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National Court of Papua New Guinea |
PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE
WS NO. 474 OF 2019 (COMM)
BETWEEN:
SUPER SERVICE LIMITED
Plaintiff
V
SANAMO CONSTRUCTION LTD
First Defendant
AND:
POLRAVEN NO. 48 LIMITED
Second Defendant
Waigani: Anis J
2021: 16th August, 6th & 30th September
TORT – premised on contract for sale of land – contract subject to Ministerial Approval – Ministerial Approval granted – contract delayed – settlement not complete – jurisdictional challenge – what is the cause of action and whether cause of action time barred under s. 16(1)(a) – Frauds and Limitations Act 1988 – When did the cause of action accrue? – preliminary considerations and findings – elements of general tort or wrong – whether tort as the underlying cause of action established – damages – whether plaintiff entitled to all relief pleaded – consideration – assessment – findings – application of interest and costs
Cases Cited:
Mapai Transport Ltd v. Romily Kila Pat (2017) N6850
Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea and The Independent State of Papua
New Guinea (2002) N2182
William Mel v. Coleman Pakalia (2005) SC790
Albert Areng v. Gregory Babia (2008) N3469
MVIT v James Pupune [1993] PNGLR 370
Komboro George v MVIT [1993] PNGLR 477
Desmond Huaimbukie v James Baugen (2004) N2589
John Pias v Michael Kodi (2004) N2690
Counsel:
R. Kelly, for the Plaintiff
P. Wariniki, for the Defendants
JUDGMENT
30th September, 2021
1. ANIS J: The matter was trialed on 16 August 2021. Presentation of submissions were made on 6 September 2021 before I reserved my decision to a date to be advised.
2. This is my ruling.
BACKGROUND
3. The plaintiff planned to purchase 2 pairs of blocks of land that were owned by the first and second defendants, in 2013. The first 2 blocks of land described as Section 111, Allotments 21 and 24, Lae, Morobe Province, State Lease Volume 19, Folios 242 and 245 (first blocks of land) were owned by Sanamo Construction Ltd, the first defendant at the material time. The second 2 blocks of land described as section 111, Allotments 22 and 23, Lae, Morobe Province, State Lease Volume 19, Folios 243 and 244 (second blocks of land) were owned by Polraven No. 48 Ltd, the second defendant. The 2 pairs of blocks of land had a single title and description prior to the defendants acquiring and separating them into blocks. They were originally registered or described as Allotments 1 and 2, Section 111, Lae, Morobe Province (original tile).
4. On 12 April 2013, the plaintiff signed 2 contracts for sale (the 2 contracts or contracts) with the first and second defendants, to purchase the 2 pairs of blocks of land. The terms and conditions of the 2 contracts were identical save for the land descriptions, the purchase price, and the parties to each of the contacts which were varied. It was agreed that the first defendant’s blocks were to be sold for K4,000,000 and the second defendant’s block K3,000,000. It was agreed in the contracts that prior to their signings, the plaintiff would make an advance payment of K700,000, which would constitute the 10% deposit, to their nominated stakeholder called the Professionals. On 26 March 2013, the plaintiff paid K700,000 to the Professionals as per the terms of the contracts.
5. The contracts were of course subject to various material conditions. They include vacant possession, stamp duty, Ministerial Approval, and settlement. As for settlement, the contracts state that it shall occur within 14 days of obtaining Ministerial Approval and upon notifying the defendants. The lawyer that acted for the parties then was late Paul Ousi of Warner Shand Lawyers. Mr Ousi prepared the conveyancing documents for the parties at the material time. Ministerial Approval was granted on 15 April 2013. Settlement under the 2 contracts did not occur. There was delay and thus led to the filing of this proceeding. It was later revealed that on 2 October 2013, an aggrieved applicant, Mapai Transport Ltd, had filed a judicial review proceeding namely OS (JR) 704 of 2013 (the judicial review proceeding) against the Lands Department, the State, and the first defendant, over the grant of land where the 2 pairs of blocks of land are situated. On 27 February 2014, the plaintiff filed an application for joinder to the judicial review proceeding. On 2 September 2014, the plaintiff was granted leave to join therein as the fifth defendant. Three years later, on 15 August 2017, the judicial review Court upheld Mapai Transport Ltd’s judicial review application. The decision is reported as Mapai Transport Ltd v. Romily Kila Pat (2017) N6850. The Court was satisfied, amongst others, that fraud was established against the first defendant in its dealings with the original title to the properties concerned. The decision by the judicial review Court essentially or directedly affected the properties that were or are the subject of the 2 contracts. The judicial review Court ordered, amongst others, and I quote:
A further Order that the Fourth and Fifth Defendants [who are the first defendant and the plaintiff herein] surrender copies of the registered State Leases for Allotments 21, 22, and 24, Section 111, Lae Morobe Province to the Registrar of Titles who shall thereupon cancel the leases. [My insertion in bold letters].
6. The first defendant appealed the decision of the judicial review Court to the Supreme Court. The appeal was dismissed on competency ground on 11 July 2018. It later filed a slip rule application before the Supreme Court which was also dismissed on 30 October 2018.
7. By this proceeding, the plaintiff alleges that the contracts are still pending, but it is alleging tort or wrongs committed by the defendants relating to the contracts as its underlying cause of action, and it seeks by way of damages, to recover (i), the 10% deposit, (ii), advance payments to monies claimed to have been made to the defendants based on the contracts, and (iii), conveyancing and litigation costs. The cause of action is not for breach of contract but rather in tort. Its foundation is pleaded at paragraphs 12 and 13 of the Amended Statement of Claim (ASoC) filed on 6 October 2020. I re-state them herein:
8. The defendants deny that the plaintiff is entitled to these claims and relief. It also raised a jurisdictional issue, that is, time-bar which I will now consider.
TIME BAR
9. The pleaded jurisdictional contention is made under s. 16(1)(a) of the Frauds and Limitations Act 1988 (FLA). The defendants claim the cause of action accrued more than 6 years ago and as such is time-barred under the provisions of the FLA. The defendants appear to compute time from the date of expiry of the 14 days which was on 29 April 2013, that is, after the date of grant of the Ministerial Approval of the contracts on 15 April 2013. This is pleaded under paragraph 9 of their Amended Defence filed on 30 November 2020.
10. The plaintiff denies the claim. It submits the cause of action accrued as of 30 October 2018 after the Supreme Court dismissed the first defendant’s slip rule application.
11. I have considered the submissions of the parties. I begin by setting-out s.16 herein:
16. Limitation of actions in contract, tort, etc.
(1) Subject to Sections 17 and 18, an action—
(a) that is founded on simple contract or on tort; or
(b) to enforce a recognisance; or
(c) to enforce an award, where the submission is not by an instrument under seal; or
(d) to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,
shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued. (Underlining mine)
12. I have these 2 queries. Firstly, I ask myself this. “What is the cause of action?” This question may not be directly relevant at this juncture given that the cause of action as pleaded appears to cover tort and or contract where both are subject to the 6-year time limitation period under the FLA. But I will of course examine them in detail if I am not minded to dismiss the matter based on the time bar issue. I note that much of the time taken in Court was spent on arguing the contracts, their terms and issues that may or may not arise from them.
13. The next question I have is this. “When did the cause of action accrue?” To answer that, I note that the plaintiff is seeking various relief based on its pleadings under paragraphs 12 and 13. In summary, the plaintiff claims that because the defendants failed to obtain clear titles to the 2 pairs of blocks of land in the contracts, it suffered and therefore seeks the following relief:
(i) its costs in the judicial review proceeding of K220,588 where it said it had to defend its interest at the material time;
(ii) its loss of K700,000 which had been paid as a deposit in the contracts;
(iii) its loss of K50,010 which had also been advanced as part of the contracts; and
(iv) its conveyancing fees of K180,156, K250 and K400, that is, for the 2 contracts.
14. The plaintiff pleads that the contracts could not conclude because of failure by the defendants to obtain clear titles to the 2 pairs of blocks of land that were to be sold under the 2 contracts. It submits the said failure, based on the pleadings, is also tied to the judicial review proceeding whereby the first defendant, who had been named as a party in that proceeding, was unsuccessful in both the National and Supreme Court proceedings. As such, the plaintiff maintains that the cause of action or the wrong claimed herein, accrued immediately after the Supreme Court had dismissed the slip rule application of the first defendant on 30 October 2017. It submits therefore that time should accrue from 30 October 2017, which would mean that the original writ of summons and statement of claim filed on 1 May 2019 was filed well within 6 years. I have stated the defendants’ position on this issue above, which is that time should be computed 14 days after the date of grant of the Ministerial Approval of the contracts on 15 April 2013.
15. I find the plaintiff’s computation of time accurate. I note that a lot was said at the hearing where counsel made substantial submissions on the contracts and its terms and conditions. Having had the benefit to carefully consider the pleadings, it is obvious that the underlying claim is in tort or wrong and not in contract. It seems that whatever the outcome of the contracts was, is or to be, is irrelevant given the underlying basis of the cause of action herein. The plaintiff simply argues that the contracts have not concluded; that they were pending when the judicial review proceeding was instituted 6 months later on 2 October of 2013; that the first defendant had unsuccessfully defended the matter to obtain clear titles to the properties under the 2 contracts; that the defendants therefore failed in their duty to secure clear titles to the properties that were the subject of the 2 contracts; that it suffered as a result of the judicial review Court defeat because it meant that the contracts could never conclude. The defendants’ computation of time as stated above, is based on the completion date of the contracts on or about 29 April 2013. This cannot be so given that the plaintiff’s underlying cause of action is not in contract. The cause of action is in tort, and time began to accrue when the defendants did not secure the properties the subject of the 2 contracts, on or about 30 October 2017.
CLAIM FOR ADVANCE OF K50,010.00
16. I will also address, as a preliminary issue, the plaintiff’s claim for advancement of K50,010 to the Joseph Kobol of the defendants. This claim appears to be based on separate facts but is sought in the same proceeding. It is briefly pleaded at paragraph 7 of the ASoC as follows:
17. The said pleading, in my view, is brief without detail particulars of any type of agreement or arrangement. I find the particular pleading insufficient and inconclusive. See cases: Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea and The Independent State of Papua New Guinea (2002) N2182, William Mel v. Coleman Pakalia (2005) SC790, Albert Areng v. Gregory Babia (2008) N3469, MVIT v James Pupune [1993] PNGLR 370, Komboro George v MVIT [1993] PNGLR 477, Desmond Huaimbukie v James Baugen (2004) N2589, and John Pias v Michael Kodi (2004) N2690. Paragraph 7, I note, does not also align with the concluding pleadings at paragraphs 12 and 13 of the ASoC. These paragraphs (i.e., paragraphs 12 and 13) refer to the allege wrongs or tort said to have been committed by the defendants in regard to the properties the subject of the 2 contracts. They do not however address the separate claim as pleaded under paragraph 7 of the ASoC. As such, it (i.e., paragraph 7) does not, in my view, amount to a cause of action that is duly pleaded in law that is properly before me for consideration. Was the K50,010 advance based on a contractual arrangement that would have to be repaid later at some point in time? What was or is the status of the properties or allotments based upon which the K50,010 was advanced? These are not pleaded and there is no evidence to support that. Or was the money advanced without any real commitment or basis for repayment? The plaintiff, at paragraphs 24 and 25 of Exhibit P1 (Affidavit of Wahju Hanafi filed on 28 February 2020), shows proof of payment of the money to the defendants. That is about all really in terms of the evidence by the plaintiff on this matter. No further evidence was adduced to say why the money was paid and to do what. No evidence was adduced to show or distinguish the payment of K50,010 from the others, and also that it was paid for the purposes as pleaded in the ASoC. In cross-examination, Mr Kobol admitted receiving the K50,010.00 from the plaintiff. However, I note that there is a general denial of an obligation to repay the money by the defendants. Mr Kobol states that the money was advanced without any intention of repaying, and because the events occurred about 6 years ago, he said his recollection was sketchy on the matter.
18. With all these considerations, I am not satisfied that the pleadings are sufficient for this claim. The terms and conditions of the agreement or arrangement are not properly pleaded nor have they been adduced in evidence to the Court. Admission of receipt of the money is no guarantee that the money should therefore be returned. As such, despite admission by Mr Kobol of receiving the money and evidence which shows that the money has been paid by the plaintiff, there is no proper foundation or basis for this claim, and I therefore dismiss it.
ISSUES
19. The main issues, in my view, are as follows, (i), whether the defendants have committed a wrong or tort when they failed to successfully obtain clear titles to the properties the subject of the 2 contracts so that the contracts could be completed, (ii), if so, what damages should be ordered for that?
THE TORT OR WRONG
20. The elements of tort in general are as follows:
(i) the presence of a duty;
(ii) breach of the duty. The defendant must have failed in his or her duty;
(iii) an injury occurred; and
(iv) the breach caused the injury.
CONSIDERATION
21. It is not disputed by the parties that the 2 contracts did not reach settlement or conclusion on 29 April 2013 after Ministerial Approval was granted on 15 April 2013. It is not disputed that under the 2 contracts that had been signed on 12 April 2013, the defendants agreed to give vacant possession and the properties at settlement whereupon the plaintiff would also pay the balance of the properties to be purchased. It is also not disputed regarding the judicial review proceeding that had been filed by Mapai Transport Ltd on 2 October of 2013, its outcome, the appeal processes that had followed before the Supreme Court, and the Supreme Court’s final decision on 30 October 2017 which upheld the decision of the judicial review Court. And consequently, it is not disputed that the defendants failed to secure the properties that were the subject of the contracts because as per the judicial review Court Order, the titles to the properties were surrendered and the leases cancelled. The judicial review Court found that the properties the subject of the contracts were obtained through fraud. As a result, the contracts could not or could not have concluded because the defendants did not have clear titles which they could or could have passed on to the plaintiff.
22. I find that the plaintiff has established the presence of the duty by the defendants which is reflected by the signing of the 2 contracts, or of the defendants’ undertaking to sell the properties concerned to the plaintiff. I also find that the defendants breached that duty when they failed to pass on good titles in the properties to the plaintiff or to attend to settlement as per the terms of the contract to conclude the sale. And I also find that as a direct consequence of that, the plaintiff has suffered damages in regard to this wrong or tort committed by the defendants.
23. I am satisfied, on the balance of probabilities, that the plaintiff has established its claim and that it should be awarded damages.
DAMAGES
(i) 10% Deposit – K700,000
24. The plaintiff seeks to essentially reclaim what it had spent in regard to the 2 contracts as damages suffered.
25. The first main claim is for the return of the K700,000 deposit that had been paid as the 10% deposit under the 2 contracts. It seeks that to be assessed as part of its damages. The defendant’s key witness Joseph Kobol gave both written and sworn evidence in Court. The witness was subjected to cross-examination. I note firstly in his affidavits marked as Exhibits D3 and D4 where he has given evidence which shows his admission to having received the 10% that was paid as per the terms of the contracts. He also deposes at paragraph 4 of Exhibit D3 that he would repay the 10% deposit. Mr Kobol also admits during cross-examination to having received the deposit. He admitted having received the funds to erect the fence and take steps to facilitate vacant possession of the properties at the material time. Mr Kobol and counsel did try to distance themselves from the money which they claim was paid to the Professionals and not the defendants. However, I find the argument to be shallow. The payment of the money to the agent was agreed to by the parties but it was essentially monies that had been advanced by the plaintiff for the benefit of the defendants, and Mr Kobol has admitted to using the K700,000. For this purpose, I am inclined to consider to award damages premised on this consideration or item.
(ii) Advance of K50,010
26. I refer to the plaintiff’s next relief, that is, loss of its advance of K50,010.00. I have addressed that above where I have rejected this claim. The said loss is therefore not available for consideration.
(iii) Conveyancing fees – K180,806
27. The plaintiff also claims that damages should be assessed based on its conveyancing costs in regard to the failed contracts, that is, legal costs that had to be incurred. I note that the fee notes are provided or proven in evidence under Exhibit P1. The damage is not remote and infact, like the plaintiff’s loss of K700,000, it constitutes costs that had been incurred by the plaintiff, as a direct result of the breach of duty or the tort that was committed by the defendants. I will grant this relief as part of the damages suffered by the plaintiff.
(iv) Litigation Costs for OS (JR) 704 of 2013
28. The plaintiff also claims that the defendants should pay for its costs incurred in the OS (JR) 704 of 2013 proceeding. At paragraph 12 of the ASoC, the plaintiff pleads as follows:
12. Because of the failure by the First Defendant to obtain a clear title to the property, the Plaintiff has incurred unnecessary legal costs of defending the judicial review proceedings.
29. And the legal cost pleaded for that is K220,588. I make the following observations. The said cost was said to have been incurred by the plaintiff in its involvement as the fifth defendant in the judicial review proceeding. However, I note that the plaintiff joined in the judicial review proceeding on its own accord. It was not named as a party by Mapai Transport Ltd who was the plaintiff. The first defendant was one of the original defendants who was named in the proceeding as the fourth defendant, but not the plaintiff. The first defendant was named because of its direct involvement, that is, it was one of the applicants for the properties in question who, with Mapai Transport Ltd, had applied to the Department of Lands or the Land Board at the material time whereupon or upon consideration, the original title to the properties was then granted to the first defendant. I take that into account. The next thing I consider is this. I refer to the contracts. Clause 17 is relevant for this purpose. It reads, and I quote:
17. LIABILITY OF THE VENDOR
The Property sold shall be at the risk of the Vendor from the date hereof until Settlement.
30. It is not an issue that the contracts were valid at the material time of their signings. It is also not disputed that settlement did not occur at the material time or to this day, and I note that both parties have their own arguments on the correct status of the contracts. However, as stated above, the contracts and their status are not relevant for this purpose given the underlying cause of action herein. But to give me guidance to consider whether I should award this damage to the plaintiff, clause 17, in my view, may be looked at. So, the obligation was on the defendants to secure or take steps to protect the titles to the properties pending settlement, and that was reflected under clause 17 of the contracts. The plaintiff, on the other hand, was not obligated under the contracts to take the steps as it had done, which was, by joining as a party to the judicial review proceeding. It, apparently and on its own volition, filed an application for joinder which was later consented to by the parties. And I also note that the plaintiff cannot have it both ways, that is, to make this argument on tort to argue that the defendants had breached their duty to secure the properties for the plaintiff and at the same time now claim to seek their costs for its own action where it had tried to assist the defendants perform their said duties.
31. Therefore, and in my view, any cost that was incurred by the plaintiff in proceeding OS (JR) 704 of 2013, was incurred on its own accord or volition. The obligation to defend or secure the properties were on the defendants, not the plaintiff. As such, it would be unjust to include this award or item in as part of the damages to be awarded in favour of the plaintiff. I refuse to grant this relief.
32. When I consider all theses, I will make an award for general damages in the sum of K880,806. The plaintiff shall be entitled to receive this sum as damages suffered for the tort or wrong committed by the defendants to it.
INTEREST
33. Interest is sought in the ASoC, that is, at 8% per annum pursuant to Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52. I note that both parties made no detail submissions in this regard.
34. The correct Act should be Judicial Proceedings (Interest on Debts and Damages) Act 2015. I will award interest at 8% per annum which shall accrue after the 30th day from the date of service of the judgment order on the defendants.
SUMMARY
35. I find the defendants liable for the tort or wrongs as pleaded. In so doing, I will award the plaintiff general damages in the sum of K880,806 plus interest at 8% per annum.
COST
36. Cost awarded herein is discretionary. I will order cost of the proceeding to follow the event on a party/party basis to be taxed if not agreed.
ORDERS OF THE COURT
37. I make the following orders:
The Court orders accordingly
________________________________________________________________
Twivey Lawyers: Lawyers for the Plaintiff
Wariniki Lawyers: Lawyers for the Defendant
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