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Maip Pty Ltd v Ambra Coffee Estates Pty Ltd [1995] PGLawRp 692; [1995] PNGLR 25 (29 September 1995)

PNG Law Reports 1995

[1995] PNGLR 25 - Maip Pty Ltd v Ambra Coffee Estates Pty Ltd 

[1995] PNGLR 25

N1368

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MAIP PTY LTD

V

AMBRA COFFEE ESTATES PTY LTD

Mount Hagen

Woods J

3 August 1995

29 September 1995

EQUITY - Tender for purchase of property - Tender accepted - No contract prepared - Delay in submitting requirements for contract - Occupation pending contract - Whether constructive trust.

EQUITY - Claim in equity - Nature of equitable estoppel - Laches.

EQUITY - Unjust enrichment - Limits to claim.

REAL PROPERTY - Occupation pending sale of property - Tenancy at will - Nature of.

Facts

The registered proprietor of property mortgaged it to a bank to secure a loan. On default, the bank advertised the property for sale by public tender. The plaintiff was the successful applicant and was required by the bank to act within 14 days in meeting a number of requirements, including payment of deposit, supplying the name in which the purchase was to proceed etc. It was also provided that the mortgagor may redeem up to the date of execution of the contract of sale.

The plaintiff paid the deposit and arranged the funding of the balance. It went into possession but was, however, subsequently advised that the mortgagor had exercised the right of redemption and the tender offer was withdrawn.

Held

N1>1.       There was no contract for sale but merely a tender and offer, which was accepted subject to some unfulfilled requirements.

N1>2.       The plaintiff could not be accorded equitable rights based on its occupation and improvement of the property, as there was no agreement for these.

N1>3.       The plaintiff was guilty of undue delay in meeting the requirements set out in the offer, and a plaintiff seeking equity must not be guilty of laches.

Cases Cited

Papua New Guinea cases cited

McCosker v Kuster [1967-68] PNGLR 182.

Ningiga v Koavea [1988-89] PNGLR 312.

Re Luabar Logging Pty Ltd [1988] PNGLR 124.

Other cases cited

Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582; 64 ALJ 536.

Waltons Stores Ltd v Maher (1988) 164 CLR 387; 62 ALJR 110; 76 ALR 513.

Counsel

D L O’Connor, for the plaintiff.

P M Dowa, for the defendant.

29 September 1995

WOODS J: The plaintiff is claiming certain rights to a property, namely portion 870, Mt Ambra, being an agricultural lease registered vol 62 folio 219 and being a coffee plantation. The plaintiff is claiming rights as the successful tenderer for the property following an advertised mortgage sale, and an implied authority to enter into possession pending completion of the purchase.

The evidence is as follows: The registered proprietor of the property according to the title deed is Totou No 36 Pty Ltd. Totou No 36 has changed its name to Ambra Coffee Estates Pty Ltd. However, that change of name has not been noted on the title due to there being no transfer requiring such notification.

Ambra Coffee Estates mortgaged the property to the Papua New Guinea Banking Corpn (PNGBC), and that mortgage is noted on the registered title. There appears to have been default under the mortgage, and the bank in 1992 advertised the property for sale by public tender.

The plaintiff was the successful applicant following this advertisement. On 14 December 1992, the bank advised the plaintiff by letter that it accepted the plaintiff’s tender and required the plaintiff to act within 14 days in meeting the following requirements:

N2>1.       deposit of 10% (K9,000) is payable now;

N2>2.       confirmation/evidence of ability to meet the balance of purchase price;

N2>3.       name in which purchase is to proceed, and

N2>4.       name of solicitor acting on the plaintiff’s behalf.

The bank also advised as follows: “Also note that the Bank reserves the right to allow the mortgagor right to redemption up to the date of execution of contracts between yourself and the mortgagee”(bank).

On 4 January 1993, the plaintiff, by letter under the letterhead of Gena Coffee Pty Ltd, thanked the bank for approving its application, forwarded the deposit of 10%, and advised that “we are under the process of arranging cash flow to be submitted to our bank for complete funding of our proposal. Although the plantation was a complete right [sic] off we are taking necessary steps to prevent it from further deterioration and vandalism. Obviously we are left with no option but to bear the costs ourselves.”

On 24 February 1993, the Agriculture Bank wrote to the PNGBC advising that the plaintiff was a client of theirs and that the plaintiff had “held discussions with us about funding the balance of the tender offer and we have requested them to submit loan proposal for our consideration”.

The next development over this tender was a letter from the PNGBC to the plaintiff advising that the directors of the defendant company had presented themselves at the bank regarding the exercise of the right of redemption. The bank thereupon advised that the tender offer from the plaintiff was withdrawn.

In view of the fact that the plaintiff was in occupation of the property, there were then efforts by the defendant to evict the plaintiff from the property.

There is no evidence that the financial arrangements were confirmed, and it is quite clear that the matters listed in the bank’s letter of 14 December were not complied with within the 14 days. And there is no evidence yet that the bank was ever advised of the name the purchase was to be effected in, nor as to who was the solicitor for the purposes of the sale and to whom the bank’s lawyers could communicate in the preparation of the contract of sale. It is noted that the letter, supposedly from the plaintiff, paying the deposit was in the name of two different companies.

There were no steps taken to have a contract of sale completed and executed by both parties, and it is trite law that such requires action and information from both parties.

It is also trite law that in dealings with land there can be no rights until a contract embodying the terms has been executed by both parties.

There is no evidence of any separate agreement, either as part of a contract for sale or otherwise, for the occupation of the property pending settlement. The letter of 4 January 1993 from the plaintiff makes no reference to actual occupation of the property pending settlement, merely a reference to taking steps to prevent further deterioration and vandalism.

So, in September 1993 there was no contract for sale in existence, there was no agreement for lease or other occupation of the property between the registered proprietor or the bank and the plaintiff, there were no legal rights in the plaintiff to the property. There had merely been a tender and an offer, which had been accepted subject to certain requirements, and those requirements had not been satisfied.

The arrangements between the bank and the mortgagor for continuation of the mortgage are purely matters between the bank and its client. The terms of such arrangement are a private matter between the parties and can be of no concern to this Court or any other party who had no legal right to the property. The plaintiff at all times was only a successful tenderer, who had to meet certain requirements and who had yet to sign a contract, and these requirements had never been complied with such that a final contract of sale could be prepared and entered into.

The plaintiff is claiming some equitable right, but to do so the plaintiff must itself be not guilty of delay or other behaviour. In the matter, the plaintiff has clearly delayed and not met the requirements set out in the letter of acceptance from the bank. And it is not as if we are talking of failure to comply within the 14 days noted in the bank’s letter of 14 December. There were months of inaction. Why couldn’t the bank assume that either the plaintiff was losing interest or could not make appropriate financial arrangements?

The plaintiff claims that it has equitable rights because it entered into occupation of the property and has improved the property. However, there was no agreement for the occupation and no agreement for such improvements to be effected. Of course, the evidence suggests that the plaintiff has itself benefited from its occupation and improvements, analogous to having a farming lease of the property on a seasonal basis. Thus, the plaintiff would be merely a tenant at will, with no right to compensation.

I have been referred to the principle of equitable estoppel, as referred to in a number of Australian cases. As was stated in Waltons Stores v Maher (1988) 164 CLR 387 at 404 by Mason CJ: “... equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it”. In that case, there had been discussions such that a draft lease had been prepared and forwarded for execution, and there was an assumption that the necessary exchange was a formality and the defendant knew that the plaintiff was undergoing costly work on the site. This is far removed from the present case, where there had been no draft contract prepared and there had been a failure by the plaintiff to act on the stated requirements. The plaintiff had not even assured the bank that it had the finance for the purchase. A plaintiff seeking equity must not be guilty of laches itself.

In Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, the court emphasised that for equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence, or a promise be performed, or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable. Priestly JA in that case at pages 612 and 614 noted that the proposition needs clarification in the light of the facts of each case. In the Austotel case as in the Waltons case, there had been sufficient negotiations for actual contracts or leases to have been prepared, and even additional action, such as construction. In the present case before me, there had been no indication that there was even finance for the contract, and any occupation, even unauthorised, was no different than a seasonal agricultural licence. The facts in the above two examples were much further advanced than in the case before me now.

The plaintiff claims that the defendant would be subject to unjust enrichment. However, it is the plaintiff who has been illegally in occupation of the property, and, anyway, the plaintiff has itself received benefits from this occupation. The cases on unjust enrichment are cases where partners were cohabiting and so conducting themselves that they encouraged the other party to assist in the improvement and development of the asset or property. In this case, there was no encouragement or agreement for the plaintiff to occupy and improve the property.

The plaintiff is challenging the right of the equity of redemption. In this case, this is merely recognising the right of a vendor to withdraw from the offer at any time up until there has been a firm agreement for sale, as evidenced by a contract of sale. The evidence is quite clear that there had never been a final meeting of terms for the proposed contract for sale. There had been inordinate delay in the plaintiff following up from its tender of December 1992. The tender and offer was purely between the bank and the plaintiff, and dealings and relationship between the bank and the defendant were purely matters personal to them.

I have been referred to no authorities that suggest that a party that has merely made an offer and has taken no further steps to finalise the terms and have a contract of sale prepared, let alone executed, can have any rights to the property, whether at law or in equity. The cases of McCosker v Kuster [1967-68] PNGLR 182, Re Luabar Logging Pty Ltd [1988] PNGLR 124, and Ningiga v Koavea [1988-89] PNGLR 312 were situations where the court gave recognition to contracts which, whilst they did not meet legal requirements under the Land Act and Stamp Duties Act, gave sufficient facts to establish agreements that could be enforced. And there are a number of cases where squatters have been given some limited rights to government land where the government had not raised objections to their presence and the squatters were found to have interests analogous to a licence. However, these facts bear no analogy to the facts in this case before me now.

I find that the plaintiff has no interest in the property which is enforceable at law, and the defendant is entitled to possession and occupation of the property. There is a cross-claim for damages for rent and accounting of profits. However, in view of the fact that the property may have been run down and the occupation seems to have been similar to a seasonal agricultural lease, I see no need to consider such damages. However, if the plaintiff fails to vacate the property forthwith, then the plaintiff could be liable for an appropriate lease rent for its occupation. I order judgment for the defendant and order the plaintiff to vacate the property forthwith.

Lawyer for the plaintiff: D L O’Connor.

Lawyer for the defendant: P M Dowa.