The burden of proving forgery lies with the Plaintiff, but banks must also adhere to strict liability for unauthorized debits on forged instruments, unless exempted under clear statutory defenses.

Introduction

[1] The Plaintiff was a customer of the Defendant, a commercial bank (the Defendant-Bank). The Plaintiff by this action in essence sought to recover monies that had been debited from the Plaintiff's account as a result of the Defendant-Bank honouring and paying out on allegedly forged cheques presented for clearance.

[2] The trial which commenced on 22 November 2012 stretched over some 17 days. Seven (7) witnesses testified for the Plaintiff while the Defendant-Bank called twenty-one (21) witnesses.

[3] On 19 December 2014, I allowed the Plaintiff's claim and made the following orders:

(a) The Defendant-Bank was not entitled to debit the Plaintiff account for the 173 cheques as listed in the First Schedule to the Re-Amended Statement of Claim amounting to a sum of RM33,338,639.27;

(b) Payment of the sum of RM30,004,775.27 as the amount owing and payable by the Defendant-Bank to the Plaintiff;

(c) Interest on the sum of RM30,004,775.27 at the rate of RM2.5% p a from the date of the Writ until judgment;

(d) Interest on the sum of RM30,004,775.27 at the rate of 5% p a from the date of judgment until full realisation; and

(e) Costs of RM150,000.00 to be paid by the Defendant-Bank to the Plaintiff.

[4] I now set out the full grounds for my decision.

Pleadings

[5] In the Re-Amended Statement of Claim the Plaintiff aver that:

(a) between the period 14 September 2004 to the 01 April 2009 the Defendant-Bank had paid out 173 cheques purported to be drawn by the Plaintiff and had debited the Plaintiff's current account with the Defendant-Bank in the total sum of RM33,338,639.27.

(b) the Plaintiff did not draw the said cheques or authorise the drawing thereof, in that the signature on each of those cheques was not of any one of the Plaintiff's authorised signatories and was forged.

(c) the Plaintiff believes or suspects that the disputed signatures were forged by one Chen Siew Keng (Chen), who was at the material time keeping and maintaining the Plaintiff's accounts.

(d) the Plaintiff's had since recovered from a 3rd party a sum of RM3,333,864.00 thereby reducing the Plaintiff's loss, the subject of the claim against the Defendant-Bank, to RM30,004,775.27.

[6] The Defendant-Bank in their Re-Amended Defence deny the Plaintiff was entitled to the relief sought or any part of it. The Defendant-Bank also stated that:

(a) the Plaintiff's current account with the Defendant-Bank was governed by the Defendant-Bank's terms and conditions for operations of current account.

(b) the Defendant-Bank had provided monthly statements of accounts to Plaintiff and the Plaintiff did not notify the Defendant-Bank that the Plaintiff had not received such monthly statements nor that the information or balances shown were in error for unauthorised debits and, unless there was such notice within 14 days of the date of such monthly statement, the balances shown were to be deemed correct.

(c) the signatures on the 173 cheques were not forged and during the period 2004 and 2009 there were several other cheques cleared which had similar, if not identical, signatures to the alleged forged signatures of the signatory on the 173 cheques.

(d) The Defendant-Bank had in respect of the 173 cheques acted in accordance with the Plaintiff's mandate without any complaint for a period of almost five years and with respect the cheques for RM25,000.00 and above, the Defendant-Bank had in accordance with usual practice obtained confirmation of Plaintiff's authorised officers prior to making payment on those cheques.

(e) the Plaintiff was solely responsible for the acts or omissions of its own