Stephan Machinery Singapore Pte Ltd v Oversea-Chinese Banking Corp Ltd

• Jurisdiction: Singapore
• Judge: Lai Kew Chai J
• Judgment Date: 26 May 1999
• Neutral Citation: [1999] SGHC 140
• Docket Number: Suit No 1736 of 1998
• Date: 26 May 1999
• Published date: 19 September 2003
• Year: 1999
• Plaintiff Counsel: Kenneth Koh (Kenneth Koh & Co)
• Citation: [1999] SGHC 140
• Defendant Counsel: Chelva R Rajah SC and Chew Kei-Jin (Tan Rajah & Cheah)
• Court: High Court (Singapore)
• Subject Matter: Whether plaintiffs can disavow knowledge of terms in defendants' forms,Contract,Contractual terms,Cheques,Duties of account holder -Conclusiveness of statements,Forged,Whether plaintiffs can breach agreement by asserting errors and discrepancies,Whether defendants can make payment on forged cheques,s 24 Bills of Exchange Act (Cap 23, 1999 Rev Ed),Conclusiveness of bank statements,Banking,Bank statements,Plaintiffs opening current account with defendants,Whether plaintiffs can breach agreement by asserting errors and discrepancies in statements,Duties of account holder

: In this action the plaintiffs claimed against the defendants the sum of $904,398.00 or alternatively damages for negligence. Their case was that by reason of s 24 of the Bills of Exchange Act (Cap 23), they lacked the authority to pay out the said sum from their current account with the defendants in respect of 57 cheques which were drawn against it but which were forged. Alternatively, they asserted that the defendants were negligent for not noticing the uncharacteristic number of cash cheques presented for payment in 1997. In response, the defendants contended that by reason of a clause in the agreement between them the defendants in the events that had happened were contractually precluded from rejecting the conclusiveness of the bank statements and the particulars of their account. They further contended that the plaintiffs` defective system of management and control of the operation of the current account caused their losses. At the conclusion of the trial, I dismissed the claims with costs. I now give my reasons.

The plaintiffs are in the business of selling spare parts. The defendants are one of the biggest local banks in Singapore. In 1994 the plaintiffs opened a current account with the defendants, at their Upper Thomson Branch. Mr Peter Reeg, their managing director, opened the account for the businesses of the plaintiffs. He then had considerable working experience. In establishing the current account, the plaintiffs submitted to the defendants, amongst other documents, a form entitled `Account Application - Business`. The form was completed; the particulars were typed in. Mr Reeg and Mr Lim Tiong Beng, a director, signed the form (exh AB161). They made the following declaration printed on the form:

I/We have received and read a copy of the Bank`s Terms and Conditions relating to the Account(s) and I/We jointly and severally agree to abide by and be bound by them and any amendments, alterations and additions thereto as may from time to time be made ...

Clause 13 of the Terms and Conditions for Current Accounts (exh AB 162A) provided as follows:

A statement of the customer`s account generated by the Bank`s Computer (bank statement) will be sent to the Customer every month unless there is no transaction during that month. The Customer shall be under a duty to examine the entries in every bank statement and to report immediately to the Bank if there are any errors or discrepancies. If the Customer does not within fourteen days after the date of the bank statement object to any of the matters contained in such statements he shall be deemed conclusively to have accepted all the matters contained in such statement as true and accurate in all respects. Subject to the rights of the Customer to object as aforesaid, the bank statement shall be accepted by the Customer as conclusive evidence of the balance in the account and of the particulars of the account.`

In the pleadings and at the trial, the plaintiffs took the position that they did not admit that a copy of the Terms and Conditions For Current Account was given to them. Mr Reeg in evidence said he did not recall receiving a copy of the Terms and Conditions For Current Accounts. The first time he saw the document was when his solicitor showed it to him, after the action had commenced. In his evidence, he observed that both the Application Form and the Terms and Conditions were in `lawyers` English` and he would not have understood them in 10 minutes.

Mr Reeg was pressed on these matters in cross-examination. He admitted that he had read the `Account Application - Business` form. He confirmed he could understand the acknowledgement and the agreement to abide by the Terms and Conditions relating to the accounts. He revealed that he had taken away the documents given to him by the defendants and had them completed by either an accounting firm, Deloitte & Touche, who were retained by the plaintiffs` headquarters to...