Concentrate Engineering Pte Ltd v United Malayan Banking Corp Bhd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 10 May 1990
• Neutral Citation: [1990] SGHC 34
• Date: 10 May 1990
• Subject Matter: Civil Procedure,Bank paid out on cheques and debited customers' account,Banking,O 14 r 3(1)Rules of Supreme Court 1970,Summary judgment,Whether customer entitled to summary judgment against bank,Forged,Suspicious circumstances surrounding cheques,Whether customer entitled to such where bank debited account on counterfeit cheques,Cheques
• Docket Number: Suit No 1326 of 1989
• Published date: 19 September 2003
• Defendant Counsel: KS Chung (Chung & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Lee Mun Hooi (Lee Bon Leong & Co)

Cur Adv Vult

This action arises out of a bold and unusual scheme to defraud either the plaintiffs as customers of the defendants or the defendants as the bankers of the plaintiffs by the use of apparently forged cheques (which I shall hereafter refer to as `disputed cheques` as the defendants are not sure whether they are forgeries under the law). Not only were the signatures of the bank signatories of the plaintiffs written on the disputed cheques alleged to have been forged, the cheques themselves were duplicate copies fraudulently printed with the same serial numbers as the genuine and unused cheques supplied by the defendants!

The defendants have debited the current account of one of their customers, the plaintiffs in this action, in the total sum of $304,576.70 paid out on the disputed cheques. The defendants are, as yet, unable to deny the alleged forgery of the disputed cheques, how it was done and who did it. Police investigation has up to date resulted in the conviction of two persons (who pleaded guilty) for cheating under s 420 of the Penal Code (Cap 224). They were responsible for the cashing of the disputed cheques. But, no one has yet been charged for forgery of the disputed cheques.

In this action, the plaintiffs have claimed that the defendants have wrongfully paid out and debited their current account for the total amount of the disputed cheques. They applied for summary judgment but the assistant registrar dismissed the application. The plaintiffs have now appealed against the said decision.

The plaintiffs had a current account with the defendants since November 1974. In 1988, they had an overdraft facility of up to $300,000 from the defendants, secured by a cash deposit of $300,000. On 4 January 1988, the plaintiffs` directors, viz Chua Thuan Khoon (CTK), Kuik Ah Han (KAH) and Ng See Toy (NST) passed a resolution that thereafter the cheques drawn on the account must be signed by at least two of the said directors, as, it would appear, two directors had resigned and CTK had come in as a new director. CTK was described as the chairman. Except for their role as cheque signatories, both CTK and KAH are said to be `sleeping` directors at all material times.

On 4 May 1988, the plaintiffs applied to the defendants for and obtained five cheque books. The application form was signed by KAH and NST. The receipt for the cheque books was signed by NST.

The statement of facts admitted by the two convicted persons at their trials disclosed the following `facts` as accepted by the police: that on 12 March 1989, NST left for China on business. Instead of delegating his duties to his fellow directors, he appointed a distant relative, viz Ng Teck Kwang (NTK), the son of a former director, to look after the affairs of the plaintiffs. On 4 April 1989, NTK received the plaintiffs` monthly statement from the bank and found that there were several unusual withdrawals reflected in the said statement. He then called NST in China and the latter confirmed that he never made those withdrawals. On the following day, NTK and KAH went to the bank to verify the discrepancies and discovered that a total of 13 cheques amounting to $304,576.40 had been cleared by the bank where the signatures were forged on printed cheque forms not supplied by the defendants. All the 13 genuine unsigned cheques bearing the corresponding printed numbers thereon were still in the possession of the plaintiffs.

Coincidentally, at the time of the said inspection, one of the convicted persons came into the bank to cash another cheque issued from the duplicated cheque book and was detained by the security guard. The story of the two convicted persons was that they had been approached by persons (described therein as Mr A and Mr B) to cash the alleged forged cheques for reward.

NTK has also been arrested by the police in connection with the fraud and released on bail pending further investigation. Counsel for the defendants says that police investigation is still continuing.

The plaintiffs have produced in evidence a report of the handwriting expert from the Department of Scientific Services. The report is dated 23 August 1989 and referred to the examination on 7 June 1989 of 16 cheques, Nos 748199 to 748206, 748208 to 748211, 748213 and 748216 to 748218, all bearing the alleged signatures of KAH and NST. The expert, after observing that all the signatures on the said cheques were not fluent but the strokes thereof were identical to the specimen signatures, opined that they could be copied forgeries, ie traced from genuine signatures. The expert found that the rubber chop used to chop the name of the plaintiffs on the disputed cheques was not the same as the genuine chop. She further found that the paper and the print of the disputed cheques were not the same as the paper and print on the cheques supplied by the bank to the defendants.

It is clear from such evidence as there was before the court that the person or persons responsible for the fraud had knowledge of the details of the banking arrangements of the plaintiffs, including the bank, branch and account number of the plaintiffs` current account, the requirements as to the number of and the identities of the cheque signatories and their signatures and also the serial numbers of the unused cheques in the cheque books then in the possession of the plaintiffs. On the basis of the expert`s report, the fraudster/s also had access to documents containing the genuine signatures of KAH and NST which were then traced on the duplicated cheques. More important than anything else is the inference that, in using the duplicated cheques with the same numbers as the genuine cheques, the fraudster/s must or most probably have done so with the fore-knowledge or the expectation that the genuine cheques bearing the same numbers would not be used at the same time, as otherwise the whole fraudulent scheme would be blown.

Naturally, in these circumstances,...