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2011 MarsdenLR 3629
HIGH COURT MALAYA ALOR SETAR
LAI BAN GUAM – Appellant
Versus
CHAN PHAIK BOI & ORS – Respondent
[Civil Suit No: 22-65-2007]
The court established that forgeries undermine the validity of share transfers, affirming that signatures must be verified to maintain corporate governance and prevent fraud.
Headnote:(A) Companies Act - Transfer of shares - Allegation of forgery - Director's circular resolution and resignation letter with alleged forged signatures, plaintiff contests validity leading to removal and transfer of shares. Court emphasizes parties bound by pleadings, corroborated by police reports and attendance logs. Standard of proof for forgery established as balance of probabilities. Court preferred plaintiff's document examiner's testimony over defendants'. Court distinguished attorney's ethical obligations. (Paras 3, 4, 6-12, 26, 28)
(B) Conspiracy - Requirements to establish conspiracy include an agreement between parties to harm the plaintiff, which was not proven in this case, as the actions were attributed to one person. (Para 14)
(C) Negligence - Company secretary's duty of care and standard of conduct evaluated; court found no negligence in the absence of requirement for signature verification due to trusting the director's authority. (Paras 15-27)
Findings of Court:
Signatures on the documents were proven to be forged, and plaintiff's claims regarding the resignation and share transfer were upheld. Dismissal of conspiracy claims against company secretaries; negligence was also not established.
Result: Plaintiff's claim for declaration upheld, conspiracy claims dismissed, costs awarded to plaintiff against certain defendants.
| Table of Content |
|---|
| 1. plaintiff's shareholding and claims. (Para 1 , 1 , 2) |
| 2. pleadings define the issue; signatures argument. (Para 3 , 4 , 5) |
| 3. forged signatures result in nullity. (Para 6 , 10 , 12) |
| 4. court's analysis on the nature of forgery evidence. (Para 7 , 8 , 9) |
| 5. conspiracy requires agreement to harm. (Para 13 , 14 , 15) |
| 6. company secretaries' duty and negligence. (Para 16 , 17 , 18 , 19) |
| 7. company secretary's role defined. (Para 20 , 21 , 22 , 23 , 24) |
[1]Plaintiff says at all material time he was a director of 2nd defendant company (D2) and held 33,333 shares. The other director is his father the 3rd defendant (D3) who held 66,667 shares. D2 has a share capital of RM100,000.00 divided into 100,000 ordinary shares of RM1.00 each. Plaintiff claims his signatures were forged on three documents which led to his removal as director and loss of his shares in D2 with 1st defendant (D1) becoming the director and holding 33,332 shares and 7th defendant (D7) 1 share. Plaintiff seeks a declaration the purported resignation and transfer of shares to D1 are null and void and of no effect. He also seeks damages against D1 and D3 for conspiracy and against 4th defendant (D4), 5th defendant (D5) and 6th defendant (D6) for conspiracy or negligence. D4, D5 and D6 were the company secretaries at the relevant material time.
Resignation And Transfer Of Shares
[2]The documents on resignation and transfer of shares which plaintiff claims his signatures were forged are:
(a) director's circular resolution dated 26 September 2006 appointing D1 as Director of D2 (P12 (1)) where the resolution was signed by plaintiff and D3;
(b) letter of resignation dated 26 September 2006 (P12 (2)) where plaintiff purports to tender his resignation with immediate effect; and
(c) two transfer forms (Form 32A) (P12 (4) and (5) for the transfer of 33,332 shares and one share;
collectively to be referred to as the three documents.
[3]It is plaintiff contention that D1-D3 having denied the allegation of forgery in the amended defence and pleading in para 10 with reference to a police report lodged by D3 the documents were signed on 26 September 2006 cannot now be allowed to depart from their pleadings. The aforesaid police report dated 7 November 2006 which is D5 specifically refers to plaintiff signing the documents on 26 September 2006 at 2.15 pm at D2's office. The evidence of both D1 and D3 in court are that plaintiff signed the three documents in their presence in D2's office on 19 September 2006. It is further D3's evidence he subsequently lodged another police report dated 24 October 2010 (D56) referring to his earlier police report of 7 November 2006 he was mistaken (tersilap) on the date of 26 September 2006 and it should be 19 September 2006. The mistake arose because he was old and ill arising from a stroke he suffered in 2006. In cross-examination D3 said D56 was lodged on his lawyer's advice and he could remember 19 September 2006 was the correct date.
[4]It is trite law parties are bound by their pleadings. Having in their defence asserted plaintiff had signed the three documents on 26 September 2006 D1-D3 cannot now contend otherwise and say the three documents were signed on 19 September 2006. Refer to the court of Appeal case ofAmBank (M) Bhd v. Abdul Aziz bin Hassan & Ors where it was said at p 792 that "pleadings operate to define and delimit with clarity and precision the real matters in controversy between the parties so that their respective cases can be prepared with ease and the court too can expeditiously adjudicate them. No litigant should be taken by surprise or be led astray due to faulty pleadings.". Refer also to Cheong Heng Loong Goldsmiths (KL) Sdn Bhd & Anor v. Capital Insurance Bhd, where it was stated at p 369 "he must stand or fall on his pleaded case. He cannot simultaneously put forward an unpleaded case".
[5]As D1-D3 had pleaded in their defence the three documents were signed on 26 September 2006 they cannot now say otherwise. As the
