Nali v Tol [2026] PGNC 6; N11702 (16 February 2026)

N11702

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO 98 OF 2025

CHARLIE NALI & WILLIE JOSHUA KOVINGRE
First Plaintiffs

EMITLA NABOAM
Second Plaintiff

MOREEN & NICK KAMBI
Third Plaintiff

NIGEL NAKGAI
Fourth Plaintiff

V

ABEL TOL, MANAGING DIRECTOR,
NATIONAL HOUSING CORPORATION
First Defendant

NATIONAL HOUSING CORPORATION
Second Defendant

BENJAMIN SAMSON, SECRETARY,
DEPARTMENT OF LANDS & PHYSICAL PLANNING
Third Defendant

ALA ANE, REGISTRAR OF TITLES
Fourth Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

MATHEW KALUVIA,
EAST SEPIK PROVINCIAL HEALTH AUTHORITY
Sixth Defendant

EAST SEPIK PROVINCIAL HEALTH AUTHORITY
Seventh Defendant

WAIGANI: CANNINGS J
24 OCTOBER, 7 NOVEMBER 2025; 16 FEBRUARY 2026

LAND – residential properties within vicinity of public hospital – competing claims to right of occupation of properties – whether National Housing Corporation had responsibility for management of properties – whether Department of Health and Provincial Health Authority has right to manage properties and develop them for hospital staff housing – State Leases – effect of registration of State Leases granted to Department of Health – whether fraud involved in granting of State Leases – meaning of “fraud” in Land Registration Act – actual fraud – constructive fraud.

Four residential properties in proximity to a public hospital have been occupied for periods of 30 to 50 years by staff of the hospital or their descendants. The properties were managed by the National Housing Corporation and the occupiers paid rent to the Corporation. In 1996 the Secretary of the Department of Lands and Physical Planning issued certificates to the Department of Health authorising its occupancy of the properties. The Corporation in 2016 entered into contracts of sale with the occupiers who paid various sums for purchase of the properties. In 2023 the Minister for Lands and Physical Planning granted 99-year State Leases to the Department of Health over the properties. In 2024 the Minister for Lands and Physical Planning granted State Leases over two of the properties to the Corporation, which then transferred the leases to two of the plaintiffs. The Department of Health, through the Provincial Health Authority, wishes to control who lives on the properties and allocate them to current staff of the Authority. The Chief Executive Officer of the Authority commenced proceedings under the Summary Ejectment Act in the District Court, which granted orders for eviction of the occupiers. The occupiers then commenced these proceedings as plaintiffs in the National Court. They seek declarations that the State Leases granted to the Department of Health in 2023 are null and void due to fraud and that the State Leases transferred to two of the plaintiffs in 2024 are valid and an order that contracts of sale between the two other plaintiffs and the Corporation be enforced.

Held:

(1) The starting point for resolution of any dispute over title to any government land, including the subject land, is the principle of indefeasibility of title: once a lease of land from the State is registered, an indefeasible title is conferred on the registered proprietor, subject only to the exceptions in s 33(1) (protection of registered proprietor) of the Land Registration Act, including s 33(1)(a), which states: “The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except ... in the case of fraud”.

(2) Here, the Department of Health was granted State Leases over the properties in 2023. The plaintiffs alleged fraud in the granting of the leases, but failed to prove it. The dispute over which governmental body had the right to manage the properties and to decide who occupied the properties was longstanding, but it was resolved by the decisions of the Secretary for Lands in 1996 to issue the certificates authorising occupancy to the Department of Health and the Minister in 2023 to grant State Leases to the Department of Health. There was no actual fraud involved. Nor was there constructive fraud: the circumstances of granting of the State Leases were not so irregular, suspicious or unsatisfactory as to be tantamount to fraud.

(3) The grant in 2024 of State Leases to the National Housing Corporation and the subsequent transfer to two of the plaintiffs was ineffective as the title obtained under those leases was subject to the prior title constituted by the State Leases granted to the Department of Health.

(4) The proceedings were dismissed and the relief sought by the plaintiffs was refused. However, as the plaintiffs had acted in good faith in commencing the proceedings and were supported by the National Housing Corporation, the parties were ordered to pay their own costs, and the defendants and all other persons were restrained for a limited period from removing the plaintiffs from the properties.

Cases cited

Divine Word University v Kuaru (2018) N7196
Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215
Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222
Kilanda v Enga Provincial Government (2023) SC2405
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120
Mudge v Secretary for Lands [1985] PNGLR 387
PNG Bible Church Inc v Mandi (2018) SC1724
PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126
Ramu Nickel Ltd v Temu [2007] 2 PNGLR 157
Tikili v Home Base Real Estate Ltd [2017] 1 PNGLR 240

Counsel

J Abone & G Odu for the plaintiffs
R N Endemongo for the first and second defendants
B Samiat for the third to seventh defendants

1. CANNINGS J: This case involves a dispute over four residential properties at the entrance to Boram General Hospital in Wewak, East Sepik Province, which have been occupied for periods of 30 to 50 years by staff of the hospital or their descendants. The properties have historically been managed by the National Housing Corporation.

2. In 1996 the Secretary of the Department of Lands and Physical Planning issued certificates to the Department of Health authorising its occupancy of the properties.

3. The properties have been managed by the National Housing Corporation and the occupiers paid rent to the Corporation, which in 2016 entered into contracts of sale with the occupiers who paid various sums for purchase of the properties.

4. In 2023 the Minister for Lands and Physical Planning granted 99-year State Leases to “Independent State of Papua New Guinea – Department of Health” over each property.

5. In 2024 the Minister for Lands and Physical Planning granted State Leases over two of the properties to the Corporation, which then transferred the leases to two of the plaintiffs.

6. The Department of Health, through the Provincial Health Authority, wishes to control who lives on the properties and allocate them to current staff of the Authority. The Chief Executive Officer of the Authority commenced proceedings under the Summary Ejectment Act in the Wewak District Court, which on 25 March 2025 issued warrants for eviction of the occupiers.

7. The occupiers then commenced these proceedings as plaintiffs in the National Court. On 7 April 2025 I granted a stay of the District Court eviction order.

8. The plaintiffs seek declarations that the State Leases granted to the Department of Health in 2023 are null and void due to fraud and that the State Leases transferred to two of the plaintiffs in 2024 are valid and an order that contracts of sale entered into in 2016 between the two other plaintiffs and the Corporation be enforced.

9. The dispute is between:

• the plaintiffs (who are supported by the first and second defendants, the Managing Director of the National Housing Corporation and the Corporation); and
  
• the third to seventh defendants (the Secretary for Lands and Physical Planning, the Registrar of Titles, the State, the CEO of the East Sepik Provincial Health Authority and that Authority).
  

PLAINTIFFS’ POSITION

10. The plaintiffs say that they or their immediate relatives have occupied the properties for generations. This is not in dispute. Though none of the plaintiffs are presently employed at Boram Hospital, they all have relatives who were employed there, most of them now deceased. They say that they have all been tenants of the National Housing Corporation and that they and their families have been paying rent diligently. In 2016 they entered into contracts with the Corporation for sale of the properties to them and they have all paid deposits.

11. For two of the properties, Allotments 3 (occupied by the first plaintiffs) and 4 (occupied by the second plaintiff), the sales have been completed. On 24 October 2024 the Minister for Lands and Physical Planning granted 99-year State Leases over Allotments 3 and 4 to the National Housing Corporation, and on 5 December 2024 the Corporation transferred Allotment 3 to Willie Joshua Kovingre (a first plaintiff) and Allotment 4 to Emelita Naboam (the second plaintiff).

12. For the other two properties, Allotments 1 and 2, the purchase prices set in the contracts of sale have not been fully paid and State Leases have not yet been granted to the Corporation.

13. The plaintiffs acknowledge the fact that State Leases over the four properties were granted, in effect, to the Department of Health on 8 September 2023. They acknowledge that that means that the Department of Health was ostensibly then the registered proprietor of the properties. However they argue that the indefeasible title enjoyed by the Department is subject to the exception of fraud created by s 33(1)(a) of the Land Registration Act, and that the exception applies in this case as the circumstances in which the State Leases were granted in 2023 were so unsatisfactory and irregular as to amount to constructive fraud. If that argument does not succeed, they argue that at least the State Leases over Allotments 3 and 4 that were granted in 2024 and transferred to the first and second plaintiffs should prevail.

14. The plaintiffs, I reiterate, are supported by the National Housing Corporation. The Corporation takes the view that it is the legitimate manager of public housing stock, it has managed these properties over a long period, it has agreed in accordance with the policies it implements under the National Housing Corporation Act to sell these properties to the plaintiffs and the contracts of sale entered into with the plaintiffs should be given effect.

ISSUES

15. The dispute over these four properties has continued for many years. Both sides genuinely believe that they are in the right.

16. The plaintiffs regard the properties as their homes that have been in their families for generations, that they have done the right thing at all times and that they have been supported by the National Housing Corporation in their quest to purchase their homes.

17. The third to seventh defendants regard the properties as reserved institutional housing required for staff of the Boram General Hospital or the East Sepik Provincial Health Authority. They have followed proper processes by getting State Leases granted to the Department of Health, and the properties need to be allocated to staff of the hospital or the Authority or perhaps redeveloped for staff accommodation.

18. The position of each side is reasonable and legitimate. The question of which side prevails is to be determined in my view by answering two questions: First, was there fraud involved in the granting of State Leases to the Department of Health in 2023? Secondly, what is the effect of granting of State leases to the National Housing Corporation in 2024?

WAS FRAUD INVOLVED IN GRANTING STATE LEASES TO THE DEPARTMENT OF HEALTH IN 2023?

19. The meaning of “fraud” in s 33(1)(a) of the Land Registration Act has been the subject of much judicial debate. Some Supreme Court decisions such as Koitachi Ltd v Walter Schnaubelt (2007) SC870 and Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222 have followed the leading judgment in Mudge v Secretary for Lands [1985] PNGLR 387 and insisted that it means actual fraud.

20. However, there is a strong line of Supreme Court decisions that have substantially qualified the concept of indefeasibility of registered title set out in Mudge. Cases such as Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215, PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126, Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120, Tikili v Home Base Real Estate Ltd [2017] 1 PNGLR 240 and PNG Bible Church Inc v Mandi (2018) SC1724 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. I will apply the constructive fraud approach in this case.

21. The plaintiffs and the National Housing Corporation submit that under the National Housing Corporation Act (ss 37, 38, 63 and 65) the Corporation was obliged to give effect to government policies regarding the sale of its properties to long-term occupiers. It was giving effect to those policies in this case by the arrangements commenced in 2016 to transfer the properties to the occupiers. Those arrangements were completed in the case of two of the properties in 2024 and are still in progress with the other two properties.

22. The plaintiffs and the National Housing Corporation submit that it was wrong in law for the State Leases to be granted in 2023 to the Department of Health as it was contrary to the National Housing Corporation Act.

23. They further submit that the provisions of Part XI (grant of State Leases of improved government land to the National Housing Corporation) of the Land Act ought to have been invoked, but the procedures under that Part were not followed. That failure to follow statutory procedures makes the granting of the State Leases to the Department of Health so unsatisfactory and unlawful as to amount to constructive fraud, which means those State Leases should be declared null and void.

24. If that argument fails, the plaintiffs and the National Housing Corporation submit that at least the State Leases transferred to two of the plaintiffs in 2024 should be declared lawful.

25. I reject those arguments. The National Housing Corporation, though it assumed responsibility for managing the properties over a long period, had no legal interest in the properties. The dwellings on the properties were not “vested” in the Corporation for the purposes of s 37 (sale of dwellings) of the National Housing Corporation Act. The Corporation therefore had no obligation, nor did it have the power, at least until 2024, to transfer the properties to the plaintiffs.

26. The Department of Health was in a superior position to decide the fate of the properties by virtue of the certificates authorising occupancy and notices of reservation issued by the Secretary of the Department of Lands and Physical Planning in 1996.

27. Mr Abone, counsel for the plaintiffs, argues that these certificates and notices were stated as being issued under s 25 of the Land Act, which is an irrelevant provision, and are therefore null and void.

28. Mr Abone is correct. Section 25 (general principles) is about determination of the amount of compensation payable in respect of land acquired by compulsory process. It is clearly an incorrect provision. The correct provision is s 49 (reservation from lease or further lease).

29. The citing of the incorrect provision was an administrative error which, in my view, does not alter the clearly intended purpose and effect of the certificates and reservations that were issued otherwise in accordance with the Land Act. Their effect was (as explained by the Supreme Court in Kilanda v Enga Provincial Government (2023) SC2405) that, by virtue of s 52 (special purposes lease to be granted over reserved land) of the Land Act, “the land shall not be granted on application or tender, and a special purposes lease over the land shall be issued and registered in the name of the Independent State of Papua New Guinea”.

30. The leases granted to the Department of Health in 2023 were granted under s 100 (grant of special purposes leases) of the Land Act. They were stated as being granted for a “Special (Public Institution) purpose” and subject to various covenants including:

Improvements being buildings for special (staff residence) purposes and ancillary uses to a minimum value three hundred thousand Kina (300,000.00) shall be erected on the land within five (5) years from the date of grant of the lease or title and these or similar improvements to the minimum value for the same purpose shall be maintained thereon in good repairs during the term of the lease.

31. The provisions of Part XI of the Land Act cover the situation where the Minister declares government improved residential land to be subject to Part XI for the purpose of granting a lease to the National Housing Corporation. Part XI has no relevance in this case.

32. The only potential problem I see in the grant of the State Leases to the Department of Health in 2023 is the failure to advertise the land as being available for lease. The power to grant a special purposes lease of government land under s 100(1) of the Land Act is qualified by the opening words of that subsection “Subject to Section 69 ...”.

33. Section 69 provides that a State Lease shall not be granted without first being exempted from advertisement. Arguably the failure to advertise in this case was an irregularity, which makes the granting of the leases vulnerable to a finding that there was constructive fraud. I point out that this argument was not raised (or if it was, it was given little emphasis) in submissions. If it had been raised, and had been upheld, I would be inclined to take the same approach I took in Divine Word University v Kuaru (2018) N7196: given the lengthy dispute over use of these properties and the clear interest shown in them since 1996 by the Department of Health, the irregularity is minor and is not regarded as so unsatisfactory, irregular or unlawful as to be tantamount to fraud.

34. I find that no fraud was involved in the granting of the State Leases to the Department of Health in 2023. It should have been obvious to the National Housing Corporation in 1996 when the certificates authorising occupancy were issued in favour of the Department of Health that the properties were required for hospital staff housing. The Corporation had no legal interest in the properties and no statutory responsibility for management of them. The Department and the Provincial Health Authority took legitimate and transparent steps to obtain the State Leases in 2023, a process that took 27 years to complete. There was no fraud, actual or constructive, involved in the grant of the leases.

WHAT IS THE EFFECT OF GRANTING STATE LEASES TO THE NATIONAL HOUSING CORPORATION IN 2024?

35. The State Leases over two of the Allotments granted to the Corporation and transferred to the first and second plaintiffs in 2024 are of no effect. Ostensibly the first and second plaintiffs have indefeasible title over those allotments. However, their title is affected by constructive fraud in that it has been obtained in unsatisfactory and irregular circumstances as there were pre-existing leases over each allotment granted to the Department of Health.

36. The pre-existing leases prevail by virtue of s 33(1)(b) of the Land Registration Act: “The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except ... the encumbrances notified by entry or memorial on the relevant folio of the Register”. Section 33(1)(b) gives effect to the general principle that a prior grant of a State Lease take precedence over a later grant (Ramu Nickel Ltd v Temu [2007] 2 PNGLR 157).

CONCLUSION

37. The State Leases granted to the Department of Health in 2023 are valid and effective. All relief sought by the plaintiffs must be refused. The case will be dismissed. The plaintiffs will have to vacate the properties. They will be given reasonable time to leave. This dispute has been continuing for many years. The plaintiffs’ desire to remain in these properties is genuine. They have not commenced the proceedings in bad faith. They have been supported by the National Housing Corporation. The result of the case will no doubt put them in a difficult situation. I will order the parties to bear their own costs.

ORDER

(1) Subject to this order, the proceedings are dismissed and the relief sought by the plaintiffs is refused.

(2) The defendants and all other persons including the Police are restrained from evicting or removing the plaintiffs from Section 22, Allotments 1, 2, 3 and 4, Wewak, East Sepik Province at any time before 12 noon on 20 April 2026, and the plaintiffs are entitled to remain in occupation of those properties until that time.

(3) The plaintiffs and all other persons occupying Section 22, Allotments 1, 2, 3 and 4, Wewak, East Sepik Province shall vacate and remove all their personal property and possessions from those properties by 12 noon on 20 April 2026, failing which the Police are authorised, from that time, to use reasonable force to evict them and remove any of their personal property and possessions remaining on those properties.

(4) The interim injunction of 7 April 2025 dissolves at 12 noon on 20 April 2026.

(5) The parties shall bear their own costs of the proceedings.

________________________________________________________________
Lawyers for the plaintiffs : Parkil Lawyers
Lawyers for the first & second defendants : Adam Ninkama Lawyers
Lawyer for the third to seventh defendants : Solicitor-General