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National Court of Papua New Guinea |
Unreported National Court Decisions
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
OS 552 OF 1999
BETWEEN: STEAMSHIPS TRADING COMPANY LIMITED
PLAINTIFF
AND: MINISTER FOR LANDS AND PHYSICAL PLANNING
FIRST DEFENDANT
AND: GARAMUT ENTERPRISES LIMITED
SECOND DEFENDANT
AND: RALPH GUISE & ORS (MEMBERS OF THE NATIONAL LAND BOARD)
THIRD DEFENDANT
Waigani
Sheehan J
28 January 2000
10 May 2000
JUDICIAL REVIEW - Challenge to issue of commercial State Lease in breach of Statutory provisions - allegations that necessary procedures under Land Act and Physical Planning Act not complied with - Claim of irregular circumstances tantamount to fraud - equitable - constructive fraud - indefeasible title.
Counsel
Mr P. Young for the Plaintiff
Mr D. Lambu for First and Third Defendants
Mr I. Molloy and I. Shepherd for the 2nd Defendant
SHEEHAN J: On 14th January 1999 Secretary for Lands gave notice in National Gazette No. 8 of 1999 that Garamut Enterprises Pty Limited the 2nd Defendant, was the successful applicant for a business commercial lease over Lot. 23 Section 71, Hohola. On 23 February 1999 that Lease was registered under the Land Registration Act 1989 under Volume 21 Folio 120.
On 13th September 1999 some eight months later, the Plaintiff Steamship Trading Company Limited (Steamships) the Plaintiff, sought leave to apply for Judicial Review of the granting of both the rezoning of the land from open space to commercial, and the subsequent granting of the lease. The Statement in Support, filed under Or. 16 R. 3 (2)(a) of the National Court Rules seeks orders in the nature of certiorari setting aside as invalid the determinations, of the Minister of Lands and Physical Planning, the First Defendant, (the Minister), and of the Third Defendants the members of the National Land Board, (the Land Board) that resulted in the rezoning of the land and the issue of the lease of it to the Second Defendant. The Plaintiff also seeks consequential orders prohibiting further development of the land.
Leave to apply for review was granted on 14th October 1999 and now following hearing of evidence and submissions on 28th January 2000 the matters now falls to decision.
The Statement details the grounds relied on. In short Steamships contends there has been a total failure by the Defendants to follow or comply with the statutory procedures for the rezoning of land set out in the Physical Planning Act or for the consideration of applications for and the issue of State Leases as prescribed in the Land Act.
FACTS
The land the subject of this dispute was formerly State Land being described as “Open Space” lying adjacent to Section 71 Hohola. It is situated at the junction of Boroko Drive and the Poreporena Highway. It is now known as Lot 23 Sect. 71 Hohola District. The following chronology details the significant events from the initial application for rezoning of the land till the issue of the lease.
Chronology
23 June 1997 - Garamut applies under the Physical Planning Act for rezoning as commercial area of open space adjacent Section 71 Lots 11-21 Hohola to erect a supermarket and bakery.
16 July 1997 - N.C.D. Physical Planning Board declines application. “Supermarket and bakery not suitable for site / too close to residents / site zoned open space and will be developed as public park.”
1 September 1997 - Taps International Pty Ltd lodges appeal on behalf of Garamut with National Physical Planning Appeal Tribunal against refusal of N.C.D. Physical Planning Board.
13 October 1997 - PNG Physical Planning Appeal Tribunal acknowledges appeal from Taps International Pty Ltd on behalf of Garamut.
November 1997 - National Physical Planning Appeal Tribunal considers appeal and makes recommendation against the appeal to the Minister.
3 February 1998 - Minister for Lands “having considered all issues” grants appeal by Garamut.
10 June 1998 - Minister for Lands grants Garamut 12 months Licence 24/98 effective 22 June 1998:
(1) ـ#8220;8220;to caro carry out feasibility studies as to viability of land.
(2) ـo carr carry out out survey ......
(3)҈& (fg perd
(4)&#(4) &160; ҈ Licence ence does noter uper upon Licences any rights oershi21;.
18 June June 1998 - Minister of Lands advises PNG Land Board of allowance of e of appeaappeal - states:
(1) ; Lan to te surveyed. yed. yed.
(2) &##160;; zoning ning to o “become legal” once gazetted
(60;&##160;;rects land be advertised for leasing per s. 68 of Land Act 19ct 1996 ` “8220;sincesince there are no legitimate grounds for exempting advertisement” under s. 69. “
3 July 1998 - Garamut applies for commercial lease of land adjacent Lot 21 Sec. 71 Hohola.
29 July 1998 - Garamut apply to Minister for exemption from advertisement of tender of land on grounds of
1) ټ H60; Having conducted surpey
2) ; Being oaiginpl applicants ants
3) &##160; N60; Need for 17 SepteSeptember 1998 - Agenda of Special PNG Land Board meeno:- publipursuant to s. 58s. 58 of L of Land Aand Act in National Gazette G. 108 no listed
applications in respect of Section 71, Lot 23 Hohola. 25 September 1998 - Survey Plan creating Lot 23 Section 71 Hohola registered. 29-30 Sept. 1998 - Land Board Meeting 2004 8 October 1998 - Minister issues notice of exemption under s. 69 (2) of the Land Act exempting Lot 23 Sec. 71 Hohola from tender or advertisement for special reasons. “1) ҈ the parcel ofel of land was an open space which is a leftover pocket from construction of the Freeway. 2) &##160;; ap60;applihaslihas funded the basic planning requirements under nder the Physical Planning Act from an Open Open Space
to a zoned land. 3)҈&ـ The applicant funded the zoninzoning surg survey and valuation of this land”8221;. 15 October 1998 - Rezoning of Lot 23 Sec. 71 Hohola from Open Space to Commercial Gazetted (G. 119). 5 November 1998 - Gazettal of commercial Lease (G.134) tender 32/98 for Lot 23 Section 71 Hohola 1.37 ha. Annual rental 1st 10 years K10,000 Reserve price K120,000.00. Closing Date for Tenders 25 November 1998. 25 November 1998 - Closing date for Tenders for Lease of Lot 23 Sec. 71 Hohola. 10 December 1998 - Gazettal (G.152) under s. 74 Land Act 1996 of applications and tenders contains and successful applicants of Land Board meeting 2004 cartons no reference to Lot 23 Sec. 71 Hohola. 15 December 1998 - National Gazette (G. 133) Corrigendum withdrawing tender of Lot 23 Sec. 71 Hohola because of exemption from advertisement by Minister. 14 January 1999 - Gazettal (G.8) of grant of Commercial Lease to Garamut Enterprises Ltd of Lot 23 Sec. 71 Hohola at Land Board Meeting 2004. 18 February 1999 - State Lease issued to Garamut Enterprises Ltd for Lot 23 Sec 71 Hohola. 23 February 1999 - State Lease of Lot 23 Sec. 71 Hohola registered Vol. 21 Folio 120. Those base facts which relate directly to the process of rezoning and issue of lease are not disputed. Added to these there is the
evidence disclosed in the affidavits of the Secretary for Lands. In the first, dated 3rd November 1999, the Secretary deposes inter alia that “the Company (Garamut) has not paid the correct tender price, Land Board Meeting No:- 2004 minutes do not reconcile with the
gazettal of successful applicant of that meeting on 10th December 1998. The members of the Board who signed the recommendation for grant were not at the Meeting No:- 2004 of the 29th and 30th of September 1999”. There was no evidence contradicting those assertions. At the time of trial the tender price had still not been paid. It was acknowledged though, that the Lands Department had even then,
not asked for that sum and that Garamut was ready at all times to pay. Further anomalies are disclosed in the Secretary’s second affidavit of 3rd February 2000 where he annexes a copy of the Notice of Exemption under s. 69 (2) of the Land Act. This annexure is dated “8th Sept 1998.” But in the affidavit of Christoper Pratt of 10th Sept 1999 the same exemption notice is dated “8th Oct 1998”. The annexure in affidavits of both deponents are purportedly photocopies of an original. Both photocopies, show
indication that at the place where the words for the months are written there is indistinct writing not now clearly recorded in the
photocopy annexure. No evidence has been adduced to explain those anomalies. PLAINTIFF’S CASE The Plaintiffs case begins with the application of 23 June 1997 to rezone the land from open space to commercial, made by Taps International
Ltd for Garamut Enterprises Pty Ltd. The rezoning was to enable development of a supermarket and bakery. That application was refused
by the National Capital District Physical Planning Board because the site was unsuitable for that purpose, because of access and
because the land was to be developed as a park. Upon appeal by Taps International Ltd to the Minister of Lands, rezoning was approved
on 3rd February 1998 though not gazetted till 15 October of that year. The challenges raised by Steamships on rezoning are that by Sect. 77 (3) (e) of the Physical Planning Act only the owner of the land
the subject of the application or the agent of that owner may seek rezoning. The Plaintiff argues that Taps International was plainly
not the owner nor did it state itself to be acting for the owner. It was agent for the Garamut the 2nd Defendant which did not own the property either. Therefore since in fact the State is the owner, the application was invalid and
could not have been entertained. Further the Plaintiff argues that for the same reasons the appeal, again lodged by Taps International,
against the Physical Planning Board refusal, must likewise be invalid. The final ground in respect of rezoning is that in allowing the appeal, the Minister gave no reasons for overturning the Physical
Planning Boards decision. It was submitted by Steamships that while the Minister has power to grant an appeal, that discretion can
only be exercised according to law. When no reasons are given then as a matter of law the presumption can only be that there are
no valid reasons for the decision and it can not stand. The challenge to the issue the State lease is made on the basis of failure to observe the procedures laid down by the Land Act. Although the property was originally gazetted for tender, it was subsequently withdrawn from public tender (before closure of tenders)
on the basis that the Minister had granted an exemption from advertising. Since none of the reasons the Minister gave for allowing
the exemption from public tender fell within the exemptions allowed by s. 69 of the Act, then the withdrawal from tender was invalid.
There was no reissue of the tender, therefore the property was not tendered pursuant to s. 68 of the Land Act and a major breach of the Act occurred. Further error is shown, it was argued because the State Lease is purported to have been granted to the Garamut at meeting No. 2004
of the Land Board held over 29 and 30 September 1999. If that was so, then the requirement under s. 58 of the Land Act that all applications to be considered at any meeting of the Land Board shall be Gazetted at least seven days prior to a meeting,
was not complied with. There was no publication in the Gazette of 11 September 1998 that preceded meeting 2004 (and which listed
the applications for consideration) that the 2nd Defendants application was on that agenda and would be considered. There is a further challenge in that the commercial land supposedly granted to Garamut at Land Board meeting 2004 at the end of September
1998 was in fact then not Gazetted as land available for commercial purposes; that is, it was not gazetted as being rezoned commercial
until the 15th October 1998. Accordingly it was not possible to grant a commercial Lease in respect of that land at that time. Finally the Plaintiff points out that the Land Board meeting 2004 took place both before the land was advertised for tender, that
is on 5th November 1998, before it was exempted from an advertisement by the Minister on 8 October 1998, and before the exemption from advertisement
was gazetted on 15th of December 1998. Therefore the Plaintiff contends any application for the Land could not have validly been considered at Land Board
Meeting No. 2004. DEFENCE Opposing the application Counsel for Garamut Enterprises Limited the 2nd Defendant (Garamut) contended that the application must fail because essentially the process by which Garamut had been granted title
to the Land substantially complied with the provisions of the relevant Acts and in any case it was now far too late to put the clock
back. It was Garamut’s contention that the Plaintiff could not assert that it was in any way aggrieved by the issue of the Lease,
it therefore had no standing in law to bring this application. Counsel for Garamut submitted that Steamship’s claim of being
a good corporate citizen, interested in good public administration and its being a trade competitor of Garamut are not sufficient
to establish locus standi in these proceedings as a party aggrieved. That is, it can not claim that it has suffered any wrong, if
wrong has occurred, beyond that suffered in common with the rest of the public. The fact of Steamships having also sought rezoning
of land of its own also does not raise their right of action any higher. Counsel submitted the application was tainted by delay, in that not only had some ten months in lapsed since grant of title but extensive
and valuable development had occurred in the interim, and the relief sought of setting the whole process at nought was wholly inappropriate
and unjustified. Such delay it is said is without any reasonable excuse. This time factor alone precludes any right to claim certiorari
and no extension of time should be allowed. Counsel for Garamut also points out that the lease has now been registered and by virtue of s. 33 of the Registration of Title Act
chpt. 181, Garamut has obtained indefeasible title such that there can be no possible successful challenge to a title so registered.
The Minister for Lands and Physical Planning the 1st Defendant and the Land Board the 3rd Defendant though initially supporting the Plaintiff, at trial reversed this position and supported Garamut. However the defence offered
was a submission only that the facts as established before the Court perhaps suggested a substantial compliance with necessary procedures. ISSUES Standing The Rules of National Court Or. 16 R. 3 (5) state that the Court shall not grant leave for judicial review unless it considers that
an applicant has sufficient interest in the matter to which the application relates. Standing was accorded the Plaintiff at grant
of leave, but the issue remains open and challenge made now to a matter of jurisdiction must be considered first. If in fact a Plaintiff
can not show sufficient interest then Court has no jurisdiction to invoke its supervisory powers of review. For Garamut it is argued
that Steamship’s interest is inadequate, based merely on citizenship and trade competition. Sufficient interest is essentially a mixed question of fact and law, a matter of fact and the degree of the relationship between the
Plaintiff and the subject matter of his complaint. Generally a Plaintiff will have standing if he can show that he as reasonably
arguable claim that by an invalid exercise of statutory power, some private right in law has been affected or that he has suffered
some prejudice. But the right to invoke the Court’s supervisory jurisdiction is not restricted protection of personal rights
only. It can extend to more public issues. A broad brush analogy may be drawn with the status of citizen witnessing an indictable
offence being committed. He has no legal obligation to intervene or to stop that offence but he does have the status to affect a
citizens arrest In determining standing, Court decisions in this country lean strongly towards the granting of status to citizens seeking to complain
of what is seen as breaches of laws of the country. In brief the decisions show an inclusive rather than an exclusive view of applicants
with standing, holding that challenges by citizens to the validity of decisions of statutory or public authorities should not too
readily be excluded from the Courts on grounds of lack of direct personal involvement. Very often determination of standing is only
possible with an examination of the complaint itself. This is shown in the decision of the Supreme Court in SCR 4 of 1980 re petition of Michael Somare 1981 PNGLR 265 where a right of
a citizen to challenge the legality of or constitutionality of legislation was recognised. The general approach to standing in UK and the Commonwealth summarised in Judicial Review of Administrative Action: deSmith, Woolf & Jowell 5th Edn 127. This summary is I believe consistent with the law in this country. It is as follows: “(1) Rfficient isterest̶” has to receive a generous interpretation. (2) ly issues astandiere tsre tswer is obvious should be resolved on the application for leave. (3)p>(3)  es su tndsnghe letage t dept depend on the remedy which hich is this then been being cing claimed. (4) ـ If the the applicant hapeciaertisthe st matf the application tion that what will bill be a fe a factoractor in establishing
sufficient interest...... (5) ҈& ....tors ...s apabcapable of qualifying as sufficientcient inte interest..... are not confined to property or financial
or other legal ints. Tan include civic (or community), environmental and cultural interests. (6 (6)) ҈ The grae gravity of the iwsue which is the subject of the application is a factor taken into account ... (7) ـ  deciwhat,what,ny, remedy to grant as a matter of disc discretion, the Court will take into acco account tunt the
extent of the applicant’s int....1;. Here the Plaintiff is a citizen entitlntitled to the complain of breaches of prof procedures and duties imposed by statute. Further
as a business competitor of Garamut the Plaintiff in my view is entitled to complain of what it sees as a commercial advantage being
granted unlawfully. Subject then to final determination of this application, I find that the Plaintiff has standing. Delay As for delay, there is strength in the argument of Garamut that Steamships have been dilatory in bringing these proceedings. Order
16 R 4 of the National Court Rules states as follows: “4 & D60;y ilaAppl ing for relr relief. (1) ـ subjectbject to this rule, where in any case the Court cers there een udelayaking an application for Judicial Review,
or, in a in a case case to whto which sich sub ruub rule two applies the application for leave urule is made after ther the rele
relevant period has expired, the Court may refuse to grant - (a) Lfave her tkinmaof t e appe application; or (b) Any relief sought o theicpplication,
In the case of an application for certiorari to remove any judgement, or order conviction or other proceedings for the purpose of quashing it, the relevant period is four months after the date of the proceedings.”
As with the issue of standing, leave has been granted despite issues of delay, but like standing, challenges on this head are not resolved simply with the grant of leave. Such challenges remain open and accordingly consequences of delay may not be determined until examination of the substantive issues.
The rules provide that the Court may deny challenges on delay, or to extend time to a Plaintiff, for good reason shown taking into account actual hardship, prejudice to another or detriment of good administration. Reasons held to offset the consequences of delay have been the pursuit of alternative legal remedies and the importance of the point of law at stake. It is usual though that in all but the clearest of cases the Court will normally postpone considerations of these issues until the full hearing. It is appropriate therefore to determine consequence of delay upon the examination of the complaint itself.
Indefeasibility of Title
Similarly the argument of Garamut as to indefeasibility of title under the Land Registration Act can also be determined only upon consideration of the complaint itself. It is appropriate therefore that before coming to any conclusion on those issues that the Court be clear on the extent to which the Plaintiffs challenges have bases in fact or law and if so to then consider whether the defences raised preclude the remedies sought as the Defendants say.
DECISION
The Plaintiff’s complaint is that the rezoning of the land and the issue of lease to Garamut occurred through breaches of the governing statutes committed by both 1st and 3rd Defendants. That is, the decision granting rezoning and the issue of the lease are illegal, unreasonable and void. When are decisions void for illegality and or unreasonable.
In Judicial Review of Administrative Action the learned authors state at p.295:
“an administrative decision is flawed if it is illegal. A decision is illegal if;
(1) t contravenes or exceedsceeds the terms of the power which authorises the making of the decision; or
(2) it pursues an objective other than that for which the power to make the decision was conferred
A statute may prescribe the manner that an authority shall conduct its duties. Those requirements may be such as to impose procedures that amount to conditions precedent to the exercise of power conferred. Examples are an obligation to consult or the need to follow specified procedural steps. Where the wording of a statute prescribes that those requirements “shall” be met, then the inference is that the provision is mandatory and any failure to carry out that duty must result in the decisions being held in breach and therefore unlawful.
But failure to meet all statutory requirements precisely will not invariably result in decisions taken, being held illegal. The Court under its powers of review may in its discretion decline to find decisions illegal where a breach is not seen as violating the interest intention or objects of a statute. This is clearly summarised in Judicial Review of Administrative Action at para 5 - 060 where it states:
“All statutory requirements are prima facie mandatory. However, in some situations the violation of a provision will, in the context of the statute as a whole and the circumstances of the particular decision, not violate the objects and purpose of the statute. Condoning such a breach does not, however, render the statutory provision directory or discretionary. The breach of the particular provision is treated in the circumstances as not involving a breach of the statute taken as a whole. Furthermore, logically, a provision cannot be mandatory if a court has discretion not to enforce it.”
Again, very often an Act provides for determination in the discretion of the statutory authority.
The task of the Court in evaluating whether a decision is a illegal is essentially one of construing the content and the scope of the instrument conferring the power in order to determine whether the decision fall within its “four corners”. In so doing the Courts enforce the rule of law, requiring administrative bodies to act within the bounds of the powers there have been given. They also act as guardians of Parliament’s will - seeking to ensure that the exercise of power is what Parliament intended.” (op.cit).
Therefore where a statutory discretion is given under a law, that discretion can only be used to promote the policy and objects of the Act. This may be found by the examination of the Act and this is a matter of interpretation for the Court. If as a result of such examination, it is found the decision of a tribunal or authority would frustrate the policy of the Act, the Court is entitled to intervene Padfield v Minister of Agriculture, Fisheries and Food [1968] UKHL 1; 1968 AC 997 see also Darvell v Auckland Legal Services 1993 NZLR 111. R. v Sec for State ex p. Fire Brigades Union [1995] 2 All ER 244. These decisions follow the principle that where the exercise of a statutory discretion has the object or leads to a result which denies or fails to achieve the object and purpose of the Act the Courts may set such determination aside not only as illegal but also as unreasonable.
In the Wednesbury case (Associated Provincial Pictures Houses Limited v Wednesbury Co. 1948 1KB 223) Lord Greene stated that a decision can be set aside if it: “is so unreasonable that no reasonable authority could ever come to it”. He went on to expand on matters constituting unreasonableness. These include bad faith, fraud, dishonesty, disregard of public policy, and failure to take into account matters which are bound to be considered. Some of these of course overlap and may result in a decision being set aside for illegality as much as for unreasonableness. Fraud clearly is both illegal and unreasonable.
Fraud generally implies a notion of dishonesty but that is not exclusively so. Fraud also encompasses situations where there need not be dishonesty, that is moral fraud. Beaman v A. R. T. S. Limited [1948] 1ALLER 465. The Court in its equitable jurisdiction may find equitable or constructive fraud where there is no “deceit or circumvention”. The unconscionable abuse of lawful authority or prima facie valid contractual power can be such as to raise a presumption of fraud. Earl of Aylesford v Morris [1872-73] 8 AR Ch. 484, 489 491.
In Statutory Interpretation: Bennion (1984) 347 the Learned author states that where a Court is considering a statute “a construction is to be preferred that prevents evasion of the intention evinced by Parliament to provide a effective remedy for the mischief against which the enactment is directed. When deliberately embarked on, such evasion is judicially described as a fraud on the Act .....”
The Courts therefore will reject an interpretation of a statute that would allow what Parliament has clearly indicated by the Act should not occur, or allows an authority to refrain from doing what Parliament has indicated should be done. Fox v Bishop of Chester 1929 English Reports 6th p. 581 cites the: “well known principle of law that the provisions of an Act Parliament shall not be evaded by shift or contrivance”. It also held that while there may be no actual fraud found on trial of the issues it remains open to a Court to find that on the circumstances revealed that there has been a “fraud on the law ...... an insult to an Act of Parliament...”
Where fraud is relied on as a cause of action then there must be actual fraud pleaded and strictly proved. But in equity that is not necessary so. In Blomley v Ryan [1956] HCA 81; (1955-56) 99 CLR 362 the High Court of Australia refers to the rule that equity may presume fraud equitable constructive fraud, from circumstance, in contrast to the common law requirement of strict proof. The principle has also been followed elsewhere in the Commonwealth. Morrison v Coast Finance Ltd [1965] 55 DLR 710 and K v K 1976 2 NZLR 31 and Hart v O’Connor [1985] UKPC 1; [1985] AC 1000 PC.
The essential duty for an authority entrusted with the implementation of statutory duties for the benefit of the public (particularly when such duties include the exercise of discretionary powers) is to act only within and according to the objects and purposes of the statute. It cannot evade this duty. Thus where the Land Act clearly has the purpose, as a matter of National interest to provide a transparent procedure for the alienation of State, land, the authorities entrusted with the supervision of those procedures may be said to be acting fraudulently - and it is fraud whether there is dishonesty or otherwise, - when it acts with the intention of achieving an object directly opposed to the purposes of the statute.
The prime consideration for a Court in a challenge to the validity of a statutory authority’s decision must be the decision itself and reasons, if any, given to support it. There may be no duty to give reasons at all and a duty is not always expressed in a statute. Some do (eg. Commissions of Enquiries Act (s. 15) while in others it may be implied from the nature of the processes required by the Act and or the consequences a determination might have on citizens rights.
Again failure to give any reasons can lead to conclusions of maladministration. Judicial Review empowers a Court to find error of law, for example, for failure to act within jurisdiction or for failure to consider relevant matters. When a decision is challenged and no reasons are given, the Court is obliged either to itself consider the evidence backgrounding the decision or to conclude from the lack of reasons, that valid reasons do not exist.
In Re Gegeyo v Minister for Lands and Physical Planning 1987 PNGLR 331 Amet, J. as he then was, said that:
“if a decision making authority gives no reasons in a case when it might reasonably be expected to do so, the Courts may infer it had no good reason for reaching its conclusions and act accordingly”.
The learned Judge in a case that followed that decision, the Application of the National Capital District Interim Commission 1987 PNGLR 339 at 343 went on to say:
“further more it leaves wide open for allegations and inferences that such decisions were made with ulterior motives and for reasons other than in the public interest. It seems to me that is even more imperative to consult and give reasons when public authorities, administrative tribunals and executive government are dealing with matters of public interest which will affect the welfare and interest of the public at large, such as public reserves where large sums of public funds are expended by public trustee to improve such reserves for benefit and enjoyment of the whole public, of a city or town such as in these two cases and it behoves the relevant departmental officers concerned and the decision making tribunal to be diligent and to act with integrity and fairness and above approach in the conduct of its business so that no aspersions can be cast on their motives......”.
That decision was followed by Brunton, J. in National Capital District Interim Commission v Crusoe Pty Limited 1989 N836 where the Court held failure to follow the mandatory procedures of the Town Planning Act (the forerunner of the Physical Planning Act) were fatal to a rezoning arbitrarily made by the Minister
Again in the Judicial Review of Administration of Action at 346 the learned authors state:
“In cases where the reasons for the decision are not available, and there is no material either way to show by what considerations the authority was influenced, the court may determine whether their influence is to be inferred from the surrounding circumstances. In such cases the courts may infer either that an extraneous purpose was being pursued or that the exercise of discretion was unreasonable. The matter was succinctly put by Lord Keith, who said that where reasons for decision were absent “and if all other known facts and circumstances appear to point overwhelmingly in favour of a different decision, the decision maker ... cannot complain if the court draws the inference that he had no rational reason for his decision”. Lonrho PJC v Secretary for Trade and Industry 1989 1 WLR 525).
It is under these principles of law that the challenges of breach of the relevant statutes must be considered.
REZONING
The preamble to the Physical Planning Act 1989 says that it is:
“an Act to establish a comprehensive mechanism for Physical Planning at National and Provincial levels of government and to provide powers for the planning and regulation of physical development .... and for related purposes .......”
Section 1 of the Act declares that it is an Act made for purpose of giving a effect to the public interest and is a law relating to a matter of National interest. Section 2 states that the Act binds the State and applies to all land in Papua New Guinea.
Section 4 of the Act specifies that particular matters are primarily of National (as opposed to Provincial) interest for the purposes of this Act. In particular these include:
(c) “a planning m tterh hich relates to a National Government function, except that this shall only include the zoning of land which is not the subject of a lease..or.
(60;&##160;; developmentpment with within thin the Nate Nationalional Capital District.”
Section 5 of the Act spells out the considerations a Physical Planning authority must take into account in respect of any particular application:
“5 Consideration of Physical Planning Matters Under this Act .
Where consideration is being given to a Physical Planning matter under this Act, the appropriate authority shall take into account such of the following matters as are of relevance to the matter under consideration - “
There are then follows 22 matters which the authorities faced with a planning application must determine. These including in particular:
(d) & The effe effect of any development on amenities including the external appearances of the development in so far as this affects the amenities ............
(e) &##160;;e charactellocallocation / bulk / scale/ siz/ size / he / heighteight / density of any development;
(f) he soaial cod eic om aspf aspect of the matter .....;
(g) The relationsh p of any deny developme adjo landther in the locality;
(n) re0; represeptesentatinn mion maon made by public authority in relation todevelt of ea, and to the rihe rights ghts and pand powers of that public authority
(o) &##160;esepratiotations on s on Physical Planning grounds made by a member of the general public;
(p) policy directive given by the Minister or a Provincial ter ped surectivectives mays may not not ............with any other provision of this Act.......”
Section 7 is relevant;
0;7 D of Mer Responsible fole for Phyr Physicalsical Planning.
(1) ҈& it shal shall be t be the duty of the Minister to ensure in the public interest that the land is used in accordance with sound Physical Planning principles and that there is consistency ontinin the preparatioration andn and execution of development plan throughout Papua New Guinea and in the general exercise of general Physical Planning control in Papua New Guinea .....”
Section 77 (3) (e) says that applications for rezoning shall be made by the owner of the land the subject to the application or the agent of that owner.
Section 97 details the matters which shall be taken into account on consideration of appeals. Essentially these are a reconsideration in terms of those matters arising under s. 5.
Schedule 1 of the Regulations under the Act provides that land zoned open space includes “public open space, public parks and recreation areas and other public reserves.”
Clearly therefore the development and zoning of land are not simply matters affecting only a particular piece of land and its owner. The Act designates these matters as being of National importance and prescribes a code of practice to ensure transparency and public participation in the development of land. The authorities empowered including appeal authorities are directed to the manner and matters of consideration of application and on appeal. The Minister is directed to ensure the objectives of the Act.
Taking the Plaintiffs complaint in order, Steamships says that State being the owner of the open space was the only party eligible to seek rezoning. (Section 77) I am not convinced this is so. While s. 77 does not provide for any one other than the owner or the owners agent to apply for rezoning, any person interested in acquiring a lease of State land must of necessity give notice to the owner, the State, of its proposal regarding that land. When in pursuant of such an proposal an application for rezoning is made without objection or with the consent of the State then no breach of the Act need occur.
What Section 77 does call for however is adequate notice to all parties who may be seen to have legitimate interest in the matter.
Section 77 (4) (4) provides that where the applicant is not the sole owner of land or the agent of the sole owner, all other owners of land (effected) shall be notified. Obviously there would need to be a notification of adjoining owners and since the land in question was open space; that is, possible public reserve or public park, there would be need ample notice to the public. Notice, not just the legal description, but also a physical description of the land so that it is identifiable. There was no evidence of any public notice of the application whether by gazettal or otherwise but there was no objection raised by the Plaintiff on this head either. Accordingly nothing turns on this issue in these proceedings.
Garamuts application for rezoning was declined by the NCD Physical Planning Board for declared reasons and the National Physical Planning Board likewise recommended to the Minister the appeal be rejected for reasons notified to him. The Minister nonetheless granted the appeal. He notified the National Tribunal that he had considered all the matters raised but granted the appeal. He gave no reasons.
There is no doubt that the Minister has the authority and discretion to decide an appeal. But equally there can be no doubt that such a discretion does not give the Minister the right to decide an appeal on personal preference or whim. By law such a discretion can only be exercised within the scope and authority of the Act itself. The Courts are empowered by Judicial Review to set aside as an excess of jurisdiction, as unreasonable (Padfield v Minister of Agriculture [1968] UKHL 1; 1968 AC 997) and as illegal, any purported exercise of discretion that fails to consider relevant matters or does not follow the legitimate purposes and scope of the Act.
Applying the principles cited in the Gegeyo v NCDC and Lonrbo cases, the known facts and circumstances in this case appear to point overwhelmingly in favour of the decisions of both Physical Planning Authorities which considered that open space was more appropriate for public use than for commercial exploitation. There being no sense or explanation for the Ministers decision that those views were wrong and that there was good reason for changing the public open space to commercial for the benefit of a single applicant, the Court can only draw the conclusion that he had no valid reason for his decision. Accordingly it cannot stand and the rezoning must be quashed as invalid.
LAND ACT 1996 - ISSUE OF LEASE
This Act is also described as an Act giving effect to National Interest and for of public purposes.
“Public purposes” are defined in s. 2 of the Act as including “the purpose of making land available to citizens for ..... economic development so that they may share in the economic progress of the country .....”.
The Act states that all land other than customary land is the property of the State (s. 4). Under Part IX which deals with the alienation of government land s. 64 states:
“64. Alion ofrGovet ment Land. (1) ҈ Governmvernment land shal not be alienated otherwise than under Act other.....”. Part X of the Act which follows, provides for Star State Lete Leases ases s. 65 says: “65. & GranStatees.
> The Minister may grant State leases of Government land as provided by this Act. While there iower ed by s. 72 for the minister to grant leases directly, (not relevant in these proe proceediceedings) the general
rule is that the Land Board shall consider all application for State leases. Section 71 states that the Land Board: “71.(a) shall hlar apl aptioca fors for State leases; and (b) l ralommecd to the Ministerister the persons (if any) to whom leases should be granted; and (c) ـ mae such such otherother recommendatto thisteronnecwith plication as the Bohe Board card considonsiders pers properroper.” The manner in which the Board is directed to conduct rocedis set out in ss.n ss. 57, 57, 58. Under s. 57 the Land Board: “shall consider all applications for grant of leases which are being investigated and referred to it by the Department.” Section 58 stipulates the procedures that must be adopted by the Land Board in considering all applications. Section 58 states: “58(1) directions that at least seven (7) days before the meeting of the Land Board, the Chairman shall publish in the National
Gazette a list of the applications to be considered and the lands to be dealt with by the Board at the meeting.” Further by s. 58: (2) & The Chae Chairman shall notify by post every person who, in his opinion, is interested in an application or m, of the date
on which it will be considered by the Land Board. At that meeting the Land Bond Board is required to deal with the applications hear
objections and report on the applications to the Minister.” By s. 58 (5) (c) “all matters shall be decided by the majority of votes of the members present ....” The Board is of course bound as well by the other provisions of the Land Act regarding the issue of State leases, particularly s. 67 that no lease shall be granted in contravention of zoning requirements of
the Physical Planning Act and it must abide by ss. 68 and 95 which requires that unless exempted by the Minister the Departmental Head, that is the Secretary
for Lands, shall give notice by advertisement in the National Gazette of all land available for leasing under the Act. That section
also spells out the detailed information that must be supplied to the Public. The scope of exemption from tender is limited to specific situation: “69. Duty to Advertise State Leases (1) ـ A Stateelease shallshall not be granted without first being advertised in accordance with Section 68 unless the land
has been exempted from advertisement under ss. 2; (2) &#The Minister may exempt lmpt land from advertisement for tender; (a) ҈ where tere the lease is gdanted to a governmental body for lic pe; or (60; ـ w6ere here here it e it isit is nece necessary to relocate persons displaced as a result of a disaster as defined i
DisaManag Act (Chaptehapter 403); or (c) where a lessee aseeiappliepplies for a further lease; or (d) & where the state has agreeagreed to provide land for the establishment or expansion of a business, projor otndert; or (e) &##160;; whee lahe land appd applied for adjoins land owned by d by the athe applicpplicant aant and is required to bring the
holding ua morkable unit, providing that the claims of other neighbouring landowners are considonsidered ered and their views taken
into account in deciding whether to exempt the land from advertisement in favour of the applicant; or (f) e ter Depertment responsiblnsible for foreign affairs recommends that land be made available to the applicant for consular
premior (g)&ـ҈ where the land is required for the resettlemenlement of t of refugrefugees; ees; or
(h) ere the applicant has fhas funded the acquisition of the land from customary landowner in order to acquire a State Lease
over it
(j) &##160; where aere a new lesse intgranted under ss 110, 130 or 131. “
The content and directives of the Act plainly demonstrate that the tion urposthe Act is provide an open transparent rent system of access to State lands, and and an oran orderly and fair process of disposition of those lands by the Minister on behalf of the State. Citizens, given due and adequate notice as to the availability of State land, are able to compete on an equal footing with one another by public open tender for a State lease.
SUBSTANTIAL COMPLIANCE
It is argued for Garamut that notwithstanding breaches of statutes as may have occurred through the actions of the Minister or the Land Board, the Company acted appropriately throughout. It had simply applied for rezoning of land. When refused that rezoning it had appealed, the appeal was upheld. Similarly when it had applied for a lease an exemption to tender had been granted. The Minister had cited reasons under s. 69 (2) and though not specified, it might be taken that he acted under s. 69 (2) (d), an agreement to provide land for establishment of a business. The Minister had approved and processed the State lease now registered. Accordingly it was argued that there had been substantial compliance with the procedures prescribed by the statutes.
I am satisfied that this is not so. While Garamut’s application for rezoning and the procedures before the Planning Board and Tribunals may be said to be unexceptional, they resulted in the refusal of the application by the authorised tribunals. The critical non compliance occurred with the Minister failing to give any reasons why the Tribunals determinations should be set aside. However reasonable Garamut’s application or appeal they cannot mend a fundamental breach of the law.
The facts outlined in the chronology above and summarised by the Plaintiff clearly show outstanding breaches of the provisions and terms of both Acts. The rezoning of the land from public open space to commercial was done without reasons being offered and even had it been valid, was not gazetted till after the grant of lease by the Land Board in September 1998. The Land Board gave no notice of its intention to consider an application from Garamut as required by s. 58 nor was any tender of the property gazetted till after the September meeting in fact had taken place. The tender was withdrawn on a decision of the Minister unlawfully exercised and notified to the public as withdrawn, after the meeting had taken place. Parties who had in fact tendered in response to the advertisement plainly were adversely affected.
Finally there is substantial reason to doubt whether the application of Garamut was ever considered at the September meeting of the Land Board at all, because the members purporting to have approved the lease were not minuted as being present at the meeting and thus in terms of s. 58 (5) (c) present to determine the grant. Given that there is no contradiction of this particular evidence and taking all the other anomalies into account I am certainly not able to conclude on the balance of probabilities that the Land Board ever considered Garamuts application at meeting 2004. The balance is towards that it did not.
Of all the anomalies the Minister’s grant of an exemption from the tender of the lease was a critical breach of the statute. He had no authority or power to introduce exemptions that were not contemplated by the Act and to that extent his decision was illegal.
It was made in face of his own earlier determination that there were no grounds for withdrawing the land from public tender. It was granted for “special reasons” which do not comply with the provisions of s. 69 (2) of the Act and even as considered as special reasons fail to achieve that status. To say that an applicant needs the land and was willing to carry out and pay for the survey simply does not amount to special reasons.
More significantly the use of the phrase “special reasons” indicates that the Minister was not even aware of the provisions of the Act under which he was obliged to consider such a matter. Under s. 57 of the old Land Act the Minister was granted wide discretion on this issue. He was able to act on “special reasons”. But that Act was repealed by the 1996 Act. Section 69 (2) is specific on the grounds of grant of such exemption. There is no provision of unspecified “special reasons”. Claiming to act under s. 69 (2) without specifying a listed exemption is not enough and gives no credence or validity to such a decision. As for the suggestion the Minister was referring to s. 69 (2) (d) there is simply no evidence of such an agreement and even Garamut does not assert one.
The prescribed procedures under the Land Act simply did not occur. From the time Garamut’s application was lodged the processing of the application failed totally to follow the requirements of the Land Act. The breaches were gross, a travesty, to the extent that it can be said the Act was not followed at all. But further, to the extent that the Minister made a disposition of State land which was not open to scrutiny but removed from the public without the sanction of the Act, granted private access to State land, conferring an advantage, particularly a commercial advantage on a single applicant without reason, the grant clearly is not only outside the scope and purposes of the Act, unreasonable and unlawful, it is a fraud on the Act itself. The grant in fact was a nullity and no lease, no interest in land, no title was issued in accordance with the Act.
LAND REGISTRATION ACT AND INDEFEASIBILITY OF TITLE.
Garamut says that notwithstanding all errors or breaches of procedures under the Act that may have occurred, Garamut now holds a registered title. Title that is by s. 33 of the Land Registration Act valid for all purposes, a title that is indefeasible . Garamut relies on the Supreme Court decision in Mudge v Secretary for Lands [1985] PNGLR 387 that registration is final on all issues and that only the exceptions provided under the Land Registration Act can be invoked to overturn a registered title. Of these, it was submitted only fraud, not specifically pleaded in these proceedings or proved, might have availed the Plaintiff.
Counsel for both the Plaintiff and Garamut also cited Emas Estate Development Pty Ltd v John Mea and Ors [1993] PNGLR 215 where the Supreme Court took a contrary view of the consequence of breaches of statutory procedures.
In that case the Court, while acknowledging the principles of indefeasibility of title nonetheless did (by a majority) consider irregularities tantamount to fraud as sufficient to overturn a registered title.
In both the Mudge and the Emas Estate cases there were challenges to the issue of leases and to the subsequent registration of them under Land Registration Act on grounds that irregularities under the Land Act rendered the leases and therefore the registrations void. In the Mudge case the Court found that the main submission of the Appellant that the Land Registration Act was to be read as subject to the Land Act could not be sustained.
For the Plaintiff it was argued this Court should follow Emas, while Counsel for Garamut contended that decision was distinguishable on its facts. The essence of the decision he said being to uphold the exception under s. 33 (c) of Land Registration Act which provides for a challenge to the register by a proprietor claiming under a prior instrument of title.
In the Mugde case Supreme Court (which followed the Privy Council in Fraser v Walker [1967] 1AC 569) said that notwithstanding there may have been irregularities in the issue of the lease.
“it is now settled law that apart from exceptions mentioned in the relevant legislation’s once land is under the Torrens system the owner acquires indefeasibility of title.”
It cited Breskvar v Wall [1971] 126 CLR 376 where Barwick CJ of the Australian High Court stated the rationale of indefeasibility that arises through that system:
“the Torrens system of .registered title of which the Act (The Real Property Acts, Queensland 1863) is a form is not a system of registration of title but a system of title by registration.“
Accordingly the Court said that in the absence of any explanation or reason why breaches of the Land Act should cause the avoidance of a subsequently registered lease the title must be upheld.
With respect there were significant reasons not put before the Court. The stated objects and purposes of the Land Act and the Land Registration Act which differ fundamentally were not raised. Nor was the Court asked to consider, if the fundamental element of title were absent at time of registration - that is, if there was no title at all to register - whether registration itself could create it.
The Land Act Part IX provides for the alienation of government land. In s. 64 (1) it says that “Government land shall not be alienated otherwise than under this Act or another law.” Parliament thereby clearly prohibits the alienation of Government land other than through the processes of the Land Act or another law.
It is very clear too that the Land Registration Act is not “another law” intended to effect such alienation. The preamble to the Land Registration Acts states that it is “an act to unify the law relating to the Registration of Title to Land, and for related purposes.” The Land Act deals with the issue of title. The Land Registration Act deals with the registration, preservation and strengthening of that title, not the creation of title itself that is described in Breskvar’s case. There can be no doubt that indefeasibility of registered title exists in PNG. The Land Registration Act provides that. But before that indefeasibility can arise there must first be a title to register.
In neither of the Mudge or Emas Estate cases did the Supreme Court have argument before it or consider what conclusions should be drawn in the event that the breach of procedures under the Land Act were not just irregularities not going to jurisdiction, but breaches that resulted in a total nullity, such that no lease issued under the Land Act at all; that there was therefore no title to register. Nor was there argument or consideration of why Parliament having stipulated in one Act the only mode of granting of state leases, should by another act grant an indefeasible title by way of lease without any need to follow that process; whether the obligations to follow the mandates of the Land Act could be wholly ignored and title achieved merely by registration of a document under the Land Registration Act.
For example suppose that on the day following the National Court decisions in either the Crusoe or NCDC case referred to above; that is the day after the Court declared the grant of lease in those cases wholly void, without any process under the Land Act a lease in the same terms was registered through error or negligence. Would that registration create indefeasible title?
It is not to the point to say that the register might be corrected for error. Could registration create a title out of nothing and incidentally defeat a judgement of the Court?
Again, under s. 99 of the Land Act the Minister may grant a residential or commercial lease over lands on which there are Government buildings. In such leases none of the normal processes for grant or forfeiture apply. The Land Registration Act is also said not to apply. If despite that, through error or negligence a commercial lease over the land on which Parliament stands were to be registered under the Land Registration Act in favour of a private company, would the lessee acquire indefeasible title? Would the Court in any of these circumstances be obliged to ignore irregularities under the Land Act, would it be precluded from setting aside registration for any ground available under judicial review. In other words are the powers of review under s. 155 of the Constitution limited by the rule of indefeasibility of title. The Supreme Court decisions in Mudge and Emas Estate are not conclusive on these issues.
On the evidence before me I am satisfied that even if the Court were to follow the decision in Mudge’s case that registration of a document alone creates an indefeasable title, notwithstanding irregularities of process or documentation that would otherwise preclude the grant of title, it is clear from the facts before this Court that there has been fraud shown in this case.
It is true that the Plaintiff did not assert fraud in the Statement filed in these proceedings. But the Statement under O 16 is a prayer for relief. It is not the pleading of a cause of action. Pleadings only arise in actions commenced by writ not in any other originating process. (Order 8 R. 1 National Court Rules) what the Plaintiff has done however is to assert unreasonableness which includes bad faith, equitable and or constructive fraud.
Counsel for Garamut cited the view of the Privy Council in the decision Assets Co. Ltd v Meri Roihi [1905] UKLawRpAC 11; 1905 AC 176 that the fraud required to defeat a registered title meant actual fraud - not equitable or constructive fraud - and actual fraud that must be brought home to the registered proprietor whose title is impeached. That view however was based on the Council’s reading of the relevant New Zealand Act. Our own Land Registration Act only speaks of fraud and does not limit its meaning nor does it require that fraud be shown in a particular party
The 1st and 2nd Defendants failed to follow the zoning laws and have displayed a total disregard for procedures the Land Act provides for the alienation of State land. Instead of the transparent process open to public participation that the Act provides, there has been exclusion and preference shown to the advantage of one only. There has not been just some minor administrative error but rather a subversion of the whole statutory process which the Court could not in good conscience support.
But I am satisfied that in this case registration on 23rd of February 1999 did not grant indefeasable title in favour of Garamut. Because what issued and was registered was no lease, no title able to be registered. It was a nullity.
Returning to the Defendant’s challenge to the Plaintiffs standing and complaint of delay, I am satisfied that the consideration of the merits of this case has confirmed that the Plaintiff’s standing remains valid. The issues raised are of public importance and Steamships has established the facts of its complaint beyond question. Accordingly notwithstanding the delay in commencing these proceedings time should be extended for this review subject to consideration of whether the granting of the relief sought would be likely to cause substantial hardship or substantially prejudice the rights of any person or would be detrimental to good administration (O 16 R 4).
It is plain fact that Garamut has now erected a substantial market on the land expending in excess of four million kina in so doing. It was pointed out that such development was carried out on the basis that Garamut believed it had a registered title to land zoned for the development that was carried out.
While it can be said that Garamut did seek the advantage of exclusive access to a commercial lease on grounds it must have known were not valid, there has been no evidence to suggest it otherwise contributed to the gross breaches of the statute that occurred. Counsel for Garamut strenuously argued, grant of any of the relief sought will constitute severe prejudice to the Company. But that prejudice must be balanced with the public interest in good administration as well as the interests of the Plaintiff.
Because of delay in bringing these proceedings I am satisfied that the Plaintiff’s applications for injunctions restraining further development or restraint of the conduct of the business should be declined. But to refuse relief as to the issue of the lease itself would be to give Court approval to gross mal administration and to publicly condone fraud. In this case the prejudice to Garamut in striking down the issue and registration of the lease is not necessarily total. Quite apart from rights of action against the 1st and 3rd Defendants that result from setting aside title, such a decision does not grant title in favour of any other. There is no reason why Garamut cannot institute fresh applications for both zoning and a lease under the appropriate lawful processes for such purposes.
I am satisfied orders should issue sought in the nature of cetoriari quashing, first the decision of the 1st Defendant of 15th October 1998 to rezone the land Allotment 23 Section 71 Hohola from open space to commercial; second the decision of 1st Defendant of 18th February granting a commercial lease of that land to the 2nd Defendant; thirdly the decision of the 3rd Defendant recorded as being made in Land Board Meeting 2004 on 30th September 1999. Finally there will be an order that the 2nd Defendant that the 2nd Defendant surrender its copy of the registered lease of the said Land to the Land Registrar who shall thereupon cancel the same.
COSTS
There is no doubt the Plaintiff should have its costs against the 1st and 3rd Defendants.
The trial of this matter has shown that they must bear responsibility for the statutory breaches that occurred. For that reason I make no order in favour of the Plaintiff for cost against the 2nd Defendant. As for the 2nd Defendant I am satisfied it should have its costs against the 1st and 3rd Defendants also.
Lawyer for the Plaintiff - Allens Arthur Robinson
Lawyer for the 1st & 3rd Defendants - Solicitor General
Lawyer for the 2nd Defendant - Carter Newell
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