Contract – Whether the bank can rely on exclusion and limitation clauses in agreement for hire to dispute liability.

United Overseas Bank (Malaysia) Bhd v Lee Yaw Lin & Anor , [2016] 4 CLJ 871

• United Overseas Bank (the “Bank”), entered into an agreement with Lee Yaw Lin and her hus-band (“Yaw Lin”)to let/rent out a safe deposit box in the bank’s Medan Pasar branch.
• Yaw Lin were the joint hirers of the safe deposit box for the services of which they paid a sum of RM400 per year.
• In the agreement signed between the Bank and Yaw Lin, an exclusion clause and limitation of liability clause were added.
• Clause 13 of the Agreement provided for an exclusion clause which expressly negates all respon-sibility and liability on part of the Bank to Yaw Lin. Clause 14 of the Agreement provides on limi-tation of liability.
• On 19 October 2012, it transpired that the vault where the safe deposit boxes were placed was broken into and burglarized.
• Upon inspection of the safety box, Yaw Lin found that it was not damaged but all the documents in it were gone.
• Yaw Lin was instructed by the Bank to provide a statutory declaration, proof of loss and lodge a police report.
• Yaw Lin did not provide a statutory declaration or proof of loss but made a claim with an inven-tory for the valuable lost with an estimate value of RM1, 480,514.
• Yaw Lin brought a claim for fraud and/or negligence against the bank, and alleged that the break-in of the safety box was an ‘inside job’.
• The High Court found in favour of Yaw Lin, hence the present appeal by the Bank.
• The primary question is the EFFECT of the exclusion clause and the limitation liability clause in the bank’s rental agreement with Yaw Lin for the hire of a safety deposit box.

• Yaw Lin is assumed to have understood and agreed to all the terms in the hire contract when they had executed it.
• It is wrong for the court to conclude that despite having signed the contract in its entirety, the parties can now contend that specific clauses are not enforceable.
• In fact, the function of the bank in relation to the safety box is only to afford its customers a de-gree of privacy to store its valuables in exchange for a very modest sum of money.
• Therefore, the amount charged in no way matches the value of the contents of the safety box, as the bank has no knowledge of the contents of each safety box.
• The bank here was therefore like insurers without the sizeable premium normally levied by in-surers.
• As the valuables are stored for a relatively modest sum, it is not unlawful for the bank to seek to limit its liability in the event of burglary, theft or events beyond their control.
• The High Court judge has thus erred in holding that the exclusion clause and the liability clause were inapplicable.
• The appeal by the Bank is allowed.