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Westpac Bank PNG Ltd v Larelake [2008] PGNC 1; N3247 (7 February 2008)

N3247

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 202 OF 2004

BETWEEN:

WESTPAC BANK-PNG-LIMITED
Plaintiff

AND:

MIAI SUVE LARELAKE
Defendant

Waigani: Gavara-Nanu, J
2006: 15 August
2008: 7 February

MORTGAGE – Mortgagor and mortgagee - Obligations of the mortgagee after repossession of property – Personal loan – Bank statements of loan Account – Automatic deductions from mortgagor’s personal bank Account with the mortgagee – Mortgagor defaulting in loan repayments – Mortgagee not being able to produce records of loan repayments – Right of the mortgagee to sell – Obligation of the mortgagee to sell property at reasonable market price.

INTERESTS AND COSTS – Judicial Proceedings (Interest on Debts and Damages) Act, (chapter No. 52) s.1 and s.2 – Court’s discretion in deciding whether to award interests and costs – Circumstances in which interests and costs may not be awarded.

Cases cited:

ANZ Banking (PNG) Ltd v. Kila Wari (1990) N801
MVIT v. Job Builders Pty Ltd [1993] PNGLR 272
NCDIC v. Crusoe Ltd [1993] PNGLR 139
Westpac Bank (PNG) Ltd v. Henderson and Henderson [1990] PNGLR 112

Other cases cited:

Cuckmere Brick Co. Ltd v. Mutual Finance Ltd [1971] EWCA Civ 9; (1971) 2 All E.R 633
Dimmick v. Pearce Investments Pty Ltd [1980] 43 F. L. R 235
Estably White v. City of London Brewery Co. [1889] UKLawRpCh 102; (1889) 42 Ch. D. 237

Counsel:

N. Saroa, for the plaintiff
R. Koaru, for the defendant

1. Gavara-Nanu J: The plaintiff is claiming K30, 083.40, which it says is owed by the defendant in unpaid personal loan.

2. The claim arises out of a personal loan the plaintiff advanced to the defendant on 13 June, 1995 for the amount of K27, 400.00 to assist the defendant build a house on a vacant land described as Section 446 Allotment 7, Hohola (Ensisy Valley), National Capital District. In return, the defendant put the above property up as a security for the loan. Under the agreement, the defendant agreed to pay K348.00 per month in loan repayments to the plaintiff. This amount covered the interest component of the amount due each month and the first payment was to commence a month after the final draw down.

3. On or about 27 April, 1997, the defendant obtained an additional loan of K2, 000.00 from the plaintiff, thus making the total loan amount at K29, 400.00.

4. Due to default by the defendant in servicing the loan, the plaintiff repossessed the property in about December, 1998 and subsequently sold the property in September, 2003 for K17, 500.00.

5. The proceeds from the sale of the property according to the plaintiff was not sufficient to satisfy the defendant’s outstanding debt. According to the plaintiff, the defendant had the outstanding debt of K30, 083.40, which is the amount claimed by the plaintiff.

6. The defendant concedes that he defaulted in his loan repayments but says that he had paid K10, 440.00 towards the loan, which he says has not been taken into account by the plaintiff. The defendant also claims that the property was sold at a price which was well below its market value. The defendant concedes owing money to the plaintiff but says that after all the payments he made, he only owes K3, 265.71 to the plaintiff.

Affidavit evidence

(a) By the plaintiff

7. The supporting affidavit sworn by Mr. Gima Ai on 26 June, 2006 affirms that when the property was sold, it was an incomplete skeleton structure standing on iron posts with iron roofing and had a timber frame with concrete base and brick walls with security fencing.

8. The plaintiff claims the property was sold at its market value after advertising it extensively. The plaintiff says that because the property had deteriorated over time, it had to be sold on "as is where is basis".

9. Mr. Gima Ai deposes that the plaintiff did everything in its power to get a good market value for the property, but because the tenders were withdrawn, the property was not sold quickly which resulted in it deteriorating to a state where the best price it could fetch was K17, 500.00.

10. Mr. Ai further deposes that the plaintiff did not have physical possession of the property until 20 February, 2002 and prior to that, the defendant had the keys to the property. Mr. Ai also deposes that the plaintiff did everything in its power to sell the property at a fair price, and says the factors which determined the property being sold at K17, 500.00 were; first, the property was incomplete and was only a skeleton structure; second, because of the failure by the defendant to provide security to the property, the iron roofing, timber frames and louvers were stolen by vandals when the defendant was working in Gulf Province; third, the defendant had the keys to the property at all material times, therefore it could not put its security in the property; fourth, the plaintiff only gained access to the property on 20 February 2002 by cutting the lock to the gate, thus, it was late to save the property from being vandalized.

(b) By the defendant

11 The defendant swore an affidavit on 12 July, 2006 in which, amongst other things, he deposes that K348.00 monthly loan repayments were made by automatic deductions from his personal Account No. 1709974 which was held at the plaintiff’s Boroko branch. The plaintiff says in his affidavit that from 1 July to 31 December, 1995, he paid total of K2, 088.00 in loan repayments and from 1 January to 31 December, 1996 he paid another K4, 176.00 and from 1 January to 31 December, 1997, he paid further K4, 176.00, thus the total amount paid in loan repayments from 1 July, to 31 December, 1997 was K10, 440.00. The defendant says, these payments have not been acknowledged and taken into account by the plaintiff. He deposes that the Statements for his Loan Account were kept by the plaintiff and his efforts to obtain copies were refused by the plaintiff. He therefore does not have records of these payments.

12. He confirms in the affidavit that when he was given an additional K2, 000.00 loan on 24 April, 1997, his total loan was K29, 000.00 with his first loan of K27, 000.00, but says the balance of the first loan by 24 April, 1997 had been reduced to K20, 092.00. He therefore says that with the K2, 000.00 additional loan by 24 April, 1997 the total balance of his loan was K22, 092.00.

13. He concedes in the affidavit that from about 8 February, 1998, when he defaulted, the plaintiff sent letters of reminder in which it also demanded settlement of the outstanding loan amounts. The first letter was dated 8 February, 1998, in which he was advised that his loan balance was K27, 389.31. The second letter was dated 27 July, 1998, in which he was advised that his outstanding loan balance was K26, 373.48 and in the last letter, dated 21 August, 1998, he was advised that his outstanding loan balance was K26, 373.48.

14. In about December, 1998, the plaintiff exercised its right as a mortgagee to repossess the property. The defendant says the above letters clearly indicate that he was paying his loan. It should be noted that the claim by the defendant that he paid K10, 440.00 in loan repayments has been refuted by the plaintiff on the basis that it has no records of those payments.

15. The defendant also deposes in the affidavit that when the plaintiff repossessed the property, it was in good condition but it deteriorated when it was in the custody and care of the plaintiff. He says when the plaintiff repossessed the property, it failed to provide security for the property and says the plaintiff by its servants and agents cut the security lock to the fence which allowed unnecessary people to enter the property and vandalized it, thus resulting in the property deteriorating fast to a skeleton structure. The defendant says, at the time the property was repossessed, its market value was around K50, 000.00 to K60, 000.00, therefore tender offers by most of the interested buyers were well below the market value of the property. The copies of these tenders are contained in Mr. Gima Ai’s affidavit. The defendant says, from the time the plaintiff repossessed the property in about December, 1998 to September, 2003, when the property was eventually sold, the property had been in possession of the plaintiff for five years. The property therefore deteriorated while it was in the plaintiff’s possession. For this reason, the defendant says there is no basis for the plaintiff to charge interest on the loan.

16. The defendant says that neglect and delay for five years by the plaintiff in selling the property resulted in it deteriorating and being vandalized to its skeleton state. The defendant therefore says the plaintiff was negligent and failed in its duty to the mortgagor to take reasonable care of the property. This he says is evidenced by the lack of security provided to the property by the plaintiff when it took possession of the property. The defendant says as a result, the property was sold at a very low price.

Evidence given at the trial

(a) By the plaintiff

17. Mr. Gima Ai was the only witness called to give evidence for the plaintiff. When he was cross-examined about the K10, 440.00 which the plaintiff says he paid in loan repayments, he said, although the plaintiff may have records of those payments, he was not able to produce them because the plaintiff was updating all its records. When Mr. Ai was asked whether he deliberately omitted to attach the Statements of the defendant’s loan Account to his affidavit, he again said he had difficulty in locating them because of the updates being done with the bank’s records. He said he could not confirm the defendant’s claim that he paid K10, 440.00 in loan repayments. He said the property was not valued when it was put on tender. He agreed that the property was repossessed by the plaintiff in 1998.

18. Mr. Ai conceded that the plaintiff did not provide security to the property and said that because of lack of security, thieves removed parts of the building. He agreed that plaintiff’s employees broke the lock to the gate of the property after the property had deteriorated. He said the plaintiff tried to sell the property but because of its poor condition, it took long time to eventually sell it for K17, 500.00.

19. Mr. Ai also said the bank’s practice with mortgage sales is that it allows mortgagors to stay in the properties until the properties are about to be sold then they tell the mortgagors to vacate the properties. He said before the plaintiff moved into the property, the plaintiff’s staff used to see the grass being cut so they thought the property was being looked after by the defendant’s people.

(b) By the defendant

20. The defendant gave evidence in his own defence and was the only witness for the defence, and his evidence is this: The plaintiff never gave him the Statements for his loan Account. The property was a double storey house and by the time he defaulted, he had spent K9, 000.00 of his own money on improvements. It had four bedrooms with an estimated market value of about K50, 000.00, when it was repossessed by the plaintiff. After the property was repossessed by the plaintiff, the responsibility of taking care of the property reverted back to the plaintiff. The property deteriorated considerably from the time it was repossessed to when it was sold. The plaintiff knew of his continuing default and it was incumbent on the plaintiff to make sure that the property was sold as soon as possible at a reasonable market price. He wrote to the bank a number of times asking for the Statements of his loan Account but there were no replies from the bank. The monthly repayments for the loan were automatically deducted from his personal Account which was with the plaintiff’s Boroko branch, thus they had records of his payments. His estimated value of the property at K50, 000.00, is based on the value of houses in the same area at that time.

21. When he went to Kerema, a relative was looking after the property but when it was repossessed by the plaintiff the responsibility to provide security was on the plaintiff. In 1996 he was very sick so the doctors advised him to go home, so he was in his village in Kerema until 2004. In 1997 he went on furlough leave then resigned to join the Gulf Provincial Government in April, 1998. He could not come back to the house because it was incomplete. He conceded that he had the keys to the house and said the gate was locked with a small pad lock which was broken by the plaintiff’s staff after the plaintiff took possession.

22. He agreed that he was given the opportunity to redeem the loan but he could not because he had no means to finance the loan. He said selling the house at K17, 500.00, was ridiculously low price because it could have been sold at around K50,000.00 had the plaintiff sold it quickly soon after taking possession.

Submissions

23. Mr. Roddy Koaru argued that the bank was guilty of undue delay in selling the property after it took possession in 1998. He submitted that there was unreasonable delay by the plaintiff in accepting the offers made by various bidders for the property, which ranged from K30, 000.00 to K50, 000.00. He said there were good offers but because of the delays by the plaintiff, the good offers do not appear to have been properly considered and acted upon by the plaintiff. He submitted that certain bidders withdrew their offers due to such delay and negligence by the plaintiff. For this, Mr. Koaru relied on ANZ Banking (PNG) Ltd v Kila Wari (1990) N801, where the Court said a mortgagee had a duty to take reasonable care of a property and to obtain a fair and reasonable market price for the property when exercising its right to sell. That case followed Cuckmere Brick Company Ltd v Mutual Finance Ltd [1971] EWCA Civ 9; (1971) 2 All E.R 633, where at 646 the court said:

"In exercising the power of sale, however, the mortgagee was not merely under a duty to act in good faith, i.e., honesty and without disregard for the mortgagor’s interest, but also to take reasonable care to obtain whatever was the true market value of the mortgage property at the moment he chose to sell it".

24. Mr. Koaru argued that in this case, there is evidence that the plaintiff did not take reasonable care of the property and by its failure to provide security when the property was in its possession, the property was allowed to deteriorate. This also resulted in the property being vandalized and left to its skeleton state, hence the depreciation in its value. Mr. Koaru therefore urged the Court to dismiss the plaintiff’s claim.

25. Mr. Saroa on the other hand argued that the plaintiff had acted reasonably and in good faith when it sold the property for K17, 500.00. He further argued that the defendant has not included the interest component of the amount owing, so the amount owed to the plaintiff is much more than K3, 000.00.

26. Mr. Saroa placed reliance on Westpac Bank (PNG) Ltd v. Henderson and Henderson [1990] PNGLR 112. That was a case where the bank (mortgagee) appointed a receiver to realize the assets of a company in which the defendants were shareholders. After the company’s assets were sold, an amount of K84, 175.00 was still owed to the mortgagee. The defendants argued that the receiver had a duty to sell the assets at good prices but it failed to do so. The Court held that whilst the receiver did owe a duty to the defendant to sell the assets at good price, the defendants failed to show that the receiver failed in that duty. Furthermore, there was no evidence that the mortgagee had interfered with the duties of the receiver. The Court therefore held that the defendants were liable to pay the amount owed to the plaintiff.

Reasons for decision

27. Because of the claim by the defendant that plaintiff was negligent in delaying the sale of the property which he says resulted in the property depreciating in its value; it is necessary that I look at the chronology of the relevant events as given in the affidavit of Mr. Gima Ai.

28. This is the chronology of events: The defendant first defaulted on or about 8 February, 1998, which resulted in the plaintiff sending a letter of demand for payment of the outstanding loan of K27, 389.31 (Annexure ‘E1’). On 27 July, 1998, the plaintiff sent another letter of demand to the defendant demanding that the defendant pay the outstanding amount of K26, 373.48 (Annexure ‘F1’). In a letter dated 21 August, 1998, the defendant wrote to the plaintiff informing the plaintiff that he had resigned from his position as a Magistrate and was having difficulties in repaying his loan as he had just started working with the Gulf Provincial Government as its Provincial Legal Officer. He advised in that letter that he would make arrangements to make payments towards his loan through his bank Account with the plaintiff (Annexure ‘G1’). Despite that letter, the defendant failed to make any payments towards the loan. On 9 November, 1988, the plaintiff wrote another letter to the defendant stating that legal proceedings would be instituted against him if no payment was received by 30 November, 1998 (Annexure ‘H1’). The defendant in his letter dated 30 November, 1998 wrote to the plaintiff and advised that he was having difficulties in repaying the loan (Annexure ‘I1’). On 1 December, 1998, the plaintiff received K250.00 from the defendant in loan repayment.

29. Following the defendant’s default, the plaintiff in exercising its right to sell, advertised the property for sale by public tender in the Post Courier on 20 January, 1999; 27 January, 1999 and 3 February, 1999 (Annexure ‘J1’). The plaintiff received a total of six tenders. First tender was received on 21 January, 1999, from Taureka Proprietary Limited for K15, 500.00, (Annexure ‘K1’). Second tender was received in February, 1999, from Pato Angare for K16, 000.00 (Annexure ‘L1’). Third tender was received on 4 February, 1999, from Danny Isram for K20, 000.00 (Annexure ‘M1’). Fourth tender was received on 5 February, 1999, from Lydia Gerega for K20, 000.00 (Annexure ‘N1’). Fifth tender was received on 21 January, 1999, from Nambawan Electrical & Electronics Engineering Ltd for K10, 750.00 (Annexure ‘O1’) and sixth tender was received on 2 February, 1999, from Paul Maurice Raim for K25, 000.00 (Annexure ‘P1’).

30. On 22 January, 1999 and 19 February, 1999 the defendant made two further payments of K200.00. The plaintiff accepted those payments but on "without prejudice" basis and advised the defendant of its right to recover the outstanding amount in full. From thereon, the plaintiff and the defendant exchanged correspondences in which the defendant made it clear that it was having difficulties repaying the loan and was looking at other sources to finance the loan. In August, 2000, the plaintiff conceded that tenders it received in January and February, 1999 were low, and re-advertised the property on the market. Advertisements were placed in the Post Courier on 30 August, 2000; 6 September, 2000 and 12 September, 2000.

31. Following those advertisements, the plaintiff received eight tenders which are Annexures ‘X1’; ‘Y1’; ‘Z1’; ‘A2’; ‘B2’; ‘C2’; ‘D2’ and ‘E2’ to Mr. Ai’s affidavit.

32. The tender in Annexure ‘X1’ was received from Wooden Poles Suppliers for K15, 000.00 dated 14 September, 2000. Tender in Annexure ‘Y1’ was received from Mr. Laurence Yarus for K18, 000.00 dated 19 September, 2000. Tender in Annexure ‘Z1’ was received from Rodolf Hagoria for K25, 000.00 dated 12 September, 2000. Tender in Annexure ‘A2’ was received from Dominic Daugil for K30, 000.00 dated 7 September, 2000. Tender in Annexure ‘B2’ was received from Rudolf Wambi for K35, 000.00 dated 14 September, 2000. Tender in Annexure ‘C2’ was received from Penias Sabatha for K45, 000.00 dated 11 September, 2000. Tender in Annexure ‘D2’ was received from Gia Rawali for K50, 000.00 dated 31 August, 2000. Tender in Annexure ‘E2’ was received from Idau Dikana for K48, 500.00 dated 19 September, 2000.

33. From these tenders, the plaintiff accepted the tender by Gia Rawali (Annexure ‘D2’) on or about 4 October, 2000 and advised Gia Rawali in a letter of its acceptance of his offer. When the plaintiff did not receive any response or reply from Gia Rawali, it decided to accept the offer by Idau Dikana (Annexure ‘E2’). The plaintiff communicated this to Idau Dikana on 13 November, 2000 (Annexure ‘H2’).

34. Following acceptance of Idau Dikana’s offer, the plaintiff in a letter dated 24 May, 2000, advised the defendant of the successful tender and further advised the defendant of its right to redeem the loan (Annexure ‘I2’).

35. On 28 November, 2000, Fiocco Posman & Kua Lawyers acting for Idau Dikana forwarded a Contract for Sale to the plaintiff for execution (Annexure ‘L2’). However on 9 February, 2001, Idau Dikana wrote to the plaintiff and advised that sale was cancelled. Following which, the plaintiff re-advertised the property for public tender in the Post Courier on 9 May, 2001; 16 May, 2001 and 23 May, 2001 (Annexures ‘N2’, ‘O2’ and ‘P2’). In response to those advertisements, the plaintiff received one tender from David Gabuina for K30, 000.00, dated 26 May, 2001 (Annexure ‘Q2’).

36. In a letter dated 22 March, 2002, the plaintiff advised the defendant of the above offers and further advised the defendant that he still had the right to redeem the loan up to immediately before the execution of a Contract of Sale (Annexure ‘R2’).

37. According to paragraph 35 of the affidavit, at the time of receiving David Gabuina’s offer, the property had deteriorated to a skeleton state after most parts such as walls, widow frames and the entire iron roofing were stolen. In paragraph 36, it is deposed that the plaintiff made several attempts to convince previous tenders to purchase the property but to no avail. In paragraph 37 it is further deposed that due to the poor state of the property, the plaintiff advised David Gabuina to inspect the property again and make another offer if he was still interested. Following that advice David Gabuina offered K18, 000.00.

38. It appears that nothing became of that second offer by David Gabuina. The property was re-advertised in the Post Courier on 5 September, 2001. Only one offer was received for K17, 500.00 from Rimbink Pato on the same day. The plaintiff accepted the offer and sold the property to Rimbink Pato for K17, 500.00 (Annexures ‘U2’ and ‘V2’).

39. From Mr. Ai’s affidavit following facts are also noted; in an inter office memo by Mr. Ai to the: "Manager, Loans Management", dated 4 October, 2000, (Annexure ‘F2’), Mr Ai advised:

"Property has been advertised twice, first in January, 1999. The tenders received were too low compared to size of the property".

40. Then went on to advise that eight tenders had been received, amounts for which ranged from the lowest of K15, 000.00 to the highest of K50, 000.00, and advised further that:

"...The tenders received were too low compared to size of the property... A valuation had been done by Veraga Valuation Ltd to assist us assess the tenders. The highest tender compare (sic.) to the valuation is ok due to condition of the materials".

41. This clearly contradicts Mr. Ai’s evidence at the trial that no valuation was done on the property. The evidence is referred to, at paragraph 25 of Mr. Ai’s affidavit. There is also evidence that plaintiff took possession of the property in 1998, and the highest tender of K50, 000.00 was equal to the market value of the property at the time according to the valuation done on the property. Thus, going by the above inter-office memo (Annexure ‘F2’), by October, 2000, the fair market price of the property was around K50, 000.00. That was also the amount offered by Gia Rawali for the property, on 31 August, 2000. It was on that basis that in the above inter-memo, Mr. Ai recommended the offer by Gia Rawali to the ‘Manager, Loan Management’.

Law

42. It is an established principle that when a mortgagee takes possession of the property, the mortgagee is under an obligation to take certain degree of care in the management of the property. Thus, where there is clear failure by the mortgagee to manage the property properly, the mortgagee may be held liable to the mortgagor. See, Estably White -v- City of London Brewery Co. (1889) 42 Ch D237. Further, a mortgagee has a duty to obtain a price equal to a fair market value when selling the property. See ANZ Banking (PNG) Ltd v. Kila Wari (supra). See also, Cuckmere Brick Co Ltd v. Mutual Finance Ltd (supra).

43. There is evidence that the plaintiff did not respond to some of the good offers submitted by certain bidders which were over K30, 000.00. There is no evidence that the plaintiff responded to those offers to indicate that due considerations were given to them. There is also evidence that the plaintiff did not expedite the sale of the property in that, it took five years to eventually sell it after it took possession of the property. The obligation was on the plaintiff as the mortgagee to provide security, care and proper management to the property from the date of possession. That is part of the obligation owed to the defendant by the plaintiff, so that the property could be sold at a reasonable market price. However, due to plaintiff’s negligence, the property was allowed to deteriorate in its value, resulting in the property being eventually sold at a very low price.

44. The defendant has said that he paid K10, 440.00 in loan repayment from 1 July, 1995 to 31 July, 1997. The plaintiff has not really denied these payments. It only said that it could not locate the records of those payments because the plaintiff was updating its systems. But there is evidence that the defendant had an Account with the plaintiff at its Boroko branch, from which monthly loan repayments were atomically deducted. Mr. Ai told the Court that the plaintiff was not able to produce the records or Statements for the defendant’s loan Account because the plaintiff was updating its system. To my mind, all that can be said about this particular evidence by the plaintiff is that, it is a normal practice in any loan arrangement between the mortgagor and the mortgagee, that what the defendant has asserted is what would have happened, i.e. the defendant paid K10, 440.00 in loan repayments through automatic deductions from his bank Account. Thus, the plaintiff having failed to disprove the defendant’s assertion, I am inclined to accept the defendant’s evidence. See, NCDC v. Crusoe Ltd [1993] PNGLR 139 at 153. The compelling reason for this is that the defendant had a personal Account with the plaintiff to which, his pay was being paid, and monthly loan repayments were automatically deducted from that Account by the plaintiff and paid towards his loan. The evidentiary burden therefore shifts to the plaintiff to disprove the assertion made by the defendant that he paid K10, 440.00, in loan repayments under that arrangement. The plaintiff having failed to discharge the onus, I must find against the plaintiff on this point.

45. From the foregoing, I find that the plaintiff had unduly delayed the sale of the property and that it was negligent in the management of the property which resulted in the property being sold in a skeleton state. I also find that the plaintiff was negligent in not properly and effectively responding to some of the good offers for the property through public tender. For these reasons, I find that there was bad faith by the plaintiff when it sold the property for K17, 500.00. In this regard, there is, as I noted, evidence that the property was valued in about 2000, and at that time, it could have been sold for K50, 00.00. The plaintiff owed a duty to the defendant to sell the property at a fair market price but he failed. See, Dimmick v. Pearce Investments Pty. Ltd. and Another [1980] 43 F.L.R 235.

46. The plaintiff has pleaded that the amount claimed is the outstanding balance of the loan remaining after deducting the amount it received from the sale of the property. The plaintiff claims that the actual amount owed by defendant as at 10 September, 2003 was K45, 202.78.

47. The amounts pleaded in the Statement of Claim appear to be at variance with the amounts given by Mr Ai at the trial, but even if I was to accept that the amount claimed of K30, 083.40 by the plaintiff could be covered by the money received from the sale of the property, I am of the view that the defendant should not pay this amount because, had the plaintiff been diligent in its management of the property and sold the property within a reasonable time after the valuation of the property in 2000 or even before; the possible purchase price, which according to evidence could be K50,000.00 could have easily satisfied the debt owed by the defendant. It is therefore my view that the defendant should not pay for the plaintiff’s own negligence.

48. I therefore refuse to enter judgment for the plaintiff in the amount claimed.

49. The defendant has conceded that it owes K3, 265.75 to the plaintiff from the loan. I will award this amount to the plaintiff. I have however decided not to award interest on this amount because interest under s.1 and s.2 of the Judicial Proceedings (Interest on Debts and Damages Act, chapter No. 52) is discretionary. Those provisions give broad discretion to the Court in deciding whether to award interest. See MVIT v. Job Builders Pty Ltd [1993] PNGLR 272. In this case, I have decided not to award interest because I hold the view that these proceedings are occasioned by the plaintiff’s negligence. Furthermore, the degree of blameworthiness on the plaintiff in my view far outweighs any blame on the defendant. In the circumstances, it would be improper and unfair for me to exercise my discretion in favour of the plaintiff.

50. As to costs, I have also decided that I will not order costs to follow the event for the reason that the plaintiff is not without fault. I therefore order that parties pay for their own costs.

Orders accordingly.

________________________________

Robert Bradshaw: Lawyers for the plaintiff
R. Koaru: Lawyers for the defendant