Esther Torato v PNG Home Finance Limited and: Jeffrey Yakopya and: Raga Kavana, Registrar of Titles and: Independent State of Papua New Guinea (2012) N4583

• Jurisdiction: Papua New Guinea
• Judge: Hartshorn, J
• Judgment Date: 31 January 2012
• Court: National Court
• Citation: (2012) N4583
• Docket Number: WS 1173 of 2009
• Year: 2012
• Judgement Number: N4583

Full Title: WS 1173 of 2009; Esther Torato v PNG Home Finance Limited and: Jeffrey Yakopya and: Raga Kavana, Registrar of Titles and: Independent State of Papua New Guinea (2012) N4583

National Court: Hartshorn, J

Judgment Delivered: 31 January 2012

N4583

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 1173 OF 2009

BETWEEN:

ESTHER TORATO

Plaintiff

AND:

PNG HOME FINANCE LIMITED

First Defendant

AND:

JEFFREY YAKOPYA

Second Defendant

AND:

RAGA KAVANA, Registrar of Titles

Third Defendant

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Defendant

Waigani: Hartshorn, J.

2011: 13th September,

2012: 31st January

Sale of property by mortgagee – effective date of registration of mortgage – s. 27 Land Registration Act considered – notice requirements on mortgagee sale – obligations upon mortgagee when selling property – true market value

Facts:

The first defendant, PNG Home Finance Ltd sold a property owned by the plaintiff Ms. Esther Torato, by mortgagee sale to the second defendant Mr. Jeffery Yakopya. Ms. Torato alleges that the mortgagee sale was performed fraudulently by Home Finance as its mortgage was not registered, the requisite notice of the sale was not given and that Home Finance was negligent in selling the property for a sum below its market value. Further Ms. Torato alleges that Mr. Yakopya acted fraudulently in his purchase of the property.

Held:

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.

Cases Cited:

Papua New Guinea cases

Nil

Overseas Cases

Cuckmere Brick Co Ltd v. Mutual Finance Ltd (1971) 2 All ER 633

Silven Properties Ltd v. Royal Bank of Scotland [2003] EWCA Civ 1409

Counsel:

Ms. M. Kokiva, for the Plaintiff

Mr. A. Chillion, for the First Defendant

Mr. N. K. Magela, for the Second Defendant

31st January, 2012

1. HARTSHORN, J: The first defendant, PNG Home Finance Ltd (Home Finance) sold a property owned by the plaintiff Ms. Esther Torato, by mortgagee sale to the second defendant Mr. Jeffery Yakopya.

2. Ms. Torato alleges that the mortgagee sale was performed fraudulently by Home Finance as its mortgage was not registered, the requisite notice of the sale was not given and that Home Finance was negligent in selling the property for a sum below its market value. Further, Ms. Torato alleges that Mr. Yakopya acted fraudulently in his purchase of the property.

Whether Home Finance acted fraudulently

3. Ms. Torato alleges that the mortgage to Home Finance from Ms. Torato pursuant to which Home Finance sold the property, was not registered on the State Lease for the property at the time that the property was advertised for sale by Home Finance on 8th July 2009. Therefore, Ms. Torato contends, Home Finance did not have the power to sell the property under the Land Registration Act (LRA) and misrepresented that it did have the power of sale to the public.

4. Home Finance submits that notwithstanding that its mortgage was not entered upon the State Lease until 3rd September 2009, it had been lodged for registration in August 2007. The delay in registration was caused by the Lands Department and not Home Finance. Confirmation that its mortgage had been lodged in 2007 is evidenced by the endorsement on the State Lease for the property (annexure “V” of Ms. Torato's affidavit) exhibit 2. The endorsement specifies that the mortgage was, “Produced 05/09/2007 at 9.24 am entered 07/08/2009.”

5. Ms. Torato relies upon sections 17, 26, 33 and 63 of the LRA to support her argument that a mortgagee is not able to sell a property over which it has an unregistered mortgage. It is noteworthy that no reference is made to s. 27 LRA by Ms. Torato as s. 27 is concerned with amongst others, the status of an instrument when it is produced for registration. Section 27 LRA is as follows:

“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.”

6. Pursuant to s. 27 LRA, 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 then, was deemed to be registered at the time that the property was advertised for sale by Home Finance on 8th July 2009. Consequently this allegation of Ms. Torato fails.

Whether the requisite notice of the sale was given

7. Ms. Torato alleges that the requisite notice under the LRA in respect of a property to be sold by a mortgagee, was not given by Home Finance.

8. Home Finance submits that:

a) a written notice of demand dated 26th May 2009 was sent to Ms. Torato by registered mail on 1st June 2009 to PO Box 4335 Boroko NCD. A copy of the registered mail receipt is in evidence, as is a copy of the default notice. The notice of demand gave Ms. Torato 14 days to pay the amount outstanding. The address is that specified for Ms. Torato in the mortgage, the Department of Lands mortgage form and the Floating Rate Loan Agreement (FLRA).

b) a second notice was sent to Ms. Torato dated 17th June 2009 by registered mail on 23rd June 2009 to the same address. A copy of the registered mail receipt and notice is in evidence. This notice gave Ms. Torato a further seven days to pay the amount outstanding.

c) on 10th July 2009 the property was advertised for sale by tender with tenders closing on 24th July 2009.

d) there is no evidence to suggest that the Post Office returned the registered letters as uncollected or unanswered.

9. Ms. Torato alleges in her statement of claim that Home Finance did not give her the 30 days notice or other expressed period of notice pursuant to s. 67 (1) and s. 73 LRA. As to this, s. 67 LRA does not require 30 days notice to be given to a debtor and s. 73 LRA permits the period specified in s. 68 (1) (a) or (b) to be extended or reduced. In this regard, I note that clause 3.12 of the mortgage reduces the period in s. 68 (1) to 24 hours.

10. Ms. Torato further submits that the requisite notices, if sent by registered post, should not have been, as there is no provision in the mortgage or LRA permitting this. As to the mortgage, clause 6.5 provides that any notice shall be given in accordance with the Agreement. The Agreement is defined in item 5 of the Schedule as the, “Agreement intended to bear even date herewith.”. That I assume, is the FRLA which is dated the same date as the mortgage. There is no specific provision in the FRLA concerning how notice is to be given. This may be because the copy of the FRLA annexed to the affidavit of Ms. Torato could be incomplete. As to this, it is for the plaintiff to ensure that the requisite evidence to prove her case is before the court. In any event, there is no provision in the FRLA before the court that either allows or prohibits notice being given by registered mail. The address of the plaintiff in the FRLA and mortgage is the address to which Home Finance maintains the requisite notice was sent by registered mail.

11. As to the requirements of the LRA as to notice, s. 67(2) (c) LRA provides that a notice of default may be given to the debtor by leaving the notice at the usual or last known address in the country of the debtor. That provision does not exclude a post office box address as being an address to which a notice of default may be sent. No case authorities were relied upon or cited by Ms. Torato to the effect that s. 67 (2) (c) LRA should be interpreted as Ms. Torato would prefer. The fact that Home Finance sent the notices by registered mail, to my mind, is indicative of it attempting to ensure that the notices reached the address specified in the FRLA and mortgage specified for and agreed to by Ms. Torato.

12. I am satisfied that Home Finance has complied with the notice requirements under the LRA. A further submission by counsel for Ms. Torato is that notice should have been given after the mortgage was registered on 7th August 2009. I have already dealt with the registration issue. Ms. Torato has not shown that there are any additional notice requirements to be met. This submission has no substance and is without merit.

Whether Home Finance was negligent in selling the property for a sum below its market value

13. Ms. Torato alleges that Home Finance had a duty of care to obtain the true market...