Monies remitted to wrong accounts abroad - Can the Bank hide behind exclusion clauses?

The case of Anish Resources v Public Bank is interesting. Not because it is particularly complex but because it a simple error which could easily happen to most people. Thankfully, logic and the law (which may not always align) prevailed with the correct conclusion- that the Bank is responsible if the funds are remitted into the wrong accounts abroad.

The facts are straightforward. Local customer remits funds to one “Ali B Beheer BV” in Netherlands. 3 account numbers were specified in the Remittance Forms. There was a mistake in the account numbers. Funds were then remitted to these 3 accounts even though none of these accounts bore the name “Ali B Beheer BV”. The Bank disputed liability to refund.

The outrage of this factual matrix is best captured by the opening paragraphs of the judgment:

“[1] If all commercial banks in Malaysia are to impose the same exclusion clause as the Respondent Bank in this case when handling overseas remittances for their customers, there is much for the customers to worry about…

[2] In reply to my question during the hearing of this appeal, learned counsel for the Bank confirmed the bank’s position is that it would disclaim liability even if the remitted money had been erroneously credited into a bank account overseas belonging to someone whose name and account number are completely different from the name and account number stated in the Remittance Form. This revelation triggered audible gasps from the Bar Table and public gallery of this Court …”

Ultimately, the High Court found that the Bank cannot rely on the “small print” exclusion clause as a shield against liability:

“[60] I would respectfully refer to the risks posed by the Respondent Bank’s exclusion clause as “veiled risks” because cl 8 is printed in such tiny fonts that an elderly customer would certainly need magnifying glasses to read it. The said exclusion clause fits the proverbial description of “small print” — intended to surface as a shield against the bank’s customers whenever a cause of action arises against the bank, such as in this case. In my judgment, this is precisely the type of case when the courts ought to invoke s 29 of the Contracts Act 1950 to invalidate the inequitable exclusion clause shrouded in small print at the back of the Remittance Form …

[61] … As for the exclusion clauses cited by the Respondent Bank, I rule that it is unconscionable for the bank to seek refuge behind exclusion clauses that leave the Appellant Customer in a lurch — literally telling the customer to go to the Netherlands to sue strangers who were not named in the Remittance Form.”

Thus, we can now take comfort that if ever we were to make the mistake of remitting funds to the correct payee (but the wrong account number), there is recourse available in Malaysia.

See grounds of judgment here:

https://tinyurl.com/3wmc2tx6