Papindo Trading Company Ltd v Pokapin Enterprise Ltd [2022] PGNC 14; N9432 (14 February 2022)

N9432

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 318 OF 2015

BETWEEN:
PAPINDO TRADING COMPANY LIMITED
Plaintiff

AND:
POKAPIN ENTERPRISE LIMITED
Defendant

Lorengau: Narokobi J
2021: 22^nd October
2022: 14^th February

MODE OF PROCEEDINGS– claims commenced under National Court Rules, Order 4, Division 4, “Originating Summons” - claim based on constructive fraud under Land Registration Act – whether the National Court Rules allow Originating Summons – relevant considerations – whether proceedings should be dismissed – interests of justice considered – proper to refer to mediation as dismissing the case will not resolve issues.

Both the Plaintiff and the Defendant hold title issued by the State to the property the subject of the proceedings. Proceedings were commenced by Originating Summons, seeking declaration under s 33 of the Land Registration Act, Ch 191 that the Plaintiff should be the declared the registered proprietor of the property. It was not clear which of the considerations in s 33 of the Act was being relied on in the declaration sought, but the evidence tendered suggest that it was for constructive fraud for non-compliance with the Land Act 1996.

Held:

(1) The Plaintiff instituted the wrong mode of proceedings as although there was no evidence of actual fraud by the Defendant, there is allegation of constructive fraud in that procedures under the Land Act 1996 were not complied with and therefore the appropriate mode of proceedings should have been through proper pleadings naming the Land Board, Secretary for Lands, Registrar of Title and the State as Defendants.

(2) Dismissing the proceedings will not resolve the issue of two titles.

(3) The matter shall be referred to mediation under the ADR Rules with both parties equally meeting the costs of the mediator.

(4) If mediation fails, then the Plaintiff will file a statement of claim under Order 4, Rule 35(1) of the National Court Rules and the matter shall continue as pleadings under the National Court Rules, naming the Land Board, Secretary for Lands, Registrar of Titles and the State as additional Defendants.

Cases Cited:
Beecraft No 20 Ltd v Minister for Lands (2001) N2125
Emas Estate Development Pty Ltd v Mea, Swokin, and The State [1993] PNGLR 215
Malewo v Faulkner (2009) SC960
Mudge v Secretary for Lands [1985] PNGLR 387
National Council of Young Mens Christian Association of Papua New Guinea (Inc) v Firms Services Ltd (2017) SC1596

Statutes cited:
Constitution
Land Act 1996
Land Registration Act Ch 191

Counsel

Mr J Haiara, for the Plaintiff
Ms M Williams, for the Defendant

JUDGMENT

14^th February, 2022

1. NAROKOBI J: The plaintiff is seeking the following orders from the Court against the Defendant:
   

“1. A declaration pursuant to Section 33 of the Land Registration Act and/or Section 155(4) of the Constitution, that the Plaintiffs right or State Lease Title as the registered proprietor of the land described as Allotment 4, Section 21, Lorengau, Manus Province contained in the State Lease Volume 123 Folio 85 is paramount or have priority over or supersede that of the Defendant.

2.A declaration that pursuant to Section 33 of the Land Registration Act and/or Section 155(4) of the Constitution, that the Defendants subsequent title issued over the same land describe as Allotment 4, section 21, Lorengau, Manus Province contained in the State Lease Volume 123 Folio 85 is void or invalid and the Defendant has no right, whether legal or equitable, to occupy, use or deal with the land.

3.Furthermore and/or in the alternative, an Order pursuant to Section 146(2)(g) of the Land Act or Section 155(4) of the Constitution that the Defendant and its servants and or agents shall be ejected forthwith and it shall give vacant possession of the land described as Allotment 4, Section 21, Lorengau, Manus Province contained in the State Lease Volume 123 Folio 85 to the Plaintiff within seven (7) days forthwith.

4.Pursuant to Section 155(4) of the Constitution and the inherent discretion of the Court that an order in the nature of permanent injunction be granted restraining the Defendant and its servant(s) and/or agents and/or associate(s), and or whosoever from doing any preparatory works, erecting any further buildings and/or fixtures or carrying out any activity on the land or dealing with or entering the land describe as Allotment 4, Section 21, Lorengau, Manus Province contained in the State Lease Volume 123 Folio 85.

5.Costs of the proceedings.”

2. The Defendant has filed a Notice of Intention to Defend and made appearance as well as filed affidavits in response.
   
3. After considering the nature of the proceedings and the evidence filed, there are two issues I must decide here. The first issue is whether this is an appropriate mode of proceedings for the plaintiff to seek the orders it is seeking in its Originating Summons and secondly, what orders should the court make, considering the evidence filed and the interests of justice in the light of s 158(2) of the Constitution?
   
4. The property the subject of the dispute is in Lorengau town, Manus Province. The property is described as Allotment 4, section 21, Lorengau, Manus Province contained in the State Lease Volume 123 Folio 85 (hereafter, “the property”). The original proprietor of the land was Lawrence Allen Sausau. The Plaintiff bought the land from him and had the title to the property transferred to them on 21 April 2009. Unknown to the Plaintiff, the State had also forfeited the title to the property held by Mr Lawrence Allen Sausau and issued it to the Defendant on 29 October 2009.
   
5. Both the Plaintiff and the Defendant now hold title to the property. Neither party dispute the authenticity of the title each holds. The difficulty centres around the validity of the title, that is, whether the Lands Department complied with the procedures prescribed under the Land Registration Act Ch 191 and the Land Act 1996 before it issued the title.
   
6. For instance, the Plaintiff submits that s 122 of the Land Act 1996 was not complied with, in that the State did not afford an opportunity to the vendor (Lawrence Allen Sausau) of the property to the Plaintiff to show cause, before it forfeited the title. The Plaintiff relies on the case of Beecraft No 20 Ltd v Minister for Lands (2001) N215 to make this submission. On the other hand, the Defendant has produced a trail of documents including a gazettal notice, G11, dated 13 November 2008 to show that the property has been issued to them.
   
7. There are two critical players in this dispute that are absent. The first is Mr Lawrence Allen Sausau. Whilst I appreciate what Mr Haiara is submitting, what his client says, are hearsay evidence. There is no evidence to say whether Mr Sausau was given a notice to show cause. However, the Defendant has produced a copy of a show cause notice. Did Mr Sausau actually receive it? I cannot determine this from the evidence. It is for the Plaintiff to prove. What the Plaintiff’s case is based on, is an assumption that he was not given that notice. The other key players are the Land Board, the Registrar of Title, the Secretary for Lands and the State. What is their evidence in relation to how they dealt with the property? These are unanswered questions that must be answered before I can decide who should be granted title.
   
8. It is settled law in this jurisdiction that registration confers indefeasibility of title. To disturb a title to a property, one of the circumstances under s 33 of the Land Registration Act, Ch 191 must be shown to exist (Mudge v Secretary for Lands [1985] PNGLR 387). Section 33, “Protection of Registered Proprietor” of the Act states:
   

“(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except–

(a) in the case of fraud; and

(b)the encumbrances notified by entry or memorial on the relevant folio of the Register; and

(c) the estate or interest of a proprietor claiming the same land under a prior instrument of title; and

(d) in case of the omission or misdescription of any right-of-way or other easement created in or existing on the same land; and

(e) in case of the wrong description of the land or of its boundaries; and

(f) as to a tenancy from year to year or for a term not exceeding three years created either before or after the issue of the instrument of title of the registered proprietor; and

(g) as provided in Section 28; and

(h) a lease, licence or other authority granted by the Head of State or a Minister and in respect of which no provision for registration is made; and

(i) any unpaid rates, taxes, or other money which, without reference to registration under this Act, are expressly declared by a law to be a charge on land in favour of the State or of a Department or officer of the State or of a public corporate body.

(2) The operation of Subsection (1) is not affected by the existence in any other person of an estate or interest, whether derived by grant from the State or otherwise, which, but for this Act, might be held to be paramount or to have priority.”

9. The Plaintiff does not say which grounds in s 33 of the Act it relies on to ask the court to have its title declared as valid. There is no direct evidence provided suggesting that the Defendant’s conduct was fraudulent. What the Plaintiff says is that proper processes were not complied with by the State before the cancellation of the title held by Lawrence Allen Sausau whom they bought it from. This is a case of constructive fraud.
   
10. The Supreme Court has stated that fraud in s 33(1)(a) of the Act includes both actual fraud and constructive fraud (Emas Estate Development Pty Ltd v Mea, Swokin, and The State [1993] PNGLR 215). The Emas case stands for the proposition that if the process followed to issue a title to a property was so irregular and unsatisfactory then that title should not be allowed to stand. This is a case which falls within that category. Authorities such as National Council of Young Mens Christian Association of Papua New Guinea (Inc) v Firms Services Ltd (2017) SC1596 go on further to say that in order for the court to find that there was fraud, either actual or constructive, it has to be properly pleaded and supported by the evidence (at para 48).
    
11. In this case, both parties provide evidence that they have followed due process, and allege that the other side has not, so the court should find in their favour. However, this is an Originating Summons proceeding. Such mode of proceeding is usually initiated where there is no substantial dispute of facts (Malewo v Faulkner (2009) SC960). I consider that for me to decide the outcome of the case, I will be making extensive findings of facts, and both sides must be on notice as to what the other side is saying in terms of the law and the evidence.
    
12. Since both parties hold title to the property, the proper cause is not to dismiss the proceedings for using wrong mode of proceedings, as it will not resolve anything. Both parties will be brought back to the original position that there are two titles to the property.
    
13. The interest of justice, which I am required to give paramount consideration to under s 158(2) of the Constitution requires that the proceedings should be referred to mediation under the ADR Rules. The matter has been going on since 2015, and dismissing the proceeding will result in filing of fresh proceeding, while the issue festers.
    
14. If mediation fails, then the Plaintiff will file a statement of claim under Order 4, Rule 35(1) of the National Court Rules and the matter shall continue as pleadings under the National Court Rules, naming the Land Board, Secretary for Lands, Registrar of Titles and the State as additional Defendants.
    
15. The interim orders will remain until the proceedings are determined. This is so that the status quo is preserved until the matter is determined.
    
16. As to costs, I will order that each party will bear their owns costs up until today, unless there were any specific orders for costs made during the course of the proceedings.
    
17. In light of the forgoing, I issue the following orders:
    
    1. The interim orders made on 14 September 2015 shall remain.
       
    2. Each party will bear their own costs of the proceedings up until today, unless there were any specific orders for costs made prior to the hearing.
       
    3. Pursuant to Section 7B (2) of the National Court Act and Rule 5(2)(a) of the ADR Rules the whole of the proceedings is referred to mediation by an accredited mediator.
       
    4. The parties shall attend mediations for the purpose of making genuine and good faith attempts to:
       

(a) resolve the proceedings; or

(b) failing settlement, identify and limit the real meritorious issues in the proceeding that warrant judicial consideration and determination; and/or

(c) reach consensus on the conduct of litigation.

5. As provided by Rule 5 (5) of the ADR Rules these orders for mediation shall not operate as a stay of the proceeding.
   
6. The mediation shall be conducted by AN INTERNAL MEDIATOR ALLOCATED BY KANDAKASI DCJ.
   
7. All mediation fees that would be payable under Rule 7 of the ADR Rules shall be paid equally by the parties.
   
8. The mediation conferences shall be held at Waigani or such other venue as the parties and the mediators may agree upon.
   
9. The parties or their lawyers shall by 28 February 2022 notify the ADR Registrar of their respective currently functional telephone numbers (land and mobile) and email and mailing addresses.
   
10. Provided all orders herein are complied with, the mediation shall be commenced by 7 March 2022.
    
11. In accordance with Rule 9(3) of the ADR Rules, the mediation process shall conclude on or before close of business on 30 April 2022 with a mediator’s certificate in Form 1 or Form 2 of the ADR Rules.
    
12. During the mediation process, the parties must be represented by a person with full capacity and authority to settle the proceeding who must come prepared with the relevant and necessary instructions and materials required at mediation and negotiate in good faith.
    
13. A failure to comply with all or any of these orders may be taken to mean a lack of good faith for the purposes of Rule 10(7) against the defaulting party.
    
14. If the mediation fails to resolve the matter fully, the parties shall together with the assistance of the mediator, attempt to:
    

(a) identify any meritorious legal issue presented at the mediation;

(b) explain why the issue is beyond resolution by mediation;

(c) explain why the issue it is one not already determined by any Court in PNG; and settle the relevant facts upon which such an issue can be resolved.

15. The proceeding shall return to Court, irrespective of the status of the mediation, on the next call-over in May 2022 in Lorengau whereupon the Court may endorse any agreement of the parties either with or without modification finalizing the proceedings or make such orders and issue such directions as are necessary to expedite the matter to trial if not fully resolved by mediation or deal with any failure to comply with this Order.
    
16. If mediation fails, then the Plaintiff will file a statement of claim under Order 4, Rule 35(1) of the National Court Rules and the matter shall continue as pleadings under the National Court Rules, naming the Land Board, Secretary for Lands, Registrar of Titles and the State as additional Defendants.
    

Orders accordingly.
________________________________________________________________
Haiara’s Legal Practice: Lawyers for the Plaintiff
MS Wagambie Lawyers: Lawyers for the Defendant