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2012 MarsdenLR 2108
HIGH COURT MALAYA, KUALA LUMPUR
ASTANA INTERNATIONAL SDN BHD & ORS – Appellant
Versus
RHB BANK BERHAD & ORS – Respondent
[Suit No: D22-253-2009]
A bank must exercise due diligence in verifying customer instructions, and is liable for unauthorized transactions arising from negligence in verifying signatures, particularly when forgery is proven.
Headnote:(A) Banking Law - Breach of fiduciary duty - Breach of trust - Negligence - Corporate veil - The unauthorized debiting of funds from plaintiffs' accounts to defendants' accounts without authority resulted in millions lost - The 1st defendant failed to verify signatures and acted negligently in their banking mandate. (Paras 3, 12, 18-21, 28-34)
(B) Fraud - Forgery - The court found that the signatures on several documents were forged, making transactions unauthorized and impacting the validity of the mandate given to the 1st defendant. (Paras 15, 16, 17)
Facts of the case:
Plaintiffs claimed against a bank and associated parties for unauthorized debits leading to losses of RM11,599,734.82, involving the misconduct of a corporate officer who controlled both plaintiffs and two defendant companies.
Findings of Court:
The bank was negligent, breaching its duty to verify signatures, and held liable for the loss incurred by the plaintiffs.
Issues: Main issues included the validity of signatures, whether the bank was negligent, and if it was liable to compensate the plaintiffs.
Ratio Decidendi: The court ruled that the bank acted negligently by failing to verify authorizations, leading to liability for unauthorized transactions based on forged instruments.
Result: The 1st defendant was ordered to pay the plaintiffs RM3,829,200.62 for losses, RM79,552.84 for closing unauthorized accounts, interest, and costs.
| Table of Content |
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| 1. overview of plaintiffs' claims and parties involved. (Para 1 , 2 , 3) |
introduction
[1] This case is about an unscrupulous trader and irresponsible bank officers whom caused the plaintiffs' monies kept in the bank accounts maintained by the 1st defendant's bank to be debited and channeled to the 2nd to 4th defendants' accounts without the knowledge and authority of the plaintiffs, resulting in the plaintiffs suffering losses in millions of Ringgit. A brief introduction of the parties is necessary to appreciate the facts.
The Parties
[2] The 1st plaintiff is a company who carries on the business of advertising services. The 2nd plaintiff carries on business in advertising and general merchandise. The 3rd plaintiff carries on business in motion pictures and other entertainment services. All three companies operate at Menara IGB, Mid Valley, Kuala Lumpur. The 1st defendant carries on banking business. It has a branch at Mid Valley, Kuala Lumpur. The 2nd defendant carries on business as landscapers and beautification contractors at Mid Valley. The 3rd defendant carries on business as general contractors including civil engineering works at Seksyen 13,Shah Alam, Selangor. The 4th defendant was a director in the plaintiffs' companies. He was also appointed as the Group Financial Controller of the plaintiffs' companies. Unknown to the plaintiffs, the 4th defendant was also a director in the 2nd and 3rd defendant's company. It was an undisputed fact that the 2nd and 3rd defendant's companies are controlled by the 4th defendant, with him being the largest shareholder. These two companies had no business relations whatsoever with the plaintiffs. They are alien to the plaintiffs.
The Plaintiffs'Claim
[3] The plaintiffs' claim against all the defendants are for:
(a) A declaration that the 4th defendant had acted in breach of his fiduciary duties owed to the plaintiffs;
(b) A declaration that the 4th defendant had acted in breach of trust;
(c) A declaration that in consequence of the lifting of the corporate veil of the 2nd and 3rd defendants, the assets of the 2nd and 3rd defendants belong to the 4th defendant;
(d) An order that the 2nd, 3rd and 4th defendants were jointly and/or severally liable to pay the plaintiffs RM3,829,200.62;
(e) A declaration that the 1st, 2nd, 3rd and 4th defendants hold RM3,829,200.62 as constructive trustee of the plaintiffs and the 1st, 2nd, 3rd and 4th defendants were liable jointly and/or severally to repay the said sum to the plaintiffs;
(f) A declaration that the purported debiting of the said 1st, 2nd, 3rd and 4th accounts of RM11,599,734.82 by the 1st defendant was wrongful, improper, without authority and of no effect;
(g) An order that the 1st defendant do pay the plaintiffs RM3,829,200.62 for wrongful and/or improper debiting of the said 1st, 2nd, 3rd and 4th accounts;
(h) An order that the 1st defendant do pay the plaintiffs RM79,552.84 as debt paid to the 1st defendant by the 1st plaintiff to close the unauthorised account;
(i) Alternatively, damages against the 1st, 2nd, 3rd and 4th defendants, jointly and/or severally, for breach of contract and/or negligence in the sum of RM3,908,753.46 to be paid to the plaintiffs;
(j) Alternatively, damages against the 1st, 2nd, 3rd and 4th defendant, jointly and/or severally, for conversion and/or monies had and received in the sum of RM3,908,753.46 to be paid to the plaintiffs;
(k) An order that all assets and proceeds of the 2nd, 3rd and 4th defendants be followed and traced and thereafter applied to discharge the indebtedness of the 2nd, 3rd and 4th defendants to the plaintiffs respectively;
(l) An order that all monies belonging to the plaintiffs paid out by the 1st defendant to unknown parties, not specifically pleaded and claimed here, (but made known after discovery proceedings and disclosures) be repaid to the respective plaintiffs.
(m) Interests on the sums claimed at such rate and for such period as the court shall deem just.
