A party receiving funds under a mistake of fact must return the amount unless they have changed their position in good faith, particularly when the funds were obtained through fraud.

[1] The 1st defendant received two banker's cheques; one dated 3 August 2007 and bearing the sum of RM144,350, the other dated 9 August 2007 bearing the sum of RM185,630. Both cheques were issued pursuant to remittance forms which contained forged signatures of the authorized signatories of a company known as Xian Jiang Trading Sdn Bhd (Xian Jiang). When the plaintiff discovered that Xian Jiang had not issued those remittance application forms, it made a police report; returned those two sums into Xian Jiang's account and, pursued the current action against the 1st defendant in order to recover the same. The plaintiff has premised its claim on several causes of action:

(i) that the 1st defendant did not receive the monies in good faith and was not a bona fides party;

(ii) that there was no consideration from the 1st defendant to the plaintiff or to Xian Jiang or to the nominees or agent of the plaintiff or Xian Jiang;

(iii) that the two payments were made pursuant to forged documents and perpetrated by fraud;

(iv) that the monies were paid under a mistake of fact; and

(v) recovery of money had and received.

Locus Standi Of The Plaintiff

[2] By way of a preliminary issue, the 1st defendant challenged the locus standi of the plaintiff in bringing the present action. Mr. Loganathan Manickam, learned counsel for the 1st defendant contended that the plaintiff had neither the necessary locus standi to initiate nor to maintain this action. There was no contractual nexus between the plaintiff and the 1st defendant nor was there what was described as "any trace of a 'tortuous' liability" pleaded against the 1st defendant. As mentioned earlier, the monies received by the 1st defendant were debited from the account of Xian Jiang, a third party. That being the case, it was argued that it would have made sense if this action was brought by Xian Jiang; but not where it was initiated by the plaintiff bank. There was also no evidence that the two sums had been credited into Xian Jiang's account. In the absence of any police investigation, handwriting expert's report, bank statement or any proof, the 1st defendant invited the court to conclude that Xian Jiang's account had not been credited at all. The plaintiff therefore did not suffer any loss for which it can initiate and maintain the present claim.

[3] Miss CP Lee, learned counsel for the plaintiff invited the court to disregard this issue because it was not pleaded. With respect, I disagree. This is an issue that can be addressed by the court regardless. In fact, the court must as it is an extremely important issue which affects the proper conduct of this action.

[4] On the facts and the applicable law, I find that the plaintiff has the necessary locus standi to initiate and maintain this claim. There is clear cogent evidence from the plaintiff's witnesses that the plaintiff has credited the sums into Xian Jiang's account following the realization of what had happened. The plaintiff had called six witnesses, three of whom were from Xian Jiang itself. They were Mr. Chung Shan Kwang, Miss Lee Mee Hong, and Mr. Tan Toh Heong.

[5] As the Managing Director of Xian Jiang, Mr. Chung Shan Kwang (PW2) was in charge of the day-to-day running of the company, including operations. He is the person who would give the necessary instructions and approvals for any banker's cheque applications that Xian Jiang may require. He instructs PW3, the person who actually handles the banker's cheque applications for Xian Jiang. It was PW2's testimony that he never gave instructions for the application of the banker's cheques in question; that the signatures on all the application forms were not his but were forged; that both Wong Yue Sie and Leong Yong Kheng were not Xian Jiang's employees; and that he did not know both gentlemen. These two persons had purportedly carried respective letters of authorization dated 3 August 2007 and 9 August 2007 when dealing with the plaintiff. PW2 categorically denied that those