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2025 MarsdenLR 2156
HIGH COURT MALAYA KUALA LUMPUR
MIDF AMANAH INVESTMENT BANK BERHAD – Appellant
Versus
TAN SRI MUHAMMAD IKMAL OPAT ABDULLAH – Respondent
[Suit No: WA-22NCC-674-09/2024]
The Plaintiff acted within contractual rights and had no duty to delay forced sale of shares despite market conditions, as the Defendant failed to maintain agreed equity ratios.
Headnote:(A) Agreement - Share Margin Financing Facility - Compliance with Required Equity Ratio and forced sale of shares - Defendant failed to maintain required equity ratio under the facility agreement, leading to the Plaintiff's right to sell mortgaged securities without further notice as per contractual terms. (Paras 1-12)
(B) Duty of Care - Plaintiff's obligation regarding forced sale of shares - Court found no delay or negligence by the Plaintiff in conducting the sale; duty to sell was established by the terms agreed upon, granting Plaintiff absolute discretion. (Paras 17-32)
Facts of the case:
Plaintiff provided a margin facility to Defendant, secured by shares, with terms specifying required equity ratios. Defendant defaulted on payments and failed to maintain the necessary ratios, prompting the Plaintiff to conduct a forced sale of the shares.
Findings of Court:
The Plaintiff acted in accordance with the terms of the agreement and had provided multiple opportunities for the Defendant to remedy breaches before proceeding with the sale.
Issues: Whether the Plaintiff delayed in selling mortgaged shares and if expert evidence was necessary to justify actions taken.
Ratio Decidendi: The court held that the Defendant's claims regarding Plaintiff's negligence were unfounded, as the Plaintiff adhered to the contractual agreement and acted with diligence.
Result: Application for summary judgment allowed.
| Table of Content |
|---|
| 1. background facts of the case (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 2. defendant's arguments on delay and negligence (Para 16 , 17 , 18) |
| 3. court's analysis and observations regarding the plaintiff's actions (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
Introduction
[1] This judgment deals with the Plaintiff's application for summary judgment for outstanding sums under a margin facility. The Defendant claimed that the Plaintiff had breached its duty to conduct the forced sale of the shares charged as security for margin facility granted by the Plaintiff upon the Defendant's default.
[2] This Court found the Defendant's contention to be wholly without any merits and did not give rise to a bona fide triable issue to merit the matter to go to trial.
Background Facts
[3] By an Agreement vide the Plaintiff's Letter of Offer dated 12 December 2019, Supplemental Letters of Offer dated 13 March 2020, 6 September 2021, the Share Margin Financing Agreement dated 23 December 2019 made between the Plaintiff and the Defendant, the Plaintiff did, upon the request of the Defendant, agree to grant a Share Margin Financing Facility of RM30,000,000.00 ("the Facility") to the Defendant to finance the purchase of securities listed on Bursa Malaysia which are acceptable to the Plaintiff and placed through the Plaintiff and to re-finance existing share margin facility granted by other party.
[4] In consideration of and as further security for the Facility, the Plaintiff was provided with a Power of Attorney dated 23 December 2019, Memorandum of Charge on Shares dated 23 December 2019 and Letter of Pledge cum Memorandum of Deposit of Stocks and Shares dated 23 December 2019.
[5] In breach of the terms and conditions of Facility, the Defendant failed to comply with the terms and conditions on which the Facility was availed including but not limited to failing to maintain the Required Equity Ratio of 250% since 18 January 2024 under the Facility.
[6] Whilst the Plaintiff has via its letter dated 5 February 2024 granted indulgences to the Defendant including but not limited to agreeing for the Defendant to settle the outstanding amount under the Facility via a repayment schedule between 8 February 2024 to 30 June 2025 and allowing the Defendant a reduced Required Equity Ratio of 150%, at all times during the tenure of the restructured facility ("1st Indulgence"), the Defendant failed and or neglected to make payment of outstanding sums under the Facility and or maintain the Equity Ratio of at least 150% since 5 February 2024 under the Facility.
[7] This breach continued despite the Plaintiff's letter dated 6 February 2024 providing notice to the Defendant to rectify the position and shortfall by 12.30pm on 6 February 2024, the Plaintiff's letter dated 28 February 2024 rejecting the Defendant's proposal to waive the requirement to maintain the Equity Ratio above 150% at all times during the tenure of the restructured facility and requiring the Defendant to maintain the Equity Ratio above 150% by third (3rd) business day after the date of the Plaintiff's letter dated 1 March 2024 rejecting the Defendant's request for thirty (30) business days to comply with the Equity Ratio above 150% and requiring the Defendant to maintain the Equity Ratio above 150% by third (3rd) business day after the date of the letter, failing which the Plaintiff shall force sell the Mortgaged Securities without giving any further notice to the Defendant in such manner and upon such terms and conditions as the Plaintiff shall think fit and shall apply the proceed thereof in reducing the balance of the Facility.
[8] By reason of the Defendant's failure to comply with the above, the Plaintiff has proceeded to exercise its right to force sell the Mortgaged Securities.
[9] Notwithstanding the same, the Plaintiff did provide further opportunity to remedy via its letter dated 6 May 2024 (2nd Indulgence), allowing the De
