Nime v Dau [1999] PGDC 1; DC47 (12 March 1999)

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CIVIL LAW—Summary Ejectment—Recovery of State Lease—Lease supposedly held without right—No Title—Contract for Sale of Land—Essence of the Contract not complied with—Ejectment—Summary Ejectment Act (Ch202) s6.

CIVIL LAW—Summary Ejectment—Contract for Sale of Land—Land—State Land—Agricultural Lease—Vendor and Purchaser's rights—Contract to sell land—Contractual terms—Stipulation—Entitlement to vacant possession only upon payment in full—Non compliance—No assignment—Land Act (Ch185) s69.

Land Act (Ch185) s68, s69, Land Registration Act (Ch191), Summary Ejectment Act (Ch202) s6.

N1>[1] This was a contract for sale of an agricultural State lease held by the vendor and granted to him pursuant to PART III Division 3 of the Land Act (Ch185) which lease is described as Portion 1443, BUVUSI, Milinch, Fourmil Talasea, West New Britain Province being the whole of the land in description comprised in the State lease Volume 60 Folio 75. There was no Ministerial approval thus the contract could not be enforced.

N1>[2] The plaintiff sues the defendant (hereinafter respectively referred to as the vendor or the purchaser) for an alleged breach of the contract for sale of land which terms stipulated that the balance of purchase monies should have been payable to the vendor some fourteen (14) days after the approval by the Minister for Lands pursuant to s68 and s69 of the Land Act. On July 1997, the parties entered into an agreement for the vendor to sell and the purchaser to buy the vendor's block No 1443 Section 2, in Buvussi Government Settlement Schemes. The block of land is the subject of a special agricultural lease which was granted to the vendor to develop such land being three (3) hectres planted with oil palm. The vendor thus alleges in the statement of claim that since the purchaser has defaulted, the latter should be evicted since the title to the abovementioned property is still under his name.

N1>[3] According to the contract signed between the vendor and purchaser on 17 July 1997, the purchase price was K10,000, and a deposit of K6,500.00 was to be payable on or before the contract was executed. There is no dispute that the vendor received the sum of K6,500.00 on the date the contract was signed after which the purchaser took control and went into possession of the lease. The balance according to clause 2(b) of the agreement still to be paid was K4,1000.00.

N1>[4] It is the evidence of both parties that although the initial negotiations was for an amount of K10,000, they waived that condition and the amount was reduced to K8,000.00. The outstanding balance in effect is now K1,500.00. The evidence of both the vendor and the purchaser confirm this.

N1>[5] The purchaser denied breaching certain conditions stipulated in the contract but not in the sense that he had paid all the outstanding balance but because since occupation he had to pay for lease rental fees which had been outstanding whilst the Vendor was still in possession. The purchaser tendered a receipt captioned "LEASE RENT ADVICE" (see Ex. "A") which bares a total owing of K505.00.

N1>[6] The defence tendered an exhibit (see Ex "A") purporting to be a receipt obtained for part payment of K85.00 supposedly paid on 24.02.99. I do not wish to accept this document for two reasons. First the writer of this document was not called to testify and identify the document to ascertain whether or not he was the writer. A party who wishes to rely on contents of a document as direct evidence must produce primary evidence (as compared to secondary) to prove its contents. This may involve tendering the original or calling the person who wrote out the receipt and sighed it: Jones v Jones [1841] EngR 1075; [1841] 9 M & W 75.

N1>[7] The second aspect of the exhibit tendered by the defence and which makes the exhibit unacceptable is that it looks as though this document ("A"D) has been forged. The wording on the receipt written in blue biro is so different from what was written either originally or a copy of the different receipt was traced. Just to pick one instance of such contradiction are the names on the foreground JOHN NEAWA ARUA. At the back-ground the first name commencing with P is unclear but the second name in either pencil or if it is a carbon copy is WARI. Another such indication that the document was forged is at the top of the rent outstanding columns, it is clearly shown in pencil as K750.00 whereas in biro it is K505.00. For the reasons I will not accept exhibit "A"D into evidence.

N1>[8] The purchaser's denial relates to certain monies alleged to be owed by the vendor to the State such monies was for rental arrears. This is the subject of exhibit "A"D. I have discussed in the last few paragraphs and which I have ruled that I do not accept such document. Part of his denial also covers an amount of K455.69 owned by the Vendor to New Britain Palm Oil Limited. As appears from exhibit "B"D it shows such amount was owing for, fertilizers and an ID card and other sundry items plus the outstanding rent. Exhibit "B"D is the only receipt that bares the name of the Vendor and which I accept believing that its contents are true. That receipt is dated 7 January 1999. It is inferred from the purchaser's evidence that because he has been paying for the outstanding balance, he must not pay for the outstanding balance, the subject of this claim.

N1>[9] The contract concerned was written and sighed by the parties together with their solicitor and although not sealed one must go back to it in order to be construed for purposes of ascertaining the parties real intentions. Clause 3 of the contract stipulated that upon completion of all the contractual terms of their agreement, the vendor was to deliver up to the purchaser a duly executed assignment of the lease to the purchaser in registerable form as required by the Land Registration Act (Ch191). The contract also provided that such contract was to be properly stamped and endorsed with the ministers approval under s69 of the Land Act which provides that a state lease must not be granted without first being advertised in accordance with s68 unless the land subject of a lease has been exempted from advertisement. See s69(2) Land Act. Certain government leases are being exempted from being advertised particularly those leases granted to governmental bodies for public purposes: see s69(2)(a).

N1>[10] An important clause of the contract is clause 3(b) which says that if the agreement was not completed by the time stipulated therein clause 2(b) the vendor would be entitled to issue a notice to the purchaser fixing a time for the completion which time would be the "essence" of the contract. This I find to be negative in the course of dealings between the vendor and the purchaser in this case. But clause 2(b) of the agreement provided that the balance of all purchase monies would have been settled fourteen (14) days from the date or time of approval by the Minister for Lands.

(a) This contract is subject to the approval of the Minister for Lands of Papua New Guinea and in the event of such approval being refused or not being forthcoming within six (6) months of the date hereof, this contract shall automatically and without further notice be rescinded and the vendor shall repay to the purchaser any monies paid by the purchaser hereunder.

(b) Both parties will do all things required by them respectively to be done for obtaining such consent.

N1>[12] It is my view that even if the purchaser had completed the purchase in accordance with the conditions of their contract and if the Minister had not approved the assignment or his approval was not forthcoming within six (6) months, the parties were bound by clause 18(a) of the agreement to treat the contract as rescinded.

N1>[13] To this Court failure by the defendant to comply with clause 2 of the contract was and is a "fundamental breach" that is to say breach of a fundamental term. A fundamental term is something which underlines the whole contract so that if it is not complied with the performance becomes something totally different from that which the contract contemplates: Suisse Atlantique Societe v NV Rotterdamsche Kolen Centrale [1966] 2 All ER 61 per Devlin J at 69. Here is a case where the parties chosed to be bound by what they agreed upon in writing. They engaged a lawyer to draw up or draft a well documented contract and the vendor and purchaser chose to sign their contract. Where parties chose to be bound by a certain agreement and where such contract is in writing, no evidence must be allowed to be added to or no evidence should be subtracted from such written terms or even vary or qualify a written contract. Curtain Bros (QLD) Pty Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285.

N1>[14] In contract, where breach of a fundamental term occurs or a fundamental breach has occurred, the party not at fault has the right to elect whether or not to rescind the contract. Failure to rescind implies the affirmation of the contract, but this does not mean that any exemption clause should be construed as if there had been no fundamental breach. Wathes v Austins [1976] 1 Lloyd's Reports 14.

N1>[15] Neither the vendor nor the purchaser gave any evidence in relation to whether or not the Minister had approved the deal. It is now more than six (6) months the time stipulated in clause 18 of the contract simply means that the parties cannot continue as there was no ministerial approval and secondly the purchaser has defaulted badly in terms of clause 2 of the contract.

N1>[16] What should happen if the agreement is rescinded pursuant to any expressed rights to rescind conferred upon the parties by the agreement. Clause 9 of the agreement provides as follows.

If this Agreement is rescinded (as distinct from terminated) pursuant to any express right to rescind (as distinct from a right to terminate) conferred by this Agreement the rescission shall be deemed to be a rescission ab initio, and

(a) The deposit and all other money paid by the purchaser hereunder shall be refunded to him;

(b) Neither party shall be liable to pay the other any sum for damages costs and expenses;

(c) If the purchaser has been permitted into occupation of the said property he shall forthwith give up the said property to the vendor; and

(d) If the purchaser is or has been in occupation or in receipt of the rents or profits of the said property he shall account for or pay to the vendor the net rents and profits received or a fair occupation rent for the said property (whichever is the greater) until the date of rescission but the vendor shall give the purchaser credit for any interest paid by the purchaser and any resulting balance payable by the purchaser may be deducted by the vendor from deposit and other moneys before returning the same to the purchaser."

N1>[17] At the end of the day, two factors were and are quite obvious. First if there was no Ministerial approval of the transfer, the contract ought to have been treated as rescinded. Secondly the parties are bound by, their expressions stated in the Agreement and they ought to have complied with what they agreed to which expressions simply stipulate that if there is no compliance in the case of non compliance with clause 2(b) which was and is largely subject to the Minister of Lands approval. This approval has not been forthcoming since the parties entered into the agreement which in my view forms the basis of the agreement. Having said the foregoing I make the following orders:

N2>2. The vendor shall refund to the purchaser the sum paid by the purchaser as part payment of the purchase price within 14 days.

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Papua New Guinea District Court

Nime v Dau [1999] PGDC 1; DC47 (12 March 1999)

Unreported District Court Decisions