Abdul Wahab Patail J:

[1] By this action the plaintiff claimed for the following:

(a) A declaration that the defendant had wrongfully debited the plaintiff's account with the total amount of RM540,500;

(b) The sum of RM540,500;

(c) Interest;

(d) Costs; and

(e) Such further and other relief as this court deems fit.

[2] On or about 2 August 1994, the plaintiff applied to open a current account with the defendant at its branch at Kompleks Pernas Sogo, 190 Jalan Tuanku Abdul Rahman, 50100 Kuala Lumpur. The application was approved and an account was therefore opened on 6 September 1994, bearing the number 5-14347-50214-7 ("the account").

[3] At all material times, the sole and only authorised signatory to the account was one Tunku Soraya Dakhlah binti Tunku Abdullah, who provided a specimen signature to the defendant upon the opening of the account.

[4] The plaintiff pleaded that from on or around 14 July 1998 until August 2000, the defendant paid out on 69 cheques, purporting to be drawn by the plaintiff and made payable to the drawee, and debited the plaintiff's account with the amounts thereof.

[5] This above is disputed by the defendant in the analysis of pleadings as a question of fact that on or around 14 July 1998 to August 2000, the defendant paid on the cheques listed in para. 8 of the statement of claim or para. 7 below.

[6] The plaintiff pleaded that however, the signatures on the said cheques were not that of the authorised signatory as provided to the defendant. The signatures on those cheques were forged ("the forged cheques") by one Affandi bin Mamat, who was at the material time in charge of keeping and maintaining the plaintiff's accounts.

[7] This above is disputed by the defendant as a question of fact that the signatures on the cheques were forged. Alternatively, the defendant asserted they were issued by the plaintiff's agent and servant on fraudulent misrepresentation to the defendant and not from the defendant's wrong doing. The plaintiff is vicariously liable and/or contributed to its losses.

[8] The plaintiff pleaded that upon discovery by the plaintiff of the forged cheques, the plaintiff immediately informed the defendant of the same by a telephone conversation on 7 September 2000 and its letter dated 7 September 2000.

[9] This above is disputed by the defendant as a question of fact that the plaintiff had immediately informed the defendant when it discovered the forged cheques.

[10] Particulars of the allegedly forged cheques were provided. This is disputed by the defendant as a question of fact that the cheques were forged.

[11] The plaintiff pleaded that the plaintiff did not draw or authorise the drawing of the forged cheques, and the defendant had therefore wrongfully and without the plaintiff's authority paid on the forged cheques and debited the plaintiff's account with the amounts thereof.

[12] This above is disputed by the defendant as a question of fact on similar grounds.

[13] There is a second suit D4-22-478-2001 for 4 other cheques for the sum of RM20,020 where the defendant is Phileo Allied Bank (Malaysia) Berhad. The issues are the same.

[14] The defendant banks, Malayan Banking Berhad and Phileo Allied (Malaysia) Berhad are collectively referred to as the banks.

The Law

[15] The case law relied upon are as follows.

[16] In Tai Hing Cotton Mill Ltd v. Liu Chong Hing Bank Ltd & Ors [1986] 1 AC 80 PC, the Privy Council rejected the argument that the customer of the bank had any duty to check the bank statements for irregularities and to inform the bank. It was held that the customer's duty is two fold:

(a) He must exercise due care in drawing his cheques so as not to facilitate fraud or forgery; and

(b) He must inform his bank at one of any unauthorised transactions or cheques which he becomes aware of.

[17] The forgery went undetected for a long time as the employee in Tai Hing Cotton Mill Ltd v. Liu Chona Hing Bank Ltd & Ors., was, like the employee in this case, a trusted employe