In Anish Resources Sdn Bhd v. Public Bank Bhd [2025] CLJU 1027, the High Court held that exclusion clauses in the bank’s remittance form, which purported to absolve the bank of liability for erroneous overseas transfers, were void undersection 29 of the Contracts Act 1950.
Background of the Case
Anish Resources Sdn Bhd (the Appellant Customer) instructed Public Bank Bhd to remit €121,100 in March 2020 to its supplier in the Netherlands for the purchase of face masks during the Covid-19 pandemic.
Despite clear instructions in the Remittance Form, the funds were erroneaously credited to bank accounts held by three unknown individuals, none of whom were the intended beneficiary. ING Bank refunded only €3,867.57 (approximately RM150,063.13), leaving a shortfall of RM434,503.87. Public Bank refused to reimburse the balance, relying on Clause 8 in the Remittance Form, which stated that telegraphic transfers were at the customer’s risk and the bank was not liable for errors or losses.
The Sessions Court initially upheld the bank’s position, ruling that the exclusion clauses protected the bank and that the Appellant should pursue recovery from the unintended recipients in the Netherlands. The Appellant appealed to the High Court.
High Court’s ruling
The High Court overturned the Session Court’s ruling and allowed the appeal:
- Breach of Contract: Public Bank breached its contract by failing to ensure that the remitted funds were credited to the supplier’s account, as specified in the Remittance Form. The court emphasized that the beneficiary’s name was a mandatory identifier for telegraphic transfers, as Clause 9 of the Remittance Form limited account-number-only reliance to Interbank Giro (IBG) transactions, not telegraphic transfers.
- Exclusion Clause Void: Clause 8, which attempted to absolve the bank of liability for errors in telegraphic transfers, was deemed unconscionable and void under section 29 of the Contracts Act 1950. The court relied on the Federal Court’s decision in CIMB Bank Bhd v. Anthony Lawrence Bourke [2019] 2 MLJ 1, which invalidated similar exclusion clauses that unfairly restrict a customer’s right to seek legal redress.
- Expressio Unius Est Exclusio Alterius: The court applied this principle, noting that by expressly limiting account-number-only reliance to IBG transactions in Clause 9, Public Bank implicitly acknowledged that telegraphic transfers require both the beneficiary’s name and account number. The absence of a similar clause for telegraphic transfers supported this interpretation.
- Unfairness of Small Print: The court criticized Clause 8’s “small print” nature, noting that the tiny font size made it difficult for customers, especially the elderly, to read. This supported the court’s finding of unconscionability, as such clauses are designed to shield banks from liability without clear customer consent
- No Duty to Sue Strangers: The court rejected the Sessions Court’s view that the Appellant should sue the unintended recipients in the Netherlands. The High Court found it impractical and unfair to place such a burden on the customer when the remittance error was caused by the bank’s failure.
Key Laws Applied
- Section 29 of the Contracts Act 1950: Any agreement that restricts a party from enforcing their rights through legal proceedings is void. The court held that Clause 8 was void as it prevented the Appellant from seeking redress for the bank’s failure.
- CIMB Bank Bhd v. Anthony Lawrence Bourke [2019] 2 MLJ 1: A binding Federal Court precedent holding that exclusion clauses which restrict a customer’s ability to seek compensation for a bank’s breach are void if they contravene public policy or section 29 of the Contracts Act 1950.
- Expressio Unius Est Exclusio Alterius: This Latin maxim means that “The Expression of One Is the Exclusion of Another”. The court applied it to interpret Clause 9, held that the exclusion of telegraphic transfers from the clause indicated they were not intended to rely solely on account numbers.
Key Takeaways
- Importance of Accurate Beneficiary Information: Banks must ensure that both the beneficiary’s name and account number are used when processing telegraphic transfers, unless the contract expressly state otherwise.
- Avoid Unconscionable Exclusion Clauses: Exclusion clauses that seek to absolve banks from liability for their own errors, especially those embedded in fine print, are at risk of being declared void under section 29 of the Contracts Act 1950.
- Judicial Scrutiny of Standard-Form Contracts: Courts will scrutinize standard-form contracts, especially where there is an imbalance of bargaining power between banks and customers, to ensure fairness and prevent abuse. One-sided contractual terms that deny consumers access to justice will not be upheld.
Conclusion
The High Court reinforces the importance of fairness and accountability in banking contracts. By voiding the Public Bank’s exclusion clause under section 29 of the Contracts Act 1950, the court protected the customer from bearing the financial burden of the bank’s operational failure.
– By George Miranda, Joy Sam Jia Qian, Nurafiqah ‘Izzati –
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.
