Yakananda Business Group Inc v Minister for Lands & Physical Planning [2001] PGNC 50; N2159 (7 December 2001)

N2159

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 170 of 1996 (H)

BETWEEN

YAKANANDA BUSINESS GROUP INC.

Plaintiff

AND

MINISTER FOR LANDS & PHYSICAL PLANNING

First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

Mount Hagen & Waigani : Sevua, J

2001 : 17th July & 7th December

ADMINISTRATIVE LAW – Judicial Review – Review of administrative action – Decision of Minister for Lands forfeiting residential lease – Notice to show cause – Not issued prior to forfeiture – Non-compliance with Land Act, s.46(2).

JUDICIAL REVIEW – Forfeiture of lease – Notice of show cause – Whether lessee entitled to receipt of notice prior to forfeiture – Whether breach of s.46(2) constitutes error on face of record – Whether judicial review available.

Held: (1) The issuing of notice to show cause by the Minister is a mandatory

requirement of law therefore the lessee is entitled to be served with notice and is entitled to explain why the lease ought not to be forfeited.

(2) There is error on the face of the record warranting the exercise of the Court’s discretion in favour of the plaintiff.

(3) Judicial Review is available where the Minister for Lands has ordered forfeiture of lease contrary to the mandatory requirements of s.46(2) of the Land Act, Ch 185.

Cases cited:

Kekedo v. Burns Philp (PNG) Ltd & Ors [1988-89] PNGLR 122

Counsel:
P. Kunai for Plaintiff
J. Kais for Defendants

7th December, 2001

SEVUA, J: This is the substantive judicial review application, leave having been granted on 26th June 1996. The review is in respect of the decision of the first defendant made on 26th July 1995 whereby he revoked the grant of a lease to the plaintiff over land described as Portion 259, Millinch Wapenamanda, Fourmil Wabag, Enga Province, and forfeited the land to the State.

The facts of this case are quite brief. Pursuant to s.54 of the Land Act, Chapter 185, the Minister for Lands granted a residential lease to the plaintiff for a term of 99 years from the 14th April 1988 to the 13th April 2087. The annual land rent for the first ten (10) years was K350.00 payable in advance on the first day of January each year. The improvement covenant in the lease was that the lessee must erect buildings for residence purposes to a minimum value of K200,000.00.

On 30th July 1994, Joseph Aoae, a delegate of the Minister for Lands & Physical Planning, issued a notice to show cause to the plaintiff pursuant to s.46 (1)(a) of the Land Act, Ch 185. The plaintiff was requested to show cause why the lease should not be forfeited on the grounds that, it had failed to pay the rent for a period of more than six months, and secondly, the plaintiff had refused or neglected to comply with the improvement covenant in the lease.

On 26th July 1995, then Minister for Lands, Sir Albert Kipalan, issued a forfeiture notice on the grounds that firstly, the improvement conditions imposed by the Act have not been fulfilled in respect of the land; and secondly, the rent remained due and unpaid for a period of more than six months.

The plaintiff subsequently instituted these proceedings on 12th April 1996, by way of originating summons, seeking leave for a judicial review; an order for a prerogative writ of certiorari to remove into this Court and quash the decision of the Minister for Lands and Physical Planning; and a declaration that the plaintiff is still the lessee of the land, the subject of these proceedings.

At the outset, when this application was made on 17th July 2001, counsel for the plaintiff, Mr Kunai, informed the Court that this matter had been outstanding for some years now. It should have been dealt with a long time ago, but the trial date continued to be vacated. I alluded to this at this stage because, at the end of the plaintiff’s evidence, counsel requested an adjournment for three days to enable the plaintiff to produce to the Court, evidence of payment of rent. The Court refused that request after the defendants objected to it. It has been five (5) years and twenty (20) days to be exact, since leave was granted, and the plaintiff should have prepared for hearing today. It should have brought its rental receipts available for production.

Furthermore, during a mini call-over on Monday, 9th July 2001, the trial date previously scheduled for 24th July 2001, was vacated and brought forward to 17th July, because a number of trials for this month’s circuit had to be vacated and the list rescheduled. In my view, the plaintiff and its lawyers have had more than sufficient time to prepare their case for trial. The failure by the plaintiff to provide vital evidence therefore cannot be attributed to the Court’s refusal to grant an adjournment. It is the plaintiff’s own making, and I find that the plaintiff had no valid reason for failing to produce the relevant evidence relating to payment of rent. One would have been forgiven if the question of non-payment of rent was not an issue in this matter, however it was, and is, an issue. In my view therefore, the plaintiff’s witness, Timothy Tima, should have brought the receipts for payment of rent to Mt Hagen for the hearing instead of leaving them in Port Moresby as stated in his sworn testimony.

There is no doubt in my mind that the reason for the forfeiture of the lease in question was twofold. First, lack of fulfilling the improvement covenant, and secondly, non-payment of annual rent. It is therefore pertinent in my view that the relevant evidence in relation to these two issues be presented by the plaintiff. As this is a judicial review, the plaintiff needs to show that there was an error of law or the usual grounds for review are present in order that it’s application can be granted.

The plaintiff’s evidence consisted of an affidavit sworn on 11th April 1996, by Timothy Tima, the plaintiff’s General Manager, and his oral testimony. In so far as the giving or serving of the notice to show cause to or on the plaintiff is concerned, there is obvious conflict in the plaintiff’s evidence. In his affidavit, Timothy Tima deposed to in paragraphs 4.23 to 4.27 inclusive that the notice was never served on the plaintiff. The statement in support of the application required by Order 16 Rule 3(2)(a) also alluded to that. In fact, in paragraph 3.11 of the statement, the plaintiff says it did not know of the notice to show cause and the subsequent forfeiture until it commenced ejectment proceedings against one of the squatters, Peter Komiti in the Wabag District Court in March 1995 when those documents were produced by Peter Komiti.

The plaintiff claims that because the first defendant did not serve the notice to show cause, the subsequent forfeiture was, "clearly in breach of the rules of natural justice and this constitutes a substantial miscarriage of justice which warrants a review of the Court." Refer paragraph 3.16 of the Statement under Rule 3(2)(b).

However, the affidavit evidence is directly in conflict with the oral testimony of the plaintiff. The plaintiff’s sole witness, Timothy Tima, on oath deviated from his affidavit evidence and said the notice to show cause was served on him, however, it was served in February 1996, one and a half years after the date of the notice. In a series of questions by the Court, the witness’ evidence became clearer and in the absence of any rebuttal evidence, and as the defendants have not refuted the variance in the plaintiff’s evidence, the Court accepts the plaintiff’s evidence that it was served with the notice to show cause in February 1996, some one (1) year and seven (7) months after the date of such notice.

In respect of the two issues raised by the notice to show cause and the forfeiture, the plaintiff’s evidence is this. On the question of rent, the plaintiff’s witness said that the plaintiff had paid up all its rent. In paragraph 4.3 of his affidavit, Tima said, "As from the date of the lease up to 1995 the applicant has paid all its lease rentals owed to the State and this has been paid annually and at no time there has been any default in the payment of State lease rentals." Tima continues this in his oral testimony and said the plaintiff is still paying rent despite the fact that the lease has been forfeited. However, the plaintiff has provided no official receipt for payment of rent.

It may be true that the plaintiff has been paying the annual rent since it was granted the lease, up to the present time, however, I am not satisfied that, that is the case. No receipts have been produced therefore I am not satisfied that the plaintiff has not defaulted in paying rent. In my view, the plaintiff’s evidence of rent payment is a bare assertion and unless I see the official receipts evidencing payment of rent, I am not easily persuaded to accept the assertion by the plaintiff. Nevertheless, the defendants have not produced any evidence that, the plaintiff had defaulted in rental payment and is in arrears. The defendants have had more than sufficient time to disprove that assertion, but has not done so. I therefore find that they have not proven the plaintiff’s default in non-payment of rent, therefore, there could be no valid basis for the claim of non-payment of rent.

The second issue relates to the improvement covenant. The plaintiff’s evidence is that at present, it has two permanent buildings for residential purposes valued at K60,000.00. In fact, Tima said in his oral evidence that in his judgment, the improvement covenant had been fulfilled prior to receiving the notice to show cause. However, when asked by the Court as to the costs of clearing, cleaning and levelling of the land, Tima was unable to tell the Court such costs. He said the use of plant and machinery took three full days and clearing took three weeks, but no actual or estimate costs were given. Again, this would appear to be a bare assertion on the improvement of the land.

But again, the State has not provided any evidence to the contrary, or any evidence that the value of the land at the time the notice to show cause was issued, did not amount to the improvement covenant in the lease, ie, K200,000.00. The first defendant was the one who asserted in the notice to show cause that the plaintiff had failed or defaulted in paying rent and further that the plaintiff had not improved the land to the value of K200,000.00. In my view, it is the defendants who should provide evidence to support those allegations. However, I find that there is no evidence to support these allegations. The evidence to support such allegations should have been before the Minister at the time of forfeiture, however, there is no evidence whatsoever, that the first defendant had evidence before him when he ordered forfeiture of the lease. I must therefore conclude that at the time the Minister issued the order for forfeiture, there was no evidence before him that the plaintiff had defaulted in paying rent, and that it had not satisfied the improvement covenant in the lease.

The plaintiff’s counsel has submitted that the relevant issues are firstly, whether the forfeiture of the plaintiff’s lease was unlawful and secondly, if the forfeiture was unlawful, what is the legal effect of the plaintiff’s lease. The defendants on the other hand, have not filed their written submissions despite the fact that the Court had directed both counsels to file written submissions. The Court will not sit and wait for counsel for the defendants, nor will the Court tolerate the failure of counsel to abide by the directions of the Court. Not only is this attitude unprofessional and unethical, but a blatant disregard for the orders of the Court and it demonstrated disrespect and discourtesy to the Court.

I have already alluded to the fact that the requirement of s.46(2)(a) of the Land Act, Chapter 185, is mandatory. The plaintiff submitted that the Minister’s failure to observe that provision amounted to an unlawful act. That provision is identical with s.122(2) of the present Land Act 1996. It was submitted on behalf of the plaintiff that the Minister’s failure to give notice to show cause prior to forfeiture was a breach of s.46(2)(a) of the Land Act (old Act). I agree with, and accept, that submission. I hold that it is quite unfair to the plaintiff to have its right or proprietorship extinguished by the Minister without him complying with the law. The Minister is not above the law and in the exercise of his powers under the Land Act, it is his duty and obligation to ensure that he complies with the requirements of that Act. In this case, I find that the Minister’s action in forfeiting the lease, the subject of this review, was unlawful and it was clearly a contravention of s.46(2) of the Land Act, Chapter 185.

In respect of both issues which the plaintiff has raised, the Minister is required to serve notice on the lessee. We have just seen from the discussions above that, the requirement to serve notice under s.46(2)(a) of the Act is mandatory. Under subsection 2(b), the Minister is also required to serve notice on the lessee requiring the lessee to comply with the improvement covenants on the lease. Although this second requirement is discretionary, notice could be given regardless of whether or not the lessee has shown cause within the period stipulated in the notice under subsection 2(a) as to why the lease should not be forfeited. Whether or not the requirement to serve notice is mandatory or discretionary, it is my view that it is in the interest of good governance and proper administration of the Land Act that the Minister serves such notices.

By virtue of s.46(3) of the Act, forfeiture of the lease would only come into effect after the lessee has either failed to comply with that notice, or he has failed to show good cause why the lease should not be forfeited. Given the effect of that provision, I consider that the service of notice by the Minister on the lessee is a condition precedent to the forfeiture of a lease. In fact, I consider that there are three conditions that must be fulfilled before a lease is forfeited. Firstly, the Minister must serve a notice to show cause on the lessee. Secondly, the Minister must give a notice on the lessee requiring the lessee to comply with the conditions of improvement stipulated on the lease. Thirdly, the lessee must show good cause why the lease should not be forfeited. Where the lessee fails to comply with a notice served under subsection 2(a) or (b), or if he fails to show why the lease should not be forfeited, the Minister can then lawfully forfeit the lease.

I find that the first defendant’s failure to comply with s.46(2) of the Land Act, Ch 185, constituted an error of law, which warrants a review of the decision he made on 26th July 1995, in forfeiting the plaintiff’s lease. Committing an error of law and a breach of natural justice are circumstances in which a Court can grant judicial review. See Kekedo v. Burns Philp (PNG) Ltd and Ors [1988-89] PNGLR 122. It therefore follows that any subsequent dealing with the land is null and void and invalid.

The effect of this finding means that the status quo of the land reverts to the plaintiff, that is, the plaintiff’s title to the land is not affected in any way. Because of the illegality and irregularity of the first defendant’s action, the plaintiff’s title to the land must be restored.

Accordingly, the plaintiff is entitled to the relief sought. The Court orders that certiorari be issued to bring to this Court the first defendant’s decision of 25th July 1995 to be quashed. The Court further declares that the plaintiff is still the lessee of Portion 259, Milinch of Wapenamanda, Fourmil of Wabag, Enga Province registered as Volume 1, Folio 47. It is noted that the actual forfeiture of the State Lease referred to Volume 73, Folio 226, although the reference 8380/0259 is the same reference appearing on the actual title which bears Volume 1, Folio 47. In the event there has been an error, the plaintiff is at liberty to apply upon three days notice. I also declare invalid, null and void, all or any subsequent dealings following the forfeiture on 25th July 1995.

Costs will follow the event, to be taxed if not agreed upon.
_____________________________________________________________________
Lawyer for the Plaintiff : Kunai & Co.
Lawyer for the Defendants : Solicitor General