Varivao Holdings Ltd v Lokumana [1999] SBHC 35; HCSI-CC 361 of 1996 (13 April 1999)

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The Plaintiffs Claim. Varivao Holdings Limited, the plaintiff, claims the sum of $55,104.45 from Mr. Charles Lokumana, the defendant, who was employed by it. The claim was originally for $57,104.45, but the plaintiff conceded that one of the plaintiff’s cheques for $2,000 was not presented to the bank for payment. The cause of action is that the defendant, during his employment, converted to his own use the sum of $55,104.45, money belonging to the plaintiff. That would be conversion in the law of tort, because it would mean that the defendant dealt with the plaintiff's money in a manner inconsistent with the plaintiff's right to possess the money. The allegation would also amount to an offence under the Penal Code. In this case the Court is concerned only with the tort of conversion. At the close of the trial, learned Counsel, Mr. A. Nori for the plaintiff, admitted that the defendant paid $9,000 back to the plaintiff. The plaintiffs claim to be decided is therefore for $46,104.45.

The defendant admits, in his pleadings, having been employed by the plaintiff in its Honiara office and that he converted to his own use, money belonging to the plaintiff, but the sum was $27,000. He says he paid back $9,000 and so the plaintiff's claim should now be for $18,000 not $55,104.45. On that admission the plaintiff could have at anytime applied for judgment for the sum of $27,000 without the need to adduce evidence, - see rule 6 Order 34 of the High Court (Civil Procedure) Rules.

The plaintiff chose not to apply, and so the admission now must be treated merely as evidence in the trial of the case.

Mr. A. Nori, submitted for the plaintiff that the plaintiff proved its claim, on balance of probability, in three ways: That the defendant wrote cheques for larger sums than for sums due for payments so that he converted the excess. That he issued cheque payments to named payees, but the cheques were never supported by invoices and vouchers, the defendant converted the proceeds. That the defendant deposited funds due to the plaintiff into his own account known as Hawka's A/C. I shall add that in as far as conversion of the funds of the plaintiff by someone is concerned, there was a fourth method: Certain cheques were missing from the office of the plaintiff, some of the cheques were presented to the bank by someone and the proceeds of the cheques were converted.

The defendant's case is that he took without authority up to $27,000, he was not responsible for up to $55,104.45 claimed by the plaintiff. He said that accounts of the plaintiff were not properly maintained and that on occasions when he was away or engaged in other duties such as driving, other employees wrote cheques and accounts of the plaintiff and did banking. He admitted exhibit No. PL1 as admission note he signed. In the note the particulars of the sums converted are given as follows:

The sums add to $20,000, so another $7,000 admitted has not been identified in the admission. To succeed in its claim, the plaintiff needed to prove specifically that cheques and cash converted on dates and in the sums other than those given in the admission note amounted to $35,104.45 which is $55,104.45 less the $20,000 particularised.

Conversion of one's goods is the intentional dealing with one's goods in a way that it infringes one's entitlement to immediate possession of the goods so as to deny one the entitlement to possession. The person entitled to immediate to possessions is usually the owner, the one with title to the goods, but others such as bailees, pledgees, executors, trustees and finders of lost goods may have to immediate possession and may therefore sue in conversion - see Rose -v- Matt [1951] 1 KB 810, Bridges -v- Hawkesworth [1851] 21 LJQB 75 and City of London -v- Appleyard [1963] 1 WLR 982. The unauthorised use of the sums of money lost to the plaintiff in this case amounted to conversion because it was dealing with the plaintiff's money in manners inconsistent with his entitlement to immediate possession. Usually the plaintiff is awarded the value of the goods in question, in the case of money it is the sum converted.

The evidence adduced proved well beyond balance of probability that sums of money totalling to well above $55,104.45, belonging to the plaintiff, have been converted. They were proceeds of missing cheques that the plaintiff did not authorise payment on, proceeds of cheques paid on non-existent invoices and without supporting vouchers, part of the proceeds of unauthorised cheques made for higher payments than were due, and money of the plaintiff not deposited into the plaintiff's account, but in someone's account.

I am not satisfied that the evidence proved that the proceeds of all the cheques, the particulars of which were given in evidence. were stolen by the defendant. I accept that the evidence raised suspicion about all the cheques identified because the defendant was in charge of accounts generally and it was him who most of the time prepared payments, wrote out cheques and did banking. There was, however, evidence that on occasions Dudley Longamei, plaintiff's only witness, Papetua and unnamed purchasing officer, both not called as witnesses, prepared payments, wrote cheques and did banking. That was largely admitted by the plaintiff's witness, Dudley Longamei himself. It is not improbable that even on occasions only, conversion that the defendant was not responsible for could have occurred.

On the, other hand, there are proceeds of cheques, that the evidence proved to very high standard, that the defendant converted to his use. The first category is of cheques banked into Hawka's Account an account which the defendant admitted was his. The sums were, not due to the defendant and he had no authority to deal with the plaintiff's money in that way. The cheques are:

Cheque No. 567721 (NBSI) for $2,000 seemed to have been repeated in exhibit PL2. For its first entry on exhibit No PL 2, the word " void" is entered as the word on the cheque counter-foil. The same cheque number appear as the sixth entry. It is shown as banked into Hawka's Account. I have omitted the first entry of the cheque and taken the sixth entry. I also omitted cheque No. 567702 for $1,789.20 said to have been banked into Hawka's Account, because in cross-examination Mr. Longamei said that it was a guess that the cheque was paid into Hawka's Account.

The second category of cheques the proceeds of which were adequately proved to have been converted by the defendant is of 13 cheques made between 13.2.1996 to 14.8.1996 by the defendant himself for payment of salaries. The cheque counter-foils were written in the handwriting of the defendant. The sums on the cheques were higher than the sums actually paid as salaries. The differences were not accounted for by the defendant. I accept that there has been sufficient proof that the defendant converted the sums representing the differences. The particulars of the cheques and differences are:

Cheque No.	Date	Amount
567791	13.6.1991	3,098.55
77327	13.2.1996	500.00
20817	27.2.1996	381.41
20874	14.3.1996	586.00
80764	27.3.1996	580.00
50619	12.4.1996	799.99
91770	29.4.1996	860.00
6917	14.5.1996	660.50
6953	28.5.1996	746.20
91933	27.6.1996	860.40
59524	12.7.1996	764.80
59547	26.7.1996	726.40
117463	14.8.1996	756.00
	<	12,109.65

In addition to thee 2 cries of cheques, there was cheque No. 567756 date dated 22.5. 1996, evidence about which sach satisfies me that the proceeds were converted by the defendant. The cheque counter-foil was in the defendant's handwriting. The proceeds converted was the sum of $5,792 overpaid for purchase of cocoa.

When the proceeds of cheques in the first and second categories are added to the proceeds of cheque No. 567756, the total proceeds proved to have been converted by the defendant is $34,160.15. To this sum is to be added the sum of $20,000 the particulars of which were given by the defendant in his admission note. The admissions in the note did not include proceeds of cheque 567756 and of cheques in the above two categories. That takes the total sum proved to have been converted to $54,160.15. The sum is short of $55,104.45 claimed, by $944.30.

It is to be noted that several cash cheques were proved as paid by the bank. There was however, not sufficient evidence that it was the defendant who cashed them at the bank. There was no evidence that the cheques were in his handwriting or that they were given to him to cash and he did not account for the proceeds, or some other evidence that connected him to the proceeds of the missing cheques cashed. Maybe there was such evidence somewhere, but it did not reach court. Another point to note is that the sums admitted in PL1 as converted by the defendant were not part of the proceeds of the cheques about which evidence was led. Had there been proof that the cashed cheques were cashed by the defendant, the plaintiff would have in fact proved its claim for sums in excess of $55,104.45, maybe by $20,000.

In the end I give judgment to Varivao Holdings Ltd, against Charles Lokumana, for the sum proved converted by him, less the sum admittedly paid back. In figures the judgment is for $54,160.15 - $9,000 which is $45,160.15.

The plaintiff has proved almost all its claim. The defendant admitted liability for up to $27,000, but only after the case had commenced and in any case, only $9,000 of it was paid. There has not been any deposit into Court for the remainder of the $27,000 admitted. The plaintiff is entitled to costs, but the costs are reduced by the proportion of $9,000 to $ 54,160.15.

Dated this Tuesday the 13th day of April 1999
At the High Court
Honiara

High Court of Solomon Islands

Varivao Holdings Ltd v Lokumana [1999] SBHC 35; HCSI-CC 361 of 1996 (13 April 1999)