Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Westpac Bank (PNG) Ltd v Mundi No.1 Ltd [2014] PGNC 296; N6008 (10 November 2014)

N6008

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 454 OF 2013

BETWEEN:

WESTPAC BANK (PNG) LIMITED
Plaintiff

AND:

MUNDI NO. 1 LIMITED
First Defendant

AND:

SAMSON JUBI
Second Defendant

AND:

KATHERINE MARIAMA JUBI
Third Defendant

Waigani: Hartshorn J.
2014: 19th August, 10th November

Trial

MORTGAGES - claim by mortgagee for possession of land and vessels secured by mortgage – alleged default of mortgagors - plaintiff is entitled to exercise its power as a mortgagor upon default of loan repayment by mortgagee – plaintiff's application granted – s74 & 75 Land Registration Act, s. 42 Merchant Shipping Act, Order 4 Rule 33 (b) (i) National Court Rules

Counsel:

Mr. N. Kopunye, for the Plaintiff
Mr. J. Sirigoi, for the Second Defendant

10th November, 2014

1. HARTSHORN J: The plaintiff Westpac Bank PNG Ltd loaned money to the first defendant, Mundi No 1 Ltd ("Mundi"). Mr. and Mrs. Samson and Katherine Jubi granted a mortgage over their real property as security. Mundi also granted mortgages over three marine vessels as security. Mundi ceased making loan repayments in July 2012. Despite numerous promises to pay what is outstanding, payment was not made and so Westpac commenced this proceeding.

2. Westpac seeks the following relief in its originating summons:

"1. An order that the Defendants and their servants, agents and/or associates forthwith give vacant possession to the Plaintiff of land described as Allotment 2, Section 17, Matirogo, Port Moresby, National Capital District (the Land) subject to State Lease Volume 5 Folio 1172.

2. An order that the Defendants to give vacant possession of the Land to the Plaintiff within 14 days of date of judgement.

3. Leave to be granted for a Writ of Possession to forthwith be issued for the Land.

4. An order that the Defendants provide details of the location of and to forthwith deliver into the Plaintiffs possession the vessels known as FV Prospector and MB Mundi.

5. An order that the Defendants give possession of the vessels known as FV Prospector and MB Mundi to the plaintiff within 7 days.

6. An order that the Plaintiff be entitled to enter into and take possession of the vessels known as FV Prospector and MB Mundi.

7. Leave to be granted for a Writ of Specific Delivery to be forthwith issued for vessels known as FV Prospector and MB Mundi.

8. A permanent injunction to restrain the Defendants, by themselves or by their agents, servants and/or agents from any conduct and/or any omission that will diminish or reduce the value of:

(i) the Land;

and the value of the vessels known as:

(ii) FV Prospector;

(iii) MB Mundi.

9. The Defendants to pay the Plaintiff's costs of these proceedings on an indemnity basis.

10. Such further or other orders as this Court deems fit."

3. The trial of the matter came before this court for hearing. The only representation at the trial was on behalf of Westpac and Mr. Jubi.

4. As to Mr. Jubi's representation, his counsel informed the court that a notice of intention to defend was filed on 15th August 2014, four days before the hearing, and was served on 18th August 2014, the day before the hearing. Counsel for Westpac was not aware of this and counsel for Mr. Jubi conceded that an affidavit of service as to the notice of intention to defend had not been filed. He informed the court however that one would be. It is not in dispute that there has been numerous email correspondence between counsel for Westpac and Mr. Jubi since this proceeding was commenced and prior to the filing of his notice of intention to defend.

5. Mundi and Mrs. Jubi have not filed notices of intention to defend. I permitted the trial to proceed as pursuant to Order 4 Rule 33 (b) (i) National Court Rules, the court may proceed with a hearing in the absence of a defendant where he is in default of giving a notice of intention to defend.

6. At the beginning Westpac sought to discontinue the proceeding against Mrs. Jubi. This was because, Westpac submitted amongst others, that it was not now necessary that Mrs. Jubi be sued as she now resides in Australia and Mr. and Mrs. Jubi are no longer married. The application to discontinue is necessary as this proceeding has been commenced by originating summons. Counsel for Mr. Jubi informed the court that he had no objection to the motion for discontinuance being moved and did not make any other submissions on the motion. I reserved my decision on the application to discontinue.

7. There is no evidence that the motion to discontinue has been served upon Mrs. Jubi or brought to her attention and there is no application for service of the motion upon her to be dispensed with. In those circumstances the application to discontinue against Mrs. Jubi is refused.

8. Westpac seeks all of the relief claimed in its originating summons. Counsel for Mr. Jubi opposed the granting of the relief. He submitted that Westpac had not properly brought its case to court for a number of reasons.

9. The first reason is that as this proceeding is being brought pursuant to Order 4 National Court Rules, and relief is being sought pursuant to s. 74 (c) Land Registration Act, Order 4 Rule 14 (1) (b) National Court Rules is required to be complied with. That Rule requires in essence, service of an occupier of property 21 days before a hearing date. Counsel for Mr. Jubi submitted that Westpac had not given evidence that this Rule had been complied with.

10. Counsel for Westpac submitted that Order 4 Rule 14 (1) (b) National Court Rules does not apply in this instance as Westpac was not aware of anyone other than Mr. and Mrs. Jubi who would be in occupation of the subject property. Also, Mr. and Mrs. Jubi are named as defendants and so this Rule does not apply. Further, counsel for Mr. Jubi had not informed the court that he is acting for someone other than Mr. Jubi and so should not be making submissions on behalf of entities other than Mr. Jubi.

11. There is no evidence that there are occupiers of the subject property before the court. Further, Mr. and Mrs. Jubi, whom Westpac believed were occupying the property, are named as defendants and so I am satisfied that Order 4 Rule 14 (1) (b) National Court Rules does not require to be complied with in this instance.

12. Counsel for Mr. Jubi, further submitted that Order 6 Rule 2 (1) National Court Rules requires that originating process shall be served personally on each defendant, but that in this instance there is only evidence of communications with Mr. Jubi.

13. Counsel for Westpac submits that this court ordered on 9th September 2013, that amongst others, "The Plaintiff to serve the Defendants documents filed by it in the proceedings herein on the address provided to it by the Defendants." The defendants have been so served submits Westpac and so it has complied with this order of the court. Since that court order, documents had been served and sent to the address given to Westpac by the defendants being "P.O. Box 449 Waigani" and to the email address of Mr. Jubi.

14. I am satisfied from the email correspondence in evidence that Mr. Jubi is aware of the documents and correspondence that have been sent. Further, the defendants have not taken issue with the order made on 9th September 2013 and as far as this court is aware, this order has not been set aside or appealed.

15. From a consideration of the evidence, including the court order made, the numerous letters to the address of the defendants, and the email correspondence with Mr. Jubi, I am satisfied that Westpac has complied with the order of this court as to service and that the defendants are aware of this proceeding.

16. Counsel for Mr. Jubi also referred to Order 6 Rule 15 National Court Rules which provides that where a husband and wife are parties to proceedings, service on the husband shall not have effect as against the wife. Here however, I am satisfied that service upon Mrs. Jubi has been effected pursuant to the court order of 9th September 2013.

17. As to the relief claimed in the originating summons by Westpac, it relies upon the evidence of Jenny Lakoro. Ms. Lakoro is employed by Westpac as its Manager Legal. There is no evidence to rebut that of Ms. Lakoro. The only evidence on behalf of Mr. Jubi is his affidavit filed on 18th August 2014 in which he annexes a copy of a writ of summons and amended statement of claim filed on the same day, the 18th August 2014, filed in proceedings WS 956/14 that Mundi has commenced against Southern Cross Assurance Ltd. In that proceeding Mundi seeks amongst others, specific performance of an insurance agreement for a payment of a sum insured of K7 million for the loss of MB Mundi Navigator and damages. Also annexed to Mr. Jubi's affidavit is a District Court Order dated 26th November 2013 dismissing an Information that was laid against Mr. Jubi alleging that amongst others, he had sent a ship to sea in an unworthy condition. None of this evidence disputes or contradicts the evidence of Ms. Lakoro.

18. Ms. Lakoro deposes that amongst others:

a) Westpac has loaned money to and provided financial facilities to Mundi;

b) in consideration of the money loaned to Mundi and the facilities provided, Mr. and Mrs. Jubi granted a mortgage in favour of Westpac over land the subject of State Lease Volume 5 Folio 1172, described as Allotment 2, Section 17, Matirogo, Port Moresby, National Capital District ("Land");

c) further to the mortgage granted over the Land, Mundi in consideration of money loaned and facilities provided, granted mortgages in favour of Westpac over the vessels MV Furno Navigator, MB Mundi and FV Prospector;

d) since July 2012 Mundi has ceased making loan repayments altogether;

e) despite numerous promises to pay outstanding money made by Mr. Jubi, payment has not been made and the debt outstanding exceeds K3 million.

f) Westpac has given notices to the defendants of the default and of its intention to foreclose on the mortgage property;

g) substantial interest has accrued and will continue to do so;

h) persons on the Land have refused Westpac's officer access to the Land.

19. Westpac relies upon s. 74 Land Registration Act which provides:

"74. Mortgagee may enter and take possession, etc.

(1)Where 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) distrain on the occupier or tenant of the land under the power to distrain 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."

20. Westpac as mortgagee/creditor is able to bring an action for ejection to obtain possession of the Land.

21. Westpac also relies upon s. 75 Land Registration Act which provides:

"75. Power of distraint.

(1)Where—

(a) any secured money has been in arrears for 21 days; and

(b) the creditor has made written application to the occupier or tenant of that land for payment of the money,

the creditor may, in addition to his other remedies—

(c) subject to Subsection (2), enter on the land subject to the mortgage or charge and distrain and sell the goods and chattels of the occupier or tenant; and

(d) detain out of the proceeds of that sale the money in arrears and all costs and expenses occasioned by the distress and sale.

(2) An occupier or tenant referred to in Subsection (1) shall not be liable to pay to the creditor a sum greater than the amount of rent which at the time of making the distress is due from him to the debtor or to the person claiming the land under the debtor.

(3) An amount paid by the occupier or tenant to the creditor on written application or realized by distress under this section is, to that extent, a satisfaction of the rent."

22. Consequently, in addition to its other remedies as creditor, Westpac is able to enter on the Land and sell goods and chattels of the occupier or tenant of the Land.

23. As to the vessels, Westpac relies upon s. 42 Merchant Shipping Act, which provides:

"42. Powers of mortgagee

(1)Except as may be necessary for making a mortgaged ship available as a security for the mortgage debt, a mortgagee shall not by reason of the mortgage, be deemed to be the owner of the ship nor shall a mortgagor be deemed to have ceased to be the owner of the ship.

(2)Subject to Subsection (3) and to Section 38, a registered mortgagee shall have power absolutely to dispose of the ship in respect of which he is registered and to give effectual receipts for the purchase money.

(3)Where there are more persons than one registered as mortgagees of the same ship, a subsequent mortgagee shall not, except under an order of the National Court, sell the ship without the concurrence of every prior mortgagee."

24. Westpac submits therefore that as mortgagee it may dispose of or sell a vessel that is subject to a mortgage. Further, Westpac as mortgagee, is entitled to obtain possession of vessels that are subject to mortgages granted in favour of it and to dispose of or sell the vessels.

25. Westpac submits that the defendants do not deny that they owe Westpac money and have not made repayments as and when required. All that the defendants have said is that they require time to collect money from persons so that they are able to pay outstanding money owed to Westpac.

26. Counsel for Mr. Jubi submitted that a certificate of currency issued by Southern Cross Assurance Limited on 13th August 2012 evidenced that the total sum insured for Mundi and subsidiary companies was K19,300,000.00 and so Mundi has sufficient assets to address its default with Westpac. Notwithstanding this, Westpac has decided to pursue Mr. and Mrs. Jubi and Mundi. Further, there is no evidence of any valuation of the Land or the vessels.

27. As to these points raised, if Mundi has sufficient assets as submitted, why has it not made arrangements with either Westpac, or alternatively other institutions to repay Westpac? Further, counsel for Mr. Jubi has not brought to this court's attention any matter that would appear to preclude Westpac from taking action under the securities to recover the amount that is owing to it.

28. In the absence of evidence to rebut that relied upon by Westpac, and from a perusal of that evidence and the submissions made, I am satisfied that Westpac is entitled to the relief as set out in its originating summons and judgment is entered accordingly

29. As for costs, Westpac seeks its costs on an indemnity basis and did warn the defendants in writing that it would seek such an order if proceedings were issued. From a perusal of the evidence before the court including the terms and conditions of the loan, I am satisfied that Westpac is entitled to such an order.

Orders

30. This court orders that:

a) judgment is entered against the defendants for the plaintiff.

b) the Defendants and their servants, agents and/or associates shall forthwith give vacant possession to the Plaintiff of the land described as Allotment 2, Section 17, Matirogo, Port Moresby, National Capital District (the Land) subject to State Lease Volume 5 Folio 1172.

c) the Defendants shall give vacant possession of the Land to the Plaintiff within 14 days of the date of judgment.

d) leave is granted for a Writ of Possession to forthwith be issued for the Land.

e) the Defendants shall provide details of the location of and to forthwith deliver into the Plaintiffs possession the vessels known as FV Prospector and MB Mundi.

f) the Defendants shall give possession of the vessels known as FV Prospector and MB Mundi to the plaintiff within 7 days.

g) the Plaintiff is entitled to enter into and take possession of the vessels known as FV Prospector and MB Mundi.

h) leave is granted for a Writ of Specific Delivery to be forthwith issued for the vessels known as FV Prospector and MB Mundi.

i) a permanent injunction is issued restraining the Defendants, by themselves or by their agents, servants and/or agents from any conduct and/or any omission that will diminish or reduce the value of:

(i) the Land;

and the value of the vessels known as:

(ii) FV Prospector;

(iii) MB Mundi.

j) the Defendants shall pay the Plaintiff's costs of these proceedings on an indemnity basis.

k) time is abridged.

_____________________________________________________________
Bradshaw Lawyers: Lawyers for the Plaintiff
Sirigoi Lawyers: Lawyers for the Second Defendant