Far Eastern Bank Ltd v Bee Hong Finance Co Ltd

• Jurisdiction: Singapore
• Judge: Choor Singh J
• Judgment Date: 29 January 1971
• Neutral Citation: [1971] SGCA 7
• Date: 18 May 1971
• Docket Number: Civil Appeal No 43 of 1970
• Published date: 19 September 2003
• Year: 1971
• Plaintiff Counsel: TC Cheng (Cheng & Co)
• Citation: [1971] SGCA 7
• Defendant Counsel: M Karthigesu (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Conversion,Collecting bank,Cheque,Account payee crossing,Banking,Whether bank negligent,Duty of care,Tort,Right to sue,Cheques

The plaintiff and the defendant are companies incorporated in Singapore, the former carrying on business as licenced moneylenders whereas the latter carries on business in banking in Singapore.

On 17 January, 1969 the plaintiff through its managing director, PW1 Ng Chwee Cheng, issued cheque No GLA 109485 chopped `A/c payee only` for $10,000 in favour of Lee Lam as a loan on the security of seven share certificates of the face value of $1,000 each. These, he had ascertained, were really worth around $15,000. There is no dispute that these certificates were subsequently discovered to be forgeries.

Immediately after receiving the cheque, Lee Lam proceeded to the defendant bank accompanied by Aw Yong San (also known as Au Eng San) where the cheque was presented to the bank`s sub-accountant, DW1, Ang Kah Soon, who was in charge of the clearing department. Both Lee Lam and Aw Yong San were total strangers to this officer of the bank. Between them they prevailed on him to have that cheque marked for payment by the paying bank and the sum of $10,000 was credited to the account of Aw Yong San with the defendant bank.

Shortly afterwards $9,800 was cashed by Lee Lam on a cheque issued to him by Aw Yong San on Aw Yong San`s account. Both these gentlemen have disappeared and it is understood that the police are still looking for them. It is noteworthy that Lee Lam had no account with the defendant bank.

The plaintiff accordingly asked for a declaration that there was negligence on the part of the defendant bank in collecting the cheque for its customer, Aw Yong San, and damages for conversion of the cheque or alternatively $10,000 for money had and received.

The sole question for determination is whether the action taken by DW1, Ang Kah Soon, the sub-accountant of the defendant bank, showed negligence on the part of the collecting bank.

The fact are not in dispute and I do not have the slightest doubt that a fraud was committed on the drawer, the plaintiff, by Lee Lam and Aw Yong San. In the first place the fact that nearly the whole of the $10,000 was cashed shortly afterwards and the fact that both these gentlemen have disappeared speak for themselves. It is perhaps unfortunate that DW1, Ang Kah Soon, allowed himself to become involved in cashing the said cheque in this extraordinary manner. As he himself admitted, this was the first time in his career of ten years with the defendant bank that he had ever done this kind of thing, ienegotiating an `A/c payee only` cheque for a payee who had no account with his bank.

Counsel for the defendant submitted that the defendant bank owed no duty of care to the plaintiff at all, the only duty of care owed being to Lee Lam and nobody else as he was the true owner. I am unable to accept this proposition. Lee Lam did not have an...