Osk Investment Bank Berhad V Lim Chee Fatt

  

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MALAYSIA

 

IN THE HIGH COURT AT KUALA LUMPUR (COMMERCIAL DIVISION)

 

SUIT NO. D-22NCC-109-2009

 

Between

 

OSK INVESTMENT BANK BERHAD

 

(Company No: 14152-V) … PLAINTIFF

 

And

 

LIM CHEE FATT

 

(NRIC NO: 590613-10-5781) … DEFENDANT

 

BEFORE THE HONOURABLE JUDGE Y.A. HAJI HAMID SULTAN BIN ABU BACKER

 

IN OPEN COURT

 

JUDGMENT

 

This is my judgment in respect of the plaintiff’s claim against the defendant as Commission Future Brokers Representatives (CFBR) of the plaintiff to trade and the defendant’s counterclaim in negligence etc.

 

Brief facts

 

1. By an agreement the defendant was appointed as the plaintiff’s CFBR. One of the primary obligations of the defendant is to indemnify for any loss occurred in his client’s account. The

 

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defendant introduced a client to the plaintiff and a trading account was opened. The defendant carried out client’s instruction and executed transactions and about March 2007 incurred losses and hence this claim for the sum of RM 786,510.86 with interest etc; based on the indemnity.

 

2. The plaintiff summarises the defendant’s contention as follows:

 

“The issues which the defendant relies on to vitiate his liability to

 

indemnify the plaintiff centres on the events of the 27th and 2&h

 

February 2007. It is the defendant’s contention that the plaintiff:

 

(i) should not have allowed the client to trade above the Position Limit and Margin Requirement;

 

(ii) should have sold down the shares on the 2&h of February 2007;

 

(iii) that the plaintiff’s act of giving the client time to rectify his amounts to a breach of the Bursa rules/terms of the Client’s Agreement with the plaintiff and therefore amounts to negligence on the part of the plaintiff OR creates a new agreement with the client which does not bind the defendant. ”

 

3. The defendant in essence says that the plaintiff had direct negotiation with the client that resulted in an agreement reached between the client and the plaintiff that effectively renders the defendant’s agreement with the plaintiff null and void.

 

4. The case of the plaintiff and defendant is adequately set out in the opening statement of the plaintiff enclosure 17 and defendant’s

 

opening speech enclosure 18, the issues to be tried enclosure 16

 

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and statement of agreed facts enclosure 15. All the above enclosures must be treated as forming part of the judgment for purpose of comprehensiveness.

 

Preliminaries

 

5. Three gave evidence for the plaintiff and the defendant was the only one who gave evidence despite the allegation that the plaintiff had direct negotiation with the client which was not admitted by the plaintiff in the manner alleged by the defendant. In addition the client was not called to give evidence by the defendant and no subpoena was issued against the defendant. The allegation of the defendant primarily must be seen as an afterthought as it was not done contemporaneously at the material time i.e. in 2007 but it was only raised in the 2009 in a reply letter to the plaintiff’s letter when the plaintiff requested that the defendant increase his repayment to RM 5,000.00 every month towards the client’s losses.

 

6. Plaintiff and defendant relied on the following cases namely: UMBC Securities Sdn Bhd v. Tan Chee Ann [2001] 3 MLJ 410; HLG Securities Sdn Bhd v. Lee Han Boon [2009] 1 LNS 605; OCBC Securities Private Limited v. Phang Yul Cher Yeow & Another Action [1998] 1 SLR 826;Kidurong Land Sdn Bhd & Anor v. Lim Gaik Hua & Ors [1990] 1 MLJ 485; Malaysian Rubber

 

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Development Corporation Berhad v. Glove Seal Sdn Bhd [1994] 4 CLJ 783.

 

7. I have heard the evidence, documents and submission of the parties in detail. Both the learned counsels have adequately dealt with the evidence and law in their submission for which I am grateful. It will not serve any useful purpose in repeating the same save to deal with the relevant issues on point directly. After giving much consideration to the submission of the defendant I take the view the plaintiff’s claim must be allowed and the defendant’s counterclaim must be dismissed. My reasons inter alia are as follows:

 

(a) The plaintiff’s witness gave evidence, which was supported by documentary evidence and were consistent despite severe cross examination, and it is my finding they are witnesses of truth.

 

(b) The defendant’s evidence was evasive on the issue of liability, despite strong documentary evidence to support the plaintiff’s case on many issues raised by the defendant inclusive of the breach of Bursa rules.

 

(c) It is important to note that the defendant has not raised the complaint at the earliest opportunity and in consequence will be estopped from relying on those issues in transaction of this nature. Support for the proposition is found in a number

 

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of cases. To name a few are as follows: (i) In UMBC Securities Sdn Bhd v. Tan Chee Ann (supra); (ii) In HLG Securities Sdn Bhd v. Lee Han Boon (supra); (iii) In OCBC Securities Private Limited v. Phang Yul Cher Yeow & Another Action (supra) ; (iv) RHB-Cathay Securities Pte Ltd v. Ibrahim Khan & Another Action [1999] 3 SLR 464.

 

(d) In the instant case I do not find any merit on the defendant’s allegation that the Bursa rules were breached. In addition the state of affairs was brought by the defendant who was obliged under the agreement to indemnify the plaintiff.

 

8. For reasons stated above, I allow the plaintiff’s claim prayers (a) and (b) with costs in the sum of RM 50,000.00 to be paid by defendant to the plaintiff. I dismiss the defendant’s counterclaim with costs. The defendant to pay costs in the sum of RM 20,000.00 to the plaintiff.

 

I hereby order so.

 

(Y.A. DR.HAJI HAMID SULTAN BIN ABU BACKER)

 

Judge

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

Date: 25th May 2010

 

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For the Plaintiff: Preetha Pillai; M/s Skrine For the Defendant: H.Y.Lee; H.Y.Lee & Co.

 

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