CGS International Securities Malaysia Sdn Bhd v Cheong Yow Kien

Case Significance

Illustrates the resolution of a stockbroking contra-loss claim by Order 14 summary judgment, and the rule that allegations of fraud must be specifically pleaded and particularised and cannot rest on bare assertions to raise a triable issue.

This High Court decision at Johor Bahru concerns an application for summary judgment under Order 14 of the Rules of Court 2012 by a licensed stockbroking firm against one of its clients. The plaintiff, CGS International Securities Malaysia Sdn Bhd, claimed against the defendant for a loss arising from a contra transaction in the shares of a listed company traded through the defendant's individual share-trading account in June 2021. The loss arose when the defendant failed to pay for the shares he had bought by the settlement time prescribed under Rule 9.09(2) read with Schedule 2 of the Rules of Bursa Malaysia Securities, which obliges a buying client to pay the participating organisation by the prescribed day and time. When the defendant did not pay, the plaintiff had to sell the shares back in the market through a force sale and used the proceeds to contra the unpaid purchase cost, the shortfall being the loss claimed. The defendant had over about two and a half years paid a substantial sum towards the debt before defaulting, and the plaintiff claimed the outstanding balance. The defendant resisted summary judgment by alleging fraud and deceit. The court, per Noor Hisham bin Ismail J, held that the defendant's allegations were bare assertions unsupported by any contemporaneous documents, and that a party is bound by documents he has signed even if they were not explained to him, applying Rabiah bt Ani v Samsi bin Hj Hasim. It further held that fraud must be specifically pleaded and particularised, which was wanting here, and that bare assertions are insufficient to raise triable issues, applying Abdol Mulok bin Awang Damit v Perdana Industri Holdings Bhd. Satisfied that the plaintiff had proved its claim and that the defendant had raised no triable issue, the court entered summary judgment for the plaintiff with costs of RM3,000. The judgment is a useful illustration of the resolution of a stockbroking contra-loss claim by summary judgment and of the requirement to plead and particularise fraud.