George Kila v Shichun Zhu

• Jurisdiction: Papua New Guinea
• Judge: David, J
• Judgment Date: 06 April 2017
• Citation: (2017) N7043
• Court: National Court
• Year: 2017
• Judgement Number: N7043

Full : OS No.503 of 2014; George Kila v Shichun Zhu & Yue Jing Sun as joint tenants and Lucas Bazo as Bank Officer of the National Development Bank and National Development Bank and Benjamin Samson, Acting Registrar of Titles (2017) N7043

National Court: David, J

Judgment Delivered: 6 April 2017

N7043

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS No.503 of 2014

BETWEEN:

GEORGE KILA

Plaintiff

AND:

SHICHUN ZHU & YUE JING SUN as joint tenants

First Defendant

AND:

LUCAS BAZO as Bank Officer of the National Development Bank

Second Defendant

AND:

NATIONAL DEVELOPMENT BANK

Third Defendant

AND:

BENJAMIN SAMSON, Acting Registrar of Titles

Fourth Defendant

Waigani: David, J

2017: 21 March & 6 April

LIMITATIONS OF ACTIONS – sale of property by mortgagee – allegations of fraud and breach of contract - claim for declarations and interim injunctions – equitable relief - whether action founded on simple contract or an action upon a speciality - Frauds and Limitations Act, Sections 16 & 18.

PNG cases cited:

John Hiwi v Rendle Rimua (2015) SC1460

Mamun Investment Ltd v Nixon Koi (2015) SC1409

Oil Search Limited v Mineral Resources Development Corporation Limited (2010) SC1022

Simon Puraituk v The State (2007) N3204

Overseas cases cited:

Gibbs v Guild (1881) 8 QBD 296

R v Williams [1942] 2 All ER 95

Treatises cited:

Halsbury’s Laws of England, Fourth Edition, Reissue, Volume 28

Osborn’s Concise Law Dictionary, 9th Edition, Sweet & Maxwell, London

Counsel:

Timil L. Tape, for the Plaintiff

Steven Ranewa, for the Third Defendant

RULING

6th April, 2017

1. DAVID, J: INTRODUCTION: This is a ruling on an application moved by the third defendant pursuant to a notice of motion filed on 20 June 2016 essentially seeking orders to dismiss the entire proceedings for; abuse of process under Order 8 Rule 27(1) and Order 12 Rule 40(1)(c) of the National Court Rules; and for being time-barred under Section 16(1)(a) of the Frauds and Limitations Act 1988.

2. On 21 March 2017 after hearing the application, I gave an ex tempore ruling with regard to the relief sought for abuse of process. The third defendant had argued that there was no need for the plaintiff to institute these proceedings against the third defendant on the basis that similar issues raised in these proceedings have already been raised by his business partner Jim Tapako in proceedings commenced by WS No.652 of 2007 against the third defendant in relation to the property. I accepted the plaintiff’s submission that the proceedings were not an abuse of process and refused to grant the relief.

EVIDENCE

3. In support of its motion, the third defendant relies on the Affidavit of Suzanne Unumba sworn on 17 June 2016 and filed on 20 June 2016.

4. The plaintiff contests the application. He relies on the affidavits of:

(a) George Kila sworn and filed on 21 May 2014 (the first affidavit);

(b) George Kila sworn and filed on 22 May 2014 (the second affidavit);

(c) George Kila sworn on 10 June 2014 and filed on 11 June 2014 (the third affidavit);

(d) Joseph Ng sworn on 16 June 2016 and filed on 17 June 2016.

PLAINTIFF’S ALLEGATIONS AND CLAIM

5. By a writ of summons endorsed with a statement of claim filed by the plaintiff on 21 May 2014 against the defendants which was amended by the amended writ of summons endorsed with a statement of claim and filed on 11 June 2014, the plaintiff makes the following allegations. He and one Jim Tapako are legally the registered proprietors as joint tenants of all that piece or parcel of land described as Allotment 4 Section 144 Badili, Matirogo in the National Capital District (the property). On or about 12 December 2000, they mortgaged the property to the third defendant, the National Development Bank formerly known as the Rural Development Bank as security for a loan. The property was leased out to one Joseph Ng, a foreigner of Chinese origin at a monthly rental of K3,500.00 for a period of 5 years. The plaintiff fell into arrears and the third defendant served him with demand notices.

6. Given his precarious financial situation and being in arrears, he authorised Joseph Ng to sublease the property to the first defendants who are of Chinese origin and to arrange with the first defendants to make an advance payment of K380,000.00 to cover for a rental period of 5 years directly to the third defendant for the settlement of the outstanding loan. On 25 March 2005, the first defendants and Joseph Ng approached the third defendant to waive the tender for the sale of the property as the first defendants were going to settle the outstanding loan. On 13 April 2005, Joseph Ng entered into a sub-lease agreement (the sub-lease agreement) with the first defendants reflecting terms that; payments made by the first defendants to the third defendant in settlement of the plaintiff’s arrears and the loan generally were to be treated as advance rental payments for the property; the amount payable also covered the optional rental period of 5 years inclusive of the remaining period of 1 year and 6 months; and that upon settlement of the loan by the sureties, the property would revert to the plaintiff. On 21 May 2005, the third defendant agreed to the proposal by Mr Ng and the first defendants to settle the outstanding loan, waived the tender of the property and allowed the loan repayment to be made and the mortgage was effectively discharged.

7. Soon after the settlement of the loan and the discharge of the mortgage, the first defendants conspired or colluded with the second defendant, bank officer employed by the third defendant and fraudulently and in breach of the sub-lease agreement effected the sale of the property to the first defendants and subsequently had the fourth defendant erroneously transfer the title to the property to the first defendants, particulars of which are:

Particulars of fraud

(a) The first defendants and second defendant conspired or colluded with each other and deceitfully treated the loan repayments made by the first defendants on behalf of the plaintiff from the advance payment for the 5 year rent as purchase moneys from the first defendants for the purchase of the property.

(b) The first defendants and second defendant conspired or colluded with each other to deceitfully divert the moneys paid for the plaintiff’s loan and apply them for the benefit and use of the first defendants to purchase the property.

(c) The first defendants and second defendant conspired or colluded with each other to deceitfully divert the moneys paid for the loan repayments made by the first defendants on behalf of the plaintiff from the advance payment for the 5 year rent as purchase moneys from the first defendants for the direct purchase of the property.

(d) The first defendants and second defendant conspired or colluded with each other by providing to the fourth defendant false information and deceitfully obtained title to the property.

Particulars of breach of the sub-lease agreement

(a) The first defendants deceitfully colluded with the second defendant to treat or divert the moneys paid for the settlement of the loan as moneys for their purchase of the property.

(b) The first defendants colluded with the second defendant to treat or divert the advance rental payment for 5 years which was used for the settlement of the loan as purchase money for the property.

8. The plaintiff therefore seeks the following principal relief:

(a) a declaration that the transfer of title from the plaintiff and Jim Tapako of Allotment 4 Section 144 Badili, Matitorgo in the National Capital District was illegal and therefore null and void.

(b) a declaration that the sale of the property to the first defendant by the second defendant was fraudulently done therefore null and void.

(c) an order that the fourth defendant restore the plaintiff and his business partner Jim Tapako back to the Register as the legal title holder of the property.

(d) General damages against the first, second and third defendants.

(e) an interim injunction restraining the first defendants, their servants or agents from selling, leasing or disposing of the property to other persons or entities pending the determination of the substantive proceedings.

(f) an interim injunction restraining the fourth defendant from entertaining any request from any interested party including the first defendants for the further transfer of the property.

9. The third defendant filed its defence on 20 August 2014. It denied the allegations of fraud and breach of agreement.

10. The plaintiff filed his reply with leave of the Court on 23 February 2016.

SUMMARY OF PLAINTIFF’S EVIDENCE

George Kila

11. He is also known as George Kia. He is a businessman. He, with Jim Tapako, are legally the registered proprietors of the property as joint tenants. The Instrument of Transfer transferring the property to the first defendants as joint tenants bearing registration number S.38926 was produced for registration at the Office of the Registrar of Titles on 18 May 2005 and entered on 26 May 2005. The Memorandum of Mortgage bearing registration number S.38927 was also produced for registration at the...