This case involves a dispute between Bee Hong Finance (BHF), a moneylender, and Far Eastern Bank (FEB), a bank, regarding FEB negotiating a cheque that was marked "A/C payee only". BHF had issued the cheque to Lee Lam as a loan but the security provided by Lee Lam was discovered to be forged. Lee Lam then took the cheque to FEB and had it deposited into another customer's account. BHF is now suing FEB, arguing it was negligent in negotiating an "A/C payee only" cheque for a customer who was not the intended payee. FEB argues it owed no duty of care to BHF and was protected under the Cheques

2. Appellant / Defendant :
FAR EASTERN BANK LTD (“FEB”)
Respondent / Plaintiff :
BEE HONG FINANCE CO. LTD (“BHF”)

3. FEB and BHF are companies incorporated in
Singapore.
FEB carries on Banking Business whereas BHF is a
licensed moneylenders.
On January 17, 1969, BHF issued a cheque marked as
“A/C payee only” in favour of Lee Lam as a loan on the
security of 7 share certificates which were then
discovered to be forged by Lee Lam.
Lee Lam after (so called) receiving the cheque went to
FEB with Aw Yong San, a Customer of the FEB.

4. Lee Lam presented the cheque to the sub-accountant
and had pursuaded him to mark the cheque for
payment though he has no account with the Bank.
Eventually the cheques has been credited into Aw
Yong San’s account.
Immediately thereafter, Lee Lam cashed the cheque
issued by Aw Yong San to him on Aw Yong San’s
account.
Issue arise:-
a)Whether the action by sub-accountant of the FEB, in
negotiating an “A/C payee only” (payee who has no(payee who has no
account/make a conversion of the cheque to aaccount/make a conversion of the cheque to a
non payee account)non payee account) cheque showed negligence in
collecting cheque.

5. APPELLANT/DEFENDANT
FAR EASTERN BANK LTD
 FEB owed no duty of care to
Bee Hong at all, the duty of
care owed only to Lee Lam as
he is the true owner of the
cheque.
 Protection of Section 4 of
Cheques Act is applicable to
FEB
 Cheque of this kind (A/C
Payee) was however
negotiable.
RESPONDENT/PLAINTIFF
BEE HONG FINANCE CO. LTD
 BHF sought a declaration that
there was a negligence on the
part of FEB in collecting
cheque for its customer, Aw
Yong San and damages for
conversion of the cheque or
alternatively $10,000 for
money had & received.

6.  4. Protection of bankers collecting payment of cheques, &c.
(1) Where a banker, in good faith and without negligence,—(1) Where a banker, in good faith and without negligence,—
(a)receives payment for a customer of an instrument to which this section applies; or
(b)having credited a customer’s account with the amount of such an instrument,(b)having credited a customer’s account with the amount of such an instrument,
receives payment thereof for himselfreceives payment thereof for himself;;
and the customer has no title, or a defective title, to the instrument, the banker doesthe customer has no title, or a defective title, to the instrument, the banker does
not incur any liability to the true owner of the instrument by reason only of havingnot incur any liability to the true owner of the instrument by reason only of having
received payment thereof.received payment thereof.
(2)This section applies to the following instruments, namely,—
(a)cheques (including cheques which under section 81A(1) of the Bills of Exchange(a)cheques (including cheques which under section 81A(1) of the Bills of Exchange
Act 1882 or otherwise are not transferable)];Act 1882 or otherwise are not transferable)];
(b)any document issued by a customer of a banker which, though not a bill of exchange, is
intended to enable a person to obtain payment from that banker of the sum mentioned in
the document;
(c)any document issued by a public officer which is intended to enable a person to obtain
payment from the Paymaster General or the Queen’s and Lord Treasurer’s Remembrancer of
the sum mentioned in the document but is not a bill of exchange;
(d)any draft payable on demand drawn by a banker upon himself, whether payable at the
head office or some other office of his bank.
(3)A banker is not to be treated for the purposes of this section as having been negligent(3)A banker is not to be treated for the purposes of this section as having been negligent
by reason only of his failure to concern himself with absence of, or irregularity in,by reason only of his failure to concern himself with absence of, or irregularity in,
indorsement of an instrument.indorsement of an instrument.

7. BHF had no title to sue under the common law in
conversion of the cheque.
FEB had acted in a good faith, without negligent and
FEB also has acted in a reasonably manner as a
collecting bank by making necessary enquiries which
a bank could reasonably expected to do.

8. The Drawer of the cheques should be the “true
owner” to be regarded as “guileless(innocent) holder
in due course”.
Banker owes the duty of cares towards the drawer of
the cheque issued to ensure the accuracy of the
transaction.
Failure on the part of the collecting bank to conduct
necessary enquiries when there is a fishy, ambigious
or absolute contradictory on the cheque transaction
will caused negligent on the part of the collecting

9. The standard of duty of care of the collecting bank
toward the drawer is higher when it involve a “A/C
payee” cheque as the drawer is treated as the true
owner and “holder in due course”.
It is a norm that a drawer is dependable on the
collecting bank’s advice for any obvious contradictory
acknowledged by the bank.
The collecting bank SHALL beware and put extra alert
and duty of care to check the FACE OF THE CHEQUE
because different type of cross cheque might cause a
different of law applicable and effect.

10. We are of the view that the judgement by the COA was
too lenient and not relying strictly on the “AC Payee”
cheque principle where this kind of cheque shall be
transferred to the payee’s account itself only.
However, we understand that this case has took place
before the amendment of the BOE in Singapore on 1992
where all crossed cheque shall be treated as non-
transferable. That is the reason why the judgement more
flexible and much dependable on the judge decision itself
(as we know pre amendment there was NN cheque and
etc).
Malaysia also has adopted the new law and had amended
our BOE Act by inserting the S81A of the Bills of Exchange
Act (Amendment) Act 1998, “crossed cheque are no longer
negotiable instruments since its validity is restricted to the
parties thereto. It is in effect a “Pay Order” to the bank by a
drawer to the named payee only”

11. THANK YOU