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2010 MarsdenLR 3085
HIGH COURT MALAYA KUALA LUMPUR
OMEGA SECURITIES SDN BHD – Appellant
Versus
DATO HAMZAH ABDUL MAJID – Respondent
[(Commercial Division) Suit No: D-22-1639-2007]
A Margin Facility Agreement must be supported by credible evidence, specifically the obligation of parties cannot be denied by claims of non-existence or illegality unless substantiated with strong evidence.
Headnote:(A) Companies Act 1965 - Section 236(2)(a) - Evidence Act 1950 - Section 90A - Limitation Act 1953 - Time-barred claims - The Plaintiff, a stock broking company wound up, claimed RM12,658,779.00 against the Defendant for contra losses, with interests calculated at 13.5% per annum from 19 April 05. The Defendant argued there was no Margin Trading Facility (MTF) and claimed a loan of RM8 million instead, asserting it was time-barred and unlawful. The Court found the Plaintiff's evidence of the MTF was credible and established the Defendant’s obligations under the Margin Facility Agreement (MFA). (Paras 1.1, 2.1, 6.1, 6.6)
(B) Illegality - Loan - Court confirmed no loan was granted as alleged by the Defendant, emphasizing the necessity of presenting evidence for claims raised at trial, highlighting that the onus was on the Defendant to prove such claims. The Defendant failed to substantiate his assertions regarding the loan, confirming the Court's discretion on evidential gaps. (Paras 6.2, 6.6)
(C) Non-stamping - The MFA not invalidated by non-stamping, as it does not affect the document’s core validity. (Paras 6.4)
(D) Time-bar - The Plaintiff commenced action timely, following the termination notice dated 18 April 05. (Paras 6.6) (E)
Result: Judgment granted for the Plaintiff with costs to be taxed.
| Table of Content |
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| 1. main issues outlined for court determination (Para 4 , 5) |
| 2. final judgment and order (Para 7) |
1.2. The Plaintiff, a former stock broking company having been wound-up on 8.7.04 filed this action through its liquidator pursuant to s 236(2)(a) of the Companies Act 1965 .
1.3. On 4.9.97 the Plaintiff issued a letter of offer to the Defendant to open an individual share trading account. The Defendant accepted the offer and signed an undated individual account application form and an undated Margin Facility Agreement (MFA). The Plaintiff granted a Margin Trading Facility (MTF) of up to a limit of RM10 million to the Defendant to enable him to trade on the securities listed on the Kuala Lumpur Stock Exchange. At all material times, the Defendant being a client of the Plaintiff maintained a Margin Account vide Account No HA600/DLH.
1 April The Plaintiff claimed that the Defendant carried out shares sale and purchase transactions on the Margin Account which resulted in contra losses. Copies of the Contract Notes and Contra Statements in relation to the transactions are exhibited in Bundle D pp 35 to 43.
1.5. The Plaintiff's Contra Notes, Contra Statements, Margin Financing Reports, Outstanding Balance, Client History Transaction, Notices from the Plaintiff to the Defendant and other documents on the outstanding balance are computer print-outs. The Plaintiff tendered a Certificate pursuant to s 90A of the Evidence Act 1950 (Bundle D1 pages 4 & 5) for the purpose of admitting the computer print-outs in evidence.
1.6. The Plaintiff terminated the MFA on 18 April 05 and claimed for the total sum of RM 12,658,779.00.
2. The Defendant's case
2.1. The Defendant claimed that no MTF was ever granted by the Plaintiff to the Defendant. In his evidence the Defendant recalled signing some documents but was not sure whether the documents were in respect of the MTF.
2.2. The Defendant claimed that he did not carry out any share trading transactions on the Margin Account but had instead obtained a loan of RM8 million from the Plaintiff, with the loan sum being deposited on 5.9.97 into the bank account of his company known as Cempaka Holdings Sdn Bhd (Cempaka Holdings). As security for the loan the Defendant had deposited 15,939,000 Wembley Industries Holdings Bhd shares (Wembley Shares) with the Plaintiff on the understanding that the shares would be sold from time to time to repay the loan. At the material time the Defendant was the Chairman of Wembley Industries Holdings Bhd.
2.3. The Defendant contended that the grant of the loan by the Plaintiff was in contravention of the Kuala Lumpur Stock Exchange Rules, Banking and Financial Institutions Act 1989 and the Securities Industries Act 1983 and was therefore void for illegality pursuant to s 24 of the Contracts Act 1950 and unenforceable against the Defendant.
2 April The Defendant also submitted that the Plaintiff's claim was time barred with the period of limitation of 6 years being applicable in this case from the date of the first demand made on 27.5.99.
2.5. The Defendant prayed that the Plaintiff's claim be dismissed on the grounds of illegality, that the Plaintiff had failed to discharge its burden of proof and that the claim was time barred under s 6(1)(a) of the Limitation Act 1953 .
3. The Plaintiff's reply
3.1. The Plaintiff was at all times in the business of share broking and trading and not in money lending.
3.2. The allegation of a loan was not pleaded by the Defendant in his Defence.
3.3. The Plaintiff did not give a loan of RM8 million to the Defendant and did not disburse the alleged loan to the Public Bank Account of Cempaka Holdings.
3 April The Wemb
