Nett Holdings Ltd v National Capital District Commission [2023] PGNC 323; N10466 (6 September 2023)

N10466

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 545 OF 2017

BETWEEN
NETT HOLDINGS LIMITED
Plaintiff

AND
NATIONAL CAPITAL DISTRICT COMMISSION
First Defendant

AND
SHIRLEY POHEI, ACTING REGISTRAR OF TITLES
Second Defendant

AND
TIRI WANGA, ACTING SECREARY FOR LANDS & PHYSICAL PLANNING
Third Defendant

AND
HON. BENNY ALLEN, MINISTER FOR LANDS & PHYSICAL PLANNING
Fourth Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Waigani: Makail, J

2023: 17^th August & 06^th September

PRACTICE & PROCEDURE – Stated case – Jurisdiction of – Purpose of – Outcome of – Effect of – Separate hearing – Separate question for determination – Hearing prior to trial – National Court Rules – Order 10, rules 21, 23 & 24

PRACTICE & PROCEDURE – Stated case – Question of statutory construction – Authority to withhold decision on application for planning permission pending payment of outstanding land tax – National Capital District Commission Land Tax Law – Section 15

Cases cited:

Nil

Counsel:

Mr. D. Kipa, for Plaintiff
Ms. M. Tusais, for First Defendant
No appearance, for Second to Fifth Defendants

RULING

06^th September 2023

1. MAKAIL J: This matter was fixed for hearing as a “Stated Case” prior to trial pursuant to Order 10, rule 21 of the National Court Rules (“NCR”)

Jurisdiction

2. First, it is instructive to note that the jurisdiction of the Court and purpose of a hearing of this nature is found in Order 10, rule 21 which states:

“Order for decision

The Court may make orders for –

(a) the decision of any question separately from any other question, whether before, at or any trial, or further trial in the proceedings; and

(b) the statement of a case and the question for decision.”

3. Secondly, the outcome of the hearing under Order 10, rule 23 which states:

“Record, etc. of decision

Where any question is decided under this Division the Court shall, subject to Rule 24, either –

(a) cause the decision to be recorded; or

(b) direct the entry of such declaratory judgment, or make such declaratory order, as the nature of the case requires.”

4. Finally, the effect of disposing the matter pursuant to Order 10, rule 24 which states:

“Disposal of proceedings

Where the decision of a question under this Division –

(a) substantially disposes of the proceedings or of the whole or part of any claim for relief in the proceedings; or

(b) renders unnecessary any trial or further trial in the proceedings or of the whole or part of any claim for relief in the proceedings; or

the Court may, as the nature of the case requires –

(c) dismiss the proceedings or the whole or any part of any claim for relief in the proceedings; or

(d) direct the entry of any judgment, or

(e) make any other order.”

5. In summary, a hearing of a stated case is one where a sperate hearing is held prior to trial. It is a hearing based on a separate question and the outcome may be an order in the nature of a declaratory judgment or declaratory order which may have the effect of either dismissing the proceedings, or the whole or part of any claim for relief in the proceedings or direct the entry of any judgment or any other order. Generally, a separate question for determination prior to trial is one of legal, such as, jurisdiction or statutory construction: Order 10, rules 21, 23 and 24 (supra).

Questions for Separate Hearing

6. The plaintiff has asked the Court to determine two questions which are set out in the notice of motion filed 09^th June 2023 and replicated in plaintiff’s counsel’s written submissions. The counsel for each party had addressed these questions in their respective submissions at the hearing. These are:

1. Does the National Capital District Land Tax Law (as amended) for the relevant years, sections 15 and/or 16 authorize NCDC to refuse to open a Property Account and so prevent the Plaintiff from lodging its’ application for “Full Planning Permission” relating to the Plaintiff’s Urban Development Leases for Portions 3230 and 3254 (UDL’s)[?] (sic). Where such an application included planning proposals for subdivision and rezoning.
   
2. Was National Capital District Commission (NCDC) entitled to refuse to open a Property Account where it was not satisfied as to the validity of the Plaintiff’s Urban Development Lease Titles for Portions 3230 and 3254, Milinch of Granville Fourmil of Port Moresby [?] (sic). If so, who within NCDC was to be satisfied and on what statutory or other legal basis, taking into account Sections 11 and 33 of the Land Registration Act and the language of the relevant Department of Lands Memo [?] (sic).
   

Basic Facts

7. The plaintiff relied on the affidavit of its managing director Jeffrey Kennedy sworn 30^th May 2023 and filed 05^th June 2023. The NCDC relied on the affidavit of Edith Laufa sown and filed 08^th August 2023, Affidavit of Delcah Harold sworn and filed 08^th August 2023 and further affidavit of Edith Laufa sworn and filed 16^th August 2023.

8. The basic facts extracted from these affidavits which are undisputed for the purpose of determining these questions are:

• The plaintiff was a holder of a State Lease in the form of Urban Development Leases (UDL) identified as Portion 2221, Granville, Moresby, National Capital District.
• It subdivided Portion 2221 and surrendered the title.
• In return, it was granted two State Leases in the form of UDLs.
• The first UDL was for Portion 3254.
• The second UDL was for Portion 3230.
• Both UDLs were granted on 23^rd May 2014 for a term of three years and to expire on 2^nd July 2017.
• On 12^th September 2016 the plaintiff made an application to the NCDC to open a Property Account for UDL for Portion 3254.
• On 12^th September 2016 the plaintiff made an application to the NCDC to open a Property Account for UDL for Portion 3230.
• The NCDC notified the plaintiff that it owed Land Tax in the sum of K71,787.82 for UDL for Portion 3230.
• The NCDC notified the plaintiff that it owed Land Tax in the sum of K107,996.00 for UDL for Portion 3254.
• The plaintiff did not pay the sum of K71,787.82 for UDL for Portion 3230.
• On 19^th December 2016 the plaintiff paid the sum of K107,996.00 under protest for UDL for Portion 3254.
• On 01^st May 2017 a Property Account was opened for UDL for Portion 3230.
• On 03^rd May 2017 a Property Account was opened for UDL for Portion 3254.
• Despite paying the sum claimed as due for Land Tax, the plaintiff disputed being liability and claimed that the sum due is less than the sum of K107,996.00.
• Further, it claimed that the sum of K107,996,00 was not only for Land Tax but also garbage rates and for properties that have been sold to third parties following subdivision of the State lease.
  

Land Tax Liability

9. The Land Tax liability of a State leaseholder in the National Capital District is found in Section 2 of the NCDC Land Tax Law. It imposes Land Tax on unimproved value of any parcel of taxable land in the National Capital District. The rate of Land Tax is specified in Schedule 1 of the Tax Law.

Authority to demand payment of outstanding Land Tax

10. As to the first question, there was some confusion at the hearing whether the controversial provision between the parties was Section 15 or Section 16. It was resolved by counsel for the parties pointing out in their respective submissions that the controversial provision was Section 15. Section 15 states:

“SERVICING OF LICENSING APPLICATIONS

(1) Where the land tax is due from the landowner, the Commission shall not process any service application until such time the applicant produces a no outstanding certificate from the Revenue Manager, confirming settlement of all property account.

(2) In case the applicant of the service application is not the landowner of the land parcel, and if the applicant pays the outstanding land tax, then the applicant is entitled to receive the payment from the landowner equivalent to the amount so paid unless agreed with the landlord otherwise.”

11. The phrase “service application” in Section 15 is not defined. However, Section 1 of the NCDC Land Tax Law refers to “Services” as “......any provision of public utilities and includes, without limiting the generality of the term “public utilities” the collection of garbage, sanitation, and general cleaning, issuing of trade and liquor licences, building permits, streetlights, use of road reserves.”

12. The gest of the plaintiff’s case is that Section 15 does not authorise the NCDC to refuse to open a “Property Account” and to process its application for “Full Planning Permission” to develop a UDL. This is because it does not refer to a “Property Account”.

13. The NCDC’s case is that it is an administrative requirement for the plaintiff to have a property account for the purpose of accounting for its Land Tax liability. It submits that the bottom-line is the plaintiff had outstanding Land Tax and it was for this reason that it refused to consider its application for full planning permission.

14. It will be correct to observe that the term Property Account is not expressed in Section 15. However, it is abundantly clear that beneath the parties’ disagreement in relation to whether the NCDC is authorised to refuse to open a Property Account for the plaintiff is the plaintiff’s Land Tax liability.

15. Thus, the question for determination should be reframed to read:

Whether Section 15 of National Capital District Commission Tax Law authorises withholding of decision on application for full planning permission for developing State lease pending payment of outstanding land tax for State leases.

16. In my opinion, this is a legal question because it involves a construction of Section 15. On a plain reading of Section 15(1) (above), it refers to Land Tax and where Land Tax is due, the Commission shall not process any service application until such time the applicant produces a no outstanding certificate from the Revenue Manager.

17. The plaintiff submits that the term “service application” is not defined in the NCDC Land Tax Law. Thus, it is not clear whether an application for full planning permission falls within the term service application and where Land Tax is due, the NCDC is entitled to withhold processing of the application for full planning permission until the Land Tax is paid or settled.

18. The NCDC submits that pursuant to Section 1 of the NCDC Land Tax Law, a broad definition be given to the term because the definition of the term “Services” in Section 1 is quiet broad and “.......includes, without limiting the generality of the term “public utilities” the collection of garbage, sanitation, and general cleaning, issuing of trade and liquor licenses, building permits, streetlights, use of road reserves.” The matters identified in Section 1 includes an application for full planning permission.

19. It will be accepted that Section 1 is board enough to include an application for full planning permission as put by the NCDC and falls within the term service application under Section 15. Where an applicant, in this case, the plaintiff makes an application for full planning permission and Land Tax is due under Section 15, the NCDC is authorised to withhold opening of a “Property Account” and processing of an application for full planning permission until the Land Tax is paid or settled.

20. It follows to answer the question posed, there will be a declaratory judgment that pursuant to Section 15 of the NCDC Land Tax Law, the NCDC is authorised to withhold opening of a “Property Account” and processing of the plaintiff’s application for full planning permission until the Land Tax is paid or settled by the plaintiff. The application for full planning permission will be process when the plaintiff produces evidence of payment or settlement of Land Tax in the form of a no outstanding certificate from the Revenue Manager.

21. Pursuant to Order 10, rule 23 (supra), the declaratory judgment as pronounced, places on record the legal position with regards to the Land Tax liability of the plaintiff. However, it does not determine the rights of the plaintiff in relation to the claim for damages because the question of whether the plaintiff is liable for land tax is a matter of evidence. That part of the claim will be set down for trial on a date and time to be fixed.

Authenticity of State Leases

22. As to the second question, the gest of the plaintiff’s case is that there is no authority conferred on the NCDC under any law to require it to prove the authenticity of the State leases for the UDLs prior to processing its application for full planning permission. Conversely, based on the doctrine of indefeasibility of title, it holds an indefeasible title to the State leases until one or more of the grounds under Section 33 of the Land Registration Act is proven, which has not been done.

23. The NCDC’s case is that it conceded that it disputed the authenticity of the plaintiff’s State leases for the UDLs during the plaintiff’s application for full planning permission. Furthermore, it conceded that the State leases are evidence of the plaintiff’s titles to the UDLs but, “.......NCDC was simply being prudent and reasonable in the circumstances, given the length of time since the grant of the UDLs until they were submitted to NCDC by the Plaintiff, to verify that there were no issues with the Plaintiff’s leases before dealing with the Plaintiff’s applications for planning permission.”

24. According to the NCDC it is necessary to undertake this verification exercise because it is probable that given the length of time between the grant of the State leases and application for full planning permission, the plaintiff “....were in breach of their UDL covenant under sections 108(a)(ii)(A) and 109(1) of the Land Act requiring them to make said application within 12 months of being granted the UDLs, which is a ground for forfeiture of the UDLs.”

25. Finally, the NCDC submits that the plaintiff avoided addressing in its pleadings and evidence why it did not submit its State leases to the NCDC to open property accounts and failed to submit its application for full planning permission within 12 months of the date of grant of State leases. If it did, the issue of authenticity of the State leases would have been avoided.

26. To determine the question posed, it may be reframed as follows:

Is the National Capital District Commission authorised by law to withhold its decision for an application for full planning permission for developing State lease pending Applicant to verify the authenticity of the Title of State lease?

27. Again, this is, in my opinion, a legal question. From the parties’ submissions, the NCDC did not contest the plaintiff’s submission that there is no law which confers authority on the NCDC to dispute the authenticity of the State leases for the UDLs and the plaintiff’s submission will be upheld. On the other hand, the NCDC’s submission is misconceived because it is contrary to the doctrine of indefeasibility of title where the plaintiff holds an indefeasible title for each UDL.

28. Furthermore, there is a distinction between the question of prudence and diligence by the NCDC in processing the plaintiff’s application for full planning permission and the requirement to comply with the covenants of the State leases for the UDLs. The power to grant State leases vests in the Minister for Lands and Physical Planning on the recommendation of the Land Board under Sections 65,71 and 76 of the Land Act 1996. A grant was made in favour of the plaintiff and unless any of the grounds set out in Section 33 of the Land Registration Act is established, the plaintiff holds an indefeasible title for each UDL. If there were any issues with non-compliance of the covenants of each State lease, it is a separate and distinct matter.

29. It follows that there will be a declaratory judgment that there is no legal basis to support the NCDC’s refusal to process the plaintiff’s application for full planning permission on the ground that the plaintiff failed to verify the authenticity of each State lease. A declaratory judgment in these terms does not resolve the question of whether the State leases have expired and whether the plaintiff is entitled to damages. These questions may be taken up at trial.

Order

30. The final terms of the Order of the Court are:

1. A declaratory judgment that pursuant to Section 15 of the NCDC Land Tax Law that, the NCDC is authorised to withhold opening of a “Property Account” and processing of the plaintiff’s application for full planning permission until the Land Tax is paid or settled by the plaintiff. The application for full planning permission will be processed when the plaintiff produces evidence of payment or settlement of Land Tax in the form of a no outstanding certificate from the Revenue Manager.
   
2. A declaratory judgment that there is no legal basis to support the NCDC’s refusal to process the plaintiff’s application for full planning permission on the ground that the plaintiff failed to verify the authenticity of each State lease.
   

3. Costs of the application shall follow the event.
________________________________________________________________
Jema Lawyers: Lawyers for Plaintiff
NCD Legal Division (In house): Lawyers for First Defendant
Solicitor General: Lawyers for Second to Fifth Defendants