Soakofa Trading Ltd v Bank of South Pacific Ltd [2021] PGSC 8; SC2068 (2 February 2021)

SC2068

PAPUA NEW GUINEA
[IN THE SUPRME COURT OF JUSTICE]

SCA NO. 82 OF 2017

BETWEEN
SOAKOFA TRADING LIMITED
First Appellant

AND
KEN PETAKIN, MANAGING DIRECTOR OF SOAKOFA TRADING LIMITED
Second Appellant

AND
BANK OF SOUTH PACIFIC LIMITED
Respondent

Waigani: Manuhu, Makail & Shepherd, JJ
2020: 12^th June
2021: 2^nd February

SUPREME COURT APPEAL – appeal against discretionary judgment – dismissal of proceeding – whether cause of action in negligence statute-barred – breach of duty of care – continuous breach of duty – recurrent fresh cause of action – banker’s negligence – Frauds and Limitations Act 1988 – section 16(1)(a)

Cases Cited:
Papua New Guinea Cases

Waim No 85 Limited v. The State (2015) SC1405
Oil Search Limited v. Mineral Resources Development Corporation Limited (2010) SC1022
Kennedy Amun v. Bank of South Pacific Limited: WS No 1316 of 2005 (Unnumbered & Unreported Judgment of 21^st July 2008 by Davani J)
Pija Grannies Limited v. Rural Development Bank Limited (2010) N5829
Wake Goi v. Bank of South Pacific Limited: WS No 1469 of 2015 (Unnumbered & Unreported Judgment by David J dated 27^th March 2020)
Public Curator of Papua New Guinea v. Konze Kara (2014) SC1420
Konze Kara v. Public Curator of Papua New Guinea & Anor (2010) N4055
Loani Henao v. David Coyle (1999) N1918
Augerea v. Bank of South Pacific Limited (2007) SC 869
Curtain Bros (PNG) Ltd v. University of Papua New Guinea (2005) SC788

Overseas Cases

Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461
Jarvis v. Moy, Davies, Smith, Vandervell& Co (No 3) [1936] 1 KB 399
Selangor United Rubber Estate Limited v. Craddock (No 3) [1968] 1 WRL 1555
Foley v. Hill [1848] EngR 837; (1848) 2 HLC 28; 9 ER 1002
Crumbie v. Wallsend Local Board [1891] UKLawRpKQB 17; [1891] 1 QB 503
Huyton v. Liverpool Corporation [1926] 1 KB 146
Donoghue v. Stevenson [1932] AC 562

Counsel:

Mr. W. Mapiso, for the Appellants
Mr. A. H. Waffi, for the Respondent

JUDGMENT

2^nd February, 2021

1. BY THE COURT: This is an appeal against a discretionary judgment of the National Court delivered at Waigani on 4^th May 2017 which summarily dismissed the proceeding for being statute-barred under Section 16(1)(a) of the Frauds and Limitations Act 1988 (Limitations Act). Section 16(1)(a) relevantly provides:

“Subject to Sections 17 and 18, an action –
(a) that is founded on simple contract or on tort; or
(b) ..................; or
(c) ..................; or
(d) ..................

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued”.

National Court Proceeding

2. In National Court proceeding WS No. 29 of 2011 the appellants (collectively referred to herein as Soakofa) sued the respondent bank for negligence and sought damages in relation to sums of money originally invested in 8 interest bearing term deposit accounts (IBDs) which they had held with the former Papua New Guinea Banking Corporation Limited (PNGBC) and with the Bank of South Pacific Limited (BSP). Four IBDs held with PNGBC were automatically transferred to BSP when PNGBC was amalgamated with the BSP on 9^th April 2002.

3. Soakofa filed their original writ of summons with endorsed statement of claim on 1^st February 2011. This was followed by the filing of an amended statement of claim on 23^rd February 2011.

4. By their amended statement of claim, Soakofa pleaded that BSP had been negligent in that BSP, post-amalgamation with PNGBC, had failed to regularly inform Soakofa on a monthly basis of the status of the 8 IBDs which Soakofa had progressively invested with the respective banks between 17^th February 1992 and 15^th January 2001. Soakofa also alleged that BSP had failed to:

(a) satisfactorily explain errors regarding the IBD accounts;
(b) keep proper records of the IBD accounts; and
(c) respond to Soakofa’s enquiries regarding the IBD accounts.

5. Particulars of Soakofa Trading Limited’s 4 IBDs invested with PNGBC as predecessor to BSP and for which BSP became responsible on its amalgamation with PNGBC are set out at paragraph 5 of the amended statement of claim:

No. Date IBD Account No. Amount Bank

(a) 18/06/93 307-004-000 K5,838.50 PNGBC
007 701 4932
(b) 09/09/95 307-004-000 K10,999.50 PNGBC
(c) 08/08/96 307-004-000 K20,364.71 PNGBC
00072121
(d) 11/03/98 715402 K72,686.32 PNGBC
Total: K109,889.03

6. Particulars of Ken Petakin’s 4 IBDS invested direct with BSP are set out at paragraph 6 of the amended statement of claim:

No. Date IBD Account No. Amount Bank

(a) 17/02/92 9610097 K23,758.91 BSP
(b) 05/08/92 9610438 K9,751.86 BSP
(c) 09/09/94 9500921 K10,506.22 BSP
(d) 15/01/01 1000159242 K40,000.00 BSP
Total: K 84,016.99

Motion to Dismiss Proceeding

7. On 18^th May 2012 BSP moved a notice of motion filed on 20^th April 2012 before the motions judge. The motion sought an order to summarily dismiss the proceeding on the basis that Soakofa’s cause of action in negligence against BSP was statute-barred pursuant to Section 16(1)(a) of the Limitations Act.

8. It was BSP’s submission that Soakofa’s cause of action was time-barred on the basis that, as pleaded in the amended statement of claim, Soakofa had “suffered loss of the principal deposit accounts held with the Defendant and its predecessor (PNGBC) between the years of 1992 and 2001.”

9. Soakofa responded to BSP’s motion by asserting to the effect that:

(a) they had no knowledge of the law which required them to file proceedings within 6 years of date of accrual of their cause of action in negligence; and

(b) they only became aware of BSP’s failure to keep records of the subject IBDs when BSP informed them by letter dated 26^th April 2009 that it no longer had those records, BSP’s response having been made in answer to Soakofa’s letter of enquiry dated 20^th February 2009.

National Court Decision

10. On 4^th May 2017 the motions judge upheld BSP’s application and dismissed the proceeding for being statute-barred under s.16(1)(a) of the Limitations Act. At paragraph 9 of his judgment the judge explained that:

I understand the Plaintiffs are complaining of not being given a monthly statement on the IBDs. While the plaintiffs do not state when BSP started defaulting in providing the monthly statement, their complaints relate to the IBDs held by BSP in Mt Hagen between 17^th February 1992 and 15^thJanuary 2001. Assuming that the first monthly statement due after this period would have been by 15^thFebruary 2001. That means the cause of action arose nearly 10 years before this proceeding was filed.

Grounds of Appeal

11. In seeking to have quashed the order for dismissal of the proceeding made by the motions judge, Soakofa rely on four grounds of appeal, these being:

1. The motions judge erred in law in holding that the cause of action was statute-barred when the cause of action was a continuing cause of action founded in negligence;
   
2. The motions judge erred in law in failing to exercise his discretion to refuse the respondent’s motion to dismiss the proceeding in circumstances where:
   

(a) BSP failed to keep proper records of the subject IBDs; and

(b) BSP unjustly enriched itself from money that belonged to Soakofa.

3. The third ground can be disregarded as it is largely a repetition of the second ground.
   
4. The motions judge erred in law in dismissing the proceeding in circumstances where the decision to dismiss was delivered almost 5 years after the hearing of BSP’s motion to dismiss.

Identification of Issue

12. We consider that as the motions judge ruled that the cause of action was statute-barred and dismissed the proceeding, the sole issue for our consideration is when did Soakofa’s cause of action accrue? This is the issue pleaded in the first ground of appeal. The remaining grounds of appeal were either not argued before the motions judge or those grounds are irrelevant to the time-bar issue and do not require our consideration.

13. It is trite law that a plaintiff’s cause of action must be commenced within the limitation period which applies to that cause of action. If the relevant limitation period has expired, this is a complete defence to the plaintiff’s claim: Waim No. 85 Limited v. The State (2015) SC1405. The expiration of the limitation period ordinarily operates to extinguish the plaintiff’s cause of action.

14. In Oil Search Limited v. Mineral Resources Development Corporation Limited (2010) SC1022 the issue of time limitation was raised in the context of whether the cause of action in that case was founded on a simple contract or on an action upon a specialty. However, we consider that the following statement of the Supreme Court is equally apposite to causes of action in tort in view of s.16(1)(a) of the Limitations Act:

A finding on an application for dismissal of a proceeding for being time-barred depends on three matters, which are:

(a) identification of a cause of action;
(b) identification of the date on which the cause of action accrued;
(c) categorisation of the cause of action ...

Identification of the cause of action

15. BSP has referred in its submissions in response to this appeal to a number of local and overseas cases such as Kennedy Amun v. Bank of South Pacific Limited WS No 1316 of 2005 (Unnumbered & Unreported Judgment of Davani J dated 21^st July 2008); Pija Grannies Limited v. Rural Development Bank Limited (2010) N5829; Wake Goi v. Bank of South Pacific Limited WS No 1469 of 2015 (Unnumbered & Unreported Judgment of David J dated 27^th March 2020); Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461; Jarvis v. Moy, Davies, Smith, Vandervell & Co (No 3) [1936] 1 KB 399; Selangor United Rubber Estate Limited v. Craddock (No 3) [1968] 1 WRL 1555 and Foley v. Hill [1848] EngR 837; (1848) 2 HLC 28; 9 ER 1002, together with a passage from Paget’s Law of Banking 8^th Edition (1972) at p. 69, in support of the obvious proposition that the relationship of banker and customer is one of contract and that a plaintiff’s cause of action accrues at the date of breach of contract. BSP argues that for this reason, this Court should find the relationship between Soakofa and the BSP is one based in contract and uphold the finding of the motions judge that the breach of contract occurred on a date in early 2001 and that this was when Soakofa’s cause of action also occurred.

16. However, there can be no doubt that pursuant to the pleadings in the amended statement of claim, Soakofa has pleaded a cause of action based on the tort of negligence. A claim in negligence is distinct from a claim for breach of contract because its constituent elements are different.

Identification of the date on which the cause of action accrued

17. The real issue is when did Soakofa’s cause of action in negligence by BSP accrue? It was submitted for Soakofa that their cause of action accrued on 26^th April 2010 as this was when BSP informed Soakofa that it had no record of the IBDs. BSP countered that Soakofa’s cause of action in negligence accrued on or about 15^th February 2001 and expired 6 years later on 15^th February 2007, this submission being based on the finding by the motions judge that 15^th February 2001 was the date when default occurred by the two banks in furnishing Soakofa with monthly statements in respect of the IBDs. BSP argued that the motions judge did not err when computing time for the purposes of the 6-year limitation period as having commenced on 15^th February 2001. BSP contended that Soakofa’s cause of action was time-barred as the writ was filed nearly 10 years after Soakofa’s cause of action was reputed to have commenced.

18. A claim in negligence is a tort covered by Section 16(1)(a) of the Limitations Act for which the period of limitation is 6 years: see also Public Curator of Papua New Guinea v. Konze Kara (2014) SC1420.

19. In the case of a tort actionable per se, the cause of action accrues when the wrongful act is committed: Konze Kara v. Public Curator of Papua New Guinea & Anor (2010) N4055. An example of a tort actionable per se is defamation: see Loani Henao v. David Coyle (1999) N1918.

20. Where a tort is actionable only on proof of damage (or loss), such as negligence, the cause of action accrues when the damage (or loss) accrues: Konze Kara v. Public Curator of Papua New Guinea & Anor (supra).

21. Some torts may be continuous, and a fresh cause of action arises daily as the tort continues. The above-cited case of Konze Kara v. Public Curator of Papua New Guinea & Anor is particularly instructive in this regard. The trial judge in that case referred extensively to the English Court of Appeal cases of Crumble v. Wallsend Local Board [1891] UKLawRpKQB 17; [1891] 1 QB 503 and Huyton v. Liverpool Corporation [1926] 1 KB 146 as persuasive authority for this proposition.

22. It should be noted that these cases were decided in the context of a legal duty prescribed by statute or trust and either the legal duty or duty imposed under the trust remained undischarged over a period of time by the defendant, that default forming the basis for continuous breach and a fresh cause of action each time a breach occurred. We consider that the same principle may be applied in cases of breach of the general common law duty of care envisaged in the leading case of Donoghue v. Stevenson [1932] AC 562.

23. We observe that the motions judge noted at paragraph 9 of his judgment to the effect that one of Soakofa’s complaints was that monthly bank statements for the IBDs were not furnished to Soakofa. As there were 8 IBDs, it follows that each IBD required a statement to be provided to Soakofa each time the IBD fell due for redemption or roll-over, based on the initial term or period for which each IBD had been invested. BSP failed to furnish those statements to Soakofa from February 2001 onwards.

24. What Soakofa’s pleadings do not disclose are the periods for which the 8 IBDs were respectively invested. Was the term for each IBD account a period of 30 days or for 2 months, 6 months, 1 year or 2 years? The pleadings do not give this information to enable us to identify the period of maturity for each of the IBDs.

25. The motions judge used the 8^th IBD account of K40,000.00 dated 15^th January 2001 and added one calendar month to calculate the due date of issuance of the monthly statement for that IBD as being 15^th February 2001. This date was taken by the motions judge to be the date of BSP’s default in its duty of care to Soakofa and therefore, according to the motions judge, the date on which Soakofa’s cause of action in negligence against BSP accrued for the purpose of calculating the 6-year limitation period under Section 16(1)(a) of the Limitations Act.

26. However, it is clear on the evidence before this Court that Soakofa lost not only the principal amounts but all interest which accrued on each of the 8 IBDs. Soakofa has alleged that further breaches of BSP’s duty of care included failure to satisfactorily explain to Soakofa errors which had occurred on the IBD accounts, failure to keep proper and correct records of the IBD accounts and failure to respond to Soakofa’s queries since 2001.

27. Soakofa’s pleadings do not tell us the specific dates the appellants made enquiries and requests of BSP for information regarding the IBD accounts. Soakofa can therefore be criticised for being delinquent in their obligation to disclose all material facts. However, what was before the motions judge was not the issue of clarity of pleadings or lack of particulars but the issue of the 6-year time bar. Thus, it is clear to us that Soakofa’s allegation is that there was a continuous and ongoing failure by BSP as from February 2001 to supply relevant information to Soakofa.

28. A banker’s duty to maintain and keep accurate records of its customers’ accounts and to provide information when due or requested was explained by the Supreme Court in Augerea v. Bank of South Pacific Limited (2007) SC 869 as follows:

In our view, all banks have a duty to maintain and keep accurate records and accounts of their customers and keep customers regularly and accurately informed of all activity and the status of their accounts on a monthly basis. This is necessary for the sake of transparency, avoiding surprises and to avoid mistakes or any anomalies of the kind identified in this case from being carried over and instead have them detected earlier on and rectified. ...

This is the least a bank can do given that, they alone have control over their charges and fees and the calculation of interests and application of them to a customer’s account. A bank’s customer usually has no control over these things. Where errors or anomalies appear, banks also have a duty to provide a satisfactory explanation for them and correct them without delay and at no costs and penalty against the customer unless the customer forced the error at the first place on the bank.

29. We consider that the duty of a bank to provide regularly-issued statements for each IBD invested with it forms part of the bank’s overall duty to maintain and keep accurate records of its customers’ accounts and to promptly respond to enquiries and requests made by customers regarding their accounts.

30. In the present case, Soakofa did not plead that any of the 8 IBDs were to be rolled over for periods comparable to their initial periods of investment if the principal amounts and interest thereon were not redeemed or withdrawn at or prior to date of each IBDs’ maturity. We nevertheless note that the motions judge acknowledged this unique feature of an IBD account when he observed:

In relation to IBDs, I am aware from my own experience that an advice is usually sent to the account holder when the term of the investment nears maturity... The advice usually show the details of the account, the deposit, the term of the deposit, the interest earned and a notice to the account holder that the balance will be rolled over for another term unless redeemed. (underlining added)

31. The motion judge’s acknowledgment in this regard reinforces the principle that it is the duty of a bank to regularly inform a customer having an IBD account as to the status of that IBD depending on the conditions on which the IBD was invested, such as the term or period of investment, the interest accrued on the IBD and whether the IBD will be rolled over for a further term if not redeemed on the maturity date. The allegation in this case is that BSP failed to provide monthly statements for each IBD account over a lengthy period of time. Thus, given the nature of an IBD account, it follows that BSP’s breaches of its duty of care in this case continued at date of maturity of each IBD up until BSP notified Soakofa on 26^th April 2010 that had no record of any of the subject IBDs.

32. In our respectful view, the negligence of the BSP was continuous. A fresh cause of action in respect of each of the 8 IBD’s arose as and when BSP failed each time to issue regular statements after February 2001 through to April 2010 and each time that the BSP failed to meaningfully respond with accurate information to Soakofa’s enquiries regarding the IBDs. We note that the second appellant, Ken Petakin filed two affidavits to oppose BSP’s motion for dismissal. He explained in his affidavit evidence that he had not filed proceedings prior to 2011 because BSP had not responded to his queries and requests in connection with the IBDs.

33. BSP referred in its evidence to 17 notices which PNGBC had issued to Soakofa in relation to IBD accounts of Soakofa. Those notices were issued for IBD account nos. 712121, 715402, 716835, 725299 and 727091.

34. Except for IBD account no. 725299, the remainder of the IBDs were the subject of Soakofa’s claim in the proceeding. BSP submitted that both PNGBC and BSP had discharged their respective obligations in the past to keep Soakofa informed as to the status of the subject IBDs. However, we are not deciding whether the motions judge was correct in deciding the merits of the claim. We are only concerned with the issue of the time bar. Evidence as to notices actually given by the PNGBC and BSP in connection with Soakofa’s IBDs prior to February 2001 may be relevant at trial. That evidence is not relevant for the purposes of this appeal.

35. On the other hand, having regard to Mr Petakin’s affidavit filed 20^th September 2011, we are satisfied that the allegation that the BSP failed to provide information in relation to each of the subject IBDs was a failure that continued from February 2001 until BSP’s letter of 26^th April 2010, which is when BSP informed Soakofa that it had no active files in its records in the name of Mr Petakin. BSP also advised by that letter to the effect that BSP had checked the Unclaimed Monies List for the period 1999 to 2007 and had ascertained that no monies in the name of Mr Petakin were disclosed in that List. This evidence is sufficient to satisfy us that BSP’s breach of its banker’s duty of care to Soakofa continued to accrue from February 2001 through to 26^th April 2010. The time-bar of 6 years applicable to Soakofa’s claim in negligence against BSP under Section 16(1)(a) of the Limitations Act therefore expired at midnight on 26^th April 2016. We are satisfied that the writ in WS No. 29 of 2011, having been filed on 1^st February 2011, was filed well within time.

36. We also note that the motions judge, at paragraph 13 of his judgment, commented that Soakofa’s evidence was vague and that commencement of the National Court proceeding some 10 years after the last IBD was due to have matured cast doubt on the merits of the claim. However, we observe that as the matter before the motions judge was a threshold application for summary dismissal of the proceeding for allegedly being statute-barred, the exercise of the Court’s discretion did not require the motions judge to embark on a detailed assessment of the credibility of the evidence of the parties as to the merits of the case. The veracity of the parties’ evidence as to whether a plaintiff is entitled to damages is a matter for trial. It was therefore not necessary for the motions judge in this instance to make any ruling on the merits of Soakofa’s claim by reference to evidence presented to the Court on the issue of the time bar.

Exercise of discretion

37. In deciding whether the motions judge properly exercised his discretion to summarily dismiss the proceeding, we are guided by the basic principle that an appellate Court should be slow to interfere with the exercise of discretion by a motions judge unless it can be satisfied that the motions judge:

(a) acted upon a wrong principle;
(b) gave weight to extraneous or irrelevant matters; or
(c) failed to take into account relevant considerations; or
(d) made a mistake as to the facts.

Even where there is no identifiable error, the appellate Court can infer such an error if the resulting judgment is unreasonable or plainly unjust: Curtain Bros (PNG) Ltd v. University of Papua New Guinea (2005) SC788.

38. In this case, we are satisfied that the motions judge failed to take into account relevant considerations, namely the evidence that BSP had failed subsequent to February 2001 to provide regular periodic statements to Soakofa for each of the 8 IBDs or to properly explain errors regarding the IBDs or to keep proper records of the IBDs or to satisfactorily respond to Soakofa’s requests and enquiries regarding the IBDs over a lengthy period of time prior to 26^th April 2010.

Conclusion

39. In conclusion, we find for the reasons we have given that there was error by the motions judge in the exercise of his judicial discretion. We uphold the appeal, quash the decision of the motions judge of 4^th May 2017, reinstate the proceeding and remit the matter to the National Court for trial before another judge on a date and time to be fixed. We order BSP to pay Soakofa’s costs of the appeal, such costs to be taxed if not agreed.

Order

40. The terms of the formal order of the Court are:

1. The appeal is upheld.
   
2. The judgment of the National Court of 4^th May 2017 is quashed.
   
3. The proceeding is reinstated and remitted to the National Court for trial before another judge on a date and time to be fixed.
   
4. The respondent shall pay the appellants’ costs of the appeal, such costs to be taxed if not agreed.

Judgment and orders accordingly.
________________________________________________________________
Guardian Legal Services: Lawyers for the Appellants
Mr A.H. Waffi: In-house legal counsel for the Respondent