AGC (Pacific) Ltd v Registrar of Titles [2009] PGNC 186; N3807 (16 July 2009)

N3807

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 275 OF 1997

BETWEEN:

AGC (PACIFIC) LIMITED
Plaintiff

AND:

REGISTRAR OF TITLES
First Defendant

AND:

CANTERBURY NO. 4 PTY LIMITED
Second Defendant

AND:

KAKAGRIM DEVELOPMENTS PTY TD
Third Defendant

Waigani: Davani .J
2009: 9th, 16th July

LAND – Application to rectify land Register – alleged perpetration of fraud on land – alleged fraudulent entries in land register – application to rectify land Register must be made to a Judge – declarations and injunctions sought – s.33(1)(a) Land Registration Act chapter 191.

LAND – State Lease – debt owing by second defendant to plaintiff – court order by plaintiff for second defendant to pay –enforcement of debt by Writ of Levy of Property – disposition of property by second defendant to third defendant – first defendant debtor had an intention to sell land to avoid enforcement process – whether this is an intention to defraud the plaintiff creditor.

LAND – Second defendant obtained Ministerial approval on Transfer of land to second defendant– first defendant registered Transfer of land on State Lease – all done in one day - questionable process – whether the first defendant Registrar’s actions are an intention to defraud creditor.

BANKING – plaintiff obtained an order for first defendant to pay monies owing – non payment by first defendant – plaintiff enforced judgment debt by Writ of Levy of Property – first, second and third defendant debtor failed to acknowledge existing judgment debt –the property in question was the subject of the Writ – whether the first, second and third defendants’ actions are deemed to be an intention to defraud creditor.

Facts

This is an application to rectify the land Register because of a fraud perpetrated upon it in relation to land described as Allotment 20 Section 483 Hohola, State lease Volume 5 Folio 127 (the ‘land’). Before the occurrence of the fraud, the plaintiff had entered into seven separate equipment lease agreements with Northgate Plant Hire, a business name owned by the second defendant. Northgate defaulted and the plaintiff filed court proceedings against guarantors Douglas James Kelson and Lynette Wesley, proceedings WS 596 of 1996. After entry of judgment by default, for the principal amount of K230,242.14, excluding interest and costs which were also ordered, the second defendant still did not pay. Because the second defendant was the registered proprietor of the land, the plaintiff took out a Writ of Levy of Property over it on 1st May, 1997. However, the second defendant had already sold the land to the third defendant for K120,000.00 on 23rd September, 1996, when the land was valued at K275,000.00. Unbeknown to the plaintiff, the third defendant obtained Ministerial approval on the Transfer of the land and registration of the Transfer of the land from the second defendant to the third defendant, all done on 9th May, 1997, a process that would normally take 6 months to a year or more. The plaintiff then took out several injunctive orders restraining the second and third defendants from dealing with the land. Despite that, on 10th August, 2000, the third defendant gave an interest in the land to PNGBC by way of mortgage which the first defendant registered as a dealing by the third defendant to the Papua New Guinea Banking Corporation, deliberately flouting the restraining orders.

Issues

1. Whether the sale of the land by the second defendant to the third defendant for an amount significantly below the market price and below the second defendant’s debt owing to the plaintiff, was an act to defraud the creditor, being the plaintiff?

2. Whether actions taken by the second defendant to transfer or dispose of its title to the land was an attempt to avoid paying the debt owed to the plaintiff?

3. Alternatively, whether the actions taken by the second defendant to transfer or dispose of its title to the land is an attempt to frustrate the enforcement proceedings brought on by the plaintiff for recovery of the debt owing by the second defendant to the plaintiff?

4. Whether the approval and registration of the Transfer of the land to the third defendant by the first defendant, done on the same day, was so irregular as to amount to fraud?

5. Whether the second defendant’s actions were to avoid payment of the debt and the enforcement/execution of the Writ of Levy of Property?

6. Whether in the circumstances, the registration of the Transfer was obtained by fraud?

7. If the registration of the transfer was fraudulently done, then is the sale voidable?

Reasons

1. Yes
2. Yes
3. Yes
4. Yes
5. Yes
6. Yes
7. Yes

The second and third defendants’ actions, together with that of the first defendant, were done to defraud the plaintiff creditor.

Ordered accordingly.

Cases Authorities Cited

Papua New Guinea Cases

Federal Huron v. OK Tedi Limited [1986] PNGLR 5
Emas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215
William Maki v. Michael Pundia [1993] PNGLR 337
Mary Tononaki Peter v. Peter Mathew, George Lessy, The Registrar General (1995) N1395
Hi Lift Co. Pty Ltd v. Miri Setae (2000) PNGLR 80 (N2004)
Steamships Trading Co. Ltd v. Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603
Elizabeth Kanari v. Augustine Wiakar (2009) N3589

Overseas Cases

Cadogan v. Kennet (1776) 2 Cow
Denise Mary Cannane and Anor v. J. Cannane Pty Ltd (In Liquidation) and Anor; Andrew Vincent Cannane and Anor v. Official Trustee in Bankruptcy as Official Trustee of the bankrupt Estate of John Vincent Cannane – BC9801073 1073
Hardie v. Hanson [1960] HCA 8; (1960) 105 CLR 451

Other References

Halsburys Laws of England Fourth Edition

Counsel:

R. Diweni, for the plaintiff/applicant
No appearance by and for the defendants

DECISION

16th July, 2009

1. DAVANI .J: The matter comes before me for hearing to rectify the Register, to be done under the Land Registration Act (chapter 191) (‘LRA’) in relation to property described as Allotment 20 Section 483 Hohola State Lease Volume 5 Folio 127 (the ‘land’) because of a fraud perpetrated upon it. The application is commenced by Originating Summons filed by Blake Dawson Waldron Lawyers (then) for the plaintiff, on 4th July, 1997.

Undefended hearing

2. This matter has a long history having come before the Courts on many occasions but which did not proceed to hearing for many reasons. Several Court Orders have been taken out where the first, second and third defendants have been ordered not to have any dealings in the land until further orders. One such order is the Court Order of 17th July, 1997 where the first defendant was ordered not to raise any dealings in the Register established under the Land Registration Act over the land. The second and third defendants were also ordered not to deal in the land or attempt to give any person any interest in the land. On 8th August, 1997, the third defendant undertook to the Court, by its lawyer, that it will not, pending the determination of the proceedings or until further order, transfer or deal with the land.

3. Because of the defendants’ lack of interest in the matter, on 2nd March, 2009, the plaintiff obtained the following orders;

"(i) The matter is adjourned to 18th March, 2009;

(ii) The plaintiff shall give notice of this adjournment by an advertisement in one of the daily newspapers, at least once a week on two (2) different occasions;

(iii) If the defendants are desirous of defending themselves, they must appear in this Court on 18th March, 2009;

(iv) The plaintiff shall prepare a Statement of Agreed and Disputed Facts and Issues for Trial for this Court’s consideration on 18th March, 2009."

4. The plaintiff complied with this order by advertising on 4th March, 2009 and 11th March, 2009 in the National newspaper. This is deposed to in the affidavit of Ralph Diweni, lawyer, sworn on 12th March, 2009 to which he attached copies of the advertisements.

5. The defendants did not respond to these advertisements.

6. On 20th March, 2009, the plaintiff again obtained further orders in relation to how the matter will proceed. These were that;

"(i) This proceeding is set down for hearing on 20th July, 2009;

(ii) Hearing of this matter shall be by way of affidavits;

(iii) The plaintiff shall file and serve the pleadings by 25th March, 2009;

(iv) If the defendants have any issue and interest to oppose the matter on the hearing date allocated, they shall file an appropriate application and serve the same on the plaintiff and proceed with the hearing of the same nor later than 14th April, 2009;

(v) Unless the defendants take the steps in paragraph 4 of the orders hereof, they shall have no liberty to appear and be heard at the trial of this matter;

(vi) Costs of this appearance are awarded against the defendants."

7. The defendants did not respond to these orders. Based on the above information, the matter proceeded to hearing, ex parte.

Background facts

8. In or about June 1994, the plaintiff entered into seven (7) separate equipment lease agreements with Northgate Plant Hire, a business name owned by the second defendant.

9. Douglas James Kelson and Lynette Wesley acted as guarantors over the agreements.

10. It was a condition of the lease agreements that Northgate pay rent on the leased equipment.

11. Northgate defaulted and the plaintiff filed proceedings on 21st June, 1996 in WS No. 596 of 1996 against the guarantors and the second defendant for the amount owing.

12. The plaintiff was granted default judgment by this Court in WS No. 596 of 1996 against the second defendant. The second defendant was ordered to pay the plaintiff K230,292.14 and interest accruing at a daily rate of K49.40. The Summons was served on the second defendant on 2nd July, 1996. The judgment came into effect on 8th August, 1996.

13. The second defendant was the registered proprietor of the land. By a Contract for Sale of Land dated 23rd September, 1996, the second defendant purported to agree to sell the land to the third defendant for K120,000.00.

14. On or about July, August and September 1996, the value of the land was K275,000.00.

15. By way of enforcement and pursuant to the judgment, the plaintiff took out a Writ of Levy of Property, on 28th November, 1996.

16. On 29th April, 1997, the Acting Deputy Sheriff, Glenn Jerry went to the land and made known to one Douglas James Kelson that he was carrying out his responsibilities under the Writ of Levy.

17. On 29th April, 1997, the plaintiff by its agent Michael O’Rourke was told by the said Douglas Kelson that the title to the land had been transferred by the second defendant to a third party.

18. On 1st May, 1997, the Acting Deputy Sheriff seized the land pursuant to the Writ of Levy.

19. By letter dated 7th May, 1997, Blake Dawson as lawyers for the plaintiff, advised the first defendant of the existing judgment debt and the Writ of Levy of Property.

20. The Acting Deputy Sheriff could not register the memorial of the Writ of Levy in the Register Book with the Lands Department because the Office of the Registrar of Titles was closed during the months of April and May 1997.

21. However, notwithstanding the closure of the office, the transfer of the land was approved by the delegate of the Minister for Lands under Section 128 of the Land Act and, thereafter, was lodged for registration under the LRA, all done on 9th May, 1997.

22. Registration of the transfer of the land from the second defendant to the third defendant was entered by the first defendant, in the Register relevant to the land, by the first defendant, on 9th May, 1997.

23. The transfer was not in accordance with Regulation 10 or Form 4 of the Regulation to the LRA, in that the third defendant had not approved it and the first defendant did not exercise at all, or properly exercise his discretion under section 159 of the LRA.

24. Because the plaintiff was aggrieved by the process adopted by the first defendant in the registration exercise, the plaintiff applied for and was granted an injunction in WS 595 of 1996 on 16th May, 1997, directed at the first defendant restraining him from registering any transfer of the land.

25. It was not until 29th May, 1997, that the plaintiff learnt of the registration of title to the land in the third defendant’s name.

26. On 4th July, 1997, the plaintiff filed these proceedings seeking orders, amongst others, that the third defendant holds title to the land subject to a fraud and that the first defendant amend the Register to replace the name of the third defendant as registered proprietor with the name of the second defendant.

27. On 7th July, 1997, the plaintiff obtained a further order in these proceedings restraining the Registrar of Titles from registering any transfer of title to the land until further orders.

28. On 11th July, 1997, the plaintiff obtained orders in these proceedings restraining the first defendant from registering any dealings on the land until further orders. In the same order, the second and third defendants were ordered not to deal in the land or give any interest in the land to any other person until further orders.

29. On 8th August, 1997, the third defendant through its lawyer, undertook not to deal in the land until further orders of the Court. This undertaking was endorsed by the Court the same day.

30. Despite the Court Orders and the undertaking by the third defendant, on or about 10th August, 2000, the third defendant gave an interest in the land to Papua New Guinea Banking Corporation (‘BSP’) by way of a mortgage, no. S.24382.

31. Additionally, despite the orders of the Court, on or about 5th July, 2001, the first defendant registered, or allowed or caused to be registered, a dealing (mortgage no. S.24382) by the third defendant to BSP.

Issues

32. Whether the sale of the land by the second defendant to the third defendant for an amount significantly below the market price and below the second defendant’s debt owing to the plaintiff was an act to defeat the creditor, being the plaintiff?

33. Whether actions taken by the second defendant to transfer or dispose of its title to the land was an attempt to avoid paying the debt owed to the plaintiff?

34. Alternatively, whether the actions taken by the second defendant to transfer or dispose of its title to the land is an attempt to frustrate the enforcement proceedings brought on by the plaintiff for recovery of the debt owing by the second defendant to the plaintiff?

35. Whether the approval and registration of the Transfer to the third defendant by the first defendant, done on the same day, was so irregular as to amount to fraud?

36. Whether the second defendant’s actions were to avoid payment of the debt and the execution of the Writ of Levy of Property?

37. Whether in the circumstances, the registration of the Transfer was obtained by fraud?

38. If the registration of the transfer was fraudulently done, then is the sale voidable?

Analysis of evidence and the law

39. As stated above, this is an action by the plaintiff to rectify the Register established under the Land Registration Act (chapter 191), because of a fraud perpetrated upon it. The relevant provision of the LRA, s.33(1)(a) reads;

"33. Protection of registered proprietor.

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

(a) in the case of fraud; and

..."

40. The plaintiff submits that the third defendant had title to the land registered in its name because of or through fraudulent means. The evidence in relation to this fraud is contained in the various affidavits filed and relied on by the plaintiff, that I will refer to.

41. On 9th May, 1997, the second defendant obtained the approval of the Minister for Lands under Section 128 of the Land Act 1996 to the transfer of the land from the second defendant to the third defendant. On the same day, the first defendant had the transfer registered on the Register of the State Lease to the land. A copy of that State Lease on which the registration is entered, is attached to the affidavit of Michael Luscombe Wright, lawyer, as annexure ‘F, sworn on 30th June, 1997.

42. The consideration shown in the transfer on the sale of the land between the second and third defendants is K120,000.00 whereas the value of the land as deposed to by Laurie Needham in his affidavit, sworn on 30th June, 1997, is K275,000.00. At that time, Laurie Needham, was the Managing Director of L.J. Hooker Pty Limited, and was experienced in valuing real estate and an expert.

43. Particulars in relation to fraud, requirement under O.8 R.30 of the NCR, are pleaded in the Particulars filed on 4th July, 1997 by the plaintiff. Therein, it pleads at paragraph (m) on pg. 3 that;

"The transfer was not in accordance with Registration 10 or Form 4 of the Regulations to the Act, in that the third defendant had not approved it and the first defendant did not exercise at all, or properly exercise his discretion under Section 159 of the Act."

44. Michael Wright’s affidavit has attached to it a letter he sent to the first defendant Registrar dated 7th May, 1997 advising that he had obtained default judgment for AGC (Pacific) Limited against Douglas James Kelson, Lynnette Wesley and Canterbury No. 4 Limited. That Canterbury No. 4 Limited was the registered proprietor of the land and that the land was seized by the Sherriff on 1st May, 1997. He also put the Registrar of Titles on notice that Canterbury No. 4 Limited may be attempting to transfer title of the land to the third defendant. That if that occurs, that the Registrar is to withhold registration and to advise Blake Dawson Waldron (then) so they will take appropriate measures to restrain the second defendant. The evidence is that 2 days later, despite receipt of that letter, the Registrar proceeded to register title in the third defendant’s name as evidenced on the Certificate of Title.

45. The Particulars plead that although a Writ of Levy of Property was placed over the land, that within a day, the second defendant obtained Ministerial Approval on the Transfer after which the land was registered to the third defendant’s name, then subsequently sold at a very undervalued price.

46. In relation to the process of Ministerial approval and Registration, the relevant evidence are affidavits from Philip Liskia, lawyer, affidavit sworn on 24th July, 1997 and Gregory Lay, lawyer (then), sworn on 18th August, 1999. As at 24th July, 1997, Philip Liskia had 3 years of experience in the firm of Blake Dawson Waldron (then), in the practice of conveyancing and land transactions. He deposed that in his experience, application for approval of a Contract and Transfer takes not less than two weeks. He deposes further that a Transfer lodged for registration on a State Lease, lodged with the Office of the Registrar of Titles will not be registered on the title in not less than one week (my emphasis).

47. Mr. Liskia deposes that his experience with the Department of Lands and the Registrar of Titles is that a ministerial approval of a transfer can take up to months and beyond. Registration of a transfer on a State Lease can also take many weeks.

48. He further deposes that during April and May 1997, the Department of Lands, Southern Region, Conveyancing Section and the Registrar of Titles’ Office was closed because the files were being relocated. During those months, he did not obtain Ministerial approval on transfers nor registration on transfers, on matters he had carriage of. He deposes that the Ministerial approval and registration of transfers for the second and third defendants that occurred on the same day on 9th May, 1997 raises the suspicion of there being foul play and impropriety by the Lands Department personnel and the Registrar of Titles.

49. Gregory Lay, then a Partner with White Young & Williams Lawyers, deposes that as at 18th August, 1999, he had been a lawyer in Papua New Guinea since 1973. He deposes that conveyancing is a part of his legal practice. That his experience has been that ordinarily, the Department of Lands takes several weeks to process Ministerial approval of a Transfer and that the same applies to the registration of the Transfer on the Title Deed. That Ministerial approval and registration of a Transfer on the State Lease in a day, in his experience, is most unusual. Gregory Lay deposes that approval and registration in a day, as having occurred on the conveyancing in relation to the land in question is "extraordinary" and "without precedent" (par.9 of Gregory Lay’s affidavit).

50. I should restate again that the filed Particulars pleads fully the facts, circumstances and matters relied upon, and rightly so because the allegation of fraud is a very serious allegation, and failure to fully plead and particularize can result in the whole claim being dismissed or struck out (Mary Tononaki Peter v. Peter Mathew, George Lessy, The Registrar General (1995) N1395; William Maki v. Michael Pundia [1993] PNGLR 337 at 338-339).

51. The applicant relies on fraud in seeking that the Register be rectified. Does the LRA provide for what a fraud is? The LRA only speaks of fraud and does not limit its meaning nor does it require that fraud be shown in a particular party. (Steamships Trading Co. Ltd v. Garamut Enterprises Ltd (2000) N1959).

52. So how have the Courts dealt with claims of fraud, more particularly in relation to dealings with the Department of Lands and the Registrar of Titles?

53. First, if the issue of title is being challenged as in this case, then no doubt the party sued will almost always rely on the argument that it has indefeasibility of title. Section 33(1)(a) of the LRA makes it clear that the proprietor of an estate holds it absolutely free from all encumbrances except fraud. Section 45(1) of the LRA makes it clear that fraud means more than constructive or equitable fraud. But when statutorily prescribed, fraud means actual fraud and not equitable fraud (see The Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603). Therefore, it is appropriate that before coming to any conclusion on that issue, that the Court must be clear on the extent to which the plaintiffs challenges have basis on fact or law and if so, to then consider whether the Defences raised preclude the remedies sought (see Steamships Trading Co. Ltd v. Garamut Enterprises Ltd (supra)).

54. In this case, the defendants did not appear to present their case. But in my view, the apparent facts and evidence demonstrate that all the defendants do not have a defence. The evidence show the following to have occurred which I summarise again;

- The plaintiff obtained judgment debt against the first defendant;

- Because of non-payment of the judgment debt, the plaintiff then took out a Writ of Levy of Property over the land;

- Even when injunctions were in place preventing or stopping the sale of the land, the second defendant’s directors sold the land to the third defendant for a far lesser consideration than what it was worth on the market and far less than the judgment debt;

- Even when the injunctions were in place and the Writ of Levy of Property in place, the first, second and third defendants, together, obtained Ministerial approval on the Transfer and registration of the Transfer on the State Lease, all in one day, an occurrence which was highly suspicious and questionable considering the first defendant’s office was closed indefinitely during that period, and that the Ministerial approval and registration processes as demonstrated in evidence above, in a regular conveyance, would take more than 6 months to a year or even more, to finalize.

55. This is a very similar situation to the case Hi Lift Co. Pty Ltd v. Miri Setae (2000) PNGLR 80 (N2004), where the defendant, the Department of Agriculture and Livestock, after being in occupation of Portion 2413 for over 10 years, a public institutions zone, suddenly found itself without title to that portion, because it had been allocated to the plaintiff company as a business lease. The Court found the issuance of title to be irregular because not only were the procedures in relation to issuance of State Leases under the Land Act, not followed, but also that the Lands Department then commenced the rezoning process, which the Court found to be very irregular. The Court found there to be fraud in the issuance of the Title Deed and refused to give possession of the subject land to the plaintiff.

56. What is apparent is that the second and third defendants with the assistance of the first defendant or his agents or nominees, intended to defeat a creditor, being the plaintiff. The evidence shows that the second defendant had substantial debt in a judgment owing to the plaintiff and yet, with complete disdain, indifference and disregard for the Court Order, which included injunctions, and a Writ of Levy of Property, it sold the land, then the third defendant used it as security for another loan. The principles and rules of the Common Law as now universally known and understood are so strongly against fraud in every shape that the Common Law would have attained every end proposed by the statutes. (See vol. 18 Halsbury’s Laws of England 4th Ed., paragraphs 358 to 666. See in particular footnote two (2) to paragraph 359 which refers to Cadogan v. Kennet (1776) 2 Cow p.432 at 434, per Lord Mansfield).

57. Denise Mary Cannane and Anor v. J. Cannane Pty Ltd (In Liquidation) and Anor; Andrew Vincent Cannane and Anor v. Official Trustee in Bankruptcy as Official Trustee of the bankrupt Estate of John Vincent Cannane – BC9801073 1073, Unreported Judgment of the High Court of Australia, Bench consisting Brennan CJ. Gaudron, McHugh, Gummow and Kirby .JJ, is an Australian case where the Court decided on a case similar to this. In that case, the bankrupt used a corporate vehicle he owned for purchase of business for the purpose of a ‘back door listing’. There was a transfer of shares in that corporate vehicle to family members for nominal but adequate consideration in expectation of increase in the value of shares. There was a subsequent purchase of the business by a corporate vehicle which saw a commensurate increase in the value of the shares. The issue before the Court was whether the disposition of the land was at an undervalued price; whether the creditors were entitled to the value of the shares and whether there was intent to defraud the creditors. Brennan CJ and McHugh .J said;

"(12). Although the party impugning the disposition of property must show an actual intent to defraud creditors at the time of the disposition, the intent may be inferred from the making of a disposition which, to adopt the words of Lord Hatherley LC in Freeman v. Pope, subtracts from the property which is the proper fund or for the payment of the debts, an amount without which the debts cannot be paid. The "proper fund" may consist in assets out of which future creditors as well as present creditors would be entitled to be paid a dividend in respect of what is owing to them. Therefore, a subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. Whether the inference should be drawn, depends upon all the circumstances of the case.

(13). If property be disposed of by sale and the sale price received by the disponor is equal to the true value of the property at the time of the disposition, the creditors have an undepleted fund against which to prove their debts. But if property is sold for an undervalue or is given away, that fact is relevant to the intent to be attributed to the disponor in disposing of the property. The value of property at the time of disposition may reflect, of course, the prospect of its future increase or decrease in value. But disposition of property at an undervalue is only a fact from which, dependent on the surrounding circumstances, an inference of fraudulent intent may be drawn. In Williams v. Lloyd; In re Williams, a majority of the Court declined to draw that inference when the disponor was in a financially sound position and transferred property to his wife and children because his wife sought to have the family property preserved against the hazard of loss by her husband."

(my emphasis)

58. In Hardie v. Hanson [1960] HCA 8; (1960) 105 CLR 451 at 456, Dixon .CJ said;

"The phrase "intent to defraud creditors of the company" suggests that present or future creditors of the company will, if the intent is effectuated, be cheated of their rights."

59. In Cadogan v. Kennet (supra), Lord Mansfield said;

"The principles and rules of the common law as now universally known and understood are so strongly against fraud in every shape that the common law would have attained every end proposed by the statutes."

60. Therefore, in applying the common law of the United Kingdom as forming part of the underlying law of Papua New Guinea (see Federal Huron v. OK Tedi Limited [1986] PNGLR 5 at pgs. 18, 19, 20, 30), I find that s.33(1)(a) of the LRA applies to a situation such as this, where there is an intention to defraud a creditor, as in this case where Canterbury No. 4 intended to defraud the AGC by abusing the processes in the Lands Department and the office of the Registrar of Titles and also, by selling property, which was already the subject of a Writ of Levy of Property, at a very undervalued price, then using that property as security for another debt.

61. In my view, that is fraud of the highest order.

62. The analysis of my brother Cannings .J in Elizabeth Kanari v. Augustine Wiakar (2009) N3589, as to what a fraud is, demonstrates the need for either Parliament to redefine and elaborate on the many categories of fraud either in the LRA, or new legislation, from the simplest frauds to very sophisticated frauds. Or a Supreme Court five (5) men bench can deliberate on and set down the test. I prefer the latter suggestion because it will put to rest the issues now raised and other disputes/issues that have yet to arise in this country.

63. In conclusion, I will adopt the position taken by the Supreme Court in Emas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215 where the Supreme Court consisting of Amet, Salika .JJ and Brown .J dissenting, held that if circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, that it is tantamount to fraud, warranting the setting aside of registration of title.

64. I find fraud was perpetrated by the first defendant or his servants and agents in collaboration with the second defendant and the third defendant, all with the intent to defraud the creditor, AGC Pacific.

Formal orders

65. The formal orders I make are these;

(1) A declaration that the third defendant holds the estate of registered proprietor in the Register (‘Register’) under the Land Registration Act (chapter 191) relevant to the whole of Allotment 20 Section 483, Hohola State Lease Volume 5 Folio 127 (the ‘land’) pursuant to a fraud;

(2) The Register shall be amended to replace the third defendant as registered proprietor with the second defendant as registered proprietor;

(3) An injunction is directed to the first defendant that the first defendant be restrained from allowing any dealings in the Register relevant to the land until after the Register has been rectified in accordance with these orders;

(4) An injunction is directed to the second and third defendants that they are restrained from dealing in the land or attempting to give to any other person any interest in the land until after the Register has been rectified in accordance with these orders;

(5) A declaration that the Court Order of 11th July, 1997 and entered on 17th July, 1997 is still binding and effective against all of the defendants;

(6) A declaration that the undertaking by the third defendant endorsed by order of this Court made on 8th August, 1997 and entered on 15th August, 1997 is binding and effective against the third defendant;

(7) An order directing the first defendant forthwith to note in accordance with s.171 of the Land Registration Act in the Register of the land, a memorial of the Writ for Levy of Property sealed in WS 596 of 1996;

(8) That all the defendants shall pay the plaintiffs costs of this proceeding;

(9) That the time for entry of these orders is abridged to the time of settlement which shall take place forthwith.

______________________

Lawyer for the applicant/plaintiff: Blake Dawson Lawyers