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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 46 OF 2021 (IECMS)(CC1)
BETWEEN:
DAVID LAMBU
Plaintiff
AND:
KINA BANK LIMITED
Defendant
Waigani: Tamade AJ
2022: 28th March, 31st May
AGREEMENTS – Sale and purchase of a bank – master transfer agreements - Defendant Bank has accepted the assignment of all the rights, benefit interests and title from the previous bank - including the home loan facility held by Plaintiff.
LAND REGISTRATION ACT 1981 – Section 66 – Transfer of Mortgage or Charge – Defendant Bank has right as registered mortgagor to put up the property for tender after registered proprietor has defaulted in loan commitments – cross-claim – defendant bank cross-claims for outstanding loan arrears and right to subject mortgaged property – defendant bank issued a notice of default – plaintiff paid off the amount owing under personal loan – plaintiff’s conduct confirms that he is aware that the defendant bank is now the collector of his home loan – plaintiff’s words goes against his actions.
Cases Cited:
Esther Torato v PNG Home Finance Limited [2012] PGNC 4; N4583
Otto Benal Magiten v William Moses and Ors (2006) N5008
Legislation:
Counsel:
Mr David Lambu, Plaintiff In Person/Cross Defendant
Mr Anthony R Paru, for the Defendant/Cross Claimant
31st May, 2022
1. TAMADE AJ: The Plaintiff was previously a customer of the Australia New Zealand Banking Group Limited (ANZ) in which he took out a personal loan and was also later granted a home loan facility to complete the construction of his dwelling home which amalgamated all his loans into one loan facility in 2015.
2. As security for the loan, the Plaintiff mortgaged his property described as Allotment 112 Section 260, contained in State Lease Volume 66 Folio 114 to ANZ Bank.
3. The Plaintiff later entered into two more variable rate home loan facilities to refinance the home loan facility with ANZ Bank in which the third home loan facility succeeded both the first and the second home loan facilities and the mortgaged property remained as security over the loan facility.
4. On 22 June 2018, ANZ Bank and the Defendant, Kina Bank Ltd entered into a sale and purchase agreement whereby ANZ Bank sold and assigned all its interest in the bank including all its rights, benefit interest and basically its business to Kina Bank Limited.
5. Having now assumed ownership of the business of banking from ANZ, the Defendant lodged a Transfer of Mortgage over the Plaintiff’s property as security to ANZ to the Department of Lands & Physical Planning to transfer the subject mortgage to Kina Bank Limited.
6. The Plaintiff is however in this Court by way of these proceedings alleging that Kina Bank Limited has no right over his mortgaged property to ANZ Bank and that the Defendant has been wrongfully collecting an amount of K86 710.05. The Plaintiff therefore claims this sum with an annual interest of 8 per cent from January 2019 until the date of judgment and for legal and incidental costs of the proceedings.
7. The Plaintiff in this matter seems to assert that his consent was not given for the transfer of the mortgage to the Defendant Bank and therefore for the period in which the Defendant Bank was not yet registered as the mortgagor, the Defendant Bank was illegally collecting the loan from his bank account in satisfaction of his loan to ANZ Bank. The Plaintiff seems to assert that the transaction of Kina Bank Limited purchasing the banking business from ANZ did not include his loan facility and that it should have involved him as a customer to give his consent for Kina Bank to deal with his loan and the mortgage over his property to ANZ Bank.
8. Kina Bank Limited on the other hand has cross-claimed against the Plaintiff on the basis that the Plaintiff has defaulted in his loan obligations initially to ANZ and now to Kina Bank as the new owner of the business and seeks to exercise its right of mortgagee sale over the subject property to recover its losses.
9. The Defendant is therefore claiming a liquidated sum of K471 559.47 in its crossclaim against the Plaintiff for loan arrears and for its right as a mortgagor over the subject property to have possession over the property and to sell the property under a mortgagee sale to recover its losses.
Is the Defendant lawfully allowed to collect loan arrears from the Plaintiff having assumed all the rights, benefits, and liabilities from ANZ Bank as its purchaser? Does the Defendant or ANZ Bank owe any duty to the Plaintiff as a customer to inform him about the transfer of his accounts to Kina Bank Limited?
10. The Defendant states in evidence in the Affidavit of Francis Waranduo who is a Manager of Asset Recoveries with the Defendant Bank filed on 19 May 2021 that:
11. The Defendant Bank states further that at the completion of the agreements entered into which is the Sale and Purchase Agreement and the Master Transfer Agreement, ANZ has assigned, and the Defendant Bank has accepted the assignment of all the rights, benefit interests and title from ANZ under and in respect of the Customer Loans, which includes the Home Loan Facility held by the Plaintiff.
12. The Plaintiff in his evidence by way of his Affidavit filed on 26 March 2021 states that he is the registered proprietor of the subject property described as Allotment 12 Section 260 contained in State Lease Volume 66 Folio 144.
13 The Plaintiff stated that he was surprised to learn through a newspaper advertisement dated 8 March 2021 that the Defendant Bank had advertised his property under a mortgagee sale. The Plaintiff also states that the Defendant Bank never lent any money to him at all as it was the ANZ Bank that lent him the money
14. I find from the Defendant’s evidence and submissions that the Defendant had legally acquired the banking business from ANZ Bank and there is no doubt in my mind that the Defendant bank is entitled to the banking business of ANZ Bank after the purchase and has received in the assignment all rights, benefits, and obligations of the business of ANZ Bank. In this regard, those rights also include the Plaintiff’s accounts including any loan facility which has now been transferred to the Defendant company.
15. Plaintiff’s allegations that he should have been informed and or his consent should have been given as to the transfer of his loan accounts and or his bank accounts from ANZ to the Defendant company and or he should have been informed of the acquisition by the Defendant company over ANZ has no legal basis in law and the Court is not assisted with any submissions on the law as to this assertion, it therefore remains an unfounded assertion.
16. On this basis, I find that any loan payments collected by the Defendant Bank from the Plaintiff after the acquisition of ANZ Bank are lawful and therefore the Plaintiff’s claims in the sum of K86 710.05 are therefore baseless and without merit. If ANZ was the banker, those are funds that should have properly been collected by ANZ in repayment of the Plaintiff’s loan. In this instance, ANZ has now exited having transferred and assigned its interest and rights to Kina Bank.
Does the Defendant have rights as a mortgagee over the subject mortgaged property owned by Plaintiff?
17. The Plaintiff however bases his argument on section 27 of the Land Registration Act that the collection of funds from his account by the Defendant prior to the Defendant being registered as the registered mortgagee in payment towards his home loan facility is wrong in law.
18. Section 27 of the Land Registration Act states that:
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.
19. Mr Waranduo who is the Asset Recovery Manager with the Defendant Bank states in his Affidavit filed on 19 May 2021 that the Defendant company lodged a Transfer of Mortgage Instrument with the Lands Department to transfer the mortgage from ANZ Bank to the Defendant Bank on 1 November 2021.
20. Mr Francis Waranduo also states in his affidavit filed on 4 February 2022 that on 9 November 2021, the Registrar of Titles registered a Transfer of Mortgage for the interest and registration of the mortgaged property described as Allotment 12 Section 260 contained in State Lease Volume 66 Folio 114 from ANZ Bank to the Defendant Bank.
21. The Plaintiff strenuously argued that pursuant to section 27 of the Land Registration Act, ANZ Bank became the registered mortgagee of the subject property on 2 March 2016 and the Defendant Bank only became the registered mortgagee on 9 November 2021. The Plaintiff seems to assert that the Defendant’s rights if any as mortgagee over the subject property and therefore as taking the place of ANZ as his banker over his accounts and his home loan facility would therefore be from the date of registration as mortgagee over the subject property from 9 November 2021.
22. Plaintiff relies on the case of Esther Torato v PNG Home Finance Limited [2012] PGNC 4; N4583 (31 January 2012), where the Court held that:
1. Pursuant to s. 27 Land Registration Act, as the mortgage is registered, and was produced on 5th September 2007, the date of the mortgage's registration is deemed to be 5th
September 2007. The mortgage was deemed to be registered at the time that the property was advertised for sale by Home Finance on
8th July 2009.
2. Home Finance has complied with the notice requirements under the Land Registration Act.
3. There is no satisfactory evidence indicating that Home Finance was negligent in its sale of the property or that it did not take
reasonable care to obtain the true market value of the property at the moment it chose to sell the property.
23. The Plaintiff also relies on the case of Otto Benal Magiten v William Moses and Ors (2006) N5008, where it was held amongst others that:
“The bank owed a duty of care to the Plaintiff by virtue of the bank-customer relationship and breached that duty by negligently purporting to exercise powers of a mortgagee when it held no mortgage over the land. Other elements of the tort of negligence were established and therefore a cause of action in negligence was established as against the bank.”
24. The Plaintiff implores me to find that the facts of the Otto Benal Magiten case are the same as in this case where the Defendant/Cross Claimant has pretended or misrepresented to the Plaintiff/Cross Defendant that it was the registered mortgagee at all material times when it was not. I refuse this assertion by the Plaintiff. The facts of these cases are not the same. The Bank in the Otto Benal Magiten case was never a registered mortgagee when it transferred the subject property to a new purchaser.
25. The Defendant Bank at all material times had communicated with the Plaintiff as his banker following up on his loan repayments after acquiring the bank from ANZ.
26. The loan repayments by the Plaintiff in the sum of K86 710.05 from 1 January 2019 to the date of these proceedings or to the relevant time it was so calculated to the Defendant Bank are proper and lawful and so should be as they are payments in settlement of his loan arrears which the Defendant Bank has assumed its right and responsibility over from its acquisition of ANZ Bank.
27. At the trial of this matter, I put to Mr Lambu that the scenario, in this case, is akin to a sub lessee who is leasing the property from a State Lease Holder or a titleholder. The Lessee has no say whatsoever as to when a titleholder exercises that right to sell the property as he is only the tenant of the property according to an agreement. A titleholder is at liberty to sell the property because the title vests with him giving him the authority to do so. As to whether the lessee continues in occupation of the property rests on the new titleholder and subject to any terms of the lease with the occupant with the title holder. The sale of ANZ with Kina Bank does not require the consent of the customers in this case the Plaintiff’s consent is not required. The business of banking remains the same however it is the ownership of the business that has changed hands. Mr Lambu adamantly refuses to accept this proposition.
28. I find no false representation and or fraudulent misrepresentation by the Defendant Bank to the Plaintiff regarding his loan arrears and or over the subject mortgage property.
29. Section 66 of the Land Registration Act which is in regard to registration of transfer of mortgages states that:
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.
30. The Plaintiff has alleged that the Defendant Bank got the mortgage transferred without his approval and consent is without any legal basis as can be seen from section 66 of the Land Registration Act, the Plaintiff’s consent is not required.
31. The Defendant Bank was duly registered as the mortgagee having been transferred the mortgage from ANZ Bank on 9 November 2021.
32. The Plaintiff’s assertions that the Defendant Bank had no right to advertise the subject mortgaged property on 8 March 2021 as it was not the registered mortgagee is arguable. The Defendant Banks states that the registration of its interest as mortgagee ought to have taken effect on 9 November 2020 when it lodged the required documentation to register its interest as mortgagee. I find based on the evidence on the Title Deed that the date of production as indicated on the Title Deed is 9 November 2021 and the date of registration stated is also 9 November 2021. The Defendant Bank had no registered right as a mortgagee to take any action to advertise the subject property for sale on 8 March 2021 though it took steps on the premise that its production of the mortgage charge documents on 9 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 9 November 2020 and when it was registered on 9 November 2021 and the actions taken within that time.
33. The delays as to the registration of the transfer of the mortgage could also be attributed to the conduct of Plaintiff in frustrating and or preventing the registration of the transfer of the mortgage. The Plaintiff in his Affidavit filed on 18 February 2022 stated in paragraph 18 of his Affidavit that on 27 May 2021, he wrote a letter to the Registrar of Land Titles informing the Registrar that the Defendant Bank is not a registered mortgagee and was trying to sell the subject property. The Plaintiff, therefore, warned that he was going to lodge a caveat over the subject property to prevent any dealings on the subject property.
34. The Defendant Bank’s interest as the transferred mortgagee was therefore registered on 9 November 2021. This now gives the bank the right as the registered mortgagor pursuant to section 66 of the Land Registration Act and the Defendant Bank now has the right to put up the property for tender as a mortgagee sale in exercising its right after any default by the registered proprietor as to his loan commitments.
35. I, therefore, find that the Defendant Bank is the duly registered mortgagee having registered its interest on 9 November 2021 and that it can take all necessary actions as a registered mortgagee.
Is the Defendant Bank entitled to its Crossclaim for judgement in the sum of K471 559.47 for outstanding loan arrears and for orders to enforce its right as a registered mortgagee over the subject property?
36. The Defendant Bank states in evidence in the Affidavit of Mr Francis Waranduo, the Asset Recovery Manager of the Defendant Bank that after the acquisition of ANZ Bank by the Defendant Bank, the Defendant lodged a Transfer of Mortgage Instrument with the Lands Department to transfer the mortgage from ANZ to the Defendant bank as giving effect to its right in place of ANZ Bank over the business of ANZ Bank.
37. The Defendant also states that the Plaintiff’s personal loan account with ANZ was also transferred to the Defendant Bank.
38. The Plaintiff, however, defaulted on his personal loan and as a result, the Defendant issued a Notice of Default dated 14 April 2020 and on or about 1 July 2020, the Plaintiff successfully paid off the amount due and owing under the personal loan.
39. Previously in a letter dated 2 December 2019, the Plaintiff wrote to the Bank and requested amalgamation of his personal account and the Third Home Facility Account, he also proposed a repayment fee of K1000 per fortnight and also proposed a waiver of the interest accrued on his debt however the Bank declined the proposals by the Plaintiff and suggested that the Plaintiff arrange a private sale of the property the subject of the mortgage to clear the outstanding loan and or seek refinancing from another commercial bank.
40. What is interesting is that after being aware that the Plaintiff’s loan repayments were now being collected by the Defendant Bank as can be seen from his bank statement on his affidavit evidence filed on 18 February 2022, the Plaintiff acknowledged that the Defendant Bank was his new banker by way of his conduct in a letter dated 30 June 2020 to Mr Francis Waranduo, Manager Asset Recovery of Kina Bank Limited enclosing a Bank Cheque in the sum of K65 000 made payable to Kina Bank Limited for settlement of his personal loan and for outstanding arrears of his housing loan.
41. The Defendant Bank acknowledged the part payment from the Plaintiff and confirmed by way of a letter dated 6 July 2020 to the Plaintiff that they had cleared his personal loan and applied the balance of his payment to offset his housing loan and reminded the Plaintiff to continue paying his housing loan at a rate of K1 500 per fortnight and to make additional payments to reduce the housing loan arrears.
42. I observe regarding the evidence in this matter that the part payment by the Plaintiff to the Defendant Bank in his letter of 30 June 2020 was followed almost a year later in his letter of 4 June 2021 to O’Briens Lawyers contesting the fact that the Defendant Bank has no claim as mortgagee over the subject property as the Defendant Bank was not yet registered on the Title Deed as having transferred the mortgage from ANZ to Kina Bank Limited and also expressing that the Defendant Bank has no dealings with the Plaintiff as mortgagee. The Plaintiff has complained to the Defendant Bank to repay him more than K90 000 as repayment to his loan under the Defendant Bank’s alleged misrepresentation in his letter of 4 June 2021 and in the previous year on 20 June 2020 and on the other hand the Plaintiff had taken action to send a cheque of K65 000 in an effort to settle his loans to the Defendant Bank. I view the Plaintiff’s conduct towards Defendant Bank as contradictory and confusing, on one hand acknowledging the Defendant as his Banker by making part payment and on the hand claiming a refund in this proceeding to him of funds properly paid in settlement of his loans.
43. The Plaintiff to my mind is unstable in his ways in his conduct to the Bank, he has not been forthright to the Defendant Bank and to this Court though he strenuously argues against the Defendant Bank has had no right to collect his money from his bank account in part settlement of his loan yet on his other hand he gives to the Defendant Bank a cheque of K65 000 under protest in part settlement of his debt. If anything, the Plaintiff has only misrepresented himself, his conduct goes against his words.
44. The Defendant Company states that though the Plaintiff has made part payment in settlement of his housing loan, there were still substantial outstanding arrears to his housing loan and on 19 January 2021, the Defendant Bank issued a Notice of Default to the Plaintiff of his loan arrears outstanding in the sum of K452 777.23. The Plaintiff has refused to meet the outstanding arrears taking issue with the Defendant Bank as the registered mortgagee over the subject property.
45. The Defendant Bank has now cross-claimed that the total arrears outstanding for Plaintiff’s housing loan is in the sum of K471 559.47 owing to Defendant Bank by Plaintiff.
46. I find that the Defendant/Cross Claimant is entitled to the crossclaim in the unpaid arrears in the sum claimed and grant the crossclaim accordingly.
47. The Plaintiff shall be ordered to give vacant possession of the subject property to the Defendant Bank who shall take steps as the registered mortgagee pursuant to section 68 of the Land Registration Act to sell the property at market value under its right as mortgagee over the subject security or mortgaged property.
48. I, therefore, make the following orders:
Orders accordingly.
________________________________________________________________
Mr David Lambu: Plaintiff In-Person/Cross Defendant
O’Briens Lawyers: Lawyers for the Defendant/Cross Claimant
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URL: http://www.paclii.org/pg/cases/PGNC/2022/217.html