Smith v Minister for Lands [2022] PGSC 123; SC2326 (6 December 2022)

SC2326

PAPUA NEW GUINEA
[IN THE SUPEREME COURT OF JUSTICE]

SCM NO. 18 OF 2021 (IECMS)

BETWEEN
DALE CHRISTOPHER SMITH
Appellant

AND
THE MINISTER FOR LANDS
First Respondent

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

AND

NCD WATER & SEWERAGE LIMITED trading as EDA RANU
Third Respondent

Waigani: Salika CJ, Makail, Tusais JJ
2022: 25^th July & 6^th December

SUPREME COURT APPEAL – Appeal against dismissal of Judicial review – Compulsory Acquisition of applicant’s state lease for the public purpose of water supply – Applicant assert that land not acquired bona fide and refuse to accept compensation-

JUDICIAL REVIEW – Appeal against refusal to quash title obtained by compulsory acquisition – Bona Fide acquisition for Public purpose - Land Act - section 12 (1) (c ), 13 (6)

Cases Cited:
Papua New Guinea Cases
Kekedo v Burns Phillip Limited [1988–89] PNGLR 122
Michael Maki v Minister for Lands (1997) N156
Takoa Pastoral Co Ltd v Dr. Temu, Ministry for Lands (2009) N3711

Overseas Cases
Deatons Pty Ltd v Flew (1949) 79 CLR 370; [1949] HCA 60

Legislation:
Land Act 1996

Counsel:
Mr Bill Frizzell, for the Appellants
Mr Lionel Manua, for the Respondents

6^th December, 2022

1. BY THE COURT: Before the Court is an appeal against the decision of the National Court in Judicial Review proceedings OS (JR) No. 402 of 2000. Decision delivered on 19^th November 2020 refused Judicial Review of land title acquired by compulsory process from the appellant. The case goes back 22 years to 24^th February 2000 when the Minister for Lands published notice in the National Gazette stating that two portions of land previously owned by the appellant had been compulsorily acquired by the State for the public purpose of water supply to the city of Port Moresby.

BACKGROUND FACTS

2. The third Respondent was incorporated by the National Capital District Commission (NCDC), to provide water supply and sewerage services to the city of Port Moresby. Its main water treatment facilities, storage tanks and pumps are built on the top of Mt Eriama, located at Bomana, near the public cemetery. Those facilities were installed by the colonial administration in the 1960s. Over time, the infrastructure became inadequate for the city’s water and sewerage needs, due to a vastly increased population in Port Moresby. Eda Ranu had to install extra facilities to meet the demand.
   
3. The immediate problem Eda Ranu faced was the shortage of suitable land to construct necessary facilities for extension and improvement of equipment for water supply. The existing water treatment plant was built on a hilltop and the surrounding topography of land consisted of steep inclines, not suited for building on. At the bottom of the hill was suitable flat land. However, it was owned by the appellant. In 1995, the third Respondent began to communicate with the appellant seeking to purchase from him, two parcels of land measuring 13.77 hectares out of total 78 hectares that he owned.
   
4. Eda Ranu and the appellant wrote back and forth for four years. They were not able to agree on the purchase price. Appellant offered to sell at prices ranging from K804,000 down to K250,000. Eda Ranu considered those prices to be too high for land which it claimed was undeveloped and said it only needed 13 hectares for which it was prepared to pay K40,000. On 15^th September 1999 the appellant advised through his lawyers that the land was not for sale.
   
5. On 24^th February 2000, the Lands Minister published notice in the National Gazette certifying an application of section 13 (6) of the Land Act in respect of the land known as Portion 435, Milinch Granville, Fourmil Port Moresby. The State thus acquired by compulsory process, portion 2460 and portion 2461 which were excised from the plaintiffs’ special purpose lease.
   
6. Aggrieved by that decision, the appellant filed Judicial Review proceedings OS 402 of 2000. Justice Sheehan heard the case and in his decision in December 2002 he commented that the process of compulsory acquisition may have been flawed, but his honour did not make definitive finding that there was error by the Lands Minister in the decision-making process. Instead, the trial Judge went on to award K400,000 as just compensation for the land.
   
7. Not satisfied with the decision, the plaintiff appealed to the Supreme court on the ground that he had not sought compensation as a remedy. Instead, he only wanted the title issued over the two portions of land to be quashed and land title restored to him. The Supreme court in case SCA No 8 of 2003, handed down its decision on the 01^st of June 2009. It upheld the appeal on the basis that the trial Judge had failed to make definitive ruling on whether the grounds for Judicial Review had been made out. Instead, it had only made passing remarks that the decision-making process may have been flawed. The Supreme Court however rejected the appellants’ argument that the trial court had actually found that there had been wrong decision by the Minister. It refused to grant orders to quash the title and make declarations that the appellant remained as title holder. Instead, the court ordered that the matter go back to the National Court for retrial before another Judge.
   
8. The case was subsequently heard by late Justice Nablu but was not completed due to her passing. By agreement of the parties, Justice Miviri completed hearing the case on affidavit material that were tendered at initial trial. On 19^th November 2020, his Honour gave his decision refusing Judicial Review. The appellant appeals against that decision to this court.
   
9. The appellants rely on the following grounds:
   
   1. The National Court erred in law or mixed fact and law in finding that its decision in judicial review must be balanced with the undisputed fact that there is a permanent public facility administered by the third respondent/defendant that serves the public and the city of Port Moresby with a basic human need for water and the interest of the appellant/plaintiff who has been denied his land by the compulsory acquisition when:
      
      • (a) on the undisputed material the appellant / plaintiff disputed that any such public facility had been constructed; and
        
      • (b) the third respondent had never constructed such public facility on the compulsorily acquired land nor any new water treatment plant and pumping facilities as stated in the gazette section 13(6) certificate under the Land Act 1996 (“the Act”); and
        
      • (c) the undisputed material before the National Court was contrary to the finding it made.
        
   2. The National Court in finding there had been informed negotiations between the parties erred in law or mixed fact and law in failing to consider or give any proper consideration to the material before the Court or to find that:
      
      • (a) the special reason in the said section 13(6) certificate was, inter alia, the third respondent/defendant had not resolved sale of the land from the appellant/plaintiff at a consideration deemed appropriate; and
        
      • (b) the deemed purchase price was an offer by the third respondent/defendant to the appellant/plaintiff approximately half the valuation obtained by the third respondent/defendant for the land to be compulsorily acquired and about a tenth of the offer made by the appellant/plaintiff such that there was no or no bona fide negotiation; and
        
      • (c) in consequence the National Court ought to have found there was no negotiation.
        
   3. The National Court erred in law or mixed fact and law in finding that special reasons stated in the 13(6) certificate were compliant with the Act when there had been no notice to treat served by the first respondent/defendant Minister upon the appellant/plaintiff, there had been no negotiation between the first and/or second respondents/defendants and the appellant/applicant at all and the special reasons in the 13(6) certificate concerned an offer by the third respondent/defendant contrary to the scheme of the Act.
      
   4. The National Court erred in law or mixed fact and law in finding that special reasons stated in the 13(6) certificate were compliant and there was no procedural ultra vires when the reasons stated in the 13(6) certificate were not factually correct or bona fide.
      
   5. The National Court erred in law or mixed fact and law in finding that the compulsory acquisition had served the Capital and its masses of its water needs when no intended construction as stated in the 13(6) certificate had ever taken place as detailed in the undisputed material before the Court which the Court failed to consider or give sufficient consideration to in its decision.
      
      6. The National Court erred in law or mixed fact and law in finding that the section 13(6) certificate was compliant and the appellant/plaintiff had not been unjustly deprived or had not been given a right to be heard when the section 13(6) certificate:-
         
      • (a) stated the land could not be acquired at the deemed purchase price which deemed purchase price on the material before the Court was about half the valuation obtained by the third respondent/defendant for the land to be acquired and a tenth of the offer of the appellant/plaintiff; and
        
      • (b) when the deemed purchase price is not a market price in accordance with the scheme of the Act and the section 13(6) certificate thereby abrogated the rights of the appellant/plaintiff.
        
   7. The National Court erred in law or mixed fact and law in not considering or not giving sufficient consideration to all the affidavits relied upon by the plaintiff rather than his affidavit of 06.07.2000 and that of Billy Imar sworn 04.09.2000 when that material showed, it is submitted, the plaintiff/appellant had made out that the special reasons in the 13(6) certificate were not bona fide.
      
      8. The National Court erred in law or mixed fact and law in giving undue weight and consideration to the proposed construction of a new water treatment plant and pumping facilities on the land compulsorily acquired pursuant to the section 13(6) certificate when:-
         
         • (a) those facilities have never been constructed by the third respondent /defendant however the use of the acquired land has been residential and;
           
         • (b) the first respondent/defendant had no special reason for not complying with section 13(1) to (5) of the Act; and
           
         • (c) the special reason advanced concerning acquisition of the land at a deemed purchase price was not bona fide; and
           
         • (d) the judicial review concerned the compulsory acquisition procedure and not the proposed public purpose of the third respondent/defendant.
           
   9. The National Court found there was no error in the procedure followed under section 13(6) of the Act to compulsorily acquire that land but erred in law or mixed fact and law in doing so because the public purpose special reason has never been constructed and the deemed purchase price special reason was not factually correct, not bona fide and contrary to the scheme of the Act for market price acquisition of land compulsorily acquired.
      
   10. The National Court erred in law or in fact and law in failing to find, on the undisputed material before the Court, that the compulsorily acquired land has never been used for the public purposes for which it was claimed to have been compulsorily acquired rather the only use to which part of the compulsorily acquired land has been put is as a residential compound and facilities which undisputed material would or ought to have a material effect on the decision of the Court.
       
   11. The National Court erred in law or mixed fact and law in finding the section 13(6) certificate compliant with the Act such that Portion 2450 and 2461 were compulsorily acquired out of Portion 1435 owned by the appellant/plaintiff.
       
10. The appellants sought the following relief in the notice of appeal:
    
    1. The appeal is allowed.
       
    2. The orders of the National Court made on 8 February 2021 are set aside.
       
    3. In lieu thereof:
       
       • (a) an order in the nature of certiorari quashing the special reasons stated by the first respondent pursuant to the section 13(6) certificate gazette pursuant to the act on or about 24.02.2000;
         
       • (b) an order in the nature of certiorari quashing the compulsory acquisition of Portions 2460 and 2461 pursuant to sections 12(1) and/or 12(2) of the Act as gazetted on or about 24.02.2000 out of Portion 1435 Granville
         
       • (c) a declaration that the appellant is the registered proprietor of Portion 1435 Granville.
         
    4. Alternatively, an order remitting the proceedings to the National Court for rehearing (by a court differently constituted).
       
    5. The First to Third Respondents pay the Appellant’s cost of the appeal and in the National Court.
       
    6. Such further or other order as the Court considers appropriate.
       

SUBMISSIONS OF THE PARTIES

11. The appellants submitted, in summary:
    
    • The appellants’ main submission is that the State acquired his land without good reason or justification. That it was not bona fide or that it was mala fides (bad faith). Neither the State nor the third respondent have made use of the land for the stated public purpose. Appellant submitted that it amounted to the same as using the land for a purpose other than the public purpose stated, Prentice v. Brisbane City Council (1966) QdR 395, Takoa Pastoral Co Ltd v Dr. Temu, Ministry for Lands (2009) N3711.
      
    • Mr Frizzell submitted quite strongly that the Trial Judge erroneously found on the evidence that there had actually been construction of water treatment and pumping facilities which was now supplying much needed water supply to a thirsty multitude in Port Moresby city. This was contrary to evidence in affidavits filed by the Respondents own witnesses. Thus, it was argued that the land had not in fact been acquired for the stated purpose. That the real reason for the compulsory acquisition was for the third respondent and NCDC to avoid paying market value for the appellants’ land. As proof of this it was argued that after the acquisition the respondents had not installed the pumping equipment and water treatment facilities. Instead, it had only built residential houses for its staff.
      
    • The Appellant also contended that whilst Section 13(6) notice described a public purpose of the third respondent the “special reason” cited was not correct in that, there had been no real negotiations between the ‘State’ or the Minister and the appellant. Instead, there had only been offers made by the third respondent to buy the appellants land at one third of the price assessed by independent valuers and one tenth of the price offered by the appellant. It was argued that the third respondent is not the Minister, nor is it ‘the State’, so it had no power to negotiate with the Appellant.
      
    • Additionally, the Court appears never to have considered the evidence that since the compulsory acquisition in over 20 years, the acquired land has never been used for the gazettal public purpose. It was submitted that had the Court properly taken those factors into account, as a matter of fact and law, then a different conclusion would be reached.
      
12. The third respondents replied as follows, in summary:
    
    • The primary Judge did not error in fact or in mixed fact and law in finding that Judicial review was not available because the appellant had not proven that any of the considerations of ultra vires, error of law, breach of natural Justice or Unreasonableness under the “Wednesbury” principles had been made out. Kekedo v Burns Phillip Limited (1988 – 89) PNGLR 122.
      
    • The appellants’ land had been acquired for the valid reason of providing water to Port Moresby city. The reasons stated in the section 13 (6) Notice for compulsory acquisition were bona fide and the appellants right to land was converted to the right to compensation only under section 53 of the Constitution and section 14 of the Land Act 1996. Michael Maki v Minister for Lands (1997) N156.
      
    • Mr Manua for the third respondent, also argued that the appellants reference to lack of development of the two portions of land since 2000 was irrelevant for purpose of Judicial review. He submitted that these factors were not in existence at the time that the minister made the decision to compulsorily acquire the land. It was further argued that after leave for Judicial review was granted, this factor operated as a stay on the 3^rd Respondents from moving in and developing the land for fear of attracting contempt of court charges. That was the only reason that for twenty years there had been no development as planned. The appellant had in fact obtained restraining orders before the first Judicial Review application. In the end, the appellant cannot rely on this factor in support of his claim that there was no bona fide acquisition of his land.
      
    • The appellant was actively involved in the initial negotiations with the third respondent. When his demands were not met, he refused to sell the land, forcing the third respondent to consult the Lands Minister. There was by then, no option but to compulsorily acquire the land, because there was no point in entering into further discussions with the appellant.
      

CONSIDERATION

13. Ultimately, one key issue arises for consideration in this appeal:
    
    • (1) Whether the two parcels of land were acquired bona fide for a public purpose.
      

LAND ACT

14. Land can be compulsorily acquired only in accordance with section 12(1) and (2) of the Act. Relevantly this requires the Minister on behalf of the State to commence the compulsory acquisition process by service of a notice to treat or notices to treat under section 13 or after giving a certificate under section 13(6). Under that latter section the Minister must specify the special reason why the section 13 notices to treat process does not apply.
    
15. Once the Minister has given a section 13(6) certificate he may compulsorily acquire any land without complying with section 13 (1) to (5). Section 13 is in these terms:
    

NOTICE TO TREAT.

(1) The Minister shall not acquire land by compulsory process under this Act unless he has first caused to be served on each of the owners of the land, or such of them as can, after diligent inquiry, be ascertained, a notice inviting the person on whom the notice is served to treat with the Minister for the sale or surrender to the Minister, on behalf of the State, of his interest in the land.

(2) A person served with a notice to treat in respect of land shall, not later than two months after the service of the notice, provide the Minister with particulars of–

(a) the interest claimed by him in the land; and

(b) the amount for which he is agreeable to sell his interest in the land; and

(c) the name and address of any other person known to him to have an interest in the land and the nature of that interest.

(3) On receipt of the particulars referred to in Subsection (2), the Minister may–

(a) treat with the person providing the particulars for the acquisition of his interest by agreement; and

(b) notwithstanding anything in this Act, enter into an agreement with that person for the acquisition.

(4) The Minister may, by written notice to a person served with a notice to treat, withdraw the notice to treat.

(5) Where the owner of an interest in land, who has provided the particulars referred to in Subsection (2), suffers loss by reason of the notice to treat having been given and withdrawn, the State is liable to pay to him such compensation as is determined by agreement between the owner and the Minister or, in the absence of agreement, by action as determined by a court of competent jurisdiction.

(6) This Section does not apply in a case where the Minister certifies that there are special reasons why the Section should not apply.

16. Thus, it is not necessary for the Minister on behalf of the State to give notice to treat to the appellant before commencing the acquisition of the parcels of land by compulsory process. The important consideration for the exercise of power by the Minister under section 13(6) is that he must be satisfied that there are “special reasons”. It follows that, as a matter of law, the Minister is conferred discretion to dispense with the requirement to give notice to the appellant. As to what may be constitute a question of fact, first the Minister was provided with information in relation to the discussions between the Third Respondent and the Appellant for the sale and purchase of the parcels of land by the Third Respondent. The proposed sale fell through because parties were unable to agree on the purchase price. Secondly, the Minister was also informed about the purpose for the use of the land. It is noted that it was proposed that the land be used for construction of a new pumping, treatment, and water supply facility. Based on this information the Minister issued the section 13(6) certificate.
    
17. It follows that the Appellant’s submission that the decision by the Minister to acquire the parcels of land without giving the requisite notice to treat to him and further, that there was no negotiation between the Minister on behalf of the State and him was unlawful and in breach of section 13 is without merit and dismissed.
    
18. On the other hand, the special reason for the section 13(6) certificate gazetted were as follows:
    

“and all other powers enabling herein certified that there are special reasons why section 13 of that Act relating to the acquisition of land by compulsory process should not apply to the land described in the Schedule herein namely that the land is required by NCDC Water and Sewerage Limited for the construction and commissioning of a new water treatment plant, pumping facilities and purposes ancillary thereto given that the topography of the land adjoining the existing Mt. Eriama water treatment plant ......... is difficult and not suitable for this purpose, given that NCD Water and Sewerage Ltd’s documented endeavours to negotiate with the lease holder the purchase of the required land out of Portion 1435 ....... have not resolved a sale/transfer of the land at a consideration deemed appropriate and given that section 4 of the NCDC Water Supply and Sewage Act 1996 does where necessary and justified authorised NCDC Water and Sewerage Limited to access and utilise the power of the Land Act 1996 in order to effect the acquisition of land within the NCDC required for water and all sewerage purposes.”

19. The main issue in this case relates to the reason(s) that caused the Minister for Lands to resort to section 13 (6) to dispense with the requirements under the other provisions in section 13 (1) to (5) prescribing the process to be followed after issuance of a notice to treat with the title holder. The Appellant argued that the reasons for compulsory acquisition were not genuine or bona fide because:
    
    1. No construction of those facilities has been done 22 years after the acquisition. Therefore, the reason stated in the section 13 (6) certificate was not bona fide.
    2. Instead, the compulsory acquisition was done in order for the third respondent to avoid paying market value for the land.
    100. The minister had not given the appellant an opportunity to be heard therefore he was denied natural justice.
         
20. The third respondent on the other hand submitted that the reasons as stated in the national gazette were genuine at that time and still remains a pressing issue to this day. It was stressed that because of the unreasonable conduct of the appellant, the second and third respondents stood to lose a substantial amount of money for breach of contract with the developer of those proposed water treatment facilities.
    
21. In our view, the primary Judge was correct to dismiss the Judicial Review. He made no error in finding that there was in fact bona fide reasons for the compulsory acquisition. That reason existed at that time and in fact is more pressing twenty-two years later. Water supply to the city is in critically short supply. We can in fact take Judicial notice of this because lack of water does affect every resident of Port Moresby, including the operations of the National and Supreme court at Waigani, where water has frequently been cut off for days at a time and caused serious inconvenience.
    
22. We find that the trial Judge did make an error of fact when he found that on the evidence the pumping facilities and treatment plants had actually been constructed and was now in operation, supplying water to a thirsty city. But that error is not fatal to the final determination that there had in fact been bona fide reasons for acquisition of the land. That reason was real and valid at the time, and remains so to this day.
    
23. The fact also remains that there is no other suitable land for water supply facilities, other than those two portions of land excised from the lease originally granted to the appellant. The needs of a huge population of Port Moresby city are in direct competition with the solitary claim of one individual, to hold onto land title granted to him by the state in the first place. We are of the view that the public interest of the majority to access clean and safe water, prevails. The appellants’ rights are now converted to right to compensation.
    
24. The appropriate order is to dismiss the appeal, with costs.

______________________________________________________________
Warner Shand Lawyers: Lawyers for the Appellant
Rageau Manua & Kikira Lawyers: Lawyers for the Respondents