Mathew Tolanas v Collins Gipe and Gome Gipe and and Sela Gipe (2008) N3536

• Jurisdiction: Papua New Guinea
• Court: National Court
• Date: 09 December 2008
• Citation: (2008) N3536
• Docket Number: OS NO. 148 OF 1999
• Year: 2008

Full Title: OS NO. 148 OF 1999; Mathew Tolanas v Collins Gipe and Gome Gipe and and Sela Gipe (2008) N3536

National Court: Gabi, J

Judgment Delivered: 9 December 2008

CONTRACT – letter of intent for sale signed between plaintiff and third defendant for sale of plaintiff’s property – third defendant makes improvements without approval from building board – plaintiff seeking to repossess property

CONTRACT - whether letter of intent constitute a valid contract - whether defendants acted unlawfully by occupying the property - whether defendants acted unlawfully by making structural alterations and additions to property without approval of Building Board

ESTOPPEL - whether principles of equitable estoppel is available to the defendants who have relied on the letter of intent - whether the plaintiff is unjustly enriched.

Cases Cited:

Papua New Guinea cases

Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705; Jay Mingo Pty Ltd v Steamships Trading Pty Ltd, trading as Steamships Property Division [1995] PNGLR 129; Paul Kumba v MVIT (2001) N2132; The State v Keboki Business Group Inc and Morobe Provinsel Gavman [1985] PNGLR 369; Putput Logging Pty Ltd v Phillip Ambalis [1992] PNGLR 159; Ronald Douglas Ferns v Charles Henry Bird [1964] PNGLR 110; Shell PNG Ltd v Speko Investment Ltd (2004) SC767; Waghi Security Service Pty Ltd v John Tembon and Western Highlands Provincial Government In Suspension [1994] PNGLR 138

Overseas Cases:

Bowmakers Ltd v Barnet Instruments Ltd [1945] 1 KB 65; Cowan v Mibourn (1867) L.R. 2 Ex 230; Liverpool Borough Bank v Turner (1860) 2 D.F. & J 502; Mansfield in Moses v Macferlan in 1760; St John Shipping Corp. v Joseph Rank Ltd [1957] 1Q B 267

DECISION

1. GABI, J: Introduction: Mathew Tolanas, the plaintiff, and Sela Gipe, the third defendant, signed a letter of intent for the sale of the plaintiff’s property for K15, 000.00. As a result, the third defendant moved into the property and made improvements without the approval of the Building Board. The third defendant has so far paid K5, 000.00 and the plaintiff is seeking to repossess the property.

2. The issues before the Court are: (i) whether the letter of intent constitute a valid contract; (ii) whether the defendants acted unlawfully by occupying the property; (iii) whether the defendants acted unlawfully by making structural alterations and additions to the property without the approval of the Building Board; (iv) whether the principles of equitable estoppel is available to the defendants who have relied on the letter of intent; and (v) whether the plaintiff is unjustly enriched.

Facts

3. The plaintiff and the defendants were known to each other. The defendants became interested in the plaintiff’s property and the plaintiff agreed to sell it to them. One of the defendants drew up a document in which the parties agreed that the price for the property was K15, 000.00, that the first payment of K3, 000 was to be made on 16th December 1992 and final payment to be made by 31st December 1993, that the plaintiff would relinquish the title and the key to the defendants after payment of the first instalment and that the defendants would carry out repairs to the property.

4. Pursuant to the agreement the third defendant moved into the property in January 1993 after payment of K3, 000.00 for the months of January, February and March 1993 and the plaintiff handed over the title deed to the defendants. Upon discovery that the title was still in the name of New Guinea Containers Pty Ltd, the defendants returned the title deed to the plaintiff and stopped payments. After demands by the plaintiff, the defendants paid K1, 000.00 in August 1993 and the last payment of K1, 000.00 was made in June 1996. No further payments have been made since.

5. The third defendant has been in occupation of the property since January 1993 and has made structural alterations and additions to the property without the approval of the plaintiff and the Building Board.

Did the letter of intent dated 15th December 1992 constitute a valid contract for the sale of the property?

6. The letter of intent is in these terms:

“LETTER OF INTENT’

BETWEEN MATHEW TOLANAS AND SELA GIPE

1. That the Seller/Owner of the said property at Allotment 7 Section 96 is Mathew Tolanas of P O Box 505 Lae.

2. The buyer of the said property is Sela Gipe, of P O Box 1018, Lae.

3. That the said property command an open Market value of K15,000.00 based on present market considerations.

4. That the Buyer will carry out major repairs on the property, including re-connection of electricity, water and telephone.

5. That the owner relinquish the original title and the keys to the buyer when the first instalment is made.

6. That the first instalment be made on the 16/12/92 at the rate of K3,000.00 and monthly thereafter.

7. The full payment shall be made by 31/12/03.

We both agree to transact the sale of the said property based on mutual understanding. Should there be any legal implications, relating to the said property, we agree to be under the Laws of the country and of the Word of God Almighty.

………………………… …………………………

Seller Buyer

………………………… …………………………

Witness Witness

Date:15-12-92.”

7. Counsel for the defendants submits that the letter of intent constitutes a valid contract between the parties for the sale of the property. He argues that the parties had reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect and that the letter of intent contains all the agreed terms of the contract which were to be restated in a formal contract of sale in the future and referred me to Ronald Douglas Ferns v Charles Henry Bird [1964] PNGLR 110. In that case, the Court considered the 3 classes of cases defined in Masters v Cameron [1954-55] 91 CLR 353 and held that the contract fell into the first of the 3 classes.

8. Counsel for the plaintiff agrees that there was an agreement to sell, but argues that the contract was void and unenforceable for 2 reasons. First, prior to 1996, no transfer of land could be made without the approval of the Minister of Lands pursuant to s69 of the Land Act, Chapter No. 185. However, the Land Act of 1996 provides that ministerial approval is not required in “permitted dealings.” A “permitted dealings” is a sale of land between two citizens. There is no provision for retrospective application under the Land Act 1996. The letter of intent precedes the 1996 Act and is covered by section 69 of the Land Act, Chapter No. 185 where ministerial approval was required. As none was obtained he argues that the agreement is void and unenforceable. Second, under s19 of the Stamp Duties Act the letter of intent is liable for stamp duty. Failure to stamp a document renders it inadmissible or unenforceable in a Court of law (see Putput Logging Ltd v Phillip Ambalis [1992] PNGLR 159 and Waghi Security Services Ltd v John Tembon and Western Highlands Provincial Government [1994] PNGLR 138). As the document was not stamped it was inadmissible and unenforceable in a Court of law.

9. It has long been held that the Court is not prevented from directing specific performance of a contract despite the absence of ministerial approval (see McCosker & King v Kuster [1967-68] PNGLR 192, Re Luabar Logging Ltd [1988] PNGLR 124 and Arnold Ningiga v Peter Lare Koavea [1988-89] PNGLR 312); however, that...