Albert Areng v Gregory Babia and National Housing Corporation (2005) N2895

• Jurisdiction: Papua New Guinea
• Judge: Sawong J
• Judgment Date: 22 June 2005
• Court: National Court
• Citation: (2005) N2895
• Docket Number: WS 501 of 2003
• Year: 2005
• Judgement Number: N2895

Full Title: WS 501 of 2003; Albert Areng v Gregory Babia and National Housing Corporation (2005) N2895

National Court: Sawong J

Judgment Delivered: 22 June 2005

N2895

PAPUA NEW GUINEA

[In the National Court of Justice in Madang]

WS 501 OF 2003

BETWEEN:

ALBERT ARENG

(Plaintiff)

AND:

GREGORY BABIA

(First Defendant)

&

NATIONAL HOUSING CORPORATION

(Second Defendant)

MADANG : SAWONG, J.

2004 : 15th October

2005 : 22nd June

PRACTICE & PROCEDURE – Claim against National Housing Corporation for Damages for Breach of Contract – Notice of Intention to make a Claim against the State – Claims by and Against the State Act – s.5 – Not Applicable.

PRACTICE & PROCEDURE – Proceedings against Statutory Corporations – Claim against National Housing Corporation – Proceedings against National Housing Corporation – Housing Corporation Act 1990 as amended to date.

HELD:

1. The provisions of s.5 of the Claims by and against the State Act do not apply to Statutory Corporation such as the National Housing Corporation.

2. The Failure to give such a Notice on the State will not render nugatory proceedings instituted against a statutory corporation.

3. There are exception either in equity by statute to the principles of privity of contract.

CASES CITED:

Mt. Hagen Urban Local Level Government v. The National Housing

Corporation (Unreported and Unnumbered National Court Judgment

dated 20th April, 2004 by Mogish J. (WS 1194 of 2002).

Reservation Pursuant to s.15 of the Supreme Court Act, SCR No. 1 of 1998

(Unreported Judgment of the Supreme Court) No. SC672.

COUNSELS:

K.P. NUGI, for the Applicant/Defendants

W.AKUANI, for the Plaintiff/Respondent

D E C I S I O N

22nd June, 2005

SAWONG, J: By an undated Notice of Motion filed on the 19th of August, 2004 the applicant seek the following orders:

1. The proceedings be dismissed as the plaintiff is not a proper party; i.e. has no standing to bring proceedings.

2. The proceedings be dismissed for non-compliance of s.5 of the Claims by and Against the State Act 1996.

3. In the alternative default judgment entered on the 16th July, 2003 be set aside.

4. Leave be granted to the defendants to file a Defense out of time.

In support of the application, counsel for the applicants relied on her own affidavit sworn on the 16th of August, 2004.

The plaintiff/respondents opposes the application. Mr Akuani relies on four (4) affidavits. These were the affidavits of the plaintiff sworn on the 28th March 2004, 9th of September 2004 and the 10th of October 2004 and the affidavit of Michael Areng, filed on 9th September, 2004.

Both counsels filed written submissions and also made oral remarks or submissions.

The background to these applications may be briefly stated as follows. The plaintiff is the eldest son and next of kin of Michael Areng and his wife who were the purchaser of a property from the National Housing Corporation (NHC) located at Section 67 Allotment 28 town of Madang (the property). They entered into a contract for the sale and purchase of land with the NHC. The contracts and other relevant documents were duly stamped and ministerial approval was given in 1985. They paid for the property but the NHC have yet to transfer the Title Deed to the plaintiff. Despite many requests to NHC, over the many years the NHC has procrastinated and delayed the transfer. A period of over 17 years lapsed without an end insight. They therefore authorized their son, the plaintiff to institute the present proceedings. Consequently, the plaintiff issued proceedings claiming damages for breach of contract etcetera. Those proceedings were filed on the 24th of April, 2003. The defendants were duly served with the proceedings. They did not file their Notices of Intention to Defend nor their Defenses at all. Consequently, the plaintiff moved by way of Notice of Motion to have default judgment entered against the defendants for damages to be assessed. Subsequently, on 16th July, 2003 the Court granted default judgment to the plaintiff for damages to be assessed and also ordered the defendants to pay the plaintiffs costs. The matter was awaiting the trial of assessment of damages, when the Defendants filed the present application on the 19th of August, 2004.

The applicants raise several grounds in support of the application. The first ground is that the present plaintiff is not a proper party to bring the present proceedings. In other words, the plaintiff has no standing to bring the proceeding. The second ground is that, the plaintiff has not complied with the mandatory requirements to give Notice of Intention to make a claim against the State as required by s.5 of the Claims by and Against the State Act (CB&ASA). And thirdly, the applicants say that the entry of default judgment was irregular because of the preceding grounds and therefore ought to be set aside.

I deal with each of the grounds. The first ground is that as the plaintiff is a third party, in that he was not privy to the contract between the NHC and his parents. Ms Nugi submits that the plaintiff, Albert Areng, has no standing to bring these proceedings against the defendants as the contract for the sale and purchase of the said property was between his parents and the defendants and not between him and the defendants. That being the case, she submits that, the present plaintiff has no standing to bring the action. She has relied on several overseas and Papua New Guinean authorities in support of her submission. See Dunlop Pneumatic Tyre Co. Limited v Delfridge & Co. Ltd (1915) AC847, Tweddle v Atkinson (1861) 1VS at p.398, Papua New Guinea Banking Corporation v Bara Amevo & Bari Investments T/A Kainantu Pharmacy & Lenny Aparima & Orito Aparima (Unreported National Court Judgment) No. N1726 and AGK Pacific (NG) Pty Limited v ET Taylor Construction Pty Limited (Unreported Judgment of the National Court) No. N871.

Mr Akuani in his written submissions does not address this issue at all.

The authorities Ms Nugi relied on, arise from the principles of privity of contract. In Papua New Guinea Banking Corporation v Bara Amevo & Ors (supra) Sevua J said at p..

“The second defendant is not a party to the contract. The doctrine of privity of contract is that, as a general rule, a contract cannot confer rights or impose obligations arising under it on any person except the parties to it. The scope of the doctrine means only that a person cannot acquire rights, or be subjected to liabilities, arising under a contract to which he is not a party.”

Whilst I accept the proposition and the principles of privity of contract, there are exceptions to that principle. These exceptions come either from statute or from equity. In other words, the doctrine of privity of contract is subject to many exceptions. For instance, a third party can acquire rights and/or obligations under contract by virtue of a number of equitable or statutory exceptions to the doctrine of privity.

In the present case, the agreement for the sale and purchase of the property was between the NHC and the parents of the plaintiff. That is clear from the Deed of Mortgage and other relevant documents which is annexed to Albert Areng’s affidavit of the 11th October, 2004. It is clear that the contract was indeed between Mr & Mrs Areng and the defendant. But that is not the end of the matter. For there are other evidence which go to the issue of standing.

Albert Areng also annexes to that affidavit a statutory declaration from Michael Areng dated 27th January, 2003 authorizing Albert Areng to act on his behalf and to do all necessary things regarding the said property. Mr Michael Areng has also filed an affidavit authorizing the plaintiff to act on his behalf and to take all necessary steps to facilitate the transfer of this property. The evidence also shows the plaintiff taking proactive role in dealing with this matter with the Defendants over many years. They took no issue of standing with him.

I accept the evidence from Albert Areng of his father’s authority to take his place and assume the obligations and rights under the contract to finalize this matter. There is overwhelming evidence from both sides that the contract for purchase and sale of land together with the instrument of transfer were in-fact approved in 1986. The contract ought to have been settled immediately soon after. The plaintiff’s parents had in fact paid the purchase price, but it was the NHC which did not do its part by delivering to the plaintiff’s parents the stamped and approved Transfer Instrument and the original Title Deed. The purchasers have been waiting for these ever since settlement took place. The question then arises as to why it has taken so long for the NHC to do its part to transfer the property. There is an unacceptable long delay on the part of the defendants. The arguments they now raise, in my view, are a belated attempt on their part to distance themselves from the performance of their obligations. In my view, this is unacceptable and the principle of doctrine of privity should not be relied on to negate their obligations. In equity it would be plainly unjust to dismiss the proceeding merely because Albert Areng was not a party to the original contract. In my view, to dismiss the proceedings on this basis in the circumstances of this case would amount to an inequitable and unjust conclusion.

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