Public Bank Berhad v Bukit Baru Villas Sdn Bhd (W-02(NCvC)(W)-1851-11/2023)

company documents in order to procure the sale of two parcels of land belonging to BBV; and

the signatures of BBV’s other authorised signatories on a number of cheques drawn on the PBB account. [12] According to BBV, part of the proceeds from the sale of those lands was used to redeem a loan granted to BBV by MBSB Bank, and the balance of the sale proceeds was deposited into the PBB Account. BBV’s case was that Jeffrey thereafter withdrew those funds by presenting those impugned cheques bearing signatures purportedly of PW1 and/or PW2, which were in fact forged. [13] BBV lodged police reports against Jeffrey on 11 and 12 March 2021. The Bank’s Case [14] The Bank’s case was that, at all material times, it dealt only with Jeffrey in relation to affairs of the PBB Account. The Bank maintained that Jeffrey was the person who handled BBV’s financial matters and banking affairs. [15] The Bank further contended that monthly statements for the PBB Account were sent to BBV and that no complaint was raised by BBV or its directors throughout the material period regarding the transactions reflected in those statements. Issues for Determination [16] Three principal issues arose for determination in these appeals:

whether the signatures of PW1 and PW2 on the impugned cheques were forged;

whether the Bank was entitled to rely on the statutory defences under sections 24 and 73A of the BEA 1949; and

whether BBV was entitled to rely on section 29 of the Limitation Act 1953 so as to postpone the commencement of the limitation period. Issue 1: Whether the signatures of PW1 and PW2 on the impugned cheques were forged? [17] The Bank’s primary complaint was that the High Court erred in concluding that the signatures of PW1 and PW2 on the impugned cheques were forged. Learned counsel for the Bank submitted that the learned JC had placed undue reliance on the expert evidence of Iskandar bin Azaman (“PW3”), BBV’s handwriting expert, and on the denials of PW1 and PW2. [18] PW3 is a gazetted Document Examiner with Jabatan Kimia Malaysia since 1 August 2008. He examined the disputed signatures on the impugned cheques and compared them with specimen signatures of PW1 and PW2. In his expert report dated 23 December 2021, PW3 concluded that the disputed signatures purportedly belonging to PW1 “were probably not written” by PW1, while those purportedly belonging to PW2 “were not written” by PW2. [19] In his examination-in-chief, PW3 explained that Jabatan Kimia adopts a five-point evaluative scale. He said that, in relation to PW2, the conclusion that the questioned signatures were not written by PW2 represented the highest level of negative opinion. In relation to PW1, the conclusion that the questioned signatures were probably not written by PW1 represented the second-highest level of negative opinion. [20] PW3 further explained that he did not go to the highest level in relation to PW1 because of the nature of PW1’s signature, which exhibited limited handwriting characteristics. Even so, he maintained that the opinion remained a conclusive opinion in the sense that he did not believe that PW1 had written the questioned signatures. [21] PW3 then identified the points of difference which formed his conclusion, including differences in stroke formation, line quality and structural characteristics between the disputed signatures and the specimen signatures. [22] Under cross-examination, PW3 explained that the phrase “limited handwriting characteristics” in relation to PW1’s signature meant that the signature consisted of garlands and hoops and was therefore less complex than PW2’s signature. He nevertheless maintained that there were sufficient significant differences to support his conclusion. [23] Importantly, PW3 was not shaken in any material respect in cross-examination. He confirmed that he had not seen the supplementary account opening form containing the specimen signatures kept by the Bank. He also explained that, in conducting his examination, he used visual equipment, namely a video spectral comparator, which enlarged the image for clearer examination. [24] Although counsel for the Bank asked several questions about aspects of PW3’s analysis, the substance of his opinion, namely that the disputed signatures were not genuinely those of PW1 and PW2, was not displaced. Analysis on Issue 1 [25] It is settled law that an appellate court does not lightly interfere with findings of fact made by a trial court. Such interference is justified only where those findings are plainly wrong, incapable of reasonable explanation or justification, or are conclusions that no reasonable judge could have reached. A “plainly wrong” finding arises where the trial judge demonstrates either no, or insufficient, judicial appreciation of the evidence and/or commits a material error of law: see Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; [2004] 4 CLJ 309; [2004] 6 AMR 781, FC; Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67; [2020] 10 CLJ 1; [2020] 8 AMR 227, FC. [26] Against that appellate framework, the Bank’s principle complaint is that BBV had failed to discharge its burden of proving forgery in respect of the impugned cheques. Learned counsel for the Bank submitted at the trial and before this Court that BBV’s failure to furnish PW3 with the supplementary account opening form dated 2 November 2009 containing the specimen signatures of PW1 and PW2 was fatal to BBV’s case. Counsel submitted that because PW3 did not analyse those specimen signatures, the methodology adopted in his examination was “unacceptable” and his expert report fundamentally “unreliable”. In support of that submission, the Bank relied on Formosa Resort Properties Sdn Bhd v Bank Bumiputera Malaysia Bhd [2011] 4 MLJ 651; [2010] 6 CLJ 530; [2009] 5 AMR 488, McLaren Saksama (M) Sdn Bhd v Hong Leong Bank Bhd [2014] 7 MLJ 104; [2013] 5 CLJ 810; [2013] MLRHU 131, and CIMB Bank Bhd v Panaron Control Sdn Bhd [2014] MLJU 01924; [2015] 1 CLJ 1056; [2014] AMEJ 1467; [2015] 1 AMCR 172. Learned counsel further argued that the testimonies of PW1 and PW2 denying the signatures were, without corroboration, “self-serving at best”, and that the learned JC had therefore erred in concluding that forgery had been established on the balance of probabilities. [27] With respect, in our judgment, the Bank’s challenge to the trial court’s finding of forgery faced three insurmountable difficulties.

The Bank did not put its true challenge to PW3 [28] The first difficulty lies in the Bank’s own conduct at trial. The Bank in its submission contended that PW3’s opinion was unreliable because he had not been shown the supplementary account opening form containing the specimen signatures retained by the Bank. But that specific challenge was never put to PW3 during cross-examination. [29] The cross-examination went no further than establishing that PW3 had not seen the document. Counsel for the Bank did not put to PW3 that, by reason of the omission, his methodology was flawed, his report unreliable, or his conclusion wrong. Instead, counsel moved on to other matters and then closed the cross-examination. [30] During cross-examination the bank’s counsel referred PW3 to the supplementary account opening form and asked whether he had previously seen the document. PW3 replied that he had not. Counsel then responded, “Thank you”, and immediately proceeded to an entirely different line of questioning. [31] What is significant is what did not occur during cross-examination of PW3. At no point did the Bank’s counsel put it to PW3 that his failure to examine the specimen signatures on the supplementary account opening form rendered his methodology flawed or his conclusions unreliable. Instead, counsel moved on to questions concerning the phrase “limited handwriting characteristics in comparison”, the equipment used in the examination and the time PW3 took to complete the analysis. Shortly thereafter, counsel for the Bank indicated that he had no further questions and the cross-examination came to an end. The central criticism now advanced by the Bank was therefore never put to the expert witness. [32] The legal consequence of the omission is governed by the well-established rule in Browne v Dunn [1893] 6 R 67. The rule embodies the principle of procedural fairness in adversarial proceedings: where a party intends to invite the court to reject a witness’s material evidence on a specific ground, that ground must be put to the witness so that the witness has a fair opportunity to explain. [33] The rational and effect of the rule were explained by the Court of Appeal in Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors & Another Appeal [1995] 2 MLJ 770; [1995] 3 CLJ 639; [1995] 3 AMR 2375. Where a party fails to put its case to a witness on a material issue, the court is entitled to treat the omission as an acceptance of the witness’s evidence on that point. Equally, a party who declines to challenge a witness during cross-examination cannot later seek to undermine that witness’s evidence in submissions on a ground which was never put to the witness while he was in the witness box. [34] In the present case, although PW3 acknowledged that he had not been shown the supplementary account opening form containing the specimen signatures of PW1 and PW2, learned counsel for the Bank never put it to him that this omission rendered his conclusions wrong, unreliable or methodologically flawed. PW3 was therefore never afforded the opportunity to explain whether the absence of those specimen signatures had any bearing on his analysis. [35] Had the Bank’s true complaint been put squarely to PW3 during cross-examination, he would have had the opportunity to explain whether the absence of the supplementary account opening form made any material difference, given that he had in fact examined a substantial amount of PW1 and PW2’s specimen signatures from other sources. However, that opportunity was not afforded to him. [36] In these circumstances, it was not open to the Bank, at the submission stage in the High Court or on this appeal, to elevate an unchallenged point into a decisive attack on the expert evidence. The Bank cannot now invoke authorities such as Formosa Resort Properties to mount a methodological challenge to the expert evidence which it elected not to test during cross-examination.

(ii) The finding of forgery was not based on the expert report alone [37] The second difficulty is that the Bank’s complaint proceeds on a false premise, namely that the learned JC found forgery solely on the basis of PW3’s report and the denials of PW1 and PW2. [38] That was not how the evidence stood. The learned JC considered:

the direct evidence of PW1 and PW2, both of whom categorically denied signing the impugned cheques;

the expert evidence of PW3, who explained his methodology and reasons; and

the evidence of DW2, the Bank’s own officer, who accepted in cross-examination that the signatures on the impugned cheques “looked different” and displayed “slight differences” when compared with the specimen signatures in the Bank’s system. [39] The denials of PW1 and PW2 were neither inadmissible nor lacking in evidential value merely because they supported BBV’s case. Their evidence was direct evidence on a matter within their personal knowledge, namely whether they had signed the impugned cheques. The mere fact that their evidence was favourable to BBV’s case did not, by itself, diminish its evidential value or make it “self-serving” in any legally objectionable sense. Its weight and credibility were matters for the trial judge, who had the advantage of seeing and hearing the witness testify. [40] Likewise, the expert report was not treated by the learned JC as conclusive. Her Ladyship was entitled to receive it as opinion evidence under section 45 of the Evidence Act 1950 and to evaluate it in the light of all the other evidence. [41] Moreover, the law is settled that expert evidence is advisory only. It assists the court; it does not bind. The court remains the final arbiter of fact: see Kulasingam s/o Samuel v Rasamah d/o JV Tambipillai [1997] 1 MLJ 288; [1997] 1 CLJ 406; [1997] 1 AMR 797, CA, and Dr Shanmuganathan v Periasamy s/o Sithambaram Pillai [1997] 3 MLJ 61; [1997] 2 CLJ 153; [1997] 3 AMR 3012, FC. [42] The Bank’s complaint that the learned JC “solely” relied on the expert report therefore does not survive a fair reading of the judgment and the records of appeal.

(iii) The absence of the Bank-held specimen signatures was not fatal in law [43] The third difficulty with the Bank’s argument is one of principle. The Bank’s submission, taken to its logical end, is that where a handwriting expert does not compare the disputed signatures with the specimen signatures or application form retained by the paying bank, the expert evidence must, as a matter of law, carry no weight and cannot support a finding of forgery. With respect, we are unable to accept so rigid a proposition. [44] The correct position, in our judgment, is that absence of the bank-held specimen signatures from the comparison may, depending on the facts, constitute a serious weakness in the plaintiff’s proof of forgery. But whether that omission is merely a matter going to weight, or is so serious as to render the proof insufficient on a balance of probabilities, depends on the evidential context of the particular case. It is not governed by an absolute exclusionary rule. [45] We have considered Formosa Resort Properties carefully. It is true that the Court of Appeal there regarded the plaintiff’s handwriting expert’s failure to compare the disputed signatures with the specimen signature card or the application form kept by the bank as a grave and ultimately fatal weakness in the expert’s methodology. The Court described the expert’s approach, which sidelined those bank-held documents and instead relied on comparison with other specimen cheques, as “totally unacceptable and misguided”, and held that to sideline the specimen signature card or application form was “disastrous” for the appellant. The Court further held that, on the evidence there, forgery had not been proved on a balance of probabilities. [46] However, Formosa Resort Properties must be read in its full evidential setting. First, the Court of Appeal affirmed that the trial judge had himself critically examined the specimen signatures and the allegedly forged cheques, appreciated the variations in the admitted signatures, and was not satisfied that forgery has been conclusively proved. Secondly, the expert evidence in Formosa Resort Properties was found insufficient because the comparison exercise itself was methodologically weak: the expert had compared the disputed signatures only with other specimen cheques of unestablished evidential pedigree, and not with the bank-held specimen signature card or the application form. In that factual setting, the Court of Appeal upheld the trial judge’s conclusion that the plaintiff had failed to prove forgery. [47] In our judgment, Formosa Resort Properties does not establish an inflexible rule of law that, in every case and without exception, expert evidence must be accorded no weight unless the bank-held specimen signature card or application form had been included in the comparison exercise. What Formosa Resort Properties establishes is that where a plaintiff alleges forgery, the failure to compare with the most obvious and authoritative genuine specimens kept by the bank may, on the facts of that case, prove fatal because the plaintiff bears the burden of proof. Whether it is fatal in any given case depends on the totality of the evidence. [48] The later authorities relied upon by the Bank do not state the matter anymore absolutely. In McLaren Saksama v Hong Leong Bank, the difficulty was not merely that the bank-held specimen signatures had not been used. The more fundamental weakness was that the expert did not disclose the basis of his opinion, the process by which he arrived at it, or the reasons supporting his conclusion. The deficiency therefore lay in the quality and reasoning of the expert evidence itself. By contrast, in CIMB Bank v Panaron Control, the court did not proceed on the footing that the absence of comparison with the bank-held specimen signatures automatically precluded a finding of forgery; rather, the court was satisfied on the totality of the evidence available in that case. [49] This present case, in our view, is closer in principle to a total-evidence evaluation than to the evidential failure seen in Formosa Resort Properties and McLaren Saksama. PW3 did not express a bare conclusion. He identified the specimen signatures he had examined, described his methodology, and explained the features that led him to his opinion. More importantly, the High Court’s finding of forgery did not rest on PW3’s report alone. It was supported by direct denials of PW1 and PW2, and by DW2’s own admission that the signatures on the impugned cheques looked different and displayed slight differences from the specimen signatures in the Bank’s system. In those circumstances, the absence of the supplementary account opening form from PW3’s comparison materials was a matter going to weight, but it did not, as a matter of law, compel the rejection of his evidence or render the finding of forgery unsustainable. Finding on Issue 1 [50] Accordingly, viewed through the appellate lens articulated in Gan Yook Chin and Ng Hoo Kui v Wendy Tan, we are entirely unable to conclude that the learned JC’s finding of forgery was plainly wrong, unsupported by evidence, or reached without proper judicial appreciation of the evidence. [51] On the contrary, the High Court’s finding of forgery was supported by a convergence of evidence: the direct denials of PW1 and PW2, the expert evidence of PW3, and the Bank’s own evidence that the disputed signatures looked different from the specimens in the Bank’s system. [52] The learned JC was therefore entitled to conclude, on the balance of probabilities, that the impugned signatures were forged. [53] Accordingly, we find that the Bank’s challenge to the finding of forgery must fail and Issue 1 is resolved against the Bank. Issue 2: Whether the Bank can rely on the statutory defence under sections 24 and 73A of the BEA 1949 [54] We now turn to Issue 2, which concerns whether the Bank has succeeded in bringing itself within the statutory defences provided under sections 24 and 73A of the BEA 1949, such as to relieve it from liability for the payment of the impugned cheques. [55] The issue is to be approached against the settled legal position that, absent a valid mandate, a bank which honours a forged instrument acts without authority and must bear the loss. Sections 24 and 73A of the BEA 17 1949 constitute limited statutory qualifications to that position. It is therefore incumbent on the Bank to bring itself strictly within their terms. The statutory framework [56] Section 24 of the BEA 1949 codifies the common law position that a forged or unauthorised signature is wholly inoperative. No rights can be acquired through such a signature, and the bank obtains no mandate to debit the customer’s account. The only recognised exception is where the party against whom the bill is sought to be enforced is precluded, in law, from setting up the forgery or want of authority. It reads:

Forged or unauthorised signature Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, 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: Provided that nothing in this section shall effect the ratification of an unauthorized signature not amounting to a forgery. [57] The scope of the exception under section 24 is narrow. As explained by the Supreme Court in United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd [1993] 1 MLJ 182; [1993] 2 CLJ 31; [1993] 1 AMR 612, adopting the Privy Council’s decision in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] 1 AC 80; [1985] 2 All ER 947, the bank’s liability is strict. A bank who pays out on a forged instrument drawn on its customer’s account is, at common law, strictly liable to make good the loss. It is no answer that the bank acted honestly or exercised reasonable care. The forged instrument is a nullity, unless estoppel is established. The Supreme Court in United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd at [1993] 1 MLJ 182 at pp. 190-191 explained: “….. at common law a banker who pays out on a forged instrument drawn on his customer’s account is absolutely liable to make good the loss. It is no answer for him to say that he was unaware of the forgery or that he took reasonable care. The forged instrument is a nullity and a banker has no authority, actual or implied from his customer to act upon it. The common law has been codified in s 24 of the Bills of Exchange Act 1949, which creates a limited exception in favour of a banker. ……… ……………. 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. [58] The nature of estoppel under section 24 of the BEA 1949 was clarified in Malaysia Plastics Sdn Bhd v United Overseas (M) Bhd and Another Suit [2012] 9 MLJ 336; [2012] 4 CLJ 997; [2012] 4 AMR 428. For estoppel to arise under section 24, there must be a clear and unequivocal representation by the customer to the bank that the forged signature is effective and that the instrument is good for payment. The representation must be directed to the operative validity of the instrument itself. It is not sufficient to rely on general conduct or circumstances from which such a representation might be inferred in a broad or indirect sense. Nallini Pathmanathan J (as she then was) held: [50] …………… It is evident from a perusal of those cases that in order to comprise an estoppel, a clear representation is required from the customer to the effect that the forged signature is effective and that the instrument is accordingly good for payment. …………. An estoppel in terms of a clear representation from the customer therefore comprises one exception to the common law position that a bank is liable to its customer when it pays out without the customer’s mandate. [Emphasis added] [59] Section 73A introduces a separate and cumulative exception. It provides that, notwithstanding section 24, a forged or unauthorised signature may be deemed operative where two conditions are satisfied: first, where the person whose signature was forged had knowingly or negligently contributed to the forgery or the making of the unauthorised signature; and secondly, that the bank paid the cheque in good faith. It reads:

Knowingly or negligently facilitating forgery 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 unauthorized signature, the signature shall operate and shall be deemed to be the signature of the person it purports to be in favour of any person who in good faith pays the cheque or takes the cheque for value. [60] The requirements under section 73A are conjunctive. Malaysia Plastics made clear that the defence is available only where the bank proves two cumulative requirements: first, that the person whose signature was forged knowingly or negligently contributed to the forgery or the making of the unauthorised signature; and secondly, that the bank paid the cheque in good faith. The absence of either is fatal to the bank’s defence. The High Court held: [52] ……... [Section 73A] provides that despite the effect of s 24 which stipulates that no effective discharge or payment can be made under a bill containing a forged or unauthorised signature save where estoppel comes into play, such a bill may yet be honoured and will in fact be deemed to be the signature of the person whose signature was forged, where that same person contributes to the forgery knowingly or negligently. The section also requires the bank to pay out on the cheque in good faith. Put another way, where the person whose signature is alleged to be forged is found to have knowingly or negligently contributed to the act of forgery, the cheque will be deemed to have been made by him and the bank will not have to make good to that person, any payment made out on that instrument. However, the bank should act in good faith. [Emphasis added] [61] It follows that the burden of proof lies squarely on the Bank. To succeed, the Bank must prove:

under section 24, there was a clear and unequivocal representation by BBV to the Bank giving rise to estoppel.

under section 73A, both (i) BBV’s negligent or knowing contribution to the forgery, and (ii) the Bank’s good faith in paying the impugned cheques. The High Court’s decision [62] The learned JC rejected both statutory defences. [63] In relation to section 24, Her Ladyship held that the Bank failed to establish any representation by BBV capable of giving rise to estoppel. She held that the surrounding circumstances should have put the Bank on inquiry. The impugned cheques involved very substantial sums and several were cash cheques presented by Jeffrey for payment to himself. In those circumstances, the learned JC held that the Bank ought not to have relied solely on Jeffrey’s confirmation but should have verified the transactions with PW1 or PW2. [64] In relation to section 73A, the learned JC found that the Bank failed on both limbs. The Bank failed to prove that BBV knowingly or negligently contributed to the forgery or the making of the unauthorised signatures, or that the Bank had acted in good faith in paying the impugned cheques. [65] In this regard, the learned JC considered the definition of “good faith” in section 95 of the BEA 1949, namely that a thing is deemed to be done in good faith where it is in fact done honestly, whether negligently or not. Her Ladyship nevertheless held, relying on Shorubber (M) Sdn Bhd v CIMB Bank Berhad [2015] MLJU 2073; [2016] 2 CLJ 158; [2015] MLRHU 788, that in the context of banker-customer relations, conduct amounting to reckless or complete disregard of the customer’s rights and interests may fall outside the notion of honesty or bona fides. The Bank’s Position [66] Before us, the Bank advanced four principal arguments seeking to bring itself within both statutory defences. [67] First, under section 24, the Bank contended that BBV was estopped from asserting forgery by reason of its own conduct. The essence of the Bank’s argument was that BBV had by entrusting Jeffrey with the day-to-day management of its banking affairs and by permitting him to act as the company’s liaison with the Bank, represented to the Bank that Jeffrey was fully authorised to manage the company’s financial affairs and deal with the Bank in relation to the PBB Account, including in respect of the impugned cheques. [68] The Bank maintained that, when the impugned cheques were presented, its officers had obtained confirmation from Jeffrey, who was himself an authorised signatory. It argued that in those circumstances, BBV was precluded from asserting forgery and denying the validity of the transactions. [69] Secondly, the Bank placed considerable reliance on BBV’s admitted failure to review the monthly statements for the PBB Account. It pointed out that under clauses 9.2 and 9.3 of the Bank’s terms and conditions, BBV was required to examine its monthly statements and report discrepancies within 21 calendar days. The Bank argued that BBV’s failure to do so gave rise to estoppel or, at the very least, precluded BBV from asserting forgery. [70] Thirdly, in support of section 73A of the BEA 1949, the Bank submitted that BBV had negligently contributed to the forgery by leaving the cheque book and practical management of BBV’s banking affairs to Jeffrey without adequate supervision, and by failing to monitor its bank statements and financial affairs. The Bank’s submission, in substance, was that BBV had created the very conditions which enabled the forgeries to occur, and should therefore bear the loss. [71] Fourthly, the Bank contended that it had acted in good faith. It argued that section 95 of the BEA 1949 makes clear that negligence does not itself negate good faith. The Bank said that it acted honestly and in the ordinary course of business by following internal standard operating procedures (“SOPs”), namely by comparing the signatures against the specimen signatures in its system and obtaining verbal confirmation from Jeffrey, who was himself an authorised signatory. The Bank further submitted that the learned JC had erred in law by conflating negligence with lack of good faith, contrary to the express wording of section 95 of the BEA 1949. BBV’s Position [72] BBV’s response was that the Bank failed to establish the factual and legal foundation for either statutory defence. [73] As to section 24, BBV denied making any clear and unequivocal representation to the Bank that the forged signatures were genuine or that the impugned cheques were valid for payment, or that Jeffrey was authorised to validate large cash cheques without the genuine signatures of the other authorised signatories. BBV pointed to PW1’s evidence that Jeffrey did not make business or financial decisions for the company, but merely implemented decisions made by the directors. In PW1’s words, Jeffrey was “just an executor”. [74] As to the failure to review monthly statements, the evidence showed that at all material times, BBV did not receive the monthly statements of account since they were sent by the Bank to a different address based on a forged letter by Jeffrey purportedly from BBV to the Bank. Furthermore, BBV contended that such omission could not, as a matter of law, amount to a clear and unequivocal representation required under section 24. At most, it might be relevant to section 73A, but even then, only if the necessary nexus to the forgery was established. [75] BBV’s explanation was that the company was at the material time a special purpose vehicle incorporated for the development of two parcels of land. According to PW1, the PBB Account was used principally to facilitate the redemption payment to MBSB Bank. After that payment was made, the directors believed only a small balance remained and did not anticipate further substantial transactions. They did not know that proceeds from the fraudulent sale of BBV’s lands had later been deposited into the account. [76] BBV further submitted that section 73A does not impose a free-standing and general statutory duty of supervision of the width contended for by the Bank. What the section requires is proof of knowing or negligent contribution to the forgery or the making of the unauthorised signature itself. General deficiencies in corporate oversight, without the requisite nexus, are insufficient. [77] Finally, BBV submitted that even if some negligence on its part were shown, the Bank still could not rely on section 73A unless it proved good faith. BBV contended that the Bank failed to do so because it ignored obvious red flags: the large amounts involved, the fact that several cheques were cash cheques payable to Jeffrey himself, the visible differences between the signatures on the impugned cheques and the specimen signatures in the Bank’s system, and the failure to verify the transactions directly with PW1 or PW2.

Section 24: no estoppel arose on the facts [78] In our judgment, the Bank cannot succeed under section 24. Its reliance on estoppel is unsustainable, both as a matter of law and on the facts. [79] Estoppel under section 24 is not to be inferred lightly. The law is clear that, for estoppel to arise under section 24, there must be a clear and unequivocal representation by the customer that the forged signatures are effective and that the instrument is good for payment: see United Asian Bank and Malaysia Plastics. The representation must be directed to the operative validity of the instrument itself. It is not enough to show, in some broad or general sense, that the customer permitted one individual to deal with the bank on its behalf. [80] On the evidence before the High Court, no such representation was proved. The Bank’s argument rests, in essence, on two strands: first, that BBV permitted Jeffrey to manage its banking affairs; and secondly, that the Bank relied on Jeffrey’s confirmation when the impugned cheques were presented. [81] However, neither strand, whether taken separately or cumulatively, constitutes a clear and unequivocal representation that the PW1 and PW2’s signatures on the impugned cheques were genuine. The fact that Jeffrey was one of the Group A signatories and the person who commonly dealt with the Bank did not amount to a representation that signatures purporting to be those of PW1 or PW2 were genuine, even though forged. It also did not amount to a representation that Jeffrey alone could validate substantial cash cheques payable to himself. [82] Nor did BBV’s failure to review its monthly statements amount to a clear and unequivocal representation that the forged signatures were valid. At the highest, that omission may be relevant to the Bank’s allegation of negligent contribution under section 73A. It does not satisfy the strict requirement of estoppel under section 24. [83] The Bank’s reliance on the High Court’s decision in Leolaris (M) Sdn Bhd v RHB Bank Bhd [2009] MLJU 568; [2009] 10 CLJ 248; [2009] 1 MLRH 113 does not carry the matter further. Whatever its facts, it cannot displace the settled principle that estoppel under section 24 requires a clear and unequivocal representation by the customer as to the efficacy of the impugned instrument. No such representation was established here. [84] We should add that the Bank’s argument under section 24 suffers from an additional difficulty. A bank that seeks to invoke estoppel in relation to forged cheques cannot ignore circumstances that would put a reasonable banker on inquiry and then rely on the customer’s alleged representation in the abstract. In the present case, the surrounding facts were themselves highly irregular. As shown below, those same facts also undermine the Bank’s assertion of good faith under section 73A. [85] We therefore agree with the learned JC that the essential element of estoppel for a statutory defence under section 24 — namely, a clear and unequivocal representation as to the validity of the impugned cheques — was not proved by the Bank on the balance of probabilities.

(ii) Section 73A: knowing or negligent contribution was not proved [86] We turn next to section 73A. The Bank’s case under the first requirement of “knowing or negligent contribution” raises an important question as to the scope of that expression within the meaning of the section. [87] The Bank’s submission was, in substance, that BBV’s authorised signatories owed a wider statutory duty not to afford the opportunity for forgery, to monitor the company’s bank statements and financial affairs periodically, and not to entrust a sole individual with practical control of the company’s banking arrangements without supervision. According to the Bank, BBV’s internal arrangements — in particular entrusting the company cheque book and its banking affairs to Jeffrey, and failing to monitor is bank statements — constituted negligent contribution to the forgery within section 73A. [88] With respect, we are unable to accept such a broad a construction of section 73A. [89] The language in section 73A is directed not to generalised negligence, but to contribution to “the forgery or the making of the authorised signature”. The statutory focus is therefore specific and causal. There must be a sufficient nexus between the conduct relied upon and the forged signature itself. [90] Section 73A does not create a free-standing and general statutory code of customer-side financial supervision. It does not provide that every lapse in corporate oversight, every failure to review statements, or every misplaced trust in an officer or director will automatically amount to negligent contribution to a subsequent forgery. The section is more precise. It requires proof that the person whose signature was forged knowingly or negligently contributed to the forgery or the making of the unauthorised signature. Opportunity is not the same as contribution. Creating an opportunity for wrongdoing is different from contributing to the wrongdoing itself. General laxity is not the same as negligent facilitation within the meaning of section 73A. [91] PW1 and PW2 accepted that they did not regularly review BBV’s monthly bank statements, and that Jeffrey appears to have had substantial practical control over BBV’s day-to-day banking matters, including custody of its cheque book. But those matters must be assessed in their proper context. The evidence accepted by the learned JC was that BBV was, at the material time, functioning essentially as a special purpose vehicle. PW1 and PW2 believed that, after the redemption payment to MBSB Bank, only a small balance remained in the PBB Account and no substantial further movements were expected. [92] Those facts may disclose overreliance on Jeffrey. But section 73A is not engaged by every imprudent internal arrangement. The Bank was required to prove that BBV’s conduct amounted to knowing or negligent contribution to the forgeries themselves. On the facts found, we were not persuaded that the omission to review bank statements, or the practical delegation of day-to-day banking matters to Jeffrey, was shown to have the necessary causal and legal nexus to the forged signatures such as to satisfy section 73A. As the evidence shows, at the material time the Bank had sent the monthly statements to another address and not to BBV’s office based on the forged letter by Jeffrey. [93] The Bank’s contrary argument, if accepted, would have far reaching consequences. It would substantially reverse the statutory scheme by shifting the essential burden of guarding against forged cheques from the paying bank to the customer whenever the customer’s internal controls were less than ideal. That is not what section 73A provides. Nor would such construction of section 73A sit comfortably with section 24, under which a forged signature remains wholly inoperative unless the bank brings itself within a recognised exception. [94] We therefore agree with the learned JC that the Bank failed to establish knowing or negligent contribution of the forgery on the part of BBV within the meaning of section 73A.

(iii) Section 73A: the Bank also failed to prove good faith [95] In any event, and more fundamentally, the Bank’s defence under section 73A fails on the second requirement of good faith. [96] The Bank submitted that under section 95 of the BEA 1949 good faith is defined in terms of honesty, whether the act is done negligently or not. It submitted that negligence cannot, as a matter of law, negate good faith. [97] The question, however, is whether, on the facts, the Bank’s conduct can properly be characterised as honest within the meaning of section 95. [98] In the specific context of banker-customer relations, the High Court in Shorubber v CIMB Bank (supra) held, after considering Malaysia Plastics, Natsafe Engineering Sdn Bhd v CIMB Bank Berhad [2014] 4 CLJ 510; [2013] AMEJ 0156; [2013] MLRHU 823, the Privy Council’s decision in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378; [1995] 3 All ER 97 and the English Court of Appeal’s decision in Starglade Properties Ltd v Nash [2010] All ER (D) 221, that conduct amounting to reckless or complete disregard of the customer’s rights and interests may fall outside the notion of honestly or bona fides. Varghese George J (as he then was) said: [58] The courts in Malaysia Plastics and in Natsafe Engineering Sdn Bhd v CIMB Bank Berhad [2014] 4 CLJ 510 have opined that ‘good faith’ under section 73A BEA had to have a nexus with the payment out of the cheques itself and it was envisaged that in that factual matrix the bank was expected to act in compliance with the highest standards required of a bank in the discharge of its duties to its customers. ………… [61] ‘Honesty’ was, in my holding, therefore no longer limited to absence of direct impropriety, fraud or complicit conduct but in some situations like here, in the particular context of a banker-customer relationship, acting in reckless or complete disregard of the rights or interest of an account holder or customer to whom a duty was owed by the bank, could fall within the wider meaning of acts not carried out ‘bona fides’ or honestly. [99] We agree with the approach taken by the High Court in Shorubber. It does not contradict section 95. Rather, it gives substantive content to the concept of honesty in circumstances where the bank, though perhaps not fraudulent in the subjective sense, proceeds in the face of obvious warnings or red flags with reckless indifference to the customer’s rights or interests. [100] Additionally, that approach is consistent with established authority on the bank’s ordinary duty of care. The Court of Appeal in Public Bank Bhd v Exporaya Sdn Bhd [2013] 1 MLJ 507; [2013] 2 CLJ 753; [2013] 1 AMCR 191, affirmed that the bank-customer relationship, in relation to the payment of cheques, is one of principal and agent, and that the bank is under an implied duty to exercise reasonable skill and care in executing its customer’s mandate. That duty requires the bank to refrain from carrying out instructions where the circumstances put it on inquiry. A bank’s standard of care is objective, i.e. whether a reasonably prudent banker, faced with the same facts, would regard the action as justifiable. [101] The same principle was affirmed by the Federal Court in Abdul Rahim Abdul Hamid & Ors v Perdana Merchant Banker Bhd & Ors [2006] 5 MLJ 1; [2006] 3 CLJ 1; [2006] 3 AMR 629, citing with approval the principle laid down in the English case of Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363 and Lipkin Gorman v Karpnale Ltd [1992] 4 All ER 409. The Federal Court held: [28] To our minds, if a bank executes an order knowing it to be dishonestly given, or shuts its eyes to an obvious fact of dishonesty, or acted recklessly in failing to disclose material facts, the bank will plainly be liable. In our judgment, it is an implied term of the contract between the bank and the customer that the bank will observe reasonable skill and care in and about executing customer's orders. See Barclays Bank plc v. Quincecare Ltd [1992] 4 All ER p. 363. …………… [32] ………………. A bank is not obliged to question any transaction which is in accordance with the customer's mandate, unless there are grounds for believing that these was a misuse of authority for the purpose of committing a fraud. See Lipkin Gorman (a firm) v. Karpnale Ltd and Another [1992] 4 All ER 409. [102] Based on these authorities, a bank is not obliged to question every transaction apparently regular on its face. But if a bank knows the order to be dishonest, or shuts its eyes to the obvious, or acts recklessly in failing to make inquiries which a prudent and reasonable banker would make, it cannot escape liability. [103] Applying those principles, we were satisfied that the Bank was put on inquiry on the facts of this case. [104] First, the impugned cheques involved very large amounts, totalling RM5.17 million, including cash cheques for RM190,000.00 and RM300,000.00. [105] Secondly, DW2 accepted under cross-examination that the signatures on the impugned cheques “looked different” from the specimen signatures in the Bank’s system and that there were “slight differences”. His explanation was that as the material time he viewed the signatures on a small monitor and compared them with the naked eye, and that the differences were not then sufficiently obvious to him. [106] Thirdly, DW3, the Banking Services Manager, who acted as the second authorising officer, likewise confirmed that his comparison was by naked eye against the specimen signatures displayed on his desktop computer monitor. He did not enlarge or zoom in on the signatures. Nor did he contact PW1 or PW2 despite the amounts involved and despite the fact that the some of the cheques were presented personally by Jeffrey for payment himself. Instead, DW3 obtained verbal confirmation from Jeffrey. [107] Fourthly, it was established that several of the impugned cheques lacked notations on the reverse side indicating that verification had been carried out with an authorised signatory. The absence of contemporaneous notations raises questions regarding the veracity of the Bank's oral description of its verification procedures. [108] In our judgment, these circumstances, taken together, revealed a verification process that fell materially short of the standard to be expected of a reasonable and prudent banker. This was not a case of mere isolated inadvertence. The Bank was faced with substantial withdrawals, some cash withdrawals and some payable to the presenting signatory himself, against a background in which its own officers accepted that the signatures looked different from the specimen signatures on its system. Yet no verification was carried out with PW1 or PW2, the Group B signatories whose signatures were in question. [109] The Bank’s reliance on its internal SOPs does not assist it. Internal procedures cannot displace the legal standard impose by law. If the procedures are inadequate in the face of the facts confronting the bank, adherence to them does not establish good faith. [110] Nor does verbal confirmation from Jeffrey cure the defect. Jeffrey was the very person presenting the cheques, some are cash payments to himself. Where suspicion had already arisen as the genuineness of the Group B signatures, confirmation from Jeffrey alone was plainly insufficient. The entire purpose of the mandate was that payment required a Group A and a Group B signatory. Once doubt arose as to the Group B signatures, prudence required the Bank to directly verify the signatures with PW1 or PW2. [111] We therefore reject the Bank’s submission that its negligent conduct was irrelevant to the question of good faith merely because section 95 of the BEA 1949 states that an act may be done in good faith whether it was done negligently or not. Mere negligence may not negate good faith. But where the conduct, as in the present case, goes beyond simple carelessness and amounts to reckless disregard of the customer’s rights and interests, the Bank cannot be said to have acted in good faith.

(iv) The contractual statement-monitoring clauses did not avail the Bank [112] The Bank also relied on BBV’s contractual obligation to monitor its monthly statements and to report discrepancies within 21 days. [113] We accept that such a contractual term existed and that PW1 and PW2 did not regularly review the statements. But the existence of that term does not answer the issues arising under sections 24 and 73A of the BEA 1949. [114] As regards section 24, breach of the statement-monitoring clause does not amount to a clear and unequivocal representation that the forged signatures were genuine or effective. [115] As regards section 73A, the breach may form part of the factual matrix but is not conclusive. The Bank must still prove that the breach bore the requisite nexus to the forgery, and that it acted in good faith. [116] The Bank cannot, by reliance on a contractual monitoring clause, circumvent the statutory structure of sections 24 and 73A or shift the essential risk of forged cheques onto the customer in every case where the monthly statements are not checked by the customer. [117] In any event, even if BBV’s omission to monitor the statements constituted a contractual breach, the Bank’s defence would still fail because, for the reasons already given, it did not establish that it had acted in good faith. Finding on Issue 2 [118] For these reasons, we held that the Bank failed to establish the prerequisites necessary to invoke either section 24 or section 73A of the BEA 1949. [119] In relation to section 24, the Bank failed to prove any clear and unequivocal representation by BBV that the forged signatures were genuine or effective. The essential element of estoppel was absent. [120] In relation to section 73A, the Bank failed to prove, (i) that BBV knowingly or negligently contributed to the forgery or the making of the unauthorised signatures within the meaning of the section; and (ii) that the Bank acted in good faith in paying out on the impugned cheques. [121] We accordingly affirmed the learned JC’s conclusion that the Bank could not rely on the statutory defences in sections 24 and 73A of the BEA 1949. Issue 3: Whether BBV can rely on section 29 of the Limitation Act 1953 to extend the limitation period. [122] The third issue is whether BBV is entitled to rely on section 29 of the Limitation Act 1953 (“LA 1953”) so as to postpone the commencement of the limitation period in respect of part of its claim against the Bank. [123] BBV sought to avoid the limitation bar by invoking section 29 of the LA 1953. BBV’s argument was that the right of action was concealed by Jeffrey’s fraud, in that he had intercepted bank statements and manipulated records. BBV contended that time should therefore run only from the date on which the fraud was discovered, namely 1 October 2020. On that footing, BBV submitted that the action, filed in May 2022, was well within six years from the date of discovery. [124] The Bank’s position was that a substantial portion of BBV’s claim was time-barred under section 6(1) of the LA 1953, which prescribes a six-year limitation for actions founded on contract or tort. [125] The 13 impugned cheques were honoured and debited from BBV’s account between 2015 and 2016. BBV commenced this action only in May 2022. On that basis, the Bank contended that any cause of action arising from cheques paid out more than six years before the filing of the writ was statute-barred. [126] The High Court held that BBV cannot rely on section 29 of the LA 1953 to postpone the limitation period because BBV did not plead fraud against the Bank. Instead, BBV had framed its claim against the Bank in negligence and for breach of fiduciary duty arising from the Bank honouring of the impugned cheques. The learned JC therefore held that the ordinary six-year limitation period under section 6(1) of the LA 1953 applied, with the result that the cause of action in respect of each cheque accrued when the cheque was paid out. Since eight of the impugned cheques had been paid out more than six years before the action was commenced, the learned JC held that the claim in respect of those cheques, amounting to RM3.19 million, was statute-barred. Analysis [127] In our judgment, the learned JC was correct. [128] Section 29 of the LA 1953 provides that where an action is based upon the fraud of the defendant or his agent, or where the right of action is concealed by such fraud, the limitation period does not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it. [129] Section 29 is not of general application. It operates in defined circumstances and must be invoked upon proper pleadings and facts which bring the case squarely within its language. Section 29 of the LA 1953 reads: 29 Postponement of limitation period in case of fraud or mistake

Where, in the case of any action for which a period of limitation is prescribed by this Act, either-

the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or

the right of action is concealed by the fraud of any such person as aforesaid; or

the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it: Provided that nothing in this section shall enable any action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which -

in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or

(ii) in the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made, by a person who did not know or have reason to believe that the mistake had been made.

Section 6A shall not apply to any action to which paragraph (1)(b) applies. [130] Two requirements are central: first, the fraud relied upon must be that of “the defendant or his agent or of any person through who he claims”; and secondly, the fraud or concealment must be properly pleaded with sufficient particularity. [131] The pleading requirements is well established. Order 18 rule 8(1) and rule 12(1)(a) of the Rules of Court 2012 require fraud and its particulars be specifically pleaded. They read:

Pleadings

Matters which shall be specifically pleaded (O.18 r.8)

A party shall in any pleading subsequent to a statement of claim plead specifically any matter, for example, performance, release, any relevant statute of limitation, fraud or any fact showing illegality-

which he alleges makes any claim or defence of the opposite party not maintainable; ……………

Particulars of pleading (O.18 rule 12)

Subject to paragraph (2), every pleading shall contain the necessary particulars of any claim, defence or other matter pleaded including, without prejudice to the generality of the foregoing words-

particulars of any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies; [132] It is settled that where fraud, deliberate concealment, or mistake is relied upon to postpone the limitation period, it must be sufficiently pleaded so as to bring the case within the statutory provision invoked. The purpose of specifically pleading fraud is to ensure that the other party is not taken by surprise and knows precisely the accusation it has to meet. Failure to specifically plead fraud is fatal to a case based on fraud: see Lim Quee Lin & Anor v Ng Jit Thye & Ors [2022] MLJU 2758; [2022] CLJU 2583; [2022] MLRHU 2307; Zung Zang Wood Products Sdn Bhd & Ors v Kwan Chee Hang Sdn Bhd [2014] 2 MLJ 799; [2014] 2 CLJ 445; [2014] 1 AMR 418, FC. [133] It is equally well established that section 29 of the LA 1953 does not operate merely because fraud exists somewhere in the factual background of a case. The fraud must be legally attributable to the defendant or his agent or of any person through who he claims, and must be relied upon as part of the pleaded cause of action. [134] In the present case, BBV did not plead fraud against the Bank. BBV’s pleaded case against the Bank was that the Bank was negligent and in breach of its fiduciary duty in honouring cheques bearing forged signatures and in failing to exercise the degree of care expected of a banker. This is a materially different case from one alleging fraud on the part of the Bank. [135] Equally important is the identity of the alleged wrongdoer. For section 29 of the LA 1953 to apply under limbs (a) or (b), the fraud must be that of “the defendant or his agent or of any person through whom he claims or his agent”. BBV’s case was that Jeffrey had acted fraudulently by intercepting bank statements and concealing unauthorised withdrawals. But BBV did not plead that Jeffrey was acting as the Bank’s agent for the purpose of section 29. On BBV’s own case, Jeffrey was one of its directors. The fraud, even if established as between Jeffrey and BBV, does not postpone limitation as against the Bank where the action framed against the Bank is one in negligence and breach of fiduciary duty. [136] Put simply, section 29 of the LA 1953 does not operate merely because a plaintiff was itself deceived by its own director or employee and, for that reason, failed to discover its cause of action earlier. [137] We therefore agree with the learned JC that BBV’s reliance on section 29 was misplaced. Since fraud was not pleaded against the Bank, and since the concealment relied upon was attributed to Jeffrey rather than the Bank or its agent, the statutory basis for postponing limitation was not established. Finding on Issue 3 [138] For these reasons, we agreed with the learned HC that the limitation period for each impugned cheque began to run from the date on which the relevant payment was debited from the PBB Account. [139] It followed that all claims relating to cheques paid out more than six years before the commencement of this action were statute-barred. [140] Accordingly, we affirm the High Court’s finding that BBV was not entitled to rely on section 29 of the LA 1953 to extend or postpone the limitation period stipulated under section 6 of the Act.

[141] For the reasons set out above, we found no merit in either Appeal. [142] The Bank’s appeal in Appeal 1851 was dismissed with costs of RM15,000.00 subject to allocatur. [143] BBV’s appeal in Appeal 1940 was likewise dismissed with costs of RM15,000.00 subject to allocatur. [144] The decision of the High Court of 23 October 2023 is affirmed. Dated: 26 March 2026 -SGD- (FAIZAH BINTI JAMALUDIN) JUDGE COURT OF APPEAL MALAYSIA COUNSELS: APPEAL NO.: W-02(NCvC)(W)-1851-11/2023 For the Appellant: Samuel Tan Lih Yau Sanjiv Naddan [Messrs Shook Lin & Bok] For the Respondent: Fiona Mathilda Bodipalar Lai Xuenwei Hanna Mathews Farah Aqila binti Mustafa [Messrs Bodipalar & Partners] APPEAL NO.: W-02(NCvC)(W)-1940-11/2023 For the Appellant: Fiona Mathilda Bodipalar Lai Xuenwei Hanna Mathews Farah Aqila binti Mustafa [Messrs Bodipalar & Partners] For the Respondent: Samuel Tan Lih Yau Sanjiv Naddan [Messrs Shook Lin & Bok]