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2025 MarsdenLR 2180
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]
A financing institution is entitled to sell mortgaged securities without liability for loss where the borrower fails to maintain agreed equity ratios, as stipulated in the margin financing agreement.
Headnote:(A) Margin Financing Agreement - Breach of terms - Plaintiff granted share margin financing facility of RM30,000,000 to Defendant - Defendant failed to maintain required equity ratio and comply with repayment terms - Plaintiff exercised right to force sell mortgaged securities due to continued default. (Paras 3, 5, 10, 26)
(B) Summary Judgment - Court found Defendant's contention lacked merit, dismissing claims of delay and negligence in the forced sale of securities - No bona fide triable issue existed to warrant trial. (Paras 2, 16, 25)
Facts of the case:
Plaintiff granted a facility to Defendant secured by a power of attorney, with ongoing breaches confirmed by a series of indulgences given by Plaintiff which were not complied with by Defendant. (Paras 3-6)
Findings of Court:
Plaintiff acted within contractual rights in selling securities; delay or negligence by Plaintiff not proven; decline in market value not attributable to any failings by Plaintiff. (Paras 27-31)
Issues: Whether Plaintiff exercised duty prudently and without delay in forced sale of securities; validation of actions as aligned with the contractual agreement. (Paras 17-20)
Ratio Decidendi: The Defendant had no ground to question the Plaintiff's manner of sale due to express contractual terms allowing Plaintiff discretion; failure to act was attributed to Defendant's inability to maintain equity ratios as contracted. (Paras 21, 24)
Result: Application for summary judgment allowed in favor of Plaintiff.
| Table of Content |
|---|
| 1. outline of plaintiff's case and facts of breach (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. defendant's claims of delay and negligence (Para 16 , 17 , 18) |
| 3. court's recognition of contractual terms (Para 19 , 20 , 21 , 22 , 23) |
| 4. court's analysis of indulgences and responsibility (Para 24 , 25 , 26 , 27 , 28) |
| 5. court's finding on evidence and market behavior (Para 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 fur
