Campbell v Bank of Queensland Ltd
[2011] QSC 122
•16 May 2011
SUPREME COURT OF QUEENSLAND
CITATION:
Campbell v Bank of Queensland Ltd [2011] QSC 122
PARTIES:
IAN ARTHUR CAMPBELL
(plaintiff)
v
BANK OF QUEENSLAND LIMITED
ACN 009 656 740(defendant)
FILE NO:
SC No 2950 of 2009
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
16 May 2011
DELIVERED AT:
Brisbane
HEARING DATE:
5 May 2011
JUDGE:
Chief Justice
ORDER:
PROCEEDINGS ADJOURNED TO A DATE TO BE FIXED WITH COSTS RESERVED. PARTIES TO SUBMIT MINUTES OF JUDGMENT REFLECTING THE RESULT INDICATED BY THESE REASONS.
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – EXEMPTION CLAUSES – where defendant bank provided line of credit facility to plaintiff – where indemnity form provided that any facsimile instructions were to be, inter alia, “signed in accordance with the Customer’s current authorities held by the Bank and in a form satisfactory to the Bank” – where forged facsimile instruction for payment was received and actioned by the defendant – whether the defendant was protected by the provisions of the indemnity
Carr v McDonald’s Australia Ltd (1994) 63 FCR 358, cited
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500, consideredTai Hing Ltd v Liu Chong Hing Bank [1986] 1 AC 80, cited
COUNSEL:
C Johnstone for the plaintiff
M Jones for the defendant
SOLICITORS:
Hickey Lawyers for the plaintiff
HWL Ebsworth Lawyers for the defendant
CHIEF JUSTICE:
Introduction
On or about 23 October 2003, the plaintiff and the defendant agreed that the defendant provide a line of credit facility to the plaintiff. The constituting documents follow tab B in exhibit one, comprising the customer account authority, loan details, banking guide and general conditions documents. Those conditions include an undertaking by the defendant not to let anyone other than the plaintiff use his account without his consent. Under the customers’ authority, only the plaintiff or his sister Mrs Purvis could use the facility.
Between 2003 and 2007, the plaintiff drew down on the facility by fax or email instructions sent to the defendant’s Benowa branch. In November 2006 at the defendant’s request, the plaintiff executed an “all purpose authority and indemnity” to cover future delivery of instructions by facsimile. A copy is included from p 40 after tab B in exhibit one. I accept that the defendant thereby contractually regulated the giving of subsequent instructions by facsimile.
Two unauthorised transactions occurred in December 2007. On 5 December, the defendant debited the account in the amount of $100,030, and on 24 December, in the amount of $25,030 (each including a $30 transaction fee). Each of those amounts was paid out to an account in the name of Palmones Teresita Villanueva with the Bank of China (Hong Kong) Ltd, not to the plaintiff or on his behalf, and the account debited, following the defendant’s receipt of facsimile instructions (tab C pp 1, 2) purportedly from the plaintiff.
In his written submissions, Mr Jones, for the defendant, pointed to a number of circumstances which may have suggested fraud – including that there had previously been transfers to foreign accounts of similar sums; that the request was sent from a hotel “not far” from the plaintiff’s place of business in the Philippines; that the author of the fax had a ‘reasonable degree’ of knowledge of the plaintiff and his bank; and that the plaintiff had access to internet banking, which he submitted raised the inference that he had more frequent access to his account balance than on receipt of the monthly hardcopy bank statements. Finally, he contended that the plaintiff’s response to the unauthorised withdrawals was “notably less intense”, as it involved a delay of several weeks in commencing legal action, than his response to a previous contested dishonour charge of $246.90.
But notwithstanding these features, I conclude on the unchallenged evidence of the handwriting expert (p 8ff) and on the oral evidence of Mr Campbell and Mrs Purvis that the signatures were forgeries – and there was at the trial no evidence or contention to the contrary.
Becoming aware of the debits in January 2008, the plaintiff raised the matter then with the defendant and asked that the debits be reversed. The plaintiff was informed on 4 March 2008 that the only course of action was to “take the matter up with the local police”, and that the defendant would not be reversing the debits. In fact, the defendant went on to levy interest on the outstanding amounts.
The defendant does accept however that if the payments were not authorised, and contractual protections do not apply, then the state of the account must be rectified, by reversal of the debits and removal of the accrued interest claims.
As the case proceeded before me, the major issue was whether the defendant was protected by the provisions of the “all purpose authority and indemnity”, for it was acknowledged that otherwise, this was simply a case of unauthorised debiting of a customer’s account – at the instance of someone other than the customer and without the customer’s authority.
Evidence led at trial
In case it subsequently matters, where there was apparent discrepancy in the evidence of the respective witnesses, I tended to prefer the evidence of the plaintiff and his sister. I do not say that critically of the defendant’s witnesses, who were bank officers, but the reality is that their recollections were unsurprisingly limited, in relation to particular dealings with the plaintiff, in the context of the multitude of transactions with which they were daily concerned.
On the other hand, insofar as an issue may have arisen in relation to the defendant’s discharge of a duty of care, I was satisfied that evidence, albeit limited, of the defendant’s system and process, and its application in this situation, demonstrated the application of reasonable care: I considered as significant the application of signatures by bank officers to documents confirming that relevant verification etc had been made.
But it is unnecessary to go into that in more detail because of my conclusion that properly construed, the protective provisions of the authority and indemnity did not apply in these circumstances where the signature on each of the instructions, purportedly that of the customer, was a forgery.
Terms of the Indemnity
The relevant terms of the facsimile instructions “all purpose authority and indemnity” follow:
“In consideration of the Bank agreeing to accept Facsimile instructions from the Customer or Account Signatory and/or agreeing to transmit certain information to the Customer or Account Signatory by Facsimile, the Customer agrees that:
9. a Facsimile instruction is to include the name of the Customer and the Account Number, and is to be signed in accordance with the Customer’s current authorities held by the Bank and in a form satisfactory to the Bank;
10. provided a Facsimile instruction is signed as in clause 9, the Bank is under no obligation to verify the authenticity or accuracy of a Facsimile instruction received from the Customer or Account Signatory or purporting to have been sent by the Customer or Account Signatory;
11. the Bank may act on any directions contained in such Facsimile instruction regardless of by whom the actual or purported instructions were transmitted or by what means any signature may have been affixed to the Facsimile instruction and notwithstanding that such facsimile instruction may have been initiated or transmitted in error or fraudulently or may otherwise have been altered or distorted prior to or in the course of transmission…”
The critical words are “signed in accordance with the Customer’s current authorities held by the Bank and in a form satisfactory to the Bank”. These impugned facsimile instructions had not been signed by the plaintiff as customer.
Mr Johnstone, for the plaintiff, contended that the phrase should be read as signed in accordance with the ‘Customer Authority’ (Tab B, p1) which was signed by the plaintiff on 23 October 2003 and which incorporates the Terms and Conditions (Tab B, p9ff), including an undertaking by the defendant not to let anyone other than the plaintiff use his account without his consent (cl 4 and 8 of the Terms and Conditions in the banking guide). As such, the indemnity would only protect the bank if it was an instruction which was in fact executed by the plaintiff (or his sister).
Yet Mr Jones, for the defendant, submitted that to give some reasonable operation to the provisions protecting the bank, cl 9 should be interpreted to mean signed “apparently” in accordance with the authorities, meaning signatures held by the bank, allowing latitude to a bank officer, approaching an assessment of the “form” of the signature, to determine whether it should be regarded as “satisfactory” (in terms of cl 9).
While, as Mr Jones submitted, the nature and object of the Indemnity contract is to limit the responsibility of the Bank, it must be recognised that this falls within the wider contractual relationship between the parties, a fundamental tenet of which is not to act upon instructions from a customer without a mandate (Tai Hing Ltd v Liu Chong Hing Bank [1986] 1 AC 80, 106).
Such an exclusion clause is to be interpreted (Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510) by:
“…construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.”
I consider the imputed instructions were not “signed in accordance with the customer’s current authorities” (cl 9) because the signature upon them, purporting to be that of the plaintiff, was a forgery.
The alternative construction would, in essence, allow the Bank to act on forged instructions from any third party, regardless of whether they were authorised to make transactions on the account. In a case of imperfect or unclear drafting, particularly where there is an imbalance of bargaining power, language is to be construed contra proferentem – Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510; Carr v McDonald’s Australia Ltd (1994) 63 FCR 358 at 379. If the defendant intended such a result, clear language to that effect should have been used.
The opening sentence preceding cl 9 says the Bank will accept facsimile instructions “from the Customer”, which would not cover the impugned transactions. Contrast the opening sentence preceding cl 13 in relation to email, which provides that the Bank agrees to “accept Email messages apparently from the Customer or Account Signatory” [emphasis added].
Contrary to the submission of Mr Jones, this construction does not render the operation of the clause a nullity. I consider that the concluding reference in cl 9 to “in a form satisfactory to the bank” relates to the signing of the document (rather than the initial reference to the facsimile instruction), and was intended to accommodate signatures applied, for example, by stamping or mechanical device (see the definition of “signature” in the banking “guide”). It could also mean that the document is in the usual form signed and transmitted by the customer.
Clauses 10 and 11
Clauses 10 and 11 give the bank certain protection in the event that the facsimile instruction method is adopted. But cl 10 accords those protections “provided a facsimile instruction is signed as in cl 9”, that is, signed in accordance with the current authorities, which must mean signed by the customer. In that event, the bank need not take further steps to verify the authenticity or accuracy of the instruction, including an instruction (actually signed by the customer) and purportedly “sent” by the customer (although perhaps by someone else, such as a secretary or associate).
Clause 11 confirms that the bank may act on “such” a facsimile (ie one properly signed) regardless of who transmitted it, or whatever the means by which the signature was affixed. It then lists a number of specific protections: the bank is protected notwithstanding the instruction was initiated or transmitted in error, or fraudulently, or where it was altered or distorted (post-signature) prior to or in the course of transmission.
But all this protection depends on the existence of an instruction genuinely signed in accordance with the current authorities. The protection then accorded allows for risks possibly attending facsimile transmission because of its nature, and allows the provisions ample commercial operation.
Mr Jones pointed out this leaves the bank having to make an assessment whether a signature is genuine. That is so (and other factors may aid that assessment), but if the bank had wanted a broader protection, that could have been achieved only by much narrower and precise language.
Conclusion
Mr Jones accepted that if the protection accorded by the provisions did not apply, because the relevant faxed instructions were not signed by the plaintiff, then the plaintiff was entitled to appropriate relief.
I should mention, finally, the indemnity provisions at p 43 following tab B in exhibit one. The arguably relevant release would arise under cl 26(b), but I consider that is to be taken to refer to the discretions expressly conferred, occurring under cll 22 and 23 (and not any unexpressed discretion which may relate to an assessment of satisfactoriness under cl 9). The indemnity provided for in those provisions (cll 22, 23) did not apply, and the saving in relation to negligence at the end of cl 26 need not be considered.
If further specific findings are necessary, they should be requested. The parties should be able to agree on a form of appropriate orders. There has been some discussion already on the matter of costs. I invite the presentation of minutes of judgment reflecting the result indicated by these reasons, and in the meantime, order that the proceeding be adjourned to a date to be fixed, with costs reserved.
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