Wangbao Trading Ltd v HQH Enterprises Ltd [2022] PGNC 368; N9777 (22 July 2022)

N9777

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 864 OF 2019

BETWEEN:
WANGBAO TRADING LIMITED
Plaintiff

AND:
HQH ENTERPRISES LIMITED
First Defendant

AND:
ALA ANE as Registrar of Titles, Department of Lands & Physical Planning
Second Defendant

AND:
BENJAMIN SAMSON as Secretary for Department of
Lands & Physical Planning
Third Defendant

AND:
HON. JOHN ROSSO as Minister for Lands & Physical Planning
Fourth Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Waigani: Dingake J
2022: 11^th April, 02^nd May, 22^nd June, 22^nd July

JUDICIAL REVIEW - Land – State Leases – two entities holding title to same piece of land – Whether proof of constructive or equitable fraud is sufficient to invalidate both titles.

Case Cited:

Mudge v Secretary for Lands [1985] PNGLR 37
Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215
PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120.

COUNSEL:

Mr. Francis Kuvi, for the Plaintiff.
Mr. Tony Sua, for the First Defendant.
Mr. Newman Yano, for the Second, Third, Fourth & Fifth Defendants

22^nd July, 2022

1. DINGAKE J: This is a judicial review application in which the Plaintiff seeks to review the decision by the Third, Fourth and Fifth Defendants dated the 9^th of May 2018, to transfer title to the First Defendant of a property described as Allotment 4 Section 12 in Popondetta Town, contained in State Lease Volume 12 Folio 109 (“the Property”).
   
2. I also refer to the above piece of land as the “subject land” in this judgment.
   
3. The grounds upon which the Plaintiff seeks to review the aforesaid decision are as follows:
   1. The purchase of the property by the First Defendant from Christian Books Melanesia Inc. was illegal in that this was a State Lease and is not susceptible to be sold or bought in a private transaction without the approval from the Minister for Lands as provided under Section 129 of the Land Act.
   2. The purchase of the property by the First Defendant from Christian Books Melanesia Inc. did not follow any of the procedures laid down in Part X Division 1 of the Land Act and especially Section 68 (Advertisement of Lands Available for Leasing), 697 (Duty to Advertise State Leases), 70 (How Applications for State Leases to be Made), and 71 (Land Board to consider Applications for State Leases);
   3. The Title to the property had already been forfeited and cancelled by the Minister for Lands at the time of the purported purchase and transfer to the First Defendant by virtue of Section 122 of the Land Act (Forfeiture of State Leases); and
   4. The First Defendant refused to obey a “stop work” notice issued by the proper authority and continue to indulge in this illegal occupation and construction contrary to the provisions of Sections 98 and 99 of the Physical Planning Act.
      
4. The material background facts gleaned from all the evidence filed of record, including the Affidavits of Awang Wang sworn and filed on the 27^th of November 2019; Roger Irurapa sworn on the 11^th of February and filed on the 13^th of February 2020; Trevor Magei sworn on the 11^th of February and filed on the 13^th of February 2020; and Patrick Halpie sworn on the 9^th of October and filed on the 12^th of October 2020, are that the subject land was once owned by Peator Enterprises.
   
5. The subject land is a business lease for commercial purposes.
   
6. It is a matter of record that Peator Enterprises transferred the subject land to Christian Books Melanesian Inc, and the latter transferred it to the First Defendant.
   
7. It is common cause that both the Plaintiff and the First Defendant have title of the subject land issued by the Lands Department. The Plaintiff’s title was issued on or about the 11^th of January 2017, and the First Defendant on the 9^th of May, 2018.
   
8. The issue that sharply falls for determination is who is the lawful owner of the subject land as title cannot be issued to two (2) or more different entities or persons.
   
9. Before dealing with the evidence and the applicable law, I wish to address the preliminary issue raised by the Solicitor General and or the First Defendant that the grounds of review by the Plaintiff are not properly pleaded and or are otherwise vague or ambiguous.
   
10. I consider that the grounds of review, though not drafted with precision are sufficiently clear as to what the Plaintiff is complaining about. In my mind, the Plaintiff pleads illegality, which is a competent judicial review ground, and avers that the purchase of the property by First Defendant from Christian Books Melanesian Inc. was not approved by the Minister as provided by Section 129 (2) of the Lands Act.
    
11. The Plaintiff also complains that the purchase of the subject land by the First Defendant did not comply with Sections 68 and 69 of the Lands Act; and further avers that the title to the subject land has already been forfeited and cancelled by the Minister for Lands at the time of the purported purchase and transfer to the First Defendant by virtue of Section 122 of the Land Act.
    
12. Having regard to the above, I do not agree that the Plaintiff’s pleading with respect to the grounds of review are vague and or that the Plaintiff confuses a review for an appeal as illegality is recognized judicial review ground.
    
13. It is trite law that the Plaintiff carries the burden to prove its allegations on a balance of probabilities.
    
14. In this case it is not necessary to traverse the grounds of review seriatim, as stated by the Plaintiff because there is evidence on record that shows that on the 13^th of February 2018, the subject land was undeveloped. This information is contained in the Inspection Report by Roger Irurapa Jr. who was at all material times hereto the Provincial Lands Adviser, based in Popondetta. (See page 169 of the Review Book – Inspection Report under: Land status).
    
15. It is also a matter of record that on the 13^th of February 2018, Mr. Irurapa Jr. wrote to Mr. Komet, Manager of Leases, in the Department of Lands & Physical Planning, to request that a Notice to Show Cause be served on the lessee.
    
16. On record there is evidence that the Minister for Lands & Physical Planning on the 20^th of February 2018, forfeited the subject land in exercise of his powers under Section 122(1) of the Land Act of 1996 on two (2) grounds; namely
    1. that the improvement condition imposed by the Act have not been fulfilled in respect of the land; and
    2. that the lease has failed to comply with Notices under Section 122(2) of the Land Act.
       
17. The regularity of the aforesaid forfeiture appearing at page 175 of the Review Book has not been impugned and or otherwise challenged.
    
18. I have also read and considered the evidence of Benjamin Samson of the Department of Lands & Physical Planning who was at all material times hereto Secretary for the Department of Lands & Physical Planning. Mr. Samson avers that the subject land is owned by the First Defendant and attaches a copy of the title deed showing that the lease was granted to the First Defendant on the 9^th of May, 2018. (See page 233 of the Review Book).
19. Mr. Samson says that the Plaintiff’s claim to hold a State Lease with respect to the subject land is fraudulent. He avers that there is no evidence that the Plaintiff complied with the allocation process that requires, amongst other things, that the Land Board make a recommendation in favour of the Plaintiff. He avers that there is no such recommendation. He also says that there is no letter of Grant (LG) and Lease Acceptance Form (LAF) for the Plaintiff’s purported title. This evidence of Mr. Samson relating to non-compliance with Land Board allocation process by the Plaintiff is not challenged and must be accepted as the truth, as I hereby do.
    
20. In any event the Plaintiff offers no proof that the Land Board processes as reflected above were complied with.
    
21. The averment that the Plaintiff’s title is false or “fake” is also repeated by the evidence of Rodger Irurapa at page 167 of the Review Book.
    
22. With respect to the alleged proprietorship of the subject land by the First Defendant, the Plaintiff argues that it was irregular or unlawful on a number of grounds, including that the subject land was not advertised before it was granted to the First Defendant and that in any event, the land was at the materials time forfeited to the State.
    
23. Significantly, Mr. Samson in his Affidavit at page 234 of the Review Book denies that the subject land was forfeited. He says from their records there is no such forfeiture of State Lease. He makes no reference to the forfeiture of State Lease instrument appearing at page 175 of the Review Book. He also does not attempt to impugn its regularity or otherwise suggest that the document is fraudulent and or false. On the face of it, the Instrument appears to be signed by the Minister for Lands & Physical Planning. It suggests that Notices under Section 122(2) of the Land Act, have not been complied with.
    
24. Section 122 (2) of the Land Act provides that the Notice to Show Cause must precede the forfeiture. The Instrument at page 175 of the Review Book suggests that such notices were not complied with.
    
25. Courts generally place reliance on documentary evidence whose regularity is not challenged as it tends to be a more reliable form of evidence.
    
26. In this case, I am satisfied, on a balance of probabilities, that the subject land was not developed in 2018, after a period of close to ten (10) years, (after transfer from the previous owner – Peator Enterprises Ltd) and that notices to show cause as contemplated by Section 122 (2) of the Land Act were issued and not complied with and that eventually the land was forfeited on the 20^th February, 2018.
    
27. With respect to the matter of the First Defendant being the proprietor of the subject land as averred by Mr. Samson, Mr. Roger Irurapa’s evidence in effect contradicts the evidence of Mr. Samson. He says even the First Defendant’s title is “fake” and obtained through fraud, because after the land was forfeited, it was not advertised for interested parties to apply.
    
28. There is also evidence of Patrick Halpie, Manager, Department of Lands & Physical Planning, at all material times hereto based in Waigani. His evidence substantially corroborates the evidence of Mr. Irurapa and contradicts that of Mr. Samson.
    
29. According to Mr. Halpie, the Minister for Lands & Physical Planning, issued a Notice to Show Cause to the previous owner of the subject land, Christian Books Melanesian Inc. on or about the 1^st of October, 2018. Mr. Halpie attaches the said Notice to Show Cause to his Affidavit. It appears at page 202 of the Review Book. The aforesaid Notice to Show Cause bears the official stamp and signature, purportedly of the Minister of Lands, Hon. Justice W Tkatchenko.
    
30. It is instructive that the aforesaid Notice to Show Cause is dated 1^st of October, 2018, whilst the forfeiture instrument at page 175 of the Review Book is dated 20^th February, 2018. This means that the Notice to Show Cause came after the actual forfeiture, appearing at page 175 of the Review Book which seems illogical or improper.
    
31. Mr. Samson in his evidence also refers to the evidence of Mr. Patrick Halpie filed on the 12^th of October, 2020, on forfeiture of the subject land and avers that the documents attached to the Affidavit of Mr. Halpie on forfeiture of the subject land were recommendations. On the face of it, Annexure “B” to Mr. Halpie’s Affidavit appears to be a request to Mr. Komet, Manager Leases, to process a Notice to Show Cause, whilst Annexure “C” to the said Affidavit appears to be Notice to Show Cause. Annexure “D” to Mr. Halpie’s Affidavit appears to be a response by First Defendant to the Notice to Show Cause. It offers a justification for the delay in developing the subject land.
    
32. Having assessed the totality of the evidence tendered by the parties, particularly the evidence of Mr. Irurapa, Mr. Halpie and Mr. Samson all of them officers of the Lands Department, I am satisfied, on a balance of probabilities, that the title to both parties herein, namely the Plaintiff and the First Defendant is irregular. The Plaintiff’s title does not seem to comply with the Land Board allocation process as set out in the law and the subject land after it was forfeited, does not seem to have been advertised as required by Section 68 of the Land Act.
    
33. This Court is particularly concerned that the Notice to Show Cause dated 1^st of October, 2018, appears to have been issued after the forfeiture has already been done. It is also a matter of grave concern to this Court that officers of the Lands Department, would give evidence, under oath, that is materially contradictory, regarding the process that was followed to grant title to the First Defendant.
    
34. I am acutely aware that in this jurisdiction the general principle is that when a State Lease is registered the proprietor is conferred an indefeasible title subject only to exceptions provided in Section 33 (1) of the Land Registration Act. (See Mudge v Secretary for Lands (1985) PNGLR 37).
    
35. In this case, ex facie, the Plaintiff and First Defendant seem to hold title to the subject land. Although fraud has been alleged there is no solid proof of how the fraud took place.
    
36. However, in this case, it is not appropriate given the evidence I have already outlined to insist on proof of actual fraud because this Court can cancel the registered proprietor’s title based on the existence of constructive or equitable fraud. Constructive fraud has been said to exist where circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, as to amount to fraud, warranting the setting aside of the registration of title.
    
37. In this case for the reasons already stated, I am satisfied that constructive fraud in the sense explained above exists as the circumstances of transfer of both titles is highly unsatisfactory and irregular; (Emas Estate Development Pty Ltd v John Mea (1993) PNGLR 215; PNG Deep Sea Fishing Ltd v Luke Critten 2010 (SC1126) and Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120).
    
38. Amongst the issues for trial identified by the parties, through their lawyers, at page 277 of the Review Book was to the effect that if both titles were found to be obtained or granted irregularly, the Cout may consider whether the matter should be referred back to the Lands Department for proper process to be followed.
    
39. Having regard to the circumstances of this case and what I have said about the contradictory and unsatisfactory evidence of the officers of the Lands Department relating to the propriety of both titles herein, I am satisfied that it is in the interest of justice to refer this matter back to the Lands Department, so that proper process prescribed by law, particularly the Land Act, may be followed.
    
40. In the result the Court makes the following Orders:
    1. The Department of Lands is ordered and directed to commence the process of allocating the subject land afresh as prescribed by law, particularly the Lands Act 1969 and or Lands Registration Act, 1981 as may be applicable.
    2. The respective titles over the subject land held by the Plaintiff and First Defendant are irregular and unlawful and are hereby cancelled and or set aside forthwith.
    100. Time is abridged to the time of settlement by the Registrar which shall take place forthwith.
    4. Each party to pay its own costs.

_______________________________________________________________
Kuvi & Associate Lawyers: Lawyer for the Plaintiff
Sua & Sons Lawyers: Lawyer for the First Defendant
Office of Solicitor General: Lawyers for the Second, Third, Fourth & Fifth Defendants