SC2844
PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]
 									
SCA NO. 103 OF 2022 (IECMS)
 
DAVID LAMBU
Appellant
 
v

KINA BANK LIMITED
Respondent
 
WAIGANI: MAKAIL J, CROWLEY J, ANDELMAN J
17 DECEMBER 2025; 23 JANUARY 2026 
 
SUPREME COURT APPEAL – sale and purchase of bank interests from previous bank - including the home loan held by appellant – appellant defaulted on loan – respondent issued a notice of default – respondent listed property for mortgagee sale – whether respondent had a legal right to loan repayments and to deal with property -  consideration of ss 27 and 66 of Land Registration Act 1981 - cross-claim by respondent for breach of contract.

Facts

The appellant was a customer of ANZ Bank. He had a number of loans including a home loan for which he had secured a property. ANZ Bank sold its business to Kina Bank Limited. The appellant defaulted on the home loan and Kina Bank sought to sell the appellant’s properties as mortgagee sales after issuing him with a notice of default. The appellant contended that Kina Bank had no right to deal with his home loan as his agreement was with ANZ Bank and titles for his property were not transferred to Kina Bank pursuant to Land Registration Act 1981. Kina Bank made a cross claim for unpaid loan payments and possession of the property. The National Court decided for Kina Bank on all claims. 

Held:
1.	Once ANZ Bank sold its business to Kina Bank, the home loan agreement the appellant had with ANZ Bank became enforceable by Kina Bank. This arose as a contractual obligation based on the terms of the contract between the appellant and ANZ Bank and the contracts between ANZ Bank and Kina Bank.
2.	When the appellant failed to make the home loan repayments pursuant to the home loan agreement, Kina Bank had a right to issue him with a Default Notice.
3.	When the appellant failed to comply with the Default Notice, Kina Bank had a right to proceed with a mortgagee sale pursuant to the terms in the home loan agreement.
4.	The effect of section 27 of the Land Registration Act 1981 is that the effective date of registration of the mortgage is when it was produced to the Registrar for registration not the date the Registrar of Titles registered the Transfer of Mortgage for the interest and registration of the property to the respondent from ANZ.
5.	The appeal is dismissed and the appellant is to pay the respondent’s costs as agreed or assessed.
 	
Cases cited

Esther Torato v PNG Home Finance Limited (2012) N4583
Otto Benal Magitten v William Moses & Rural Development Bank Limited (2005) N5008

 Counsel 

Mr D Lambu, the appellant, in person
Mr J Kakaraya and Mr S Fungke for the respondent

1.	BY THE COURT: This is an appeal against all of the Orders made in David Lambu v Kina Bank Limited [2022] N9644. 

2.	On 17 December 2025 at the commencement of the substantive hearing, the appellant informed the court that he was not well enough to conduct the appeal. He agreed for the court to make the decision on the papers. The Court made orders for the appeal to be determined on the papers permitting the parties to file additional submissions.  

BACKGROUND FACTS

3.	The following facts are not in dispute:
a.	On 9 February 2017 appellant entered into a home loan agreement (the agreement) with the Australia New Zealand Banking Group Limited (ANZ) in the sum of K475,942.00. As security for the loan, the agreement recorded that the appellant mortgaged his property described as Allotment 112 Section 260, contained in State Lease Volume 66 Folio 114 to ANZ Bank (the property).
b.	On 22 June 2018, ANZ and Kina Bank Ltd, the respondent entered into a sale and purchase agreement whereby ANZ Bank sold and assigned all its interest to Kina Bank Limited.
c.	On 22 September 2018, ANZ and the respondent entered into a Master Transfer Agreement which caused the interests of all ANZ customers to be transferred to the respondent.
d.	On 9 November 2020, the respondent lodged a Transfer of Mortgage Instrument with the Lands Department to transfer the mortgage from ANZ to the respondent.
e.	On 4 January 2021 the appellant was served with a Notice of Demand for unpaid home loan repayments.
f.	On 27 January 2021 the appellant was served with a Notice of Default.
g.	On 8 March 2021 the appellant became aware through a newspaper advertisement that the respondent had advertised the property under a mortgagee sale.
h.	On 9 November 2021, the Registrar of Titles registered the Transfer of Mortgage of the property from ANZ to the respondent.

THE FINDINGS BELOW

4.	The trial judge found that the respondent was lawfully permitted to collect loan arrears from the appellant having assumed all the rights, benefits and liabilities from ANZ as its purchaser. The trial judge dismissed the appellant’s claim that the respondent had a duty to inform him about the transfer of his accounts from ANZ to the respondent.

5.	The trial judge found that the respondent had rights as a mortgagee over the property owned by the appellant as security. At paragraphs 14 and 15 the trial judge found that the appellant’s submission that his consent was required for the sale and transfer agreements between ANZ and the respondent to be groundless and rejected his submission that his loan payments for the property to the respondent were unlawful.

6.	At paragraph 32, the trial judge found that:

The Plaintiff’s assertions that the Defendant Bank had no right to advertise the subject mortgaged property on 8th March 2021 as it was not the registered mortgage is arguable. The Defendant Banks (sic) states that the registration of its interest as mortgage ought to have taken effect on 9th of November 2020 when it lodged the required documentation to register its interest as mortgage. I find based on the evidence on the Title Deed that the date of production as indicated on the Title Deed is 9th of November 2021 and the date of registration stated is also 9th November 2021. The Defendant Bank had no registered right as a mortgage to take any action to advertise the subject property for sale on 8th March 2021 though it took steps on the premise that its production of the mortgage charge documents on 9th November 2020 to the Registrar of Titles gave them a legitimate expectation that lodging or producing the documents to the Registrar of Titles would be deemed as being registered and they acted thereafter as the registered mortgagee. I am satisfied with the explanations given by the Bank as to when the documents were lodged on 9th November 2020 and when it was registered on 9th November 2021 and the actions taken within that time.
7.	The trial judge found that the respondent had rights as a mortgagee over the property owned by the appellant as security and made orders that the appellant give vacant possession of the property to the respondent who was to take steps as the registered mortgagee pursuant to s 68 of the Land Registration Act to sell the property.

8.	The trial judge found that the respondent was entitled to its crossclaim for the judgement sum of K471,559.47 for outstanding loan arrears and possession of the property.

THE APPELLANT’S GROUNDS OF APPEAL

9.	The appellant had two claims below. First, that the respondent had no right over his property mortgaged to ANZ and that the respondent had been wrongfully collecting an amount of K86 710.05 as home loan repayments. Secondly, that the respondent’s advertisement of the mortgagee’s sale of the property on 8 March 2021 was invalid as it was not the registered mortgagee of the property until 9 November 2021.

10.	The same arguments were mounted on appeal. 
a.	Ground 1 - The respondent had been wrongfully collecting an amount of K86, 710.05 consistent with the trial judge’s finding at paragraph 32 of the decision that ‘the Defendant Bank had no registered right as a mortgagee to take any action to advertise the subject property for sale on the 8th March 2021.’
b.	Ground 2 – Misapplication of section 27 of the Land Registration Act 1981.
c.	Ground 3 – That the respondent had no cause of action on its cross claim and the trial judge accepted irrelevant evidence.
d.	Ground 4 – If the trial judge was correct, the appellant should have been permitted to pay K1,500 per fortnight as agreed by the respondent and not K471,559.47 within 30 days from the date of the order.

SUBMISSIONS

11.	The appellant submitted that his consent was not given for the transfer of the mortgage from ANZ to the respondent and for the period in which the respondent was not yet registered as the mortgagor, the respondent was illegally collecting the loan from his bank account in satisfaction of his loan to ANZ. 

12.	The appellant submitted that pursuant to sections 27 and 66 of the Land Registration Act, the respondent was not permitted to collect funds from his account prior to  it being registered as the registered mortgagee and the respondent’s rights as mortgagee over the property were from the date of registration as mortgagee over the subject property, which was from 9 November 2021.

13.	The appellant relied on paragraph 32 of the decision below to submit that once the trial judge found that the respondent had no legal right as a mortgagee to take any action to advertise the subject property for sale, the finding ought to have followed that the respondent had wrongfully sought to collect an amount of K86 710.05 as home loan repayments from him.
14.	The respondent contended that the trial judge was correct in the reasoning adopted and orders made and sought an order that the appeal be dismissed with costs.

CONSIDERATION
Grounds 1 and 2
15.	Grounds one and two both take issue with the trial judge’s finding at paragraph 32 which dealt with the question of whether the respondent had rights as a mortgagee over the property owned by the appellant.

16.	Both grounds involve the construction of ss 27 and 66 of the Land Registration Act.

17.	The appellant submitted that the respondent was unable to receive loan repayments from the appellant for the home loan following purchase and transfer agreements between ANZ in June and September 2018 was made on the basis of the fact that it was not until 9 November 2021 that the Registrar of Titles registered the transfer of mortgage for the interest and registration of the mortgaged property to the respondent from ANZ.

18.	The appellant submitted that pursuant to s 27 of the Land Registration Act the respondent’s rights as mortgagee over the property were from the date of registration as mortgagee over the subject property. 

19.	The respondent lodged a transfer of mortgage instrument with the Lands Department to transfer the mortgage from ANZ to it on 9 November 2020.

20.	On 9 November 2021 the Registrar of Titles registered the Transfer of Mortgage for the interest and registration of the property to the respondent from ANZ.

21.	Section 27 of the Land Registration Act is in the following terms:

27. EFFECTIVE DATE OF REGISTRATION.

(1) An instrument, when registered, takes effect from the date when it was produced to the Registrar for registration which date shall be specified in the certificate of title or other instrument issued by the Registrar.

(2) The date of production of an instrument to the Registrar for the purpose of registration shall be deemed to be the date of registration of the instrument. (Emphasis added).

22.	Pursuant to s 27(1), the effective date of registration of the mortgage is when it was produced to the Registrar for registration not the date the Registrar of Titles registered the Transfer of Mortgage for the interest and registration of the property to the respondent from ANZ;  Esther Torato v PNG Home Finance Limited (2012) N4583 at [6]. 

23.	Section 66 of the Land Registration Act which regards the registration of transfer of mortgages:

66. TRANSFER OF MORTGAGE OR CHARGE.
(1)A mortgage or charge may be transferred by an instrument in the approved form.
(2) The consideration for a transfer of a mortgage or charge shall be specified in the transfer.
(3) Where the consideration is not an amount of money the approved form of transfer shall be amended to state concisely the nature of the consideration.
(4) On registration of a transfer of a mortgage or charge–
(a) the interest of the transferor, as specified in the transfer, with all rights, powers and privileges belonging to that interest passes to and vests in the transferee; and
(b) the transferee becomes subject to and liable for the same requirements and liabilities to which he would have been subject and liable if he had been named originally in the mortgage or charged as the mortgagee or charge, as the case may be.
(5) The rights, powers and privileges passing to the transferee by virtue of Subsection (4) include:
(a) the right to sue on the mortgage, charge, or other instrument the subject of the transfer; and
(b) all interest in and right to recover a debt, sum of money, annuity or damages under the mortgage, charge, or other instrument.
(6) The operation of Subsection (5)(b) is not affected by reason only that the right of recovery is a chose in action.
(7) This section does not prevent a court of competent jurisdiction giving effect to a trust affecting the debt, sum of money, annuity or damages referred to in Subsection (5)(b) where the transferee is a trustee for any other person. 

24.	The transfer of mortgage was signed on 9 November 2020. This is the date from which registration takes effect for the purposes of s 66(4) and (5) of the Land Registration Act.

25.	With respect to the trial judge, the finding in paragraph 32 is incorrect. However, while this is an error of law, it does not assist the appellant and it does not impact on the merits of the appeal as the trial judge went on to make the correct decision. 

26.	As the respondent lodged a transfer of mortgage instrument with the Lands Department to transfer the mortgage from ANZ to it on 9 November 2020 it was a registered mortgagee on 8 March 2021.

27.	Similarly, the appellant’s reliance on the case of Otto Benal Magitten v William Moese & Rural Development Bank Limited (2005) N5008 does not assist him because it is distinguishable.  As the National Court correctly found, while the defendant bank lend money to the plaintiff, the loan was not secured by a mortgage, hence it was not a registered mortgagee at the time it transferred the interest in the State Lease to the first defendant.  In the present case, the respondent was the registered mortgagee. 

28.	 We dismiss the appellant’s submission that the trial judge erroneously entered judgement for the respondent on the basis that it was not the registered mortgagee of the appellant’s property on 8 March 2021.

Ground 3

29.	This ground related to the respondent’s cross claim below. The respondent pleaded breach of contract. The trial judge upheld the cross claim.

30.	The agreement between the appellant and ANZ is set out in the Letter of Offer dated 6 February 2017 as:
a Variable Rate Home Loan Facility on the terms set out in this letter together with any special conditions accompanying the Letter of Offer, and the accompanying ANZ Consumer Lending Products Terms and Conditions 10.13 Papua New Guinea Edition as may be varied, amended and supplemented from  time to time.

31.	 The Letter of Offer stated that the credit provider is:

Australian and New Zealand Banking Group (PNG) Limited and its successors and assigns.

32.	The property is listed as a security to secure ‘any money due under the agreement’.

33.	The Letter of Offer contains provisions as to default.

34.	The Memorandum of Common Provisions contains standard terms and conditions such as the requirement to pay money owing to ANZ on time. Clause 7 is titled default events. A default event occurs if the appellant does not pay money owing to ANZ on time. The consequence of a default event is amongst other things a requirement to pay all secured money to ANZ.

35.	The enforcement powers operate ‘subject to any laws which cannot be excluded’. ANZ is permitted to take possession of any property and dispose of it to satisfy the amount owing to it. ANZ is required to give notice before sale ‘pursuant to any laws which cannot be excluded’.

36.	ANZ is defined as:

means Australian and New Zealand Banking Group (PNG) Limited and its successors, transferees and assignees.

37.	By September 2018, ANZ sold its banking businesses to the respondent. The respondent had acquired all of ANZ’s customer’s interests, contracts and agreements, including the appellant’s contract made on 9 February 2017.

38.	On 4 January 2021 the appellant was served with a Notice of Demand which stated that unless he paid the outstanding amount of K452,083.80 plus interest within 14 days, the respondent would:
exercise its powers and remedies including any power to sell conferred on it by the securities and by the law and will take necessary measures to recover payment thereof and the costs incurred therewith.

39.	On 27 January 2021 the appellant was served with a Notice of Default. The letter stated that unless the outstanding amount was paid within 14 days, the respondent would commence enforcement proceedings and exercise its rights and powers of sale in respect of the given and or registered securities.
40.	The contract the appellant had with ANZ was that he would pay K1,774.53 on a fortnightly basis. That the interest for the loan was at a rate of 8.95% per annum. The property was provided by the appellant as security for the loan.
41.	It was a term of the contract that if the appellant defaulted on the loan, ANZ could sell the property to recover outstanding amounts and that the appellant indemnified ANZ against loss, cost, charges on an indemnity basis.
42.	The appellant’s obligation to repay the home loan on the same terms as his agreement with ANZ also arises as a result of the sale and purchase agreement on 22 June 2018 and the transfer agreement on 22 September 2018.
43.	There is nothing in the home loan agreement or any statute that required ANZ or the respondent to seek the appellant’s agreement prior to entering into arrangements as they did in 2018.
44.	The respondent’s claim to home loan repayments arises out of the home loan agreement. It is correct that the appellant entered into the home loan agreement with ANZ. However, by 22 September 2018, ANZ had sold its interests and transferred all agreements it had with its clients including the appellant to the respondent. From 22 September 2018, the respondent had a right to enforce the appellant’s home loan agreement as it was ANZ. This arises from the definition of ANZ in the agreement as including its successors, transferees and assignees. 
45.	The respondent’s claim to loan repayments on the property arose not because of the operation of the Land Registration Act 1981 but based on a contract the appellant had with ANZ entered into on 9 February 2017, which ANZ transferred to the respondent by September 2018.
46.	We see no error in the trial judge’s finding that the respondent was lawfully permitted to collect loan arrears from the appellant having assumed all the rights, benefits and liabilities from ANZ as its purchaser, nor that the respondent had a duty to inform the appellant about there had been a transfer of his accounts from ANZ to the respondent.
47.	ANZ’s rights under the contract with the appellant were transferred to the respondent and it was entitled to receive the loan repayments on the property and exercise rights set out in the contract in case of default, which was to conduct a mortgagee sale following the issue of a Notice of Demand and Notice of Default which it did.

48.	This ground of appeal is dismissed.

Ground 4

49.	The appellant is aggrieved that the trial judge did not permit the appellant to pay the judgement debt of K471,559.47 in instalments as this was the agreement with the respondent. The respondent denies that there was any agreement.

50.	There is no evidence before the court as to any agreement for the payment to be paid in instalments or why the usual order should not have been made.

51.	We see no error in the trial judge’s findings that the appellant pay the judgement sum within 30 days from the date of the order. This ground of appeal is dismissed.

ORDERS 

52.	We make the following orders:

a.	The appeal is dismissed.
b.	The appellant to pay the respondent’s costs as agreed or assessed. 

Lawyers for respondent: O’Briens Lawyers