force in the Chief Master’s decision.’
[24]In the Court of Appeal, [2022] Ch 105 at [26], David Richards LJ said the following on the same point:
‘26. I accept that the underlying cause of action in both proceedings [i.e. the claim for declaratory relief and the present claim in debt] is the same, namely that Mr Nasir as allottee and registered holder of the shares was liable to pay in cash the amount called up on the shares, amounting to €36m. For the reasons that follow, I do not accept that the 2017 order, containing declarations that the shares were unpaid and that Zavarco was entitled to forfeit the shares, excluded Zavarco's right subsequently to bring proceedings for judgment for €36m.’
[25]It was then accepted by Zavarco in the Supreme Court that, at least in the context of merger, the same cause of action was pursued in the present proceedings as in the declaratory relief proceedings leading to Mr Griffiths’ judgment in 2017. Lord Hodge said at [38], with reference to the definition of a cause of action derived from Letang (discussed above), that:
‘It is not disputed that the factual circumstances underpinning the earlier application for declaratory relief and those relied on in the current action are the same.’
[26]Chief Master Marsh indicated when discussing the cause of action point that there was no authority to support the proposition in Palmer that, where the company’s articles provide for the shareholder to remain liable for all sums payable in respect of the forfeited shares at the date of forfeiture, this creates a new obligation as a debtor which can be enforced by an action. Mr Lawrence relied in the present application on Victorian authorities as supporting the proposition, which do not appear to have been cited to the Chief Master.[27]In Re Blakely Ordinance Company: Stocken’s Case (1868) LR 3 ChApp 412 at 415-416, Lord Cairns LJ said the following as to the right of a company to pursue a claim against a member for past calls following the forfeiture of shares. In doing so, he upheld Lord Romilly MR:
‘…I am strongly disposed to think that the mere fact of a duly authorized forfeiture of shares without anything in the articles defining the effect of forfeiture, would of itself, in the very nature of things, render any proceedings at law for past calls incompetent, because such proceedings must, I apprehend, be on the footing that the person sued was a shareholder in the company; and if his interest in the company had been destroyed, it is by no means clear that the action could be maintained. The following part of the 50th clause shews that the construction which I have put upon the first part is the construction put on it by the framer of the articles; for he evidently thought that if he stopped there any right to proceed for calls would be gone, and he therefore introduces a provision which seems to me to be in substance and in words the creation of a new right. The words are these: "but any member whose shares have been forfeited shall notwithstanding be liable to pay to the company" - what? He is not to be liable for anything for which this clause does not say he is to be liable, and what it is said he is to be liable for is this: “to pay to the company all calls owing on the shares at the time of such forfeiture;” not saying a word as to interest.’
[28]This analysis was later adopted by the Court of Appeal in Ladies Dress Association Ltd v Pulbrook [1900] 2 QB 376, and by Lawrence J in Re Darwen and Pearce [1927] 1 Ch 176 at 185-187, who commented that the relevant article provided in words and in substance for the creation of a new right in the company against their shareholders. In none of these cases was the court concerned with the question whether a cause of action had become time barred. I would note that, in the Ladies Dress Association case, Vaughan Williams LJ expressly declined to decide whether the old liability continues, or whether a new one was created, as it was immaterial to the claim before him (which concerned the question not whether the right of action survived forfeiture, but survived a subsequent liquidation of the company).

Discussion

[29]Mr Lawrence did not dispute the proposition that there is a six-year period of limitation in this case. He pointed out that an effect of section 33(2) of the Companies Act 2006, which provides that money payable by a member to the company under its constitution is a debt due to the company and (in England and Wales and Northern Ireland) is of the nature of an ordinary contract debt, is that such a liability is no longer treated as a liability under a specialty (which would entail a twelve-year limitation period under section 8(1) of the Limitation Act 1980). He also submitted that the effect of section 33 did not go beyond that, to entail the conclusion that there was no new cause of action created upon forfeiture.[30]The question is when that six-year period of limitation started to run.[31]Mr Lawrence presented his primary argument as the act of forfeiture creating a new cause of action, with time running effectively again from the date of forfeiture. His secondary argument was that, on a construction of Zavarco’s articles, the obligation to make payment of the agreed contribution to the share capital does not arise until a demand has been made. I consider that the secondary argument should be considered first, as it will be material to establish whether, as at the date of forfeiture, there remained outstanding an enforceable obligation on the part of Mr Nasir to make payment to Zavarco.[32]The general rule is that the right to payment under a contract for work or services to be provided arises as soon as the work is done, unless there is a term of the agreement to the contrary: Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] 1 WLR 3850 at [20], applying Coburn v Colledge [1897] 1 QB 702. As Andrews LJ said in Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia) [2023] 4 WLR 15 at [33] to [35], in a passage cited by Mr Temmink:
‘33. …. The debt accrues when the work is done; the time at or by which the debt must be discharged is a different matter altogether. Indeed, a provision in a contract which sets a time for payment for services rendered is implicitly premised on the existence of a liability to pay for those services. The right to sue for the payment may not arise until the time has elapsed, but that does not affect the accrual of the right to payment. …. 35. The Judge rightly identified in para 58(iv) that the critical distinction is between terms which are conditions precedent to the right to payment arising, and terms which impose conditions for the bringing of proceedings, which are concerned with limiting the creditor’s right to bring an action to enforce an entitlement to payment. The latter are procedural obstacles which do not prevent the running of time unless they are covered by one of the exceptions in the Limitation Act 1980.’
[33]Andrews LJ then went on to refer to authority discussing when this position may be displaced:
‘36. There have been dicta in a number of cases that “clear words” are needed to displace the default position referred to in Coburn, especially if the “special term” gives the service provider complete control over the running of time for limitation purposes (as it would in the present case). See eg the observations of Lord Neuberger MR in Legal Services Commission v Henthorn [2011] EWCA Civ 1415; [2012] 1 WLR 1173 at [31]: “Save where it is the essence of the arrangement between the parties that a sum is not payable until demanded (eg a loan expressly or impliedly repayable on demand) it appears to me that clear words would normally be required before a contract should be held to give a potential or actual creditor complete control over when time starts running against him, as it is such an unlikely arrangement for an actual or potential debtor to have agreed.”’
[34]As appears from Lord Neuberger MR’s example of a loan, the principle that time starts running for limitation as soon as the obligation to pay has arisen is of general application, and not restricted to contracts for work or services. Indeed, it was Mr Lawrence’s submission that, as payment was not made or demanded immediately, Zavarco made an implied loan to Mr Nasir, which loan required a demand before time could run at all. I have already noted that the obligation assumed by Mr Nasir to the company, arising under its constitution and being an obligation to pay money to the company, is an ordinary contract debt. Zavarco pleads as much in paragraph 10 of the particulars of claim.[35]Snowden LJ explained in Zavarco v Sidhu at [83] that the subscribers to a company’s memorandum become members of the company when the memorandum is registered, and from that time hold the number of shares specified in the statement of capital and initial shareholdings. No separate action on the part of the company is required for the subscriber to become a shareholder. He then said, at [92], that the obligation imposed by section 584 of the 2006 Act to pay up in cash any shares taken by a subscriber to the memorandum of a public company operates directly on an existing contractual obligation. He made no mention of any requirement for a call notice (or other demand) to be made in order to trigger the liability.[36]As the subscriber becomes a shareholder upon registration of the memorandum, and not upon payment for the shares, there would be no obvious reason why the obligation to make payment for the shares should be contingent upon the making of a demand by the company. In any event, Mr Lawrence does not contend that the subscriber’s liability to pay always arises only when a demand is made. He contends that is the effect of the articles in the present case, and that one must look at the relevant provisions in the articles and ascertain their proper construction.[37]Zavarco thus submits that a demand is required which, in this case, was satisfied by the making of a call notice in 2015 in accordance with article 69. It is therefore Zavarco’s case that Mr Nasir was under no obligation to pay until such a demand was made, and that the obligation had therefore not accrued (relying by analogy on N Joachimson v Swiss Bank Corporation [1921] 3 KB 110, where it was held to be necessarily implied that a bank was not liable to pay a customer the amount of their balance until payment was demanded).[38]One argument put forward by Mr Lawrence was that it follows from Mr Nasir’s case that, as he was liable to pay for his shares and that sum was left outstanding, an implied contract of loan arose, requiring a demand before time could run at all. In that case, he submits that section 6 of the Limitation Act 1980 applies, with the effect that the six-year period in section 5 does not start to run until a demand has been made. This point was not elaborated on in oral submissions, and Mr Temmink certainly did not accept that any implied loan had arisen. As matters stand, no arguable basis for holding that an implied loan arose has been articulated. The mere fact that a sum due is not paid and is not demanded for some time cannot suffice for a loan to arise without more. If it did, the position as set out by Lord Neuberger MR in the Henthorn case, that clear words are required to give a creditor control over when time starts running, would not be correct. There must be something in the factual circumstances to justify the implication of a loan beyond the fact that payment to the company by the subscriber has been neither made nor demanded. No such circumstances have been identified by Zavarco.[39]Similarly, Mr Lawrence submitted that the articles should be construed as requiring payment only when demanded. The only article to which I was referred which deals with the question of demands for payment is article 69. That article provides that a call notice may be made requiring a member to pay a specified sum which is payable in respect of shares, and sets out procedural requirements for doing so.[40]The effect of a call notice being served, and not complied with, is that the automatic consequences of non-compliance, in article 72, come into operation. One of those is that the subscriber’s right to receive dividends and to attend meetings of the company is suspended. Another is that the company may issue a notice of intended forfeiture in accordance with article 73 which, if not complied with, gives the company’s board the right under article 74 to forfeit the shares in respect of which the call notice was issued, and all payments due to the member in respect of those shares. A call notice is not required when payment for the shares is required on the occurrence of a particular event or on a particular date (article 71). In those circumstances, a call notice is treated as having been issued and the member is treated as having failed to comply with it once that event or date has passed with the shares remaining unpaid.[41]In other words, the purpose of a call notice is to suspend the member’s rights as a member until the notice has been complied with, and to facilitate the forfeiture of the relevant unpaid shares. It is not to bring about the obligation to pay, which the subscriber assumed on incorporation. The notice may be issued in the first instance (article 71 aside, it not applying here) only when the obligation to pay has not already been complied with. Accordingly, there is no ability to issue a call notice unless the member is already in breach of their obligation to pay for their shares. Article 69.1 makes plain that a call notice may be served only when in respect of a specified sum of money which is payable (my emphasis). The obligation to pay must arise before the call notice is issued. That obligation is not triggered by the call notice. That is consistent with Snowden LJ’s authoritative statement of how the member’s obligations arise.[42]Accordingly, I consider that on construction of the articles, the subscriber’s obligation to pay for their shares arises on the registration of the memorandum, and not when a demand is made. Time started to run, therefore, in 2011 and not in 2015. A demand made by the company at a later date (such as that made by the call notice), not being a payment or acknowledgment by the member, does not create a new cause of action or cause time to run afresh. The factual situation the existence of which entitles the company to obtain from the court a remedy against the subscriber does not depend on the making of a demand by the company and is thus in existence, such that time runs, as soon as the memorandum is registered.[43]For those reasons, the conclusion I have reached is that as at the date of issue of the current claim, more than six years had passed and the claim is prima facie time barred.[44]An issue may arise, although not on the facts of the present case, as to the ability of a company in such circumstances to issue a call notice more than six years after the date of the subscription agreement, i.e. after the contractual right to payment has become time barred. Furthermore, by the time Mr Griffiths made his order in November 2017 declaring that Zavarco had the right to forfeit Mr Nasir’s shares, it was more than six years since the right of action had accrued. The right to forfeit shares (which is all Mr Griffiths was concerned with) does, of course, depend upon a call notice having been validly issued and for it to remain unsatisfied; there is thus no requirement for the right to payment for the shares to continue to be enforceable at the date of forfeiture. The factual situation required to enforce the forfeiture of shares, and to entitle the company to a declaration that it is entitled to forfeit them, is thus different from that required to claim a money judgment. That is a distinction which was not a feature of the arguments on the merger issue and, in my view, the judicial comments about the identity of the cause of action in the two sets of proceedings pursued by Zavarco against Mr Nasir must be viewed accordingly.[45]Zavarco’s primary position is that the act of forfeiture caused a new period of limitation to begin upon that forfeiture. Mr Lawrence submits, on the basis of the authorities set out at [27] and [28] above that a new cause of action accrues in favour of the company upon forfeiture.[46]Assuming for the sake of argument that this submission is correct, it is important to bear in mind the default position, that upon forfeiture the member loses their shares but the company also loses its rights against the member. This is the position unless there is some provision in the articles to contrary effect.[47]The relevant provision in Zavarco’s articles is article 75.3.4. This provides that the person whose shares have been forfeited remains liable to the company ‘for all sums payable by that person under the Articles at the date of forfeiture in respect of those shares….in the same manner in all respects as if the shares had not been forfeited, and to satisfy all (if any) claims, demands and liabilities which the Company might have enforced in respect of the shares at the time of the forfeiture.’ The words at the end of the provision about satisfying demands etc which the Company might have enforced do not feature in the model articles for public companies, but the provision is otherwise taken directly from the model articles (article 60(3) in the current version).[48]Article 75.3.4 therefore refers to the continuation of the forfeiting member’s liability both for sums payable and for liabilities that the company might have enforced, as at the date of forfeiture. It appears to me for the reasons I have already explained that Mr Nasir’s liability to the company in accordance with the contractual obligation recognised in section 584 of the 2006 Act was by the date of forfeiture no longer enforceable as more than six years had passed since that cause of action accrued. The reference in the article to liabilities which the company might have enforced must be a reference to those which might have been enforced if the shares had not been forfeited (words found in the first part of the provision). The continuing liabilities for these purposes are therefore not liabilities which the company was entitled to enforce by forfeiture itself, but otherwise.[49]Furthermore, the reference to sums for which the person remains liable are sums which remain payable, in the same manner as if the shares had not been forfeited. Even though the expiry of a limitation period does not extinguish a debt, a person can be liable in civil proceedings for a debt in the same manner as if the shares had not been forfeited only if the debt could have been pursued in civil proceedings if the shares had not been forfeited. In Stocken’s Case, Lord Cairns LJ held that any provision in the articles for continuing liability must be strictly construed, and in Re Darwen and Pearce, Lawrence J stressed (at 186) that the forfeiting member was ‘not to be liable for anything which this clause does not say he is to be liable’. I consider that clear words would be required to render a forfeiting member liable for debts which had already become time barred.[50]It is for these reasons that I have concluded that the consequences of forfeiture do not include the liability of Mr Nasir to Zavarco for the sums claimed. Those claims were time barred immediately before forfeiture and thus on a construction of article 75.3.4, Mr Nasir did not retain liability for them (or acquire a new liability for them) following forfeiture. The article does not purport to resurrect liabilities which the company could not have enforced through civil proceedings if the shares had not been forfeited.[51]Accordingly, the question whether a fresh period of limitation starts to run on forfeiture, where a forfeiting member remains liable, does not arise. Without needing to decide the point, I will comment on the submissions I have received.[52]On this question, each side relies on seemingly contradictory judicial statements concerning the question whether a claim by a company against a shareholder is of a different nature once the shareholder’s shares have been forfeited. Mr Temmink cites the comments of Chief Master Marsh, seemingly concurred in by each of the appeal courts which considered the merger issue, who concluded that the cause of action pursued in this claim is the same as the cause of action pursued in the declaratory relief proceedings. That would point to a conclusion that time for bringing the claim ran from the date of subscription to the memorandum in 2011 or, possibly, from the date of the call notice in 2015 (although the Chief Master clearly assumed it was the latter date). Mr Lawrence cites Stocken’s Case, and supporting commentary, for the proposition that the obligation pursued by a company against its former shareholder after forfeiture of the relevant shareholding is a new obligation.[53]It would seem clear that the Chief Master did not have in mind arguments about limitation when commenting on the identity of causes of action in the two sets of proceedings. Birss J indicated that he saw the force of the analysis that the cause of action was the same but did not decide the point and, in the Court of Appeal, David Richards LJ accepted that the causes of action were the same.[54]In the Supreme Court on the merger issue Lord Hodge said at [33] that, ‘In his written case for the respondent Patrick Lawrence KC correctly describes the concept of a cause of action as protean and in the context of the doctrine of merger as being imprecise and ambiguous.’[55]Lord Hodge then commented at [36] on the potential for imprecision in the use of the term cause of action by reference to Australian authority, which explained that cause of action sometimes means a right and sometimes means the facts which support a right.[56]By the time of the hearing before the Supreme Court, at least, Zavarco accepted that the factual circumstances underpinning the earlier application for declaratory relief and the current claim were the same. David Richards LJ had said that the material facts which were common to both sets of proceedings were that Mr Nasir was liable to pay the €36 million for the shares which had been called up. The question of when that cause of action accrued was not an issue for consideration, and was not part of the agreed common underpinning. Limitation was not a matter which was in issue. The fact that a call notice had been issued before either claim was commenced was not part of the analysis of any of the appeal courts, but was an agreed part of the background to the claim. Mr Lawrence submitted that the court was then understandably not concerned with limitation and that it would therefore be misconceived to rely on David Richards LJ’s obiter comment about what facts were material. I see force in this submission.[57]I also see considerable force in Zavarco’s submission, relying on Stocken’s Case, that a company which can enforce a liability after forfeiture as it could have done immediately before the forfeiture has a right against the former shareholder in a different capacity. This might mean that a new period of limitation commences on forfeiture, when the forfeiting member becomes liable in that different capacity. I have already explained why I do not consider that this is so in relation to a debt that has already become time barred.[58]For the reasons I have set out above, I consider on the basis of the arguments I have heard that summary judgment could be granted to Mr Nasir on grounds of limitation. Mr Lawrence submitted that, in the event that was my conclusion, I should not enter reverse summary judgment at this juncture, but should require the defence formally to be filed, to give Zavarco an opportunity to file a factual response on its secondary argument, that in the circumstances of the case a demand was necessary in order to trigger Mr Nasir’s liability to pay, and that such demand did not come before the call notice, issued within six years of the commencement of these proceedings.[59]I am concerned that, even though earlier intimated in correspondence, Mr Nasir’s application for reverse summary judgment was issued only shortly before the hearing. As Mr Temmink was keen to stress, limitation is a substantive defence, which is why he did not need to raise it whilst contesting jurisdiction on the merger point in 2019 (on which I agree with him). Zavarco has had no formal opportunity to plead a response, if there is one, and only a short opportunity to explain its position. I am satisfied that, on the arguments I have considered, Mr Nasir is entitled to reverse summary judgment on limitation. While I do not consider that the defence should be filed, I am not quite persuaded that Zavarco should have no further opportunity to put forward a factual case that might be pleaded in reply on limitation (and/or, perhaps, by an amendment to the particulars of claim).[60]When I sent out this judgment in draft, I accordingly invited the parties to make submissions on whether Zavarco should, as a matter of procedure, be afforded this opportunity. I have already received submissions from Mr Temmink, but Zavarco’s solicitors have requested that they be given until 2 March 2026 for Zavarco’s submissions. I will allow Zavarco until then to make their submissions, and will not make an order until I have considered those submissions.

Other matters

[61]The hearing was initially listed to deal with an application for summary judgment issued by Zavarco. If reverse summary judgment is granted in favour of Mr Nasir, that application does not arise. I will indicate only briefly why (in any event) I shall dismiss it.[62]In the draft defence prepared on behalf of Mr Nasir (but not yet filed) it is pleaded in the alternative to the limitation defence that the incorporation of Zavarco and the pursuit of the present claim are part of an illegal purpose. Mr Nasir contends that Zavarco was incorporated as part of a scheme to allow Zavarco Berhad and/or VTel (Malaysian companies) to be (indirectly) listed on the Frankfurt Stock Exchange at a dishonest and fraudulently high valuation. He indicates that he will if necessary plead that he was encouraged by the proposed additional parties to take the subscriber shares in Zavarco (and, before that, shares in ZB, which was acquired by Zavarco) in order to lend further legitimacy to the scheme and thus further assist in the dishonest defrauding of third parties, including investors on the Frankfurt Stock Exchange and Bank Pembangunan Malasia Berhad (“BPMB”). As indicated above, Mr Nasir thus indicates that he will seek to argue that the court should refuse to allow the claim to proceed on grounds of public policy. He also intimates a counterclaim against Zavarco (and an intention to pursue a part 20 claim against the proposed additional parties) for damages for fraudulent misrepresentation, arguing that misrepresentations were deliberately made to him with the effect of procuring his subscription to the memorandum, and therefore becoming holder of the shares the payment for which these proceedings are concerned. Mr Nasir says that the counterclaim is for the amount claimed by Zavarco, thus saying there is circuity of action.[63]Mr Lawrence contended that these defences and proposed counterclaims are barred by issue estoppel arising from the declaratory relief proceedings, or that they were an abuse of process under the rule in Henderson v Henderson (1843) 3 Hare 100, and the court could determine on a summary judgment basis that they should not be permitted to proceed.[64]First, there can be an issue estoppel only if the issue in the later case is one which was expressly decided, or a necessary and fundamental part of or a step in the decision, in the earlier case: see Re Lehman Brothers plc [2024] 2 BCLC 396 at [97]. As Hildyard J said, ‘the fact that the approach of the court on an issue arising in one case may be determinative of a different issue in another case between the same parties does not, without more, establish an issue estoppel’. It was not expressly decided by Mr Griffiths in 2017 that the allegations of fraud which Mr Nasir has indicated he would wish to pursue were unproven. They were not then before the court, so neither was this a necessary step in the court’s decision that the shares were unpaid and that Zavarco was entitled to forfeit them; indeed, and as both counsel pointed out, it was Mr Nasir’s case then both that he was a member of the company and that he had paid for his shares by an agreed method other than cash. There is no issue estoppel.[65]The essential nature of a Henderson v Henderson abuse was explained thus by Lord Bingham of Cornhill, in Johnson v Gore-Wood & Co (a firm) [2000] 2 AC 1 at 31:
‘The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.’
[66]Mr Lawrence pointed out that issues about the valuation of the shares, and whether the Frankfurt Stock Exchange was given accurate information about the shares, was in issue in the 2016 proceedings. Mr Nasir had by then written to the Malaysian Anti-Corruption Commission, indicating that he had concerns among other things about irregularities in the way that VTel was being operated. The way that Zavarco became the ultimate owner of VTel is set out by Judge Jonathan Richards in Zavarco v Sidhu [2021] EWHC 1526 (Ch) at [9] onwards. It is Mr Nasir’s case that VTel was deliberately overvalued.[67]Accordingly, Mr Lawrence submitted that Mr Nasir was aware of the thrust of the fraud allegations when defending the 2016 proceedings. He had a choice to make; either to maintain that he had paid for his shares through a valid arrangement, or argue that there was a fraud. It is, he said, an abuse of process for the fraud allegations to be introduced now.[68]The arguments on Henderson v Henderson abuse cannot properly be determined at this stage as a matter of summary judgment. There is a significant amount of documentary evidence on the point, almost none of which I was taken to and which in any event and almost inevitably will not be the whole story. Mr Nasir contends that he has become aware of significant evidence relevant to his fraud allegations since the 2016 proceedings, both from the proceedings pursued by Zavarco against Mr Sidhu, which came to judgment at first instance only in 2021, and by reason of proceedings in Malaysia commenced in 2022 by BPMB, alleging fraud against (inter alia) Zavarco and the proposed additional parties. The allegations of fraud made by him now are significantly wider than those which it can be shown that he had in mind in 2017.[69]The broad merits-based assessment which the court is required to carry out in order to determine whether the raising of an issue now is abusive cannot be made on the basis of the impressionistic approach adopted by Zavarco. The fact that Mr Nasir had apparent awareness of some of the allegations now set out in the draft defence is not sufficient to lead to the determination that he was in 2017 able sufficiently to plead the defence of fraud. No attempt was made on behalf of Zavarco to compare the state of Mr Nasir’s apparent knowledge in 2017 with the allegations contained in the draft defence. It is also by no means self-evident that he was required at that stage to elect between his claim to have paid for his shares, and a claim that he was the victim of fraud which at that stage may have entailed a counterclaim seeking to set aside his agreement to purchase the shares. By the same token, I do not suggest that Zavarco’s position is unarguable; rather that it is not a matter for summary judgment.

Conclusion

[70]I am satisfied on the basis of the arguments that have been made to me on behalf of both parties that Zavarco’s claim is time barred and that, in principle, reverse summary judgment should be entered. As I have indicated above, when I have heard from both parties I will determine whether Zavarco should as a matter of procedure (and as Mr Lawrence has requested) have a further opportunity to put forward a factual case as to why Zavarco’s cause of action did not accrue until a demand was made.