Table of Content
1. plaintiff's claim details and losses. (Para 1 , 4 , 5)
2. defendant's breach of duty and authority. (Para 3)
3. legal principles and related cases. (Para 6)

[1] This is my judgment in respect of the plaintiff's claim against the defendant for honouring forged cheques, and debiting the same in the plaintiff's account. The relevant part of the statement of claim, inter alia, reads as follows:

"3. The terms of the contract (hereinafter referred to as the said contract) between the plaintiff and the defendant in respect of the opening of the current account referred to in para 2 above are inter alia as follows:

3.1 Express Terms

(a) that the authorised signatories of cheques drawn by the plaintiff are Gordon Stuart Bell, William leslie Addington, John E Dixon and Ling Hee Kiat and

(b) that the signatories for cheques drawn by the plaintiff for RM5,000 and below would be any one of the four authorised signatories and for cheques in excess of RM5,000/- would be any two of the four authorised signatories.

3.2 Implied Terms

(a) that the defendant shall protect the plaintiff from being defrauded and

(b) that the defendant shall only make payments on cheques which are regular and unambiguous in form.

[2] The defendant paid the following cheques purported to be drawn by the plaintiff and debited the plaintiff's accounts with the amount thereof:

[3] The payments referred to in para 4 above were made by the defendant in breach of the express and/or implied terms of the said contract.

PARTICULARS

(a) The plaintiff did not draw the said cheques or authorise the drawing thereof and the signature thereon was forged. In the premises the defendant had no authority to pay the said cheques.

(b) The defendant failed to take all necessary precautions to protect the plaintiff from being defrauded.

(c) The defendant made payments on cheques which were irregular and ambiguous in form;

(d) The defendant made payments on the said cheques contrary to the mandate given by plaintiff.

(e) The defendant made payments when the defendant had grounds for believing that the funds of the plaintiff were being misappropriated taking into account in particular but not limited to the defendants knowledge of the signatories, the amount involved, the presence of unusual features and the scope and means for making reasonable inquires.

[4] By reason of the matters aforesaid the plaintiff has suffered loss and damage.

[5] Wherefore the plaintiff claims:

(a) a declaration that the defendant is not entitled to debit the plaintiff's current account with the amount of the respective cheques as enumerated in para 4 of the statement of claim amounting to RM1,091,921.78;

(b) payment of the sum of RM1,091,921.78 as due and owing by the defendant to the plaintiff;

(c) interest on the respective sums as stated in the respective cheques as enumerated in paras 3 and 4 of the statement of claim from the date of payment out of the account to the date of judgment;

(d) interest on the judgment sum from date of judgment to date of full and final payment;

(e) cost; and

(f) such further relief as is deemed fit by this Honourable Court.

[6] It must be noted that:

(i) as early as the Year 1985, the Privy Council in the case of Tai Hing Cotton Mill Ltd v. Liu Chong Hing Bank Ltd and Others [1985] 2 All ER 947 had, in an immutable term, stated that bank is contractually liable if it honours cheques which are not mandated by the customer, and the bank cannot raise negligence of customer in allowing the state of affairs to happen or to continue unless there is express agreement to contrary which has been clearly brought to the notice of the customer and not purely by general exclusion clauses;

(ii) the Privy Council in the judgment did not deal with the defence to bankers like that provided under ss 24 and 73A (73A was only inserted in 1998) of Bills of Exchange Act 1949 (BEA 1949) which read as follows:

Section 24

"Subject to the provisions of this Act where a signature on a bill is forged or placed ther

Click Here to Read the rest of this document