Tiri v Eka [2017] PGSC 13; SC1586 (27 April 2017)

SC1586

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 85 OF 2011

BETWEEN
DOMINIC TIRI
Appellant

AND
ALISON EKA
Respondent

Waigani: Kirriwom, Batari & Neill JJ
2017: 25, 27 April

NATIONAL HOUSING CORPORATION "SELF-HELP SCHEME" allocated unimproved state land to public servants - contract for sale between parties not in writing and hence void - part purchase price paid - breach by delay in paying balance - summary ejectment of buyer.

Cases Cited:
Papua New Guinea cases

State v Principal Magistrate, District Court Port Moresby: Ex parte Public Prosecutor [1983] PNGLR 43
State v Rush: Ex parte Rush [1984] PNGLR 124

Overseas cases

Cuthbertson v Irving[1859] EngR 767; (1859) 157 E.R. 1034

Other References

Treitel in AN OUTLINE CF THE LAW OF CONTRACT (6^th ed. Oxford)
Halsbury's Laws of England (4^th ed.) volume 9
Land Law by Butt (5^th ed.)
Webb v Austin [1844] EngR 724; (1844) 135 E.R. 282

Counsel:

Levi Tilto, for the Appellant
No appearance for the Respondent

JUDGEMENT

27^th April, 2017

1. BY THE COURT: BACKGROUND: This is an appeal to the Supreme Court from the decision of the National Court delivered 29 July 2011 (decision). The decision concerned an appeal from orders made by the District Court in Port Moresby on 15 January 2008 (orders).

2. The non-appearance by the Respondent gave rise as a preliminary matter whether the hearing of the appeal should proceed. Counsel for the Appellant referred to the Affidavit of Service of the Appellant (document 26) where the Appellant deposed to serving the Respondent on 20 March 2017 with the Notice of Hearing. He deposed that at that time the Respondent said, "Forget about the Court. I am not interested." The Court ordered that the hearing would proceed in the absence of the Respondent.

DISTRICT COURT PROCEEDING

Fundamental breach of contract condition

3. The Respondent first brought a debt recovery claim in the District Court against the Appellant. The Respondent asked to be paid K2, 600 which was due under an unwritten agreement between the Appellant and the Respondent (agreement). The agreement was for the Respondent (as vendor) to sell his entitlement to certain land to the Appellant (as purchaser) for K9, 000. An order in favour of the Respondent was made on 1 May 2006. The Appellant did not promptly pay the K2, 600.
4. The matter returned to Court in 2007. By December 2007 the Appellant decided to pay the K2, 600 but the Respondent would not accept that money. The Respondent's view was that by his long delay in making payment, the Appellant breached the contract for sale in a fundamental way. He considered that the contract was at an end, so he refused to accept the K2, 600. The balance outstanding of K2, 600 was about 30% of the total price.
5. The District Court depositions read:
   

"I [Respondent] will not accept the remaining balance because I was waiting for 4 years and 5 months. For that reason I resold my property to new buyer and the property is now under new buyer's name. On the contrary I will refund some money to the [Appellant]."

6. The District Court depositions as to the Magistrate's reasons state:

"[Appellant] now had the money to pay the balance but the [Respondent] refused to accept on the grounds he had been waiting for 4 years 5 months coming from village Rigo checking ..."

7. The depositions note that the 2006 order for the Appellant to pay the K2, 600 had not been complied with. The District Court considered the delay from the date of the order to the matter returning to court in the context of the total wireframe of delay noted by the Respondent as 4 years and 5 months.

Agreement between Appellant and Respondent

8. A term of the agreement was (a) the price to be paid and (b) when it was to be paid. It is clear that the price was K9, 000 and that of that amount a sum of K2, 600 had been outstanding for over four years, despite requests by the Respondent for it to be paid. The Respondent is clear in the depositions that he considered prompt payment of the whole of the price fundamental to the agreement. It follows that the Appellant's delay in paying a significant part to the price breached the agreement. The Respondent considered he could resell as the breach by the Appellant had terminated the agreement.
   
9. The agreement offends the requirement that an agreement to sell land must be in writing. There are sound reasons for this law because land is such an important matter that who owns land and how it is transferred requires certainty. As the agreement was at an end the District Court ordered the Respondent to return the money paid by the Appellant and the Respondent could resell the property to someone else.
10. In this case, the outcome resulting from there being no evidence in writing is no different from the outcome if the contract had been in writing. In each situation at the relevant time, there are the same consequences: If there is no contract, due to illegality at the outset, then the parties have to be restored to their respective positions at the outset of the "contract". Where there was a legal contract at the outset but it was subsequently terminated due to fundamental breach, the innocent party can rescind the contract.
11. Treitel in AN OUTLINE OF THE LAW OF CONTRACT (6^th ed. Oxford) at page 343 succinctly states the law: The effects of rescission...The injured party is released from future obligations under the contract...The party who has failed to perform is also released from future (but not from accrued) obligations to perform. Halsbury's Laws of England (4^th ed.) volume 9 paragraph 551 refers to pre-Independence cases and summarises the law regarding rescission as follows: "a serious breach has the effect of giving the innocent party the right to elect whether he will treat the contract as at an end or as still on foot."
    
12. And on the point of how this election is made, at paragraph 556 Halsbury's comments: "The question whether or not a party as elected to rescind is one of fact. An election to rescind must involve an unequivocal assertion by the innocent party that he regards himself as no longer bound by the contract as a result of the breach."

As to the agreement being void due to it not being in writing, Halsbury's comments at paragraph 442: "a contract which is incapable of performance at the time when it is made will be void as initio".

13. It follows that the Respondent in declaring at the District Court he would not take the balance of the price because of the years of delay by the Appellant, clearly demonstrates that the Respondent rescinded the agreement. The District Court did not err in ordering the Respondent to repay to the Appellant the sum of K6, 400 and for the Appellant to take back the K2, 600 he belatedly offered.
    

Entitlement to the land

14. The depositions note that the [Respondent] made an application to evict (application) the [Appellant] from the property the subject of the agreement and sets out the facts on which the Respondent based the application:
    

"Sale of contract was never completed in order to qualify for the title to be transferred. [Respondent] had all the required documents from the Lands Department and the National Housing Corporation but because payment was not completed he has the right to withdraw them."

15. Court ordered:
    

"1. The [Appellant] to release the property s. 104 Lot 2 to [Respondent]". 3. When [Appellant] receives all his refund, he must move out of the property and [Respondent] will take custody of the property and thereafter he may pass it to new buyer."

The property - lot 2 sect. 104 Matirogo NCD

16. The Respondent based his complaint for ejectment on his entitlement to a property Lot 2 Section 104 Matirogo NCD at Sabama, Port Moresby (property). No State Lease has been issued for the property, nor has there been a grant made pursuant to the Land Act process of tender for State land.
    
17. The situation of who might be entitled to claim an interest in the property is explained in a letter dated 17 December 2007 (2007 letter) sent by the Department of Lands & Physical Planning (Dept. Lands) (Land Administration Division) to the District Court. The letter explains the property was in a National Housing Corporation (NHC) subdivision set up in the 1980s for Public Servants to acquire unimproved land under a Self-help Housing Scheme. The scheme contemplated that persons who met its criteria and fulfilled the conditions of the scheme, would then go with a letter of confirmation from the NHC and made application to Dept. Lands for issue of a grant. The letter states the Respondent is considered the person who is entitled to make that application.
18. The 2007 letter corresponds to a letter dated 4 April 2006 (2006 letter) from the NHC "Southern Business Unit" to Dept. Lands endorsing that the Respondent is the person to whom a grant should be issued.
19. Indeed the Respondent had signed a NHC document headed, "tenancy agreement self-help housing scheme no covenant land" dated 15 August 2000. It provides for the improvement covenant and fees to be paid. The Respondent did comply with those conditions and did apply for grant of State lease to the Department of Lands. The Respondent's Department of Lands Application Form for a grant of the property is dated 16 October 2005.
20. A letter dated 21 December 2009 on the letterhead of the Legal Section of the NHC authored by the Acting Senior Lands Officer of NHC says the property "belongs to the [NHC] however [NHC] is yet to apply for grant of lease from the Lands Department." The officer's view does not accord with the self-help scheme.
21. A computer printout made 2011 shows the entry of Koive Ieme as the "client". An affidavit filed by the Respondent gives information on how he came into possession. Koive Ieme was the original beneficiary of the property under the self-help scheme. He then sold his right to the property to the Respondent.
22. After the agreement between the Appellant and the Respondent was terminated by the Appellant's breach, the Respondent resold the property to Tee Kee. The contract with Tee Kee is recorded on a NHC form dated 3 December 2007.
23. The Acting Managing Director of NHC wrote on 23 August 2011 to the Appellant's lawyer saying that the NHC is "landlord" and any transaction between Koive Ieme, the Appellant or the Respondent cannot deprive NHC of the title to the property. But then contradicts himself saying if NHC had known of the transfer(s), would have "obviously dealt with the current sitting tenant" i.e the Appellant. The A/Managing Director does not comment on the contents of the 2007 letter, or on the 2006 letter, or on the 2000 agreement signed by the NHC and the Respondent. It follows that the comments made in the 2011 letter are not evidence as to the status of who is entitled to the property.
24. On the application for ejectment the position of the Respondent was clear to the District Court. The Appellant's occupancy of the property depended on the Respondent allowing him into possession and allowing the Appellant to remain in possession, subject to the condition of paying the full price of K9,000. The Appellant breached that condition and thus the Respondent had the right to bring the action for ejectment. There was no dispute as to title, the chain of transactions noted above as between NHC, Koive and the Respondent show the Respondent was entitled to occupy the property and (in time ultimately) the issue of a grant of land. The District Court considered the basis of the application for ejectment saying, "[Respondent] had all the required documents from the Lands Department and the National Housing Corporation". The Appellant on the other hand could not show any claim as his occupancy depended entirely on the Respondent's right to the land.
    
25. The District Court expressed in laymen terms the situation and reached the correct decision in law. The Appellant had nothing on which he could base a right to occupy the land except the agreement with the Respondent. On the other hand the Respondent had the documentation endorsed, as noted by the Court, by the NHC and the Department of Lands. There can be no dispute of right to occupy the property so as to deprive the District Court of jurisdiction and the District Court was correct in its reasoning on which the orders it made.
26. The Appellant cited in a list of authorities, State v Rush: Ex parte Rush [1984] PNGLR 124 and State v Principal Magistrate, District Court Port Moresby: Ex parte Public Prosecutor [1983] PNGLR 43.

Neither case is on point regarding jurisdiction relevant to the facts in this appeal. The Rush case arose from committal proceedings where there was delay in the prosecution serving the "hand up brief" but regardless the Magistrate proceeded to commit Mr Rush for trial. The committal was quashed by the National Court which cited pre-Independence authority that: "Wherever anybody of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority they are subject to [review by the appropriate superior court]."

In the 1983 decision the issue was the Public Prosecutor's right to elect for certain offences to be dealt with summarily or by committal. This is set out in the District Court Act. The case held that once that election was made to proceed summarily the information could be withdrawn.

27. The District Court did not exceed the jurisdiction conferred on it by the District Court Act for the reasons stated above (paragraphs 21, 22).

NATIONAL COURT FINDINGS

28. The National Court states that the District Court papers showed it was: "essentially a claim for relief arising out of a breach of or failure to complete or the unenforceability of a contract for sale of the property. ... If the [Appellant] took the view that the [Respondent] had no title then clearly there could be no valid contract of sale...The fourth ground is that the court erred in enforcing a verbal agreement for the transfer of land contrary to the Frauds and Limitations Act but the [District Court] did not do that at all. On the contrary, the [District Court] acted in compliance with the Act by treating the contract as void and unenforceable. . The [District Court] did not enforce the alleged verbal agreement... It ordered the property to be returned to the [Respondent] and the monies to be returned to the [Appellant]."

GROUNDS OF APPEAL

Submission by the Appellant

29. The Appellant in his submission filed 23 June 2016 (document 19) sought to argue that the Court did not have jurisdiction as the title to the property was bona fide in dispute and he relied on section 21(4) of the District Courts Act. This was not a ground of appeal. Counsel for the Appellant informed that he did not draft the Notice of Appeal. We referred counsel to the provisions for amending a Notice of Appeal. We had sympathy for the situation of counsel taking over another lawyer's case, but the counsel was the author of those submissions and so had about 10 months from 23 June 2016 to the hearing of the appeal to apply to amend the grounds. He cannot at this late time do so. None the less, as Ground 3(iii) raises section 155(4) of the Constitution the matter of the Court's jurisdiction is considered under that heading.

First Ground

30. This ground says that the effect of the National Court dismissing the appeal from the District Court is to make the (void) agreement enforceable. This ground is not made out. After saying that the agreement is of no legal effect, the District Court goes on to describe the consequence of the agreement being void, i.e. what each party has given/received has to be restored to the respective party.

First Ground

31. This ground says that the effect of the National Court dismissing the appeal from the District Court is to make the (void) agreement enforceable. This ground is not made out. After saying that the agreement is of no legal effect, the District Court goes on to describe the consequence of the agreement being void, i.e. what each party has given/received has to be restored to the respective party.

Second Ground

32. The decision, which confirmed the order of the Court, is plainly based on what is set out in the foregoing paragraphs that with there being no contract in law, the parties have to return to their respective positions before they paid money and took possession. The Appellant wrongly labels the resale by the Respondent as illegal.
33. That contract with Tee Kee is in writing on NHC documentation dated 3 December 2007. To repeat the above finding, the agreement between the Appellant and the Respondent was no longer in existence due to termination by breach and also as it was void from outset. The contract between the Respondent and Tee Kee is not so tainted. There is a chain of transfers going back to the "self-help" scheme. It is for the Dept. Lands to action now the arrangement which has been brokered between the NHC and the Department of Lands going back to the 1980s. The resale to Tee Kee is not tainted by any illegality.

Third Ground

34. The Appellant says that the National Court erred in "only dismissing the Appeal and not making further orders including the dismissal of the District Court proceedings". It stands to reason that if the National Court dismissed the appeal against the District Court orders that those orders remain in force.
    
35. The Appellant rephrased the First Ground. Following the above findings on the 1s^t and 2^nd grounds of appeal, we find that the 3^rd is similarly misconceived. In considering the power given under the Constitution to do justice, it is clear that the Court did not err in finding it was able to hear the complaint. From the matters (paragraph 21, 22) above, it is clear that section 21(4) of the District Courts Act had no application to the complaint. It is justice for the Respondent.
36. The ground is misconceived because the law is clear that where a person we label for convenience as the lessor ("lessor") has no title to grant a lease, nevertheless purports to give a right to occupy property to someone we label for convenience as the tenant ("tenant"), the law considers that the lessor's lack of title should be of no concern to the tenant. In particular, the tenant is not permitted to deny the lessor's title to grant the lease nor is the lessor permitted to deny the tenant's occupation, subject of course to the conditions of that occupancy. This law is well established as part of our received law. The English courts' decisions go back to the 1800s and are cited in Land Law by Butt ₍₅th _ed. Law Book Co.) at page 293, including Cuthbertson v Irving(1859) [1859] EngR 767; 157 E.R. 1034, Webb v Austin [1844] EngR 724; (1844) 135 E.R. 282. The law is settled. What the Appellant seeks to do, and where the Acting Managing Director of the NHC fell into error, is deny the existence of that established law.
37. The Appellant incorrectly argues that there is a denial of title so as to invoke section 21(4) of the District Courts Act and that as a matter of justice we should allow the appeal. Plainly there cannot be a denial of title when the law is clear that the Appellant (as "tenant") cannot deny the title of the Respondent (as "lessor"). Justice is seen by the Appellant in one way, i.e. as his being entitled to the property, whereas justice would be seen differently by the Respondent. A representation of "justice" is a statue which is blindfolded and holding up scales. This signifies that the courts without prejudice to either side in a dispute, considers the law and the facts and reaches a conclusion which is just. There is no reason for the Appellant to attempt to argue that neither the National Court nor the District Court did justice. The District Court made balanced findings of fact based on the evidence. The District Court did not cite the law set out in the last paragraph (the law is clear) but correctly applied the law. The District Court and the National Court made correct decisions in fact and law.

Fourth Ground

38. This ground rephrases the 3^rd ground and is dismissed for the reasons set out in regard to the 3^rd ground.

Fifth Ground

39. The Respondent was entitled to reject the late payment of K2, 600 as the Appellant had breached the agreement in a fundamental term and it was at an end. It is not a matter of reviving the agreement. The Respondent was not obliged in law to accept this money. There is no error and this ground is dismissed.

Sixth Ground

40. As a matter of law by 21 December 2007 there was no agreement in existence as the Appellant had failed to pay the price and so had breached a fundamental term of the agreement. The Respondent rescinded the agreement. It is not a matter of renegotiating the agreement as the Appellant is entitled to say that the agreement was at an end.

Undertaking as to damages

41. It follows that as the Appeal has been dismissed, the Appellant must pay damages to the Respondent for any loss caused by the injunction.

ORDERS

42. The formal Orders of the Court are:
    
    1. The Appeal is dismissed.
    2. The decision of the National Court in regard to the orders made by District Court Port Moresby is confirmed.
    3. The interim injunction granted in this appeal is dissolved.
    4. The Appellant to pay to the Respondent damages (to be agreed or assessed) pursuant to the Appellant's undertaking given as pre-requisite to the grant of the ex parte interim injunction.
    5. Each party to bear their own costs in the Appeal.
       

_____________________________________________________________

Kari Bune Lawyers: Lawyers for the Appellant

Respondent: No lawyer