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Schmitz v Ravula [1991] FJHC 50; Hbc0136d.91s (27 August 1991)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 136 OF 1991

Between:

WERNER SCHMITZ
Plaintiff

- and -

ELGA RAVULA
Defendant

Mr. W. Morgan for the Plaintiff
Mr. J. Singh for the Defendant

RULING

This is an application by the defendant under Order 18 Rule 18 of the High Court Rules seeking to strike out the plaintiff's Statement of Claim on the sole ground that it discloses no reasonable cause of action.

Such an application is in the nature of a 'pre-emptive strike' and it is well settled that it is only in plain and obvious cases that the court should exercise its powers under the summary process provided by the rule. Furthermore under this procedure the facts pleaded in the Statement of Claim are taken to be admitted in the determination of the application.

In this latter regard the facts pleaded by the plaintiff may be summarised as follows:

"that the defendant is the registered proprietor of a piece of land in Savusavu which she offered in writing to sell to the plaintiff a German for $98,000 in July 1990. The plaintiff accepted the offer and paid a deposit of $1,000 to the defendant and it was agreed that the documentation relating to the contract was to be completed in December 1990. In August 1990 however at the request of the defendant, the plaintiff came to Fiji to complete the transaction and application was made seeking the requisite consent of the Minister of Lands to the transaction. Thereafter the plaintiff signed the necessary documentation which included a Sale and Purchase Agreement and paid a further sum of $21,000 to the solicitors handling the documentation for the parties. The defendant has refused to sign any of the documentation."

More particularly and in summary, the plaintiff pleads the following alternative causes of action:

"10. That the defendant has wrongfully refused to complete the execution of the Agreement for Sale and Purchase and other documentation relating to the transfer;

and alternatively:

11.... the defendant by words, actions and documents has entered into a binding contract to execute the said Agreement for Sale and Purchase and other documents relating to the transfer upon the receipt of the Minister of Lands consent.

WHEREFORE THE PLAINTIFF CLAIMS

Specific performance of the Agreement for Sale and Purchase and subsequent documents."

Learned counsel for the defendant has minutely dissected each paragraph of the plaintiff's Statement of Claim in an attempt to demonstrate to the Court that individually and collectively it discloses no reasonable cause of action. In particular, counsel noted the absence of any allegation of a breach of contract other than various failures on the defendant's part. At most the facts raised an agreement to execute a Sale and Purchase Agreement the terms of which counsel suggested were as yet not agreed upon.

In the circumstances counsel for the defendant submitted that the plaintiff's claim was plainly nothing more than an agreement to execute (which meant 'make') an agreement and that is not something that gives rise to enforceable rights.

In support of this proposition counsel sought to rely on the words of Lord Denning MR in Courtney Ltd. v. Tolaini Bros. Ltd. (1975) 1 WLR 297 where he said at p.301:

"It seems to me that a contract to negotiate, like a contract to enter into a contract, is not a contract known to the law."

But that statement cannot be divorced from the factual context in which it was made as was clearly stated by Bingham L.J. in "The Didymi" [1988] 2 Lloyds Rep. 108 at p.122 where he said of the decision:

"It is, I think, plain from that report that this issue arose at the outset of the parties relationship and concerned the existence of any contract at all between them ... It further appears from the report that the whole substance of the parties relationship in the Tolaini case was unsettled. "

If I may say so that is a factual situation which contrasts materially from the present facts pleaded by the plaintiff in his Statement of Claim and which in this application must be accepted as prima facie true.

Learned counsel for the plaintiff submits that it is inappropriate for the Court at this stage to consider whether or not "specific performance" is an appropriate remedy given the facts pleaded nor is there a need to allege a breach of contract.

Counsel further submitted that the facts pleaded in paras 2 and 3 of the Statement of Claim clearly showed that an oral contract for the sale and purchase of the defendant's land had previously been concluded between the parties and although the documentation was incomplete, nevertheless, that did not belie the existence of a contract. Needless to say in counsel's view 'execute' meant 'sign'.

Lord Diplock put it thus in Sudbrook Trading Estate Ltd. v. Eggleton [1983] 1 AC 444 when he said at p.478:

"A contract is complete as a contract as soon as the parties have reached agreement as to what each of its essential terms is or can with certainty be ascertained: for it is an elementary principle of the English law of contract id certum est quad certum reddi protest. True it is that an agreement for the sale of land remains executory until transfer of title to the land and payment of the purchase price; but if this is the sense in which the agreement is said not to be complete it is only executory contracts that do require enforcement by the courts; and such enforcement may either take the form of requiring a party to perform his primary obligation to the other party under it (specific performance) or, if he has failed to perform a primary obligation, of requiring him to perform the secondary obligation, that arises only upon such failure, to pay monetary compensation (damages) to the other party ..."

Even accepting that one of the documents that was tendered for execution was a Sale and Purchase Agreement nevertheless as was said by Parker J. in Von Hatzfeldf-Wildenburg v. Alexander (1912) 1 Ch.D 284 at 288:

"... it is a question of construction in each case whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored."

In this case in the absence of any written correspondence between the parties (which admittedly exists), this Court is unable to go behind the plaintiff's pleaded facts which in my considered view confirms the existence of a contract between the parties to buy and sell a piece of land in Savusavu.

Accordingly the application is dismissed with costs to the plaintiff to be taxed if not agreed.

By way of further directions the defendant is ordered within 21 days to file and serve a Statement of Defence and thereafter the case is listed to be called in Court on Friday the 13th of September, 1991.

(D.V. Fatiaki)
JUDGE

At Suva,
27th August, 1991.

HBC0136D.91S