Feo v Samson [2020] PGNC 86; N8270 (21 April 2020)

N8270

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 494 OF 2018

BETWEEN
KINOKA FEO
Plaintiff

AND
BENJAMIN SAMSON, REGISTRAR OF TITLES
First Defendant

AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

AND
NANCY KALEBO
Third Defendant

AND
LUCAS MAINO
Fourth Defendant

Waigani: Makail, J
2019: 10^th May & 2020: 21^st April

JUDICIAL REVIEW – Review of Registrar of Title’s decision to cancel title – State lease – Exercise of power – Breach of natural justice – Error of law – Land Registration Act – Sections 160 & 161 – Constitution – Section 59

Cases cited:
Timothy Alex Aipa v. Benjamin Samson & Ors (2012) N4777

National Airports Corporation Limited v. Airport Guest House Limited & Ors (2019) SC1865

Counsel:
Mr. J. Poya, for Plaintiff
Ms. B. Kulumbu, for First and Second Defendants
No appearance, for Third Defendant
Mr. A. Ona, for Fourth Defendant

JUDGMENT

21^st April, 2020

1. MAKAIL, J: This is an application for judicial review of a decision by the Registrar of Titles (Registrar) to cancel a State lease title and issue another under Order 16 of the National Court Rules.

2. The National Housing Corporation (NHC) was the original title holder of a State lease described as Section 51 Allotment 125, Granville, Volume 43 Folio 115, National Capital District (Property).

3. Mrs Nancy Kalebo’s late husband Christopher was the tenant under a tenancy agreement with the NHC. On 9^th May 2007 the NHC offered to sell the property to him under the Cash Sale Scheme for K94,710.00 on condition that he pay a 10% deposit and associated costs and complete it before the title be transferred to him.

4. He accepted the offer on 22^nd May 2007. On 29^th May 2007 he paid K9,821.00 as 10% deposit and associated costs. Unfortunately, he passed away on 15^th December 2009 and did not complete the sale.

5. After about five years, on 24^th September 2014 the NHC offered the property to Mr Kinofa Feo for K336,875.00 on condition that he pay a 10% deposit of K33,876.00 and associated costs before completing the sale and transfer of title to him. On 25^th September 2014 Mr Feo signed a contract of sale with the NHC and paid the purchase price of K336,875.00 in full.

6. Apparently Mrs Kalebo placed a caveat against the registration of title and it took awhile before the NHC Managing Director intervened and made representation to the Secretary of Department of Lands and Physical Planning on 26^th October 2016 to lift the caveat and paved the way for registration of Mr Feo’s title.

7. On 6^th April 2017 the title was transferred (registration) to Mr Feo. Meanwhile the NHC entered into another contract of sale with Mrs Kalebo on 7^th April 2016. After a number of requests for Mrs Kalebo and her family to vacate the property Mr Feo instituted proceeding in the District Court and obtained an order to evict them.

8. Mrs Kalebo then instituted National Court proceeding WS No 7 of 2018 against Mr Feo and the Registrar including the State to set aside Mr Feo’s title on the grounds of fraud.

9. She obtained an ex parte interim injunction on 13^th February 2018 to restrain Mr Feo and the Registrar from dealing with the property and evicting her and her family.

10. The ex parte interim injunction was returnable for inter parte hearing on 6^th March 2018 but it is not known if there was an inter parte hearing. It is also not known if the National Court proceeding has been concluded.

11. However, Mrs Kalebo made representation to the Registrar to cancel Mr Feo’s title on the grounds of fraud. The Registrar issued a summons in a form of a letter dated 5^th March 2018 to Mr Feo to deliver up his title within fourteen days.

12 Computing the fourteen days from 5^th March, it would have expired on 19^th March 2018. The summons was not delivered to Mr Feo until 27^th March 2018 by a member of the police named Constable Roy Anthony. By then the fourteen days had expired on 19^th March 2018.

13. Nonetheless, Mr Feo’s lawyers responded to summons by writing to the Registrar under cover letter of 28^th March 2018 explaining that Mr Feo’s title was valid because he was the first party to enter into a contract of sale with the NHC and purchased the property.

14. The lawyer also informed the Registrar in that letter that Mrs Kalebo had instituted National Court proceeding to set aside Mr Feo’s title on the grounds of fraud and the proceeding was pending before the Court.

15. Mr Feo’s lawyer’s response was late because the Registrar by then had cancelled his title and registered Mrs Kalebo as the title holder of the property on 27^th March 2018. Two days later, on 29^th March 2018 Mrs Kalebo sold the property to Mr Lucas Maino of Tabubil for K650,000.00 under a contract of sale.

16. Mr Maino’s purchase price was financed by Bank South Pacific Limited (BSP Bank) and the Bank holds a mortgage over the property as at 20^th June 2018 as noted from the State lease title.

17. Mr Feo relies on fraud to set aside the decision to cancel his title and registration of Mrs Kalebo as title holder on the following grounds:

• his title was granted first in time pursuant to a contract of sale with NHC
• The NHC’s offer to sell the property to Mr Kalebo lapsed when he passed away and did not complete the sale
• Mrs Kalebo had no interest in the property because she was not a tenant of NHC
• breach of Sections 160 and 161 of the Land Registration Act
• breach of natural justice
• failure to delay the cancellation on the grounds that his title was disputed by Mrs Kalebo in the National Court proceeding
  

18. However, Mr Maino is the current title holder after he purchased the property from Mrs Kalebo. There is no evidence that he fraudulently procured the title or colluded with Mrs Kalebo to fraudulently procure the title to form a basis for his title to be set aside under Section 33(1)(a) of the Land Registration Act.

19. On the other hand, the grounds relied upon by Mr Feo established that first after Mr Feo did not deliver the title on 18^th March 2018 because he was not served the summons with fourteen days, the Registrar proceeded to cancel his title. The breach is the failure by the Registrar to serve the summons within fourteen days.

20. Where no summons (notice) and no right to be heard was given to Mr Feo, it constituted a denial of natural justice under Section 59 of the Constitution and Section 160(1) of the Land Registration Act.

21. As the National Court held in Timothy Alex Aipa v. Benjamin Samson & Ors (2012) N4777:

“An administrative decision that interferes with or removes a person’s interests in property is subject to the principles of natural justice: the decision-maker must before interfering or removing that person’s interests give that person notice of the proposed decision and a right to be heard and act in an impartial and unbiased manner. Here no prior notice and no right to be heard was given to the Plaintiffs. There was a denial of natural justice.”

22. Secondly, the decision is not only in breach of the principles of natural justice but also contrary to law. Sections 160 and 161 of the Land Registration Act must be read together. Section 160 is a precondition which must be complied with before the Registrar can exercise his power under Section 161 to cancel the title.

23. As the Court held in Timothy Alex Aipa (supra):

“The Land Registration Act Chapter No 191, Sections 160 and 1661, prescribes a procedure for the cancellation of title, the Registrar of Titles, upon being satisfied that an instrument has been issued to a person in error, must first “summons that person to deliver that instrument” and only after a summons has been issued can the instrument be cancelled. Here no summons was issued prior to the decision to cancel title. This was an error of law”.

24. Here the summons was served late or after the decision to cancel the title was made. This constitutes an error of law.

25. Thirdly, where Mr Feo failed to deliver up the title to the Registrar, the latter must apply to the Court for a summons to be issued to Mr Feo to deliver up the title and allow him to show cause why the title should not be delivered up.

26. Section 160(2) states:

(2) Where a person refuses or neglects to comply with a summons under Subsection (1), or cannot be found, the Registrar may apply to the Court to issue a summons for that person to appear before the Court and show cause why the instrument should not be delivered up”.

27. Note the Court referred to in Section 160 is the National Court as defined in Section 2(1) of the Land Registration Act.

28. There is no evidence that the Registrar applied to the National Court to issue a summons after Mr Feo failed to deliver up the title within fourteen days of the Registrar issued summons of 5^th March 2018.

29. The Registrar failed to comply with this procedure. As a result, he acted contrary to the law and this constitutes an error of law.

30. Finally, he did not have power to proceed to cancel Mr Feo’s title after Mr Feo failed to deliver up the title. The power to issue a summons to Mr Feo to show cause why the title should not be delivered up where he fails to comply with the summons issued by the Registrar is conferred on the National Court under Sections 1(2) and 160(2) (supra). Here the Registrar’s exercise of power was ultra vires.

31. All these established that there has been a gross breach of Mr Feo’s right to be heard as guaranteed by Section 160(2) “...........person to appear before the Court and show cause why the instrument should not be delivered up” and Section 59 of the Constitution.

32. They also established that there has been a flagrant abuse of power by the Registrar. As a result, Mr Feo was denied procedural fairness and the decision by the Registrar to cancel his title was made in breach of Section 160(2) of the Land Registration Act and Section 59 of the Constitution.

33. The consequence of all these breaches is, the decision to cancel the title is illegal and must be set aside. In addition, the question of cancellation must be remitted to the Registrar to rehear according to law: See National Airports Corporation Lmited v. Airport Guest House Limited & Ors (2019) SC1867.

34. The application for judicial review is upheld in part. The decision of the Registrar of 27^th March 2018 to cancel Mr Feo’s title over State lease Section 51 Allotment 125, Granville, Volume 43 Folio 115, National Capital District is set aside. The matter is remitted to the Registrar to rehear according to law under Sections 160 and 161 of the Land Registration Act forthwith.

35. As there is no proof of fraud against Mr Maino, he shall remain the title holder of the property until ordered otherwise.

36. As the Registrar, the State and Mrs Kalebo are responsible for the cancellation of Mr Feo’s title, they shall pay the costs of the application for judicial review, to be taxed, if not agreed.

37. Time for entry of these orders shall be abridged to the date of settlement by the Registrar, which shall take place, forthwith.

Judgment and orders accordingly.

________________________________________________________________
Poya Legal Services: Lawyers for Plaintiff
Solicitor General: Lawyers for First and Second Defendants
Ona Lawyers: Lawyers for Fourth Defendant