JUDGMENT

Muhammad Adam @ Edward Abdullah JC:

(Enclosure 1)

Introduction

[1] The appeal before me is directed against the post-trial decision of the learned Sessions Court Judge ("LSCJ"), delivered on 31 January 2024 dismissing the Plaintiff's claim under a Fidelity Guarantee Policy issued by the Defendant.

[2] Parties will be referred to as they appeared in the Court below.

[3] The appeal turns principally on whether the Plaintiff proved the essential policy trigger which is the direct pecuniary loss sustained by an act of fraud or dishonesty committed by an employee, during the period of insurance and during the employee's uninterrupted continuance of employment.

[4] Having carefully considered the Record of Appeal, the pleadings, the evidence adduced at trial, the written and oral submissions of the parties, and the applicable legal principles governing fidelity insurance and appellate review, I find no basis to disturb the findings of the LSCJ.

[5] I dismissed the appeal with costs and affirmed the decision of the LSCJ.

Background Facts

The Plaintiff's Pleaded Case

[6] The Plaintiff held a Contract of Fidelity Insurance ("Policy") with the Defendant. The Plaintiff has been insured up to RM500,000.00 against loss and damage caused by the fraudulent or dishonest acts of employees for the period 1 July 2016 to 30 June 2017.

[7] The Plaintiff pleaded that its employee, one Teoh Chin Kooi ("TCK"), who was employed as its accountant from 3 August 2015, had access to the Plaintiff's accounts including cheque books.

[8] In September 2016, five cheque books were applied for by the accounts department. The Plaintiff alleges fraud or dishonesty against TCK. It was alleged that TCK, in a position of trust, dishonestly caused cheques to be issued and payments to be made to persons not related to the Plaintiff, concealed the wrongdoing and retained control of the cheque book or leaflets used.

[9] The pleading then contains a critical allegation and it is this; that even after TCK resigned on 17 November 2016, the cheque book was "stolen and kept" by TCK because that cheque book continued to be used to issue cheques after his resignation.

[10] The Plaintiff pleaded that on 18 May 2017 its Chief Financial Officer discovered that one cheque book bearing serial numbers 31551 to 315600 could not be found.

[11] Inquiries with the bank revealed cheques were issued and monies withdrawn. The total amount withdrawn through these cheques was RM746,393.25. The cheque images showed payments to unrelated parties and unauthorised signatures. This led to police reports being lodged. A Chemistry Department forensic report later confirmed signatures on the cheques concerned were forged.

[12] The Plaintiff then made a claim under the Policy. The Plaintiff further pleaded that the Defendant only allowed the claim for two cheques totalling RM22,900.00. The remainder was rejected on the basis that the fraud or dishonesty occurred after resignation.

[13] The Plaintiff pleaded that this rejection was wrong. The Plaintiff advanced a "chain of conduct" theory which is that the fraud commenced during employment and continued after resignation. The Plaintiff also pleaded that alternatively, the later cheques were "incidental" to fraud committed during employment. The Plaintiff further pleaded that by approving two of the claims, the Defendant had effectively acknowledged the existence of fraud and cannot deny the remainder of the claim.

[14] The Plaintiff pleads, in the alternative, that certain clauses in the Policy, particularly cl 10, are contrary to the Limitation Act 1953, art 5 of the Federal Constitution, and s 29 of the Contracts Act 1950.

[15] After deducting sums recovered from the bank and the amounts paid by the Defendant, the Plaintiff pleads that it suffered losses of RM675,602.25. However, the Plaintiff limited its claim under the Policy to RM477,100.00 being the Policy limit of RM500,000.00 less the amount already paid by the Defendant.

[16] The Plaintiff seeks decl