A. The Problem

1. Construction law is well-known for its voluminous documents.
2. If lawyers dealing with construction disputes are overwhelmed by the volume of documents, imagine the company themselves. Clearly the documents furnished to the lawyers would be only a fraction of the documents in fact kept by the company.
3. Problem: So many people are involved in a single construction project that at times, the company may not be able to keep track of the documents issued.
4. So what happens when an employee leaves the company, and suddenly the company discovers documents purportedly issued by the employee which would be against the company’s interest?
5. The employee may no longer be located, may not be co-operative or may even deny having issued those documents in the first place. Nevertheless, those documents exist in the possession of a counter-party, who now seek to rely on those documents against the company.
6. As far as the counter-party is concerned, these are legitimate documents which they had received either prior to or during the subsistence of a project. However, as far as the company is concerned, those documents are either instruments of fraud or otherwise forged.

B. Proving authenticity and/or forgery

7. The Evidence Act 1950 (“EA 1950”) provides that “(if) a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person’s handwriting shall be proved to be in his handwriting”.
8. However, that begs the question as to how such handwriting is to be proved?
9. Guidance can be sought from the case of RHB Bank Bhd v Dominance Timber Industries Sdn Bhd & Ors and Another Case [2007] 7 CLJ 654 HC.
10. The Dominance Timber case concerned a claim by RHB Bank against a defaulting borrower and its guarantors. One of the guarantors claimed that his signature was forged, and that he could not recall having signed the guarantee, nor did he request for the facility.\
11. Two contradicting expert reports were furnished to the Court. Additionally, the Bank relied on the direct evidence of the attesting solicitor who confirmed that he attested the impugned signature.
12. The learned Hamid Sultan Abu Backer JC (as his Lordship then was) set out 6 different ways in which a signature could be proved. These are as follows:
    • by evidence of the writer himself (pursuant to ss 60 and 67 EA 1950);
    • by evidence of another person who has seen him writing the document (pursuant to ss 60 and 68 EA 1950);
    • by evidence of a person acquainted with the handwriting of a person by whom the writing in question is supposed to have been written and signed (pursuant to s 47 EA 1950);
    • by evidence of a handwriting expert (pursuant to s 45 EA 1950);
    • by way of comparison made by the Court, of the writing or signature in question with any others proved to the satisfaction of the Court to be genuine (pursuant to s 73 EA 1950); and
    • the Court may also direct the person alleged to have written the document to write any word or figure to enable the Court to compare.

C. Burden and Standard of Proof

13. S 101(1) EA 1950 sets out the basic principle that the person who asserts a fact bears the burden to prove the same. However, with regard to forged documents, would the burden fall on the party relying on the documents (to prove their authenticity), or conversely would that burden fall on the party asserting forgery (to prove the forgery)?
14. S 102 EA 1950 stipulates that the burden falls on the person “who would fail if no evidence at all were given on either side”. Illustration (b) to s 102 EA 1950 gives the example of a suit for money due on a bond. It says that “(the) execution of the bond is admitted, but B says that it was obtained by fraud, which A denies.” In such a scenario, “(if) no evidence was given on either side, A would succeed as the bond is not disputed and the fraud is not proved”.
15. But what if the document itself is disputed? Surely then A who is relying on that document to assert its right would need to first and foremost prove the said document.
16. This brings us to the case of Lethumanan Chettiar Alagappan (as executor to SL Alameloo Achi (deceased) & Anor v Secure Plantation Sdn Bhd [2017] 5 CLJ 418 FC.
17. Lethumanan Chettiar concerned the sale of a piece of land belonging to the deceased by way of a power of attorney (“POA”). However, it was alleged by the Appellants that the POA was a forgery. The Respondent, on the other hand, sought specific performance of the sale of the land which was entered into pursuant to the POA.
18. Where then does the burden of proof lie? Does it lie with the Appellants to prove the forgery? Or does it lie with the Respondent to prove the genuineness of the POA?
19. The learned Jeffrey Tan FCJ (as his Lordship then was) opined at [62] that the burden was on the Respondent to prove that the POA was valid, and that burden needs to be discharged “regardless of whether the defence of forgery had or had not been made out”. His Lordship goes so far as to say in [71] that “(there) was no onus to prove forgery and or fraud if the validity of the impugned (POA) were not first proved”.
20. The same case also affirmed that the standard of proof required to establish forgery would be on a balance of probabilities (see [34-35]).
21. Therefore, in a case whereby documents issued by a company are said to be forged, the burden lies on the party seeking to rely on those documents to establish the authenticity of the documents in the first instance. Only when the authenticity is established would the onus of proof shift to the party disputing the documents to establish forgery on a balance of probabilities.

D. Turquand’s Rule

22. But what if the forgery was purportedly carried out by an employee (or more usually a former employee) of the company? Would the company then not be bound by the acts of its (former) employee under the indoor management rule?
23. That depends.
24. For the indoor management rule to apply, the (former) employee must have had at least some ostensible authority. The Federal Court made it clear in Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen & Ors [1998] 1 MLJ 465 FC that “(the) rule in Turquand’s case cannot be invoked if the outsider relying on the rule knows or ought to have known that there is an irregularity”. Additionally, “(the) outsider… bears the burden of showing that he is not disqualified from invoking the rule”.
25. How would one discharge the burden of showing that one is not disqualified from invoking Turquand’s rule?
26. This was answered in Kang Hai Holdings Sdn Bhd & Anor v Lee Lai Ban (trading as the sole proprietor under the name and style of ‘Sang Excavating Services’) [2018] 2 MLJ 574 FC, where the learned Prasad Abraham FCJ (as his Lordship then was) opined at [14] that “(with) the rapid development of modern technology, and the access to information available in the database of the Companies Commission of Malaysia, the law in our view imposes a minimum duty on the ‘outsider’ to, at the very least, make this minimum check to afford the outsider the protection of the rule in Turquand.”
27. In other words, an outsider may still rely on forged documents if the forgery was effected by an insider of the company provided the outsider had made the requisite checks. That would include a search of the company with the Companies Commission of Malaysia, and if the insider does not appear as a director in the said search, there may be need for further enquiries to be made.
28. In Sarens (M) Sdn Bhd v Causeway Iron Works Sdn Bhd & Ors [2026] MLJU 356 HC, the learned Atan Mustaffa J declined to apply the rule in Turquand when the outsider, inter alia, did not even comply with their own internal requirements for verification in accepting forged work orders.

E. Conclusion

29. Therefore, when there is an allegation of forgery, the burden lies first and foremost on the party seeking to rely on the allegedly forged document. If that burden is discharged, then the onus shifts to the counter-party to prove the forgery.
30. Of course, ideally the construction company would have systems in place to prevent such a situation from arising. But alas, “(the) best laid scheme o’ Mice an’ Men Gang aft agley” (Robert Burns).

Author: Chan Kheng Hoe ([email protected])