Teh Hin Beng … Perayu/DefendanDanTa Securities Sdn Berhad … Responde

  

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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR

 

(BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS) RAYUAN SIVIL NO. R3(2)-12B-820-2004 RAYUAN SIVIL NO. R3(2)-12B-824-2004

 

ANTARA

 

TEH HIN BENG

 

PERAYU/

 

DEFENDAN

 

DAN

 

TA SECURITIES SDN BERHAD … RESPONDEN/

 

PLAINTIF

 

GROUNDS OF DECISION

 

This action which was heard before the Sessions Court was a claim by the Plaintiff (TA Securities Sdn Berhad) for contra losses on share trading for the pleaded sum of RM 22,087.07 as at 19th September 1994 and further interest that on at the rate of 12.75% per annum at daily rests calculated from 20th September 1994 until date of judgment, and thereafter at 8% annum from the date of judgment until date of full settlement. The Defendant (Teh Hin Beng) denied conducting the share trading, allegedly in Berjaya Group shares, from which the contra losses were incurred. The Defendant counterclaimed for the sum of RM 90,000.00, damages and interest at the rate of 8% per annum, against the Plaintiff for its conversion and negligence in failing to return

 

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his 20 lots of Berjaya Industrial Berhad shares for which he had fully paid in the sum of RM 89,417.20 then.

 

Both the main claim and the counterclaim were dismissed by the learned Sessions Court Judge on the basis that both parties had failed to prove their respective claims on a balance of probabilities.

 

The learned Sessions Court Judge found, however, it was proven on the evidence that the relevant contract notes and contra losses were sent to the Defendant at his address, as given in the Account Opening Form (Exhibit P-1). Nevertheless, he concluded, purely on the issue of proof, the Plaintiff had failed to establish its case since essentially the pleaded amount failed to tally with the evidence presented, namely Exhibits P-5, P-6 and P-11. P-5 and P-6 specified a figure of RM23,090.49, whereas the Letter of Demand stated RM 20,642.44.

 

Further to this finding on the facts and evidence, the learned Sessions Court Judge also came to a separate finding that it was not proven the dealing in shares which led to the losses were instructed by the Defendant or obtained his approval, whether orally or in writing. The third finding of fact related to the issue was whether the Plaintiff complied with all the terms and conditions agreed between the Plaintiff and the Defendant. Although the learned Sessions Court Judge did not elaborate in full the circumstances, the pleadings and the evidence led on these two additional findings of fact, it is evident, based on the pleaded case of the Defendant, that he was referring to the claim by the Defendant that the alleged share dealing was not authorised by the Defendant and/or were carried out by a person or persons who did not have the requisite dealer’s representative licence at the time the trades

 

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were done. On the third issue of non-compliance with the terms and conditions, the Defendant pleaded and led evidence to establish that the Plaintiff had not complied with the KLSE rules on selling out of shares not paid by a customer of a stockbroking company, namely the T+8 rule. There was no dispute that this was the applicable rule at the date of the alleged share transactions were done, and on the evidence the Defendant had established that the selling out was done at T+9 and T +11.

 

There was one issue that was not addressed by the Sessions Court but was part of the evidence led at the trial by the Defendant, and that had to do with the rate of interest imposed by the Plaintiff. The Plaintiff pleaded interest at 12.75% per annum at daily rests from 20 September 1994 to the date of judgment, but this was not the interest rate specified in the Account Opening Form.

 

Having reviewed the entirety of the notes of proceedings in the Appeal Record, the findings of the learned Sessions Court Judge could not be faulted, since it was evident from the record the evidence given by the three witnesses for the Plaintiff were weak and did not successfully address and answer the Defendant’s pleaded case. Since the Defendant had challenged the very existence and validity of the share trading alleged to have been authorised by him, it was incumbent on the Plaintiff to introduce evidence to show who was the authorised dealer’s representative, or remisier, who carried out the transactions. This was especially important because the Defendant had alleged the transactions were actually done by one Steve Wong Seng Huat, who at the material times, did not possess a valid Dealer’s Representative Licence. If this was correct, the entire share dealing would have been

 

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invalid for breach of a mandatory requirement under the Securities Industry Act.

 

Thus, the decision of the learned Sessions Court Judge on the main claim was allowed to stand, and consequently the Plaintiff’s appeal was dismissed with costs.

 

As regards the counterclaim, however, this was allowed with costs with a further order that the counterclaim be remitted back to the Sessions Court to consider and decide on the issue of damages, as pleaded by the Defendant in his counterclaim. Unlike the evidence led in respect of the main claim by the Plaintiff, the evidence on the existence of the separate purchase of Berjaya Industrial shares by the Defendant, for which he had fully paid, was clear. I agreed with the submission taken by counsel for the Appellant/Defendant (in Appeal No. R2-12-820-04), that the learned Sessions Court Judge had inordinately emphasised the relevance of IDD 23 (indeed its inadmissibility and non-relevance), but failed to properly consider the pleadings.

 

The reference to IDD 23 appeared on page 64 of the Appeal Record, as part of the Notes of Proceedings (Examination in Chief of DW-1) where the reference was to an “offer of sale” of the shares for which the Defendant “was not given the option to subscribe the same.” The IDD document itself appeared at pages 104 – 106. This was related to the dividend issue, offer for sale and bonus issue in relation to the Berjaya Industrial Shares claimed by the Defendant to have been in the custody of the Plaintiff. The fact that this was merely an identified document in connection with these issues and therefore inadmissible as evidence should not have been decided as conclusive on the main issue

 

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of ownership of these shares and whether they had been fully paid by the defendant. On this, the learned Sessions Court Judge had failed to consider not only the pleadings, but also had failed to draw the proper inferences from the totality of the evidence.

 

It was accepted evidence that the Defendant was a “retail” client and being so, he was not required to deposit shares as collateral. These shares claimed by him in the counterclaim were therefore not collateralised shares, and there was no evidence tendered by the Plaintiff that they had liquidated these shares as collateral, if indeed they were. The strong evidence presented by Exhibits D-29 and D-30 (page 81 to 82 of the Appeal Record) confirmed these Berjaya Industrial shares were in the possession of the Plaintiff. The Plaintiff’s solicitors confirmed that their client had deposited the shares concerned in a CDS account, when queried on it by the Defendant’s solicitors.

 

The reply to the defence and counterclaim did not deny these shares existed, but pleaded they were being used as collateral. The evidence flatly contradicted the pleading, since it was confirmed the Defendant was a retail client and no collateral was required from him. If indeed these shares were collateral, why were they not sold in accordance with the KLSE rules, and since they were purchased for RM 89,417.20 then, how was it that the Plaintiff was still claiming for RM 22,087.07 as at 19th September 1994?

 

The argument by counsel for the Defendant that in these circumstances, the Plaintiff must be regarded as bound by their pleading was therefore well-taken. The passage in Nor Azlina Abdul Aziz v

 

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Aminah Omar [1998] 2 CLJ 527 which was cited by counsel in the course of his written submission was particularly apt.

 

As decided in that case, it is settled law that parties are bound by their pleadings. A case must be decided on issues raised by the pleadings which bind parties. If other issues are desired to be raised or come to light during the trial, they must be pleaded by way of amendment. If there exists a variance between the pleading and the evidence given by a party at the trial, an amendment will become necessary and should be asked for.

 

The counterclaim was therefore allowed with costs, with a further order that the counterclaim be remitted back to the Sessions Court to decide on the issue of damages claimed by the Defendant in his counterclaim.

 

25th May 2009

 

Sgd.

 

( MOHAMAD ARIFF BIN MD YUSOF ) JUDICIAL COMMISSIONER HIGH COURT MALAYA KUALA LUMPUR

 

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COUNSELS

 

For the appellant:

 

Jadadish Chandra Messrs Arbain & Co.

 

For the respondent:

 

Malini Vepaneswaran

 

Messrs Tetuan Nik Hussain & Partners.

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