Gregory Puli Manda v Yatala Limited and Daryl Haste (2009) SC974

• Jurisdiction: Papua New Guinea
• Judge: Gavara-Nanu, Batari & Manuhu JJ
• Judgment Date: 30 April 2009
• Court: Supreme Court
• Citation: (2009) SC974
• Docket Number: SCA NO 23 OF 2003
• Year: 2009
• Judgement Number: SC974

Full Title: SCA NO 23 OF 2003; Gregory Puli Manda v Yatala Limited and Daryl Haste (2009) SC974

Supreme Court: Gavara-Nanu, Batari & Manuhu JJ

Judgment Delivered: 30 April 2009

SC974

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 23 OF 2003

GREGORY PULI MANDA

Appellant

V.

YATALA LIMITED

First Respondent

AND

DARYL HASTE

Second Respondent

Waigani: Gavara-Nanu, Batari & Manuhu JJ

2007: 26 February

2009: 30 April

JUDGMENT

CONTRACT – Sale of property – Agreed Purchase Price was K155,000.00 – Appellant purchaser unable to settle due to shortfall of K7,750.00 – Parties agreed to vary lease back clause in Contract of Sale to accommodate shortfall – Settlement completed after variation – Appellant subsequently claimed rental arrears on the basis of original clause – Appellant denied shortfall and contested variation agreement – Respondent raised and relied on agreement to vary – Whether there was a shortfall – Whether agreement to vary enforceable – Whether sufficient consideration.

Cases Cited:

Papua New Guinea cases

Brinks Incorporated and Brinks Air Courier Australia Pty Ltd v Brinks Pty Ltd (1997) N1567

In the matter of an application Timothy Mathew O’Dwyer v Arnold Theodorus Derks (2007) N3226

New Ireland Development Corporation Ltd v Arrow Trading Ltd (2007) N3240

Pinpar Developer Pty Ltd v TL Timber Development Pty Ltd (2006) N3075 PNG Ready Mixed Concrete Pty Ltd v The Independent State of Papua New Guinea [1981] PNGLR 396

Steamships Trading Co Ltd v Garamut Enterprises Ltd (2000) N1959

Overseas cases

D. & C. Builders Limited v Rees [1966] QBD 617 and Williams v. Roffey Bros. & Nicholls (Contractors) Ltd [1991] C.A. 1.

Counsel:

Mr. G. P. Manda, in person

Ms. J. Murray, for the Respondents

30 April, 2009

1. BY THE COURT: This is an appeal against the decision of Salika J. delivered on 14th February 2003 in the National Court at Waigani which dismissed the Appellant’s claim for, among other things, rental arrears and an order for eviction.

2. The appeal relates largely to calculations of payments for sale of property. In our consideration of the appeal, therefore, it is appropriate to, in addition to other evidence, pay particular attention to the relevant primary documentary evidence which comprises of the Contract of Sale, the various correspondence between the parties and their respective banks, the Settlement Statements and copies of settlement cheques.

What are the issues?

3. The claim in the court below was for rental arrears of K21,000.00 pursuant to a lease back clause in a contract of sale of property the parties had entered into earlier in relation to the same property. The Respondents contested the claim on the basis that the lease back clause in the Contract of Sale had been varied to accommodate the Appellant’s shortfall at the time of settlement of sale of the property, and; consequently, the Appellant could not maintain a claim pursuant to the original clause. The Appellant counter argued that he did not incur any shortfall, and; further that, the shortfall in question was for the discharge of the mortgage which payment was the Respondents’ responsibility.

4. The initial issue, therefore, is whether there was a shortfall. This is a question of fact. If there was indeed a shortfall, the next issue would be whether there was a valid and enforceable variation of the lease back clause in the Contract of Sale. This is a question of mixed fact and law. The nature of the alleged variation would have to be determined and considered in accordance with the appropriate principles of contract law.

5. It is convenient to consider the appeal in this manner rather than labour on each ground of appeal. The grounds of appeal are individually and collectively interconnected to the identified questions. Answers to these questions would determine ultimately whether the trial Judge’s decision should be overturned.

Was there a shortfall?

6. Towards the end of 1999, the Appellant became interested in acquiring the Respondents’ property, a block of units, described as Allotment 9 Section 4 Matirogo National Capital District, which had been placed on the property market by sales agent Puritau Real Estate. Negotiations between the parties through the agent eventually resulted in the agreed sale price of K155,000.00.

7. The Appellant made a 10 per cent deposit of K15,500.00 into the trust account of Puritau Real Estate on 4th November 1999 and secured the sale. The Appellant then organized for a bank loan of K131,750.00 from Papua New Guinea Banking Corporation (PNGBC). In the meantime, on 20th December 1999, the Respondents’ lawyer, Blake Dawson Waldron, forwarded the Contract of Sale to the Appellant for execution and requested for a stamp duty cheque of K7,752.00 and a lodgment fee cheque of K50.00 in favour of Department of Lands and Physical Planning. The Contract of Sale was duly executed and returned with the lodgment fee and an application for exemption from payment of stamp duties.

8. The Appellant was advised on 28th January 2000 that his loan application for K131,750.00 had been approved. On 1st March 2000, the Appellant was advised that transfer of interest in the subject property had been approved by Department of Lands and Physical Planning and settlement was to take place on 14th March 2000. Unfortunately, the anticipated settlement did not take place and was deferred to 17th March 2000. In any event, the Settlement Statement of 14th March 2000 had the following settlement details:

Purchase Price K155,000.00

Less Deposit Paid (K15,500.00)

Total Payable K139,500.00

Adjustments plus land rent @ K1,375.00 per annum. K1,085.72
Purchaser allows 289/366 days

Plus land rate @ K60.00 per annum. Purchaser allows K47.38
289/366 days (Arrears: K1,158.13)

Plus Water Rate @ K22.50 per quarter. Purchaser (K6.92)
allows 28/91 days (Arrears K780.73)

Amount payable K140,640.02

Bank cheques required at settlement

Department of Lands K1,375.00

National Capital District Commission K1,158.13

Eda Ranu K780.73

Blake Dawson Waldron K1,592.36

Bank of South Pacific K139,500

9. The Settlement Statement, which had been prepared by Blake Dawson Waldron, was in order. We note that, consistent with conveyancing practices, the statement reflected the Appellant’s 10 per cent deposit of K15,500.00 and K139,500.00 payable by the Appellant to Bank of South Pacific (BSP) being the Respondents’ bank. These figures add up to K155,000.00.

10. We note, secondly, that a vendor could cover incidental costs from the sale proceeds. In this case, for instance, the sales commission was deducted by Puritau Real Estate from the Appellant’s 10 per cent deposit. On the other hand, incidental costs incurred by a purchaser are additional payments he is required to make. These additional payments are not part of the purchase price. In this case, for instance, the Settlement Statement shows that adjustments, rates and arrears are separate additional payments for the Appellant to settle on settlement date.

11. On that connection, we further note that the Appellant was also required to pay legal costs. Each party should have been paying for his own legal costs. We will not interfere, however, because what was in the statement could be the Appellant’s agreed share of legal costs. More importantly, we are not prepared to interfere and, thereby, alter the terms of the parties’ agreement.

12. We note, moreover, that the amount of K139,500.00, as shown in the statement actually comprises of the approved loan of K131,750.00 and the Appellant’s required contribution of K7,750.00 additional to the 10 per cent deposit of K15,500.00. They all add up to K155,500.00. Unfortunately, the Appellant’s letter of 16th March 2000 suggests that he did not have K7,750.00 to complete the purchase. He did not want his bank to raise the settlement cheque of K139,500.00. He wanted to separately raise K7,750.00 although he claimed he had sufficient funds.

13. It was obvious by 24th March 2000, that the Appellant did not have K7,750.00 in his bank account or anywhere else for that matter. The Appellant’s shortcoming posed a serious threat to settlement and the entire contract. In a worse case scenario, the sale could have been aborted by the Respondents who had a keen purchaser with a higher offer.

14. The shortcoming was acknowledged in his letter of 24th March 2000 where the Appellant sought the Respondents’ assistance “to support my intended application for an additional loan of K7,750.00 to meet the shortfall….” Even then, in the same letter, the Appellant appeared to have mistaken the real nature of the said K7,750.00. He regarded the said K7,750.00 as if it was for the discharge of the mortgage and attempted to get the Respondents to provide it. The Respondents quite rightly ignored him.

15. The Respondents were not mistaken. They wrote to the Appellant on 31st March 2000 and made an offer for a lease back arrangement. It was a prudent course to take because the sale had been substantially completed. It was necessary for the parties to agree on an alternative arrangement or call off the sale. The Respondents’...