N11170

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS 19 OF 2021 (COMM) (IECMS)

SEONG GUAN NG
First Plaintiff/Cross Defendant

SHUH JUANG KIU
Second Plaintiff/Cross Defendant

V

BOW AH MENG
First Defendant/Cross Plaintiff

GOOD DAY LIMITED 1-81274
Second Defendant/Cross Plaintiff

WAIGANI: ANIS J
6, 7, 15 AUGUST, 17 SEPTEMBER, 3 OCTOBER 2024; 7 MARCH 2025

MISREPRESENTATION & UNJUST ENRICHMENT – Claim for return of monies and damages suffered – claim premised on an agreement to agree – intended Contract called Contract of Sale of Shares and Sublease - parties entered into discussions for defendants to construct and for the plaintiffs to purchase a unit – deposit and down payments made by the plaintiffs – delay in completion of the project – plaintiffs moved into the unit – complaints began of defects in the construction of the unit – parties failed to agree on the terms of the intended Contract – plaintiffs vacated the premises after occupying it for about 3 to 4 years – whether defendants committed misrepresentation and if so whether they should be held liable – or, whether the defendants have unjustly enriched themselves from the failed transaction thus orders of restitution should be made against them – consideration - findings

BREACH OF CONTRACT – Cross-claim – whether a binding contract exist or existed between the parties, - whether the only contract that existed between the parties was an agreement to agree – consideration – whether cross-claimants entitled to the relief sought – whether a valid oral agreement exist between the parties for payment of interest at a certain rate in relation to down-payments that were to be made by the plaintiffs towards the purchase of the unit – if so, whether the cross-defendants breached the said agreement and whether they should be held liable for breach of contract with damages awarded in that regard - whether there was an agreement in place for the cross-claimants to claim rental payments for the duration of the cross-defendants’ stay at the unit – if so, whether the agreement was breached and damages should be awarded in that regard - whether cross-claimants should be paid or re-imbursed with the expenses that were conceded to by the cross-defendants – consideration - findings

Cases cited

Albert Areng v. Gregory Babia (2005) N2895
Beno Maoko v. Kevin Ling (2008) N3293
Courtney & Fairburn Ltd -v- Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297
Dekenai Constructions Ltd v Tati Keke Resources Ltd (2019) SC1800
Jackson Laka v. Pius Nui (2013) SC1223
Jixing Industries Ltd v. Aitape Metropolitan Forest Investment Ltd (2013) SC1294
Kumasi v Air Niugini Ltd (2024) N10869
Leonard Gaua v. Joe Amir and Ors (2009) N3891
Masters v Cameron [1954] 91 CLR 353
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370
Motor Vehicles Insurance (PNG) Trust v. John Etape [1995] PNGLR 214
Naki v. AGC (Pacific) Ltd (2005) N2782
Nings Trading Pty Ltd -v- ANZ Banking Group (PNG) Limited (1995) N1700
Papua New Guinea Banking Corporation (PNGBC) v Tole (2002) SC694
Pius Koroguen v. Christine Wagen (2008) N3422
PNG Bottle Industries Ltd v. Smithbridge PNG Ltd (2022) N9474
PNGBC v Burra Amevo [1998] PNGLR 240
Soka Toligai v. Sir Julius Chan and Ors (2012) N4842
Vuksich & Borich (NZ) Ltd v. Pacific Energy Aviation (PNG) Ltd (2022) N10714

Counsel

I R Shepherd with C Joseph for the plaintiffs
P Kipa for the defendants

JUDGMENT

1.	ANIS J: This was a trial on both liability and quantum, in relation to claims premised on misrepresentation, unjust enrichment and breach of contract.  I heard closing submissions from the parties on 3 October before I reserved my decision to a date to be advised.

2.	This is my ruling.

BACKGROUND

3.	The plaintiffs and the first defendant were friends.  In 2013, the plaintiffs had informal discussions with the first defendant.  It was revealed around that time that the defendants were going to build block of units on one of their properties in Port Moresby.  The property is described as Allotment 41, Section 406, Hohola, National Capital District (State Lease).  The block of units were described as penthouses or Haven Residences.  

4.	The plaintiffs were interested to purchase a 3-bedroom penthouse apartment, so in July 2013 they began negotiations with the defendants.  The apartment they chose is described as Unit 3321 in Haven Residences located within the State Lease (Unit 3321).  The plaintiffs agreed with the defendants that they would proceed with the purchase of Unit 3321.  The purchase price was agreed at K1,950,000.  The parties contemplated a contract for sale of shares and sub-lease which may be summarised as follows:  The first defendant, upon receiving full payment, would transfer specific shares in the second defendant to the plaintiffs to create the plaintiffs’ interest or ownership over Unit 3321.  The same would also be reflected in the intended sub-lease.

5.	The admitted pleadings may be summarised as follows:  Between August 2013 and February 2018, in anticipation of the parties entering into a Contract of Sale of Shares and Sublease (intended Contract) to purchase Unit 3321 for the sum of K1,950,000, the plaintiffs made various down payments that totaled K1,428,113.20.  The sum was to be credited to the purchase price.  Particulars of these payments are pleaded under para. 6 of the Amended Writ of Statement of Claim filed 14 March 2023 (ASoC).  

6.	In 2016 and by mutual agreement, the plaintiffs took up early occupation of Unit 3321.  The intended Contract was not signed and was still pending at the time the plaintiffs occupied Unit 3321.

7.	However, the negotiations for the signing of the intended Contract fell through, and in 2020, the plaintiffs returned the keys to the premises and vacated the area.

CLAIM

8.	They now sue the defendants.  Their cause of action is two-fold.  They allege (i) the tort of misrepresentation (fraudulent) and (ii) unjust enrichment, against the defendants.  In their prayer of relief, they seek orders (i) for the return of the monies they say they paid to the defendants, which totaled K1,428,113, (ii) for the refund of K93,669.48 (as expenses) which they say they spent on Unit 3321 during the time that they occupied Unit 3321, and in the alternative, they seek (iii) damages for deceit and/or breach of warranty, including damages for hardship, inconvenience and distress.  They also seek interest and costs.

9.	The defendants deny the claim.  They filed their Amended Defence and Cross-Claim on 22 March 2024 (AD&CC).  In their cross-claim, they allege breach of contract.  They also allege existence of another agreement (oral) concerning interest payments between the parties, and they allege that the plaintiffs breached that agreement when they failed to pay the agreed interest rate on the various instalment payments that were made by the plaintiffs towards the purchase price of the unit.  The total interest sum outstanding they say is K110,085.18.  They also claim a loss of K1,950,000, which is the purchase price of Unit 3321.  The defendants further allege that because the plaintiffs breached the main contract, they should be held liable for (i) rental loss suffered in the sum of K1,325,000, and (ii), Body Corporate outstanding fees of K42,694.72.  The defendants, in pleading breach of contract, also claim K18,911.36 as expenses for repairing or renovating Unit 3321.  Other relief sought in general are (i) legal cost of K62,908 which they say they incurred in OS 785 of 2019, (ii) general damages for distress, inconvenience and hardship, (iii) interest and (iv) cost of the proceeding.

EVIDENCE

10.	Both parties gave oral and written testimonies to the Court.  Each of their written evidence were marked with exhibit numbers.  The plaintiffs tendered a total of 2 affidavits.  The defendants tendered a total of 4 affidavits in response.

ISSUES

11.	The main issues of liability alleged by the plaintiffs relate to misrepresentation and unjust enrichment.  Did the defendants misrepresent the plaintiffs or unjustly enriched themselves at the material time in regard to the intended property deal. In regard to the cross-claim, the issues concern (i) whether there exist or existed a binding contract between the parties for the sale of shares and sublease, (ii), whether the parties also entered into a valid oral agreement on the interest rate that is required to be paid by the plaintiffs on a monthly basis, (iii), whether there was an agreement for payment of rents for the period of time that the plaintiffs had occupied Unit 3321, (iv) whether the defendants have established breach of contracts that may entitled them to claim other relief such as Body Corporate fees and renovations or refurbishment expenses that were carried on Unit 3321 after the plaintiff vacated the area.

12.	I will address liability before moving on to consider the relief.

PRELIMINARY CONSIDERATIONS

13.	Based on the pleadings and submissions received, including the adduced evidence of the parties, there is no doubt in my mind that this was a case where there was an agreement in place between the parties to enter into a contract.  The parties had intended to agree into the Contract.  The defendants were to sell Unit 3321, and the plaintiffs were to purchase the unit.  

14.	The first main issue is whether a binding contract exist or existed between the parties.  The plaintiffs maintained in their pleadings and submissions at the hearing, that nothing materialized after the intended Contract fell through when it was not signed; they claim that the parties parted ways after they conducted a joint inspection on the unit in July of 2020; keys to Unit 3321 were handed over to the defendants.  These facts are not disputed.

15.	So, at the hearing, I asked counsel for the defendants to confirm these facts; that the only agreement that existed was an ‘agreement to agree’ and that was that; that no other valid agreement existed after that.  Counsel for the defendant, however, gave a different position.  Counsel submitted that a valid contract existed between the parties at the material time.  Counsel referred to the offer that was offered in a letter dated 13 July 2013 which was accepted by the plaintiffs.  Counsel submitted, amongst others, that part payments had been made; the plaintiffs had moved into the unit in 2016 and had resided there for about 4 to 5 years before they vacated the premises.

16.	I will decide on this issue as the first matter.

PLEADINGS / EVIDENCE OF A VALID CONTRACT

17.	What do the pleadings and evidence say in relation to the proposition that there was only one valid agreement to agree between the parties to enter into a contract?  And do the pleadings and evidence also refer to a separate binding agreement that exist or existed between the parties?  

18.	To answer that, I make the following observations:

•	There were admissions by the defendants in regard to the facts pleaded at paras. 1 to 6 of the ASoC, that is, and I make reference to para. 1 of the AD &CC;
•	Apart from an agreement to agree as pleaded by the plaintiffs, there are no pleadings by either parties of another binding agreement that exist or existed between them at the material time in regard to purchase of shares and sub-lease; for example, at para. 14 of the AD&CC, the defendants expressly state and I quote, “The Cross Defendants despite numerous requests by the Cross Claimants to execute the Contract, they delayed and kept giving excuses from March 2018 until the Cross Claimants issued a Notice to Quit on them on 18th October 2019 to vacate the Unit resulting in the termination of the sale.”

•	I observe the plaintiffs’ pleadings and note that evidence and submissions made are consistent with their claim of the existence of the agreement to agree as being the only agreement had between the parties at the material time;
•	After disputes had arisen between the parties in regard to the proposed terms and conditions of the Contract, which is not disputed, the first defendant deposed at paras. 40 and 41 of Exhibit D1 as follows:

“I then provided instructions to my lawyers who in turn had dialogue with the Plaintiffs lawyers and a draft Contract for the Sale and Purchase of Share and Sublease was circulated for review and agreed upon however the Plaintiffs continuously made no efforts to sign the Contract or meet outstanding fees and payments and have been living in Unit 3321 in an illegal capacity.

I therefore had no other choice but to instruct my lawyers to serve upon the Plaintiffs a Notice to Quit and vacate the property which became the subject of injunction proceedings known as OS 785 of 2019:  Shuh Juang Kiu & Seong Guan Ng vs Bow Ah Meng.” [Underlining mine]

•	The above depositions by the first defendant under oath supports the proposition that no valid contract had been reached or had existed after the intended Contract was rejected or fell through between the parties;
•	I also note, which is not disputed, that Unit 3321 and portions of the shares in the second defendant, were never transferred to the plaintiffs as intended by the parties.  And premised on the evidence adduced by both parties, both parties met in July of 2020 where they conducted a final inspection on Unit 3321, and after that, they went their own path without complaints of existence of a valid or binding agreement;
•	I note that neither parties sought orders for specific performance which could be telling of their awareness of the situation which was that the intended Contract had fallen through and that that was it;
•	I also observe s. 2(1)(a) of the Frauds and Limitation Act 1988 which states or requires an interest in land to be in writing if it is to be created or disposed;
•	There had been various advance deposits made by the plaintiffs that added to more than K1.4 million; however, I note that these were made premised on the understanding that the parties would sign the intended Contract;
•	During cross-examination of the first defendant and in the plaintiffs’ closing submission, it was revealed that the defendants did not provide evidence of (i) certificate of completion and (ii) certificate of occupancy, in regard to their project or over Unit 3321; the absence of these evidence before me can only strengthen the plaintiffs’ argument that their unit was not completed on the terms and conditions that were initially agreed upon at the start of the project in 2013, which was why they had to cancel the intended Contract and vacate the premises; Counsel for the defendants, when pressed by the Court during closing submissions, referred the Court to Exhibit D3 and para. 27 of Exhibit D1; I observe that none of these evidence attach the two certificates;
•	Finally, I was not quite impressed with the demeanor of the first defendant in Court; he appears evasive and ignorant at times when he was cross-examined; I find him to be less credible as a witness when comparing him with the first plaintiff; quite to the contrary, I find the evidence of the plaintiffs credible, consistent and they appear to be on par with their pleadings.

19.	The above considerations make it clear, in my view, that the only agreement that existed in relation to purchase of Unit 3321, was an agreement to agree to enter into the intended Contract.

20.	An agreement to agree on something, however, is not a binding contract and cannot be enforced.  See cases: Jixing Industries Ltd v Aitape Metropolitan Forest Investment Ltd (2013) SC1294, Courtney & Fairburn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297, Nings Trading Pty Ltd v ANZ Banking Group (PNG) Limited (1995) N1700, and PNG Bottle Industries Ltd v Smithbridge PNG Ltd (2022) N9474.

21.	Woods J in Ning’s Trading Pty Ltd v. ANZ Banking Group (supra) referred to Masters v Cameron [1954] 91 CLR 353 where he stated in part:

In the case Masters v Cameron [1954] 91 CLR 353 the High Court considered the relevant authorities on agreements to sell subject to contract and said:

Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any one of three classes. (1) It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but no different in effect. Here there is a contract binding the parties to perform the agreed terms whether the formal document does or does not come into existence and also binding them to join in settling and signing the formal document. (2) One in which the parties have finally agreed upon all the terms of the bargain and intend no departure from or addition thereto, but yet have made performance of one or more of the terms conditional upon the execution of a formal document. Here there is a contract which binds the parties to join in bringing the formal contract into existence and then carry it into execution. (3) One in which the parties do not intend to make a concluded bargain at all unless and until they execute a formal contract. Here there is no enforceable contract. What has been agreed on must be regarded merely as the intended basis for a future contract and not as constituting a contract. [Underlining mine]

22.	Based on my observations, the agreement to agree between the parties would fall under the 3rd category in the illustration in Masters v Cameron (supra).  At the time when the plaintiffs accepted the offer in 2013, which was premised on issued brochures and representations made by the defendants of what was expected to be built, the project had not yet commenced.  The parties agreed that they would sign the intended Contract which would entitle the plaintiffs to shares and interest in the second defendant, to secure their ownership over Unit 3321.  The plaintiffs made a 10% deposit in advance towards the purchase price of Unit 3321, in the hope that when the unit was completed, that they would settle full payment where the parties would sign the intended Contract and where the plaintiffs would become legal owners of Unit 3321.  

23.	However, what turned out which was established by the plaintiffs and the undisputed facts were as follows:  There was significant delay in the completion of the project by the defendants.  The plaintiffs were provided with early occupation of Unit 3321 in 2016.  There were defects discovered in the unit, and monies had to be spent by both parties to rectify the defects.  There was also significant delay in the execution of the intended Contract.  Evidence adduced shows that no certificates of occupancy and completion were ever issued by the National Capital District Building Board to the defendants.  The parties could not settle on the terms and conditions of the intended Contract.  The plaintiffs vacated Unit 3321 after the parties conducted a final joint inspection in July of 2020.  From the time the plaintiffs vacated Unit 3321 up to the present time, the defendants continue to keep all the deposit payments that the plaintiffs have made to them.  Also, the defendants have not transferred any shares in the second defendant to the plaintiffs nor have they transferred legal ownership of the lease in Unit 3321 to the plaintiffs.

MISREPRESENTATION/ UNJUST ENRICHMENT

24.	I note the pleadings and evidence that have been adduced by the plaintiffs.

25.	The first leg of their cause of action is misrepresentation.

26.	Let me address that.  Makail J in Kumasi v Air Niugini Ltd (2024) N10869 when addressing misrepresentation, stated at para. 45:

45. At common law there are three main types of misrepresentation. These are fraudulent misrepresentation, negligent misrepresentation and innocent misrepresentation. A misrepresentation is a false statement of a material fact made by one party which affect the other party’s decision in agreeing to a contract. It can be brought in respect of a misrepresentation of fact or law. An action in misrepresentation can be brought by the misled party.

27.	And Cannings J in Naki v. AGC (Pacific) Ltd (2005) N2782, stated:

A contract is voidable – ie one of the parties can get out of the contract – if it can be proven that the other party has been guilty of a misrepresentation during the course of the negotiations that led to the contract. The precise effect of misrepresentation depends on whether it was innocent or fraudulent.

However to establish that a contract is voidable, the party seeking to avoid it must establish clearly that there was some misrepresentation of a material matter.

28.	I note that in contract law, misrepresentation, when alleged, refers to contract that the parties have entered into.  Existence of the contract would be the basis for a claim or cause of action for misrepresentation, and a main relief may be to declare the contract void or invalid.

29.	In the present case and premised on my findings, there was no valid contract that existed between the parties that was or is enforceable.  I also note that no detailed submissions were made in regard to this action, the elements, and whether they have all be satisfied to an extent that I should hold the defendants’ liable. I am therefore not satisfied that the plaintiffs have properly established a case of misrepresentation against the defendants.

30.	However, there appears to be overwhelming evidence which is not disputed that the defendants have gained at the expenses of the plaintiffs.  The intended Contract was never signed.  The plaintiffs deposited a total of K1,428,113.20.  This money is admitted as paid to the defendants (see also para. 1 of the DD&CC).  Evidence adduced shows that the plaintiffs were part of a small group of investors whom the defendants had secured to secure a loan of K14 million from their bank ANZ.  The plaintiffs’ intentions and contributions had assisted the defendants to secure the loan to develop the Property.  The submission by the defendants that they did not directly receive the money but that it was paid to ANZ, with respect, is misconceived and baseless.  The intended transaction was between the plaintiffs and the defendants.  ANZ, just like the developer that the defendants had engaged, were third parties whose dealings with the defendants were separate and distinct.  No privity of contract existed between the plaintiffs and ANZ or the plaintiffs and the defendants’ developers.  See cases:  PNGBC v Burra Amevo [1998] PNGLR 240, Beno Maoko v Kevin Ling (2008) N3293, Albert Areng v Gregory Babia (2005) N2895, Soka Toligai v Sir Julius Chan and Ors (2012) N4842 and Dekenai Constructions Ltd v Tati Keke Resources Ltd (2019) SC1800.

31.	Evidence adduced also shows that upon occupation of Unit 3321 in 2016, the plaintiffs had to pay at their own expenses for various repairs, defects and things that needed attention at their unit.  The total expenses claimed is K93,669.48.  The defendants, in their closing submissions, do not dispute this sum or seriously challenge that.  The plaintiffs have also provided evidence to support the said expense.

32.	The elements of an equitable claim for unjust enrichment are quite settled in this jurisdiction.  I refer to the cases, Pius Koroguen v Christine Wagen (2008) N3422, Jackson Laka v Pius Nui (2013) SC1223 and Leonard Gaua v Joe Amir and Ors (2009) N3891, and summarise them as follows:

(i)	the defendant has been enriched by the receipt of a benefit;

(ii)	the defendant has been enriched at the plaintiff’s expense; and

(iii)	it would be unjust to allow the defendant to retain that benefit.

33.	I find that the plaintiffs are entitled to their equitable claim of unjust enrichment.  I am satisfied that the necessary elements have been met by the plaintiffs which are mainly contained in their evidence as presented to the Court, that is, (i) the plaintiffs have proven that the defendants have been enriched, (ii), that the enrichments in question have been at the plaintiffs’ expenses, (iii), and that if allowed without any recompense or restitution would be unjust to the plaintiffs, and the defendants would be regarded as unjustly enriching themselves.  See cases: Pius Koroguen v Christine Wagen (supra), Jackson Laka v Pius Nui (supra), Leonard Gaua v Joe Amir and Ors (supra) and Vuksich & Borich (NZ) Ltd v Pacific Energy Aviation (PNG) Ltd (2022) N10714.

34.	In this instance, the intended Contract fell through. As a result, the plaintiffs missed out on their planned investment opportunity which was to purchase and secure Unit 3321.  During their stay, they spent their own money to fix or repair the various defects in the unit.  They also made advance deposits for their unit which had played a role or which had assisted the defendants to secure a loan with their banks to develop the block of units.  When the plaintiffs left without a deal, the defendants continue to keep the plaintiffs’ deposit monies and Unit 3321.

35.	I am therefore minded to make restitution awards for the two claims, namely, K1,428,113.20 and K93,669.48, in favour of the plaintiffs.

36.	I am, however, not minded to make any awards for the relief of hardship and stress.  I do not find that this relief may be sought under the claim for unjust enrichment.  The remedy for unjust enrichment is restitution which has been ordered.  Further, this was a commercial transaction that was not successful.  The only agreement that existed at the material time for the sale and purchase of Unit 3321 was an agreement to agree.  Both parties parted ways in 2020 after the intended Contract fell through.  I partially uphold the submissions of the defendants that the parties knew of the risks that were involved.  They had entered into negotiations at their own free will.

DEFENCE OF ESTOPPEL BY CONDUCT

37.	Whilst I have found the defendants liable, the defendants raise the defence – estoppel by conduct.  In their written submission, they say the plaintiffs are estopped from making the claim by their conduct.  They assert that by their (i.e., plaintiffs’) conduct in occupying Unit 3321 earlier in 2016, and in living there until they were forcefully evicted, that they are estopped from making the claim.

38.	I note the submissions of the parties on this matter.

39.	I note that the defendants’ reliance on this defence is premised on the assumption that there was a valid contract that existed between the parties at the material time.  Since I have already ruled against that fact above in my decision, the said defence will also fail.  I also note the following in arriving at this decision.  First, the parties had mutually agreed, which is supported by their evidence, for the plaintiffs to take up early occupation of Unit 3321 in 2016.  And evidence adduced shows that the defendants attempted to evict the plaintiffs from Unit 3321 in 2019.  The plaintiffs obtained injunctive orders and prevented that, in proceeding OS 785 of 2019.  The proceeding was discontinued by consent of the parties in 2020.  The plaintiffs did not move out by force as asserted by the defendants in their submission.  Rather, and as revealed in the evidence of both parties, they vacated the unit by mutual agreement or consensus reached between the parties which included an agreement for a final joint inspection over the unit.

40.	I therefore dismiss the defendants’ equitable defence of estoppel by conduct.

WANT OF CLEAN HANDS

41.	The defendants also raise this equitable defence which is that, “he who seeks equity must come with clean hands”.  

42.	Having considered the adduced evidence and the undisputed facts, I am not convinced that the plaintiffs have come to the Court without clean hands.  The defendants had represented to the plaintiffs that they would build the block of units and that the plaintiffs should sign an agreement with them to own one of the units.  The agreement to agree was effected in 2013.  By 2020, the intended Contract was not signed; there were still complaints raised between the parties as to the readiness of Unit 3321.  At the trial, the plaintiffs adduced evidence to support their arguments.  There were evidence that supported their claim of the lack of readiness of the unit.  The defendants then had the burden to disprove the evidence and claims made by the plaintiffs.  And the cogent evidence that they would have had that would have dismissed the claims by the plaintiff were evidence of certificates of completion and occupation.  Such evidence would have been issued by the National Capital District Building Board.  The defendants failed to produce these evidence to the Court.

43.	There was evidence of good faith demonstrated by the plaintiffs.  Despite the very long delay in completing the project by defendants, and despite the fact that the parties had not executed a binding contract, the plaintiffs (i) paid the full 10% deposit, (ii), paid additional advances totaling over K1.4 million, and (iii) occupied the unit and used its own funds to try to improve the unit.

44.	In regard to other matters raised including the use and occupation of the unit, I note that I have already addressed them above.

45.	I therefore also dismiss this equitable argument raised by the defendants.

CROSS-CLAIM

46.	I ask myself this.  What precisely are the defendants claiming in their cross-claim?  Having considered the pleadings, the written submissions of the defendants as well as exchanges between the bench and bar at the trial, it becomes clear to me that the defendants assert that a valid contract had already formed between the parties, and the contract exist or existed at the material time.  The contract that they refer to is premised on the same material facts and evidence which the plaintiffs had relied on to assert creation of the ‘agreement to agree.’

47.	I note that I have already made a determination on this.  As such, the defendants’ cause of action based on breach of contract shall fail.

48.	The defendants also claim interest payments totaling K110,085.18.  The defendants say the sum is due as orally agreed between the parties in regard to the down payments or instalment payments that had been made by the plaintiffs to the defendants at the material time for the purchase of Unit 3321.  The defendants make these assertions at paras. 10, 11, 12 and 13 in their AD&CC.

49.	Let me address that with this observation.  The defendants’ claim for interest is based on a binding contract that they say exist or existed between the parties.  This claim has now been dismissed.  Premised on the said main contract, they allege that an oral agreement on interest had been reached between the parties.  It was difficult for me to try to understand what the terms and conditions of the oral loan agreement were in the AD&CC.  The defendants’ submissions did not also address that.  The plaintiffs deny the arrangement and the claim for interest in their pleadings.  However, I note that under Exhibit P1, the plaintiffs agree that there was an oral agreement reached between the first plaintiff and the first defendant.  I refer to depositions made at paras. 22 to 27 of Exhibit P1.  This is also explained in the filed Statement of Agreed and Disputed Facts and Legal Issues (SoADFLI).  However, they assert that the oral agreement ended in 2017 when they learnt that the first defendant started to charge a higher interest rate.  The first defendant also gave evidence in that regard.

50.	I note the evidence of the parties on the matter.

51.	I further observe that the oral agreement on interest and the allegations raised in that regard by the defendants in their cross-claim, were premised on the basis or understanding that the parties were going to sign a binding contract which was the intended Contract.  I have already ruled above that no such binding agreement exist or existed.

52.	This claim will therefore fail.  

53.	Now, even if I were to find that such an oral agreement on interest exist or existed, it would be or have been regarded as entered in ‘vacuum’, again, because of the absence of the intended Contract which was never signed, and the oral agreement would be considered void or voidable.

54.	Having clarified the defendants’ cross-claim on the purported oral agreement on interest, and given my finding that no legal binding contract exist or existed between the parties, the defendants’ claims for breach of contracts are dismissed.

OTHER CLAIMS

55.	The defendants also make a claim that the plaintiffs should pay rents for the duration of their stay in Unit 3321 from 2016 to 2020.  The plaintiffs deny the claim and say no agreement to pay rent was ever signed or reached between the parties.  They also submit that the parties never contemplated rent because they were of the view at the material time that they would enter into the intended Contract, and that the plaintiffs would purchase Unit 3321.

56.	I uphold the submissions of the plaintiffs on this issue.  The evidence of both parties support the argument that rent was not an issue that was discussed then because the parties had hoped that they would sign the deal.  There is no written agreement for payment of rent that is adduced in the evidence that is filed by the parties.  Had rent been contemplated by the parties, it could have been discussed or worked out before the plaintiffs were permitted to reside at Unit 3321 in 2016.  I see no credible evidence that is adduced by the parties that may assist me make a determination on the matter except mere assertions.

57.	I refer to the defendants’ pleadings on the subject matter.  I observe that they appear to suggest or imply possible claim for unjust enrichment.  However, I note that it was not properly pleaded as a cause of action against the plaintiffs.  The defendants or the parties in general, are bound by their pleadings.  See cases:  Papua New Guinea Banking Corporation (PNGBC) v Tole (2002) SC694, Motor Vehicles Insurance (PNG) Trust v John Etape [1995] PNGLR 214 at p.221, and Motor Vehicles Insurance (PNG) Trust v James Pupune [1993] PNGLR 370.

58.	The defendants also claims Body Corporate Fees, which is claimed at K42,694.72.  The plaintiffs do not challenge this claim.  They regard the claim as necessary expenses, that is, expenses the defendants incurred at the duration of the plaintiffs’ occupation of the unit from 2016 to 2019 or 2020; the expenses include gas, electricity and parking space.

59.	I am minded and will make an award for this sum in favour of the defendants only on the basis that it was conceded to by the plaintiffs.  There is no contractual basis for making this award because of my earlier findings.  There is also no express claim for unjust enrichment made by the defendants.  Thus, the settlement of this expense is premised on consent or own volition of the plaintiffs which I will allow.

60.	The defendants also allege that because the plaintiffs have accepted to pay this debt, it means that they have conceded to the existence of a binding contract between the parties.  The plaintiffs reject the submission.  They allege that these were actual cost that they had caused upon the defendants by their occupation of Unit 3321.  They maintain their submissions that their occupation of the unit was premised on mutual consensus; that there was no agreement to pay rent; that the parties had intended to settle on the intended Contract which never eventuated.  

61.	I note the submissions of the parties on this issue.  I, however, reject the defendants’ submission given my findings above regarding want of existence of a legally binding contract between the parties.  I uphold the plaintiff’s submission that these were expenses that the defendants had incurred premised on the parties’ arrangement, that is, where the defendants had allowed the plaintiffs to occupy Unit 3321 to await finalization of the unit, and for the parties to settle and sign the intended Contract.

62.	The defendants also claim refund of monies allegedly incurred to refurbish Unit 3321 after the plaintiffs vacated the unit in 2020.  The sum claimed for is K18,911.36.  The plaintiffs, when making submissions orally in closing conceded that the sum may be deducted from what may be awarded.  The plaintiffs submit that the sum was part of the expenses that they had caused the defendants to incur when they resided at Unit 3321 from 2016 to 2020.

63.	I will therefore allow this expenses claim by the defendants, again, premised on acceptance by the plaintiffs to pay on their own volition.

64.	The defendants also and as a final claim, seek refund of legal fees in the sum of K62,908.  They claim that they incurred the said legal fees in proceeding OS 785 of 2019.  The plaintiffs deny this claim.

65.	I note the submissions of the parties in this regard.

66.	I reject this claim by the defendants.  The relief will fail because I have already dismissed the cause of action by the defendants.  And there is no proper pleadings or basis for making this claim in the manner as it is pleaded.  The claim or relief sought is also, in my view, misconceived.  Costs incurred in the separate proceeding would have already been decided by that Court, that is, on who should be liable to pay the cost of the proceeding.  It cannot simply be sought as a separate relief in another proceeding.  If the defendants intend to resurrect the issue of cost that it had incurred or was awarded by the Court in proceeding WS 785 of 2019, the correct process should be to apply or file proceeding to revive proceeding WS 785 of 2019, or appeal or file a review to the Supreme Court.

67.	I therefore dismiss the cross-claim for this relief.

SUMMARY

68.	In summary, I first dismiss the plaintiffs’ claim for misrepresentation.  Secondly, I find that the plaintiffs have established their second cause of action for unjust enrichment against the defendants.  I find that the defendants have unjustly enriched themselves at the expenses of the plaintiffs in relation to the intended Contract that did not eventuate between the parties.  The defendants are therefore liable to restore the plaintiffs of their costs and expenses including monies that they have paid in advance in anticipation that the intended Contract would be settled and signed.

69.	The evidence adduced also support the losses suffered by the plaintiffs.  Let me remind the parties of these significant facts.  The intended Contract fell through in 2019 where it was never signed because the parties could not agree on the terms and conditions.  The parties had agreed on mutual terms to do a final inspection in July of 2020 after which the keys to Unit 3321 were returned and the parties parted ways.  The plaintiffs presently do not own a lease over Unit 3321, nor do they hold any shares in the second defendant.  In the meantime, or as at 2020, the defendants continue to keep the deposit monies that have been paid by the plaintiffs to them in regard to the failed intended Contract.  The defendants also continue to enjoy or benefit from the improvements that the plaintiffs carried out over Unit 3321 which they had done on the premise that they had thought that they would own the unit after the deal was signed.  

70.	I am minded to award the sums K1,428,113.20 and K93,669.48 as restitution to the plaintiffs.  The total award for restitution I make is K1,521,782.68 (principal sum).

71.	The plaintiffs also seek interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015.  Interest is discretionary in terms of assessing what percentage to award and when it should accrue.  I am minded to award interest at the rate of 8% per annum.  I am also minded to order interest to accrue from the date of filing the proceeding, to the date of payment.  I will also order post interest to accrue if the award and prejudgment interest are not settled within 30 days after the date of the judgment.

72.	I calculate interest as follows: Interest at 8% of K1,521,782.68 is K121,742.61 which is the interest for 1 year over the principal sum.  Dividing by 365 days equals K333.54 which is interest that is accruing on the principal sum per day.  The claim was initially filed on 19 May 2021.  The date for the judgment is 7 March 2025 which means the pre-judgment interest period will run from 19 May 2021 to 7 March 2025, which is a total of 3 years 9 months and 15 days (i.e., to 6 March 2025 which is the day before the judgment day).  I will estimate each month at 30 days for this purpose.  First, I multiply K121,742.61 by 3 years and get K365,227.83.  Then I multiply 30 days by 9 months and get a total of 270 days.  Then I multiply 270 days by K333.54 and get K90,055.80.  I multiply 15 days by K333.54 and get K5,003.10.  I add K365,227.83 plus K90,055.80 plus K5,003.10, and get K460,286.73.

73.	I also award K460,286.73 as pre-judgment interest over the sum that is awarded as restitution.  The judgment sum (inclusive of interest) is K1,982,069.41.

74.	I dismiss the defendants’ cross-claim for breach of contracts.  In so doing, I refuse the relief that are sought in their cross-claim in general.  The only allowances I give are the 2 expenses that have been conceded to by the plaintiffs.  I will make an award that the defendants shall be reimbursed with the sums K42,694.72 and K18,911.36.  The total sum awarded is K61,606.08.

OFFSET

75.	I will make a further order to offset the K61,606.08 from the principal sum of the judgment that is awarded to the plaintiffs.

76.	I minus K61,606.08 from K1,521,782.68 and get K1,460,176.60.

77.	I then add K1,460,176.60 onto the prejudgment interest sum K460,286.73 and get this final reduced judgment sum (inclusive of pre-judgment interest) which is K1,920,463.33.

COST

78.	An award of cost is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

ORDERS

79.	I make the following orders:

1.	The plaintiffs have established their cause of action for unjust enrichment.

2.	Judgment in the sum of K1,521,782.68 for restitution is awarded to the plaintiffs.

3.	Interest at 8% per annum is awarded to the judgment sum which shall accrue from the date of filing the proceeding to the date of judgment, and interest shall continue to accrued after 30 days from the date of this order if the judgment sum and the accrued prejudgment interest sum are not settled in full.

4.	The pre-judgment interest sum on the principal sum is K460,286.73 which is also awarded to the plaintiff.

5.	The defendants’ cross-claim for breach of contract and other related claims are dismissed.

6.	Premised on the plaintiffs’ concessions in relation to expenses incurred by the defendants on the property deal between the parties that fell through, I award a total sum of K61,606.08 as re-imbursement expenses.

7.	The K61,606.08 award shall be used to partially off-set the judgment sum that is awarded against the defendants.

8.	The final sum that is due and payable to the plaintiff after the off-set is K1,920,463.33 (inclusive of pre-judgment interest).

9.	Cost of the proceeding is awarded to the plaintiffs against the defendants, on a party/party basis which may be taxed if not agreed.

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

The Court orders accordingly
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Lawyers for the plaintiffs:	Ashurst PNG
Lawyers for the defendants:	Wang Dee