Kina Finance Ltd v Aburin [2015] PGNC 293; N6399 (5 May 2015)

N6399

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 885 OF 2013

BETWEEN:

KINA FINANCE LIMITED
Plaintiff/Cross Defendant

AND:

CECILY ABURIN

Defendant/Cross Claimant

Waigani: Hartshorn J.
2014: 11^th August
2015: 5^th May

Trial

Cases:
Jacob Simbuaken v. Neville Egari (2009) N3824
Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694
Sogeram Development Corporation Ltd v. Som (2014) N5874

Counsel:

Mr. D. Bidar ,for the Plaintiff/Cross Defendant
Mr. M. S. Wagambie, for the Defendant/Cross Claimant

5^th May, 2015

1. HARTSHORN J: The plaintiff Kina Finance Ltd (KFL), sues the defendant Cecily Aburin for breaching a loan agreement it has with her. Ms. Aburin cross claims against KFL as it is claimed that without authority, KFL gave a tenant of Ms. Aburin a notice to vacate Ms. Aburin’s property and as a consequence Ms. Aburin suffered a loss of rental income.

2. In February 2009, KFL advanced to Ms. Aburin the sum of K 133,000. This sum was to enable Ms. Aburin to meet the construction costs of a property located at allotment 41 section 432 Hohola Ensisi Valley NCD (property). In June 2012, the amount advanced was increased to K 193,100. Ms. Aburin provided security for the loan by giving a registered mortgage over the property to KFL. Ms. Aburin agreed to repay the loan together with interest by monthly repayments in about 10 years.

3. KFL pleads that Ms. Aburin has not made the monthly repayments as agreed and has defaulted under the loan agreement by failing to comply with several written notices of demand and default that required payment of the amount owing. Ms. Aburin pleads that KFL breached the loan agreement by increasing the required monthly repayments from K 1,457.84 to K 3,479.38, and without authority KFL gave notice to vacate to Ms. Aburin’s tenant, causing her to vacate, and thereby contributing to Ms. Aburin’s default and causing Ms. Aburin to suffer loss.

4. In her statement of defence Ms. Aburin pleads amongst others that:

1. she was in default, but that the default was caused by KFL increasing the amount of the monthly repayment from K 1,457.84 to K 3,479.38 which was in breach of the loan agreement;
   
2. the default occurred because an eviction notice was issued to Ms. Aburin’s tenant by KFL causing the tenant to vacate. This resulted in no rental payments being received and being used to service the loan, and arrears began to accrue;
   

100. she did not deliberately and completely neglect her duty to repay the loan as although she fell into arrears, she continued to make payments to reduce the arrears;
     

4. the proceeding is premature as Ms. Aburin continues to meet her loan obligations
   

5. In her cross claim, Ms. Aburin pleads amongst others that:

1. without her consent KFL gave notice to vacate to her tenant;
   
2. KFL did not have a legal or equitable relationship with the tenant that entitled it to give the notice to vacate;
   

100. the tenant vacated the property and breached the lease agreement that the tenant had with Ms. Aburin as a result of KFL’s actions;
     

4. as a result of the breach of the lease agreement Ms. Aburin suffered loss of rental income in the sum of K 14,732.
   

Increase in monthly repayments

6. As to the increase in the monthly repayments from K 1,457.84 to K3,479.38, the evidence is that the variation of the loan agreement, was signed by Michael Ting, KFL’s Deputy General Manager and by Ms. Aburin in the presence of Nou Asigau on 9^th June 2012. The varied loan agreement provides that the monthly repayment amount is K 3,479.38. Ms. Aburin does not dispute that she signed the document and there is no evidence that she was coerced or induced into signing the document.

7. Submissions were made concerning an alleged failure by KFL to provide monthly statements, to assist Ms. Aburin “by encouraging her to repay her loan”, to inform her of the increase in monthly payments and to inform Ms. Aburin the customer, of misunderstanding and errors that appear on the account or statement. However, none of these matters are pleaded in Ms. Aburin’s defence.

8. As to the requirement to plead, I refer to the decision of Davani J. in Jacob Simbuaken v. Neville Egari (2009) N3824; Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694, a decision of Kandakasi J. and my decision of Sogeram Development Corporation Ltd v. Som (2014) N5874 in which I said:

“In Tole’s case (supra), Kandakasi J stated, “The law on pleadings in our jurisdiction is well settled..... unless there is foundation in the pleadings of a party, no evidence... of matters not pleaded can be allowed.”

In Simbuaken’s case (supra), after setting out Order 8 Rule 14, Davani J. stated that the reason that certain matters should be pleaded is to avoid surprises and to ensure that all issues that need to be raised are raised long before the matter progresses to trial. Further, each party must plead all the material facts on which he means to rely at the trial otherwise he is not entitled to give any evidence of them at the trial. I respectfully agree with the above statements.

Order 8 Rule 14 National Court Rules requires that in a defence the defendant shall plead any matter which he alleges makes any claim not maintainable, or if not pleaded would take the plaintiff by surprise. If he does not so plead all material facts on which he intends to rely at trial, a defendant is not entitled to give any evidence of those facts at the trial.”

9. I am satisfied from the evidence that Ms. Aburin agreed to the monthly repayment of K 3,479. 38. As to the increase to that amount being in breach of the loan agreement between KFL and Ms. Aburin, the basis for that contention was not pleaded or explained, and consequently is rejected.

Notice to vacate

10. Ms. Aburin contends that KFL was not entitled to give a notice to vacate to her tenant as the notice was given without her consent and KFL did not have a legal or equitable relationship with the tenant entitling it to give the notice to vacate.

11. KFL submits that the notice to vacate, which was addressed to Ms. Aburin, was properly issued in accordance with s. 68 Land Registration Act. It was served on the occupants of the mortgaged property so that they were aware that they had to vacate the property as it was to be sold by KFL.

12. Section 68 Land Registration Act, relevantly provides that where certain default continues, the creditor may sell the land the subject of the mortgage. Section 68 (2) provides that, “For the purpose of effecting a sale under this section the creditor may execute any document.”

13. The continuing default was the non-payment of the secured money owing after notice to pay the amount owing had been given.

14. In this instance, the evidence is that a notice of demand and a notice of default were issued to Ms. Aburin demanding payment of the total amount owing and then notifying that there had been default in complying with the demand. Further, Ms. Aburin was alerted to the intended recovery action against her. These notices were issued pursuant to s. 67 and s. 68 Land Registration Act.

15. Given this, KFL was entitled to sell the mortgaged property pursuant to s. 68 Land Registration Act and was entitled to execute any document for the purpose of effecting a sale. I am satisfied that any document includes a notice to vacate a mortgaged property to be sold by a creditor.

16. On the evidence I am satisfied that KFL was entitled to issue the notice to vacate as it did. Consequently this defence to KFL’s claim and the cross claim of Ms. Aburin have no merit.

17. As to the remainder of the defence of Ms. Aburin, it is clear that she is in default of her obligations under the loan agreement with KFL. I am satisfied that KFL is entitled to the relief that it seeks in its statement of claim.

Orders

18.

1. the cross claim is dismissed;
   
2. the relief sought in the amended statement of claim is granted;
   

100. time is abridged.

_____________________________________________________________O’Briens Lawyers : Lawyers for the Plaintiff/Cross Defendant
M. S. Wagambie Lawyers: Lawyers for the Defendant/Cross Claimant