KBA1195R
FIN360 : LEGAL ASPECTS AND ETHICS BANKING
BROWN
VS
WESTMINSTER BANK (1964)
MOHAMMAD SYAHRIZAN BIN RUBIN (2021108877)
ALIF NAZRAN BIN MOHD AZEMI (2021124671)
NURLIANA KAMILIA BINTI KHAIRIL ANUAR (2021108863)
NUR SYAFIQAH BINTI MOHD ASLI (2021123265)
IMAN INSYIRAH BINTI MOHD NADZREE (2021122955)
CHRONOLOGY CASE ISSUE RELATED TO
In this case, the plaintiff, Mrs. Emma Eliza BANKING OPERATION
Brown, whose negligence caused her cheques
The plaintiff said that her cheque was
to be stolen and her signature forged by her
servants. Then, the plaintiff claims that 329
1. stolen and her signature was forged.
cheques were wrongly debited to her account
The plaintiff was estopped from providing
by the defendant. The defendant,
Westminster Bank, admitted that 100 cheques
2. the true facts about the forged cheque.
were forged but put the plaintiff to prove that
the remaining 229 cheques were forgeries. The
The court decided that the plaintiff's claim
defendant also insisted that the amount was 3. failed due to her negligence that led to the
correctly debited to her account. forgery of the cheque.
DUTIES OF CUSTOMER RIGHTS OF CUSTOMER
Section 24 of Bill of Exchange (BEA) 1949, 1) Right to be informed.
customers who do not perform those duties As a client, Mrs Brown have the right to
would be prohibited from arguing the legitimate data because it allows her to make
forged cheque was wrongfully honored by informed judgments.
the banker.
In this case, the bank should debit her
1) Duty to notify the bank promptly of any account for the amount of the forged
false or forgery of cheques - In this case, the cheque, so she may be able to prove that
plaintiff provided no information about the the bank was either negligent or acted in
cheque being forged. bad faith in paying her.
2) Duty to take good care of their cheque -
As a client, Mrs. Brown must take good care 2) Right to be supplied with account
of her cheques. In this case, her cheque was statement.
forged by her servants due to her negligence. Mrs Brown has the right as a client to access her
account statements from the bank. Only she will
DUTIES OF BANKER be able to ascertain whether the misleading
statements were made under her account.
Section 73(a) of Bill of Exchange (BEA) 1949,
a cheque is a written order instructing a RIGHTS OF BANKER
bank to pay someone on demand that is to
pay them when the cheque is paid in or a Right to plea of estoppel
request for crash is made. (Section 117, Evidence Act 1950)
1) Duty to exercise care when providing 1) Right to expect the customer to take due
service to the customer - The defendant care when issuing cheques - The plaintiff did
contacted the plaintiff to confirm whether or not take good care of her cheque and caused
not the cheque issued to her account was her cheque to be stolen and forged by her
related to the plaintiff. servants.
2) Duty to ensure that every customer's 2) Right to plea of estoppel - The right to
cheque must be signing by the customer assert that the client's silence is a
itself before they are honoring it - If representation that her signature is correct.
something unusual happens with the
customer's cheque, the defendant must obtain PRINCIPLE
confirmation from the client.
Definition of Bank:
COURT HELD Bank is a Financial Institution that receive
deposit, provide loans and provision that
1) The defendant stated the cheques were
allows by Ministry of Finance Malaysia.
genuine and the plaintiff never denied the
genuine of those cheques.
Section 3 Financial Service Act 2013:
2) The payment failed even though the
Bank is liable to make payment of issues
defendant stated the cheques were genuine
cheque.
and the plaintiff never denied the genuine
of those cheques. LESSON LEARNED
Bill of Exchange Act 1949.
RIGHT ALTERNATIVE 1. Section 24
The customer should be aware of their payee
Check the cheque book issued by
statement if there any mistakes or forgery happened.
her for forged bank forms The customer needs to inform the bank if there are
immediately. (Sec24, BOE, 1949) any forgeries in their cheques issued.
Ensure that the signature on the 2. Section 60
cheque is the same as the owner. The bank is liable to make payment on the issued
cheques because they did not have any
information about forgeries.
