McMahon and Aitsi v Port Moresby Real Estate Pty Ltd [1986] PNGLR 208 (9 October 1986)

Papua New Guinea Law Reports - 1986

[1986] PNGLR 208 - Milton McMahon and Louisa Aitsi v Port Moresby Real Estate Pty Ltd 

[1986] PNGLR 208

N561

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MILTON MCMAHON AND LOUIS AITSI

V

PORT MORESBY REAL ESTATE PTY LTD

Waigani

Wilson J

6 October 1986

9 October 1986

STAMP DUTIES - Unstamped documents - Admitted in evidence - No appeal from ruling on.

PRINCIPAL AND AGENT - Real estate agents - Commission - Whether agent effective cause of sale - Particular circumstances - Vendor taking over after agent introduced property to purchaser - Entitled to commission.

VENDOR AND PURCHASER - Agents commission on sale - Whether agent effective cause of sale - Particular circumstances - Vendor taking over after agent introduced property to purchaser - Entitled to commission.

Held

(1)      As the intent of the provisions of the Stamp Duties Act (Ch No 117) relating to the production of unstamped documents in evidence is to protect the revenue, a ruling that an unstamped document should not have been received in evidence is not a competent ground of appeal.

Held Further

(2)      For a real estate agent to be entitled to commission on sale he must be the effective cause of the sale. Whether in any particular case the agent has been the effective cause of the sale is a question of fact.

Edebohls v Foy [1917] ArgusLawRp 78; [1917] VLR 573, considered.

(3)      In circumstances where the vendor appointed the agent in writing to effect a sale of property, the agent introduced the property to the purchaser, then the vendor took over without informing the agent, the appointment had not been terminated and the vendor was on notice when he took the purchaser to the property that she had already been shown it by the agent, the agent was entitled to the commission agreed under the appointment of agent.

Cases Cited

Edebohls v Foy [1917] ArgusLawRp 78; [1917] VLR 573; (1917) 39 ALT 44; 23 ALR 366.

Appeal

This was an appeal from a decision of a District Court Magistrate allowing the respondent/plaintiff his commission on sale in respect of the sale of a house.

Counsel

J S Kudada, for the appellant.

N Kila, for the respondent.

Cur adv vult

9 October 1986

WILSON J: This is an appeal against a decision of a District Court Magistrate at Port Moresby regarding a claim for agents commission in respect of the sale of a house at Gerehu.

FACTS

On 7 March 1984 Mr Milton McMahon, by a document dated that day appointed Port Moresby Real Estate Pty Ltd (the agent) as the agent to effect a sale of property known as Allotment 57 Section 274. I set out the document:

“Appointment of Agent

I, M A McMahon being registered or entitled to be registered as proprietor of land known as Allotment 57 section 274 being the whole of the land and buildings comprised in State Lease Volume Folio together with the improvements erected thereon (“the property”) hereby appoint port moresby real estate pty ltd (“PMRE”) my/our agent for the purpose of effecting a sale/providing management in respect of the property.

it is agreed and acknowledged that PMRE shall remain as my/our agent until such agency is revoked in writing by me/us.

I/We agree that PMRE are entitled to a commission in accordance with the scale set out in the First Schedule hereto (“the commission”) upon completion of the sale and purchase of the property for the sum specified in the Second Schedule hereto or such other sum as I/We may direct PMRE to accept.

I/We authorise and direct PMRE to deduct a management fee at the rate specified in the Second Schedule hereto (“the management fee”) upon securing a tenant in respect of the property.

I/We hereby irrevocably authorise and direct PMRE to deduct the commission upon completion of the sale and purchase of the property.”

Asking price K52,000

C/- PO Box 5607

BOROKO

“First Schedule

The Commission	<<
First	100,000	5.0%
Next	100,000	3.5%
Next	300,000	3.0%
Next	500,000	2.0%
Second Schedule
The Management Fee
Seven Point Five Per Centum		7.5%
Letting Fee Monthly tenancy		1 weeks rent
1-6 months		1 weeks rent
1-12 months		2 weeks rent
1-18 months		3 weeks rent
1-24 months		4 weeks rent

Where it is a high rise commercial or residential building 5 per cent of 1st years rent.

DATED the 7 day of March 1984.

(SIGNED by)

(... signed ...)

in the presence of

(... signed ...)

Witness”

Following this appointment the agent caused certain advertisements to be placed in the Post Courier but there was little or no response. This situation existed up until the end of the year when on 6 December Theresa Aitsi (purchaser) went to the agent enquiring about houses for purchase. She was shown the property by the agent but, although interested, did not agree with the then asking price of K52,000.

She put a counter offer of K35,000 which was relayed by the agent to McMahon who, in consultation with his wife Louis Aitsi, rejected it but indicated that K42,000 would be acceptable. The potential purchaser was unknown to them at this stage.

On 8 December the purchaser met McMahon and Aitsi in Steamships. The purchaser and Aitsi were related and had not seen each other for sometime. They went to McMahon and Aitsi’s house for tea. During their conversation the purchaser told them of her interest in buying a house and they said they were selling one. McMahon took the purchaser to the house and she identified it immediately as the one she had been shown two days before by the agent.

Some discussion then occurred between McMahon and Aitsi and the purchaser, the result of which was an agreement to sell at K40,000.

On 12 December 1984 the purchaser and her husband wrote to the agent confirming their interest in the property at K40,000 and advising the name of their lawyer. The letter is set out as follows:

“House No. 3

O Tau Village

Sai Kung-New Terent

Kowloon, Hong Kong

12th December, 1984

Port Moresby Real Estate

PO Box 473

PORT MORESBY

PAPUA NEW GUINEA

Dear Sir

RE: ALLOTMENT 57 SECTION 274 — GEREHU

As I’m interested in buying the abovementioned property — I wish to offer K40,000.

If the vendor agrees I would like to pay deposit before I go back to Hong Kong.

The rest can be finalised by the ANZ Bank Boroko (Manager — Mr Nichols).

As Mr Gary Pammer is the lawyer for me, (us) you would contact him for details.

Thanking you for your co-operation.

Yours faithfully

Theresa Margaret Aitsi &

Richard E Halstead”

This letter was received by the agent on 17 December and the agent wrote to McMahon on 19 December as follows:

“19th December, 1984

Ref: M252/Bs/mh/1567

Milton A McMahon Esq,

PO Box 5607

BOROKO

Dear Sir

Re: Allotment 57 Section 274 — Gerehu

This is to confirm that Brian Singut of this office took our client Theresa Aitsi to inspect the above property on Thursday 6th December 1984, and that Miss Aitsi has made offers of K35,000 and K40,000 for this property. These offers were passed on to you by Brian Singut.

However we believe that you have since made direct contact with our client and have agreed to sell the property to her for K40,000.

We also understand that contracts have been prepared by Beresford Love Francis & Company for our client to take to Hong Kong where they will be executed.

This is to inform you that this company introduced Theresa Aitsi to this property and we have received a written offer from her. We shall therefore be claiming the full commission on this sale to which we are entitled.

For your information commission fees on a sale of K40,000 amount to K2,000.00. These are the scale fees as contained in the Agency Agreement that you signed with this company on 7th March 1984.

Yours faithfully

PORT MORESBY REAL ESTATE PTY LTD,

HENI OALA,

Director”

In evidence in the District Court McMahon seemed reluctant to admit that he received this letter. If there by any lingering doubt on this I am of the view, on the balance of probabilities, that he did receive it.

The sale was completed on 19 March 1985.

GROUNDS OF APPEAL

The issues argued before me can be summarised as follows:

1.       It was submitted that since the appointment of the agent had not been stamped the document should not have been received into evidence and therefore there was no agency agreement in force. Section 19(1) of the Stamp Duties Act (Ch No 117) was relied on.

2.       As Louis Aitsi was the registered owner of the property, the appointment of the agent by Milton McMahon was not binding.

3.       As McMahon and Aitsi negotiated the sale price direct with the purchaser, the agent was not entitled to commission.

FINDING ON GROUNDS OF APPEAL

I will refer to the grounds on the numbering set out above.

Ground 1: In discussing this ground I note that it was conceded by Mr Kila on behalf of the respondent that duty would be payable on the appointment. The relevant provision of the Stamp Duty Act is s 19 which I set out in full:

“19.    Unstamped instruments produced in evidence

(1)      Subject to this Act, an instrument shall not:

(a)      be pleaded or given in evidence, except in criminal proceedings; or

(b)      be admitted to be good, useful or available in law,

unless it is duly stamped in accordance with the law in force at the time when—

(c)      it was first executed; or

(d)      it came into the country,

whichever is the later.

(2)      Where an instrument that is not duly stamped is produced in evidence in any proceedings other than criminal proceedings, the officer of the court whose duty is to read the instrument shall inform the court that the instrument is not duly stamped.

(3)      Where an instrument referred to in Subsection (2) is one that may be stamped after it has been executed, it may be received in evidence on payment to the officer referred to in Subsection (2) of:

(a)      a fee of K2.00; and

(b)      the stamp duty, or so much of the stamp duty as has not been paid; and

(c)      the penalty payable on stamping the instrument.

(4)      The officer receiving the duty and penalty shall:

(a)      give receipt; and

(b)      make an entry in a book kept for the purpose showing the amount and particulars of the payment; and

(c)      advise the Minister of:

(i)       the name or title of the cause or proceedings; and

(ii)      the name of the party from whom he received the money; and

(iii)     the amount and date of receipt of the money; and

(iv)     the date and description of the instrument; and

(d)      pay the amount to the Consolidated Revenue Fund.

(5)      When:

(a)      an instrument in respect of which money have been paid under Subsection (3); and

(b)      the receipt showing that payment,

are produced to him, the Minister shall denote on the instrument the payment of the duty and of the penalty (if any), and the instrument shall be deemed to be duly stamped.”

An objection to the tender of the appointment was made before the learned Magistrate. No ruling appears from the depositions, however, it is clear that the magistrate took the view that the document should be admitted.

The intent of the provisions in the Stamp Duties Act is to protect the revenue. Similar provisions are common in other jurisdictions, including England. The principles regarding such issues on appeal in England are set out in Halsbury’s Laws of England 4th Ed, Vol 17, p 162 par 230:

“Appeal from Ruling on Stamps

No appeal lies, and a new trial will not be ordered, on the ground of the ruling of any judge that a document is sufficiently stamped or does not require to be stamped, or on the ground that an unstamped document was improperly admitted in evidence; but a decision rejecting a document on grounds of stamping is subject to appeal.”

I consider that these principles should also apply in this jurisdiction and in so adopting them, Ground 1 thereby requires no further deliberation.

I would like to add for the guidance of those who face this question in future proceedings that the legislation has an easy remedy as set out in s 19(3)(4) and (5) of the Act.

Ground 2: I am satisfied on the evidence contained in the depositions and the conduct of the parties that Milton McMahon had a real interest in the property, having assisted with the purchase money, and that he was fully authorised by Louis Aitsi to appoint the agent and conduct dealings with the agent for and on behalf of Louis Aitsi, the registered owner of the property.

The ground of appeal is not sustained.

Ground 3: An agent, to recover commission must be the effective cause of the sale. Whether in any particular case the agent has been the effective cause of the sale is a question of fact.

On the evidence it is clear that the agent was the first to introduce the property to the purchaser. After this introduction, and in a period when the agent would have been negotiating, and had in fact commenced that process, the owner took over without informing the agent. For an analogous case see Edebohls v Foy [1917] ArgusLawRp 78; [1917] VLR 573.

It is clear that as far as the purchaser was concerned, the agent was actively involved even after the price was agreed. This is demonstrated by her letter of confirmation set out above.

In this case the agent was precluded by the actions of the owner from pursing its task and I am of the view that the agent did all that was practical and possible to effect the sale within the confines imposed by the actions of the owner in negotiating the sale price due it.

The agent had accepted the terms of appointment, advertised the property, introduced the property to the purchaser and commenced negotiations. There had been no termination of its appointment by McMahon. McMahon was on notice when he took the purchaser to the property that she had already been shown it by the agent.

The agent was entitled to the commission agreed under the appointment of agent.

CONCLUSION

It follows from my observations that I dismiss the appeal and uphold the decision of the learned magistrate. The cost of this appeal are to be met by the appellant.

Appeal dismissed

Lawyer for appellant: Rei & Kudada.

Lawyer for respondent: Numana Kila & Associates.