Ian H.C. Chin J:

Introduction

Hock Hua Bank (Sabah) Berhad ("the plaintiff") took out the present writ on 7 February 1994, against nine defendants claiming against them a sum of RM7,681,000 for fraud and/or conspiracy to defraud the plaintiff. It was alternatively claimed against the 2nd to 9th defendants that they were in receipt of the said sum RM7,681,000 which resulted from of a breach of trust and or fiduciary duty by the defendant Lam Tat Ming ("the 1st defendant"). An early trial was held on 8-13, 16-20, 22 & 24 May 1995. The facts of this case are as follows:

Facts of Case

The plaintiff, a commercial bank, has a branch in Labuan ("HHB"). The 1st defendant had been employed by the plaintiff for more than 20 years and he became the current account officer, Class II, in September 1992, and, later on, Class I in March, 1993. Part of his duties were set out in the Current Account Operation Manual ("manual"). The relevant provisions of the manual that was in use from July 1988 until March 1993 are as follows:

Marking of Cheques

23.1 As laid down by the Association of Banks in Malaysia, no bank shall certify a cheque as good for payment except to another bank and a minimum charge of RM200 on the actual expenses incurred is to be levied for marking the cheque.

23.2 Outward Marked Cheque

23.2.1. When a customer wishes to know the fate of the cheque immediately, he could request the bank in writing to mark the cheque, after paying the service charge of RM5 plus cost of transport.

23.2.2. A set of drawing vouchers (two copies) or a mark cheque form, as in the case of Sibu Branch where there is no central clearing system, is prepared and detail recorded in the Marked Cheque Register. The officer-in-charge will check and sign on the first copy of the drawing vouchers/mark cheque form and initial the register (See Appendix VIII on sample of drawing vouchers).

23.2.3. The drawing vouchers/a mark cheque form and the cheque will be sent by the messenger to the drawer bank which will sign and return the second copy of the drawing voucher or the customer's copy of the pay-in slip duly confirmed "Good for Payment" or return all with an appropriate reason stated on the drawing vouchers or a notice of return in the case of mark cheque form used.

23.2.4. Upon receipt of the drawing voucher (in time for the day's clearing)/pay-in-slip from the drawee bank, the proceeds of the marked cheque will be credited to the customer's account (i.e. if marked good).

Accounting Entries

(a) General Clearing System

DR Bank Negara Malaysia A/C

CR Customer's A/C

If the drawing voucher could not be presented in time for the day's clearing both entries would be effected in the next working day.

(b) Non Central Clearing System

DR Banker's A/C

CR Customer's A/C

23.3 Inward Marked Cheque

23.3.1. In this case, the cheque drawn by our customer is presented to us for marking by another bank. The officer-in-charge should ensure that:

i) the cheque is technically in order,

ii) payment of the cheque has not been countermanded;

iii) there is sufficient available fund in the customer's account;

iv) there is no legal bar on the drawer's a/c; and

v) the marked cheque amount is debited to the customer's account immediately.

vi) confirm with the customer if the amount is significant, or unusual for his account.

23.3.1. For drawing vouchers used

Two officers, one of whom must be a Class 1 Officer will sign and return the second copy of the drawing voucher duly confirmed "Good for Payment".

For pay-in-slip used

The pay-in-slip will be checked by the officer-in-charge and overprinted by the teller machine. The officer-in-charge or a Class 1 officer will initial and return the customer's copy and duly confirmed "Good for Payment".

23.3.2. If the cheque has to be returned for any one of the reasons listed under s.24.1.1, the counter clerk will prepare a notice of return (for mark cheque\form used) giving the appropriate reason or state the reason on the drawing vouchers,