Unreported National Court Decisions
N1334
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
0S 326 OF 1994
KUTUPA SERVICES PTY LIMITED - Plaintiff
V
HIGHLANDS KAKARUK PRODUCTS PTY LIMITED - Defendant
Mount Hagen
Woods J
15 May 1995
16 June 1995
REAL PROPERTY - Contract for sale - possession given - whether surfficient preformance - purchaser defaults - Order for possession to vendor and registered proprietor.
Cases Cited:
McCosker & King v Kuster [1967-68] PNGLR 182
Ningiga v Koavea [1988-89] PNGLR 312
Counsel:
W Duma for the Plaintiff
P Dowa for the Defendant
16 June 1995
WOODS J:  The Plaintiff is seeking an Order for possession of the property known as Portion 523, Milinch of Hagen, Fourmil Ramu, Western Highlands Province and a writ of possession of the property.  The Defendant has crossclaimed for a declaration that a valid contract was entered into between the plaintiff and defendant on 21 July 1989 and that the defendant has obtained an equitable interest in the property and the defendant further claims an order for specific performance.
The issues seem to be:
1.       Whether a valid contract for the sale of the property between the plaintiff and the defendant was executed.
2.       If so whether that contract has been completed and specific performance can be ordered.
3.       Whether the Plaintiff is entitled to vacant possession of the property.
The evidence before the court showed that:
1.       The Plaintiff is the registered proprietor of the property as per the State Lease Volume 106 Folio 36 the owners copy of which was produced to the Court.
2.       In 1989 there were negotiations between the parties for the sale and purchase of the property and both parties executed a Contract for the Sale of the property on the 20th November 1991 which required a deposit of 20,000 to be paid on exchange and the balance of the purchase price to be paid within 14 days after the Minister’s approval was obtained.
3.       The deposit as required in the contract for sale was not paid by the defendant at the time the contract was executed and exchanged.
4.       No action was taken by either party to the contract to have the contract properly stamped in accordance with the provisions of the Stamp Duties Act, it being the responsibility of the purchaser to pay the Stamp Duty.
5.       No steps were taken by either party to the contract to have the contract lodged with the Department of Lands for the requisite approval under the Lands Act.  The steps for approval require action by both parties although it is the Vendor’s responsibility to lodge the application.
6.       There was some agreement whereby the defendant entered into occupation of the property to operate his business and there was some agreement for the payment of an occupation fee.  There was no written documentation to support this agreement.  There is no signed and stamped lease.
7.       There is no evidence of any variation to the original contract for the purchase price to be paid on terms or by instalments nor for the operation of the occupation fee to be counted as terms payments off the purchase price.  Whilst there was a suggestion of payment over 10 years in the 1989 negotiation this was not contained in the 1991 contract.
8.       The Defendant has been in occupation of the property since before 1991 and has paid certain amounts by way of occupation fees but such payments ceased some time ago.  There is no evidence as to how these occupation payments were treated in the accounts of the defendant,whether capital payments off the purchase or whether as lease payments and therefore costs of running the business for taxation and balance sheet purposes.
9.       In April 1994 the Defendant requested the Plaintiff to execute a fresh contract for sale of the property at a much reduced price to the original price in the 1991 contract.
Whilst there appears to have been negotiations and firm intentions to enter into a contract for the sale of land the purchaser never completed the exchange of contracts provided for in clause 5 of the contract  by paying a deposit, nor paying the stamp duty, nor taking the appropriate steps to assist with the seeking of the approval of the Minister for Lands.  The contract of sale has never been stamped so in accordance with the provisions of the Stamp Duties Act it cannot be pleaded or presented in court.  Further as the contract has not been approved by the Minister for Lands  it can have no force and effect.  Of course just because there has been no compliance with the requisite legislation does not mean that it is in equity devoid of all effect.  See McCosker & King v Kuster [1967-68] PNGLR 182 and Ningiga v Kuavea [1988-89] PNGLR 312.  However the evidence shows that the defendant has deliberately failed to comply with critical prerequisites of the agreement namely the paying of the deposit in accordance with the terms of the contract, nor made any offers or attempts to join the vendor with the seeking of the approval, nor made any attempt to have the stamp duty paid.  Then in 1994 the Defendant acted as if the contract of 1991 was abrogated by seeking a fresh contract for the same land.  So it is not as if the plaintiff/vendor has refused to complete or to perform its obligations, it is the defendant who has refused to comply with the requirements and terms of the contract.  So this court is unable to give any effect to the intent of the agreement and the contract as it stands is unenforceable as the defendant has failed to comply with the terms and has acted as if the original contract has been rescinded or abrogated.
Whilst there was a valid agreement for the sale of land entered into in 1991 the defendant by its failures to comply with the terms cannot seek enforcement of the agreement and instead has acted to rescind that contract and cannot now seek its enforcement.
Whilst the defendant may have had some agreement for some kind of leasehold possession and occupation of the property there has been no document presented to this court evidencing the terms of that occupation so such occupation can only be at will or by consideration of the occupation fees, however as the occupation fee is no longer being paid the occupation can only be at will.  Whilst the Defendant talks of having effected improvements to the property to support its argument that there was more than a lease there is no evidence of any fixed or permanent landlord’s improvements.  There is only reference to livestock on the property and other suchlike tenants improvements such as if running a business on the property.  The costs referred to can clearly be classified as running costs for business or taxation purposes not as payments of capital as if for a purchase.  The plaintiff has formally requested vacant possession of the property for the failure to pay the occupation fee and as the registered proprietor the plaintiff is entitled to such possession.
I order that there is no enforceable contract of sale between the parties.  I order that the defendant give up vacant possession of the property to the Plaintiff forthwith.
Lawyer for Plaintiff:  Blake Dawson Waldron
Lawyer for Plaintiff:  P Dowa