Liability in tort of negligence requires establishment of duty of care, breach, causation, and foreseeability; both banks were found negligent, but the claimant's own conduct contributed substantially to the loss.

[1] Civil Appeal W-02-2886-2010 is the appeal by Mayban Finance Berhad (MFB) against the decisions of the High Court on 23 September 2010 to enter judgment of liability in Civil Suit S4(6)-22-686-1998 and apportionment of 40% liability against MFB.

[2] Civil Appeal W-02-2890-2010 is the appeal by Bank Bumiputra Malaysia Berhad (BBMB) against judgment and apportionment of 40% liability for damages to be assessed entered against it in the same Civil Suit S4(6)-22-686-1998.

[3] The above Civil Appeals W-02-2886-2010 and W-02-2890-2010 were heard together.

Background

[4] MFB provided a loan of RM500,000.00 to Emas Bestari Sdn Bhd ("Bestari") under a Term Loan Facility Agreement, with guarantees by its directors Ablah bin Othman and Hezlin Hezri bin Ablah (the guarantors) and the cheque for which loan sum was released on 28 October 1995 to Zauwiah bte Dahlan (Zauwiah).

[5] The cheque for the loan sum was paid by Zauwiah into an account in BBMB under the name of Bestari. The money was taken out of the account three days later. Bestari and the guarantors say that:

(i) MFB wrongly released the cheque for the loan to Zauwiah; and

(ii) BBMB wrongly opened the account for Bestari as it was without their authority and knowledge, and wrongly allowed the money to be taken out by Zauwiah.

[6] Bestari commenced proceedings in Kuala Lumpur Civil Suit S4(6)-22-686- 1998 against MFB, BBMB and Zauwiah bt Dahlan (Zauwiah) under the tort of negligence on the part of MFB and BBMB.

[7] An action was earlier commenced by MFB against Bestari, and its guarantors Ablah bin Othman and Hezlin Hezri bin Ablah under Shah Alam Civil Suit MT5-22-533-1997. That civil suit was transferred to Kuala Lumpur and registered as S-22-835-2010 and consolidated with the action commenced by Bestari.

[8] Before trial, judgment in default was entered against Zauwiah. The civil suit by MFB was dismissed on the ground that MFB failed to prove the amount outstanding as at 11 August 1997 as claimed. There is no appeal by MFB against the dismissal.

The High Court

[9] In the High Court, Bestari sought the following orders against MFB, BBMB and Zauwiah bte Dahlan:

"a) Gantirugi am termasuk teladan;

b) Gantirugi khas sebanyak RM1,032,494.60;

c) Kos tindakan ini;

d) Faedah terhadap keseluruhan amaun penghakiman disini pada taraf dan untuk jangkamasa yang mahkamah mulia ini fikir patut dan sesuai;

e) Apa jua perintah dan/atau relif lain yang dianggap sesuai dan wajar oleh mahkamah yang mulia ini."

[10] The causes of action relied upon by Bestari was negligence in:

(i) MFB employing less than active banking procedures and failure to adhere to terms and conditions on the part of MFB in:

(a) failing to adhere to cl 3.03, 6.01(b) and 6.01(h) of the facility agreement of 28 October 1995;

(b) releasing the loan sum to Zauwiah bte Dahlan before Bestari supplied to MFB specimen signatures of those authorised to sign on behalf of Bestari.

(ii) BBMB employing less than active banking procedures in:

(a) failing to verify the application to open the account 010013066091 on 24 October 1995;

(b) its servants, En Zabidi Mohamed Akib and En Rusli Dollah, for whose acts it is vicariously liable, failing to verify that directors of Bestari had signed the forms to open the account before giving approval.

[11] At the end of trial, the High Court ordered:

(i) The claim by Bestari in Civil Suit S2(6)-22-686-1998 was allowed against MFB and BBMB with