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Setao Investment Ltd v BSP Financial Group Ltd [2025] PGNC 136; N11264 (1 May 2025)

N11264

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

OS NO. 27 OF 2025

SETAO INVESTMENT LIMITED
Plaintiff

-V-

BSP FINANCIAL GROUP LIMITED
Defendant

WAIGANI: KARIKO, J
20 MARCH, 1 MAY 2025

BANKING – cheque deposit – deposit held for clearance – whether reasonable cause of action disclosed

The plaintiff deposited a Department of Works cheque into its account kept with the defendant commercial bank. Due to a direction of the Ombudsman Commission issued under s 27(4) of the Constitution directing commercial banks, among others, not to make payments regarding claims against the government, the defendant placed a hold on the deposit pending clearance by the Ombudsman Commission. The plaintiff claimed the actions by the bank were unreasonable and sued for damages.

Held
The proceedings did not disclose a reasonable cause of action: the claim was not a form of action known to law.

Cases cited
Kiee Toap v The State (2004) N2731
Mount Hagen Urban Local Government v Sek No 15 Limited (2009) SC1007
Tigam Malewo v Keith Faulkner (2009) SC960

Counsel
C Kaki for the plaintiff
S Kiene for the defendant

1. KARIKO J: In these proceedings, the plaintiff alleges the defendant commercial bank unreasonably placed a restriction against the plaintiff from accessing monies in its account held with the bank by putting a hold on cheque deposit in the amount of K1, 144, 837.61.
   
2. The plaintiff seeks orders for:
   
   • damages for loss suffered resulting from the restriction, and
     
   • the restriction to be removed.
     

BACKGROUND

3. The following relevant facts disclosed by the evidence are not in controversy.
   
4. By letter dated 15 November 2024, the Ombudsman Commission (the Commission) informed the defendant of a direction it had issued under s 27(4) of the Constitution dated 12 November 2024 regarding payments for claims by various persons including contractors submitted to the government (the Direction).
   
5. The Commission advised that it was investigating several claims for payment submitted through the Office of the Minister for Finance and directed that any transaction or payments relating to the claims listed in a spreadsheet attached to the Direction as an appendix (the Appendix) must be first cleared with the Commissions.
   
6. The Direction sought the defendant’s assistance to:
   
   • (a) not pay, transact, release, clear or disburse the claims noted in the Appendix,
     
   • (b) freeze or restrict payment of the claims upon receipt of the Direction, and
     
   • (c) submit all claims to the Commission for verification and clearance.
     
7. The plaintiff was named in the Appendix.
   
8. On 20 January 2025, the plaintiff deposited into its account with the defendant a BPNG Cheque No. 118108 dated 23 December 2024, drawn on the Department of Works Sal Reimbursement Account for K1, 144, 837.61 made payable to the plaintiff (the Cheque).
   
9. According to the bank’s procedure, the Cheque was subject to the normal clearance period of two (2) business days.
   
10. When the bank noted that the plaintiff was named in the Appendix, it advised the plaintiff to seek clearance in writing from the Commission notwithstanding the plaintiff’s assertion that the claim listed against its name in the Appendix related to a different claim from the one for which the Cheque was raised.
    
11. The plaintiff did not seek clearance from the Commission.
    
12. The Cheque was subsequently dishonored by the defendant, and it was returned to the relevant account with BPNG.
    

SUBMISSIONS

13. The plaintiff argued that because the Cheque was for a claim different to the one listed against it in the Appendix, the defendant unreasonably placed a restriction on its deposit.
    
14. The defendant asked for dismissal of the case arguing that the actions it took were proper for these reasons:
    
    • (1) It was obliged by law to comply with the Direction.
      
    • (2) The plaintiff was asked to obtain clearance from the Commission, which it failed to do.
      
    • (3) The cheque was returned to the drawer’s account when it was not cleared within time.
      

CONSIDERATION

15. I first consider whether a reasonable cause of action is disclosed by this suit.
    
16. The originating document filed to bring an action must demonstrate that the plaintiff has a cause of action - a legal right or form of action known to law. The document must clearly set out the legal ingredients or the elements of the claim and the facts that support each element of the claim. Only if the plaintiff’s originating document does that, is there a reasonable cause of action; and Kiee Toap v The State (2004) N2731, Tigam Malewo v Keith Faulkner (2009) SC960, Mount Hagen Urban Local Government v Sek No 15 Limited (2009) SC1007.
    
17. The plaintiff did not contend that its claim was grounded on negligence. It simply alleged that the restriction placed on its account was unreasonable. I am not aware that such claim is a form of action known to law but that aside, the evidence does not support the claim. I accept the submissions of the defendant that the actions it took regarding the cheque deposit were proper and reasonable in circumstances where:
    
    • (1) Failure to comply with the Direction would have attracted sanctions under s 23 of the Constitution which includes imprisonment for up to 10 years or a fine of up to K10,000.00.
      
    • (2) The plaintiff had the opportunity to clear the cheque payment with the Commission but failed without reason to do that.
      
    • (3) The Cheque was promptly returned to its drawer as it had not been cleared, meaning the defendant never held the monies represented by the Cheque.
      
18. I dismiss the proceedings and costs will follow the event.
    

ORDER

1. These proceedings are dismissed.
   
2. The plaintiff shall pay the defendant’s costs of and incidental to the proceedings on party-party basis, to be taxed if not agreed.

________________________________________________________________
Lawyers for the plaintiff: Raynett & Kaki
Lawyers for the defendant: BSP Financial Group Limited Legal Services