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Bank South Pacific Ltd v Pundia [2012] PGNC 112; N4747 (26 July 2012)

N4747

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 377 OF 2011

BETWEEN

BANK SOUTH PACIFIC LIMITED
Plaintiff

AND

DENNIS PUNDIA
Defendant

Waigani: Makail, J
2012: 19th & 26th July

MORTGAGE - Breach of loan agreement - Housing loan - Written agreement - Failure by mortgagor to repay loan - Loan account in arrears - Exercise of right of possession by mortgagee - Order for possession - Land Registration Act, Ch 191 - s. 74.

Cases cited:

Bank of Papua New Guinea -v- Muteng Basa [1992] PNGLR 271
Papua New Guinea Banking Corporation -v-Bara Amevo [1998] PNGLR 240
Max Umbu -v- Steamships Limited (2004) N2738

Counsel:

Mr K Kawat, for Plaintiff
No appearance, for Defendant

JUDGMENT
26th July, 2012

1. MAKAIL, J: This is an ex parte trial matter, the defendant having shown no interest in defending the claim since its commencement on 04th July 2011. The plaintiff seeks an order for possession of a property described as allotment 9, section 312, Hohola in the National Capital District following an alleged breach by the defendant of a loan agreement.

2. In support of the claim, the plaintiff relies on a number of affidavits of its Commercial National Recovery Officer in the Asset Management Division Mr Raymond Bonjui. They are:

(a) Affidavit sworn on 30th June 2011 and filed on 04th July 2011, (Exhibit "P1");

(b) Affidavit sworn and filed on 01st August 2011, (Exhibit "P2");

(c) Affidavit of Publication sworn and filed on 25th October 2011, (Exhibit "P3");

(d) Supplementary affidavit of sworn and filed on 11th July 2012, (Exhibit "P4"); and

(e) Additional affidavit sworn and filed on 12th July 2012, (Exhibit "P5").

3. The undisputed facts are, the defendant was employed by the plaintiff. In or about February 2003, he applied for a housing loan of K48,000.00. On 18th February 2003, the plaintiff approved the loan and on 12th March 2003, the parties signed a loan agreement. A copy of the agreement is annexed to the affidavit of Mr Bonjui (exhibit "P1"). The money was for the defendant to purchase a property described as allotment 9, section 312, Hohola in the National Capital District, contained in State lease Volume 83 Folio 167. It was a term of the agreement that the defendant repay the loan at K300.00 per fortnight with interest of 5 % per annum over a period of 15 years. In terms of security, the property was put up as security for the loan.

4. In or around 03rd March 2005, the defendant fell into arrears and the loan account was referred to the Bad and Doubtful Debt section of the plaintiff for further action. It was then referred to the Asset Management Division to recover the arrears. As at 08th February 2005, the outstanding loan was K44,295.02. On 21st March 2005, the plaintiff served letters of demand and notice of default on the defendant demanding settlement of the outstanding loan. Despite that, the defendant failed. According to the Statement of Account as at 19th July 2012, the outstanding loan is K73,056.60. On the evidence, I am satisfied the defendant has defaulted on the loan and is in breach of the agreement.

5. The plaintiff, as the mortgagee, now seeks to exercise its right of possession of the property based on the security given by the defendant. It relies on the security to repossess the property. It also relies on s 74 of the Land Registration Act which states:

"74. MORTGAGEE MAY ENTER AND TAKE POSSESSION, ETC.

(1) Whee default is made in payment of any secured money, a creditor may -

(a) enter into possession of the mortgaged or charged land by receiving the rents and profits of the land; or

(b) distain on the occupier or tenant of the land under the power to distain conferred by Section 75; or

(c) bring an action of ejectment to obtain possession of the land.

(2) The creditor may bring an action under Subsection (1)(c) before or after exercising a remedy -

(a) referred to in this section; or

(b) conferred by Section 68.

(3) A creditor is entitled by action or other proceedings in the Court to foreclose the right of the debtor to redeem the mortgaged or charged land."

6. There have been many cases in the past where the mortgagee has exercised its right to take possession of the property where the mortgagor has defaulted on the loan: Bank of Papua New Guinea -v- Muteng Basa [1992] PNGLR 271, Papua New Guinea Banking Corporation -v-Bara Amevo [1998] PNGLR 240 and Max Umbu -v- Steamships Limited (2004) N2738.

7. The facts of Muteng Basa's case (supra) are identical to this case. In that case, the defendant was an employee of the plaintiff Bank. He obtained a staff housing loan at a concessional interest rate from the plaintiff Bank. He met the repayments whilst employed until he resigned from the Bank. He fell into arrears. Justice Brown (as he then was) held that:

"The mortgagor's impecunious state does not preclude the mortgagee bank from exercising rights to possession found in the mortgage document and supported by the Land Registration Act Ch 191."

8. In Barra Amevo's case (supra), Justice Sevua held that:

"[b]y law, and under the terms of the mortgage, the plaintiff, as the mortgagee, has the right to foreclosure because, the first defendant, as the mortgagor, had defaulted in his obligations. Sections 68 and 74 of the Land Registration Act, Ch 191 confers a statutory right or power to the plaintiff mortgagee to sell the property or take possession." Similarly, in Max Umbu's case (supra), Justice Salika (as he then was) held that "[t]he right to foreclose is also conferred by Section 74 of the Land Registration Act. In circumstances where the plaintiff defaulted on making the repayments the defendant was at liberty to exercise its right under the mortgage and under the Land Registration Act to sell the property and have vacant possession of the property."

9. On these authorities, I am satisfied the plaintiff has proven its claim. I order that the defendant give vacant possession of the property forthwith. In addition, I grant leave to the plaintiff to issue a writ of possession forthwith. I also order the defendant to pay the plaintiff's costs of the proceedings to be taxed if not agreed.
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In-house counsel: Lawyers for Plaintiff