Tagan v Nawara [2015] PGSC 38; SC1443 (10 July 2015)

SC1443

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV NO. 19 OF 2015

BETWEEN

LESLIE AMOS TAGAN
Applicant

AND

ANNA NAWARA
First Respondent

AND

PHILOMENA PIAMARI NAWARA
Second Respondent

AND

AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LIMITED
Third Respondent

AND

GENERAL MANAGER,
NATIONAL HOUSING CORPORATION
Fourth Respondent

AND

THE REGISTRAR OF TITLES
Fifth Respondent

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Sixth Respondent

Waigani: Makail J
2015: 07th & 10th July

SUPREME COURT – PRACTICE & PROCEDURE – Application for leave to review – Review of decision of National Court to dismiss application for judicial review – Principles of leave considered – Exceptional circumstances – Satisfactory explanation for default – Failure to file appeal within 40 days – Arguable case – Constitution – Section 155(2)(b).

Cases cited:

Avia Aihi v. The State [1982] PNGLR 44
Jeffery Balakau v. Ombudsman Commission [1996] PNGLR 346; (1996) SC529
Danny Sunu v. The State [1984] PNGLR 305
The State v. Colbert [1988] PNGLR 138
Joseph Kupo v. Steven Raphael (2004) SC751
Martha Limitopa v. The State [1988-89] PNGLR 364
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378
Walter Schnaubelt v. Hon. Byron Chan & Electoral Commission (2012) N4791
Micky Akai v. Warner Shand Lawyers (2014) SC1393
The Papua Club Incorporated v. Nasaum Holdings Limited (No. 2) (2004) N2603
The Papua Club Incorporated v. Nasaum Holdings Limited (2005) SC812
Koitachi Limited v. Walter Schnaubelt (2007) SC870
Mudge v. Secretary for Lands [1985] PNGLR 387
Eric Kiso v. Bennie Otoa & Ken Wutnalom (2013) SC1222
Paul Asakusa v. Andrew Kumbakor (2008) N3308

Counsel:

Mr. R. Habuka, for Applicant
No appearance, for First Respondent
Mr. C. Raurela for Second Respondent
Mr. T. Anis, for Third Respondent
No appearance, for Fourth, Fifth and Sixth Respondents

RULING ON LEAVE TO REVIEW

10th July, 2015

1. BY THE COURT: This is an application for leave to review a decision of the National Court dismissing an application for judicial review pursuant to Section 155(2)(b) of the Constitution. The Applicant had lost his right to appeal against the decision of the National Court which was given on 20th February 2015 when the statutory time limit of 40 days expired on 30th March 2015. That is not to say that he did not exercise that right. He did when he filed an appeal by using a Notice of Appeal in accordance with Form 8 (Order 7, rule 9(e) of the Supreme Court Rules (SCR)) instead of Notice of Motion under Form 15 (Order 10, rule 3(c) of the SCR). That Notice of Appeal was judged to be incompetent by the Supreme Court and was dismissed. By that time, 40 days had expired.

2. The power of the Supreme Court under Section 155(2)(b) of the Constitution is discretionary but the test applied in deciding whether to grant leave to an Applicant who has lost the right of appeal is higher than the one applied in the case of leave to appeal under Section 14 of the Supreme Court Act. Leave will only be granted in exceptional circumstances where some substantial injustice is manifest, or the case is of special gravity: Avia Aihi v. The State [1982] PNGLR 44.

3. There must be convincing reasons why leave should be granted, an explanation for the delay in filing the appeal in time and it must be shown that there is an arguable case on the merits: Avia Aihi (supra) and adopted in Jeffery Balakau v. Ombudsman Commission [1996] PNGLR 346; (1996) SC529.

4. It was contended on behalf of the Applicant that the default in complying with the statutory time limit of 40 days to file an appeal can be satisfactorily explained. The explanation was; the Applicant had used a form to institute the appeal which was later found to be incorrect and the appeal was dismissed. This was not a case where the Applicant had sat on his right of appeal like the Jeffrey Balakau case (supra) but one where the Applicant had took active steps to challenge the decision under consideration. The use of the incorrect form was the doing of the Applicant's former lawyers and the Applicant should not be penalised for the lawyers' error of judgment or incompetence.

5. But this is not a satisfactory explanation. The Applicant had retained the services of lawyers to act for him in the appeal. It was expected of them as the Applicant's legal advisors to properly advise him on how to prosecute the appeal; beginning with the basics, such as ensuring that the appeal was instituted using the correct form prescribed by the Supreme Court Rules. These are basic things that must be done correctly.

6. It was also pointed out by the Second Respondent that the incorrect form was drawn to the attention of the Applicant's former lawyers and also the current lawyers before the time limit of 40 days had expired but they took no steps to rectify it. This does not improve the Applicant's position when it comes to working out whether there is a satisfactory explanation for the default. When it is considered as a factor against the exercise of discretion, it confirms that lawyers' error of judgment or incompetence is fatal to the Applicant's application for leave to review.

7. Both the Supreme Court and the National Court have made it abundantly clear that lawyers' error of judgment or omission resulting in a default is no explanation for the default. In such a case, leave would be refused. The remedy against the lawyers is in damages for professional negligence: Danny Sunu v. The State [1984] PNGLR 305; The State v. Colbert [1988] PNGLR 138; Joseph Kupo v. Steven Raphael (2004) SC751; Martha Limitopa v. The State [1988-89] PNGLR 364; Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 and Walter Schnaubelt v. Hon. Byron Chan & Electoral Commission (2012) N4791. See also Micky Akai v. Warner Shand Lawyers (2014) SC1393.

8. Based on this consideration alone, there is nothing exceptional about this case for the discretion to be exercised in favour of the Applicant. Neither is it peculiar such that it would bring it within the bounds of an exceptional case and warrant a further consideration. The conflict between the parties, moreover the Applicant and the Second Respondent is a common one. It is about a residential property at East Boroko in the National Capital District. The Second Respondent is the current registered proprietor. The Applicant instituted judicial review proceedings and sought orders to set aside the title based on fraud. He claimed that he had an interest in the property as a sitting tenant of the Fourth Respondent and as an intending purchaser. Unbeknown to him, the property was sold to the First Respondent and subsequently to the Second Respondent.

9. It was his further claim that the sale of the property to the First Respondent, in the first instance, was done in fraudulent circumstances. First, the First Respondent was not a sitting tenant of the Fourth Respondent and secondly, the sale was not approved by an authorised officer of the Fourth Respondent. Thirdly, no consideration was given for the property (the Fourth Respondent received no money from the sale of the property). Fourthly and as a direct consequence of the unauthorised sale, there were two titles issued to two different title holders; one the Second Respondent and the other the Fourth Respondent.

10. He raised a further point in relation to the conduct of the First and Second Respondents by asserting that while the legality of the title was pending in the District Court by reason of an eviction proceeding instituted by the First Respondent against him and others, the First Respondent sold the property to the Second Respondent, thus implying that the Second Respondent was aware and part of the fraudulent transaction.

11. Under Section 33 of the Land Registration Act, a registered proprietor holds an indefeasible title. The title can be set aside if fraud is proven against the registered proprietor. Relying on the cases of The Papua Club Incorporated v. Nasaum Holdings Limited (No. 2) (2004) N2603; The Papua Club Incorporated v. Nasaum Holdings Limited (2005) SC812; Koitachi Limited v. Walter Schnaubelt (2007) SC870 and Mudge v. Secretary for Lands [1985] PNGLR 387, the learned trial judge found that the Applicant failed to prove fraud against the Second Respondent as the registered proprietor and dismissed the proceedings. His Honour found that there was no evidence to establish that the Second Respondent was privy to the transaction that occurred prior to the transfer of title from the First Respondent to the Second Respondent in order to connect her to the fraudulent transaction. His Honour found that she was a bona fide purchaser.

12. The Applicant's proposition that fraud can be inferred based on the irregularities surrounding the transfer of title to the Second Respondent thus it is arguable that it is not necessary to prove actual fraud runs contrary to the well established principle that a registered proprietor holds an indefeasible title and actual fraud must be proven to upset the title of the registered proprietor. There is a long line of case authority on this principle beginning with Mudge v. Secretary for Lands (supra) and The Papua Club Incorporated v. Nasaum Holdings Limited (No. 2) (supra) and the Supreme Court decisions in The Papua Club Incorporated v. Nasaum Holdings Limited (supra) and Koitachi Limited v. Walter Schnaubelt (supra). His Honour had referred to them and had acknowledged them in his consideration.

13. In referring to these cases including some overseas cases from Australia, particularly, Western Australia and England, his Honour pointed out that the protection of a registered proprietor is paramount. To attain that, there must be indefeasibility of title, irrespective of whether the previous owner of the property had a void title unless the current owner was part of the previous owner's fraudulent deal. Otherwise, serious consequences would follow if a registered proprietor is not given that protection. Title can be set aside at will thus affecting a family's life if it is a residential property or a business operation if it is a commercial property or the public at large if it is a recreational property. The point is, fraud must be attributed to the registered proprietor and must be strictly proven.

14. As recent as 01st March 2013, the Supreme Court reaffirmed this principle in the case of Eric Kiso v. Bennie Otoa & Ken Wutnalom (2013) SC1222. Mr Kiso had entered into an agreement with Mr Otoa to buy his property. Mr Otoa just like the Applicant in this case was a sitting tenant of the National Housing Corporation and in anticipation of buying the property from the latter, agreed to sell the property to Mr. Kiso prior to the transfer of title. Mr Kiso paid part of the purchase price and while waiting for the transfer of title, Mr Otoa sold the property to Mr Wutnalom. Mr Wutnalom registered the title in his name. At no time did Mr Wutnalom know of the agreement between Mr Kiso and Mr Otoa. Mr Kiso issued proceedings to set aside Mr Wutnalom's title claiming it was obtained by fraud. The Supreme Court sympathised with Mr Kiso for his unfortunate situation but upheld the decision of the National Court by holding that it was insufficient for him to prove fraud on the part of Mr Otoa unless he further proved that Mr Wutnalom was a party to that fraud and thereby secured registration on the Register of State Leases. Mr Kiso failed to do that.

15. Even then, the allegation that the First Respondent was not a sitting tenant of the Fourth Respondent and not entitled to buy the property and that the sale was not approved by the authorised officer of the Fourth Respondent are matters that could be easily said and done, as it were. But someone might turn up later and say that the sale was unauthorised because the person who approved it was not authorised, as it seemed to be the case here.

16. The Applicant's interest is only equitable. He has yet to purchase the property offered for sale, notwithstanding his right of occupancy as a long time sitting tenant and has expended substantial funds to maintain it. The Second Respondent is the legal owner of the property and has superior rights over his interest. The Second Respondent's interest is at risk now that the property is subject of a mortgage to the Third Respondent. The flow on effect is the Third Respondent is also put at risk because it has financed the purchase price of the property for the Second Respondent and will suffer substantially if the Applicant's interest takes precedence here. If anything, the Applicant's remedy lay in damages for breach of contract against the Fourth Respondent.

17. His Honour found that there was no evidence to challenge the authority of the person that signed the contract of sale on behalf of the Fourth Respondent and the First Respondent, thus it was taken that that person had authority to act on behalf of the Fourth Respondent. It was argued for the Applicant that his Honour erred in reaching this conclusion because there was evidence from the then Managing Director of the Fourth Respondent Mr Tarcissius Muganaua and Legal Officer Mr Gabriel Gore that the person who signed the contract lacked authority. That person has been identified in the Statement in Support for judicial review as one Elizabeth Bowada, a Legal Officer with the Fourth Respondent.

18. It is easy for the Applicant and these two witnesses to turn up one day so to speak and claim that Ms Bowada lacked authority to act for the Fourth Respondent in this matter. But it is not that easy where fraud is alleged. It is even difficult for the learned trial judge where the evidence of the Applicant is in direct conflict with the Second Respondent's evidence. Where the parties' evidence is evenly matched, it would be necessary to test the veracity of the witnesses' evidence through cross-examination. It was not disputed that the trial in the National Court was by affidavits and none of the deponents of the affidavits were cross-examined. This has placed his Honour in a situation where he did not have the benefit of observing the demeanour of the witnesses and their response to questions during cross-examination. The onus of proof is always on the Applicant as the party alleging fraud to prove it and where the evidence of both sides is evenly matched, it would be difficult to pin it down to a case of fraud. This explains why his Honour held that it must be taken on face value that the person who signed the contract had authority to do so.

19. The same reasons can be given for the allegation that no consideration was given for the property. The difficulty in proving fraud was further compounded by the lack of sufficient pleading of facts in the Statement in Support for judicial review which resulted in the Applicant failing to connect the Second Respondent to the fraudulent transaction, save seeking orders to set aside the title of the Second Respondent. Refer to Paul Asakusa v. Andrew Kumbakor (2008) N3308 for the duty to plead particulars of fraud.

20. Turning to the relief sought, the Applicant had sought, amongst other orders, an order that the Fifth Respondent cancel the title of the Second Respondent and restore it to the Fourth Respondent. The order sought would fall within one of the exceptions under Section 33(1). It is under Sub-paragraph (c) which states "the estate or interest of a proprietor claiming the same land under a prior instrument of title;" This exception would cover a situation where there is one title issued to two different title holders as in the present case. The party to challenge the registration of title by another must be the party who is the title holder of the same property. In this case, the Fourth Respondent who asserted that it is the title holder of the same property did not challenge the registration of the title save supported the Applicant in the National Court. The Applicant's contention based on two different title holders is misconceived for this very reason.

21. Finally, the further point by the Applicant that the Court should have inferred from the conduct of the First and Second Respondents that they committed fraud. That is while the legality of the title was pending in the District Court by reason of an eviction proceeding instituted by the First Respondent against him and others, the First Respondent sold the property to the Second Respondent. This submission is misconceived because the eviction proceeding did not concern the legality of the title of the First Respondent or the Second Respondent but was based on the right of the First Respondent to evict the Applicant based on the title she had. Any issue as to the legality of the title was a matter for the National Court to determine and which was done and the Court found against the Applicant. This contention is, therefore, dismissed.

22. For these further reasons, the Applicant has failed to demonstrate that there is an arguable case which would warrant further consideration. Leave is refused with costs.

________________________________________________________________
Daniels & Associates Lawyers: Lawyers for the Applicant
Raurela Lawyers: Lawyers for the Second Respondent
Bradshaw Lawyers: Lawyers for the Third Respondent