Kwila Insurance Corporation v Kwangtun Pty Ltd

• Jurisdiction: Papua New Guinea
• Judge: Sheehan J
• Judgment Date: 10 July 1992
• Citation: [1992] PNGLR 200
• Court: National Court
• Year: 1992
• Judgement Number: N1091

National Court: Sheehan J

Judgment Delivered: 10 July 1992

N1091

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

KWILA INSURANCE CORPORATION LTD

V

KWANGTUN PTY LTD

Waigani

Sheehan J

29 October 1992

1 November 1991

10 July 1992

CONTRACT — Sale of land — Specific performance ordered — Performance of order by execution of fresh agreement — Claim order thus varied — Claim order failed by lapse of time.

REAL PROPERTY — Contract of sale of land — Delay in obtaining ministerial approval — Declaration that contract of sale to be rescinded failed.

Facts

The plaintiff, after contracting to sell land to the defendant, sought to avoid this contract to sell to a third person whose offer was better. The defendant then obtained a court order for the contract to be specifically performed. The Court ordered the parties to conclude the sale. However, the plaintiff now seeks the Court's declaration that the contract of sale be rescinded due to the lapse in time for required ministerial approval.

Held

1. When a party reneges on its contract of sale, the Court cannot by an order of specific performance convert an unwilling vendor into a willing seller, but it can compel the unwilling seller to do all the things that a willing seller would do to endeavour to complete the sale.

2. The application by the plaintiff fails and the motion is dismissed.

Counsel

J Bray for the plaintiff

B Curran for the defendant

SHEEHAN J: This is a case where a vendor, having contracted to sell a property to a purchaser, subsequently received a better offer for the property and sought to avoid his contract with the original purchaser. This obliged the purchaser to come to the National Court to obtain an order that the contract of sale entered into by the parties be specifically performed.

The parties are now back in court. This time it is the vendor who is the plaintiff. It seeks a declaration that, because the required statutory approval of the Minister for Lands to the transaction has not been obtained within the time stipulated in the contract of sale signed by the parties subsequent to the court order, the contract between the parties is automatically rescinded. The sequence of events backgrounding the application is as follows.

On 17 May 1990, the National Court made an order that the agreement for the sale of Lot 3 Section 451 Hohola, made between the parties in July 1987, be carried out. The order is made in the following terms.

The Court orders that:

1. The defendant sells that portion of land known as Lot 3 Section 451 Hohola to the plaintiff at the price of K49,000.00 within two months.

2. The defendant takes all steps necessary to obtain approval under s 69 of the Lands Act Ch 185 to transfer the title of the state lease being Lot 3 Section 451 Hohola to the plaintiff.

3. The defendant to pay the plaintiff plaintiff's taxed costs. [Ordered 17 May 1990 and entered 1 June 1990.]

On 28 June 1990, the vendor's solicitors, "pursuant to the National Court order of 17 May 1990", presented an agreement for sale of the property to the purchaser company direct.

Then followed a request by the purchasing company through its solicitors to substitute another transferee. This was refused. The vendor's solicitors pointed out:

"We confirm that our client does not agree to amend the terms of the sale but simply intends to comply with the National Court Order of 17 May 1990."

By further letter sent the same day, 11 July 1990, the vendor's solicitors stated that, should the executed contract of sale and the transfer instrument and necessary cheques not be received by 17 July 1990, that is two months after the court order, it would give serious consideration to advising it's client that it's obligations under the court order were at an end. The purchaser, in reply, on 16 July, returned the Agreement for Sale duly executed together with a transfer and the necessary fees. It also requested to be notified when these documents had been lodged for stamping and statutory approval.

Receiving no reply to that letter, a follow-up request was made on 30 August 1990, which brought the response from the vendor's solicitors stating that the documents were then at the stamp office being stamped. That letter was sent on 7 September 1990 and, in fact, it was only on that day that the documents were lodged for stamping.

They were subsequently lodged with the Department of Lands and Physical Planning on 25 September 1990 but were rejected because of an erroneous claim that land rent was still outstanding by the vendor. This issue was subsequently overcome and the documents re-lodged with the department, though the purchaser's solicitors were not advised of this. This led to further correspondence on 27 November requesting further information as to the state of the...