KOPERASI SAHABAT AMANAH IKHTIAR BERHAD RHB INVESTMENT BANK BERHAD

KOPERASI SAHABAT AMANAH IKHTIAR BERHAD RHB INVESTMENT BANK BERHAD

An investment bank that receives a substantial third-party deposit owes a duty of care to ascertain the depositor's identity and mandate before transferring funds; D1 breached that duty by transferring RM10 million to D3 on the basis of an unsigned bank-in slip and oral instruction without verifying authority, causing foreseeable loss; the bank is vicariously liable for its employees and must account for the sums, less dividends received.

Citation
W-02(NCvC)(W)-2084-10/2018 (Mahkamah Rayuan)
Parties
Appellant / Plaintiff: Koperasi Sahabat Amanah Ikhtiar Berhad; Respondent / Defendant: RHB Investment Bank Berhad; Defendant (bankrupt): Lotfi Bin Miskam; Defendant (liquidated): Tareeq Asset Management Sdn Bhd (formerly Abhar Capital Holdings Sdn Bhd)
Court
NCvC
Jurisdiction
Malaysia
Judgment Date
30 November 2021
Case Number
W-02(NCvC)(W)-2084-10/2018 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal / Court of Appeal Decision (appeal Allowed)
Outcome
Appeal allowed; High Court judgment set aside; appellant's claim allowed in negligence
Legal Topics
Duty of Care to Non Customers, Vicarious Liability, Know Your Customer (kyc) Obligations, Anti Money Laundering Compliance, Banking Mandate, Monies Had and Received, Constructive Trust, Mistake of Fact
Source Language
Malay/English
Tort (negligence) Banking Law Financial Regulation Equity/trusts Duty of Care to Non Customers Vicarious Liability Know Your Customer (kyc) Obligations Anti Money Laundering Compliance +4 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 6 Authorities cited 16 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Koperasi Sahabat Amanah Ikhtiar Berhad

Appellant / Plaintiff

RHB Investment Bank Berhad

Respondent / Defendant

Lotfi Bin Miskam

Defendant (bankrupt)

Tareeq Asset Management Sdn Bhd (formerly Abhar Capital Holdings Sdn Bhd)

Defendant (liquidated)

Procedural Posture

Civil Appeal / Court of Appeal Decision (appeal Allowed)

Legal Issues

  1. 1 Whether an investment bank owes a duty of care to a depositor who is not a customer when it receives a deposit and thereafter transfers it without authorization
  2. 2 Whether D1 breached any duty by transferring RM10 million to a third party trading account on the basis of a bank-in slip and oral instruction
  3. 3 Whether the bank-in slip or conduct constituted a mandate or authorization to transfer funds

Ratio Decidendi

An investment bank that receives a substantial third-party deposit owes a duty of care to ascertain the depositor's identity and mandate before transferring funds; D1 breached that duty by transferring RM10 million to D3 on the basis of an unsigned bank-in slip and oral instruction without verifying authority, causing foreseeable loss; the bank is vicariously liable for its employees and must account for the sums, less dividends received.

Court Disposition

Appeal allowed; High Court judgment set aside; appellant's claim allowed in negligence

Orders

  • Judgment for the appellant in the sum of RM9,927,000.00 (RM10,000,000.00 less RM73,000.00 dividend) with interest from date of judgment to realization
  • Costs awarded to the appellant of RM40,000.00 for this Court and the High Court, subject to allocator