Joe Kawage and Piawa Toko Limited v Kanturk Limited (2020) SC1990

• Jurisdiction: Papua New Guinea
• Judge: Cannings J, Kangwia J, Miviri J
• Judgment Date: 27 August 2020
• Court: Supreme Court
• Citation: (2020) SC1990
• Docket Number: SCA NO 8 OF 2020
• Year: 2020
• Judgement Number: SC1990

Full Title: SCA NO 8 OF 2020; Joe Kawage and Piawa Toko Limited v Kanturk Limited (2020) SC1990

Supreme Court: Cannings J, Kangwia J, Miviri J

Judgment Delivered: 27 August 2020

SC1990

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 8 OF 2020

JOE KAWAGE

First Appellant

PIAWA TOKO LIMITED

Second Appellant

V

KANTURK LIMITED

Respondent

Waigani: Cannings J, Kangwia J, Miviri J

2020: 24th, 27th August

CONTRACTS – sale of land – vendor selling same property twice to different purchasers – whether vendor breached first contract of sale by not completing it and selling property to another purchaser – consequences of breach – whether purchaser under first contract ought to be granted decree of specific performance – significance of purchaser under second contract becoming registered proprietor.

The first appellant entered into a contract for sale of his property to the respondent, then subsequently, before completion of that contract, entered into a contract for sale of the same property to the second appellant. The first appellant refused to complete the first contract, so the respondent commenced proceedings, as plaintiff, by writ of summons in the National Court against both appellants, who were defendants. The respondent’s cause of action was breach of contract by the first appellant. The National Court upheld the respondent’s claim by finding that there was a breach of contract by the first appellant and granted an order for specific performance of the respondent’s contract with the first appellant. The appellants appealed against the order of the National Court, arguing that the trial judge erred in law by (1) finding that the contract between the first appellant and the respondent was valid and enforceable when the respondent had breached the contract by not providing a copy of it to the first appellant; (2) finding that the contract between the first appellant and the respondent was valid and enforceable when the respondent had breached the terms of the contract requiring it to obtain ministerial approval within a prescribed time limit, which had lapsed; (3) failing to consider that the property that was the subject of the contract between the first appellant and the respondent was a different property to that which was the subject of the second contract; (4) ordering specific performance of the first contract despite the respondent being guilty of unreasonable delay in commencing the proceedings, after the second appellant had become registered proprietor; (5) failing to find that the second appellant was a bona fide purchaser who had entered into the second contract without knowledge of the first contract; and (6) finding that by virtue of the first contract the first appellant became trustee of the property for the respondent.

Held:

(1) The respondent did not breach the first contract by not providing a copy of it to the first appellant.

(2) The respondent did not breach the first contract by failing to obtain ministerial approval in a timely manner.

(3) There had been a misdescription of the property in the first contract but it was not a material issue at the trial and the statement of claim had been amended to clarify that the same property was the subject of the two contracts. The trial judge made no error in that regard.

(4) The fact that the second appellant had become registered proprietor of the property prior to commencement of the proceedings was in evidence but not brought to the trial judge’s attention by any of the parties. It was a critical fact that made it inappropriate to order specific performance.

(5) The trial judge erred in finding that the second appellant was not a bona fide purchaser and that it had entered into the second contract with knowledge of the first contract.

(6) The trial judge did not err in finding that by virtue of the first contract beneficial ownership of the property had passed to the respondent.

(7) The appeal was allowed as the order for specific performance was made in error. The order of the National Court was quashed and the proceedings were remitted to the National Court for further conduct of the proceedings. Parties were ordered to bear their own costs.

Cases Cited

The following cases are cited in the judgment:

Augwi Ltd v Xun Xin Xin (2014) SC1616

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

Isaac Lupari v Sir Michael Somare (2010) SC1071

Koang No 47 Pty Ltd v Mondo Merchants Pty Ltd (2001) SC627

Mudge v Secretary for Lands [1985] PNGLR 387

Papua Club Inc v Nusaum Holdings Ltd (2005) SC812

APPEAL

This was an appeal against a decision of the National Court which ordered specific performance of a contract for the sale of land.

Counsel

S Javati, for the First Appellant

J S Abone, for the Second Appellant

S Gor, for the Respondent

27th August, 2020

1. BY THE COURT: This is an appeal against a decision of the National Court that ordered specific performance of a contract for the sale of a property, Section 70, Allotment 26, in Gordon, National Capital District.

2. The first appellant, Joe Kawage, was the registered proprietor of the State Lease over that property. On 31 January 2014 he entered into a contract for its sale with the respondent, Kanturk Ltd, for the sum of K1.3 million. On 30 July 2014, before completion of that contract, Kawage entered into a contract for sale of the same property to the second appellant, Piawa Toko Ltd, for the sum of K1.55 million.

3. Kawage refused to complete the first contract, so Kanturk commenced proceedings, as plaintiff, by writ of summons in the National Court against both appellants, as defendants. Kanturk’s cause of action was breach of contract by Kawage.

4. After a trial at which all parties were legally represented, the National Court, constituted by Justice Hartshorn, in a judgment delivered on 9 December 2019, upheld Kanturk’s claim. His Honour held that there was a breach of contract by Kawage in two respects: failing to notify Kanturk that an application to change the State Lease from residential to commercial had been granted and refusing to complete the contract. His Honour granted Kanturk an order for specific performance of its contract with Kawage.

GROUNDS OF APPEAL

5. The appellants argue that the trial judge erred in law and/or fact in six respects:

(1) finding that the contract between Kawage and Kanturk was valid and enforceable when Kanturk had breached the contract by not providing a copy of it to Kawage;

(2) finding that the contract between Kawage and Kanturk was valid and enforceable when Kanturk had breached the terms of the contract requiring it to obtain ministerial approval within the prescribed time limit, which had lapsed;

(3) failing to consider that the property that was the subject of the contract between Kawage and Kanturk was a different property to that which was the subject of the contract between Kawage and Piawa Toko;

(4) ordering specific performance of the first contract despite Kanturk being guilty of unreasonable delay in commencing the proceedings, after Piawa Toko had been transferred title and become registered proprietor;

(5) failing to find that Piawa Toko was a bona fide purchaser that had entered into the second contract without knowledge of the first contract; and

(6) finding that by virtue of the first contract Kawage became trustee for Kanturk of the property and that beneficial ownership of the property had passed to Kanturk.

GROUND 1: FINDING THAT THE FIRST CONTRACT WAS VALID AND ENFORCEABLE DESPITE KANTURK BREACHING IT BY NOT PROVIDING A COPY OF IT TO KAWAGE

6. We find that there was no credible evidence or argument that Kanturk breached the first contract by not providing a copy of the contract to Kawage. 7. That issue was not included in Kawage’s defence. The trial judge focussed on the defences pleaded by Kawage: that there was difficulty in giving vacant possession to Kanturk and difficulty in changing the status of the State Lease from residential to commercial use.

8. His Honour properly found that the defences were not supported by the evidence, that the first contract was valid and enforceable, that it had not been breached by Kanturk and that it had not been lawfully terminated by Kawage. We dismiss ground 1.

GROUND 2: FINDING THAT THE FIRST CONTRACT WAS VALID AND ENFORCEABLE DESPITE KANTURK BREACHING IT BY FAILING TO OBTAIN MINISTERIAL APPROVAL

9. We find that there was no credible evidence or argument that Kanturk breached the first contract by failing to obtain ministerial approval within the prescribed time. That issue was not included in Kawage’s defence. The trial judge focussed on the defences pleaded by Kawage: that there was difficulty in giving vacant possession to Kanturk and difficulty in changing the status of the State Lease from residential to commercial use.

10. His Honour properly found that the defences were not supported by the evidence, that the first contract was valid and enforceable, that it had not been breached by Kanturk and that it had not been lawfully terminated by Kawage. We dismiss ground 2.

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