Case:

Brief Facts:

• The Appellant, Starfish Holdings Sdn Bhd (“Starfish”) is a private limited company and the customer of the 1^st Respondent, Hong Leong Bank Berhad (“HLBB”).
  
  
• Starfish opened and maintained a current account with HLBB at its Desa Sri Hartamas bank branch for the purposes of its business.
  
  
• Starfish employed the 2^nd Respondent as its accounts clerk to handle its cheque books. However, the sole authorised signatory of the Account is Miss TCY.
  
  
• Around 2.11.2017, Starfish discovered that there were 37 cheques totalling RM254,890.00 that was cleared without its authority and knowledge (“Unauthorised cheques”).
  
  
• Amongst the Unauthorised cheques, 34 of them were cash cheques en-cashed by the 2^nd Respondent over the counter of HLBB bank totalling RM248,700.00.
  
  
• Starfish then commenced a civil suit against both HLBB and the 2^nd Respondent to recover the sums lost.

THE DECISION OF SESSIONS COURT (SC)

• The SC ruled in favour of Starfish and opined that HLBB had no right to debit RM254,890.00 from Starfish’s Current Account.
  
  
• HLBB was unhappy with the decision and appealed to the High Court.

THE DECISION OF HIGH COURT (HC) – APPEAL ALLOWED

• The HC found that the signatures on the disputed cheques were deemed forgeries, which is supported by evidence.
  
  
• The evidence showed that the Starfish employee was negligent by giving the 2nd Respondent access to the cheque books and failing to check the bank statements.
  
  
• The HC disagreed with the SC finding that Starfish took preventive measures because Starfish breached the bank’s terms and conditions by not securing the cheque books properly.
  
  
• The HC found that Starfish is negligent because it allowed a non-signatory access to cheque books.
  
  
• The HC also found that Starfish failed to reconcile the monthly statements with the cheque butts, which would have revealed the forgeries.
  
  
• The HC found that HLBB acted in good faith as there was no evidence of dishonesty on the part of HLBB.
  
  
• HLBB was found to have complied with the SOP of checking the specimen signature and also calling the company if the amount exceeded RM30,000.00 per cheque. In this case all cheques were below RM30,000.00.
  
  
• The HC ruled that Starfish was contractually obligated to check monthly bank statements and notify HLBB of any discrepancies within 14 days, which it failed to do, estopping it from claiming forgery.
  
  
• Starfish was dissatisfied with this Judgment and lodged an appeal to the Court of Appeal.

THE DECISION OF COURT OF APPEAL (COA) – APPEAL DISMISSED

• The COA agreed with the HC that Starfish had knowingly or negligently contributed to the forgery and that HLBB had acted in good faith.
  
  
• The COA dismissed the appeal.
  
  
• HLBB was found not liable.