Australia nd New Zealand [ANZ] Banking Group (PNG) Ltd v Kila Wari (1990) N801

• Jurisdiction: Papua New Guinea
• Judge: Salika AJ
• Judgment Date: 16 February 1990
• Citation: (1990) N801
• Court: National Court
• Judgement Number: N801

Full Title: Australia nd New Zealand [ANZ] Banking Group (PNG) Ltd v Kila Wari (1990) N801

National Court: Salika AJ

Judgment Delivered: 16 February 1990

N801

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

W.S 139 OF 89

AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LTD

V

KILA WARI

Waigani

Salika AJ

21 November 1989

16 February 1990

MORTGAGE — Improperly signed mortgage — Mortgagor in Arrears — Sale — Duty of Mortgagee — Standard of duty in exercising power of sale — Duty to take reasonable care to obtain price equal to market value — Allowing sale to go ahead despite very low offers — Whether mortgagee liable for its own negligence in failing to realise full market price.

DAMAGES — Property valuation — Exercise of power of sale by mortgagee — Mortgagee negligent in failing to realise market value at trial — value of property — Evidence of true market value at trial.

Cases Referred To

Cuckmuere Brick Company Limited v Mutual Finance Limited 1971 2 AII E R 633

Perry v Sidney Phillips & Son (1982 IWLR 1297)

Jarvis v Swan Tours 1973 QB 233

Legislation Referred To

Sections 67 & 68 of the Land Registration Act Chapter No. 191. Sections 5 of Interpretations Act Chapter No 3

Cur adv vult

SALIKA AJ: This is a summons by Australia and New Zealand Banking Group (PNG) Ltd (plaintiff) against Kila Wari (defendant).

The plaintiff alleges that it entered into an agreement with defendant on or about the 20th August 1984 whereby it (plaintiff) was to advance K153,000.00 to the defendant for the purchase of Allotment 43 Section 51, Airvos Avenue, Port Moresby. The agreement was in the form of a registered mortgage Leasehold over the property executed on the 31st October 1984.

It was a term of the agreement that the defendant would repay the loan together with interest accrued thereon.

A further term of the agreement was that the moneys lent by the plaintiff to the defendant would bear interest at the bank overdraft rate from time to time. The rate being 17% per annum. The defendant made several repayments since 1984 and as of 26th January 1989, the outstanding balance was in the sum of K64,807,79. Interest accrued from 29th September 1988 to 26th January 1989 was in the sum of K3,591,95. Further interests are being accrued at the daily rate of K31.15.

The plaintiff alleges that as the defendant was in arrears a notice was served on him dated the 19th January 1987 informing him of his debt and demanding that he pay to the plaintiff the debt and interest, otherwise the plaintiff would exercise its rights and powers to sell the property under clause 15 of the Mortgage deed and S67 and S68 of the Land Registration Act. The plaintiff further alleges that a further notice of default was served on the defendant on the 5th of February 1987. On the 16th of February 1987 the plaintiff caused to advertise in the Post Courier a Tender for a Mortgage Sale of the property and the property was sold at a purchase price of K130,000.00.

Then on the 17th of March 1988 the plaintiff served a notice of demand on the defendant for the repayment of the loan and interest thereon but the defendant has refused or neglected to repay the same.

The plaintiff claims:

(a) K64,807,78;

(b) Interest of K3,591,95;

(c) Interest at daily rate of K31.15 from 26th January 1989 until payment in full is made;

(d) Costs.

The sum now claimed is the balance which is allegedly left owing by the defendant to the plaintiff having taken into account the amount received on the sale of the property and all expenses etc incidental thereto.

At the outset there is no dispute that an advance of K153,000.00 was granted to the defendant by the plaintiff to purchase Allotment 43 Section 51 Airvos Avenue Port Moresby. The defendant admits that it was a term of the agreement that he would repay the loan together with interest accrued thereon. The defendant also admits that he made several repayments. He agrees that the plaintiff on 16th of February 1987 caused to advertise in the Post Courier a Tender for Mortgage sale of Allotment 43 Section 51 Airvos Avenue Port Moresby. The defendant further agrees that the property was sold at a price of K130,000.00.

The defendant denies knowing that the interest on the loan would be at the bank over draft rate of 17% per annum. The defendant also denies he was in Arrears on the 19th January 1987. He further denies having received a notice of demand on the 19th January, 1987 and the notice of default on the 5th of February 1987. He also denies receiving a notice of demand on the 17th March 1988. The defendant denies owing anything to the plaintiff and has himself filed a cross claim for damages for loss of property and nervous shock against the Australia New Zealand Banking Group (PNG) Ltd. Mr Wari Cross claims that the Cross defendant improperly and illegally exercised a mortgagees power of sale in that it sold to a third party his house and land, such sale being in breach of the contract between him and the cross defendant. He further contends that the cross defendant by that sale was in breach of the implied conditions imposed by Sections 67 and 68 of the Land Registration Act Chapter No 191.

The Cross claimant also argues that the provisions of the Mortgage document are Ultra vires the Land Registration Act and are unreasonable. He further argues that the Cross defendant owed a duty of care to him as its customer and alleges negligence on the part of the cross defendant.

Liability is denied by both the defendant and the cross defendant.

The plaintiff/cross defendant did not call any oral evidence. It relies on documents which were tendered in evidence. The document it relies on largely is the Mortgage Deed itself executed on the 12th of November 1984. The plaintiff also relies on a Bank statement dated the 11th of May 1987, two letters written by the Banks manager dated 26th November 1986 and 5th January 1987 and affidavits of Jessuit Kamilius Konia and Aaron Lawson Barriage.

The plaintiff argued that there was a legal and a properly executed Mortgage Deed which provided among either things that the defendant or the mortgagee will on demand in writing pay the bank the amount or balance which shall for the time being be owing or unpaid. The plaintiff says the defendant fell into arrears in repayment of the loan in November 1986. On the 16th of February 1987 the plaintiff caused to advertise for sale by tender the property in the Post Courier as a result of the defendants attitude in not meeting with the mortgage requirements. The plaintiff says demand notices were served on the defendant. In all the plaintiff argues that all requirements under sections 67 and 68 of the Land Registration Act and the mortgage Deed itself where complied with.

The defendant says that in the first place the Mortgage Deed is invalid. The defendant gave evidence that the mortgage was executed towards the end of October 29th and 30th October 1984. The mortgage document in evidence was executed on the 12th of November 1984. He says that the Mortgage is further invalidated by the fact that the attesting witness who signed the document did not sign in the presence of the defendant and that the witness was not known to him. He argues that the Bank cannot now rely on the document for any purpose for that reason alone.

The defendants contention is that had the bank done everything properly it would have obtained a good price and he would owe no money to the bank. But he says the bank had done everything wrong. He argues that the mortgage is wrong, the notices are wrong, the sale was wrong and the bank had not acted with reasonable care towards its customer.

The only tested evidence in court is that of the defendant in relation to the attestation of the mortgage itself. In view of that I have to accept that evidence and accordingly find that the attestation was done improperly in that the attesting witness was not present at the time Mr Wari signed the document and was unknown to him. In relation to the date of execution although Mr Wari gave evidence that he signed at the end of October 1984, I note that an error has been initialled and one of the signatures is similar to that of Mr Kila. I am satisfied that the mortgage was executed on the 12th November 1984. I am not saying Mr Wari lied about the date rather because it is a long time ago when he signed. I think he is mistaken about the exact date of execution. The document speaks for itself.

Having found that the mortgage was improperly attested what is the effect of an improperly attested mortgage? Does it invalidate the whole document? No, I do no think an improper attestation invalidates the mortgage. Section 19 (3) of the Land Registration Act says that where an instrument lodged for registration is not properly attested the Registrar may register it if genuineness of signature is proved to his satisfaction. In this case the Registrar did register the instrument which indicates that he was satisfied of the genuineness of the signature and as such the...