Emas Estate Development Pty Ltd v Mea, Swokin, and The State [1993] PGLawRp 524; [1993] PNGLR 215 (2 August 1993)

PNG Law Reports 1993

[1993] PNGLR 215 - Emas Estate Development Pty Ltd v John Mea, Kala Swokin, and The State 

[1993] PNGLR 215

U3

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

EMAS ESTATE DEVELOPMENT PTY LTD

V

JOHN MEA;

KALA SWOKIN;

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Waigani

Amet Brown Salika JJ

2 August 1993

REAL PROPERTY - Indefeasibility of registered title - Whether principle applicable to registration under the Land Registration Act - Effect of irregularities on registered title.

Facts

The first respondent successfully sought judicial review of the decision of the Minister for Lands to forfeit his state lease under irregular circumstances. The property was subsequently granted to the appellant company for a residential lease for a term of 99 years and registered.

Held

N1>1.       The forfeiture of the respondent's lease and the reallocation of the land to the appellant were irregular for various reasons and could not be upheld.

N1>2.       The order for forfeiture, being invalid, should be set aside.

N1>3.       (Brown J dissenting) Registration in the circumstances could not vest in the appellant an indefeasible title as against the first respondent.

N1>4.       (Brown J dissenting) The doctrine of indefeasibility of title is one that does not necessarily apply, nor is it necessarily appropriate in the circumstances of the case. "For this fundamental reason ... the doctrine, which has hitherto been applied without any examination as to its appropriateness and applicability in the development of the underlying law for this country, should not be applied in this case."

Cases Cited

Papua New Guinea cases cited

Kitogara Holdings v NCDIC [1988-89] PNGLR 346.

Mudge v Secretary for Lands [1985] PNGLR 387.

Okuk v Fallscheer [1980] PNGLR 274.

Other cases cited

Breskvar v Wall (1971) 126 CLR 376.

R v Secretary of State for India [1941] 2 KB 169.

Ridge v Baldwin [1963] UKHL 2; [1964] AC 40.

Counsel

IR Molloy for the appellant.

C Karingu for the first respondent.

2 August 1993

AMET J: The appellant appeals from the whole of the judgment of Los J in the National Court given on 31 July 1992 at Waigani in proceedings OS No 273 of 1991. Upon a judicial review of the decision of the second respondent, Minister for Lands, to forfeit the state lease over the portion of land, allotment 11, section 2, Boroko, held by the first respondent, John Mea, and its subsequent allocation or grant to the appellant, the trial judge ordered that the land be reallocated to the first respondent. I set out, hereunder, the factual history of this matter.

The first respondent, John Mea, was the owner of the state lease over this parcel of land, having been given it by E E Kriewaldts and Company Limited in 1976 for long service to the company. On the land was a fully furnished three bedroom house in which John Mea lived, plus domestic quarters in the back. An update inspection was conducted on various run-down and unimproved blocks in Boroko and Korobosea on 7 and 8 December 1988. The report on this property showed that rent was paid to date. The comments in respect of the property were that the house was run-down, with parts of walls, door, and windows broken, that it was completely run-down, and the lessee had to demolish the house and rebuild. The lessee was to be asked to explain his lack of maintenance on existing improvements. Subsequently, on 16 February 1989, a letter of demand for outstanding rent of K20.00, being K10.00 for arrears and K10.00 for the current annual rent, was forwarded to the first respondent. The first respondent paid the outstanding rent on 10 April 1989. On 24 October 1989, the Lands Department issued a notice to show cause pursuant to s 46(2) of the Land Act Ch 185, addressed to the first respondent at c/o P O Box 1219, Boroko. The notice required the first respondent "to show cause why that lease should not be forfeited on the grounds that you have refused or neglected to comply with the improvement covenant or condition in that lease and you have failed to pay the rent for a period of more than six months. If sufficient cause is not shown within one month of the date of this notice, the lease may be declared forfeited." Subsequently, on 2 March 1990, a forfeiture notice was issued by the second respondent, Minister for Lands, pursuant to s 46(1) of the Act forfeiting the lease on the grounds that:

N2>(a)      the improvement conditions imposed by the Land Act have not been fulfilled in respect of the land;

N2>(b)      the rent remains due and unpaid for a period of more than six months.

The forfeiture notice was gazetted on 26 April 1990. Subsequently, the Minister was advised by the department and, pursuant to s 57(5), the Minister issued an exemption from public advertisement and tender notice in respect of the forfeited land. There were subsequently two applicants for the allocation of the land, the appellant Emas Estate and an employee of the Lands Department, one Leo Minjan. The Lands Board subsequently granted the lease to the appellant. Mr Minjan, aggrieved by that decision, appealed to the Minister pursuant to s11 of the Land Act on 29 October 1990. Whilst that appeal was still pending, the lease was issued to the appellant on 28 March 1991 and registered on 29 July 1991. I note that the lease was not actually signed by the Minister in person but by one Otta Karo as a delegate of the Minister.

The first respondent contended before the National Court that he had not received any notice to show cause under s 46(2) of the Land Act, nor was he aware of the subsequent forfeiture and the reallocation of land to the appellant. In September 1990, he had torn down the house to build the new one at the cost of K70,000.00. He deposed to an affidavit in the National Court that he only became aware of the forfeiture and the subsequent re-leasing of the land in October 1990, when he made enquiries at the Lands Department. He deposed that he immediately instructed Mr G O Emilio, a lawyer, who wrote to the Assistant Secretary, Southern Region, of the Lands Department on 4 October 1990, which letter was exhibited in the court below in relation to the forfeiture and the first respondent's lack of notice of the second respondent Minister's intention to forfeit his land. There was no reply to this letter of the 4 October 1990. On 2 July 1991, the first respondent again instructed Karingu and Sitapai Lawyers, who wrote to the Secretary for the Department of Lands again in a similar vein that the first respondent had not been served Notice to Show Cause, pursuant to s 46(2) of the Act. Again, there was no reply to this letter up until this date.

It was in these circumstances that the first respondent obtained leave and sought judicial review of the second respondent's decisions to forfeit his land for the reasons stipulated above, and to subsequently re-lease it to the appellant.

The trial judge found on the basis of evidence before him that the first respondent did not receive the notice to show cause, as was a necessary requisite to the Minister exercising his discretion to forfeit the lease.

Secondly, the learned trial judge found, as a matter of fact, that when the notice to show cause was issued on 24 October 1989, which was forwarded by mail to the address P O Box 1219, Boroko, and which the trial judge found was not received by the first respondent, the first respondent was not in arrears of rent, nor was there any rent outstanding because, as evidenced by the official receipt issued on 10 April 1989, the first respondent had already paid the outstanding amount of K20.00. Consequently, the second ground for forfeiture, that is that there was outstanding rent in excess of six months, could not be sustained, and the department and the Minister had in fact erred in this conclusion. The learned trial judge found, therefore, that the Minister had no power to issue such a notice in respect of this ground.

In relation to the allegation of the breach of improvement condition, the first respondent contended that he had been in occupation of the house at all times until September of 1990, when he demolished the house in order to rebuild a K70,000.00 house in its place. The learned trial judge concluded that, if the Minister and the department were prepared to issue notice for alleged failure to pay rent to-date, then the allegation of the breach of the improvement condition was suspect.

I, too, agree with the factual conclusions of the learned trial judge. First, I agree that the notice to show cause pursuant to s 46(2) was forwarded by mail instead of being personally served on the first respondent and, consequently, there is no proof that the first respondent in fact received it. His evidence in the National Court, evidenced by letters written by his lawyers on two occasions to the department, clearly raised the issue at the earliest opportunity of his contention that he had not been properly served notice to show cause. Consequently, there is just not sufficient evidence that, in fact, the first respondent received and, thus, was properly served the notice to show cause. Secondly, I agree with the learned trial judge that the allegation in the notice to show cause that the first respondent had rent outstanding just could not be sustained on the evidence before the Court. The documentary receipts and the records of inspection clearly revealed that, at the time of the issuing of the notice to show cause on 24 October 1989, the first respondent was, in fact, up-to-date with his rental payments. I, therefore, agree with the finding of the learned trial judge that this ground for the forfeiture could not be upheld. In any event, the amount alleged to be in arrears, K20.00, is so relatively insignificant an amount that it could not justify the exercise of a discretion to forfeit a substantial property.

These, in my view, are the primary reasons why the forfeiture in the first instance was invalid. And, in my view, it was quite properly set aside by the learned trial judge. Furthermore, in my view, the subsequent transactions in respect of this property leave much to be desired. Firstly, on 8 March 1990, within but six days of the forfeiture notice by the Minister, he was persuaded by interested officers of the Lands Department to exempt the land from public advertisement for applications and tender. Secondly, there being two applicants only, the unsuccessful applicant, Leo Minjan, being aggrieved by the Lands Board decision to award the land to the appellant, lodged an appeal to the Minister pursuant to s11 of the Act. This appeal remains undetermined to this time. The lease was subsequently issued on 28 March 1991, and signed not by the Minister but by one Otta Karo as delegate of the Minister, and subsequently registered on 29 July 1991.

The issue at the end of the day is whether, in these circumstances, the registration of the lease vests in the appellant indefeasibility of title as against the first respondent. My view is that the circumstances are so irregular and unlawful at the very outset to the subsequent transactions that it ought not to prevail. I consider that the learned trial judge properly set aside the forfeiture of the lease by the Minister and ordered its reallocation to its rightful owner, the first respondent. The manner in which the matter was handled subsequent to the forfeiture - the land exempted from public advertisement within a very short time of less than a week, a new lease issued whilst a legitimate aggrieved applicant had lodged an appeal which is still outstanding, and the new lease signed not by the Minister but by a departmental officer as delegate - are all, to my mind, less than satisfactory, highly irregular, and tantamount to fraud, such that the registration of the title should not be allowed to stand.

The issues in this case raise for consideration the principle of indefeasibility of title under the Torrens land registration system that hitherto has been applied in this jurisdiction. I do not believe that the system is necessarily appropriate in circumstances such as this, where an individual land owner is deprived of his title to land by irregular procedure on the part of officials and a department of the State, to the advantage of a private corporation. I do not accept that quite clear irregularities and breaches of the statutory provision should remain indefeasible. I believe that, although those irregularities and illegalities might not amount strictly to fraud, they should, nevertheless, still be good grounds for invalidating subsequent registration, which should not be allowed to stand. To not do so would be harsh and oppressive against the innocent individual leaseholder, such as the first respondent.

I disagree with the further contention on the part of the appellant that damages are adequate remedy for the aggrieved first respondent. I do not believe this is a satisfactory remedy for the wrong done to the first respondent. It is not an easy task to pursue a claim for damages against the State which is quite costly. Similarly, I do not necessarily accept that, quite simply because the appellant, a private corporation, has incurred expenses and mortgaged the property, it would suffer greater prejudice and damage which a remedy of damages could not rectify, as against the first respondent doing the same.

For these reasons in the end result, I do not believe that the errors, irregularities, and illegalities and possible fraud on the part of the officers and the Department of Lands ought to prevail to deprive the first respondent. In the end result, on balance, my conclusions are that the land, the property of the first respondent, was wrongly and unlawfully forfeited by the second respondent, when he had, in fact, not breached any condition of his lease. He had lost his property. The Minister and the department erred in law and, in my view, there is no reason at all, in principle, why the first respondent should not be entitled to the reallocation of his property to him. The balance of convenience, equity, justice, and fairness, in my conclusion, between the individual wronged, the first respondent, and the appellant corporation compels me to the view that the first respondent's interest should prevail. I consider that damages would be adequate remedy for the appellant corporation against the second and third respondents. I have concluded also that the doctrine of indefeasibility of title under the Torrens system of land registration is one that does not necessarily apply, nor is it necessarily appropriate in the circumstances such as this that will continue to be experienced by ordinary Papua New Guinean landowners against the might of the State and private corporations. For this fundamental reason, I am of the view that this doctrine, which has hitherto been applied without any examination as to its appropriateness and applicability in the development of the underlying law for this country, should not be applied to this case.

I would dismiss the appeal with costs.

BROWN J: This is an appeal from the decision of Los J in judicial review proceedings in the National Court on 31 July 1992. That decision was in favour of John Mea, and involved the act of the Minister for Lands in forfeiting a state lease of land. Emas Estate Development Pty Ltd (hereafter Emas) was not a party to those proceedings. On review, the Judge held that the purported forfeiture by the State of the lease over land of John Mea was void and of no effect.

The grounds of appeal are in the following terms:

N2>(a)      The order of Los J, so far as it is made against the "former" Minister of Lands and Physical Environment, is of no force or effect.

N2>(b)      The appellant will rely upon fresh evidence which it will seek to adduce to establish that the judgment of the National Court was wrong in that:

(i)       the appellant has indefeasible title to the property the subject of the proceedings pursuant to the Land Registration Act (Ch 191)

(ii)      the National Court erred in giving judgment for the first respondent in that he was guilty of exceptional delay and the interests of the appellant have intervened whereby the appellant would suffer substantial prejudice.

N2>(c)      The orders of the National Court should be set aside on the basis that the first respondent (John Mea) failed to disclose to the court the adverse interests of the appellant.

N2>(d)      The trial judge misconceived the principles relating to delay and prejudice to third parties.

A chronology of events is helpful.

d widt width=576 valign=top style='width:432.0pt;padding:0cm 5.4pt 0cm 5.4pt'>

State Lease dated 28 March 1991 effective from 14 March 1991.

2 March 1991	Forfeiture of John Mea's lease of subject land.
14 March 1991	Gazettal (G27) of grant of residential lease in the company's favour.
29 July 1991	Registered vol 1 folio 138.
27 November 1991	Application for judicial review filed by John Mea against the decision of the Minister for Lands to forfeit John Mea's lease of allotment 11 section 2, Boroko, for non-compliance with the terms of the lease.
19 December 1991	Lessee to apply for judicial review.
31 July 1992	Judgment of Los J on the judicial review ordering that a lease be given John Mea.
3 August 1992	Letter of demand by lawyers for John Mea.

It can be seen, then, that a fresh state lease had issued and had been registered by Emas before the review proceedings were instituted.

There had been an argument before the Supreme Court on 28 September 1992, when the first respondent's objection to competency was heard. It was necessary for the present appellant to seek the court's leave to appeal since it had not been a party to the original claim by John Mea, which was heard by Los J. Leave was given on 28 September 1992.

After hearing argument, this Court allowed the appellant company to read the affidavit of Hii Yii An, a director of Emas, who set forth facts amounting to fresh evidence for the purpose of this appeal. Those facts can be conveniently summarised here, for they form the basis on which the appellant has argued its case. The company is the registered leasehold proprietor of a property known as allotment 11, section 2, Boroko. The company has a residence lease under s 54 of the Land Act Ch 185 for a term of 99 years from 14 March 1991. There is an annual rent of K2,300 to be paid, and the company shall observe and perform the terms and conditions endorsed on the lease, including the erection of improvements for residential purposes to a minimum value of K120,000 within one year from the commencement date of the lease. The lease, in fact, is dated under hand of a delegate of the Minister for Lands, Mr Otta Karo, on 28 March 1991 and was registered in the register of state leases, vol 1, folio 138, on 29 July 1991. The lease was issued after advertisement by the Department of Lands seeking expressions of interest in the land, and the company tendered for the vacant land.

In about the first week of August, the company received a letter dated 3 August 1992 from Karingu and Sitapai, Lawyers, stating that they act for John Mea and making certain demands. The letter included the following:

"We advise that the forfeiture of allotment 11, section 2 was found to be unlawful, null and void by the National Court on 31 July 1992. The court therefore ordered that the said land be re-allocated to John Mea which then means that the title issued by the Lands Department to your good company is invalid, null and void. Copies of the court decision and orders are attached herewith for your ease of reference. You are therefore advised to stop continuing the building until further notice.

Finally we are instructed by our client to advise that he is willing to transfer the same to your company for a price of K150,000. Please advise within seven days hereof of your company's stance, otherwise we shall take out eviction orders without any further notice to evict anybody on the land."

A copy of that letter was sent to the Manager, ANZ Banking Group (PNG) Ltd and to the Secretary, Department of Lands, Waigani. The company's leasehold interest in the property was granted on 2 March 1991 and gazetted in the National Gazette No G27 on 14 March 1991 following an application by the company under the provisions of the Land Act Ch 185.

At the time the company obtained the fresh lease in respect of the land, it was unaware of any claim by John Mea (or anyone else) in respect of that parcel. The director of the company deposes that, so far as he is aware, the company by its officers, servants and agents was unaware of any claim by John Mea or anyone else in respect of the subject land until the company received the letter from Messrs Karingu and Sitapai in about the first week of August 1992. I am satisfied that the company took its lease from the State without notice of any contrary or competing interests and free of fraud.

The company, consequently, caused its lawyers to conduct a search of the National Court Registry to ascertain what proceedings had been taken in the National Court, and it became apparent that Los J had dealt with the cause commenced by application for judicial review filed on 27 November 1991. By that application, the first respondent had sought an order quashing a decision given on 2 March 1990 by the Minister for Lands, forfeiting John Mea's interest in the subject parcel. On 19 December 1991, the National Court granted John Mea leave to apply for judicial review, and on 31 July 1992, the National Court ordered that the property be reallocated to John Mea.

There is nothing on the material filed in the appeal book to suggest the trial judge was aware that a fresh lease had issued in favour of the company following forfeiture of the earlier lease held by John Mea. The only material relevant to that aspect was an oblique reference in the affidavit of one Dogo Olewale, the Acting Regional Manager for Lands, sworn on 17 March 1992, where he says (following evidence surrounding the forfeiture of the lease of John Mea) that, after forfeiture, the lease of allotment 11, section 2, Boroko became vacant land. Consequently, the Land Board, in item 35 of meeting 1836, approved Emas and granted to it a residential lease over that land. He annexed to his affidavit a true copy of the Land Board's decision but did not further refer to the particular residential lease in favour of Emas. That is understandable for, whilst the Land Board may have issued the state lease, in fact it was registered by the Registrar-General's Department. Again, there was an oblique reference to Emas in an affidavit of the lawyer for John Mea, Canisius Karingu, sworn 8 May 1992, which was read in the judicial review proceedings before Los J. That affidavit (in which Mea was described as the plaintiff) said in para 3:

"That piece of land was then still registered under the plaintiff's name. See Annexure B. On the first week of March 1992, I carried out a search of the Lands Department's file and found out by the Lands Department that the lease has been registered. Further that the land was mortgaged to the ANZ Bank Boroko Branch in February 1992, despite the fact that the National Court order restraining the Lands Department from dealing in any way with the land until the determination of these review was on record. See annexure C (para 4). I am informed and I verily believe Mr Leo Minjam, that he was one of the unsuccessful tenders and he has filed an appeal against the Lands Board's decision to allocate that land to Emas Estate Pty Ltd."

It is clear from that part of the lawyer's affidavit that there has been no disclosure of the true situation and that the judgment of Los J at pp 11 and 12 illustrates the misconception under which the trial judge suffered at the time this cause was heard.

That misconception arose out of the erroneous material in the lawyer's affidavit.

The trial judge said at p 11 of his reasons:

"In the present case as at 27 September, 1990, the lease had not been transferred to any third party a week before the plaintiff's lawyer wrote to the Lands Department. The note on the Land Board meeting of 1836 reads: 'Emas Estates Pty Ltd application be considered. This item was a deferred item from previous meetings'. The Board rejected the other applicants on the grounds that there was a change of names to the applicants and their financial proposal was insufficient to consider and as at 31 October 1991, the information sheets still showed the plaintiff as the registered owner of the lease. I do not consider that there was any bona fide party involved when at the time the Land's Department and its interested clients were aware that the original lease owner was disputing the forfeiture of the lease. The plaintiff is therefore entitled to the relief he seeks. And the court orders accordingly. The costs of the proceedings are awarded in favour of the plaintiff."

The Judge is plainly factually wrong if he meant, when he said: "as at 31 October, 1991, the information sheets still showed the plaintiff (John Mea) as the registered owner of the lease", i.e., that John Mea was the proprietor of the property for as can be seen from the chronology, the lease of John Mea had been forfeited and a fresh lease had issued over the subject land.

The reference by the trial judge to the information sheets as at 31 October 1991 is, in fact, a reference to an annexure to Canisius Karingu's affidavit of 8 May 1992. That annexure is a photo-copy of what appears to be a Department of Lands proforma entitled "general information" and relates to allotment 11 section 2, Boroko. It purports to show the current owner as John Mea, P O Box 9071, Hohola. There is a warning at the foot of the photo-copy in these words:

"Lands and Physical Planning do not accept liability for any errors or omissions."

There is no reference to any lease number. In the space provided for "current interest: title type" is written state land. No particulars are shown for any commencing date or term, no details are provided for annual rent. The detail relating to "land use" discloses "undeveloped land". Quite clearly, coming as it did without explanation from the lawyer, it should not have been used as evidence of the fact of ownership where proprietary interests in land are concerned. The warning on the copy searched paper is enough. It does not purport to be a search of the registered lease affecting the subject land. It may be general information in the files of the Department of Lands and Physical Planning but it has not come from proper custody, rather through the lawyer's affidavit. Great caution should be exercised when relying on any detail in the face of the warning. The trial judge appears to have relied on this hearsay evidence by the lawyer as proof of the fact of ownership. The warning as to its veracity so far as dealings affecting that land were concerned should not have been overlooked. The state lease vol. 5 folio 1145, forfeited on the 2 March 1990, was John Mea's only claim to ownership of the subject land, yet that "general information" by the Department of Lands is dated 31 October 1991, long after Mr Mea's rights to the land had been extinguished by forfeiture.

The appropriate role of counsel as advocate does not include that of witness. Mr Karingu's affidavit relates to issues which go to the very crux of the judicial review. From the extract above he has purported to prove subsequent or subsisting interests in the subject land. He does not mention the fact that a new lease had been issued affecting the land. As well, he pleads some alleged grievance by an unsuccessful tenderer, Mr Leo Minjan, in support of the alleged fact that his client, Mr Mea's, lease had been injustly forfeited.

In this case, Mr Karingu has given evidence of material facts. The judicial reviewing authority, Los J, is faced with hearsay, and it cannot be tested by cross examination. It is not a mere matter of ethics. There should be a rule that counsel may not give evidence. A lawyer may be counsel in a case but cannot be both counsel and witness (see R v Secretary of State for India [1941] 2 KB 169). Judges should not decide on hearsay statements of counsel. The Emas company had not at any time prior to 31 July 1992, been informed of or served with documents pertaining to the proceedings brought by John Mea to set aside the decision to forfeit his interest in the said property, a decision made by the Lands Department.

Since the time of the issue of the fresh lease to the company, the company has sought to comply with the improvement covenant requiring construction of a residential building to a minimum value of K120,000. To 24 August 1992, an amount of approximately K200,000 has been spent. The company will suffer substantial prejudice if it is deprived of its leasehold interest in the subject property for it has expended a substantial sum of money in constructing improvements on the property. The director of the company further deposed to an intention to be joined as a party in those proceedings instituted by John Mea seeking judicial review, had the company, by its servants or agents, been made aware of the existence of such proceedings in the National Court. It is suggested by the director of the company from the terms of Messrs Karingu and Sitapai's letter of 31 July that those lawyers were well aware of the company's interest in the said property but failed to inform the company of those proceedings or to inform the court of the applicant's interest as owner. Further, by virtue of a notice of motion filed on 29 April 1992, Mr Mea's lawyers must have been aware that the company had an interest in the property, at the latest by that date. The motion is in the following terms:

N2>1.       Emas Estate Development Pty Ltd or its agents or servants be restrained from continuing building the building on state lease allotment 11, section 2, Boroko, until the determination of these proceedings.

N2>2.       The costs of the application be costs in course.

N2>3.       The time of this order be abridged.

The subject property is, in fact, mortgaged by the company to the ANZ Banking Group. As a result of the aforesaid, the company asserts that it has an indefeasible title to the property within the meaning of s 33 of the Land Registration Act Ch 191.

John Mea had been the leasehold proprietor of the subject property until his state lease was forfeited on 2 March 1990 by the Minister for failure to comply with an improvement covenant. Facts surrounding the forfeiture have been dealt with by the trial judge in his reasons for the decision.

Mr Molloy, for the company, argued why the company should be given leave to appeal. He said that the company was not a party to the National Court proceedings although it had a registered state lease over the subject land and had proceeded to comply with the covenants, more particularly the covenant relating to construction. Further, the respondent, John Mea, through his lawyers, was aware of the company's interest on the property prior to the hearing of the cause. He said that, by virtue of 0 16, r 5(2) of the National Court Rules, an application for judicial review must be served on all persons directly affected, and the company was such a person. The rules of natural justice, consequently, include a right to be heard. The company has not been afforded that right by the trial judge when the fresh evidence clearly shows the company as a person directly affected by the proceedings. He pointed to the reasons for the decision, which have been set out above, as evidence that the judge had not been informed, that the company knew nothing about the proceedings, that the company was the registered leaseholder proprietor, that the company had built improvements on the land in value in excess of K200,000, and further that there was a mortgage over the land. Mr Molloy suggested that Mr Karingu had knowledge of those facts, and this is clear when one has regard to the terms of his affidavit in a critical light.

In the circumstances, the company never had a chance to defend its interests by being joined in the National Court proceedings. Even though it was not a party to the National Court proceedings, the company, as an aggrieved person, has a right to appeal against the decision. Mr Molloy relied on Kitogara Holdings v NCDIC [1988-89] PNGLR 346 and Emas Estate Development Pty Ltd v Mea (unreported, unnumbered Supreme Court judgment of 28 September 1992). Mr Molloy argued that fresh evidence having been admitted, there has been a breach of rules of natural justice, and an order made in breach of those rules cannot be allowed to stand. He relied on the principles enunciated in Okuk v Fallscheer [1980] PNGLR 274 at 276 and Ridge v Baldwin [1963] UKHL 2; [1964] AC 40. He said that if the trial judge had been made aware of the true situation, he would not have made the order he did because, firstly, the appellant company has a registered title and, secondly, the appellant's rights had intervened. He further pointed to the fact that, in the application for judicial review, the applicant, Mr Mea, had alternatively claimed damages and that the damages claim would be a proper recourse since rectification of the register (in terms of the trial judge's order) could not be allowed to stand.

Mr Karingu, for the first respondent, argued that the Supreme Court should not interfere with the trial judge's findings, for the notice of appeal was silent as to the requirements of s 14(1) of the Supreme Court Act to specify errors in law or fact made by the trial judge on the factual situation before the trial judge. Rather, as Mr Molloy states, the judge's reasons are misconceived, for the true facts have not been disclosed. It is not right to say, as Mr Karingu has argued, that "there was no bona fide third party involved". The company was clearly the registered proprietor of a leasehold interest in the subject land following a grant by the Department of Lands and Physical Planning. The fact has been glossed over by Mr Karingu. Mr Karingu further argued that fraud was apparent on the evidence of Leo Minjan, whose affidavit, sworn on 5 November 1992, was admitted into evidence on the hearing of this appeal. In those circumstances, Mr Karingu says the company does not have an indefeasible title in terms of s 33(1)(a) of the Land Registration Act, and he relied on the trial judge's reasoning, which has been quoted above. We consider, however, that the reference by the trial judge to there being "not any bona fide party involved", cannot be support for Mr Karingu's assertion that there is fraud in the company. The bona fides of the company were not the subject of investigation in the judicial review proceedings. The trial judge was unaware of the fact that the company was the present registered proprietor of the state lease. The use of the affidavit of Leo Minjan in these circumstances does not evidence any fraud on the part of the successful tenderer for the fresh state lease, Emas Estate Development Pty Ltd, although it may be evidence of some procedural irregularities in the Department of Lands. There is confirmatory evidence of advertisement in relation to the subject land, and public tenders were called for, but there is no suggestion that Emas has perpetrated a fraud in the tender process. In the circumstances of this case, I find that there is little reason to depart from the reasoning of this Court in Mudge v Secretary for Lands [1985] PNGLR 387, where the court had reason to consider the principle of indefeasibility of title. Notwithstanding that a state lease issued under the Land Act may have been issued irregularly and in breach of the provisions of that act, registration under the Land Registration Act will confer an indefeasible title. Whilst no argument was mounted in relation to s 41 of the Constitution, it is interesting to note that Pratt J dealt with that issue at p 398:

"The final ground of appeal to which I intend to refer is the claim by the appellant that the outcome of the Court's application of the law in this matter will bring about a result which is harsh and oppressive on the appellants and thus by the Constitution, s 41, any such act, be it done under a valid law or otherwise, is unlawful. Again I am unable to appreciate how the issue of a registered lease with indefeasibility under the Land Registration Act, s 33, and thereby ensures the continuance in this jurisdiction of such principle and the paramountcy of the Torrens system generally, can be said to be harsh and oppressive and thereby unlawful when the person making such claim does not even have a legal or equitable interest in the matter."

Once an indefeasible title to the subject land has been found, (and here there can be no question about that in the face of the state lease vol 1 folio 138 in the name of the company), John Mea has no legal or equitable interest in the land. This Court has already said that registration of leases is effective to vest an indefeasible title in the registered proprietor, subject to exceptions enumerated in s 33 of the Land Registration Act. Kidu CJ in Mudge's case said at 390:

"... the real question for determination by this Court is whether, apart from exceptions enumerated in the Land Registration Act, s 33, land once registered attracts the principle of indefeasibility of title. This Act and its forerunners - the Real Property Ordinance (Papua) and the Land Registration Ordinance (NG) - are based on Australian Acts. They all reflect what is commonly known as the Torrens system of land registration. Under legislations based on this system (in Australia and New Zealand) it is now settled law that, apart from exceptions mentioned in the relevant legislations, once land is registered under the Torrens system the owner acquires indefeasibility of title. The relevant judicial authority in respect of New Zealand is the Privy Council decision in Frazer v Walker [1967] 1 AC 569 and in Australia it is the decision of the High Court in Breskvar v Wall (1971) 126 CLR 376. Counsel for the appellants ignored these authorities. The thrust of his main submission was that as the Land Registration Act had to be read subject to the Land Act any breach or non-compliance of the latter Act rendered registration of any estate or interest in land invalid. The Land Act does not say this. But Mr Donigi relied on ss 36(2), 37, 38(1)(c) and 39 of the Land Registration Act. However I consider that these provisions in no way affect the indefeasibility of title of a State lease once it is registered."

The Chief Justice went on to quote with approval Barwick CJ in Breskvar v Wall (1971) 126 CLR 376 at 385:

"The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formerly had, or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor. Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void. The affirmation by the Privy Counsel in Frazer v Walker [1967] 1 AC 569 of the decision of the Supreme Court of New Zealand in Boyd v Mayor of Wellington [1924] NZGazLawRp 58; [1924] NZLR 1174 at 1223 now places that conclusion beyond question. Thus the effect of the Stamp Act upon the memorandum of transfer in this case is irrelevant to the question whether the certificate of title is conclusive of its particulars".

I am sure that had the trial judge been made aware of the true situation in relation to the grant and registration of the fresh lease affecting the subject land, he would not have made the orders that he did, for the company had then an indefeasible title upon registration on 29 July 1991.

The order of the judicial review should be quashed as a nullity, based as it was on facts shown to be patently wrong.

Whether the respondent, John Mea, has a claim for damages for unlawful forfeiture should be left to a court properly constituted to hear any such claim. The judicial review now quashed cannot be said to have properly considered the question, for it was asked to rectify title, not to award damages, and, as I say, proceeded on an erroneous premise.

I said earlier that, by the manner in which the respondent John Mea's counsel had presented this case, there had been no disclosure of the true situation. The motion of 15 May 1992 clearly illustrates knowledge in John Mea that building work had commenced on the subject land.

The fact was not alluded to in argument in the judicial review. The lawyer for the State must bear some responsibility, for he also appears to have been remiss in not following the obvious trail to the fresh lessee. The motion was not served on Emas, the company, to be restrained, nor were those proceedings pursued. That company would, on the fact of building work progressing, have had a reasonable expectation to be joined in proceedings involving the powers of the Minister to forfeit a state lease affecting land on which such work was carried out, yet John Mea, by his lawyer, has seen fit not to give such notice. I consider that the error into which the judicial reviewing authority has fallen is directly attributed to the manner in which the plaintiff's lawyer, Mr Karingu, had conducted this case. While the question has not been argued, I would not be prepared to say that Mr Karingu's actions were dishonest. Suffice to say, however, that the judicial officer was misled.

I would quash the findings of Los J on the judicial review.

The first respondent shall pay the costs of the appellant, the Minister, and the State on the appeal.

I would direct that the first respondent's original application be reheard denovo and that the appellant be permitted to intervene, for it has a sufficient interest.

SALIKA J: I have read the judgment of my brothers, and I say the following on my own behalf. I agree with the factual information that both my brothers have included in their respective judgments. I agree, in principle, that where a title has been registered under one's name, it is not capable of being annulled, except where title has been acquired through fraud. I think other exceptions suitable for Papua New Guinea circumstances should be included such as:

N2>1.       where title has been registered fraudulently

N2>2.       where title has been registered while a court or tribunal is deliberating on the subject land

N2>3.       where title has been registered under influence of position of power or money

N2>4.       where title has been registered under circumstances giving rise to possible breach of principles of natural justice.

I lay out these conditions because land is a very important commodity in this country. Government land is very scarce in this country, and people or corporations applying for lease of government land must be seen to be allocated such land without any fraud or outside influence, but simply on the merits.

In the instant case, there is evidence that John Mea, the former proprietor of the lease in relation to the subject property, was not informed that his lease was going to be forfeited. In other words, he was not served a notice to show cause why his lease should not be forfeited. The State went ahead and forfeited his lease and then granted a new lease to the plaintiff. Given the situation that John Mea was not given a chance to defend the continuation of his lease, I am of the view that the failure to give him notice was a fundamental breach by the State officers. In my view, it would amount to a breach of John Mea's rights under category 4, I have outlined.

Another factor that needs to be given serious consideration is that an unsuccessful applicant had lodged an appeal under s 12(2)(a) of the Land Act, appealing against the granting of the lease to the appellant in this case. While that appeal was on foot, the lease was registered in the name of the appellants. The registration of the lease at that stage in the name of the appellants would fall under category 2 of my list of exceptions.

It is basically for those reasons that I do not think the appellant has a properly acquired title to the subject property.

I would dismiss the appeal with costs.

Having dismissed the appeal, there is evidence that the appellant has expended a substantial amount of money on the subject property. It would be unjust to have the appellant removed without any form of compensation or damages. In that regard, I would have the matter remitted to the National Court to determine the questions of compensation or damages to the appellants.

Lawyer for the appellant: Henaos Lawyers.

Lawyer for the first respondent: Karingu and Sitapai Lawyers.