Peya v Kipane [2024] PGNC 116; N10747 (19 April 2024)

N10747

PAPUA NEW GUINEA
[IN NATIONAL COURT OF JUSTICE]

WS NO. 784 OF 2020

BETWEEN:
JONAH PEYA
Plaintiff/first Cross -Defendant

AND
JOSHUA KIPANE
First Defendant/Crossclaimant

AND
NATIONAL HOUSING CORPORATION
Second Defendant/second Cross Defendant

AND
ALA ANE, REGISTRAR OF TITLES
Third Defendant

AND
BENJAMIN SAMSON SECRETARY-DEPARTMENT OF LANDS &
PHYSICAL PLANNING
Fourth Defendant

AND
THE INDEPENDENT STATE OF PAPUANEW GUINEA
Fifth Defendant

Lae: Dowa J
2022: 2^nd & 15^th June
2024: 19^th April

REAL PROPERTY – Indefeasibility of title-plaintiff seeking declaratory orders he has indefeasible title to property and that the subsequent grant of replacement State lease and registration of title to land to the first Defendant be declared null and void and of no effect, and other consequential orders – plaintiff executed sale outside of the official Conveyancing process by National Housing Corporation-obtained title improperly from unauthorised officers of NHC-NHC opted to sell property to the first defendant–a property improved by Plaintiff on a Self-help Housing Scheme managed by NHC- plaintiff alleges abuses its powers by overlooking him

FRAUD - actual and constructive fraud- Whether transfer of title to the Plaintiff was valid-whether transfer of state lease to the First Defendant by the Second Defendant is fraudulent –– Plaintiffs actions amounted to constructive fraud – transfer of state lease declared null and void and of no effect- transfer of title to the first Defendant declared valid-orders accordingly.

Cases Cited:
Mota v Camilus (2010) N3851
Pius Tikili v Home Base Real Estate (2017) SC1563
PNG Bible Church Inc v Carol Mandi (2018) SC1724
Toki v Helai (2016) SC1558
Vaki Vailala v NHC (2017) N6598
Rosemary John v James Nomenda (2010) N3851
Mudge -v- Secretary for Lands [1985] PNGLR 387

Counsel:
T. Berem, for the Plaintiff/FirstCross-Defendant
T Cook, for the First Defendants/Cross-Claimant
A. Luke, for the Second Defendant/Second Cross-Defendant
N. Kibikibi, for Third & Fourth Defendants

JUDGMENT

19^th April 2024

1. DOWA J. This is a decision on a dispute over the ownership of a property between the Plaintiff and the First Defendant.
   
2. The Plaintiff seeks, amongst others, the following orders in the statement of claim:

“

1. A declaration that the registration of transfer of the state lease of the land described as Section 292, Allotment 10, Lae, Morobe Province to the Plaintiff is lawful, valid, and proper, and the Plaintiff holds an indefeasible title.
   
2. A declaration that the Plaintiff is the registered proprietor of the land described as Section 292, Allotment 10, Lae, Morobe Province.
   

100. A consequential order that the subsequent transfer of the State Lease registered to the First Defendant is unlawful, invalid and be quashed forthwith.
     

4. An order permanently restraining the First Defendant and his agents and servants from threatening, intimidating, and harassing the Plaintiff from his quiet and peaceful enjoyment and occupation of the land.

..........”

3. The first Defendant seeks, by way of Cross-claim, amongst others the following orders:

“

1. A declaration that the transfer of State Lease Volume 20 Folio 160, Section 292, Allotment 10, Lae, Morobe Province (hereinafter, “the property)” to the Cross-Claimant on 17^th February 2020 is lawful, valid, and proper for all purposes.
   
2. A declaration that the Cross-Claimant is the registered proprietor of the property.
   

100. An Order that transfer of the property to the first Cross-defendant on 2 October 2019 is unlawful, invalid and improper for all purposes.
     

4. An Order restraining the Cross-Defendant from interfering, in any manner whatsoever, with the Cross-claimant’s use, enjoyment and benefit of the property.

...............”

Background Facts

4. The dispute is over a property, Allotment 10 Section 292, Lae, Morobe Province under State Lease Volume 20 Folio 160. The State Lease was originally registered in the name of the second Defendant, National Housing Corporation (NHC). The property is managed by the National Housing Corporation, in its Self-Help Settlement Scheme. The Plaintiff alleges he purchased the property from NHC for K 25,000.00 in April 2015. He signed the contract for sale in September 2018. The Title was transferred to him on 3^rd October 2019. He alleges that the subsequent transfer of the Title to the First Defendant by the Second Defendant is improper, unlawful, and fraudulent. He institutes these proceedings for a declaration that he is the legitimate owner of the property and for consequential orders.
   
5. The First Defendant, on the other hand, alleges in his Cross-claim that he is the owner of the said property. He pleads, he bought the property from the second Defendant, NHC, on 1^st March 2019 through the Self-Help Settlement Scheme. The transfer was registered in his name on 17^th February 2020. He alleges that the earlier transfer of the Title to the Plaintiff by the second Defendant is improper, unlawful, and fraudulent. He files a Crossclaim against the Plaintiff seeking a declaration that he is the legitimate owner of the property, and not the Plaintiff, and for consequential orders.
   
6. The second Defendant, NHC, denies the Plaintiff’s claim and pleads that NHC did not approve or authorise any sale and transfer of the property to the Plaintiff and in the absence of the tortfeasors being named, there is no valid cause of action against NHC and that thus, the alleged sale and transfer is invalid.
   
7. The third, fourth and fifth defendants did not file any defence but participated in the proceedings, regardless.
   

Issues
8. The issues for consideration are:

1. Whether the transfer of title registered in the name of the Plaintiff is valid and protected by section 33 of the Land Registration Act.
   
2. Whether the Plaintiff is entitled to all the reliefs sought in the statement

of claim.

100. Conversely, Whether the transfer of title to the first Defendant/Cross-claimant by the second Defendant is valid and protected by section 33 of the Land Registration Act.
     

4. Whether the first Defendant/Cross-claimant is entitled to all the reliefs sought in the Cross-claim.
   

Trial

9. The trial was conducted by Affidavits as well as cross-examination of the deponents of the various Affidavits of the parties.

Plaintiff’s Evidence

10. Apart from oral evidence, the Plaintiff relies on the following affidavits:

(1) Affidavit of Jonah Peya sworn 29 September 2020 and filed on 5 October 2020 (Court Document No.3) (Exhibit P1); and

(2) Affidavit of Jonah Peya sworn on 28 May 2021 and filed on 31 May 2021 (Court Document No.12) (Exhibit P2).

11. This is the summary of his evidence. Towards the end of March of 2015, he came to Lae looking for vacant land to develop and settle on. He was advised by friends to enquire with the Second Defendant’s Lae office.
    
12. On 1^st April 2015 he successfully expressed an interest over the subject property, Allotment 10 Section 292, Lae, at the Second Defendant’s Lae office and a Tenancy Agreement was entered into between him and the Second Defendant. He returned on 10th April 2015 and paid K 25,000.00 in cash for the property. The cash was paid to Abraham John and David Kaupa, the Regional Manager for NHC, Lae. Although promised, he was not issued with a receipt but signed a Statutory Declaration in the NHC office witnessed by the Legal Officer, Mr. Mathew Limu, providing proof for the payment.
    
13. On 18 September 2018, he and the Second Defendant executed a Contract of Sale and a Transfer Instrument for the sale and transfer of the property. On 3 October 2019, the transfer was registered in his name.
    
14. He returned in the year 2020 to develop the property but was restrained by the First Defendant from doing so. This resulted in him instituting District Court proceedings seeking injunctive Orders against the First Defendant; however, the District Court proceedings were struck out when the First Defendant produced another Title over the same property.
    
15. This resulted in the current proceedings. He has no formal education and, therefore, has no knowledge of the Second Defendant’s conveyancing process and he just relied on their instructions.
    

First Defendants Evidence

16. The First Defendant, in turn, relies on the following Affidavits:
    
    • (1) Affidavit of Joshua Kipane sworn on 4 August 2021 and filed on 5 August 2021 (Court Document No. 35) Exhibit 1D1);
    • (2) Affidavit of Joshua Kipane sworn and filed on 11 August 2021 (Court Document No.45) (Exhibit 1D2);
    • (3) Affidavit of Joshua Kipane sworn and filed 18 August 2021 (Court Document No. 49) (Exhibit 1D3); and
    • (4) Affidavit of Joshua Kipane sworn and filed on 30 September 2021 (Court Document No. 53) (Exhibit 1D4).
      
17. This is the summary of the first Defendant’s evidence. Sometime in 2018 he expressed an interest at the Second Defendant’s Lae office to purchase the property, the subject of these proceedings. The property, was vacant and undeveloped, was under the control of the Second Defendant in its Self-Help Housing Scheme.
    
18. On 1^st March 2019, following the Second Defendant’s approval of his purchase of the property, he paid the purchase price of K1,500.00 and an official receipt numbered 575243 was issued to him.
    
19. On 12^th March 2019, the Second Defendant’s Provincial Manager – Morobe, advised the Second Defendant’s Conveyancing Section of the purchase and requested them prepare the conveyancing documents. On 25th March 2019, noting the Owners Copy of the title missing, the Second Defendant lodged an application with the Department of Lands & Physical Planning for a Replacement Title.
    
20. On 15 April 2019, the first Defendant executed a Contract of Sale with the Second Defendant’s Acting Managing Director. On 17 April 2019 he paid a fee of K200.00 to the Department of Lands and Physical Planning for the transfer of Title and an official receipt numbered R00000922560 was issued to him.
    
21. On 4 July 2019 the Third Defendant published in one of the two daily Newspaper an intention to issue an Official Copy of the State Lease. On 25 July 2019 the Third Defendant issued a Replacement Official Copy of the Title. On 11 October 2019 the Second Defendant, by letter dated 12 August 2019, lodged the Contract for Sale and the Transfer Instrument with the Third Defendant to register the transfer onto the title. On 17 February 2020 the Transfer is registered, and the title was transferred to him.
    
22. In response to the Plaintiff’s dispute to his ownership, he obtained a letter from Ala Ane, the third Defendant, dated 19th June 2020 confirming that he is the registered owner of the property.
    
23. Finally, in noting the Plaintiff’s Contract for Sale bearing the signature John Dege, the former Managing Director of NHC allegedly executing the Contract and the Transfer on 18th September 2018, Mr Kipane deposes that it is unlikely for Mr Dege to sign the documents as he has resigned in October 2016 and was no longer an employee of NHC at the time of the execution of the contract for sale.
    

The Second Defendants Evidence

24. Apart from the oral evidence, the Second Defendant, relies on the following affidavits:
    
    • (1) Affidavit of Geua Noho sworn on 9 April 2021 and filed on 6 August 2021 (Court Document No. 38) (Exhibit 2D1); and
      
    • (2) Supplementary Affidavit of Geua Noho sworn on 26 April 2022 and filed on 29 April 2022 (Court Document No. 79) (Exhibit 2D2).
      
25. This is the summary of Geua Noho’s evidence presented on behalf of NHC, the second Defendant. She is the Officer-in-Charge of the Second Defendant’s Conveyancing Section and that she prepares all Contracts of Sale and Transfer Instruments for the Second Defendant. She was not instructed to prepare any conveyancing documents for the Plaintiff and was not aware of the documents executed by the Plaintiff. She says the circumstances leading to the Plaintiff obtaining the State lease from the NHC and the subsequent transfer of title to him is questionable.
    
26. She deposes that on 8 February 2016 she received a memo from the Second Defendant’s Executive Officer, David Kaupa, requesting the release of original Titles to two properties – one of which was for this property – to investigate serious allegations concerning the titles. She released the Titles to Mr. Kaupa the following day. On 11 February 2016 she sent a memo to Mr. David Kaupa to return the titles to the two properties but received no response. Since then, the title to the subject property was never returned to the Second Defendant’s Conveyancing Section.
    
27. She says on 18th March 2019, she received official instructions from the Regional Manager-Momase with supporting documents to prepare conveyancing documents for the sale of the property to the first Defendant, Joshua Kipane. She prepared the first Defendant’s Contract of Sale and Transfer Instrument which went through the Second Defendant’s normal conveyancing process.
    
28. On 25 March 2019, due to the unavailability of the Owners ‘Copy of the State Lease, she prepared an application for the replacement of the Official Copy of the Title. On 25th July 2019, the Official Replacement Title was made and signed by the Registrar of Titles. On 11h October 2019, the conveyance documents together with application for rental remission were lodged for the registration of the transfer to the first Defendant. The registration of the transfer was held up for some time until cleared by the Secretary for Lands & Physical Planning on 13th February 2020. The transfer of the State Lease from NHC to the first Defendant was finally registered on 17th February 2020.
    
29. In response to a subsequent query by the Registrar of Titles concerning the proprietorship of the property, Allotment 10 Section 292, Lae, the Managing Director of NHC has unequivocally advised the Registrar of Titles by letter dated 16 February 2022 that the first Defendant is the legitimate purchaser and owner of the Property.
    

Evidence of third, fourth and Fifth Defendants.

30. The third, fourth and fifth Defendants offered no evidence.

Submissions of Counsel-The Plaintiff

31. Mr. Berem, counsel for the Plaintiff, submits the Plaintiff is the legitimate owner of the property, Allotment 10 Section 292, Lae having purchased the property from NHC for K 25,000.00 and has indefeasible title pursuant to section 33(1) of the Land Registration Act. In particular, he submits that:
    
    1. Prior to the purchase he was an existing tenant and a qualified candidate for the purchase for the purposes of sections 37 & 38 of the National Housing Commission Act.
    2. He paid K 25,000.00 for the purchase price.
    100. He executed a Contract for the Sale of the property with the Management of NHC.
    4. The Transfer of title was duly registered with Registrar of Titles.
       
32. In respect of the first Defendant’s Title, Mr. Berem submits that the sale and transfer of title to the first Defendant was improper, unlawful, and void in that:
    1. The land was not vacant as the Plaintiff was the sitting tenant.
    2. The property was sold at an undervalued purchase price of K1,500.00 in breach of section 41 of the NHC Act.
    100. There was abuse of statutory powers by NHC as the property was not available for sale as it was already transferred to the Plaintiff.
    4. The actions and conduct of NHC was unfair, arbitrary, harsh, and unlawful contrary to the spirit and intent of the NHC Act.
    5. The NHC should have challenged the Plaintiff’s Title rather than issuing another title to the first Defendant.
       

The First Defendant’s Submissions

33. Mr. Cook, counsel for the first Defendant, submits the transfer of Title from NHC to the Plaintiff failed to follow due process and was irregular amounting to constructive fraud in that:
    
    1. Entering into a tenancy agreement on a property that is just a vacant land, devoid of any improvements.
    2. Executing a Contract for Sale and Transfer outside of the normal established Conveyancing Section of the NHC.
    100. Providing no official receipt or proof of payment of K 25,000.00
    4. Relying on a Contract for Sale bearing the signature of John Dege as Managing Director on a date Mr. Dege was no longer the Managing Director of NHC.
       
34. Mr. Cook submits that the transfer of Title to the first Defendant is proper and valid in that:
    
    1. The first Defendant followed all conveyancing process in purchasing the property from NHC.
       
    2. He requested to buy the property and was approved and did not have to be a tenant as it is a vacant land under the NHC Self Help Settlement Scheme.
       
    100. He executed a Contract for Sale with the Managing Director of NHC, paid the purchase price, was issued an official receipt by NHC.
         
    4. Both the NHC and the Registrar of Titles recognise him as the legitimate registered owner of the property.
       

The second Defendants (NHC) Submissions

35. Mr. Luke, counsel for NHC, the second Defendant, submits that the transfer of title to the Plaintiff is irregular and fraudulent and be nullified in that:
    
    1. NHC did not sell the property to the Plaintiff through their normal conveyancing process.
       
    2. NHC did not receive the K25,000.00 allegedly paid by the Plaintiff.
       
    100. The Contract of Sale allegedly signed by John Dege as Managing Director for NHC is questionable as Mr Dege was not the Managing Director for NHC at the time when the Contract was executed.
         
    4. The Owners Copy of the Title relied on by the Plaintiff was a lost document which was eventually cancelled by the Registrar of Tiles on 25th July 2019 before the Plaintiff registered his transfer on 3rd October 2019.
       
36. In respect of the first Defendants title, Mr. Luke submits that:
    
    1. The first Defendant has acquired a good and valid title as it was properly transferred to him by the owner, NHC.
    2. He paid for the property at the price set by the NHC at its discretion for unimproved land under the Self-Help Settlement Scheme.
    100. The first Defendant does not need to be a tenant for the purposes of sections 37 & 38 of the NHC Act to qualify as submitted by the Plaintiff because the property is a vacant land managed by NHC in its Self-Help Settlement Scheme.
         

Law on Fraud

37. Section 32 of the Land Registration Act provides that where an instrument of title describes a person as the proprietor of an estate or interest, that person is the registered proprietor of the estate or interest. Section 33 of the Land Registration Act provides that a registered proprietor of an estate or interest holds it absolutely free from all encumbrances except for fraud and other exceptions set out in (1)(a) to (f). (Mudge -v- Secretary for Lands (1985) PNG LR 387)
    
38. Section 33 (1) reads:

“(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.”

36. Fraud is defined in the head notes of the judgments in the case Vaki Vailala v NHC (2017) N6598 and Pius Tikili v Home Base Real Estate (2017) SC1563 to mean “actual fraud or constructive fraud. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular, or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

37. The law on constructive fraud is now settled in this jurisdiction. Refer to Pius Tikili v Home Base Real Estate Ltd (2017) SC1563, PNG Bible Church Inc v Carol Mandi (2018) SC1724 and Rosemary John v James Nomenda (2010) N3851, Toki v Helai (2016) SC1558, and Vaki Vailala v NHC (2017) N6598 and Mota v Camilus (2017) N6810.

38. In the Pius Tikili case, the Supreme Court has this to say at paragraph 23 concerning constructive fraud:

“His Honour, we consider, should have addressed the meaning of “fraud” in section 33(1)(a) of the Land Registration Act more rigorously. There is now a strong line of Supreme Court decisions that have substantially qualified the concept of indefeasibility of registered title set out in Mudge v Secretary for Lands (1985) PNGLR387.Cases such as Emas Estate Development Pty Ltd v John Mea (1993) PNGLR215,PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126 and Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120 support the proposition that in many situations it will not be appropriate to insist on proof of actual fraud before the National Court considers cancelling the registered proprietor’s title. It will be sufficient if constructive or equitable fraud is proven. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

39. The Tikili decision is further endorsed and supported by the Supreme Court in the most recent case of PNG Bible Church v Carol Mandi (supra) that a failure to follow the process under the Land Act and the National Housing Corporation Act can render all dealings invalid because of constructive fraud. At paragraph 18 of the judgment, the Court said this:

“It is now well-established law in PNG that a failure to follow the process provided under the Land Act when dealing with State land amounts to fraud capable of undoing any title secured outside the statutorily prescribed process. The decision of the Supreme Court, drawn to our attention by learned counsel for the Church in Pius Tikili v Home Base Real Estate Ltd (2017) SC1563 is a case on point. There the Court comprising of Cannings, Yagi and Neill JJ., said:

“His Honour, we consider, should have addressed the meaning of “fraud” in Section 33(1)(a) of the Land Registration Act more rigorously. There is now a strong line of Supreme Court decisions that have substantially qualified the concept of indefeasibility of registered title set out Mudge v Secretary for Lands [1985] PNGLR 387. Cases such as 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 support the proposition that in many situations it will not be appropriate to insist on proof of actual fraud before the National Court considers cancelling the registered proprietor’s title. It will be sufficient if constructive or equitable fraud is proven. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

Consideration of Issues

1. Whether the transfer of title registered in the name of the Plaintiff is valid and protected by section 33 of the Land Registration Act.

The Two Titles
40. I will deal with the two titles first. The Plaintiff and the First Defendant are challenging each other’s title to the property, Allotment 10 Section 292, Lae. Both have produced Owner’s copies of titles showing transfers registered in their respective names. The first Defendant’s copy shows two entries. The first entry relates to the production and registration of the Replacement Official Copy of the State Lease Volume 20 Folio 160. It was produced on 25th July 2019 and registered on 5th August 2019, Entry No 22975. The second entry is for the transfer of title to the First Defendant produced and registered on 17th February 2020, Entry No. 23422. The Plaintiff’s copy of the Title shows the transfer was produced on 2nd October 2019 and registered on 3rd October 2019 with entry No. 23101.

41. The immediate question that comes to mind is, how could the Registrar of Titles register the transfer to the Owner’s Copy of the State Lease produced by the Plaintiff when he has already replaced the Owners copy at the request of NHC on 25th July 2019 and registered on 5th August 2019. Does this mean the Register of Titles have two Official State Leases or one of the parties is producing false entries. The answers to this question can only be answered by the Registrar of Titles, the third Defendant. The third Defendant did not give evidence. The onus is on the Plaintiff to prove his case and the parties would have used the provisions under the Rules and the Evidence Act to produce that evidence but did not.

42. There is another matter for clarification. I note from the Plaintiff’s Affidavit that he annexes a letter dated 26 February 2020 (Exhibit P1 Annexure “D-2”) issued by the Registrar of Titles stating that the Plaintiff is the registered proprietor of the property. Interestingly, the first Defendant has also produced an identical letter from the same author, the Registrar of Titles, dated 15 June 2020 (annexure “H” to his Affidavit Exhibit 1D1) confirming, this time, that the first Defendant is the registered proprietor of the property. How could the third Defendant issue two conflicting letters or statements. Or did he? Again, the third Defendant was not called to clarify. In the absence of an explanation from the third Defendant, the Court will not give any weight to the two letters.

43. Despite the uncertainty, the Court accepts the submissions of counsel for the second Defendant that the Owner’s Copy of the State Lease held by Plaintiff was replaced by a new one on 25th July 2019. The replacement was done after following due process. The new Title was registered on 5th August 2019. After the replacement, the Owner’s Copy of the State Lease held by the Plaintiff became obsolete and valueless and from then on, it was incapable of transferring any interest to the Plaintiff. The registration of the transfer of title on 3rd October 2019 did not confer any valid interest to the Plaintiff. The Plaintiff’s title is no longer indefeasible as it is invalid falling into the exceptions in Section 33 (1) (a) and (c) of the Land Registration Act.

Following Due process
44. Did the Plaintiff follow due process in having the title transferred to him. The Plaintiff says he is a person of little education, and he is not aware of NHC’s conveyancing process. He relied on the advice of David Kaupa and Abraham John, both employees of NHC at the material time. The second Defendant argues that the Plaintiff did not follow the official conveyancing process of NHC. I accept the evidence of Geua Noho of NHC as credible. The Owners Copy of the State Lease held by the Plaintiff was not given to him by NHC officially. The evidence shows the State Lease was taken from the Conveyance Section by one David Kaupa. Mr Kaupa did not return the State Lease to the Conveyancing Section despite requests made by Ms Guea Noho, the Officer -In-Charge. The Title was deemed lost but ended up with the Plaintiff. Although the Plaintiff says he paid K25,000.00 in cash, NHC denied receiving the money. The Plaintiff did not produce any official receipt issued by NHC or bank statements to show proof of payment except a statutory Declaration. The conveyancing documents were not prepared by the Conveyancing Section of NHC. The Contract of Sale allegedly signed by John Dege, the Managing Director of NHC on 18th September 2018 is questionable and not possible because John Dege has resigned in October 2016 and was not the Managing Director at the time of execution.
45. In the circumstances, it is safe to infer that David Kaupa who picked up the Title from NHC Conveyancing Section unlawfully released the Title to the Plaintiff as the evidence shows the Plaintiff was dealing with Mr Kaupa at the relevant time. Mr Kaupa was not authorised to sell or release the Title and any dealings by him, or any other person is improper and invalid by virtue of section 65 of the NHC Act. Section 65 of the National Housing Corporation Act provides that.

“Where, without the consent in writing of the Corporation, a person purports to—(a) sell or contract to sell; or(b) mortgage; or(c) lease or sub-lease; or(d) transfer; or(e) assign, any property in which the Corporation has an interest under this Part, the sale, contract, mortgage, lease, sub-lease, transfer of assignment is void and of no effect.”
46. I find the alleged purchase and transfer of title from the second Defendant through David Kaupa and Abraham John without the authority and consent of the second Defendant renders the transaction void and of no effect under section 65 of the NHC Act.

Sections 37 & 38 of the National Housing Corporation Act
47. The Plaintiff’s contends that he signed a tenancy agreement, and his interest is protected under section 37 and 38 of the NHC Act, whereas the first Defendant was a stranger who did not qualify to buy the property.

48. Sections 37 and 38 of the Act are relevant and they read:

“37. Sale of dwellings.

Subject to this Division, the Corporation may sell a dwelling vested in it to—

(a) an eligible person; or

(b) an approved applicant; or

(c) a person who exercises the option offered to him under Section 38 (1).

38. Options to purchase.

(1) After a tenancy agreement has been in force for two years between the Corporation and a tenant, the Corporation may, in its discretion, offer to—

(a) the tenant; or

(b) the spouse, widow or widower of the tenant; or

(c) the tenant and his spouse as joint tenants; or

(d) the tenant and his next of kin,

an option to purchase the dwelling the subject of the agreement at a purchase price specified in the option, subject to the conditions imposed by this Division....

(3) A contract of sale under this section may provide—

(a) for the outright purchase; or

(b) for the payment of the purchase price by instalments; or

(c) for the payment of the purchase price to be secured—

(i) by mortgage, in the prescribed form, over the property in respect of which the advance is made; or

(ii) by any other security approved by the Corporation.”

49. After careful consideration, I accept the submissions of the Defendants that sections 37 and 38 of the NHC Act are not applicable. These sections relate to the sale of dwelling houses to persons who have existing tenancy agreements and especially where tenancy agreements have been in force for two years. The subject property is a vacant unimproved land managed by NHC under its Self-Help Housing Scheme. There is no dwelling or residential home. Even then, there is no evidence that the Plaintiff was residing on the property for two years. The evidence from the Plaintiff shows he signed the tenancy agreement on 1^st April 2015 and allegedly paid K 25,000.00 for the property on 10^th April 2015. The total period of tenancy is just 10 days, and this alone disqualifies him under section 38 (2) (a) of the Act.

50. On the other hand, the NHC has a discretion to dispose of the property without the necessity of a prior tenancy agreement. The land was undeveloped and was sold to the first Defendant for K 1,500.00 under the Self-Help Housing Scheme. The Plaintiff contends that the purchase price of K 1,500.00 is ridiculously too low and unbelievable and contrary to section 41 of the NHC Act, implying impropriety on the part of first and second Defendants. While it is arguable that the price is low, it is a matter for NHC. Section 41 of the Act relates principally to setting prices for dwelling houses rather than undeveloped land. In any case, again that is a matter for NHC in setting the terms including the purchase price in their general function under section 28 of the Act.

Sale and Transfer to the First Defendant
51. The Plaintiff contends that the second Defendant abused its powers by selling and transferring the property to the first Defendant knowing full well that the land was not vacant and not available for sale as it was already sold to the Plaintiff. Without repeating the findings above, save to say that the property was not lawfully sold to the Plaintiff in the first place. The sale and transfer of title was done improperly and the title allegedly passed to him was valueless as the Owners’Copy of the State Lease in the possession of the Plaintiff was replaced before the transfer of the title was even registered.
52. On the other hand, the sale and transfer of the property to the first Defendant was authorized by NHC. The conveyancing was facilitated by NHC Conveyancing Section, and the Contracts were transparently executed. A valid consideration was paid. The Transfer to the Title was properly registered on the Replacement Title or State Lease and the first Defendant has received an indefeasible title under section 33 of the Land Registration Act.

53. For the foregoing reasons, I find the Plaintiff failed to establish or prove on the balance of probabilities that the transfer of title registered in his name over the property, Allotment 10 Section 292, Lae, State Lease Volume 20 Folio 160 is valid and protected by section 33 of the Land Registration Act. The Plaintiffs claim shall therefore be dismissed in its entirety.

The First Defendants Crossclaim.
54. The first Defendant claims in his Crossclaim, amongst others, a declaratory order that the transfer of the State Lease Volume 20 Folio 160, over property Section 292, Allotment 10, Lae, Morobe Province to him on 17^th February 2020 is lawful, valid, and proper for all purposes.

55. I will not repeat the findings. Based on the pleadings, evidence presented, submissions of counsel and the reasons given in the preceding paragraphs in the whole of this judgment, the Court is inclined to grant the basic reliefs claimed by the first Defendant. The first Defendant followed due process in purchasing the property. He was sold the property by NHC. He paid for the same and valid consideration passed. There was consensus ad idem between the parties. The transfer of the title was registered in his name on the State Lease, and he is now the registered owner of the property for the purposes of Sections 32 and 33 of the Land Registration Act.

Other Reliefs
56. Apart from the basic reliefs, the first Defendant sought various consequential orders. The Court will only grant those orders that are compatible with the main declaratory orders and not otherwise.

Costs
57. Normally, the cost follows the event. In the present case the Plaintiff failed in the prosecution of his claim. The first Defendant is successful. The first Defendant is entitled to costs. Who should pay the cost. In my view the Plaintiff shall pay the first Defendants cost to be reimbursed by NHC. The third and fourth Defendants are not entitled to any order for costs.

58. Let me explain. In my view, the staff employed by NHC created the problem. Initially, the staff members Abraham John and David Kaupa lured the Plaintiff into this transaction. The evidence shows another officer Mathew Limu, based in Lae knew about this. He is the legal officer who witnessed the Statutory Declaration signed by the Plaintiff and David Kaupa. Mr. Limu also wrote a letter in April 2020 affirming the interest of the Plaintiff when he was the Regional Manager. None of these officers were called, especially Mr. Limu to give rebuttal evidence. For these reasons, NHC is not entitled to costs. Instead NHC shall pay the first Defendant’s Cost on behalf of the Plaintiff.

59. As for the third, fourth and fifth Defendants, the Court gave directions to them to file their Affidavit evidence but failed to comply, especially the third Defendant who is the custodian of all state leases. His evidence is vital in resolving the issues before the Court, but he did not file any evidence. For this reason, no award for costs shall be made in their favour.

Orders

60. The Court orders:

(a) The Plaintiff/first Cross-Defendants proceedings are dismissed in its entirety.

(b) By way of Declaration that transfer of the Title to the Plaintiff/first Cross-defendant on 3rd October 2019 is unlawful, invalid, and improper for all purposes.

(c) By way of a Declaration that the transfer of State Lease Volume 20 Folio 160, Section 292, Allotment 10, Lae, Morobe Province to the first Defendant/Cross-Claimant on 17^th February 2020 is lawful, valid, and proper for all purposes.

(d) By way of a Declaration that the first Defendant/Cross-Claimant is the registered proprietor of the said property.

(e) The Plaintiff/first Cross-Defendant is restrained from interfering, in any manner whatsoever, with the first Defendant/Cross-claimant’s use, enjoyment and benefit of the property.

(f) The Registrar of Titles, the Third Defendant, shall take all the necessary steps to correct all entries to the Register of Titles, where necessary to give effect to the above orders.

(g) The Plaintiff/first Cross-defendant shall pay the first Defendant/Cross-claimant’s cost which shall be reimbursed by the National Housing Corporation. For clarity, the National Housing Commission shall pay the first Defendant/Cross’s cost to be taxed, if not agreed.

(h) Time be abridged.

Berem Lawyers: Lawyers for the Plaintiff

Cook Lawyers: Lawyers for the First Defendant

NHC Inhouse Lawyers: Lawyer for the Second defendant

Solicitor General: Lawyers for the Third, Fourth and Fifth Defendants