A bank's obligation under a Survivorship Clause is overridden by statutory provisions prohibiting payments under forged signatures, establishing strict liability.

[1] Leave to appeal has been granted by this court on the following question:

"Whether a survivorship clause which is found in the banking contract and/ or the nature of the joint account itself automatically operates upon the death of a joint account holder and allows the Bank to pay the money to the surviving joint account holder to obtain a good discharge where the survivor subsequently presented to the Bank a cheque containing the forged signature after the death of the other joint account holder."

[2] In the High court, the 1st and 2nd respondents sued the appellant bank in relation to a joint current account opened by the late husband of the 2nd respondent, Loo Keng Tatt (LKT) together with Lim Chee Wan (LCW). LKT was the controlling shareholder and the alter ego of the 1st respondent company known as New Ace Digital Print Sdn Bhd. LCW was its Managing Director. The joint account was opened by LKT and LCW at the main branch of the appellant bank in Kuala Lumpur and was subjected to the terms stipulated by the appellant bank as stated in the application form for the opening of the account.

[3] Of relevance to this appeal were two main terms of the joint account. The first being that all cheques issued in the account required the signatures of both account holders. The other is the Survivorship and Discharge Clause (Survivorship Clause) which spells out the obligation of the bank on how the credit outstanding in the joint account was to be dealt with upon the death of one account holder.

[4] LKT passed away on 22 July 2009 leaving LCW as the surviving joint account holder. At the time of LKT's death, there was a balance of RM586,079.69 outstanding in that account. Three weeks after the death of LKT, a sum of RM500,000.00 was drawn by LCW on the account via a Cheque No: 067709. The cheque was honoured by the appellant bank, leaving a balance outstanding of RM89,788.60. The deceased's wife, the 2nd respondent, complained to the appellant bank that the purported signature of her late husband LKT on Cheque No: 067709 presented by LCW was forged. On that complaint, the appellant bank proceeded to freeze the joint account.

[5] In order to reactivate the account that was then frozen, LCW by way of Originating Summons No: D-24NCC-258-2010 (the OS), filed at the Kuala Lumpur High court, sought and obtained a declaration that he, being the survivor of the joint account, was entitled to be paid the balance amount of RM89,788.60. The 2nd respondent was notified by the appellant bank of the OS. Despite the notification, the 2nd respondent did not intervene in the said OS proceedings. Neither did the 2nd respondent take any step to set aside the orders made pursuant to the OS.

[6] Instead, the 2nd respondent together with the 1st respondent filed a claim against the appellant bank by a writ action at the Kuala Lumpur High court about two years later in Suit No: 22NCC-1711-11-2012 (which formed the subject of the current appeal) for wrongful payment of the sum of RM500,000.00 from the joint account through a forged cheque. It was contended that the payment which was based on a forged cheque was a nullity and void ab initio as it was made in breach of s 24 of the Bills of Exchange Act 1949 (BEA). Apart from the allegation of breach of s 24, the appellant bank was alleged to have breac