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Niugini Steel Corporation Pty Ltd v Olympic Stationary Pty Ltd [1998] PGSC 11; SC546 (3 April 1998)

Unreported Supreme Court Decisions

SC546

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]
SC APPEAL NO 30 OF 1995
NIUGINI STEEL CORPORATION PTY LTD
V
OLYMPIC STATIONARY PTY LTD

Waigani

Amet CJ Kapi DCJ Injia J
20 September 1996
3 April 1998

APPEAL - Contract for sale of property - no evidence to show that the vendor failed to perform its objection under the contract.

Counsel

P Payne for the Appellant

W Frizzel for the Respondent

3 April 1998

AMET CJ KAPI DCJ INJIA J: Olympic Stationary Pty Ltd (hereinafter referred to as the Respondent) sued Niugini Steel Corporation Pty Ltd (hereinafter referred to as the Appellant) for specific performance of a contract or, alternatively, damages for breach of the contract. The respondent is the registered proprietor of land, Lots 18 and 19 Section 341 at Hohola. The appellant is the registered proprietor of land Lot 20, 21, 22 and 23 Section 341 Hohola. The appellant and the respondent share land boundaries. The parties entered into negotiations for the appellant to sell Lot 20 section 341 to the respondent. The parties agreed to a purchase price of K15, 000.00. A contract of sale was drawn up and was executed by the representative of the parties on 29th October 1990. The respondent had paid a deposit of K14, 900.00 towards the purchase price. The Ministerial approval for the deal was granted on 12th February 1991. As a condition of the contract it was agreed for the appellant to obtain a separate State Lease over Lot 20 Section 341 with conditions acceptable to the respondent within 6 weeks of the date of the contract. This condition was not fulfilled and the respondent brought this action.

The trial was conducted on two major issues, namely, whether there was a valid contract between the parties and whether or not the appellant refused to perform its part in terms of obtaining a separate lease for Lot 20 Section 341. The National Court concluded that there was a valid contract of sale between the parties and further concluded that the appellant failed to perform its obligation under the contract to obtain a separate lease for Lot 20 Section 341. Consequently, the Court ordered specific performance of the contract, namely, that the appellant is to speedily do all things that are necessary to obtain a separate State Lease of Allotment 20 Section 341 Hohola being part of the land comprised in State Lease Vol. 84 Fol. 198 together with the improvements and do all things that are necessary to complete the sale of the said piece or parcel of land.

The appellant has appealed against the whole of the decision. The appellant filed numerous grounds of appeal in support. At the hearing, the appellant abandoned grounds relating to the question of whether there was a binding contract between the parties. The remaining grounds of appeal relate to the question of whether the appellant failed in its obligation to obtain a separate State Lease in respect of Allotment 20 Section 341 Hohola.

Counsel for the appellant attacked the findings of the trial judge on a number of grounds. The main thrust of the appellants submissions is that, first, the respondent agreed to take on the responsibility to perform all legal requirements for obtaining a separate lease under s. 71 of the Lands Act. Second, that there is no evidence that the respondent ever took any steps to make an application pursuant to s. 71 of the Lands Act. Third, that there is no evidence that the appellant either refused or failed to sign any such application. He submitted that at all relevant times the appellant was willing to do all things necessary for the application to be made. He submitted that the respondent failed to take any step and cannot rely on its failure to ask for the specific performance of the contract.

Clause 19 (b) of the contract stipulated that the appellant was to be responsible for obtaining a separate lease for the property in question. However, the evidence showed that the respondent took on the responsibility to obtain the lease. The trial judge in fact came to this conclusion. However, he further concluded:

“The defendant has refused to surrender the lease in that it has refused to sign the application made on its behalf for a subdivision of the land under section 71 of the Lands Act having been sent to NSC for execution or lodgement.”

Counsel for the appellant has submitted that there is no evidence to support this finding. The respondent’s evidence at the trial consisted of two witnesses. Its main witness was Mr Ray Thurecht the Managing Director of the respondent company. There is no evidence given by this witness that the respondent did prepare an application for the lease under s. 71 of the Lands Act as agreed. At page 46 of the Appeal Book this witness is recorded as saying that ANZ Bank showed some reluctance to transfer the property. However, he agreed that he was not aware of what really transpired. There is no other evidence to show that the respondent or its lawyers actually prepared an application for the lease. In fact there is no evidence that it did anything at all. The only piece of evidence relevant to this issue is correspondence from respondent’s lawyers addressed to the Secretary of the appellant company dated 21 October 1992. In part this letter stated:

“We were advised by your mortgagee, ANZ Banking Group (PNG) Limited (‘ANZ’) that you had indicated to them that you were not proceeding with completion of this conveyance.”

This letter does not really tell the full story of what happened. It is dated 21st October 1992, some two and a half years after the contract was signed. There is no evidence as to what steps were taken by the respondent or its lawyers and what transpired prior to the date of this letter.

There is correspondence from the appellant dated 7th January 1992 authorising the respondent to uplift the title from its mortgagee, ANZ Banking Group (PNG) Limited. This letter is at least indicative of the willingness of the appellant to perform its part of the obligation as agreed. There is no other evidence that it refused to corporate including refusing to sign the application for the lease under s. 71 of the Lands Act.

We find therefore that the trial judge erred in concluding that the appellant failed to perform its obligation under the contract. It was stipulated as part of clause 19 (b) of the contract that if the separate lease is not obtained within six weeks of the date of the contract, the purchaser may rescind the contract. This event did not take place within the stipulated time. In the circumstances the appellant is entitled to rescind the contract. We would allow the appeal and quash the decision of the trial judge. We further order that the respondent pays the appellant’s costs of the appeal.

Lawyers for the Appellant: Blake Dawson Waldron

Lawyers for the Respondent: Warner Shand