N5138

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 831 OF 2008

BETWEEN:

KENA KAIESO
Plaintiff

AND:
BELDEN MEMI trading as BELDEN MEMI & ASSOCIATE VALUERS, AUCTIONEERS & REAL ESTATE AGENTS
First Defendant

AND:
STAINER SAPU
Second Defendant

Goroka: Yagi J
2011: 18th March & 9th June

Cases Cited:

Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112 
Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285
Nicholas Regglie v Director of National Narcotics Bureau & Ors (2009) N3805
Cheong Supermarket Pty Ltd v Muro; New Guinea Cocoa (Export) Co Pty Ltd v Bougainville Enterprises Pty Ltd [1987] PNGLR 24 N583

Counsel:

K.Pilisa, for the Plaintiff
Both Defendants appeared in Person

RULING
9th June, 2011

1. YAGI J: The plaintiff seeks summary judgment to be entered against the defendants pursuant to Order 12 Rules 33 and 38 of the National Court Rules.

2.	The application is made pursuant to amended notice of motion filed on 13th December 2010. It is supported by two affidavits; both sworn by the plaintiff and filed on 17th June 2010. These affidavits were filed together with the notice of motion dated 17th June 2010, which is now superseded by the amended notice.

3.	The plaintiff seeks judgment for interest and costs of the proceedings. The amended notice of motion relevantly states:

"1.	Summary Judgment pursuant to Order 12 Rule 33 and 38 of the National Court Rules with interest and costs of the proceedings to be taxed if not agreed."

4.	The application is strenuously opposed by the defendants. As a matter of fact, and by way of response, the first defendant filed a notice of motion on 3rd September 2010 seeking to dismiss the proceeding for want of jurisdiction. In support of this motion, both defendants filed separate affidavits. At the hearing of the plaintiff's application, the defendants relied on their respective affidavits to argue their case.

Law

5.	The law on summary judgment was settled by the Supreme Court in Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112 and was followed in many subsequent cases: see Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285 and Nicholas Regglie v Director of National Narcotics Bureau & Ors (2009) N3805.

6.	The case law authorities essentially re-affirm the requirements of rule 38 of Order 12, and that is, the plaintiff must establish by evidence:

(1)	proof of the essential elements of the claim
(2)	there is no defence to the claim, which evidence must be given by 	the plaintiff or some responsible person in terms of his or her belief

Background

7.	The background of the case is this. The first defendant is a professional consultant and conducts professional businesses including acting as a property agent. In or about August 2003, the plaintiff made enquiries with the first defendant and expressed interest in purchasing a property. After some discussions the plaintiff and the first defendant reached an understanding in relation to a property described as Allotment 10 Section 115 Goroka Eastern Highlands Province ("the property"). Amongst others, it was agreed that the plaintiff make a deposit payment towards the property and the first defendant would use the funds to off-set outstanding mortgage debt owing on the property. This understanding was reduced into writing and signed by both parties. The terms of the understanding are as follows:

"AGREEMENT

Between

Belden Memi and Associate Valuers, Auctioneers and Real Estate Agents of Post Office Box 208,GOROKA, Eastern Highlands Province (party A)

And

Mr. Kenna KAIESO (party B)
Of Post Office Box

With regards to purchase and transfer of a residential Property described legally as Allotment 10 Section 115 Goroka Town,Eastern Highlands Province.

1.	Both parties acknowledge that a sum of K20,000.00 as down payment was done by Party B towards purchasing the above described property and that is held by party A.

2.	Both parties agree to the final sale Price of the above mentioned property as at K65,000.00

3.	Both parties agree that there shall be no changes in the final sale price after signing of this agreement. 

4.	Both parties agree that Final sale price includes the chattels and current tenancy agreement already existing.

5.	Pay A shall pay the landlord or its agent or agents of the above mentioned property who will then use the K20,000.00 down payment to pay off outstanding purchase arrears with The National Housing Corporation.

6.	Party A shall provide the Original Land Title to Party B after it is obtained from National Housing Corporation.

7.	Party B shall after obtaining this Land Title proceed further to pay balance of K45,000.00 to party A who shall then pay the Landlord or its agent or agents.

8.	Part A shall assist party B to obtain any bank loan and or get funds out from any savings of Party B as to complete purchase of the above mentioned.

9.	Party A shall advise the landlord or its agent or agents to take insurance cover with a reputable insurance company immediately.

10.	If the property is partially or fully destroyed bu fire in the absence of insurance, party A shall negotiate with the landlord or its agent or agents to full reimburse the down payment of K20,000.00 to party B

11.	In the event of sudden death of party B whilst the above mentioned property is still under transfer, Party A shall inform the relatives of party B to complete sale or reimburse the down payment, after cost.

12.	Both parties agree that the sale and purchase shall be completed.

Signed
For and on behalf of Part A by his duly appointed officer: ______(Signed)_____________

Part B: ______(Signed)_____________

WITNESS 1 ______(Signed)_____________
WITNESS 2 ______(Signed)_____________

17/08/05."

8.	There are two fundamental legal issues of significance relating to the written understanding that require some observation. Firstly, I note that whilst the understanding purports to be an agreement for sale of property, it does not appear to create a legally binding relationship between the plaintiff and the defendants. Secondly, neither the requisite statutory approval under s. 128 of the Land Act 1996 was given nor stamp duty was paid on the purported agreement. Section 128 of the Land Act 1996 stipulates that a transfer of land is invalid unless ministerial approval is granted. It is also a legal requirement that an agreement for sale and an instrument for transfer of land are liable for duty under the provisions of the Stamp Duties Act 1952 (as amended). The Stamp Duties Act, s. 46(3) states that duty is payable on an agreement for sale and transfer of real property or land. 

9.	Moreover, s.46(8) of the Stamp Duties Act states that an agreement for sale and transfer of land, such as in this case, is admissible as evidence in a court of law only where duty is paid on such agreement.

10.	In this case, the purported agreement which both parties seek to rely upon in this application is seriously wanting in terms of both legal requirements. That is to say, ministerial approval under s. 128 of the Land Act 1996 was not granted; and, stamp duty was not paid on the purported agreement. By virtue of s. 46(8) of the Stamp Duties Act, the purported agreement cannot be used as evidence to enforce a claim for damages arising under the agreement. Strictly speaking, therefore, neither the plaintiff nor the defendants are entitled to rely on the agreement in this application.

11.	At the time when the purported agreement was entered into, the title in the property was not held by the second defendant. I assume it was held by the National Housing Corporation. It appears that the property was offered for sale to the second defendant; however, there was some delay in the process in terms of effecting a legal sale and transfer of title. There were a number of reasons for the delay. The main reason was the outstanding obligation by the second defendant to settle the mortgage debt owed to the National Housing Corporation. 

12.	After paying a deposit of K20,000.00 pursuant to the understanding, the plaintiff applied for a bank loan to pay for the balance of the purchase price. The application was approved in principle, subject to the plaintiff providing to the bank the owner's copy of the title deed. The plaintiff was unable to satisfy the bank on this requirement and consequently, the loan was withdrawn by the bank.

13.	The plaintiff therefore wrote to the first defendant for a full refund of the deposit money. The first defendant was unable to refund the money immediately. The first defendant claims that the money was applied to pay for the outstanding mortgage debt and for purposes associated with his efforts in facilitating for the title to be obtained from the National Housing Corporation.

14.	On 18th July 2008, the plaintiff commenced the current proceedings to recover the deposit. The plaintiff also claims general damages for stress and frustration, mesne profits, interests and cost. The defendants then took steps to defend the claim by filing a notice of intention to defend and a defence to the claim.

15.	On 24th July 2009, the defendants refunded the K20,000.00 to the plaintiff. The payment was by way of a bank cheque. The payment was made after the second defendant was able to sell the property to a third party.

16.	Despite having recovered the K20,000.00 the plaintiff continued to pursue the outstanding claims.

Facts

17.	The facts relevant to the application are not in dispute. The plaintiff withdrew from the understanding about 2 years later following his inability to secure a bank loan. He asked for the refund of the deposit at no extra cost. The request was not responded to and therefore he commenced legal proceedings about 1 year later. Then about 1 year after the action was filed and served the defendants refunded the amount of K20,000.00. In effect the plaintiff's principal claim in the proceedings has been fully settled, somewhat belatedly. 

18.	As I alluded to the outstanding claims are for general damages for stress and frustration, mesne profits, interests and cost. However, the plaintiff, in this application is seeking summary judgment only in respect to interests and cost in the proceedings. This is clearly stated in the plaintiff's amended notice of motion and evidenced by the plaintiff in his affidavit sworn and filed on 17th June 2010.

19.	The obvious questions is; is there any evidence that pertains to interests and cost and whether there is evidence given by the plaintiff that in his belief, the defendants have no defence on these claims.

20.	In his affidavit sworn on 29th October 2009, the plaintiff deposes that following the understanding reached with the first defendant he approached the bank for a loan to meet the balance of the purchase price. The loan was approved subject to the production of the deed of title to the property. The plaintiff was unable to provide the title deed because the first defendant failed in his obligation pursuant to the written understanding. He therefore cancelled the deal and demanded for the refund. The defendants neglected or failed to make the refund and consequently he commenced recovery proceedings. About a year later, the defendants refunded his money. After receiving legal advice, he decided to pursue the claim for interests and cost. He says that the defendants had no intention to refund his money until he commenced recovery proceedings. He therefore believed that the defendants have no defence to his claim for interests and cost.

21.	The defendants, in their affidavits, deny that their actions caused any stress and frustration to the plaintiff. They argue that the plaintiff was fully aware of the steps and the associated difficulties involved pursuant to the written understanding. They claim instead that the plaintiff was rather impatient in prematurely withdrawing from the arrangement that led to his detriment. He was offered the opportunity to take early possession of the property pending the legal transfer in title but he refused. They also argue that they have already repaid the K20,000.00 claimed by the plaintiff and therefore there is no basis for the plaintiff to maintain his claims. The same arguments are essentially what is contained in their defence filed in court.

22.	Clearly, the defendants have misconceived the basis of the application. The application is not made in respect to the claim for stress and frustration nor mense profit. It appears these claims have been abandoned by the plaintiff. 

23.	The claim for interests and cost are consequential reliefs. They are not substantive reliefs. The substantive claim or relief is "the refund of K20,000.00". These consequential claims are dependent upon the success of the substantive claim. Under normal circumstance, a plaintiff is entitled to interests and cost where judgment or an order is entered in his or her favour on a substantive relief. In this case, there is no judgment or order entered in favour of the plaintiff. The substantive relief was settled out of court without a judgment or order of the Court. The question is can the plaintiff seek judgment on the consequential reliefs?

24.	The plaintiff's counsel submits that Order 12 Rules 33 and 38 of the Court Rules grants power to the Court to enter judgment on consequential reliefs including interests and cost. I accept this submission. Firstly, Order 12 Rule 33(2) is specific as to cost and entitles the plaintiff to judgment on costs alone where the principal claim is satisfied by the defendant and renders the proceedings unnecessary to be pursued any further. This Rule states:

"33.    Judgement for costs alone. (17/10)

(1)    …………………………...

(2)     Whatever claims for relief are made by a plaintiff, where a defendant satisfies the claims of the plaintiff or complies with the demands of the plaintiff or for some other reason it becomes unnecessary for the plaintiff to continue the proceedings against that defendant, but the defendant is in default, the Court may, on application by the plaintiff, direct the entry of judgement against that defendant for costs.

(3)     ………………………………." (my emphasis)
 
25.	And Rule 38, in my view, allows for a plaintiff to apply for summary judgment on any claim for relief including consequential reliefs such as interest. This provision provides:

"38.    Summary judgement. (13/2)

(1)     Where, on application by the plaintiff in relation to any claim 	for relief or any part of any claim for relief of the plaintiff—
(a)  there is evidence of the facts on which the claim or part is based; and
(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,
the Court may, by order, direct the entry of such judgement for the plaintiff on that claim or part, as the nature of the case requires.
(2)     …………………………..
(3)     ………………………….." (my emphasis)

26.	In Cheong Supermarket Pty Ltd v Muro; New Guinea Cocoa (Export) Co Pty Ltd v Bougainville Enterprises Pty Ltd [1987] PNGLR 24 N583, the Court held that a party claiming interest must plead in the statement of claim whether interest is claimed as of right under s. 2 or generally under s. 1 of the Judicial Proceedings (Interests on Debt and Damages) Act Chapter 52. Where a claim for interest is claimed as of right based on contract, interest may be awarded based on the agreed rate of interest, provided the details as to the rate of interest is sufficiently pleaded. A claim for interest under s. 1 or in all other cases should result in an order for "interests to be assessed".

27.	In this case, the plaintiff in his statement of claim makes a general claim for interests. In the circumstances, any order or judgment on interests should be on terms that interest be assessed.

28.	I am therefore satisfied that the plaintiff is entitled to judgment on interests and cost in the proceedings and has fulfilled the requirements of the applicable Court Rules. I therefore make the following orders:

1.	The application is granted.
2.	Summary judgment is entered against the first and second defendants for interests to be assessed and cost in the proceedings to be taxed, if not agreed.
3.	Costs of and incidental to this application is also awarded to the plaintiff to be taxed if not agreed.

Orders accordingly.

________________________________________________________________

Pilisa Lawyers: Lawyer for the Plaintiff
Defendants in Person