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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS N0. 1343 OF 2017
BETWEEN:
JULIE KOHOU
Plaintiff
AND
WESTPAC BANK (PNG) LIMIT
First Defendant
AND
JIMMY ATAMANG
Second Defendant
AND
Gregory Masing trading as RAM BUILDING CONTRACTORS
Third Defendant
Lae: Pitpit, J
2018: 24th August
STATUTORY LAW- Frauds and Limitations Act 1988 s.16- Fairness of Transaction Act 1993- time barred for filing the proceedings.
PRACTICE AND PROCEDURE- Application to dismiss proceedings- not disclosing reasonable cause of action- being frivolous or vexatious- abuse of process- Order
14 Rule 40 (1) National Court Rules 1983
Held:
1. Motion be dismissed with costs to the Plaintiff.
2. Time for abridgement is to be forthwith.
Cases Cited:
Augerea v The Bank of South Pacific Ltd [2007] PGSC 12
Bank of South Pacific –v- Tingke (2012) N4901
Counsel:
Mr. Moses Murray, for the Plaintiff/Respondent
Ms. Gloria Lakati, for the First Defendant/ Applicant
24th August, 2018
1. PITPIT J: This is the decision on an application by the First Defendant Westpac Bank (PNG) Limited filed on the 24th May 2018 seeking orders for the dismissal of the proceeding in the WS 1343 of 2017 on the grounds that;
2. In support of this application, the First Defendant submits that it would seek to rely on:
3. I shall firstly look at the First Defendant / Applicant’s grounds of its application, its arguments, then, I will look at the Plaintiff/Respondents response and its arguments and then decide accordingly. But before this I shall look at the back ground of the case itself.
Relevant Background information
4. In September 2007, the Plaintiff Julie Kohou approached the First Defendant and requested for a personal loan to develop her property described as Section 32 Allotment 17, Hibiscus Avenue, Cedar Road, Lae (the property).
5. On 13th September 2007, The First Defendant approved the loan in the sum of K256, 000.00 to the Plaintiff. And according to the First Defendant, the Plaintiff gave the property described above as security for the mortgage to the First Defendant for the loan. According to the First Defendant, the Bank’s mortgage was registered to the property in favour of the First Defendant.
6. The First Defendant made several draw-down payments purportedly to the Plaintiff in the total sum of K 249,707.88 by 14 August 2008.
7. The Plaintiff made repayments of the loan from 27 October 2008 until August 2010 when the Plaintiff fell into arrears.
8. The Plaintiff applied for an additional loan from the First Defendant around September 2010 for purposes of completing the building and development work to the Property.
9. The First Defendant considered the Plaintiff’s circumstances and offered a further loan in the sum of K35, 000.00 to the Plaintiff on 23 September 2010.
10. The second loan consequently increased the Plaintiff’s credit to K302,000.00 including the first loan amount and interests accrued on a monthly basis in accordance with the terms of the Loan Agreement.
11. The Plaintiff defaulted in repaying the loan and fell into arrears by January 2017. The First Defendant then issued letters of demand and relevant notices to the Plaintiff from 6 January 2017.
12. The Plaintiff threatened to take the First Defendant to court in her letter dated 27 April 2017.
13. The Plaintiff stopped servicing the loan from 18 July 2017 onwards. The First Defendant then took steps to foreclose on the Property and as a result of the Plaintiff’s default in repaying the loan.
14. As a consequence, the Plaintiff commenced this court proceeding alleging negligence, vicarious liability and breach of fiduciary duty under the Fairness of Transaction Act 1993 against the First Defendant for reasons summarized under paragraph 15 of Jenny Lakoro’s affidavit sworn 9 May 2018 and filed 29 May 2018.
15. The Plaintiff stated in paragraph 15 of her affidavit that the Bank was negligent at the time she applied and was approved the bank loan of K256, 000.00, which was around September 2007.
16. The Plaintiff entered into an Agreement with the Third Defendant for purposes of developing and completing the building and maintenance work on the Property within 4 months. The Plaintiff claims the Third Defendant breached that Agreement by failing to complete the building project in time.
17. The Plaintiff alleges the Bank was negligent in the total conduct and supervision of the draw-down payments made which resulted in the Third Defendant not completing the construction work on the Property.
The First Defendant Defence filed 5 March 2018 and Affidavit of Jenny Lakoro sworn 9 May 2018 and filed 29 May 2018.
18. The First Defendant denied all allegations of negligence whether fiduciary or otherwise and whether in common law or under the Fairness of Transaction Act 1993.
19. The Plaintiff’s claim was brought outside of the statutory time limit. Pleaded in paragraph 21(c) of its Defence.
20. The First Defendant wrote a forewarning letter dated 15 March 2018 to the Plaintiff’s lawyers inviting the Plaintiff to discontinue the proceedings for being filed outside of the statutory time limit.
21. The Plaintiff did not respond to the letter dated 15 March 2018 nor file a Reply to the Bank’s Defence regarding the claim being out of time.
THE MAIN ISSUES
22. Has the Plaintiff established a cause of action against the First Defendant?
23. If yes, when did the cause of action accrue and is it time-barred?
LAW ON STATUTORY TIME LIMIT
24. Section 16 of the Frauds and Limitations Act
Section 16. Limitation of actions in contract, tort, etc.
(1) Subject to Sections 17 and 18, an action -
(a) that is founded on simple contract or on tort; or
(b) – (d)...
Shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.
(2) – (8)...
Section 11 of Fairness of Transaction Act 1993 provides as follows:
11. Limitations of proceedings.
(1) Any proceedings under this Act shall, subject to Subsection (2), be commenced soon after the party aggrieved by the transaction to which they relate suffers the disadvantage or becomes aware of the matters which amount to or constitute the unfairness, as the case may be, but no action shall lie later than three years after the date of the transaction.
(2) A transaction that has already been dealt with under this Act may be further reviewed if the Court is satisfied that there exist new circumstances or consequences not apparent or anticipated in the earlier proceeding, but in any case no later than six years after the date of the transaction to which they relate. The First Defendant argument is that the claim by the Plaintiff is basically time barred and ought to be dismissed.
12. The plaintiff’s Responses to the Application by the First Defendant were as follows:
(1) According to the Plaintiff’s Statement of Claim, the Plaintiff began consulting the First Defendant through the Second Defendant who was then an employee of the First Defendant on or about the third week of April 2007 with the view to obtain a bank loan to develop her property on section 32 Allotment 17, Hibiscus Avenue Cedar Road, Lae. During this first meeting, the Second Defendant had requested for the production of the “Title Deed” to the said property and further suggested to the Plaintiff of its knowledge of a reliable building contractor which could perform the task.
(2) On or about the first week of May 2007 the Plaintiff visited the First Defendant the second time and met with the Second Defendant and showed him the original of the “Title Deed” of the said property and was told that a condition to a successful loan application is the transferring of her current saving with the Bank of South Pacific to the First Defendant bank.
(3) Following the Second Defendant’s request to transfer her then current savings from Bank of South Pacific, the Plaintiff did so immediately closing her savings account then held at Bank of South Pacific and had it transferred to the First Defendant bank.
(4) On or about the 16th of May 2007 the Plaintiff meet with the Second Defendant and introduced the Third Defendant as its choice of the building contractor, and the discussion concluded with the Third Defendant’s estimated quotation which was accepted by the Plaintiff.
Particulars of the Quotation by the Third Defendant
3.1 Construction of the Duplex Apartment - K 226, 262. 35
3.2 Maintenance to existing building - K29, 951.10
K256, 213. 45
3.3 Period of completion of both Duplex
Apartment and maintenance of existing building - 4 Months
(4) In this meeting the Second Defendant made strong recommendations to the Plaintiff to accept the Third Defendant’s quotation presentation
Particulars of the strong recommendations
4.1 “mi save long Kontraktor”
4.2 “Kontraktor, em boi blong grup”
4.3 “givim em moni em bai pinisim wok insait long 3 mun”
13. Was there a cause of action in law? The Plaintiff argues that there was and described this as being a one of streams of actions in negligence throughout from the time the loan was approved to the time the Plaintiff pleaded with them to correct their dealings as lender.
14. According to the Plaintiff, the agreement that was entered into between the Plaintiff and the Third Defendant was not a proper agreement to be used in PNG. The First Defendant was to have facilitated the loan to the Plaintiff based on this agreement. It however, did not make it its duty to verify and ensure that the said agreement used was proper and applicable under the circumstance. The agreement was Australian based and only applicable to Australian in Australia and not in Papua New Guinea. The First Defendant bank was negligent in that it did not make it its duty to check and see that proper and appropriate agreement should be used to bind the Plaintiff and the Third Defendant. The Approval of the loan to the Plaintiff was based on the execution of the agreement between the Plaintiff and the Third Defendant. It was only the last two pages that were changed to reflect the names of the Plaintiff and the Third Defendant.
15. Further, that despite the Plaintiff’s request for a lawyer of her choice to be present and to assist in construing the agreement and the Memorandum of Mortgage, the First Defendant was negligent in not affording her the opportunity to find herself a lawyer to assist her with legal advice as to the agreement between herself and the Third Defendant as well as the mortgage document. Instead, the First Defendant went ahead and advised her to execute the agreement so that the loan could be approved under the agreement. [see Augerea v The Bank of South Pacific Ltd [2007]PGSC 12] where the Supreme court had said; when negotiating and entering into an agreement with a client banks are under a duty to ensure clients get independent legal advice.
16. When did the plaintiff learn of or come to know that the agreement between the Plaintiff and the Third Defendant was not a proper one? The agreement was therefore unconscionable and not enforceable in PNG. The contents are very different and difficult as it was meant for Australians. The Plaintiff learnt this from her Lawyer Mr Murray on the 26th of August 2017.
17. When did the Plaintiff learnt or come to know that she had the right to be represented by a lawyer of her choice to look at all the documents inclusive of the agreement and the mortgage documents. Again, the Plaintiff learnt about this through her lawyer Mr Murray on the 26th of August 2017. The First Defendant ought to have made it his business to advice the Plaintiff properly to delay the process of approving the loan even though the Plaintiff wants it badly until the Plaintiff has got herself a lawyer to assist in checking all the documents including the actual mortgage document itself. In view of that timing, it is proposed argument that, that was the time the Plaintiff knew of the cause of action arising- cause of action did not arise at the time of approval of the loan on the 13th September 2007.
18. The other material dates we argue to give rise to a cause of action in law is the date the First Defendant gave Mortgage Foreclosure Demand dated 16th February, 2017 and Notice to Quit dated 07th March, 2017. Prior to that date the Plaintiff had written letters requesting First Defendant her pleas on a number of issues. The first would be that of releasing funds to the contractor when no work was done and even when it was done, it was done very poorly. There was no “quality workmanship”. In spite of her many complaints the First Defendant refuse to take heed and correct the situation. That is negligence on the part of the First Defendant as the cause of action was recurring.
19. See case of: SCA No 70.2005. Parties are Rage Augerea & Maureen Augerea (appellant) v Bank of South Pacific (respondent). Even though this case did not discuss the cause of action as to when it arose, the case discussed the very issue the Plaintiff complained about by requesting the bank to re-visit its position on these issue raised which were the copy of mortgage documents was not given to her, the approval of monies to the contractor without consulting her, she was not told as to her position with respect to approval of funds to the contractor, interest arising on loan was due to banks fault as it did not take corrective steps when issues were brought to its attention by the Plaintiff.
20. Clause 37 of Memorandum of Mortgage reads-
This Mortgage is made subject to the approval in writing of the Minister for Lands and Physical Planning or his delegate and unless and until such approval is given shall have no force or effect.
21. Any approval of the mortgage must be made in writing by the Minister for Lands and Physical Planning or his delegate. Documents filed by the First Defendant shown no such written approval of the Minister and or his delegate. There is therefore no lawful Mortgage in place to bind the Plaintiff and the First Defendant. An approval and grant of loan by the lender is based on the lawful mortgage document in place. That is not so.
22. Date of transaction as appeared in the Memorandum of Mortgage document is 17th September 2007 being the date of the execution of the Mortgage by the parties which are the First Defendant and the Plaintiff. The stamping of the Registrar of Titles stamp on the document showing the residence lease being mortgage to the First Defendant fell short of the mandatory provision of the Clause 37 of Memorandum of Mortgage. The affidavit sworn by Jenny Lakoro on 9th May, 2018 and filed on 29th May, 2018 did not provide any written documentary evidence to confirm compliance with Clause 37. [See case of Bank of South Pacific –v- Tingke (2012) PGNC 250: N4901 (29th October 2012)].
23. As to other straight cases if “when cause of action” this case is distinguished from these other cases. This is a case which draws legal strength from Bank of South Pacific v Tingke (supra). The facts in this case are different from other cases where “ when causes of action accrue”. The reason being:
(a) there was no proper agreement between the Plaintiff and the Third Defendant. The agreement used was the Australian version with the last two pages change to reflect the parties. First Defendant was negligent in allowing the use of this agreement as it was executed in the presence of bank officers.
(b) Clause 37 of Memorandum of Mortgage did not comply with at the time the Plaintiff parted with her property under the mortgage agreement. The said clause is mandatory. There is no evidence from the First Defendant to show that it was complied with. On that bases the case of Magiten –v- Moses (supra) must be followed.
(c) The entire action by the First Defendant after it was given approval of loan to Plaintiff was marred with actions of streams of negligence on the part of first defendant bank. The case of Magiten –v Moses (supra) is available to assist the cause of plaintiff and is good law. This case has not been appealed (according to my search of Court appeal precedents) and stands as a good law on issue of “ when cause of action arose” within the provision of section 16 (1) of Frauds & Limitations Act 1988.
24. The other case of Bank South Pacific –v- Tinge [ 2012] PGNC 250; N4901 (29 October 2012)], a decision by His Honor Justice Kandakasi did no more than “ slamming” the banks for their unfairness actions given their financial power position as against the person seeking loan whose standing is very inferior. The decision follows those principles and observations of those principles that have been covered in the Supreme Court case of Rage Augerea & Maureen Augerea (appellant) –v- Bank of South Pacific (respondent) (supra).
25. It is submitted the orders as sought by the First Defendant in its Notice of Motion filed on 24th May, 2016 be dismissed with cost to the plaintiff.
26. In the event this Court rules against the Plaintiff, then the final leg of this submission is that the plaintiff be allowed to sell the property herself. This has been held in many cases where bank is at fault.
27. In conclusion, I find that the Plaintiff has on the balance of probabilities proven all necessary elements to sustain a cause of action in negligence against the First Defendant The Westpac Bank (PNG) Limited. Plaintiff has proven that:
a) the First defendant owed a duty of care to the Plaintiff;
b) it breached that duty (ie acted negligently or other than a reasonable person in its position would have;
c) the breach of duty caused damages to the plaintiff( see paragraphs of the Plaintiffs’ affidavit;
d) the type of damages was not too remote; and the the Plaintiff has not contributed to her own injuries eg, by being contributorily negligent or voluntarily assuming the risk of injury.
28. I therefore order that the orders as sought by the First Defendant in its Motion filed on the 24th of May 2018 be dismissed with costs to the Plaintiff.
29. I further order that this matter is to be adjourned to the 5th of October 2018 for direction.
30. Time for abridgement is to be forthwith.
_____________________________________________________________
Murray & Associates: Lawyers for the Plaintiff
Dentons PNG: Lawyers for the First Defendant
No Representation for Second Defendant
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