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Atua v Kemmah [2011] PGNC 328; N4296 (13 May 2011)

N4296

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 426 OF 2008

SONNY ATUA
Plaintiff

V

GRACE KEMMAH
First Defendant

DAVID GABRIEL
Second Defendant

Madang: Cannings J

2010: 23 April, 14 May,
2011: 13 May

LAND – equity – unjust enrichment – plaintiff entered into verbal agreement with defendants for purchase of land – part-payment made, then agreement terminated – restitution.

The plaintiff entered into a verbal agreement with the defendants to purchase from them a block of land in which they had an interest. He paid them money in connection with the purchase but they unilaterally terminated the agreement, then refused to refund the money. He commenced proceedings against the defendants, claiming a liquidated sum plus damages.

Held:

(1) The plaintiff cannot sue for breach of contract as he is alleging breach of a verbal contract for the sale of land and Section 4 of the Frauds and Limitations Act 1988 prevents an action being brought upon a contract for the sale of land that is not in writing.

(2) However, the statement of claim is drafted in sufficiently broad terms to accommodate an action for unjust enrichment.

(3) To succeed in an action for unjust enrichment a plaintiff must prove three things:

• that the defendant has been enriched by the receipt of a benefit;
  
• that the defendant has been enriched at the plaintiff's expense;
  
• that it would be unjust to allow the defendant to retain that benefit.
  

(4) The defendants were enriched by receiving K21,880.00 from the plaintiff and were enriched at the plaintiff's expense and it would be unjust to allow the defendants to retain the benefit they had derived as the plaintiff had acted in good faith, and received little in return for the money he paid to them.

(5) The plaintiff therefore established a cause of action in unjust enrichment and it is appropriate that the matter proceed, in a separate hearing, to assessment of compensation.

Cases cited

The following cases are cited in the judgment:

Active Auto Parts (PNG) Pty Ltd v Brian Hull (1990) N833
Ansett Transport Industries Pty Ltd v Reginald Walter Eginton (1971) No 645
Aquip Pty Ltd v Gastrouevo [1987] PNGLR 491
Breckwoldt & Co (New Guinea) Pty Limited v Harold Gnoyke (No 2) [1975] PNGLR 195
Jacobs v Kwaindu [1991] PNGLR 366
Leonard Gaua v Joe & Theresia Amir (2010) N3891
Mathew Tolanas v Collins Gipe (2008) N3536
Pamela Ipi Pangu v Ian Ellery (2007) N3227
Pius Koroguen v Christine Wagen (2008) N3422
Putput Logging Pty Ltd v Ambalis [1992] PNGLR 159

TRIAL

This was a trial on liability.

Counsel

W Akuani, for the plaintiff

13 May, 2011

1. CANNINGS J: The plaintiff, Sonny Atua, alleges that he entered into a verbal agreement with the defendants, Grace Kemmah and David Gabriel, to purchase from them land in Madang in which they had an interest. He alleges that he paid them money in connection with the purchase but they unilaterally terminated the agreement, then refused to refund what he paid them. He has commenced proceedings against them, claiming a liquidated sum of K22,080.00 plus damages.

2. The defendants filed a defence but did not attend the trial, despite adequate notice being given to them. The case has proceeded without the benefit of any evidence from them. The plaintiff's counsel, Mr Akuani, requested that there be a trial on liability only, with an assessment of the amount of money due to the plaintiff to be assessed later in the event that liability is established. The trial has proceeded on that basis. Two issues arise:

• First, are the defendants liable in breach of contract to the plaintiff?
  
• Secondly, is there any other cause of action on which the plaintiff can establish liability?
  

ARE THE DEFENDANTS LIABLE IN BREACH OF CONTRACT TO THE PLAINTIFF?

3. Breach of contract appears to be the primary cause of action on which the plaintiff relies, however the case cannot proceed on that basis due to Section 4 of the Frauds and Limitations Act 1988, which prevents an action being brought upon a contract for the sale of land that is not in writing. Section 4 (contracts for the sale of land, etc) states:

No action shall be brought upon a contract for the sale or other disposition of land or an interest in land unless the contract, or some note or memorandum of the contract, upon which the action is brought is in writing signed—

(a) by the person against whom the action is brought; or

(b) by an agent of that person lawfully authorized in writing for the purpose.

4. Section 4 has been applied in numerous cases, eg Active Auto Parts (PNG) Pty Ltd v Brian Hull (1990) N833, Jacobs v Kwaindu [1991] PNGLR 366 and Pamela Ipi Pangu v Ian Ellery (2007) N3227. Here, no part of the alleged contract for the sale of land was in writing so the plaintiff cannot base a claim for relief on breach of contract. He must rely on some other cause of action.

IS THERE ANY OTHER CAUSE OF ACTION ON WHICH THE PLAINTIFF CAN ESTABLISH LIABILITY?

5. The answer is yes. The statement of claim is drafted in sufficiently broad terms to accommodate an action for unjust enrichment. To succeed in such an action a plaintiff must prove three things:

(a) that the defendant has been enriched by the receipt of a benefit; and

(b) that the defendant has been enriched at the plaintiff's expense; and

(c) that it would be unjust to allow the defendant to retain that benefit.

6. If he proves those three elements of the cause of action the court can award a remedy by way of restitution (Pius Koroguen v Christine Wagen (2008) N3422, Leonard Gaua v Joe & Theresia Amir (2010) N3891). A common example of unjust enrichment is where a person has paid money under a mistake of fact to another person who has no right in law or conscience to receive it (Ansett Transport Industries Pty Ltd v Reginald Walter Eginton (1971) No 645; Breckwoldt & Co (New Guinea) Pty Limited v Harold Gnoyke (No 2) [1975] PNGLR 195; Aquip Pty Ltd v Gastrouevo [1987] PNGLR 491; Putput Logging Pty Ltd v Ambalis [1992] PNGLR 159; Mathew Tolanas v Collins Gipe (2008) N3536 and see generally Goff & Jones, The Law of Restitution, 2nd edn, 1978, pp 13-14).

(a) Have the defendants been enriched by the receipt of a benefit?

7. Yes. In late April-early May 2003 the defendants were enriched by receipt of the following benefits:

(i) a bank cheque for K19,000.00 was purchased by the plaintiff with his own funds, drawn in favour of the National Housing Corporation and applied, pursuant to the verbal agreement between the plaintiff and the defendants, to money due by the defendants to the NHC in respect of the property that was the subject of the agreement, Section 38, Allotment 11, Modilon Road, Madang;

(ii) the plaintiff gave K1,000.00 cash to the defendants;

(iii) the plaintiff purchased two Air Nuigini tickets in the name of the defendants to the total value of K1,780.00 and gave the defendants those tickets plus K100.00 cash.

The total value of those benefits was K19,000.00 + K1,000.00 + K1,880.00 = K21,880.00. The plaintiff's claim that the total was K22,080.00 is not substantiated. There is evidence of only K21,880.00.

(b) Have the defendants been enriched at the plaintiff's expense?

8. Yes. There is sufficient evidence that the money came from the plaintiff's personal account at Bank South Pacific Madang.

(c) Would it be unjust to allow the defendants to retain the benefit?

9. Yes. I am satisfied that the plaintiff paid the money out of his own funds to the benefit of the defendants. He did so in good faith to give effect to a verbal agreement made in April 2003 with the defendants under which money would be paid to the NHC to discharge moneys due to the NHC by the defendants and the property would be sold by the defendants to the plaintiff. Pursuant to the agreement the plaintiff moved into the property in May 2003 and stayed there until November 2003 when the defendants told him to leave as they had arranged to lease the property to a third party. By doing so the defendants unilaterally terminated the agreement but failed to refund the benefits they obtained under that agreement. It would be unjust in these circumstances to allow the defendants to retain all the benefits.

CONCLUSION

10. The plaintiff has established a cause of action in unjust enrichment. Therefore it is appropriate that the court order restitution as a form of compensation. Assessment of the amount of compensation will be the subject of a separate hearing in accordance with the plaintiff's request that this be a trial only on liability. The costs of the proceedings will follow the event, ie the defendants will be ordered to pay the plaintiff's costs.

ORDER

(1) The defendants are liable in unjust enrichment to the plaintiff, who has established that he is entitled to compensation.

(2) The amount of compensation to which the plaintiff is entitled shall be assessed at a separate hearing.

(3) The costs of the proceedings to date shall be paid by the defendants to the plaintiff on a party-party basis, to be taxed if not agreed.

(4) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Orders accordingly.
____________________________
William Akuani Lawyers: Lawyers for the Plaintiff