Noble Brothers Enterprises v Kaumae [2014] SBHC 23; HCSI-CC 423 of 2013 (25 March 2014)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

NOBLE BROTHERS ENTERPRISES
1st Claimant

And:

ISLANDERS NO. 1 BUILDING CONSTRUCTION & PLUMBING SERVICES
2nd Claimant

And:

DAVID KAUMAE
1st Defendant

And:

BANK OF SOUTH PACIFIC LIMITED
2nd Defendant

Mr. J. Keniapisia for the 1st and 2nd Claimants.
Mr. Lidimani for the 1st Defendant
Mr. A. Radclyffe for the 2nd Defendant.
Date of hearing: 21 March 2014.
Date of Ruling: 25 March 2014.

RULING

Apaniai, J:

1. This is an application by the 2nd defendant, Bank of South Pacific Limited, ("Bank") for dismissal of the claim by the 1st claimant, Noble Brothers Enterprise, ("Noble Brothers") against the Bank. The ground for the application is that the claim does not disclose any reasonable cause of action against the Bank.
   
2. At the commencement of the hearing of the application, Mr. Keniapisia of counsel for the 1st and 2nd claimants, sought adjournment to enable the claimants obtain copies of cheques belonging to Noble Brothers which have been presented to, and presumably honoured by, the Bank. Counsel alleges that the Bank was negligent in honouring the cheques as they were not signed by two compulsory signatories of the cheque account. He argues that it is vital that copies of the cheques are sighted in order to make a proper decision on the application for dismissal.
   
3. I refused the application for adjournment for a number of reasons. First, I do not consider that sighting the cheques will provide any substantial assistance in determining the issue in this application, which is whether or not a reasonable cause of action is disclosed. It has been a long standing principle of law that where an application is made for the dismissal of a claim on the ground that no reasonable cause of action is disclosed, it is not necessary to adduce evidence to show that a cause of action is, or is not, disclosed. The court will simply look at the statement of the case and determine whether, assuming that the facts averred in the statement of the case are true, those facts have disclosed a tenable case for the relief claimed[1].
   
4. Second, Mr. Keniapisia admits that he has been requesting copies of the cheques from the Bank but without success. If he could not obtain copies as he has been requesting, I do not see how an adjournment would solve that problem. I think an adjournment would only prolong the hearing of the application.
   
5. Third, the notice for the hearing of the application for the dismissal was issued as long ago as 27 November 2013. The claimants have had enough time to notify the court and the other parties that they would be seeking an adjournment unless copies of the cheques have been provided to them. They have waited until the hearing date to make the application for adjournment from the bar table.
   
6. I now turn to the application by the 2nd defendant for dismissal of the claim.
   
7. The issue on this application is whether no reasonable cause of action is disclosed against the Bank. In determining this issue, the court will apply the principle referred to in paragraph 3 above.
   
8. The court will look at the statement of the case and determine whether, assuming that the facts averred in the statement of the case are true, those facts have disclosed a tenable case against the Bank for the relief sought.
   
9. The relief sought against the Bank is for the court to find that the Bank had negligently facilitated cheque withdrawals from Noble Brothers' cheque account because it had allowed withdrawals from that account contrary to instructions that two compulsory signatures should appear on the cheques before withdrawals can be made from the account. Consequently, the 1st claimant seeks damages against the Bank for any associated/consequential financial or business loss resulting from the Bank's alleged negligent conduct.
   
10. The facts averred against the Bank are set out in paragraphs 10, 11, 12 and 13 of the statement of the case.
    
11. Paragraph 10 alleges that there are four signatories to the 1st claimant's cheque account. These signatories are Norman P Su'unorua, Sam Su'unorua, David Kaumae Jr and Linda Kaumae. Paragraph 10 further alleges that the four signatories have informed the Bank by way of the bank form[2] ("SN04") signed by the four signatories that the signatures of David Kaumae and Norman Su'unorua would be the two compulsory signatures to sign for every cheque withdrawals to be made from the firm's cheque account. SN04 is the usual form provided by the Bank to be completed by those seeking to open a new account with the Bank.
    
12. Paragraph 11 alleges that the Bank had breached the instructions contained in SN04 by negligently processing withdrawals of cheques presented by David Kaumae without the other compulsory signature (that of Norman Su'unorua) appearing on the cheques.
    
13. Paragraph 12 alleges that the cheques listed in schedule 2 of the claim were issued in 2012 and were signed only by David Kaumae and that the other compulsory signatory, Norman Su'unorua, did not sign the cheques. The paragraph further alleges that by processing the cheques, the Bank was negligent and had acted in breach of the instructions contained in SN04.
    
14. Paragraph 13 alleges that as a result of the Bank processing the cheques, the 1st claimant had suffered losses.
    
15. Much of the argument on this application has centred on the question whether there was instruction in SN04 requiring "two compulsory signatures" before withdrawals are allowed.
    
16. Mr. Keniapisia argues that it is clear from SN04 that the last two signatures appearing at the bottom of SN04 are meant to be the compulsory signatures that must appear on all cheques before the Bank can honour them. He argues that this is an issue to be determined at trial and therefore the application should be dismissed to enable evidence to be called to prove that this was the intention of the four signatories at the time they signed SN04.
    
17. Unfortunately, I do not agree with Mr. Keniapisia that it is necessary for evidence to be called to prove what the intention of the four partners were at the time they signed SN04. In my view, the terms of SN04 are clear and need no further evidence to show what was intended by the parties when drawing cheques upon Noble Brothers' account. Paragraph 1(a) lists the names of the partners in Noble Brothers which owns the cheque account. The partners are Norman P Su'unorua, Sam Su'unorua, David Kaumae Jr and Linda Kaumae. Paragraph 1(b) of SN04 shows that the partners have informed the Bank that "any two" of the signatories whose signatures appear at the foot of SN04 can draw cheques upon the account of Noble Brothers. In paragraph (2) of SN04, the partners have authorised the Bank to accept any cheque drawn by "any two" of the signatories at the foot of SN04. At the foot of SN04 (under "Partners' signature") are the signatures of the four partners. At the very bottom of SN04 are two signatures. One is said to be that of Norman P Su'unorua and the other is said to be that of the 1st defendant, David Kaumae, who is not a partner in the firm but the appointed manager and administrator of the firm and the person having financial oversight over the firm's businesses. It can be seen that those two signatures appear in the space provided for the signatures of persons who are not partners in the firm but who are authorised to sign cheques on behalf of the firm.
    
18. The conclusion one draws by looking at SN04 is that there are five signatories who can draw cheques on Noble Brothers' account but for the Bank to honour any cheque, the cheque must bear at least two of the five signatures. I see nothing in SN04 which says that the signatures of David Kaumae and Norman P. Su'unorua are compulsory signatures which must appear on the cheques before the Bank can honour the cheque. Had the intention been that both David Kaumae and Norman P. Su'unorua must sign on all cheques issued by the firm, paragraphs 1(b) and (2) of SN04 would have used words to that effect. Those two paragraphs have not restricted the signing of cheques to David Kaumae and Norman P. Su'unorua only but said that "any two" can sign the firm's cheque. I reject Mr. Keniapisia's argument.
    
19. Unfortunately, that does not settle the issue before the court on this application for there seems to be an allegation against the Bank in paragraphs 11 and 12 of the Amended Claim, which appear to suggest that the Bank had been honouring cheques signed only by David Kaumae. If it is shown that the Bank had been honouring cheques signed solely by David Kaumae then there is a case that the Bank might have been acting contrary to the instructions in SN04 requiring at least two signatories and therefore liable for negligence as alleged.
    
20. In the light of the assertions in those two paragraphs, I am satisfied a cause of action has been disclosed. The cause of action may not be very clear by the way it was stated in those paragraphs, but it is settled law that striking out claim and dismissing a case summarily is a drastic action which can be done only in very clear cases where the claim is baseless and so hopeless as to be described as abuse of process[3]. I am not satisfied that this case can be so described.
    
21. It follows that this application is dismissed and that the 1st claimant will pay the costs of the application for the reason that the application was prompted by the manner in which the claim was drafted.
    
22. The orders of the court are:-
    

[1] The application by the 2nd defendant is dismissed.

[2] The 1st claimant will pay the costs of the 2nd defendant of, and in connection with, this application to be taxed if not agreed.

[3] The case is adjourned to 9.30 am on 27 March 2014 for further directions.

THE COURT

_________________________
James Apaniai
Puisne Judge.

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^[1] Tikani v Motui [2002] SBHC 10; HC-CC 029 of 2001 (18 March 2002); Earthmovers (Solomons) Ltd (trading as Pacific Timbers) -v- Samuel Thao & Others (trading as Aola Timber Exports Agency) [1998] SBHC 49; HC-CC 65 of 1997 (30 June 1998).
^[2] The bank form is annexed as exhibit “SN04” to the joint sworn statement by Norman P Su’unorua and Sam Su’unorua filed on 22 November 2013.
^[3] Tatalu v Lifuasi [1996] SBHC 32; HC-CC 146 of 1996 (19 June 1996).