Bank of Papua New Guinea v Muteng Basa [1992] PNGLR 271

• Jurisdiction: Papua New Guinea
• Judge: Brown J
• Judgment Date: 21 July 1992
• Citation: [1992] PNGLR 271
• Court: National Court
• Year: 1992
• Judgement Number: N1109

Full Title: Bank of Papua New Guinea v Muteng Basa [1992] PNGLR 271

National Court: Brown J

Judgment Delivered: 21 July 1992

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

BANK OF PAPUA NEW GUINEA

V

MUTENG BASA

Waigani

Brown J

21 July 1992

MORTGAGES — Mortgagor's default — Claim to possession by mortgagee of registered mortgage — Statutory rights.

MORTGAGES — Interest rate — Penalty rate charged.

CONSTITUTION — Whether exercise of remedies by mortgagee is harsh and oppressive under s 41 Constitution.

Facts

The Bank of Papua New Guinea claimed vacant possession of property mortgaged by the defendant to secure repayment of its loan to the latter. The defendant was in arrears of the principal and interest for a substantial sum. He argued that the bank's exercise of its powers would affect adversely his livelihood, and such act is unfairly unreasonable, therefore, "harsh and oppressive" within the meaning of s 41 Constitution.

Held

1. The mortgagor's impecunious state does not preclude the mortgagee bank from exercising rights to possession found in the mortgage document and supported by the Land Registration Act Ch 191.

2. The contractual relationship of the parties does not impinge on constitutional rights, therefore s 41 has no application.

3. The loan agreement specified an interest rate of 3 percent and made no provision for the calculation of a higher penalty rate, there being no commencement date.

Cases Cited

Tarere v ANZ Banking Group [1988] PNGLR 201.

Counsel

K Kua, for the plaintiff.

A Marat, for the defendant.

21 July 1992

BROWN J: This is a claim by the bank, instituted by way of originating summons, for possession of real property belonging to the defendant, Muteng Basa, but mortgaged to the bank to secure the repayment of a loan given by the bank to Mr Basa to assist him with the property's purchase. The plaintiff pleads the mortgage No 64545, which affects the defendant's land at Hohola, more particularly described as State Lease Volume 29 Folio 7127, being Allotment 115 Section 231 Hohola, National Capital District.

That mortgage and the loan agreement are in evidence. The defendant obtained a staff loan at a concessional interest rate on the 26 May 1987 and met his repayments from salary until he resigned from his employment with the bank on 16 August 1990, when his repayment ceased. He was asked to refinance his housing loan through another institution but he has failed to do so. His arrears of principal and interest are now, on the Bank's calculation, some K34,665.00 and accruing with a current interest rate of 10% per annum (p.a.). The defendant relies on a defence which pleaded that the plaintiff bank, in exercising its powers to foreclose under the terms of the mortgage, did so unfairly, unreasonably, and without due regard to the defendant's livelihood and to his past services to the plaintiff bank.

This defence cannot stand. It is not available, as Mr Kua says, under s 41 of the Constitution since the contractual relationships of the parties do not impinge on a constitutional right....