1. Customer remitted funds via telegraphic transfer; bank credited funds into wrong beneficiary accounts and relied on exclusion clauses to disclaim liability. (Para 1 , 3 , 5 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 30 )
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2025 MarsdenLR 2138
HIGH COURT MALAYA KUALA LUMPUR
ANISH RESOURCES SDN BHD – Appellant
Versus
PUBLIC BANK BHD – Respondent
[Civil Appeal No: WA-12BNCvC-77-07-2024]
Petitioner Advocates:Ong Kim Hong ,Respondent Advocate: Marianne Loh Suet May,Megan Phang Yuet Yee
Exclusion clauses that restrict a customer's rights to sue due to negligence or errors in banking transactions are void under Section 29 of the Contracts Act 1950.
Headnote:(A) Contracts Act 1950 - Section 29 - Exclusion clauses in banking transactions - Remittance of funds - Customer's funds erroneously credited to incorrect accounts - Bank sought to disclaim liability under exclusion clauses - Court found that the terms were void as they restricted the customer's rights to sue, conflicting with public policy and applicable law. (Paras 56-59)
(B) Contracts - Obligations and liability - Banks' duty to verify beneficiary identity in remittances - The court established that the bank must include the beneficiary's name as an identifier, not solely the account number, thus rendering the bank liable for the loss suffered by the customer due to its negligence. (Paras 56, 61)
Facts of the case:
The Appellant, a company, instructed the Respondent Bank to remit €121,100.00 to a supplier in the Netherlands as payment for face masks. The funds were instead credited to the accounts of other individuals. The bank only refunded a portion and then claimed no liability under its exclusion clauses.
Findings of Court:
The court held that the Respondent Bank breached its contract with the Appellant by failing to ensure remittance to the correct beneficiary's account and that its exclusion clauses were invalid due to public policy considerations.
Issues: The court addressed whether the Respondent Bank breached its contract and whether it could rely on the exclusion clauses to deny liability.
Ratio Decidendi: The court ruled that the exclusion clause was void under Section 29 of the Contracts Act 1950, as it restricted the customer’s legal rights. Additionally, the bank had a duty to verify both the account number and the beneficiary's name.
Result: Appeal allowed; the Respondent Bank ordered to repay RM434,503.87.
Legal Category Hierarchy
- banking and finance
- contract law
- consumer protection
Table of Contents
2. Appellant argues bank breached contract by failing to use beneficiary name as identifier; Respondent Bank contends exclusion clause in Remittance Form validly disclaims liability. (Para 2 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 )
3. Appeal allowed; bank held liable for breach of contract; exclusion clauses void under s 29 Contracts Act 1950. (Para 6 , 55 , 61 )
4. Is the bank liable for erroneously crediting remitted funds into the wrong beneficiary account in a telegraphic transfer?
Yes. Telegraphic transfers are not IBG transactions; cl 9 states only IBG transactions rely solely on account number, so the beneficiary name must also be used as an identifier when instructing intermediary banks. The bank's failure to do so constitutes breach of contract. (Para 31 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 47 , 48 , 51 , 52 , 53 , 54 )
5. Is the exclusion clause in cl 8 of the Remittance Form valid under s 29 of the Contracts Act 1950?
No. The clause is void as it unconscionably restricts the customer's right to sue the bank for losses caused by the bank's failure to properly execute the remittance, contravening s 29 of the Contracts Act 1950. (Para 56 , 57 , 58 , 59 , 60 , 61 )
6. Does the principle of Expressio Unius Est Exclusio Alterius apply to cl 9 of the Remittance Form?
Yes. Since cl 9 expressly states only IBG transactions are based solely on account number, other remittance modes including telegraphic transfers are presumed to require additional identifiers such as the beneficiary name. (Para 46 , 47 )
7. Must the bank use the beneficiary name as an identifier when instructing intermediary banks for overseas telegraphic transfers?
Yes. The bank is legally obliged to stipulate the beneficiary name as an identifier when instructing its agent or intermediary banks; failure to do so results in breach of contract and the bank's liability for the resulting losses. (Para 48 , 49 , 50 , 54 )
Introduction
[1] If all commercial banks in Malaysia are to impose the same exclusion clause as the Respondent Bank in this case when handling overseas remittances for their customers, there is much for the customers to worry about. This is so because the Respondent Bank takes the position that it is entitled to rely on exclusion clauses in its Remittance Form to disclaim all liabilities if the customer's money had been erroneously credited into the bank account of someone whose name is completely different from the beneficiary/payee's name stated in the Remittance Form.
[2] In reply to my question during the hearing of this appeal, learned counsel for the Respondent Bank confirmed the bank's position is that it would disclaim liability even if the remitted money had been erroneously credited into a bank account overseas belonging to someone whose name and account number are completely different from the name and account number stated in the Remittance Form. This revelation triggered audible gasps from the Bar Table and public gallery of this Court. The bank's position is that it would "do its best" to assist the customer to request a refund from overseas but would disclaim liability.
[3] In this case, the Respondent Bank's Remittance Form, which was duly filled in by the customer (the Appellant Customer), stated the name of the beneficiary/payee as "ALI B BEHEER BV" and its bank account is with ING Bank in the Netherlands. However, the remitted money, by way of 3 tranches, ended up being credited by ING Bank into bank accounts belonging to Hr M Masseling, Mw NR Suleman and Hr A Nour respectively.
[4] The details shall be discussed below. Suffice for now, to highlight that ING Bank refunded only about 25% of the customer's money through the Respondent Bank, and the Appellant Customer was told to go to the Netherlands to sue those 3 persons who received its money.
[5] There are two main issues that arise in this case; the first is whether the Respondent Bank has breached the terms of its contract with its customer (the Appellant) because even though the bank account of the beneficiary/payee stated in its Remittance Form has not been credited with the money remitted by its customer, the Respondent Bank had refused to reimburse the customer. The second issue is whether the Respondent Bank is entitled to rely on the exclusion clause stated in its Remittance Form.
[6] After reserving the decision to consider those two issues and reading the authorities cited by learned counsel, I decided that this Court ought to allow the customer's appeal and hold the bank liable. My reasons are as set out below.
Background Facts
[7] The Appellant/Plaintiff (hereinafter referred to as "the Appellant Customer") is a company incorporated in Malaysia while the Respondent/Defendant (hereinafter referred to as "the Respondent Bank") carries on banking business in Malaysia.
[8] The Appellant Customer is a customer of the Respondent Bank.
[9] In March 2020, when the whole world was stricken by the Covid-19 virus which led to the Government making it mandatory to wear face masks, the Appellant Customer decided to import a large quantity of face masks from the Netherlands — hoping to profit from the sudden surge in demand for face masks.
[10] The Appellant Customer found a supplier by the name of ALI B BEHEER BV whose place of business is in the Netherlands, and decided to purchase 3 consignments of face masks from the said supplier. The ensuing events were visits to the branch of its banker (the Respondent Bank) on 24th and 26 March 2020 to remit the purchase price to the supplier ALI B BEHEER BV. The Appellant Customer was instructed by the supplier to pay into three different accounts, all bearing the same name of ALI B BEHEER BV. The details of those remittances are as pleaded in the Appellant Customer's Amended Statement of Claim, a screenshot of which is pasted below:
[11] The total amount of money remitted, in Euro currency, was €121,100.00, and
