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2011 MarsdenLR 3589
GUNALAN MUNIANDY
SEE CHOO @ SEE GUAT KIOK – Appellant
Versus
JB SECURITIES SDN BHD – Respondent
In civil fraud cases, the plaintiff must prove allegations beyond reasonable doubt; defenses citing limitation apply strictly due to the absolute nature of statutory time limits.
Headnote:(A) Limitation Act 1953 - Section 6(1) - Civil Procedure - Claims of fraud in share trading - Plaintiff's cause of action based on alleged fraud by stock broking defendant leading to losses from share trading accounts - Allegations of negligence and breach of contract also raised. (Paras 1, 4, 33)
(B) Legal Burden of Proof - In civil claims involving fraud, the plaintiff has the burden to prove the allegations, which is high - Standard of proof is 'beyond reasonable doubt', not merely 'balance of probabilities'. (Paras 17, 34)
(C) Estoppel and Limitation Defense - Plaintiff's claim was determined to be time-barred as the cause of action arose over six years prior to suit being filed, despite reliance on fraud for tolling the limitation period. (Paras 6, 21, 33)
Facts of the case:
The plaintiff, under two trading accounts with the defendant stock brokerage, alleged fraudulent trading practices and sought disclosure for irregularities. Claims against the defendant included negligence and breach of contract with the defendant asserting time-bar defenses and questioning the substantiation of fraud allegations.
Findings of Court:
The court found that the plaintiff had not proven fraud against the defendant, and the claims were past the limitation period for action. The dismissal of the claim was upheld.
Issues: Main issues included the establishment of fraud by the defendant, whether negligence occurred, breach of contract evidenced, and whether the claims were barred by limitation.
Ratio Decidendi: The court concluded that the plaintiff failed to meet the burden of proof required for fraud allegations and that the claims were time-barred since proper disclosure and knowledge of transactions existed long ago.
Result: Claim dismissed with costs.
| Table of Content |
|---|
| 1. establishment of plaintiff's claim and defendant's background. (Para 1 , 2 , 3 , 4 , 5) |
| 2. limitation period and fraudulent claims. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13) |
| 3. impact of prior legal suit on current claims. (Para 15 , 16) |
| 4. burden of proof in fraud allegations. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32) |
| 5. conclusion on proof of fraud and outcome of case. (Para 33 , 34 , 35 , 36) |
GUNALAN A/L MUNIANDY, JC:
(1) The plaintiff (P)s cause of action, which arises from a contractual relationship with the defendant (D) involving share trading, is premised on fraud as particularised in the statement of claim. The alleged fraud by D revolved around the manner in which Ps share trading accounts were operated by D. The claim was broken down into various heads, each particularised in the form of individual trading names for shares of companies listed on the Kuala Lumpur Stock Exchange (KLSE). The various heads refer to the trading counters as set out in the statement of claim (SOC).
Summary of Facts (Agreed)
(2) (1) The plaintiff was a client of the defendant. The defendant is a stock broking company, whose main trading activity is the buying and selling of shares on the Kuala Lumpur Stock Exchange.
(2) The plaintiff had two trading accounts with the defendant, namely 2AM033 and 3SE035.
(3) Account No. 2AM033 was a margin-trading account. This margin trading facility was offered under account 2AM033 which was set up by Arab-Malaysian Merchant Bank Berhad ("AMBB").
(4) There were transactions under the following counters of companies of the KLSE:
(a) Malakoff
(b) Faber Merlin
(c) Jasa Mega
(d) Landmark
(e) MFCB
(f) Mentiga
(g) HICOM
(h) SittTatt
(i) NBT
(j) ANCOM
(k) BIN
(5) The plaintiff has made many complaints and inquiries, and had also made various relevant applications as follows:
(a) Johor Bahru High Court on 3/11/1999,
(b) Johor Bahru High Court 13/6/2002, and
(c) Johor Bahru High Court 2/12/2002
for the Defendant to disclose the said purchases (together with the documentation relevant thereto).
P obtained orders of disclosure against D through these applications.
Summary of Defendant (D)s Case
(3) 1. The Defendant states that the 2AM033 account was a margin financing facility opened by the plaintiff but operated by the plaintiffs agent, Arab Malaysian Merchant Bank Berhad (AMMBB).
2. AMMBB dealt directly with the Defendant in respect of the trade settlement of payments for the plaintiff under the 2AM033 account and since the margin financing facility was operated by AMMBB, the Defendant sent to AMMBB all contract notes, bills, contract statements and the monthly statement of accounts in respect of the 2AM033 account.
3. In respect of the trades in specific shares the gist of Ds main contentions were:
a) All the sale and purchase transactions were done on Ps instructions with her full knowledge without any fraud, breach of duty or wrongful actions.
b) All the contract notes pertaining to the above transactions had been given to AMMB, who managed Ps 2AM033 account, in the normal course of business.
c) Losses, if any, sustained by P were the result of normal trades and risks associated with share trading.
d) D was not privy to the statements of accounts (SOA) issued by AMMB to P nor responsible for them.
e) Ps two accounts, 2AM033 and 3SE035 were separate and distinct accounts.
f) The buy-in of shares complained of was to comply with KLSEs requirement and practice due to Ps short sell position and there was no wrongdoing.
g) All sale and purchase transactions in respect of the relevant counters were reflected in the SOA sent to P either by D for 3SE035 account or by AMMB for 2AM033 account, including the keying- in mistake shown by notice of wrong entry and subsequent amendment.
h) D did not conceal any trades or cancellations from P.
i) P had not raised any complaints or issue of discrepancies upon receipt of the contract notes in respect of both account
