N8242

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 608 OF 2015

BETWEEN
VOWAGU CONSTRUCTION
Plaintiff

AND
CHRISTOPHER ORAKE
First Defendant

AND
BANK SOUTH PACIFIC LIMITED
Second Defendant

Alotau: Toliken J
2019: 08th November

CIVIL – Claim for damages – Negligence - False representation – Bank and client – Representation by bank teller to client –Whether teller represented to client that bank was agent of overseas trucking company – Whether teller was acting with his employer’s authority and within scope of employment –Whether Bank vicariously liable.

Facts:
The First Defendant was employed by the Second Defendant as a teller. He made representations to the Plaintiff, a customer of the Second Defendant that he was an agent for a US based trucking company and that he can arrange for the purchase of vehicles, by remitting payments to the company using the Second Defendant’s Telegraphic Transfer (TT) facility. He received the funds and purportedly transferred the funds through the Second Defendant’s TT Facility. The funds were received by the nominated overseas bank, but the Plaintiff did not take delivery of the vehicles. The Plaintiff sued for damages in negligence. The Second Defendant is sued on the basis of vicarious liability. 

Held: 

(1)	The First Defendant represented to the Plaintiff’s agent that he (the First Defendant) and not his employer, the Second Defendant, was the agent for the US based trucking company.
(2)	In so far as the First Defendant deviated from his assigned duties as stipulated to him by the Second Defendant, and embarked upon an enterprise of his own, albeit using the Second Defendants’ Telegraphic Transfer facility and was performing his assigned duties that day, he cannot be said to have been acting with his employer’s authority let alone within the scope of his employment.
(3)	The Second defendant is not vicariously liable and the claim against him is dismissed with costs.
(4)	Judgment is entered against the First Defendant with damages to be assessed.

Cases Cited:

Nil

Counsel:

P. Palek, for the Plaintiff
M. Henao and A Paru, for the Second Defendant
Nil appearance by the First Defendant

JUDGMENT ON LIABILITY

08th November 2019

1.	TOLIKEN J:	By Writ of Summons dated 24th April 2015, the Plaintiff, Vowagu Construction (Vowagu) seeks damages against the Defendants for loss he allegedly suffered because of the misrepresentations allegedly made by the First Defendant, Christopher Orake (Orake) in the course of his employment with the Second Defendant, Bank South Pacific Ltd (BSP). Vowagu subsequently amended its writ on 26th May 2015. 

THE CLAIM
2.	Vowagu relevantly pleaded in its Amended Statement of Claim dated 22nd December 2015 the following –

(1)	that it is a business registered under the Business Names Act and carries on business in civil construction and hires and thus has the capacity to sue and be sued in its corporate name and capacity. 
(2)	That the First Defendant, Christopher Orake (Orake) was at all material times an employee of the Second Defendant (BSP).
(3)	That BSP is a company registered under the Companies Act and the Financial Institutions Act as a bank and carries on business of and in relation to banks and financial institutions and thus can sue and be sued.
(4)	On 14th March 2011,one Llyod Franklin, an agent of Vowagu, attended BSP’s Alotau Branch for assistance to purchase a two (2) tonne truck for Vowagu from a Japanese Used Car dealer.
(5)	Orake attended to Vowagu’s agent in his capacity as employee of BSP.
(6)	At the relevant and material time Orake represented himself to Vowagu’s agent that he (Orake) was a representative of a trucking company in the United States of America and represented to the said agent that with the assistance of BSP he could purchase two trucks from the US company for the price of one.
(7)	Relying on the representations made by and on behalf of BSP the agent drew a cheque from Vowagu’s cheque account for the sum of K32,050.00 as advised by Orake. 
(8)	The representation by Orake was made in the course of his employment with BSP and BSP is therefore vicariously liable for Orake’s actions.
(9)	The representations by Orake for and on behalf of BSP that he was an agent of an American trucking company were false and negligent and resulted in Vowagu suffering loss and damages.
(10)	Vowagu therefore claims the following –

(1)	Damages in the sum of K32,050.00
(2)	Damages for loss of business in the sum K315,261.14
(3)	Exemplary damages
(4)	Special damages
(5)	Interest
(6)	Costs
(7)	Such further orders as the Court deems appropriate. 

DEFENCE
3.	Mr. Orake did not file any defence in respect of this suit nor did he appear at any of the appearances prior to and including the substantive hearing. 

4.	In its Amended Defence, BSP admits that it is registered both under the Companies Act and the Financial Institutions Act, that it is a bank and carries on a banking business which included the transfer of money for payment of goods. It admits that Mr. Orake was at the material time employed at its Alotau Branch as a teller. It also admits that Vowagu had held and operated a cheque account (no. 1002455606) at its Alotau Branch. BSP further admits that on 14th March 2011, on written instructions from Vowagu, it took steps for the Telegraphic Transfer (TT) of USD11718.40 (PGK32,000.00) to an overseas bank account nominated by Vowagu and on 15th March 2011 the amount of K32,050.00 was drawn fromVowagu’s account and the amount of USD11,718.40 was remitted subsequently to the nominated overseas bank account. In respect of Vowagu’s TT instructions to Mr. Orake, BSP admits that in that regard Mr. Orake was acting in his capacity as its employee.

5.	BSP, however, denies that–

(a)	it carries on business as a motor dealer or held itself out to be a motor dealer.
(b)	representation was made as alleged by Vowagu.
(c)	but if there was, it was not made in the course of Mr. Orake’s employment with BSP or with BSP’s authority.
(d)	It is vicariously liable for any representation made by Mr. Orake as such representation was not connected in any way to BSP’s banking business. 
ISSUES
6.	The issues for the Courts determination therefore are –

(1)	Whether Mr. Orake made the representation alleged by Vowagu;
(2)	If it was made, whether it was made in the course of Mr. Orake’s employment with BSP and with BSP’s authority,
(3)	Whether BSP is vicariously liable.

UNDISPUTED FACTS
7.	The following facts are not disputed, and I adopt them as helpfully articulated by Mr. Henao, Counsel for the Second Defendant, in his submissions. Mr Llyod Franklin, principal witness for Vovagu also confirms these.  

(a)	Vowagu is a business registered under the Business Names Act and carries on business in civil construction and hires. It was registered on 06 July 2010. Its registered owner is Alfred John. The business’ principal address is Suau Compound, Alotau, Milne Bay Province. Mr. Lloyd Franklin is the agent of Vowagu in Alotau. 
(b)	On the day in question Mr. Orake was employed by BSP as a bank teller at its Alotau Branch.
(c)	BSP was and is a duly incorporated company and a registered Financial Institution providing banking and financial services to its customers. These services include remittance of funds abroad.
(d)	Vowagu was, at the relevant time a customer of BSP and operated a cheque account No. 1002455606.
(e)	BSP is neither a motor vehicle dealer nor an agent of any overseas motor vehicle company or dealer.
(f)	Sometime around March 2011 Vowagu intended to import a used truck from Japan to expand its operations. Its agent Llyod Franklin attended the BSP Branch in Alotau and was served by Mr. Orake. What transpired between them is disputed and I will return to it presently. 
(g)	It so happened, however, that on 14th March 2011, Llyod Franklin, applied on behalf of Vowagu to remit by Telegraphic Transfer (TT) the sum of $USD11,718.40 (PGK32,000.00) to Trade & Shipping Services International, St. Paul, Minnesota for the for the purchase of two x 2 ton trucks through its nominated bank account (no. 104780045324) US Bank, Little Canada Branch, 2850 Rice Street, St Paul, Minnesota. The funds were drawn from Vowagu’s cheque account by cheque no. 000014 for the sum of K32,050.00, inclusive of a bank charge of K50.00.
(h)	The TT for the amount of US$11718.40 was dispatched to the nominated account on 15 March 2011 under Reference no. F60315262844000.
(i)	Vowagu did not take delivery of the trucks they paid for. Its complaints to BSP prompted an investigation by Merolyn Samson, the Banks Head of International Operations at its Headquarters in Port Moresby. A SWIFT message from BSP’s partner bank in the US, Wells Fargo Bank, New York International Branch, showed that the receiving bank of the funds had acknowledged crediting the funds into “BNF” on 15 March 2011.
(j)	Subsequent to these investigations Mr. Orake and another officer Hiroshi Kapigeno were dismissed from their employment with Bank. 

DISPUTED FACTS

10.	The following facts are disputed –

(i)	That Mr. Orake represented to Mr. Franklyn for and on behalf of BSP that he was an agent of an American trucking company were false and negligent.
(ii)	That the representation was made with BSP’s authority and in the scope of Mr. Orake’s employment. 
(iii)	That BSP was vicariously liable for Mr. Orake’s representations
(iv)	That Vowagu suffered loss as a result of the representation
(v)	That Mr. Orake and BSP are liable for the losses suffered by Vowagu.

11.	I now turn to the issues.

Whether Mr. Orake represented to Mr. Franklin for and on behalf of BSP that the bank was an agent of an American trucking company?

12.	The only evidence directly on this issue is that of Lloyd Franklin. He is the Plaintiff’s agent in Alotau. He deposed to having identified some Japanese used cars from an email advertisement and thereafter of attending BSP in Alotau on 14th March 2011 to seek assistance to purchase a two (2) tonne tipper truck from a Japanese Used Car dealer.  He was served by the Mr. Orake who was at the material time employed by BSP as a teller. He told Mr. Orake his plan to purchase a used tipper truck, Mr. Orake told him that he (Orake) was an agent of an American trucking company called Global Trade & Shipping International. He advised Franklin that with the help of BSP, he could purchase two trucks for the price of one, which will be US$11,718.40 or K32,000.00. Mr. Orake then produced an invoice purportedly from Global Trade & Shipping International.

13.	Believing this to be a better investment, Franklyn drew the sum of K32,050 from the Plaintiff’s account, the extra K50.00 being for the Bank’s service fee. 

14.	 As we have seen above the funds were transmitted by BSP to the nominated overseas account and duly acknowledged as having been credited to the said account.  

15.	So, what exactly did Orake represent to Franklyn?  Orake has not filed a defence let alone appear at the trial and so we are stuck with Franklyn’s evidence, uncorroborated as it is. 

16.	If we were to rely on that evidence, it appears plainly clear to me that Orake represented himself to Franklyn as the agent of Global Trade & Shipping International, and not his employer BSP.  In so far as he represented himself as the agent for that US trucking firm is concerned, I find that there is nothing in the evidence to show that he was in fact what he held himself out to be, or that he was not for that matter. In other words, he may very well have been,for all we know.Whether or not this representation was false, has not been proved on the balance of probabilities. It may very well have been false, but no evidence has been led to prove that it in fact was. The fact that the trucks did not arrive may prove that the representation was false but without evidence to support the Plaintiff’s claim, I cannot hold otherwise.  

17.	But then it is further pleaded, and evidence was led by Franklyn in support of that, that Orake represented to him that BSP would assist him in purchasing the trucks. Franklyn does not say in his affidavit what he understood this to mean. BSP submitted though that it did what the customer ordered and transferred the funds to the nominated overseas account – a fact not disputed in any way by the Plaintiff. 

18.	Indeed given the nature of BSP’s main business and the fact that it is not a car dealer, and that no evidence has been led that it has held itself out to be one or an agent for that matter, lesser still an agent for Global Trade & Shipping International, at the relevant time or ever at all, Orake’s representation that BSP will assist with the purchase of the trucks, will be understood  by any reasonable person, and more so by any reasonable customer of the bank, that BSP will assist with the transfer of funds through its TT service. If that were the case, and I believe it was, then I do not see how that statement could be understood to be a misrepresentation. 

19.	But even if alleged representations were made, were they made with BSP’s authority and in the scope of Orake’s employment? 

Whether the Representation Was Made With BSP’s Authority and within Scope of Employment.

20.	There is no dispute that Orake was employed by BSP at its Alotau Branch as a teller at the relevant time. It is not disputed that he attended the Plaintiff’s agent Mr. Lloyd Franklin on 14th March 2011 and that he facilitated the transfer of funds drawn from the Plaintiff’s account to Global Trade & Shipping International through BSP’s TT Service  for the purchase of two trucks from Global Trade & Shipping International instead of buying from a Japanese Used Car dealer.

21.	However, did he act with BSP’s authority and within the scope of his employment? From the evidence adduced before me by BSP’s witnesses, particularly Nao Airi, it is clear to me that he did not act with BSP’s authority or in the scope of his employment. In so far as Orake deviated from his assigned duties as stipulated to him by BSP, and embarked upon an enterprise of his own, albeit using BSP’s facilities and performing his assigned duties that day, he cannot be said to have been acting with his employers authority let alone within the scope of his employment. 

Whether BSP is Vicariously Liable

22.	 BSP cannot therefore be held vicariously liable for the representations made by Orake to the Plaintiff’s agent on 14th March 2014, let alone the damages the Plaintiff suffered as a result of any representation made by the Mr. Orake. The claim against BSP should therefore be dismissed with costs.

23.	As for the First Defendant he has not defended the claim against himself and the evidence before me proves on the balance of probabilities that he is entirely personally liable for the losses suffered by the Plaintiff. Judgment ought therefore to be entered against him with damages to be assessed.

Orders

24.	My orders are therefore as follows –

1.	The Plaintiff’s claim against the Second Defendant is dismissed with costs which will be taxed if not agreed upon.
2.	Judgment is entered against the First Defendant with damages to be assessed.
Ordered accordingly.
________________________________________________________________
L.B. Mamu, Public Solicitor: Lawyers for the Plaintiff
No Appearance by First Defendant
BSP In-House Lawyers: Lawyers for the Second Defendant