N8139

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) 260 OF 2016

BETWEEN
MANGAH CONSTRUCTIONS LIMITED
Plaintiff

AND
WILLIM WANDAKI
First Defendant

AND
PROPERTY SECURITY CONSULTANTS LTD
Second Defendant

AND
SAM WANGE – Chairman of National Lands Board
Third Defendant

AND
LUTHER SIPISON – Acting Secretary,
Department of Lands & Physical Planning
Fourth Defendant

Waigani:  Gavara-Nanu, J
2017:	25th October
2019:	 25th March

STATE LEASES – Urban Development Leases – Requirements under the Land Act, 1996 – Urban Development Lease issued in breach of mandatory statutory requirements – Urban Development Lease illegal, null and void.

Cases Cited: 

Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705
Innovest Ltd v. Hon. Patrick Pruaitch and The State (2014) N5949
Martin Maso v. Romilly Kila Pat (2016) N6550

Counsel:

L. Yandaken, for Applicant
N. Yano, for the State

25th March, 2019

1.	GAVARA-NANU J: 	This is an application by the plaintiff made pursuant to a Notice of Motion filed under Order 16 r 5 (1) of the National Court Rules on 8 August, 2016.  The plaintiff seeks a declaration that an Urban Development Lease (UDL) issued to the first and second defendants (the defendants) over a portion of land described as Portion 3124 Granville (the land) on 2 August, 2016 is null and void.

2.	Brief background facts are these; the plaintiff was initially the only applicant for an UDL for the land in 2015, and the Land Board in its meeting No. 136 of 2015 listed the plaintiff as the only applicant for the land.  The plaintiff’s application was gazetted for the Land Board hearing.  After the close of tender, the defendants who later became aware of the tender, objected to the listing of the plaintiff as the only applicant for the land.  The Minister for Lands then issued an addendum allowing the defendants to be listed as second applicants.  The Land Board subsequently met and considered the applications and decided in favour of the defendants.  
    
3.	The plaintiff argued that since it was initially the only applicant for the land, it should have been issued the UDL.  The plaintiff claims it was denied the right to be heard and that the actions of the third and fourth defendants were pursuant to s.41 of the Constitution, harsh and oppressive.

4.	The defendants on the other hand challenged the competency of the plaintiff’s application. They have among others, raised issues regarding pleadings in the Statement in Support.  They urged the Court to dismiss the application for being incompetent.

5.	The plaintiff is challenging the validity of the UDL issued to the defendants, it argued that the defendants should not have been added as second applicants for the land in the first place because he says the gazettal of its application concluded the tender process. 

6.	In regard to the issues raised by the defendants regarding the competency of the plaintiff's application, I consider that these are matters which should have been raised during the Directions hearings.  As to the pleadings in the Notice of Motion and the Statement in Support, I find that they are in substantial compliance with the Rules. See, Innovest Ltd v. Hon. Patrick Pruaitch and The State (2014) N5849. Thus, I refuse the defendants’ application to dismiss the application for being incompetent.  

7.	It should also be noted that the plaintiff appealed the Land Board decision to recommend the defendants for an UDL, but that appeal was dismissed by the Minister, quite properly in my view.  

8.	There is undisputed evidence from the defendants that they had some existing interests in the land, thus they argued that under s. 58 (2) of the Land Act 1996, they had the right to be informed by the Land Board by post when the land was put on tender.   

9.	Because the Minister had issued an addendum for the defendants to be listed as second applicants, the defendants were quite properly added as the second applicants.  

10.	That said, the question still remains as to whether the UDL issued to the defendants was valid.  This being a sale by tender, the sale had to comply strictly with the tender requirements stipulated in s.73 (1), (2) and (4) of the Land Act, which are in mandatory terms.  Subsection (1) (a) provides that the tender notice shall contain the particulars specified in s. 68.  Subsection (1) (b) provides that the tender notice shall specify the reserve price for the land.  The relevant part of s. 68 is Subsection (2) (h), which amongst others provides that the tender advertisement “shall” contain the reserve price.  Section 73 (4) provides that the successful tenderer “shall” pay the State the amount of his tender.  The reserve price for the purposes of ss. 68 (2) (h) and 73 (1) (b) is the unimproved value of the land.  According to the affidavit of Emmanuel Pamunda sworn on 26 April, 2016, the unimproved value of the land as at 9 September, 2014, was K490, 000.00.  

11.	It should also be noted that s. 73 (2) of the Land Act, provides that a tender for an amount less than the reserve price under s. 73 (1) (b) is invalid and “shall” not be considered.  Therefore, in this case an amount tendered which was less than the unimproved value of K490, 000.00 rendered the whole tender process invalid. It also follows that the subsequent grant of the UDL to the defendants was invalid.  Furthermore, because the defendants wanted to sub-divide the land they were required under s. 107 (2) (e) to provide evidence of their financial and other resources to fund such sub-divisions and other infrastructure developments.
  
12.	Having perused and considered all the evidence before me, including submissions by counsel, I find that the mandatory requirements under the Land Act, to which I adverted were not complied with by the defendants.  For example, the tender notice did not give the reserve price for the land and the tender by the defendants did not state or indicate the amount they were offering to pay. 

13.	There are two tender applications by the defendants, one had the second defendant as the applicant, the application is dated 13 March, 2015.  In this application, the proposal was to build affordable accommodation for middle income earners.   The estimated amount for the project was K11m.  However, no amount was offered as the tender price.  In the application form an applicant must as a matter of a mandatory statutory requirement give the tender price offered.  The second application by the defendants had the first defendant as the applicant and the application was dated 25 October, 2013.  The proposal under this application was residential development.  The estimated cost was K5m.  The glaring thing about this tender is that it was made two years before the Minister for Lands issued the addendum.

14.	The addendum was issued on 17 March, 2015.  Mr. Sipison tried to justify the second tender by describing it as unsolicited.  There is no such thing as unsolicited tender under the Land Act. The fact remains that the tender by the defendants did not give the description of the land, nor the tender price.  The existence of the two tenders gives rise to serious irregularities in regard to the grant of the UDL to the defendants.  Both tenders by the defendants breached mandatory requirements under the Land Act, particularly ss. 104, 105, 106, 108 and 109 which relate to UDL applications.  

15.	The breaches of the tender process by the defendants can be summarized as follows; failure to include the reserve price in the tender notice, failure to state the amount of tender, which had to be more than the reserve price, which was the unimproved value of the land; failure to produce evidence of financial capacity and other resources to fund the proposed infrastructure developments, including power, water, sewerage and utilities.  

16.	The defendants are prohibited by law from selling the UDL because it is not an ordinary lease and the defendants were required to develop the land soon after the UDL was issued to them.  

17.	It is clear that the Department of Lands and Physical Planning failed to protect the interests of the State.  Breaches of mandatory statutory requirements in this case render the UDL issued to the defendants’ illegal, null and void.  See, Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705.

18.	The above requirements under the Land Act, are intended to ensure that the scarce State land throughout the country, especially in towns and cities is protected and only genuine applicants are issued with leases.  There is a greater need for the ownership of State land to be strictly controlled and regulated so that towns and cities can be properly developed. See, Martin Maso v. Romilly Kila Pat (2016) N6550.

19.	People who bid for an UDL have the onus to demonstrate that they are serious in their bid by showing clearly with strong and convincing evidence that they have the financial capacity to develop the land and to comply with the conditions of the UDL.  In this case there is overwhelming evidence that the defendants failed to comply with the mandatory statutory requirements discussed above for an UDL.    

20.	Consequently, I also refuse the plaintiff’s application to declare it as the owner of the land.   The end result is that the land described as Portion 3124, Granville remains a State land.  

21.	The defendants are ordered to surrender the UDL issued to them on or about 2 August, 2016, to the Registrar of Titles for cancellation forthwith.  The Registrar of Titles is pursuant to ss. 160 and 161 of the Land Registration Act, Chapter No. 191 ordered to amend all its records including its Register of titles upon cancellation of the defendants’ UDL. Thus the Registrar of Titles is also ordered to issue a summons under ss.160 and 161 of the Land Registration Act, to the defendants to forthwith deliver up their purported owners' copy of the UDL and cancel it.

22.	The Solicitor General is ordered to ensure that these Orders are complied with.  The orders will be served on the Registrar of the National and Supreme Courts to ensure their compliance by the parties.

23.	Parties are to pay their own costs.
________________________________________________________________
Yandaken Lawyers: Lawyers for Applicant	
Solicitor General: Lawyers for Respondents