N9353

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 119 OF 2021

ELEANA TJANDRANEGARA & ELEANA TJANDRANEGARA trading as RIGANA CAFE
First Plaintiff

AND:
CENTRAL LAND LIMITED
Second Plaintiff

AND:
DAS DEVELOPMENT LIMITED
Third Plaintiff

AND:
BSP FINANCIAL GROUP LIMITED
Defendant

Waigani:  Kandakasi DCJ,
2021:	08th September, 08 and 13th December

BANKING LAW – banker-customer relationship – nature of – contractual – rights of contracting parties – both banker and customer have equal right to terminate without notice but banker with added obligation to give reasonable notice – attempt to impose additional term for bank to hear and give reasons to the customer before termination – not properly made out in fact and in law – claim rejected.

CONSTITUTIONAL LAW – claim of constitutional right in banker-customer relationship -right of equality or right against discrimination - freedom from harsh and oppressive treatment – enforcement of – must be based on facts pleaded and proven by evidence and supported by law – lack of – no rights warranting protection or enforcement established for the purposes of Constitution sections 41 (1) (2) and (3), 55 and 59  - undisputed fact – contractual relationship – rights available under contract – both parties have equal rights to terminate with additional requirement for bank to give reasonable notice – no breach of constitutional rights.

WORDS & PHRASES – exceptio doli generalis  (exceptio - exception, doli - trickery or deception, generalis - general or generic) or otherwise known as the exceptio doli which is an exception whereby a defendant can raise the defence that the plaintiff has not acted in good faith - “lex commissoria” – sometimes known as the sunset or forfeiture or cancellation clause in a contract, which expressly or tacitly gives a party the right to terminate a contract for good cause, bad cause or no cause at all – “pacta sunt servanda” contractual obligations must be honoured.

Facts

The plaintiffs who are serious participants in the country’s economy with millions of Kinas worth of investments and undertakings, have had a banker-customer relationship with the defendant and have had operating bank accounts with the defendant. The plaintiff used their respective bank accounts for their respective personal and business financial transactions.  In May 2021 the defendant, by written letters to each of the plaintiffs, gave 30 days’ notice of its intention to terminate its relationship with each of them and have their accounts closed. The plaintiffs asked the defendant to give them reasons for its decision, but the defendant declined to provide any reason for its decision.  The plaintiffs responded with the filing of this proceeding and secured an interim restraining order against the bank.  In support of their application, the plaintiffs sought to invoke the provisions of Sections 41(1), (2) and (3), 55(1) and 59 of the Constitution, claiming the defendant’s action was discriminatory, harsh, and oppressive and was arrived at without first hearing the plaintiffs and giving reasons for the decision.  Consequently, they claimed the decision was unlawful and null and void. Further they argued that if there is a lack in the law this Court must develop a rule of the underlying law to supply the gap in the law pursuant to sch. 2.3 of the Constitution.   In its defence the defendant argued the only obligation it has according to law as a banker is to give reasonable notice before closing the plaintiffs accounts, which it did.  No law requires bankers to hear a customer first before arriving at a decision to terminate and give reasons for its decision. Contract law governs the relationship between the parties and not any of the constitutional provisions. Finally, the defendant argued, the plaintiffs failed to plead and adduce appropriate evidence establishing their claims. 

Held: 

1.	At common law as adopted under sch.2.2 of the Constitution, the relationship between a banker and customer is contractual and hence the principles of contract law apply. This principle applies without the need for any specific adoption and application by the Supreme Court. The Court is duty bound to apply the provisions of Sch. 2.2 and adopt and apply the relevant common law principles of law on point as pronounced by the authoritative decisions of the English courts prior to PNG’s independence, unless a case is clearly made out under s 7(4) and (5) and s 9 of the Underlying Law Act 2000 (ULA) for a departure or until a subsequent court of competent jurisdiction either in England or in PNG deliberately decides for good reason and or a case being made out to depart from the accepted position at law.

2.	Based on the law as it is at present, both a banker and customer have the equal right to terminate their relationship at any time without reason and hearing the other, but the bank has the added obligation to give reasonable notice. 

3.	The provisions of the Constitution providing for the rights and freedoms and in particular the right to be heard cannot be imposed or implied in a private contractual relationship of banker-customer without their expressed agreement or specific legislative authorisation.

4.	A party wanting a Court to come to a decision that a current applicable “underlying law is no longer appropriate to the circumstance of the country” or is inadequate, is required by s 7 (4) and (5) and s 9 of the ULA to plead his case with sufficient clarity and with particulars. Such pleadings must plead in clear and precise terms the:
(1)	current law on point or lack thereof;
(2) 	current circumstances of the country which render an application of a principle of the common law or the underlying law inappropriate and inapplicable;
(3)	harm or mischief the current law or the lack thereof is causing;
(4)	relevant and applicable principles of the:
(a)	National Goals and Directive Principles;
(b)	basic rights;
(c)	analogies from any written and customary law;
(d)	laws of a foreign country relevant to the subject matter of a proceeding,
which the Court must consider in order to formulate a new underlying law principle;
(5)	new principle or law being proposed; and
(6)	proposed new principles benefits, or how it will eliminate the harm or mischief caused by the current law or a lack thereof.

5.	The plaintiffs failed to establish in their pleadings and evidence a case for a finding that the defendant’s action was discriminatory, harsh, or oppressive within the meaning of s. 41 (1) (2) (3), 55 (1) or that the right to be heard under s. 59 was incorporated or needs to be incorporated into the contract between the parties and was breached. The plaintiffs also failed to establish a case for the Court to depart from the adopted common law principles governing the contractual relationship of banker-customer and develop and apply a new underlying law rule requiring banks to first hear a customer and then give reasons for its decision to exit a customer.  Accordingly, the proceeding was dismissed with costs to the defendant.

Cases Cited:
Papua New Guinea Cases

John Kasaipwalova v. The State [1977] PNGLR 257.
Kennedy Amun v. Bank of South Pacific Ltd (2008) Unreported Judgment, WS 1316/2005 Waigani delivered by Davani, J on 21 July 2008.
Pija Grannies Ltd v. Rural Development Bank Ltd (2010) N5829.
Goi v. Bank South Pacific Ltd (2020) N8271. 
Wahgi Savings and Loan Society Ltd. v. Bank of South Pacific Ltd (1980) SC185.
Iambakey Okuk & Anor v. Fallscheer [1980] PNGLR 274.
The State v. Bisket Uranquae Pokia [1980] PNGLR 97.
SCR No 4 of 1980; Re Petition of MT Somare [1981] PNGLR 265.
Joel Luma v. John Kali (2016) N6337.
Teio Raka Ila v. Wilson Kamit (2002) N2291.
Leo Nuia v. The Independent State of Papua New Guinea (2000) N1986.
Tian Chen Limited v. The Tower Limited (N0.2) (2003) N2319.
Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705.
Bluewater International Ltd v. Roy Mumu (2019) SC1798.
Vitus Sukuramu v. New Britain Palm Oil Limited & Ors (2007) N3124.
New Britain Oil Palm Ltd v. Vitus Sukuramu (2008) SC946.
Jimmy Malai v. PNG Teachers Association [1992] PNGLR 568. 
Application by Ila Geno (2014) SC1313.
Tigam Malewo v. Keith Faulkner (2009) SC960.  
William Hagahuno v. Johnson Tuke & Electoral Commission (2020) SC2018.
Delba Biri v. Bill Ninkama [1982] PNGLR 342.
Premdas v. Independent State of PNG [1979] PNGLR 329.
Morobe Provincial Government v. John Kameku (2012) SC1164.
Re the Public Money Management Regularisation Act 2017 (2020) SC1944.
Court in Perryman v. Minister for Foreign Affairs and Trade [1982] PNGLR 339.
Chief Collector of Taxes v. Bougainville Copper Ltd; Bougainville Copper Ltd v. Chief Collector of Taxes (2007) SC853.
Bank of PNG v. Muteng Basa [1992] PNGLR 271.
Morua v. China Harbour Engineering Company (PNG) Ltd (2020) N8188.
SC Reference No. 1 of 1977 [1977] PNGLR 362.
The State v. Painke (No 2) [1977] PNGLR 141.
The State v. Transferees (2015) SC1451.
The State v. Tamate & Ors (2021) SC2131.
Geosite Management Ltd v. Kavo (2020) N8439.
SC Review No 4 of 1990; Application by Wili Kili Goiya [1991] PNGLR 170.
William Powi (Acting Administrator for Southern Highlands Province) v. Southern Highlands Provincial Government (2006) SC844.
Eremas Wartoto v. The State (2015) SC1411.
Louis Medaing v. Ramu Nico Management (MCC) Limited (2011) SC1156.
Boochani v. Independent State of Papua New Guinea (2017) SC1566. 

Overseas Cases Cited:

Foley v. Hill (1848) 2 HLC 28.
Royal Bank of Scotland v. Skinner [1931] SLT 382.
Joachimson v. Swiss Bank Corporation [1921] 3 KB 110.
National Commercial Bank Jamaica Ltd v. Olint Corp Ltd (Jamaica) [2009] UKPC 16.
N v. The Royal Bank of Scotland Plc [2019] EWHC 1770 (Comm) delivered on 8th July 2019, by the English High Court.
Prosperity Ltd v. Lloyds Bank Ltd (1923) 39 TLR  372. 
Bredenkamp v. Standard Bank of South Africa Ltd & Ors [2009] (6) SA 277 (GSJ).
Brendenkamp v. Standard Bank of South Africa Ltd & Ors [2010] (4) SA468 SCA.
Minister for Finance v. Oakbay Investments Pty Ltd & Ors [2017] 4 ALLSA 150 (GP).
Barkhuizen v. Napier (2007) 5 SA 323 (CC).
Bank of Lisbon & South Africa Ltd v De Ornelas (1988) 3 SA 580 (A)).
Wong Kam-ing [1979] 1 All ER 939. 
Hammond’s Case [1941] 3 All ER 318.
Ridge v. Baldwin [1964] AC 40.
Durayappah v. Fernando [1967] 2 AC 337.

Other Sources Cited:

The Encyclopaedia of the Laws of Scotland, Stair Memorial Encyclopaedia, Vol. 2, Banking and Financial Institutions.
Paget’s Law of Banking, Eighth Edition 1972.  
Lexis Nexis, Banking and Finance Law of Australia, at [2-1100].
G A Weaver and C R Craigie, The Law Relating to Banker and Customer in Australia, Thompson Lawbook Co., at [2.9200].
http://www.saflii.org/za/cases/ZASCA/2010/75.html both in word and PDF versions.
The Bank’s Right to Cancel the Contract Between It and Its Customer Unilaterally” by W.G. Schulze of University of South Africa (UNISA) appearing at https://journals.co.za/doi/pdf/10.10520/EJC85389
Jean-Louis Nel, “The Right to Terminate a Banking Relationship Unilaterally”, paper submitted in partial fulfilment of the degree of Master of Laws (Banking), University of Pretoria, South Africa, located at https://repository.up.ac.za/bitstream/handle/2263/69949/Nel_Right_2018.pdf?
Annotated Constitution of Papua New Guinea

Counsel:	

Mr. B. Lomai, for the Plaintiffs
Mr. J. Brooks, for the Defendant

08th and 13th December, 2021

1.	KANDAKASI DCJ:	This claim concerns a decision by the defendant, BSP Financial Group Limited (“BSP”) to close each of the plaintiffs' bank accounts without giving any reason. But before doing so, BSP gave 30 days’ notice communicated to each of the plaintiffs by letters respectively dated 21st May 2021, 27th May 2021, and 28th May 2021.  Failing a negotiated resolution of the problem that created, the plaintiffs came to Court seeking two main reliefs.  These are:

(a)	a declaration that the decision of the bank to close the accounts were discriminatory, harsh oppressive and contrary to Sections 41 (1), (2) and (3), 55 (l) and 59 (1) of the Constitution and is therefore unlawful, null and void and of no legal effect; and 
 
(b)	pursuant to s. 57 (1) and (3) and s. 155 (4) of the Constitution a permanent injunction preventing BSP from closing any of the plaintiffs’ accounts.

Parties Claims and Issues for determination

2.	The plaintiffs claim the actions of BSP was discriminatory, harsh and oppressive and therefore contrary to Sections 41 (1), (2) and (3), 55 (l) and 59 (1) of the Constitution and is therefore unlawful, null and void and of no legal effect.  BSP argues two points. Firstly, the relationship of a bank and its customer is a contractual one in which each party retains the right to terminate the relationship unilaterally. However, the bank must give reasonable notice prior to closing a customer’s account.  Secondly, the facts and the circumstances in this matter do not enliven the constitutional provisions the plaintiffs seek to invoke given the contractual relationship between the parties.

3.	Hence, the issues the Court must resolve are these:

(1)	Was BSP entitled to close each of the plaintiffs’ accounts on 30 days written notice?

(2)	Whether the actions of BSP constituted a constitutional rights breach as alleged which warrants a grant of the relief sought by the plaintiffs?

Relevant Facts

4.	The relevant facts from which this case has come to this Court and the issues that are presented here, are in the various affidavits the parties have filed. The main evidence comes from Eleana Tjandranegara, the first plaintiff and a Geoffrey Emang for BSP.  Eleana Tjandranegara deposes she is the director of both the second and third plaintiffs.  She is a PNG citizen aged 73 living in the country conducting various successful businesses, which includes popular brands or names in Port Moresby like the Super Value Store or SVS as many people refer to it as.  Her companies have bid for major public works projects which include the new Waigani Supreme and National Court Complex, copies of which are annexed to her affidavit.  The picture presentation of the bid for the Court complex for example, looks very impressive and I pause to wonder why that bid was rejected and we got that which is under construction now.  The same can be said of other projects the plaintiffs have bided for.  Currently the plaintiffs have two major projects worth millions of Kinas to build on land they already own. Both these projects have the potential to substantially add to the ongoing development of the nation’s capital city, Port Moresby, impressively if permitted and allowed to proceed without unnecessary politics and corruption coming in their way.  The plaintiffs say they have had all their taxes due from their various businesses paid and have not been convicted of any offence. 

5.	The plaintiffs maintained and operated the following bank accounts under the following account numbers and names:

Account number 	Account name	
1	1012156467	Eleana Tjandrangera (personal)	
2	7016211 893	Central Land Limited	
3	1000036803	Das Development Corporation	
4	7008321502	Eleana Tjandrangera (for Rigana Café)	

6.	Based on their volume and or nature of business, I infer that through these accounts, the plaintiffs transact millions of Kinas. A closing of these accounts will obviously affect the plaintiffs’ business and existence unless they can open accounts with the other banks. 

7.	By letters respectively dated 21st May 2021, 28th May 2021, 28th May 2021, and 27th May 2021 the Bank gave notice without disclosing any reason that it will close each of the above accounts.   Each of the letters were in similar terms save only for the relevant dates of the letters and when the accounts' closure was to take place stated:

“We are writing to advise you that BSP has taken a decision to close your account. We also formally advise that BSP will cease conducting a banking relationship with you and your Group of companies as its customers. 

You are hereby given 30 days from the date of this letter to make alternative banking arrangements. 

On 21 June 2021, the bank will close your Account, banking fees will be collected and the bank cheque for the residual balance in your Account will be made available for collection by you at the Bank’s BSP First - Gordons Commercial Centre.”

8.	The plaintiffs inquired of BSP for its reasons for the decision to close their respective bank accounts. That consisted of a letter from the plaintiffs then lawyers, Messrs Donald & Company Lawyers dated 26th May 2021. That letter amongst others stated: 

“It is acknowledged that at common law banks may close accounts for inactivity, instances of customer actions deemed as specific risks to the bank, including monetary losses and potential fraudulent or illegal activity such as money laundering, drug trafficking and terrorism. It is further acknowledged that banks can also close accounts at their discretion.”

9.	The lawyer’s letter after addressing other matters went on to say:

“We also note from your case reference GE/AML/RETAIL/ETJANDRANEGARA  that the notice may not be a true reflection of the real reasons behind the decision made by the bank and intended action to be taken. It is reasonable to infer that our client’s account has been allegedly deemed by the bank as one having potential risk of money laundering contrary to the law regarding Anti- Terrorism and Money Laundering (AML) and we derive this from the abbreviation AML in case then our client is entitled to be simply notified of the reasons for the decision for actions deemed as potential risk for alleged money laundering. 

As a regulated institution BSP is required to conduct its business in a prudent manner, by virtue of Section 4, Part 2, Schedule 2, Part XI of the Banks and Financial Institutions Act 2000. This includes in our view the duty to provide a copy of the customer deposit agreement to our client in order for her to know the bank’s policy regarding closure of a customer’s account with cause and without case (sic). Our client is also entitled to know the real reasons behind the decision to terminate the banking relationship.”

10.	In response, the bank by letter dated 8th June 2021 maintained its position based at common law, that it is not obliged to give any reason of its decision to close a customer’s account.  It then added:

“Further to the common law position that the bank is not required to provide its reasons for closing a customer’s account, you would be aware that the relationship between a bank and its customer lies essentially in contract. 

As such, that contractual relationship may terminate under the following circumstances: 

(a)	by agreement between the parties; 
(b)	by a unilateral act, such as where the customer or the banker gives notice to terminate;
(c)	by the death of the customer.

As to termination by notice, please note that where it is the banker that gives notice to terminate an account in credit, such notice must be reasonable to enable the customer to make other banking arrangements. 

You have made reference to Section 4 in Schedule 2 of the Banks and Financial Institutions Act 2000, and we say that the reference to prudency extends to prevent risks and maintaining capital resources and adequate liquidity among others. 

You are also aware that the bank is also under an ongoing obligation to conduct ongoing due diligence in respect of all its business relationships under the respective provisions of the Anti-Money Laundering and Counter Terrorism Financing Act 2015.”

11.	On 17th June 2021, the plaintiffs issued this proceeding and sought an interim restraining order restraining BSP proceeding with its action pending a hearing and a determination of the proceeding.   Given that this is the first time a case on a closure of a bank account and therefore a termination of a banker and customer relationship has come to the Court and the need to hear the parties fully and come to a considered decision, I granted the plaintiffs’ application on 24th June 2021 and listed the substantive matter for hearing on 8th September 2021. The hearing proceeded eventually.

12.	I will now turn to a consideration of each of the issues in the order presented.

Issue 1 - 	Was the Bank entitled to close each of the plaintiffs’ accounts on 30 days written notice?

13.	 To answer the question presented in the first issue it is necessary for the Court to inform itself of the relevant principles of law on point and apply them to the facts as presented.   At common law, the House of Lords in the case of Foley v. Hill (1848) 2 HLC 28 settled the law.  Adopting and applying the law in Scotland by Lord Mackay in Royal Bank of Scotland v. Skinner1931 SLT 382 at 384 said:

“After some fluctuation of opinion, it is now well settled that the relationship of customer and banker is neither a relation of principal and agent nor a relation of a fiduciary nature, trust, or the like, but a simple relation - it may be one sided, or it may be two-sided - of creditor - debtor.  The banker is not in the general case, the custodian of money. When money is paid in, despite the popular belief, it is simply consumed by the banker, who gives an obligation of equivalent amount.”

14.	Commenting on the law, the learned authors of The Encyclopaedia of the Laws of Scotland, Stair Memorial Encyclopaedia, Vol. 2, Banking and Financial Institutions at paragraph 1168 say the above statement by Lord MacKay accurately reflects the law under English common law.  They then go on to comment:

“… once money, whether representing the proceeds of a benefit payment or any other source, is credited to a bank account it simply becomes a debt due by the bank to the account holder and it is not necessary to identify the source of the funds…”

15.	This position of the law was adopted and applied by our Supreme Court in its decision in John Kasaipwalova v. The State [1977] PNGLR 257, per Frost CJ. That was in the context of the criminal offence of larceny.  The learned Chief Justice considered amongst others, the question, “what if the money is paid into a bank account, and the account is then drawn on by the person who received the money for his own purpose…” and answered the question in these terms:

“This type of case has been considered in England, R. v. Davenport [1954] 1 W.L.R. 569, in the High Court of Australia in an appeal from the Supreme Court of the Australian Capital Territory, Croton v. The Queen (1967) 117 C.L.R. 326, and in Papua New Guinea in Reg. v. Jamieson [1975] P.N.G.L.R. 216. In the latter case Prentice J., as he then was, in a case of stealing under s. 391 and s. 393, adopted the law as stated in those outside jurisdictions in relation to larceny, that if money is paid into a bank, that money becomes at once the money of the banker, as the relationship between banker and customer is that of debtor and creditor, and all that the customer has is a chose in action, that is the right to recover from the bank the amount standing to his credit.”

16.	However, as represented by the leading decision of the House of Lords in Joachimson v. Swiss Bank Corporation [1921] 3 KB 110 (Joachimson v. SBC) the law has developed to the point of clarity that the relationship that exists between a banker and its customer is contractual and the law of contract applies in terms of determining the respective obligations of a banker and that of its customer. Lord Atkin elaborated at [127] on the obligations in these terms:

“The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch and as such written orders maybe outstanding in the ordinary cause of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except on reasonable notice. The customer on his part undertakes to exercise reasonable care in executing is written orders so as not to mislead the bank or facilitate forgery.”

(Underlining supplied)

17.	In the same case, Warrington LJ stated at [125]:

“There are some points in reference to the relation of banker and customer which seemed to me to indicate that such obligation is part of the contract. If the general rule above mentioned were applicable, the banker would be bound to seek out his customer and pay him, and the customer would be bound at any time and without notice to receive the amount due, but it is well settled that a banker is not at liberty to close account in credit by payment of the credit balance without giving reasonable notice and making provision for outstanding cheques.”
(Underlining supplied)

18.	Since the decision in Joachimson v. SBC it has now become trite law that the relationship between a banker and its customer is contractual.  In our jurisdiction, the National Court has in a few of its decisions by different judges accepted that position at law.  The first of those decisions is Kennedy Amun v. Bank of South Pacific Ltd (2008) Unreported Judgment, WS 1316/2005 Waigani delivered by Davani, J on 21 July 2008 which was referred to by Hartshorn, J in Pija Grannies Ltd v Rural Development Bank Ltd (2010) N5829. Her Honour referred to and reproduced a passage from “Paget’s Law of Banking, Eighth Edition 1972 at p. 69.  The passage reads:

“The relationship of a banker to customer is one of contract, though for long this way of looking at the matter seemed not to have attracted much attention in the courts.  It follows, as in all cases, that a banker must not be negligent in performing his contract, whatever it may be what will amount to negligence must clearly depend on the facts of the particular case….. The relationship consists of a general contract which is basic to all transactions, together with special contracts (such as the contract of borrowing and lending) which arise only as they are brought into being by the express acts or implied intentions of the parties. The General Contract is a simple, indivisible contract (see Atkin LJ in Joachimson v. Swiss Bank Corporation [1921] 3KB 110 at 127) though with many facts; it arises the moment the parties agree to enter into contractual relations with each other and continues until brought to an end by consent or perhaps by revocation by either party; it is a contract which is underwritten and undefined by the parties - in other words it is implied.”

19.	David J., referred to this statement of the law in his decision in Goi v. Bank South Pacific Ltd (2020) N8271.  

20.	Specifically, on termination of the relationship between a banker and its customer, the ordinary position in contract law applies. The relationship may be terminated by mutual agreement of the parties or the unilateral action of one of them or in any of the other ways in which a contractual relationship could be terminated: See Lexis Nexis, Banking and Finance Law of Australia, at [2-1100].  

21.	The only known and accepted legal condition upon which a bank may unilaterally terminate its relationship with a customer is the provisions of “reasonable notice” before terminating in most cases.  The decision in Joachimson v. SBC (supra) is the leading authority on point.  Subsequent decisions as in the case of National Commercial Bank Jamaica Ltd v. Olint Corp Ltd (Jamaica) [2009] UKPC 16, noted in this context that:
 
“The chief issue in this appeal, as formulated by Panton P in the Court of Appeal, is whether a bank, ‘by merely giving reasonable notice’, can lawfully close an account that is not in debit, where there is no evidence of that account being operated unlawfully... Their Lordships have no doubt that in the absence of express contrary agreement or statutory impediment, a contract by a bank to provide banking services to a customer is terminable upon reasonable notice: Paget's Law of Banking 13th ed (2007) p. 153.”

22.	This position of the law has been consistently adopted, restated, and applied in many recent decisions in the common law world.  An example of a case on point is the decision in N v. The Royal Bank of Scotland Plc [2019] EWHC 1770 (Comm) delivered on 8th July 2019, by the English High Court.  In that case, the court made the point that a banker’s right to terminate cannot be subjected to a test of reasonableness.  In so doing, the court rejected a customer’s argument that a banker’s contractual right to terminate was subject to a test of reasonableness.  That decision is consistent with earlier case law on point as represented by the decision in Prosperity Ltd v Lloyds Bank Ltd (1923) 39 TLR  372.  There, a customer sought declarations and an injunction against a bank on the ground that the bank had given insufficient notice of intention to close the customer’s bank account.  The court expressly held that, the period of notice applicable in any case must depend on its own particular facts and the terms of the contract. 

23.	Given the above position of the law, applications seeking to restrain the closing of a customer’s bank account in the main have been unsuccessful. The main reason for this has been that an injunction to restrain the closure of an account would amount to a decree for specific performance of a contract for the provision of personal services and the borrowing of money by the banker: See Prosperity Ltd v Lloyds Bank Ltd (supra) and G A Weaver and C R Craigie, The Law Relating to Banker and Customer in Australia, Thompson Lawbook Co., at [2.9200].

24.	For the plaintiffs, Mr. Lomai submits that, in PNG, there is a duty on this Court and the Supreme Court under s.155 (4) and Sch. 2.2 and Sch. 2.3 of the Constitution, to develop the common law and therefore a clause in a private agreement in a bank-customer relationship can be scrutinised to ensure that it complies with the Constitution. He goes onto submit, this power is conferred on the National and the Supreme Courts by the inherent jurisdiction it has and in appropriate cases both the Supreme Court and the National Court must develop PNG’s own common law. Mr Lomai submits the Court's must consider the interests of justice and consider the applicability or appropriateness of the position at common law to the circumstances PNG. Further, he goes on to suggest that this Court should depart deliberately from the settled position at common law and impose a requirement for banks to exercise their right to termination or exit a customer and give a valid reason.

25.	In support of that submission, Mr. Lomai refers to two South African cases, namely Bredenkamp v. Standard Bank of South Africa Ltd & Ors [2009] (6) SA 277 (GSJ) and Brendenkamp v. Standard Bank of South Africa Ltd & Ors [2010] (4) SA468 (SCA) (Bredenkamp v. SBCAL) and Minister for Finance v. Oakbay Investments Pty Ltd & Ors [2017] 4 ALLSA 150 (GP). Counsel submits:

“both parties accepted that the exercise of the violation that offended constitutional principles could not be permitted. However, when determining whether the termination was fair or not, the Court relied on Barkhuizen v. Napier 2007 (5) SA 323 (CC) and inquired into the Clause and raised two questions:

1.	Is the clause considered reasonable?
2.	If so, will the Clause, if implemented in the circumstances in question, be reasonable?

The first question involves the weighing of two considerations, namely the convictions of the public opinion and the principle that parties should comply with their contractual obligations that has been freely and voluntarily entered into.  The latter is known as “pacta sunt servanda (that is, contractual obligations must be honoured) or in other words, a party is bound by the agreement that party entered into.

The latter principle is an important principle because it gives effect to the constitutional values of freedom and dignity. A party is afforded that self-autonomy to contract to his detriment in accordance with one’s own affairs. This is the underlying principle of freedom and attaches to a person’s dignitas (dignity). It is, however, a trite principle and Sections 41, 55, 57 and 59 of the Constitution that, irrespective of pacta sunt servanda, a person has the right to seek judicial redress where the effect of the Clause may infringe on his or her constitutional values (rights) in certain circumstances.

26.	Then Mr. Lomai goes on to make several more points. These are:

(1)	Even though banks are private business for profit, they are central to a country’s economy. Many businesses and individuals, citizens and foreigners alike rely exclusively on the banking system for their businesses and personal survival. Given that, they serve a public purpose, which is to assist in the growth of a country’s economy. BSP is no exception;

(2)	The relationship is no longer based on friendly terms and amongst equals but one where the banks have enticed customers to become dependent on their products. A termination of the relationship without cause will cause customers to suffer damages; 

(3)	PNG has only three banks and a possible takeover of Westpac Bank by the Kina Bank or one of the three taking over the other will leave only two banks operating in the country.  Given that, the actions of the banks will need to be carefully scrutinised to avoid the public and the economy of the country from being manipulated in a duopoly;

(4)	Banks operate in global economies which requires them to adhere to national and international legislation. Their actions or inactions impact locally and internationally on issues like money laundering and organised crime that transcend domestic boundaries. Hence, they must exercise care when making decisions that will impact a customer both locally and internationally;

(5)	PNG is regarded by many as a gateway to many neighbouring countries like Australia other Pacific Island states and Asian countries like the Philippines, Singapore, China and Japan;

(6)	The banking industry in PNG is regulated by the Central Bank of PNG (BPNG) under Section 4 Part 2 Schedule 2, Part XI of the Banks and Financial Institutions Act 2000, for the purpose of providing an equitable, prudent and efficient banking system for the community to promote economic growth;

(7)	BPNG has the duty to ensure that the public is protected from unfair banking policies in the pursuit of maximising profits or in some cases abuse of their position as the provider of all financial services; 

(8)	Increases in banking services by the banks from the traditional business of accepting deposits and paying on demand by way of withdrawals to credit and debit cards to internet banking has correspondingly increased the duties and responsibilities of banks.  The Courts need to remind themselves that the situation is not the same as it was in the 1800's and 1900's when the common law principles were developed;

(9)	The Constitution protects the rights of the individuals and corporate entities and promotes an equal opportunity for all. With the development that has happened in the banking industry, the banks' right to terminate under the common law without reason will violate the public rights and interests which are protected by the Constitution;

(10)	Given the above, the banks must give their customers valid reason to close or terminate their account. If there is no valid reason, the banks should discuss the matter with the customers and compensate them for terminating their relationship after having solicited them from the customers. This is because the customers have come to have an expectation of continuity of the banks’ services. Hence, the argument that both a banker and a customer can terminate their relationship at any time without prior notice and without reason only valid for a customer and not a banker.  This is because a banker’s right to terminate in the same way ceased to be valid from the moment the banks increased their range of services or products on offer to their customers and the customers became dependent on the banks;

(11)	BSP cannot operate in isolation and impose terms on clients to create a situation of take it or leave it; and 

(12)	Applying the above, learned counsel for the plaintiffs submits that BSP violated the rights of his provided for under ss. 41(1), (2), (3), 55 (1) and 59 (1) of the Constitution.

Consideration

27.	With respect, I find there are number of serious flaws in the submissions of the plaintiffs learned counsel and hence the submissions of the plaintiffs. Firstly, learned counsel for the plaintiffs, Mr Lomai did not assist the court with any submissions as to the relevant facts in Bredenkamp v. SBCAL.  Similarly, Mr. Lomai did not assist with any submissions on the specific findings and holdings of the court in that case.  But on my own research I note that, the relevant facts of the case were not in dispute from a reading of the case itself and has been summarised in a case note headed “The Bank’s Right to Cancel the Contract Between It and Its Customer Unilaterally” by W.G. Schulze of University of South Africa (UNISA) and a paper by Jean-Louis Nel headed, “The Right to Terminate a Banking Relationship Unilaterally”.  

28.	The facts as summarised by the two sources mentioned above are these. Bredenkamp was a businessman of substantial means. He and the other three applicants, companies and trusts under his control, held bank accounts of various kinds at the Bank. All these accounts were current accounts. On 25 November 2008 the American Department of Treasury’s Office of Foreign Assets Control (“OFAC”) listed Bredenkamp and the other applicants as “specially designated nationals” (“SFNs”). That meant that they became subject to the sanctions imposed and enforced by OFAC. The following day, the Bank became aware of Bredenkamp’s listing and that OFAC suspected Bredenkamp of “being involved in illicit business activities including tobacco trading, arms trafficking, oil distribution, diamond extraction and of being a confidant and financial backer of Zimbabwe’s Robert Mugabe”. During December 2008, the Bank decided to terminate the relationship between it and Bredenkamp and to close the accounts which Bredenkamp had with it. There were three reasons for the Bank deciding to close Bredenkamp’s accounts.  The first was the mere fact of the OFAC designation of Bredenkamp and the other three applicants.  Secondly, the risk of the Bank’s reputation being negatively affected should it continue to have Bredenkamp as a customer.  Thirdly, there were other business risks for the Bank should it carry on granting banking facilities to Bredenkamp and the business entities under his control because of his listing as a SFN.  The Bank argued that the contract between itself and Bredenkamp contained lex commissoria” (“forfeiture clause” or “cancellation clause” or sometimes called in contract law a sunset clause, which expressly or tacitly gave it the right to terminate the contract for good cause, bad cause or no cause at all. These facts were undisputed and were common to all three cases. 

29.	Pending a hearing and determination of the substantive matter, Bredenkamp applied for an interim injunction to prevent the Bank from closing his bank accounts and so it could retain the status quo.  The clear issue before the court was whether the Bank had the right to terminate the bank-customer relationship unilaterally. In the interim application Jabjhay J held that the Bank’s decision was not reasonable and granted the relief sought. The Judge also held that the Bank’s decision was based on perceptions regarding the latter’s business activities and connections with Mugabe and not on facts. Bredenkamp pointed out that he was not a “Mugabe crony and had in fact been imprisoned by the Mugabe regime”.  Bredenkamp argued, he and the other applicants “should never have been placed on any sanctions list”.  At the time of their application, they were in the process of having their names removed from the sanctions list. The court considered Bredenkamp’s prima facie right to an injunction in the light of recent constitutional law developments in South Africa, and especially the court’s duty to develop the common law through the constitution.  The court then held contractual relations that are regulated by the common law are not immune from constitutional control and scrutiny. 

30.	Jabjhay J relied on the decision of the Constitutional Court in Barkhuizen v. Napier (2007 5 SA 323 (CC).   That case dealt with a potentially unfair term in an insurance contract, as authority for the proposition that a party to a contract cannot, first, impose a term on another party if it would, if applied, operate unfairly and cannot, secondly, enforce a term in a manner that is unfair.  The Judge applied guidelines as to the role of public policy and constitutional control in scrutinizing the fairness or otherwise of a contractual relationship, pointed out, South African banks operate within the framework of an oligopoly in which four large banks dominate the market for banking services. The court further held that, this power is exploited by banks to impose standard-form contracts on their customers.  The court went on to hold such powers would be exercised oppressively and there was undeniably an element of oppression when a bank decided to terminate the contract without good cause. The court reasoned that the Bank had a range of alternative options available to it before resorting to the drastic step of closing Bredenkamp’s accounts. The alternatives included a request for an undertaking by Bredenkamp to refrain from dealing with nationals from certain foreign jurisdictions; effective reporting on transactions by Bredenkamp that might be deemed controversial; and special monitoring of the accounts pending the final determination of the present dispute. Hence, the court concluded, the Bank’s decision to close all Bredenkamp’s accounts summarily was unreasonable; it operated unfairly towards Bredenkamp; and was not in line with the constitutional guidelines laid down in Barkhuizen v. Napier. 

31.	Schulze noted and Nel accepted that Jabjhay J’s reasoning in the interim application was controversial and not convincing. That became clearer from the decision in the substantive application and the decision on appeal. Jabjhay J’s decision caused flutter in the banking sector.  In the main application Lamont J rejected Jabjhay J’s reasoning and the court affirmed a bank’s right to terminate the relationship between it and its customer unilaterally, provided that certain requirements are met. In coming to that decision, the court examined the constitutionality of the lex commissoria present in the contract between the parties. The court found it was common cause that the lex commissoria did not offend any constitutional values. The issue to be decided was whether in the circumstances of the case, the way the Bank implemented the lex commissoria to cancel the contract, offended any constitutional values.  The court adopted and applied the decision in Barkhuizen v. Napier to determine the fairness of enforcing contractual rights in the light of the applicable constitutional values as laid down in that case.  Those values included firstly, if a contractual clause is reasonable in a general sense, it must also be established whether the enforcement of the clause is reasonable in the light of the circumstances in each case.  Secondly, public policy dictates that parties should comply with their contractual obligations, but must also incorporate notions of fairness, justice, and reasonableness. 

32.	Applying those principles to the specific circumstances presented in the Bredenkamp case, the court held that the parties contracted on an equal footing, even though the contract was based and concluded on the bank’s standard form contract. The court emphasised that Mr. Bredenkamp, as well as the individual business entities he represented, was a formidable persona and customer of the Bank. Bredenkamp was an international commodities trader who represented a multi-national entity of great wealth. Bredenkamp himself was reputed to have a USD 350 million fortune and was reported to be the seventy-sixth richest man in England in 1996. At the same time, there was no evidence before the court that a bank is generally able to impose terms on prospective or existing customers. The court thus held, in the absence of evidence to the contrary, a bank cannot generally be expected to be able to impose terms on its customers in addition to the standard terms.  The court concluded its reasoning on this point and held that there was no evidence that Bredenkamp and his companies and trusts were unable to obtain a bank account with any other bank, the Bank had decided to terminate the contractual relationship between them.  

33.	As far as Bredenkamp’s integrity was concerned, the court held that a bank is entitled to rely on the integrity of its customers to conduct their business legally. A bank also has certain obligations and regulations to comply with in terms of national and international legislation. Failure to comply with the relevant and applicable legislative regulations may have serious legal consequences for a bank. The court further emphasized the multi-faceted duties which rest on a bank when dealing with a customer, including its common-law duties in terms of the banker-customer relationship. In this regard it held that:

“[t]he banker/customer relationship should not be seen in isolation in relation only to its impact upon persons within the country in which the bank operates. This is particularly so when the customer is an international entity. The bank inevitably, if it deals with an international entity, will be dealing with other international entities at the request of the customer. The bank in its dealings in the international world on behalf of the customer becomes obliged, in my view, to have regard to the impact of its actions in the international world. The need for dishonest people to set up international structures, to make use of a variety of banks internationally for the process of laundering monies and implementing fraudulent conduct is widely known. Steps are taken on an international basis to limit the activities of such persons. In my view, even if the foreign legislation does not have the effect of law nationally, to the extent that it has an impact on the relationship between the bank and external bodies, the bank is entitled to have regard thereto. The bank is an entity which on behalf of all of its customers, performs acts for them throughout the world. These acts may be compromised if other persons in other jurisdictions take steps against them.”

34.	Eventually, the court concluded, the OFAC listing entitled the Bank to reassess Bredenkamp’s account. It was entitled to act reasonably on receiving such information, including terminating Bredenkamp’s account. Bredenkamp appealed to the Supreme Court of Appeal. The appellate court dismissed the appeal. Harms DP with Cloete, Ponnan and Cachalia JJA and Saldulker AJA concurring held as follows: 

(1)	Bredenkamp’s acceptance of the provisions of the contract which entitled the Bank to terminate the contract on reasonable notice as fair and reasonable, and therefore not in conflict of any constitutional values, limited Bredenkamp’s complaint to the exercise of the admittedly “fair” and valid lex commissoria.

(2)	It was clear, it was not Bredenkamp’s case that the Bank’s right to cancel the contract implicated any constitutional principle, compromised constitutional democracy, or his dignity, and freedom or right to equality. The present case was about fairness as an overarching principle, and nothing more.

(3)	The court rejected the argument that recent case law had revived the exceptio doli generalis a doctrine that was rejected more than two decades ago in Bank of Lisbon & South Africa Ltd v De Ornelas (1988 3 SA 580 (A)) as an anachronism which did not form part of South African law. Notwithstanding a bulky body of academic writings in which the decision in the De Ornelas case was lamented, the court in Bredenkamp was at pains to emphasize that the exceptio doli generalis was simply a convenient label for a number of rules, but that it had no specific content. 

(4)	 Bredenkamp’s argument that the decision in the Barkhuizen case had to be interpreted to entail that all contractual provisions have to be “reasonable”, was rejected. 

(5)	The Barkhuizen case is no authority for the proposition that fairness is a core value of the Bill of Rights and that it is therefore a broad requirement of our law generally. Such an interpretation of the Barkhuizen case would lead to all types of absurdities and impracticalities. For example, a debtor would be able to argue that it would be unfair of a creditor to call up a loan on the due date because the debtor is unable to repay the loan and that enforcement could lead to the latter’s sequestration. 

(6)	Further, the Barkhuizen case is no authority for the proposition that the enforcement of a valid contractual term must be fair and reasonable even if no public-policy consideration found in the Constitution or elsewhere was implicated. 

(7)	The principle of pacta sunt servanda (i.e., contractual obligations must be honoured) was held to be a core principle of our law of contract, only limited by principles of public policy. Hence, fairness was not a freestanding requirement of a contractual right.  Strictly speaking, it was unnecessary for the court to consider the facts of the Bredenkamp case relating to the requirement of fairness. It nevertheless held, by way of a list of obiter dicta, that the Bank had acted fairly in terminating its relationship with Bredenkamp. 

(8)	The court considered the question whether the Bank had good cause to close Bredenkamp’s accounts. The court pointed out that the agreement between the Bank and Bredenkamp contained a valid lex commissoria that gave the Bank the right to cancel the contract.  The Bank perceived that Bredenkamp’s listing created reputational and business risks for it. It applied its mind to the matter and exercised its right of termination in terms of the lex commissoria in a bona fide manner. It gave Bredenkamp a reasonable time to take his business elsewhere. The termination of the agreement did not offend any identifiable constitutional value and was not contrary to any other public policy consideration. 

(9)	Finally, the court pointed out that the Bank did not publicize the closure of Bredenkamp’s accounts or the reasons for its decision to close the accounts. The appeal was accordingly dismissed with costs. Application for leave to appeal to the Constitutional Court was dismissed.

35.	A careful consideration of the decision in the Bredenkamp case clearly shows, the decisions of the primary trial judgment hearing and determining the main case and that of the appellate court do not support the plaintiffs’ submissions on all fronts and hence their case. It is however clear that most of the plaintiff’s submissions appear to be grounded or inspired by the decision of Jabjhay J granting Bredenkramp’s interim injunctions. That decision was the subject of adverse commentary and ultimate quashing and or setting aside by the main trial court and appellate court.  

36.	Secondly, I accept Mr Lomai’s submissions, that both this Court and the Supreme Court, have a duty to develop the common law or PNG’s underlying law. The starting point, of course, s. 155 (4), Sch. 2.2 and 2.3 Constitution. In this regard, the provisions of Sch. 2.2(1) and (3) are instructive. These provisions read:

(1)	Subject to this Part, the principles and rules that formed, immediately before Independence Day, the principles and rules of common law and equity in England are adopted, and shall be applied and enforced, as part of the underlying law, except if, and to the extent that—
(a)	they are inconsistent with a Constitutional Law or a statute; or
(b)	they are inapplicable or inappropriate to the circumstances of the country from time to time; or
(c)	in their application to any particular matter they are inconsistent with custom as adopted by Part 1.
…
(3)	The principles and rules of common law and equity are adopted as provided by Subsections (1) and (2) notwithstanding any revision of them by any statute of England that does not apply in the country by virtue of Section Sch.2.6 (adoption of pre-Independence laws).
(Underlining supplied)

37.	Kapi DCJ (as he then was) held in Wahgi Savings and Loan Society Ltd. v. Bank of South Pacific Ltd (1980) SC185, Iambakey Okuk and Anor v. Fallscheer [1980] PNGLR 274 and The State v. Bisket Uranquae Pokia [1980] PNGLR 97
held that the provisions of Sch. 2.2 froze the application of English common law in PNG upon the country gaining independence to that which was applicable in England as of 15 September 1976.  That was with one exception, namely any correction of the law by a subsequent decision as did the decision in Wong Kam-ing [1979] 1 All ER 939. That decision declared a certain principle of common law decided in 1941, as in the case of Hammond’s Case [1941] 3 All ER 318, was wrong.

38.	Hence, consistent with the established approach, the ascertainment of the relevant common law must start with the question, what was the common law as at immediately before Independence on 16th September 1975?.  For the purpose of the present case, the answer is the decision in Joachimson v. SBC (supra).  As already noted, that decision remains valid and is part of the common law of England and PNG under Sch. 2.2 of the Constitution. 

39.	Scheduled 2.3 of the Constitution comes into operation only when there is no applicable law. This is apparent from subsection 1 of that schedule which reads:

“(1)	If in any particular matter before a court there appears to be no rule of law that is applicable and appropriate to the circumstances of the country, it is the duty of the National Judicial System, and in particular of the Supreme Court and the National Court, to formulate an appropriate rule as part of the underlying law ...”
(Underlining supplied)

40.	In my view, by reason of Sch. 2.2 of the Constitution, we do not have a vacuum in terms of the relevant and applicable principle of law.  The relevant and applicable law is as represented by the decision in Joachimson v. SBC (supra) and the line of cases that have adopted and applied it.  The list of cases includes the National Court’s decisions in Kennedy Amun v. Bank of South Pacific Ltd (supra) and Pija Grannies Ltd v. Rural Development Bank Ltd (supra).  Counsel for the plaintiffs, in my respectful view, has failed to demonstrate as to why the development of the law based on Joachimson v. SBC (supra), the earlier cases and those that followed it are wrong, or that they have been corrected by a subsequent decision of a competent court.  Hence, my view that there is no vacuum for the purposes of bringing into operation the provisions of Sch. 2.3 of the Constitution. If, however, there was a vacuum and it was necessary for this Court to venture out and look for persuasive authorities outside England and in that respect have regard to the decision in Bredenkamp, that decision as already noted, is of no help to the plaintiffs.  It instead, affirms the position at common law.  Arguably, the only exception there might be is the fact that the trial court granted an interim injunction and made an inquiry into the reasonableness of the bank’s decision. Later however, both the trial court hearing and determining the substantive matter, and the appellate court on appeal, corrected the trial court’s interlocutory decision and rendered that decision null and void.

41.	Thirdly, I find with respect each of the additional points made by Mr. Lomai as set out at paragraph 20 above are also flawed.  The reasons for this are in the commentary that follows hereunder for each of the points.

Banks serving a public purpose – Point (1)	

42.	 In respect of the first additional point, I noted there can be no dispute and indeed there is no dispute regarding the suggestion that banks are serving a public purpose by contributing to the economy of the country through a provision of their banking services, which is critical for any economy. The three banks, Bank South Pacific, Kina Bank and Westpac Bank are privately owned.  They exist and function as businesses for profit and not necessarily to render a “public service” as the term applies in the public sector. The banks play a critical role and part in the flow of money in the country’s economy. Without the banks, a country’s economy would suffer seriously.  All personal and corporate activities and transactions would come to a stop which would spell disaster for a country, not only economically, but its existence as a country.  This does not however mean that the banks are discharging a “public purpose” in the sense that phrase applies to the State or a public authority who owe a duty to the public or the country at large.  The banks exist to conduct business on their terms or that which may be agreed to between them and their respective contracting clients or customers subject to the relevant public policy framework and guidelines set by the executive and legislative arms of government through the relevant and applicable legislation.

Lack of equality and increased banking services – Points (2), (8) and (11)

43.	In respect of the plaintiffs’ additional points (2), (8) and (11), I find these points do not support and or advance the plaintiffs case in any way.  I accept that with the phenomenal increase in technology especially computers and internet, there has been a corresponding increase in the availability of goods and services at unprecedented levels in some instances. Banks have taken advantage of the advancement in technology and have increased their range of products that are on offer to their customers from the traditional business of accepting deposits and paying on demand by way of withdrawals to credit and debit cards, to internet banking to cross border money transfers. With that level of increased products on offer to customers, bankers have increased duties and responsibilities.  I therefore accept the submission that, the present economic and commercial realties are not the same as they were in the 1800's and 1900's when the common law principles were developed.  However, some if not almost all of the common law principles developed and applied from the time of their inception have withstood the test of time in most areas of the law and more so in the case of banking law.  If, however, there has been any change, the onus was on the plaintiffs to draw those to the attention of the Court.  That they did not do. I take it therefore, that there has been no change to the principles of law that govern the contractual relationship between a banker and customer, and the respective rights and duties of the parties which are grounded in the common law as accepted into PNG under Sch.2.2 of the Constitution.

44.	On the question of the banker customer relationship not being one between equals, I note, the plaintiffs failed to produce any evidence demonstrating their position compared to that of BSP.  Instead, the affidavits filed by the plaintiffs demonstrate they are persons of some means and are not just simple people with nothing much in their bank accounts.  In any case, I accept that, except for large corporate or individual customers who might have substantial financial, properties and other assets to match if not, come close to those of banks, most of the banks’ customers are ordinary people or small businesses who may not see annual turn overs anywhere near K1 million, at least in PNG.  Usually, the terms and conditions on which banks may choose to accept a person as a customer are standard and are fixed.  Generally, they do not discriminate against the different classes of customers in terms of the fundamental terms of the contract that exists between banks and their customers. However, in terms of rendering their services, certain categories or types of customers might be accorded certain privileges such as personalised customer services.  Provision of such level of service is not exclusive to the banking sector; airlines, hoteliers, and other service providers do the same with their respective loyalty and other programs.

45.	Turning to the issue of standard term contracts, I note that, banks are not the only business who operate according to standard contracts which have standard terms and conditions. Other industry or sectors, like airlines, hotels, and other businesses also use such contracts.  They have standard terms and conditions for the kinds of service they offer to the public.  Even in some public sectors, such as employment in the public service, there are standard term contracts of employment.  In these kinds of contracts, there is always the option for a prospective employee, passenger, guest, or a customer not to enter into a contractual relationship if they do not accept the standard terms.  There is usually no compulsion involved. Any departure from the standard terms or implied terms is usually by mutual and specific agreement of the parties. In the case of a banker and customer, whilst they may be miles apart in terms of their respective financial positions, they have the equal right to terminate their relationship anytime without notice and without giving reasons.  The same goes for employment in the private sector.  Unless otherwise expressly provided for in their contract, either party can terminate without prior notice, warning or hearing the other.  The Courts duty is to give meaning and effect to the parties’ agreements and not to rewrite them.  In Tian Chen Limited v. The Tower Limited (N0.2) (2003) N2319 after reviewing the relevant cases on point and stated at pages 20-21:

“It is clear from these authorities that, it is the duty of the Court to uphold the agreement of the parties regardless of whatever difficulties there might be in the construction of their contract. In the exercise of that duty, the Courts must endeavour to uphold the agreement of the parties, particularly in commercial arrangements. This is because the Courts are not there to destroy the agreement of parties but to uphold them. This should readily be the case where the parties have not only agreed but have gone further into implementing their agreement resulting in expenses being incurred by either or both of the parties. In so doing, the Courts can and have ignored words or clause that are meaningless or superfluous (Nicolene v. Simmonds (1953) 1 QB 543) and supply terms or words as appear reasonable and necessary in the circumstances to give effect to the parties agreement”.

46.	The Supreme Court in Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705, effectively endorsed this discussion and statement of the law and applied them to the case before it in favour of a contract despite being met with some uncertainties. Subsequent decisions of the Supreme Court like the one in Bluewater International Ltd v. Roy Mumu (2019) SC1798, have done the same.

 47.	Despite that clear position at law, the National Court in Vitus Sukuramu v. New Britain Palm Oil Limited & Ors (2007) N3124 (Sukuramu v. NBPOL), decided to impose an additional requirement to give an employee the right to be heard first in a private employment setting.  That relief was not pleaded, and parties were not heard on the Court’s intention to introduce the term or conditions. On appeal, the Supreme Court in New Britain Oil Palm Ltd v. Vitus Sukuramu (2008) SC946 (NBPOL v. Sakuramu), upheld the appeal against such an addition, for reasons other than that which is discussed here.  I will return to those reasons in the context of commenting upon point (9).

Manipulation by the duopoly and the role of BPNG – Points (3), (6) and (7)

48.	I make four points in response to the plaintiffs’ points (3), (6) and (7).  Firstly, it is undisputed that we have three banks operating in the country.  There is no evidence before this Court of the speculated takeover by Kina Bank of Westpac Bank having occurred.  Secondly, there is no evidence of any manipulation actual or inferentially either by BSP or the other two commercial banks and the other finance companies we have in the country.  Hence, without the evidence, the plaintiffs’ submissions are only speculation. Thirdly, the very issue of duopoly or triopoly raised by the plaintiffs here was raised in the Bredenkamp case.  Despite citing it, the plaintiffs have not assisted with any submissions as to how the court in that case dealt with the issue or the point and how and why this court should adopt and apply it in the present case.  From my own research, I note the court in that case was dealing with a case of only 6 commercial banks operating in South Africa.  As already noted, the case does not support the plaintiffs’ case here because both the main trial judge and the appellate court effectively reaffirmed the common law position that the terms and conditions governing a banker customer relationship are contractual. As such, it is to the contract one must turn for a determination of the parties’ respective rights, duties and or obligations.  Fourthly, there are authorities other than the courts that are primarily charged by society with the power, duty and or responsibility to address and provide against the risk of the duopoly or triopoly manipulating the banking industry and hence the economy of the country. Those authorities are the executive arm of government to come up with appropriate policies, then through the legislative arm of government, enact the policies into law to create the necessary investment climate and encourage and support more banks to set up in the country.  In the meantime, it is these two arms of government that have the duty and power or authority to provide for and guard against the risk of any manipulation by the triopoly.  

49.	Additionally, the State through the executive and legislative arms of government has enacted the Banks and Financial Institutions Act 2000 (BFIA). I accept the plaintiffs’ submission that the banking industry in PNG is regulated by the BPNG under the said Act. That regulation is for the primary function of promoting “general stability and effective working of the financial system in Papua New Guinea.”  Included expressly in that function or duty of BPNG is to, protect the banks depositors or potential depositors.  There is no allegation here that BSP breached its duties and responsibilities as a bank under the BFIA which BPNG failed to prevent from occurring in a due discharge of BPNG’s duties and responsibilities under the BFIA. I assume the standard terms and conditions governing BSP’s contractual relationship with its customers have been in existence from the day BSP first set up as a bank in PNG. If there has been a change, it was incumbent upon the plaintiffs to demonstrate that by appropriate evidence. This they failed to do.  There claims must therefore correspondingly fail.

Banks operating in a global economy – Point (4)

50.	This takes us to Mr. Lomai’s point number 9. I accept that the world has now become a global village.  This has been made possible by the many advancements in technology making travel, business, communication, banking, and other aspects of life much easier.  Banks have thus become participants in the global economy.  That necessarily requires them to adhere to national and international legislation. Their actions or inactions impact locally and internationally on issues like money laundering and organised crime that transcend domestic boundaries. Hence, they must exercise care when making decisions that will impact a customer both locally and internationally.  This the banks are required to do within the terms and conditions of the contractual relationship they have with each of their customers and as may be required by any relevant and applicable legislative provision.  In the present case, neither is there any evidence, nor is there anything in submissions of the bank which demonstrates, BSP breaching any particular duty or obligations imposed upon it by a term of the contract between the parties or any specific statutory law.  The absence of any such evidence and submission, does not assist the plaintiffs at all.

International gateway – Point (5)

51.	Turning next to the plaintiffs’ claim of PNG being regarded by many as a gateway to many neighbouring countries like Australia, other Pacific Island countries and countries in Asia, I note this submission has no pleading or factual foundation.   Without, the relevant and necessary evidence, this is nothing more than speculation.  Hence, the claim cannot be sustained.

Constitutional Rights – Point (9), (10) and (11):  main Issue 2:

Whether the actions of BSP constituted a constitutional rights breach which warrants a grant of the relief sought by the plaintiffs?

52.	Finally, I turn to the Constitution based arguments of the plaintiffs covered in Mr. Lomai’s points  9, 10 and 11.  These points give rise to the second main issue in this proceeding.   Hence, I will address the points in question as well as the second main issue in the proceeding together. 

53.	The point being made here by learned counsel for the plaintiffs is that the Constitution protects the rights of individuals and corporate entities alike and promotes the notion of equal opportunity for all.  The submission then goes on to argue that, with the development that has happened in the banking industry, the bank’s right to terminate under the common law without reason violates the public’s rights and freedoms which are protected by the Constitution.  

54.	The submission goes on to argue that the banks must give their customers valid reason before terminating or closing the customers’ accounts. If there is no valid reason, the banks should discuss the matter with the customers and compensate them for terminating their relationship after having solicited them to become their customers and that the customers have come to have an expectation of continuity of the banks’ services. Hence, the argument that both a banker and a customer can terminate their relationship at any time without prior notice and without reason only applies to a banker and not a customer.  This is because a banker’s right to terminate in the same way ceased to be valid from the moment the banks increased their range of services or products on offer to their customers and the customers became dependent on the banks.  

55.	Further, learned counsel for the plaintiffs, argues BSP failed to provide any reason for its decision to terminate the relationship and also failed to hear the plaintiffs.  Accordingly, it is submitted BSP violated their rights under ss. 41(1), (2), (3), 55 (1) and 59 (1) of the Constitution.

56.	There are a couple of problems with these submissions.  Firstly, the plaintiffs have not clearly pleaded with any particulars the basis for their claims of BSP breaching these provisions. The pleadings needed to properly plead the factual foundation for the plaintiffs claim of breaches of these provisions, especially their claims of discrimination, harsh and oppressiveness and hence a breach of ss.41(1) and (2) and 55 (1) of the Constitution.  With regard to the plaintiffs’ claim of not been accorded the opportunity to be heard and reason given before termination, it was also necessary for them to properly plead with sufficient particulars the facts forming the basis for their claims. 

57.	The plaintiffs have come to this Court by way of an Originating Summons instead of a Writ of Summons.  Order 4 of the National Court Rules amongst others. provides for the various modes for the commencement of proceedings.  Rule 1 of that Order prescribes the kinds of cases in which a writ of summons should be used while r. 3 (1) and (2) gives plaintiffs’ the right to choose, whether to use a Writ of Summons or an Originating Summons to commence proceedings.  Rule 3 (2) (a) and (b) makes it clear that the mode of Originating Summons is to be used where:

“(a) 	… the sole or principal question at issue is, or is likely to be, one of the construction of an Act or of any instrument made under an Act, or of any deed, will, contract or other document, or some other question of law; or
(b)	in which there is unlikely to be a substantial dispute of fact; or 
(c)	in which a person is authorized by an Act, regulation or by these Rules to make an application to the Court or a Judge with respect to a matter that is not already the subject matter of a pending cause or matter, and no other mode of making the application is prescribed by that Act, or regulation or by these Rules…”

58.	In the present case, the plaintiffs are seeking relief and the basis on which it is sought do not easily fall under subrule (3) (2) (a) or (c).  This is because this case does not involve any “construction” of any of the matters specified in (a) or any authorisation or prescription falling under (c).  I am thus of the view that the plaintiffs have decided to commence their proceeding using an originating summons because they were of the view that the relevant facts were not in dispute. 

59.	Secondly, the undisputed facts establish only two facts, firstly, the plaintiffs are serious businesspersons dealing in millions of Kina worth of business and transactions.  Secondly, by the various letters issued in May 2021, BSP gave notice to terminate their relationship in 30 days. That was for the plaintiffs to make alternative arrangements, which they did by applying for the opening of accounts with Kina Bank.  The plaintiffs have failed to plead and adduce any other evidence which establishes any other fact.   Based only on the undisputed facts, the plaintiffs are trying to make their case both in law and in fact.

60.	Thirdly, as already noted, the Constitution by sch. 2.2 accepted as part of the country’s underlying law, the common law of England as it stood as of 15th September 1975. Included in the principles of common law adopted were the principles governing a banker and customer relationship as a matter of contract law.  Courts are therefore required to apply them unless a party is able to establish to the satisfaction of the court that one or more of the exceptions under sch.2.2 (1) (a) to (c) exists.  Since independence, relevant parts of the common law have been readily adopted and applied in many cases and many contexts in our jurisdiction.   In the banking law area, as also already noted, at least three National Court decisions have adopted and applied and accepted the common law position that the relationship between a banker and its customer is contractual.   The parties have the equal right to terminate their relationship at any time, without reason or prior notice except for a banker who is also required to give reasonable notice.

61.	Another area of law which has similarities with a banker-customer relationship is the employer-employee relationship.  At common law an employer is entitled to hire and fire at will and do so with or without warning and or reasons especially in the private sector.  This principle was affirmed by the Supreme Court in Jimmy Malai v. PNG Teachers Association [1992] PNGLR 568. Despite that, Cannings J in Sukuramu v. NBPOL (supra) N3124 decided to impose a requirement as an implied term in contracts of employment for an employer to first, give an employee an opportunity to be heard before terminating him or her.   On appeal, the Supreme Court in NBPOL v. Sukuramu (supra) reaffirmed its earlier decision in the Jimmy Malai case.

62.	The National Court in that case had regard to the provisions of Constitution ss. 20, 21, 25, 37(1), 41(1), 43, 48, 55, 59, 60, 63, Schedule 2.9, 2.10 and the Underlying Law Act 2000 (ULA). His Honour found that the principles of natural justice and the constitutional rights of protection against harsh, and oppressive conduct apply, and consequently he should develop the underlying law so as to find that there is an implied right to procedural fairness and to be heard before dismissal, in every contract of employment.  He went on to find that there was such a right implied in the contract before him and that the appellant had breached that right and consequently the respondent was entitled to damages.

63.	The Supreme Court upheld the appeal on the basis that there was no foundation in the pleadings specifically for the development of an underlying law. Also, the learned trial judge failed to invite and hear the parties first on the underlying law he proposed to develop.  Later the Supreme Court in the Application by Ila Geno (2014) SC1313 held, “the underlying law is no longer to be developed in accordance with Schedule 2.3. The ULA was made in accordance with Section 20(1) of the Constitution. It is that law – not Schedule 2.3 – that must be invoked if consideration is to be given to formulating new rules of the underlying law.”  This was an affirmation of the Court’s earlier decision in Tigam Malewo v. Keith Faulkner (2009) SC960.  There the Court held that, “underlying law issues must be carefully pleaded in accordance with the Underlying Law Act 2000”.

64.	In the present case, the plaintiffs’ chose to use an Originating Summons to commence their proceeding.  In their Originating Summons, they indicate they are seeking a number of declaratory reliefs.  Reliefs 1 to 4 seek declarations that BSP’s decision to exit the plaintiffs on the dates specified in the respective letters to them without giving reasons and the right to be heard was “discriminatory, harsh and oppressive and it’s contrary to Section 41 (1), (2), and (3) and Section 59(1) of the Constitution and is therefore unlawful, null and void and of no effect.”  The balance of the reliefs sought from 5 to 8 seeks pursuant to s. 57 (1) (3) and s.155(4) a permanent injunction restraining BSP from closing their respective accounts and ceasing their relationship.  This relief presupposes that the law already obligates BSP and therefore all banks to first hear their customers and give reasons before deciding to terminate or exit their customers.  For reasons already given above, there is no such obligation at law.  Hence, going by the law as it is presently, the relief sought by the plaintiffs cannot be granted.

65.	But as noted already, Mr. Lomai of counsel for the plaintiffs submits, this Court should develop the underlying law to allow for an imposition upon banks of an obligation to first hear customers and provide reasons before exiting them.  This is contrary to and is an invitation to depart from the common law as adopted under sch.2.2.  In order for this Court do that, there must be foundation in the pleadings going by the Supreme Court’s decisions in Application by Ila Geno (supra) and Malewo v. Faulkner (supra) and NBPOL v. Sukuramu (supra).  

66.	Sections 7 and 9 of the ULA are instructive. They respectively stipulate as follows:

“7.	Formulation of law.
…
(4)	Subject to Subsection (5), if—
(a)	the underlying law; and
(b)	the customary law; and
(c)	the common law,
do not apply to the subject matter of a proceeding, the court shall formulate a rule, appropriate to the circumstances of the country, as part of the underlying law.
(5)	The court in formulating a rule under Subsection (4) shall have regard to—
(a)	the National Goals and Directive Principles and Basic Social Obligation established by the Constitution; and
(b)	the basic rights guaranteed by Division III.3 (Basic Rights) of the Constitution; and
(c)	analogies drawn from the relevant written law and customary law; and
(d)	the laws of a foreign country relevant to the subject matter of a proceeding.”
…
“9.	Inappropriate underlying law.
In a proceeding, if the Supreme Court or the National Court considers that a rule of the underlying law is no longer appropriate to the circumstance of the country, it may formulate a new rule, appropriate to the circumstances of the country, as part of the underlying law, having regard to -
(a)	the National Goals and Directive Principles and Basic Social Obligations established by the Constitution; and
(b)	the basic rights guaranteed by Division III.3 (Basic Rights) of the Constitution; and
(c)	analogies drawn from the relevant written law and customary law; and
(d)	the laws of a foreign country relevant to the subject matter of a proceeding.”

67.	As the Supreme Court held in NBPOL v. Sukuramu (supra) and as affirmed by the decisions in Application by Ila Geno (supra) and Malewo v. Faulkner (supra) this is not an empowerment of a court to proceed on its own motion.  Instead, a party wishing the Court to come to a decision that a current applicable “underlying law is no longer appropriate to the circumstance of the country” or is inadequate is required to plead his case with sufficient clarity and particulars. Such pleadings in my view must plead in clear and precise terms the:

(1)	current law on point or lack thereof;

(2) 	current circumstances of the country which render an application of a principle of the common law or the underlying law inappropriate and inapplicable;

(3)	harm or mischief the current law or the lack thereof is causing;

(4)	relevant and applicable principles of the:
(a)	National Goals and Directive Principles;
(b)	basic rights;
(c)	analogies from any written and customary law;
(d)	laws of a foreign country relevant to the subject matter of a proceeding,
which the Court must consider in order to formulate a new underlying law principle;

(5)	new principle or law being proposed; and

(6)	proposed new principles benefits or how it will eliminate the harm or mischief caused by the current law or a lack thereof.

68.	In my view, these are important factors and matters that must be properly pleaded in a statement of claim instead of an originating summons seeking declaratory orders merely stating the relief sought.  This is necessary because departing from an existing and applicable principle of law is no light matter.   Sitting in the Supreme Court in William Hagahuno v. Johnson Tuke & Electoral Commission (2020) SC2018, I considered the issue of departing from established case precedent.  After having due regard to the relevant authorities on point, I stated the relevant principles that govern departures from the past binding decisions of the Supreme Court as follows:

“A careful consideration of the above authorities makes it clear that:

(a) 	the Supreme Court is not bound by its own earlier decisions;

(b) 	but in the interest of providing certainty and consistency in the law for the society’s guidance and for the avoidance of chaos and disorder, the Court cannot readily and easily depart from its earlier decision;

(c) 	departures within a short space of time are undesirable and should not be encouraged; and

(d) 	departures are permissible only in exceptional circumstances where:

(i) 	the earlier decision misinterpreted, misconceived, mistook or misunderstood the law which requires correction;

(ii) 	the law pronounced or stated in the earlier decision is no longer appropriate and applicable to the current prevailing circumstances and needs of the country; and

(iii) 	as a matter of practice, the Chief Justice must be part of a Court comprising of 5 Judges which may decide to depart from an earlier decision.”

69.	Applying these principles, I decided in favour of overturning the long binding decision of the Supreme Court in Delba Biri v. Bill Ninkama [1982] PNGLR 342 in the following terms:

“(a) 	this five-member Supreme Court is not bound by its own earlier decisions starting from the three-member Supreme Court decision in Delba Biri v. Bill Ninkama [1982] PNGLR 342

(b) 	in the interest of providing certainty and consistency in the law for the society’s guidance and for the avoidance of chaos and disorder, the Court has not readily and easily departed from its earlier decisions;

(c) 	departure from the Biri v. Ninkama and the line of decisions following it have been called for and finally after more than 31 years later, this Court in Kikala v. Electoral Commission departed from the decision in the Biri v. Ninkama and the various decisions that follow it; and

(d) 	additionally, exceptional circumstances now exist which warrant a departure from the decision in Biri v. Ninkama and its line of authorities because:
(i) 	that decision and those following it have misinterpreted, misconceived, mistook and or misunderstood the law as pointed out above which require correction in the terms discussed;
(ii) 	the law pronounced or stated in the earlier decisions are no longer appropriate and applicable to the current prevailing circumstances and needs of the country for the reasons also given above; and
(iii) 	although the Chief Justice is not a part of this Court comprising of 5 Judges, His Honour then as Deputy Chief Justice, was the president of the Court in Kikala v. Electoral Commission which consciously commenced the departure from Biri v. Ninkama and its line of case.”

70.	In the present case, we may not have a binding authority or decision of the Supreme Court in PNG which adopts and confirms the position at common law in accordance with sch. 2.2 of the Constitution.   At the same time, I note that, sch. 2.2 does not require any Supreme Court or a National Court decision which expressly adopts and applies a position at common law to make a common law principle have application in PNG. Instead, Parliament has enacted the provisions in question.  This Court is duty bound to apply the provisions of Sch. 2.2 and adopt and apply the relevant common law principles of law on point as pronounced by the authoritative decisions of English courts prior to PNG’s independence.  At least three National Court decisions have already accepted the common law principles governing the contractual relationship between a banker and customer.   That being the case, the plaintiffs were required to plead and establish by appropriate evidence a case under s. 7 (4) and (5) and s. 9 of the ULA for a departure in the way suggested by the plaintiffs from the trite common law position as adopted into PNG. There is a complete lack of pleading and evidence establishing the current prevailing circumstances, how are they different from those prevailing at the time of the development and application of the principle sought to be departed from and how the departure sought is warranted.  It follows therefore that, unless a case is clearly made out under ss.7 and 9 of the ULA for a departure, the common law will continue to be the case until a subsequent court of competent jurisdiction either in England or in PNG deliberately decides upon a case being made out to depart from the accepted position at law and the court so decides.

71.	The only matter that is relevant and stated in the Originating Summons appears in the reliefs sought, per terms 1 – 4 which are in similar terms except for the identification of each of the plaintiffs and their respective account numbers.  They read:

“…the Defendant’s decision by letter dated 21 May 2021, to close the First Plaintiffs personal bank account, number 1012156467 and, ceasing conducting banking relationship with the First Plaintiff, without giving any reasons for such decision hence giving no opportunity to the First Plaintiff to be heard, is discriminatory, harsh and oppressive and it’s contrary to Sections 41 (1), (2) and (3), Section 55 (1) and Section 59 (1) of  the Constitution, and is therefore unlawful, null and void and of  no effect.”  

72.	The statements in the various reliefs sought are conclusions or submissions.  There must be foundation in a set of pleadings which pleads the relevant facts from which the conclusion could be inferred or drawn.  The decision of the Supreme Court in Premdas v. Independent State of PNG [1979] PNGLR 329 (Premdas v. The State) is instructive here. There, Prentice CJ, when speaking of s. 41 (and I consider it applies to the other provisions as well), said:

“I consider that, giving s 41 a fair and liberal meaning as the court is instructed to do by Schedule 1.5 (2) of the Constitution, it should be regarded as of general application. The criteria put forward in the section are clearly questions of fact. Both counsel concur in the submission that in assessing the quality of the relevant facts, the test should be an objective one. I feel that the test should be to question whether the Minister and the Committee acted as reasonable men in the circumstances, having regard to the policy of the act on the one hand and the various provisions of the Constitution on the other.”

73.	The pleadings need to first plead the relevant facts forming the foundation for these claims succinctly and must be backed up by relevant and credible evidence.   Only the letter containing BSP’s letter giving notice of its intention to close each of the plaintiff’s accounts (which is not in dispute) is the only piece of relevant evidence before the Court.  There is no other evidence that touches on the plaintiffs’ claims of discrimination, harsh and oppressiveness against them and that such conduct is unlawful.  The letter in question as already noted is consistent with the current position of the law and in the absence of any pleading and evidence to the contrary, it cannot and does not form the basis for the plaintiffs’ claims.

74.	 The above should be enough reason to determine this proceeding against the plaintiffs.  However, for completeness, I turn specifically to a consideration of the various provisions of the Constitution the plaintiffs rely upon. The first of the provisions is s. 41 has been given a wide interpretation and has been used to protect both qualified and basic and fundamental rights.   In Morobe Provincial Government v. John Kameku (2012) SC1164 the Supreme Court stated:

“Section 41 proscribes (ie prohibits) and gives protection against seven sorts of acts (Petrus and Gawi v Telikom PNG Ltd (2008) N3373). Even if done under a valid law and notwithstanding anything to the contrary in any law, an act is unlawful if it is, in the particular case:
•	harsh; or
•	oppressive; or
•	not warranted by the requirements of the particular circumstances; or
•	disproportionate to the requirements of the particular circumstances; or
•	not warranted by the requirements of the particular case; or
•	disproportionate to the requirements of the particular case; or
•	otherwise not, in the particular circumstances, reasonably justifiable in a democratic society having a proper regard for the rights and dignity of mankind.”

75.	In Re the Public Money Management Regularisation Act 2017 (2020) SC1944 I considered the provisions of s. 41 of the Constitution and outlined its essential elements in the following way at [150]:

“…A careful consideration of this provision reveals the following essential components for a proper invoking of this provision:
(1)	notwithstanding any other law;
(2) 	an act that is done under a valid law;
(3) 	but in the particular case it is:
(a)	harsh; or
(b)	oppressive; or
(c)	not warranted in the particular circumstances of the case because:
(i)	it is disproportionate; or
(ii)	is otherwise not reasonably justifiable in a democratic society having a proper regard for the rights and dignity of mankind.”

76.	Whether all of these essential elements have been met or not is dependent on the relevant facts.  Again, the leading case on point which affirms that position is the decision of the Supreme Court in Premdas v. The State (supra). There, as already noted, Prentice CJ, when speaking of s 41, said:

“I consider that, giving s 41 a fair and liberal meaning as the court is instructed to do by Schedule 1.5 (2) of the Constitution, it should be regarded as of general application. The criteria put forward in the section are clearly questions of fact. Both counsel concur in the submission that in assessing the quality of the relevant facts, the test should be an objective one. I feel that the test should be to question whether the Minister and the Committee acted as reasonable men in the circumstances, having regard to the policy of the act on the one hand and the various provisions of the Constitution on the other.”

77.	The Supreme Court in Perryman v. Minister for Foreign Affairs and Trade [1982] PNGLR 339 [341] endorsed the above statement of the law in these terms:

“We note that counsel did not rely on s. 41 of the Constitution in relation to the detention of the appellant. The onus is on the party alleging that an act is unlawful. Prentice C.J. in the Premdas case said, at p. 344:
‘The criteria put forward in the section are clearly questions of fact. Both counsel concur in the submission that in assessing the quality of the relevant facts, the test should be an objective one.’
There is absolutely no evidence before this court in relation to the question of the detention of the appellant. We find there are no facts which give rise to the consideration of section 41 of the Constitution. We therefore refuse to grant the application to release the appellant from detention.”

78.	The Supreme Court decision in Chief Collector of Taxes v. Bougainville Copper Ltd; Bougainville Copper Ltd v. Chief Collector of Taxes (2007) SC853 at [107] held:

“This view is consonant with those of Kidu CJ, Kapi DCJ (as he then was), and Kaputin J in SCR No 1 of 1984; Re Minimum Penalties Legislation. What appears clearly from these authorities is that, whether an act or conduct is harsh and oppressive is dependent on the relevant facts giving rise to a claim of harsh and oppressiveness.  The person making the claim has the burden to establish his or her claim by appropriate evidence.”

79.	It has already been held in our jurisdiction that, a bank exercising its mortgagee powers as a matter of contract law does not attract an application of s. 41 of the Constitution.  In Bank of PNG v. Muteng Basa [1992] PNGLR 271 (BPNG v. Basa), the bank sought vacant possession of a property mortgaged by the defendant as a security for a concessional loan Mr. Basa obtained from the bank. That followed Mr. Basa defaulting and falling into arrears in a substantial amount in both the principal borrowed and interest.  In his defence, Mr. Basa argued, the bank’s exercise of its powers would affect adversely his livelihood.  He thus argued that such act is unfair, unreasonable, and therefore, ‘harsh and oppressive” within the meaning s. 41 of the Constitution. The Court held, Mr. Basa’s impecunious state did not preclude the mortgagee bank from exercising its rights to possession founded as it was on the mortgage as supported by the Land Registration Act Ch 191.  Also, and most importantly, the Court held, the contractual relationship of the parties did not impinge on any of the respondents’ constitutional rights.  Consequently, it held s. 41 had no application.

80.	In the present case, no facts have been pleaded. Also, no evidence beyond the uncontested facts has been adduced for or by the plaintiffs which supports their claims of BSP acting discriminatorily, with harsh and oppressiveness. The uncontested fact establishes BSP decided to exercise its contractual right to terminate its relationship with each of the plaintiffs with notice and nothing more.  The period of notice allowed was 30 days for each of them.  This was to enable the plaintiffs to open accounts with either of the two other banks.  Indeed, the plaintiffs applied to have their accounts opened with Kina Bank.  No further evidence has been provided as to the outcome of their applications.   As was held in PNG v. Basa (supra) the contractual relationship of the parties in this case did not impinge on constitutional rights inclusive of s. 41 here.

81.	The next constitutional provision relied upon by the plaintiffs is s. 55 and the most relevant provision there is subsection (1).  This provision reads:

“(1)	Subject to this Constitution all citizens have the same rights, privileges, obligations and duties irrespective of race, tribe, place of origin, political opinion, colour, creed, religion or sex.”

82	As with the claim under s. 41, no facts such as an instance of un-equal treatment of the plaintiffs with other customers is pleaded or disclosed to properly invoke this provision.  The only uncontested facts demonstrate BSP exercising its contractual right, a right which the plaintiffs equally have.  However, BSP has the added duty to give reasonable notice before exiting the plaintiffs.  There is no dispute that this is what BSP did when it gave each of the plaintiffs 30 days’ notice of its intention to exit them.  In these circumstances, I find BSP’s actions did not infringe against s. 55 of the Constitution. 

83.	Section 59 of the Constitution is the final constitutional provision relied upon by the plaintiffs. This provision reads:

“59.	Principles of natural justice.
(1)	Subject to this Constitution and to any statute, the principles of natural justice are the rules of the underlying law known by that name developed for control of judicial and administrative proceedings.
(2)	The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly.”

84.	As with ss 41 and 55 of the Constitution, no factual foundation for seeking to invoke this provision has been pleaded or adduced into evidence.  The relevant facts amongst others may have included evidence of the terms governing the contractual relationship between the plaintiffs and BSP.  Such evidence needs to show amongst others, that a term of the contract required BSP to first give each of the plaintiffs an opportunity to be heard, hear them, and then give reasons before coming to its decision to exit them.  If such a term does not exist in the contract between the parties, facts disclosing such a term being implied in the general rules that govern the banking industry or guidelines under which banks operate in the country should have been pleaded and established by evidence.  There is neither any pleading nor did the plaintiffs adduce any evidence of the kind in question. 

85.	Having so failed, learned counsel also failed to assist with any helpful submission or at all as to how s. 59 applies or how his clients are entitled to invoke it.  Also, learned counsel for the plaintiffs did not assist the Court with any submission on how the Supreme and National Courts have interpreted and applied the provisions of s. 59.  The learned authors of the book, The Annotated Constitution of Papua New Guinea, give us some idea with their commentaries.  The learned authors, say:

“The principles of natural justice form part of the body of law which applies in Papua New Guinea to control administrative and judicial proceedings. This area of the law is complex and much of it is far from settled. Three important aspects remain to be authoritatively determined. These are:
(a)	what is the content of the rules of natural justice applying in Papua New Guinea,
(b)	to what proceedings do these rules apply, and 
(c)	are the principles of natural justice constitutionally entrenched or can they be excluded by the legislature.”

86.	Early, English common law authorities have shown that, there was a marked distinction between judicial and administrative acts. Where an authority was exercising an administrative act, it was said that this was not subject to the scrutiny or control of the courts. In other words, it was thought that the principle of natural justice applies only to judicial and quasi-judicial proceedings or in administrative proceedings in which the administrator was under a duty to act judicially.   That was the case until the landmark decision in Ridge v. Baldwin [1964] AC 40 which many authorities like judges, courts and scholars alike accept, put an end to the distinction that earlier existed.   Lord Reid, spoke of three types of cases in which the principle of natural justice would apply.  These are:

(1)	a case of dismissal from office for a cause;

(2)	if it involves property rights; and

(3)	if it involves the exercise of authority with civil consequences to the person affected.

87.	In his Lordship’s judgment, he referred to authorities dealing with each of these three categories and then said at [79]:

“I would sum up my opinion in this way.... The respondents’ contention is that, even where there was a doubtful question whether a constable was guilty of a particular act of misconduct, the watch committee were under no obligation to hear his defence before dismissing him. In my judgment it is abundantly clear from the authorities that I have quoted that at that time the courts would have rejected any such contention.”

88.	Later in Durayappah v. Fernando [1967] 2 AC 337, the decision in Ridge v. Baldwin was approved. Lord Upjohn said at [349]:

“Outside the well-known classes of cases, no general rule can be laid down as to the application of the general principle in addition to the language of the provision. In their lordships’ opinion there are three matters which must always be borne in mind when considering whether the principle should be applied or not. These three matters are: first what is the nature of the property, the office held, status enjoyed or services to be performed by the complainant of injustice. Secondly, in what circumstances or on what occasions is the person claiming to be entitled to exercise the measure or control entitled to intervene. Thirdly, when a right to intervene is proved, what sanctions in fact is the latter entitled to impose on the other. It is only on a consideration of all these matters that the question of the application of the principle can properly be determined.”
(Underlining supplied)

89.	In Iambakey Okuk v. Fallscheer (supra), Kapi J (as he then was) found this was “a very good general statement of the test to be applied” and he had “no difficulty in finding that the rationale of their lordships’ decision in Ridge v. Baldwin (supra) was consistent with these principles.

90.	There is no doubt that these principles apply in the public law area or domain.  I am, however, not too sure about their application and extension into the private law area and more so in the context of terminating a private contractual relationship.  I remind myself of the fact that the National Court at least attempted to impose a requirement into the accepted legal position governing the employer-employee relation for an employer to hear its employee first before terminating an employee in Sukuramu v. NPBOL (supra) which the Supreme Court in NBPOL v. Sukuramu (supra) rejected. Given that, the duty was upon the plaintiffs and their learned counsel to properly make a case for this Court to impose upon a banker a duty to first hear its customer and then give reasons before terminating its banker-customer contractual relationship.  This they failed to do. Accordingly, their submissions  and ultimately their claims must correspondingly fail.

Relief pursuant to s 57 (1) (3) and s 155 (4) of the Constitution 

91.	The final matter I turn to is the plaintiffs’ reliance on s. 57 (1) and (3) and s. 155 (4) of the Constitution as the foundation for the permanent injunctive orders they are seeking. Section 57 (1) and (3) read as follows:
 
“57.	Enforcement of guaranteed rights and freedoms.

(1)	A right or freedom referred to in this Division shall be protected by, and is enforceable in, the Supreme Court or the National Court or any other court prescribed for the purpose by an Act of the Parliament, either on its own initiative or on application by any person who has an interest in its protection and enforcement, or in the case of a person who is, in the opinion of the court, unable fully and freely to exercise his rights under this section by a person acting on his behalf, whether or not by his authority.
…
(3)	A court that has jurisdiction under Subsection (1) may make all such orders and declarations as are necessary or appropriate for the purposes of this section, and may make an order or declaration in relation to a statute at any time after it is made (whether or not it is in force).”

92.	It is well settled law that this provision comes into operation when a person’s human rights are being violated or stand the risk of being violated. After considering a number of decisions of the Supreme Court I concluded in Morua v. China Harbour Engineering Company (PNG) Ltd (2020) N8188 at [24 and 25]:

“…the object of s. 57 was to enable a prompt intervention and judicial determination in respect of any actual, imminent, likely or reasonable probability of a breach of any person’s human rights.”  
(Underlining supplied)

93.	One of the decisions I considered was the decision of Frost CJ in SC Reference No. 1 of 1977 [1977] PNGLR 362 where he said at [366] – [368] who considered the relevant parts of the Constitutional Planning Committee report and summed up the provisions of section 57 and what the CPC said in the following terms:

“Provision for the enforcement of the rights and freedoms conferred in Div. 3 is set out in Subdivision D – Enforcement, which contains ss.57 and 58. Such a right or freedom is to be protected by and is enforceable in the Supreme Court and the National Court, and that protection is to be afforded either on the initiative of the Court, or on application by any person who has an interest in its protection and enforcement, or if unable to exercise his rights, by a person acting on his behalf (s.57). For the purposes of the section the Law Officers of Papua New Guinea and other defined persons have an interest in the protection and enforcement of the rights, but the subsection does not limit the persons or classes of person who have such an interest (subs.(2)). Plainly a person who claims that his right is infringed is a person who has an interest in its protection and enforcement. If there were any doubt about this, it is dispelled by the Report of the Constitutional Planning Committee, which may be used, so far as it is relevant as an aid to interpretation of the Constitution (s.24(1))”
(Underlining supplied)

94.	In the same year, the learned Chief Justice in The State v. Painke (No 2) [1977] PNGLR 141 at [145] stated the object of s. 57 91) and (3) in this way:

“I consider this view to be correct. It does not seem to me possible for the National Court to exercise its jurisdiction under s 57(1) and (3) to make an order which is necessary for the protection of a Constitutional right or freedom unless that Court both interprets and applies the relevant Constitutional provision.”
(Underlining supplied)

95.	This line of judicial pronouncements has continued into later years. In The State v. Transferees (2015) SC1451, Gavara-Nanu J reaffirmed the clear position of object of s. 57 (1) (3) in these terms:

“Section 57 in its heading provides for the – “enforcement of guaranteed rights and freedoms”.  In its specific terms, subsection (1) provides for the protection and enforcement of a right or a freedom.”
(Underlining supplied)

96.	The more recent 5-member Supreme Court decision in The State v. Tamate & Ors (2021) SC2131 surveys in detail some of the passed decided cases on s. 57 especially in the context of a Judge or the National Court acting on its own initiative.  The numerous cases the Court refers to, reiterate the obvious that all of the actions by the Courts were for the enforcement or the protection of a human right or freedom provided for under the Constitution.  That decision also highlights the fact that, there must be evidence disclosing either an actual or imminent breach of a person’s right 

97.	Applying the law to the present case, the plaintiffs had the obligation to clearly establish what right they have that has been breached or is likely to be breached by the actions of BSP.  As already said, this must be established as a matter of fact first in their pleadings and secondly by adducing evidence establishing their claims.  As noted, the relationship between the plaintiffs and BSP is a private contractual one governed by the law of contract. The established law based at common law as adopted under sch. 2.2 of the Constitution recognise a banker’s right to exit a customer subject only to reasonable notice before doing so.  The law also recognises a customer having the right to also terminate but without a corresponding requirement for prior reasonable notice.  Both are not required to hear the other before exercising their respective rights to terminate their relationship.   That being the case, the plaintiffs are seeking to enforce a right that does not exist as a matter of law.  Hence, s. 57 (1) and (3) are inapplicable.  

98.	This leaves us to consider the application of s. 155(4) of the Constitution.  This provision reads:

“(4)	Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.”

99.	As I noted in many of my decisions, this provision has been readily used by so many lawyers and parties almost as a matter of cause.  In most cases, this provision has been abused more than its proper application. One of the very first cases in which this provision was incorrectly sought to be invoked was in the matter of SC Review No 4 of 1990; Application by Wili Kili Goiya [1991] PNGLR 170.  There, Kapi DCJ (as he then was) said with the agreement of the other members of the Court, their honours, Los and Sheehan JJ:

“In summary, these cases establish that the first limb of s155 (4) gives the Supreme Court and the National Court power to make orders in the nature of prerogative writs and the second limb power to make other orders which are remedial, adjectival as well as procedural in nature.

In so far as power is given to make these orders in reviewing exercise of power by the courts, this supervisory jurisdiction is exercised over inferior courts. That is the nature of prerogative writs. It cannot be used by the same court to review a decision of the same level of court. If the constitutional framers intended this, they would have said so expressly.”
(Underlining supplied)

100.	Later in William Powi (Acting Administrator for Southern Highlands Province) v. Southern Highlands Provincial Government (2006) SC844, the Court carefully reviewed and considered all the cases on point and clearly stated the correct parameters for the application of s. 155(4) in the following terms:

“From the foregoing, we are of the view that, there are about five important features or attributes of s. 155 (4) of the Constitution. These are as follows:
1.	The provision vests the Supreme and National Court with two kinds of jurisdictional powers, namely orders in the nature of prerogative writs and the power to make ‘such other orders as a necessary to do justice in the particular circumstances of a case’ before the Court; 

2.	Although the power is inherent, it is not a grant of jurisdiction to cover all and every other situation and for the creation and grant of new rights. Instead it is a general grant of power to the Court to develop and grant such remedies as are appropriate for the protection of rights already existing and granted by other law, including the Constitution; 

3.	Where remedies are already provided for under other law, the provision does not apply;

4.	The provision does not grant the Supreme Court power to set aside or review the decision of another Supreme Court regardless of the number it is constituted, except as may be provided for by any law; and

5.	A person seeking to benefit from that provision has an obligation to demonstrate a case of his rights or interest being affected or that he stands to suffer much damage or prejudice and he has no remedy available under any other law.’
(Underlining supplied)

101.	Applying this to the case then before the Court, the Court held at [35]:

“Hence, to the extent that, the applicants seek to invoke s. 155 (4) of the Constitution and not the relevant and applicable provisions of the Supreme Court Act, the application is an abuse of the process of the Court.  The Court has an inherent power to protect itself from any such abuse by dismissing the application and we would do just that here.”
(Underlining supplied)

102.	Almost 10 years later, in Eremas Wartoto v. The State (2015) SC1411 the Supreme Court had occasion to consider a case in which the appellant sought to invoke s. 155(4) of the Constitution to injunct criminal proceeding.   In Sakora J. and my joint judgment we referred to the above statement of the law and said at [64]:

“Hence, it would be an abuse of the process of the National Court and s. 155 (4) of the Constitution itself for an accused person to seek to invoke the civil jurisdiction of the National Court to effectively review criminal investigations and prosecutions, without first exhausting the remedies that are available under the District Court Act, the Criminal Code and the National Court’s Criminal Practice Rules.”
(Underlining supplied)

103.	Subsequent decisions have endorsed the statement of the proper parameters of s. 155(4) of the Constitution as enunciated in the William Powi case.  For examples of cases on point, I refer to the decisions in Louis Medaing v. Ramu Nico Management (MCC) Limited (2011) SC1156 and Boochani v. Independent State of Papua New Guinea (2017) SC1566. 

104.	Applying the law to the case at hand, I note the plaintiffs had the obligation to clearly establish a case of having a right without remedy for any of its breaches.  The plaintiffs would have discharged that obligation by establishing as a matter of fact first in their pleadings and secondly by adducing evidence establishing the pleaded matter.  The plaintiffs failed in both respects. Instead, the clear and uncontested evidence or fact is that the relationship between the plaintiffs and BSP is a private contractual matter, which is governed by the law of contract. The established law based at common law as adopted under sch. 2.2 of the Constitution recognise a banker’s right to exit a customer subject only to reasonable notice before doing so.  The law also recognises a customer having the right to also terminate but without a corresponding requirement for prior reasonable notice.  Both are not required to hear the other before exercising their respective rights to terminate their relationship.   That being the case, the plaintiffs are seeking to enforce a right that does not exist as a matter of law and in respect of which the law already addresses as to the issue of any remedies for any alleged breach within the four corners of the relevant contract.  Hence, s. 155(4) is inapplicable.  The plaintiffs attempt at invoking ss. 57 and 155 (4) of the Constitution is an abuse of those provisions and are therefore unsustainable.

105.	Based on the foregoing discussions, the short answer to the two main issues presented are as follows:

(1)	Was BSP entitled to close each of the plaintiffs’ accounts on 30 days written notice?
	Answer: Yes.

(2)	Whether the actions of BSP constituted a constitutional rights breach as alleged which warrants a grant of the relief sought by the plaintiff?
	Answer: No

106.	Ultimately, I find the plaintiffs have failed to make out a case as a matter of fact and or as a matter of law or a mixture of both.   Consequently, the whole claim must fail.

Formal Orders tell

107.	The formal orders of the Court are thus as follows:

1.	The plaintiffs’ claim is dismissed.

2.	The interim restraining orders issued on 24th June 2021 and as varied on 08th September 2021 is dissolved.

3.	Costs to the defendant to be ascertained by taxation, unless otherwise agreed.

4.	The time of the entry of these orders is abridged to take place forthwith upon the Court signing them.

__________________________________________________________________
Lomai & Lomai Attorneys:	Lawyers for the Plaintiffs
Ashurst Lawyers:			Lawyers for the Defendant