Stephen Asivo v Bank of South Pacific Ltd

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 15 April 2011
• Citation: (2011) N4252
• Court: National Court
• Year: 2011
• Judgement Number: N4252

Full : OS No 279 of 2010; Stephen Asivo v Bank of South Pacific Limited (2011) N4252

National Court: Cannings J

Judgment Delivered: 15 April 2011

N4252

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO 279 OF 2010

STEPHEN ASIVO

Plaintiff

V

BANK OF SOUTH PACIFIC LIMITED

Defendant

Madang: Cannings J

2010: 20 August,

2011: 15 April

JUDGMENT

JUDGMENTS AND ORDERS – giving effect to previous order that a bank and its customer attempt to reach settlement – recall of matter upon failure of parties to settle – alternative dispute resolution – whether to order mediation – ADR Rules, Rule 5 (ordering mediation) – National Court Act, Part IIA (mediation).

In previous proceedings between a bank (the defendant) and its customer (the plaintiff) the court ordered specific performance of a loan agreement (which required the bank to make available the balance of a loan facility) and damages against the bank. The court also ordered the parties to attempt to reach settlement on a revised agreement or reach agreement on the state of the loan account, failing which the court would recall the matter for appropriate directions and orders. The bank complied with the order for specific performance and damages but the parties failed to settle or agree on the prescribed matters, so the plaintiff applied to the court by motion for an order that the terms he proposed for a revised agreement be endorsed and made the subject of a court order. He also sought interest and costs in respect of the previous proceedings. The bank argued that the motion was procedurally defective and an abuse of process and should be dismissed but if entertained, that the bank’s offer as to the terms of a revised agreement should be endorsed.

Held:

(1) Though the motion had come to the court via an unusual route and in novel circumstances it was not an abuse of process and should be entertained as it was a genuine attempt by a party to give effect to a previous court order.

(2) The evidence adduced by the parties as to the state of the loan account was insufficient to allow the court to draft an appropriate order and in such circumstances it was appropriate to consider whether to order mediation, having regard to the matters prescribed by Rule 5 of the ADR Rules.

(3) Mediation was considered the best option as it would not result in prejudice to the rights of either party and it would minimise the amount of the court’s time that would need to be devoted to resolving the proceedings and result in a quicker and simpler outcome that would reduce the likelihood of further litigation.

(4) An order for mediation was accordingly made under Rule 5 of the ADR Rules and Section 7B of the National Court Act.

Cases cited

The following cases are cited in the judgment:

Polem Enterprise Ltd v Attorney-General (2010) SC1073

Steven Asivo v Bank of South Pacific Ltd (2009) N3754

William Duma v Yehiura Hriehwazi (2004) N2526

NOTICE OF MOTION

This was a motion seeking to give effect to an order of the National Court in related proceedings.

Counsel

S Asivo, the plaintiff, in person

M Koimo for the defendant

15 April, 2011

1. CANNINGS J: This is a ruling on a motion by the plaintiff, Steven Asivo, for an order that would set the terms of a revised loan agreement between him and the defendant, the Bank of South Pacific Ltd. The motion arises out of previous court proceedings involving the same parties.

HISTORY

2. In August 2006 Mr Asivo and his wife entered into a loan agreement with the bank to enable them to purchase a property in Newtown, Madang. The first drawdown on the facility occurred on 10 October 2006 when the bank provided K30,000.00. Shortly afterwards the bank discovered what it regarded as a previous bad debt Mr Asivo had with the bank, which he had not disclosed in his loan application. The bank, on 28 November 2006, wrote to Mr and Mrs Asivo demanding full and immediate payment of their indebtedness to the bank, which then stood at K34,437.57, failing which it would take such steps it considered necessary to recover the amount due, including exercising its powers as mortgagee over the land and house. In February 2007 the bank wrote to Mr Asivo advising that he owed K92,975.65 on his previous loan and that he needed to arrange regular payments by the end of that month, failing which the bank would have no option but proceed with further recovery action. In December 2007 the bank served Mr and Mrs Asivo with a notice under the mortgage, demanding payment of K32,038.86 within 14 days, failing which the bank would be at liberty to sell the property. In November 2008 the bank served them with a notice to vacate the property within seven days failing which action would be taken to enforce eviction. Such action was eventually stayed by order of the National Court.

3. Mr Asivo in 2009 commenced court proceedings, OS No 290 of 2009, against the bank, for breach of contract, and sought an order for specific performance of the loan agreement and damages. The bank defended the proceedings, a trial was conducted and on 2 October 2009 I, as the presiding Judge, handed down judgment in favour of Mr Asivo (Steven Asivo v Bank of South Pacific Ltd (2009) N3754).

4. I held that the bank was guilty of a breach of contract and ordered specific performance of the loan agreement (which meant the bank had to make available the balance of the loan facility, K28,700.00) and damages of K20,000.00. I also ordered that:

The plaintiff and the defendant shall attempt to reach settlement on a revised agreement or reach an agreement on what the state of the loan account is and file within 30 days after the date of entry of this order an appropriate document in the National Court Registry at Madang for endorsement by the Court; failing which the Court will recall the matter for appropriate directions and orders.

5. The bank filed a notice of appeal to the Supreme Court against those orders but the appeal has not yet been heard. It applied to stay the orders of 2 October 2009 but on 1 March 2010 its application was refused by Injia CJ, sitting as a single Judge of the Supreme Court.

6. By the beginning of June 2010 the bank had still not complied with the orders of 2 October 2009, so on 7 June 2010 Mr Asivo commenced the proceedings, OS No 279 of 2010, under which the present motion is being brought. His initial purpose was to prosecute the bank and its officers for contempt of court by reason of the failure to provide the balance of the loan facility and pay the damages (which the court had ordered be paid within 30 days).

7. The bank complied with the 2 October 2009 orders, belatedly, on 8 June 2010: it made available the balance of the loan facility and paid the damages, interest and costs awarded against it in both the National Court and the Supreme Court.

8. In June and July 2010 there was an exchange of correspondence between Mr Asivo and the bank about the terms of a revised loan agreement. But no agreement was reached. Mr Asivo was still intent on prosecuting the bank and its officers for contempt. However, when the matter came before me on 22 July 2010 I suggested that that would not seem to be a productive exercise and ordered the parties to continue to attempt to settle on a revised agreement.

9. Still, they failed to settle and on 6 August 2010 Mr Asivo filed the motion that is now before the court. It was mentioned before me on 13 August 2010 and I set it down for hearing on 20 August 2010. Mr Asivo seeks the following orders:

1 The plaintiff and the defendant shall accept and agree on the loan amount proposed by the plaintiff and fix the amount of the loan at K50,995.83.

2 The plaintiff and the defendant shall accept the date 9 June 2010 as the date of drawdown of the loan.

3 The loan shall be repaid over a 16 year timeframe from the date of drawdown as agreed in the original loan agreement.

4 The defendant shall reverse and write off all interest charged to the loan account prior to 9 June 2010.

5 The interest of the loan shall accrue from the date of drawdown, which is 9 June 2010.

6 The instalment loan repayment is fixed at K517.78 per month.

7 All other terms of the original loan remain unchanged.

8 The defendant shall pay to the plaintiff further accumulated interest ordered on 2 October 2009 to the date of settlement (6 June 2010).

9 The defendant shall pay to the plaintiff a total of K41,570.70 being reimbursement of costs and subsequent losses suffered by the plaintiff whilst travelling between Madang and Port Moresby to convince the defendant to release the balance of the loan prior to filing of OS 290 of 2009.

PRELIMINARY ISSUES

10. Before dealing with the issue of whether the court should make an order concerning the revised loan agreement in the terms proposed by Mr Asivo, there are two preliminary issues to dispose of.

11. First, the bank argues that the motion is an abuse of process as it should have been filed in the previous proceedings, OS No 290 of 2009, not in OS No 279 of 2010...