JUDGMENT

Kang Hwee Gee J:

[1] We heard the parties on 3 March 2009 when we dismissed the appellant's claim and allowed the respondent's counter-claim. We intimated that we would provide our written judgment at a later date.

[2] The appellant was the respondent's stockbroker for the sale and purchase of shares at the Kuala Lumpur Stock Exchange (KLSE) pursuant to an application to open an Individual Account Agreement (the application) signed by the respondent and accepted by the appellant.

[3] The opening paragraph of the application read:

By signing below, I, Tan Hock Leong

(1) request you to open an Account in En. J Securities Sdn. Bhd. (EN: J) and undertake to abide by the Rules and Regulations of The Kuala Lumpur Stock Exchange ("The KLSE") and any relevant regulations governing the purchase and sale of shares quoted on The KLSE being in force and any subsequent new rules or regulations that may be brought into force from time to time. A copy of such rules and regulations can be made available to me.

[4] The Rules and Regulations of the KLSE in question was r. 8 of the Rules For Trading By Member Companies, which read as follows:

Selling Out In Relation to the FDSS (From sub-reg 3 of FDSS of Members' Circular No 713/1990)

Member companies shall close-off purchase positions of clients who fail to pay for their purchases by 12:30pm on the seventh market day following the date of contract and shall on an immediate delivery basis institute a selling-out by the eighth day the securities or any of the securities for which the client has not made full payment by the said due date. The member companies may at any time thereafter sue such clients for the difference and all losses and expenses consequent upon such selling-out. It shall not be necessary for member companies to give notice of all such selling-out and all damages which the member companies may sustain shall be recoverable from the clients as liquidated damages.

[5] The dispute between the parties arose from the purchase of 13 counters of the KLSE which the defendant failed to pay for on the seventh day of purchase after the day of transaction (T+7) under the above-mentioned rule. Under the same rule the appellant was bound to force-sell the shares in the open market on the 8^th day (T+8) if they are not paid for on the seventh day.

[6] It is common ground that the respondent had failed to pay for the shares on T+7 in consequence of which the appellant had forced sold them not on T+8 but at a later date. The various counters were as listed in exh. P2. The loss which the appellant was claiming was quantified at RM46,271.62 as set out in the statement of claim.

[7] The respondent's defence is premised on the contention that:

(i) In respect of the counters 2, 3, 4, 5, 6, 7 and 13 (the first group as listed in exh. P2), the appellant failed to sell it on the 8^th day (T+8) in contravention of the KLSE Rules under which both the parties had agreed to adopt as a term of the agreement;

(ii) In respect of the counters 9, 10, 11 and 12 (the second group as listed in exh. P2), the appellant proceeded to dispose of all the shares notwithstanding that the appellant had agreed to withhold the sale upon the respondent depositing with the appellant as security 10 lots of Landmarks shares and 5 lots of Kemunting shares.

[8] For the aforesaid reasons the respondent claimed he suffered loss. He counter-claimed for special damages of RM58,030.50 arising out of breach of contract on the part of the appellant with costs and interest.

[9] We are unanimous in our finding that the learned judge was right in accepting the testimony of the respondent the Landmarks and the Kemunting shares referred to above, were deposited with the appellant "to delay the forced-selling of the shares" of counters 9 to 12 in the list exh. P2. The appellant was not able to produce any evidence to the contrary as the dealer who was assigned to deal with the respondent was not called to give evidence. We are unanimous in our views that