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Unagi v Westpac Bank PNG Ltd [2013] PGNC 137; N5328 (6 May 2013)

N5328

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 641 OF 2012

BETWEEN:

STEVEN SIPA UNAGI
Plaintiff

AND:

WESTPAC BANK-PNG-LIMITED
Defendant

Waigani: Kariko, J
2013: 19th April & 6th May

CONTRACT LAW – breach of a loan agreement - plaintiff mortgaged property as security for loan – default in loan repayment by plaintiff– defendant exercised right as mortgagee

ORDERS – plaintiff filed this proceedings for declaratory orders – plaintiff also seeks interim injunction stopping defendant from evicting him - whether proper grounds have been established to grant an interim injunction – principles of granting interim injunctions – consideration of - Plaintiff has no cause of action and no arguable case – plaintiff has no equitable right which no longer exists - application and proceeding dismissed.

Cases cited:

Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853
Credit Corporation (PNG) Limited v David Nelson (2011) N4368
Golobadana No 35 Ltd v. Bank of South Pacific Limited (formerly Papua New Guinea Banking Corporation) (2002) N2309

Counsel:

Mr S Soi, for the plaintiff
Mr N Kopunye, for the defendant

RULING

6th May, 2013

1. KARIKO, J: Steven Unagi obtained a substantial loan from Westpac Bank-PNG-Limited ("Westpac") to purchase the property described as Section 68 Allotment 12 Boroko, National Capital District and contained in State Lease Volume 20 Folio 173 ("the Property"). As security for the loan, the Property was mortgaged to Westpac. Upon default in repaying the loan in accordance with the terms of the loan agreement, Westpac took steps to exercise its rights over the Property as mortgagee, namely to sell the Property to recover the outstanding on the loan.
   
2. Mr Unagi filed this proceeding for declaratory orders that he has an equitable right to redeem the Property and should be allowed to exercise that right. Pending final determination of his claim, he has applied for an interim injunction against Westpac from evicting him from the Property.
   

Competency

3. Counsel for Westpac argued that the motion be dismissed as incompetent for not citing the concise reference to the Court's jurisdiction to grant the orders sought pursuant to O4 r49(8) National Court Rules.
   
4. It is true that no reference has been cited in the motion but given that the plaintiff was unrepresented at the time and until recently, I will not exercise my discretion as urged by Mr Kopunye.
   

Issue

5. The main question for my determination is whether proper grounds have been established to grant an interim injunction?
   

Applicable law

6. The principles for the grant of interim restraining orders are well settled; see for example Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853. It is incumbent on a plaintiff to show that:
   
   • (1) there are serious questions to be tried and that an arguable case exists;
     
   • (2) an undertaking as to damages has been given;
     
   • (3) damages would not be an adequate remedy if the interim order is not granted; and
     
   • (4) the balance of convenience favours the granting of the interim order.
     

Evidence

7. Evidence filed by Westpac shows that Mr Unagi had not been making the loan repayment in accordance with the loan agreement since 2008, and he has consistently defaulted in the repayments. The defaults have attracted late fees, accumulation of the interest on the loan, and default interest. As at 6th November 2012, Mr Unagi owed Westpac K291,019. In contrast, Mr Unagi claims that the debt only amounted to K30,000 as of October 2012.
   
8. Westpac issued a Notice to Quit to Mr Unagi in respect of the Property on 5th March 2012. Even after expiry of that Notice Mr Unagi had opportunity to make good the arrears but failed to do so. Exercising its rights as mortgagee, Westpac advertised the Property for mortgagee sale by tender in August 2012. The successful bid was for K600,000 and a contract of sale was entered into with the bidder on 19th October 2012, which incidentally was 19 days before this proceeding was filed.
   
9. Mr Unagi has explained why he fell into arrears – that he was spending time and money causing renovations and improvements to the Property. He also says he is now in a position to settle his debt (which he claims to be K30,000).
   
10. On 3rd April 2013 he registered a caveat against registration of any dealings concerning the Property being dealt with.
    
11. As at the hearing of this application, Mr Unagi's debt with Westpac remains unsettled.
    

Findings

12. In this proceeding, Mr Unagi seeks to enforce his equitable right of redemption but Westpac has already entered into a contract with a third party for the sale of the Property. In Credit Corporation (PNG) Limited v David Nelson (2011) N4368 Kandakasi, J affirmed what he held in Golobadana No 35 Ltd v. Bank of South Pacific Limited (formerly Papua New Guinea Banking Corporation) (2002) N2309 in discussing the relevant principles in relation to a mortgagor's right to redeem his property, that:
    

"The right in a mortgagor to redeem exists until a contract of sale has been signed between a mortgagee and a third party in the case of a mortgagee exercising his right of sale."

13. The plaintiff argued that notwithstanding this, clause 22 of the relevant contract of sale was an acknowledgement by the parties to the contract that the mortgagor's right of redemption continues to exist. That clause amongst other things provides that where the mortgagor settles all outstanding monies in full in exercising his right of redemption, the contract is rendered null and void. This clause however is contrary to the law and in any case there is no evidence that Mr Unagi is able to exercise his right of redemption by paying in full the monies outstanding under the mortgage with Westpac. In fact he undertook through his lawyers by letter to Westpac dated 21st March 2013 to settle the outstanding arrears by 29th March 2013. That date has passed with no repayment whatsoever.
    
14. I find that Mr Unagi has no cause of action and no arguable case. The equitable right he claims, no longer exists. For this reason alone, I consider that his application and indeed this proceeding should be dismissed.
    
15. I might add that I also agree with the submission that should Mr Unagi believe that Westpac has unfairly or improperly exercised its rights as mortgagee, he could file a claim for damages against the bank. In my view, damages would be adequate remedy if this application is refused and the substantive hearing decided in favour of the plaintiff. For this reason also, I would dismiss this motion.
    

Orders

16. Accordingly I order as follows:
    
    • (1) The plaintiff's notice of motion filed 26th October 2012 is dismissed.
      
    • (2) This proceeding is dismissed in its entirety.
      
    • (3) The Registrar of Titles shall upon service of this Order, cancel the caveat registered 3rd April 2013 in respect of the property described as Section 68 Allotment 12 Boroko, National Capital District and contained in State Lease Volume 20 Folio 173.
      
    • (4) The plaintiff shall pay the defendant's costs of and incidental to this proceeding, to be taxed if not agreed.
      
    • (5) Time is abridged.

___________________________________________________

Soi & Associates: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the Defendant