N11164

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 98 OF 2023

BETWEEN:
CAPTAIN DABUNG KIONG AND WANDUI KIONG
Plaintiffs

AND:
HICKY GUBAG & ANGELA GUBAG including their relatives, servants, agents and other persons acting with and under their permission and authority.
Defendants

MADANG:  NAROKOBI J
10 JULY 2024; 4 MARCH 2025

LAND LAW – meaning of “fraud” in s 33 (1)(a) of Land Registration Act.

LAND LAW – Actual and constructive fraud – whether it is open to the court to find constructive fraud.

STARE DECISIS – Conflicting Supreme Court Decisions – Whether National Court open to decide when Supreme Court decisions are conflicting.

The Plaintiff filed proceeding seeking orders that they are the registered proprietors of the properties described as section 123, allotments 1, 2 and 3, Madang, Madang Province as contained in the state lease volume 28, folio 137, 138 and 139, Milinch of Kranget, Fourmil Madang, Madang Province (the property). Consequent to those orders they seek vacant possession of the property by the current occupants who are they assert are illegally occupying the property.

Held:

(1)	The law on whether fraud is actual fraud only or includes constructive fraud under s 33(1) of the Land Registration Act 1981 has not been settled by the Supreme Court (see Camilus v Mota (2022) SC2210 and Timothy v Timothy (2022) SC2282).

(2)	Constructive fraud was first defined by Amet J in Emas Estate Development Pty Ltd v Mea, Swokin, and The State 1993] PNGLR 215 as acquisition of title where “…circumstances are so irregular and unlawful at the very outset to the subsequent transactions that it ought not to prevail.” 

(3)	H.R. Holdings Ltd v Taka (2023) SC2411 followed in cases of conflicting Supreme Court decisions.

(4)	 Considering the value that land has to Papua New Guineans, a fait accompli approach may result in the law sanctioning a plainly unjust outcome. In Emas, Salika J stated, “…land is a very important commodity in this country. Government land is very scarce…, and people or corporations applying for lease of government land must be seen to be allocated such land without any fraud or outside influence, but simply on the merits.” Section 158 of the Constitution behoves courts to give paramount consideration to the dispensation of justice. Moreso, National Goal No 2 of the Constitution requires equitable distribution of resources.

(5)	On the evidence, the Defendants had indigenous connection to the land, and were required to give their free, prior and informed consent, before the land they were occupying is converted to state land.

(6)	Given these considerations the Supreme Court’s view that fraud included constructive fraud in Camilus v Mota (2022) SC2210, and the line of authorities it followed was preferred.

(7)	There is no evidence of how the land in contention was converted from customary land to state land under the relevant provisions of the Land Act 1996. These provisions are s 7, s8, s9 and s10 of the Land Act. The conversion of customary land was therefore wholly irregular and unlawful. There was therefore constructive fraud in the alienation of the subject land, with the conclusion that the state lease should be cancelled pursuant to s 33(1)(a) of the Land Registration Act and the land redesignated as customary land.   

Cases cited

Camilus v Mota (2022) SC2210
Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215
H.R. Holdings Ltd v Taka (2023) SC2411
Timothy v Timothy (2022) SC2282

Counsel:

Burnie Meten for the plaintiffs
Cornelius Momoi for the defendants

DECISION

1.	NAROKOBI J: This is a decision after a contested trial over a piece of land in Madang town of Madang Province. 

Background

2.	The Plaintiff filed proceeding seeking orders that they are the registered proprietors of the properties described as section 123, allotments 1, 2 and 3, Madang, Madang Province as contained in the state lease volume 28, folio 137, 138 and 139, Milinch of Kranget, Fourmil Madang, Madang Province (the property). Consequent to those orders they seek vacant possession of the property by the current occupants who they assert are illegally occupying the property.

Issues

3.	The issue in my view is twofold – firstly whether constructive fraud applies under s 33(1)(a) of the Land Registration Act 1981, and secondly whether section 123, allotment 3, Madang, Madang town was converted to state land through constructive fraud, and therefore should still remain as customary land.

Evidence

4.	From the affidavits tendered by the Plaintiffs and the Defendants, the following story emerges. Captain Dabung Kiong in his affidavit filed on 5 May 2023 states that the property was initially customary land that he bought from Matulon Land Group. They had allowed the Defendants to move in and occupy the place, until such time, the place was developed, then they would ask them to leave. Much money has been paid to the customary landowners and also to develop the property. Attempts now to get the Defendants to vacate the property has not been successful. The property has since then been converted to state land, after it was advertised and the Plaintiffs successfully applied for it. Three separate state leases have been issued for the property under the name of Dabung Kiong and Wandui Kiong, the Plaintiffs.

5.	Ms Patrolina Atolik, the provincial alienated lands officer with the Madang Provincial Lands office states in her affidavit filed on 21 July 2023 that she prepared inspection reports after she was approached by the Plaintiffs and one Paul Kamang (since deceased) the Chairman of the Matulon Clan of Yabob Village. She had no idea that the property was advertised. In her view the property should have been advertised in Madang so that other interested persons may apply for the property. It is not fair that the Plaintiffs should have three parcels of land.

6.	Mr Francis James Irara, the Director of Natural Resources with the Madang Provincial Lands Office filed an affidavit on 3 April 2024 in support of the Defendants. His role is to manage the affairs of the Madang Provincial Lands and Physical Planning office. His functions extend to managing the Provincial Mining Office and the Provincial Forestry office. He draws attention to s 68 and s 69 of the Lands Act 1996, which provides for the advertisement in the National Gazette of all land that are going to be leased. No advertisement was made of the property, but if it was, then it was not sent to Madang to be advertised on the public notice board. Land that are being leased must have more than one applicant. In that event that there is only one applicant, the property should have been withdrawn to allow other persons to apply as well. He concludes that the whole allocation process was unfair.

7.	Angela Gubag, from Yabob Village, deposes to an affidavit filed on 3 April 2024, and is the wife of Hicky Gubag. She is a member of the Matulon Land Group Incorporated. Her husband is from Karkar Island and the elder brother of one of the Plaintiffs, Wangui Kiong. She and her husband were residing in her village, Morelang village, but due to rising sea levels,  they asked Paul Kamang to relocate them to reserve land that were under the control of Matulon ILG. Paul Kamang told them to find a developer so they approached the Plaintiffs to become their developer. Angela and her husband together with the plaintiffs went to Paul Kamang and he gave them section 123, allotment 1, to Wandui Kiong because she was her husband’s sister and Paul gave allotment 2 to her. However, the plaintiff wanted both allotments 1 and 2 and they went to see Paul Kamang and discussed the matter further. Paul Kamang gave allotments 1 and 2 to Wandui Kiong and relocated them to allotment 3.

8.	Sometimes in March 2014 Angela Gubag and her husband settled on section 123, allotment 3 Madang town with the permission of the Matulon ILG chairman. During 2014 Dabung Kiong helped her husband to build a house in allotment 3 which they now reside. In 2015 PNG Water Board connected water to allotment 3. Then in 2015 and again in 2017, she filled tender forms and submitted it to the Madang provincial lands office showing her interest to obtain title to section 123 allotment 3 Madang town, however she did not keep copies of her application forms.

9.	In 2018 the Plaintiffs built their house on allotment 1 and they commenced arrangement to take over their allotment while development of allotment 2 was to take place. Angela Gubag and her husband were surprised to learn in August 2022 that the Plaintiffs had obtained state lease titles to section 123 allotments 1, 2 and 3, Madang town. Three months later, in November 2022 she and her husband were served District Court summons to have them evicted. The Plaintiffs who were the complainants, failed to appear many times in the District Court and the matter was struck out for want of prosecution on 17 March 2023.

10.	Afte the proceedings in the District Court, in May of 2023 Angela Gubag and her husband were given notice to appear in the National Court for this matter. No opportunity was provided to them to apply for the state lease title of section 123, allotment 3, Madang town because the notice that the portion of land was available for lease was not displayed on the notice boards of Madang provincial lands office for them to see and approach the administration office to submit their applications. Furthermore, if the Lands department was considering applications made prior to the date of Gazette, that is, 20 September 2021, then their application was made in 2015 and 2017 to obtain state lease of allotment 3 and should have been considered, and it is unfair now that their application was not considered. She also says that section 123, allotment 1, 2 and 3, Madang town are customary land, owned and under the control of Matulon ILG. She says that the customary lands were fraudulently converted to state land and then made available for lease to the Plaintiffs.

The Law

11.	The law on whether fraud is actual fraud only or includes constructive fraud has not been settled by the Supreme Court (see Camilus v Mota  (2022) SC2210 and Timothy v Timothy (2022) SC2282).  Constructive fraud was first defined by Amet J in Emas Estate Development Pty Ltd v Mea, Swokin, and The State 1993] PNGLR 215 as acquisition of title in “…circumstances are so irregular and unlawful at the very outset to the subsequent transactions that it ought not to prevail.” Here the process to convert customary land was absent, raising doubts as to what actually transpired such that it is wholly irregular and should not be countenanced by the law. Given the state of the law, it is open to me, to follow which of the Supreme Court decision, I should apply. The choice of which Supreme Court decision to apply was explained well in H.R. Holdings Ltd v Taka (2023) SC2411, which I adopt. Considering the value that land has to Papua New Guineans, a fait accompli approach may result in the law sanctioning a plainly unjust outcome. In Emas, Salika J stated, “…land is a very important commodity in this country. Government land is very scarce in this country, and people or corporations applying for lease of government land must be seen to be allocated such land without any fraud or outside influence, but simply on the merits.” Section 158 of the Constitution behoves courts to give paramount consideration to the dispensation of justice. Moreso, National Goal No 2 of the Constitution calls for equitable distribution of resources. I am therefore persuaded that fraud includes constructive fraud.            

Considerations

12.	Weighing the evidence of the parties, the Defendants narration of events is to be preferred. Captain Dabung Koing omitted to disclose how he and his wife came to occupy the property. This is explained by Angela Gubag. Her husband, Hicky Gubag from Karkar Island, is the elder brother of Wandui Kiong. They were invited by Hicky Gubag’s wife, Angela Gubag to come and develop the place, but only in relation to allotment 1 and 2. I have accepted the evidence that allotment 1, 2 and 3 prior to its conversion to state land was customary land. This is from the affidavits of both the Plaintiffs (Captain Dabung Kiong) and the Defendants (Angela Gubag). There is no evidence of how the land was converted from customary land to state land under the relevant provisions in the Land Act 1996. These provisions are ss 7, 8, 9 and 10 of the Land Act. What is certain is that the Plaintiffs were granted permission from the customary landowners through the invitation of the Defendants and the customary landowners, represented by Paul Kamang to settle on allotments 1 and 2 of section 123. From the evidence, under custom, consent was given to the Plaintiffs for allotment 1 and 2 only. The Plaintiffs therefore had rights under custom to convert the customary land to state land, although I am unsure how that occurred and if proper procedures were followed. That issue is not before me. On the other hand, the Plaintiffs and for that matter, the State had no rights under written law and custom to alienate section 123, allotment 3 because the Defendants having indigenous connection to section 123, allotment 1, were to have been consulted, even if it was compulsory acquisition.

13.	Advertising in a Gazette Notice may satisfy the requirement for notice to the world at large including the Defendants where no legitimate interest in custom is at stake. But this is a different scenario here. The right of the present occupier (the Defendants) of the subject property to be consulted must be observed under the regime of ss 7, 8, 9 and 10 of the Land Act as I am satisfied from the evidence, they have an interest under custom.

14.	Under international law there is a shift towards “free, prior and informed consent.” Angela Gubag was not consulted. The Plaintiffs had in fact been invited by the Defendants to come and develop the land. Dabung Kiong helped the Defendants to build their house on allotment 3. In my view, the Lands Department failed to properly carry out its investigation over section 123, allotments 1, 2 and 3, Madang town, before declaring that allotment 3 should be converted to state land. Had they done that, the Lands Department would have consulted Angela Gubag before the land she was living on was converted to state land. The whole process was therefore wholly irregular and unlawful within the meaning envisaged in Emas. 

15.	I am led to the conclusion that there was constructive fraud, in having allotment 3, section 123 declared as state land. Accordingly, the state lease, described as section 123, allotment 3, is hereby cancelled on the basis of constructive fraud under s 33(1)(a) of the Land Registration Act and it is declared that for all intents and purposes, still customary land, which shall be occupied by the Defendants under rights and obligations determined by the customary laws of that place. For the avoidance of doubt, section 123, allotments 1 and 2 remain state land and the Plaintiffs continue to be its registered proprietor.

Conclusion

16.	The Plaintiffs have successfully converted customary land, at the expense of persons who had direct interest over this land, and it was only fair that they were informed before the land was converted to state land. In my view consultation is a fundamental principle that permeates the provisions of the Land Act that I have referred to. For these reasons the title cannot stand by operation of constructive fraud. 

Orders

17.	On account of my findings, I make the following orders:

1.	State lease described as section 123, allotment 3, Madang, Madang Province as contained in the state lease volume 28, folio 139, Milinch of Kranget, Fourmil Madang, Madang Province is cancelled pursuant to s 33(1)(a) of the Land Registration Act 1981 and is hereon declared as customary land.
2.	The Lands Department and the Registrar of Title shall cancel State lease described as section 123, allotment 3, Madang, Madang Province as contained in the state lease volume 28, folio 139, Milinch of Kranget, Fourmil Madang, Madang Province and update its record to reflect it as customary land.
3.	For the avoidance of doubt, State lease described as section 123, allotments 1, and 2, Madang, Madang Province as contained in the state lease volume 28, folio 137, and 138, Milinch of Kranget, Fourmil Madang, Madang Province remains as state land, leased to Captain Dabung Kiong and Wandui Kiong.
4.	Each party shall bear their own costs.
5.	The matter is considered determined, and the file is closed.
6.	Time for entry of the orders is abridged.

Judgment and orders accordingly.    

Lawyers for the plaintiffs:  Meten Lawyers
Lawyer for the defendants:   Public Solicitor