CASE OF THE WEEK

The first defendant was the cashier and the second defendant was the branch manager of the plaintiff bank's Yong Peng branch (`the branch') at the material time. The plaintiff's action against the first defendant was for misappropriation of cash from the branch. The plaintiff's action against the second defendant was for assisting and/or allowing the first defendant to misappropriate cash from the branch. Alternatively, the plaintiff sued the second defendant for negligence. The misappropriation of the plaintiff's monies became known to the plaintiff accidentally after the second defendant was suspended as branch manager. An acting branch manager who was sent to the branch had discovered the misappropriations. During the investigations carried out by the plaintiff, the first defendant confessed in writing that he had misappropriated cash from the branch. It was found that the first defendant had manipulated the plaintiff's accounting system through the process relating to cash movement within the branch. The plaintiff therefore claimed against the defendants, inter alia, that the defendants repay the sum of RM8,250,000 (`RM8.25 million'). The first defendant denied all allegations of misappropriation. The second defendant pleaded that he had no knowledge of the misappropriation. The issues that arose against the first defendant were: (i) whether the first defendant owed a duty of fidelity and good faith to the plaintiff; (ii) whether the first defendant owed a fiduciary duty to the plaintiff; (iii) whether the first defendant breached the said legal duties; (iv) whether the first defendant committed fraud; and (v) what were the losses suffered by the plaintiff as a result of the first defendant's wrongful conduct. On the other hand, the issues which arose against the second defendant were: (i) what were the legal duties owed by the second defendant to the plaintiff; (ii) whether the second defendant was negligent in allowing the first defendant to wrongfully remove physical cash from the branch; and (iii) whether the second defendant conspired with the first defendant to wrongfully remove monies from the branch.

Held (allowing plaintiff's claim with costs):

(1) It is an implied term of a contract of employment that an employee owes a duty to serve his employer with fidelity and in good faith. The first defendant was the employee of the plaintiff at the material time and he was therefore under the legal obligation to discharge his duty of fidelity to the plaintiff when discharging his duties as cashier at the branch. (para 23)

(2) The first defendant owed a fiduciary duty to the plaintiff when discharging his duties as a cashier. Based on the "guidelines" alluded in Frame v. Smith, the first defendant was placed in the fiduciary position vis the plaintiff vis the scope of his duties and discretion exercised as the cashier at the branch (Tengku Abdullah Ibni Sultan Abu Bakar & Ors v. Mohd Latiff Shah Mohd & Ors & Other Appeals; refd). (paras 24 & 25)

(3) The first defendant had intentionally and fraudulently manipulated the ATM settlements in order to remove physical cash from the branch. The first defendant's intention to fraudulently manipulate the ATM settlements was moreover supported by his own confession. The first defendant's confession was voluntarily given by him. (para 36)

(4) The first defendant had breached his duty of fidelity and good faith to the plaintiff as well as the fiduciary duty to the plaintiff. (para 49)

(5) The plaintiff had successfully proved beyond reasonable doubt that the first defendant had defrauded the plaintiff when he had wrongfully siphoned off monies out of the branch to the amount of RM8.25 million (Ang Hiok Seng v. Yim Yut Kiu; refd). (para 52)

(6) An employee owes a duty of care when discharging his duties to his employer. This duty is implied under the contract of employment and under common law. The second defendant as the Branch Manager and an employee of the plaintiff owed a duty to act with fidelity and in good faith to the plaintiff. The second defendant also owed a fiduciary duty to the plaintiff. (para 54)

(7) The second defendant had breached his duty of care to the plaintiff. The breach of his duty of care to the plaintiff had caused the plaintiff to suffer losses in the form of cash which were wrongfully removed from the branch by the first defendant. (para 60)

(8) In order to prove the tort of conspiracy, the plaintiff needed to prove: (a) an agreement between two or more persons; (b) for the purpose of injuring the plaintiff; and (c) acts done in the execution of that agreement resulted in damage to the plaintiff. The plaintiff had successfully proved beyond reasonable doubt that the defendants had conspired to wrongfully remove monies from the branch. As a result of the defendant's conspiracy, it had caused the plaintiff to suffer losses arising from the misappropriated monies. (paras 61-63)

Case(s) referred to:

Ang Hiok Seng v. Yim Yut Kiu [1997] 1 CLJ 497 FC (refd)

Frame v. Smith [1987] 42 DLR (4th) 81 (refd)

Loi Hieng Chiong v. Kon Tek Shin [1983] 2 CLJ 70; [1983] CLJ (Rep) 240 FC (refd)

Malayan Banking Bhd v. Basarudin Ahmad Khan [2007] 1 CLJ 309 FC (refd)

Robb v. Green [1895] 2 QB 315 CA (refd)

SCK Group Bhd & Anor v. Sunny Liew Siew Pang & Anor [2010] 9 CLJ 389 CA (refd)

Tengku Abdullah Ibni Sultan Abu Bakar & Ors v. Mohd Latiff Shah Mohd & Ors & Other Appeals [1997] 2 CLJ 607 CA (refd)

Wessex Dairies Ltd v. Smith [1935] 2 KB80 CA (refd)

Yong Tim v. Hoo Kok Chong & Anor [2005] 3 CLJ 229 FC (refd)

Counsel:

For the plaintiff - Andrew Chiew Ean Vooi (Ivan Ong Chee Kong with him); M/s Lee Hishammuddin Allen & Gledhill

For the 1st defendant - Zul Helmi Wakiman; M/s Sahrihan & Hamdan

For the 2nd defendant - Jayakumar; M/s Roy & Assocs

Reported by Amutha Suppayah