TST Development Ltd v Global Customs and Forwarding Ltd [2024] PGNC 158; N10815 (17 May 2024)

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BREACH OF CONTRACT – Contract for sale of land – purchase price K4,000,000 - 10% deposit of K400,000 paid as consideration - defendant granted access prior to completion – contract require ministerial approval – ministerial approval not granted – contract rescinded – notice to vacate issued – property not vacated – claim for breach of contract – claim for vacant possession, damages for trespass and mesne profit – claim for occupational fees – consideration – assessment of damages - ruling

CROSS-CLAIM – Challenge on title – claim that contract for sale of land did not exist or was void on the basis that the plaintiff did not have title to the land at the material time the contract was signed – claim that property was purportedly forfeited on 28 August 2014 and later on 27 May 2017– claim to declare contract non-existent - claim for return of K400,000 deposit and various damages – consideration - ruling

Mudge v. The Secretary for Land [1985] PNGLR 387
Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215
Gari Raka v. Peter Taule (2011) N4196
Housing Commission v. Yama Security Services Pty Ltd [2000] PNGLR 69
Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959
Dominic Tiri v Alison Eka (2017) SC1586
Gesring Gabing Bob v Stettin Bay Lumber Company Ltd (2008) N3440
PNG Ports Corporation Ltd v. Charles Inni (2012) N4717
Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22
Waisime v. Auskoa Enterprises Ltd [2019] N7727
Pacific Trade International Ltd v. Waisime [2020] SC1935
Rimbunan Hijau (PNG) Ltd v. Ina Enei (2017) SC1695
Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126
Madaha Resena v. The State [1990] PNGLR 22
PNG Nambawan Trophy Ltd v. Tubuan Investments Ltd (2009) N5349
National Capital District Commission v Dademo [2013] SC1260
Cheong Supermarket Pty Ltd v Perry Muro [1987] PNGLR 24
Aiwara v. PNG Cocoa Board of PNG (2017) N6788

1. ANIS J: This was a trial for vacant possession of a property and damages for breach of contract. The defendant contested the matter, and in so doing, filed a defence and cross-claim against the plaintiff.

4. The primary claim concerns a contract for sale of land that had failed to conclude. The plaintiff was the intended vendor and the defendant the intended purchaser (the Parties). The contract for sale agreement was entered on or about 14 August 2013 (the Contract). The land in question is described as State Lease, Volume 82, Folio 202, Section 250, Allotment 22, Hohola, NCD (the Land). The purchase price of the land was set at K4,000,000 (the purchase price). In consideration and in accordance with the terms of the Contract, the defendant paid the plaintiff K400,000, which represented 10% of the purchase price.

5. A material term of the Contract was that it was subject to Ministerial Approval.

6. According to the terms of the Contract, the plaintiff permitted the defendant to early access and occupation of the Land. The defendant proceeded to occupy the Land. The defendant has remained on the Land since where it conducts its business.

7. Unfortunately, and after several years of waiting, on 26 May 2017, the Department of Lands and Physical Planning (Lands Department) advised the plaintiff that Ministerial Approval for the sale of the Land had been rejected.

8. So, on 30 May 2017, the plaintiff, through its lawyers, rescinded the Contract. The plaintiff also put the defendant on notice that the defendant had breached various terms of the Contract and that it would sue the defendant for breach of contract to seek various relief including an order for vacant possession of the Land.

9. On 2 September 2017, the plaintiff filed this proceeding. The matter was set down for hearing on 6 December 2018. However, on 9 October 2018, the then Minister for Lands and Physical Planning Hon. Justin Tkatchenko issued a notice in the National Gazette where he forfeited the Land. So, on 2 November 2018, the plaintiff challenged the decision by filing an appeal, that is, CIA No. 104 of 2018 (CIA 104 of 2018). On 10 May 2022, His Honour Justice Dingake handed down his final decision where His Honour quashed the decision of the Minister that had forfeited the plaintiff’s Title to the Land. Consequently, the plaintiff’s Title and ownership over the Land has been restored. The Parties acknowledge that the Lands Department has appealed against the decision of Dingake J to the Supreme Court which is pending.

10. The proceeding herein continued thereafter until it was trialed in 2022. The plaintiff is seeking damages for breach of the Contract and vacant possession of the Land. It is also seeking damages in trespass, private nuisance, and unjust enrichment. At the trial, however, the plaintiff has discarded its claims for private nuisance and unjust enrichment.

11. The defendant, as stated, has filed a defence and cross-claim. The pleadings, namely, in paras. 3, 4 and 5 of the Cross-claim (see Defence and Cross-Claim filed 22 September 2017) expressly state or acknowledge the fact that the Parties have entered into the Contract. However, at paras. 3, 5 and 6 of the defence, the defendant alleges that the Contract was null and void ab initio because (i), the plaintiff’s Titled to the Land had been forfeited by the Lands Department earlier on 28 August 2014, and (ii), due to the fact that Ministerial Approval for the sale of the Land was declined on 27 May 2017.

12. As for the relief, the defendant (i) seeks to declare the Contract or the payment of the purchase price unenforceable, (ii), seeks to declare the plaintiff’s Title to the Land invalid on the basis that it had been forfeited by the Lands Department on 28 August 2014, (iii), seeks injunctive orders to be issued against the plaintiff from interfering with the defendant’s use and right to use and occupy the Land, (iv), seeks a refund of its K400,000 plus interest, and (v), seeks other relief such as general damages, future economic loss and special damages.

13. The parties tendered their evidence by consent and without the benefit of cross-examination. The plaintiff tendered a total of 4 affidavits which were marked as exhibits P1 to P4. The defendant also tendered a total of 4 affidavits which were marked as exhibits D1 to D4.

14. I was of the view that there was no issue in regard to the existence of the Contract. The pleadings, namely, in paras. 3, 4 and 5 of the Cross-claim (see Defence and Cross-Claim filed 22 September 2017) expressly pleads or acknowledge that the parties had entered into the Contract. However, in paras. 3, 5 and 6 of the defence, the defendant alleges that the contract was null and void ab initio (i), because the plaintiff’s Titled to the Land was later forfeited by the Lands Department on 28 August 2014, and (ii), due to the fact that Ministerial Approval for the sale of the Land was declined on 27 May 2017.

15. I note that the defendant did not make any submission regarding its claim that the Title to the Property had been forfeited earlier on 28 August 2014. I note that no evidence were drawn to the Court’s attention by the defendant to support this assertion. Therefore, and for clarity, I find that this claim has been abandoned, and I therefore dismiss it.

16. At the hearing, counsel for the defendant made inconsistent submissions in regard to the Contract. On the one hand, counsel made submissions denying its existence, and on the other hand, counsel appears to argue that the Contract existed but was rescinded. However, in both these instances, counsel submits the end result is the same which is that there was no contract that existed between the parties that the plaintiff could sue under.

17. The plaintiff, on the other hand, argues that the defendant cannot have it both ways. And it submits in response that there was a binding contract between the parties which was subject to Ministerial Approval. It submits that since Ministerial Approval was unsuccessful, the Contract was rescinded in accordance with its terms and conditions.

18. The defendant also argues that the plaintiff failed to plead common law as the basis for its claim for damages. However, I note that the claim for breach of contract in this proceeding is premised on the common law of England, that is, under its law of contract. The common law of England is that which exists that predates 16 September 1975, which was adopted by the Papua New Guinea Constitution. I also note that the pleadings herein are premised on facts that relate to the Contract that was entered between the parties. The argument is baseless, and I also dismiss it.

(iv) Subject to the issues 1 and 2, what damages, if any, should be awarded to the plaintiff;

(v) Whether the continuous occupation by the defendant over the Land after the Contract was rescinded was unlawful, and whether that constitutes the tort of trespass where the defendant should be held liable, and if so, what compensatory award should be made against the defendant?

(vi) Whether the defendant should be refunded its 10% deposit of K400,000, and further, whether the defendant has established its equitable claim over the Land where it should be granted its other damages sought including general damages, future economic loss, right to peaceful enjoyment of the Land and special damages.

21. The issue of who is the registered proprietor of the Land is not a difficult one.

22. The Owner’s Copy of the Title to the Land is marked as Annexure B to Exhibit P1 which is the affidavit of Leonard Kwong Yew Tan filed 20 October 2017. A copy is also attached and acknowledged by the defendant, that is, under Annexure D to Exhibit D1 which is the affidavit of Harupa Peke filed 10 October 2017.

23. At the material time before, during, and after the Parties signed the Contract in 2013, the defendant did not take issue with the Title to the Land. The defendant only raised this claim years later after it had learnt that the Minister for Lands had forfeited the Land in 2017. However, the forfeiture decision by the Minister was overturned and quashed by the National Court on 10 May 2022, in CIA 104 of 2018.

24. There is no other evidence of any state lease or title adduced before this Court to prove or show that that the plaintiff’s current Title over the Land has been revoked.

25. What may be relevant that may require consideration under this sub-heading is this. There may be a Supreme Court Review that is pending, that is, challenging Dingake J’s decision where His Honour quashed the Minister’s decision to forfeit the plaintiff’s Title over the Land. However, the status quo of the matter and submissions in that regard were not properly addressed by the Parties.

27. This issue is not properly before me, and as such, I decline to deal with it. I am minded therefore to uphold the plaintiff’s submission. I also note that the plaintiff’s Title is protected under the principle of indefeasibility of title. See cases: Mudge v. The Secretary for Land [1985] PNGLR 387, Emas Estate Development Pty Ltd v. John Mea and Ors [1993] PNGLR 215, Gari Raka v. Peter Taule (2011) N4196, Housing Commission v. Yama Security Services Pty Ltd [2000] PNGLR 69 and Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959.

28. Also of significance is this fact. Regardless of the purported forfeiture which the plaintiff has been successful in the National Court, meaning that its Title has been restored and that a review may be pending before the Supreme Court, the plaintiff is protected under s.142 of the Land Act 1996 (LA). The section reads:

(a) a re-appraisal of imposition of rent, or a variation or imposition of royalty, under Section 100(5); or

(2) An appeal under Subsection (1) shall be made within 28 days after the matter complained of, or within such further time as the National Court for any special reason allows.

(3) Where an appeal is made under Subsection (1), the matter complained of has no effect until–

(b) where no further appeal is made to the Supreme Court–the period prescribed for making an appeal has expired; or

(c) where a further appeal is made to the Supreme Court–the Supreme Court has decided the appeal,

and, subject to Subsection (4), a lessee may in the meantime continue lawfully to occupy the land the subject of the appeal and to exercise his rights, and shall fulfil his obligations, under the lease.

29. Finally, I note from both counsel that the Parties do not dispute the fact that the plaintiff currently retrains the Owner’s Copy of the Title to the Property, that is, as its registered proprietor.

31. Premised on the adduced evidence of Parties, what is clear or certain is this. At the material time when the Contract was signed, the defendant did not take issue with the plaintiff’s Title to the Land. It did not take steps to vacate the Land or repudiate the Contract.

33. Contrary to the defendant’s claim, it paid the plaintiff the 10% deposit of the purchase price, which was required under Clause 4 of the Contract, that is, a sum of K400,000. And the defendant, as agreed by the Parties and in accordance with Clause 11 of the Contract, was permitted to take early possession of the Land. The defendant took possession immediately after payment of the deposit, in 2013.

34. I note that Counsel for the defendant did not address the elements of a valid contract to seriously dispute the existence or validity of the Contract.

35. The second and perhaps more telling position of the defendant in regard to the Contract, is what it has been pleaded in its filed defence and cross-claim. The defendant, as correctly submitted by the plaintiff, did not deny signing the Contract with the plaintiff. The first reason for disputing the validity of the Contract as pleaded and as stated above is premised on an alleged purported forfeiture notice that was issued by the Lands Department on 28 August 2014. I have ruled above that this claim was abandoned by the defendant. The second reason for disputing the validity of the Contract is premised on the decision of Minister Tkatchenko in forfeiting the Titled of the Land on 9 October 2018. Again, I have addressed this above and found in favour of the plaintiff. And finally, the third reason raised by the defendant is where it disputes the validity of the Contract, refers to the fact that Ministerial Approval had not been obtained, and the fact that the Contract had been rescinded. I will address rescission separately below.

36. So, premised on the evidence, the findings by this Court, and conduct of the parties as summarised above, I find that there was an offer made by the plaintiff to the defendant to sell the Land at the price of K4,000,000. I find that there was acceptance by the defendant. I also find that there was consideration and an intention to create legal relationship between the parties. The defendant, in signing the Contract, paid the plaintiff the 10% deposit of the purchase price, namely, K400,000 in accordance with the terms of the Contract. The Condition Precedent was that the Contract was subject to Ministerial Approval. Clause 9.1 states:

To the extent that any provision of this Agreement constitutes a controlled dealing as defined in Section 128 of the Land Act 1996, then the Agreement is subject to the approval of the Minister for Lands and Physical Planning under Section 128(1) of the Land Act 1996 (the “Statutory Approval”)

37. The defendant, knowing fully well of the terms and conditions as agreed between the Parties, took possession of the Land, and since then, continues to reside there and continues to conduct its business. I note and find that the plaintiff would not have permitted the defendant to take possession of the Land had there been no agreement signed in the first place, namely, the Contract.

38. In summary, I find that the Parties have entered into a legally binding agreement which is the Contract.

39. Pursuant to Clause 9.1, the Contract was subject to Ministerial Approval. But as stated, Ministerial approval was rejected on 27 May 2017.

40. And the plaintiff, by way of a letter through its lawyers dated 30 May 2017, which was served on 7 June 2017, notified the defendant, amongst others, that it had rescinded the Contract. A copy of the letter is attached as Annexure G to Exhibit P1.

“As a consequence of these breaches of the Contract, and the refusal of the Ministerial Consent for the transfer, the Vendor gives the Purchaser notice that it rescinds the Contract for Sale with immediate effect, pursuant to clauses 9.3 and 18 of the Contract.

You are now required to immediately give up possession of the property to the Vendor in accordance with clause 18(c).

Please note that if you do not vacate the property within 7 days, we hold instructions to commence legal proceedings against your company to obtain vacant possession and for occupation fees or net rent and profits in accordance with clause 18(d) of the Contract.

If Statutory Approval is refused this Agreement shall be rescinded and the provision of Clause 18 shall apply.

If this agreement is rescinded (as distinct from termination) under any express right to rescind (as distinct from a right to terminate) conferred by this Agreement the rescission shall be deemed to be a recession ab initio, and;-

(a) The Deposit and all other money paid by the Purchaser shall be refunded to it;

(b) Neither party shall be liable to pay the other party any sum for damages costs and expenses;

(c) If the Purchaser has been permitted into occupation of the Property it shall immediately give up the Property to the Vendor;

(d) ....account for and pay to the Vendor the net rents and profits received or a fair occupational rent for the Property (whichever is the greater) until the date of rescission. The Vendor shall give the Purchaser credits or any interest paid by the Purchaser. Any resulting balance payable by the Purchaser may be deducted by the Vendor from the Deposit and other moneys before returning it to the Purchaser.”

43. Rescission of a contract in general simply means the contract no longer exist and that the parties are put back to their original positions immediately before they signed the contract; it means parties are released from their present or future obligations on a contract that the parties had entered.

44. Apart from my general understanding of the term, the Supreme Court in Dominic Tiri v Alison Eka (2017) SC1586 stated at paras. 11 and 12 which I adopt herein, as follows:

11. Treitel in AN OUTLINE OF THE LAW OF CONTRACT (6th ed. Oxford) at page 343 succinctly states the law: The effects of rescission...The injured party is released from future obligations under the contract...The party who has failed to perform is also released from future (but not from accrued) obligations to perform. Halsbury's Laws of England (4th ed.) volume 9 paragraph 551 refers to pre-Independence cases and summarises the law regarding rescission as follows: "a serious breach has the effect of giving the innocent party the right to elect whether he will treat the contract as at an end or as still on foot."

12. And on the point of how this election is made, at paragraph 556 Halsbury's comments: "The question whether or not a party as elected to rescind is one of fact. An election to rescind must involve an unequivocal assertion by the innocent party that he regards himself as no longer bound by the contract as a result of the breach."

45. Given these, and given my finding that the Contract was valid, I find as a matter of fact that the Plaintiff rescinded the Contract on 30 May 2017.

46. However, unlike the immediate effect of an agreement that is rescinded that is not in writing where there are no express provisions or clause for rescission with set conditions, the Contract does have clauses, some of which have been stated above, that would take effect in the event the Contract is rescinded which the Parties have agreed to abide by.

47. My role therefore and given my finding that the Contract was valid, is to consider, interpret and find whether there were breaches to the clauses of the Contract, and give effect to the recission clauses premised on what is being claimed by the Parties in this proceeding.

48. I must clarify a misconceived submission that was made by the defendant concerning rescission of the Contract. Counsel submits that because the Contract was rescinded, the Parties cannot rely on its terms and conditions because there is no contract that exist to begin with. I reject this submission. The Contract was rescinded by the defendant, however, there are clauses therein that stipulate the rights and obligations of the Parties which must be complied for a recission to take its full effect. These terms and conditions of the Contract are binding upon the Parties.

49. I note from the written submissions of the plaintiff that its claim for breach of contract is limited to those terms and conditions that are prescribed in the Contract in the event the Contract is rescinded. At the trial, the plaintiff is relying on the terms and conditions of the rescinded Contract, to argue that the continuation of occupancy of the Land by the defendant is unlawful, that is, pursuant to the rescission clauses of the Contract, thus, the Court should find the defendant liable in trespass and award damages in that regard and also order the defendant to vacate the Land.

51. I ask myself this, whether the defendant is presently unlawfully occupying the Land?

52. The answer to this query is obvious, which is, “yes, the defendant is presently unlawfully occupying the Land.” Adduced evidence shows that after the Ministerial Approval was rejected, the plaintiff gave notice to the defendant on 30 May 2017, to vacate the Land pursuant to the Clause 18(c) of the Contract. Clause 18(c) states:

18. If this agreement is rescinded (as distinct from termination) under any express right to rescind (as distinct from a right to terminate) conferred by this Agreement the rescission shall be deemed to be a recession ab initio, and;-

(c) If the Purchaser has been permitted into occupation of the Property it shall immediately give up the Property to the Vendor;

53. I recall repeatedly asking counsel for the defendant on what basis did his client continue to remain on the Land. I must say that counsel was unable to assist the Court in that regard except to make submissions denying the existence of the Contract. Even if that was the case, I asked counsel the same question, and again I received no valid submissions in law from counsel to explain the premise that gave his client the right to continue to occupy the Land.

54. I find that the defendant has been unlawfully occupying the Land after it was asked to leave by the plaintiff who is the registered proprietor of the Land. The unlawful occupation commenced 7 days after the defendant received the plaintiff’s letter dated 30 May 2017. The plaintiff’s letter was received by the defendant on 7 June 2017, thus, 7 days from 7 June would be 14 June 2017. Therefore, the defendant was illegally occupying the Land as of 15 June 2017 to the date of the judgment which is 17 May 2024.

55. Did the defendant also trespass onto the plaintiff’s land as pleaded in the SoC?

56. I adopt Justice Cannings’s decision in Gesring Gabing Bob v Stettin Bay Lumber Company Ltd (2008) N3440 where His Honour identified the elements of trespass. His Honour held:

(1) To succeed in an action for trespass to land, a plaintiff must prove five things:

(a) the defendant entered land, either directly (in person) or indirectly (eg by propelling an object or a third party on to the land); and

57. Premised on the undisputed facts and my findings above, I find the defendant liable for the tort of trespass. The defendant intentionally remained on the plaintiff’s Land after it was told to move out by the plaintiff. The defendant initially entered the Land lawfully premised on consensus had between the Parties which was in accordance with the terms of the Contract. However, when the Contract was rescinded, Clause 18(c) required the defendant to immediately vacate the Land. It failed to do so in this case. After or as of 15 June 2017, the defendant had no lawful authority to remain on the Land. The plaintiff is the legal proprietor of the Land, and it had and continues to suffer want of occupation, use of, and enjoyment of the Land, due to the actions of the defendant in refusing to give vacant possession of the Land.

58. The plaintiff’s Title was forfeited one time by the Lands Department. However and as stated, the forfeiture was quashed and at the material time to the date of trial, the plaintiff was and is the registered proprietor of the Land.

59. The defendant made submissions to attempt to capitalize on the fact that the there had been past forfeitures including the recent attempt in 2017 by the Lands Department.

60. All these submissions, in my view, go to show or prove that the defendant is disingenuous. It had intended to purchase the Land from the plaintiff. The plaintiff entered into a contract of sale of land with it, and the plaintiff invited the defendant onto its Land premised on the intended sale agreement. The Contract failed to materialize. The plaintiff then asked the defendant to vacate the Land. And the defendant refused to do so. And all this time, evidence adduced shows that the defendant is using the Land rent free and is also conducting its business there.

62. Premised on the plaintiff’s submissions including its written submission, the plaintiff, as stated, has abandoned relief E and F. As such, I will refrain from addressing them.

63. The plaintiff shall have vacant possession of its Land. I have no issue in granting relief A and B. The defendant must deliver-up vacant possession of the Land to the plaintiff. As to timing, I will order 21 days from today, that is, for the defendant to vacate the Land.

64. Moving on, I ask myself whether the plaintiff is entitled to claim Damages for loss of occupational fees and/ or mesne profits. What does the Contract say in regard to the claim for occupational fees? The plaintiff is relying on Clause 11.1(c) and 11.2 to make this claim. I, however, am minded to reject this claim. I interpret Clause 11 to apply to the Parties where the defendant is given early possession of the Land where the Parties may agree upon a rate for occupational fee whilst the Contract exists up until before or until its completion date. In the present matter, the Contract was rescinded before it was completed, therefore, the provision, in my view, does not apply favourably for the plaintiff. Further, more justification is given with this interpretation by looking at the rescission clause, namely, Clause 18. In the event that the Contract is rescinded, Clause 18(b) is express, and it reads, Neither party shall be liable to pay the other party any sum for damages costs and expenses. Damages or costs for occupational fees is prevented by this clause.

65. I therefore make no awards for rents or occupational fee that is claimed from the time of occupation of the Land by the Defendant, to the date of when the defendant was required to vacate after the Contract was rescinded. The material dates, in my view, were 15 August 2013 and 14 June 2017.

66. That aside, I ask myself this. What about the period from 15 June 2017 to the end of the prejudgment period which is 16 May 2024? This period is outside the Contract (period of unlawful occupation of the Land). The plaintiff is claiming that it should also be compensated for this period outside the Contractual period. Is the plaintiff entitled to claim rent or mesne profit from the Defendant for this period? My answer to that is, “yes, the plaintiff is entitled to claim this relief.” The defendant has trespassed and continued to reside unlawfully on the plaintiff’s Land ‘rent free’, so to speak, for a period of 6 years 11 months and 1 day. I find that the defendant is therefore liable to pay mesne profit to the plaintiff for this period.

67. I will, for assessment purposes, rely on submissions from the parties. How should I proceed to make an assessment for this award? I note that the defendant has not made any submissions on this. Its submission was limited to liability.

68. The plaintiff on the other hand has provided submissions, and I have considered them.

69 In PNG Ports Corporation Ltd v. Inni (2012) N4717, David J stated at paras. 71 to 74, which I adopt herein as follows:

71. As to whether the plaintiff is entitled to mesne profit, I make the following observations. McGregor on Damages, Sweet & Maxwell Limited, 14th Edition, (1980), Chapter 32, deals with torts affecting land.

72. At paragraph 1135 the learned author describes what the action for mesne profit is about. He states, inter alia,:

"Where the defendant wrongfully deprives the plaintiff of his land, the plaintiff will generally wish to recover not the value of the land but the land itself. The principal action is therefore an action for the recovery of the land, historically better known as the action of ejectment. Damages will thus generally be limited to loss arising from the period of wrongful occupation by the defendant. Such damages are recoverable in the action for mesne profits, in origin an action of trespass..."

73. At paragraph 1136, the learned author states what the normal measure of damages is in an action for mesne profit. He states, inter alia,:

"The normal measure of damages is the market value of the property occupied or used for the period of wrongful occupation or user. There is little authority, but this measure is consonant with general principles and with the name of the action for wrongful occupation as one for mesne profits. If the rental value varies due to market fluctuations during the period of wrongful occupation, these fluctuations should be taken into account. If the defendant makes improvements on the land, the rental value should be assessed upon the unimproved..."

74. Since the termination of the lease agreement on 21 January 2011, the defendant continued to be in occupation of the demised premises without any legal basis. The plaintiff was wrongfully dispossessed of the demised premises therefore has a right of action against the defendant for mesne profits: see for instance, Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22. The right to mesne profit accrues from the date of determination of the lease agreement and in the present case it will be calculated from 21 January 2011 to the date vacant possession is given to the plaintiff. Assessment of mesne profits will be calculated at the rate of K110.00 per month as from 21 January 2011 until date of vacant possession.

70. In Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22, Frost CJ stated, which I also adopt, as follows:

The final matter is the plaintiffs entitlement to mesne profits. Any person wrongfully dispossessed of land has, in addition to a right of action for the recovery of the land, a right of action for damages in respect of all loss suffered by him during the period of his dispossession. Such an action is termed an action for mesne profits. Salmond on Torts, 16th ed., p. 576.

The loss recoverable clearly extends, but is not limited to the rental value of the land. Normally the rent paid by a party overholding is taken as the measure for loss of that nature. Guthrie v. McCrindle[xxii]10. But two objections have been made by Mr. Darvall to that approach in this case. First, it is said that the sum of $6,000 per month fixed by the licence agreement is excessive having regard to the rate of return on capital. Thus $6,000 per month amounts to over 29% per annum return on a capital value of $250,000. It was also contended that the rate was fixed to cover not only rental value, but also some additional sum by way of purchase money or perhaps to cover interest on the unpaid purchase price.

71. The third relevant case law I refer to is Waisime v. Auskoa Enterprises Ltd [2019] N7727. The case was later approved on appeal by the Supreme Court in Pacific Trade International Ltd v. Waisime [2020] SC1935. The primary judge, Kandakasi J, as he then was, in considering what appropriate method should be applied to calculate mesne profit on a land that had been unlawfully occupied, stated at paras. 42 and 43:

42. In the Plaintiffs submissions, which is somewhat confusing, they suggest their mesne profits be assessed in terms of “13 months x K150 x 12 months x 402 square meters = 13 months x K60,300 per annum. (K60,300 /12 months = K5,025.00 per month. Mesne Profits Total = K60,300.00 + K5,025.00 (for 13 months) = K65,325.00.”

43. I consider an easier way to calculate the mesne profits is to multiply the K150 per square meter rate by 402 being the total square meters to arrive at the annual rental rate which comes to K60,300.00. Then since we have 13 months and 16 days, we should get a daily rate by dividing the annual rental by 365 days in a year to arrive at the daily rate. Applying that formula produces, a daily rate of K165.21 (rounded up). If we then multiply that by the total number of days which comes to around 419 days the total annual rental comes to K69,222.99 for the 13 months and 16 days occupation by the Defendants. Consequently, I assess and allow the Plaintiffs mesne profit damages at K69,222.99.

72. In Waisime v Auskoa (supra), the parties did not agree on what occupational fee or rent should apply that would assist the Court to assess mesne profit. So, the plaintiff sought the assistance of a reputable real estate firm called Century 21 Real Estate, to give an estimate on the unimproved value of the land per square meter. The Court stated in part at para. 40:

40. Here there is no agreement to go by. That means we will have to ascertain the commercial rental market value of the property and assess the damages for mesne profits. The Plaintiffs have secured the assistance of one of the leading real estate companies in the country, Century 21 Real Estate Ltd. Century 21 has given a figure of K150.00 per square meter per annum. There is no serious dispute or contest on this rate. I will thus use that figure, and have it multiplied by the total land area which is given as 402 square metres, again a figure that is not the subject of any serious contest. I will then have these multiplied by the total period the Defendants occupied the land until they fully vacated it.

73. In the present matter, the plaintiff has adduced evidence in support of its assessment. I refer to annexure B of Exhibit No. P3, affidavit of Leonard Kwong Yew Tan filed 2 November 2018. The annexure attaches a covering letter dated 22 May 2018 by the plaintiff’s lawyers, and the letter attaches a copy of a report dated 15 May 2018 from the real estate firm Century 21 (Report by C21). The estimated loss of profits or rents contained in the Report by C21, which was premised on the unimproved value of the Land from August 2013 to 2018, was assessed at K4,699, 837.48. C21 applied various rates per square meter ranging from K50 to K70, to make its assessment. The plaintiff submits that the Court should apply the lowest rate, that is, K50 per square meter to make its assessment on mesne profit.

74 Again, the defendant has provided no assistance or submissions in that regard.

75. The Land has a land mass of 10,538 square meters or 1.538 ha. I am minded to apply the suggested rate, that is, K50 per square meter. The daily rate of the assessed rent payable would stand at K1,443.56. The period of unlawful occupation of the Land by the defendant, as determined above (after the Contract was rescinded), is 6 years, 11 months and 1 day. I multiply K1,443.56 by 365 days to get the assessed annual rate of K526,899.40. For the 6 years, I multiply K526,899.40 by 6 and get K3,161,396.40. As for the 11 months, I will estimate, for this purpose, 30 days to be the number of days per month. Therefore, I multiply 30 days by 11 months at the daily rate of K1,443.56 and get K476,374.80. I then add K1,443.56 for the extra day and get K477,818.36.

76. When I add all that up, I get a final sum of K3,639,214.76. I will not add K1,063,227.48 or any improved value that may increase the value of the Land from the period 15 June 2017 to 16 May 2024. The plaintiff has not entered the Land since 15 June 2013 where it could have improved the value of the Land whereby such a consideration could be added.

77. I therefore find and award K3,639,214.76 as mesne profit that is owed by the defendant to the plaintiff.

78. Having also found the defendant liable in trespass, I ask myself what award I should make for this head of damage?

79. This damage is distinct from an award of mesne profit. See cases: Pacific Trade International Ltd v. Waisime (supra); Rimbunan Hijau (PNG) Ltd v. Ina Enei (2017) SC1695; Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126; Madaha Resena v. The State [1990] PNGLR 22; PNG Port Corporation Ltd v. Charles Inni (supra) N4717 and PNG Nambawan Trophy Ltd v. Tubuan Investments Ltd (2009) N5349.

80. Assessments for trespass that have been awarded by courts range from K20,000 to K50,000. The Court’s power to make such an award is discretionary and is based on the circumstances of each case or the severity of trespass committed.

81. The plaintiff submits that this Court should make an award of K400,000 against the defendant as damages for trespass. The defendant did not address this matter.

82. I refer to my findings above on this matter. As stated, and I will re-iterate that I find the actions of the defendant as disingenuous. The defendant, instead of leaving the Plaintiff’s Land because Ministerial Approval had not been obtained, continued to occupy the Land with the aim to overthrow or nullify the plaintiff’s Title to the Land. Its actions, I note, has tremendously affected the rights and interest of the plaintiff over the Land. The plaintiff had to fight various Court battles to retain its Title to the property. Evidence adduced suggests that the defendant was or may be behind these claims, working with others to try to remove the plaintiff’s Title over the Land.

83. I note that the only reason why the defendant was allowed access and occupation of the Land was because it had intended to purchase the Land from the plaintiff. If the defendant claims that the Contract was void or invalid, it should have immediately rescinded the Contract or disputed it after it was signed, given vacant possession of the Land back to the plaintiff, gotten its 10% refund, and moved on with its life. Similarly, if the defendant disputes the plaintiff’s Title to the Land, it should have done the same thing back in 2013 or 2014. Yet the defendant decided otherwise. But regardless, I note that the 2 arguments or claims do not give any legal right whatsoever to the defendant to continue to remain on the Land.

84. I could have awarded a sum that is higher under this head of damages had the plaintiff not set its claim for this damage at K400,000. As such, I am minded to and will award a sum of K400,000 in favour of the plaintiff for the tort of trespass committed by the defendant.

85. An award of interest is discretionary. See cases: National Capital District Commission v Dademo [2013] SC1260, Cheong Supermarket Pty Ltd v Perry Muro [1987] PNGLR 24 and Aiwara v. PNG Cocoa Board of PNG (2017) N6788.

86. The plaintiff pleads and seeks interest at 8% per annum under the Judicial Proceedings (Interest on Debts and Damages) Act 2015 (JP Act). There is no opposing argument put forward by the defendant on interest. In considering the matter, I am minded to apply varying interest rates which I think better suits this case given its circumstances.

87. I will award interest at 8% per annum on the judgment sum which shall be computed from the date the cause of action arose which was on 15 June 2017, to the end of the prejudgment period which is 16 May 2024. However, interest shall continue to accrue but at a higher rate of 28% per annum after a month from today, that is, if the judgment is not settled in full which includes giving vacant possession of the Land to the Plaintiff.

88. Whilst this assessment is discretionary, it is also, in my view, consistent with s.4(1) of the JP Act, which states:

(1) Subject to Section 5, in proceedings in a court for the recovery of a debt or damages, the court may order a rate as it thinks proper to be applied to the sum for which judgment is given interest, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

89. The total judgment sum awarded for mesne profit and trespass is K4,039,214.76. The computing period is 6 years and 11 months and 1 day. Eight percent of K4,039,214.76 is K323,137.18 which is the interest sum on the judgement sum per annum. I divide K323,137.18 by 12 months and get K26,928.10 which represents the interest per month. With this, I multiply 6 years by 12 and add 11 months and get a total of 83 months. I then multiply K26,928.10 by 83 months and get K2,235,032.30. For the extra day to 16 May 2024, I divide K323,137.18 by 365 days to get K885.31. And I then add K885.31 to K2,235,032.30 to get K2,235,917.61.

90. The assessed pre-judgment interest on the judgment sum is assessed at K2,235,917.61. This sum constitutes the 8% interest on the judgment K4,039,214.76.

91. Under the defendant’s cross-claim, it admits the Contract and payment of K400,000 to the plaintiff. The defendant also claims that the Contract was breached because of various reasons, the main one being that Ministerial Approval was rejected. The defendant also claims that the Title to the Land had been forfeited on 28 August 2014.

92. The defendant claims to have an equitable interest over the Land. It claims that it has developed the Land and the Land currently has a market value of K2,997,000.

93. With respect, I note that the defendant did not properly address its cross-claim. Its written submission on the matter was brief. The defendant’s main focus was to argue that there was no contract of sale. However, that submission is made contrary to the defendant’s own pleaded cross-claim. Also, and as I have already ruled above, the allegation of a purported forfeiture of the Title to the Land on 28 August 2014 was abandoned by the defendant. In regard to the later forfeiture in 2017, I have already addressed that which is that the Minister’s decision was successfully overturned in Court by the plaintiff.

94. Given my findings above in regard to the plaintiff’s claim, I find the cross-claim to be baseless and in so doing, I dismiss it, that is, with only one qualification. The qualification relates to the 10% deposit that was paid by the defendant.

95. So, what does the Contract say in regard to the K400,000 deposit, that is, in the event the Contract is rescinded? The relevant clause is 18(a) which states:

(a) The Deposit and all other money paid by the Purchaser shall be refunded to it;

96. Any rescission under Clause 18 is deemed absolute but subject to its stated preconditions, and one of which is that the deposit of K400,000 must be refunded to the defendant.

97. I therefore find that the defendant is entitled to its refund given that the Contract has been rescinded. It is not disputed that the plaintiff has not paid back the said money to the defendant. I am therefore inclined to make such an order. However, I note that the plaintiff has, in its defence, claimed set-off of the said sum against its damages, and I note that I have already made awards in favour of the plaintiff that exceeds K400,000. It is therefore possible that the deposit sum will be used to off-set the sums that this Court has already awarded in favour of the plaintiff.

98. In response, the plaintiff also argues that a main reason why it has kept the money is due to the fact that the defendant has refused to vacate the Land after the Contract was rescinded. I note that Clause 18(c) requires the defendant, in the event the Contract is rescinded, to immediately vacate the Land. Clause 18(c) states:

(c) If the Purchaser has been permitted into occupation of the Property it shall immediately give up the Property to the Vendor;

99. This is a summary of the awards I made in favour of the plaintiff plus the calculated interest:

Type of damage	Assessment/award	Interest at 8% per annum from 15 June 2017 to 16 May 2024	Comment
Mesne Profit	K3,639,214.76
Trespass	K400,000
		K2,235,917.61
Total:	K4,039,214.76

Total with interest:	K6,275,132.37
Off set sum	K400,000
Final judgment sum less off set sum	K5,875,132.37

100. The final judgment sum I make in this matter favours the plaintiff in the sum of K5,875,132.37.

101. I will also issue orders for vacant possession to be effected immediately with other consequential orders. But in all fairness and as stated above herein, I will allow 21 days for the defendant to give vacant possession of the Land to the plaintiff.

102. An order for cost always remains discretionary with these types of claims. In this case, I will order cost to follow the event, that is, on a party/party basis to be taxed if not agreed.

________________________________________________________________
Jema Lawyers: Lawyers for the Plaintiff
Raymond Obora Lawyers: Lawyers for the Defendant

National Court of Papua New Guinea

TST Development Ltd v Global Customs and Forwarding Ltd [2024] PGNC 158; N10815 (17 May 2024)