N11267
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO 1138 OF 2016 (CC1)

BETWEEN
LAMECH LEE EVARA
Plaintiff/Cross-Defendant

AND
KENNEDY LAMBEN
Defendant/Cross-Claimant

WAIGANI: MAKAIL J
12 , 22 JULY 2024; 5 MAY 2025
 
LIABILITY – Fraud – Title of property – Indefeasible title – State Lease – Residence Lease – Property of National Housing Corporation – Conspiracy to defraud sit in tenant of property – Specific performance – Proof of – Land Registration Act – Section 33(1)(a)

STATE LEASES – State lease – Residence lease – Dwelling of National Housing Corporation – Criteria for sale of dwelling discussed – Eligible person – Approved applicant – Person offered to purchase a dwelling – Tenant – Tenant and his next of kin – Tenancy agreement – Contract of sale executed – Payment of purchase price by instalments – National Housing Corporation Act, 1990 – Sections 1, 2, 3, 37 & 38(1)(a)&(d)&(4)(b)

DAMAGES – General damages sought for stress, anxiety and frustration – Proof of – Evidence of – Lack of – Award of general damages refused 

CROSS-CLAIM – Trespass to property – Vacant possession – Title to property set aside – Title procured by fraud – Order sought refused 

Cases cited
Mudge v Secretary for Lands [1985] PNGLR 387 
Emas Estate Development Pty Limited v John Mea & Ors [1993] PNGLR 215 
Koitachi Limited v Walter Schnaubelt (2007) SC870
Rosemary John v James Nomenda & National Housing Corporation (2010) N3551
Vailala v National Housing Corporation (2017) N6598

Counsel
Mr O Dekas for plaintiff/cross defendant
Mr A Benny for defendant/cross-claimant

JUDGMENT

1.	MAKAIL, J: Pursuant to an amended writ of summons and statement of claim filed on 8th April 2022 the plaintiff sues the defendant for procuring the title of a property by fraud under Section 33(1)(a) of the Land Registration Act and seeks, interalia, an order for specific performance to have the National Housing Corporation (“the NHC”) complete a contract of sale entered between the plaintiff’s late father and the NHC for the property described as Section 76 Allotment 8 Korobosea, National Capital District.

2.	The defendant filed an amended defence and crossclaim on 25th April 2022.  He denied the claim by the plaintiff and alleges that the plaintiff lacked locus standi to bring this proceeding and that he purchased the property from the NHC by following due process.  In his crossclaim, he alleges he is the registered proprietor of the property and seeks orders to affirm his right to the property and for vacant possession because the plaintiff and his family members are currently occupying the property.	

Definition of Fraud

3.	While the defendant holds an indefeasible title for the property, it is not absolute.  Section 33(1)(a) of the Land Registration Act states that “The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except in the case of fraud.” The word “fraud” in Section 33(1)(a) of the Land Registration Act has been defined as actual fraud or constructive fraud:  Mudge v Secretary for Lands [1985] PNGLR 387, Emas Estate Development Pty Limited v John Mea & Ors [1993] PNGLR 215 and Koitachi Limited v Walter Schnaubelt (2007) SC870.

Grounds of Fraud

4.	The grounds which the plaintiff relies on to prove fraud are extracted from paragraphs 1 to 41 of the statement of claim as follows:

•	either independently or through his late father, the plaintiff is a sit in tenant and approved purchaser of the property under the Morgan Scheme by operation of Sections 37 and 38(1)(a) and (d) of the NHC Act.

•	because of this, the plaintiff’s late father was offered the property to purchase and accepted it and paid the purchase price by instalment through salary deduction.

•	subsequently, the plaintiff paid the purchase price of K12, 260.00 and executed a contract of sale and Transfer Instrument with the NHC to transfer the title of the property from the NHC to him.

•	while waiting for the transfer of title of the property from the NHC to the plaintiff, the title of the property was transferred to the defendant.

•	on the other hand, the defendant was not a sit in tenant and approved purchaser of the property under the Morgan Scheme and any other schemes of the NHC for public servants to own.

•	the defendant was not a resident of Port Moresby but Wabag and not eligible for a property in Port Moresby, yet instructed an agent named Mathew Lau to secure the property for him.

•	alternatively, the defendant is a fictitious person and the real person behind is Mathew Lau to secure the property and supported by a Robert Lao.

•	alternatively, Mathew Lau is an agent of Leo Lao and the defendant to secure the property for the first defendant.

•	there is no payment of the purchase price to the NHC by the defendant.

•	there is no sealed contract of sale and Transfer Instrument for the transfer of title from the NHC to the defendant.

•	the defendant is related to Robert Lao and Mathew Lau and engaged Niuage Lawyers to institute summary ejectment proceedings at the Port Moresby District Court to evict the plaintiff and his family members from the property.

•	Robert Lao was the Estate Officer engaged in 2008 to assist with queries by the plaintiff and was employed by the NHC and in or around 2011, was arrested and charged for similar dealings with a property described as Section 147 Allotment 4, Hohola, National Capital District.

•	subsequently, Robert Lao was convicted by the National Court Sakora J presiding for forgery and uttering under Sections 462(1) and 463(2) of the Criminal Code and sentenced to 8 years imprisonment in hard labour at Bomana prison in proceedings described as CR No 311 of 2011: The State v Robert Lao.

5.	According to the plaintiff, these grounds collectively show that the defendant conspired with the NHC and its officer Robert Lao and another, Mathew Lau to defraud him of the property.

Parties’ Evidence

6.	The plaintiff tendered the following:  

(a)	his affidavit sworn on 12th September 2016 and filed on 14th September 2016 (Exhibit “P1”),

(b)	his affidavit sworn on 6th April 2017 and filed on 11th April 2017 (Exhibit “P2”),

(c)	his affidavit in support sworn and filed on 23rd May 2017 (Exhibit “P3”),

(d)	his supplementary affidavit sworn on 25th October 2016 and filed on 31st October 2017 (Exhibit “P4”); and

(e)	his affidavit in support sworn and filed on 14th November 2016 (“Exhibit “P5”).

7.	The defendant tendered the following:

(a)	his affidavit sworn and filed on 24th September 2018 (Exhibit “D1”),

(b)	his affidavit sworn on 12th June 2020 and filed on 15th June 2020 (Exhibit “D2”),

(c)	his affidavit sworn on 9th July 2020 and filed on 10th July 2020 (Exhibit “D3”), and

(d)	affidavit of Kingsley Tondop sworn and filed on 2nd March 2020 (Exhibit “D4”).
Findings of Fact

8.	The plaintiff and defendant were cross-examined in relation to their respective accounts in their affidavits, but major parts of their accounts are not in dispute and considering them with the accounts extracted from the above affidavits, I make the following findings:

•	on 30th June 1982 the plaintiff’s father late Benjamin Evara signed a tenancy Memorandum of Agreement with the Department of Urban Development for the property and tenancy commenced on 11th July 1980.

•	the plaintiff grew up on the property until he got married and raised his own children in the property until today.  It is over forty years of living on the property.  

•	the plaintiff’s late father was a senior public servant.  He was an approved purchaser of the property under the Morgan Scheme whose name was published in the National Gazette No. G58 dated Monday 31st August 1987.

•	he was an approved purchaser of the property declared under Special Category of Houses with Specifications of Terms and Conditions of Sale which he preferred to purchase by instalments under Condition 6 of the Terms and Conditions published in the National Gazette No. G58 dated Monday 31st August 1987 through salary deduction at K47.61 per fortnight.  However, a complete record of the salary deductions cannot be retrieved from the NHC despite numerous requests by the plaintiff.

•	in 1986, the plaintiff’s late father was retrenched forcefully and his salary deductions stopped.

•	on 7th March 2016 the NHC gave a fourteen day-notice to the plaintiff and his family members to settle the outstanding arrears of K8,745.98 but the plaintiff disputed it on account of its accuracy and that the late father had completed the purchase price prior to his death.

•	 the unreconciled balance as at 18th April 2016 was K12,260.00. After paying the sum of K12,260.00 to the NHC and waiting for the contract of sale, Transfer Instrument, Stamp Duty Exemptions Application and an Application for Remission of Rent to be completed, and pending counter signing by the Managing Director of the NHC.

•	while waiting for the title to be transferred to the plaintiff, on 24th August 2016 the agent of the defendant by the name of Mathew Lau served a sealed copy of summary ejectment proceedings documents on the plaintiff.

•	the plaintiff and his family members were not aware of the title of the property being transferred to the defendant by the NHC on 24th March 2016.  

•	on 29th August 2016, the plaintiff made a complaint to the Registrar of Titles and the Managing Director of the NHC about the transfer of title to the defendant.

•	on the other hand, the defendant is not a sitting tenant of the property but a Town Mayor of Wabag Town in Enga Province and on 10th February 2016, expressed his interest in purchasing a property from the NHC.  Following this, on 16th March 2016, the NHC offered the property to him.  

•	Mathew Lau supported by a Robert Lao assisted the defendant to secure the property for him by preparing the contract of sale and Transfer Instrument for the transfer of title from the NHC to the defendant.

•	the defendant is related to Robert Lao and Mathew Lau and engaged Niuage Lawyers to institute summary ejectment proceedings at the Port Moresby District Court to evict the plaintiff and his family members from the property.

•	Robert Lao was the Estate Officer engaged in 2008 to assist with queries by the plaintiff and was employed by the NHC and in or around 2011, was arrested and charged for similar dealings with a property described as Section 147 Allotment 4, Hohola, National Capital District.

•	subsequently, Robert Lao was convicted by the National Court Sakora J presiding for forgery and uttering under Sections 462(1) and 463(2) of the Criminal Code and sentenced to 8 years imprisonment in hard labour at Bomana prison in proceedings described as CR No 311 of 2011: The State v Robert Lao.

•	on 21st March 2016 the defendant and the Managing Director of the NHC signed a contract of sale and Transfer Instrument before paying the selling price of K200,000.00 to the NHC under the NHC Outright Cash Sale Scheme on 23rd March 2016.

•	the title of the property was registered by the Registrar of Titles and the transfer was entered on the State Lease on 29th March 2016.

•	following this, the defendant attempted to evict the plaintiff and his family members from the property but was unsuccessful.

Proof of Fraud 

9.	The plaintiff relies on Section 37 of the National Housing Corporation Act (“NHC Act”) and submits that he is an approved applicant for the property but missed out.  Section 37 states in part:

“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).”

10.	On the other hand, the defendant was not a sitting tenant, nor did he have a tenancy agreement with the NHC and was not eligible to be awarded the right to purchase the property from the NHC.  Because of this, the contract of sale between the NHC and defendant and Transfer Instrument to have the title of the property transferred from the NHC to the defendant was in breach of Section 37 of the NHC Act.

11.	In Rosemary John v James Nomenda & National Housing Corporation (2010) N3551 which was reinforced in Vailala v National Housing Corporation (2017) N6598 it was held that a failure by the registered proprietor to comply with the procedure for procuring title of a property from the NHC under Section 37 of the NHC Act and the guidelines for “Home ownership Scheme” constitute constructive fraud and title can be set side under Section 33(1)(a) of the Land Registration Act.  

12.	Section 37 of the NHC Act confers authority on the NHC to sell a “dwelling” vested in it.  A “dwelling” is defined in Section 1 (Interpretation) of the NHC Act as:

“includes the appurtenances, outbuildings, fences and permanent provision of lighting, water supply, drainage and sewerage provided in connection with a dwelling, and in relation to the letting, selling, vacating or erecting also includes the land on which a dwelling is situated but does not otherwise include land”.

13.	The NHC may sell a dwelling in three ways:

(a)	it may sell a dwelling to an eligible person. 
(b)	it may sell a dwelling to an approved applicant.
(c)	it may sell to a person who exercises the option offered to him under Section 38(1). (Emphasis added).

14.	An eligible person is defined in Section 1 (Interpretation) of the NHC Act as:

“means a person declared under Section 3 to be eligible for assistance under Part IV”.

15.	Section 3 of the NHC Act states:

“The Corporation may declare a person to be a person eligible for assistance under Part IV by reason of – 

(a)	his limited means; or

(b)	his present unsuitable housing; or

(c)	any other circumstances considered relevant by the Corporation”.

16.	An approved applicant is defined in Section 1 (Interpretation) of the NHC Act as:

“means – 

(a)	the State; or 

	(b)	an instrumentality of the State; or

	(c)	a Provincial Government; or

(d)	an instrumentality of a Provincial Government, or

(e)	a Local-level Government; or

(f)	an organization or person declared under Section 2 to be an approved applicant for the purposes of this Act”.

17.	The reference to an organization or person declared under Section 2 in Section 1(f) (supra) is by a Ministerial Declaration in the following terms:

“The Minister may declare an organization or person to be a person to be an approved applicant for the purpose of this Act.”

18.	The reference to a person who exercises the option offered to him under Section 38(1) in Section 37(1) of the NHC Act is a person offered to purchase a dwelling.  Section 38(1) states: 

	“38.	OPTION 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

(2)	…….. 
(3)	…….. 

(4)	After 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”.

19.	I uphold the plaintiff’s submissions because I am satisfied that the defendant is neither:

•	an eligible person because of his limited means, or of his present unsuitable housing, or of any other circumstances considered relevant by the NHC under Sections 1, 3 and 37 of the NHC Act, nor, 

•	an approved applicant because there is no evidence of a Ministerial Declaration approving the applicant to purchase the property under Sections 1(f) and 37 of the NHC Act, or

•	a sit in tenant and absence of a tenancy agreement with the NHC under Sections 2, 37(1) and 38(1)(a), (b), (c) & (d) & (4) of the NHC Act.

20.	For these reasons, and contrary to the defendant’s strong submission that the NHC had the ultimate discretion to offer the property to him, that discretion must be exercised according to Sections 1, 3, 37, & 38 of the NHC Act.  In this case, the NHC acted outside the parameters of Sections 1, 2, 3, 37 and 38(1)(a), (b), (c) & (d) & (4) of the NHC Act.

21.	On the other hand, the plaintiff’s late father was an approved purchaser and sit in tenant of the property under the Morgan Scheme and upon his death, by operation of Sections 2, 2, 23 and 38(1)(d) of the NHC Act, the plaintiff is eligible to purchase the property, to which he did.  It follows that the defendant’s objection to the plaintiff’s standing to bring this proceeding is misconceived and dismissed.  

22.	Meanwhile, the NHC offered the property for sale to the defendant, but at no point in time did it inform the plaintiff of its intention to sale the property to the defendant.  Similarly, while the defendant says that he had expressed an interest to purchase a property from the NHC, and that he was not aware or informed by the NHC that the property was occupied by the plaintiff and his family members, any prudent purchaser will first check if the property is vacant and if not, whether the sit in tenant has been given the first right of refusal to purchase the property pursuant to Sections 1, 2, 3, 37 and 38 of the NHC Act.  It is important to conduct due diligence because such dwellings are not private property but for public servants and the plaintiff’s late father was none of them.

23.	Further, while the defendant asserts that ultimately, the NHC has the discretion to offer the property for sale to another person including him where the plaintiff’s late father defaulted to complete the purchase price, the NHC did not unequivocally say that it will not complete the sale of the property to the plaintiff when he made numerous follow-up requests to the NHC and that it will sell the property to the defendant.  

24.	At the end of the day, the NHC and its officer Robert Lao unjustly enrich themselves from by securing the sum of K12,260.00 from the plaintiff as final payment of the purchase price for the property and received a further K200,000.00 from the defendant as purchase price for the same property.

25.	Moreover, there is strong circumstantial evidence based on similar fact evidence and finding above that the defendant conspired with Robert Lao and Mathew Lau to defraud the plaintiff of the property because Robert Lao has a bad track record.  He was convicted and sentenced to a term of imprisonment for forgery and uttering under the Criminal Code by the National Court in 2012.  And he has done it again.

26.	Next is the speed of the sale of the property by the National Court to the defendant.  While the plaintiff and before him, his late father were waiting patiently for the sale to be completed by the NHC and transfer of title of the property to be processed, the defendant suddenly appeared and within a space of less than two months from 10th February to 23rd March 2016, the title of the property was transferred from the NHC to him at the costs of K200,000.00.

27.	This was a person who was not eligible to an NHC dwelling let alone being a resident of Wabag Town as its Lord Mayor and yet was given first preference over a sit in tenant who had been patiently waiting and following up with the NHC to complete the sale of the property to him. Surely, he cannot be indifferent or ignorant about what was happening around him regarding the property especially when the sale was at great speed.

28.	The conduct of the NHC and its officer Robert Lau supported by Mathew Lau outlined above support the plaintiff’s case that they conspired with the defendant to defraud the plaintiff of the property.  I am satisfied that the plaintiff has proved on the balance of probabilities that the defendant procured the title of the property by fraud, and it must be set aside under Section 33(1)(a) of the Land Registration Act.

29.	On the other hand, because of the sale of the property to the defendant, the sale of the same property to the plaintiff remains incomplete and must now be completed in order for the NHC to transfer the title of the property to the plaintiff. As the plaintiff also seeks an order for specific performance, I grant that order. 

General Damages for stress, anxiety and frustration

30.	The plaintiff seeks general damages for stress, anxiety and frustration.  However, the plaintiff’s account is vague and lacking and unsupported by detailed submissions articulating the stress, anxiety and frustration and an appropriate sum to award.  Because of this, an award of general damages is refused. 

Defendant’s Crossclaim 

31.	Pursuant to the title to property, the defendant asserts that the plaintiff has trespassed on his property by his ongoing occupation without his permission and lawful authority and seeks vacant possession.  However, because the defendant’s title has been found to have been procured by fraud and set aside, the order sought is refused.

Costs

32.	There will be an order for costs of the proceeding in favour of the plaintiff, to be taxed, if not agreed.

Order 

33.	The final terms of the order are as follows:

1.	An order in the nature of a declaration that the plaintiff has standing to bring this proceeding under Sections 1, 2, 3, 37 and 38 of the National Housing Corporation Act, 1990.

2.	An order in the nature of a declaration that the property described as Section 76 Allotment 8 Korobosea, National Capital District was sold to the plaintiff pursuant to the pending contract of sale and Transfer Instrument.

3.	An order in the nature of a declaration that the late Benjamin Evara has paid a sum of K8,745.98 as part of the purchase price of the property.

4.	An order pursuant to Section 155(4) of the Constitution restraining the defendant, his servants and agents from threatening, harassing and interfering with the plaintiff and his family members on the property described as Section 76 Allotment 8 Korobosea, National Capital District.

5.	An order that the National Housing Corporation and its employees discharge their duty under the National Housing Corporation Act, 1990 including, but not limited to, by completing the contract of sale of the property described as Section 76 Allotment 8 Korobosea, National Capital District and processing the transfer and registration of title from the National Housing Corporation to the plaintiff by the Registrar of Titles within thirty days of this Order.

6.	An order in the nature of a declaration that the title of the defendant has been procured by fraud and is a nullity under Section 33(1)(a) of the Land Registration Act.

7.	Pursuant to Order 1, rule 7 and Order 12, rule 1 of the National Court Rules and Section 155(4) of the Constitution the District Court proceeding DC No 656 of 2016 between Kennedy Lamben and Evara Benjamin & Ors filed on 18th June 2016 for summary ejectment of the plaintiff and his family members from the property described as Section 76 Allotment 8 Korobosea, National Capital District is permanently stayed.

8.	The order sought for general damages for stress, anxiety and frustration is refused.

9.	The defendant’s crossclaim is dismissed.

10.	The defendant shall pay the plaintiff’s costs of the proceeding on party/party basis, to be taxed, if not agreed.
________________________________________________________________
Lawyers for plaintiff/cross-defendant: Ogenson Lawyers	
Lawyers for defendant/cross-claimant: Niuage Lawyers