Ponda v Mamun Investments Pty Ltd [1991] PGNC 66; [1991] PNGLR 337; N1004 (6 September 1991)

N1004

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

PONDA AND KOMBO FOR MT HAGEN YOUNG MENS CHRISTIAN ASSOCIATION INC

V

MAMUN INVESTMENTS PTY LTD

AND

NOAH WAREKIA

AND

KALA SWOKIN

AND

THE STATE

Mount Hagen
Woods J

7 August 1991
6 September 1991

REAL PROPERTY - State land leases - Special purposes lease - Transfer - Burden of special purpose runs with land - Land Act (Ch No 185).

VENDOR AND PURCHASER - Sale of land - Special purposes lease - Burden of special purpose lease runs with land - Land Act (Ch No 185).

Held

The burden of the specific purposes of a special purposes lease under the Land Act (Ch No 185) runs with the land and is binding on a purchaser of the land.

Cases Cited

Mudge v Secretary for Lands [1985] PNGLR 387.
Papua New Guinea Air Pilots Association v Director of Civil Aviation and Air Niugini [1983] PNGLR 1.
SCR No 4 of 1980; Re Petition of M T Somare [1981] PNGLR 265.

Application

This was an application pursuant to s 155 of the Constitution, for, inter alia, declarations as to the validity and effect of the sale of land the subject of a special purposes lease under the Land Act (Ch No 185).

Counsel

M Maladina, for the applicant.
P Dowa, for the first and second respondents.
Cur adv vult

6 September 1991

WOODS J: This is an application under s 155(4) of the Constitution and the applicants are seeking declarations:

(1) that the sale of property namely section 13, allotments 1 and 2, Mt Hagen is invalid and of no legal affect;

(2) that the property section 13, allotments 1 and 2 is a special purpose lease and therefore at law is not eligible for sale for commercial or business purposes;

(3) that the sale of the subject property is invalid and be declared null and void and of no legal effect.

This application has come by way of s 155(4) of the Constitution. The National Court of Justice is a court with wide ranging powers and this includes the power to grant declaratory orders. Section 166(1) of the Constitution emphasises this by saying "subject to this Constitution the National Court is a Court of unlimited jurisdiction". And the court’s power to make declaratory orders is given by s 155(4) of the Constitution:

"Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case."

To seek relief from the court under s 155(4) it is of course necessary for the applicants to substantiate their standing to come before the court, they must have locus standi. However to decide that it is necessary to go into the history of this matter.

The subject matter is a special purposes lease under s 70 of the Land Act (Ch No 185) registered as State Lease, vol 48, folio 16. It was issued on 30 September 1971 over lots 1 and 2, section 13, Mt Hagen for a period of ninety-nine years from 20 August 1970 and the main term and condition was that the lease should be used bona fide for youth centre purposes. The lease was issued to the National Council of the Young Mens Christian Association of Australia and later transferred to the National Council of the YMCA of Papua New Guinea.

There is evidence presented to the Court to show that at no time was there a properly organised local branch of the YMCA registered in accordance with the Constitution of the National Council of the YMCA. However there appears to have been various persons representing the YMCA albeit unofficially and using the centre and property for the purposes of a youth and sports centre.

In 1990, the National Council of the YMCA decided for various reasons to dispose of the property and entered into a contract to sell the property to Mamun Investments Pty Ltd and such sale received ministerial approval under the Land Act. In view of what I will say later in this judgment I am surprised and disturbed that the State, whilst joined in these proceedings, has not appeared separately in this matter nor given evidence nor filed any affidavit as to how such ministerial approval was given.

The applicants are persons who state that they have been operating as a local branch of the YMCA in the operation of the property as a youth and sports centre albeit unofficially as far as the National Council is concerned but now more recently having properly incorporated themselves. They challenge all aspects of the transaction and in the end assert that the property is still bound by the terms of the lease that it is to be used for the stated special purpose as a youth centre and they are the appropriate body to so exercise that use.

All authorities on locus standi in such applications emphasise that an applicant must have sufficient interest whether of proprietary rights or business or economic interest or social or political interests. And I refer here to the cases SCR No 4 of 1980; Re Petition of M T Somare [1981] PNGLR 265 and also Papua New Guinea Air Pilots Association v Director of Civil Aviation and Air Niugini [1983] PNGLR 1.

The applicants here clearly have an interest, a social interest in the operation of the property as a youth centre. On the evidence presented they have, albeit officially, as I have already mentioned, operated as a branch of the YMCA and helped to co-ordinate the use of the building as a youth and sports centre.

In the case of Mudge v Secretary for Lands [1985] PNGLR 387, the Court held that it can only interfere with the exercise of ministerial discretion where there is concrete evidence of malpractice and impropriety. However, in the case before me now it is quite clear that the whole procedure in selling a special purposes lease for youth centre purposes to a commercial enterprise and the granting of the approval was quite improper and must breach the whole intent and purpose of the Land Act.

This is a property located within the Mt Hagen town specially set aside for youth purpose and the government obviously granted it to the National Council of the YMCA as an appropriate body to co-ordinate and operate these youth purposes although the clause in the lease does not specifically designate the YMCA as the only body that would or could fulfill the youth purpose. Therefore it would be open to the YMCA, the original grantee of the lease, to transfer that responsibility to any other appropriate body or organisation or even for the government to operate the lease. Thus any person or organisation in Mt Hagen whose concern is for youth must have an interest in any dealing with the land specifically if any dealing would appear to defeat the purpose of the lease. So whilst the applicants may not have been properly established or recognised by the original lessee of the lease namely the National Council of the YMCA they have shown to this Court that they are persons who are concerned and affected by the intent and purpose of the lease and are in the position of a body and persons who have attempted to operate the property for the purposes for which the property is designated.

I therefore find that the applicants in this matter do have sufficient standing for the purposes of this application.

This being a lease for a specific purpose, namely, youth centre purpose it is quite clear that the purchaser was most ill advised to have entered into such a purchase and I am amazed how any legal adviser could advise the purchaser that he was able to purchase a special purposes lease for a youth centre and expect to be able to use it for commercial purposes. Further the vendor, the National Council of the YMCA, would have had no power to sell the property the way it did and again their legal adviser must have realised this. Whilst the National Council of the YMCA may have not been legally bound to consult with any Mt Hagen YMCA the fact is that the property is not just for the purpose of the YMCA itself but by its special purposes is for the benefit of the community at large. My understanding of a special purposes lease of this nature which is clearly for a community or special purpose is that if the operating body wishes to divest itself of such lease it can only do so by returning it to the State for the State to determine a new person to take the purpose. If however it wishes to divest itself of the lease and sell it elsewhere for a non-commercial purpose it is bound to advertise that fact to the community at large and either seek an alternative operator that way or apply to change the purpose of the lease. And I am aware from my own experience of such leases and the Land Act that this was the practice that was and should be followed in such situations. However here this procedure was not followed and instead on 20 August 1990 an agreement to sell was entered into between the National Council of the YMCA and Mamun Investments Pty Ltd, a transfer was executed on the same date and seven days later on 27 August the contract for sale and transfer received ministerial approval. So all the arrangements for the sale which as I have suggested were highly irregular have been compounded by the action of the Minister for Lands who approved such a sale which on its face was contrary to the intent and purpose of the Land Act and the status of the special purposes lease.

Therefore the lease must still remain as a lease for its original purpose namely a youth centre purpose and any person holding such lease is bound by that purpose. Thus any holder of the lease for allotments 1 and 2, section 13, Mt Hagen is bound to hold the lease for the purposes of a youth centre and, in the application before me, the applicants have shown that they are an appropriate body for which the lease should be held.

I therefore declare that the property at allotments 1 and 2, section 13, Mt Hagen, is a special purposes lease specifically for a youth centre and is not eligible for sale or for use for commercial or business purposes whilst such special purpose exists. I further declare that the purchase by Mamun Investments Pty Ltd of the said land is subject to the special purpose designated in the lease as "The lease shall be used bona fide for Youth Centre Purposes" and I declare that the lease is thus subject to the interest of the applicants as representing the Mt Hagen Young Mens Christian Association (YMCA) Incorporated, being operators of an organisation for youth and sporting purposes.

Declarations so made

________________

Lawyer for the applicant: M Maladina.
Lawyers for the first and second respondents: Henao Cunningham Priestly.