Papua New Banking Corporation v Barra Amevo and Bari Investments t/a Kainantu Pharmacy, Lennie Aparima and Orito Aparima [1998] PNGLR 240

• Jurisdiction: Papua New Guinea
• Judge: Sevua J
• Judgment Date: 26 May 1998
• Court: National Court
• Citation: [1998] PNGLR 240
• Year: 1998
• Judgement Number: N1726

National Court: Sevua J

Judgment Delivered: 26 May 1998

N1726

PAPUA NEW GUINEA

[National Court of Justice]

OS 489 of 1997

BETWEEN: PAPUA NEW BANKING

CORPORATION

Plaintiff

AND: BARRA AMEVO & BARI

INVESTMENTS t/a KAINANTU

PHARMACY

First Defendant

AND: LENNIE APARIMA & ORITO

APARIMA

Second Defendant

Waigani: Sevua, J

1998: 24th March & 26th May

Real Property – Mortgage – Mortgagor’s default – Mortgagee’s right to foreclosure – Power of sale or possession – Statutory rights – Land Registration Act Ch 191.

Mortgage – Rights and obligations – Third party claiming interest on mortgaged property - Privity of contract – Whether third party has legal right or interest.

HELD: 1. The mortgagor’s impecuniosity 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 191.

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2. The second defendant’s interest which is not legal and unregistered, does not preclude the plaintiff from exercising its right to forclosure under the terms of the mortgage and the provisions of the Land Registration Act Ch. 191 to possess or sell the property.

3. The second defendant, is not a party to the mortgage contract therefore has no valid claim in law against the plaintiff. The doctrine of privity of contract confers no right or imposes no obligation to the second defendant.

4. The second defendant is not entitled in law to specific performance of a contract which he is not a party to.

5. The arrangment between the first and second defendant did not constitute a legal binding contract enforceable in law, there being no executed contract of sale and transfer and ministerial approval.

6. The second defendant’s interest is only an equitable interest which does not entitle him to the legal title of the property without a formal contract of sale and transfer.

7. The plaintiff, by law, and pursuant to the terms of the mortgage is entitled to foreclose on the property and has rights conferred by statute and the terms of the mortgage to possession and sale.

CASES CITED:

· Bank of Papua New Guinea –v- Muteng Basa [1992] PNGLR 271 applied.

Ms L. Brew for Plaintiff

Mr P. Ame for Second Defendant

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26th May, 1998

SEVUA, J: This is an application by the plaintiff seeking an order for possession of land described as Section 5 Allotment 15, Ubank Road, Kainantu. The plaintiff also sought leave for a writ of possession to be issued forthwith.

The first defendant, Dr Barra Amevo did not appear and was not represented although he was served. His callous attitude and conduct which, in my view, amounted to unjust enrichment at the expense of the second defendant, directly led to the predicaments of the second defendant. What he did amounted to the worst form of spivving by a doctor that I have come across. The second defendant appeared at the hearing and defended its interest.

Dr Barra Amevo, is the registered proprietor of the property, Section 5, Allotment 15, Kainantu the subject of this matter. The property, which is State Lease, Volume 51, Folio 96, was previously owned by the University of Papua New Guinea. It was transferred to Dr Barra Amevo on 26th August, 1994. The plaintiff holds a registered mortgage over this property, which was registered on 6th December, 1994. There is no dispute over the plaintiff’s registered legal interest over this property.

Infact, the property was mortgaged in consideration of a fully drawn loan of K35,000.00 for working capital purpose lent to Dr Barra Amevo and Bari Investments Pty Ltd. Loan repayment was set at K1,620.00 per month over 24 months. Repayment of the loan were made for a period of only one year when the loan account fell into arrears and the first defendant has ignored and neglected its legal obligation.

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Strictly speaking, the first defendant has no defence and the plaintiff is entitled, in law, to enforce its right under the mortgage. The plaintiff’s rights stems from the terms and conditions of the mortgage itself and from statute.

However, the second defendant had been drawn into these proceedings because of an “arrangement” between them and Dr Barra Amevo. Orito Aparima who is married to Lennie Aparima, is Dr Amevo’s sister. Lennie Aparima is therefore Dr Amevo’s brother in-law. It was through that relationship that Mr & Mrs Aparima currently occupy the property and I will discuss this more fully from Mr Aparima’s evidence.

The property in question...