Associated Plumbing Installation Limited v Air Niugini Limited (2011) SC1127

• Jurisdiction: Papua New Guinea
• Court: Supreme Court
• Date: 28 October 2011
• Citation: (2011) SC1127
• Docket Number: SCA NO 160 OF 2010
• Year: 2011

Full Title: SCA NO 160 OF 2010; Associated Plumbing Installation Limited v Air Niugini Limited (2011) SC1127

Supreme Court: Cannings, Makail & Kawi, JJ

Judgment Delivered: 28 October 2011

LAW OF CONTRACT - Contract of sale - Sale of property - Sale by public tender - Offer and acceptance - Offer made - Acceptance of - Whether offer and acceptance constituted a contract - Considerations of - Enforceability of - Requirements of obtaining statutory approvals - Compliance of - Failure of - Effect of - Illegality of - Independent Public Business Corporation of Papua New Guinea Act, 2002 - s46B & s46F.

PRACTICE & PROCEDURE - Dismissal of proceeding - Application of - Ground of - Failure to disclose reasonable cause of action - Whether arguable case shown - Cause of action unsustainable or obviously and incontestably bad - Proceeding bound to fail - Appeal dismissed - National Court Rules, 1983 - O 12, r 40(1)(a).

Facts

The respondent put up for sale by tender a property by advertising it for interested applicants to apply to purchase it. The property is located at 6 Mile, in Port Moresby and described as portions 454 and 455. The appellant who was its tenant made an offer of K7 million. The respondent accepted it and advised the appellant to make a down payment of K700,000.00 as 10% deposit. About 5 days later, the respondent informed the appellant that it had decided to withdraw its offer as it needed to obtain approval from its board and also the Independent Public Business Corporation and Minister for Treasury under s46B and s46F of the Independent Public Business Corporation of Papua New Guinea Act, 2002 before proceeding further with the negotiation.

The appellant obtained ex parte interlocutory orders, inter-alia, restraining the respondent from evicting it from the property and subsequently commenced substantive proceeding by originating summons seeking inter-alia, a declaratory order that it had a binding contract with the respondent based on various correspondences exchanged between the parties and an order that the respondent complete the contract. The respondent applied by notice of motion to dismiss the proceeding for failing to disclose a reasonable cause of action pursuant to O 12, r 40(1)(a) of the National Court Rules, 1983. The National Court upheld the application and dismissed the proceeding for failing to disclose a reasonable cause of action. On appeal, the appellant argued inter-alia, the National Court erred in dismissing the proceeding when there was sufficient evidence based on the various correspondences exchanged between the parties that there was a contract between the parties sufficient to establish an arguable case.

Held:

1. The primary judge did not fall into error when she held that the various correspondence exchanged between the parties did not constitute a contract of sale of property. The various correspondence exchanged between the parties was regarded merely as an intended basis for a future contract and not as constituting the contract.

2. Further, even if there was a contract, it was null and void, hence unenforceable against the respondent as no statutory approvals had been obtained from the respondent’s board and also the Independent Public Business Corporation and Minister for Treasury under sections 46B and 46F of the Independent Public Business Corporation of Papua New Guinea Act, 2002.

3. The appellant had failed to sufficiently establish an arguable case and the cause of action was unsustainable or obviously and incontestably bad such that it was bound to fail if it were allowed to go to trial. PNG Forest Products Pty Ltd and Inchcape Berhad -v- The State [1992] PNGLR 85 referred to.

4. The appeal was accordingly dismissed with costs.

Cases cited:

Papua New Guinea cases:

PNG Forest Products Pty Ltd and Inchcape Berhad v The State [1992] PNGLR 85

Nings Trading Pty Ltd v ANZ Banking Group (PNG) Limited (1998) N1700

Re The Companies Act Chapter 146 and Pacific Rim Corporation Holdings Pty Ltd [1992] PNGLR 491

Mathew Tolanas v Colin Gipe (2008) N3536

Shell Papua New Guinea Ltd v Specko Investment Ltd (2004) SC767

Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705

The State v Barclay Brothers (PNG) Ltd (2001) N2090

Sioti Bauf and Lovoi Nadai v Poliamba Pty Ltd [1990] PNGLR 27

Golobadana No 35 Ltd v Bank of South Pacific Ltd (2002) N2309

Overseas cases:

Cameron v Masters [1954] 91 CLR 353; Rushton (Qld) Pty Ltd & Ors v Rushton (NSW) Pty Ltd & Ors (2003) QSC 8 (24th January 2003); GR Securities v Baulkham Hills Private Hospitals Pty Ltd (1986) 40 NSWLR 631

Legislations:

Independent Public Business Corporation of Papua New Guinea Act, 2002; National Court Rules, 1983

28th October, 2011

JUDGMENT

1. BY THE COURT: This is an appeal against the decision of the National Court of 05th November 2010 which set aside ex parte interlocutory orders of 27th August 2010 and also dismissed the proceeding in its entirety...