Kanari v Wiakar [2009] PGNC 10; N3589 (16 February 2009)

N3589

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 562 OF 2007

ELIZABETH KANARI
Plaintiff

V

AUGUSTINE WIAKAR
First Defendant

REGISTRAR OF TITLES
Second Defendant

Kimbe: Cannings J
2008: 16 October, 10 December
2009: 16 February

JUDGMENT

LAND – State Lease – agricultural lease – death of registered proprietor – registration of transfer to another person – no evidence of instrument of transfer – allegation of fraud – meaning of "fraud" – Land Registration Act, Section 33(1)(a).

The person who was the registered proprietor of a State Lease died intestate after living on and developing the land over a period of 23 years. During that time another person consistently complained that he should be the registered proprietor. Three years after the death of the registered proprietor, the lease was transferred from him to the first defendant, the son of the person who consistently complained that he should be the registered proprietor. The plaintiff, the widow of the deceased registered proprietor, challenged the first defendant’s title, claiming that the lease was transferred by fraud, and seeking orders that the transfer is null and void and that her late husband be restored as registered proprietor.

Held:

(1) "Fraud" in Section 33(1) (a) of the Land Registration Act includes not only actual fraud but circumstances in which interests in land have been transferred in an obviously unlawful or irregular manner (Koitachi Ltd v Walter Schnaubelt (2007) SC870 considered; Emas Estate Development Pty Limited v John Mea and The State [1993] PNGLR 215 applied).

(2) The transfer from the deceased registered proprietor to the first defendant was obviously unlawful and irregular, as it took place following the death of the transferor, who had died intestate, and no person had been appointed to administer his deceased estate.

(3) The transfer amounts to fraud for the purposes of Section 33(1) (a) of the Land Registration Act and it was appropriate to make the sort of orders sought by the plaintiff.

Cases cited

The following cases are cited in the judgment:

Emas Estate Development Pty Limited v John Mea and The State [1993] PNGLR 215

Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80

Koitachi Ltd v Walter Schnaubelt (2007) SC870

Mision Asiki v Manasupe Zurenuoc (2005) SC797

Mudge v Secretary for Lands [1985] PNGLR 387

Ramu Nickel Ltd v Temu (2007) N3252

Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959

The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603

Abbreviations

The following abbreviations appear in the judgment:

DCJ – Deputy Chief Justice

Inc – Incorporated

J – Justice

Ltd – Limited

N – National Court judgment

No – number

OPIC – Oil Palm Industry Corporation

PNGLR – Papua New Guinea Law Reports

SC – Supreme Court judgment

V – versus

WNB – West New Britain

WS – Writ of Summons

STATEMENT OF CLAIM

This was a claim for orders and declarations regarding a State Lease.

Counsel

G Linge, for the plaintiff
M S Wagambie, for the first defendant

16 February, 2009

1. CANNINGS J: This case is the latest chapter in a long-running saga of disputed ownership of a block of land in the Buvussi oil palm settlement near Kimbe. The block, of 6.2 hectares, is covered by a State Lease, an agricultural lease. The land is formally described as Portion 1357, Milinch Megigi, Fourmil Talasea.

2. The official copy of the State Lease shows the following chain of title:

• 28 May 1970 – the colonial administration granted the lease to Topukaliu Topikolo;
  
• 16 April 1974 – lease transferred from Mr Topikolo to Bernard Tonuknuk;
  
• 7 February 1978 – lease transferred from Mr Tonuknuk to Tangen Kanari;
  
• 4 November 2004 – lease transferred from Mr Kanari to Augustine Wiakar.
  

3. The dispute now before the court is between:

• the plaintiff, Elizabeth Kanari, who is the widow of Mr Kanari, he having died in 2001;
  
• the first defendant, Augustine Wiakar, who is the current registered proprietor of the lease, the son of a man, Alois Wiakar, who says he bought the block from Mr Tonuknuk in 1976 and put Mr Kanari in as a caretaker.
  

THE PLAINTIFF’S CASE

4. Mrs Kanari says that she and her late husband married and moved on to the land in 1978, then obtained a bank loan and developed the block by planting and harvesting oil palm. Alois Wiakar complained over a long period that the land was his, but her husband never agreed with that and always maintained that he was the rightful owner. She says that the lease was transferred to Augustine Wiakar without the knowledge or consent of herself or any member of her family. The transfer took place three years after her husband’s death and must be regarded as fraudulent. Mr Kanari died intestate (without leaving a will). She wants the court to restore her late husband as the registered proprietor so that she and her eldest son, Gideon Kanari, can apply to have the lease transmitted by custom.

THE FIRST DEFENDANT’S CASE

5. Augustine Wiakar says his father, Alois, was the one who purchased the block from Bernard Tonuknuk in 1976. His father bought the land for him. He was seven years old at the time. His father put Mr Kanari on the land as a caretaker in 1977 and only realised in 1992 when he managed to get hold of the lease that Mr Kanari had somehow got his name on it as registered proprietor. In 1993 his father took the matter to the local land mediation committee which decided in 1998, with the agreement of OPIC, that he was the rightful owner of the block. Augustine Wiakar argues that the 1978 transfer from Mr Tonuknuk to Mr Kanari was fraudulent. The 2004 transfer from Mr Kanari to himself was in compliance with the decision of the local land mediation committee, and facilitated by the WNB Provincial Lands Officer, he says. Mr Wiakar has presented, amongst others, affidavits by his father and Mr Tonuknuk, in support of those propositions.

ISSUES

6. The principal issue is whether the 2004 transfer of the lease from Mr Kanari to Mr Wiakar is effective. Before determining that, it is necessary to go back to the 1978 transfer from Mr Tonuknuk to Mr Kanari. But even before determining that, there are two preliminary points made by Mr Wiakar’s counsel, Mr Wagambie, which must be resolved.

7. I will address the issues in this order:

1. Has the plaintiff breached the Claims By and Against the State Act?
   
2. Does the plaintiff have standing to bring these proceedings?
   
3. Was the 1978 transfer from Mr Tonuknuk to Mr Kanari effective?
   
4. Was the 2004 transfer from Mr Kanari to Augustine Wiakar effective?
   

1 HAS THE PLAINTIFF BREACHED THE CLAIMS BY AND AGAINST THE STATE ACT?

8. Mr Wagambie submitted that the plaintiff had to give notice in writing of her intention to make a claim against the State under Section 5 of the Claims By and Against the State Act, as she joined the Registrar of Titles as a defendant. She failed to give notice within six months after the occurrence out of which the claim arose. She also failed to serve the writ and statement of claim on the Registrar. Therefore the proceedings should be dismissed, Mr Wagambie asserted.

9. I reject this submission. The notice requirements of the Claims By and Against the State Act apply only to actions that are founded on contract or tort or breach of constitutional rights (Mision Asiki v Manasupe Zurenuoc (2005) SC797). The present proceedings are not based on any of those sorts of cause of action. There was no need to give notice to the State under Section 5. Nor was there any need for the Registrar to be served. That was desirable but not a necessary procedural step for the plaintiff to take.

2 DOES THE PLAINTIFF HAVE STANDING TO BRING THESE PROCEEDINGS?

10. Mr Wagambie submitted that Mrs Kanari is not the correct person in law to institute these proceedings.

11. He did not elaborate on the submission and I am at a loss to see any merit in it. Clearly Mrs Kanari has an interest in the proceedings. She was living on the land and the lease was registered in the name of her husband for more than 20 years. She is aggrieved by the transfer of the lease to Mr Wiakar. She has a legitimate legal interest in the subject matter of the proceedings.

3 WAS THE 1978 TRANSFER FROM MR TONUKNUK TO MR KANARI EFFECTIVE?

12. Mr Wagambie submitted that all the evidence points to this transfer being a fraudulent transaction. Mr Tonuknuk has sworn an affidavit that he sold the land to Alois Wiakar. Mr Kanari was only put on the land as a caretaker. The plaintiff has not produced the transfer instrument or any other document to provide evidence of a legitimate transfer of the lease in 1978. The local land mediation committee and other authorities such as OPIC and the Provincial Lands Officer inquired into the matter over a number of years and decided that Alois Wiakar was the legitimate owner of the land and that Mr Kanari had to hand it back to him or his son, Augustine.

13. I reject this submission for two reasons. First, the official copy of the State Lease shows that the transfer from Mr Tonuknuk to Mr Kanari was registered in 1978. Mr Kanari thereupon became the registered proprietor and became entitled to the protection of Section 33(1) of the Land Registration Act, (protection of registered proprietor), which relevantly states:

The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except -

(a) in the case of fraud.

14. The evidence adduced in this case falls well short of proving that the 1978 transfer was affected by fraud. Even if there were evidence of fraud I would be hard pressed to conclude that it should be used as a reason to disturb an interest in land that was registered more than 30 years ago. Neither counsel addressed this point in their submissions, but I cannot conceive that it would be proper for the court, except in the most exceptional circumstances, to go so far back in time and declare that a transfer was void. Exceptional circumstances have not been shown to exist.

15. Secondly, the evidence about the local land mediation committee and OPIC and the provincial lands adviser ruling in Alois Wiakar’s favour and supporting his attempts to move Mr Kanari off the land, is irrelevant. None of those authorities have any power to amend the lease or the Register or give directions to anybody regarding the land. Only the Registrar of Titles or the National Court had power to remove Mr Kanari as registered proprietor and replace him with Alois Wiakar. The Registrar took no action, at least not until 2004. And the National Court took no action either. Alois Wiakar and Mr Tonuknuk commenced proceedings in the National Court in 1999, challenging Mr Kanari’s title (WS No 259 of 1999). But those proceedings were dismissed by Lenalia J on 24 September 2001.

16. I conclude that the 1978 transfer was effective to confer on Mr Kanari the status of registered proprietor and that he retained that status until his death in 2001; and that from the date of his death until the transfer to Augustine Wiakar on 4 November 2004, his estate held title in the land under the lease.

4 WAS THE 2004 TRANSFER FROM MR KANARI TO MR WIAKAR EFFECTIVE?

17. This transfer was registered three years after Mr Kanari died. He died intestate, and no person has been appointed to administer his estate. He did not sign a transfer instrument before he died. There is ample evidence that the transfer was facilitated and registered without the knowledge or consent of Mrs Kanari or any member of her family. The transfer came about due to representations by Alois Wiakar and Augustine Wiakar, with supporting documents from the local land mediation committee, OPIC and the provincial lands adviser. The instrument of transfer is not in evidence and it is doubtful, given the way Mr Wagambie responded to my enquiries at the trial, that one exists. I find that the Registrar of Titles or his delegate acted on the representations by Alois Wiakar and Augustine Wiakar and, without consulting any of the registered proprietor’s immediate relatives or legal representatives, registered the transfer to Augustine Wiakar on 4 November 2004.

18. I have not been alerted to any provision of the Land Registration Act or any other law that permits the transfer of a lease in this manner. I consider that the transfer was irregular and unlawful. Does it follow from this that the transfer was ineffective?

19. The answer to that question turns on whether a transfer in these circumstances is a "case of fraud" for the purposes of Section 33(1)(a) of the Land Registration Act. Mr Linge, for the plaintiff, submits that it is fraud, plain and simple. Mr Wagambie submits to the contrary.

20. Papua New Guinea has adopted a Torrens Title system of land registration for alienated government land. We apply the principle of indefeasibility of title. Registration of leases vests an indefeasible (unforfeitable) title in the registered proprietor subject only to the exceptions in Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The only exception that might apply in this case is Section 33(1) (a): in the case of fraud.

21. As to what "fraud" means, there are two schools of judicial thought. On the one hand, in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215 the Supreme Court (Amet J and Salika J, Brown J dissenting) held that if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.

22. In that case the registered proprietor of a State lease had his lease forfeited in dubious circumstances. The Minister for Lands then exempted the land from public advertisement and a new lease was issued. This all happened in a short space of time while there was an appeal pending against the Minister’s decision to grant the lease to a new lessor. Amet J, as he then was, said:

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 landowner is deprived of his title to land by irregular procedures on the part of officials and of the department of the State, to the advantage of a private corporation. I do not accept that quite clear irregularities and breaches of the statutory provisions should remain indefeasible. I believe that, although these irregularities and illegalities might not strictly amount 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 ...

23. This wide view of "fraud" – it includes irregularities that are tantamount to fraud and constructive fraud – has been followed in the National Court decisions of Sheehan J in Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959, Sevua J in Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80 and Injia DCJ in Ramu Nickel Ltd v Temu (2007) N3252.

24. On the other hand, a narrower view was recently favoured by the Supreme Court (Gavara-Nanu J, Mogish J and Hartshorn J) in Koitachi Ltd v Walter Schnaubelt (2007) SC870. The Court held that the Emas Estate case was distinguishable on its facts as it concerned a registered proprietor whose State Lease was forfeited and then allocated and registered in the name of a third party. As to the Garamut case, that was said to concern a challenge to the issue of a State Lease on the grounds that procedures in the Land Act were not complied with. The Court adopted the view of fraud taken in the National Court decision of Gavara-Nanu J in The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603, where his Honour stated:

The word ‘fraud’ in Section 33(1) (a) of the Land Registration Act, is not defined anywhere in the Act, but Section 45(1) makes it clear that fraud means more than constructive or equitable fraud. ...

It is implicit from these provisions that "fraud" ... means fraud committed by the registered proprietor or actual fraud. That is the only ground upon which a registered proprietor’s title can be rendered invalid.

25. Which of the two views of fraud should be applied in the present case? The wide view pioneered by the Supreme Court in Emas Estate and followed in Garamut, Hi-Lift and Ramu Nickel? Or the narrow view propounded by the Supreme Court in Koitachi?

26. In Koitachi the Court did not seek to overturn or expressly disapprove of the view taken by the majority in Emas Estate, or by the National Court in Garamut, preferring instead to confine those cases to their facts. The decision in Emas Estate must still be regarded as good law.

27. There are clearly competing interpretations to be placed on Section 33(1) (a). It may well be that the best way to bring more certainty into its practical application is for the issue to be the subject of full argument before a five-member Supreme Court bench. Until that happens, I think the best thing for the National Court to do is follow the Supreme Court decision that is based on facts which bear the closest similarity to the facts before the National Court.

28. In Koitachi the dispute arose between two different parties who claimed to have purchased the land from a vendor. One of the purchasers lodged a caveat on the title to the property. The Registrar of Titles cancelled the caveat and registered the transfer to the other purchaser. The purchaser who had his caveat cancelled then applied to the National Court by way of judicial review for registration of the transfer to be set aside and for his caveat to be reinstated. He succeeded in the National Court but the other purchaser won the appeal in the Supreme Court. It was in that context that the Supreme Court took the narrow view of fraud and decided that actual fraud had neither been pleaded nor proven.

29. The facts in Emas Estate are more akin to those of the present case: there were obvious irregularities and breaches of statutory procedures of the sort that were found to exist in the subsequent National Court cases of Garamut, Hi-Lift and Ramu Nickel. I consider therefore that the view of fraud I should apply in the present case is the view of the Supreme Court in Emas Estate: if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.

30. I now revert to what I concluded earlier. The 2004 transfer from the late Mr Kanari to Augustine Wiakar was irregular and unlawful. It was registered contrary to the Land Registration Act. The circumstances in which it was registered are so unsatisfactory, dubious and irregular as to be tantamount to fraud. Actual fraud has not been proven but I am satisfied that there is constructive fraud. Therefore it is a "case of fraud" for the purposes of Section 33(1) (a) of the Land Registration Act. It follows that the 2004 transfer is ineffective at law and that it must not be allowed to stand.

CONCLUSION

31. It is appropriate to grant relief to the plaintiff along the lines sought in the statement of claim. I will declare that the 2004 transfer is null and void. I will order the Registrar of Titles to amend the Register and restore Mr Kanari as registered proprietor. It will then be up to Mrs Kanari or perhaps her son to take appropriate steps under the Land Registration Act for transmission to them by custom of the late Mr Kanari’s interest in the land.

32. I will also order that there be an orderly and peaceful transfer of the right of possession of the land.

33. As to costs, each side of the dispute has been represented by private counsel and in these circumstances the rule of thumb as to costs should apply: the losing side should pay costs.

DECLARATIONS AND ORDERS

(1) The transfer of Portion 1357, Milinch Megigi, Fourmil Talasea, to Augustine Wiakar, entered on 4 November 2004, is null and void and of no effect.

(2) The registered proprietor of Portion 1357, Milinch Megigi, Fourmil Talasea is Tangen Kanari.

(3) The Registrar of Titles shall, within 21 days after service of this order upon him or his delegate, amend the Register and all copies of the State Lease for Portion 1357, Milinch Megigi, Fourmil Talasea, and do all other things required to give effect to these declarations and orders.

(4) The first defendant, Augustine Wiakar, and all his family, agents, servants and all other associates, shall, on or before 16 March 2009 vacate Portion 1357, Milinch Megigi, Fourmil Talasea and give up peaceful possession of the land to the plaintiff, Elizabeth Kanari, and shall not within that period or at any other time damage or destroy oil palm or any other crops or any other property of economic value on the land, including any dwellings or other structures and shall not on or after 17 March 2009 enter the land or interfere in any way with the plaintiff’s peaceful enjoyment of the land.

(5) The plaintiff, Elizabeth Kanari, shall be entitled to occupy the land at Portion 1357, Milinch Megigi, Fourmil Talasea, with effect from 17 March 2009 and shall not before that date enter the land or interfere in any way with the first defendant’s enjoyment of the land.

(6) The Police are authorised, from 17 March 2009 onwards, to take such reasonable steps as are necessary to give effect to these declarations and orders.

(7) The Oil Palm Industry Corporation shall from the date of this order take all such steps as are necessary to give effect to these declarations and orders.

(8) The first defendant shall pay the plaintiff’s costs of these proceedings on a party-party basis, to be taxed if not agreed.

Orders and declarations accordingly.

____________________________

Linge & Associates: Lawyers for the plaintiff
MS Wagambie Lawyers: Lawyers for the first defendant