Watt K Kiddie and Kiddie and Associates v Robert Pavey and Betty Pavey (2004) N2513

• Jurisdiction: Papua New Guinea
• Judge: Manuhu AJ
• Judgment Date: 11 March 2004
• Court: National Court
• Citation: (2004) N2513
• Year: 2004
• Judgement Number: N2513

Full Title: Watt K Kiddie and Kiddie and Associates v Robert Pavey and Betty Pavey (2004) N2513

National Court: Manuhu AJ

Judgment Delivered: 11 March 2004

1 Real Property—contract of sale unexecuted—specific performance not available.

2 Contract—collateral contract—prior occupation—repair and maintenance upon prior occupation—enforceability.

3 Tort—remoteness of damage—tort of dispossession of property—damage is rental value.

4 McCosker and King v Kuster [1967–68] PNGLR 182, Daba Hisiuna Pty Ltd v Turner & Davey Electrical Pty Ltd [1974] PNGLR 164, Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22, Madaha Resena v The Independent State of Papua New Guinea (Re Fisherman's Island) [1990] PNGLR 22 referred to

___________________________

N2513

Papua New Guinea

[IN THE NATIONAL COURT OF JUSTICE]

WS 332 of 1998

BETWEEN:

WATT K. KIDDIE & KIDDIE AND ASSOCIATES

Plaintiffs

AND:

ROBERT PAVEY & BETTY PAVEY

Defendants

Lae: Manuhu, AJ

2003: August 7 &

2004: March 11

DECISION

Real Property – contract of sale unexecuted – specific performance not available.

Contract – collateral contract – prior occupation – repair and maintenance upon prior occupation - enforceability.

Tort – remoteness of damage –tort of dispossession of property – damage is rental value.

Cases cited:

King & McCosker v Kuster [1967-68] PNGLR 182.

Daba Hisiuna Pty Ltd v Turner & Davey Electrical Pty Ltd [1974] PNGLR 164.

Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22.

Madaha Resena & Ors v The State [1990] PNGLR 22.

Mr. D. Poka, for the Plaintiffs.

Mr. P. Ousi, for the Defendants.

11 March 2004.

MANUHU, AJ: This is a claim for costs of repairs and maintenance to a property at Section 57 Allotment 18 Lae which was to have been sold to the plaintiffs for K56,000.00. The plaintiff also claims for loss of income, cost of insurance and lawyers fees, interests and fees on a Rural Development Bank loan of K44,000.00. In the alternative, the plaintiffs seek orders for specific performance to compel the defendants to sell the property to them.

The defendants deny any agreement to sell the property but admitted there were discussions on a possible sale. Since the sale did not materialize, the defendants claim rental value for the period the plaintiffs failed to vacate the property upon demand.

The facts of the case are apparent from the claims and counterclaims. The property referred to was to be sold to the plaintiffs but the defendants refused to have the sale completed. The reasons for the cancellation, according to the defendants, are that first, they did not like a certain term in the proposed contract of sale. That term states:

“The purchaser has the right to be reimbursed by the vendor for monies expended on the maintenance and repairs done to the property upon prior occupation should the property vanish or the transaction fails to materialize.”

The second reason given is that the 10 per cent deposit was only K5,000.00 and not K5,600.00. The plaintiffs say they paid K5,200.00. I do not intend to dwell on what was actually paid.

If these are the only grounds relied upon by the defendants then they are not serious enough to warrant a cancellation of the contract of sale. On the balance of probabilities, prior occupation of the property was part of the pre-sale agreement between the parties. The plaintiffs could not have secretly moved into the property and without the knowledge and authority of the defendants.

Consistent with prior occupation, I am so satisfied, is the agreement or permission that the plaintiffs carry out repair and maintenance to suit the purpose of prior occupation. Maintenance and repairs could not have been carried out without the defendants knowing. By such conduct, I am satisfied that there was a serious discussion to sell the property to the plaintiffs.

Against this background, I find it unreasonable that the defendants should frustrate the sale on the basis of an undesirable term of the proposed contract of sale. I am of the view that the proposed term of the contract is a valid one and one that does not undermine the sale and any benefits the defendants would have enjoyed from the sale. In fact, the term was part of the contract of sale instrument which if signed would have done no harm to the defendants. I also find that the defendants’ reason concerning the 10 per cent deposit being K600.00 less than required to be of no threat to the agreement. It was not serious enough to warrant a cancellation of the sale agreement. Any amount outstanding could have been settled at the time of settlement. The defendants must have had other reasons for not proceeding with the sale agreement. They know what those reasons are but have not disclosed them.

It is trite law that in dealing with land there can there can be no rights until a contract embodying the terms has been executed by both parties. And until any such agreement is signed, the court cannot order specific performance. See King & McCosker v Kuster [1967-68] PNGLR 182 and Daba Hisiuna Pty Ltd v Turner & Davey Electrical Pty Ltd [1974] PNGLR 164. But I am of the view that the plaintiffs claim in relation to repair and maintenance costs is not a claim based on the main contract of sale of the property. The claim is based on the pre-contractual arrangement which is a contract in itself and is enforceable. It is a collateral contract between the parties, the consideration for which is the completion of the contract of sale of the property. It is a contract that is the same as the one regarding the usual requirement for a 10 per cent deposit. Upon payment of the 10 per cent deposit, the vendor is under the obligation to ensure that the sale is completed. When the...