Noko No. 96 Ltd v Temu [2013] PGNC 365; N7932 (10 May 2013)

N7932

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA No. 36 OF 2010

BETWEEN:
NOKO NO. 96 LIMITED
Appellant

AND:
SIR PUKA TEMU – MINISTER FOR LANDS & PHYSICAL PLANNING
First Respondent

AND:
PEPI KIMAS – SECRETARY FOR LANDS & PHYSICAL PLANNING
Second Respondent

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

AND:
KOPANA INVESTMENTS LIMITED
Fourth Respondent

Waigani: Gavara-Nanu, J

2012: 14, 16 & 22 November

2013: 10 May

PRACTICE AND PROCEDURE – Forfeiture of State Leases – Appeal against forfeitures – Land Act, 1996; ss. 122 (2), (3) and (4); 142 (1) and (2) and 169 (3) – Notices to show cause – Forfeiture notices - Appropriate mode of service of such notices – Lessee’s last known postal address with the Department of Lands – Service of the notices by a registered mail – Whether such service is valid.

Cases Cited

Dr Allan Marat v. Hanjung Power Ltd (2014) SC1357
Koitachi Ltd v. Walter Schnaubelt (2007) SC870
Mudge v. Secretary for Lands [1985] PNGLR 387
National Fisheries Authority v. Idumava Investment Limited and Ors (21 September, 2012)
Papua Club Inc v. Nusaum Holdings Ltd (No.2) (2004) N2603

Counsel

F. Griffin, for the Appellant
S . Ketan, for the First, Second and Third Respondents

1. Molly with P.J. Wright, for the Fourth Respondent
   

10^th May, 2013

1. GAVARA-NANU J: The appellant appeals against the decisions of the first and second respondents given on 28 August, 2009, to forfeit its leases in respect of the properties described as Section 26 Allotment 16, 17, 18, 19 and 20, Granville, Port Moresby, National Capital District, State Lease Volume 19 Folios 221, 222, 223 and 224. The forfeitures followed a purported failure by the appellant to comply with the improvement covenants and the conditions of the respective leases.

2. The appellant appeals the forfeitures pursuant to s. 142 (1) (b) of the Land Act, 1996 and a 14 day extension given to the appellant on 11 March, 2010, to file the appeal out of time after it failed to appeal within the statutory period of 28 days under s. 142 (2) of the Act. The appellant denies being served with the notices to show cause and the forfeiture notices. It claims the notices were either not served at all or were posted to the wrong postal address.

3. The forfeitures were made pursuant to s. 122 of the Land Act, which provides that the Minister may by notice in the National Gazette, forfeit a State Lease if the rent on the lease remains due and unpaid for a period of six months, or if a covenant or a condition of the lease is not complied with. Under s. 122 (2) and (3) the Minister is required to first serve a notice on the lessee to show cause within the period given in the notice.

4. Under s. 122 (2) (b) the Minister may also whether or not cause is shown, serve a notice requiring the lessee to comply with the improvement covenants or conditions of the lease or provisions of the Act, as the case may be, within the period given in the notice.

5. The Minister has no power to forfeit a lease without first giving a lessee a notice to show cause. The service of a notice to show cause on a lessee is a mandatory requirement under s. 122 (2 (a) and (3) (a) of the Act.

6. Section 122 (4) provides that if a lease is forfeited, copies of the forfeiture notice and the notice to show cause shall be served on all persons, who to the knowledge of the Departmental Head or the Secretary for Lands, have or claim to have a right, estate or interest in, to or in relation to the land, title, or such of them as can with reasonable diligence be ascertained and found.

7. In National Fisheries Authority v. Idumava Investment Limited and Ors (21 September, 2012), which the appellant relied on, I held that the requirements of s. 122 (4) of the Land Act, imposed a duty on the Secretary for Lands to inform the lessee of the forfeiture by serving a forfeiture notice on the lessee in order to give the lessee an opportunity to appeal the forfeiture under s. 142 (2) of the Act.

8. It is convenient now to state briefly the background of this appeal. The appellant was granted the above leases on 03 December, 1997. Under the improvement covenants of each lease, the appellant was required to make improvements to all the properties to the total value of K35 million by 2002. However, by the end of 2002, the appellant had still not made improvements to any of the properties. By 2009, still no improvements were made to the properties. The annual lease rental for each property was K1,750.00. By January, 2009, the total outstanding lease rentals for all the properties was K27,750.00. Thus, by 2002, the appellant was already in breach of the improvement covenants and conditions of the leases, which was a clear ground for all the leases to be forfeited under s. 122 (1) (a) (d) (i) and (2) and (3) of the Act.

9. The forfeitures followed an investigation into all the properties by the Valuer General. A report on the investigation dated 25 January, 2009, which was submitted to the Department of Lands, recommended forfeiture of all the leases. Another report was by the Acting Director, Land Administration dated 24 August, 2009, it also recommended forfeiture of all the leases.

10. The appellant was incorporated on 29 March, 1996. It was previously owned by Mr Anthony Skinner and Mr Peter George Balhm, both Australians. Mr. Skinner sold his shares to Mr. Richard Wong, Mr James Pong and Mr Chan Beng Lee, in early 2009.

11. According to the records in the Department of Lands, the postal address of the appellant was P.O. Box 1708, PORT MORESBY, National Capital District. This is confirmed by the supplementary affidavit of Romily Kila Pat, Acting Secretary for Lands sworn on 10 September, 2010. This affidavit annexes the computer print-outs from the Department of Lands regarding the land, which confirm the appellant's postal address. The lease rental notices and the notices to show cause were sent to this address. This is confirmed by the affidavits of Mr. Richard Wong sworn on 13 April, 2010; Mr. Romily Kila Pat (supplementary affidavit) and Mr. Tawai Atani sworn on 12 July, 2010. Mr. Atani’s affidavit also deposes that the notices to show cause were sent to the appellant by a registered mail on 4 March, 2009, to the above postal address. In each notice to show cause, the applicant was given the postal address for the Department of Lands to which it could send its responses to show cause, viz; Department of Lands and Physical Planning, P.O. Box 5665, BOROKO, National Capital District. Mr. Atani has annexed a copy of the receipt for the payment he made to send the notices to show cause to the appellant by a registered mail.

12. According to Romily Kila Pat’s supplementary affidavit, in mid 2002, Mr. Skinner, requested an extension of time to settle the outstanding lease rentals. Mr. Skinner told the then Secretary for Lands that he was awaiting funds from overseas. The request was granted. Mr. Skinner made the request after the notices to show cause were sent to the appellant through the above postal address.

13. The appellant was given 28 days to show cause, which it failed to do. On 31 March 2009, the appellant through Mr Skinner applied for replacement leases for all the properties claiming that the original leases had been lost.

14. In that application, Mr Skinner gave the appellant’s postal address as P.O. Box 6509, BOROKO, National Capital District. The Deputy Secretary for Lands, Operations, subsequently sent a letter of reminder to the appellant about the outstanding lease rentals using the same postal address. The letter is significant and it is reproduced below in full.

Date: 1^st July, 2009

The Managing Director
Noko No. 96 Pty Ltd
P.O. Box 6509
Boroko
NCD

Attention: Mr Tony Skinner

Dear sir,

RE: REMINDER NOTICE OVER ALLOTMENTS 16, 17, 18 AND 20, SECTION 26, GRANVILLE, NCD.

May I draw your attention to the Notice To Show Case (NTSC) dated 27^th February, 2009 that were served through registered Mail No. 890844 via P O Box 1708, Port Moresby, NCD. (copies attached for ease of reference)

Further, to identify the proper address of the company thorough search was carried out and the above address have been captured from the Replacement Application Form through Registrar of Titles Office. As in the recent past you have applied for Replacement of Tiles over the said allotments from that Office.

Considering the nature of the case and for conveniences, I am serving this reminder notice to you to respond why these leases should not be forfeited. Failure to do so may result in your leases been forfeited.

I will appreciate your early response, please.

Yours faithfully,

ROMILLY KILA PAT

Deputy Secretary – Operations.

15. The appellant did not respond to the letter. The forfeitures were subsequently gazetted on 28 August, 2009.

16. On 22 April, 2009, the fourth respondent had applied for all the properties. By then, all the leases were already liable to forfeiture. The fourth respondent paid all the relevant fees for its applications which were subsequently considered and granted by the Land Board.

17. Because the fourth respondent’s applications were for business leases, the Minister in the exercise of his powers under s. 69 (2) (d) of the Land Act, exempted the leases from being put on public tender.

18. Mr. Wong has alleged that the fourth respondent acquired the titles by fraud. However, there is no evidence of any fraudulent dealings by the fourth respondent in acquiring the properties. I am satisfied that the acquisition of the titles to all the properties by the fourth respondent was free from fraud viz, fraud in the context of s. 33 of the Land Registration Act, Chapter No. 191, which is actual fraud or fraud by the registered proprietor. See Papua Club Inc. v. Nusaun Holdings Ltd (No.2) (2004) N2603, Mudge v. Secretary for Lands [1985] PNGLR 387 and Koitachi Ltd v. Walter Schaulbelt (2007) SC870.

19. That said, the question still remains whether the appellant was properly served with the notices to show cause when the notices were sent to P.O. Box 1078, PORT MORESBY, National Capital District, instead to P.O. Box 32, Port Moresby, which Mr Wong claimed was the correct postal address for the appellant. Or should the respondents served the notices on the appellant through its registered office, or personally on Mr. Skinner or Mr Wong or any other Director of the appellant.

20. Mr Griffin relied on my decision in National Fisheries Authority v. Idumava Investments Ltd (supra), he submitted that in that case, I held that s.122 (4) provides for a personal service of a forfeiture notice on the lessee. He argued that I ordered restoration of the plaintiff’s title because of lack of personal service of the forfeiture notice on the plaintiff. However, in that case, the forfeiture notice was not served on the plaintiff at all. I said the failure by the defendants to serve the forfeiture notice on the plaintiff amounted to a denial of natural justice because the plaintiff was denied the right to appeal the forfeiture. There were other grounds upon which I ordered restoration of the plaintiff’s title. One was the failure by the defendants to prove the grounds upon which the lease was forfeited namely, the defendants’ claim that the plaintiff’s lease rentals remained due and unpaid for a period of six months and the failure by the plaintiff to comply with the improvement covenants and the conditions of the lease. Both grounds were strongly denied by the plaintiff, and I said given such strong denials by the plaintiff, it was incumbent on the defendants to prove their claims. I also found that there was actual fraud by the registered proprietor in acquiring the title.

21. In this case, when the leases were forfeited in August, 2009, the conditions and the improvement covenants for all the leases were already breached. Even if the lease rentals had been paid after the forfeitures, pursuant to s. 122 (5) of the Land Act, the appellant still was not entitled to its leases being restored. For these reasons, this case is clearly distinguishable from the National Fisheries Authority v. Idumava Investment Ltd.

22. As to the question of whether posting the notices to show cause to the appellant through P.O. Box 1708, PORT MORESBY, National Capital District Commission by a registered mail was a proper service, I also raised the issue of personal service with Mr. Molloy because of the word “found” in s. 122 (4). I asked Mr. Molloy if the word "found" implied personal service on the lessee. Mr. Molloy submitted that when s. 122 (2), (3) and (4) are read together, it is clear that they do not imply or require personal service.

23. Having had a closer look at s. 122 (2), (3) and (4) of the Land Act, I think Mr Molloy had it right that no personal service of a notice to show cause or forfeiture notice is required on a lessee. To find the meaning and context of these sub-sections, in my view they also need to be read together with s. 169 of the Land Act, which provides the mode of service for the notices, more particularly subsection (3), which provides:

169. Service of notices, etc

(3) where under the Act, a claim, notice or thing is required or permitted to be given to or served on a corporation, the claim, notice or thing may be given or served by registered post to the postal address of the corporation last known to the Departmental Head.

24. In this case pursuant to s. 169 (3) the postal address of the appellant last known to the Secretary for Lands was P.O. Box 1708, PORT MORESBY, National Capital District. That was the only postal address of the appellant kept in the Department of Lands. The postal address, P. O. Box 32, PORT MORESBY, National Capital District, was not the postal address of the appellant kept in the Department of Lands and was not the postal address of the appellant last known to the Secretary for Lands. Thus, sending the notices to show cause through a registered mail to the appellant through P.O. Box 1708, PORT MORESBY, N.C.D, constituted a proper service of the notices, and it was consistent with the requirements of s. 169 (3). Other correspondences and notices for the appellant were also sent to this postal address.

25. The provisions of the Companies Act, relating to service of documents and notices are irrelevant. The appropriate and proper mode of service of documents and notices on a lessee is that prescribed by s. 169 of the Land Act, which is the enabling legislation. See, Dr Allan Marat v. Hanjung Power Ltd (2014) SC1357.

26. The appellant was given a further opportunity to show cause when it was sent a reminder letter through the same postal address but it also failed to avail itself of the opportunity to show cause.

27. The appellant also asked for an extension of time to pay its outstanding lease rentals, but it failed to pay the lease rentals, although it was given the extension.

28. In the circumstances, I am satisfied that the appellant was not denied natural justice by the respondents.

29. For the foregoing reasons the appeal is dismissed.

30. The appellant will pay the respondents’ costs of and incidental to the appeal.

__________________________________________________________
Young & William Lawyers: Lawyer for Appellant
Ketan Lawyers: Lawyer for First, Second and Third Respondents
Posman, Kua & Aisi Lawyers: Lawyers for the Fourth Respondent