Boubou v Development Bank of Kiribati [2013] KICA 10; Civil Appeal 19.2012 (23 August 2013)

IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION
HELD AT BETIO
REPUBLIC OF KIRIBATI

Civil Appeal No. 19 of 2012

BETWEEN

BOUBOU, RIABEN AND BAAKA
APPELLANTS

AND

DEVELOPMENT BANK OF KIRIBATI
RESPONDENT

Before: Paterson JA
Blanchard JA Handley JA
Counsel: Nancy Walker for appellants
Batiwate Itibita for respondent
Date of Hearing: 20 August 2013
Date of Judgment: 23 August 2013

JUDGMENT OF THE COURT

1. This is an appeal from the judgment of the Chief Justice of 25 May 2012 in which he allowed the Bank's appeal from the decision of the Magistrates' Court at TabNorth of 10 December 2009. The latter had dismissed the Bank's application to enforce its securities over two parcels of land at TabNorth to recover the debt due under its loan.
   
2. The appeal to the High Court from the Magistrates' Court was a full appeal on fact and law. The Chief Justice held that the Magistrates' Court had not properly assessed the evidence, "and if it had done so the Bank would have succeeded". He also held that it had failed to "properly consider ... [the] terms and conditions of the loan. These are errors of law which clearly justify interfering with the decision of the Court below".
   
3. Ms Walker for the appellants challenged the Chief Justice's decision and took this Court to the evidence and findings in the Magistrates' Court.
   
4. The loan agreement of November 3 1993, the Loan application Certificates, the Bill of Sale and the Legal Charge were in evidence.
   
5. The oral evidence of the Bank's witness before the Magistrates' Court on 10 December 2009 was that the then balance due under the loan agreement was $5,731.97 comprising interest of $3,942.02, penalties of $2,425.58, extra charges of $209.39 and "repayment withdrawn" of $396. The Bank's ledger cards for this loan are not in evidence and were not produced.
   
6. The loan agreement and security documents entitled the Bank to charge 12% compound interest on monthly rents, but gave the Bank no contractual right to charge penalties, extra charges, or "repayment withdrawn" charges. Counsel for the Bank conceded before us that the Bank had no right to make these charges under its contract or its Act.
   
7. It is of some significance that the Bank did not claim that any amount was owed for principal.
   
8. On 17 April 2009, the first day of hearing in the Magistrates' Court the Bank's witness agreed that the borrower made a payment of $800 in May 1999 to representatives of the Bank who had come to TabNorth to repossess "our big canoe" which the Bank had as security under its bill of sale.
   
9. The Bank representatives did not repossess the canoe but accepted payment of $800 which the borrower's witness said was "our last payment" but the Bank later appropriated it as "penalty for late payment". While on TabNorth the Bank representative wrote a letter for the borrower or borrowers seeking confirmation that the debt had been paid off. The Bank's representatives took the letter back with them but the borrowers did not receive a reply.
   
10. At the end of the evidence that day the magistrates gave interim reasons:
    

"The Court having heard both parties saw that the application by the [Bank] is not strong and clear. In the evidence given by the Respondent they mentioned that there were two employees that came from the [Bank] in Tarawa and were given the amount of ... $800 and where they said that they will clear their loan/debt. Therefore this Court decides that the [Bank's] representative that came from Tarawa must be invited to the Court in future. This case is therefore adjourned".

11. The hearing resumed on 10 December 2009 and at the outset the Bank's representative produced the borrower's 1999 letter to the Bank which did not go into evidence. The representative then said that after the payment of $800 the Bank was still owed $394.04.
    
12. Apart from sending various reminder letters the Bank did nothing to recover the outstanding debt for nearly ten years before sending a representative to the island on 24 March 2009. The borrower or borrowers were not happy with the Bank's demand and a court summons followed soon afterwards.
    
13. The Bank's representative admitted that one of the representatives who visited the island in 1999 to repossess the canoe was still employed by the Bank. The Court wanted to know why the Bank did not bring the case to Court in 1999 and received an unsatisfactory answer. One of the alleged borrowers then gave evidence.
    
14. The Court gave judgment dismissing the Bank's application:
    

"Since the Court saw that there was a letter signed by the group members written by Tabera [the Bank's representative], and they requested Tabera to send back the reply of their letter so they can understand their loan outstanding, and that the letter of Tabera (reply letter) never received, this Court do not grant this application".

15. The reasons are brief but, when read with those of 17 April 2009, they are adequate. At the end of the evidence on the first day the Court was not satisfied with the Bank's case and were not prepared to make an order in its favour at that stage. However, instead of dismissing the case, the Court gave the Bank an adjournment to enable it to call two Bank officers as witnesses. At the resumed hearing eight months later those witnesses were not called, and there was no explanation for their absence. The same Bank representative appeared again and gave further evidence along the same lines as before. The Court can only conclude that the evidence of the missing Bank officers would not have supported the Bank's case.
    
16. The appellants' case is also supported by circumstantial evidence. In April 1999 the Bank's representatives went to TabNorth to repossess the canoe, and came back with $800 and no canoe. If the $800 was not enough to pay off the debt they should have asked for more and, if they did not get it, one would have expected them to repossess the canoe.
    
17. The representatives returned with a letter signed by the borrower or borrowers seeking written confirmation that the debt had been paid off. There was no reply. There was then no effective contact between the Bank and the borrower or borrowers for 10 years.
    
18. The Bank's evidence is that after the payment of $800 was received there was an outstanding balance of $399.04, but this was for a penalty for late payment. This is confirmed by the Bank's evidence about the outstanding debt at the adjourned hearing where the components do not include any amount for principal.
    
19. The problem for the Bank is that, as its counsel was forced to concede before us, it had no right to charge any penalty for late payment.
    
20. The Chief Justice identified two errors of law in the decision of the Magistrates' Court. In our judgment there were no such errors. On the whole of the evidence we find that the payment of $800 discharged the debt due to the Bank and the Magistrates' Court were justified in refusing to make an order authorising it to enforce its securities. The appeal must therefore be allowed.
    
21. The following orders are made:
    
    1. Appeal allowed with costs;
    2. Judgment of the High Court set aside;
    3. In lieu thereof order that the appeal to the High Court be dismissed with costs;
    4. The Bank to pay the costs and disbursements of the respondents in this Court.
       

Paterson JA

Blanchard JA

Handley JA