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Lae Bottling Industries Ltd v Lae Rental Homes Ltd [2017] PGSC 43; SC1641 (8 September 2017)

SC1641


PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]


SCA No. 61 of 2016


BETWEEN:
LAE BOTTLING INDUSTRIES LIMITED
First Appellant


AND
MONEY TALKS LIMITED
Second Appellant


AND
MATHEW MINAPE
Third Appellant


AND
LAE RENTAL HOMES LIMITED
First Respondent


AND
ROMILLY KILA-PAT as Secretary for Department of Lands & Physical Planning
Second Respondent


AND
BENNY ALLAN as the Minister for Lands & Physical Planning
Third Respondent


AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Respondent


Waigani: David, Murray & Pitpit, JJ
2017 : 28 August & 8 September


APPEALS – forfeiture of State Lease – mode of challenging decision to forfeit State Lease – appeal to National Court under Land Act, Section 142 – where right of appeal lost, proceed by way of judicial review under National Court Rules, Order 16 – originating summons filed to challenge forfeiture – originating summons subsequently converted to pleadings - application to dismiss proceedings under National Court, Order 12 Rule 40 for adopting wrong mode of originating process dismissed by National Court –error demonstrated – appeal upheld.


Cases cited:


Davis v Pitzz (1988-89) PNGLR 143
Dent v Kavali [1981] PNGLR 488
Michael Gene v Hamidian-Rad [1999] PNGLR 444
Nambawan Super Ltd v Pepi S. Kimas (2013) N5062
Noko No 96 Ltd v Sir Puka Temu (2012) SC1192
Premdas v The Independent State of Papua New Guinea (1979) PNGLR 329


Counsel:


David Levy, for the Appellants
Moses Phillip, for the first Respondent
Eava Geita (Jnr), for the Second, Third and Fourth Respondents


JUDGMENT


8 September, 2017


  1. BY THE COURT: INTRODUCTION: This appeal arises out of the whole of the decision of the Lae National Court made on 8 April 2016 in proceedings commenced by OS No.49 of 2015, Lae Rental Homes Limited v Lae Bottling Industries Ltd & Others.
  2. The National Court proceedings concern land contained in Allotment 1 Section 65 and described in State Lease Volume 6 Folio 144 (the land). The first respondent was the registered proprietor of the land until December 1997 when it was forfeited. Following the forfeiture, the land was granted to the First Appellant. The first respondent unsuccessfully appealed to the Minister for Lands and Physical Planning against the grant. The first respondent then commenced judicial review proceedings in OS No.202 of 1999 challenging the Minister’s refusal of its appeal. On 27 October 2003, the National Court constituted by Justice Kirriwom found in favour of the first respondent and quashed the decision of the Head of State and subsequently the Minister dismissing the first respondent’s appeal on the ground of fraud, illegality and breach of the principles of natural justice. His Honour’s decision essentially restored the first respondent as the proprietor of the land. Consequent to that conclusion, His Honour ordered, inter alia, that:
    1. the purported revocation of the grant of title of the land to the first respondent in respect of the parcel of land by the former Minister for Lands in April 1996 was improper and was null and void ab initio;
    2. the subsequent forfeiture of the first respondent’s title to the land was done in breach of the provisions of the Land Act and was null and void ab initio;
    3. the Land Board decision number 199 made on 14 May 1998 allocating the land to the first appellant was not made in accordance with the Land Act and was void for illegality;
    4. the dismissal of the first respondent’s appeal against the Land Board’s decision number 199 could not be sustained and be quashed because it was arrived at without good reasons and in the absence of transparency and principles of good governance.
  3. However, a new State Lease was issued to the first appellant after the decision of Justice Kirriwom was delivered.
  4. The decision of Justice Kirriwom was unsuccessfully challenged by the first appellant in the Supreme Court in SCR No.15 of 2006 by way of a judicial review and later by a slip rule application.
  5. Despite the decisions of Justice Kirriwom and the Supreme Court, by notice dated 11 December 2012 published in the National Gazette No.481 dated 13 December 2012, the second respondent, Secretary of the Department of Lands & Physical Planning acting as the delegate of the third respondent, Minister for Lands & Physical Planning again forfeited the land.
  6. Aggrieved by the forfeiture, the first respondent commenced the National Court proceedings by way of the originating summons filed on 11 February 2015. On 21 April 2015, the Court ordered the proceedings to continue by pleadings. In accordance with the said order, a statement of claim was filed on 5 May 2015, challenging the forfeiture of the first respondent’s State Lease. On 24 November 2015, the first, second and third defendants (now the first, second and third appellants) filed an amended notice of motion, seeking, inter alia, an order to dismiss the proceedings under all grounds specified under Order 12 Rule 40 of the National Court Rules including for being an abuse of process of the Court as the proceedings were instituted contrary to Section 142 of the Land Act. The said motion was heard on 4th March 2016 and a decision reserved till 8th of April 2016, when the National Court dismissed the motion by the appellants.
  7. Aggrieved by the said decision, the appellants filed an application for leave to appeal the National Court decision, as it was a decision arising from an interlocutory application. On 11 August 2016, the application for leave to appeal the decision of the National Court was granted by His Honour, Justice Batari.
  8. Following the grant of leave to appeal, the appellants, on 30 August 2016, filed their appeal by the filing of their notice of appeal.

GROUNDS OF APPEAL


  1. Seven grounds of appeal are pleaded at paragraph 3 of the notice of appeal, but they essentially give rise to one principal ground and that is:

His Honour erred in law in finding that the first respondent who was aggrieved by a forfeiture of a State Lease had a choice of the mode of proceedings to challenge the forfeiture, either by way of an appeal to the National Court under Section 142 of the Land Act 1996 or file either a writ of summons or an originating summons or by judicial review under Order 16 of the National Court Rules when the Court should have found that an interested person who decides to challenge a forfeiture must appeal to the National Court under Section 142 of the Land Act 1996 and not through any other mode of proceedings.


ORDERS SOUGHT


  1. The orders sought in the appeal are set out at paragraph 4 of the notice of appeal and these are:
(b) The entire National Court proceeding be dismissed for being incompetent and an abuse of the process of the Court.
(c) The costs of the appeal and the National Court proceedings be paid by the First Respondent.

ISSUES


  1. The main issue for this Court’s consideration and determination is whether the National Court erred in not dismissing the National Court proceedings either for disclosing no reasonable cause of action or for being frivolous or vexatious or for being an abuse of the process of the Court because the National Court proceedings challenging the forfeiture ought to have being pursued by way of an appeal pursuant to Section 142(1) of the Land Act?
  2. Peripheral to the main issue is whether the phrase “may appeal” used in Section 142(1) of the Land Act gives an interested person, in this case the first respondent, an option or discretion to challenge a forfeiture by adopting other modes of commencing civil proceedings in the National Court.
  3. We will discuss those issues together.

SUBMISSIONS OF THE APPELLANTS


  1. It was submitted by Mr Levy of counsel for the appellants that the trial judge erred when he found that the correct interpretation of the words “may appeal” under Section 142(1) of the Land Act 1996 is in relation to choosing a mode of proceedings to challenge a forfeiture of a State Lease such as either to appeal or commence proceedings in the National Court by a writ of summons, originating summons or apply for judicial review under Order 16 of the National Court Rules. However, counsel said when reading together the whole of that provision, the correct interpretation would be that, it gives an interested person the discretion whether or not to appeal the decision of an officer of the Department of Lands and Physical planning to forfeit a State Lease. In addition, it was submitted that if the interested person decides to challenge the forfeiture, then the interested person must do so within 28 days, but if out of time, then he or she may only seek an extension of time under Section 142(2) of the Land Act to lodge an appeal or seek leave to apply for judicial review under Order 16 of the National Court Rules to challenge that administrative decision.
  2. In addition, it was submitted that by not challenging the forfeiture by way of an appeal under Section 142 of the Land Act or alternatively, if out of time, by way of a judicial review under Order 16 of the National Court Rules, the National Court proceedings commenced by originating summons and later converted to pleadings amounted to a failure to disclose a reasonable cause of action, were frivolous or vexatious or an abuse of the process of the court so the trial judge ought to have dismissed the National Court proceedings and the appeal be upheld with costs.

SUBMISSIONS OF THE SECOND, THIRD AND FOURTH RESPONDENTS


  1. The second, third and fourth respondents supported the appellants, adopted their submissions and submitted that the appeal should be upheld with costs.

SUBMISSIONS OF THE FIRST RESPONDENT


  1. Mr Phillip for the first respondent submitted that the appeal should be dismissed with costs on the basis that:

REASONS FOR DECISION


  1. Before we address the issues we have set out in paragraphs 11 and 12 above, we wish to address firstly, one matter that arose from the first respondent's second argument raised in its submission as a ground that this Court should dismiss the appeal on. That argument is with respect to the consent by the appellants in the National Court to convert the first respondent's claim commenced by originating summons to pleadings by the filing of a statement of claim. The first respondent in its submission before us, argued that, by their conduct in agreeing for its claim in the National Court to continue on pleadings, the appellants are now estopped from arguing that the mode used by it to continue its claim is an abuse of the process of Court, and that in itself is an abuse of the process of Court.
  2. We find this argument to be misconceived and could dismiss it on that basis alone. We say it is misconceived because it was never raised by the first respondent and never argued in the National Court, when the appellants applied to dismiss the National Court proceeding for being an abuse of the Court's process. However, because it was raised and argued before us, we feel we should address it and we now do so.
  3. The question that arises from that argument is; whether the appellants are estopped by their conduct for; not raising their objection to the competency of the National Court proceedings at the earliest opportunity; and consenting to the originating summons being converted to pleadings?
  4. The various types of the principles of estoppel were summarized by Jordan CJ in Discount & Finance Ltd v Gehrigs NSW Wines Ltd & Anor [1940] NSWStRp 52; (1940) 40 SR (NSW) 598 at 602-3 as follows:

"There are various types of estoppel. There is estoppel by deed, which, in any action on a deed, prevents a party to it from disputing any distinct allegation of fact which he has made in it: Norton On Deeds, 2nd ed. 211-15. There is common law estoppel, which, if a person does an act, affecting someone else, which he is entitled to do only if a certain state of things exists, prevents him from asserting, as against the other, that when he did it, that state of things did not exist: Franklin v Manufacturers Mutual Insurance Ltd (1935) 36 SR (NSW) 76 at 80-2. There is estoppel by representation which prevents a person who, by a representation of fact, has led another to alter his position, from denying that the fact is as represented: ibid. There is estoppel by judgment, which prevents every party to the litigation in which the judgment was given from questioning in anyway, in any subsequent litigation between himself and another party to the litigation, anything decided by the judgment. Ex parte Amalgamated Engineering Union; Re Jackson (1937) 38 SR (NSW) 13 at 17, New Baunswick Railway Co. v British and French Trust Corp Ltd [1939] AC 1. In all these cases, estoppel is a rule of evidence which, in the given circumstances, prevents a person from denying or asserting, as the case may be, the existence of some fact, irrespectively of whether it really exists. There is also equitable estoppel by acquiescence, which prevents a person, who has knowingly permitted another to act, through mistake, to his own detriment and to the advantage of the former, from profiting by the other's mistake: Ramsden v Dyson [1866] UKLawRpHL 7; LR 1 HL 129 at 168; NSW Trotting Club Ltd v Glebe Muicipal Counsel [1937] NSWStRp 14; (1937) 37 SR (NSW) 288 at 308."


  1. The learned authors in Halsbury’s Laws of England, 4th Edition, Volume 16 at paragraph 962 describe the doctrine of estoppel as follows:

“The doctrine of estoppel may not be invoked to render valid a transaction which the legislature has, on grounds of general public policy, enacted is to be invalid, or to give the Court a jurisdiction which is denied to it by statute, or to oust the Courts statutory jurisdiction under an enactment which precludes the parties from contracting out of its provisions.”


  1. Clearly, estoppel by conduct is not available where the action is ultra vires or gives a court jurisdiction which is denied to it by statute or illegal: Paul Kumba v Motor Vehicle (PNG) Trust (2001) N2132; Polem Enterprise Ltd v Attorney General of Papua New Guinea (2006) N2968.
  2. If the appellants failed to raise any objection or apply to have the National Court proceedings dismissed for want of compliance with Section 142 of the Land Act or other procedural irregularities as a defence at the earliest opportunity and allowed the matter to be progressed by conversion to pleadings by consent, an estoppel whether by conduct or even by acquiescence cannot operate in favour of the first respondent because in our view, the equitable doctrine of estoppel cannot override statutory law. In other words, equity simply follows the law.
  3. In the present case, the first respondent filed National Court proceedings in an attempt to give the National Court jurisdiction which is clearly denied by statute. We therefore reject the first respondent’s argument on this issue as being mischievous and having no valid or legal basis.
  4. We now turn to consider the main issue before us, i.e., whether the National Court erred in not dismissing the National Court proceedings either for disclosing no reasonable cause of action or for being frivolous or vexatious or for being an abuse of the process of the Court because the National Court proceedings challenging the forfeiture ought to have being pursued by way of an appeal pursuant to Section 142(1) of the Land Act?
  5. Section 142 of the Land Act creates the right of appeal to the National Court for an interested person whose lease has been forfeited. It specifies the time limit as to when an appeal should be filed and also prescribes the effect that filing of an appeal entails.
  6. Section 142 states:

(1) An interested person may appeal to the National Court on—

(a) a re-appraisal of imposition of rent, or a variation or imposition of royalty, under Section 100(5); or

(b) the forfeiture of a lease.

(2) An appeal under Subsection (1) shall be made within 28 days after the matter complained of, or within such further time as the National Court for any special reason allows.

(3) Where an appeal is made under Subsection (1), the matter complained of has no effect until—

(a) the National Court has decided the appeal; or

(b) where no further appeal is made to the Supreme Court—the period prescribed for making an appeal has expired; or

(c) where a further appeal is made to the Supreme Court —the Supreme Court has decided the appeal,

and, subject to Subsection (4), a lessee may in the meantime continue lawfully to occupy the land the subject of the appeal and to exercise his rights, and shall fulfil his obligations, under the lease.

(4) When an appeal is made under Subsection (1)(a) the decision of the National Court or of the Supreme Court shall be deemed to operate as from the date of the matter complained of.


  1. Under Section 142:
  2. In the present case the first respondent commenced proceedings in the National Court against the forfeiture of its lease which was subsequently converted into pleadings by an order of the National Court. This raises the issue of whether the mode adopted by the first respondent contravenes Section 142? The answer to that question is found in the opening sentence of section 142(1) by examining the phrase “may appeal” used there and also considering the purpose of that provision. The trial judge observed at paragraph 20 of his decision as follows:

“The first sentence in that sub-section provides “an interested person may appeal to the National Court. In my view, the expression may indicate that an interested person has choices as to how to challenge a forfeiture of a lease. To my mind on a plain reading it indicates that an interested person has a choice either to appeal to the National Court or may seek redress by filing either a Writ of Summons, or an Originating Summons to challenge the forfeiture. In my view, to restrict the right of an interested person, that is, his right to challenge a forfeiture is only by way of an appeal to the National Court under section 142 of the Land Act is to read and place too much restriction and to attempt to oust the jurisdiction of the Court.”


  1. The trial judge went on to observe:

“I therefore come to the conclusion that section 142 is not the only mode or exclusive procedure to be utilized by an interested person to challenge a decision of the Minister or his delegate to forfeit a lease. In my view and interested person has a choice to either to challenge the decision to forfeit a lease – this can be done either by way of an appeal under section 142 to the National Court or by way of an Originating Summons by way of a Judicial Review under order 16 of the National Court Rules or by way of a Writ of Summons.”


  1. In arriving at those conclusions, the trial judge took into consideration and applied two National Court decisions of Justice Bredmeyer namely, Dent v Kavali [1981] PNGLR 488 and Davis v Pitzz (1988-89) PNGLR 143.
  2. In Dent v Kavali, the plaintiff’s property comprising three allotments at Hohola was forfeited for failure to comply with an improvement covenant. He did not appeal to the National Court under provisions of the Land Act 1962 which were similar to section 142 nor did he apply for certiorari under Order 81 Rule 7 of the Rules of the Supreme Court which imposed a month’s time limit within which such applications were to be made. He commenced proceedings by a writ of summons seeking a declaration that the forfeiture was void and of no effect. The defendant, State and others demurred that the plaintiff’s cause of action was bad in law because his remedy was by way of appeal, the time for which had expired, under the Land Act 1962. His Honour rejected the demurrer on the basis that; the jurisdiction or power of the Court to grant declaratory relief involving the determination of issues arising under the Land Act 1962 notwithstanding any time limitation on appeal imposed by that Act was derived from Section 155(4) of the Constitution; and a writ seeking a declaratory order was within the discretion of the court and could not be demurred to.
  3. In Davis v Pitzz, the plaintiff commenced judicial review proceedings challenging the forfeiture of his lease for failure to comply with an improvement covenant and failure to pay rent. Justice Bredmeyer followed and applied his own decision in Dent v Kavali and said a that tenant whose lease is forfeited can sidestep the 28 day appeal time limit by applying for a review of the decision by way of declaration by applying for judicial review as had been done in that case. He granted judicial review and quashed the decision of the Minister to forfeit the lease.
  4. It is our respectful view that, the correct interpretation of the phrase “may appeal” in Section 142(1) would be that submitted by the appellants which we accept and that is that it gives an interested person an option or discretion as to whether or not to appeal the decision to forfeit the lease. So an interested person who decides to challenge the forfeiture of his or her lease must do so within 28 days, but if out of time, then he or she may seek an extension of time under Section 142(2) demonstrating special reasons within which to lodge a an appeal. We agree with the appellants counsel that, if we accept the reasoning of the National Court's interpretation of Section 142 (1), then not only will subsections (2) and (3) of Section 142 become meaningless, but also the whole provision will have no meaning and application to circumstances that this provision of law seeks to protect.
  5. The provision under Section 142 is essentially there for the protection of the lessee whose lease is forfeited. We make reference to the observation of the Supreme Court in Noko No 96 Ltd v Sir Puka Temu which we adopt and endorse where it observed:

“If the purpose of the legislature had been to protect a person who has become a lessee of the land after the forfeiture of a lease in respect of the same land, the sub-section would be superfluous. Section 142(3) is intended, in our view, to protect the person who is appealing. Without it the person appealing would lack protection, which is clearly not the intention of the legislature.”


  1. Section 142 is silent on how the appeal ought to be commenced in the National Court and prosecuted or progressed to a hearing and bearing in mind that the National Court, by that provision, is vested with an appellate jurisdiction. To remedy the lack of procedure, we consider that the procedure under Order 18 of the National Court Rules should be adopted as was suggested by Salika DCJ in Nambawan Super Ltd v Pepi S. Kimas (2013) N5062. This is what His Honour said at starting at paragraph 28 of his decision in that case:

“28. In my opinion the appellant has decided, in this case to invoke the jurisdiction of this Court under s. 142 of the Land Act. The provisions do not say that an appeal under this Section is to be restricted to only rehearing of material that was before the original decision maker, or based on material before the original decision maker and subject to the powers of the Court to grant leave to parties to adduce additional evidence or a de novo appeal.


29. The scheme under s. 122 of the Land Act 1996, in my opinion does not intend the Court to usurp the powers of the Minister granted under s. 122 of the Land Act.


30. Moreover, there is no provision under the Land Act 1996 for the Lands Minister to supply its record of proceedings or depositions for the purpose of an appeal. However, as the appeal is against a decision of the Minister, it is desirable to have a full record of the Minister’s decision before the appellate body, the National Court. However the scheme under Order 18 of the National Court Rules could be adopted when considering the basis for availability of transcript of proceedings where the original decision was made, compilation of the Appeal Book, and whether a party should be granted leave to call fresh evidence by the court on application and that is what I intend to do in this case.


31. The focus of the appeal under s. 142 must be on the Minister’s decision to forfeit the original lease. The primary question is whether the Minister erred in the forfeiture of the lease by non-compliance with the prescribed process. The Land Act 1996 does not allow the Court to go beyond the decision made under s. 122 of the Land Act 1996 and begin conducting a fresh hearing which would be encroaching on the decision making power of the Minister or his delegate conferred on him by the maker of that provision.


32. Having heard submissions from counsel and the three (3) ways suggested in the Internal Revenue Commission v Bougainville Copper Ltd (supra) case, I am of the view that an appeal under s. 142(1)(a) and (2) of the Land Act 1996 should be by way of a rehearing based on reconsideration of the material that were before the Minister under Order 18 Rules 4(5)(f) to (2); 5(5)(), (x) and 10(s) of the National Court Rules that is where the Court grants leave to call fresh evidence. This to me, would be the fairest thing to do to achieve justice.”


  1. We endorse those observations.
  2. Where no appeal is made to the National Court, then the protection is lost, unless the interested person seeks redress in the National Court through another process which we will address shortly.
  3. One reason for promulgating Section 142 and the scheme it presents we think is that when a forfeiture of a lease is not challenged by an appeal either within the period stipulated or an extended period, the Department of Lands and Physical Planning is free to deal with it under the Land Act.
  4. The right of appeal created by Section 142, in our opinion cannot be sidestepped. It is a process that must be invoked where one is aggrieved by a decision forfeiting his or her lease and wants to challenge it. However, when an interested person loses his or her right of appeal due to non-compliance with the time limitation of 28 days or not applying for an extension of time, then the only remedy available to him or her is by way of judicial review under Order 16 of the National Court Rules through the National Court's powers under Section 155(3)(b) of the Constitution because the decision to forfeit a lease is made by the Minister for Lands and Physical Planning or his delegate which is an administrative decision by an administrative or public body: Premdas v The Independent State of Papua New Guinea (1979) PNGLR 329; Michael Gene v Hamidian-Rad [1999] PNGLR 444. In Michael Gene v Hamidian-Rad, the Supreme Court having regard to Order 16 Rule 1 held that where a party is seeking an order in the nature of a prerogative writ, the proper procedure to adopt is the procedure under Order 16 of the National Court Rules, which it said was “an exclusive procedure provided by the rules.”
  5. The first respondent has failed to utilise the correct mode of proceeding to challenge the forfeiture of the lease either by way of an appeal under Section 142 of the Land Act or if out of time by judicial review under Order 16 of the National Court Rules. The first respondent’s submission in relation to the appellants’ arguments concerning the application of judicial review process is therefore of no consequence.

CONCLUSION


  1. In the result, we concur with the appellants that the trial judge erred in not dismissing the proceedings under Order 12 Rule 40 of the National Court Rules.

ORDER


  1. The formal orders of the Court are:

(b) The National Court decision and orders of 8 April 2016 are quashed forthwith.

(c) The entire National Court proceedings, OS No.49 of 2015, Lae Rental Homes Limited v Lae Bottling Industries Ltd & Others filed on 11 February 2015 are dismissed under Order 12 Rule 40 of the National Court Rules.

(d) The first respondent shall pay the costs of the appellants and the second, third and fourth respondents, to be taxed, if not agreed.

________________________________________________________________
Manase & Co.: Lawyers for the Appellants
Korerua & Associates: Lawyers for the First Respondent
Solicitor General: Lawyer for the Second, Third and Fourth Respondents


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