Putput Logging Pty Ltd v Phillip Ambalis

• Jurisdiction: Papua New Guinea
• Judge: Sheehan J
• Judgment Date: 18 June 1992
• Citation: [1992] PNGLR 159
• Court: National Court
• Year: 1992
• Judgement Number: N1094

Judgment Delivered: 18 June 1992

National Court: Sheehan J

N1094

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

PUTPUT LOGGING PTY LTD

V

PHILLIP AMBALIS

Lae

Sheehan J

18 June 1992

EQUITY — Statute not permitted to be used as cloak of fraud.

EQUITY — Unjust enrichment — Measurement of damages.

LEASE — Customary land — Agreement void pursuant to s 73 of Land Act — Provisions of the Act are for the protection of customary land owners — Contract performed — Unjust enrichment.

Facts

The appellant contracted with a land-owning company to log and market timber from the customary land of the owners. Contrary to his assumption, the area on the beach from which the logs were to be shipped was not included in the agreement. Appellant and respondent entered into a lease agreement for the former to use that portion of land as a log pond at a rental of K400 per month for a period of 10 years. The agreement was not stamped in accordance with s 19 of the Stamp Act and was, therefore, inadmissible in evidence. It was also void under s 73 of the Land Act which provided that:

"a native has no power to sell, lease or dispose of customary land otherwise than to natives in accordance with custom, and a contract or agreement made by him to do so is void."

The Minister of Forest revoked the Timber Rights Permit prematurely as a result the logging agreement was cancelled and the appellant paid rent to the respondent for only 9 of the 26 months of use. The respondent sued for the balance of the rent due and interest thereon. The District Court magistrate enforced the agreement and found in his favour. Appellant appealed against the decision.

Held

1. Failure to stamp the document does not affect its validity but renders it inadmissible or unenforceable in a court of law, until it is duly stamped.

2. The agreement was by s 73 of the Land Act void and, as such, the magistrate erred in enforcing it.

3. No enforceable rights can arise out of a void transaction.

4. If the parties to the agreement are not in pari delicto, the person for whose benefit the statute is made may recover monies due pursuant to the contract. Section 73 of the Land Act is intended to protect customary landowners and, therefore, in this particular illegality they are not in pari delicto.

5. Situations may arise where it would be unjust for courts to allow a party to take advantage of the illegality of an agreement by him hiding behind its unenforceability and, thereby, unjustly enriching himself. For the court to countenance such a fraud would be contrary to "natural justice".

6. Although the court will not enforce an agreement declared void by statute, it would award the respondent a reasonable sum as compensation for the use made of his land.

Cases Cited

Bowmaker Ltd v Barnet Instruments Ltd [1945] 1 KB 65.

Browning v Morris (1778) 2 Cowp 790, 98 ER 1364.

Chappel Pty Ltd v Pett Pty Ltd [1971] 1 SASR 188.

Kiriri Cotton Co Ltd v Dewani [1960] 1 All ER 177.

Moses v Macferlan (1760) 2 Burr 1005, 97 ER 676.

Counsel

R B L Barrell, for appellant.

Respondent in person.

18 June 1992

SHEEHAN J: This is an appeal against a decision of Lae District Court delivered on 8 November 1991, when it entered judgment for the respondent in respect of an agreement to lease customary land on Umboi Island in the Morobe Province.

In January 1988, the Putput Logging Pty Ltd contracted with a land-owner company, Umboi Timber Investment Pty Ltd, to log and market timber from customary land on Umboi Island. Umboi Timber Investment held a valid Timber Rights Permit issued by the Minister of Forests, which detailed the logging area.

Logging duly commenced that month, January 1988, with logs shipped off the island from the only beach access on that part of the coast. Unknown to the appellant at the time, the beach used as their assembly point for logs, that is the "log pond", was not land within the Timber Rights Permit, as it had supposed. It belonged, in fact, to the respondent, who was at that time also the manager of Umboi Timber Pty Ltd, the permit holder.

On 1 October 1988, as a result of negotiations the appellant and respondent entered into an agreement whereby the appellant leased the beach property of approximately 4.4 hectare for a period of ten years for use as a log pond. Commencement of the lease was stipulated to be from the commencement of logging operations in January of 1988. The lease agreement (which was drawn up by the appellant) expresses itself to be "subject to compliance with s 15 of the Land Act chapter 185 and other provisions of the Land Act".

In August 1989, however, the Minister of Forests revoked the Timber Rights Permit (TRP) and, as a result, the logging and marketing agreement between Umboi Timber and Putput was also cancelled. After a cleaning up period (moving fallen logs and cleaning up the logging sites), the appellant left Umboi in February of 1990.

The lease agreement between appellant and respondent provided for a rental of K400.00 per month, but the appellant paid only the equivalent of nine (9) months rent, that is K3,600.00, and as at February 1990, there remained seventeen (17) months rent (i.e. K6,800.00) outstanding. In January 1991, the respondent sued the appellant in the District Court at Lae for the balance due. Judgment was given for that sum together with interest and costs, resulting in a total judgment of K8,485.40.

The appellant maintains that the learned Magistrate erred in finding any enforceable contract between parties based on the supposed agreement of 1 October 1988. This is because the agreement was not admitted in evidence before him, as it had not been duly stamped in accordance with s 19 of the Stamp Duties Act.

It was also argued that, even if it had been admitted, it would nonetheless be unenforceable as none of the procedures prescribed under s 15 of the Land Act had been undertaken.

Other grounds cited were that the respondent, while acting as general manager of Umboi Timber, the holder of the Timber Rights Permit, had failed to disclose his interest in the beach property in due time, and his insistence on payment for use of it after operations commenced constituted duress and pressure on the appellant.

In answer, the respondent, who appeared in person, supported the findings and decisions of District Court.

In the hearing of the appeal, there was initially some difficulty in finding the judgment of the District Court, but there can be no doubt that the hand written decision eventually located on file (though unsigned) is the written decision of that Court and coincides exactly with the order recorded on 8 November 1991.

The facts as outlined above are, in fact, not disputed. There was some concern by the appellant as to whether the boundary of TRP might, in fact, have included the log pond area, but no evidence was offered of this to counter the respondent's assertion that the log pond area was his own property and outside the TRP.

Of course, the fact that the agreement to lease was prepared by the appellant company itself is also significant. That shows that the appellant was satisfied of the need for such an agreement. The preparation of the agreement by the appellant also contradicts any claim of duress or that it represented only a compensation claim.

These matters, raised in this Court were covered in the submissions of the appellant before the District Court. They can conveniently be quoted here:

"The complainant's claim is in contract seeking damages for breach of a purported contract of lease dated 1 October 1988. No such contract was produced in evidence. The complainant gave verbal evidence of the existence of such a contract and the defendant admitted it had entered into some sort of agreement with the complainant for the use of the complainant's land. The defendant introduced evidence of its manager, Mr Richard Kong that this agreement was entered into under a certain amount of...