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 all liability and argues that the entire proceedings should be dismissed with costs and that Mr Asivo should be ordered to repay the whole of his housing loan within 30 days. 

4.	Each cause of action will be addressed separately. Before doing that it is necessary to set out the history of the matter.

HISTORY

2006

5.	In August 2006 Mr Asivo and his wife, Theresa Asivo, entered into a loan agreement with the bank to enable them to purchase a property in Newtown, Madang. The first drawdown on the facility occurred on 10 October 2006 when the bank provided K30,000.00. 

Shortly afterwards the bank discovered what it regarded as a previous bad debt Mr Asivo had with the bank, arising from a truck loan, which he had not disclosed in his loan application. The bank took the view that Mr Asivo had misled it when he made the housing loan application. On 28 November 2006, the bank wrote to Mr and Mrs Asivo demanding full and immediate payment of their indebtedness to the bank, which then stood at K34,437.57, failing which it would take such steps it considered necessary to recover the amount due, including exercising its powers as mortgagee over the land and house. 

2007

6.	In February 2007 the bank wrote to Mr Asivo advising that he owed K92,975.65 on the truck loan and that he needed to arrange regular payments by the end of that month, failing which the bank would have no option but proceed with further recovery action. 

In December 2007 the bank served Mr and Mrs Asivo with a notice under the mortgage on the house, demanding payment of K32,038.86 within 14 days, failing which the bank would be at liberty to sell the property. 

2008

7.	In November 2008 the bank served them with a notice to vacate the property within seven days, failing which action would be taken to enforce eviction. Such action was eventually stayed by order of the National Court.

2009

8.	Mr Asivo commenced proceedings, OS No 290 of 2009, against the bank, for breach of contract, and sought an order for specific performance of the loan agreement and damages. The bank defended the proceedings, a trial was conducted and on 2 October 2009 judgment was handed down in favour of Mr Asivo (Stephen Asivo v Bank of South Pacific Ltd (2009) N3754).It was held that the bank had breached the loan agreement. The court ordered specific performance of the loan agreement (which meant the bank had to make available the balance of the loan facility, K28,700.00) and damages of K20, 000.00, both sums to be paid within 30 days. 

The bank appealed to the Supreme Court but the appeal was unsuccessful. 

2010

9.	By June 2010 the bank had still not complied with the orders of 2 October 2009. On 7 June 2010 Mr Asivo commenced fresh proceedings, OS No 279 of 2010. 

His initial purpose was to prosecute the bank and its officers for contempt of court for failure to provide the balance of the loan facility and pay the damages (which the court had ordered be paid within 30 days after 2 October 2009). However the contempt prosecution did not eventuate. 

The bank complied with the 2 October 2009 orders, belatedly, on 8 June 2010: it made available the balance of the loan facility and paid the damages, interest and costs awarded against it in both the National Court and the Supreme Court.

In June and July 2010 there was an exchange of correspondence between Mr Asivo and the bank about the terms of a revised loan agreement. But no agreement was reached. 

2011

10.	On 15 April 2011, after hearing a motion by Mr Asivo in OS No 279 of 2010 aimed at obtaining a court order setting the terms of a revised housing loan agreement, I referred the parties to mediation (Stephen Asivo v Bank of South Pacific Ltd (2011) N4252).

2012

11.	The mediation took place in April 2012 in Port Moresby. Mr Asivo represented himself. The bank was represented by its Director of Legal Services, Mr John Maddison. 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: 

(a) extinguish the truck loan (clause 1), 

(b) restructure the housing loan (clauses 2 and 3), and 

(c) remove the adverse entries regarding the plaintiff it had made with the Credit Data Bureau (clause 4). 

12.	The agreement was in the following terms:

MEDIATED AGREEMENT

OS 279 of 2010 Asivo v Bank of South Pacific

1.	The Bank of South Pacific (BSP) agrees to extinguish the truck loan Account No 1000164933.

2.	The housing loan Account No 10001224348 to commence 8 June 2010 for term of 14 years.

3.	Repayments of the housing loan will be calculated following removal of the recovery fee debited to the account on 17 November 2006. The Bank will calculate the instalment amounts and advise Mr & Mrs Asivo of the monthly repayments.

4.	BSP agrees to remove the adverse credit rating in relation to the truck and housing loans. If this cannot be achieved with the Credit Data Bureau, BSP will provide a letter confirming that the truck loan has been finalised to the Bank’s satisfaction.

[signed]								[signed]
Stephen Asivo					John Maddison for BSP
23/04/12								23/04/12

The bank asserts that it complied with clauses 1 and 4 immediately: it extinguished the truck loan and removed the adverse credit rating with the Credit Data Bureau. However, Mr Asivo claims that that is not true. These are   contentious questions of fact, to be addressed later. 

The bank concedes that it did not restructure the housing loan in 2012, a state of affairs that continued throughout 2013 and into 2014.  

During 2012 Mr Asivo made a fresh loan application to the bank, seeking K150,000.00 for the purpose of developing two other properties at Newtown. His application was declined. He then made similar applications to ANZ Bank and Westpac Bank, both of which were declined. He was told by representatives of each of the three banks that he had an adverse credit rating. 

2013

13.	The bank did not restructure the housing loan in 2013.

2014

14.	On 18 July 2014 the Court upheld a motion filed by Mr Asivo in OS No 279 of 2010 and endorsed the terms of the mediated agreement of 23 April 2012 as an order of the Court. 

On 28 July 2014 Mr Asivo commenced the present proceedings, WS No 838 of 2014. He served the writ on 30 July 2014. 

In September 2014 the head of the bank’s asset management unit, Mr Bevan Clark (who gave evidence in the present proceedings) wrote three letters to Mr Asivo, advising that the truck loan had been closed to the satisfaction of the bank, that the adverse entries with the Credit Data Bureau had been deleted and that the repayments on the housing loan would be calculated and that he would be advised regarding the revised loan terms.

On 7 November 2014 Mr Asivo filed an amended writ and statement of claim.

On 22 December 2014 Mr and Mrs Asivo agreed on the terms of a restructured loan, showing a balance outstanding of K58,063.00, repayable over a 14-year period at K590.52 per month. 

2015

15.	On 6 January 2015 the bank established a new loan account for Mr Asivo in accordance with the agreement of 22 December 2014, with repayments due to commence on 6 February 2015.

Mr Asivo has not met any repayments since the date of commencement of the restructured loan. 

The present trial was conducted on 17 August and 8 September 2015.

I will now address each of the five causes of action relied on by Mr Asivo.

1	BREACH OF CONTRACT 

16.	Mr Asivo submits that the mediated agreement of 23 April 2012 is a contract and that the bank breached it in three respects:

(i) it has failed to extinguish the truck loan, a situation that, Mr Asivo asserted, still existed at the date of trial; 

(ii) it did not restructure the housing loan immediately after the signing of the mediated agreement and did not comply with its contractual obligations in this regard until December 2014, which was two years and eight months after the signing of the mediated agreement in April 2012;

(iii) it did not remove the adverse entries regarding him that it had made with the Credit Data Bureau, a situation that, he asserted, still existed at the date of trial.

17.	 Mr Asivo contends that he has proven a cause of action in breach of contract, making the bank liable in damages.

The bank does not deny that the mediated agreement was a contract and does not deny the factual allegation in (ii). However, Mr Brooks, for the bank, submitted that even if the bank’s failure to restructure the loan in a timely manner amounts to a breach of contract, Mr Asivo has suffered no loss. In fact, he has gained. As to allegations (i) and (iii), these are strenuously denied by the bank.

18.	I will address these competing arguments in the context of the elements of a cause of action for breach of contract, of which there are three:

(a) there was a contract, 
(b) the defendant breached it, and 
(c) the plaintiff, as a consequence, suffered damage (Steven Naki v AGC (Pacific) Ltd (2005) N2782, Chris Rai v Memafu Kapera (2014) N5806).

(a)	Was there a contract?

I find that as a matter of law, 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 therefore a contract (Joe Tipaiza v James Yali (2006) N3178, Francis Fuliva v Anthony Wagambie (2011) N4397). 

(b)	Did the bank breach the contract? 

I find that, in relation to allegation (ii), the bank breached the mediated agreement by not restructuring the housing loan within a reasonable time after 23 April 2012. Mr Asivo submitted that the bank was obliged to restructure the loan immediately. The agreement does not say that and I reject the submission. However there was an implied obligation to restructure the loan, and comply with clauses 2 and 3 of the mediated agreement, within a reasonable time. Not complying with those terms until December 2014 was a clear breach of the bank’s obligations. 

The bank tried to deflect blame to Mr Asivo by suggesting that he was not cooperating with the bank. But, as Mr Asivo submitted in response, it was not his job to restructure the loan. It was squarely the bank’s responsibility. I agree. 

What about the two other alleged breaches of the mediated agreement: (i) the alleged failure to extinguish the truck loan and (iii) the alleged failure to reverse adverse entries made with the Credit Data Bureau?

As for the truck loan, I accept the evidence of Mr Clark that, for all intents and purposes, it was extinguished immediately after the mediated agreement of 23 April 2012. Mr Clark explained that at that time the loan was being managed by the Asset Management Unit, together with the housing loan. The bank did not, after 23 April 2012, have or express any intention of attempting to recover any money from Mr Asivo under the truck loan. As to the loan statement that Mr Asivo obtained from the Madang branch, which appears to show a substantial amount still outstanding, Mr Clark explained that this was a “Non-Accrual Loan” statement. It records the amount payable should it be possible to recover that amount from the borrower. He stated that it is part of the bank’s records and it cannot be wiped from the computer system. Mr Clark stated that he wrote a letter to Mr Asivo dated 25 September 2014, saying that the truck loan had been satisfied. 

I find that the bank did not breach clause 1 of the mediated agreement in regard to its obligation to extinguish the truck loan.

As for the adverse entries with the Credit Data Bureau, I accept the evidence of Mr Clark and the Managing Director of Credit Data Bureau Ltd, Mr Bruce Mackinlay, that the adverse entries were deleted on the afternoon of 23 April 2012. I also find that, at the date of trial:

•	there were no adverse entries made by BSP appearing in relation to Mr Asivo;
•	there was no way in which an authorised user of the Credit Data Bureau could re-enter or know about the adverse BSP-related entries that were deleted on 23 April 2012;
•	there were two adverse entries appearing in relation to Mr Asivo, which had been entered by other financial institutions – not by BSP.

Mr Asivo referred to the evidence of his unsuccessful attempts in 2014 to get loan finance from BSP, ANZ and Westpac and his being told by each bank that he had an adverse credit rating or that he was an “undesirable customer”. He submitted that the inference should be drawn from that evidence that the adverse entries made by BSP had never been removed. I reject that submission. The proper inference to  be drawn from that evidence  is – and Mr Mackinlay’s evidence confirms this – that Mr Asivo has an adverse credit rating due to adverse entries, made by financial institutions other than BSP, appearing next to his name in the records of the Credit Data Bureau.  

I find that the bank did not breach the mediated agreement in regard to its obligation under clause 4 to remove adverse entries made with the Credit Data Bureau.

In summary, the bank breached the mediated agreement by its failure to restructure the housing loan in a timely manner. Allegation (ii) is sustained. The bank did not breach the agreement in regard to allegations (i) and (iii), extinguishing the truck loan and removing adverse entries from the Credit Data Bureau. 

(c)	Did Mr Asivo suffer damage?

The question to ask is whether Mr Asivo suffered any loss as a consequence of the proven breach of the mediated agreement? The answer is no. I uphold Mr Brooks’ submission that Mr Asivo benefited from the bank’s failure to restructure the housing loan in a timely manner. Although Mr Asivo, and his wife, gave evidence of the stress and inconvenience they endured as a result of the bank’s actions, much of this was attributable to their perception that the truck loan had not been extinguished and that the adverse entries at the Credit Data Bureau had not been removed, a perception that did not reflect the facts.

19.	Mr Asivo benefited from the bank’s failure to restructure the housing loan in the following way:

•	he has had the benefit of the full amount of the principal (K58,700.00) since 7 June 2010; 

•	although under the mediated agreement, the loan was to commence on 8 June 2010 with interest payable from that date, the bank elected (as Mr Clark explained in his evidence) to commence the loan from 6 February 2015;

•	as a consequence, no interest accrued on the loan in the period from 8 June 2010 to 6 February 2015;

•	Mr Asivo had not, at the time of the trial, made any of the monthly repayments due since 6 February 2015, putting him in default of the repackaged loan;

•	despite Mr Asivo’s default, the bank has taken no recovery action. 

Has a cause of action in breach of contract been established?  

No. Without proof of damage arising as a consequence of the proven breach of contract, a plaintiff cannot establish a cause of action. 

2	SECTION 4, FAIRNESS OF TRANSACTIONS ACT

20.	Mr Asivo argued that the bank acted harshly, oppressively, unconscionably and unfairly in its dealings with him, in particular in regard to its failure to extinguish the truck loan and to remove the adverse entries regarding him at the Credit Data Bureau. He pleads that the bank’s conduct has given rise to a cause of action under Section 4 (fairness) of the Fairness of Transactions Act, which states:

(1)	For the purposes of this Act, the concept of fairness relates to the principle of the just and equitable distribution to and among parties to a transaction of the rights, privileges, advantages, benefits and duties, obligations and disadvantages of the transaction in proportion and relative to a party's standing in or contribution to the transaction, and according to business principles and practices appertaining to the particular transaction in question and the provisions of this Act shall be read liberally and applied accordingly.

(2)	In accordance with the general tenor and purposes of this Act as stated in Section 1 and Subsection (1) of this section, but without departing drastically from the rule of law of right to contract, in determining the fairness or otherwise of a transaction, the circumstances of the parties existing before, at and after the entering into of the transaction shall be taken into account.

21.	I reject this claim for two reasons. First, Section 4 does not create a cause of action. In fact none of the provisions of the Fairness of Transactions Act create a discrete cause of action or actionable wrong that is capable of being enforced by the court (BSP Ltd v Robert Tingke (2014) SC1355, Paul Pilimbo Pora v Dean Hull (2012) N4936). The Act operates in two main ways. One way is by creating a procedure by which a party to a transaction can make an application to the National Court to review the transaction. This is done under Section 5(1) of the Act (review of transactions, grounds etc), which states:

A transaction to which this Act applies may be reviewed by a court on the application of any party, if the Court is satisfied that the transaction was not genuinely mutual or was manifestly unfair to a party. 

22.	If such an application is made, the Court is obliged by Section 7 (mediation), in the first instance, to “attempt to arrive at an amicable settlement” through a “mediated order”. Only after such an attempt has failed is the Court authorised by Section 8 (judicial orders) to “proceed to review the matter and make such order between the parties as it thinks conforms with Section 4” (Panamaseier Resources Pacific Company Ltd v Richard Sikani (2015) N6166, James Geama v OTML Shares In Success Ltd (2011) N4269, Onne Rageau v Chaudoc Ltd (2015) N5901). 

23.	The other way the Act operates is by evincing the legislative policy, set out in its long title as:

Being an Act relating to the effect of certain transactions, to ensure that they operate fairly without causing undue harm to, or imposing too great a burden on, any person, and in such a way that no person suffers unduly because he is economically weaker than, or is otherwise disadvantaged in relation to, another person,

24.	That legislative policy can be drawn upon by the courts in the interpretation of contracts and other legal documents. The Supreme Court held in Rage Augerea v Bank South Pacific Ltd (2007) SC869 and Pija Grannies Ltd v Rural Development Bank Ltd (2011) SC1327 that an implied term of many standard banking transactions is that the bank has a duty to be fair to its customer. That principle was put into effect in the first of Mr Asivo’s cases against the bank, in which I stated:

Banks have a duty to be fair to their customers, especially to those who are in a relatively weak economic position. This is a statutory duty enforceable under the Fairness of Transactions Act 1993 (Negiso Investments Ltd v PNGBC (2003) N2439).

25.	In the present case, Mr Asivo has not sought to invoke the Fairness of Transactions Act in either of those ways. He has not made an application for review under Section 4(1). He has not asked the Court to regard the bank’s duty of fairness as an implied term of any particular transaction. Nor has he argued that the breach of such an implied term has constituted a breach of contract. 

He has simply pleaded and argued that the bank has breached Section 4 and that that amounts to a cause of action, making the bank liable in damages. That is insufficient.  The claim based on Section 4 of the Fairness of Transactions Act is dismissed. 

3	BREACH OF HUMAN RIGHTS

26.	Mr Asivo argues that the bank 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(1) of the Constitution. He claims to have established a cause of action for breach of human rights.

27.	His argument is based on the contention that the bank erroneously made an adverse entry to the Credit Data Bureau regarding the alleged default on his housing loan in July 2009. He submits that the bank has continuously failed to remove it, despite this Court finding in its judgment of 2 October 2009 in Stephen Asivo v Bank of South Pacific Ltd (2009) N3754 that he was not in default, and despite the bank promising though the mediated agreement of 23 April 2012 that it would remove it.

28.	I reject the argument for three reasons. First, it is not based on a sound factual foundation. I have already found as a fact that the bank did remove the adverse entries to the Credit Data Bureau. That was done, in compliance with clause 4 of the mediated agreement, on 23 April 2012. As to the period before that,  it did not form part of the judgment in Stephen Asivo v Bank of South Pacific Ltd (2009) N3754 that the bank had made adverse entries to the Credit Data Bureau. The issue was not raised, no findings of fact were made and the Court did not order the bank to do anything in relation to such a matter.

Secondly, if the court had made findings of fact of the nature contended for by Mr Asivo, he has not proven how the bank’s actions would have amounted to a breach of either of the two human rights on which this part of his case is based. 

Section 49 (right to privacy) of the Constitution states:

Every person has the right to reasonable privacy in respect of his private and family life, his communications with other persons and his personal papers and effects, except to the extent that the exercise of that right is regulated or restricted by a law that complies with Section 38 (general qualifications on qualified rights).

Section 53(1) (protection from unjust deprivation of property) of the Constitution states:

Subject to Section 54 (special provision in relation to certain lands) and except as permitted by this section, possession may not be compulsorily taken of any property, and no interest in or right over property may be compulsorily acquired, except in accordance with an Organic Law or an Act of the Parliament, and unless—

(a)	the property is required for—

(i)	a public purpose; or
(ii)	a reason that is reasonably justified in a democratic society that has a proper regard for the rights and dignity of mankind,

that is so declared and so described, for the purposes of this section, in an Organic Law or an Act of the Parliament; and

(b)	the necessity for the taking of possession or acquisition for the attainment of that purpose or for that reason is such as to afford reasonable justification for the causing of any resultant hardship to any person affected.

29.	Mr Asivo has failed to show, for the purposes of Section 49, how the bank infringed the reasonable privacy of his private and family life. He has failed to show, for the purposes of Section 53, how the bank took compulsory possession of any of his property.

Thirdly, the amended statement of claim makes no mention of an alleged breach of Section 49. It is a new argument, introduced in submissions, which has no basis in the pleadings. 

30.	The claim based on breach of human rights is therefore dismissed. 

4	NEGLIGENCE

Mr Asivo argues that the bank has committed the tort of negligence in that:

(a) the bank owed him a duty of care; 

(b) the bank breached that duty (acted negligently) by failing to immediately perform the mediated agreement, in particular by failing to (i) extinguish the previous truck loan account, (ii) restructure the housing loan and (iii) remove the adverse entries it had made with the credit data bureau; 

(c) the breach of duty caused him damage in that he was erroneously given an adverse credit rating; and 

(d) the type of damage was not too remote.

31.	Mr Asivo has correctly laid out the elements of a cause of action in negligence (Baikisa v J & Z Trading Ltd (2016) N6181). He has proven the first two elements, and I find that:

(a)	the bank owed Mr Asivo a duty of care, as it has been consistently recognised that banks owe a general duty to take reasonable care in their relations with their customers and can be found liable in negligence if all other elements of the tort of negligence are established (Magiten v Rural Development Bank Ltd (2006) N5008, Richard Manui v ANZ Banking Group (PNG) Ltd (2008) N3405, David Nelson v Credit Corporation (PNG) Ltd (2011) N4368, Simaul Guru v National Development Bank Ltd (2016) N6162). 

(b)	the bank breached its duty of care, ie it was negligent, in that it failed to restructure the housing loan within a reasonable time after the mediated agreement of 23 April 2012.

32.	However he has failed to prove the third or fourth elements, for the same reason he was unable to establish a cause of action in breach of contract. He has not proven that he suffered any loss as a consequence of the bank’s negligent conduct. In fact he benefited from it. 

The claim based on negligence is therefore dismissed. 

5	DEFAMATION 

33.	Mr Asivo argues that the bank defamed him and destroyed his reputation. He claims to have established a cause of action in defamation of character.

His argument is based on the contention that the bank erroneously made an adverse entry to the Credit Data Bureau regarding the alleged default on his housing loan in July 2009. He submits that the bank has continuously failed to remove it, despite this Court finding in its judgment of 2 October 2009 in Stephen Asivo v Bank of South Pacific Ltd (2009) N3754 that he was not in default, and despite the bank promising though the mediated agreement of 23 April 2012 that it would remove it.

I reject the argument for two reasons. First, it is not based on a sound factual foundation. I have already found as a fact that the bank did remove the adverse entries to the Credit Data Bureau. That was done, in compliance with clause 4 of the mediated agreement, on 23 April 2012. As to the period before that, as I explained above in relation to the breach of human rights claim,  it did not form part of the judgment in Stephen Asivo v Bank of South Pacific Ltd (2009) N3754 that the bank had made adverse entries to the Credit Data Bureau. The issue was not raised, no findings of fact were made and the Court did not order the bank to do anything in relation to that matter.

Secondly, if the court had made findings of fact in the present case of the nature contended for by Mr Asivo, he has neither pleaded nor proven all the elements of a cause of action in defamation. 

34.	In Papua New Guinea the actionable civil wrong called defamation can be labelled as a ‘statutory tort’ in that it is based on the common law tort of defamation, but its elements and its prosecution as a cause of action have been codified by the Defamation Act (Chapter 293). There are also special pleading requirements prescribed by the National Court Rules that must be complied with (South Pacific Post v Nwokolo [1984] PNGLR 38, David Lambu v Paul Paken Torato (2008) SC953, Paul Wagun v Robert Palme (2015) N5917).

Mr Asivo has not complied with the pleading requirements. He has also failed to prove all the elements of the tort, namely:

(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 (David Lambu v Paul Paken Torato (2008) SC953, Theresa Joan Baker v Lae Printing Pty Ltd [1979] PNGLR 16, Elizabeth Kimisopa v Darryl Kamen (2015) N5844, Francis Chibelle v Jack Mafu (2015) N5942).

35.	As to (a), I am not satisfied, on the evidence available, that Mr Asivo has proven that mere making of an adverse entry in the register of the Credit Data Bureau amounts to a defamatory imputation. 

As to (b), I am satisfied that information as to Mr Asivo’s default on the truck loan and the housing loan was ‘published’ (within the meaning of that term in Section 4 of the Defamation Act).

However, as to  (c), I am not satisfied that its publication was unlawful, given that access to  the information was strictly limited to financial institutions who were authorised users of the Credit Data Bureau database. 

No cause of action in defamation is established.

CONCLUSION

36.	As the plaintiff has failed to establish any of the five causes of action relied on, the proceedings must be dismissed. Costs will not follow the event, for two reasons. 

First, Mr Asivo has succeeded in showing, again, that the bank’s conduct in this saga, which has extended for a period of ten years, since 2006, has been less than exemplary. He has proven that the bank breached the mediated agreement and was negligent in that it failed to repackage the housing loan until two years and eight months after the date of the mediated agreement. He has demonstrated how this was a continuation of the sort of dilatory conduct of the bank displayed in regard to the Court’s orders of 2 October 2009 in OS No 290 of 2009, Stephen Asivo v Bank of South Pacific Ltd (2009) N3754. Those orders were to be complied with by the end of October 2009. They were not complied with until June 2010. In that case I made these comments on the conduct of the bank:

Clearly the bank is in the wrong. Its internal procedures broke down. It failed to do a proper reference check. Then it blamed its customers – and tried to make them pay – for its own mistakes. This is unacceptable banking practice (Steven Naki v AGC (Pacific) Ltd (2005) N2782). The bank treated Mr and Mrs Asivo in a shabby and insensitive way and used bullying tactics, culminating in their threatened eviction from the property that they had purchased with the bank’s assistance.

37.	I have seen no need to make the same comments regarding the bank’s conduct since 2009. However, in April 2011, in the second judgment, Stephen Asivo v Bank of South Pacific Ltd (2011) N4252, I still had concern about the bank’s attitude:

As for the bank, it needs to appreciate that it was found in the previous proceedings to have not only committed a breach of contract but to have treated its customers in a shabby and insensitive way and used bullying tactics against them, culminating in their threatened eviction from the property that they had purchased with the bank’s assistance. Its internal procedures broke down and it blamed its customers for its own mistakes. I am not sure that the bank appreciates that it was found so clearly to have been in the wrong. The submissions made in court by its counsel suggest a lack of preparedness to accept that errors have been made. … This also conveys the impression that the defendant bank has not grasped the importance of the need to make firm and timely decisions on this case and to resolve its differences with its customers and settle this matter expeditiously. The bank needs to change its attitude.

38.	Five years later, I reluctantly am driven to make similar comments. Is the bank learning from its past mistakes? Does it know how to deal with difficult customers? How did the bank manage to dither over the need to repackage the housing loan for two years and eight months after the mediated agreement was signed? How did it manage to not communicate with Mr Asivo effectively and tell him in clear and straightforward terms (until September 2014, and only after commencement of the present proceedings) that the truck loan had been extinguished, and that the adverse entries at the Credit Bureau had been removed?

Mr Asivo is no shrinking violet. He is a formidable litigant. Surely the bank can give this saga priority and make every effort to avoid further litigation, so as not to embarrass itself again.  

Secondly, the relative economic positions of the parties do not warrant an award of costs in favour of the bank.

39.	Finally I rule on Mr Brooks’ closing submission that Mr Asivo be ordered to repay the housing loan in full within 30 days. No cross-claim has been made.  No application for such an order is properly before the court. The submission is refused.  

ORDER

(1)	It is declared that the plaintiff has failed to prove any cause of action.

(2)	The proceedings are accordingly dismissed.

(3)	The parties will bear their own costs. 

Judgment accordingly,

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Ashurst Lawyers:   Lawyers for the Defendant