N5098

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1216 OF 2006

BETWEEN:

ERIC KISO
Plaintiff/Cross Defendant

AND:

BENNIE OTOA
First Defendant

AND

KEN WUTNALOM
Second Defendant/Cross Claimant

Waigani: Hartshorn J.
2011: 20th April
: 8th August

Trial

PROPERTY – claim for specific performance of agreement to sell property – whether cross claimant has indefeasible title to property – whether specific performance can be ordered against first defendant when cross claimant has title to the property

Facts:

The plaintiff entered into an agreement with the first defendant to buy the first defendant's property for K18,000. The plaintiff paid a deposit of K6,000 and took possession of the property. The first defendant was to obtain the title to the property from the National Housing Corporation and then transfer the title to the plaintiff. The first defendant obtained title to the property in May 2006 but failed to transfer the title to the plaintiff. The cross claimant purportedly purchased the property in December 2008. The plaintiff claims specific performance of the agreement or alternatively damages against the first defendant. The plaintiff has remained in and continues to be in possession of the property.

Held:

1. There is no evidence of fraud, whether constructive, equitable, or actual by the cross claimant, the registered proprietor. 

2. The cross claimant has acquired an indefeasible title to the property and is entitled to vacant possession of the property.

3. The first defendant would not be able to comply with an order for specific performance and so an award of damages is the appropriate remedy against the first defendant.

Cases cited:

The Papua Club Inc. v. Nusaum Holdings Ltd (No. 2) (2004) N2603
Koitachi Ltd v. Walter Schnaubelt (2007) SC870

Counsel:

The Plaintiff/Cross Defendant in person
Mr. K. Imako, for the Second Defendant/Cross Claimant

8th August, 2011

1. HARTSHORN J: The plaintiff Mr. Eric Kiso claims that in December 1993, the first defendant Mr. Benny Otoa agreed to sell a residential property to him for K18,000. At that time, Mr. Kiso paid K6,000 of the purchase price and took possession of the property. Mr. Otoa was to obtain the title to the property from the National Housing Corporation and then transfer the title to Mr. Kiso. Mr. Otoa obtained title to the property in May 2006 but failed to transfer the title to Mr. Kiso. Mr. Kiso claims specific performance of the agreement or alternatively damages against Mr. Otoa. Mr. Kiso has remained in and continues to be in possession of the property.

2. The matter was called for trial. Notwithstanding that Mr. Kiso informed the court that he had notified Mr. Otoa of the hearing date of the trial, there was no appearance by him or representation on his behalf. The trial proceeded in the absence of Mr. Otoa pursuant to Order 10 Rule 12 (b) National Court Rules.

3. Mr. Ken Wutnalom was joined as the second defendant to the proceeding in May 2010. Mr. Wutnalom claims that he purchased the property from Mr. Otoa in December 2008 and is the registered proprietor registered upon the state lease for the property.

The pleadings

4. Mr. Kiso's statement of claim does not contain any allegations or seek any relief against Mr. Wutnalom. Notwithstanding Mr. Wutnalom's joinder as second defendant, Mr. Kiso has not filed an amended statement of claim that contains any allegations and seeks relief against Mr. Wutnalom. Consequently Mr. Kiso is not claiming and is not entitled to any relief against Mr. Wutnalom on his statement of claim.

5. Mr. Otoa has not filed a defence to Mr. Kiso's statement of claim. Mr. Wutnalom has filed a defence to the statement of claim and has also filed a cross-claim against Mr. Kiso seeking vacant possession of the property and damages. Mr. Kiso has filed a reply and defence to the cross claim.

Statement of claim

6. As mentioned, Mr. Otoa has not filed a defence. The allegations against him in the statement of claim are unchallenged. Accordingly, Mr. Kiso is entitled to judgment against Mr. Otoa. As to the relief that should be granted to Mr. Kiso, Mr. Kiso claims specific performance or alternatively damages in lieu and damages for breach of contract. Before deciding to what relief Mr. Kiso is entitled, I will consider the merits of the cross-claim in which vacant possession of the property is sought by Mr. Wutnalom. This is because if the court finds that Mr. Wutnalom is the registered proprietor of the property, Mr. Otoa would not be, and would not be able to comply with an order for specific performance.

Cross claim

7. As to the evidence, Mr. Wutnalom has put into evidence a copy of the state lease for the property that shows that he is the current registered proprietor registered on the state lease for the property and that the previous registered proprietor was Mr. Otoa.

8. Mr. Kiso alleges in his defence to the cross-claim that any transfer of title of the property between Mr. Otoa and Mr. Wutnalom is illegal and void as it occurred because of fraud and is a breach of restraining orders of this court. As to a breach of restraining orders, I am not satisfied that the evidence establishes that Mr. Wutnalom was aware of such orders, if indeed, such orders existed at the time of his purchase of the property. As to the fraud allegation, I am not satisfied that the evidence establishes any fraud; the evidence consisting merely of unsubstantiated allegations.

9. In this regard I refer to the Supreme Court case of Koitachi Ltd v. Walter Schnaubelt (2007) SC870 where the Court adopted the views of Gavara Nanu J. in The Papua Club Inc. v. Nusaum Holdings Ltd (No. 2) (2004) N2603 which are that fraud in s. 33 (1) Land Registration Act means more than constructive or equitable fraud and that fraud means fraud committed by the registered proprietor or actual fraud.

10. Here, I am not satisfied that there is particular evidence of fraud, whether constructive, equitable, actual or by the registered proprietor. Consequently I am satisfied that Mr. Wutnalom as the registered proprietor, has acquired an indefeasible title to the property. In the absence of any title, and any title that would take precedence that Mr. Kiso has to the property, Mr. Wutnalom is entitled to vacant possession of the property. Given this finding, Mr. Otoa would not be able to comply with an order for specific performance.

Orders

11. The Orders of the Court are:

a)	judgment is entered for the plaintiff against the first defendant upon the statement of claim with damages to be assessed.

b)	the first defendant shall pay the costs of the plaintiff of and incidental to the hearing upon the statement of claim.

c)	judgment is entered for the cross claimant against the cross defendant upon the cross claim with damages to be assessed.

d)	the costs of the cross claimant of and incidental to the hearing upon the cross claim shall be paid by the cross defendant.

e)	the cross defendant shall give vacant possession of the land and property situated at Allotment 12 Section 295 Hohola being all the land contained in State Lease Volume 91 Folio 84, to the cross claimant within 14 days of today.

____________________________________________________________

Plaintiff/Cross Defendant In person 
Rageau Manua & Kikira Lawyers: Lawyers for the Second Defendant/Cross Claimant