Can banks rely on an exclusion clause in its main banking contract to exclude liability in respect of remittances made under a different contract with the same bank?
CLEARPATH MARKETING SDN BHD V MALAYAN BANKING BERHAD  1 LNS 111
- Clearpath Marketing Sdn Bhd (“Agent”) is in the business of selling, dealing, distributing and marketing orthodontic products (“Products”).
- The Products are manufactured and supplied by Clearpath Trading & Manufacturing & Co in Saudi Arabia (“Principal”).
- The Principal is a company from Saudi Arabia and has granted the Agent sole and exclusive rights to distribute the Products in Malaysia, Singapore, Indonesia and Thailand (“Distribution Contract”).
- The Agent is a customer of Malayan Banking Berhad (“Bank”) and had opened and maintained a current account with the Bank for the purpose of its business (“Banking Contract”).
- The Agent had initiated a suit against the Bank in respect of two (2) remittances by telegraphic transfers sent from its current account to the Principal’s bank account in Dubai.
- The Agent claimed that the Bank was negligent and/or in breach of contract when it delayed in effecting these remittances and that such delay led to the termination of its Distribution Contract with the Principal.
- The termination by the Principal allegedly caused the Agent to suffer loss and damage to both its business and reputation.
- The Bank claimed that the delay was caused by the Agent’s mistake in the remittance form.
- The Bank also alleged that the Agent’s suit was an abuse of court process as there was an exclusion clause in the Banking Contract which essentially said the Bank would not be liable in the event of delay in performance or non-performance of its obligations (“Exclusion Clause”).
- The High Court found in favour of the Bank.
- The Agent appealed to the Court of Appeal.
COURT OF APPEAL DECISION – APPEAL ALLOWED!
The Court of Appeal allowed the appeal and held in the Agent’s favour on the following basis:
- The Agent had provided all the requisite information in respect of the beneficiary or recipient of the remittance in the remittance form and these details were provided in the correct column of the form.
- Hence the Bank was clearly in breach of its duty of care when it failed to and delayed the relevant remittances.
- The Exclusion Clause contained in the Banking Contract is not applicable to the current remittance arrangements as the Exclusion Clause was not found in any of the remittance documents/forms.
- These remittance forms are the underlying contracts between the parties and there are no provisions in the remittance forms requiring it to be read together with the terms found in the Banking Contract.