N11566
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

CIA 06 OF 2025

JAMES LANSON
Appellant

v

BEN DANIEL
Respondent

WABAG: ELLIS J
31 OCTOBER 2025

APPEAL FROM DISTRICT COURT – Loan with interest rate of 30% per fortnight held to be unenforceable by District Court – lesser amount substituted by Magistrate – legal basis for that lesser amount not disclosed – basis of calculation of lesser amount not disclosed – appellant not given opportunity to make submissions in relation to the lesser amount – appeal allowed

Cases cited
No cases are cited.

Counsel
James Lanson, the appellant, in person
Respondent - no appearance

JUDGMENT

1.	ELLIS J:  In a complaint dated 13 March 2024, the respondent alleged that the appellant had borrowed from him an amount of K2,000 at an interest rate of 30% per fortnight.  It was suggested the respondent was entitled to recover 48 interest payments of K600 plus the principal, giving a total of K30,800.  However, the respondent said he “abandoned” K20,900 and only claimed K9,900, plus K1,500 in costs.

2.	An affidavit in support, also dated 13 March 2024, was provided by the respondent.  It is noted that the respondent’s affidavit suggested that Samuel Siki was present when the appellant sought and obtained that loan from the respondent.  What was said to be a record sheet shows four payments of K50 and one payment of K100.  That record sheet, has a column which shows the balance payable, being a column which only adds K600 to an amount of K2,000, not K600 per fortnight, and suggests a balance outstanding, as at 5 May 2022, of K2,300.

3.	In response to the complaint, the appellant submitted an affidavit dated 11 April 2024 which claimed that the amount borrowed was only K200 which amount was said to have been paid back.

4.	A document headed “Statement/Submission”, signed by the respondent and dated 7 October 2024 suggested that, on 25 September 2024, the appellant offered to pay him K500 but did not include any indication of what was said on that occasion.

5.	A 9 October 2024 affidavit in response was provided by the appellant.  That affidavit denied that Samuel Siki was present when the loan was said by the respondent to have been made and explained that the offer to pay K500 was made for the purpose of trying to settle the proceedings.

6.	The reasons published by the magistrate who heard the case may be summarised as follows:
(1)	It was noted that “Apart from seeing them come together and talking, Samuel Siki never saw the money changing hands let alone the amount claimed”.
(2)	The loan was for K2,000, not K200.
(3)	The respondent was not entitled to charge interest of 30% per fortnight.
(4)	Even interest of K7,900, being the K9,900 claimed less the suggested loan amount of K2,000, was an excessive amount for interest.
(5)	Interest of K3,000 was awarded, plus costs of K500.
(6)	K122.50 was allowed for statutory interest of 8% on the loan amount.

7.	The learned Magistrate correctly found that a loan which charged interest of 30% per fortnight was unenforceable.  The fact that the respondent abandoned K20,900, to make his claim less than K10,000, did not alter the fact that the loan was unenforceable.

8.	In deciding that an amount of K3,000 should instead be awarded for interest, there was no indication (1) of legal basis for doing so, (2) of how that amount was obtained, or (3) that the appellant was given a chance to be heard on that aspect of the case.

9.	While the Fairness of Transactions Act 1993 does permit a transaction to be revised, that Act only applies to proceedings in the National Court or Supreme Court, not the District Court.  Further, such a revision of a transaction can only be done after an attempt to arrive at a mediated solution and there is nothing on the District Court file to suggest that was done.  Accordingly, the award of interest of K3,000 cannot stand.  The position was that the loan was unenforceable, which means that the complaint should have been dismissed.

10.	While it is not necessary to determine what was the amount of the loan, it is noted that there was competing evidence from the respondent and the appellant.  The respondent claimed that Samuel Siki was present when the loan was made, but there was a finding that Samuel Siki never saw that, which suggests the evidence of the appellant should have been preferred to the evidence of the respondent.  The respondent’s own document records four repayments of K50 and the balance shown in that document suggests interest of 30% on the loaned amount and not 30% per fortnight.

11.	The appellant’s offer to pay K500 to the respondent was an offer to settle the proceedings in the District Court.  As a settlement offer, it should have remained confidential and not been the subject of evidence.  That offer does not tell against the appellant because it was not referable to the loan as such, but to the finalisation of the proceedings.

12.	The idea that someone could borrow K2,000 and then owe K30,800, more than 15 times the amount borrowed, is clearly an enforceable loan.  The respondent’s attempt to ‘soften the blow’ by limiting his claim to K9,900, and to be able to commence proceedings in the District Court, does not alter the position.  Indeed, even a claim that K9,900 was owed on a loan of K2,000 is unenforceable.

13.	As required by s 230 of the District Courts Act 1963, the Court has inquired into the decision of the District Court and is satisfied that there has been a substantial miscarriage of justice.  By reason of that clear, substantial miscarriage of justice, the time for the commencement of the appeal should be extended to 14 March 2025, as permitted by s 231 of the District Courts Act 1963.

14.	For the reasons just indicated, the orders of the Court will be as follows:

1	The time for commencing this appeal is extended to 14 March 2025.
2	The appeal is allowed.
3	The orders made by the District Court on 16 December 2024 are set aside.
4	The respondent is to pay the costs of the appellant, as taxed if they cannot be agreed.
5	Time is abridged so that these orders may be entered forthwith.
Orders Accordingly.
__________________________________________________________________