The ownership of funds in margin accounts was determined in favor of the beneficial owner, negating claims of fiduciary breach by account holders.

[1] The appeal concerns a claim which was initially commenced by the appellants against the first respondent by originating summons dated 30 March 2012 but was subsequently ordered by the learned trial Judge on 3 August 2012 to be converted to a writ of summons. On 17 August 2012 a statement of claim was filed which was nevertheless amended twice. In the meantime, the second respondent sought and obtained leave of the High COURT to be joined as a defendant to the appellant's claim. He filed a defence and counterclaim. After eight days of trial, the learned trial Judge dismissed the appellant's claim and allowed the second respondent's counterclaim. The appellants appealed to this COURT against the said decision.

The Appellants' Claim

[2] The first and second appellants were account holders of Share Trading Margin Accounts bearing numbers MD 0120 and MD 0119 (the margin accounts) respectively with BBMB Securities Sdn Bhd (BBMB Securities) since 1997. It is noteworthy that BBMB Securities was the first respondent's predecessor whose assets and liabilities had apparently been taken over by the latter. The appellants had credit balances in the margin accounts since 1997 that were being paid out to them in instalments by BBMB Securities until the said accounts were frozen on the instructions of the Commercial Crime Department of the Royal Malaysian Police (PDRM) on 2 November 1999 pending the investigation of one Thum Hong Gaik (Cherie Thum), the second respondent's dealer's representative who handled the transactions pertaining to the margin accounts at the material time. At the time of the freezing order by PDRM, the first and second appellants each had credit balances in their respective margin accounts in the sums of RM2,050,020.38 and RM1,054,290.00. On 1 August 2011, PDRM confirmed by letter that the freezing order on the said accounts was lifted as investigations were concluded.

[3] The appellants had been receiving monthly account statement for the said accounts from the first respondent from December 1999 till July 2012 showing the above balances were the monies due to them by way of account stated. Thereafter, the first respondent failed to provide such monthly statements despite requests for the same by the appellants. It transpired that the first respondent had utilized the monies in the said accounts to settle a judgement debt of the second respondent obtained by way of a Consent Judgement (the Consent Judgment) in Kuala Lumpur High COURT Civil Suit No D1-22-4634-1998 ("the 1998 Suit") by the first respondent on 16 December 2003 without the appellants' knowledge and consent.

[4] Based on the first respondent's aforesaid act, the plaintiffs have suffered loss and damage and been deprived of their monies. The appellants thus assert that the first respondent, in breach of their fiduciary and contractual duty to the appellants, failed to obtain the appellants' consent or approval as account holders to deal with the monies and further did not inform the appellants of the first respondent's act or provide the appellants a chance to dispute the first respondent's act before the monies were removed from the margin accounts. The appellants therefore claim that the first respondent pay-

(a) the first appellant the sum of RM2,050,020.38 standing in Margin Account Number MD 0120;

(b) the second appellant the sum of RM1,054,290.00 standing in Margin Account Number MD 0119; and

(c) both appellants general damages, exemplary damages as well as interest at 5% per annum from 1 August 2011 till the date of satisfaction and costs.

The First Respondent's Defence

[5] In their defence, the fir