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Wauwa K Ltd v Bank of South Pacific Ltd [2019] PGNC 488; N8840 (27 June 2019)

N8840


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 2 OF 2017 (CC 3)


BETWEEN:
WAUWA K LIMITED
Plaintiff


AND:
BANK OF SOUTH PACIFIC LIMITED
First Defendant/Cross-Claimant


AND:
TRAVELLERS INN LIMITED
Second Defendant/First Cross-Defendant


AND:
THOMAS PHILAR GAMU
Second Cross-Defendant


AND:
GERMAN PETER
Third Cross-Defendant


AND:
PETER TUMU also known as PETER TUMU
Fourth Cross-Defendant


AND:
JOE TONDE
Fifth Cross-Defendant


AND:
COMA 05 LIMITED
Sixth Cross-Defendant


Waigani: Thompson J
2019: 28th & 29th May, 27th June


NEGLIGENCE – breach of contract by committing fraud - Fraud in Civil Litigation – Dishonest Intention – Standard of Proof – Negligence – Weight of Evidence


Counsel:


Mr. S Wani, for the Plaintiff
Mr. A Waffi, for the First Defendant
Mr. W Mapiso, for the Second Defendant
Mr. Peter Tumun In Person
Mr. M Paiya, for the Sixth Defendant


27th June, 2019


Background


  1. THOMPSON J, The Plaintiff is a company incorporated in 2010 of which Wale Bulu (“WB”) is a director. Although he described it as a landowner company, WB and his brother are the only shareholders, and WB is the sole signatory on the Company’s bank account with Bank South Pacific, Account Number 1002486635, domiciled at the BSP Haus Branch. BSP held WB’s photo and specimen signature on file.
  2. On 30 November 2016 in proceedings on OS 258 of 2016 to which WB and the Plaintiff were parties, the Court made Orders by consent whereby WB and the Plaintiff were the “lead agents for the PDL 7 Landowners”, the State was to pay K4 million into the Plaintiff’s BSP account, WB and the Plaintiff were to immediately pay half of that amount, namely, K2 million, to Pambai Holdings Ltd, and the Plaintiff was to “provide acquittals and evidence of payments being shared with the landowners of PDL 7”, for their land compensation claim.
  3. On being served with this Order by Pambai Holdings Ltd, and after obtaining advice from the BSP Legal Team, BSP placed a restriction on all debits from the Plaintiff’s account, to ensure compliance with the terms of the Court Order. The Plaintiff criticized this as being unnecessary when there was no Order for BSP to do this. However, it is clear that experience has shown BSP that it is better to err on the side of caution, than to risk being charged with being in contempt of Court orders.
  4. On 8 December 2016, the State issued a cheque for K4 million payable to the Plaintiff. The accompanying letter from the State said that the payment was pursuant to the Court Order. WB paid this cheque into the Plaintiff’s bank account, and it was credited into the account on 13 December 2016.
  5. On 12 December 2016, WB signed a letter on the Plaintiff’s letterhead, addressed to BSP at the Harbour City Branch. This letter said in vague terms that cheque numbers 0101 – 0158 had “gone out” to people “in the pretext of service providers” without the Plaintiff’s authorization and requested that the cheques not be processed (“the dishonour letter”).
  6. According to WB, he attended at the Bank on 12 December 2016 and gave the cheque for K4 million to be deposited, together with the dishonour letter, to Martin Kilage.
  7. According to Mr Kilage, WB attended at the Port Moresby Premium Branch of BSP in Town on 13 December 2016, and gave him the cheque and letter. WB was not a Premium Branch customer, but had entered with a group of landowners who were Premium Branch Customers. Mr Kilage said that after reading the letter, he gave it back to WB and informed WB that because the Plaintiff’s account was domiciled at the BSP Haus Branch, he would have to present his letter to them at that Branch, and that Mr Kilage could not act on it. He said that the BSP Haus Branch was not far away, in Konedobu.
  8. WB did not either plead or give evidence that he delivered the dishonour letter to the BSP Haus Branch, and it was an Agreed Fact No. 22 in the Statement of Agreed and Disputed Facts that it was not delivered.

Pleadings


  1. The Plaintiff has pleaded that the 1st Defendant was negligent and breached an unspecified contract, and has pleaded that both the 1st and 2nd Defendants acted fraudulently. The Amended Statement of Claim also included some assertions about fraudulent changes to the 2nd Defendant’s company structure, but no evidence was produced by the Plaintiff on this matter, and it was not pursued in the oral testimony or in the written submissions.
  2. Despite it forming a large part of Plaintiff’s written submissions, “conspiracy to defraud” was not pleaded by the Plaintiff. As there was no such pleading, no evidence or relief can be allowed (see PNGBC v Jeff Tole (2002) PGSC 8).
  3. The Plaintiff made no claims against any of the Cross-Defendants.
  4. Although there is no pleading, it may be inferred that a term of the unspecified contract between the Plaintiff and 1st Defendant was that BSP would carry out its customers’ lawful instructions.
  5. The Plaintiff pleads that on 12/12/2016 he deposited a cheque for K4 million to the Plaintiff’s account, and gave BSP a letter of the same date asking them not to process cheques numbers 0101 – 0158. In paras 19 and 21.1 - 2.17 of the Amended Statement of Claim, he pleads that in breach of this instruction, on and after 16/12/2016 the 1st Defendant knowingly processed and paid out cheque 0155 for K1.15 million to the 2nd Defendant, and 5 other unspecified cheques totaling K593,700 or K650,000 (the figures are inconsistent) to the 2nd – 4th Cross-Defendants and to unknown persons, without the Plaintiff’s authority. He pleads that this was both negligent and fraudulent. He has not pleaded any particulars of a breach of contract.
  6. He pleads that BSP was negligent by failing to check with WB to verify the payments, and in paying out cheques which should have been dishonoured. He pleads that the 2nd Defendant knowingly accepted the payment when the 2nd Defendant knew that it was not entitled to, and that this was fraudulent.
  7. A dictionary definition of fraud, from the Australian Modern Oxford Dictionary and Oxford Dictionary of Law, is “dishonestly making a false representation for the purpose of gain, or to cause loss”. In a criminal case, to defraud means to deprive a person of property which is his, by using dishonest means, and knowing that he has no right to deprive that person. (See Roland Tom and Kalen Kopen v The State SCRA No. 62 and 69 of 2017).
  8. The Plaintiff has the onus of establishing that the 1st and 2nd Defendants dishonestly made false representations for the purpose of gain to them, or to cause loss to him, knowing that they had no right to do so. It is an essential element of fraud that the Defendants had a dishonest intention. The Plaintiff also has the onus of establishing that the 1st Defendant was negligent.
  9. There is no pleading which identifies any false representations made to the Plaintiff by either the 1st or 2nd Defendants. The Plaintiff’s allegations are simply that the 1st Defendant acted without the Plaintiff’s authority in making the payments, and that the 2nd Defendant kept its payments without the Plaintiff’s authority.

Evidence


  1. The uncontested evidence was that the Plaintiff issued and signed cheques to the Second Defendant and to the Cross-Defendants. The evidence showed that those cheques had not “gone out” to people who were pretending to be service providers, without WB’s authority. It showed that WB issued and gave those cheques to the payees in payment of various obligations which he had incurred.
  2. At 9.00 am on Friday 16 December 2016, WB attended at the BSP Premium Branch, and asked to cash cheques he had drawn on the Plaintiff’s account. Mr Kilage told him that the account was restricted, and he would have to attend at the domiciled BSP Haus Branch to sort it out.
  3. The evidence from the Defendants and Cross Defendants was that at about 9.30 am on 16 December 2016, a group of people including the 2nd, 3rd and 4th Cross-Defendants accompanied WB into the BSP Haus Branch. They presented cheques numbers 127, 137, 155 and 158 drawn on the Plaintiff’s account and signed by WB, for encashment. Despite being there, WB did not give the dishonour letter to anyone in the Bank, and did not tell either BSP, the Defendants or Cross-Defendants that he had asked BSP to dishonour their cheques.
  4. Willie Fime was a teller at the BSP Haus Branch. He told them that there was a restriction on all debits on the account, he would need to obtain clearance, and told them to return after the restriction was lifted.
  5. At about 11.00 am, WF was told by Peter Komon, the Branch Manager, that the general restriction was lifted, and replaced with a partial restriction on K2 million, to ensure there were sufficient funds to cover the Court-ordered payment to Pambai Holdings Ltd.
  6. WB and the group of people returned to the BSP Haus Branch. WF gave evidence that WB was there in person, he asked WB to verify the cheques by endorsing them, WB wrote his name and signed at the back of all 4 cheques, WF compared his signature with the specimen signature in their records, compared his facial picture with the facial picture in their records, and confirmed that the account had sufficient funds in it to meet the cheques. He told the person presenting the 6th Cross-Defendant’s cheque No. 158 that as the 6th Cross-Defendant did not have an account at BSP, it would have to be presented at the 6th Cross-Defendant’s bank. At about this time, two of the persons whom WB had identified as the 3rd and 4th Cross-Defendants, left. WF said they returned at about 3.00 pm and presented cheques 127 and 137, which were duly paid.
  7. WF produced copies of cheque numbers 127, 137, 155 and 158. They were dated 12, 14 and 16 December 2016, each was signed on the back by WB, and all were date-stamped as being received by BSP on 16/12/2016. WF also produced copies of deposit slips dated 16/12/2016 and date-stamped as being received by BSP on 16/12/2016, a copy of a letter from the Plaintiff to BSP dated 12/12/2016 authorising them to pay cheque number 158 to the 6th Cross-Defendant, and a copy of a letter from the Plaintiff to BSP dated 13/11/2016 authorising them to pay cheque 155 to the 2nd Defendant.
  8. In relation to cheque 155, Thomas Gamu presented various documents including the letter from the Plaintiff dated 13/11/2016 signed by WB, which authorized BSP to pay cheque number 155 to the 2nd Defendant. As the cheque was for a large amount, Mr Fime cleared the authority with his Deputy Branch Manager, Bau Kiso, who confirmed the specimen signature and photograph in the Bank’s records, and so the cheque was accepted.
  9. Bau Kiso gave evidence that he was the Deputy Branch Manager at the BSP Haus Branch. On 16/12/2016 at about 11.00 am he was asked by Mr Fime to confirm the signature and facial image of WB which he did by comparing them with the specimen signature and photograph in the Bank’s records.
  10. Lucyanna Oki gave evidence that she was a teller at the BSP Waigani Drive Branch. On 16/12/2016 at about 3.00 pm Joe Tonde attended at her branch and presented the Plaintiff’s cheque number 152 payable to him. She gave it to Navu Urro for checking, she checked that the signature which had been signed on the back of the cheque was the same as the specimen signature, and approved the processing of the cheque.
  11. Navu Urro gave evidence that on 16/12/2016 at about 3.00 pm, Joe Tonde attended at the BSP Waigani Drive Branch, and presented the Plaintiff’s cheque number 152 for payment. He was accompanied by WB. Ms Urro asked him to confirm his identity, WB signed on the reverse of the cheque, she confirmed his signature with the specimen signature on file, and confirmed his facial image with the facial image on file, and then authorized Lucyanne Oki to process the payment. She produced a copy of the cheque number 152 which was dated 15/12/2016, signed by WB on the back, and date-stamped as being received by BSP on 16 December, and a copy of the deposit slip also dated 16 December and date-stamped as being received by BSP on 16/12/2016.
  12. Rarua Kema gave evidence that on 16/12/2016 at about 4.30 pm, WB attended at BSP’s Waigani Banking Centre which was close to the Waigani Drive Branch, to cash 4 cheques drawn on the Plaintiff’s account numbers 160, 162, 168 and 170, totalling K330,000.00. WB produced his identification card and bank account details. Mr. Kema asked him to verify the cheques by endorsing the back, and WB wrote his name and signed on the back of each of the cheques. Mr. Kema confirmed the signatures with the specimen signature, compared WB with the photograph held in the Bank’s records, processed the cheques of which K180,000 was paid to WB as cash, and of which K150,000 was deposited into WB’s personal bank account number. Mr. Kema produced copies of the 4 cheques all dated 16/12/2016, signed on the back by WB and date-stamped by BSP as being received on 16/12/2016. The first 3 cheques were further endorsed as “Creditors payments. Wale Bule present”.
  13. On Monday 19/12/2016, cheque 155 was returned by the Kina Automated Transfer System (“KATS”) and dishonored, due to the restriction on the account. Mr. Kiso said that the BSP Transaction Channel Support Team then advised that the restriction could be temporarily lifted.
  14. Peter Komon, the BSP Haus Branch Manager, confirmed that he instructed the restriction to be lifted, cheque 155 to be re-presented, and the restriction to then be reinstated
  15. On 20/12/2016 cheque No. 155 was re-presented by BSP and the payment was processed. There was no evidence that BSP issued a bank cheque. The evidence was that it simply re-presented the Plaintiff’s cheque.
  16. On 20/12/2016, Thomas Gamu attended at the BSP Haus Branch, and withdrew K355,000.00 from his account, out of which he transferred K53,700 to the Plaintiff. He said that he then went to the Fraud Squad at the Police Station where WB was being detained by his landowners, and gave WB K50,000 cash.
  17. On 21/12/ 2016, Thomas Gamu again attended at the BSP Haus Branch and withdrew a further K200,000, which he then paid into WB’s personal bank account. WF produced copies of the cheque and deposit slip, in confirmation.
  18. WF said that on 21/12/ 2016, the Plaintiff’s cheque dated 20 December 2016 for K2 million payable to Pambai Holdings Ltd, was presented and this payment was debited from the Plaintiff’s account. WF produced copies of the cheque, and of the deposit slip dated 21 December 2016.
  19. On 21/12/ 2016 WB attended at the BSP Haus Branch, and at about 3.00 pm there was a meeting between WB, Peter Komon, Willie Fime and Bau Kiso. At this meeting, WB asked BSP to reverse payment of cheques 127, 137 and 155, and referred to a letter in which he had instructed BSP not to pay those cheques. PK told WB that he was not aware of any such letter, it had not been received at the BSP Haus Branch, and he asked for a copy, which WB did not produce. PK advised WB that the payments could not be reversed, as they had already been paid.

Cheque No. 155: Paras 4-6, 7, 16-19 and 22 of the Amended Statement of Claim.


  1. In relation to cheque number 0155 for K1.15 million payable to Travellers Inn Ltd, Thomas Gamu’s evidence was that WB issued a cheque for K1.15 million payable to the 2nd Defendant. TG said that the money was in part-repayment of loans he had made to WB, and partly for the purchase of shares in the 2nd Defendant. WF produced a copy of a Memorandum of Agreement signed by WB and the 2nd Defendant on 2/11/2016, which verified amounts owing to the 2nd Defendant totalling K1.16 million. TG said that WB had also issued a supporting letter for BSP authorizing the payment, had signed both the cheque and the letter, and gave them to him. On 13/12/2016 WB came and showed him a copy of the Government cheque for K4 million, and told him to deposit the Plaintiff’s cheque for K1.15 million on Friday 16 December 2016.
  2. TG said that on 16 December he went to the Bank, but was told that the cheque could not yet be cleared. He said that at about 11.00 am he went back to the Bank, with WB, who confirmed to the Bank that the cheque was authorized by him to be paid to the 2nd Defendant. Willie Fime and Bau Kiso confirmed this evidence, and said that they asked WB to confirm that cheque number 0155 was valid, by getting him to sign his name on the back of the cheque, and then confirming that his signature and facial image matched the specimen signature and photo on file. They produced a copy of cheque 0155 dated 14 December 2016 with WB’s signature on the back, date-stamped as received by BSP on 16/12/2016, and produced a copy of the Plaintiff’s letter of authority to BSP also date-stamped as received by BSP on 16/12/2016.
  3. WB admitted issuing cheque 155 and writing the letter to BSP confirming that cheque 155 was in order and approved by him for payment to the Second Defendant. However, WB said that BSP should have acted on the dishonour letter, and denied going to the Bank on 16 December with TG.
  4. WB was not an impressive witness. His evidence was generally inconsistent and unsupported by documents or by witnesses. He did not at any time in his pleadings, affidavits or oral evidence say that the Pambai Clan members had taken him to the Fraud Squad and detained him there all day until he made a payment to them. In para 22 of his Submissions, he said that he was present at the BSP Waigani Branch at about 3.00 pm on 16/12/16 where he was served by Rarua Kema, but in para 29, he said that he was at the Fraud Squad office on 16/12/16 from morning until late.
  5. Although he did not mention it in his Amended Statement of Claim, WB said in cross-examination that he could not have gone to the bank on 16 December because he was somewhere else but did not say where. In his final submissions, the Plaintiff’s lawyer said that WB could not have been at the Bank on 16 December, because the affidavits of Jerry Somon and Hebe Himuni proved that WB was at the Police Fraud Squad office all day on 16 December.
  6. That was not correct. The affidavit of JS said only that WB had been at the Fraud Squad on an unspecified date in December 2016. It went on to say that in front of JS and the landowners, WB wrote out a cheque for K2 million payable to Pambai Holdings Ltd. The affidavit of HH said that on 16 December he and the landowners went to the Fraud Squad office with WB and stayed there from 9.30 am to 5.00 pm, and that in front of them, WB wrote out a cheque for K2 million payable to Pambai Holdings Ltd.
  7. The Bank produced a copy of this cheque which was cheque number 0176 payable to Pambai Holdings Ltd, dated 20 December 2016, and which was deposited with a deposit slip dated 21 December 2016 date-stamped as being received by BSP on 21 December 2016.
  8. As the cheque was dated 20 December, and as JS and HH had both said that WB wrote the cheque for K2 million to Pambai Holdings Ltd in front of them and the landowners, and neither of them said that WB had post-dated the cheque four days later, the only reasonable inference is that WB wrote the cheque to Pambai Holdings in front of them when he was at the Fraud Squad on 20 December 2016, and that Pambai Holdings Ltd presented the cheque on 21 December 2016.
  9. It was also of note that HH said that he was from the same village and clan as WB. He could not be regarded as an independent witness, and his sole reference to 16 December 2016 in his affidavit sworn 2 years later, was contradicted by the fact that the cheque which he said was written in front of him on that day, was dated 20 December 2016. His evidence of the date was more than outweighed by the evidence of the Bank records and of the other witnesses, which all showed that WB did attend at the Bank on 16 December 2016. WB offered no reason why and gave no evidence showing that the 1st and 2nd Defendants and 6 Cross-Defendants would have forged documents and that 10 witnesses would have given false evidence about this date.
  10. Finally, WB made no attempt to contradict BSP’s evidence that WB had attended at the Bank on 16/12/2016 and personally cashed 4 cheques from the Plaintiff’ account. In fact, he admitted it in his Submissions. WB clearly could not have been at the Fraud Squad all day on 16/12/2016. The evidence was more than sufficient to show that WB had been at the Fraud Squad all day on 20/12/2016.
  11. In relation to para 21.4 of the Amended Statement of Claim, the only evidence of a cheque for K53,700 was a cheque drawn by the 2nd Defendant, not by the Plaintiff. It was not paid to the 2nd Defendant, it was paid to the Plaintiff. This pleading is factually wrong.

Other Cheque Numbers 127, 137, 152 and 158 – Paras 21 – 22 of the Amended Statement of Claim


  1. In relation to cheque number 127, this was for K150,000, given to Peter Tumu the 4th Cross-Defendant, endorsed on the back by WB, verified by BSP, and paid.
  2. In relation to cheque number 137, this was for K10,000, given to German Peter the 3rd Cross-Defendant, endorsed on the back by WB, verified by BSP, and paid.
  3. In relation to cheque number 152, this was for K150,000, given to Joe Tonde the 5th Cross-Defendant, endorsed on the back by WB, verified by BSP, and paid.
  4. In relation to cheque number 158, this was for K230,000, given to Coma 05 Ltd t/a Edward Wamp lawyers, the 6th Cross-Defendant, verified by BSP to the payee’s Bank, and paid.
  5. The Plaintiff’s case rests on the uncontested evidence that WB gave the dishonour letter to Martin Kilage on or about 13/12/2016. However, it was also uncontested in the evidence that MK told WB that he could not action the letter as it had to be given to the domiciled branch at BSP Haus, he returned the letter to WB, and WB did not give the letter to any one at the BSP Haus Branch.
  6. As it is uncontested that the dishonour letter was not given to the BSP Haus Branch, it follows that its’ employees were unaware of a request not to pay the cheques. BSP employees simply followed their normal procedures for processing cheques. They did not know that WB had requested that the cheques be dishonoured, and on the contrary, they had letters of authority and other documents from the Plaintiff and WB authorizing the cheque payments, and they had WB in front of them verifying his signature and facial photo. The Defendants and Cross-Defendants’ evidence was consistent that WB was at the BSP Haus and other branches with them and did not tell them or the Bank to dishonour the cheques.
  7. The Plaintiff produced no evidence of the alleged “normal banking practice” relating to restrictions on accounts or stopping of cheques. In response to the Bank’s evidence of their employees following their normal banking procedures, the Plaintiff produced no evidence to rebut it, and merely submitted that “any teller would cook up in allegations of fraud like this”, without a single piece of supporting evidence.
  8. WB admitted that he wrote all the cheques payable to the 2nd Defendant and to the Cross-Defendants and gave the cheques to them. There was no evidence that he informed any of the Defendants or Cross-Defendants that he had cancelled the cheques, or that they were not entitled to receive the payments. There was no evidence that he asked any of them to return the payments. The 1st and 2nd Cross-Defendants gave evidence that their payment was in part-reimbursement of loans made by them to the Plaintiff, of expenses incurred by them for the Plaintiff, and for the purchase of shares in his company. The 4th Cross-Defendant gave evidence that the payment to him was in consideration for him having provided support to WB. The 5th Cross-Defendant gave evidence that the payment to him was in consideration for him having provided accommodation and other support to WB and his family for 2 years. The 6th Cross-Defendant gave evidence that his payment was for legal fees pursuant to a written and signed fee agreement. All of them honestly believed that they were entitled to payment, and none of them had been informed by the Plaintiff that they were not entitled to be paid the proceeds of the cheques which he had already issued to them.
  9. There was therefore no evidence of any dishonest intention by any of the Defendants or Cross-Defendants. The evidence showed that the BSP Haus Branch did not receive the letter or other instruction from the Plaintiff to cancel any of the cheques which it had issued. The evidence showed that BSP complied with its legal obligations to pay cheques lawfully presented to it. The evidence showed that BSP acted in accordance with the express authority of the Plaintiff in authorizing payment of the cheques, after verifying the authority with WB, Thomas Gamu and the other payees. The BSP employees gave evidence in a credible manner, and their evidence was supported by the contemporaneous documents.
  10. Furthermore, even if the Plaintiff had delivered the letter of 12/12/2016 to the BSP Haus Branch (which he admitted he did not), the evidence was sufficient to show that this instruction was later countermanded on 16/12/2016 by WB when he appeared in person, signed the back of each of the cheques, and confirmed to BSP that the cheques should be paid. The Plaintiff submitted that this was not sufficient authority because the account was in a company name. However, if a company account has only a sole signatory, that signatory is all that is required to authorize a payment.

Conclusions


  1. The Plaintiff made numerous surmises and allegations in his submissions, which were completely unsupported by either the pleadings or the evidence. For instance:
    1. In relation to the Bank Statements, the Plaintiff submitted that the entry of “CNTR” with information showing that WB made withdrawals on 16/12/2016, meant “Central Waigani”, and that by contrast the Branch names and other information of other persons who made withdrawals, were not given, and that this showed a conspiracy. In fact, “CNTR” meant “Counter”, and it showed that WB had attended at the counter and made withdrawals on 16/12/2016. As WB was the sole signatory on the account, the names of any other persons making withdrawals would not be expected to be shown.
    2. The Plaintiff submitted that payment of the cheque of K2 million to Pambai Holdings Ltd was suspicious, because it wasn’t made before the other payments were made. However, it is obvious that the Bank can only pay cheques when they are presented, and the Pambai cheque was only presented on 21/12, 5 days after the other cheques on 16/12/2016.
    1. The Plaintiff complained that the Bank had not produced security footage from its CCTV cameras, presumably from each of its Branches. However, the Plaintiff’s allegation that WB did not attend the Bank on 16/12/2016 was not made in its lawyers’ letter of 28/12/2016, or in the writ, amended writ of summons or Reply. It appears to have been first made in the Statement of Agreed and Disputed Facts filed on 19 July 2018, and so this would have been the first time that WB’s attendance at the Bank was raised as an issue and became relevant to the proceedings. The Plaintiff did not request Discovery or issue a summons for Production of any CCTV footage, even if it was still available after 2 years. No adverse inference can be drawn against BSP for not providing it, in circumstances where it was not known at the time that WB’s personal attendance was an issue, and where no request was made to produce it.
    1. The Plaintiff repeatedly said that if WB had received loans from TG or agreed to purchase shares in the 2nd Defendant or had legal services with the 6th Cross-Defendant, there should be evidence. In fact, apart from the affidavit and oral evidence of TG and Edward Wamp, there was a written Memorandum of Agreement between the Plaintiff and 2nd Defendant signed by WB on 2/11/2016, confirming the loans of K710,000, a further payment of K150,000, and the purchase of shares in the 2nd Defendant for K300,000, totalling K1.16 million, and a written Professional Services Agreement between the Plaintiff and 6th Cross-Defendant signed by WB on 9/12/2016 confirming payment of K230,000 for fees. The Plaintiff made no attempt to challenge these documents.
  2. Where fraud is alleged in civil litigation, the onus of establishing fraud lies with the person making the allegation, and the standard is proof on the balance of probabilities. The strength of the evidence necessary to establish a fact on the balance of probabilities may vary according to what it is sought to prove, and so may be more than the mere balance of probabilities. When the allegations of fraud are serious, the standard of proof may be commensurate with the standard in criminal proceedings, namely, proof beyond reasonable doubt (see Paga No. 36 Ltd v Joseph Ealedona & Ors (2018) PGSC 1671).
  3. An allegation of fraud against a Bank is a serious allegation, as it attacks the very basis of trust and honesty on which a Bank carries on business. While not necessarily reaching the standard of beyond reasonable doubt, the evidence necessary to establish fraud in this case should be something stronger than on the mere balance of probabilities.
  4. Under the Bills of Exchange Act, when cheques are presented, they are payable on demand. Every party whose signature is on the cheque is prima facie deemed to be a party to the cheque for value, and every holder of the cheque is prima facie deemed to be a holder in due course, ie; he took the cheque in good faith and for value.
  5. The onus was therefore on the Plaintiff to produce evidence to rebut these prima facie presumptions. The Plaintiff did not provide any such evidence. WB admitted that his signature was on the cheques and produced no evidence to rebut the Defendants’ evidence that they took the cheques in good faith and for value.
  6. The sole basis of the Plaintiff’s allegations against the Defendants, was that BSP did not comply with the dishonour letter. The Plaintiff did not deny that he had not delivered the letter to the branch where his account was domiciled, as instructed by BSP. He merely submitted that this was not a reasonable requirement. However, it could not be said to be an unreasonable requirement, as it was not difficult or onerous, and in any event it was a requirement which was made known to the Plaintiff, and with which he did not comply, and gave no reason for not complying. There was no evidence that the requirement was in breach of any contract between the Plaintiff and BSP.
  7. Furthermore, even if the Plaintiff had complied and delivered the letter to the domiciled branch before 16 December, the Plaintiff has not shown that it would have been fraudulent or negligent for BSP to proceed on the basis that the dishonour letter was countermanded by the later instructions to honour the cheques. The preponderance of the evidence was that WB attended at BSP on 16 December, and specifically authorized BSP to pay the cheques. WB was the sole signatory on the bank account, and when he attended, he gave verbal authorization to pay the cheques, and also gave written authorization by signing on the back of the cheques. Authority from the sole signatory was sufficient to constitute a valid authority to BSP to pay the cheques.

Findings


  1. There was no evidence of any dishonest intention by the 2nd Defendant or Cross-Defendants in presenting the cheques, or of any dishonest intention by BSP in paying the cheques. There was no evidence of any intention by the 2nd Defendant or Cross-Defendants to present the cheques knowing that they had no right to them, or of any intention by BSP to process the cheques knowing that they had no right to do so.
  2. The Plaintiff has failed to establish, even on the balance of probabilities that either the 1st or 2nd Defendant acted fraudulently.
  3. The Plaintiff has failed to produce evidence of any negligence by BSP in following its procedures or processing cheques.
  4. The Plaintiff has failed to establish that BSP acted in breach of any instruction to dishonor the cheques and has therefore failed to establish any breach of a contract by the 1st Defendant.
  5. For these reasons, the Plaintiff’s claim is dismissed.
  6. As there is no liability in the 1st Defendant, the cross-claims against the Cross-Defendants, are all dismissed.
  7. If the Plaintiff had not alleged that the 1st Defendant had fraudulently made payments to the Cross-Defendants, it would not have been necessary for the 1st Defendant to issue cross-claims against them. The Plaintiff is therefore to pay the costs of the 1st and 2nd Defendants, and the Cross-Defendants.

__________________________________________________________________
Morgens Lawyers: Lawyer for the Plaintiff
BSP Legal Division: Lawyer for the First Defendant
Guardian Legal Services: Lawyer for the Second Defendant
In person: Lawyer for the Fourth Defendant
Paiya Lawyers: Lawyer for the Sixth Defendant

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