DC162

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE N0 1494 OF 1999

BETWEEN

Dana Pty Ltd
Complainant

V

Papua New Guinea Banking Corporation
First Defendant

Assistant Manager, Mary Kilimani
Second Defendant

Port Moresby: Bidar
2000: 16, 17, 18, 23 & 29th August
1st September & 2001: 12th October

Civil Law - Negligence - Negligence by bank officer - Breach of bank authority - Failure to observe bank's own signature verification procedure Judgement for plaintiff.

Cases Cited
There are no cases cited in the judgement.

Counsel
Mr. J. Yagi, For The Plaintiff
Miss J. Kasou, For The Defendants

DECISION

12th October, 2001

C. BIDAR, PM:

The plaintiff, Company, sued Papua New Guinea

Banking Cooperation for reimbursement of monies fraudulently drawn out of the company account by one of the co-directors namely, Beru Waie through the negligence of the bank staff.

Mr Beru Waie, director of plaintiff, Company, picked up a cheque payable to the plaintiff by Department of Defence at Murray Barracks for maintenance work done at the army barracks. The cheque was for the sum of K7,412.00 which was picked up by Mr Waie on or about 29 July 1998. He took the cheque to Papua New Guinea Banking Cooperation, Port Moresby branch, where the plaintiff operated its account and cashed it.

There is no dispute that the cheque for K7,412.00 was taken to the bank for cashing and as the bank staff Horere Mora advised Beru Waie to seek special answer (clearance) from Bank of Papua New Guinea against which the Papua New Guinea Defence Force cheque was drawn.

When Beru Waie returned with a special answer or clearance from the drawing bank, the defendant bank through Horere Mora authorised the cheque in question to be cashed without requiring the other two directors to sign for withdrawal. The cheque in question was not even deposited into the account before Beru Waie could draw from it.

The plaintiff initially sued for the entire amount in the cheque, the sum of K7412.00 but on legal advise it reduced the claim to K3,000.00 on the basis that a sum of K2,970.00 was drawn by Benu Waie and K30.00 was the fee charged for special clearance of the cheque.

THE EVIDENCE

The plaintiff's case is that, the bank did not observe signature verification procedures, when bank officer Morere Mora authorized part of the proceeds of the cheque to be paid without requiring the three signatories to sign. If the bank observed the procedures it would have required three directors' signatures before drawing monies from the account.

The cheque was not negotiable which could not be cashed but to be deposited into the account. This the plaintiff says was negligence on the defendant's part.

The defence evidence on the other hand, is that, the bank officers who attended and effected the service and did their job well and there was no negligence involved.

The Port Moresby branch manager at the time of transaction was Mr Peter Toran. He gave evidence for defence and his evidence completely destroyed the defence mounted by the defendants. He agreed with plaintiff's counsel that what the bank officer did was negligence. He stated that what bank officer did was beyond the bank's requirements. The authority required stipulated number of signatories to sign.

The defence mounted in my view was a very vain attempt that what did take place was in good faith and no negligence was involved.

I have considered the evidence thoroughly in toto and the submissions by both counsel, I am inclined to the view that, the bank through its officers did not diligently follow its own verification procedures. I am therefore satisfied on the balance of probabilities that the defendants were negligent and I find them liable.

ASSESSMENT

The claim is for the sum of K3,000.00 reimbursement, a liquidated amount. There is no dispute as to the amount claimed.

I enter judgement for plaintiff in the sum of K3,000.00 I allow interest at the rate of 8 % from date of Summons to judgement on the whole amount. The plaintiff shall have its costs to be taxed if not agreed.

Judgement and orders accordingly

Mr J. Yagi: Complainant