Kupiane Gold Resources Ltd v Y Rengle Trading Ltd [2022] PGSC 31; SC2225 (12 April 2022)

SC2225

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 213 OF 2019

BETWEEN:
KUPIANE GOLD RESOURCES LIMITED
Appellant

AND:
Y. RENGLE TRADING LIMITED
Respondent

Waigani: Gavara-Nanu J, Dingake J, Numapo J.
2022: 30 March, 12^th April

SUPREME COURT - Loan – parties agreeing to 20% interest – whether same amounts to penalty interest and therefore impermissible – held the Respondent did not charge higher interest rate than agreed and that same is not impermissible.

Case Cited:

Rage Augerea and Maureen Augerea v Bank South Pacific Ltd (2007) SC869.

Counsel:

Mr. Rex Mann-Rai, for the Appellant
Mr. Edward Wamp, for the Respondent

12^th April, 2022

1. BY THE COURT: This is an appeal against the decision of the National Court made on the 2^nd of December, 2019, in terms of which the Court entered judgment in favour of the Respondent in the following terms:
   1. Judgment entered in favour of the Respondent for the sum of K3,770,000.00.
   2. Statutory interest at the rate of 2% from the date of judgment until the final settlement under the Judicial Proceedings (Interests on Debts and Damages) Act 2015.
   100. The Appellant to pay the Respondent’s costs of the proceedings, to be taxed if, not agreed.
2. The Appellant was aggrieved by the aforesaid decision, hence this appeal.
   
3. The facts that underpin this litigation are fairly straight forward and may be stated briefly.
   
4. On the 22^nd of June 2012, the Appellant and the Respondent entered into a written agreement, whose material terms were as follows:
   1. The Respondent to loan the Appellant the sum of K200,000.00.
   2. The Appellant shall repay the principal amount with interest at 15% per month within three (3) months from the date the amount is borrowed.
   100. The interest rate will be increased to 20% per month if the Appellant defaults in repaying the loan within the Repayment Period.
5. It is not in dispute that the Respondent defaulted in repaying the loan as agreed.
   
6. In this appeal, the Appellant seeks to overturn the National Court decision primarily on the grounds advanced in its Notice of Appeal. Appellant complains that the principles of natural justice were breached when the Court delivered its judgment without hearing the parties oral submissions; in assuming that there had been a hearing on assessment of damages on the 23^rd of December 2019, in failing to take into account the nature of the main relief pleaded in the Statement of Claim and in awarding damages of K3,770,000.00 and 20% penalty interest per month for 87 months.
   
7. We have considered the grounds of appeal set out in the Notice of Appeal and after a careful consideration of the evidence and the submissions of the parties, we are of the considered view that the appeal is without merit.
   
8. Firstly, the Appellant’s complaint that the principles of natural justice were breached because the Court determined the matter based on submissions only is plainly disingenuous because on the evidence, (Document No. 22 at page 221 of the Appeal Book) the parties agreed to the procedure adopted by the Court, being that once the parties have filed their written submissions the Court would proceed to make a determination.
   
9. The balance of the grounds of appeal are all without merit in that the decision of the National Court was primarily based on the loan agreement that was pleaded in the Statement of Claim filed on the 10^th of August 2018, and the evidence before the Court.
   
10. The argument advanced by the Appellant that the 20% interest agreed by the parties amounted to penalty interest and therefore impermissible was not supported by any authority, and we reject it as unmeritorious.
    
11. We find that the principal case of Rage Augerea and Maureen Augerea v Bank South Pacific Ltd (2007) SC869 cited by the Appellant in support of the argument that 20% interest charged was high and impermissible is not applicable for the reason that the facts in this case are not the same as in the Augerea case and that in any event, in the Augerea case, the Court held, amongst other things, that interest rates higher than what was initially agreed is impermissible.
    
12. In the case of Rage Augerea cited above, the Respondent Bank was claiming well over 100 percent recovery on its initial loan of K25,000.00, adding a much higher interest rate than was initially agreed, effectively preventing the Appellant (Augerea) as the mortgagor from redeeming the property.
    
13. In all the circumstances of this case, we find that the National Court was correct in awarding the damages in the manner it did and in computing interest in a manner consistent with the agreement of the parties. In this case, the Respondent did not charge a higher interest than what was agreed.
    
14. In the result:
    • (i) The appeal is dismissed.
    • (ii) The Order of the National Court made on the 2^nd of December, 2019 is upheld.
    • (iii) The Appellant to pay costs incidental to this appeal, such costs to be taxed, if not agreed.

_______________________________________________________________

Mannrai Lawyers: Lawyers for the Appellant
Edward Wamp Lawyers: Lawyers for the Second Defendant