Mano v Westpac Bank (PNG) Ltd [2022] PGNC 558; N10080 (2 December 2022)

N10080

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 220 OF 2022

BETWEEN:
JESSE MANO
Plaintiff

AND:
WESTPAC BANK (PNG) LIMITED
Defendant

Waigani: Tamade AJ
2022: 28^th November; 2^nd December

INJUNCTIONS – application for interim injunction to stop bank from acquiring mortgaged property – principles for grant of interim injunction not satisfied

BANKS AND CUSTOMERS – loan agreements – right to redemption of property – right of mortgagee or banks – right of mortgagor in equity and in law not made out – failure to prove right under Section 53 – Constitution – proceedings lacks merit and foundation in law

Cases Cited:

Asivo v Bank of South Pacific Ltd [2016] PGNC 318; N6518
Chief Collector of Taxes v Bougainville Copper Limited [2007] PGSC 1; SC853
Employers Federation of PNG v PNG Waterside Workers and Seamen’s Union (1982) N393
Mauga Logging Company Ltd -v- South Pacific Oil Palm [1977] PNGLR 80
Robinson -v- National Airline Commission [1976] PNGLR 59
Papua New Guinea Banking Corporation v Amevo and Bari Investments [1998] PNGLR 240

Counsel:

Ms Gertrude Kubak, for the Plaintiff
Mr Wilson Mininga, for the Defendant

2^nd December, 2022

1. TAMADE, AJ: The Plaintiff in these proceedings on 11 March 2015 entered into a mortgage agreement with the Defendant Bank where his property described as Allotment 16 Section 11, Boroko, NCD was mortgaged to the bank as security as well as his interest-bearing deposit funds in the sum of K300 000 as security for loan agreements with the Bank which included two housing loans.

2. The Plaintiff defaulted in his loan repayments in July of 2017 as he was experiencing financial difficulty and approached the bank to propose if his loan commitments can be adjusted and restructured. He also stated that due to the Covid19 pandemic, this affected his ability to meet his loan commitments on time.

3. On 2 August 2021, a Mortgage Foreclosure Demand was issued to the Plaintiff by the Bank. He then instructed his lawyer to communicate with the bank to give him leniency in his loan commitments. On 6 October 2021, the Bank issued a Notice of Default to the Plaintiff in which the Plaintiff responded by suggesting alternatives as a way forward. On 29 April 2022, the Bank gave a final notice to pay up the arears which was in the sum of K1 152 307.10.

4. On 2 September 2022, the Bank gave a Notice to Quit to the Plaintiff to deliver up possession of the property the subject of the mortgage. The Plaintiff is therefore claiming that the conduct of the bank is unfair to him as a customer as he has proposed alternate ways to offset the loan including selling the house the subject of the mortgage however the bank insisted that he should get their consent as mortgagee first. The Plaintiff has also suggested that his interest-bearing deposit funds be used to offset the loan and claims that the bank has not diligently dealt with him to be lenient to his loan commitments.

5. From the correspondence that the Plaintiff’s lawyers have with the bank, the Plaintiff insists that though the bank has the right to foreclose on the mortgaged property, the bank must not be unconscionable in its dealing with the Plaintiff’s property.

6. On 27 October 2022, the Plaintiff filed these proceedings by way of an Originating Summons seeking as a primary right of a declaration pursuant to section 53 of the Constitution that the Plaintiff’s right to redemption of the property described as State Lease Volume 5, Folio 1054, Allotment 16, Section 11, Boroko, Port Moresby, NCD be recognized and given effect to as well as orders seeking injunctions to restrain the Bank from taking possession of the mortgage property.

7. By way of a Notice of Motion filed on 27 October 2022, the Plaintiff on 28 November 2022 moved the Court for urgent interim injunctions to restrain the Defendant from enforcing the Notice to Quit and taking possession of the property the subject of the mortgage.

Principles for the grant of injunctions

8. Ms Kubak of the Plaintiff has referred to the cases of Employers Federation of PNG v PNG Waterside Workers and Seamen’s Union^[1], Mauga Logging Company Ltd -v- South Pacific Oil Palm,^[2] Robinson -v- National Airline Commission^[3] and the Supreme Court case of Chief Collector of Taxes v Bougainville Copper Limited^[4] which lays down the following principles for the grant of interim injunctive orders:

1. Has the Plaintiff delayed in making the application?
2. Is the action not frivolous or vexatious? Is there a serious question to be tried?

100. Does the balance of convenience favour the grant or refusal of the injunctive relief? Does the Plaintiff have property or other interests which may be jeopardized if it is not granted: what hardship will the Plaintiff suffer if granted and what hardship would the Defendant suffer if it was not granted.

4. If an injunction is not granted, can the Plaintiff’s loss be adequately compensated by damages?
5. Has an undertaking as to damages been filed? Is the Defendant adequately protected by the Plaintiff’s Undertaking as to Damages?
6. When all things are equal, the status quo of the matter should be preserved and,
7. The interest of justice principle.
   

9. The grant of an injunction is an equitable relief and in this particular case, the pertinent question to consider in my view is whether there is a serious question to be tried and or is there a meritorious question that warrants this Court’s jurisdiction. This is on the law that banks and financial institutions have the unfettered authority to act on their right as mortgagees over properties the subject of their interest pursuant to mortgage agreement entered into with their clients.

10. The Plaintiff in this instance claims a right pursuant to section 53 of the Constitution. Section 53 of the Constitution is in regard to the protection of unjust deprivation of property. The Plaintiff has not provided any case law in support of a right pursuant to section 53 of the Constitution that trumps the right of the bank as mortgagee pursuant to a legally binding contract.

11. In the case of Asivo v Bank of South Pacific Ltd^[5], Justice Cannings considered a similar case wherein the Plaintiffs had sued the BSP Bank over restructuring of their loan. The matter had gone for mediation and subsequently the Plaintiffs sued on the mediated agreement. His Honour found that in relation to the claim for a right under section 53 of the Constitution, the Plaintiffs did not prove how the Bank compulsory took possession of their property contrary to section 53 of the Constitution. The Court held that:

“Under Section 53 of the Constitution every person has a general right of protection against compulsory taking of their property. Nothing that the defendant did amounted to compulsory taking of the plaintiff’s property, so there was no breach of the plaintiff’s human rights in the manner alleged.”

12. The bank’s right to repossess the Plaintiff’s property the subject of the mortgage is by law pursuant to the contract between the parties and it is not unjust pursuant to section 53 of the Constitution.

13. The Plaintiff has failed to prove a right under section 53 of the Constitution that the Bank breached by acting on its’ lawful right to redeem the property as the Plaintiff’s failure to settle his loan commitments. The Bank can not be held at ransom without lawful cause for exercising it’s right in law. In the case of Papua New Guinea Banking Corporation v Amevo and Bari Investments^[6] the Court held that:

“The mortgagor’s impecuniosities does not preclude the mortgagee bank from exercising its right under the terms of the mortgage and the statutory rights conferred by the Lands Registration Act Ch. No. 191.”

14. The Plaintiff’s application therefore fails the test that it does not have any merit at all and shall be dismissed together with these proceedings.

15. The Court, therefore, makes the following orders:

1. The Plaintiff’s Notice of Motion filed on 27 October 2022 is dismissed.
2. Pursuant to Order 12 Rule 1 of the National Court Rules, these proceedings are also dismissed for lacking any merit and foundation in law.
3. Plaintiff shall meet the Defendants costs of these proceedings to be taxed if not agreed.
   

Orders accordingly.
_____________________________________________________________
Kubak & Kubak Solicitors & Barristers: Lawyers for the Plaintiff
Bradshaw Lawyers : Lawyers for the Defendant

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^[1] (1982) unreported N393
^[2] [1977] PNGLR 80
^[3] [1976] PNGLR 59
^[4] [2007] PGSC 1; SC853 (2 February 2007)

^[5] [2016] PGNC 318; N6518 (11 November 2016)
^[6] [1998] PGNC 163; [1998] PNGLR 240 (26 May 1998)