Fose v Kunia [2018] PGNC 371; N7487 (2 October 2018)

N7487

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 766 OF 2014

BETWEEN
DR SETH FOSE
Plaintiff

AND
SOARE KUNIA
First Defendant

AND
OIRIO TOM
Second Defendant

AND
PETER TOM
Third Defendant

AND
NIMUKIRI GOROGAHA LAND GROUP INC
Fourth Defendant

AND
RELLICE PIWEN POKSEN
Fifth Defendant

&
OS NO. 96 OF 2018

BETWEEN
ILLIYA LIMITED
First Plaintiff

AND
JOE LAI as MANAGING DIRECTOR OF THE PLAINTIFF COMPANY
Second Plaintiff

AND
CHARLES K. AIIYOK
Defendant

&
OS NO. 149 OF 2018

BETWEEN
MATAIO GEITA
Plaintiff

AND
ILLIYA LIMITED
Defendant

Waigani: Makail, J
2018: 30 April, 4 May & 2 October

PROPERTY LAW – State Lease – Sale and purchase of land – Agreement for sale of land – Breach of – Sale of land to third party – Repudiation of contract – Fraud alleged – Indefeasibility of title – Proof of – Fraud must be proved against the title holder – Proof of requisite intention – Actual or implied – Lack of – Appropriate remedy – Damages – Land Registration Act – Section 33 (1) (a)

No cases cited:

Counsel:

Mr. G. Geroro, for Plaintiff in WS No. 766 of 2014
Mr. L. L. Aigilo, for First Defendant in WS No. 766 of 2014
No appearance, for Second, Third and Fourth Defendants in WS No. 766 of 2014
Mr. C. Jaminen, for Fifth Defendant in WS No. 766 of 2014
Mr. D. Kipa, for Plaintiffs in OS No. 96 of 2018 & Defendant in OS No.149 of 2018
Mr. L. L. Aigilo, for Plaintiff in OS No. 149 of 2018
No appearance, for Defendant in OS No.96 of 2018

JUDGMENT

2^nd October, 2018

1. MAKAIL J: These three different proceedings have a common dispute. The dispute is over a property described as Portion 2631C Milinch Fourmil Moresby, National Capital District. It is registered as State Lease Volume 35, Folio 97 and will be referred to as the land. The proceedings were tried together on 30^th April 2018 and final submissions, both written and oral were received from the parties on 4^th May 2018.

2. In each proceedings, the plaintiffs claimed ownership of the land. The following is a summary of the basis of claim for relief in each proceedings:

2.1 In WS No. 766 of 2014 proceedings commenced by Dr. Seth Fose against Soare Kunia and 4 others, he alleged breach of contract and/or fraud on the title of the fifth defendant and seeks a declaration that the transfer of title from the first, second, third and fourth defendants to the fifth defendant is null and void and a further order that the first, second, third and fourth defendants transfer the title to him. He also seeks damages.

2.2. In OS No. 96 of 2018 proceedings by Illiya Limited and Joe Lai against Charles Aiiyok, the plaintiffs seek declaratory orders to assert their entitlement to the land pursuant to a certificate of title dated 9^th April 2015.

2.3. In OS No. 149 of 2018 proceedings by Mataio Geita against Illiya Limited, Mr. Geita seeks declaratory orders to assert his entitlement to the land pursuant to an estate in fee simple granted on 25^th April 2017.

3. Under the current land law, there can only be one legal title holder. The question then is, which one of the plaintiffs is the legal title holder? Is it Dr. Fose, Illiya or Mr. Geita? The defendant Mr. Charles K. Aiiyok’s interest is secondary to the primary issue of title and will only be upheld if Mr. Geita’s claim to title is upheld.

4. There is no dispute that Dr. Fose entered into a contract of sale with the first, second and third defendants on 19^th March 2008 to purchase the land in the total sum of K48,000.00. A sum of K41,000.00 was paid to the defendants by instalments and it was agreed that the balance of K7,000.00 was to be paid by 30^th December 2010. The land was to be used by Dr. Fose for residential and business purposes. According to the certificate of title produced by Dr. Fose, the title was transferred from the fourth defendant to the first defendant on 24^th November 2009.

5. It was the case then that as at 24^th November 2009 the first defendant was the title holder of the land and for Dr. Fose to pay the balance of K7,000.00 by 30^th December 2010. According to Dr. Fose, the sum of K41,000.00 represented “part-payment” of the purchase price although it should be said that in a typical case, a 10% deposit of the purchase price is given to the vendor as an undertaking to complete the sale by the purchaser at some future date. A 10% deposit of K48,000.00 should be K4,800.00 for Dr. Fose to give to the first, second and third defendants but the sum given was over and above K4,800.00 and appeared over generous by Dr. Fose in an effort to tie down the first, second and third defendants to the sale. In turn, the first, second and third defendants were bound by the contract until 30^th December 2010.

6. Such a time frame appeared quite unusual because in a typical case, a settlement of the purchase price does not take that long, but certainly not more than two years. A short time frame is ideal to prevent the risk of the vendor opting out of the sale, which appears to be the case here. That, it was sometimes in 2010 that the first, second and third defendants attempted to sell the land to a Mr. Fred Sheekiot. Upon discovery, amongst other things, on 8^th June 2010 Dr. Fose obtained an ex parte order from the District Court at Port Moresby and restrained the defendants from selling the land to Mr. Sheekiot and to complete the sale to him. Mr. Sheekiot later withdrew from the sale. The defendants did not co-operate with Dr. Fose and despite numerous follow-ups, the sale fell through.

7. There is no doubt that Dr. Fose had paid a large sum of money and it brought him nil return. By their conduct, the first, second and third defendants have repudiated the contract and no longer wish to be bound by it. In such a case, the law grants to an injured party like Dr. Fose, a remedy in damages for breach of contract. Damages will be a full refund of the sum paid. The defendants will be and were obliged to refund the sum of K41,000.00 to him. They did not and will be ordered to do so.

8. It was not until 28^th April 2014 when Dr. Fose conducted a title search at the Department of Lands and Physical Planning that he discovered that the title was transferred to the fifth defendant on 25^th October 2010. It was this discovery that led him to conclude that when the defendants went ahead to transfer the title to the fifth defendant they breached the court order of 18^th June 2010 which was still in force. He alleged that fraud can be inferred from this unscrupulous conduct. However, fraud must be proved against the title holder. For a title holder holds an indefeasible title unless fraud is proved: Section 33(1)(a) of the Land Registration Act. Fraud, whether actual or implied, is difficult to prove.

9. Dr. Fose did not point to any evidence of the order of 18^th June 2010 being served on the fifth defendant to show that she was aware of his interest in the land and that she failed to take steps to bring it to the notice of the defendants before proceeding with the sale and purchase of the land. In other words, if she was not aware of the order and Dr. Fose’s interest, the evidence fell short of establishing the requisite intention to fraudulently procure the title to the land. As to the alleged breach of the order, the appropriate remedy is one of contempt of court. It will be a matter for Dr. Fose to take advice from his legal advisors, and pursue, if he wishes. But his claim of being the legal title holder must fail.

10. Meanwhile, as at 25^th October 2010 the certificate of title recorded that the title was transferred from the first respondent to the fifth defendant. However, Mr. Geita claimed that he did not know about the sale of the land and subsequent transfer of title by the first defendant to the fifth defendant. But his story did not add up. If his story is true, how comes he was able to say that the previous title holder of the land was the fourth defendant? And if the fourth defendant was granted a Special Agriculture and Business Lease (“SABL”) over the land, why did he not challenge it? He said nothing about this. Except for a report in a news-article that all SABLs were going to be cancelled, there is no evidence that this SABL was cancelled. He even claimed that he was given a power of attorney to act on behalf of the first defendant to restore the title to the land group and pursued it with the Land Titles Commission. The end result was that he was granted an estate in fee simple on 25^th April 2017.

11. Based on this title, the land was leased to the National Capital District Commission (“NCDC”) to build a temporary market for Port Moresby North East and South electorates. Construction has commenced but was disrupted by Illiya and Mr. Lai when they engaged police to stop the workers from working. Illiya and Mr. Lai denied that they had no authority to stop the work undertaken by the defendant Mr. Charles Aiiyok on the land. They alleged that they have a valid title and were entitled to stop the illegal activity on the land.

12. As far as the fifth defendant was concerned, her negotiations leading up to the purchase of the land from the first defendant was always with the first, second and third defendants as members of the fourth defendant. None of them informed her that Dr. Fose was also interested in purchasing the land and had made part-payment of the purchase price. According to the fifth defendant, the purchase price for the land was K30,000.00 and the amount may have varied when she said during cross-examination that it was K400,000.00. If that was the case, the first, second and third defendants would have struck a better deal than the previous one but her admission to K400,000.00 as being the purchase price was by no means an admission that she was the instigator such that fraud should be inferred.

13. Other than the differences in the purchase price there is no evidence that she was aware of Dr. Fose’s interest and urged the first, second and third defendants to go ahead with the sale to her. It is difficult to rely on the differences to infer fraud when she has denied the allegation and stated that the land was put up for sale, that she met the defendants to discuss its purchase and did her own title search at the Land’s Department, as any prudent purchaser would do, to confirm that the vendor was the title holder. It was her word against Mr. Geita. The right person to put it to rest was the first defendant but she was a no show at trial even though she was advised through her lawyers.

14. Similarly, Mr. Geita’s claim of being unaware of the transfer of title from the first defendant to the fifth defendant is self-serving. Where fraud is not established, the fifth defendant’s title remains intact. Apart from the Land Titles Commission’s lack of jurisdiction to set aside a title to land, the subsequent claim of an estate in fee simple granted to Mr. Geita on 25^th April 2017 under the Land Tenure Conversion Act was done well after the grant of title to Illiya on 9^th April 2015 and is void abinitio. It follows that Mr. Geita’s claim of being the legal title holder must also fail.

15. It also follows that the lease with the NCDC to build a temporary market, any engagement of people or work undertaken on the land was illegal and must be stopped forthwith. Similarly, any structures put up on the land by defendant Charles K. Aiiyok and his servants and agents must be removed at his own expense.

16. Apart from attempting to discredit the evidence of Mr. Joe Lai that the type of lease was a SABL, that it was illegal to have one located at the current location, that Illiya was going to build and operate a fuel service station contrary to the purpose of the lease and that Mr. Lai was a non-citizen, all of which were denied by Mr. Lai, there is no evidence that Illiya conspired with the fifth defendant to procure the title to the land. On the contrary, the evidence established that the land was sold to Illiya by the fifth defendant in the sum of K2 million. Evidence of a contract of sale was produced to verify the sale. The contract of sale referred to a loan (mortgage) obtained by Illiya from ANZ Bank to finance the purchase price. A copy of the loan agreement and statement of the loan account were produced to verify the source of funding and was also confirmed by Mr. Lai in his evidence. Mr. Lai’s evidence put it beyond doubt that Illiya acted in good faith when it purchased the land and was conferred title. Its claim of being the legal title holder is upheld.

WS No. 766 of 2014

17. There will be no orders for the voiding of the transfer of title from the first defendant to the fifth defendant and the transfer of title from the first defendant to Dr. Fose but there will be a judgment in the sum of K41,000.00 against the first, second and third defendants. This sum will be paid to Dr. Fose forthwith.

OS No. 96 of 2018

18. There will be orders affirming Illiya Limited as title holder of the land described as Portion 2631C Milinch Fourmil, Moresby, National Capital District in State Lease Volume 35, Folio 97 and for the defendant Charles K. Aiiyok, his servants and agents to be permanently restrained from interfering and/or harassing Illiya Limited’s servants and agents from conducting their business on the land. Furthermore, the defendant and his servants and agents will remove all structures put up by them on the land at their own expense within one month from the date of this order.

OS No. 149 of 2018

19. There will be no orders to void Illiya Limited as the title holder of the land but there will be orders voiding Mr. Mataio Geita as title holder under an estate in fee simple forthwith.

20. I will hear parties on the question of costs.

Judgment and orders accordingly.
______________________________________________________
Geroro Lawyers: Lawyers for Plaintiff in WS No. 766 of 2014
Lakakit & Associates: Lawyers for First Defendant in WS No. 766 of 2014
Mambei Lawyers: Lawyers for Second–Fourth Defendants in WS No. 766 of 2014
Jaminen Lawyers: Lawyers for Fifth Defendant in WS No. 766 of 2014

Twivey Lawyers: Lawyers for Plaintiffs in OS No. 96 of 2018 & Defendant in OS No.149 of 2018
Lakakit & Associates: Lawyers for Plaintiff in OS No. 149 of 2018