THE UPDATE SCOOP (#4/2025)
“Bank Liable for Mistake in Remittance via TT” | Banking Law
By TAY & HELEN WONG – 10 June, 2025
The incident in Anish Resources Sdn Bhd v Public Bank Bhd [2025] could have happened to any one of us, that your bank erroneously credited your remittance into a wrong bank account of a 3rd party. The ensuing issue is thus the extent of liability of the bank. Can the bank depend on exclusion clauses in its relevant remittance form to disclaim all liabilities?
The appellant (P) was a customer of the respondent bank (D) and sought to remit some funds to an overseas supplier, Ali B Beheer BV. P duly filled in D’s Remittance Form and stated therein the name of the beneficiary/payee, Ali B Beheer BV and that its bank account was with ING Bank in the Netherlands (ING Bank). P subsequently discovered that the remittances were erroneously credited into the bank account of 3rd parties instead of the bank account of Ali B Beheer BV. ING Bank refunded only 25% of the monies through D. In reliance on the exclusion clause in its Remittance Form, D denied any liability and declined to pursue any claim against its agent/intermediary banks and/or ING Bank.
There were two clauses relied in the main by D. The first was clause 9 on the operation of Interbank Giro (IBG) system which reads as follows :
“9. For IBG transactions, the credit to the beneficiary’s account will be based solely on the account number given by the applicant.”
Next was the exclusion clause in clause 8 which reads as follows :-
“8. Telegraphic Transfer (TT) and Interbank Giro (IBG) are sent by wire, cable or telex or through any other channels, coded as required, entirely at applicant’s own risk. Neither the Bank nor any of its branches, correspondents and agents shall be liable for any consequence which may arise through interruption, omission, error, misinterpretation, mutilation, loss or delay in transmission.”
Given that clause 9 only stated “IBG transactions”, it was fair, reasonable and logical to construe the said clause as intended to mean that remittances other than IBG transactions would still be transacted based on other identifiers stated in the remittance form, including the name of the beneficiary/payee, to identify the beneficiary/payee’s bank account.
Unless clearly stipulated by D that telegraphic transfers should be based solely on the account number, the beneficiary/payee’s name must be deemed a mandatory identifier apart from the account number. The contra proferentem rule applied, which would result in an interpretation against D because the terms and conditions in the Remittance Form were imposed by D on its customers.
Having validated the beneficiary’s name, D ought to have instructed its intermediary/agent banks accordingly to ensure remittance to the correct named party. The failure to do so constituted a breach of contract and D was therefore liable to repay the said funds to P.
Based on the apex court’s decision in CIMB Bank v. Anthony Lawrence Bourke [2019], the exclusion clause relied upon by D was void under s 29 of the Contracts Act 1950. It was unconscionable for D to avoid liability by seeking refuge behind such a clause that left P with no recourse.
D was ordered to repay the full sum of the remittance monies to P.
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Tags: [wrong account] [overseas remittance] [non-validation of payee’s name] [exclusion clause] [s 29 Contracts Act 1950] [liability of bank]