Mur v Kewa [2010] PGNC 66; N4016 (10 May 2010)

N4016

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 174 OF 2010

BETWEEN

JOHN MUR as CHAIRMAN FOR AND ON BEHALF OF KUNJAMB DEVELOPMENT CORPORATION LIMITED
Plaintiff

AND

LES KEWA as PRESIDENT OF BANZ CLUB
Defendant

Mount Hagen: Makail, J
2010: 04th & 10 May

INJUNCTIONS - Interlocutory injunctions - Interlocutory mandatory injunctions - Equitable relief - Grant of - Discretionary - Principles of - National Court Rules - Order 14, rule 10.

REAL PROPERTY - State lease - Title of - Indefeasible title - Allegations of constructive fraud - Revocation of title - Forfeiture of lease - Failure to give notice to show cause - Mandatory - Effect of - Land Act, 1996 - Section 122 - Land Registration Act, Ch 191 - Section 33.

Cases cited:

Rex Kune -v- Michael Kapak & Ors: OS No 147 of 2010 (Unnumbered & Unreported Judgment of 20th April 2010)
Thaddeus Kambanei -v- The National Executive Council & 5 Ors (2006) N3064
Yama Group of Companies Ltd -v- PNG Power Ltd (2005) N2831
Rosemary John -v- James Nomenda & Ors: WS No 1818 of 2005 & OS No 446 of 2005 (Consolidated) (Unnumbered & Unreported Judgment of 18th January 2010)
Mudge -v- Secretary for Lands [1985] PNGLR 387
Emas Estate Development Pty Ltd -v- John Mea & Ors [1993] [PNGLR 215
Steamships Trading Company Limited -v- Garamut Enterprises Limited & Ors (2000) N1959
The Papua Club Inc -v- Nusaum Holdings Limited (No. 2) (2004) N2603
Hi Lift Co Pty Ltd -v- Miri Setae & Ors [2000] PNGLR 80; (2000) N2004
Ramu Nickel Limited & Ors -v- Honourable Dr Puka Temu & Ors (2007) N3252
Elizabeth Kanari -v- Augustine Wiakar & Registrar of Titles (2009) N3589
Koitachi Farms Limited -v- Walter Schnaubelt (2007) SC870

Counsel:

Plaintiff in person
Mr G Anis, for Defendant

INTERLOCUTORY RULING

10th May, 2010

1. MAKAIL, J: This is an application by the plaintiff by notice of motion filed on 13th April 2010 seeking inter-alia an interlocutory mandatory injunction to compel the defendant to vacate a property described as allotment 1, section 18 and registered as a State lease in Volume 15, Folio 235 pursuant to Order 14, rule 10 of the National Court Rules (preservation of property) pending the determination of the substantive proceeding. The dispute arises from a grant of title to the property by the Minister of Lands and Physical Planning to Kunjamb Development Corporation Limited on 20th December 2009.

2. The plaintiff says that the grant of title to Kunjamb Development Corporation Limited was made following the defendant's failure to pay land rentals to the State for the past 13 years since his occupation. The previous registered proprietor was Waghi Farmers & Settlers Association and has since abandoned the property and the defendant has been illegally occupying it. An investigation was carried out by an officer of the Department of Lands and Physical Planning by the name of William Donump into the status of the property and a report was submitted to the head office in Waigani where the Minister for Lands and Physical Planning upon being satisfied with the report, revoked the title granted to Waghi Farmers & Settlers Association by notice published in the National Gazette on 10th September 2007 and forfeited the property to the State. Subsequently, the property was put up on open tender and he applied for it. He was successful and the Minister for Lands and Physical Planning granted title of the same property to Kunjamb Development Corporation Limited.

3. He says that he will suffer substantial damages because by virtue of the lease, he is obliged to develop or put up improvements on the property up to the value of K300,000.00 within three years and pay an annual rental of K750.00 to the State. He would be in breach of these covenants and suffer these damages if he is not given immediate possession of the property. As for the defendant, he will not suffer any or substantial damages because the property is run down or has not been adequately maintained.

4. The defendant opposes the application. He says that the Court should not grant the interlocutory mandatory injunction because first, the manner in which the plaintiff and Kunjamb Development Corporation Limited went about to obtain title to the property is highly suspicious and questionable. He says that there was fraud involved in the grant of title. This is apparent from the fact that he and other members of Banz Club were not aware of the investigation and preparation of the report by Mr Donump to the Minister for Lands and Physical Planning to revoke the title to Waghi Settlers & Farmers Association. They were also not aware of the subsequent revocation of title to Waghi Farmers & Settlers Association by the Minister for Lands and Physical Planning and grant of title to Kunjamb Development Corporation Limited. All of these were done without their knowledge and he came to know of the grant of title to Kunjamb Development Corporation Limited when the plaintiff served on him copies of the originating summons and supporting documents on 16th April 2010 at Banz station.

5. He and his associates immediately commenced an inquiry into the circumstances surrounding and leading up to the revocation of title and subsequent grant of title to Kunjamb Development Corporation Limited. Councilor Morgan Mombol and Ruth Kaman took part in this investigation and their investigation led them to Mr Donump in his village at Kilip along Fatima road. Mr Donump confided in them that he (Mr Donump) had not carried out a physical inspection of the property before preparing the report to the Minister for Lands and Physical Planning to revoke the title to Waghi Farmers & Settlers Association and further that Mr Mur was the person who had approached him and asked him to prepare the report which he did: see affidavit of Councilor Morgan Mambol sworn on 27th April 2010 and filed on 28th April 2010 and also affidavit of Ruth Kaman sworn on 27th April 2010 and filed on 28th April 2010.

6. Further to the first point, he says that the property was and is not vacant. It was and is presently occupied by the Banz Club of which he is the president. The Minister for Lands and Physical Planning either failed or deliberately ignored to take into account the defendant's interest and occupation of the property when he revoked the title of Waghi Farmers & Settlers Association and forfeited the property to the State. This is another reason to say that there was fraud in the revocation of title to Waghi Farmers & Settlers Association and subsequent grant of title to Kunjamb Development Corporation Limited.

7. Secondly, the defendant says that he operates a club called Banz Club at the property and has been occupying the property for a long time. The Banz Club is made up of members of Waghi Farmers & Settlers Association and has put up substantial improvements comprising of buildings and so forth to the value of K100,000.00 over the years, hence, it would suffer substantial monetary loss in the event that he and Banz Club were ordered to vacate the property on short notice. Finally, whilst the plaintiff has covenants in the lease of the property to develop or put up improvements on the property to the value of K300,000.00 within three years, and is obliged to pay annual rental of K750.00 to the State, he says that damages would be an adequate remedy for the plaintiff. The plaintiff may sue and recover these damages from him and Banz Club if it turns that Kunjamb Development Corporation Limited is the legitimate registered proprietor of the property.

8. I have considered the arguments in relation to the competing interests of the parties in this case and must weigh them up according to law. As noted above, the plaintiff seeks an interlocutory mandatory injunction against the defendant to deliver up possession of the property. An interlocutory mandatory injunction is an equitable relief and is granted at the discretion of the Court. In the exercise of the discretion, the Court takes into account two maxims of equity. The first one is, "He who seeks equity must do equity" and the second one is, "He who seeks equity must come with clean hands" and the law places on an applicant the onus to show that, first, there is a strong case or real prospect of success at trial in relation to the issue or issues raised in the proceeding and secondly, that there will be less damage or less injustice to the defendant in the event that the applicant is unsuccessful at trial. As to the question of damage or injustice to the defendant, the Court would normally refuse the relief unless it is shown that the prejudice and hardship to the applicant is disproportionate to the prejudice and hardship to be caused to the defendant in performing the order: see Rex Kune -v- Michael Kapak & Ors: OS No 147 of 2010 (Unnumbered & Unreported Judgment of 20th April 2010), Thaddeus Kambanei -v- The National Executive Council & 5 Ors (2006) N3064 and Yama Group of Companies Ltd -v- PNG Power Ltd (2005) N2831.

9. In the present case, it is clear to me that the previous registered proprietor of the property is Waghi Farmers & Settlers Association. It was the registered proprietor until the Minister for Lands and Physical Planning revoked its title on 10th September 2007. The reason for revocation of title and forfeiture of the lease, it appears, was non payment of annual rent. It is also clear that the Minister for Lands and Physical Planning acted on the report prepared by Mr Donump to revoke the title of the property to Waghi Farmers & Settlers Association and forfeited the lease to the State. I consider that there is nothing wrong or sinister about the Minister for Lands and Physical Planning relying on the report by Mr Donump to revoke the title of Waghi Farmers & Settlers Association and forfeiting the lease to the State. I also consider that it may be the case that the Minister for Lands and Physical Planning revoked the title and forfeited the lease because of non payment of annual rent by Waghi Farmers & Settlers Association for over 13 years as suggested by the plaintiff.

10. However, there is a suggestion that Mr Donump did not physically inspect the property before making and submitting the report to the Department of Lands and Physical Planning in Waigani whereupon the Minister for Lands and Physical Planning had acted upon to revoke the title of Waghi Farmers & Settlers and forfeiting the lease to the State. There is also a suggestion that the plaintiff was the person who instigated the move to have the title of Waghi Farmers & Settlers Association revoked and lease forfeited so that he could have the title to the property by attending to and requesting Mr Donump to prepare and submit such a report to the Department of Lands and Physical Planning in Waigani. If Mr Donump had independently verified the status of the property, he would have discovered that the property was occupied by the defendant and Banz Club.

11. Of course, the plaintiff refutes these suggestions and says that he did not approach or influence Mr Donump to prepare and submit the report to the Department of Lands and Physical Planning in Waigani. In his submissions, he contends that it was John Poro of Poro Lawyers who requested Mr Donump to prepare the report because he (John Poro) was interested in purchasing the property. The plaintiff's submission does not seem to have support from the report by Mr Donump where Mr Donump stated at the opening paragraph that, "[o]n the 3rd June a visit to the subject land was made by Mr. John Kati (Applicant) and me following reports of illegal occupation and activities on the subject land. Initially Mr Kati lodged his interests with Lands Hagen, he intends to renovate the existing run down building and also do a face lift of the entire perimeter."

12. I do not know if John Kati is the same person as the plaintiff or some other person but there is no doubt in my mind that there is some true in the defendant's assertions because what is apparent is that there is an issue between the parties in relation to the propriety of the report by Mr Donump, which report was relied upon by the Minister for Lands and Physical Planning to revoke Waghi Farmers & Settlers Association's title to the property and forfeit the lease to the State. What is also apparent is that, the Minister for Lands and Physical Planning may have been misled into revoking Waghi Farmers & Settlers Association's title and forfeiting the lease without inquiring into whether Waghi Farmers & Settlers Association still had interest in the property. In my view, there is a serious issue raised in relation to the propriety of the report by Mr Donump which requires immediate attention by the Court.

13. In respect of whether or not Waghi Farmers & Settlers Association may still have interest in the property, there is no evidence of a report from the Companies' office in Port Moresby to show its current status. The only evidence of its status is from the plaintiff who says at paragraph 6 of his affidavit in support sworn and filed on 13th April 2010 that it is "defunct" following "the early Coffee and Tea planters returned to their country of origin". It may be that it is "defunct" but that does not necessarily mean that it is not interested in the property. It is not disputed that the defendant and Banz Club are presently occupying the property but there is also no evidence from the defendant to show what kind of relationship he and Banz Club have with Waghi Farmers & Settlers Association. I do not accept the defendant's contention that Banz Club inherited the property from Waghi Farmers & Settlers Association because some of the members of Waghi Farmers & Settlers Association are also members of Banz Club.

14. It is wrong because if it is true that some of the members of Waghi Farmers & Settlers Association are members of Banz Club (which I make no finding here because there is no evidence of that before me), these are two different legal entities and there must be something more than a mere claim of inheritance to legitimize Banz Club's occupation of the property. For example, there is no evidence of a lease or tenancy agreement between Waghi Farmers & Settlers Association and Banz Club for Banz Club to occupy the property. The point is, it is irrelevant if the defendant and Banz Club were and are in occupation of the property and claim an interest in the property when they are not the registered proprietor. It may mean also that their occupation of the property may be illegal but I am not making any finding on that at this stage as that is a matter for trial. What is relevant is the interest of Waghi Farmers & Settlers Association that must be taken into account when the Minister for Lands and Physical Planning is considering a request to revoke the title and forfeiting the lease to the State. That is the more serious issue in this case.

15. In this respect, I accept the defendant's submission that fraud is apparent in the grant of title to Kunjamb Development Corporation Limited. There appears to have been breach of statutory procedures in relation to the revocation of title to Waghi Farmers & Settlers Association and subsequent grant of title to Kunjamb Development Corporation Limited. Section 122 of the Land Act, 1996 requires that the registered proprietor be served notice to show cause as to why its title should not be revoked. In my view, section 122 of the Land Act, 1996 makes it mandatory for the Minister for Lands and Physical Planning to give notice to a registered proprietor to show cause as to why the title should not be revoked and the lease forfeited to the State. This is a fundamental requirement and must be complied with by the State through the Minister for Lands and Physical Planning because it would give a registered proprietor an opportunity to explain why the title should not be revoked and the lease forfeited to the State.

16. The reasons for the Minister for Lands and Physical Planning to issue a notice to show cause to a registered proprietor are many and may vary from case to case. Some of the reasons are set out in section 122(1) of the Land Act, 1996. For example, a registered proprietor may have not paid rent for a period of six months. In such a case, the Minister for Lands and Physical Planning is required to give notice to the registered proprietor to show cause as to why the lease should not be forfeited. The registered proprietor is then obliged to give reasons as to why the title should not be revoked and the lease forfeited to the State. If the reason offered by the registered proprietor is unsatisfactory, the Minister is entitled to revoke the title and forfeit the lease to the State.

17. In this case, the Minister for Lands and Physical Planning was required to serve a notice to show cause as to why the lease should not be forfeited on Waghi Farmers & Settlers Association regardless of who was and is occupying the property, be it the defendant and Banz Club or anyone for that matter. This is because at the end of the day, Waghi Farmers & Settlers Association is the registered proprietor and its interest is affected. This is a fundamental requirement and must be complied with before the Minister for Lands and Physical Planning could start thinking of revoking the title and forfeiting the lease to the State and more so, venture on to put the property on open tender and subsequently grant a new title to Kunjamb Development Corporation Limited over it.

18. In this respect, it is noted that there is no evidence before the Court to show that the Minister for Lands and Physical Planning served a notice to show cause on Waghi Farmers & Settlers Association and by the same token, I place no reliance on the statement by Mr Donump in his report marked as annexure "A" to the affidavit of the plaintiff sworn and filed on 16th April 2010 that notices were given to the parties. I say this because the statement is vague. It does not give details of where, when and to whom the notices were served.

19. The lack of notice to show cause by the Minister for Lands and Physical Planning confirms or is consistent with the defendant's claim that he was not aware that Waghi Farmers & Settlers Association's title to the property was revoked and the lease forfeited to the State. He was also not aware that the lease was subsequently placed on open tender and the plaintiff applied and was granted title. I consider that if the defendant had known about this, he would have taken some steps to register his interest and perhaps, applied for the grant of title. In my view, the statutory requirement to give notice to show cause to Waghi Farmers & Settlers Association under section 122 of the Land Act, 1996 is fundamental to the subsequent grant of title to Kunjamb Development Corporation and where it is being breached or not observed by the Minister for Lands and Physical Planning, an irregularity is apparent, thus affecting the subsequent title.

20. An allegation of constructive fraud has been raised and the Court needs to properly determine it. Fraud, whether actual or constructive is a ground to overturn a registered proprietor's title under section 33 of the Land Registration Act, Ch 191: see also my decision in Rosemary John -v- James Nomenda & Ors: WS No 1818 of 2005 & OS No 446 of 2005 (Consolidated) (Unnumbered & Unreported Judgment of 18th January 2010) where I discussed statutory breaches and procedural irregularities amounting to constructive fraud with reference to Mudge -v- Secretary for Lands [1985] PNGLR 387, Emas Estate Development Pty Ltd -v- John Mea & Ors [1993] [PNGLR 215, Steamships Trading Company Limited -v- Garamut Enterprises Limited & Ors (2000) N1959, The Papua Club Inc -v- Nusaum Holdings Limited (No. 2) (2004) N2603, Hi Lift Co Pty Ltd -v- Miri Setae & Ors [2000] PNGLR 80; (2000) N2004, Ramu Nickel Limited & Ors -v- Honourable Dr Puka Temu & Ors (2007) N3252, Elizabeth Kanari -v- Augustine Wiakar & Registrar of Titles (2009) N3589, Koitachi Farms Limited -v- Walter Schnaubelt (2007) SC870.

21. Fraud is a serious matter and where it is alleged that a title to a property was obtained by fraud as is alleged in this case, the Court must treat the allegation seriously and properly consider it. This is where the exercise of discretion by the Court comes into play and the two maxims of equity which I have mentioned above, "He who seeks equity must do equity" and "He who seeks equity must come with clean hands" become relevant. The plaintiff seeks to assert his right to the property and to do so, he too must not be guilty of inequity. A serious allegation of fraud has been leveled against him and for that reason, there is a question mark over his claim of right to the property. A Court of equity would be hesitant to grant him the orders he seeks when there is a serious allegation of fraud made against him. Thus, when the entire circumstances surrounding the grant of title to Kunjamb Development Corporation Limited is considered, I am not satisfied that the plaintiff has a strong case or a real prospect of success at trial in relation to asserting the title to the property where an interlocutory mandatory injunction would usually lie.

22. I must also agree with the submissions of the defendant that he will suffer more harm than good if an interim mandatory injunction is issued because he has put up substantial improvements on the property over the years. The plaintiff does not deny this, except to suggest that the buildings are run down. Be that as it may, the fact remains that the defendant has made improvements on the property and is operating a club. The losses that may be suffered by the defendant and Banz Club if an interim mandatory injunction is issued are far more serious than the plaintiff. They are and will be disproportionate. When the losses are compared, the plaintiff's losses may be restricted to the annual rent payable to the State through the Department of Lands & Physical Planning and the deprivation of the opportunity to carry on business on the property immediately to bring in income and ultimately profit.

23. Further, the inconvenience that may be caused to the defendant and Banz Club are more serious than the plaintiff if an interim mandatory injunction is issued to compel the defendant and Banz Club to vacate the property because if they are ordered to vacate the property immediately and are successful at the end of the trial and the proceeding is dismissed, they will have to return to the property. This would require time and money to enable them to vacate the property and then return. In my view, it would be very inconvenient to the defendant and Banz Club. Hence, at the end of the day, I am of the view that the damages and injustice that may be suffered by the defendant and Banz Club are and will be disproportionate to the damages and injustice that the plaintiff has and will suffer.

24. For the foregoing reasons, I am not persuaded that the plaintiff has made out a case where an interlocutory mandatory injunction be issued, hence I am not inclined to grant the plaintiff's application. I refuse the orders sought in the plaintiff's notice of motion filed on 13th April 2010 with costs to be in the cause.

Ruling accordingly.

____________________________________
Plaintiff in person
Simon Norum Lawyers: Lawyers for the Defendant