A bank has a fiduciary duty to verify signatures on cheques and cannot absolve itself from liability for payments made on forged instruments, even under statutory defenses.

Introduction

[1] The Plaintiff's case against the Defendant is for special damages amounting to RM5,170,000.00, general damages, interest and cost for the negligence, failure and/or refusal of the Defendant as a bank in carrying out its duty for its customer, the Plaintiff.

[2] The case went for full trial and the following witnesses were called:

Plaintiffs' Witnesses

(i) PW1 - Muck Ho Wan, Director of the Plaintiff

(ii) PW2 - Wee Soon Teck, Director of the Plaintiff

(iii) PW3 - Iskandar bin Azaman, expert and document examiner from Jabatan Kimia Malaysia

Defendants' Witnesses

(i) DW1 - Kharzul Rafi bin Md Yazid, Customer Service Ambassador, Seri Gombak Branch of the Defendant (previously an executive at the Defendant's PJ Old Town Branch)

(ii) DW2 - Roslee bin Abd Karim, Assistant Manager of the Current Account Department, Jalan Kelang Lama Branch of the Defendant (previously a Senior Executive at the Defendant's PJ Old Town Branch)

(iii) DW3 - Ku Kim Soon, Manager of Central Monitoring Department, Banking Operations Division, Head Office of the Defendant (previously Banking Services Manager at Defendant's PJ Old Town Branch)

(iv) DW4 - Lim Sok Mui, Banking Services Manager of Defendant's PJ Old Town Branch

Brief Facts

[3] The Plaintiff opened a current account bearing account number 3144285022 (Account) with the Defendant's PJ Old Town Branch on 29 January 2008 and the authorised signatories to operate the Account were:

(i) Loh Kim Fee;

(ii) Lau Jenn Wee (Lau); and

(iii) Yeoh Teen Eam (Jeffrey).

[4] Accordingly, as mandated by the Plaintiff's Directors' Circular Resolution dated 11 January 2008, the authority to operate the Account (including the issuance of cheques) by the Plaintiff was on the condition that it contained any 2 signatures of the aforesaid authorised signatories (Authorised Signatories).

[5] Further, on 2 November 2009, the Plaintiff updated the list of Authorised Signatories of the Account to include PW1 and PW2 while Loh Kim Fee was removed.

[6] The specimen signatures of PW1 and PW2 were accordingly furnished to the Defendant through a Supplementary Account Opening Form dated 2 November 2009. It was mandated pursuant to the Plaintiff's Director's Circular Resolution dated 2 November 2009, of the change in the Authorised Signatories that any one signature from Group A (Lau and Jeffrey) and any one signature from Group B (PW1 and PW2) would be required to operate the Account including for the issuance of cheques (2009 Mandate).

[7] The matter in dispute is regarding 13 cheques of the Plaintiff's (Disputed Cheques) that were cleared by the Defendant between March 2015 and January 2016 which the Plaintiff contended were forged signatures of PW1 and PW2 by Jeffrey who was one of the Authorised Signatories from Group A. PW1 and PW2 had denied signing any of those Disputed Cheques.

[8] The Disputed Cheques with forged signature of PW1 are:

(Disputed Cheques with Forged Signatures of PW1)

[9] The Disputed Cheques with forged signature of PW2 are:

(Disputed Cheques with Forged Signatures of PW2)

[10] Among the Disputed Cheques with Forged Signatures of PW1 and PW2 are cash cheques No 494199 amounting to RM190,000.00 and No 221024 amounting to RM300,000 (Cash Cheques).

[11] Thus, the Plaintiff claims for RM5,170,000.00 being the sums of the Disputed Cheques that were alleged to be paid out by the Defendant without mandate.

Plaintiff's Contention

[12] The Plaintiff contended that the signatures on