Lyn v Yaku [2017] PGSC 6; SC1574 (10 March 2017)

SC1574

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 162 OF 2010

BETWEEN:

PETERSON LYN
Appellant

AND

LESLEY YAKU

Respondent

Waigani: Kirriwom J, Kassman & Ipang JJ
2015: 29^thJune
2017: 10^thMarch

PURCHASE AND SALE OF LAND - no written contract - party claiming oral agreement to purchase land - claims specific performance and alternative claim for reimbursement - Frauds and Limitations Act 1988 Sections 2 and 4

The Plaintiff claimed he entered into an oral agreement with the Defendant, where he agreed to purchase and the Defendant agreed to sell a property for the sum of K20,000. The Plaintiff claimed that he paid to the Defendant K7,250 in cash and the balance of the purchase price would be settled by part payments over a period of time. Further, the Plaintiff claims it was agreed he would spend his own money to complete the house and the Defendant would transfer title to the Plaintiff. The Plaintiff's attempt to make a further part payment of K2, 000 in the year 2000 was refused by the Defendant and the Defendant failed to transfer title to the Plaintiff. The Plaintiff claimed specific performance of the sale and purchase agreement and alternatively recovery of monies paid and damages. The Plaintiff's claims were dismissed as disclosing no reasonable cause of action.

Held:

1. There was no written document confirming the oral agreement referred to and relied on by the plaintiff to purchase the property from the defendant. In those circumstances, the plaintiff did not acquire any legal interest in the land Frauds and Limitations Act 1988 Sections 2
   
2. There was no written document confirming the oral agreement referred to and relied on by the plaintiff to purchase the property from the defendant. The plaintiff had no cause of action to pursue relief as to the sale and acquisition of any legal interest in the land Frauds and Limitations Act 1988 Sections 4
   

100. The decision of the learned primary judge dismissing the claim for specific performance of the oral agreement is confirmed.
     

4. The decision of the learned primary judge dismissing the plaintiff's alternative claim for monies paid and damages was not heard and determined by the learned primary judge and was dismissed in error. In that regard, the appeal is upheld and the proceedings and claim for relief in that respect is reinstated.
   

Cases cited:
Jacobs v Kwaindu [1991] PNGLR 366
Leontine Ofoi v Kris Bongere [2007] N3248

Legislation cited:
Statute of Frauds and Limitations Act 1988 Sections 2, 4 and 16(1)(a)
National Court Rules Order 12 Rule 40(1)(a)

Counsel:

Tony Yamarhai, for the Appellant
Ramsy Pariwa, for the Respondent

DECISION

10^th March, 2017

1. BY THE COURT: This is an appeal from a judgment of the National Court sitting in Wabag in proceedings WS No. 446 of 2004 Paterson Lyn v Lesley Yaku delivered on 12 October 2010 where the court dismissed the proceedings for disclosing no reasonable cause of action.
   

Background

2. The Appellant Peterson Lyn ("Lyn") and the Respondent Lesley Yaku ("Yaku") are both from Wabag in the Enga Province. They are not related. Their wives are sisters. Yaku is the owner of a residential property at Section 22 Lot 55 Wabag ("the property"). These facts are not disputed.
   
3. In a Statement of Claim indorsed with a Writ of Summons filed in the National Court at Wabag on 30 April 2004, Lyn claimed he entered into oral agreement with Yaku in January 1997, where he agreed to purchase and Yaku agreed to sell the property for the sum of K20,000 ("the agreement"). Lyn claimed that in accordance with the agreement, he paid to Yaku K7,250 in cash on 18 February 1997 and it was further agreed that the balance of the purchase price would be settled by part payments over a period of time. Further, Lyn claims it was agreed that Lyn would spend his own money to complete the house and Yaku would organise for the transfer of title to Lyn. No further particulars of the agreement were disclosed. Lyn claims his attempt to make a further part payment of K2,000 in the year 2000 was refused by Yaku.
   
4. Lyn claims further that in the period in the years from 1997 to 1999, he spent about K70,000 on materials and labor and completed construction of the house and he and his family continued to occupy the house until he put the house on rent on 9 July 2001. Lyn also claims that in breach of the agreement, Yaku failed to transfer title to the property to Lyn and Yaku commenced proceedings in the District Court and obtained an order to evict Lyn from the property.
   
5. Lyn sought orders for specific performance of the agreement to compel Yaku to transfer title in the property to Lyn. In the alternative, Lyn sought damages for reimbursement of the cash deposit of K7,250 and the costs for completion of construction of the house of K70,000 along with other damages for breach of contract.
   
6. In an Amended Defence filed by Yaku on 1 December 2009, Yaku denied having agreed to sell the property to Lyn and denies liability for the claims by Lyn. Yaku also claimed that if Lyn did expend any money on the construction of the house on the property, then those monies were recovered by Lyn through the rental payments Lyn had received. Yaku also stated in his defence that he relied on certain provisions of the Statute of Frauds and Limitations Act 1988. Lyn mentions reliance on Sections 2 and 4 without saying any more and in another paragraph he cites Section 16(1)(a) and says Lyn's cause of action is Statute Barred.
   
7. By a Notice of Motion filed on 21 April 2010, Yaku then sought orders for the dismissal of the proceedings for disclosing no reasonable cause of action and that application was made pursuant to Order 12 Rule 40(1)(a) of the National Court Rules. In an affidavit sworn by Yaku in support of his application, Yaku claimed he had obtained an order from the District Court at Wabag on 29 October 2004 giving Lyn 14 days to vacate the property but Lyn remained in occupation and rented out the property at K900 per month and Yaku claimed rent at that rate from 29 October 2004 to the date of his application.
   
8. Yaku's application was heard by Ellis J on 12 October 2010. Lyn appeared in person and Yaku was represented by a lawyer. The hearing of that application was brief, lasting 22 minutes. Essentially, the primary judge read the pleadings and the affidavits and then asked Lyn if the agreement he refers to and relies on was made orally or in writing to which Lyn said "Just a verbal agreement" and when pressed by the primary judge through the interpreter "Tell him, I do not want the story, I just want to know whether it was in writing or not" to which Lyn responded "Just verbal, nothing in writing". The primary judge then said to the interpreter "Tell him that the law requires that if he is going to buy a property, it should be in writing."
   
9. The primary judge then proceeded to rule on the application by Yaku after satisfying himself that Lyn had nothing further to address the court on. The primary judge then dismissed the proceedings. The pertinent part of the ruling is set out here. "By a notice of motion filed 21 April 2010, the defendant seeks to have the proceedings dismissed on the grounds that they disclose no reasonable cause of action in that the contract or agreement upon which the plaintiff relies was oral and was not in writing as required by the Statute of Frauds and Limitations Act 1988. The plaintiff has conceded that the contract was not in writing and in those circumstances the answer in this case is clear. I make orders 1 and 2 as requested in the notice of motion so the - firstly, the proceedings are dismissed for disclosing no reasonable cause of action pursuant to order 12 Rule 41(a). The plaintiff is to pay the defendant's costs of the motion and of the proceedings and the proceedings are thereby finalized."
   
10. After dismissing the proceedings, the primary judged asked Lyn how much time he needed before vacating the property and Lyn asked for 3 months so the primary judge gave Lyn until 31 December 2010 to vacate the property.
    

Frauds and Limitations Act 1988

11. The Frauds and Limitations Act 1988 ("the Frauds Act") is an Act that makes provision with respect to transactions that must be, or be evidenced, in writing and the limitation period for the bringing of actions and for related purposes. Before addressing the grounds of appeal, we will discuss this law as it is on point in certain respects for the reasons stated below.
    
12. Part II of the Frauds Act is titled "Transactions that must be, or be evidenced, in writing." Division 1. Refers to Land Transactions. Section 2. Creation, etc., of interest in land provides "(a) no interest in land can be created or disposed of except (i) by writing signed (a) by the person creating or disposing of the interest; or (b) by that person's agent lawfully authorized in writing for the purpose; or (ii) by operation of law; or (iii) by will. Section 4 Contracts for the sale of land, etc. provides "No action shall be brought upon a contract for the sale or other disposition of land or an interest in land unless the contract, or some note or memorandum of the contract, upon which the action is brought is in writing signed (a) by the person against whom the action is brought; or (b) by an agent of that person lawfully authorized in writing for the purpose.

13. Lyn conceded the agreement he was relying on was an oral or verbal agreement. Lyn conceded the agreement was not stated or reduced to or confirmed in writing and executed or signed by both or either of them. The law is quite clear as stated above. By section 2, any agreement to transfer title from Yaku to Lyn had to be stated in writing and signed by both Yaku and Lyn. All Lyn claims is that he had an oral or verbal discussion with Yaku during which Yaku agreed to sell and he agreed to purchase the property. Lyn did not claim the agreement was reduced into writing and signed by Lyn and Yaku. That being the case, there was no legal agreement for the transfer of title in the property from Yaku to Lyn. In practical terms, Lyn could not seek to register his "interest" on title in the property at the Registry of Titles based purely on his alleged verbal or oral agreement. Likewise, neither could Yaku seek registration of a transfer or other "interest" on title in the property at the Registry of Titles based purely on a verbal or oral agreement.
    
14. The provisions of Section 2 are reinforced by Section 4 which goes further to state that no action shall be brought upon a contract for the sale or other disposition of land or an interest in land unless the contract, or some note or memorandum of the contract, upon which the action is brought is in writing and signed by the person against who the action is brought. In other words, Section 4 prohibits Lyn from commencing proceedings, as he did, to enforce the agreement to purchase the property from Yaku unless such agreement was reduced into writing and signed by Yaku. Lyn did not claim the agreement was reduced into writing and signed by Yaku. That being the case, Lyn was prohibited by Section 4 from commencing proceedings against Yaku as he did in the proceedings WS 466 of 2004. In Leontine Ofoi v Kris Bongere N3248, Injia DCJ (as he then was) discussed sections 2 and 4 and said "an action to enforce an oral agreement to transfer legal title to ... property ... would not be possible as an agreement to transfer interest in land is required by statute to be in writing. ... As there was no such written agreement, no action lies upon an oral agreement to transfer land." In Jacobs v Kwaindu [1991] PNGLR 366, Justice Los found a "letter from the purchaser to the bank was a sufficient note or memorandum for the purpose of s.4 ..." In this case, there was no written document whether agreement, letter or memorandum signed by the Yaku to come within section 4.
    
15. For the reasons discussed above, the primary judge did not err in finding that there was no reasonable cause of action disclosed in Lyn's claim for orders for specific performance of the agreement to compel Yaku to transfer title in the property to Lyn.
    
16. But that was not the end of the matter. As stated above, Lyn also sought, in the alternative, damages for reimbursement of the cash deposit of K7,250 and the costs for completion of construction of the house of K70,000 along with other damages for breach of contract. From our perusal of the transcript of the primary judge's ruling on 12 October 2010, there was no discussion at all on this alternative claim by Lyn. We have discussed the learned primary judge's ruling and the arguments presented in court on the hearing of the application in paragraphs 8 and 9 above and it is clear the primary judge failed to address his mind to this alternative claim by Lyn.

17. In his Amended Defence, Yaku also referred to Section 16(1)(a) of the Frauds Act. That is found in PART III of the Act which is titled "Limitation periods for actions in contract, tort, etc". Section 16. Limitation of actions in contract, tort, etc provides an action that is founded on simple contract shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued. We will return to this.
    

Grounds of Appeal

18. In Lyn's Notice of Appeal filed 19 November 2010, he raised seven grounds of appeal which are restated here:
    

“3.1 His Honour erred in fact and in law in concluding that there was no verbal agreement between the Appellant and the Respondent when same was specifically pleaded in the Statement of Claim.

3.2 His Honour erred in fact and in law in finding that there was no reasonable cause of action when breach of contract was particularized and pleaded in the Statement of Claim including outstanding monies to be reimbursed.

3.3 His Honour erred in fact and in law in dismissing the National Court Proceedings by way of interlocutory judgment and did not take into account the whole of the cause of action pleaded in the Statement of Claim.

3.4 His Honour erred in fact and in law in dismissing the National Court Proceedings by way of interlocutory judgment when there was evidence that the Appellant had expended a considerable amount of money towards the development of the property in dispute pleaded in the Statement of Claim.

3.5 His Honour erred in fact and in law in dismissing the National Court Proceedings by way of interlocutory judgment when the Title of the property was in dispute and was alleged and pleaded in the Statement of Claim.

3.6 His Honour erred in fact and in law in dismissing the National Court proceedings by way of interlocutory judgment and should have allowed the matter to proceed to the substantive stage as fraud and breach of contract was alleged and pleaded in the Statement of Claim.

3.7 His Honour erred in fact and in law when he allowed the motion to be moved by the Respondent when the Appellant was not legally represented and he was defending the Respondent's motion, it was necessary for the learned trial judge to exercise care and caution before proceeding to judgment against him in that the Respondent was claiming a lack of strict compliance of the rules. It is therefore fair and reasonable that the Respondent also comes with full compliance of the requirements of the law or the rules of the Court”.

Ground 3.1.

19. This ground is misconceived. Lyn argues the primary judge concluded that there was no verbal agreement between Lyn and Yaku. That is not correct. The primary judge found that the agreement relied on by Lyn was verbal or oral and not in written form. This finding was made following the admission by Lyn when specifically asked by the judge. As we have already said, Section 4 the Frauds Act prohibited Lyn from commencing proceedings, as he did, to enforce the verbal or oral agreement to purchase the property from Yaku unless such agreement was reduced into writing and signed by Yaku. Lyn did not claim the agreement was reduced into writing and signed by Yaku. That being the case, Lyn was prohibited by Section 4 from commencing proceedings against Yaku as he did in the proceedings WS 466 of 2004. On that basis, the primary judge was satisfied no cause of action was disclosed. We have found no error in the primary judge's finding in this regard. This ground of appeal is dismissed.
    

Grounds 3.2, 3.3 and 3.4.

20. These three grounds raise the same argument that the primary judge erred in failing to find that Lyn had raised an alternative cause of action to that which we have addressed in the preceding paragraph. We have already found that the primary judge did not err in finding that there was no reasonable cause of action disclosed in Lyn's claim for orders for specific performance of the agreement to compel Yaku to transfer title in the property to Lyn. As stated above, Lyn also sought, in the alternative, damages for reimbursement of the cash deposit of K7,250 and the costs for completion of construction of the house of K70,000 along with other damages for breach of contract. From our perusal of the transcript of the primary judge's ruling on 12 October 2010, there was no discussion at all on this alternative claim by Lyn. Clearly, the primary judge erred in dismissing the proceedings without addressing this alternative claim by Lyn which was raised in his statement of claim.
    
21. We have taken the liberty to examine this alternative claims by Lyn and the pleadings in response by Yaku. Firstly, Lyn claims reimbursement of the cash deposit of K7,250 which he says he paid in cash to Yaku on 18 February 1997 in the presence of witnesses. Secondly, Lyn claims recovery of the costs for completion of construction of the house of K70,000 which he claims to have incurred between 1997 and 1999.
    
22. In response, Yaku denied receiving the cash deposit of K7,250. As to Lyn's claim for the costs for completion of construction of the house, Yaku denies such costs were incurred and he goes further to say that if such costs were incurred, Lyn has recovered all such costs from the rental monies. Yaku also cited Section 16(1)(a) of the Frauds Act and says Lyn's cause of action in this regard is statute-barred as Lyn failed to commence proceedings for these claims within 6 years from the date when those causes of action accrued.
    
23. It is arguable, Lyn's claim for recovery of the cash deposit of K7,250 accrued when Yaku refused to take the further part payment of K2,000 from Lyn in the year 2000. That action alone demonstrated Yaku did not see himself bound to accept any payments from Lyn in accordance with the agreement as claimed by Lyn. As such, Lyn had until the year 2006 to commence proceedings against Yaku for recovery of the cash deposit of K7,250. The proceeding WS 446 of 2004 was filed in the National Court at Wabag on 30 April 2004. It is arguable this cause of action is not time-barred.
    
24. It is also arguable, Lyn's claims for recovery of the costs for completion of construction of the house of K70,000 are not time-barred. Lyn claimed to have incurred those expenses in the years between 1997 and 1999. Lyn claims he incurred those expenses on the understanding that he had an agreement with Yaku to complete construction of the house and Yaku would transfer title to the property to him. It is also arguable Lyn's cause of action in this regard also accrued when Yaku refused to take the further part payment of K2,000 from Lyn in the year 2000. That action alone demonstrated Yaku did not see himself bound by the agreement as claimed by Lyn. As such, Lyn had until the year 2006 to commence proceedings against Yaku for recovery of the costs for construction of the house of K70,000. The proceeding WS 446 of 2004 was filed in the National Court at Wabag on 30 April 2004, a date within the six year time period to the year 2006.

25. As these claims were not time-barred, the dismissal of the entire proceedings pursuant to an interlocutory application based on a part of the whole proceeding, without giving the appellant the benefit of presenting his case or story on those other matters he raised amounted to an error of law. In Leontine Ofoi v Kris Bongere [2007] N3248 the court held that the plaintiff was entitled to receive just returns for what he had spent based on a perceived legal relationship that did not materialize because the other party reneged on it and went back on their mutual promise and refused to complete the agreement. Whilst the facts of the case are not similar to the present case which is caught by the restrictions in section 2 and 4 of the Frauds and Limitation Act, the doctrine of equity estoppels would not allow the Plaintiff who had spent so much money to construct a building on the land based on the oral agreement however wrong he could have by law, the Respondent was aware of the construction allowed him to go on with what he was doing. It is immaterial whether he had recouped all the money he spent contracting the house from the rentals he received or may have received, that is a contention to be addressed at the proper trial that the appellant was deprived of by the dismissal of the action on the strict interpretation of sections 2 and 4 of the Frauds and Limitation Act.
    
26. Thirdly, Lyn claims other damages for breach of contract. No particulars of this claim are provided and it is best we refrain from commenting any further on this claim. For the reasons discussed, we uphold grounds 3.2, 3.3 and 3.4 of the appeal.
    
27. Ground 3.5.

In this ground, Lyn argues the primary judge erred in dismissing the proceedings when title to the property was in dispute and pleaded in the statement of claim. No such pleading is made by Lyn in the statement of claim. We have already discussed the claims that are raised by Lyn in his statement of claim and he does not challenge the validity of Yaku's title to the property. Lyn's principal claim was an order for specific performance of an agreement to compel Yaku to transfer title to him. In the alternative, Lyn claimed recovery of certain sums of money and damages for breach of contract. There is no claim by Lyn that title to the property is in dispute. Ground 3.5 is misconceived and is therefore dismissed.

28. Ground 3.6.

In this ground, Lyn appears to argue the primary judge erred in failing to allow the matter to proceed to trial on the basis fraud and breach of contract were pleaded by Lyn in his statement of claim. We do not see any logic in this argument. There is no law or practice that provides that a proceeding shall go to trial and cannot be summarily determined without trial where a party pleads fraud and breach of contract. This ground of appeal is dismissed.

29. Ground 3.7.

In this ground, Lyn argues the primary judge erred when he allowed Yaku's lawyer to move the application when Lyn was representing himself. Lyn argues the primary judge should have exercised care and caution before proceeding to judgment against Lyn. There is no law or rule of practice that restricts a party who is legally represented from taking any step in a proceeding where the other or opposing party is not legally represented. Neither is there any law or rule of practice that requires a judge to restrict a party who is legally represented from taking any step in a proceeding where the other or opposing party is not legally represented. This argument has no foundation and is rejected. The argument that the primary judge failed to exercise care and caution before proceeding to judgment also lacks foundation as it is a bare assertion without any detail or particulars as to how the primary judge failed to exercise care and caution in the hearing and determination of the application. From our perusal of the transcript, there is nothing to suggest Lyn was not duly served with the documents or that he did not have the opportunity to consider the documents or take legal advice prior to the hearing. An interpreter assisted with translation primarily for the benefit of Lyn. The primary judge considered the pleadings and evidence and ensured that all parties were duly heard. This ground of appeal is dismissed.

30. In summary, Lyn has succeeded in one of the two major grounds of the appeal. On that basis, and in the exercise of our discretion, we order that both parties shall bear their own costs of the appeal.
    
31. The formal orders of the court are:
    1. Grounds 3.2, 3.3 and 3.4 of the appeal are upheld.
    2. Grounds 3.1, 3.5, 3.6 and 3.7 of the appeal are dismissed.
    100. The Appellant and the Respondent shall bear their own costs of this appeal.
    4. The National Court proceeding WS No. 446 of 2004 Paterson Lyn v Lesley Yaku is reinstated forthwith.
    5. The Order of the National Court in WS No. 446 of 2004 Paterson Lyn v Lesley Yaku of 12 October 2010 is quashed and replaced with orders that:
       
    • (i) the claim for orders for specific performance of the agreement to compel Yaku to transfer title in the property to Lyn is dismissed; and
      

(ii) all remaining claims are reinstated for hearing and determination by the National Court.

Judgment accordingly:

_________________________________________________________________
Warner Shand Lawyers : Lawyers for the Appellant
Office of the Public Solicitor : Lawyers for the Respondent