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

• Jurisdiction: Papua New Guinea
• Judge: Cannings, Makail & Kawi, JJ
• Judgment Date: 28 October 2011
• Court: Supreme Court
• Citation: (2011) SC1127
• Docket Number: SCA NO 160 OF 2010
• Year: 2011
• Judgement Number: SC1127

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

SC1127

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 160 OF 2010

BETWEEN

ASSOCIATED PLUMBING INSTALLATION LIMITED

Appellant

AND

AIR NIUGINI LIMITED

Respondent

Waigani: Cannings, Makail & Kawi, JJ

2011: 26th & 28th October

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 - Sections 46B & 46F.

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 sections 46B and 46F 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) SC 705

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

Counsel:

Mr G Poole & Ms A Narokobi, for Appellant

Mr I Shepherd, for Respondent

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 for failing to disclose a reasonable cause of action pursuant to O 12, r 40(1)(a) of the National Court Rules, 1983.

Brief Background Facts

2. 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 sections 46B and 46F of the Independent Public Business Corporation of Papua New Guinea Act, 2002 (“IPBC Act”).

3. The appellant obtained an ex parte order restraining the respondent from evicting it from the property and subsequently commenced substantive proceedings by originating summons seeking inter-alia, a declaratory order that it had a contract with the respondent based on various correspondence exchanged between the parties and an order that the respondent complete the contract. The respondent applied by notice of motion to dismiss the proceedings for failing to disclose a reasonable cause of action pursuant to O 12, r 40(1)(a) of the National Court Rules. The National Court upheld the application and dismissed the proceeding for failing to disclose a reasonable cause of action.

Grounds of Appeal

4. It raised 8 grounds of appeal. For convenience of parties, we set out in full the grounds hereunder:

“3.1 The learned Judge at first instance erred in summarily striking out the Appellant/Plaintiff’s Amended Originating Summons filed on 30 September 2010 as an abuse of process when there was evidence that the Appellant/Plaintiff had pleaded an arguable case.

3.2 The learned Judge at first instance erred in law in concluding “that the correspondence exchanged does not constitute a binding contract” to convey title when the evidence was that:

(a) the Respondent/Defendant purported to withdraw its prior acceptance of the Appellant/Plaintiff’s offer to purchase the property.

(b) the Respondent/Defendant had taken a step in part performance.

3.3 The learned Judge at first instance erred in law in concluding that if the correspondence between the Appellant/Plaintiff and the Respondent/Defendant constituted a binding contract, that agreement would be null and void by reason of Sections 46B and 46F of the Independent Public Business Corporation of Papua New Guinea Act 2002 Consolidated No. 15 of 2008.

3.4 The learned Judge at first instance erred in concluding that the ex parte Orders obtained by the Appellant/Plaintiff on 27 August 2010 expired on 10 September 2010.

3.5 The learned Judge at first instance erred in setting aside the ex parte Orders made on 27 August 2010 in view of her finding that they had expired on 10 September 2010.

3.6 The learned Judge at first instance erred in law and the exercise of her discretion in setting aside the ex parte Orders made on 27 August 2010 on the basis that the Undertaking as to Damages was not made under the Appellant/Plaintiff’s seal.

3.7 The learned Judge at first instance erred in law in concluding that the interim Injunction was not properly before the Court and there were sufficient bases to set aside the interim Injunctive Orders.

3.8 The learned Judge at first instance erred in exercising her discretion awarded costs in favour of the Respondent/Defendant.”

Issues

5. From our perusal of the grounds of appeal and having considered parties’ submissions, we consider grounds 3.1 & 3.2 raise the issue of whether or not there is a...