Markham Farming Co Ltd v Wanga [2019] PGNC 366; N8103 (2 July 2019)

N8103

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (APP) NO. 925 OF 2017

BETWEEN:
MARKHAM FARMING COMPANY LIMTIED
Plaintiff

AND:
TIRI WANGA, SECRETARY DEPARTMENT OF LANDS
AND PHYSICAL PLANNING
First Respondent

AND:
HONOURABLE JUSTICE TKATCHENKO, MINISTER FOR LANDS
AND PHYSICAL PLANNING
Second Respondent

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

Waigani: Gavara-Nanu J.
2018: 14^th November
2019: 2^nd July

JUDICIAL REVIEW - Land Act, 1996; ss. 122 (2) & (4); 142; 169 - National Court Rules; Order 16 rr 8 (1) (d) & 13 (6) (4) - Forfeiture notice - Service of notices - Corporations - Mode of service under Companies Act, 1997; Proper mode of service - Enabling legislation prescribing mode of service.

JUDICIAL REVIEW – Practice and Procedure – Statement of Agreed and Disputed Facts and Legal Issues – Binding Effect of concessions made by parties.

Cases Cited:

Dr. Allan Marat v. Hamjung Power Ltd (2014) SC1357
Gundale Ltd v. John Ofoi (2017) N6696
Highlands Produce Buyers Ltd v. Minister for Lands and Physical Planning [1988] PNGLR39.
PNG Power Ltd v. Edward Make (2018) N7442
North Fly Development Corporation Ltd v. Pepi Kimas, Secretary for Lands and Ors (2015) N6122
University of Papua New Guinea v. John Ofoi (2016) N6303

Counsel:

I. Shepherd, for the Plaintiff
E. Geita for, the Respondents

2^nd July, 2019

1. GAVARA-NANU J: The plaintiff was the holder of State Lease Volume 108 Folio 144, Portion 381, Milinch, Erap Fourmil, Markham, Morobe Province (the land).
   
2. On 11 November, 2009, the first respondent served on the plaintiff a notice to show cause dated 14 September, 2009. The notice was served pursuant to s. 122 (2) of the Land Act, 1996. The notice gave the appellant 28 days to show sufficient cause why the State Lease should not be forfeited. The notice contained two grounds. First was failure to comply with the improvement covenants of the lease. Second was the lease rentals remained unpaid for six months. The notice stated that outstanding lease rental as at January, 2009 was K1, 075.00. Notably though this was the amount of rent for a year.
   
3. In a letter to the first respondent dated 12 November, 2009, the plaintiff responded to the notice to show cause and provided reasons why the State Lease should not be forfeited.
   
4. A notice in the National Gazette No. G230, dated 2 April, 2015, gave notice that the first respondent had forfeited the State Lease. The reasons for the forfeiture were; failure to comply with the improvement covenants, lease rentals remained unpaid for six months and failure to show cause.
   
5. The respondents also claim the plaintiff was served a second notice to show cause dated 17 October, 2013 on or about 3 March, 2014, which contained only one ground, viz. failure to comply with the improvement covenants of the lease.
   
6. The plaintiff brings this appeal against the forfeiture of its State Lease pursuant to s. 142 (2) of the Land Act. The plaintiff argued that the forfeiture breached certain mandatory requirements under the Land Act, thus the forfeiture was unlawful. The plaintiff also submitted that it had shown cause in 2009, and explained why the State Lease should not be forfeited after it was served with a notice to show cause.
   
7. It is also noted that the land was mortgaged to the ANZ bank, and the mortgage was not yet discharged at the time the lease was purportedly forfeited.
   
8. The plaintiff at the hearing denied being served with the notice to show cause in 2009, because the notice was not served on its registered office. It was instead served on Warner Shand Lawyers, Lae, who were its lawyers.
   
9. The respondents argued that service was proper because the postal address for Warner Shand Lawyers, Lae, was the postal address the Department of Lands had for the plaintiff.
   
10. In my view no issue arises regarding service of the notice to show cause on the plaintiff in 2009, because the plaintiff showed cause by responding to the notice.
    

11. As to the second notice to show cause, the plaintiff also strongly denied being served with the notice. The respondents claimed that just like the first notice to show cause, it was served on Warner Shand Lawyers, Lae, by post.

12. The plaintiff argued that even if it had been served with the second notice through Warner Shand Lawyers, Lae, the service would have still been defective because proper service could only be effected on its registered address.

13. The plaintiff raised four main grounds of appeal:

1. Non-compliance with the requirements of the Land Act, 1996
   

(i). The plaintiff claims it was not notified of the forfeiture, thus denying it the right to appeal the forfeiture within the statutory period.

2. Mortgagee was not served with the forfeiture notice
   

(i). Failure by the respondents to serve the forfeiture notice on the ANZ bank as the mortgagee as required under s. 122 (4) of the Land Act.

3. The respondents failed to exercise the statutory powers in a bona fide manner
   

(i) The respondents did not act in good faith when forfeiting the State Lease because the plaintiff had shown cause in 2009.

(ii) The respondents failed to respond to the plaintiff’s show cause in 2009.

4. The respondents failed to exercise statutory powers reasonably
   

(i) The notice to show cause in 2009 was served on the plaintiff after it had settled all the outstanding lease rentals.

(ii)The land was always used for grazing because it was not suitable for cultivation and the respondents had ulterior motive in forfeiting the lease. This was shown by allowing settlers to illegally occupy the land.

(iii)The respondents acted ultra vires because the notices to show cause were not served on its registered office.

15. The plaintiff has placed reliance on its response to the notice to show cause served in 2009, to challenge the validity and the reasonableness of the forfeiture of its lease.

16. The question as to whether the service of the notice to show cause on the plaintiff in 2009, was proper and valid or not remains to be determined. The second respondent argued that service was proper because it was effected through the plaintiff’s postal address that was kept with the Department of Lands. The postal address through which the notice was served was used by Mr. Nigel Paul Merrick of Warner Shand Lawyers, Lae, who was a Director of the plaintiff company. The notices for lease rentals were always sent to this postal address.

17. In my view, the service of the notice to show cause on the plaintiff in 2009, was proper and valid as it was consistent with the requirements of s.169 (3) of the Land Act, which provides the relevant mode of service for notices. The provision states that service of a notice on a corporation may be effected by a registered post through the postal address of the corporation last known to the Head of the Department of Lands.

18. In this instance, there is no evidence that the notice to show cause issued in 2009, was served on the plaintiff by a registered mail. These observations are however inconsequential and academic only because the plaintiff had responded to the notice and showed cause by giving reasons why its lease should not be forfeited.

19. As to the second notice to show cause, the plaintiff has strongly denied being served. Given such strong denial of service of the notice, the respondents carry the onus to strictly prove service on the plaintiff. The respondents have failed to discharge the onus.

20. I note from Annexure ‘E’ to the affidavit of Luther Sipison sworn on 27^th April, 2018, which is a copy of a Statutory Declaration made by one Raymond Lavaki that a notice to show cause was purportedly posted to the plaintiff by an express mail on 13 March, 2014. I reject this evidence for two reasons. First, it is hearsay as it was given by someone other than Raymond Lavaki. Second, the mode of service was in breach of s. 193 (3) as service was not by a registered mail. The postal address through which the notice was purportedly served is also unknown.

21. The respondents relied on this affidavit, but as I said the affidavit contains hearsay evidence because Luther Sipison deposed to matters over which he had no direct control or involvement. For example, service of notices to show cause, the purported failures by the plaintiff to comply with the improvement covenants of the lease and non-payment of lease rentals were matters only the particular staff members of the Department of Lands, who were directly involved in those matters could depose to. See, University of Papua New Guinea v. John Ofoi (2016) N6303.

22. A service of a forfeiture notice must be served in accordance with the mandatory requirements of s. 169 (1) and (2), in case of a person and s. 169 (3) in case of a corporation.

23. The requirements of service under the Companies Act, 1977, are in my view irrelevant and they do not apply here. The service of notices, such as a notice to show cause or a forfeiture notice must comply with the requirements of the enabling legislation, which is the Lands Act. See, Dr. Allan Marat v. Hamjung Power Ltd (2014) SC1357, and University of Papua New Guinea v. John Ofoi (supra).

24. As to the forfeiture, it is not disputed that no notice of forfeiture was served on the plaintiff. In paragraph 6 of the Statement of Agreed and Disputed Facts and Legal Issues (SADFLI), the respondents agreed that the first respondent did not serve the forfeiture notice on the plaintiff. This was a concession by the respondents which is relevant to the primary issue of whether the forfeiture was valid.

25. Section 122 (4) of the Land Act, requires a forfeiture notice to be served on all persons having an interest in the matter. Thus, it is mandatory that a lease holder whose lease has been forfeited and as a person directly affected by the forfeiture is served with a copy of the forfeiture notice. See, PNG Power Ltd v. Edward Make (2018) N7442. In this case, the failure by the respondents to comply with these mandatory statutory requirements renders the forfeiture void abinitio.

26. The respondents’ failure to serve a forfeiture notice on the plaintiff also resulted in the plaintiff being denied natural justice. See, Gundale Ltd v. John Ofoi (2017) N6696.

27. The decision to forfeit the lease was made six years after the plaintiff showed cause in 2009, after it was served with a notice to show cause. The decision to forfeit the lease was therefore also unreasonable given the inordinate delay in making that decision and given that the respondents did not respond at all to the plaintiff's show cause.

28. The concession by the respondents in the SADFLI that the forfeiture notice was not served on the plaintiff is fatal. A concession is akin to an admission in a defence to a statement of claim. The concession is therefore binding on the respondents. The binding effect of a concession made in a SADFLI derives from the terms of the SADFLI which are mutually agreed to by the parties, following Directional Orders given by the Court. Such the concession narrows down the issues for litigation. See, Order 16 r 13 (6) (4) of the National Court Rules. In this instance, the concession also contributed to the effective disposal of the substantive issues. See, also Order 16 r 8 (l) (d) (Schedule A) of the National Court Rules.

29. Notably also, at the time of the purported forfeiture, the ANZ bank had a mortgage over the land. There is no dispute that the forfeiture notice was not served on the ANZ bank. This was in direct breach of s. 122 (4) of the Land Act, thus it is a ground upon which the forfeiture is rendered a nullity. See, North Fly Development Corporation Ltd v. Pepi Kimas, Secretary for Lands and Ors (2015) N6122. See also, Highlands Produce Buyers Ltd v. Minister for Lands and Physical Planning [1988] PNGLR 39.

30. For the foregoing reasons, the purported forfeiture of the plaintiff’s State Lease, on or about 14 January, 2015, is void ab initio. I declare all subsequent dealings on the lease, including the purported gazettal of the forfeiture notice null and void.

31. Consequently, I also declare that the appellant remains the owner and the registered proprietor of the subject State Lease.

32. Pursuant to ss. 160 and 161 of the Land Registration Act, (Chapter No. 191), the Registrar of Titles is ordered to make appropriate corrections on the register of subject State Lease in order to reflect the Orders of the Court and to restore the plaintiff's State Lease.

33. The first and second respondents will pay the plaintiff's costs of and incidental to the appeal, which if not agreed, to be taxed.

34. Orders accordingly,
______________________________________________________________
Ashurst Lawyers: Lawyers for the Plaintiff
Solicitor General: Lawyers for the Respondents