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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 18 OF 2008
BETWEEN
GWANZIK WIRING
Plaintiff
AND
JOHN MUINGNEPE
First Defendant
AND
RAGA KAVANA
REGISTRAR OF TITLES
Second Defendant
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant
Lae: Gabi, J
2012: 26 July
CIVIL – Frauds and Limitation Act 1988 s2(1) – no interest in land can be created or disposed of except by writing signed by the person disposing of the interest
Land Registration Act S33 – indefeasibility of title – setting aside registration of title in the case of fraud – essential element of fraud – personal dishonesty
Facts
The plaintiff and the first defendant entered into a written contract for the sale of a parcel of the plaintiff's land to the first defendant on terms of payment of a deposit and monthly instalments. A deposit was paid but the monthly instalments were not paid and the contract was never completed. Some years later the first defendant arranged with the second defendant for the plaintiff's title to the land to be cancelled and a fresh title issued to the first defendant, on the basis that the plaintiff's title was lost. The plaintiff's title was always with him and was not lost.
Held
1. The requirement that the Registrar give 14 days notice of intention to issue a replacement title is mandatory and there was no evidence that this notice was given, at [12];
2. Fraud entails dishonesty and there must be personal dishonesty of some sort in the acquisition of the title to defeat the indefeasibility provisions of the Land Registration Act, at [25];
3. The first defendant obtained title by fraud and the registration of the first defendant as proprietor will be set aside.
Cases Cited:
Papua New Guinea Cases
Emas Estates Development Pty Ltd. vs. Mea [1993] PNGLR 215
Koitachi Ltd vs. Walter Schnaubelt (2007) SC879
Mudge vs. Secretary for Lands [1985] PNGLR 387
Roslyne Cecil Kusa vs. Motor Vehicles Insurance (PNG) Trust – N2328
Steamships Trading Company Ltd. vs. Garamut Enterprises Ltd. (2002) N1959
Territory of Papua New Guinea vs. Balius Tirupia and Others In Re. Vunapaladig and Japalik Land [1971-72] PNGLR 229
The Papua Club Inc. vs. Nusaum Holdings Ltd. (No.2) (2004) N2603
Overseas Cases
Assets Company Ltd vs. Mere Roihi and Others [1905] UKLawRpAC 11; [1905] AC 176
Breskvar vs. Wall (1971) 126 CLR 376
Butler vs. Fairclough and Another (1917)23 CLR 78
Frazer vs. Walker [1967] 1 AC 569
Friedman vs. Barret, Ex-parte Friedman [1962] QD.R 498
Liquidator of Oakleigh Acquisitions Pty Ltd and Others vs. Registrar of Titles and Others [2001] WASC 201; (2001) 24 WAR 299
Registrar of Titles (WA) vs. Franzon (1975)132 CLR 611
Scruttons vs. Midland Cilicones Ltd [1961] UKHL 4; [1962] 2 WLR 186 at 199
Tanzone Pty Ltd vs. Westpac Banking Corporation [1999] NSWSC 478; [1999] ATPR 46-195
Templeton vs. Leviatham Pty Ltd [1921] HCA 55; (1921) 30 CLR 34
Counsel
K. Gamoga, for the plaintiff
S. Toggo, for the first defendant
J. Kerenge, for the second and third defendants
JUDGMENT
26 July, 2012
1. GABI, J: Introduction: Gwanzik Wiring, the plaintiff, is the registered owner of portion 474, a State lease in Bulolo, Morobe Province. On 1st November 2000, the plaintiff and John Muingnepe, the first defendant, entered into an agreement for the sale of the land to the first defendant for K25, 000.00. The first defendant defaulted in paying the balance of the purchase price. In June 2005, it appears that a second agreement between the plaintiff and the first defendant was concluded for the sale of the same land but the terms of the agreement are unknown. It was alleged that the original title was lost so a new title was issued and the property was transferred to the first defendant. In 2006, the plaintiff terminated the agreement that was concluded on 1st November 2000. Both parties have title to the property. The plaintiff claims that consent and authority for the transfer was obtained under duress, false pretence, fraud and misrepresentation and/or such consent and authority was obtained without the benefit of independent legal advice.
2. The issues are: (i) whether the first contract was subsisting when the second agreement was concluded; (ii) whether the original title was lost; and (ii) whether the transfer in 2005 was obtained by fraud.
Evidence
3. The trial proceeded by way of affidavit evidence and oral testimonies. The following affidavits were filed: (i) affidavit of Wiring Gwanzik dated 14th March 2008; (ii) affidavit of John Muingnepe dated 26th May 2008; (iii) affidavit of Rose Muingnepe dated 26th May 2008; (iv) affidavit of Utupu Pakiabi dated
26th May 2008; and (v) affidavit of Terah Baloiloi dated 23rd September 2008.
Facts
4. To appreciate the background I set out the relevant facts in chronological order. The plaintiff is the Registered Proprietor of Business Lease volume 2 folio 82, portion 474, Bulolo, Morobe Province. The property was granted to the plaintiff in 1989 by the Minister for Lands. The lease was issued to the plaintiff on 1st March 1990 and the original title deed has been in his possession since. Sometime in early 2000, the plaintiff and his late son Kennedy Wiring Gwanzik and the first defendant held discussions regarding the sale and transfer of the property. The plaintiff agreed to sell the property to the first defendant for
K25, 000.00. On 28th April 2000, the plaintiff instructed Gamoga & Co. Lawyers to act for him in the sale transaction. Gamoga & Co. Lawyers prepared the contract and the relevant documents, which were signed on 1st November 2000 and were sent to Stamp Duties Office. On 9th November 2000, the contract and transfer were stamped at the Stamp Duties Office. The first defendant paid a deposit of K5, 000.00 and the balance of the purchase price of K20, 000.00 was to be paid by monthly instalments of K500.00 until completion. The first defendant never paid the balance of the purchase price.
5. In early 2005, it appears that the plaintiff and the first defendant entered into a second agreement for the sale of the land without the knowledge of Gamoga & Co. Lawyers, who were acting for the plaintiff. The first defendant and his wife, Rose Muingnepe, said that they were informed by the plaintiff that the title to the property was lost. As a result, the first defendant paid the outstanding rental arrears of K1, 300.00 and K150.00 for costs of a replacement title. The plaintiff and Rose Muingnepe attended at the Provincial Lands Office and met Terah Baloiloi, a Lands Officer, who assisted them to obtain a new title deed and transfer the property to the first defendant. On 6th May 2005, Terah Baloiloi prepared a letter addressed to the Secretary for Lands in the name of Lawrence Billy where he advised that the plaintiff has lost his title and requested a replacement title. On 15th June 2005, a transfer was allegedly signed and executed by the plaintiff and the first defendant. On 24th June 2005, the title of the property was transferred to the first defendant.
6. On 26th July 2006, the plaintiff instructed Gamoga & Co. Lawyers to write to the first defendant to terminate the first agreement. A notice to terminate was duly sent to the first defendant. In early 2007, the plaintiff and his son Mete Joel attended at Lands Office in Lae to make enquiries regarding the property and were told by Lands Officers that the property was in the name of the first defendant. The plaintiff immediately instructed Gamoga & Co. Lawyers to do a title search. A search through A.C. Fox & Associates was conducted on 25th September 2007. This shows the first defendant as the registered proprietor. On 19th October 2007, Gamoga & Co. Lawyers wrote to the first defendant advising him that he had not paid the balance of the purchase price and that without the plaintiff's knowledge he registered the title in his name. They requested the first defendant to revoke his title and have it re-transferred to the plaintiff. On 8th November 2007, the first defendant wrote to Gamoga & Co. Lawyers denying the allegation that he transferred the title to his name without the knowledge and consent of the plaintiff. On 26th November 2007, Luke Mungul of Morobe Provincial Administration wrote to Mete Joel, the plaintiff's son, directing him to remove the fence and the temporary house on the property and to quit the land by 7th December 2007 as it belonged to the first defendant. On 19th December 2007, Luke Mungul again reminded Mete Joel to vacate the land and suggested that the contract between the plaintiff and the first defendant is deemed inappropriate as the land was undeveloped. On 17th January 2008, the plaintiff instituted this proceeding.
Replacement of title
7. The first defendant and Rose Muingnepe said that in early 2005 the plaintiff approached them and told them that he wanted to transfer the title to them, that the first defendant develop the land and give him a space to operate his small business, that the original title to the property was lost, that he was not able to develop the land, that he owed outstanding lease rentals of K1, 300.00 and that he wanted some financial assistance from them. They agreed to the proposal and paid the outstanding lease rentals of K1, 300.00 and an additional sum of K150.00 for costs of a replacement title. They also paid him some money. The first defendant said they paid him K6, 000.00 while Rose Muingnepe put the figure at K4, 000.00. The plaintiff and Rose Muingnepe then travelled to the Provincial Lands Office in Lae to pay the rental arrears and made arrangements for transfer of the title to the first defendant. At the Lands Office in Lae, they met Terah Baloiloi, a Lands Officer with the Division of Lands, Morobe Provincial Administration, who assisted them with documentation for obtaining a new title deed and to transfer the title to the first defendant.
8. Terah Baloiloi confirmed that the plaintiff and Rose Muingnepe attended at his office sometime in 2005 and advised him that the original title to the property had been lost and that the plaintiff wanted to transfer his title in the property to the first defendant. He said he explained the procedure for transfer of a State lease and gave them a transfer form to execute the transfer.
9. The plaintiff denied going to see the first defendant and his wife in early 2005 and telling them that the original title was lost. He maintains that the original title has always been in his possession since 1st March 1990. He said he became aware of the transfer of the title to the first defendant in early 2007 when he and his son, Mete Joel, were advised by Lands Officers in Lae. He recalled being approached by the first defendant in early 2005 to lease part of the land and he told him that he could build on the land so long as he engaged his lawyers and prepare the documents for signature.
10. On 6th May 2005, Terah Baloiloi prepared and signed a letter in the name of Lawrence Billy. The letter reads:
| "The Secretary | |
| Department of Lands | Date: May 6, 2005 |
| P.O. Box 5665 | Our Ref: 38-3-474 |
| BOROKO | Action Officer: TBaloiloi |
| National Capital District | Designation: LO |
Attention: B. Samson – Land Titles Officer (Momase) – Registrar of Titles Office
RE: APPLICATION FOR REPLACEMENT OF TITLE OVER PROPERTY PORTION 474, M/I BULOLO, F/M WAU – CITY OF LAE
Leaseholder of the abovementioned property Wiring Gwanzik of P.O. Box 139, Bulolo, has approached this office and requested this office to assist in the replacing of title of his property which has gone missing or lost.
Find enclosed is the application form for the replacement of the title with the application fee of K150.00 paid vide O/R U #3240 dated 28/04/05 at the Provincial Treasury office, Lae. The outstanding rental fee of
K1, 300.00 has also been paid vide O/R U # 32429 dated 28/04/05.
This office on behalf of the client hereby request that you look into this matter as a matter of urgency and have the necessary documents prepared for the processing for the replacement of the title.
We look forward to your favourable respond and action.
Lawrence Billy
Programme Advisor
Cc: Wiring Gwanzik
P.O. Box 139
BULOLO"
11. The Land Registration Act sets out the procedure for the issuance of a replacement title. Section 162 provides:
"(1) Where an instrument of title has been lost, destroyed or
defaced, the registered proprietor or, if he is dead, his legal personal representative, may apply to the Registrar for a replacement instrument of title or official copy.
(2) An application under Subsection (1) shall be accompanied by-
- (a) such evidence as the Registrar considers sufficient of the loss, destruction or defacing; and
- (b) particulars of all mortgages, charges or other matters affecting the land or the title to the land.
(3) The Registrar may-
- (a) on receipt of an application made in accordance with Subsections (1) and (2), together with the prescribed fee;
- (b) on his own volition;
if he considers it necessary, replace an instrument of title by making new instrument of title or official copy, as the circumstances require.
(4) When an application under this section relates to a lost or
destroyed instrument of title the Registrar shall give at least 14 days notice of his intention to make a new instrument of title or official copy by advertisement in the National Gazette and in at least one newspaper circulating in the country.
(5) A new certificate of title or official copy made under this section
shall be-
(a) endorsed with a memorial stating the circumstances under which it is made; and
(b) available for all purposes and uses for which the original instrument of title would have been available and be as valid for all purposes as the original." (Emphasis added)
12. The application for a replacement title must be made by the registered proprietor to the Registrar. In this case, it was instigated
by Rose Muingnepe and the first defendant. There is no evidence from the Registrar before the court of the evidence before him and
the enquiry undertaken by him before the issuance of the replacement title. The Registrar "shall give at least 14 days notice of his intention to make a new instrument of title or official copy by advertisement in the National
Gazette and in at least one newspaper circulating in the country."
(See s. 162(4)). This is a mandatory requirement and there is no evidence of the publication in the media before the court. The circumstances
surrounding the application and the issuance of the new title leaves a lot to be desired. The Registrar was represented in this proceeding
but he made no attempts to place evidence before the court. I find that the original title was never lost and that the Registrar
failed to comply with the procedure under s. 162 of the Land Registration Act before issuing the new title.
13. The first defendant knew that Gamoga & Co. Lawyers acted for the plaintiff and should have notified them of the alleged loss of title, particularly in view of the fact that the first agreement was still on foot. Secondly, the application for the issuance of a replacement title ought to have been made by the plaintiff and his lawyers, not instigated by Rose Muingnepe and the first defendant. It was improper and deceitful on the part of the first defendant and his wife to go directly to the Office of Division of Lands without the knowledge of the plaintiff's lawyers. The new title was issued in the name of the plaintiff with a registered transfer to the first defendant. I am of the view that the issuance of the new title deed was deceitful or improper and calculated to deprive the plaintiff of his title to the land.
The second agreement
14. The contract of 1st November 2000 was in writing and signed by the plaintiff and the first defendant. The parties agreed to the
sale and purchase of the property for K25, 000.00. A deposit of K5, 000.00 was paid and the balance of the purchase price of K20,
000.00 was to be paid by monthly instalments of K500.00 commencing thirty (30) days after completion. The first defendant defaulted
by failing to pay the balance of the purchase price of K20, 000.00.
On 26th July 2006, the plaintiff gave notice of termination.
15. The affidavit evidence of the plaintiff, the first defendant, Rose Muingnepe and Terah Baloiloi do not disclose that a written contract was entered into. However, at the trial during cross-examination, the first defendant admitted that he entered into a second written agreement with the plaintiff and that he would make it available if required by the court. The first defendant said the plaintiff approached him and told him that he wanted to transfer the title to him. The first defendant agreed to the proposal and paid the outstanding lease rentals of K1, 300.00 and an additional sum of K150.00 for costs of a replacement title. The first defendant said he paid the plaintiff K6, 000.00 while Rose Muingnepe put the figure at K4, 000.00. The plaintiff said that he received K2, 000.00 from the first defendant. The first defendant was asked why he failed to disclose the existence of the second written agreement. The first defendant's response was that this case is about the first agreement so he decided not to disclose the second agreement. I enquired with both counsel if they were aware of the second agreement and both advised the court that they were not aware of the existence of the second written contract. The terms of the second agreement are also unknown.
16. Mr. Toggo of counsel asked the court to admit the agreement into evidence. Mr. Gamoga, on the other hand, objected strenuously to the tender of the agreement on the grounds that the first defendant did not plead the existence of the second agreement nor did he disclose the agreement during discovery.
In his defence dated 20th February 2008, the first defendant refers to an agreement (see paragraph 6(d) of the Defence). However, the pleadings do not demonstrate whether the agreement was in writing or oral. Secondly, on 1st April 2008, the plaintiff filed his notice of discovery where he requested discovery of documents from the first defendant with verification within fifteen (15) days. On 17th June 2008, the first defendant filed his list of documents. The second agreement was not included in the list of documents. This case is about the acquisition of title by the first defendant and the second agreement is critically important and ought to have been disclosed during discovery. I refused to admit the agreement into evidence for a number of reasons. First, it would be inappropriate, without an amendment to the defence to plead the second agreement specifically and time for the plaintiff to consider and amend his statement of claim if necessary, to allow into evidence so late in the day a document which has no bearing on the case as pleaded, but which allegedly goes to the central issue in the case. Secondly, parties to a proceeding must act fairly. There must be full and frank disclosure from the beginning so as to avoid surprises at the trial. Facts must be specifically alleged so that the opposite party is not taken by surprise. Failure to do so attracts adverse consequences against the party in default. We do not conduct nor do we allow trial by ambush in our system of justice. Finally, the plaintiff was not questioned or examined on the second agreement and offered no explanation before the close of his case so it would be unjust to allow the agreement into evidence. Failure to disclosure the second agreement is clearly a dishonest act. Viewing the entire evidence in its totality, I have formed the view that the first defendant deliberately concealed the second agreement so that his dishonest conduct in obtaining the title could not be uncovered. Even, if I were to admit the agreement, the disclosure is less than full and frank disclosure and is tantamount to or reflective of a dishonest conduct on the part of the first defendant in obtaining the title to the property.
17. Counsel for the first defendant submitted that "the plaintiff and the first defendant entered into a contract for sale of land for the second time and had the same stamped by the Office of the Internal Revenue Commission, however, the copy of the said contract is not before the Court." The documentary evidence on which this submission is based is not before the court. I find that no second written contract was executed between the plaintiff and the first defendant for the sale and purchase of the property in question.
Transfer
18. While the second agreement was not discovered, the second transfer was. The list of documents filed on 17th June 2008 disclosed the existence of a transfer form. Two (2) transfers were before the court. The first transfer is dated 1st November 2000 (see affidavit of Wiring Gwanzik dated 4th March 2008, annexure "B") while the second one is dated 15th June 2005 (see affidavit of John Muingnepe dated 26th May 2008, annexure "F").
19. The second transfer was witnessed by Rose Muingnepe. The first defendant signed as the transferee. The plaintiff never signed the transfer as a transferor but a mark "x" appears on the document. Rose Muingnepe said the mark "x" on the document dated 15th June 2005 belonged to the plaintiff. There is no evidence before me to indicate where the plaintiff allegedly put his mark on the document. The first defendant was attending Parliamentary session when Rose Muingnepe and the plaintiff went to the Lands Office in Lae to obtain a transfer document and made arrangement for a replacement title.
20. The first defendant and Rose Muingnepe said that the plaintiff consented and freely placed his mark on the document. The plaintiff's evidence was that in the Lands Office Terah Baloiloi and Rose Muingnepe were talking among themselves and that he was just following what they told him. The plaintiff said Rose Muingnepe never told him that he was going to see Terah Baloiloi to transfer his title to the first defendant. The plaintiff also denied that Terah Baloiloi explained the transfer procedure to him. Hereunder is part of his evidence:
"Q. You put your mark on the transfer document?
Q. You signed transfer on 15th June 2005?
A. Yes.
Q. You signed transfer after Terah Baloiloi explained the procedure to you?
A. No."
21. There were two (2) transfers before the Court and both had the mark "x". The transfer dated 15th June 2005 was never signed by the transferor. There is no dispute that the mark "x" on the transfer dated 1st November 2000 belongs to the plaintiff. As there were two transfers before the Court, it would have been preferable to ask him about each mark. This was not done. I am not satisfied that the mark "x" on the transfer dated 15th June 2005 belonged to the plaintiff.
Fraud
22. Section 33 of the Land Registration Act provides:
"(1) The registered proprietor of an estate or interest holds it
absolutely free from all encumbrances except-
(a) in the case of fraud;..."
23. In Koitachi Ltd v Walter Schnaubelt (2007) SC879, the Supreme Court said:
"22. There is not a definition of 'fraud' in the Lands Registration Act.
Counsel for Mr. Schnaubelt cites the Supreme Court case of Emas Estates Development Pty Ltd. vs. Mea [1993] PNGLR 215 in which Amet CJ. (as he then was) said, 'irregularities tantamount to fraud was (sic) sufficient to overturn a registered title', and Steamships Trading Company Ltd. vs. Garamut Enterprises Ltd. (2002) N1959 in which Sheehan J. (as he then was) said, 'section 33 only speaks of fraud and does not limit its meaning nor does it require that fraud be shown in a particular party'.
23. The Emas Estate case (supra) concerned an owner whose State lease was forfeited and then allocated and registered in the name of a third party company. In a majority decision, Amet CJ., one of the majority, was inter alia, of the view that the doctrine of indefeasibility should not be applied to that case. The Steamships case (supra) concerned a challenge to the issue of a State lease on the grounds that procedures in the Lands Act were not complied with. Both cases are distinguishable from this case on their facts.
24. The definition of 'fraud' in s.33 (1)(a) Lands Registration Act and the doctrine of indefeasibility of title and its applicability in this jurisdiction were comprehensively considered by Gavara Nanu J. in The Papua Club Inc. vs. Nusaum Holdings Ltd. (No.2) (2004) N 2603. We take the liberty of reproducing a large part of His Honour's judgment as it is particularly apposite to the present case:
'The word 'fraud' in s. 33 (1) (a) of the Land Registration Act, is not defined anywhere in the Act, but s.45 (1) makes it clear that fraud means more than constructive or equitable fraud. In this regard, it is noted that s. 146 (d) and (e) also provide for the ejectment of a registered proprietor from land if the title is obtained through fraud. Section 146 (4) makes it even more clear although not specifically expressed, that fraud in that section does not refer to fraud by the person from whom the registered proprietor acquired the title or the estate; rather, it is fraud by the registered proprietor himself or herself when acquiring title.
Thus, it is implicit from these provisions that 'fraud' in s.33 (1) (a) 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.
Turning now to the authorities on this point, I find that the principle is quite neatly illustrated in Assets Company Ltd vs. Mere Roihi and Others [1905] AC 176. The case discusses what may constitute or amount to fraud under the Torrens System. The relevance and the applicability of the Torrens System to this jurisdiction was quite clearly expressed by Kidu CJ., in Mudge vs. Secretary for Lands [1985] PNGLR 387, at 390:
'That third respondent has a State lease registered under the Land Registration Act (Chapter No. 191) and although the appellants have raised eight questions of law (including constitutional laws) the real question for determination by this Court is whether, apart from exceptions enumerated in the Land Registration Act, s.33, land once registered attracts the principle of indefeasibility of title. This Act and its fore runners – the Real Property Ordinance (Papua) and the Land Registration Ordinance (New Guinea )– are based on Australian Acts. They all reflect what is commonly known as the Torrens system of land registration. Under legislations based on this system (in Australia and New Zealand) it is settled law that, a part of exceptions mentioned in the relevant legislations, once land is registered under the Torrens system the owner acquires indefeasibility of title'.(my underlining).
In Assets Company Ltd vs. Mere Roihi and Others (supra), members of a Maori community were the traditional owners of the land. A person by the name of Cooper fraudulently acquired the land from the indigenous community. Ownership of the land changed several times. The appellant company was the subsequent purchaser and the registered proprietor under the New Zealand Land Transfer Act 1870, which corresponds with the Land Registration Act. The respondents challenged the appellant company's title on the basis, inter alia, that its registration as owner was procured by fraud.
The evidence showed that the agents of the appellant company took certain documents to the Registrar and had them registered, which according to their purport and effect clearly entitled and which the company's agents also believed entitled the company to be registered as the owner of the land. There was no evidence or suggestion whatsoever of any fraudulent statement or misrepresentation made to the Registrar by the appellant company's agents nor were there any evidence or suggestion of bribery, corruption or dishonesty offered or displayed by the appellant company's agents in their dealing with the Registrar.
On appeal, the Privy Council held that fraud meant actual fraud by the registered proprietor, involving personal dishonesty. It did not mean constructive fraud.
Lord Lindley at 210 stated the ratio of the decision of the Privy Council:
'Passing now to the question of fraud, their Lordships are unable to agree with the Court of Appeal (New Zealand Court of Appeal). Sections 46, 119, 129 and 130 of the Land Transfer Act, 1870, and the corresponding sections of the Act of 1885 (namely, ss. 55, 56, 189 and 190) appear to their Lordships to shew that by fraud in these Acts is meant actual fraud, i.e., dishonesty of some sort, not what is called constructive or equitable fraud – an unfortunate expression and one very apt to mislead, but often used, for want of a better term, to denote transactions having consequences in equity similar to those which flow from fraud. Further, it appears to their Lordships that the fraud which must be proved in order to invalidate the title of a registered purchaser for value, whether he buys from a prior registered owner or from a person claiming under a title certified under the Native Lands Acts, must be brought home to the person whose registered title is impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents. The mere fact that he might have found out fraud if he had been more vigilant, and had made further inquiries which he omitted to make, does not of itself prove fraud on his part. But if it be shewn that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud maybe properly ascribed to him. A person who presents for registration a document which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he honestly believes it to be a genuine document which can be properly acted upon'.
These observations quite clearly accord with s. 146 (4) of the Land Registration Act.
In Conlan (as Liquidator of Oakleigh Acquisitions Pty Ltd) and Others vs. Registrar of Titles and Others [2001] WASC 201; (2001) 24 WAR 299, Owen J at 328 stated the same principle in this way:
'The exception 'in fraud cases' is limited to fraud by or on behalf of the party who obtains registration: see Breskvar (at 384). Put in a slightly different way, the fraud which must be proved in order to invalidate the title of a registered proprietor must be brought home to the person whose registered title is impeached or to his or her agents: see Assets Co. Ltd (at 210). It is a fraud for which the person who becomes registered can be said to be responsible: see Registrar of Titles (WA) vs. Franzon (1975)132 CLR 611 at 618'.
At 336 his Honour said:
'Nonetheless, indefeasibility is at the heart of the Torrens system. As was said in Franzon (at 620-621) 'the protection of the registered proprietor is paramount'. This was reiterated in a note in (1992) 66 ALJ 507 where the author said: 'Public confidence in the Torrens system depends on the rock solid effect of registration.' The principle of indefeasibility of title is well understood by lawyers and by the commercial community. In my view it must be given the utmost respect and should be applied according to its tenor'.
It can be seen here that, his Honour followed Assets Co. Ltd -v- Mere Roihi and Others (supra) and Breskvar vs. Wall (1971) 126 CLR 376, and thus Frazer vs. Walker [1967] 1 AC 569. See, also Tanzone Pty Ltd vs. Westpac Banking Corporation [1999] NSWSC 478; [1999] ATPR 46-195. All these cases affirm the principle or the view that fraud means fraud committed in the act of acquiring the title by the registered proprietor or actual fraud.
It can therefore be deduced from these principles that once the land is registered, the owner attains indefeasibility of title which cannot be invalidated by any unregistered interests or mere irregularities except fraud by the registered proprietor or actual fraud.
As I said, it is in my opinion settled in this jurisdiction that fraud in s. 33 (1) (a) of the Land Registration Act, means actual fraud. Although that is not expressed in the section, it is implicit from the provisions of the Act, to which I adverted earlier. Same inference can be drawn from the decided cases. For instance, Mudge vs. Secretary for Lands and Others (supra) which adopted Frazer vs. Walker (supra) and Breskvar vs. Wall (supra). The two latter cases adopted the principle in Assets Company Ltd vs. Mere Roihi and Others (supra). See, also Friedman vs. Barret, Ex-parte Friedman [1962] QD.R 498 and Templeton vs. Leviatham Pty Ltd [1921] HCA 55; (1921) 30 CLR 34. In all these cases, it was held that fraud meant actual fraud. Similar approach was adopted in Butler vs.Fairclough and Another (1917)23 CLR 78, where the High Court of Australia at 90 and 97, said that fraud meant actual fraud importing personal dishonesty or moral turpitude.
In Mudge vs. Secretary for Lands and Others (supra) the Supreme Court at 395 said:
'... The New Zealand approach resulted in an eventual appeal to the Privy Council in the celebrated case of Frazer vs.Walker [1967] 1 AC 569 and although their Lordships were not obliged by the facts before them to resolve the dispute between the Australian and New Zealand courts, they did go out of their way to support the principle that registration of a void instrument was, in the absence of fraud, ' effective to vest and divest title and to protect the registered proprietor against adverse claims'.
The decision in Mudge vs. Secretary for Lands and Others (supra) being the decision of the Supreme Court is binding on me. Needless to say that the principle in Assets Company Ltd vs. Mere Roihi (supra) which was adopted and applied in Mudge vs. Secretary for Lands and Others (supra) through Frazer vs. Walker (supra) and Breskvar vs.Wall (supra), is a sound and well established principle in this jurisdiction. I therefore have no difficulty in adopting and applying it in this case as a binding precedent. See, Roslyne Cecil Kusa vs. Motor Vehicles Insurance (PNG) Trust – N2328 and Scruttons vs. Midland Cilicones Ltd [1961] UKHL 4; [1962] 2 WLR 186 at 199. I also, with respect, adopt the observations made in Conlan and Others vs. Registrar of Titles and Others (supra) as principles applicable to indefeasibility of the registered proprietor's title under the Land Registration Act.
In The Administration of the Territory of Papua New Guinea vs. Balius Tirupia and Others In Re. Vunapaladig and Japalik Land [1971-72] PNGLR 229, the Supreme Court also held that in the absence of fraud, the registered proprietor's title cannot be affected by actual or constructive notice of any claim, right, title or interest in the land acquired prior to its registration. There, the Supreme Court was in effect echoing s. 45 (1) of the Land Registration Act. Again, this case illustrates the principle that fraud must be by the registered proprietor or actual fraud, and not by someone from whom the title was acquired. The principle also echoes s.146 (4) of the Land Registration Act.'
25. This Court concurs with His Honour's reasoning and conclusions and respectfully adopts them as our own."
24. The plaintiff pleaded the following particulars of fraud:
"(i) That the First Defendant without paying the balance of the purchase price, proceeded and registered his name on the Title Deed.
(ii) That the Original Transfer Instrument dated 1st November 2000 duly stamped is still with the Plaintiff and the First Defendant fraudulently and by false pretence procured and signed a new Transfer Instrument in the name of the Plaintiff, thus enabling the First Defendant to register his name on the Title Deed.
(iii) That the Original Title Deed is still in the possession of the Plaintiff and the First Defendant by false pretence and fraud obtained or caused to be obtained and processed by the Registrar a new Title Deed with his (Defendant) name."
25. Fraud entails dishonesty and there must be personal dishonesty of some sort in acquiring the title. The protection of the indefeasibility provisions of the Land Registration Act will not apply if the alleged fraud is perpetrated by the registered proprietor in the course of acquiring the title. Was the first defendant dishonest?
26. The first defendant was a Member of Parliament from 2002 to 2007, a very prominent person in the community. He is a highly educated person. The plaintiff, on the other hand, is an illiterate old man and did not understand many things in the transaction. However, the first defendant's conduct in this matter is deceitful, to say the least. The first agreement was on foot and had not been terminated when the first defendant secretly entered into the second agreement with the plaintiff without notifying Gamoga & Co. Lawyers or paying the balance of the purchase price. The second agreement was not disclosed during discovery and not admitted into evidence and the consideration is unclear. The first defendant said he gave K6, 000.00 in financial assistance to the plaintiff. Rose Muingnepe puts the figure at K4, 000.00. The plaintiff said he received K2, 000.00 from the first defendant. The consideration under the first agreement was K25, 000.00. Under the second agreement, the plaintiff was to receive anything between K2, 000.00 and K6, 000.00 or the maximum of K10, 000.00. I do not believe that the plaintiff would have agreed to receive something less than K25, 000.00. I do not accept the evidence of the first defendant and Rose Muingnepe that the plaintiff wanted to transfer the title to the first defendant under the second agreement. Furthermore, I am not satisfied that the mark "x" on the transfer dated 15th June 2005 is placed on the document by the plaintiff.
27. With respect to the evidence of the first defendant and Rose Muingnepe that the title deed was lost, it would have been prudent and proper to advise Gamoga & Co. Lawyers of the alleged loss as they acted for the plaintiff. The title has never been lost; it has always been with the plaintiff since 1st March 1990. I do not believe the evidence of the first defendant and Rose Muingnepe. I believe the plaintiff, who said in cross examination that the first defendant was lying.
28. The first defendant and Rose Muingnepe with the assistance of Terah Baloiloi obtained a new title deed from the Registrar when the original title was always with the plaintiff. The Registrar issued a title deed without complying with the procedure under s. 162 of the Lands Registration Act.
29. For all the reasons in the judgment, I am satisfied that the first defendant obtained the title fraudulently. I make the following orders:
__________________________________________________
Gamoga & Company Lawyers: Lawyer for the plaintiff
Daniels & Associates Lawyers: Lawyer for the first defendants
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