DC441

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE NO 122 OF 2003

St. Francis Youth Group
Complainant

V

Virgil Yvonne
First Defendant

Rau Bole
Second Defendant

Manager - BSP Formerly of PNGBC Port Moresby Branch
Third Defendant

Port Moresby (Central Court): Gauli, M
2003: 07, 21, 28 August; 08, 15, 22, 29 September
06, 13, 20 October

Civil Law: Damages - Claims Value of State Bank Cheque - Processed Stolen Stale Bank Cheque By Depositing in a new Account

Cases Cited:
Nil

Counsel
For Complainant: Mr Aldis Korua (Headmaster)
For Defendant: Mr Arua (Bsp's Legal Officer)

GAULI, M: The Complainant brought this action against the Defendants in damages for allowing a Stale Bank Cheque paid to persons who falsely claimed to be the Members of the St. Francis Youth Group.

The facts are as follows. The Complainant, St. Francis Youth Group hereafter the Youth Group is from Rarai Village in Bereina District of the Central Province. In 1984 the Youth Group opened an Interest Bearing Deposit (IBD) Account with the then Papua New Guinea Banking Corporation (PNGBC) at its Port Moresby Branch with a deposit of K500.00, between the period from 1984 to the year 2000. The interest had accumulated to a total of K1,735.76. The IBD Account was automatically renewed at maturity in the Banking System during that same period for 16 years. In the year 2000, the then PNGBC had made a Bank Policy that all IBD’s less than K2,000.00 are to be closed and the monies repaid to the investors. Following this policy the then PNGBC, Port Moresby Branch closed the Complainant's IBD Account and drew a Bank Cheque No. 0557654 valued at K1,735.76 on 28th December, 2000 payable to the Youth Group.

The said Cheque was given to Mr Aloisis Korua, Headmaster of the Rami Primary School of Bereina District in the Central Province sometimes in August, 2002 by Mr John Veigu, Treasurer of the said Youth Group. The Headmaster, Mr Korua and the Chairman of the School's Board of Management presented the said Cheque to the Bank South Pacific (BSP) who has then taken over the PNGBC. They were told by the Bank Teller that the Cheque had gone Stale; it is valueless and could not be cashed. The Teller however informed them that he will find out about that Account and be informed later.

In September, 2002 they followed up with the Bank Teller but were told that there was no record of information in the Bank or that he was not able to locate the records. The Teller said he will make further search and later be advised of it. Several follow ups were made but with no positive results. The last of these follow ups was made in November, 2002 with no result. At that time the Stale Cheque was pick-pocketed at the Gordens market from the side pocket of the Headmaster, Mr A Korua. This was not noticed until the close of the school year in 2002 when Mr Joe Veigu, one of the Youth Group's Executives asked for that Cheque before Mr Korua proceeded to his Recreational Leave. After noticing the Stale Cheque had been missing the Headmaster, Mr Korua reported the missing Cheque to the Bank in December, 2002. The Bank Teller told him not to worry about it because the Stale Cheques would not be cashed in anyway.

In late February, 2003 when Mr Korua went to the Bank he was told the said Stale Cheque was deposited and withdrawn from a new Account opened by the St. Francis Youth Group leaving a balance of K60.00 only.

The new Account No. 294 - 6341217 was opened on 09th January, 2003 under the name St. Francis Youth Group of Tapini in the Central Province. The Signatories to this new Account were Linus Kaita (Chairman). Laiam Kulolo (Secretary) and Emmanuel Baio (Treasurer) of the said Youth Group. These three signatories who are also the Executives of the Youth Group were, by a letter of introduction dated 03rd January, 2003 (03101/03), recognized by the Defendants, Vigil Yvonne. Rau Bola and Joseph Merusa. These three Defendants are alleged to be the Council from Tapini in the Goilala District of the Central Province. Upon this recognition by this Council. the Bank allowed them to open a new Account and allowed withdrawals.

The Council for the 04th Defendant, the Bank South Pacific raised four issues namely:-

1. Whether or not the Fourth Defendant is liable to the claim by the Complainant.

2. Is the Complainant guilty of contributing negligence in so far as it failed to:-

(A) Quickly opened a new Account and deposit the Cheque instead of holding on to the Cheque for almost two years;

(B) Try and cash the Cheque in any of the other Commercial Banks instead of holding on to the Cheque for almost two years;

(C) Report the matter of the stolen Cheque quickly thereby placing the Bank in a prejudiced position;

3. Whether or not the First, Second and Third Defendants should be liable.

4. Is the Complainant entitled to the amount of money claimed in his submission of claims filed on 19th September, 2003?

The Parties have provided Affidavit evidence and written submissions which I have read and considered. The facts deposed above are not in dispute and so I accepted the facts as they are stated. I will now discuss the issues as stated before this Court.

The first issue is:

1. "Whether or not the Fourth Defendant is liable to the claims by the Complainant". The Fourth Defendant, the Bank submitted that he is not liable to the claims for the reasons that:-

(a) The Complainant held onto the Bank Cheque for too long thereby allowing the Cheque to go stale.

(b) The Complainant failed to report to the Bank that the Stale Cheque had been stolen, so the Bank would have taken necessary steps to cancel the cheque from payment.

(c) The Complainant failed to negotiate with the Bank or to open a new Account to deposit the Cheque, instead held the Cheque for two years, 

and various other reasons. In the light of these reasons, I consider the Affidavit Evidence of the Witnesses, Mr Alois Korua and Mr Joe Veigu for the Complainant. The witness, Joe Veigu in his Affidavit stated that when the Bank closed the Complainant's IBD Account and drew the Cheque No. 0557654 for K1,735.76, that Cheque was received in April, 2001. In May the following month that cheque was presented to the Bank but the Bank refused to process it as it became staled. The Youth Group did not know what to do with it and just kept it until towards the end of 2002, they approached Mr Alois Korua the Headmaster. When Mr Korua re-presented the cheque at the Bank he was told the cheque was stale and could not be cashed. In December, 2002 that cheque was stolen and the wrong people claiming to be the Executives of the St. Francis Youth Group of T apini opened a new Account in January, 2003. They deposited that cheque in that new Account and withdrew the rest of the money leaving the balance of K60.00. The evidence of Mr A Korua corroborates the evidence of witness, Joe Veigu.

From the evidence of the witness, Joe Veigu, I find that the Complainant presented the cheque to the 4th Defendant, the Bank within five (5) months from the time the cheque was drawn. The Bank said it was Stale Cheque and refused to process it. When does a cheque becomes stale, is it 30 days, six months or twelve months from the date it was drawn. The 4th Defendant gave no evidence as to when a cheque becomes stale. The Bank never assisted the Complainant as to what steps the Group should take to have the cheque processed.

They were never told to open a new Account from the first day the cheque was presented to the Bank. The Complainant was never informed by the Bank to open a new Account either with the same Bank or with another Bank to have the cheque deposited for processing. The Bank has failed to properly advise the Complainant what to do in order to have the stale cheque processed.

When the cheque fell in the hands of the wrong people after two years has lapsed, the Bank then saw fit to inform those people who are in possession of the cheque to open a new Account and process the Stale Cheque. The Complainant, St. Francis Youth Group of Rarai Village is from Bereina District of Central Province. When they first opened the IBD Account in 1984, the Bank must have compiled a file under that name which would contain their address and the names of their Executives or the signatories. When the Staled Bank Cheque No. 0557654 was presented to the Bank in January, 2003, the Bank failed to make thorough check or investigation or inquiries with the St. Francis Youth Group of Rarai village of the Bereina Diocese and the 1 S\ 2nd and 3rd Defendants who are alleged to have authorized the opening of the new Account. I find that the Bank could not be satisfied on the face of the letter titled "INTRODUCTION TO OPEN NEW ACCOUNT - ST. FRANCIS YOUTH GROUP" which was signed by the 1st, 2nd and 3rd Defendants. The Bank failed to confirm with these three Defendants of the actual existence of said Group from Tapini. I find that the 4th Defendant is liable for processing the Staled Cheque to the wrong people.

I now turn to the Second issue that is:-

2. Is the Complainant guilty of contributory negligence in so far as it failed to:-

(A)
(B) and 
(C)
(As above).

As I have alluded above that the Bank draw the cheque on 28th December, 2000, the Complainant received the cheque in April, 2001 and in May, 2001 when the cheque was presented, the Bank refused to process it claiming it was Stale. The cheque was presented again in August, 2002 and 2002 up in September, November and December. 2002 but the Bank maintained that, it was staled and could not be processed.

The Complainant presented the cheque within a reasonable time to the Bank as soon as the cheque came to their possession but the Bank blatantly refused to process it. It was the Banks blatant ignorance that let the Complainant to keep the cheque too long. The Bank failed to advise the Complainant the procedures they should take to have the Stale Cheque processed.

I fail to find any contributory negligence on the part of the Complainant. In fact it was the Bank who was negligent in properly advising the Complainant the processes to enable to negotiate and process the Stale Cheque. So the answer to the question is No. "The Complainant is not guilty of contributory negligent".

The Third Issue is -

"Whether or not the First, Second and Third Defendants should be liable".

These three Defendants namely Virgil Yvonne, Rau Bole and Joseph Merusa are sued because of their part in identifying the Executives of the Sf. Francis Youth Group namely Linus Kaita (as the Chairman), Laiam Kulolo (as Secretary) and Emmanuel Baio (as Treasurer). These three Defendants in their Affidavits denied having any knowledge of the said Executive Members and they all claim that their signatures may have been forged. They said the only St. Francis Youth Group they know of is from Rarai village in Bereina. The Defendant, Joseph Merusa is the Deputy Administrator for Goilala District while the Defendants Virgil Yvonne and Rau Bole are based at the Central Province Administration Headquarters in Port Moresby. They are not from Tapini. Had the Bank made contact in person with these three Defendants before allowing the application for the opening of the new account, the Bank would have detected that the stale cheque was in the wrong hands and would have avoided processing it. I find that the document titled:

"INTRODUCTION TO OPEN NEW ACCOUNT - ST. FRANCIS YOUTH GROUP" dated 03/01/03 was fraudulently made with forges signatures of the first three Defendants. I am convinced that signatures of the Defendants, Mr V Yvonne, Mr Rau Bole and Mr J Merusa were forged. I find these defendants not liable. The Bank also failed to record the report by Mr A Korua in December, 2002 of the Stale Cheque been stolen.

The 4th Issue:

"Is the Complainant entitled to the amount of money claim in his submission of claims filed on 19th September, 2003".

These claims by the Complainant are:-

1. Stale Cheque Refund - K1,735.76
2. Interest of 8% - K408.00
3. Damages and loss to St. Francis Youth Group - K1,500.00-7-
4. Defamation of Character (Mr A Korua) - K1,000.00 
5. Risks - K500.00
6. Cost and Expenses - K1,600.00

The Complainant would be entitled to some of these claims while the other claims are matters that would be considered on their own as to whether the Defendant would be liable.

1. Stale Cheque refund K1, 735. 76. My findings in considering the Issue No. 1 above I have ruled that the Defendant is liable for processing the staled cheque to the wrong people. I therefore answer the issue; "yes" the Complainant is entitled for the refund of the staled cheque, valued K1,735.76.

2. Interest of 8%. Under Section 1 of Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52 in an action for recovery of debts or damages the Court may order interest. It is the discretion of the Court to consider, it does not come automatically. There is no evidence to suggest that the Complainant had intended to invest money again. The Bank was paying out that money and it fell in the wrong hands. I consider that the Complainant is not entitled for the interest.

3. Damages and loss to St. Francis Youth Group K1,500.00. The Complainant has not established any proof that it suffered damages and loss apart from the value of the staled cheque. The Complainant is not entitled to this particular claim.

4. Defamation of character (Mr A Korua) K1,000.00. This would be a separate cause of action on its own which the Complainant must prove that the Defendant has defamed his name and character. Damages for defamation, if any, would not be considered in the course of this proceeding.

5. Risks K500.00. There is no evidence of risks being present. Complainant could not be entitled for risks.

6. Costs and expenses K1,600.00. Generally costs and expenses are allowed to a party in whose favour the judgment of the Court are made. The party entitled to costs and expenses are based under the SCHEDULE 3 & 4 of the District Courts Act and actual out of pocket expenses. This will have to be properly assessed, the amount could be more or less than what is claimed here.

For the reasons as alluded above' find that the first, second and third defendants are not liable for the claims in this action. The fourth defendant the Bank South Pacific took over the Papua New Guinea Banking (PNGBC) in about the year 2002. When the BSP took over PNGBC all liabilities of the former PNGBC automatically transferred to BSP.
The staled cheque No. 0557654 was drawn on or by the PNGBC on 28th December 2000. That cheque was allowed and processed by the SP on opening a new account in January 2003. The 4th defendant, BSP is therefore liable.

This Court therefore enters a judgment in favour of the Complainant, the St. Francis Youth Group of Rarai Village, Bereina District the sum of K 1, 735.76 against the 4th defendant the BSP with costs the sum of K 507.60. The total amount of K 2,243.36 to be paid within 30 days from the date of this order.

The costs covers -

1. Transport		
a. Bereina I Gordons return K 30.00 x 11 days	= K 352.60	
b. Bus Fare - Gordons I Porn return K 2.00 x 11 days	= K 22.00	
		
2. Filing Fee	= K 1.60	
		
3. Typing and copying affidavits	= K 154.00	
		
Total Costs 	= K 507.60