N6856
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 854 OF 2013

BETWEEN

JACOB KAUVA
Plaintiff

AND
ANTONY EDWARD CAVANAGH
Defendant

Kokopo: Anis AJ
2017: 26th July, 10th & 30th August  

REAL PROPERTY – claim for cancellation and return of title of property based on constructive fraud - purported oral agreement for transfer of interest in land - followed by subsequent contract of sale of land - section 2 and section 4 - Frauds and Limitations Act 1988 - dealings in interest in land to be in writing - purported oral agreement not supported with documentations - constructive fraud based on alleged coercion, intimidation, blackmail and purported facts surrounding signing of the contract of sale

Cases cited:

Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215
Gire Gire Estates Ltd v. Barava Ltd (2016) N6473
Koang No. 47 Ltd v. Monodo Merchants (2001) SC675
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Kol Toki v. Moeka Morea Helai (2016) SC 1558
Leontin Ofoi v. Kris Bongare (2007) N3248
Pamela Ipi Pangu v. Ian Ellery (2007) N3227
Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603
Vaki Vailalala v. National Housing Commission (2017) N6598
West New Britain Provincial Government v Kimas (2009) N3834

Counsel:

Mrs N Rainol, for the Plaintiff
Ms J Marubu, for Defendant

JUDGMENT

30th August, 2017

1.	ANIS AJ:	The plaintiff's claim is based on fraud, that is, constructive fraud.  Let me summarise.  He pleads a purported oral agreement over a residential property.  The property is described as Section 33, Allotment 9, Kenabot, East New Britain Province (the property).  The plaintiff previously owned the property.  Here, he firstly alleges the existence of the purported oral agreement.  He then alleges facts surrounding it and accuses the defendant of coercion, intimidation or blackmail, for the sale of the property by himself to the defendant in 2007.  The plaintiff claims that the defendant and his solicitor had forced him into signing a written contract of sale of land (contract of sale) despite the existence of the purported oral agreement.  He seeks relief primarily for the return of the property to him.

2.	So as I see it, the plaintiff intends to prove constructive fraud by firstly establishing the purported oral agreement, that is, to prove its existence and its terms and conditions.  After that, he plans to establish the facts before, during and after the signing of the contract of sale, which had had the property sold to the defendant.  His aim, as I gather, is to demonstrate constructive fraud based on these two (2) sets of facts or events.

3.	The defendant is the registered proprietor of the property.  He admits that there had been an oral agreement before the actual signing of the contract of sale in 2007.  But he says that the terms of the oral agreement were completely different from those as pleaded by the plaintiff.  He says that the terms of the oral agreement, as he knew it, were reflected in the contract of sale, which he says was signed on 23 November 2007.

4.	The trial was heard on 26 July 2017.  Presentation of submissions hearing was held separately on 10 August 2017.  I reserved my ruling thereafter to a date to be advised.

5.	I rule on it now.

Evidence

6.	The plaintiff gave oral evidence.  He was cross-examined.  His other witness who also gave oral evidence and was cross-examined was his carpenter Nelix Kola.  The defendant gave oral evidence.  He was also cross-examined.  Also called for the defendant to give oral evidence was his former solicitor David Lidgett.  Mr Lidgett was also cross-examined.

7.	The parties tendered their affidavits.  I accepted them and marked each one separately.  I used the abbreviation "P" to indicate affidavits that were tendered by the plaintiff, and the abbreviation "D" to indicate affidavits that were tendered by the defendant.  Let me set them out here:

Exhibit No.
	Description	Date filed
	
“P1”	Affidavit of Jacob Kauva	11/07/17
	
“P2”	Affidavit of Nelix Kola	11/07/17
	
“P3”	Affidavit of Tracie Kauva	11/07/17
	
“P4”	Affidavit of Ellelleys Kauva	11/07/17
	
“P5”	Affidavit of Jacob Kauva	05/08/13	
“P6”	Affidavit of  Jacob Kauva	17/10/16	
“P7”	Affidavit of Tracie Kauva	24/09/15	
“P8”	Affidavit of Jacob Kauva	09/04/14	
“P9”	Affidavit of Jacob Kauva	18/08/15	
“P10”	Affidavit of Jacob Kauva	24/09/15	
“P11”	Affidavit of Nelix Kola	22/12/14	
“D1”	Affidavit of Geoffrey Brian Stephenson	09/12/15	
“D2”	Affidavit of Anthony Cavanagh	27/07/15	
“D3”	Affidavit of Anthony Cavanagh	29/07/16	
“D4”	Affidavit of David Lidgett	20/07/15	
“D5”	Affidavit of David Lidgett	04/11/15	
“D6”	Affidavit of David Lidgett	19/07/17	

Issues

8.	The parties identified the issues as follows:

(i)	Whether there was a verbal agreement between the parties;
(ii)	If so, what were the terms of the verbal agreement?
(iii)	Whether the verbal agreement is enforceable in law;
(iv)	Whether the actions of the defendant constituted acts of coercion, black mail, duress, deceit and constructive fraud;
(v)	Whether the purchase of the property for the value of the loan and the transfer of the title to the name of the defendant were secured by acts of constructive fraud;
(vi)	Whether the plaintiff is entitled to the relief claimed in law or otherwise.

9.	In my view, and I say this by looking at the pleadings, the central issues are as follows:  Firstly, I should consider whether an oral agreement that concerns interest over land, like the one that is alleged and pleaded in the statement of claim, is permitted in law.  If so, I will then go on to determine the existence of and the terms of the oral agreement.  And subject to my findings on the two (2) issues or otherwise, consider whether constructive fraud can be inferred or established from the dealings the parties have had over the property at the material time.

Constructive fraud

10.	Constructive fraud is explained in the case law.  There are numerous examples.  For this purpose, I will only name a few cases.

11.	Let me firstly refer to what the Supreme Court has said in the case of Kol Toki v. Moeka Morea Helai (2016) SC1558.  It held in part and I read, Constructive or equitable fraud will exist if interests in land are transferred in an obviously unlawful or irregular manner.  Justice Cannings, in the second case which I will refer to, that is, Vaki Vailalala v. National Housing Commission (2017) N6598 also held in part and I read, Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.  

12.	I find them relevant.  I adopt these definitions or references concerning application of constructive fraud, as my own.  Moving on, I say this.  If constructive fraud is established in this matter, it would be sufficient for me to cancel and then transfer the title of the property back to the plaintiff (see cases: Kol Toki v. Moeka Morea Helai (supra); Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215; Gire Gire Estates Ltd v. Barava Ltd (2016) N6473).  And this Court's power to cancel title is of course derived from section 33(1)(a) of the Land Registration Act Chapter No. 191.  Let me read out section 33(1)(a) here:

33.  Protection of registered proprietor.

(1)	The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except—
(a)	in the case of fraud; and
.....

13.	I note that both parties acknowledge in their submissions the two (2) views in regard to the definition of fraud under section 33(1)(a) as held by the Courts in this jurisdiction.  The first view of course is sometimes referred to as "the narrow view" or actual fraud.  I refer to some of the cases that support this view: Koitachi Ltd v Walter Schnaubelt (2007) SC870; The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603.  The second view is also known as the "wide view" or constructive fraud.  I also refer to some of the cases that support this view: Emas Estate Development Pty Ltd v John Mea & Ors (supra); Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959; West New Britain Provincial Government v Kimas (2009) N3834.  The parties here do not argue that the plaintiff is seeking fraud based on the wide view, which is, constructive fraud.  The plaintiff has also pleaded it in his statement of claim.  I accept that to be the case.

The oral agreement

14.	I think the best way for me to begin with my judgment, is to address the claim based on this assumption.  Let me assume that there was an oral agreement between the parties as alleged by the plaintiff.  Let me assume that the terms of the oral agreement are those as pleaded at paragraph 12 of the statement of claim.  Let me quote them here:

(i)	That the Defendant would assist the Plaintiff to pay the outstanding loan of K131,000.00 in order to prevent the bank from exercising its rights under the mortgage.
(ii)	That in return, the title to the property would be transferred to the Defendants fiancée Tracie Kauva and subsequently to their unborn child in acknowledgement of the fact that the title was being transferred to them without the Defendant paying the full value of the property which at the time was valued at about K400,000.00.
(iii)	That in return the Defendant would lease out the property for a period of ten years in order for him to collect rentals to recoup his funds.
(iv)	That when the Defendant and Tracie Kauva’s child is born the title would then be transferred to the child’s name in that way it would not be seen to be transferred to someone else and would still remain within the family.
(v)	That in the meantime, the Plaintiff and his family would live at the back of the property and that the property would not be disposed and would be the first of many properties that the Defendant endeavoured to find in Kokopo for investment purposes.
(vi)	That as a cost savings measure, and due to the Defendant’s financial position at the relevant time, rather than engaging outside contractors, the Plaintiff and his carpenter would carry out repairs and renovations at the earliest so the property could be rented out to tenants as soon as possible.
15.	The question I would have, based on the assumption, is this, whether agreements like that that concerns transfer or dealings in land are recognised, valid or enforceable.  What does the law say on this type of agreement in this jurisdiction?  I note that both parties have, in their written submissions, referred to sections 2(1)(a) and 4 of the Frauds and Limitations Act 1988 (Frauds and Limitations Act).  Let me read out the two (2) sections here:

PART II - TRANSACTIONS THAT MUST BE, OR BE EVIDENCED, IN WRITING.

Division 1.—Land Transactions.

2.	Creation, etc., of interest in land.
(1)	Subject to Subsection (2) and Section 5—
(a)	no interest in land can be created or disposed of except—
(i)	by writing signed—
(a)	by the person creating or disposing of the interest; or
(b)	by that person's agent lawfully authorized in writing for the purpose; or
(ii)	by operation of law; or
(iii)	by will; and
.....
4.	Contracts for the sale of land, etc.

No action shall 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—
(a)	by the person against whom the action is brought; or
(b)	by an agent of that person lawfully authorized in writing for the purpose.

(Underlining is mine)

16.	The two (2) sections are relevant.  And the case law that supports them is settled.  Let me begin with the case of Leontin Ofoi v. Kris Bongare (2007) N3248.  Deputy Chief Justice Sir Salamo Injia, as he then was, now the Chief Justice, held and I quote:

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.

17.	Let me also refer to the case of Pamela Ipi Pangu v. Ian Ellery (2007) N3227.  Justice Manuhu held and I quote:  

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.  

18.	I find the two (2) decisions relevant to a certain extent and I adopt them.  I make the qualification because I note that the plaintiff here is not strictly seeking to enforce the purported oral agreement but rather to assert it and then together with his other evidence, establish constructive fraud.

19.	Having clarified that and in my opinion, it is without doubt that the plaintiff's pleaded purported oral agreement deals with interest in land.  It concerns the property, which is a state lease.  And if the purported oral agreement exists in the terms as pleaded, it would contravene section 2(1)(a)(i) and section 4, of the Frauds and Limitations Act.  I make this finding because the purported agreement, if it exists, requires the property to be transferred from the plaintiff to his daughter Tracie and then onto her unborn child after the child is born.  These terms, if established, would contravene the two (2) provisions because they are not in writing and signed by the parties.

20.	There is, in my view, also another reason why the purported oral agreement, assuming that it exists, would fail.  The parties had entered into the contract of sale of the property.  The contract of sale was executed on 23 November of 2007 and the property has since been sold to the defendant.  The case law states that interests of parties over land in a written or a signed legal contract will precede other interests on the same land.  I refer to the Supreme Court case of Koang No. 47 Ltd v. Monodo Merchants (2001) SC675.

Secondly, in relation to the appeal itself, it is trite law that as the registered State leaseholder of a registered land, the registered leaseholder's title is superior to the interest of any other person having or claiming to have any other form of secured or unsecured legal or equitable interest over the same land. A valid Contract for Sale of the land, per se, is a legal agreement, which is enforceable. Any interest in the land created by the legal contract is simply equitable and the equitable relief of specific performance is available to an aggrieved purchaser (or vendor) to the extent that an unwilling vendor may be required to honour its obligation under the contract, to do all that is necessary to complete the sale.

In the present case, there was a second Contract of Sale ("the Second Contract") of the same land executed between Melpa and Koang, whilst there was already in existence a Contract of Sale ("the first Contract") entered into between Melpa and Mondo in relation to the same land. It is trite law that a second contract for the sale of the same land cannot be validly entered into between the same vendor and a second purchaser when there is already in existence a valid first Contract of Sale between the vendor and the first purchaser.

21.	The contract of sale that was signed by the plaintiff and the defendant on 23 November of 2007 was legal.  The plaintiff's oral agreement, assuming that it had existed in August of 2007, would not have been binding or legal because such a contract is disallowed by sections 2 and 4 of the Frauds and Limitations Act.  Secondly, upon coming into effect of the contract of sale on 23 November 2007, it, following the decision in Koang No. 47 Ltd, became legally binding and had preceded the purported oral agreement.  In the end, the contract of sale was concluded and the property was transferred to the defendant. 

22.	So based on the assumption that the oral agreement exists, or has existed, it could not have been recognised as valid under law that may be enforced.  In other words, what this simply means is that the plaintiff should not have pleaded the oral agreement as part of the foundation of his claim.

23.	On that basis, I therefore find it futile for this Court to determine whether the purported oral agreement as pleaded by the plaintiff exists or existed.  I refuse to go down that path.  I find the pleadings, in relation to the alleged oral agreement, as baseless.  However, I note that my findings under this sub-heading only relates to the first set of the alleged facts that have been relied upon by the plaintiff to argue constructive fraud.  Therefore and at this stage, it is not sufficient for me to dismiss the proceeding in its entirety on this ground alone.  Let me consider the second set of allegations. 

Defendant and his solicitor

24.	The plaintiff also pleads constructive fraud based on the actions or inactions of the defendant and his solicitor at the material times before, during and after the signing of the contract of sale.  He said that in August 2007, the defendant arrived at Kokopo.  He said they had a family meeting at the premises where the property is situated.  He said that it was during that meeting that they had reached the purported oral agreement.  I note that I have ruled out the relevance of the purported oral agreement.  Moving on, the plaintiff said that it was at the time when he and his daughter Tracie had gone to sign the contract of sale at the defendant's solicitor's office on 19 September 2007 that the defendant, according to the plaintiff, had changed the terms of the intended agreement.  He said he first protested but then said he was forced, coerced or intimidated into signing the contract of sale by the defendant's solicitor or ultimately by the defendant.  He said he had little choice at that time because the bank's due date for him to settle his loan arrears was also almost up.  He said he had to consult his daughter Tracie to seek her permission before he signed the contract of sale and the transfer instrument.  I note that during the trial, the plaintiff tried to dispute his signatures in the contract of sale and in the transfer instrument.  He cited alleged incidents where he claimed that he may not have signed the documents.  He also alleged that witnesses were not present to witness the signatures.  He also claimed that he signed documents without them being properly explained to him.

25.	I note that with the oral agreement allegations out of the way, I am confined to considering constructive fraud based on the plaintiff's various allegations concerning execution of the contract of sale.  So recapping on application of constructive fraud, I ask myself this, whether the circumstances surrounding the signing of the contract of sale and the transfer of title were so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.  My answer to this question is "no".

26.	At the outset, I must say that I do not find the plaintiff's evidence convincing.  I make particular reference to his evidence at the material time of the signing of the contract of sale.  The plaintiff is an educated man.  I find that to be the case based on his oral testimony and of his knowledge of loans, mortgage and purchase of properties.  This was not his first time to engage in real property.  Evidence also suggests that he may have owned properties in Bougainville.  The transaction in question was not something that was new to him.  He had purchased the property and had applied for various loans from the bank in the past.  The property had been mortgaged as a security for the loans that the plaintiff had borrowed.  He had defaulted and the bank was after its loan money and had threatened to sell the property.  The bank put the plaintiff on notice of its intention to sell.  That then led to his dealings with the defendant, one of which was the sale of the property.

27.	The plaintiff was incapable of paying off his loan arrears at the time.  Evidence shows that he had asked for assistance from other banks, his friends, but he was unsuccessful.  He then enters into this private arrangement with the defendant who at that time was befriending his daughter.  He alleges the oral agreement, which I have already ruled out above in my judgment.  I think what everyone keeps forgetting particularly the plaintiff is the fact that it was he that had signed the contract of sale, the transfer instrument and other documents at that time.  A crucial evidence, apart from the contract of sale and the transfer instrument which he had signed, which, in my opinion, speaks contrary to everything that the plaintiff has said about coercion, blackmail or intimidation, is the letter of 19 September 2007 by the defendant's solicitor's to the defendant.  The plaintiff was present at the defendant's solicitor's office at that time with his daughter.  This fact is not in dispute.  And the plaintiff's signature is shown as a counter- signature in the letter.   The letter is admitted in the evidence of both parties.  It is marked as Annexure F2 to Exhibit P5 and Annexure A to Exhibit D5.  The plaintiff does not expressly deny signing the letter.  But regardless, his signature was on it together with that of the defendant's solicitor.

28.	Let me quote the main content of the letter here:

SALE AND PURCHASE SECTION 33 LOT 9 KENABOT, KOKOPO, ENBP - VENDOR JACOB KAUVA

We have attended Jacob Kauva to-day and on his instructions confirm to you that you having paid K13,124.45 to his credit at Bank South Pacific (being a 10% reduction of his outstanding mortgage balance) on payment of the remaining 90% balance, he undertakes to enter into a contract of sale and transfer of the property to you absolutely and solely for a total sum of K131,245.50.

He also envisages you will be responsible to pay any outstanding State Lease rental, Provincial Land Tax, local authority utilities, stamp duty, Land approval fees, registration fees and legal costs.

We shall set about quantifying those costs (as considered estimates) and advise you accordingly in the next few days, so you are clear as to your total ongoing costs.

Prior to advancing any further funds, we recommend that you instruct us to prepare and register a consent caveat in your favour against the title, which will forbid the registration of any other dealings against the title without your prior consent.  Amongst other things this will protect you should, for example, Jacob unexpectedly pass away during the period when you have paid the monies but not yet executed the sale contract.
.....

(Underlining is mine)

29.	I find the letter authentic.  It expressly confirms, in my opinion, the parties' intention at that time.  The intention was for the plaintiff to dispose the property absolutely and solely to the defendant.  I find as a fact that the plaintiff did counter-sign on the said letter on 19 September 2007.

30.	I refer back to the relevant conveyance documents.  The contract of sale is attached as Annexure C to Exhibit D5.  The transfer instrument is attached as Annexure D to Exhibit P9.  I note the plaintiff's signature in the contract of sale.  His signature is also found in the transfer instrument.  The plaintiff can’t say now that he did not want to but had signed the documentations, but given his level of education or should I say his knowledge of such commercial dealings, it makes his argument incredible for me to accept.  Secondly, I note that the plaintiff has said that he had protested and had consulted his daughter when the defendant's solicitor, on 19 September 2007, presented him with the express terms of what was to be signed off between the parties.  This implies, in my opinion, that the plaintiff knew of the terms of the intended agreement.  Thirdly and with respect, the plaintiff keeps forgetting the simple notion of what it means when you sign something.  What does one do if he or she disagrees with something that he or she is being asked to sign on?  The answer is simple, which is, Do not sign.  It is futile, in my view, to say that I did not like what I saw but I signed it anyway and then argue later and say that the document that I had signed means nothing because I did not intend to sign the document in the first place.  My conclusion therefore is that the plaintiff is being dishonest about the contract of sale.  His various signatures, in my view, have expressly spoken for him.

31.	The other crucial or revealing fact is this.  The plaintiff alleges that he never showed up again or had any dealings with the defendant's lawyers after 19 September 2007.  He was forceful to that claim when he testified in Court.  The plaintiff, in my view, makes the assertion to draw doubt as to how it was ever possible for him to have signed the contract of sale and the instrument after 19 September 2007, as alleged by the defendant and his solicitor.  However, I find that in making that claim, the plaintiff has again exposed himself as a dishonest witness.  Let me explain.  Firstly, I note that the plaintiff did not plead, in the statement of claim, that the defendant or his solicitor had forged his signature.  So his attempt to raise this issue at the trial is baseless.  But it does not get any better for the plaintiff.  Despite what he has said in his oral evidence, he has admitted to signing the contract of sale at paragraphs 16 and 17 of the statement of claim.  He has also admitted to signing these documents in his various sworn affidavits.  Evidence of these may be seen at paragraph 22 of Exhibit P5, paragraph 7 of Exhibit P8 and paragraph 37 of Exhibit P9.  In summary, I see and find that the plaintiff tried to change his story or the facts as to what may have transpired between the parties from 19 September 2007 to 23 November 2007.  I find the facts in his written evidence of the said period different or at times contrary to what he has said in his oral testimony.  These, in my view, do not look good on the plaintiff as a credible witness.

32.	Now, the defendant's evidence in reply to the facts of what may have transpired between the parties before, during and after the signing of the contract of sale is those given by his solicitor David Lidgett.  Mr Lidgett gave both written and oral evidence.  I find consistencies in both his oral and written evidence.  I find his evidence relevant and credible.  The significant revelation was where he had demonstrated that the contract and the transfer instrument were not signed on 19 September 2007 but that the plaintiff had signed and had returned them to him well after 19 September 2007; facts that have been challenged by the plaintiff.  Mr Lidgett said that the contract and the transfer instrument were prepared and sent to the plaintiff to execute on 25 October 2007.  He said that the plaintiff could not have signed the contract documents on 19 September 2007, as they were not yet prepared and ready for signing.  I refer to Exhibit D6.  Mr Lidgett attaches to it at Annexure A his firm's covering letter which is dated 25 October 2007 which attaches the relevant conveyance documents including the contract of sale and the transfer instrument.  He deposes that the plaintiff had collected the letter on or about the same day on 25 October 2007.  He deposes that the plaintiff had signed the conveyance documents and the plaintiff himself had returned them to his office on 12 November 2007.  To corroborate that, Mr Lidgett attaches a copy of an email, which he said he sent to the defendant on the following day after he had received back the contract documents from the plaintiff on 12 November 2007.  The said email is attached as Annexure B to Exhibit D6.  It is dated 13 November 2007 and it reads in part and I quote, I am pleased to say that Jacob came in y/day with the signed contracts etc.  I note that the plaintiff did not challenge this evidence.

33.	I find Mr Lidgett's letter of 25 October 2007 as strong evidence, which shows that the conveyance documents were ready and were delivered to the plaintiff to sign on that day.  I also find the email that Mr Lidgett had sent on 13 November 2007, again as another good example of strong evidence.  The said email supports the defendant's claim that the plaintiff had dealings with the defendant and his solicitors after 19 September 2007 contrary to his denials in Court.

34.	I therefore accept Mr Lidgett's accounts of what he said happened on 19 September 2007 and beyond until the time the contract of sale was concluded on 23 November 2007.  I reject the plaintiff's evidence of his accounts during the same period.  I must say that I also reject the evidence of the plaintiff's daughter Tracie Kauva.  Her evidence namely Exhibit P3 and Exhibit P7 were not tested because she was never called in as a witness to give oral evidence.  Her evidence on point supports her father's evidence.  Because I have found her father's evidence and testimonies to be untrustworthy, her evidence will suffer the same fate.  I therefore do not believe Tracie's account of what she said happened at the office of the defendant's solicitors on 19 September 2007 or thereafter.

35.	For the defendant, I accept his evidence.  His evidence is consistent with the facts, the documentations and his solicitor's evidence.  During the trial, I did not detect or find him as a person who perhaps may be regarded as holding things back.  He gave me an impression of someone who was honest and who was willing to tell his full story to the Court.  He explained his profession as a professional golf player.  He also explained how he first came to the country and then onto Rabaul; how he had met the plaintiff's daughter and of their relationship; he said they had a son as a result of that relationship.  He also explained the problems and challenges that he had faced with the plaintiff's daughter.  He said the plaintiff had agreed to sell him the property.  He said based on that understanding, he instructed his solicitor to act for him, and to draft the contracts and transfer instruments.  He said both parties signed the contract of sale and the transaction was completed in 2007.

36.	I also accept and find that the defendant had spent close to K500,000, including the purchase price of the property, to try to improve it.  I refer to his oral testimony and to what he has said at paragraphs 30 to 33 of Exhibits D2.  I find as a fact that he had spent a considerable time and effort on the property before and after he purchased it.  I note that he explains that clearly as well in his oral testimony.  His evidence suggests that monies that he had sent to the plaintiff to renovate the property had not been properly accounted for.  

Summary

37.	I find the plaintiff's reliance on the purported oral agreement as misconceived and baseless.  I find that if the agreement exists or existed in the terms as pleaded in the statement of claim, the law under section 2 and section 4 of the Frauds and Limitations Act would not recognise it.

38.	Because of that finding, I found it futile and ruled against considering the existence of and the terms of the purported oral agreement.  I note that had I gone ahead and found the oral agreement to have existed, I would still arrive at the same conclusion, which is that the oral agreement will not be recognised as valid or enforceable under section 2 and section 4 of the Frauds and Limitations Act.

39.	The plaintiff's claim for constructive fraud was then limited to the contract of sale.  I did not find any impropriety before, during and after the signing of the contract of sale that would have warranted me to say that the transfer of title was so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.  I also found the allegations baseless because the plaintiff himself had signed the contract of sale and the transfer instrument, and based on these, the property was transferred to the defendant who now acquires an indefeasible title.  I did not find the plaintiff to be an honest witness and I rejected evidence of his accounts before, during and after his meeting with defendant's solicitor's on 19 September 2007.  I have ruled out his evidence where he had denied signing the contract and the transfer instruments.  I have accepted the defendant's evidence.  I found overwhelming evidence from the defendant and his solicitor, which showed that the plaintiff was happy about the deal and he had voluntarily signed the contract and the transfer instruments and had returned it to the defendant's solicitor without any difficulties or issues.  I also found that the plaintiff had tried to change his story and as a result, he contradicted himself on various matters.

40.	Finally, I refer to the plaintiff's 'black mail' claim.  I did not address that so I do so now.  I find the claim, with respect, bizarre.  To allege black mail, or coercion or intimidation based on the fact that the defendant and his solicitor had known about the plaintiff's deteriorating financial position and had capitalised on it cannot be sustained.  In my view, there is nothing illegal about the transaction.  The plaintiff's issue with the bank was his personal problem.  Even if the defendant was aware of that fact (i.e., plaintiff's weak financial position) when he may have bargained with the plaintiff, there is nothing wrong with that.  It would have been regarded as a normal commercial activity.  I dismiss the 'black mail' claim.

41.	In conclusion, I find that the plaintiff has failed to establish constructive fraud over the sale and purchase of the property in 2007.

Remark

42.	I can perhaps understand the plaintiff's frustration.  Perhaps the plaintiff had thought that the relationship between the defendant and his daughter Tracie would be a lasting one, which was why he decided to sell the property to the defendant when his bank was after him for the loan arrears.  But at the end of the day, it was his own decision to sell the property to the defendant on the terms as contained in the contract of sale. 

Cost

43.	Cost of the proceeding is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

THE ORDERS OF THE COURT

44.	I make the following orders:

1.	The proceeding is dismissed.

2.	Cost of the proceeding is awarded to the defendant on a party/party basis, which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.

________________________________________________________________
NatPhil & Associates:	Lawyers for the Plaintiff
Solway Lawyers:	Lawyers for the Defendant