N3248

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1748 of 2003

BETWEEN:

LEONTINE OFOI
Plaintiff

AND:

KRIS BONGARE
Defendant

Waigani: Injia, DCJ.
2007: 20 July

CIVIL – Claim for re-imbursement of monies spent on rebuilding house owned by de facto husband – Expenses incurred based on promise to marry – Equitable trust created – Breach of - Enforcement of - Expenses not amounting to "everyday expenses incurred in course of the relationship" allowed – Monies spent on rebuilding the husband’s house recoverable – Judgment for the plaintiff in the sum of K101,185.79 – Defendant restrained from selling house until judgment is settled in full.
 
PNG Cases cited:

Bulage v Ben [1990] PNGLR 473

Overseas Cases cited:

Balfour v Balfour [1919] 2 KB 571. 
Binions v Evans [1972] Ch. 359; 
Cooke v Head [1972] 1 W.L.R 518 
Eves v Eves [1975] 1 WLR 1338
Gissing v Gissing [1971] A.C. 886 
Husley v Palmer [1972] 1 W.L.R. 1286
Synge v Synge [1894] 1 QB 466. 
Counsel:

S. Kassman and J. Nidue, for the Plaintiff
A. Amet (Jnr), for the Defendant

20 July, 2007

1. INJIA, DCJ: The trial on this action was commenced initially inter partes. The plaintiff gave her evidence, was cross-examined and the matter was adjourned for the defendant’s case to commence. The defendant and/or his counsel failed to attend on the date and time fixed. After further adjournment and notification to the defendant’s lawyer and their failure to attend, I granted leave to the plaintiff to proceed ex parte. The plaintiff’s lawyer filed two written submissions for my consideration.

2. The evidence before me consists of the plaintiff’s evidence and the following affidavits:

i.	Exhibit "A" – Plaintiff’s affidavit sworn on 5 December 2003 and filed on 8 December 2003.

ii.	 Exhibit "B" – Plaintiff’s affidavit sworn and filed on 12 December 2003.

iii.	Exhibit "C" – Plaintiff’s affidavit sworn on 29 July 2005 and filed on 9 August 2005.

iv.	Exhibit "D" – Affidavit of J. Ofoi sworn and filed on 21 July 2005.

v.	Exhibit "E" – Affidavit of Mary Kassman sworn and filed on 21 July 2005.

3. I have considered the evidence and submissions.

4. There is no dispute that the plaintiff and the defendant lived in a de facto relationship between 1996 – 2001. They have a son from that relationship, born on 11 February 1998. In this period, they occupied the property situated on Section 21 Allotment 38, Vavai Avenue (the property), Boroko. The property is owned by the defendant. In March 2001, they separated. The defendant went on to marry another woman. 

5. The plaintiff’s claim is for:- (a) transfer of the property to her or alternatively re-imbursement of expenses incurred in repairing or re-building the house situated on the property; (b) re-imbursement of expenses incurred on a motor vehicle owned by the defendant; (c) for compensation for another motor vehicle owned by the plaintiff but damaged beyond repair by the defendant’s agents; and (d) re-imbursement of money she spent on his education. 

6. The defendant denies the claim and says even if she incurred those expenses, she did so out of total love and affection for him, that in the circumstances, there was no legally binding agreement entered into for the reimbursement of these monies and therefore they are not recoverable. In respect of the house he says no proper physical planning and building approval was obtained from relevant authorities. She has failed to prove that she built the house of the description given in her evidence.

7. In my view, except to the extent that the defendant through cross-examination contested the plaintiff’s evidence in certain respects, the plaintiff’s evidence remains virtually uncontested. 

8. The main issue is whether the defendant, in law should reimburse these monies. I will first deal with the claim over the property.

9. The plaintiff’s main claim is over the house. The evidence adduced by the defendant in cross examination in effect do not challenge the plaintiff’s main evidence that she spent her own money to tear down the old house and built a new house in its place. The issue remains to be determined whether the defendant approved of this. The evidence clearly establishes the fact that the plaintiff pulled down the old house and built a new house on the defendant’s land, the house is still there, the defendant remains the owner of that house and he is benefiting from its use, to the exclusion of the plaintiff. The oral evidence is that the new house is valued at K250,000. The new house cost K122,390.25. The plaintiff contributed K92,790.50 and the defendant contributed K29,599.75. As a Senior officer of the Investment Corporation, (now ICPNG), I am satisfied she had sufficient finances to cover the cost of the building. Her share of the cost came from her retrenchment benefits paid to her in 1999 by her former employer. In her evidence, she has summarized each item of expenditure and substantiated them with copies of receipts. I am satisfied that the amount she says she spent is reasonable and I accept her evidence.

10. In my view, the defendant’s assertion that there is no evidence of any approved building plan, physical planning approval and certificate of completion issued by the relevant authority is no answer to the fact that the plaintiff pulled down the old house and built a new house and he is now its sole owner and he and his new wife are the beneficiary of the house. The only valid issue raised by the defendant in cross examination is whether the plaintiff is entitled at law to recover this money.

11. The plaintiff accepts that there is no written contract between them on the demolition of the old house and the construction of the new house. But I accept her evidence that the work was done with the full knowledge and verbal and tacit approval of the defendant, who at the material time was studying overseas. 

12. Her claim in law is based on what her lawyer submits is a breach of a quasi-contract and based on principles of equity relating to doctrine of estoppel by acquiescence or "propriety estoppel". It is in two parts. First, the defendant allowed or agreed to the plaintiff spending her own money on the house on the understanding that the property would be transferred to her and their son. He allowed or agreed to her pulling down the old building and building a new one. Based on that agreement, she spent her retrenchment money and demolished the old house and built a new one. He breached the agreement by leaving her and their son and married a new woman in March 2001. The plaintiff seeks to enforce the contract by seeking orders in the nature of specific performance by ordering him to transfer the house to her and their son or alternatively to reimburse the money she spent. 

13. In my view, an action to enforce an oral agreement to transfer legal title to the property to the plaintiff and her son would not be possible as an agreement to transfer interest in land is required by statute to be in writing: ss 2 & 4 of Frauds and Limitations Act 1988. As there was no such written agreement, no action lies upon an oral agreement to transfer land.

14. The question is whether there was such an agreement(s) that is enforceable at law. The evidence shows that the agreement was in the nature of a promise to marry the plaintiff. At law it is possible for a man and a woman living outside lawful wedlock or de facto relationship to enter into an agreement to improve or purchase real or personal property, based on a promise to marry. 

15. The case of Eves v Eves [1975] 1 W.L.R 1338 cited by the plaintiff’s counsel is a case on point. There is also a local case on point which the plaintiff’s lawyer has overlooked and that is Bulage v Ben [1990] PNGLR 473, a National Court judgment of Brunton, J. in which Eves case was cited.

16. Eves’ case, involved two divorcees. The man induced the woman to live with him, intending to marry her sometimes later. They lived in a de facto relationship and had several children. During the relationship, the man bought a house for them to live in. They intended to buy the house as a family home under their joint names but could not because the woman was below 21 years of age and therefore lacked capacity to hold title to property in her own name. He purchased the house in his own name but he intended to convert it to a joint tenancy after their respective pre-existing divorces came through and she came of age. Although the woman did not contribute to the purchase of the house financially, she worked hard to maintain and improve the house as any normal wife would do in respect of their family house. When she turned 21 and the divorces came through, she asked him to enter into the marriage but the man said nothing and went on to marry another woman. The woman and her children were forced out of the house. The woman sued the husband for a share in the house.

17. On appeal, the English Court of Appeal found in favour of the woman. The Court applied the principle of constructive trust developed by Lord Diplock in Gissing v Gissing [1971] A.C. 886 at 905 which was followed in a number of cases including Binions v Evans [1972] Ch. 359; Cooke v Head [1972] 1 W.L.R 518 and Husley v Palmer [1972] 1 W.L.R. 1286. In Cooke’s case, Lording Denning amplified the principle as follows:

". . . whenever two parties by their joint efforts acquire property to be used for their joint benefit, the courts may impose or impute a constructive or resulting trust. The legal owner is bound to hold the proper on trust for them both. This trust does not need any writing. It can be enforced by an order for sale, but in a proper case the sale can be postponed indefinitely. It applies to husband and wife, to engaged couples, and to man and mistress, and maybe to other relationships too."

18.	Lord Denning applied those principles to the facts of Eves’ case as follows:

 "The principle does apply in the present case. Although Janet did not make any financial contribution, it seems to me that this property was acquired and maintained by both by their joint efforts with the intention that it should be used for their joint benefit until they were married. And thereafter as long as the marriage continued. At any rate, Stuart Eves cannot be heard to say to the contrary. He told her that it was to be their home for them and their children. He gained her confidence by telling her that he intended to put it in their joint names (just as married couples often do) but that it was not possible until she was 21. The judge described this as a "trick," and said that it "did not do him much credit as a man of honour." The man never intended to put it in joint names but always determined to have it in his own name. It seems to me that he should be judged by what he told her—by what he led her to believe—and not by his own intent which he kept to himself. Lord Diplock made this clear in Gissing v Gissing [1971] A.C. 886, 906.

"It seems to me that this conduct by Mr Eves amounted to a recognition by him that, in all fairness, she was entitled to a share in the house, equivalent in some what to a declaration of trust; not for a particular share, but for such share as was fair in view of all she had done and was doing for him and the children and would thereafter do. By so doing he gained her confidence. She trusted him. She did not make any financial contribution but she contributed in many other ways. She did much work in the house and garden. She looked after him and cared for the children. It is clear that her contribution was such that if she had been a wife she would have a share in it on a divorce: see Wachtel v Wachtel [1973] Fam. 72, 92 – 94.

"In view of his conduct, it would, I think, be most inequitable for him to deny her any share in the house. The law will impute or impose a constructive trust by which he was to hold it in trust for them both".

19. In Bulage’s case, the man and woman lived in a de facto relationship. During that relationship, she had a child by him. He spent a total of K1,840 on her for things like giving her cash money, paying her brother’s bride price, money for school fees for children from her previous marriage, compensation for death, etc. Later they separated. The man sued the woman for repayment of those expenses. On appeal, Brunton J found in favour of the woman. His Honour distinguished between those types of "every day expenditure incurred during the course of the relationship" which are not recoverable in law and those types of expenditure on "particular items of property accumulated, or passed during such a relationship" which are recoverable in law. His Honour said:

"If there was to be a legal basis for the cause of action, it would have been either in statute or in case law. There is no statute that gives a man the right to sue his girlfriend for the money he spends on her. In this country there are no rules of law developed by the courts which would support such an action. Outside of marriage, men and women do spend sums of money on each other in the process of courtship, and when they entered de facto relationship. An action may lie in respect of particular items of property accumulated, or passed during such a relationship. For example a couple may live together, and through their joint effort purchase a house, or car. When they break up, there may be questions of how the property is to be partitioned, or who has the ownership of the property. But there is no action to recover the every day expenditure incurred during the course of the relationship. In many cases outlays of cash will be in the nature of domestic expenditure on food, clothing and other essentials. In other cases the expenditure will be of the sort to which formal, or business relations are not normally attributed, outlays made as a result of the love or affection existing at the time between the parties. They are not matters to which the courts attribute a contractual relationship: see Balfour v Balfour [1919] 2 KB 571. This does not mean that married couples or couples living together cannot enter into legal relationships in respect of property. For example, where a man before marriage promised his future wife to leave her a house if she married him, the woman was able to enforce the promise although it was made informally and in affectionate terms: Synge v Synge [1894] 1 QB 466. A more modern example is Eves v Eves [1975] 1 WLR 1338. That was a case of an unmarried couple living together as husband and wife. It was said to be part of the bargain between the parties, expressed or to be implied that the woman should contribute her labour towards repairing the house and get a beneficial interest in the house. This arrangement was held to be enforceable by way of either contract or constructive trust. The essence of the modern cases seems to be that there was some sort of an agreement, either express or implied between the parties in relation to some property, and that one of the parties acted in reliance on the promise, and contributed labour, or other resources, on the basis of the promise (either express or implied).

"In this case there was no evidence of any promise either express or implied. There was no evidence that the expenditure went towards a particular item of property that the respondent could claim. The expenditure was of the general nature that Papua New Guineans face in the course of their lives. – bride-price, birthday parties, dinau (credit) at the trade store, compensation for a death. If a man enters into a relationship with a woman and in order to keep her happy, and himself happy too, spends money on her, then he cannot claim that money back if she eventually leaves him. The same would apply to a woman who laid out money in her relationship with a man. The situation may be different if there is evidence of some enforceable agreement between the parties, or the parties acquired a particular item of property, be it real property, a chattel, or a chose in action."

20. I would adopt the same approach as in Bulage’s case, by adopting the principle of constructive trust in Eves’ case and with appropriate modification, apply it to the present case. In my view, it is clear that both parties intended to develop a permanent marriage relationship at some point in time, in preparation of which they lived together under one roof for three years. The arrangement was genuine because it was based on mutual love and affection, or as defence counsel eloquently put it in cross-examination, "out of total love and affection" for each other. Both parties are educated professional people and they were not mistaken as to the nature of this relationship and their intentions. They shared the house and agreed to re-build it in good faith. She spent her own money on the house in good faith, with the full knowledge and approval of the defendant. She worked hard to pull down the old house and built a new one. The defendant of course contributed to the cost but the plaintiff met a substantial portion of the cost. The defendant was consulted at every phase of the demolition and re-building project. After the house was completed it was rented out and was making good money. This kind of expenditure of a business nature can hardly fall under the category of "every day expenditure incurred in the course of the relationship". Upon his return from his overseas course, he turned his back on the plaintiff and went on to marry another woman. But he and his new wife still enjoy the occupation and use of the house built by the plaintiff.

21. I am satisfied that a constructive trust was created by agreement in the connection with an agreement to marry. The agreement is valid and enforceable in equity. It would be most unfair and most un-equitable that he should not marry the plaintiff and told her to leave without a penny in recompense for the house she built after he married another woman. The defendant must repay her share of the cost of building the new house. If he is unable to find the money, he should sell the property and repay her share. Alternatively, the plaintiff should enforce the judgment in the usual manner and execute the property to satisfy the judgment.

22. In respect of the car Reg. No. BAZ 650 which is owned by the defendant, he should reimburse the sum of K8,395.29 she paid to repay the lease, for the same reasons I have given above. The lease was a private business arrangement between the defendant and the finance company. In ordinary circumstances, had it not been for the defendant’s intention to marry her, she would not have repaid his personal business debt. 

23. In respect of the motor vehicle Reg. No. AGM 492 owned by the plaintiff and the defendant’s education expenses met by the plaintiff, I consider these expenses to be part of every day expenses in a de facto relationship. I would not allow these claims.

24. For these reasons, I enter judgment on liability in favour of the plaintiff and award damages in the total sum of K101,185.79 plus interest at 8 percent to run from the date of judgment plus costs.

25. Further, in order to safeguard the plaintiff’s interest in securing satisfaction of the judgment, I order that the defendant and the Registrar of Titles, his officers or agents are permanently restrained from dealing with the property situated on Section 21 Allotment 38, Vaivai Avenue, Boroko, State Lease Volume 6, Folio 1292, until the judgment is settled in full by the defendant. 

_______________________________________________

Kassman Lawyers:  Lawyer for Plaintiff
Amet Lawyers: Lawyer for Defendant