Trinco No. 6 Ltd v Assemblies of God Boroko Association Inc [2019] PGNC 429; N8154 (6 December 2019)

N8154

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 884 OF 2016

BETWEEN
TRINCO NO. 6 LIMITED
First Plaintiff

AND
DYNAMIC DEVELOPMENT LIMITED
Second Plaintiff

AND
ASSEMBLIES OF GOD BOROKO ASSOCIATION INC
First Defendant

AND
HON. BENNY ALLEN MINISTER FOR LANDS
Second Defendant

AND
REGISTRAR OF TITLES
Third Defendant

AND
THE INDEPENDENT STATE OF PAUA NEW GUINEA
Fourth Defendant

Waigani: Gavara-Nanu J
2019: 21^st November & 6^th December

PRACTICE & PROCEDURE - Application for a joinder - National Court Rules; Order 5 r 8 (1) - Whether applicant has direct interest in the proceeding - Whether applicant ought to have been joined - Whether joinder necessary for all issues to be effectively and completely determined.
Cases Cited:

Markham Farming Company Limited v. Tiri Wanga & Ors (2019) N8103
PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1120
Summit Development Ltd v. Byron Chan (2016) N6390

Counsel:

B. Frizzell, for the Plaintiffs
D. Harold, for the First Defendant
I. Guba, for the Interested Party

6^th December, 2019

1. GAVARA-NANU J: This is an application by the ANZ Banking Group (PNG) Limited (the applicant) to be joined as the fifth defendant in this proceeding. The application is made pursuant to a notice of motion filed on 16 October, 2019.

2. The applicant invokes Order 5 r 8 (1) of the National Court Rules (NCR) for a joinder. The applicant also, as consequential relief seeks orders that it be served with all the relevant court documents and abridgement of time for the entry of such orders, should its application be granted.

3. The following background facts are not in dispute. In 2003 the Assemblies of God Boroko Association Inc. (AOG), which is the first defendant in this proceeding was granted State Leases in respect of the properties described as Section 389 Allotments 2, 4, 5, 6 and 7; State Lease Volume 28 Folios 69, 70, 71 and 72.

4. In 2006, the AOG used its State Leases as security to secure a loan from the applicant. In 2008, the above State Leases were forfeited by the State through the Minister for Lands and Physical Planning (the Minister for Lands). The applicant claims it was not served with the forfeiture notice(s).

5. In 2011, Section 389 was subdivided into Lots 4 and 7 (Lot 7 was comprised of previous Lots 3, 5 and 6) and Urban Development Leases were granted over these properties. The second plaintiff (Dynamic Development Limited) was granted an Urban Development Lease (UDL) over Lot 4 and the first plaintiff (Trinco No. 6 Ltd) was granted an UDL over Lot 7.

6. The AOG issued legal proceedings challenging the granting of the above UDLs to the first and second plaintiffs respectively (the plaintiffs). The AOG then obtained restraining orders against the plaintiffs, thus restraining them from dealing with the respective properties. This resulted in the plaintiffs' UDLs expiring in January, 2016.

7. Prior to the expiration of the plaintiffs' UDLs, the plaintiffs applied for an extension of their UDLs. In September, 2016, the plaintiffs were granted UDLs over Lots 4 and 7.

8. Before the above UDLs were granted to the plaintiffs, two new State Leases were granted to the AOG over Lots 8 and 9, which covered the area of land which was formerly known as Lot 3. The plaintiffs as a result issued proceeding OS (JR) 884 of 2016, challenging the granting of State Leases over Lots 8 and 9 to the AOG.

9. In March, 2018, the UDLs granted to the plaintiffs over Lots 4 and 7 were cancelled. As a result, the plaintiffs issued proceeding OS (JR) 255 of 2016, challenging the cancellation of their UDLs.

10. The applicant claims it only became aware of the various transactions including the forfeiture of the State Leases held by the AOG in 2008, when it was served court documents by the AOG for a joinder application.

11. The applicant argues that it ought to have been joined to proceedings OS (JR) 884 of 2016 and OS (JR) 255 of 2016, because it has direct interest in the proceedings, hence this application.

12. In OS (JR) 884 of 2016, the plaintiffs are seeking an order in the nature of certiorari to quash the granting of a State Lease over the abovementioned properties to the AOG. The grounds for the application are, the State Leases were forfeited and no appeal was lodged against the forfeiture under s. 142 of the Land Act, 1996 and the plaintiffs having been granted UDLs the subsequent grant of State Leases were contrary to the Land Registration Act, Chapter 191 and the Physical Planning Act, 1989.

13. In regard to OS (JR) 255 of 2016, the plaintiffs also seek an order in the nature of certiorari to quash the decision of the third defendant to cancel their respective UDLs. The grounds for the application are, the requirements of ss. 160 and 161 of the Land Registration Act, were not complied with by the third defendant and the reasons given for the cancellation of the UDLs had no basis.

14. It was submitted by Mr Frizzell of counsel for the plaintiffs that the applicant had no interest in the two proceedings because its rights over the subject properties as a mortgagee had been discharged and extinguished following forfeiture of the relevant State Leases which were previously held by the AOG, in 2008. Furthermore, no appeals were lodged against the forfeitures by the AOG, thus those State Leases effectively remain forfeited and the applicant cannot have interest over State Leases which do not exist.

15 The applicant relies upon an affidavit of one of its employees, namely Arnold Gilalong, sworn on 11 October, 2019, for its joinder application. In paragraphs 9 to 13 of the affidavit, it is deposed that properties previously known as Lots 3, 4, 5, and 6 were mortgaged to the applicant in July and August, 2006.

16. The applicant held mortgages over all these properties until 2016, when Lots 3 and 4 were released to the AOG with the owner’s copies of the State Leases returned to the AOG. This was a mutual commercial arrangement between the applicant and the AOG. Under this arrangement the AOG was to have the properties which had Mission Leases converted into Commercial Leases and the AOG was to deal with the properties to generate income which the AOG would then use to pay its outstanding loans with the applicant.

17. In regard to Lots 5 and 6, the applicant to this day still holds onto the respective State Leases as the mortgagee. This is not disputed.

18. In his affidavit, Arnold Gilalong deposed that the applicant was not served with the forfeiture notice(s) at all. If this is true, it would render the forfeiture of the State Leases in 2008, invalid as the forfeiture were done in breach of s.122 (4) of the Land Act, 1996.

19. It is convenient to reproduce s. 122. It is in these terms:

PART XV—FORFEITURE OF STATE LEASE AND FINES.

Division 1.—Forfeiture of State Lease.

122. Forfeiture of State Lease.

(1) The Minister may, by notice in the National Gazette, forfeit a State lease—

(a) if rent on the lease remains due and unpaid for a period of six months; or

(b) if fees are not paid in accordance with this Act; or

(c) if the amount payable in respect of improvements is not paid in accordance with this Act; or

(d) if—

(i) a covenant or condition of the lease; or

(ii) a provision of this Act relating to the lease; or

(iii) a requirement of a notice under Section 91 relating to the lease,

is not complied with; or

(e) if the granting of the lease has been obtained, in the opinion of the Minister, wholly or partly as a result of statements that were, to the knowledge of the lessee, false or misleading.

(2) Before forfeiting a State lease under Subsection (1), the Minister—

(a) shall serve notice on the lessee calling on him to show cause, within a period specified in the notice, why the lease should not be forfeited on the ground or grounds specified in the notice; and

(b) may, whether or not cause has been shown in accordance with a notice under Paragraph (a), serve on the lessee a notice requiring him, within a period specified in the notice, to comply with the covenants or conditions of the lease or the provisions of this Act.

(3) The Minister shall not forfeit a lease under this Section unless—

(a) the lessee has failed to comply with a notice under Subsection (2)(a) or (b); or

(b) the lessee has failed to show good cause why the lease should not be forfeited.

(4) Copies of a notice of forfeiture and a notice under Subsection (2)(a) or (b) shall be served on all persons who, to the knowledge of the Departmental Head, have or claim to have a right, title, estate or interest in, to or in relation to the land, or such of them as can with reasonable diligence be ascertained and found.

(5) No acceptance of rent by the State waives a right to forfeit a lease under this Act.

(6) For the purposes of this Section the grant of an application for a State lease shall be deemed to be the grant of the lease.

20. The applicant argued that because it had mortgage over the properties at the time the State Leases were forfeited, the fact that the forfeiture notices were not served on it would render the forfeiture illegal and therefore null and void as the forfeiture would have been done in breach of the mandatory requirements of s. 122 (4) of the Land Act. Whether the forfeiture of the State Leases was legal or not is a fundamental substantive issue which should be appropriately dealt with at the trial and the applicant would have the right to be heard on the issue.

22. The principles relating to joinder applications are settled in this jurisdiction. A leading case is PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126. The relevant principles for a joinder enunciated in that case by the Supreme Court have been adopted in many other Supreme Court and National Court decisions. In Summit Development Ltd v. Byron Chan (2016) N6390, I reiterated these principles. In emphasising the key principles, I said:

“In PNG Deep Sea Fishing Limited v. Hon. Luke Critten, Governor for Milne Bay & Ors (2010) SC1126, the Supreme Court adopted with approval Ken Norae Mondiai v. Wavoi Guavi Timber Company Limited (supra), in which the National Court held that Order 5 r 8 (1) provides the jurisdictional basis for joinder applications. The Supreme Court in considering this Rule went on to state that the requirements that an applicant for a joinder has to satisfy are set out under Orders 5 r 8 (1) and 16 r 5 (2). Under Order 5 r 8 (1), an applicant seeking joinder has to show that it – “ought to have been joined as a party...” or that its joinder as a party is – “...necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated on”. Under Order 16 r 5 (2), an applicant seeking joinder has to show that it is – “...directly affected...” - by the proceeding, thus has an interest in the case. Whether an applicant for a joiner is directly affected by a proceeding or not is a question of fact which has to be decided on the facts of each case.

When one looks closely at the requirements under Order 16 r 5 (2) and Order 5 r 8 (1), they are intertwined and when applied, they effectively raise one common requirement which an applicant for a joinder has to meet viz; he or it – “ought to have been joined as a party...” - to the proceeding. This makes the two Rules equally relevant and applicable with equal force in joinder applications. In PNG Deep Sea Fishing Limited v. Hon. Luke Critten, Governor for Milne Bay (supra), the Supreme Court held that an applicant for a joinder must meet the requirements under these two Rules, before it can be joined as a party. In that case, the Supreme Court considered Order 5 r 8 (1), in an appeal against the decision of the National Court which refused a joinder application made under Order 5 r 8 (1). The Supreme Court held that the requirements set out under the two Rules being satisfied by an applicant for a joinder is pre-requisite to the grant of a joinder”. (My underlining).

23. So the key issues are – First; Is the applicant directly affected by the proceeding? Second; a related question is; Was the applicant entitled to or ought to have been joined in the proceeding? Third; Will the joinder of the applicant ensure that all the issues will be effectively and completely determined? If the answer to these questions is in the affirmative then the application should be granted.

24. I am satisfied from the evidence adduced by the applicant that it had mortgage over Lots 3, 4, 5 and 6, and was directly affected by the forfeiture of the State Leases. The applicant therefore has direct interest in the proceeding, thus pursuant to the mandatory requirements of s. 122(4) of the Land Act, it should have been served with the forfeiture notice(s). In Markham Farming Company Limited v. Tiri Wanga, & Ors, (2019) N8103, a similar issue arose. The applicant herein also had a mortgage over a portion of land, the subject of that proceeding. The State through the Minister for Lands forfeited the State Lease but the forfeiture notice was not served on the applicant. I held that the failure by the State to serve a forfeiture notice on the applicant rendered the forfeiture null and void. I said:

“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, Sectary for Lands & Ors (2015) N6122. See, also Highlands Produce Buyers Ltd v. Minister for Lands and Physical Planning [1988] PNGLR 39”. (My underlining).

25. Its significant to note that s. 122(4) of the Land Act, imposes a duty on the Secretary for Lands to diligently ensure that all persons having interest in the land are found or ascertained for the purposes of serving forfeiture notices on them. I hold a firm view that this requirement entails the Secretary for Lands ascertaining contact details of such persons, including their telephone numbers, postal addresses, email addresses and their locations, where possible and making contact with them and making genuine efforts to serve the forfeiture notices on them. The Secretary for Lands would in my view, sufficiently comply with the mandatory requirement of s. 122 (4), by doing a thorough search of the Department of Land's file on the subject land to ascertain the contact details of the persons having interest in the land. Such enquiries should include conducting title searches at the Titles Office, to among others, ascertain the registered proprietor of the land and whether the land is under a mortgage and if so, whether such mortgage is current or has been discharged. Without such efforts being made by the Secretary for Lands, it would amount to a failure by the Minister through the Secretary for Lands to comply with the mandatory requirements under s.122(4) of the Land Act, to find and ascertain the persons having interest in the land, thus render the forfeiture null and void.

26. In this instance, the applicant having had a mortgagee over Lots 3,4,5 and 6 at the time of the forfeitures, it has direct interest in the proceedings and has the right to be heard on the issue of whether the State Leases were validly forfeited. Forfeiture of the State Leases prima facie are a relevant issues that should arise at the trial.

27. For these reasons, I order that the applicant be joined as a defendant in each of the proceedings.

Orders accordingly

Warner Shand Lawyers: Lawyers for the Plaintiffs
Allens Lawyers: Lawyers for the Applicant (Interested Party)
Jaminan & Partners Lawyers: Lawyers for the First Defendant
Solicitor General: Lawyers for the Second and Third Defendants