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
• Court: National Court
• Citation: [1998] PNGLR 240
• Date: 26 May 1998
• Year: 1998

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

National Court: Sevua J

Judgment Delivered: 26 May 1998

1 Real Property—Mortgage—Mortgagor's default—Mortgagee's right to foreclosure—Power of sale or possession—Statutory rights—Land Registration Act (Ch191)

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

3 Bank of PNG v Muteng Basa [1992] PNGLR 271 applied.

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 Land Registration Act (Ch191).

(2) The second defendant's interest which is not legal and unregistered, does not preclude the plaintiff from exercising its right to foreclosure under the terms of the mortgage and the provisions of the Land Registration Act (Ch191) 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 arrangement 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.

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