N3227

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 733 OF 2005

BETWEEN:

PAMELA IPI PANGU
First Plaintiff

AND:

IPANGU REAL ESTATE
Second Plaintiff

AND:

IAN ELLERY
First Defendant

AND:

KONEBADA NO. 38 LIMITED
Second Defendant

Lae: Manuhu J
2007: 11 May & 14 June

RULING

PRACTICE AND PROCEDURE – Motion to dismiss proceeding – Ground – No cause of action – Consideration of.

CONTRACT –Contract of sale of property – Specific performance – Availability of.

CONSTITUTION – Inherent powers: Section 155 (4) - Refund of 10 per cent deposit not triable issue – Substantive orders made for refund. 

Case cited

Maip Pty Limited v Ambra Coffee Estates [1995] PNGLR 25.

Counsel: 

D. Gonol, for the Plaintiffs. P. Ousi, for the Defendants.

14 June, 2007

1.	MANUHU, J.: Introduction: This is an application by Ian Ellery and Konebada No. 38 Limited to set aside interim injunctive orders and to dismiss the substantive proceeding. The substantive matter, commenced by way of an originating summons, seeks orders for specific performance for the Defendants to sell a certain property to the Plaintiffs or in the alternative that the 10 per cent deposit be reimbursed with subsequent costs. In the interim, the Plaintiffs obtained an order preventing the Defendants from disposing of the property to another purchaser with a better offer.

The facts

2.	The Defendants advertised their property described as Konebada Building or Post Courier Building for sale for K1.45 million. The Plaintiffs made a 10 per cent deposit of K145,000.00 "subject to finance and any counter offers exceeding your offer". The parties did not execute a formal contract of sale and after receiving a higher offer from another purchaser the intended sale to the Plaintiffs was terminated. 

The issues

3.	It is not disputed that the Plaintiffs are entitled to the refund of their 10 per cent deposit. I will return to this aspect later. The immediate issue is whether the Plaintiffs are entitled to the equitable remedy of specific performance; and, whether the consequential restraining order preventing the Defendants from disposing of or dealing with the property is maintainable.

Specific performance

4.	It is trite law that specific performance is a remedy designed to compel a defendant to perform or carry out the obligation expressly or impliedly imposed upon him by the contract between him and the other contracting party. Specific performance is, however, available only when damages, which purpose is to restore the injured party to the position he was in immediately before the breach, is not adequate. 

5.	It is also trite law that there can be no contract of sale of property until such time such formal contract of sale is executed by the parties. Under the Fraud and Limitation Act 1988 (s.2), no interest in land can be created or disposed of except by writing signed by the person creating or disposing of the interest or by that person’s agents lawfully authorized in writing for the purpose. 

6.	Similarly, under s. 4, no action can be brought upon a contract for the sale or other disposition of land or an interest in land unless the contract, or some note or memorandum of the contract, upon which the action is brought is in writing signed by the person against whom the action is brought; or by an agent of that person lawfully authorized in writing for the purpose. See Maip Pty Limited v Ambra Coffee Estates [1995] PNGLR 25, per Woods J.

Application of law to the facts

7.	In this case, in the absence of a formal contract of sale, the Plaintiffs cannot claim any right over the property. The Plaintiffs should have obtained an order for the reimbursement of the said K145,000.00. It is as simple as that. The property, on the other hand, is simply not theirs and they do not have the right to demand that it be sold to them. They also do not have the right to stop the Defendants from dealing with and disposing of the property. 

8.	Accordingly, the claim for specific performance is unfounded in law. It follows also that the Plaintiffs cannot restrain the Defendants from dealing with or disposing of the property. 

Refund of 10 per cent deposit

9.	The balance of the originating summons relate to the refund of K145,000.00 which is not disputed. I have been asked to dismiss this claim too but I am reluctant to oblige because the claim is not disputed. I am specifically asked to dismiss this particular claim because reimbursement has been made in full. I am, however, also reluctant to dismiss the claim because evidence suggests that full repayment has not yet been made. 

10.	The evidence of Mike Quinn suggests that only K96,947.56 has so far been paid. Similarly, the evidence of Danny Gonol suggests that only K123,798.20 has so far been paid. Whatever is outstanding, it is apparent that payments already made into the Plaintiffs’ lawyers Trust Account do not represent the full payment of the 10 per cent deposit. 

11.	For these reasons, I am not sufficiently persuaded to dismiss this head of claim.

12.	However, on the basis of the pleadings and evidence, and I do not think the situation will change in the future, there is no need to send the parties to trial on the question of refund of the 10 per cent deposit. I appreciate that this is not a hearing on the substantive issue but it is very obvious that the parties are not disputing that the Plaintiffs are entitled to the refund. 

13.	I am also mindful of the parties’ right to be heard but, as I was saying, there is no dispute in relation to the refund of the 10 per cent deposit. I am also mindful that further proceeding will mean further legal costs to the parties. I am further mindful of the growing need to expedite cases before the courts. In that regard, on the facts, it is disappointing that the matter was made to look bigger and harder when the solution to the dispute was very clear and simple. I do not see any reason for delaying the refund of the 10 per cent deposit. 

14.	I am, therefore, adequately compelled to invoke my inherent powers under s. 155(4) of the Constitution "to do justice in the circumstances". I will accordingly make an order to facilitate the refund of the 10 per cent deposit taking into account whatever has already been paid so far. 

Costs

15.	In relation to the question of cost, the nature of the orders I am about to make means that the dispute between the parties, subject to the right of appeal, is now over. This conclusion, which is beneficial to both sides, has come about as a result of the Defendants’ application, which the Plaintiffs should be thankful for. 

16.	The Defendants’ application was necessitated by heads of claims in the originating summons which, except the claim for refund, were not based on trite legal principles and statute law. As alluded to, the proceeding was made to look bigger than it really is and the Defendants were unnecessarily prevented from dealing with their property. I am somewhat fascinated by the insistence that, despite there being no formal contract of sale, if the property has already been sold, such sale should be voided. Equity follows the law and will not create such a mess. 

17.	I take into account that the Plaintiffs were awarded costs in previous interim proceedings. I also note that the refund of the 10 per cent deposit will normally be accompanied by 8 per cent interest and I have no reason to decide otherwise. For these reasons, it is just and fair that, this time, cost should be awarded to the Defendants.

Conclusion

18.	For the foregoing reasons, the claim for specific performance, which is unfounded in law, is dismissed. It follows that the interim orders restraining disposition of the property is unsustainable, is set aside and dismissed. By virtue of my inherent powers under section 155 (4) of the Constitution, I will make a substantive order for the refund of the 10 per cent deposit with 8 per cent interest. Cost is awarded to the Defendant. 

Orders

19.	For clarity, the orders of the Court are as follows:

a)	The Ex parte injunctive orders obtained by the Plaintiffs on 2 July, 2005 made absolute on 12 August, 2005 are set aside.

b)	The Plaintiffs’ claim for specific performance in paragraph 1 of the originating summons is dismissed.

c)	The Plaintiffs’ claim for interim orders restraining the Defendants’ from dealing with and disposing of the property is dismissed.

d)	The Defendants shall pay to the Plaintiffs the sum of K145,000.00 forthwith with 8 per cent interest.

e)	Compliance and enforcement of the order for reimbursement shall take into account any payment already made to the Plaintiffs’ Lawyers Trust Account.

f)	These orders supersede all previous interim orders including the garnishee orders.

g)	Cost of this application is awarded to the Defendant which, if not agreed, shall be taxed. 

___________________________________

Paulus Dowa Lawyers: Lawyer for the Plaintiffs
Warner Shand Lawyers: Lawyer for the Defendants