Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Gaua v Amir [2010] PGNC 247; N3891 (29 January 2010)

N3891

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1298 OF 2008

LEONARD GAUA
Plaintiff

V

JOE & THERESIA AMIR
First Defendants

ROBERT BUKU & ANTON LAVU
Second Defendants

ALFRED SEETO – JT TYRES
Third Defendant

Kimbe: Cannings J
2009: 15, 17 September, 7 October,
2010: 29 January

LAND – unjust enrichment claim by plaintiff who erected buildings on defendant's land without consent of defendant – defendant earning income from rental of land and buildings – whether plaintiff should be compensated by defendant

EQUITY – unjust enrichment – elements of cause of action

The plaintiff erected two buildings on land owned by the first defendant without her knowledge or consent while she was absent, but with the consent of her brothers (the second defendants). The first defendant returned three years later and leased the land and buildings to the third defendant for the purposes of conducting a business. The plaintiff made an unjust enrichment claim against the first defendant on the basis that she had been enriched at his expense, therefore he should be paid a proportion of the rent she received over an eight-year period and general damages. The first defendant said that she owed the plaintiff nothing.

Held:

(1) To succeed in an action for unjust enrichment a plaintiff must prove three things:

• that the defendant has been enriched by the receipt of a benefit; and
• that the defendant has been enriched at the plaintiff's expense; and
• that it would be unjust to allow the defendant to retain that benefit.
  

(2) The first defendant had been enriched by having two buildings, which were income-earning assets, erected on her land at no expense to her, therefore increasing the value of the land and providing her with extra income.

(3) The first defendant had been enriched at the plaintiff's expense as he spent his own money erecting the buildings.

(4) It would be unjust to allow the first defendant to retain the benefit she had derived as the plaintiff had acted in good faith, as had other parties concerned, and he had not received anything for the work, effort and money he invested in the land.

(5) The plaintiff therefore established a cause of action in unjust enrichment and it was appropriate that he be compensated by the first defendant paying him K40,000.00 within three months.

Cases cited

The following cases are cited in the judgment:

Ansett Transport Industries Pty Ltd v Reginald Walter Eginton (1971) No 645
Aquip Pty Ltd v Gastrouevo [1987] PNGLR 491
Breckwoldt & Co (New Guinea) Pty Limited v Harold Gnoyke (No 2) [1975] PNGLR 195
Maip Pty Ltd v Ambra Coffee Estates Pty Ltd [1995] PNGLR 25
Mathew Tolanas v Collins Gipe (2008) N3536
Pius Koroguen v Christine Wagen (2008) N3422
Putput Logging Pty Ltd v Ambalis [1992] PNGLR 159

Counsel

L Gaua, the plaintiff, in person
G Linge, for the First Defendant

29th January, 2010

1. CANNINGS J: In 1997 Leonard Gaua erected two buildings on a piece of land near Kimbe owned by Theresia Amir. Mr Gaua did not realise at that time that Mrs Amir was the owner. Mr Gaua thought the owners were Robert Buku and Anton Lavu – they are Mrs Amir's brothers – so he entered into an agreement with them which allowed him to erect the buildings in return for paying them rent.

2. In late 1999 Mrs Amir returned from Aitape where she had gone to live with her husband, Joe Amir. She was surprised to find the buildings on her land but did not complain. In April 2000 she entered into a lease agreement with Alfred Seeto who has since then rented the land, including the two buildings, for K1,300.00 per month. He runs a business there called JT Tyres.

3. Mr Gaua is aggrieved by what has happened. He says he spent a lot of money improving the land by erecting the buildings and developing the site but Mrs Amir is reaping the benefits of his work. He seeks compensation from Mrs Amir. The legal basis of his claim is not clearly defined. At one stage it looked like a breach of contract claim. But after the evidence was presented and Mrs Amir's counsel, Mr Linge, exposed the difficulties Mr Gaua would have in establishing the existence and breach of any contract (particularly as there was no contract between Mr Gaua and Mrs Amir) the claim switched to one of unjust enrichment.

4. The question is whether Mr Gaua can establish a cause of action in unjust enrichment against Mrs Amir. To do so he must prove the three elements:

1. that the defendant has been enriched by the receipt of a benefit; and
   
2. that the defendant has been enriched at the plaintiff's expense; and
   
3. that it would be unjust to allow the defendant to retain that benefit.
   

5. If he proves those three things the court can award a remedy by way of restitution (Pius Koroguen v Christine Wagen (2008) N3422). A common example of unjust enrichment is where a person has paid money under a mistake of fact to another person who has no right in law or conscience to receive it (Ansett Transport Industries Pty Ltd v Reginald Walter Eginton (1971) No 645; Breckwoldt & Co (New Guinea) Pty Limited v Harold Gnoyke (No 2) [1975] PNGLR 195; Aquip Pty Ltd v Gastrouevo [1987] PNGLR 491; Putput Logging Pty Ltd v Ambalis [1992] PNGLR 159; Mathew Tolanas v Collins Gipe (2008) N3536 and see generally Goff & Jones, The Law of Restitution, 2nd edn, 1978, pp 13-14).

HAS MRS AMIR BEEN ENRICHED BY THE RECEIPT OF A BENEFIT?

6. Yes. There are two buildings on her land, which she did not pay for, which have increased the value of the land and which are income-generating assets. Mrs Amir testified that the buildings are not as valuable as Mr Gaua claims – he says he spent K197,000.00 developing the site in 1997 – and that she actually laid the foundations for one of them. Mr Seeto testified that one of the buildings – the shed that has become his workshop – was incomplete and that he had to install compressors, pipes, water and electricity to make it suitable for his business. I accept that evidence but it does not detract from the fact that the erection of the buildings has been of benefit to Mrs Amir and in that sense she has been enriched.

HAS MRS AMIR BEEN ENRICHED AT MR GAUA'S EXPENSE?

7. Yes. Mr Gaua spent his own money erecting the buildings. That is a fact that cannot reasonably be disputed. It is at Mr Gaua's expense that Mrs Amir has been enriched.

WOULD IT BE UNJUST TO ALLOW MRS AMIR TO RETAIN THAT BENEFIT?

8. Mr Gaua erected the buildings in good faith without knowledge that the land, called "Tangala 2", actually belonged to Mrs Amir. She only acquired it in 1995. Before that it was customary land belonging to members of the Honde-Laulimi clans of nearby Ruango village. He knew that Mr Buku and Mr Lavu were Mrs Amir's brothers and thought on reasonable grounds that even if the land technically belonged to Mrs Amir her brothers would have the right according to custom to make decisions over the land. Mrs Amir was not present at the time. The agreement that Mr Gaua entered into with Mr Buku and Mr Lavu broke down after only a few months. There are claims and counter-claims as to whose fault that was but they are irrelevant for present purposes. The important thing is that Mr Gaua was acting in good faith. He was not trying to hoodwink Mrs Amir or anything like that. He has a genuine grievance as he has seen Mrs Amir reap the benefits of the work, effort and money he put into the land.

9. I can appreciate Mrs Amir's position. She feels that Mr Gaua's problem is of his own making. He did not get approval from her to erect the buildings. Her brothers had no right to let him on to her land. He assumed the risks of any person who comes on to land without legal title and without the owner's consent and takes it upon themselves to spend money and effort improving the land (Maip Pty Ltd v Ambra Coffee Estates Pty Ltd [1995] PNGLR 25).

10. These are all valid arguments and considerations but, on balance, I consider that it would not be fair to leave Mr Gaua without a remedy. It would be unjust to allow Mrs Amir to retain all the benefits she has derived as a result of having the two buildings on her land.

WHAT ORDERS SHOULD THE COURT MAKE?

11. As Mr Gaua has established a cause of action in unjust enrichment it is appropriate that the court order restitution as a form of compensation. What should the amount be? Mr Gaua submits that Mrs Amir should be ordered to pay him at least K50,000.00 and that Mr Seeto (who has by virtue of a District Court order of 2 November 2006 not been paying rent to anyone) should pay him a similar amount. He seeks interest and damages on top of those amounts.

12. This is too much. I have examined his calculations which are based on his spending K197,000.00 in 1997 erecting the buildings and developing that site. There is insufficient evidence to support that figure. The court made a site visit and I looked at the buildings and I have also considered the evidence of Mrs Amir and Mr Seeto. I consider that the basis of Mr Gaua's calculations is inflated.

13. Having considered all the evidence I think the fairest method of assessing the amount of restitution is to identify how much rent was generated by the land (including the buildings) from the date of commencement of Mr Seeto's lease (1 June 2000) to the date of filing of Mr Gaua's writ (10 November 2008) and to attribute a proportion of that to Mr Gaua's input. The appropriate proportion is one-third. That amount is:

➢ K15,600.00 per year x 8.4 years x 0.33 = K43,243.20.

14. That amount should be discounted slightly because of a lack of diligence and acumen by Mr Gaua in prosecuting his claim. He has tried unsuccessfully in the District Court on a couple of occasions to sort out the matter and when he came eventually to the National Court his claim was confusing. These considerations do not defeat his claim but I have taken them into account when arriving at the amount of restitution that I consider in all the circumstances to be just and reasonable: K40,000.00.

15. Mr Seeto in his evidence said that he has since the District Court's order of 2 November 2006 been putting to one side the rent that otherwise he would have been paying to Mrs Amir. If that is correct, then he should be able to quickly pay to Mrs Amir about K50,000.00 (the total amount of rent @ K15,600.00 per year x 3.2 years), K40,000.00 of which will then go to Mr Gaua. That will be the end of the matter. Mr Gaua will have no further claim against Mrs Amir or Mr Seeto and none against Mr Buku or Mr Lavu or Mr Joe Amir. Mr and Mrs Amir have separated and Mr Amir has no interest in the land, which belongs exclusively to Mrs Amir.

16. I will not award any interest. That is a matter of discretion and I think it would complicate things unduly to award interest. Mr Gaua has not succeeded entirely in his claim so an award of interest is not appropriate. I will order that the parties bear their own legal costs as there is no clear winner.

ORDER

(1) Theresia Amir shall pay Leonard Gaua K40,000.00 as restitution within three months after the date of entry of this order which shall be full and final settlement of all claims and relief in the statement of claim.

(2) All other relief sought in the statement of claim is refused.

(3) All orders of the District Court concerning this matter are set aside.

(4) Alfred Seeto shall within three months pay to Theresia Amir all rent due for Tangala 2 in respect of the period from 2 November 2006 to date.

(5) The parties shall bear their own costs.

(6) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Orders accordingly.
___________________________________________________________

Lawyers for the plaintiff: Nil
Linge & Associates: Lawyers for the First Defendants