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D’seksa discovery date of cheque book forged on 21/10/2015, cheque no.

(RM4,800) - Recipient: Beh Tah Han

Date Cheque no. Amount Recipient Remarks

19/10/2015 007553 RM 4,800 CASH

19/10/2015 007555 RM 4,800 Zakaria bin Samar

19/10/2015 007558 RM 4,750 Beh Tah Han

20/10/2015 007556 RM 4,880 Zakaria bin Samar

20/10/2015 007551 RM 4,950 Global E-store

20/10/2015 007561 RM 4,770 MDF Solutions

20/10/2015 007559 RM 4,930 Beh Tah Han

21/10/2015 007569 RM 4,870 Zakaria bin Samar

21/10/2015 007579 RM 4,860 Beh Tah Han

22/10/2015 007557 RM 4,850 Shamunathan a/l Kandiah

23/10/2015 007554 RM 4,950 RETURNED

23/10/2015 007560 RM 4,980 RETURNED

25/10/2015 007562 RM 4,980 RETURNED

25/10/2015 007567 RM 4,950 RETURNED

25/10/2015 007573 RM 4,890 RETURNED

Total Cheque REFUNDED: RM

Total Cheque Requested to refund: RM 48,460.

● Stop cheques
○ 23 Oct after NSY Issued notice
■ Cheques number: 7554 & 7560
● both paid on 22nd returned on 23rd
○ On 25th another notice issued
■ Cheque 7551
● cash x refunded
■ Cheque 7650
● paid on 22nd, refunded on 25th
○ Bank refunded additional 4 cheques w/o instructions, 1 on 23rd (7554 and 3
on the 25th (7573, 7562, 7567)
○ When?
○ Which cheques? 2 were executed as instructed by NSY, following 2 x.
○ Amount? Total yet to calculate
○ Which payee? Dont know

● 5 cheques reversed
o Whose statement? Current Account statement 31.10.15

- Clause 12

The 10 disputed Cheques (cont.)

Other points:
1. Also other evidence suggesting Bank’s knowledge of irregularities, even before the
customer demanded rectification/recovery of sums dissipated.
5 cheques were refunded by the bank without being instructed.
2. Possible to return 5 cheques was because it wasn’t out of their systems yet. The
customer couldn’t recover other because they were clear out too fast (2-3days to
3. Also the part where copies of the cheque that was sent
4. Copies

Key phrases to incorporate:

● The cause of action in… is made out unless the claimant can show that…
● An essential ingredient of the defence of … is…, but the facts do not support it
● Section … applies only when…, which is not the case here
● All the ingredients of the cause of action are made out, so the resolution of the matter
will depend of what defence is available.
● On these facts, liability cannot be established because, quite clearly, the defendant is
entitled to rely on … as…
● The facts match up all the requirements for the operation of section… (S.73A)

We have been asked to advise Belasah Bank on its Rights and Remedies arising from the
10 cheques paid out from the bank allegedly to be forged between the 19th – 23rd of
October 2015 totalling to RM 48,460. We are a bank, as a registered financial institution we
offer financial services – one of which is the services of cheque books. Customers who wish
to use this service would (1) firstly need to maintain a current account at any of our branches
and (2) have applied for the services through 1 of the 2 methods we have available.

Application process
Deseksa - one of our many such customer utilising this service - have maintained an
account at defendant’s Branch in KL with CA No. ending..3304 since 21st OCT 2007. Upon
opening the account, they were given A copy of the Rules for Current Account and were
required to have their signatories sign on our specimen signature card, of whom were, Ng
Sek Yeh (Managing Director) and Wong Loh Poh (Operations Manager). A cheque would
only be honoured if it bears one of these signatory’s signature in addition with the customer’s
company stamp. In applying for this services, a customer is given 1 of two options for their
mode of application. Firstly is through the Request Slip which is attached within a cheque
book, and Secondly through an Application Form.

On the 15th of October, we received an application through an ‘Application form’ (hereinafter

‘the form’) from Ng Sek Yeh (The Managing Director of Deseksa), though not specifying the
amount, 2 cheque books were issued (containing 50 cheque each) these we Cheque books
containing cheques 7551 to 7600 (Hereinafter ‘Cheque Book 1’), and 7601 to 7650
(Hereinafter ‘Cheque Book 2’). The form also authorised 1 Mr.Zakaria Bin Samar (IC
no.800301-25-5073) to make the collection. For both the application and instruction to collect
were authorised with what appeared to be Mr.Ng Sek Yeh’s Signature.

This request was processed by Cik Mahajan Bti Semarak a Customer Service Executive
who signed over the request and instructions. 2 Days after the application date, Mr.Zakaria
(the Customer’s Agent) came to our Bank to make the collection. He was attended by the
Bank Clerk Cik Hamidah. Following the instructions on the form, she ran the necessarily
identity verification by requesting Mr.Zakaria to produce his IC. Satisfied with the consistent
particulars in IC no and Name against the form, she proceeded to hand him over the
requested cheque books together with a Slip of acknowledgement of receipt for the
signatories to sign. According Wai Tai Koon, the Branch Manager at the material time, we
had duly received this slip the following day (19th of OCT) bearing with what appeared to be
Ng Sek Yeh’s signature.

On this date: 19.10.2015 (3 Cheques from Cheque book 1 was cleared)

Cheques •Cash 007553 - RM4800 | Beh Tah Han 007558 - RM4750 | Zakaria bin Samar
007555 - RM4800

On this date: 20.10.2015 (4 Cheques from Cheque book 1 was cleared)

Cheques Beh Tah Han 007559. - RM4930 | Zakaria bin Samar 007556 - RM4880 |
•Global E-Store 007551- RM4950 | •MDF Solution 007561 - RM4770

On the 21st of October (2 days later), A staff member of the bank, (at this point we don’t
know it was) phoned Deseksa ( Ng Sek Yeh ) to inform them that there was insufficient
funds in their CA ending ...3304. Because of this Cheque 7575 for the sum of RM 4,800 and
some other cheques were not honored. We then received representatives from Deseksa
presumably a while later after the phone call, to inspect their accounts. After their inspection
we did not receive any further instruction by the customer.

On this date: 21.10.2015 (2 Cheques from Cheque book 1 was cleared)

Cheques Beh Tah Han 007579 - RM4860 | Zakaria bin Samar 007569 - RM4870

On this date: 22.10.2015 (1 Cheques from Cheque book 1 was cleared)

•Shamunath an a/l Kandiah 007557- RM4850

2 days later (23rd of OCT) an individual, Beh Ta Han visited to encash a cheque ..7566 for
the amount of RM4,960 Against the customer’s CA was dishonored again due to there being
insufficient funds in their account. Our Bank Officer Cahaya bt Suria proceeded to call
Deseksa’s Operation manager to inform the about their state of account which had resulted
in cheque 7556 failing to clear. Upon making this clear them, we received instructions that
this cheque was unauthorized. The Branch Manager (Wong Tai Koon) had the branch
contract the police to arrest Beh Ta Han, to which he then lodge a police report on the same

Presumably after this incident, Branch Manager COPIES GIVEN (NO DATE) - but no
instructions ( protocol at this point dictated safety of the records/ to preclude the possiblity of
any tampering;- sensitive issue and that we at this point felt that due to the record of the
customer we kept)

23rd instructions & 25th instructions notice to stop payment

- We dully complied to these instructions and did not honor.

But only after 2 months - did the issue of the 10 cheques arose - forgery - liable for a breach
of Breach of mandate entered into discussion. A letter issued by Ng Sek Yeh to have 10
cheques was sent.

The case for the Bank Issues:Resolve the matter

It is the submission of the Bank that it is not liable for a breach of mandate for the 10
cheques that the Customer is pursuing. The consequence of liability under S.24 of the Bills
of Exchange Act requires a paying bank to refund any unauthorised transaction. Further we
submit, that these 10 transaction which were drawn between the 19th and 21st of OCT had
been duly authorised by the customer, and even in the case where it hadn’t been duly
authorised by the customer, and the case of forgery is to be believed, it is submitted that
they had been complicit in facilitating the forgery by … (case of facilitation)

Firstly the case against Forgery S.24

The cause of action in breach of mandate is made out unless the claimant can show that
there all the disputed cheques were duly authorised by the customer. The Bank is given the
mandate to honor cheques bearing the signature of the signatories and also bearing the
company stamp. A consequence of a paying bank in such a breach is provided under S.24
of the Bills of Exchange Act which reads, it:
“...renders a forged or unauthorized signature on a bill wholly inoperative and as such
no right to enforce payment on the bill against any party.”

Here, the Burden of proof lies on the customer to prove that his signature was forged.

Issue 1: Whether, it Ng Sek Yeh’s Signature?

Balance of probabilities:
(1) Deseksa’s usual means of renewing their cheque books was through request slip
attached to existing cheques. (8 yrs)
(2) Bank’s evidence Means of application was by application form which is accessible at
all BBank’s branches. Opportunity for fraud is higher. + Specimen Card was kept at
the branch (means) + or the Client themselves.
(3) In Panaron ref in Public Bank where the D could NOT specifically prove who the
fraudster was, but pointed on the that an insider was probable because the sole staff.
(4) In Wenham v Banque du peuple1 plaintiff's money was drawn out by means of forged
cheques by some person or persons unknown, the signatures being so perfect that
the difference could be hardly be discovered: held the bank must pay.

[For Bank]
(5) We have evidence - the application form, the honored cheques and speciment card.
has no evidence to substantiate.
Bank has no evidence - application form is compromised + dispute as to the
acknowledgement sip.

Issue 2: Acknowledgment went to wrong party?

(1) The dates 17,18,19 - standard form by bank - Customer’s mistake in dating the slip.
(2) Base on evidence Zakaria was authorised to confirm all cheques payable from the
account and that he was authorised to deal with the appellant.

Mini Conclusion:
It seems that a cause of action in forgery is made out unless the Bank can show that
‘Unless the party against whom it is sought to retain or enforce payment of the bill is
precluded from setting up the forgery or want of authority.’
How this proviso entitles a paying bank in breach a defence is expounded in the case
of United Asians Bank2 by J Annuar, that:

Section 24 protects a banker by recourse to the doctrine of estoppel. A

customer cannot recover if he has represented to his banker that the forged
signature is effective and that the instrument is accordingly good for payment.

# Exception S.24 ‘precluded - silence’

Here the Burden of proof is on us to establish that due to the silence of the customer,
(1865) 1 LCLJ 30 (CAN)
Section 24 protects a banker by recourse to the doctrine of estoppel. A customer cannot recover if he has
represented to his banker that the forged signature is effective and that the instrument is accordingly good for
payment. - United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd the Supreme Court, through Annuar
on the 19th till the 22th of OCT, during which the disputed/forged cheques were
cleared, it amounted to a representation. It is our submission that due to their silence
it estopped the customer from claiming forgery.

Issue 1: Silence that Amounts to a representation.

In the case of Greenwoord , Lord Tomlin stated that:

“A Conduct amounting to a representation intended to induce the

person to whom it is made to adopt a course of conduct which results
in detriment or loss.3”


“ Mere silence or inaction cannot amount to a representation unless

there be a duty to disclose or act.4”

The Malaysian position to this is made clear in United Asian Bank Bhd (SC)5
that A customer only has two main duties to the bank under common law.
Under the MacMillian Duty - though not directly applicable here as applies to
drawing of cheques - and, the Greenwood Duty, the customer has an implied
duty to his bank to inform it of any forgery of a cheque purportedly drawn on
the account ‘as soon as he becomes aware of it.6

Elements of this :
(1) Awareness earliest on the 21st of October after cheque 7575 was
dishonored due to insufficient fund- we had received no instructions
after their inspection. In absence of any instructions, and their
perceived silence amidst a duty to disclose amounts to a
representation that their accounts were in order.
(2) In Barclays Bank v Quincecare7 J Steyn that trust, not distrust is also
the basis of a bank’s dealings with its customers. And full weight must
be given to this consideration before one is entitled, in a given case, to
conclude that the banker had reasonable grounds for thinking that the
order was part of a fraudulent scheme.’.8
(3) ‘Soon’, within reasonable time, their instruction from the Managing
Director some 2 months later does not amount to reasonable time.

Greenwood's case [1933] A.C. 51, 57. Per Lord Tomlin
Greenwood's case [1933] A.C. 51, 57.
‘Macmillan’ and ‘Greenwood’ duties approved by the Supreme Court in United Asian Bank Bhd. v Tai Soon Heng Construction
Sdn. Bhd
Greenwood v Martins Bank [1932] AII ER Rep. 318
[1992] 4 All ER 363 <https://2sbwww27nmts1j4cfl1tbmvh-wpengine.netdna-ssl.com/wp-content/uploads/JIBFL_2017_Vol32_Issue6_Jun_343.pdf>
Barclays Bank v Quincecare
(4) Silence here was to the past 10 cheques (between 19-22nd), best
case of estoppel is on the 22nd. As it only can be applied to future
cheques. But here the bank would have been

(5) Awareness on 21st of October was mutual as the bank would assist
the customer as to the reason for the insufficient funds by looking
back to the account. Bank had learned of source of the insufficient
fund was from unauthorised cheques.Awareness and notice to the
bank would have been instantaneous.
(6) Bank was further negligent by knowing - yet honoring on the 22nd
Bank relies on the proceeds.

On these facts, liability on the bank cannot be established for forgery of the 10
cheques because … Although the customer is not estopped for the further 5 cheques
in cheque book 2 that have been honored, it is not being claimed for by the

Even if liability is established under S.24, S.73A provides a complete defence for the
bank through it deeming provision.

Even if it was forged - defence under S.73A

‘Notwithstanding’ in the case Public Bank Idrus Harun JCA intended to specify that this
section operate even where s.24 applies. (S.73A prevails over s.24)9
- The law reads: Notwithstanding Section 24, where a signature on a cheque is forged
or placed thereon without the authority of the person whose signature it purports to
be, and that person whose signature it purports to be knowingly or negligently
contributes to the forgery or the making of the unauthorised signature, the signature
shall operate and and shall be deemed to be the signature of the person it
purports to be in favour of any person who in good faith the cheque or takes
the cheque for value.
Parliament’s intention; the purpose of this amendment
- In Public Bank JCA Idrus Harun:10
- is to limit the rigours of the strict liability imposed on the banks and to
widen the duty of care borne by its customers to not only take care in
drawing the cheques but also in the governance of the account and
conduct so as to avoid making easier the forgery of the signature.
- The purpose of the amendment is not difficult to comprehend in that it seeks
to increase the protection for any financial institution against the customers.
On the other hand, the customers can no longer rest on common law to pin
the blame onto the bank where it is the customer’s own negligence that has
helped the commission of the fraud or forgery. The legislative intent of the
section seeks to protect the bank so that where the negligence of the
customer has made the forgery easier, the bank is absolved from liability. It is

Para 31, Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah [2016] MLJU 1719
[2016] MLJU 1719, at para 39
admittedly a fairer approach as both the customer and the bank share a
portion of the responsibility should either of them fail to take precautionary
steps to prevent the forgery.11
Applying the section to the instant case, it would seem clear that the Bank needs to prove
that the Customer had knowingly or negligently contributed to the forgery in the sense of
making it easier for the forgery to be committed and that the appellant had acted in good
faith when it paid the cheques. It is pertinent at this stage to know that S.73A significantly
widens the duty of care beyond the ambit of English common law.12 Public Bank based on
the decision in Prima Nova13 14 stated is that our courts should no longer determine the
liability of a bank on a claim on forged cheques based on whether the customer observed
the ‘Macmillan’ and ‘Greenwood’ duties but the wider duty of care considered but
rejected by the Privy Council in Tai Hing Cotton. 15 A customer in Malaysia 3 main duties
to the bank under common law ( prior to S.73A’s amendment)16 Macmillan duty 17
Greenwood duty18 and the duty in Tai Hing Cotton requiring a customer to take
reasonable precautions in the management of his business to prevent forged cheques being
presented to the bank for payment, or to take such steps as a reasonable customer would to
check the periodic bank statements in order to be able to notify the bank of any items which
were not, or might not have been, authorised, could be implied into banking contracts as a
necessary incident of the relationship of banker and customer.19

Mini Conclusion
- Clearly the the act of not expressly notifying the Bank and not giving express
instructions constitutes negligence in respect of the duty of the governance of
the account expected by Tai Hing’s case. The Customer could have easily
identified the irregularities upon a periodical check of their account which is
expected by Malaysian common law that would have avoided the fraud from
happening. But their notice of this would only made 2 months later.

Good faith S.73A

In Public Bank, cheques were cleared by the appellant for payment in good
faith.20Learned judge in this regard had found that there was indeed no lack of good
faith or honesty on the part of the appellant in honouring the cheques.21The learned
judge had also found that the defendant had complied with all established

[2016] MLJU 1719, at Para 36
Para 35, , Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah [2016] MLJU 1719
Prima Nova Sdn. Bhd. v Affin Bank Berhad [2014] 9 CLJ 442 at Para 23
approved by the Supreme Court in United Asian Bank Bhd
Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah (COA) [2016] MLJU 1719, Para 40
adopted by our courts in the case of United Asian Bank Bhd. v Tai Soon Heng Construction Sdn. Bhd. [1993] 1 MLJ 182
London Joint Stock Bank v Macmillan and Arthur[1918-19] AII ER Rep. 30 ; Duty of the customer in drawing a cheque to take
usual and reasonable precautions to prevent forgery. If owing to neglect of this duty forgery takes place, the customer may be
liable for the loss.
Greenwood v Martins Bank [1932] AII ER Rep. 318 ; The customer has an implied duty to his bank to inform it of any forgery of a cheque

purportedly drawn on the account ‘as soon as he becomes aware of it.

Tai Hing Cotton Mill Ltd. v Liu Chong Hing Bank Ltd. & Ors (supra).[1985] 3 WLR 317 at 318
Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah (COA) [2016] MLJU 1719, Para 11
Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah (COA) [2016] MLJU 1719, Para 32
banking procedures, examined the signatures on the cheques against the
specimen signatures in its system and generally taken all precautionary
measures. The respondent, the learned judge stressed, had not shown the appellant
to be unduly careless or negligent in doing so.22
(1) It is submitted that Belasah bank complied with all necessary verification procedure.

[For Deseksa]
Belasah Bank not in good faith
1. Also other evidence suggesting Bank’s knowledge of irregularities, even before the
customer demanded rectification/recovery of sums dissipated.
5 cheques were refunded by the bank without being instructed.
2. Possible to return 5 cheques was because it wasn’t out of their systems yet. The
customer couldn’t recover other because they were clear out too fast (2-3days to
3. Reason for the resignation of the officer responsible for the processing of cheque
book applciation.

Base on the wider duty of care afforded in Prima Nova and that Belasah bank has
acted in good faith, and that the deeming provision of S.73A should apply to afford a defence
to any claim of forgery by the customer. In our submission on the balance of probabilities
that the customer’s negligence had facilitated, afforded the opportunity of making a 3rd
party commit forgery of the cheques.

Exclusion Clause[ For Dseksa]

Clause 12: customers are requested to examine all entries in the statement of account, and
to immediately report to the Bank any error found therein. If the customer does not within
fourteen days after the receipt of statement of account object to any entry therein, he shall
be deemed to have accepted the entries made up. The Customer had in this case only
reported the claim of 10 unauthorised cheques after 2 months. The bank is entitled to deem
the account balance to be correct.

(1) A matter of construction, - last entry in the statement of account as ‘correct’ - Correct x
mean Legal or authorized. In Tai Hing Cotton

(2) conclusive evidence clauses, in Tai Hing Cotton terms failed to make the Customer
understand intended importance of the inspection he is being expressly or impliedly invited
to make,” or conclusive effect against him if he raises no query, or fails to raise a query in
time, upon his bank statements. If banks wish to impose upon their customers an express

Public Bank Bhd v Tetuan Kumar Jaspal Quah & Aishah (COA) [2016] MLJU 1719, Para 32
Tai Hing Cotton[1985] 3 WLR 317, at 324
Tai Hing Cotton[1985] 3 WLR 317 at 331
obligation to examine their monthly statements and to make those statements, in the
absence of query, unchallengeable by the customer after expiry of a time limit, the burden of
the objection and of the sanction imposed must be brought home to the customer.

(3)Clear and unambiguous provision is needed if the banks are to introduce into the contract
a binding obligation upon the customer who does not query his bank statement to accept the
statement as accurately setting out the debit items in the accounts.

Tai Hing Cotton[1985] 3 WLR 317, at 333