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Surute v Porusa [1995] PNGLR 477 (15 June 1995)

PNG Law Reports 1995

[1995] PNGLR 477 - Kevin Surute v Anthony Porusa 

[1995] PNGLR 477

N1339

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

KEVIN SURUTE

V

ANTHONY PORUSA

Popondetta

Brown J

15 June 1995

EQUITY - Estate contract - Right of contractor.

REAL PROPERTY - Tenant purchase scheme - Tenant equitable owner - Sub-lease - Expiration of sub-lease - Sub-tenant at will.

PRACTICE AND PROCEDURE - No appearance of respondent - Powers of Court to make order.

Facts

The appellant, purchaser of real property under the government home purchase scheme, entered into a tenancy agreement with the respondent for a lease for one year. The lease expired and the appellant brought an ejectment action against the respondent. The District Court Magistrate rejected the application on the ground that the appellant had no legitimate rights in the property.

Held

1.       The National Housing Corpn is, pending registration of a transfer, the registered proprietor of the property. The appellant is the purchaser under contract and, as such, is the equitable owner, subject to the contract terms.

2.       On the expiry of the lease, the respondent has only a tenancy at will. The appellant is granted a warrant of possession.

Counsel

S Balen, for the appellant.

No appearance, for the respondent.

15 June 1995

BROWN J: This is an appeal against an order of the District Court Magistrate at Popondetta, refusing a summons for ejectment of tenants of a property at section 2 allotment 13, Mandora Street, Popondetta. The appellant, Kevin Surute, entered into a contract to purchase the subject property, a high covenant residence, while he was working for the government in 1983. On 22 August 1983, the Secretary, Department of Housing, wrote acknowledging receipt of Mr Surute’s notice of acceptance of the department’s offer to sell the subject property under the government house ownership scheme. The balance of purchase money was to be paid by installments from Mr Surute’s salary by periodic deductions. Mr Surute was an owner/occupier. He was retrenched on 7 September 1990. He later entered into a “memorandum of understanding” with the respondent on 3 September 1993. This document could be loosely described as a lease, for it recited the payment of rent of K150 per month under a “tenancy agreement” for 12 months. Mr Surute moved out, and Mr Porusa moved in to occupation. The memorandum was prepared at a round table discussion between the parties to this appeal and the Provincial Housing Manager. Consequently, there was no doubt that the tenancy agreement was with the consent and approval of the Department of Housing. On 22 September 1994, the Managing Director, National Housing Corpn wrote to the appellant, Mr Surute, confirming the corporation’s approval to sublease of the property.

In any event, there has been no lease document, as such, tendered before the Magistrate, and the memorandum, which could have existed as a tenancy agreement, was not stamped with duty. The memorandum or agreement expired on 2 September 1994. No fresh agreement was entered into.

A document was prepared by Mr Surute, but the occupier, Mr Porusa, declined to sign it, for the rent had been expressed to increase to K500 per month. Mr Porusa has continued to pay, and Mr Surute has continued to accept, the K150 per month originally agreed. Consequently, there is a tenancy from month to month in an amount of K150, determinable at the will of either party.

On 22 November 1994, Mr Surute issued a summons seeking to eject Mr Porusa from the premises. The basis of the summons was that the contract for tenancy had expired, Mr Surute had given Mr Porusa notice to quit. Mr Porusa had no right to remain in occupation of Mr Surute’s house when Mr Surute had determined the tenancy.

The Magistrate refused to issue an ejectment order, for he said the applicant, Mr Surute, had no legitimate right to exercise. He further said that Mr Surute must fully satisfy the mortgage contract first, which was in arrears of K4,943. The Magistrate further said that the right to evict Mr Porusa only lies with the National Housing Corpn (landlord/mortgagor), and not the applicant (the mortgagee).

The Magistrate, on the face of his order, clearly had no clear idea of the legal rights and obligations which had arisen in the circumstances of this case.

The National Housing Corpn is, pending registration of a transfer, the registered proprietor of the property. The appellant, Mr Surute, is the purchaser under contract and, as such, is the equitable owner, subject to the contract terms. He cannot be described as the mortgagee, nor can the National Housing Corpn be described as the mortgagor.

Once the National Housing Corpn agreed to a lease by Mr Surute, the contract for sale (requiring the consent of the corporation to a sublease) was complied with, and Mr Porusa’s assertion that Mr Surute was in arrears with his payments was no bar to Mr Surute seeking the redress of the District Court under the Summary Ejectment Act Ch 202. The rights of the National Housing Corpn were not in issue in the summons proceedings before the Magistrate. Consequently, the Magistrate had no power to make orders that the appellant pay the National Housing Corpn’s moneys under some supposed mortgage contract.

There is no such thing as a mortgage in this case; rather, a terms contract of sale. Since Mr Surute is the purchaser under the terms contract, it can clearly be seen that he is, in equity, the owner, for he can call for a transfer on tender of the balance of purchase moneys.

The tenant, Mr Porusa, has no contractual rights with the National Housing Corpn, although he certainly has embarrassed Mr Surute by presuming to write to the corporation, seeking to have Mr Surute ejected from his own home.

As I say, Mr Porusa has only a tenancy at the will of Mr Surute. Mr Surute does not wish that tenancy to continue.

By virtue of s 3 of the Summary Ejectment Act, on the expiration of the term on 2 September 1994, Mr Surute was entitled to a summons of ejectment when Mr Porusa refused to vacate. The Magistrate has clearly erred both in law and in fact.

ORDER

The Magistrate’s order is quashed. A warrant for possession under s 3(3) of the Summary Ejectment Act, in favour of the appellant, shall issue forthwith. Such warrant shall not be executed for a period of one month.

I order the respondent to pay the appellant’s costs of the appeal.

I am satisfied that the notice of appeal has been properly served. I have given leave to file the affidavit of service in court. Further, on hearing that the appellant had spoken with the respondent’s wife to inform her that the matter will proceed today, and bearing in mind that the Court circuits irregularly to Popondetta, I am satisfied that the respondent had notice of the hearing of this appeal in these sittings. I dispense with compliance with any rules which may prevent the appellant from having the appeal determined today.

Lawyer for the appellant: Pato Lawyers.