Stephen Ian Asivo v Bank of South Pacific Ltd

• Jurisdiction: Papua New Guinea
• Court: National Court
• Judge: Cannings J
• Judgment Date: 11 November 2016
• Citation: (2016) N6518
• Judgment Number: N6518
• Year: 2016

Full : WS No 838 of 2014; Stephen Ian Asivo v Bank of South Pacific Limited (2016) N6518

National Court: Cannings J

Judgment Delivered: 11 November 2016

N6518

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 838 OF 2014

STEPHEN IAN ASIVO

Plaintiff

V

BANK OF SOUTH PACIFIC LIMITED

Defendant

Madang: Cannings J

2015: 17 August, 8 September

2016: 11 November

BANKS AND CUSTOMERS – CONTRACTS – mediated agreements – Fairness of Transactions Act 1993 – human rights – Constitution, Section 53 (protection from unjust deprivation of property) – negligence – defamation.

This was a trial on liability in which the plaintiff, a customer of a bank, prosecuted a claim against the bank, pleading five separate causes of action, arising from a complex set of events that began eight years before commencement of the proceedings. In October 2006 the plaintiff and the defendant bank entered into a loan agreement under which the bank lent money to the plaintiff to purchase a house. The following month, the bank, having discovered a previous bad debt, a truck loan, the plaintiff had with the bank, demanded full and immediate repayment of the loan. In 2009, the plaintiff commenced proceedings against the bank and, after a trial, succeeded, in October 2009, in obtaining an order for specific performance and damages against the bank. The bank was slow in complying with the court’s orders, so the plaintiff, in 2010, commenced fresh proceedings against the bank, resulting in a court order on 15 April 2011 referring the parties to mediation. The mediation was successful in that the plaintiff and the bank signed a mediated agreement on 23 April 2012, under which the bank agreed to:(i) extinguish the previous truck loan account, (ii) restructure the housing loan and (iii) remove the adverse entries regarding the plaintiff it had made with a credit data bureau. It is the alleged failure of the bank to comply with the mediated agreement that is the subject of the present proceedings, which the plaintiff commenced in 2014. He claims that the bank (1) breached the mediated agreement, making it liable in damages for breach of contract; (2) breached its duty of fairness to its customer, argued to be an actionable wrong under Section 4 of the Fairness of Transactions Act 1993; (3) breached his human rights, in particular the right to protection from unjust deprivation of property under Section 53 of the Constitution,(4) committed the tort of negligence through its negligent failure to comply with the mediated agreement; and (5) committed the tort of defamation. Causes of action (3), (4) and (5) are based largely on the contention that the bank did not remove the adverse credit ratings it had entered in 2009 with the Credit Data Bureau regarding the truck and housing loans, resulting in the plaintiff being unable to obtain loans from three financial institutions, being deprived of property rights and having his reputation damaged. The bank denied all liability and submitted that the entire proceedings be dismissed with costs and that the plaintiff be ordered to repay the whole of his housing loan within 30 days.

Held:

(1) The elements of a cause of action in breach of contract are: (a) there was a contract, (b) the defendant breached it and (c) the plaintiff, as a consequence, suffered damage. The mediated agreement of 23 April 2012 was an agreed compromise of existing legal proceedings, which demonstrated an intention by those who were a party to it to create legal relations and the rights it conferred and obligations it imposed were legally enforceable. It was a contract. The defendant breached the contract by not restructuring the housing loan within a reasonable time. However the plaintiff failed to plead or prove that he suffered damage as a consequence of the breach. He therefore failed to prove a cause of action.

(2) Section 4 of the Fairness of Transactions Act, on which the plaintiff relied, does not create a cause of action. A transaction to which that Act applies can, under Section 5 of the Act, be reviewed by the Supreme Court or the National Court, on application by a party to the transaction. But the plaintiff did not make such an application and it was inappropriate for the Court to engage in a review without notice to the parties of its intention to do so. The claim based on Section 4 was dismissed.

(3) Under Section 53 of the Constitution every person has a general right of protection against compulsory taking of their property. Nothing that the defendant did amounted to compulsory taking of the plaintiff’s property, so there was no breach of the plaintiff’s human rights in the manner alleged.

(4) To establish a cause of action in negligence a plaintiff must prove the elements of the tort: (a) the defendant owed a duty of care to the plaintiff; (b) the defendant breached that duty (acted negligently); (c) the breach of duty caused damage to the plaintiff; and (d) the type of damage was not too remote. The bank owed a duty of care to the plaintiff, its customer, to take reasonable care in the conduct of the banker-customer relationship. It breached its duty of care by negligently failing to ensure that the housing loan was restructured within a reasonable time and by not communicating effectively with the plaintiff as to its extinguishment of the truck loan and removal of the adverse entries made with the Credit Data Bureau. However, as with the breach of contract claim, the plaintiff failed to plead or prove that he suffered damage as a consequence of the breach. He failed to prove a cause of action in negligence.

(5) The elements of a cause of action in defamation are: (a) the defendant made a defamatory imputation in relation to the plaintiff, (b) the defendant published it, and (c) the publication was unlawful in that it was not protected, justified or excused by law. Here, the defendant made no defamatory imputations in relation to the plaintiff. No cause of action in defamation was established.

(6) In summary the plaintiff failed to prove any of the five causes of action. The parties were ordered to bear their own costs for two reasons: (a) the plaintiff proved significant parts of the case alleged against the bank, exposing a breach of contract by the bank and negligent handling of the matter and (b) the relative economic positions of the parties.

Cases cited:

The following cases are cited in the judgment:

Baikisa v J & Z Trading Ltd (2016) N6181

BSP Ltd v Robert Tingke (2014) SC1355

Chris Rai v Memafu Kapera (2014) N5806

David Lambu v Paul Paken Torato (2008) SC953

David Nelson v Credit Corporation (PNG) Ltd (2011) N4368

Elizabeth Kimisopa v Darryl Kamen (2015) N5844

Francis Chibelle v Jack Mafu (2015) N5942

Francis Chibelle v Jack Mafu (2015) N5942

Francis Fuliva v Anthony Wagambie (2011) N4397

Francis Fuliva v Anthony Wagambie (2011) N4397

James Geama v OTML Shares In Success Ltd (2011) N4269

Joe Tipaiza v James Yali (2006) N3178

Magiten v Rural Development Bank Ltd (2006) N5008

Onne Rageau v Chaudoc Ltd (2015) N5901

Panamaseier Resources Pacific Company Ltd v Richard Sikani (2015) N6166

Paul Pilimbo Pora v Dean Hull (2012) N4936

Paul Wagun v Robert Palme (2015) N5917

Pija Grannies Ltd v Rural Development Bank Ltd (2011) SC1327

Rage Augerea v Bank South Pacific Ltd (2007) SC869

Richard Manui v ANZ Banking Group (PNG) Ltd (2008) N3405

Simaul Guru v National Development Bank Ltd (2016) N6162

South Pacific Post v Nwokolo [1984] PNGLR 38

Stephen Asivo v Bank of South Pacific Ltd (2009) N3754

Stephen Asivo v Bank of South Pacific Ltd (2011) N4252

Steven Naki v AGC (Pacific) Ltd (2005) N2782

STATEMENT OF CLAIM

This was a trial on liability in which a customer of a bank prosecuted a claim against the bank, pleading five separate causes of action.

Counsel:

S Asivo, the Plaintiff, in Person

J Brooks, for the Defendant

11 November, 2016

1. CANNINGS J: The plaintiff, Stephen Asivo, a customer of the defendant, the Bank of South Pacific, sues the bank and claims damages. He pleads five separate causes of action. They arise from a complex set of events that began in 2006 when Mr Asivo and his wife obtained a housing loan, and has already resulted in two separate court proceedings, the second of which was referred by the court to mediation and resulted in a “mediated agreement” of 23 April 2012.

2. It is the alleged failure of the bank to comply with the mediated agreement that is the subject of the present proceedings, which Mr Asivo commenced in 2014. He claims that the bank:

(1) breached the mediated agreement, making it liable in damages for breach of contract;

(2) breached its duty of fairness to its customer, which was argued to be an actionable wrong under Section 4 of the Fairness of Transactions Act 1993;

(3) breached his human rights, in particular the right to privacy under Section 49 of the Constitution and the right to protection from unjust deprivation of property under Section 53 of the Constitution,

(4) committed the tort of negligence through its negligent failure to comply with the mediated agreement; and

(5) committed the tort of defamation.

3. The bank denies...