Mua v Australia and New Zealand Banking Group (PNG) Ltd [2018] PGNC 529; N7670 (17 December 2018)

N7670

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 598 of 2018

BETWEEN:
DR JOHN MUA
Plaintiff/Cross-Defendant

AND:
AUSTRALIA AND NEW ZEALAND
BANKING GROUP (PNG) LIMITED
Defendant/Cross-Claimant

Waigani: Hartshorn J
2018: 15^th November
: 17^th December

Application for Summary Judgment

Cases Cited:

Bruce Tsang v. Credit Corporation Ltd [1993] PNGLR 112
Christopher Smith v. Ruma Construction Ltd (2000) N1982
William Duma v. Eric Meier (2007) SC898

Counsel:

Mr. C Raurela, for the Plaintiff/Cross-Defendant
Mr. T. Yapao, for the Defendant/Cross-Claimant

17^th December, 2018

1. HARTSHORN J: This is a decision on a contested application for summary judgment pursuant to Order 12 Rule 38 National Court Rules, on an amended cross-claim.

Background

2. In or about April 2013, the defendant/cross claimant (ANZ) provided loan facilities including a fully drawn loan advance (FDA Loan) to Pacific Jets Ltd (Pacific Jets). Dr. Mua is the sole director of Pacific Jets and manages the company. Dr. Mua provided a personal guarantee, and mortgaged his property at Airvos Avenue, Port Moresby, to ANZ as security for the loan facilities and FDA Loan. By March 2015 Pacific Jets was in default under the FDA Loan. Dr. Mua made various promises that the loan facilities would be paid by Pacific Jets but this did not and has not eventuated.

3. ANZ served notices of demand and notices of default and in May 2018 ANZ served a notice to vacate the Airvos Avenue property. Dr. Mua informed ANZ that he would vacate the Airvos Avenue property on 29^th May 2018, but then issued this proceeding.

4. Dr. Mua seeks various declaratory and injunctive relief and claims that before selling the Airvos Avenue property ANZ must fully exhaust all possible recovery options against Pacific Jets.

5. ANZ in its cross claim seeks judgment against Dr. Mua for the amount owing by Pacific Jets pursuant to the guarantee given by Dr. Mua to ANZ, and amongst others, orders for the possession and sale of the Airvos Avenue property. Dr. Mua has failed to file a defence to the cross claim.

6. Dr. Mua opposes the application for summary judgment on the basis that:

a) the debt owed to ANZ, is owned by Pacific Jets and not by him;

b) he is only a third-party guarantor and not the debtor;

c) ANZ has bypassed the debtor and is seeking to enforce against him, which he claims is unjust and unreasonable;

d) there is no evidence that ANZ has attempted to recover against Pacific Jets first.

7. ANZ submits amongst others that:

a) Dr. Mua has not filed a defence to the cross claim;

b) ANZ has made numerous demands of Pacific Jets since 2014 for it to repay the FDA Loan but to no avail;

c) there is no evidence that Pacific Jets has any property against which ANZ could have recourse;

d) Dr. Mua has given a cross-guarantee that speaks for itself. The terms are clear;

e) Dr. Mua does not have a defence to the cross claim.

Law

8. ANZ relies upon the Supreme Court case of Bruce Tsang v. Credit Corporation Ltd [1993] PNGLR 112 in which the Court in considering Order 12 Rule 38 National Court Rules said that there are two elements involved, being:

a) evidence of the facts proving the essential elements of the claim; and

b) that the plaintiff or some responsible person gives evidence that in his belief there is no defence.

9. The Court stated further:

“If a defence is filed or evidence is given by the defendant ... the plaintiff must show that, upon the facts and/or the law, the defendant has no defence. The plaintiff will not be entitled to summary judgment if there is a serious conflict of fact or law.”

10. There are numerous decisions concerning the requirements for a successful summary judgment application. One of these is William Duma v. Eric Meier (2007) SC898. As to an application for summary judgment the Court said:

“Summary judgment is a discretionary power and may be granted if there is evidence of facts on which the claim is based and evidence is given by some responsible person that in his belief the defendant has no defence to the claim or part of the claim.........

The discretion conferred on the Court should be exercised in a clear case and with considerable care. Summary judgment should be granted only where there is no serious triable issue of fact or law. If there is no dispute as to fact and there is clear admissions of the claim or part of the claim then judgment must be entered for the plaintiff.”

11. I also make reference to a passage in Christopher Smith v. Ruma Construction Ltd (2000) N1982, a decision of Sakora J in which his Honour, in my respectful view, correctly records the test to be applied when regard is had to the wording of Order 12 Rule 38 (1) National Court Rules. For summary judgment to be entered:

“1. The applicant must verify by affidavit evidence the cause of action.

2. The applicant must swear to a belief on his part that the respondent (defendant) has no defence to the cause of action (or the pleadings).

If the Court has been satisfied in respect of (1) and (2), then the onus is on the respondent to:

3. show an arguable defence or that there is a real question to be tried.”

Consideration

12. In this instance, Mr. Francis Waranduo, the Manager, Asset Management for ANZ, on behalf of ANZ, deposes in considerable detail as to ANZ’s claim against Dr. Mua. Amongst others, Mr. Waranduo deposes that, “Based on all the records, court documents and information available to me, it is my belief and the belief of the Bank that Dr. Mua has no defence to the cross claim.”

13. Mr. Waranduo has satisfied the two factors or elements previously referred to. ANZ’s cause of action has been verified by Mr. Waranduo’s affidavit evidence and Mr. Waranduo has sworn that it is his belief and that of ANZ that Dr. Mua does not have a defence to the cross claim.

14. The onus is now upon Dr. Mua to show that he has an arguable defence or that he has a real question to be tried. As referred to, Dr. Mua has not filed a defence to the cross claim. In his evidence and in the submissions of his counsel the only purported defences are that the debt is not his, it is Pacific Jets, and that it is unjust and unreasonable for ANZ to proceed against him without first taking all steps to recover from Pacific Jets first.

15. In regard to the debt not being Dr. Mua’s and being the debt of Pacific Jets, it is not disputed by Dr. Mua that he gave the guarantee and that he is liable to ANZ for the debt of Pacific Jets. In regard to ANZ not proceeding first against Pacific Jets, Dr. Mua relies upon the case of Papua New Guinea Banking Corporation v. Pala Aruai & Freeway Enterprises Ltd (2002) N2234 in which it is stated amongst others, that:

“where a third party to a loan agreement gives security to a bank to facilitate an advance or a loan to a borrower, it is only fair and reasonable that every step must be taken to recover the principle and the interest from the borrower first.”

16. From a perusal of that case, I note that it does not appear to have been concerned with a guarantee given to the subject bank as occurred here.

17. In this instance, the unrebutted evidence is that numerous demands have been made of Pacific Jets by ANZ to pay its debt, since 2014. Dr. Mua is the sole director of Pacific Jets. If Pacific Jets had the wherewithal, resources or ability to pay its debt owing to ANZ, Dr. Mua would have facilitated that - he being the sole director. To my mind, there is little merit in the submission that it is only fair and reasonable that every step must be taken to recover against the debtor before recourse is sought against the guarantor, in circumstances:

a) where the guarantor, being the sole director of the debtor, has the ability to ensure that the debtor pays the debt if the debtor has the resources to do so, and also has the knowledge that the debtor is unable to pay the debt; and

b) where it is not a term of the guarantee given, that every step to recover against the debtor must first be taken, before recourse may be taken against the guarantor.

18. Dr. Mua has not brought to this court’s attention any matter that would appear to preclude ANZ from taking action under the guarantee to recover the amount that is owing to it by Pacific Jets. I am not satisfied that Dr. Mua has discharged the onus of showing that he has an arguable defence or that there is a real question to be tried. ANZ is entitled to the summary judgment relief that it seeks. Given this, it is not necessary to consider the other submissions of counsel.

Orders

19. The court orders as follows:

1. Pursuant to Order 12 Rule 38 National Court Rules, judgment is entered for Australia and New Zealand Banking Group (PNG) Ltd (ANZ PNG) against John Mua and John Mua is ordered to pay ANZ PNG the sum of Four Million, Four Hundred Ninety One Thousand Eighty Kina and Twenty Five Toea (K4,491,080.25) together with interest thereon from 31^st August 2018 to payment as follows-
   

i) Interest on K3,342,204.99 at 15.20%; and

ii) Interest on K4,060,707.41 at 14.70%

2. John Mua is ordered to deliver up to Australia and New Zealand Banking Group (PNG) Ltd possession of the land described as Allotment 43 Section 51 Granville, National Capital District (the Property) on or before 12^th January 2019.
   
   100. If John Mua does not deliver up vacant possession of the Property on or before 12^th January 2019, Australia and New Zealand Banking Group (PNG) Ltd is granted leave after 12^th January 2019 to issue forthwith a writ of possession in respect of the Property on terms that the Police are, for the purpose of delivering up vacant possession of the Property, empowered to enter the Property and cause Australia and New Zealand Banking Group (PNG) Ltd to have vacant possession of the Property.
        

d) The Property may be sold by Australia and New Zealand Banking Group (PNG) Ltd or its agents to satisfy the Judgment sum including interest and costs and the reasonable expense of sale, with the balance, if any, to be paid to John Mua.

e) John Mua and his servants, agents or relatives are ordered to allow prospective purchasers to inspect the Property as and when is required by Australia and New Zealand Banking Group (PNG) Ltd or its agents.

f) John Mua and his servants, agents or relatives are ordered not to impede the sale of the Property by any means.

g) John Mua is ordered to pay the Australia and New Zealand Banking Group (PNG) Ltd’s costs of this proceeding, to be taxed if otherwise not agreed.

h) Time is abridged.
_____________________________________________________________
Raurela Lawyers: Lawyers for the Plaintiff/Cross-Defendant
Allens Lawyers: Lawyers for the Defendant/Cross-Claimant