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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS (JR) NO 927 OF 2011
OPEN BAY TIMBER LIMITED
First Plaintiff
PAPUA NEW GUINEA FOREST AUTHORITY
Second Plaintiff
V
HON LUCAS DEKENA,
MINISTER FOR LANDS & PHYSICAL PLANNING
First Defendant
HENRY WASA, REGISTRAR OF TITLES
Second Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant
SECRETARY,
DEPARTMENT OF LANDS & PHYSICAL PLANNING
Fourth Defendant
PAPUA NEW GUINEA LAND BOARD
Fifth Defendant
TZEN PLANTATIONS LIMITED
Sixth Defendant
Waigani: Cannings J
2013: 13, 14, 15, 26 March
JUDICIAL REVIEW – decision to grant State Lease – whether decision contrary to Forestry Act, Section 139A (transfer of land to the Authority) – whether actual fraud by a registered proprietor is a proper ground of judicial review, Land Registration Act, Section 33(1)(a) – whether errors of law committed in decision-making process culminating in granting of State Lease – remedies – principle of indefeasibility of title – whether constructive fraud established.
The Secretary for Lands granted a 99-year State Lease to the sixth defendant over a portion of land for agricultural purposes. The first plaintiff, a timber company, and the second plaintiff, the Papua New Guinea Forest Authority, were aggrieved by the Secretary's decision and other decisions leading up to it and sought judicial review of those decisions and relief that would have the effect of quashing the sixth defendant's lease and confirming the plaintiffs' interests in the land, on three grounds: (1) granting of the lease was contrary to the Forestry Act, Section 139A, under which the land was the property of the PNGFA; (2) the sixth defendant obtained title by actual fraud; (3) gross and extensive error of law constituted by statutory breaches, resulting in the sixth defendant obtaining title in circumstances that were so unsatisfactory, irregular and unlawful as to amount to constructive fraud.
Held:
(1) Section 139A of the Forestry Act deems all land in Papua New Guinea in the name of the State that was held under a certificate of occupancy or set aside for use by the Department of Forests immediately before the coming into operation of the Forestry Act (25 June 1992) to have been transferred to and become the property of the Authority. The subject land was held by the Department of Forests under a certificate of occupancy at the relevant time and is therefore deemed to have been transferred to and become the property of the Authority on and from the coming into operation of the Forestry Act. The land remained the property of the Authority on the date of grant of the State Lease to the sixth defendant. The lease was granted contrary to the Forestry Act, Section 139A. The first ground of review was upheld.
(2) Actual fraud by a registered proprietor is a ground on which a State Lease can be quashed under Section 33(1)(a) of the Land Registration Act. However it is not a proper ground of judicial review unless the registered proprietor is a public official or governmental body. Here the registered proprietor was a private corporation so the ground of review alleging actual fraud against it was not properly before the Court (it should have been pleaded, if at all, by writ of summons and statement of claim under Order 4 of the National Court Rules). Further, the evidence was not sufficient to prove actual fraud against the sixth defendant. The second ground of review was dismissed.
(3) Public officials and governmental bodies have a duty to comply with the law when making decisions relating to allocation of land, including granting of State Leases. Here the plaintiff proved that a number of errors of law were made:
(a) the State Lease was granted over land that was not "Government land" (as defined by Section 2 of the Land Act) contrary to Section 65 of the Land Act, as the land was the property of the Authority;
(b) the land was unlawfully exempted from advertisement in that: the Secretary lacked power to exempt it from advertisement, none of the circumstances in which land may under Section 69(2) of the Land Act be exempted from advertisement applied (in particular the State had not agreed to provide the land for the establishment of a project, on the contrary the State had agreed not to provide the land for a project), the instrument of exemption did not adequately state the reason for exempting the land from advertisement, the Secretary, who had actual knowledge of the plaintiffs' interests in the land, denied natural justice to them by not notifying them of his intention to exempt the land from advertisement so that the land could be leased to the sixth defendant;
(c) the Chairman of the Land Board, which recommended that a State Lease be granted to the sixth defendant, breached Section 58 of the Land Act by failing to notify the plaintiffs of the date on which the sixth defendant's application for the State Lease would be heard and of its recommendation that the Lease be granted to the sixth defendant, thereby denying the plaintiffs the opportunity to make representations to the Board and/or appeal to the Minister under Section 62 of the Land Act;
(d) the decisions of the Secretary to exempt the land from advertisement and grant the Lease to the sixth defendant were so unreasonable that no reasonable administrator could have made either decision;
(e) the Deputy Registrar of Titles registered the Lease granted to the sixth defendant contrary to the Land Registration Regulation as the land was already subject to eight separate State Leases, the registered proprietor of which was the PNGFA [including portion 9: 999.99 hectares];
and therefore the third ground of review was upheld.
(4) As two grounds of review were upheld the decision to grant the State Lease to the sixth defendant and related decisions were susceptible to judicial review. Notwithstanding the general principle of indefeasibility of title there is an exception where it is proven that the circumstances in which a person has obtained title are so unsatisfactory, irregular and unlawful as to amount to constructive fraud for the purposes of Section 33(1)(a) of the Land Registration Act. Here the errors of law proven by the plaintiffs under grounds 1 and 3 were so numerous and serious as to amount to constructive fraud, warranting the exercise of the Court's discretion by granting the relief sought by the plaintiffs. The decisions culminating in the decision to grant the State Lease and the decision to register the Lease were quashed and the court granted consequential relief to reflect those orders.
Cases cited
Papua New Guinea Cases
Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110
Commonwealth v Western Australia [1999] HCA 5
Costello v Controller of Civil Aviation [1977] PNGLR 476
Dale Christopher Smith v Minister for Lands (2009) SC973
Elizabeth Kanari v Augustine Wiakar (2009) N3589
Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215
Helifix Group of Companies Ltd v PNG Land Board (2012) SC1150
Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80
Kapiura Trading Ltd v Bullen (2012) N4903
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120
Lae Rental Homes Ltd v Viviso Seravo (2003) N2483
Medaing v MCC and Iamo (2011) N4340
Mision Asiki v Manasupe Zurenuoc (2005) SC797
Mosoro v Kingswell Ltd (2011) N4450
Mudge v Secretary for Lands [1985] PNGLR 387
NCDIC v Crusoe Pty Ltd [1993] PNGLR 139
Paul Saboko v Commissioner of Police (2006) N2975
Ramu Nickel Ltd v Temu (2007) N3252
Robertson Rataba v Gari Baki (2010) SC1014
Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603
Timothy Alex Aipa v Benjamin Samson, Deputy Registrar of Titles (2012) N4777
West New Britain Provincial Government v Kimas (2009) N3834
Yakananda Business Group Inc v Minister for Lands (2001) N2159
Overseas Cases
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
Counsel
J Brooks & M Mukwesipu, for the first plaintiff
K Iduhu & M Pala, for the second plaintiff
I Mugugia & S Havori, for the first, second, third, fourth & fifth defendants
I Molloy & I Shepherd, for the sixth defendant
26th March, 2013
1. CANNINGS J: This is a ruling on an application for judicial review. The applicants are the plaintiffs Open Bay Timber Ltd and the Papua New Guinea Forest Authority ("PNGFA"). They apply for judicial review of administrative decisions that resulted in the Secretary for Lands and Physical Planning in January 2011 granting a 99-year State Lease to the sixth defendant, Tzen Plantations Ltd, over a portion of land of about 9,418 hectares known as Portion 777 in the Mevelo area of Pomio District, East New Britain Province ("the Mevelo land").
2. The plaintiffs claim that Portion 777 has long been earmarked for reafforestation by Open Bay Timber Company, a Japanese-owned timber company that has been operating in the area for almost 40 years. They say that Open Bay has a sound record of environmental management and that its operations have long been approved and supported by the PNGFA and its predecessors, the Department of Forests and the Office of Forests. They claim that the Secretary for Lands and Physical Planning had no right to grant a lease over the Mevelo land to Tzen Plantations and that the decision to grant the lease and other decisions including a decision of the Land Board to recommend the granting of the lease were unlawful. They seek orders that would result in Tzen Plantations' lease being quashed and declarations that the land is the property of the PNGFA and that would preserve the interests of Open Bay Timber Company in relation to it.
3. The defendants fall into two categories. The first to fifth defendants (the Minister, the Registrar of Titles, the State, the Secretary and the Land Board) are the public officials or bodies whose decisions are the subject of review. The sixth defendant Tzen Plantations is the registered proprietor of the State Lease over Portion 777. The defendants' position is that no illegality, fraud or excess of jurisdiction was involved in granting the lease to Tzen Plantations and that all relief sought by the plaintiffs should be refused.
GROUNDS OF REVIEW
4. The plaintiffs' statement under Order 16, Rule 3(2)(a) of the National Court Rules does not clearly set out the grounds of review. However it was clarified at the start of the trial that there are three major grounds of review and the defendants took no exception to the trial proceeding on that basis. The grounds are:
(1) granting of the State Lease to Tzen Plantations was contrary to the Forestry Act, Section 139A, under which the land was the property of the PNGFA;
(2) Tzen Plantations obtained title by actual fraud;
(3) gross and extensive error of law constituted by breaches of the Land Act and the Land Registration Act, resulting in Tzen Plantations obtaining title in circumstances that are so unsatisfactory, irregular and unlawful as to amount to constructive fraud.
(1) BREACH OF THE FORESTRY ACT, SECTION 139A
The plaintiffs' arguments
5. The plaintiffs argue that the Secretary for Lands erred in law in granting a State Lease over Portion 777 to Tzen Plantations as the land was by virtue of Section 139A of the Forestry Act 1991 the property of the PNGFA. It was not available for leasing. Section 139A (transfer of land to the Authority) states:
(1) All land in Papua New Guinea in the name of the State held under a Certificate of Occupancy or set aside for use by the Department of Forests or the Forest Industries Council immediately before the coming into operation of this Act is, on and from the coming into operation of this Act deemed to have been transferred to and to have become the property of the Authority.
(2) Where land referred to in Subsection (1) is land registered under the Land Registration Act (Chapter 191), the Registrar of Titles shall, without formal transfer and without fee, on application in that behalf by the Authority, enter or register the Authority in the Registrar kept under that Act and, on entry and registration, grant a certificate of title, lease or other instrument evidencing title to the land within that Act.
6. The plaintiffs rely on Section 139A(1) and point to the fact that in 1977 the Office of Forests within the Department of Primary Industries was granted a Certificate Authorising Occupancy over the Mevelo land, which was in those days described as Portion 761. The Office of Forests became the Department of Forests in 1985, which became the PNGFA upon the coming into operation of the Forestry Act 1991 on 25 June 1992. Section 139A was a new section introduced by an amendment to the Act in 1996. There are three preconditions to land being deemed to be PNGFA land:
7. Mr Brooks for Open Bay Timber Company, supported by Mr Iduhu for the PNGFA, submitted that all preconditions are satisfied. First, Portion 777 (or Portion 761 as it was then known) had become alienated Government land in 1969, when it was acquired by the colonial Administration from customary landowners. It was therefore land "in the name of the State". Secondly, the land was held under a Certificate Authorising Occupancy granted in 1977, which has never been revoked. An attempt was made in 2001 by the Department of Agriculture and Livestock to revoke it and to confer a similar certificate on the East New Britain Provincial Government, but the attempt was unsuccessful and in any event could not defeat the legal effect of Section 139A(1). Thirdly the certificate operated in favour of the Department of Forests immediately before the coming into operation of the Forestry Act, 25 June 1992.
8. The plaintiffs argue that as a consequence Portion 777 (or Portion 761 as it was then known) was from the coming into operation of the Act (25 June 1992 or 5 December 1996 depending on whether the Forestry Act itself or the Amendment Act is taken as the point of reference) "deemed to have been transferred to and to have become the property of the Authority". Nothing happened subsequently to disturb the PNGFA's interest in the land, which remained its property in January 2011 when the Secretary for Lands granted – unlawfully according to the plaintiffs – a State Lease over it to Tzen Plantations.
The defendants' response
9. The defendants do not take issue with the factual foundations of the plaintiffs' argument: the Office of Forests was granted a Certificate Authorising Occupancy in 1977, the Office became the Department in 1985, which became the PNGFA in 1992, and the dates of commencement of the original Act and the Amendment Act are uncontested. However the defendants take issue with the plaintiffs' interpretation of Section 139A, which they say would lead to absurd consequences: one governmental body would suddenly become the title-holder of vast tracts of land throughout the country, defeating the interests of the State in that land, without having its interests in the land registered under the Land Registration Act. The proper interpretation, they argue, is one that would vest in the PNGFA the same interest in the land that its predecessors, the Office of Forests and the Department of Forests, had on immediately before the coming into operation of the Forestry Act, but no greater or other right or interest. That this is the purpose and intention of Section 139A is clear when it is read in the context of other provisions of Part X (savings and transitional) of the Forestry Act, particularly Section 138 (transfer of assets etc to the Authority), which states:
(1) All—
(a) assets (other than land held by the State) which, immediately before the coming into operation of this Act, were held or occupied by the Department of Forests and all liabilities and obligations of the Department of Forests immediately before the coming into operation of this Act; and
(b) assets (other than land held by the State) which immediately before the coming into operation of this Act were held or occupied by the Forest Industries Council and all liabilities and obligations of the Forest Industries Council immediately before the coming into operation of this Act,
are, on that coming into operation, transferred to and become assets and liabilities and obligations of the Authority.
(2) Where any property transferred under Subsection (1) is land registered under the Land Registration Act (Chapter 191), the Registrar of Titles shall, without formal transfer and without fee, on application in that behalf by the Authority, enter or register the Authority in the Register kept under that Act and, on entry and registration, grant a certificate of title, lease or other instrument evidencing title to the land within that Act.
10. Mr Molloy for Tzen Plantations, supported by Ms Mugugia for the other defendants, submitted that if Section 138(1) were read literally all assets referred to in the provision would on the coming into operation of the Act be transferred to and become assets of the PNGFA. The same thing would happen under Section 138(2) in the case of land registered under the Land Registration Act: it would be transferred upon application by the PNGFA to the PNGFA which would upon entry and registration be granted a certificate of title, lease or other instrument evidencing title to the land. This cannot be the correct interpretation as it would mean that a mere right of occupation of land by the PNGFA could be converted to an entitlement by way of a certificate of title, lease or other instrument evidencing title. However that is not what is intended by Section 138. Its purpose is to vest the same but no greater or other right or interests in the PNGFA than existed in its predecessors. So although Section 138 refers to all assets (including certain land) it is not actually the asset that is intended to be transferred. What is intended to be transferred is the previously held right or interest in that asset, including in some cases a right or interest in land. Although Section 138(2) refers to a certificate of title, lease or other instrument being issued to the PNGFA in respect of such land where it is land registered under the Land Registration Act, it cannot mean that title to the land that the PNGFA occupied is transferred from the existing proprietor to it. That would be an absurd interpretation and would amount to compulsory acquisition of property (in the case of a citizen) contrary to Section 53 (protection from unjust acquisition of property) of the Constitution.
11. The same interpretation should be applied to Section 139A(1). It is possible to read it literally and out of context in the way advanced by the plaintiffs, but that would defeat the purpose of the provision and lead to absurd consequences. It is preferable to read it in a way consistent with its purpose, which would lead to a sensible and fair outcome. Mr Molloy pointed out that Section 139A(2) is in the same terms as Section 138(2), which underlines the point that the purpose of neither Section 139A nor Section 138 is to transfer to the PNGFA any interest in land greater than that enjoyed by its predecessor, the Department of Forests. Mr Molloy submitted that the following considerations supported the defendants' interpretation of Section 139A:
Consideration
12. When the court is faced with competing interpretations of a statutory provision the best starting point is to read the provision literally and ask the question: what does it say? Is it clear what it says? Is it ambiguous? If it is clear, the words should be given their literal meaning unless to do so would lead to absurd or unjust consequences. In PNG the courts are required by Section 158(2) (exercise of the judicial power) of the Constitution when interpreting the law to "give paramount consideration to the dispensation of justice". That in my view is a sufficient justification for being constantly alert to the purpose of a statute and the interests of justice. Indeed it is the duty of the courts to do so. If the provision is ambiguous the duty to consider the purpose of a provision and the interests of justice is enhanced. It can also be useful to consider the debate, if any, in the Parliament that took place at the time that the Act was passed. Explanatory memoranda are also a guide to legislative purpose. Mr Molloy notified the court that in this case none of those extrinsic aids to interpretation shed light on the interpretation of Section 139A.
13. The parties agree that Section 139A(1) says that in certain circumstances certain interests in land will be "deemed to have been transferred to and to have become the property of the Authority". They agree on the circumstances in which Section 139A(1) applies, ie that there are three preconditions to its operation:
14. The parties agree on the meaning and effect of the second and third preconditions. They applied here as Portion 761 was held by the Department of Forests under a Certificate Authorising Occupancy immediately before commencement of the Forestry Act.
15. They disagree over the meaning of land "in the name of the State". The defendants say that this means the land had to be registered in the name of the State on the Register of Titles. The plaintiffs say that it includes any State land. There is an ambiguity so the purpose of the provision should be considered. In my view the purpose is fairly clear: to not only preserve for the benefit of the PNGFA the right of occupancy that the Department of Forests had in respect of Government land, but to formalise that interest in the land by deeming the land "to be transferred to and to have become the property of the Authority". The final words of Section 139A(1) have considerable force and effect. I reject the argument of the defendants that the words "in the name of the State" mean that Section 139A(1) applies only to land registered in the name of the State. The literal meaning of the provision is that it applies to any Government land.
16. Does this lead to absurd consequences? Does it mean that the PNGFA will have acquired greater interests in land – by having land transferred to it, which will become its property – over and above the right of occupation that its predecessor enjoyed? Yes, however I don't think that is either an absurd or unintended consequence. The PNGFA was established by Section 5 (establishment etc of Papua New Guinea Forest Authority) of the Forestry Act as a corporation with power to acquire, hold and dispose of property. One of its objectives under Section 6(a) (objectives of the Authority) is "the management, development and protection of the Nation's forest resources and environment in such a way as to conserve and renew them as an asset for succeeding generations". One of its functions under Section 7(e) (objectives of the Authority) is "to prepare and review the National Forest Plan and recommend it to the National Executive Council for approval". The long title shows that the Forestry Act is intended "to provide for and to give effect to the National Goals and the Directive Principles" and in particular "manage, develop and protect the Nation's forest resources and environment in such a way as to conserve and renew them as an asset for the succeeding generations". The evident legislative intention was to confer on the PNGFA a much broader range of powers, functions, duties and responsibilities, and a greater degree of independence, than the Department of Forests had. It is unsurprising that a provision such as Section 139A(1) exists, as it allows forest resources to be brought under regulatory control and managed by a central authority, the PNGFA.
17. Mr Molloy's submission about the need to read Section 139A harmoniously with Section 138 is valid, up to a point, but his submission introduces problems in the application of Section 138 (and therefore Section 139A) that I think are largely illusory. The argument is that if Section 138 were read literally there could be situations where a person (other than the State) who has a registered interest in land which was occupied by the Department of Forests under a Certificate Authorising Occupancy would be at risk of having their interest in the land compulsorily acquired by virtue of the land being transferred to and becoming an asset of the PNGFA; in which case the PNGFA could under Section 138(2) be granted a certificate of title over the land. I expect that that would be a very rare scenario and in the event that it happened, it may well be necessary not to give Section 138 its literal meaning on the ground that its literal meaning would lead to an absurd and unjust result.
18. Mr Molloy's submission was focussed rather too much on Section 138, which is not the provision the interpretation of which is in question. A sceptic could be forgiven for thinking that this was a diversionary tactic. I appreciate Mr Molloy's plea for Section 139A to be read in context. But this means not only in the context of Section 138 and the provisions of Part X of the Forestry Act but also in the context of the entire Act, one of the principal purposes of which is to enhance the management and control of the nation's forest resources in order to give effect to the National Goals and Directive Principles, in particular National Goal No 4 (natural resources and environment) of the Constitution, which states:
We declare our fourth goal to be for Papua New Guinea's natural resources and environment to be conserved and used for the collective benefit of us all, and be replenished for the benefit of future generations.
19. Though the National Goals and Directive Principles are in general terms by force of Section 25(1) (implementation of the National Goals and Directive Principles) of the Constitution non-justiciable, it is nevertheless the duty of all governmental bodies under Section 25(2) to apply and give effect to them as far as lies within their respective powers. Section 25(3) reinforces the acute need for the courts to have regard to the National Goals and Directive Principles when interpreting legislation. It states:
Where any law, or any power conferred by any law (whether the power be of a legislative, judicial, executive, administrative or other kind), can reasonably be understood, applied, exercised or enforced, without failing to give effect to the intention of the Parliament or to this Constitution, in such a way as to give effect to the National Goals and Directive Principles, or at least not to derogate them, it is to be understood, applied or exercised, and shall be enforced, in that way.
20. As I indicated in Medaing v MCC and Iamo (2011) N4340 Section 25(3) means that where any judicial power can reasonably be exercised in such a way as to give effect to the National Goals and Directive Principles, and without failing to give effect to the intention of the Parliament or to the Constitution, it is to be exercised and shall be enforced in that way. Judges must be emboldened, informed and inspired by the National Goals and Directive Principles, so when Section 139A of the Forestry Act is considered in that context I have no difficulty upholding the interpretation advanced by the plaintiffs. It is also useful to consider the historical context in which the Forestry Act 1991 was enacted. Judicial notice is taken of the fact that it was a legislative response to the Barnett Commission of Inquiry into the Forestry Industry which reported on rampant corruption and mismanagement in the forestry industry and recommended Criminal Code and Leadership Code prosecution of many individuals and changes in the laws and the establishment of a central regulatory authority. Hence prosecutions took place, the Forestry Act Chapter 216 and related legislation was repealed and replaced by the Forestry Act 1991 and the Department of Forests was abolished and replaced by the PNGFA.
21. I find none of the other arguments advanced by the defendants for avoiding the literal meaning of Section 139A persuasive. Mr Kila-Pat's evidence about the generally accepted view being that all certificates of occupancy ceased upon commencement of the Forestry Act was vague and unconvincing. If that is the generally accepted view, it is misguided. It cannot defeat the force and effect of a statutory provision, which may well have been unappreciated or misunderstood until this trial. As to the presumption of statutory interpretation referred to – a statute does not divest the State of its property, rights, interests or prerogatives unless that is clearly stated or necessarily implied – I doubt its relevance and application in PNG, given the clear fingerposts of interpretation in the Constitution, none of which would seem to provide for it. If it does apply, it has a limited application in this case as the body in whose favour the State is being divested of its property is a governmental body, the PNGFA, which is an organ of the State, accountable to the People through a Minister and the Parliament.
Determination
22. The plaintiffs' arguments are soundly based in law and policy. Errors of law were committed by the defendants in the decisions to make Portion 777 available for lease, to grant the lease to Tzen Plantations and to register the lease in favour of Tzen Plantations. At the time that those decisions were made the land was by virtue of Section 139A of the Forestry Act the property of the PNGFA. It does not matter that the PNGFA did not have its interest in the whole of the land recognised in the Register of Titles (although arguably it had such an interest over a part of Portion 777 known as Portion 9, an issue that will be addressed later). It is sufficient that the land was deemed on the coming into operation of the Forestry Act, 25 June 1992, to have been transferred to it and become its property. The plaintiffs submitted that this position is reinforced by Section 33(1)(h) of the Land Registration Act, however I find that that provision does not apply as the authority to the PNGFA was not granted by "the Head of State or a Minister". The position in law is that the PNGFA has never been lawfully divested of that interest so it was an error of law to grant and register a State Lease over the land in favour of Tzen Plantations. Ground 1 of the review is upheld.
(2) ACTUAL FRAUD
The plaintiffs' arguments
23. The plaintiffs argue that Tzen Plantations obtained title to Portion 777 by actual fraud on its part and that its State Lease can be quashed for that reason under Section 33(1)(a) of the Land Registration Act. Mr Brooks submitted that Tzen Plantations and the related company Tzen Niugini Ltd had engaged in deceitful and dishonest conduct over a period of about five years, with the complicity of a former Secretary for Lands, a former Minister for Lands and a former Minister for National Planning. Mr Brooks tendered affidavits by the Managing Director of the PNGFA and other senior officers, which were admitted into evidence, which demonstrated the alleged pattern of deceit.
24. The plaintiffs claim that in 2004 the National Executive Council approved the Ili-Wawas Integrated Rural Development Project, an oil palm project to be developed by Tzen Niugini in an area of land in the Wide Bay area, close to the Mevelo land covered by Portion 777. The National Executive Council decided at the beginning that the Ili-Wawas project would not include the Mevelo land. It was widely understood that the Mevelo land belonged to the PNGFA and had been reserved for reafforestation. The Ili-Wawas project would be overseen by the PNGFA.
25. The Ili-Wawas project was progressed in 2006. It was to be undertaken on customary land so there were meetings between customary landowners, Tzen Niugini, the PNGFA and the East New Britain Provincial Forest Management Committee. A National Executive Council decision in 2006 concerning Ili-Wawas confirmed that the Mevelo land was excluded from the oil palm project. Project guidelines for Ili-Wawas were prepared by the PNGFA and provided to Tzen Niugini, specifically excluding the Mevelo land. In March 2007 the PNGFA granted a Forest Clearing Authority and a Timber Authority to Tzen Niugini, excluding the Mevelo land. Unbeknown to the PNGFA Tzen Niugini in 2007 commenced efforts to obtain a State Lease over the Mevelo land. They negotiated with the then Secretary for Lands and Physical Planning, Mr Pepi Kimas, and garnered the support of the Member for Pomio and then Minister for National Planning, Hon Paul Tientsen MP, who requested the then Minister for Lands and Physical Planning, Dr Puka Temu MP, to grant a lease to Tzen Niugini.
26. During 2008 and 2009 Secretary Kimas exchanged correspondence with Tzen Niugini regarding the Mevelo land, at one stage granting a licence to conduct a feasibility study. Tzen Niugini was invited to submit an 'application for tender'. An application was submitted, not by Tzen Niugini, however but by the Chief Executive Officer of Tzen Plantations Mr Tan Eng Kwee (who gave evidence for Tzen Plantations in the trial). In April 2010 Portion 777 was exempted from advertisement and in October 2010 Mr Tan's application was considered by the PNG Land Board and a recommendation was made that a State Lease be granted, not to Mr Tan or Tzen Niugini but to Tzen Plantations. In January 2011 the lease was granted. All of this was done without the knowledge of Open Bay Timber Company and the PNGFA. It was not until April 2011 when Tzen Niugini lodged a Forest Clearing Authority over Portion 777 that the PNGFA had any idea that Tzen Plantations had been granted a State Lease over the Mevelo land. After that there was considerable correspondence purporting to be from the registered proprietor of Portion 777, sometimes under the Tzen Niugini letterhead, sometimes under Tzen Plantations letterhead.
27. Late in 2011 Tzen Plantations commenced legal proceedings, WS No 836 of 2011, seeking to injunct Open Bay Timber Company from working on the Mevelo land. This was despite Open Bay Timber Company investing large sums on infrastructure over a period of more than 30 years, including building the Trans-Island Highway that runs through Portion 777, and contributing enormously to the social welfare of the local people through building of community facilities including schools, churches and aid posts; and despite creation of small portions of land known as Portions 2, 3, 4, 5, 6, 7 and 8, that were part of the original 761 (the other part of Portion 761 was originally called Portion 9, and then became Portion 777). However, the PNGFA was not made a party to WS No 836 of 2011.
28. Mr Brooks' submission is that this is evidence of personal dishonesty of Mr Tan, Tzen Niugini and in particular, Tzen Plantations. There has been a continued pattern of dishonesty and deceit since 2005. There is evidence of deliberate fraud, sufficient to have the State Lease over Portion 777 quashed.
The defendants' response
29. The defendants take little issue with the plaintiffs' allegations of fact. They concede that the original scope of the Ili-Wawas project excluded the Mevelo land as the Mevelo land was being managed by the PNGFA and earmarked for reafforestation, not oil palm. However the priorities were later changed. It was agreed politically that the Mevelo land should be incorporated within the Ili-Wawas project. It does not follow that fraud was involved.
30. No fraud on the part of Tzen Plantations has been established. The plaintiffs, having raised the allegation of fraud, are required to prove it on the balance of probabilities. They have fallen well short. Their case against Tzen Plantations is built on the premise that Tzen Plantations knew full well that the Mevelo land was the property of the PNGFA and part of the reafforestation project being undertaken by Open Bay Timber Company and excluded from Tzen Niugini's Ili-Wawas project agreement. However there is no evidence that Tzen Plantations did in fact know these things. Quite the contrary, the evidence shows that though it had knowledge that the Mevelo land was intended to be excluded from the Ili-Wawas project, enquiries made by Tzen Plantations with the Department of Lands and Physical Planning and the office of the Surveyor-General (confirmed by the evidence of the current Secretary Mr Kila-Pat and the Surveyor-General Mr Sipison) showed that in fact the land was available as vacant State land.
31. Besides their failure to prove fraud against Tzen Plantations, Mr Molloy submitted that the plaintiffs also failed to plead the allegations with precision.
Consideration
32. I uphold the arguments of the defendants, for two reasons. First, because the allegation of fraud has not been properly pleaded with precision. I agree with Mr Molloy that this has been unfair to Tzen Plantations which has not had a proper opportunity to be heard on such a serious allegation. Indeed I query whether in judicial review proceedings an allegation of actual fraud against a defendant who is not a public official or public body whose decisions are the subject of review, is a proper ground of judicial review. Allegations of actual fraud are better prosecuted by writ of summons and statement of claim. Indeed there is a strong argument to say that an allegation of actual fraud against a private individual or corporate body, even if it is to be agitated alongside conventional grounds of judicial review, must unless the leave of the Court is obtained to dispense with the requirements of the Rules be prosecuted by writ of summons. Order 4, Rule 2(1)(b) (where writ of summons required) of the National Court Rules states that "proceedings shall be commenced by writ of summons ... where a claim made by the plaintiff is based on fraud. Particulars of the alleged fraud would have to be pleaded under Order 8, Rule 30 (fraud etc).
33. Secondly, the evidence was not sufficient to prove actual fraud against Tzen Plantations. Its conduct can fairly be described as clever and shrewd and devious. Perhaps unethical, crafty, underhand, suspect, or disingenuous are better epithets. But there is no evidence of bribery or corrupt payments (or any payments for that matter). While I agree that the manner in which the State Lease was granted was unsatisfactory and inevitably suspicious, actual fraud has not been proven.
Determination
34. Actual fraud by a registered proprietor is a ground on which a State Lease can be quashed under Section 33(1)(a) of the Land Registration Act. However it is not a proper ground of judicial review unless the registered proprietor is a public official or governmental body. Here the registered proprietor was a private corporation so the ground of review alleging actual fraud against it was not properly before the Court. Further, the evidence was not sufficient to prove actual fraud against Tzen Plantations. The second ground of review is dismissed.
(3) BREACHES OF THE LAND ACT AND THE LAND REGISTRATION ACT
The plaintiffs' arguments
35. The plaintiffs argue that the first five defendants committed gross and extensive errors of law constituted by various statutory breaches, resulting in Tzen Plantations obtaining title in circumstances that were so unsatisfactory, irregular and unlawful as to amount to constructive fraud, warranting the quashing of their State Lease over Portion 777. The statutory breaches relied on are:
(a) Breach of Section 65 of the Land Act: the State Lease was granted over land that was not "Government land" as defined by Section 2 of the Land Act, as the land was the property of the PNGFA.
(b) Breach of Sections 68, 69 and 87 of the Land Act: the land was not advertised for leasing and was unlawfully exempted from advertisement in that the Secretary lacked power to exempt it from advertisement, none of the circumstances in which land may be exempted from advertisement applied, the notice of exemption did not adequately state the reason for exempting the land from advertisement and the Secretary denied natural justice to the plaintiffs. Further, there was no proper reason to grant an agricultural lease;
(c) Breach of Sections 57, 58(2), 58(10) and 71(c) of the Land Act: there was no proper investigation of the circumstances of the proposed grant of the State Lease and the Chairman of the Land Board failed to notify the plaintiffs of the date on which the application for the State Lease would be heard and of its recommendation that the Lease be granted to Tzen Plantations. Further, the Land Board's recommendation was not a "proper" one;
(d) Breach of Sections 26, 27 and 33(1)(c) and (e) of the Land Registration Act and Sections 6 and 8 of the Land Registration Regulation: the Deputy Registrar of Titles registered the State Lease to Tzen Plantations despite the land already being subject to eight separate State Leases to the PNGFA and there was no proper survey plan.
36. It was further argued:
(e) The decisions of the Secretary to exempt the land from advertisement and grant the Lease to Tzen Plantations were so unreasonable no reasonable administrator could have made either decision.
The defendants' response
37. The defendants argue that no errors of law were committed in the grant or registration of the State Lease over Portion 777. The process was initiated by a letter from Mr Tiensten MP to the Minister for Lands Dr Temu requesting that the land be made available for development purposes. Tzen Plantations was then advised that in fact it was available as it was vacant State land. A licence was granted, an application was duly made, the land was lawfully exempted from advertisement, the Land Board dealt with the application and recommended in favour of Tzen Plantations. Notice of the grant of the lease was published in the National Gazette No G307 on 20 December 2010. Tzen Plantations was sent a letter of grant and a lease acceptance form which were accepted and completed. The lease was granted and registered in accordance with law. As to the specific allegations of error of law made by the plaintiffs:
(a) There was no breach of Section 65 of the Land Act as the State Lease was granted over "Government land", which was vacant and available for lease. It was not the property of the PNGFA. It is true that the PNGFA had acquired a State Lease over an area of land that was described as Portion 9, which the PNGFA might have believed was over an area of land corresponding to Portion 777. But that was not the case. That State Lease was a nullity as the land described in the Lease was based on a volume and folio reference somewhere near Kokopo, in another part of the province and it covered only an area of 999.99 hectares whereas Portion 777 is 9,418.6 hectares.
(b) Portion 777 was lawfully exempted from advertisement by the Secretary for Lands as a delegate of the Minister. The exemption notice states that it was executed by the Secretary as delegate of the Minister. This is evidence that there was in fact a delegation in place, evidence which was reinforced by the present Secretary Mr Kila-Pat who testified that the Secretary was indeed the Minister's delegate. No evidence was called or challenged to impugn that delegation. Furthermore there is a presumption of regularity, which according to the principles in Costello v Controller of Civil Aviation [1977] PNGLR 476 which has not been rebutted. The reasons for the exemption were adequately set out in the notice. The word "agreed" in Section 69(2)(d) should be given its ordinary and natural meaning. It simply means assented to. To suggest as in West New Britain Provincial Government v Kimas (2009) N3834 that there needs to be a contract or formal agreement is to create a gloss on the plain meaning of the word "agreed". Here the fact is that the State agreed to provide the land for an extension of the Ili-Wawas oil palm project.
(c) There was no breach of Sections 57, 58(2), 58(10) of 71(c) of the Land Act. It has not been proven that there was no proper investigation of the circumstances of the proposed State Lease. The plaintiffs have not been shown to be persons who in the opinion of the Chairman of the Land Board were interested in the application for the purposes of Section 58(2) or Section 58(10) of the Land Act. So far as the departmental records were concerned the land was vacant State land. It has not been shown that the Land Board failed to exercise its powers under Section 71 and no adverse finding should be made against the Chairman as he is not a party to the proceedings.
(d) There was no breach of the Land Registration Act or the Land Registration Regulation as errors in the description of Portion 777 were corrected. There is no valid title conflicting with the registered State Lease over Portion 777.
(e) There is no proper basis for a finding that the decisions of the Secretary to exempt the land from advertisement and grant the Lease to Tzen Plantations were unreasonable.
Consideration
(a) Breach of Section 65 of the Land Act
38. Section 65 (grant of state leases) of the Land Act states:
The Minister may grant State leases of Government land as provided by this Act.
"Government land" is defined by Section 2(1) to mean:
(a) customary land that is not leased by the customary owners to the State; or
(b) land held by a person other than the State for an estate greater than an estate for a term of years; or
(c) land that is the subject of a State lease or a lease from the State under any other Act; or
(d) land reserved from lease or further lease under this Act.
39. I uphold the plaintiffs' argument that paragraph (b) applies: Portion 777 was held by a person other than the State – the PNGFA – for an estate greater than an estate for a number of years. Portion 777 had by virtue of Section 139A of the Forestry Act (for the reasons set out in ground 1) been transferred to and become the property of the PNGFA. Its estate in the land was not limited by a term of years. Portion 777 was not Government land for the purposes of Section 65. The Minister for Lands lacked power to grant a State Lease over it to any person other than the PNGFA. It follows that the Secretary for Lands who purported to grant the Lease to Tzen Plantations as a delegate of the Minister lacked power to do so. Error of law has been established.
40. If I am wrong in my interpretation of Section 2(1)(a) and Portion 777 was Government land, it was not vacant Government land due to the fact that it was the property of the PNGFA. In drawing that conclusion I take into account and uphold the defendants' submission regarding the State Lease over Portion 9: it was so badly misdescribed as to be a nullity. Nevertheless, though the attempt by the PNGFA to acquire a State Lease over what later became Portion 777 was ineffective, its property in the land existed by operation of Section 139A of the Forestry Act. The land was not vacant and it was not available for leasing. The result is the same: the Secretary for Lands erred in law by granting a State Lease over land that was not available for leasing.
(b) Breach of Sections 68, 69 and 87 of the Land Act
41. Sections 68 and 69 are in the following terms:
68. Advertisement of lands available for leasing.
(1) Except where land has been exempted from advertisement under Section 69, the Departmental Head shall give notice, by advertisement in the National Gazette, of all lands available for leasing under this Act.
(2) An advertisement under Subsection (1) shall contain the following information:—
(a) the type of lease available to be granted;
(b) the purpose of the lease;
(c) the length of the lease;
(d) a description of the land to be leased;
(e) the amount of rent (if any) payable for the first period of the lease;
(f) in the case of a special purposes lease—any royalties that are payable;
(g) the terms and conditions of the lease;
(h) the reserve price;
(i) such other information as the Departmental Head thinks fit or the Minister directs.
(3) A statement contained in an advertisement under this Section does not in any way bind the State in the granting of a lease over land the subject of the advertisement or constitute an offer to lease land.
69. Duty to advertise State Leases.
(1) A State lease shall not be granted without first being advertised in accordance with Section 68 unless the land has been exempted from advertisement under Subsection (2).
(2) The Minister may exempt land from advertisement for application or tender—
(a) where the lease is granted to a governmental body for a public purpose; or
(b) where it is necessary to relocate persons displaced as a result of a disaster as defined in the Disaster Management Act (Chapter 403); or
(c) where a lessee applies for a further lease; or
(d) where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking; or
(e) where the land applied for adjoins land owned by the applicant and is required to bring the holding up to a more workable unit, providing that the claims of other neighbouring landowners are considered and their views taken into account in deciding whether to exempt the land from advertisement in favour of the applicant; or
(f) where the Department responsible for foreign affairs recommends that land be made available to the applicant for consular premises; or
(g) where the land is required for the resettlement of refugees; or
(h) where the applicant has funded the acquisition of the land from customary landowners in order to acquire a State lease over it; or
(i) where a lease is to be granted under Section 99 or 102; or
(j) where a new lease is granted under Section 110, 130 or Section 131.
42. The effect of these provisions is that:
43. In the present case the Secretary for Lands exempted the land from advertisement by signing an instrument in the following terms:
INDEPENDENT STATE OF PAPUA NEW GUINEA
LAND ACT NO 45 OF 1996
NOTICE UNDER SECTION 69(2)(d)
I, PEPI S KIMAS OL, a delegate of the Minister for Lands and Physical Planning by virtue of the powers conferred in me by Section 69(2)(d) of the Land Act 1996 HEREBY EXEMPT from advertisement the land described in the Schedule.
SCHEDULE
All that piece and parcel of land described as Portion 777 Milinch Open Fourmil Rabaul, East New Britain Province.
Dated this 9th day of April 2010.
[Signed]
PEPI S KIMAS OL
A Delegate of the Minister for Lands and Physical Planning
44. I uphold the plaintiffs' contention that Secretary Kimas erred in law in exempting Portion 777 from advertisement for the following reasons:
(i) Secretary Kimas was not a delegate of the Minister. He required an instrument of delegation stating clearly that the Minister had delegated his power of exemption to him. None was adduced in evidence. The vague assurance of the present Secretary in oral testimony that Secretary Kimas was a delegate of the Minister carries little weight, as does the statement in the notice to that effect. The Minister for Lands is specifically authorised by Section 25 of the Ministers (Delegation) Regulation to "by writing under his hand, delegate to a person all or any of his powers and functions relating to land". It is one thing to have a power of delegation. It is another thing to exercise it properly and to show that it has been exercised properly and for the delegate to show that he has exercised power in accordance with the delegation. These matters should not be the subject of assumption (Robertson Rataba v Gari Baki (2010) SC1014). The plaintiffs bore the legal burden of proving that Secretary Kimas was not a delegate, but having raised the issue and challenged Secretary Kila-Pat to provide a copy, the evidentiary burden shifted to the defendants, and it was not discharged. If there was an instrument of delegation it should be in the records of the Department and easily accessible. The presumption of regularity, to the extent that it is applicable to the current circumstances of PNG, has been rebutted.
(ii) No reasons were given in the notice for exempting the land from advertisement. A lawful exercise of the power of exemption requires that a valid reason, justified by one of the conditions in Sections 69(2)(a) to (j), be expressly stated. None was stated.
(iii) The evidence before the Court shows that none of the circumstances in Sections 69(2)(a) to (j) in fact applied. The one relied on by the defendants – (d) – is not applicable. I reject the defendants' contention that there is sufficient evidence that "the State has agreed to provide land for the establishment or expansion of a business, project or undertaking". I follow the approach I took in West New Britain Provincial Government v Kimas (2009) N3834. Section 69(2)(d) requires that "the State" has agreed to provide land. Not "the Minister" or "the Departmental Head" or the "Land Board" or "a delegate of the Minister". Agreements are usually executed for and on behalf of the State by the Governor-General, acting with and in accordance with the advice of the National Executive Council (see, for example, the Public Finances (Management) Act 1995, Section 47, which deals with execution of agreements on behalf of the State). As the Land Act is silent on how an agreement by the State to provide land should be made, executed or evidenced the usual practice regarding agreements by the State should apply. The Governor-General, as personal representative of the Queen and Head of State under Section 82(2) (Queen and Head of State) of the Constitution, should sign the agreement acting with and in accordance with the advice of the National Executive Council. And there should be an instrument – a memorandum of agreement – which records the terms of the agreement. This instrument should be separate and distinct from the notice of the agreement. Section 69(2)(d) should not be read down to allow an agreement on the part of the State to be executed by any person or authority other than the Governor-General. I am not convinced that this is an unwarranted gloss on the provision or unjustified. Land must be exempt from advertisement in special circumstances only, to preserve transparency in land allocation and reduce the risk of corruption (Helifix Group of Companies Ltd v PNG Land Board (2012) SC1150). If, however, I am wrong on the need for an agreement to be executed by the Governor-General the agreement of the State to provide the land must at least be evidenced by a decision of the National Executive Council. Here there was an NEC decision in regard to the Ili-Wawas project but there was no agreement on the part of the NEC to provide the Mevelo land (Portion 777) for that project. As Mr Brooks emphasised: the Mevelo land was expressly excluded. The only agreement to make Portion 777 available for the Ili-Wawas project came from Ministers Tiensten and Temu, and that failed to meet the requirements of Section 69(2)(d).
(iv) The exemption was granted contrary to the principles of natural justice. It is an integral part of the common law principles of natural justice that have been adopted as part of Papua New Guinea's underlying law that if a public authority exercising statutory powers proposes to make an administrative decision that will interfere with or remove a person's interests in property that decision is subject to the principles of natural justice (Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110, NCDIC v Crusoe Pty Ltd [1993] PNGLR 139). The decision-maker must before interfering with or removing the person's interests give that person notice of the proposed decision and a right to be heard and act in an impartial and unbiased manner (Timothy Alex Aipa v Benjamin Samson, Deputy Registrar of Titles (2012) N4777). I find that Secretary Kimas had actual knowledge of each of the plaintiffs' interests in the land, which meant that he was obliged to act fairly and be seen to act fairly in any decisions made under the Act that would defeat their interests. He failed to let the plaintiffs know what he was doing and failed to give them any opportunity to be heard on the matter.
45. I find that the plaintiffs have not proven an error of law under Section 87 of the Land Act.
(c) Breach of Sections 57, 58(2), 58(10) and 71(c) of the Land Act
46. Sections 57 and 58 are in the following terms:
57. Functions of the Land Board.
(1) In addition to such other functions as are conferred on it by this Act, the Land Board shall consider and make a recommendation on any matter referred to it by the Minister or by the Department.
(2) Except where the Minister is empowered by this or any other Act to make a direct grant of a State lease, the Land Board shall consider all applications for grant of leases which have been investigated and referred to it by the Department and all other matters that are remitted to it by the Minister for its consideration.
58. Meetings of the Land Board, reports, etc.
(1) At least seven days before a meeting of the Land Board, the Chairman shall publish in the National Gazette a list of—
(a) the applications and other matters to be considered; and
(b) lands to be dealt with,
by the Board at the meeting.
(2) The Chairman shall notify by post every person who, in his opinion, is interested in an application or matter, of the date on which it will be considered by the Land Board.
(3) The meeting of the Land Board shall be held not less than seven days nor more than 42 days after the publication of the list referred to in Subsection (1), and the Board shall deal with applications and matters, hear any objections and report on the applications or matters within 14 days to the Minister.
(4) The Chairman shall cause meetings of the Land Board to be held as he thinks necessary.
(5) Subject to Section 106, for the conduct of business at a meeting of the Land Board—
(a) three members, of whom one is the Chairman or a Deputy Chairman nominated for the purpose under Section 55(5), are a quorum; and
(b) the Chairman or the Deputy Chairman nominated for the purpose, shall preside; and
(c) all matters shall be decided by the majority of votes of the members present; and
(d) the person presiding has a deliberative and, in the event of an equality of votes on a matter, also a casting vote.
(6) The person presiding at a meeting of the Land Board shall—
(a) where he thinks it necessary to do so; or
(b) where he is directed by the Chairman to do so,
exclude any or all members of the public from the meeting.
(7) The Departmental Head or his delegate—
(a) may attend any meeting of the Board; and
(b) shall, where so requested by the Chairman, attend a meeting of the Board,
in the capacity of adviser to the Board.
(8) Where the Land Board—
(a) takes evidence at a meeting from which members of the public have been excluded; or
(b) is directed by the Minister that the recommendation of the Board is not to be made available to members of the public; or
(c) deals with an application or matter that has been specified in the notice in the National Gazette under Subsection (1) to be the subject of a confidential report,
it shall report on it within 14 days to the Minister.
(9) In respect of each application the Land Board shall recommend—
(a) the applicant to whom, in the opinion of the Land Board, the State Lease should be granted; and
(b) the applicant who, in the opinion of the Land Board, is the second-choice successful applicant; and
(c) the applicant who, in the opinion of the Land Board, is the third-choice successful applicant,
and where the Land Board, in making a recommendation in any case, considers that two or more applicants are of equal merit, it may decide the matter by ballot and shall report on the ballot to the Minister within 14 days.
(10) The Chairman shall forward notice of the Land Board's recommendations, other than a recommendation to which Subsection (8) applies, to every person who, in his opinion, is interested in an application or matter dealt with by the Board.
(11) A member of the Land Board shall not sit on any matter in which he is directly or indirectly interested.
47. The effect of these provisions is that:
48. I find that none of these requirements was satisfied. The application by Mr Tan for Portion 777 was never properly investigated, so the Land Board lacked jurisdiction under Section 57(2) and was led into error. I hesitate in making adverse findings against the Chairman of the Board for the reason explained by Mr Molloy – the Chairman is not a party to the proceedings – but the Land Board is. I cannot believe that the Chairman could reasonably have formed the opinion that no one – not even the PNGFA – would have been interested in the application (which was inherently vague: was it an application by Mr Tan, by Tzen Plantations or by Tzen Niugini?) or in the recommendation of the Land Board. The Chairman breached his obligations under Sections 58(2) and 58(10).
49. I find that the plaintiffs have not proven an error of law under Section 71(c) of the Land Act.
(d) Breach of Sections 26 and 27 and 33(1)(c) and (e) of the Land Registration Act and Sections 6 and 8 of the Land Registration Regulation
50. I find all these allegations proven as the Deputy Registrar of Titles registered the State Lease to Tzen Plantations despite the land already being subject to eight separate State Leases to the PNGFA (as well as to sub-leases to Open Bay Timber Company). An attempt was made to correct the original errors but the attempt was amateurish and clumsy and ineffective at law.
(e) Unreasonableness
51. The combined effect of so many serious errors of law is that the defendants' decisions, which resulted in a State Lease being granted and registered in favour of Tzen Plantations were unreasonable according to the principles laid down in the classic case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223. The decisions were so unreasonable, having regard to all the circumstances, no reasonable decision-maker could have made such decisions (Paul Saboko v Commissioner of Police (2006) N2975).
Determination
52. Public officials and governmental bodies have a duty to comply with the law when making decisions relating to allocation of land, including granting of State Leases. Here the plaintiffs proved that a number of errors of law were made. The third ground of review is upheld.
WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?
53. An application for judicial review proceeds in two stages. First the plaintiff must establish good grounds for judicial review. Secondly if one or more grounds are established the plaintiff must make a case for a remedy, which is a matter of discretion (Mision Asiki v Manasupe Zurenuoc (2005) SC797, Dale Christopher Smith v Minister for Lands (2009) SC973). Here two grounds of review have been established: errors of law involving a breach of Section 139A of the Forestry Act (ground 1) and errors of law involving breaches of the Land Act and the Land Registration Act (ground 3). Each involves a serious excess of jurisdiction on the part of the Secretary, the Chairman of the Land Board, the Land Board and/or the Deputy Registrar of Titles, which has affected the interests of the plaintiffs.
54. By an amended notice of motion filed on 27 March 2012 (constituting the application for judicial review under Order 16, Rule 5 of the National Court Rules) the plaintiffs seek nine types of declarations or orders, including orders in the nature of certiorari that would have the effect of quashing decisions relating to the granting of the State Lease to the sixth defendant and in the nature of mandamus compelling an amendment to the certificate of title for Portion 9.
55. The principle of indefeasibility of title must now be considered. Under Papua New Guinea's Torrens Title system of land registration for alienated government land, registration of a lease vests an indefeasible (unforfeitable) title in the registered proprietor subject only to the exceptions in Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The question arises whether any of those exceptions apply. The only exception that might apply in this case is Section 33(1)(a): in the case of fraud.
56. I have addressed the meaning of "fraud" in a series of cases, including Elizabeth Kanari v Augustine Wiakar (2009) N3589, West New Britain Provincial Government v Kimas (2009) N3834, Mosoro v Kingswell Ltd (2011) N4450 and Kapiura Trading Ltd v Bullen (2012) N4903. There are two schools of judicial thought. I acknowledge the helpful submissions of Mr Brooks that the two schools might not actually be as conflicting as they have hitherto been thought to be and that it is possible to regard them as harmonious, but for present purposes I retain the view that is useful to regard them as different approaches. On the one hand in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215 the Supreme Court (Amet J and Salika J, Brown J dissenting) held that if the circumstances of a grant, forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title. This wide view of "fraud" – it includes irregularities that are tantamount to fraud and constructive fraud – has been followed in the National Court decisions of Sheehan J in Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959, Sevua J in Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80 and Injia DCJ in Ramu Nickel Ltd v Temu (2007) N3252. The view that the National Court has an important role in its judicial review jurisdiction of correcting errors of law made in connection with State Leases is supported by the decisions of Sevua J in Yakananda Business Group Inc v Minister for Lands (2001) N2159 and of Kirriwom J in Lae Rental Homes Ltd v Viviso Seravo (2003) N2483 and significantly the recent decision of the Supreme Court (Gavara-Nanu J, Davani J, Yagi J) in Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120.
57. On the other hand a narrower view was favoured by the Supreme Court (Gavara-Nanu J, Mogish J and Hartshorn J) in Koitachi Ltd v Walter Schnaubelt (2007) SC870. The Court held that the Emas Estate case was distinguishable on its facts as it concerned a registered proprietor whose State Lease was forfeited and then allocated and registered in the name of a third party. As to the Garamut case, that was said to concern a challenge to the issue of a State Lease on the grounds that procedures in the Land Act were not complied with. The Court adopted the view of fraud taken in the National Court decision of Gavara-Nanu J in The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603, where his Honour stated:
The word 'fraud' in Section 33(1)(a) of the Land Registration Act, is not defined anywhere in the Act, but Section 45(1) makes it clear that fraud means more than constructive or equitable fraud. ...
It is implicit from these provisions that "fraud" ... means fraud committed by the registered proprietor or actual fraud. That is the only ground upon which a registered proprietor's title can be rendered invalid.
58. I consider, as I have concluded in the various cases referred to above, that the wide view should be followed and that the way in which decisions were made in favour of Tzen Plantations constituted a fraud on the statute. The circumstances in which the State Lease over Portion 777 was granted and registered are so unsatisfactory, dubious and irregular as to be tantamount to fraud. Actual fraud has not been proven but I am satisfied that there is constructive fraud. Therefore it is a "case of fraud" for the purposes of Section 33(1)(a) of the Land Registration Act. It follows that the granting and registration of the Lease are ineffective at law and should not be allowed to stand. I will make declarations and orders to correct the errors of law that have been made.
59. I will exercise the discretion of the Court by making orders and declarations substantially in terms of those sought by the plaintiffs subject to some exceptions. I consider the application for an order in the nature of prohibition to restrain the defendants and all other persons from dealing with the Mevelo land in any way inconsistent with the 2005 project agreement between the PNGFA and Open Bay timber Company is cast in terms that are too broad and might be oppressive and prejudicial to other persons who are not parties to these proceedings. I consider that orders for the production of documents to the court for inspection by the parties are at this stage unnecessary.
60. The Court's orders will require the Register of Titles to be corrected to give effect to Section 139A of the Forestry Act, by ensuring that the PNGFA becomes the registered proprietor of Portion 777 and the other portions of the Mevelo land that have been created within the former Portion 761. The orders will also give effect to the sub-leases of the various portions from the PNGFA to Open Bay Timber Company that have taken place. It is necessary to do so in the interests of justice and to give effect to the National Goals and Directive Principles and to protect the integrity of the laws that are required to be followed in the allocation of land and in particular land allocated for reafforestation in Papua New Guinea. Costs will follow the event and be payable on a party-party basis.
ORDER
(1) The application for judicial review is granted.
(2) The decision of the Secretary for Lands dated 9 April 2010 to exempt Portion 777, Milinch Open, Fourmil Rabaul, East New Britain Province from advertisement is declared null and void and is quashed.
(3) The decision of the Land Board at Meeting No 05/2010 published in National Gazette No G307 of 20 December 2010 to recommend to the Minister that an Agricultural Lease be granted to Tzen Plantations Ltd over Portion 777, Milinch Open, Fourmil Rabaul, East New Britain Province is declared null and void and is quashed.
(4) The decision to grant a State Lease over Portion 777, Milinch Open, Fourmil Rabaul, East New Britain Province ("the Mevelo land") on or about 4 or 7 January 2011 to Tzen Plantations Ltd is declared null and void and is quashed.
(5) The decision of the Deputy Registrar of Titles to register a State Lease over Portion 777, Milinch Open, Fourmil Rabaul, East New Britain Province on 11 January 2011 to Tzen Plantations Ltd is declared null and void and is quashed.
(6) It is declared that the entire area of the land formerly described as Portion 761, Milinch Open, Fourmil Rabaul, East New Britain Province ("the Mevelo land") was transferred to and became the property of Papua New Guinea Forest Authority on and from 25 June 1992.
(7) It is declared that Papua New Guinea Forest Authority is the registered proprietor and Open Bay Timber Ltd is the registered sub-lessee of the following land within the area of the land formerly described as Portion 761, Milinch Open, Fourmil Rabaul, East New Britain Province ("the Mevelo land"), namely:
- (a) Portion 2, Volume 16, Folio 158;
- (b) Portion 3, Volume 16, Folio 160;
- (c) Portion 4, Volume 16, Folio 159;
(d) Portion 5, Volume 16, Folio 161;
(e) Portion 6, Volume 16, Folio 162;
(f) Portion 7, Volume 16, Folio 163;
(g) Portion 8, Volume 16, Folio 164;
(h) Portion 9, Volume 16, Folio 165.
(8) Tzen Plantations Ltd shall within 14 days return its owner's copy of the State Lease over Portion 777, Milinch Open, Fourmil Rabaul, East New Britain Province to the Secretary for Lands.
(9) The first, second, third, fourth and fifth defendants and the Surveyor-General shall forthwith do all things necessary to amend all records of the State to correct errors in the description of Portion 9 Volume 16, Folio 165, which appears to show its area of only 999.99 hectares, whereas its area and description should reflect the balance of the entire Mevelo land of 11,341 hectares less the total area of Portions 2 to 8.
(10) The Registrar of Titles shall forthwith amend the Register of State Leases and all other records of the State under his control to reflect all the orders of the Court.
(11) Half of the plaintiffs' costs of these proceedings shall be paid by the first, second, third, fourth and fifth defendants and the other half of the plaintiffs' costs of these proceedings shall be paid by the sixth defendant, and in each case the costs shall be paid on a party-party basis, to be taxed if not agreed.
(12) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.
Judgment accordingly.
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Gadens Lawyers: Lawyers for the First Plaintiff
Fairfax Legal: Lawyers for the Second Plaintiff
Solicitor-General: Lawyer for the First, Second, Third, Fourth & Fifth Defendants
Ashurst Lawyers: Lawyers for the Sixth Defendant
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URL: http://www.paclii.org/pg/cases/PGNC/2013/81.html