1069
PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE
SITTING IN ITS CIVIL JURISDICTION]
GFCi 30 of 2010

BETWEEN

DAVID KUBULO YA
Complainant

AND

PETER MUKALE
Defendant

Goroka : G Madu

2010: May 13 June 16 July 15 August 11
: September 14 October 14, 15, 29
: November 5, 22 December 21
2011: January 6, 26 February 22, 25 March 4, 30

CIVIL- Claim rental – Agreement for lease of a trade store – monthly payment of rental part of the term – Bond fees not specifically stated –payment of rental at any time and any amount renders agreement void – such action is in breach of agreement – Complainant failed to act properly – failed to meet his obligation to pay part of sale price – cannot come with unclean hands – damages not awarded – claim for rental dismissed – Previous owner paid himself the balance amount of Sale Price – Complainant entitled to ownership of the property.

Cases Cited

Maip Pty Ltd –v- Ambra Coffee Estate Pty Ltd [1995] PNGLR 25
Re Nagi Clan [1995] PNGLR 13 

References
Nil
 
Counsel
 David KubuloYa, for the Complainant
 Matilda Irai, for the Defendant

 30th March 2011

REASONS FOR DECISION

G Madu PM .The complainant takes an action against the defendant for debts in rental payment in the sum of K9,750.00 of properties at Faniufa Service Station. 

 2. The brief facts are the complainant David Kubulo Ya entered into an agreement to purchase the property from Jacob Opu for K15,000.00 at Faniufa Service Station. The Complainant paid as part of consideration K9,500.00 in two lots of payment with a balance of K4,500.00 which was agreed to pay by instalments.

3. Whilst this part of the agreement was in force, David Kubulo Ya entered into a rental agreement with Peter Mukale which is the subject of this proceeding. The Complainant and the Defendant entered into a written rental agreement on the 14th February 2008 at the rate of K1.000.00 per month and other terms of the agreement was the complainant will get K750.00 and the balance of K250.00 to pay Land Owner Mr. Iveho for the land on which the building stands and the defendant to pay K3,000.00 as bond fees. The following is the format of the agreement.

MEMORANDUM OF AGREEMENT
RENTAL AGREEMENT OF TRADE DTORE/PROPERTY-DKTRADING AT FANIUFA SERVICE STATION, GOROKA EHP, PNG

•	This is a formal agreement between MR. DAVID KUBULO of Faniufa village, Goroka, P.O.Box 451, Goroka EHP, Mobile phone #, 6919118, 72195304, Trade Store/ Property Owner.

 AND

•	MR. PETER E. MUKALE C/- P.O.Box 966, GOROKA, SIMBU, MISSION PNG
 
 THAT

•	I MR. DAVID KUBULO agreed to let MR. PETER MUKALE to rent Trade Store/Property for the amount of (K1.000 00) One Thousand Kina per month and subject to Renewal at the end of every (12) twelve months.

•	ADVANCED DEPOSIT OF (K4,000.00) four thousand for (4) four months is paid on this day being the 14th Thursday February, 2008.

•	Termination of Agreement shall be served six (6) months in advance for the tenant to vacate rented area.

•	Any disagreements, false statements and breach of this agreement is an offence and is liable for legal action

MR.PETER E MUKALE WITNESS:
TENANT Name: MR. WILSON MUKALE

Sign.......................................... Sign .................................................... 

MR. DAVID KUBULO Name MAINA DAVID
Trade Store / Property Owner

Sign------------------------------- Sign.........................

Date: 14 / 02/ 2008 Date: 14/02/2008 
Tim3.15 pm Time: 3.15pm

4. The original of the MOA was signed by both parties and witnessed by Wilson Mukale and Maina David.. The terms of the agreement stipulated were:

 (i)	the rental payment was for K1000.00 per month and to be renewed at the end of twelve months. 
 
 (ii) Advance deposit of K4000.00 for four (4) to be paid on February 2008

(iii)	advance notice of six (6) months must be given before vacating the property.
 
(iv)	failure to comply with the terms of the agreement will result legal action by the aggrieved party.

5. The complainant claims that the defendant moved into the property on 18th February 2008 without paying bond fee of K3,000.00. Under the agreement the defendant was to pay rental to him but since July 2009, the rental payments were not forth coming from the defendant to the complainant instead the rental payment were made to the former owner Mr. Jacob Opu. The complainant claims that the rental payments were not being paid by the defendant for the nine (9) months.

6. The complainant stated that on numerous occasions defendant was approached and asked to make payment of his outstanding rental payments but there were no positive responses.

 7. The complainant claims that defendant is in breach of the written agreement that was mutually signed by both parties for failure to pay bond fees of K3,000.00 and monthly rental payment in the amount of K6,750.00 totalled up to K9,750.00.

8. The complainant alleges that by reasons of the breach of the terms of the agreement by the defendant, he has suffered loss of income and damages.

9. The former Owner Jacob Opu was not aware of the purported agreement signed between the complainant and the defendant however Peter Mukale disputed that he owes the complainant the outstanding rents and according to the terms of the agreement he has paid his monthly rental of K1,000.00 in the total sum of K11,850.00 over the period of the lease.

10.. This case raises three (3) issues: 

 (i) whether the lease agreement between the complainant and the defendant is a valid agreement and binding on parties in the light of existing incomplete sale and purchase of of the property by complainant.

 (ii) whether the action of the defendant constituted a breach of the lease agreement

 (iii) whether damages can be awarded to the complainant

EVIDENCE ADDUCED BY COMPLAINANT

11. Complainant Davaid Kubulo Ya did not call any witnesses and was the only one who filed an affidavit and was cross-examined.

12. The complainant evidence basically was that the property in issue was owned by Jacob Opu and was sold to him for K15,000.00. The complainant said he paid K9,000.00 and K6000.00 remained to be paid. The defendant entered into Rental Agreement with Peter Mukale on 14th August 2008. Under that agreement the defendant was to pay K10000.00 rent per month. The defendant ceased paying rental from July 2009 for nine (9) months without any notice to the complainant and was in arrears. The complainant claims that outstanding rentals have accumulated up to K6,750.00 together with the security bond fees of K3,000.00 totalled up to K9,750.00. Despite the notices were given and was personally approached the defendant did not make any attempt to make payments so this has resulted in this court proceeding.

EVIDENCE ADDUCED BY DEFENDANT

13. Defendant Peter Mukale submitted affidavits of four (4) witnesses including the defendant himself and his three (3) witnesses were cross-examined.
 
14. The defendant Peter Mukale in his evidence stated that prior to renting the trade Store he was aware that the trade store belonged to a family from Goroka. The defendant said that after speaking to the complainant he came to know that complainant bought the trade store from Jacob Opu.

15. With that understanding he entered into a Lease Agreement with the complainant and started paying rent from 2008. In February 2010 Jacob Opu informed that the complainant had not paid the balance of the purchase price and told the defendant not to make rental payments to the complainant.

16. On 27th February 2010, Jacob Opu laid a complaint at the Goroka Police Station Fraud Squad and the complainant and the defendant were brought in to sort the issue on rental payment of the trade store. The member of the Fraud Squad advised defendant to stop paying rentals to the complainant and instead pay the rent to Jacob Opu.

17. The defendant said that since from that time on the rental payment was paid to Jacob Opu so the issue of ownership between the complainant and Jacob Opu needs to be sorted out as both are claiming ownership of the said property. The defendant stated that Jacob Opu instructed complainant to refrain from collecting rental from him.

18. Jacob Opu was called by the defendant as witnessed and deposed in his affidavit the following: He was the owner of the trade store built on the land owned by Iveho Atuakin which the defendant rented and the complainant is claiming ownership. 

19. He stated that prior to entering into agreement to sell the trade store to the complainant, he allowed the trade store to be rented by couple of individuals to run their trade store business but their businesses broke down. He then decided to put his trade store on sale for K20,000.00.

20. The complainant approached him to purchase the trade store and after having negotiated the sale both entered into an agreement to the sale of the trade store. Complainant and Jacob Opu agreed to purchase price of K18,000.00 and there was no formal agreement signed at that time.
Jacob Opu stated he received from complainant part payment of K9,500.00 for the trade store and the balance of K8,500.00 was still outstanding.

21. After numerous complaints he went to see the complainant but realised it was the defendant Peter Mukale trading from the building and not the complainant and the defendant was surprised to learn that he was the owner and not David Kubulo Ya the complainant.

22. Jacob Opu at that time found out that more than ten thousand six hundred kina (K10,600.00) have been paid in rentals to the complainant. Some of the monies could have been used by the complainant to pay his outstanding balance of the purchase price of the trade store. 

23. Jacob Opu stated that because the complainant failed to pay the outstanding balance of K8,500.00 he advised the defendant to direct all the rental payments to him as the complainant did not fully paid the balance of the Purchase Price.

24. Jacob Opu states that this matter should have been instituted against him rather than the defendant because he instructed the defendant to stop making rental payment to the complainant.

25. Eric Posa deposed that on 27th February 2009 he received a complaint from David Kubulo Ya over a property situated at Faniufa Service Station involving Peter Mukale and Jacob Opu and had them all in his office. 

26. During that discussion Eric told David Kubulo Ya to sort the matter with Jacob Opu and not with Peter Mukale. He told defendant to pay the remaining rental payments to Jacob Opu as complainant did not have the title to the property. At that time Eric also advised the complainant that if he was not happy he can institute court proceedings against defendant.

27. On 14th October 2009, Peter Mukale reported that the complainant was using threat to demand rental payments. A letter was written to David Kubulo Ya warning him of the demand he was making against the defendant until he sorted out the ownership issue.

Issue – No.1 – Whether the Lease Agreement between the complainant and the defendant is a valid agreement and binding on parties in the light of existing incomplete sale and purchase of the property by the complainant.

28. Defence argument is that rental agreement entered by the parties did not disclosed the term on the bond fees and the agreement was rendered void by complainant himself when he made request and was paid money whenever he so request at any one time during the course of tenancy. He was not diligent in collecting rentals monthly as was agreed to but did so whenever in however little amounts he needed here and there.

29. The defence contended that the evidence show that the defendant did not cease payment of rentals on the said property, he only directed payment to Jacob Opu upon instruction as regard to the dispute over the property. This situation would not have arisen had the complainant settled his affairs with Jacob Opu. 

30. The complainant argues that when the defendant moved into the trade Store on 18th February 2008 he commenced his business without paying the bond fees of K3,000.00. This was verbally agreed which was to be reduced to writing at a later date. The complainant stated that in any business dealing with renting of properties a bond fees are compulsory if there is a breach of agreement or damages result during tenancy.

31. Under the Memorandum of Agreement it is very clear that the Rental Agreement was duly signed which specifically stated that the rental payment is K1,000.00 per month but it did not specifically stated about Bond fees so one can conclude that there was no specific mention of the Bond fees as one of the terms of the agreement. If the complainant claims that it was agreed verbally upon reaching understanding then it would have been reflected in the written agreement. Failure of having the payment of bond fee as one of the terms of the agreement rendered the agreement void.

32. The other specific term of the agreement was the rental payment of K1,000.00 per month. It appeared that the defendant was not making payment as stated in the agreement. The evidence had been adduced to the court by the complainant as annexure “H” records of rental payment. The records show that rental payments were made when ever there was a request and on any amount he requested. From complainants action it shows that he was not serious and diligent in collection rentals on monthly basis as stipulated in the agreement. It was obvious that the defendant did not have much choice but to adhere to the request. I find that complainant’s action was in breach of the rental agreement and therefore the agreement was not binding on the parties.

Issue No.2 – Whether the actions of the defendant constitute the breach of the lease.

33. The complainant claims that having endorsed the Memorandum of Agreement for lease of the Trade Store by the both parties constituted a valid agreement binding on the parties. This meant the both parties had to perform by fulfilling the terms of the agreement.

Evidence showed that the defendant commenced paying rental of K1,000.00 per month in February 2008 and ceased on February 2010. The reason for defendant stopping the rental payment was upon instruction from Jacob Opu, the former owner who advised not to pay rents to the complainant but instead to pay rent to him (Jacob Opu). The reason being that the complainant did not fully pay the sale price of the property and that the balance payment of K6,000.00 was still outstanding.

34. The complainant stated that the agreement was between himself and the defendant and Jacob Opu should not have interfered as he was only a third party and not a party to the lease agreement. 

35. The defendant argued that the complainant misrepresented himself as the owner of the property. He lied to the defendant when he had not fully paid for the property. There was no breach of the lease agreement as the rent was being diverted to the original owner and the rental payment was not being ceased.

36. Once again referring to the way the complainant was conducting his business was not according to the terms of the agreement. The terms specified for payment of K1,000.00 to be made monthly. The payment of rentals was done by the defendant on the amount requested by the complainant whenever he wanted the money. It was not paid on monthly basis in lump sum. It is all clear that by his own actions the complainant was in breach of the agreement as he did not comply with the terms of the agreement. On the balance of probability I find that the defendant action was not in breach of the lease.

Issue No.3 – Whether damages can be awarded to the complainant.

37. The complainant is claiming damages for defendant being in breach of the agreement and incurring costs for bringing up the matter in court and for going through mental stress to himself and the family as a result of this case.

38. The defendant contends that the complainant has not shown that he is blameless of the situation purported breach of the tenancy agreement. His inaction to sort his affairs out with Jacob Opu has brought about the situation giving rise to the breach, and he cannot come to court to seek justice against another party who are affected by his actions.

39. The complainant in this action seeking to recover the outstanding bond fees of K3,000.00 and K6750.00 for unpaid rental owed by the defendant. He states that by virtue of the agreement entered into with the defendant to lease the trade store.

40. In conclusion I find that the complainant’s hands are not clean when he failed to fulfil his obligation in the sale and cannot come with unclean hands to claim for damages.

41. The defence rely on the principle of equitable estoppel in the case of Re Nagi Clan [1995] PNGLR 13 where if the applicant wanting court to give them relief or certain rights, then they must have acted properly in the beginning. Further in Maip Pty Ltd v Ambra Coffee Estates Pty Ltd [1995] PNGLR 25 there is no contract of sale when contract was accepted subject to some unfulfilled requirements.

42. In conclusion the complaint is dismissed. I order that outstanding rentals paid to the Jacob Opu remains as such and the defendant continue occupation and lease on the property. 

Orders accordingly.

_______________________
Lawyer for the Complainant: David Kubulo YA
Lawyer for the Defendant: Warner Shand Lawyers