Kalgregos Electronics Ltd v Mamun Investments Ltd [2022] PGSC 33; SC2216 (2 March 2022)

SC2216

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 13 OF 2022

BETWEEN:
KALGREGOS ELECTRONICS LIMITED
Applicant

AND
MAMUN INVESTMENTS LIMITED
Respondent

Waigani: Logan J
2022: 22^nd March

PRACTICE & PROCEDURE – stay of orders of the National Court pending appeal – where the National Court made ex parte orders requiring the registered proprietor of a State Lease to deliver vacant possession – where registered proprietor makes application to set aside the ex parte orders requiring delivery of vacant possession – where application to set aside orders denied by the National Court – where respondent concedes arguable case for error in the part of the National Court – application for stay granted

Facts:

The National Council of the Young Men’s Christian Association (YMCA) became the registered proprietor of certain property in Mt Hagen (Subject Land) in or around the 1970s. The Subject Land was subsequently transferred to Mamun Investments Limited (Mamun) on 13 December 1990. Mamun’s registered proprietorship was later cancelled. In its place the National Council of the YMCA of Papua New Guinea Inc (National Council) became the registered proprietor of the Subject Land. The National Council in turn transferred its interest in the Subject Land to Kalgregos Electronics Limited (Kalgregos), which became the registered proprietor of the Subject Land.

Manum commenced proceedings against Kalgregos seeking, inter alia, declarations as to the proper ownership of the Subject Land. At the time of the commencement and hearing of those proceedings, the certificate of title in respect of the Subject Land recorded Kalgregos as registered proprietor of the State Lease. The Subject Land was also encumbered by a mortgage in favour of Australia and New Zealand Banking Group (PNG) Limited.

On 14 December 2021 (with orders entered on 16 December 2021), the National Court declared – ex parte – Mamun to be registered proprietor of subject land. Consequential orders were made by the National Court requiring Kalgregos to give vacant possession of the Subject Land and authorising the issuing of a writ of possession in circumstances where vacant possession was not provided.

On 27 January 2022, Kalgregos applied to the National Court for orders setting aside the orders made on 14 December. That application was dismissed on 11 February 2022, with orders entered on 15 February 2022.

On 18 February 2022, Kalgregos filed a notice of appeal from the orders of the National Court, made on 11 February 2022. Concurrently, Kalgregos applied to stay the operation of the orders of the National Court pending the hearing and determination of Kalgregos appeal. In the intervening period, Mamun had demolished all structures on the subject land.

At hearing of the application, Mamun, through its lawyers, conceded that there was an arguable case of error established in the National Court dismissing Kalgregos’ notice of motion on 11 February 2022.

Held:

The interests of justice favour staying the orders of the National Court pending final determination of the appeal to maintain the status quo given the arguable case of error in those orders: McHardy v Prosec Security and Communications Ltd [2000] PNGLR 279 and PNG Pipes Pty Ltd v Sefa, Globe Pty Ltd, Macasaet and ANZ Banking Group (PNG) Ltd [1997] PGSC 7; SC524 referred to.

Cases Cited:

Mamun Investment Ltd v Koim [2015] PGSC 9; SC1409
McHardy v Prosec Security and Communications Ltd [2000] PNGLR 279
Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308
PNG Pipes Pty Ltd v Sefa, Globe Pty Ltd, Macasaet and ANZ Banking Group (PNG) Ltd [1997] PGSC 7; SC524
Ponda v Mamun Investments Pty Ltd [1991] PNGLR 337; PGNC 66; N1004
Wawoi Guavi Timber Company Ltd v Molu [2016] PGSC 32; SC1514

Legislation:

Constitution of the Independent State of Papua New Guinea
Land Registration Act 1981
Supreme Court Act 1975
Supreme Court Rules 2012

Counsel:

Mr. Y Awi, for the Applicant
Mr. N Ako, for the Respondent

Oral decision delivered on
2^nd March 2022

1. LOGAN J: By an order made on 14 December 2021, and entered on 16 December 2021, the National Court (Tamade AJ) made the following orders:
   

“1) The Plaintiff is the registered proprietor of the Property described as Allotment 1 and 2 (consolidated), Section 13, Mt Hagen, Western Highlands Province subject to Supreme Court Orders of 31st August, 1995 and 24th February, 2015 and Section 155 (4) and 166 of the Constitution and Order 4 Rules 1, 2 (3) (a) and 3 of the National Court Rules.

2. Defendants shall give vacant possession of the Property to the Plaintiff within a month of today by 14th January, 2022.
3. Should Defendants fail to give vacant possession to the Plaintiff by 14th January, 2022, a Writ of Possession is granted to the Plaintiff with the assistance of Police to enforce the orders for vacant possession of the subject land.

4) Time is abridge to the date of these orders to take effect forthwith.”

2. A writ of possession directed to the Sheriff was consequentially issued by the National Court in respect of allotment 1 and 2, consolidated, section 13 Mount Hagen, Western Highlands Province, State Lease, volume 49 folio 16 (Subject Land).
   
3. The certificate of title in respect of the Subject Land at the time those orders were made and the writ of possession consequentially issued, recorded that the registered proprietor was the present applicant, Kalgregos Electronics Limited (Kalgregos). It is common ground today that those orders were made ex parte; in other words, on hearing the present respondent, Mamun Investments Limited (Mamun), but without hearing from Kalgregos.
   
4. Kalgregos applied by notice of motion filed on 27 January 2022 to the National Court for orders to set aside those made ex parte on 14 December 2021. On 11 February 2022, Kalgregos’ application to set aside those orders was dismissed by the National Court. That dismissal order was entered on 15 February 2022. Kalgregos applied promptly, on 18 February 2022, pursuant to s 19 of the Supreme Court Act 1975, Order 13, Rule 14(1) of the Supreme Court Rules 2012 and s 155(4) of the Constitution of the Independent State of Papua New Guinea to stay the final order or decision of the National Court which was said to be that made on 11 February 2022, pending the hearing and determination of an appeal against that order of dismissal. The notice of appeal concerned was also filed on 18 February 2022.
   
5. The grounds of appeal are detailed. The first two paragraphs of the notice of appeal and the grounds relied upon by Kalgregos are:
   

“1. The Appellant appeals form the whole of the Decision/Order of the National Court made on 11th February 2022 in the proceeding, OS No. 196 of 2020 by Her Honour Acting Justice Tamade whereby the Court dismissed the amended notice of motion filed by the Appellant and declared the Respondent as the registered proprietor of the property described as Section 13, Allotments 1 & 2 (consolidated), Mt. Hagen, Western Highlands Province and further ordered the Appellant to give vacant possession of the said property to the Respondent.

2. The Appeal lies without leave as it raises issues of mixed facts and law pursuant to Section 14 (1) (b) of the Supreme Court Act Ch. No. 37 and also the appeal is against a Decision or Order given by the National Court which was final in nature pursuant to Section 14 (3) (b) (iii) of the Act.
   

GROUNDS

(1) Her Honour erred in law and facts in stating that the Originating Summons was properly served on the Appellant when there was no evidence indicating that the Plaintiff had complied with the directions issued on 23rd September 2021 for substituted service of the said Originating Summons by publication in daily papers within two weeks (document #12) and further failed to consider that the Plaintiff also files an amended Originating Summons of 2nd December 2021 (document #13) without leave of Court and knowledge of the defendants and proceeded to obtain the substantiative reliefs exparte on 14th December 2021 in breach of procedural laws of National Court Rules lack of personal service of the amended Originating Summons and Section 59 of the Constitution, the principles of natural justice.

(2) Her Honour erred in law and facts in stating that the there was no defence on merits or valid argument affecting the merits of the case by only relying on the affidavits of the Plaintiff without having any regard to the Appellant’s evidence that it is currently the registered proprietor of described as Section 13, Allotment 1 & 2 (consolidated), Mt. Hagen, Western Highlands Province, transferred to it on 25th April 2012 which is confirmed by a copy of the title or owner’s copy referred to as annexures A1, A2, A3, A4 & A5 of the affidavit of So Gregory Koim filed on 11th January 2022, document #19 and annexure “B”, a copy of the letter dated 30th April 2015 from the Registrar of Titles which means the Appellant has the right to use and occupation of the said property absolutely free from all encumbrances pursuant to Section 33(1) of the Land Registration Act 1988.

(3) Her Honour erred in law and facts in failing to consider the Appellant’s evidence, affidavit in support by So Gregory Koim filed on 11th January 2022, document #19 and affidavit in support by So Gregory Koim sworn on 25th January 2022 and filed on 27th January 2022, document #23 that the Originating Summons, document #1 on 7th December 2020 together with the application for interim orders, affidavits for substantive hearing, the amended Originating Summons on 2nd December 2021 (document #13), the Order of 14th December 2016 and Writ of Possession were never served on the Appellant despite knowing the location or address for service which is Section 13, Allotment 1 & 2 (consolidated), Mt. Hagen, Western Highlands Province, the property that is the subject of the proceeding and that the claim was prosecuted in breach of procedural laws particularly Order 6 Rules 3 and 4 of the National Court Rules and the principles of natural justice under Section 59 of the Constitution and also the Court failed to consider that there was no evidence by the Plaintiff in serving the aforesaid documents.

(4) Her Honour erred in law and facts in referring to the respective Orders or Decision of the Supreme Court in Mamu Investment Pty Ltd -v- Pond [1995] PNGLR 337 and Mamu Investment Ltd -v- Koin [2005] SC1409 and failed to consider that no changes have been made to the entries on the current lease and the legality of the transfer of title to the Appellant on 25th April 2012 has never been challenged in Court or the tile has never been nullified by any Court meaning that there is no specific order for cancellation of the tile to the Property, No.H.10767-Transfer to Kalregos Electronics Limited 25/04/2012 and Her Honour further failed to consider that no steps have been taken by the Registrar of Titles under Section 160 and 161 of the Land Registration Act 1988 for production and cancellation of the Title.

(5) Her Honour erred in law and facts in failing to consider the Appellant’s submission that it was not a party in the two Supreme Court cases of Mamu Investment PTY Ltd -v- Ponda [1995] PNGLR 33 and Mamu Investment Ltd -v- Koin [2005] SC1409 and the orders in the respective proceedings did not affect its status as currently the registered proprietor, Bona fide purchase of the property protected by Section 33 (1) of the Land Registration Act 1988 and further Her Honour failed to take into account that the issue of ownership of the said property is disputed.

(6) Her Honour erred in law and facts in failing to consider that the claim by the Respondent in the proceeding styled OS No. 196 of 2020 seeking orders in the nature of declaration and orders for the Appellant to give vacant possession of the property was time barred as raised by the Appellant in its submission, pursuant to Section 16 of the Frauds and Limitations Act 988 as the Appellant obtained the title to the property on 25th April 2012 in good faith and the current proceeding was filed on 7th December 202 after more than 8 years and 7 months.”

6. It emerges from an affidavit of Mr Awi, the lawyer for Kalgregos, that last month Mamun, with the assistance, doubtless to keep the peace, of the police, undertook demolition work in respect of buildings on the subject land. Mr Awi deposes that all structures or buildings on the subject land were demolished; a position, prima facie, confirmed by photographs annexed to his affidavit.
   
7. Mamun today, appeared by its lawyers, albeit that the lawyers concerned appeared in court 20 minutes after the appointed time. I directed the lawyers to make and file an affidavit deposing to the reasons for that tardiness and to serve a copy of that affidavit on the Law Society for such action, if any, as the Law Society may deem fit in respect of the failure to attend court at the appointed time.
   
8. Such has been the pace of events that it has not been possible for either of the parties to obtain a copy of the transcript in respect of proceedings either on 14 December 2021 or 11 February 2022. Some indication as to her Honour’s reasons for failing to set aside the orders made ex parte in December is, however, given by the grounds of appeal.
   
9. The procedure adopted by Kalgregos in filing the notice of appeal and seeking to challenge the orders made on 11 February 2022 is not without its procedural support: see in this regard Wawoi Guavi Timber Company Ltd v Molu [2016] PGSC 32; SC1514.
   
10. For Mamun, the point was, however, made that the order made on 11 February 2022 was strictly interlocutory with the final order being that made on 14 December 2021. If those submissions were correct, then two deficiencies would emerge. Firstly, if the orders of 11 February 2022 were interlocutory, then leave to appeal would be required. Further, if truly the appeal lay against the substantive orders made on 14 December 2021, not only was the notice of appeal not filed within the requisite 40-day period but also no application for an extension of that time had been filed within that period. As to this, see: Mann v Alpar Trading Limited [2013] PGSC 69; SC1229 and Talu v Petroleum Exploration Joint Venture Limited [2016] PGSC 85; SC1621.
    
11. It is, however, clear to the point of demonstration that even assuming that the procedure adopted by Kalgregos was irregular that Mamun has, since January 2022, been aware that the orders made in December 2021 were under challenge by Kalgregos. Mr Awi for Kalgregos, whilst maintaining that the appeal was aptly and regularly instituted in respect of the orders made on 11 February 2022, did come to apply in the alternative and orally for an order instanter granting leave to appeal insofar as the same may be necessary.
    
12. There is truly no prejudice to Mamun in the grant of such leave. I make that observation because, with the very greatest respect to the learned primary judge, it is, to say the least, a very strong thing indeed to deprive a registered proprietor – in this case, Kalgregos – of title without hearing from that registered proprietor. Subject to exceptions countenanced by the Constitution, officers in the executive and judicial branches of government are obliged by s 59 of the Constitution to observe the principles of natural justice.
    
13. As a registered proprietor and subject to exceptions specified in s 33(1) of the Land Registration Act 1981, Kalgregos had indefeasible title to the State Lease; see Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308 and a very long line of overseas cases comprehensively discussed in Mudge in relation to the Torrens System of title by registration.
    
14. Another point made for Mamun was that the appeal as presently constituted ought to have named the members of the Mount Hagen Young Men’s Christian Association (YMCA) as additional respondents. Persons representing themselves as the members of the Mount Hagen YMCA had been named as first defendants in the National Court proceedings.
    
15. The certificate of title in respect of the State Lease is in evidence. It reveals a succession of registered proprietors in respect of that leasehold interest which predates independence.
    
16. Materially, the National Council of the YMCA of Papua New Guinea Inc (YMCA PNG) became registered proprietor of the Subject Land in the 1970s. A transfer to Mamun is recorded such that Mamun became registered proprietor on 13 December 1990. Mamun’s registered proprietorship was cancelled and the National Council of YMCA Inc became registered proprietor on 16 February 2012. In turn, on 25 April 2012, Kalgregos became registered proprietor. The last entry on the certificate of title in respect of the State Lease records that on 27 August 2015, a mortgage in favour of Australia and New Zealand Banking Group (PNG) Limited (ANZ Bank) was entered.
    
17. Regard to the certificate of title, therefore, raises an interrogate note as to the adequacy of joinder of parties in the National Court. It is apparently not the Mt Hagen YMCA but rather an incorporated body YMCA PNG Inc, which was hitherto a registered proprietor. That body obviously, given its separate corporate status, would be an entity separate in law from the unincorporated association apparently joined in the National Court as first defendant. Yet further as to adequacy of parties in the National Court and again, prima facie, the order made by the learned primary judge affected not just Kalgregos but also the ANZ Bank. It was not destructive of the ANZ Bank’s registered interest as mortgagee but it had the potential, realised on the evidence in actuality, to destroy the worth of that security. Further, the mortgage inferentially related to borrowings by the registered proprietor at the time, Kalgregos, not Mamun.
    
18. Thus, apart from the apparent failure to observe to afford Kalgregos natural justice when making the orders in December 2021, the proceeding in the National Court have been deficient in terms of necessary parties. That serves only to emphasise how fraught, with respect, it was to proceed ex parte to make the orders in question in December 2021.
    
19. Some further detail in relation to the history of the dealings in respect of the subject lease is offered by a letter authored by the then Registrar of Titles on 30 April 2015, which is in evidence. That records, as the certificate of title confirms, Kalgregos registered proprietorship on transfer from the National Council of the YMCA Inc. The Registrar gives some history in respect of the State Lease recording and stating that it was initial granted to the National Council of the YMCA of Australia in 1970 with that being transferred to the National Council of the YMCA PNG thereafter.
    
20. The Registrar also expresses a view in the letter as to any dealing with Kalgregos and its authorised agent over the State Lease being “valid, proper and correct.” That, of course, is a view given administratively which in no way would bind either the National Court or this court. However, the position on the face of the title was that Kalgregos was registered proprietor.
    
21. It also emerges from submissions made on behalf of Kalgregos by Mr Awi that there has been some litigation in relation to the subject land: see Ponda v Mamun Investments Pty Ltd [1991] PNGLR 337; PGNC 66; N1004 and Mamun Investment Ltd v Koim [2015] PGSC 9; SC1409. However that may be, it seems that Kalgregos was not a party to that litigation.
    
22. It was, with respect, a strong thing for the learned primary judge who had also made the orders in December not to have reopened the proceeding. It was conceded on behalf of Mamun that there had been an arguable case of error established in relation to the dismissal of Kalgregos’ notice of motion. The interests of justice, in my view, do favour the staying, not just of the order of dismissal made on 11 February, but of all of the orders made in December 2021. That cannot, of course, undo such loss and damage, if any, as may be the subject of any cause of action as between Kalgregos and Mamun. It does, however, prevent any further change in the status quo pending the hearing and determination of an appeal or, as what we will be seen shortly, any application for leave to review or further order of this court.
    
23. It may be that the joinder albeit, not of the incorporated YMCA, but the unincorporated body, was not necessary in the National Court but that position is far from clear on the evidence today. It seems to me that if only out of an abundance of caution, the YMCA PNG Inc ought to be added as a party. It is that body, not the first defendant in the National Court, which was at one stage the registered proprietor. It does seem as if Mamun considered that the interests of an earlier registered proprietor may be affected and, therefore, albeit misguidedly joined the unincorporated body. It also seems to me, particularly in light of the demolition events which have occurred, that the ANZ Bank is a necessary party or at least should be offered an opportunity to be heard by being joined as a party.
    
24. Overwhelmingly in my view, the interests of justice require that the court confront the substance of whether the orders made in December 2021 were made according to law. There should be no impediment to that in terms of procedural objection. Indeed as I have mentioned, it may be that there is no procedural objection save perhaps to a question of parties.
25. To approach the case by reference to potential procedural difficulties would, I am convinced, render a serious injustice both to Kalgregos, Mamun and potentially also the YMCA Inc and the ANZ Bank. It was accepted on behalf of Mamun that such procedural objections, if any, as there may be, were not incurable by a judge of this court. That is a view which I share.
    
26. Kalgregos has, in terms of the authorities, established a case for a stay. There is an arguable case of error both in respect of the orders made on 11 February and in respect of those made in December 2021, and the balance of convenience favours preservation of the status quo such as it is: see as to those authorities, McHardy v Prosec Security and Communications Ltd [2000] PNGLR 279 and PNG Pipes Pty Ltd v Sefa, Globe Pty Ltd, Macasaet and ANZ Banking Group (PNG) Ltd [1997] PGSC 7; SC524.
    
27. I note that Kalgregos, by its managing director, has offered the usual undertaking as to damages.
    
28. I shall add to the reasons for judgment, if only out of an abundance of caution, if there be some deficiency in relation to the competency of the appeal against the orders made in December 2021, it is overwhelmingly desirable in the interests of justice, in my view, given the events which have transpired for the notice of appeal also to stand as, and to be deemed to be, an application for leave to review those orders.
    

Orders

29. For these reasons then, I make the following orders:
    
1. The orders made by the National Court on 14 December 2021 (entered on 16 December 2021) and 11 February 2022 be stayed pending hearing and determination of the appeal and application for leave to review or further earlier order.

2) The appellant have leave to amend the notice of appeal so as to:

(a) add as second and third respondents respectively the National Council of Young Men’s Christian Association of Papua New Guinea Inc and the Australia and New Zealand Banking Group (PNG) Limited, with the present respondent becoming the first respondent; and

(b) make explicit, by amendment of paragraph 1, that the orders made in the National Court on 14 December 2021 (entered on 16 December 2021) are also the subject of appeal.

3. Insofar as the same may be necessary, the appellant have leave to appeal against the orders made on 11 February 2021, with the notice of appeal, including as amended in accordance with these orders, being deemed to have been filed after the grant of leave to appeal.
4. The appellant file and serve a copy of the notice of appeal as amended and a copy of this order on all respondents forthwith.
5. The amended notice of appeal also stand for all purposes as, in the alternative, an application to the Court for leave to review the orders made by the National Court on 14 December 2021, so as to seek orders quashing those orders, and such further orders as the Court deems just.
6. The appeal book prepared in accordance with the rules also stand as the application book in respect of the application for leave to review.
7. The lawyers for the present respondent who have appeared in Court this day make and file an affidavit deposing as to why they were 20 minutes late for court and serve a copy of that affidavit on the Law Society.

8) Costs be reserved.

9) The orders made this day be entered forthwith.
__________________________________________________________________
Awi Lawyers: Lawyers for the Applicant
Warner Shand Lawyers: Lawyers for the Respondent