N4742

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 280 OF 2011

BETWEEN

DESMOND WANGORO YANINEN
Plaintiff

AND

ANTHONY KOLOU & GIA KOLOU
Defendant

Waigani: Makail, J
2012: 25th July

PRACTICE & PROCEDURE - Application for summary judgment - Discretionary - Granted in very clear cases - Breach of contract of sale - Unclear whether 10% deposit to be returned to purchaser - Application refused - National Court Rules - O 12, r 38.

Cases cited:

Bruce Tsang -v- Credit Corporation (PNG) Limited [1993] PNGLR 112 
 Curtain Bros (Qld) Pty Limited -v- The State [1993] PNGLR 285
Hornibrook NGI Pty Ltd -v- Lihir Management Company Pty Ltd and Wests Process Engineering Pty Ltd (Administrator Appointed) [1998] PNGLR 52; (1998) N1735 
Pacific Helicopters Pty Limited -v- Department of National Disaster, Surveillance & Emergency Services & The State (1998) N1817
Chief Collector of Taxes -v- TA Field Pty Limited [1975] PNGLR 144

Counsel:

Mr F Pomoso, for Plaintiff
Mr P Kaman, for Defendant

RULING

25th July, 2012

1.	MAKAIL, J: The plaintiff applies by notice of motion filed on 21st October 2011 for summary judgment in the sum of K32,000.00 and in the alternative, for default judgment in the sum of K32,000.00 pursuant to O 12, r 38 and O 12, rr 25 & 27 of the National Court Rules respectively. Further, the plaintiff seeks default judgment for general and special damages to be assessed.

2.	Relying on the affidavit of the plaintiff sworn on 08th August 2011 and filed on 10th August 2011, counsel submits the defendants have admitted receiving K32,000.00 from the plaintiff as upfront payment for a housing they were selling to the plaintiff. The purchase price was K300,000.00. They agreed to sell it to the plaintiff because at the material time, they were in arrears by K32,000.00 on a loan they had obtained from PNG Home Finance Company Limited to purchase the house and it was going to repossess it and sell it . It was also agreed that the plaintiff would pay the balance over a period of time. The plaintiff secured a loan of K250,000.00 from the National Development Bank to finance the balance of the purchase price. 

3.	After the defendants received the money and passed it on to Kina Finance Limited (PNG Home Finance Company Limited), they increased the purchase price to K450,000.00 citing high market prices. The plaintiff refused and offered K400,000.00. It was accepted but the defendants insisted that he pay a further K8,000.00 before they give vacant possession. He asked for the refund of the K32,000.00 but the defendants did not return it. Thus, counsel submits the defendants have misled and fraudulenty misrepresented to the plaintiff that they were selling the house when their intention was to use the plaintiff to pay off their debt with finance company.

4.	Counsel for the defendants concedes that the defendants received K32,000.00 but submits they will be filing a defence and cross claim in due course raising a defence that parties had a "gentlemen's agreement" and that is for the plaintiff to pay the balance of the purchase price over time. That is to say, the deal between the parties is still very much alive and all the plaintiff is required to do is to complete the balance of the purchase price and the house will be given to him.

5.	A summary judgment is granted at the discretion of the Court. According to O 12, r 38 of the National Court Rules, an applicant must show that:

1.	there is evidence of the facts proving the essential elements of the claim; and
2.	the applicant or some responsible person give evidence that in his belief there is no defence.

6.	If the applicant is able to establish these two elements, summary judgment may be granted without a need for a full trial. The cases of Bruce Tsang -v- Credit Corporation (PNG) Limited [1993] PNGLR 112 and Curtain Bros (Qld) Pty Limited -v- The State [1993] PNGLR 285, have laid down these principles for summary judgment cases and have been adopted and applied in many subsequent cases such as Hornibrook NGI Pty Ltd -v- Lihir Management Company Pty Ltd and Wests Process Engineering Pty Ltd (Administrator Appointed) [1998] PNGLR 52; (1998) N1735 and Pacific Helicopters Pty Limited -v- Department of National Disaster, Surveillance & Emergency Services & The State (1998) N1817. It has also been held that summary judgment will be granted in very clear cases: see Chief Collector of Taxes -v- TA Field Pty Limited [1975] PNGLR 144.

7.	What are the essential elements of the cause of action, or to begin with, what is the plaintiff's cause of action? From my perusal of the statement of claim, I am unable to work out precisely the cause of action. This is because the pleading in the statement of claim is vague. Doing the best I can in the circumstances, I deduce that it is one of breach of contract based on the failed agreement to sell the house and also fraudulent misrepresentation. 

8.	The essential elements of a claim for breach of contract are; contract, breach of, and damages. There is no dispute the plaintiff agreed to purchase the house from the defendants. The revised consideration is K400,000.00. The plaintiff has already paid K32,000.00 and was required to pay a further K8,000.00. To date, he has yet to pay it even though there is evidence to suggest that he has secured K250,000.00 from the National Development Bank to fund the balance of the purchase price. He now seeks the refund of K32,0000.00. But it is unclear from the agreement of the parties as to what would happen to the K32,000.00 in the event that the agreement fall through. Will it be returned to the plaintiff or will it be retained by the defendants? I ask this question because in a typical conveyance case, a front up payment or what is commonly known as "10% deposit fee" is made to secure the property and when the agreement fails, it is the vendor that retains it. It is to compensate the vendor for expenses incurred and lost opportunity to sell it to another purchaser. 

9.	As noted above, summary judgment will be granted in very clear cases: Chief Collector of Taxes -v- TA Field Pty Limited (supra). In this case, the recovery of K32,000.00 is the essence of the plaintiff's claim. It is the upfront payment or 10% deposit fee and in my view, it is unclear whether the parties have agreed that it be returned to the plaintiff in the event that the agreement fails. This means, I am not satisfied that the plaintiff has proven the element of damages. It also means that there is a possible defence against the claim. I refuse the application for summary judgment. 
10.	In relation to the application for default judgment, the defendants have failed to file a defence to the claim. I could enter judgment now but in my view, the issue in relation to the refund of K32,000.00 is unclear and a matter that requires further consideration by the Court. This can only be done at trial. For this reason, I refuse the application for default judgment. As for the application for default judgment for general damages and special damages to be assessed, for the same reason I have given, I refuse it. Costs shall be in the cause.
_______________________________________________________________
Namani & Associates: Lawyers for Plaintiff
Henao Lawyers:	Lawyers for Defendants