N2375

PAPUA NEW GUINEA

[National Court of Justice in Madang]

WS NO. 495 OF 1999

BETWEEN

SHEM PAKE
Plaintiff

AND

DANIEL TULAPI
First Defendant

AND

JIMMY ARETE
Second Defendant

WAIGANI, MADANG	:	SAWONG, J
2001	:	 16th May, 8th June

Sale of Goods - Contract for Sale of Motor Vehicle - Passing of Title - When passing of Title effected - intention of parties - S. 18, 21, 22, 24, 25 Goods Act. (Ch. No. 25)

Sale of Goods - sale of same goods to another buyer by same seller - Seller had no valid title to sell - Subsequent buyer acquired no valid title.

CASES CITED:
There are no cases cited in the judgment.

Counsel:
P KOROWI, for Plaintiff
NO APPEARANCE, for First / Cross Defendants
G POOL & T DAWIDI, for Second Defendant / Cross Claimant

8th June, 2001

SAWONG, J: In this case the Plaintiff is suing the First Defendant/Cross-Defendant (Tulapi) and the Second Defendant/Cross-Claimant (Arete) for the return of a Toyota Land Cruiser, bearing registration No. BAA 526 (formerly SAA 872) (the vehicle), unspecified damages for mental distress, anxiety and costs. In the alternative he claims a refund of the sum of K50,000.00 he paid to Tulapi.

Arete has made a cross claim against Tulapi. In it he claims damages for breach of contract, a declaration that he is the owner of the vehicle and a further declaration that the sale of the vehicle to the Plaintiff was null and void.

This matter was originally listed for hearing on 9th May 2001. On that day the matter did not proceed because Tulapi sought an adjournment. After hearing arguments from all parties the reliefs sought were refused. Tulapi then intimated that he would seek a review of the ruling that I had made. I then gave directions, inter-alia, that any party wishing to file any further applications ought to do so by filing and serving any necessary application to the other parties by Monday 14th May. I also then fixed this matter for trial on 16th May 2001 at 10.30 am.

On 16th May 2001 the matter came up before me for trial. At that time Tulapi did not appear after his name had been called. Just before the trial proceeded Mr Korowi informed the Court that the Tulapi had informed him that he would not appear at the trial. Thereafter the proceedings proceeded to a trial without the presence of Tulapi. Thus there was no evidence from Tulapi.

The Plaintiff’s evidence consisted of three (3) affidavits. These were the affidavits of the Plaintiffs sworn on 18th May 1999, 5th July 1999 and 26th July 1999.

Some paragraphs of these affidavits were deleted or struck down upon objections being taken. He was then cross-examined by Mr Pool on the contents of his affidavit evidence. I summarise his evidence as follows. He says that prior to the 27th April 1999 he entered into negotiations with Tulapi, for Tulapi to sell to him the vehicle for the sum of K50,000.00. On 27th April 1999 he paid Tulapi sum of K50,000.00 and he was then given the vehicle and he took possession of it. At the time of the sale Tulapi also handed over to the Plaintiff the Registration Certificate, Certificate of Transfer of Registration and the MVIT transfer forms. He says that upon receiving the registration papers he noticed that the vehicle was registered under the name of a company called Resurrection Hill Limited (the company). He said he made inquiries of Tulapi about the ownership of the above company and he was told that it was owned by Tulapi and his brother. He says that he had no reason (at the time of the handing over to Tulapi the purchased price), to doubt the transaction between himself and Tulapi. He deposed that on 30th April 1999 he received a telephone call from Mr Nasun Yawake and Mr Augustin Lame who requested to see him urgently. He says that these two men met him and told him that the vehicle he had bought from Tulapi had been previously sold by Tulapi to an Engan person and that there was a dispute over it. He found out that Messrs Pato, Lawyers were acting for the Engan person. The Plaintiff then contacted Mr Alfred Manase of Pato Lawyers who informed him that the Engan man was a Mr Timmy Arete (Arete) who had a running dispute with Tulapi over the vehicle. He claims that he then wrote a letter to Mssrs Pato, Lawyers informing them that he had purchased this vehicle from Tulapi. On 30th April 1999, the Plaintiff changed the vehicle registration number plate from SAA 872 to BBA 256.

On 3rd May 1999 the Plaintiff telephone Arete and informed him that he had purchased the vehicle from Tulapi and that the vehicle was in his possession.

He further says that on 10th May 1999 he parked the vehicle at the upper level car park of the Port Moresby Travelodge as he was leaving for Australia. He returned from Australia on 14th May 1999 and when he went to the Port Moresby Travelodge to take possession of the vehicle he found that the vehicle was not there and was missing.

The Plaintiff’s next affidavit was of the 25th of July 1999. In that affidavit he says that he was informed by Tulapi that the vehicle had been driven away from the parking lot. He confirmed subsequently that the motor vehicle had been shipped out of Port Moresby and was in the possession of Arete in Wabag. He deposes that Arete confirmed over the telephone call referred to above that Tulapi and his relatives had taken possession of the vehicle and had handed it over to Arete’s agent in Port Moresby.

Arete relied on his affidavit of the 23rd August 1999. He also gave some oral evidence. In summary his evidence is that he entered into a written agreement with Tulapi for Tulapi to sell and for him (Arete) to buy the vehicle. The Agreement was in writing and was entered into and executed on 19th February 1999. The purchase price of the vehicle was K75,000.00.

I will refer to the terms of the Agreement later on in this judgment. On the same day (that is 19th February 1999) pursuant to the provisions of the agreement, Arete paid K30,000.00 to Tulapi as part payment of the purchase price. In consideration Tulapi gave the vehicle together with the key for it to him. He then took delivery and possession of the vehicle and drove away in it.

Subsequently on 18th and 19th March 1999 Arete made a further payments of K10,000.00 to Tulapi. These further payment were also part payments of the purchase price.

From the 19th February 1999 to 26th March 1999 the vehicle was in the custody and possession of Arete. During this time Arete was using the vehicle.

On 26th March 1999 Tulapi removed the vehicle from the possession of the Arete without his consent from the under cover car parking lot of the Port Moresby Travelodge. At that time the vehicle was with Arete pending transhipment to Lae.

Arete says that when he paid the initial deposit of K30,000.00, Tulapi also gave him the Registration papers of the vehicle, which revealed that the vehicle was registered in the name of the company. He too says that when he made enquiries with Tualpi as to who the company was, Tulapi told him that the company was owned by him and his brother and that there was no difficulty.

He says that after the vehicle was removed from the under cover car park of the Port Moresby Travelodge, he reported the theft to the Security Personnel at the Port Moresby Travelodge and then to the police at the Port Moresby Police Station. The vehicle was recovered the same day by the Police from Tulapi. It was then taken away and locked at the Boroko Police Station but subsequently removed by force by Tulapi. He says that despite his attempts to have the police take possession of the vehicle from Tulapi it became difficult for the Police to have the vehicle removed from Tulapi’s possession.

He deposes that he was not aware of the subsequent sale of the vehicle between the Plaintiff and Tulapi. He says he became aware of the purported sale between the Plaintiff and Tulapi when he was informed by his lawyers sometime in April 1999.

In his oral evidence he said that on or about the 10th May 1999 Tulapi rang him and told him to pay the outstanding balance of K35,000.00 and he would get the car. He said that as a result on 11th May 1999 he arranged for a bank cheque in the sum of K35,000.000 in favour of Tulapi’s company. The cheque was delivered to the Tulapi by his agent, one Elias Taim. He said Tulapi accepted the cheque and delivered possession of the vehicle to Elias Taim on his behalf.

UNDISPUTED FACTS

Much of the facts are not in dispute. I find that the following facts are not in dispute. At the relevant and material time Resurrection Hill Limited (the company) was the registered owner of the motor vehicle. Tulapi was either a director, shareholder or both of the company. He thus had either direct or implied authority to sell the motor vehicle.

I find that a valid and enforceable agreement for sale and purchase of the vehicle was entered into between Tulapi and Arete on 19th February 1999 for the sale and purchase of the vehicle, for the purchase price of K75,000.00. On 19th February 1999 Arete paid Tulapi a sum of K30,000.00 pursuant to Clause 2.2 of the Agreement as part payment of the purchase price. On the same date Tulapi handed over the possession of the vehicle, keys and registration papers to Arete. Arete thereupon took possession of the vehicle and drove the vehicle away. On 18th and 19th March 1999 Arete paid separate sums of K10,000.00 each to Tulapi as further part payments of the purchase price for the vehicle. Between the 19th February 1999 and 26th March 1999 Arete had in his possession and used the vehicle during that period. On 26th March 1999 the vehicle was unlawfully removed by Tulapi from the care, possession and custody of Arete.

Between the 26th March 1999 and 27th April 1999 Tulapi had the use, possession and control of the vehicle. 

On 27th April 1999 Tulapi purported to sell the vehicle to the Plaintiff for the sum of K50,000.00. I find that on that date the Plaintiff did in fact pay Tulapi the sum of K50,000.00 for the vehicle, whereupon Tulapi handed over the vehicle, it’s key and registration papers to the Plaintiff.

The Plaintiff then had the use and possession of the vehicle from 27th April 1999. I find that as at 27th April 1999 the Plaintiff was not aware that the vehicle had been previously sold to Arete. Between the 27th April 1999 and the 10th May 1999 the Plaintiff had the possession and use of the vehicle. 

On or about the 10th or 11th May 1999 Tulapi spoke to Arete for the payment of the balance of the purchase price namely K35,000.00. As a result, on 11th May 1999 Arete arranged for a bank cheque in the sum of K35,000 to be paid to Tulapi. This money was given to Tulapi by Arete’s agent Elias Taim. In return, Tulapi handed over the vehicle to Elias Taim, who then arranged for the vehicle to be shipped to Lae to Arete.

The issue in this case is whether Tulapi had valid legal title to sell the vehicle to the Plaintiff on 27th April 1999.

Mr Korowi submitted that Sections 21, 22, 24 and 25 of the Goods Act (Ch No 251) may be relevant in determining the issue. These provisions were not fully argued in this case. Consequently, other than making some general comments, I do not intend to examine and analyse these provisions in any length.

Before I consider these provisions, I think s.18 (1), (2), (3) (a) is relevant and ought to be considered first. Section 18 is in Division 2. 

"18.	Time of Passing of Property 
(1)	Where there is a contract for sale of specific or ascertained goods, the property in ………. Is transferred to the buyer at the time when the parties to the contract intend it to be transferred.
(2)	For the purpose of ascertaining the intention of the parties for the purposes of Subsection (1), regard shall be had –
(a)	to the terms of the contract; and
(b)	to the conduct of the parties; and
(c)	to the circumstances of the case.
(3)	Unless a contrary intention appears, the following rules apply in the ascertainment of the intention of the parties as to the time when the property in goods is to pass to the buyer:-
(a)	where there is an unconditional contract for the sale of specific goods in a deliverable state –
(i)	the property in the goods passes to the buyer when the contract is made; and
(ii)	it is immaterial whether the time of payment or the time of delivery or both are postponed; and

For the present purpose, in my view, s.18 (1), (2), (3) (a) are relevant and applicable. Section 18 (1) provides in clear terms that, where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at the time when the parties to the contract intend it to be transferred.

 Section 18 (2) provides that in order to ascertain the intention of the parties one must take into consideration the terms of the contract, the conduct of the parties and the circumstances of the case.

 Subsection 3 then specifically provides the rules in determining the intention of parties as to the time when the property in goods is to pass to the buyer. There are several categories of rules, but for our purpose the relevant category is to be found in s.18 (3) (a), which reads:

 "..... where there is an unconditional contract for the sale of specific goods in a deliverable state .....

(i)	the property in the goods passes to the buyer when the contract is made; and 
(ii)	it is immaterial whether the time of payment ..... (is) postponed."

Section 21 provides that a seller, who is not the owner or is not selling with the owner’s consent or authority, confers no better title on the buyer than he had himself (unless the owner is estopped by his conduct from denying the seller’s authority to sell. This general rule is subject to several exceptions, the most important of which are set out in s.22, 23, 24 and 25. These exceptions are not relevant or applicable in the present case.

It has been submitted on behalf of Arete that Tulapi had no valid title to sell the vehicle at the time he purported to sell it to the Plaintiff on 27 April 1999. It was submitted that under the terms of the agreement entered into between Tulapi and Arete on the 19th February 1999, completion took place on that date and the title to the vehicle was passed to Arete on that date. Here counsel for Arete relies on Clause 3 and 9 of the Agreement.

"3.	COMPLETION

3.1	Completion of this Agreement ("Completion") shall take place on the date of execution of this Agreement at Port Moresby notwithstanding that the balance of the purchase price has not been paid.

3.2	The Purchaser shall pay the balance of the consideration by unendorsed Bank cheque or cash to the Vendor’s banked with PNGBC/BSP, Waigani Account No
1.	The sum of K45,000.00 within three (3) weeks from the date of this agreement; and

3.3	Upon payment of K30,000.00, the Vendor shall deliver to the Purchaser:-
(a)	the current registration papers for the Vehicle plus transfer  documents duly executed in favour of the Purchaser.
(b)	copies of all papers in relation to all policies of Insurance of  the vehicle including all third party Insurance etc.
(c)	Log Book (If any).

3.4	If the purchaser shall not have paid the balance of the purchase  price as provided for herein, the Vendor shall be entitled to recover such of the balance of the purchase price as maybe outstanding as a debt and not otherwise. 

9.	REMEDIES ON DEFAULT

If the Purchaser fails to pay the balance of the purchase price, the Vendor may at his option without prejudice to any other rights available to him at law or in equity may cancel this agreement in which case he may pursue all or any of the following remedies, namely:

(a)	Forfelt and retain for his own benefit from the deposit paid by the Purchaser an amount of K30,000.
(b)	Sue the Purchaser for damages for the balance of the purchase price but in the event he shall be required to give credit for any deposit retained by him and not otherwise."

It was further submitted that in the event of default the only remedies available to Tulapi as against the Arete was to sue him for the unpaid outstanding balance as a debt and not otherwise. His further remedy was to forfeit and retain the deposit of K30,000.00, and sue for any outstanding amount as a debt. He submitted that there is uncontested evidence that Arete paid K30,000.00 and took possession of the vehicle on 19th February 1999. It was further submitted that there was no evidence that the Agreement had been cancelled and that there was no provision for the First Defendant to repossess the vehicle in the event of the non-payment of balance of purchase price. The only remedy Tulapi had against Arete was to sue for the unpaid balance as a debt. It was submitted that Arete was therefore a bona fide purchaser and therefore the legal owner of the vehicle. Mr Pool submitted that as such the purported subsequent sale to the Plaintiff was null and void as Tulapi had no valid legal title to sell the vehicle.

For the Plaintiff it was not seriously contended that Tulapi had a valid title to sell to the Plaintiff.

Further, it was submitted that if it was found that the subsequent sale to the Plaintiff was invalid then the Court ought to order Tulapi to repay the K50,000.00 to the Plaintiff. In addition the court was urged to award some damages for mental distress to the Plaintiff.

The rights and obligations between Arete and Tulapi are as set out in their written agreement. The terms of that agreement described the parties and the goods (the vehicle) to be sold. It also stated the purchase price for the vehicle and also set how the purchase price was to be paid. More importantly it set the terms of transfer of title and also set out the remedies for Tulapi in the event of a default on the part of Arete. I find that there was a legally valid and binding contract between Arete and Tulapi. I further accept that this contract was not cancelled.

 In my view title to the vehicle passed to Arete in accordance with the Clause 2.2 of the Agreement on 19th February 1999. The evidence shows that the Arete made partial payment of K30,000.00. It was an expressed term of the agreement that completion will take place and title would pass onto Arete on the signing of the agreement. Moreover on the payment of the deposit Arete took possession of the vehicle. He then used it from 19th February 1999 until 26th March 1999 when it was removed unlawfully from his possession by Tulapi. During that period Arete made additional payments towards the purchase price of the vehicle in accordance with the terms of the agreement.

It is clear from the terms of the agreement, as I have set out above that the parties’ intended that title to the vehicle was to pass to Arete on the signing of the agreement. Moreover the undisputed evidence from Arete confirms that the parties intended that title to the vehicle was to pass to the purchaser on 19th February 1999. All of this evidence point to the conclusion that the parties intended that title to the vehicle was to pass to Arete as at 19th February 1999.

It follows from this, that the subsequent repossession by Tulapi of the vehicle, was unlawful. Further more, in my view Tulapi had no valid legal title to sell the vehicle thereafter. Consequently the purported sale to the plaintiff was void. In other words Tulapi passed no valid title to the Plaintiff.

Thus in my view Tulapi had no valid legal title to the vehicle at the time he purported to sell it to the Plaintiff on 27th April 1999. He had no valid title to pass to the Plaintiff. He had, in my view acted fraudulently in his purported sale to the Plaintiff. Thus the Plaintiff acquired no valid title to the vehicle.

There is overwhelming evidence that the Plaintiff paid K50,000.00 to Tulapi for a vehicle he had no title to sell. In the circumstances, the Plaintiff is entitled to have that money paid back to him. There will therefore be judgment entered in favour of the Plaintiff for the sum of K50,000.00 together with interest there on from the date of the issuing of the Writ to today.

In addition the evidence also shows that Tulapi misled the Plaintiff into thinking that he had a clear title to the vehicle to sell to him. The Plaintiff paid K50,000 for the vehicle, only to find that Tulapi had no title to sell. As a result of Tulapi’s action, the Plaintiff has suffered considerably in the whole of the circumstances. This involved the Plaintiff having to issue proceedings. I accept his evidence that all these have caused him embarrassment, anxiety and mental distress. There will therefore be judgment for the Plaintiff under this head, which I assess at K10,000.00 being damages for mental distress etc. 

In so far Arete is concerned, he has not pleaded or made a claim for this. Accordingly, I would not award any damages to him for any mental distress that he might have suffered.

In so far as the Plaintiff’s claim against Arete is concerned, I find that really there was no cause of action against him. He was not a party to the actions of Tulapi which gave rise to those proceedings. Consequently, the Plaintiff’s claim against Arete is dismissed.

In so far as Arete’s cross claim is concerned, his evidence remains undisputed and unchallenged. I would accept his evidence. I am satisfied on all of the evidence from Arete that his cross claim against Tulapi must succeed. From all the evidence it is clear that Tulapi was in breach of the Agreement between him and Arete. Arete therefore suffered loss for that and for loss and enjoyment of the use of the vehicle. I think that in all these circumstances I must award some damages for breach of contract to Arete. On the evidence, I give judgement to him in the sum of K15,000.00.

For these reasons I would make the following orders:

1.	I declare that Timmy Arete is the legal owner of the vehicle.
2.	I declare that the purported sale of the vehicle by Tulapi to the Plaintiff on 27 April 1999 is null, void and of no effect.
3.	I give judgment in favour of Plaintiff against Tulapi, as follows: 

(a) In the sum of K50,000.00
(b) Interest at 8% 9,644.80
(c) Damages for mental stress etc. 10,000.00
(d) Interest at 8% 1,927.20
__________
Total due to Plaintiff from Tulapi	K71,572.00
__________

4.	I give judgment in favour of Arete against Tulapi as follows:

1. General Damage for breach of Contract K15,000.00
2. Interest 8% (from date of cross-claim to today) 1,065.96
__________
Total due to Arete from Tulalpi	K16,065.96
__________

5.	That the Plaintiff’s claim against Arete be dismissed.
6.	That Tulapi shall pay the costs of the Plaintiff and Arete.
7.	That the Plaintiff shall pay Arete’s costs.

I direct that judgment be not entered for fourteen (14) days from to-days date. The parties may during that time apply to the court to vary the judgement to correct errors of calculation or errors of a similar kind. If the parties are agreed that such an error has been made, it may be dealt with by chamber order. Otherwise, the judgment shall take effect and may be entered at the end of that time.
_____________________________________________________________________
Lawyers for the Plaintiff			:	Paul Paraka Lawyers
Lawyers for the First Defendant		:	…
Lawyers for the Second Defendant		:	Pato Lawyers