Jacob Kauva v Antony Edward Cavanagh

• Jurisdiction: Papua New Guinea
• Judge: Anis AJ
• Judgment Date: 30 August 2017
• Citation: (2017) N6856
• Court: National Court
• Year: 2017
• Judgement Number: N6856

Full : WS No 854 of 2013; Jacob Kauva v Antony Edward Cavanagh (2017) N6856

National Court: Anis AJ

Judgment Delivered: 30 August 2017

N6856

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 854 OF 2013

BETWEEN

JACOB KAUVA

Plaintiff

AND

ANTONY EDWARD CAVANAGH

Defendant

Kokopo: Anis AJ

2017: 26th July, 10th & 30th August

REAL PROPERTY – claim for cancellation and return of title of property based on constructive fraud - purported oral agreement for transfer of interest in land - followed by subsequent contract of sale of land - section 2 and section 4 - Frauds and Limitations Act 1988 - dealings in interest in land to be in writing - purported oral agreement not supported with documentations - constructive fraud based on alleged coercion, intimidation, blackmail and purported facts surrounding signing of the contract of sale

Cases cited:

Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215

Gire Gire Estates Ltd v. Barava Ltd (2016) N6473

Koang No. 47 Ltd v. Monodo Merchants (2001) SC675

Koitachi Ltd v Walter Schnaubelt (2007) SC870

Kol Toki v. Moeka Morea Helai (2016) SC 1558

Leontin Ofoi v. Kris Bongare (2007) N3248

Pamela Ipi Pangu v. Ian Ellery (2007) N3227

Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959

The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603

Vaki Vailalala v. National Housing Commission (2017) N6598

West New Britain Provincial Government v Kimas (2009) N3834

Counsel:

Mrs N Rainol, for the Plaintiff

Ms J Marubu, for Defendant

JUDGMENT

30th August, 2017

1. ANIS AJ: The plaintiff's claim is based on fraud, that is, constructive fraud. Let me summarise. He pleads a purported oral agreement over a residential property. The property is described as Section 33, Allotment 9, Kenabot, East New Britain Province (the property). The plaintiff previously owned the property. Here, he firstly alleges the existence of the purported oral agreement. He then alleges facts surrounding it and accuses the defendant of coercion, intimidation or blackmail, for the sale of the property by himself to the defendant in 2007. The plaintiff claims that the defendant and his solicitor had forced him into signing a written contract of sale of land (contract of sale) despite the existence of the purported oral agreement. He seeks relief primarily for the return of the property to him.

2. So as I see it, the plaintiff intends to prove constructive fraud by firstly establishing the purported oral agreement, that is, to prove its existence and its terms and conditions. After that, he plans to establish the facts before, during and after the signing of the contract of sale, which had had the property sold to the defendant. His aim, as I gather, is to demonstrate constructive fraud based on these two (2) sets of facts or events.

3. The defendant is the registered proprietor of the property. He admits that there had been an oral agreement before the actual signing of the contract of sale in 2007. But he says that the terms of the oral agreement were completely different from those as pleaded by the plaintiff. He says that the terms of the oral agreement, as he knew it, were reflected in the contract of sale, which he says was signed on 23 November 2007.

4. The trial was heard on 26 July 2017. Presentation of submissions hearing was held separately on 10 August 2017. I reserved my ruling thereafter to a date to be advised.

5. I rule on it now.

Evidence

6. The plaintiff gave oral evidence. He was cross-examined. His other witness who also gave oral evidence and was cross-examined was his carpenter Nelix Kola. The defendant gave oral evidence. He was also cross-examined. Also called for the defendant to give oral evidence was his former solicitor David Lidgett. Mr Lidgett was also cross-examined.

7. The parties tendered their affidavits. I accepted them and marked each one separately. I used the abbreviation "P" to indicate affidavits that were tendered by the plaintiff, and the abbreviation "D" to indicate affidavits that were tendered by the defendant. Let me set them out here:

Exhibit No.	Description	Date filed
“P1”	Affidavit of Jacob Kauva	11/07/17
“P2”	Affidavit of Nelix Kola	11/07/17
“P3”	Affidavit of Tracie Kauva	11/07/17
“P4”	Affidavit of Ellelleys Kauva	11/07/17
“P5”	Affidavit of Jacob Kauva	05/08/13
“P6”	Affidavit of Jacob Kauva	17/10/16
“P7”	Affidavit of Tracie Kauva	24/09/15
“P8”	Affidavit of Jacob Kauva	09/04/14
“P9”	Affidavit of Jacob Kauva	18/08/15
“P10”	Affidavit of Jacob Kauva	24/09/15
“P11”	Affidavit of Nelix Kola	22/12/14
“D1”	Affidavit of Geoffrey Brian Stephenson	09/12/15
“D2”	Affidavit of Anthony Cavanagh	27/07/15
“D3”	Affidavit of Anthony Cavanagh	29/07/16
“D4”	Affidavit of David Lidgett	20/07/15
“D5”	Affidavit of David Lidgett	04/11/15
“D6”	Affidavit of David Lidgett	19/07/17

Issues

8. The parties identified the issues as follows:

(i) Whether there was a verbal agreement between the parties;

(ii) If so, what were the terms of the verbal agreement?

(iii) Whether the verbal agreement is enforceable in law;

(iv) Whether the actions of the defendant constituted acts of coercion, black mail, duress, deceit and constructive fraud;

(v) Whether the purchase of the property for the value of the loan and the transfer of the title to the name of the defendant were secured by acts of constructive fraud;

(vi) Whether the plaintiff is entitled to the relief claimed in law or otherwise.

9. In my view, and I say this by looking at the pleadings, the central issues are as follows: Firstly, I should consider whether an oral agreement that concerns interest over land, like the one that is alleged and pleaded in the statement of claim, is permitted in law. If so, I will then go on to determine the existence of and the terms of the oral agreement. And subject to my findings on the two (2) issues or otherwise, consider whether constructive fraud can be inferred or established from the dealings the parties have had over the property at the material time.

Constructive fraud

10. Constructive fraud is explained in the case law. There are numerous examples. For this purpose, I will only name a few cases.

11. Let me firstly refer to what the Supreme Court has said in the case of Kol Toki v. Moeka Morea Helai (2016) SC1558. It held in part and I read, Constructive or equitable fraud will exist if interests in land are transferred in an obviously unlawful or irregular manner. Justice Cannings, in the second case which I will refer to, that is, Vaki Vailalala v. National Housing Commission (2017) N6598 also held in part and I read, Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.

12. I find them relevant. I adopt these definitions or references concerning application of constructive fraud, as my own. Moving on, I say this. If constructive fraud is established in this matter, it would be sufficient for me to cancel and then transfer the title of the property back to the plaintiff (see cases: Kol Toki v. Moeka Morea Helai (supra); Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215; Gire Gire Estates Ltd v. Barava Ltd (2016) N6473). And this Court's power to cancel title is of course derived from section 33(1)(a) of the Land Registration Act Chapter No. 191. Let me read out section 33(1)(a) here:

33. Protection of registered proprietor.

(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except—

(a) in the case of fraud; and

.....

13. I note that both parties acknowledge in their submissions the two (2) views in regard to the definition of fraud under section 33(1)(a) as held by the Courts in this jurisdiction. The first view of course is sometimes referred to as "the narrow view" or actual fraud. I refer to some of the cases that support this view: Koitachi Ltd v Walter Schnaubelt (2007) SC870; The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603. The second view is also known as the "wide view" or constructive fraud. I also refer to some of the cases that support this view: Emas Estate Development Pty Ltd v John Mea & Ors (supra); Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959; West New Britain Provincial Government v Kimas (2009) N3834. The parties here do not argue that the plaintiff is seeking fraud based on the wide view, which is, constructive fraud. The plaintiff has also pleaded it in his statement of claim. I accept that to be the case.

The oral agreement

14. I think the best way for me to begin with my judgment, is to address the claim based on this assumption. Let me assume that there was an oral agreement between the parties as alleged by the plaintiff. Let me assume that the terms of the oral agreement are those as pleaded at paragraph 12 of the statement of claim. Let me quote them here:

(i) That the Defendant would assist the Plaintiff to pay the outstanding loan of K131,000.00 in order to prevent the bank from exercising its rights...