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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO 910 OF 2013
KELLY SALUNG & TABA SILAU
Plaintiffs
V
MADANG VISITORS & CULTURAL BUREAU
Defendant
Madang: Cannings J
2014: 7 February, 14 March, 9 May
ADMINISTRATIVE LAW – statutory corporations – membership of board of management – appointment procedures – whether members duly appointed in accordance with provincial law – status of members upon expiry of terms of appointment – effect of there being no duly appointed members on legality of corporation's actions.
LAND – State Leases – indefeasibility of registered title – allegation of fraud – meaning of "fraud" – Land Registration Act, Section 33(1)(a).
The plaintiffs sought damages and other relief against the defendant, a statutory corporation, on the ground that the defendant had, by obtaining eviction orders from the District Court, unlawfully evicted them from residential properties they had each been occupying for more than ten years, thereby breaching their constitutional rights. The plaintiffs claimed that the defendant acted unlawfully in that (1) the members of its board of management had never been appointed in accordance with law, and if they had been lawfully appointed, their appointments had lapsed by the time that the defendant evicted them; and (2) the defendant obtained title to the properties by fraud as the person who held himself out as Chairman of the corporation was not the lawful occupant of that position during 2009, when he signed contracts for purchase of the properties by the corporation and during 2013 when he gave instructions for eviction of the plaintiffs.
Held:
(1) As to the first ground of illegality:
(a) The members of the board of management were on 19 January 2009 duly appointed for terms of two years each in accordance with the provincial law that established the corporation. On 19 January 2011 their terms of appointment lapsed and none of them were validly reappointed in the period since then to the date of trial, 14 March 20014. No other persons in that period validly held office as members of the board of management.
(b) When, in 2013, the corporation commenced eviction proceedings in the District Court and that Court made orders for eviction of the plaintiffs, the corporation, as a matter of law, had no board of management.
(c) However, the corporation had an independent existence pursuant to its enabling legislation, and its day to day management, including the commencement of eviction proceedings lawfully fell within the responsibility of its Executive Director (who was presumed, in the absence of evidence to the contrary, to be lawfully holding office at the relevant time).
(d) Therefore the corporation did not act unlawfully in obtaining the eviction orders.
(2) As to the second ground of illegality:
- (a) The person who held himself out as Chairman was the lawful occupant of that position during 2009, when he signed contracts on behalf of the corporation for purchase of the properties.
- (b) The corporation became registered proprietor of the properties in December 2011 and thereupon had indefeasible title subject only to limited exceptions, including in the case of fraud, prescribed by Section 33(1) of the Land Registration Act.
- (c) The plaintiffs fell well short of proving fraud or any other exception to the principle of indefeasibility.
- (d) The defendant was the registered proprietor of the properties both when the application for eviction orders was made to the District Court and when that Court made the eviction orders.
- (e) Though it was correct that the person who held himself out as Chairman in 2013 did not as a matter of law hold that office, it was not correct to assert that he had given instructions to the Police to evict the plaintiffs as all that he did was request that the Police give effect to the orders of the District Court. Furthermore it is reasonably inferred that he acted in good faith without knowledge of the legal flaw in his acting as Chairman.
(3) Their two primary arguments having failed, the plaintiffs failed to establish a cause of action and failed to establish any breach of their constitutional rights, so the question of remedies did not arise. The proceedings were wholly dismissed, with costs.
Cases cited
The following cases are cited in the judgment:
Emas Estate Development Pty Limited v John Mea and The State [1993] PNGLR 215
Open Bay Timber Ltd v Minister for Lands & Physical Planning (2013) N5109
STATEMENT OF CLAIM
This was an action in which the plaintiffs sought damages and other relief against the defendant for unlawful eviction.
Counsel
T M Ilaisa, for the plaintiff
Y Wadau, for the defendants
9th May, 2014
1. CANNINGS J: At the centre of this case are two residential properties in Coronation Drive, Madang, situated near Modilon Road: Section 42, Allotments1and 2. Each is covered by a State Lease, the registered proprietor of which is the defendant, Madang Visitors & Cultural Bureau.
2. The Bureau is a statutory corporation, established by the Madang Visitors & Cultural Bureau Act 1998, a provincial law made by the Madang Provincial Assembly. The Bureau's functions are set out in Section 3 of the Act and include promoting and encouraging the development and growth of tourism and culture in Madang Province. Title to the properties was transferred to the Bureau, from the National Housing Corporation, in December 2011, pursuant to contracts of sale executed in 2009.
3. The plaintiffs, Kelly Salung and Taba Silau, are former employees of the Bureau. Mr Silau was the Executive Director before he resigned in 2005. Both plaintiffs had been occupying the properties (Mr Salung on Allotment 2, Mr Silau on Allotment 1) for more than ten years when on 9 May 2013 the Madang District Court ordered their eviction, upholding an application for eviction orders by the Bureau.
4. The plaintiffs are aggrieved by the eviction orders but rather than appealing against those orders they have commenced proceedings in the National Court by writ of summons to challenge their eviction. They seek damages and other relief against the Bureau on the ground that it had, by obtaining the eviction orders, unlawfully evicted them, thereby breaching their constitutional rights.
5. The plaintiffs rely on two principal arguments. They claim that the Bureau acted unlawfully in that:
(1) the members of its board of management were never appointed in accordance with law, and if they had been lawfully appointed, their appointments had lapsed by the time that the defendant evicted them; and
(2) the Bureau obtained title to the properties by fraud as the person who held himself out as Chairman, Sir Peter Barter, was not the lawful occupant of that position during 2009, when he signed contracts for purchase of the properties, and during 2013 when he gave instructions for eviction of the plaintiffs.
6. The plaintiffs raised other arguments in the statement of claim concerning the validity of the Madang Visitors & Cultural Bureau Act, but they were not pursued at the trial.
7. The Bureau denies any illegality on its part and says that the eviction orders were properly obtained and there is nothing wrong with its title to the properties. It argues that the members of its Board of Management, including Sir Peter, were validly appointed in January 2009 and have continued at all material times to hold office and that it holds indefeasible title to the properties, that there was no fraud involved in the transfer of the properties to it and that the eviction of the plaintiffs has been effected pursuant to a lawful order of the District Court.
8. The following issues arise:
1 DID THE MEMBERS OF THE BOARD OF MANAGEMENT LAWFULLY HOLD OFFICE?
9. Mr Ilaisa for the plaintiffs submitted that the purported appointment of Sir Peter Barter and other Board members on 19 January 2009 was never effective at law as the appointments were not gazetted as required by Section 5 (membership of the board) of the Madang Visitors & Cultural Bureau Act, which relevantly provides:
(1) The Board shall consist of 11 members appointed by the Provincial Executive Council acting upon the advice of the Chairman of the Committee responsible for culture and tourism matters by notice in the Madang Provincial Gazette of whom –
- (a) one shall be appointed as Chairman; and
- (b) one shall be appointed as Deputy Chairman.
(2) Subject to this Act, a member holds office for a period of two years and is eligible for reappointment.
10. Mr Ilaisa further submitted that if Sir Peter and the other members were validly appointed on 19 January 2009 their appointments lapsed on 19 January 2011 and they were not reappointed.
11. I reject the first part of Mr Ilaisa's submission as there is sufficient evidence before the Court to show that Sir Peter (appointed as Chairman) and ten other persons were appointed by the Provincial Executive Council on 19 January 2009 and that their appointments were published in the Provincial Gazette on 3 February 2009.
12. Though the instrument of appointment did not state their terms of appointment, I find that Sir Peter and the other members of the Board were appointed for a period of two years and were eligible for reappointment. Section 7 of the Act states that a member of the Board is deemed to have vacated office in various circumstances such as resignation or permanent incapacity. There is no evidence of any of those circumstances applying, at least not in the case of Sir Peter, so this means that Sir Peter and, by inference, the other Board members held office under the original instrument of appointment until 19 January 2011.
13. As for the period after 19 January 2011, there is no evidence that Sir Peter or any of the other Board members were reappointed until at least 3 December 2013 when the present Governor Hon Jim Kas MP wrote to Sir Peter advising that he was appointing him "to head the interim board ... until a new Board is appointed by the Provincial Executive Council". Then on 19 December 2013 the Provincial Executive Council decided to appoint Sir Peter and most of the original Board members on an interim basis until 31 March 2014.
14. Mr Wadau conceded that in the period between 19 January 2011 and 3 December 2013 there was no instrument in place expressly reappointing Sir Peter and the other Board members. However, that was of no consequence, he argued, as they were deemed by operation of Section 53 of the Interpretation Act to have been reappointed. I reject Mr Wadau's submission. Section 53 provides for acting appointments, which are by no means automatic or deemed to have taken effect. Section 53 has no application to this case.
15. I uphold the second part of Mr Ilaisa's submission and find that Sir Peter's appointment as a board member and as Chairman, and the appointment of all other Board members, lapsed on 19 January 2011.
16. As for Governor Kas's decision of 3 December 2013 to appoint Sir Peter as interim Chairman I find that it was of no legal effect as the appointing authority is the Provincial Executive Council, not the Governor.
17. As for the Provincial Executive Council decision of 19 December 2013, I uphold Mr Ilaisa's submission that gazettal of an appointment is a mandatory procedural requirement. It follows that the decision of 19 December 2013 was of no legal effect as there has been no notice of that decision or the appointments of Sir Peter or any of the other Board members in the Provincial Gazette.
18. To summarise:
19. I have just found that the Bureau had no Board of Management in 2013. This is a significant period as it was when the Bureau made its application to the District Court for eviction of the plaintiffs and when, on 9 May 2013, the District Court granted the application and ordered their eviction. Does this mean that the Bureau acted without authority or unlawfully?
20. No. I find that the Bureau has an independent existence due to its being established by the Madang Visitors & Cultural Bureau Act, Section 2. It is clearly intended that it have a Board of Management, the functions of which include, under Section 9, managing and controlling the affairs of the Bureau. But if for any reason a Board is not in place, the Bureau is still able to operate, a situation which is made possible by Section 11(1)(a) of the Act, which makes provision for appointment of an Executive Director. Section 11(2) states:
The Executive Director is the Chief Executive of the Bureau and is responsible for the day to day management, including discipline, of the affairs of the Bureau.
21. I consider that the commencement of eviction proceedings against former employees of the Bureau who are allegedly unlawfully in occupation of the Bureau's properties is a matter that falls within the ambit of responsibility of the Executive Director. It is to be inferred, in the absence of evidence to the contrary, that there was an Executive Director lawfully holding office in 2013 and I find that the decision to commence the eviction proceedings was lawfully made. The Bureau did not act unlawfully in obtaining the eviction orders.
22. I confirm, as found above, that during 2009 – and specifically in the period 19 January to 31 December 2009 – Sir Peter, who held himself out as Chairman, was the lawful occupant of the office of Chairman of the Board of Directors. The parties agree that it was during 2009 that Sir Peter signed contracts on behalf of the Bureau for purchase of the properties from the National Housing Corporation. I acknowledge, as pointed out by Mr Ilaisa, that both contracts are substantially undated in that, in items 1 and 9 of the schedule in each contract, the execution date states:
The ___________ day of ___________ 2009.
23. This is sufficient evidence on which to find that the contracts were lawfully executed on or after 19 January 2009 by Sir Peter Barter.
24. An examination of the two State Leases reveals that the Bureau became registered proprietor of both Allotments 1 and 2 on 23 December 2011. It thereupon had indefeasible title to both properties subject only to limited exceptions. The Bureau's title can only be disturbed if the plaintiffs can prove to the satisfaction of the Court that this was a case of fraud for the purposes of Section 33(1)(a) of the Land Registration Act, which states:
The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except ... in the case of fraud.
25. I have expressed the view in a number of cases that it is not necessary for a plaintiff to prove actual fraud (eg Open Bay Timber Ltd v Minister for Lands & Physical Planning (2013) N5109). I have applied the wide view of fraud favoured by the majority decision of the Supreme Court in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215. Thus, 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.
26. Here the plaintiffs have proven some irregularities, but not illegalities, in the management and control of the Bureau in the period after 19 January 2011. However they have failed absolutely to prove, or even argue, actual fraud. They have fallen well short of proving that the circumstances of the transfer of title from the National Housing Corporation to the Bureau were unsatisfactory, irregular or unlawful. Therefore they have failed to prove constructive fraud. This is not a case of fraud and the plaintiffs have failed to make out a case for setting aside the defendant's title.
27. On 25 July 2013 Sir Peter wrote in his capacity as Chairman to the Provincial Police Commander enclosing a copy of the District Court eviction order. Sir Peter stated that the plaintiffs had been served with the order more than a month ago but they have refused to vacate, so he requested the PPC to "undertake the eviction as soon as possible". The plaintiffs argue that Sir Peter's correspondence amounts to him unlawfully giving instructions for their eviction. Though it is correct that Sir Peter was not in 2013 as a matter of law the Chairman of the Bureau or its Board of Directors, it is not correct to assert that he gave instructions to the Police to evict the plaintiffs. All that he did was request that the PPC give effect to the orders of the District Court. He held himself out as Chairman, that is correct, and with the benefit of hindsight and with the benefit of this judgment it can be said that he should not have done that. However that is of no consequence. It is reasonably to be inferred and I find that Sir Peter acted in good faith without knowledge of the legal flaw in his purporting to be Chairman.
28. Their two primary arguments having failed, the plaintiffs have failed to establish a cause of action and failed to establish any breach of their constitutional rights, so the question of damages and other remedies does not arise. The proceedings will be wholly dismissed, with costs.
ORDER
(1) The proceedings are wholly dismissed and all claims for relief are refused.
(2) The plaintiffs shall pay the costs of the proceedings to the defendant on a party-party basis, which shall, if not agreed, be taxed.
____________________________________________________________
Thomas More Ilaisa Lawyers: Lawyers for the Plaintiff
M S Wagambie Lawyers: Lawyers for the Defendants
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