Atan Mustaffa Yussof Ahmad J:

GROUNDS OF JUDGMENTINTRODUCTION

[1]Before the court is a case involving a complex interplay of banking law, contractual obligations, and third-party fraud. The Plaintiff, Pax Investments Limited (In Liquidation), a foreign company incorporated in Jersey, Channel Islands, has sued the Defendant, Standard Chartered Bank Malaysia Berhad, for breaches of contract and negligence following the loss of funds from its account through court proceedings initiated by third parties.

[2]The case raises significant questions about the scope of a bank’s duty of care to its customers, particularly in relation to its customer due diligence procedures and compliance with court orders. It also examines the responsibilities of financial institutions when processing transactions that affect their customers’ accounts and the standard of communication expected in such circumstances.

[3]The dispute centres on the bank’s handling of two key events: first, the extended freezing of the Plaintiff’s Bank Account during a due diligence process that spanned several years, and second, the bank’s subsequent release of substantial funds pursuant to a court order obtained by third parties. These events culminated in the loss of over RM6.5 million from the Plaintiff’s Bank Account, leading to the present action.

BACKGROUND FACTS

[4]The Plaintiff is a limited liability company incorporated in Jersey, Channel Islands, which has maintained a bank account under Account No. 312100897264 (“Bank Account”) with the Defendant since the 1970s. The Plaintiff has no presence in Malaysia and functions as an investment vehicle exclusively.

[5]The relationship between the parties is governed by the Defendant’s Terms and Conditions (“T&C”), which includes Account Terms, Standard Terms, Country Supplement (Malaysia), and various other supplements applicable to SME banking services. These terms were notified to the Plaintiff by way of a letter dated 16.12.2013, and both parties have acknowledged these T&C as binding.

[6]On 19.8.2013, the Plaintiff was placed in voluntary liquidation. Beginning 2014, the Plaintiff initiated contact with the Defendant to close its Bank Account and retrieve its funds.

[7]Around March 2014, the Plaintiff discovered that its Bank Account had been “frozen” or “deactivated” by the Defendant. The Defendant issued multiple letters between 31.12.2013 and 25.8.2014 requesting the Plaintiff to provide necessary information and documents as part of its customer due diligence process.

[8]Between 2014 and 2016, communications ensued between the parties regarding the reactivation of the Bank Account:

a)On 14.7.2014, the Plaintiff provided initial documentation requested by the Defendant.

b)On 11.8.2014, the Plaintiff provided further documents, which the Defendant deemed incomplete.

c)Between September 2014 and January 2015, the Plaintiff corresponded with the Defendant’s representative, Angela Shamini.

d)Between April 2015 and May 2015, the Plaintiff corresponded with another of the Defendant’s representatives, Michelle Rajasooria.

e)Between December 2015 and July 2016, the Plaintiff corresponded with Mohd Hafiz Jamaludin of the Defendant.

f)On 12.7.2016, Hafiz informed the Plaintiff: “We will assist to activate the account & notify once account active.”

[9]On 23.12.2016, the Defendant received a letter from Messrs Zainal & Badrol (“Messrs ZB”), enclosing a copy of a Garnishee Order to Show Cause dated 30.11.2016, issued in proceedings between ABK Power Sdn Bhd (“ABK”) and the Plaintiff. ABK had obtained a Judgment in Default dated 20.9.2016 against the Plaintiff.

[10]By a letter dated 27.12.2016, the Defendant notified the Plaintiff that it was “obliged to freeze” the amount in the Plaintiff’s Bank Account upon receipt of the Garnishee Order to Show Cause.

[11]On the same date, the Defendant issued a letter to Messrs ZB confirming receipt of the Garnishee Order to Show Cause and requesting Messrs ZB to mention on the Defendant’s behalf at the next h