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H.Q.H Enterprises Ltd v Wangbao Trading Ltd [2023] PGSC 69; SC2419 (28 April 2023)

SC2419


PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]


SCM NO. 21 OF 2022


BETWEEN
H.Q.H ENTERPRISES LIMITED
Appellant


AND
WANGBAO TRADING LIMITED
First Respondent


AND
ALA ANE as Registrar of Titles, Department of Lands and Physical Planning
Second Respondent


AND
BENJAMIN SAMSON as Secretary for Lands & Physical Planning
Third Respondent


AND
HON. JOHN ROSSO as Minister for Lands & Physical Planning
Fourth Respondent


AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Respondent


Waigani: Gavara-Nanu J, Collier J & Frank J
2023: 27th March & 28th April


APPEAL – Practice & Procedure – State Lease – Transfer of title by contract of sale and Ministerial Approval – Validity of title – Forfeiture of lease – Land Act, 1966; s. 122 – Mandatory statutory requirements not complied with.


APPEAL – Practice & Procedure – Land Registration Act, Chapter No. 91; ss. 33; 160 and 161 – Meaning of fraud - Power to cancel an invalid title.


Cases Cited:
Allolim v. Kirokim (2018) SC1735
Beecraft No. 20 Ltd v. Minister for Lands (2001) N2125
Davis v. Pitzz [1988-89] PNGLR 143
Dent v. Kavali [1981] PNGLR 488
Elisha Timothy & Ors v. Joshinta Timothy (2022) SC2282
Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215
Jaro Investments Ltd v. Ane (2022) SC2192
John Mur v. Les Kewa (2010) N4016
Kekedo v. Burns Philp (PNG) [1988-89] PNGLR 122
Koitachi Ltd v. Walter Schnaubelt (2007) SC870
Kwayok v. Singomat (2017) N7097
Lae Bottling Industries Ltd v. Lae Rental Homes Ltd (2011) SC1120
Mudge v. Secretary for Lands [1985] PNGLR 387
Noko No. 96 Limited v. Sir Puka Temu; Minister for Lands and Physical Planning (2013) N7932
Paga No. 36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation [2018] PGSC 17; SC1671
Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603
PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126
PNG Power Ltd v. Reipi (2018) N7442
PNG Sustainable Development Program Ltd v. Rosso (2022) SC2230
Ombudsman Commission v. Yama (2004) SC747
Somare v. Manek (2011) SC1118
Steamships Trading Company v. Hon. Benny Allen & Ors (2021) N9334
The National Council of Young Mens’ Christian Association of Papua New Guinea Inc. Firms Services Ltd & Ors (2017) SC1596
University of Papua New Guinea v. Ofoi (2016) N6303
Yakamanda Business Group Inc. Minister for Lands and Physical Planning (2001) N2195


Counsel:
G. Garo with S. Supro, for the Appellant
F. Kuvi, for the First Respondent
N. Yano, for the Second to Fifth Respondents


28th April, 2023


  1. GAVARA-NANU J: I have read the judgments of Collier J and Frank J and I respectfully agree with the conclusions reached by their honours. I would however like to add some comments of my own.
  2. The background facts and the grounds of the appeal have been succinctly summarized by Collier J in her judgment, it is therefore unnecessary for me to repeat them here.
  3. My comments relate to the requirements of s. 122 of the Land Act 1966; ss. 33, 160 and 161 of the Land Registration Act, Chapter No. 191.
  4. I deal firstly with s. 33 of the Land Registration Act as it relates to fraud. It was argued before the court below on behalf of the first respondent who was the plaintiff in the proceeding that appellant obtained its title through constructive fraud. It was claimed that this happened when certain requirements under the Land Act were not complied with when the appellant obtained its title, thus resulting in the appellant’s title being allegedly obtained irregularly. Based on these arguments the court below went on to find that appellant obtained its title through constructive fraud and held that appellant’s title was invalid.
  5. It has however been affirmed by the Supreme Court in a long line of cases that fraud under s. 33 under Torrens system of land registration means actual fraud, viz; fraud by the registered proprietor. It does not mean constructive fraud. In Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603, the court gave the historical development of the law on this point with a comprehensive survey of decided cases in jurisdictions similar to Papua New Guinea regarding land ownership under Torrens system particularly England, Australia, and New Zealand. The decision of the Supreme Court in Mudge v. Secretary for Lands [1985] PNGLR 387 in which it was pronounced for the first time in this jurisdiction that “fraud” under s. 33 of the Land Registration Act meant actual fraud was among others, based on the cases cited in Papua Club Inc.
  6. The notion of constructive fraud has its genesis in Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 219, with the greatest of respect, the decision in my view lacked proper legal reasoning. I was indeed critical of the decision in The National Council of Young Mens’ Christian Association of Papua New Guinea Inc. v. Firms Services Ltd & Ors (2017) SC1596. The decision in Papua Club Inc. was approved by the Supreme Court in Koitachi Ltd v. Walter Schnaubelt (2007) SC 870. It has been cited with approval in other subsequent Supreme Court decisions. See, for example Elisha Timothy & Ors v. Joshinta Timothy (2022) SC2282 and Paga No.36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation [2018] PGSC 17; SC1671.
  7. Notably, subsequent Supreme Court decisions have expressly overruled Emas in which the notion of constructive fraud was used to describe failure by officers and authorities in the Department of Lands to comply with mandatory statutory requirements for grant of a title. In Elisha Timothy & Ors v. Joshinta Timothy (supra) the Court in its deliberation of the majority decision in Emas, with which the Court disagreed said:

“Against this background of cases consistently decided at ultimate appellate level over the course of the 20th century in relation to the Torrens system of title by registration, the conclusion unanimously reached by this court in Mudge v The Secretary for Lands [1985] PNGLR 387 that, notwithstanding that a State lease issued under the Land Act may have been issued irregularly and in breach of the provisions of that Act, the resultant registration of an interest in that lease conferred indefeasibility in respect of that interest was, with respect, completely congruent and orthodox. The court adopted and applied Assets Co, Frazer v Walker and Breskvar v Wall in reaching that conclusion. Explicitly in the judgment of Pratt J and, by their application of these cases implicitly in the case of Kidu CJ and Woods J, the court also accepted that, in s 33 of the Land Registration Act, fraud meant actual fraud. Thus, Kidu CJ held (at 390):

“Under legislation based on the ... [Torrens] system (in Australia and New Zealand) it is now settled law that, apart from the exceptions mentioned in the relevant legislation, once land is registered under the Torrens system the owner acquires an indefeasibility of title”.

To a like effect is this statement by Pratt J (at 397):

“The end result of all this is that even if I were to find in the appellants' favour that the lease was void because of serious irregularities concerning the way in which it was issued prior to registration, such registration, in the absence of fraud, achieves an immediate indefeasible title. I agree with the learned trial judge that “whilst the Court could have been of assistance to the plaintiff prior to the day of registration because of failure in issuing a lease to observe the provisions ... under the Land Act, but time had moved on”.

It must follow that, as at Independence, and as at the time the Land Registration Act was enacted, the fraud exception to the indefeasibility otherwise conferred by registration did not mean constructive or equitable fraud. Parliament must be taken to have enacted the Land Registration Act against the background of settled authority as to the meaning of the fraud exception. For fraud to carry the meaning constructive or equitable fraud would have required a special definition of fraud in that Act. There is no such definition. The Land Registration Act is a conventional, Torrens title system statute.

Mudge has been followed and applied by this court on numerous occasions: Keindip v The State of Papua New Guinea [1993] PNGLR 28; Timano v Timano [1993] PNGLR 334; Mamun Investments v Ponda [1995] PNGLR 1; Kiso v Otoa [2013] PGSC 3; SC1222; Paga No 36 Ltd v Eleadona [2018] PGSC 17; SC1671; Soto v Our Real Estate Ltd [2018] PGSC 55; SC1701. More than once, it has been stated that fraud for the purposes of s 33(1)(a) of the Land Registration Act means actual, not constructive, fraud. There are numerous examples of adherence to this view in the National Court, the most notable of which is Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178; N2603, in which Gavara-Nanu J offers a comprehensive survey of authority on the subject in this and other jurisdictions.

...The origins of the constructive fraud line of authority may be traced to Emas Estate Development Pty Ltd v Mea [1993] PNGLR 215. In that case, the respondent (Mea) was the registered proprietor of a State Lease. The relevant Minister purported to forfeit Mea’s lease on the basis of alleged breaches of certain covenants. Rival applications for grant of a lease in respect of the land previously leased to Mea were made by Emas Estate and another party. The Land Board recommended that the relevant land be leased to Emas Estate. Mea appealed to the Minister against the Land Board’s decision. While that appeal was pending the land was leased to Emas Estate. Emas Estate became the registered proprietor of the State Lease.

The Supreme Court (Amet and Salika JJ; Brown J dissenting) was divided in Emas Estate Development Pty Ltd v Mea on the question as to whether the fraud exception in s 33(1) of the Land Registration Act required proof of actual fraud by the registered proprietor or whether constructive fraud was sufficient. The majority considered that indefeasibility could be overcome where there were clear breaches of statutory provisions by an appropriating authority. Thus, Amet J (as his Honour then was) (at 219-220) stated that:

“I believe that, although those irregularities and illegalities might not amount strictly to fraud, they should, nevertheless, still be good grounds for invalidating subsequent registration, which should not be allowed to stand. To not do so would be harsh and oppressive against the innocent individual leaseholder, such as the first respondent”.

.... The remaining judge, Brown J, dissented on the grounds that Emas Estate had acquired indefeasible title and Mea’s claim did not fall within any of the exceptions under s.33 of the Act. In doing so, his Honour cited and applied Mudge.

It is difficult not to feel a sense of disquiet, even outrage, on the facts of Emas Estate Development Pty Ltd v Mea in relation to the forfeiture, without notice, of Mr Mea’s leasehold interest. However, there was no finding that Emas Estate was complicit in that forfeiture. As Frazer v Walker makes clear, a conclusion that the fraud exception to indefeasibility has not been proved does not exclude such remedies in personem as may exist. Mr Mea may have had such remedies against the State in light of the Minister’s action. Equally, and with the very greatest respect to the majority in that case, the role of enacting amendments to legislation is consigned by the Constitution to the parliament, not to the judiciary. Truly profound questions of great national importance to those holding registered interests in land, be they residential or otherwise, and to those who lend on the basis of the indefeasibility (subject to strictly limited exceptions) of such interests are, and always have been, raised by such a marked departure from a universally settled feature of the Torrens system of title by registration and the understanding that the fraud exception to the indefeasibility of a registered interest requires proof of actual fraud.

The position in which we find ourselves in relation to the meaning of the fraud exception to indefeasibility for which s 33(1)(a) of the Land Registration Act provides is a difficult one indeed. Mudge is a considered, unanimous judgment of three judges of this Court. It adopts as applicable to the construction of s 33(1)(a) the understanding of that meaning adopted by a long line of authority of judgments of the highest persuasive authority. Mudge and that line of overseas authority has, on many an occasion, been followed by this Court. On the other hand, Emas Estate Development Pty Ltd v Mea is also a judgment of this Court constituted by three members, one of whom dissented on a matter of relevant principle as to the outcome. It, too, has been followed more than once by this Court. The question as to which line of authority is correct has not to date, as well it might have been, been considered, much less answered, by this Court constituted by more than three judges. In hindsight, were there to be a departure from Mudge, Emas Estate Development Pty Ltd v Mea or any other of the later cases where that departure is evident ought desirably to have been heard and determined by this Court constituted by five judges: Public Prosecutor v John Aia and Peter Pino [1978] PNGLR 224; SC132. Principles of stare decisis, consistency and judicial comity were, and remain, at large and on this important point of law, all too often encountered in cases in the lists of the National Court and this court.

These weighty considerations acknowledged, and as was highlighted in SCR No 2 of 1992: Re The Leadership Code [1992] PNGLR 332; SC440, in a proper case a three-member court may overrule an earlier judgment of a three member court. This is made explicit by Schedule 2.9(1) of the Constitution, “(1) All decisions of law by the Supreme Court are binding on all other courts, but not on itself” (emphasis added).

In our respectful view, the time has well and truly come to overrule Emas Estate Development Pty Ltd v Mea and all subsequent authorities in which it has been held that “fraud” in s 33(1)(a) of the Land Registration Act includes constructive fraud.

Thus, while we acknowledge that the approach of the learned primary judge that proof constructive fraud was sufficient to demonstrate the exception to indefeasibility for which s 33(1)(a) of the Land Registration Act provides is supported by a line of authority, we are unable, with great respect, to accept the correctness of that line of authority. That line of authority should be overruled.” (My underlining)’


  1. Therefore, lack of compliance with mandatory statutory requirements under the Land Act in my respectful view can only be properly described as irregularities. But whether a title is obtained irregularly or through actual fraud pursuant to the exception in s. 33 (1) (a) of the Land Registration Act, the result would be same, viz; the title is invalid. See, Paga No. 36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation & Ors (supra) and Papua Club Inc. Therefore, finding by the court below that there was constructive fraud against the appellant in obtaining its title in my respectful view amounts to an error of law. Constructive or equitable fraud is not an exception under s. 33 (1) (a) of the Land Registration Act to vitiate a title. See, Elisha Timothy & Ors v. Joshintha Timothy (supra); Paga No. 36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation & Ors (supra) and Papua Club Inc.
  2. Regarding ss. 160 and 161 of the Land Registration Act, the provisions lay out a process under which the Registrar of Titles may cancel a title, including a title which had been issued in error or fraudulently or wrongly obtained. The process includes the Registrar issuing a summons to the person holding title to deliver up the title for cancellation. But, before issuing the summons, it must appear to the satisfaction of the Registrar that the title had been issued in error or issued fraudulently or obtained wrongly. Thus, the power to cancel a title is vested in the Registrar of Titles, the exercise of such power must be made on proper grounds. For example, exercising the power pursuant to an order(s) made by a court. See, Jaro Investment Ltd v. Ala Ane (2022) SC2192 and Steamships Trading Company v. Hon. Benny Allen & Ors (2021) N9334.Thus, given the process set out under these provisions, the court below with respect lacked power to order cancellation of the appellant’s title. The Registrar of titles must therefore invoke the process prescribed under ss. 160 and 161 of the Land Registration Act and cancel the first respondent’s title.
  3. Turning now to s. 122 of the Land Act, which deals with forfeiture of State Leases, it is in mandatory terms thus its requirements must be strictly complied with. See, PNG Sustainable Development Program Ltd v. Rosso (2022) SC2230. In this case it is not disputed that the notice of the purported forfeiture of the appellant’s title was served after the forfeiture. That was in clear breach of s. 122 (2). This error was conceded by counsel for the first respondent during the hearing of this appeal. Even where conditions of a lease are not complied with, the Minister must first serve a notice on the lessee to show cause within a period given in such notice before forfeiture. See, Noko No. 96 Limited v. Sir Puka Temu; Minister for Lands & Physical Planning & Ors. (2013) N732. In this case, failure to comply with s. 122 (2) also resulted in s. 122 (3) and (4) not being complied with by the first respondent. The result is by law, the appellant’s title was not forfeited, the appellant therefore always had a valid and indefeasible title.
  4. To me these are sufficient basis to allow the appeal, accordingly I allow the appeal with costs. I grant the orders sought by the appellant which should be in terms proposed by Frank J in his judgment.
  5. COLLIER J: Before the Court is an appeal against the whole of a judgment of the National Court of Justice given on 22 July 2022 in proceedings OS (JR) No. 864 of 2019; Wangbao Trading Limited v H.Q.H. Enterprises Limited, in which the primary Judge made orders concerning title to property described as Allotment 4 Section 12, Popondetta Town, contained in State Lease Volume 12 Folio 109 (the Property). On 22 July 2022 the primary Judge made the following orders:
    1. The Department of Lands is ordered and directed to commence the process of allocating the subject land afresh as prescribed by law, particularly the Land Act 1969 and or Lands Registration Act 1981 as may be applicable.
    2. The respective titles over the subject land held by the Plaintiff and First Defendant are irregular and unlawful and hereby cancelled and or set aside forthwith.
    3. Time is abridged to the time of settlement by the Registrar which shall take place forthwith.
    4. Each party to pay its own costs.
  6. The appellant, who claims that its title to the Property is valid, has appealed these orders.
  7. Relevant background facts are set out in the decision of the primary Judge to which I will initially turn.


BACKGROUND FACTS


  1. The Property is a State lease for commercial purposes, once owned by Peator Enterprises Limited. An instrument of title was initially issued to Peator Enterprises Limited on 14 June 2004 and registered on 17 June 2004. Peator Enterprises Limited transferred that interest to Christian Books Melanesia Inc on 30 September 2008.
  2. For reasons not the subject of evidence, an instrument of title was issued to the first respondent by the Lands Department in respect of the Property on 11 January 2017. It is not alleged that the first respondent became the registered owner through any transfer by the registered title holder, Christian Books Melanesia Inc.
  3. There is, however, evidence that on 17 July 2017 Christian Books Melanesia Inc and the appellant entered into a contract, whereby the appellant agreed to purchase the Property for the amount of K650,000.00. A copy of the contract was annexed to the affidavit of Mr David Lin sworn 2 December 2019. Similarly attached to Mr Lin’s affidavit is a copy of the instrument of transfer of the Property dated 9 May 2018 from Christian Books Melanesia Inc to the appellant.
  4. There was evidence before the primary Judge that after purchasing the Property the appellant applied for a Building Permit for commercial development of the Property, which was granted on 23 August 2019. The appellant then commenced construction of a three storey supermarket on the land the subject of the Property.
  5. As his Honour explained, the issue which fell for determination concerned the identity of the lawful owner of the Property.
  6. The first respondent claimed to hold a superior title to that held by the appellant over the Property. It further contended that the appellant’s purchase of the Property was illegal in that title to the Property had already been forfeited and cancelled by the Minister for Lands at the time of the appellant’s purchase. The appellant made inquiries of the Department of Lands, however, was informed by letter dated 5 November 2019 that the appellant was the registered proprietor of the Property without encumbrances.
  7. The proceedings before the primary Judge were commenced by the first respondent, who sought judicial review of the decision of the third, fourth and fifth respondents to register the appellant’s title to the Property following the transfer to the appellant by Christian Books Melanesia Inc. The grounds on which the first respondent sought that judicial review in the National Court were as follows:
    1. The purchase of the property by [the appellant] from Christian Books Melanesia Inc. was illegal in that this was a State Lease and is not susceptible to be sold or bought in a private transaction without the approval from the Minister for Lands as provided under Section 129 of the Land Act.
    2. The purchase of the property by [the appellant] from Christian Books Melanesia Inc. did not follow any of the procedures laid down in Part X Division 1 of the Land Act and especially Section 68 (Advertisement of Lands for Leasing), 697 (Duty to Advertise State Leases), 70 (How applications for state Leases to be Made), and 71 (Land Board to consider Applications for State Leases);
    3. The Title to the property had already been forfeited and cancelled by the Minister for Lands at the time of the purported purchase and transfer to [the appellant] by virtue of Section 122 of the Land Act (Forfeiture of State Leases); and
    4. [The appellant] refused to obey a “stop work” notice issued by the proper authority and continue to indulge in this illegal occupation and construction contrary to the provisions of Sections 98 and 99 of the Physical Planning Act.


DECISION OF THE PRIMARY JUDGE


  1. Despite challenges on this point by the appellant and the third, fourth and fifth respondents, the primary Judge found that the grounds of review relied on by the first respondent were drafted with sufficient particularity to be valid. His Honour then observed that it was for the first respondent to prove its case on the balance of probabilities. His Honour continued:
    1. In this case it is not necessary to traverse the grounds of review seriatim, as stated by the Plaintiff because there is evidence on record that shows that on the 13th of February 2018, the subject land was undeveloped. This information is contained in the Inspection Report by Roger Irurapa Jr. who was at all material times hereto the Provincial Lands Adviser, based in Popondetta...
    2. It is also a matter of record that on the 13th of February 2018, Mr Irurapa Jr. wrote to Mr. Komet, Manager of Leases, in the Department of Lands & Physical Planning, to request that a Notice to Show Cause be served on the lessee.
    3. On record there is evidence that the Minister for Lands & Physical Planning on the 20th of February 2018, forfeited the subject land in exercise of his powers under Section 122 (1) of the Land Act of 1996 on two (2) grounds, namely
      1. that the improvement condition imposed by the Act have not been fulfilled in respect of the land; and
      2. that the lease has failed to comply with Notices under Section 122 (2) of the Land Act.
    4. The regularity of the aforesaid forfeiture appearing at page 175 of the Review Book has not been impugned and or otherwise challenged.
  2. The primary Judge referred to evidence of the third respondent that the Property was owned by the appellant, and a copy of a title deed showing that the State Lease was granted to the appellant on 9 May 2018. The primary Judge also accepted evidence of the third respondent that the first respondent’s claim to hold a State Lease with respect to the Property was fraudulent, and that there was no evidence that the first respondent complied with the allocation process that required that the Land Board make a recommendation in its favour.
  3. The primary Judge noted the evidence of the third respondent denying that the Property was forfeited, and that there was no forfeiture of the State Lease in the records of the Department of Lands and Physical planning.
  4. At [24] his Honour referred to s122 (2) of the Land Act which provides that a Notice to Show Cause must precede the forfeiture, and that, on the evidence, there had not been compliance with such notice in this case.
  5. His Honour continued:
    1. In this case, I am satisfied, on a balance of probabilities, that the subject land was not developed in 2018, after a period of close to ten (10) years (after transfer from the previous owner – Peator Enterprises) and that notices to show cause as contemplated by Section 122 (2) of the Land Act were issued and not complied with and that eventually the land was forfeited on the 20th February, 2018.
  6. The primary Judge accepted the evidence of Mr Irurapa to the extent that Mr Irurapa gave evidence that the appellant’s title was “fake” and obtained through fraud, because after the Property was forfeited, it was not advertised for interested parties to apply. His Honour noted that the forfeiture instrument in the Review Book was dated 20 February 2018, which meant that the Notice to Show Cause came after the actual forfeiture (which was illogical or improper). His Honour also opined that the forfeiture instrument was not otherwise impugned by the second to fifth respondents.
  7. The primary Judge concluded:
    1. Having assessed the totality of the evidence tendered by the parties, particularly the evidence of Mr Irurapa, Mr Halpie and Mr Samson all of them officers of the Lands Department, I am satisfied, on a balance of probabilities, that the title to both parties herein, namely the [first respondent] and the [appellant], is irregular. The [first respondent’s] title does not seem to comply with the Land Board allocation process as set out in the law and the subject land after it was forfeited, does not seem to have been advertised as required by Section 68 of the Land Act.
    2. This Court is particularly concerned that the Notice to Show Cause dated 1st of October 2018, appears to have been issue after the forfeiture has already been done. It is also a matter of grave concern to this Court that officers of the Lands Department, would give evidence, under oath, that is materially contradictory, regarding the process that was followed to grant title to the [appellant].
  8. Materially his Honour then observed:
    1. I am acutely aware that in this jurisdiction the general principle is that when a State Lease is registered the proprietor is conferred an indefeasible title subject only to exceptions provided in Section 33 (1) of the Land Registration Act. (See Mudge v Secretary for Lands (1985) PNGLR 37).
    2. In this case, ex facie, the Plaintiff and First Defendant seem to hold title to the subject land. Although fraud has been alleged there is no solid proof of how the fraud took place.
    3. However, in this case, it is not appropriate given the evidence I have already outlined to insist on proof of actual fraud because this Court can cancel the registered proprietor’s title based on the existence of constructive or equitable fraud. Constructive fraud has been said to exist where circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, as to amount to fraud, warranting the setting aside of the registration of title.
    4. In this case for the reasons already stated, I am satisfied that constructive fraud in the sense explained above exists as the circumstances of transfer of both titles is highly unsatisfactory and irregular; (Emas Estate Development Pty Ltd v John Mea (1993) PNGLR 215; PNG Deep Sea Fishing Ltd v Luke Critten 2010 (SC1126) and Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120).
    5. Amongst the issues for trial identified by the parties, through their lawyers, at page 277 of the Review Book was to the effect that if both titles were found to be obtained or granted irregularly, the Court may consider whether the matter should be referred back to the Lands Department for proper process to be followed.
    6. Having regard to the circumstances of this case and what I have said about the contradictory and unsatisfactory evidence of the officers of the Lands Department relating to the propriety of both titles herein, I am satisfied that it is in the interest of justice to refer this matter back to the Lands Department, so that proper process prescribed by law, particularly the Land Act, may be followed.
40. In the result the Court makes the following Orders:
  1. The Department of Lands is ordered and directed to commence the process of allocating the subject land afresh as prescribed by law, particularly the Lands Act 1969 and or Lands Registration Act, 1981 as may be applicable.
  2. The respective titles over the subject land held by the Plaintiff and First Defendant are irregular and unlawful and are hereby cancelled and or set aside forthwith.
  1. Time is abridged to the time of settlement by the Registrar which shall take place forthwith.
d) Each party to pay its own costs.


APPEAL


  1. In a somewhat lengthy Notice of Motion dated 19 August 2022 the appellant appealed the decision of the primary Judge on 14 grounds, several of which were particularised. In summary however the appellant’s grounds of appeal were as follows:
  1. The appellant sought the following orders:
(1) That the appeal be upheld.
(2) The whole of the judgment of the Honourable Mr Justice Oagile Dingake given on 22 July 2022 in the National Court proceedings be quashed or set aside.
(3) The First Respondent’s application for judicial review be dismissed.
(4) An Order that the First Respondent’s title be cancelled or set aside forthwith and the Appellant’s title be affirmed as valid and indefeasible.
(5) The First Respondent to pay the Appellant’s costs of the National Court proceedings and the costs of this appeal, to be taxed, if not agreed.
(6) Such other or further orders as this Honourable Court deems proper.
(7) Time for entry of the order be abridged to the time of settlement which shall take place forthwith.


SUBMISSIONS OF THE PARTIES


  1. Submissions were filed in the appeal by the appellant and the second to fifth respondents. The appellant and the second to fifth respondents all submitted that the appeal should be allowed.
  2. The first respondent filed no submissions in the appeal. Mr Kuvi for the first respondent sought leave to hand up submissions at the hearing. The Court granted leave.
  3. In summary, the appellant submitted as follows:
  1. The second to fifth respondents adopted and supported the grounds of appeal of the appellant, as well as its submissions. Further they submitted:
  1. In summary, the first respondent submitted:

CONSIDERATION


  1. A key issue in this proceeding is the validity of the Notice to Forfeit dated 20 February 2018 in respect of the State Lease of the Property.
  2. At [26] the primary Judge found as follows:
    1. In this case, I am satisfied, on a balance of probabilities, that the subject land was not developed in 2018, after a period of close to ten (10) years, (after transfer from the previous owner – Peator Enterprises Ltd) and that notices to show cause as contemplated by Section 122 (2) of the Land Act were issued and not complied with and that eventually the land was forfeited on the 20th February, 2018.
  3. Grounds of appeal (d), (e), (j), (k) and (l) all addressed the finding by the primary Judge that the Notice to Forfeit was effective and the State Lease over the Property – previously held by Christian Books Melanesia Inc – was forfeited.
  4. Section 122 of the Land Act provides:
FORFEITURE OF STATE LEASE.
(1) The Minister may, by notice in the National Gazette, forfeit a State lease–
(a) if rent on the lease remains due and unpaid for a period of six months; or
(b) if fees are not paid in accordance with this Act; or
(c) if the amount payable in respect of improvements is not paid in accordance with this Act; or
(d) if–
(i) a covenant or condition of the lease; or
(ii) a provision of this Act relating to the lease; or
(iii) a requirement of a notice under Section 91 relating to the lease,
is not complied with; or
(e) if the granting of the lease has been obtained, in the opinion of the Minister, wholly or partly as a result of statements that were, to the knowledge of the lessee, false or misleading.
(2) Before forfeiting a State lease under Subsection (1), the Minister–
(a) shall serve notice on the lessee calling on him to show cause, within a period specified in the notice, why the lease should not be forfeited on the ground or grounds specified in the notice; and
(b) may, whether or not cause has been shown in accordance with a notice under Paragraph (a), serve on the lessee a notice requiring him, within a period specified in the notice, to comply with the covenants or conditions of the lease or the provisions of this Act.
(3) The Minister shall not forfeit a lease under this Section unless–
(a) the lessee has failed to comply with a notice under Subsection (2)(a) or (b); or
(b) the lessee has failed to show good cause why the lease should not be forfeited.
(4) Copies of a notice of forfeiture and a notice under Subsection (2)(a) or (b) shall be served on all persons who, to the knowledge of the Departmental Head, have or claim to have a right, title, estate or interest in, to or in relation to the land, or such of them as can with reasonable diligence be ascertained and found.
(5) No acceptance of rent by the State waives a right to forfeit a lease under this Act.
(6) For the purposes of this Section the grant of an application for a State lease shall be deemed to be the grant of the lease.
(emphasis added)
  1. Service of notices under the Land Act is further addressed in s 169 of the Act which provides:
169. SERVICES OF NOTICES, ETC.
(1) Subject to this section, where, under this Act, a claim, notice or thing is required or permitted to be given to or served on a person (other than a corporation), the claim, notice or thing may be given or served personally or by registered post to his postal address last known to the Departmental Head.
(2) Where–
(a) in the opinion of the Departmental Head, it is impracticable to serve a person in accordance with Subsection (1); or
(b) the Departmental Head has cause to believe that that person is dead,
it is a sufficient service if a copy of the claim, notice or thing–
(c) is published in three consecutive issues of a newspaper that is distributed regularly throughout the country; and
(d) is forwarded by pre-paid post to the Local-level Government (if any)–
(i) in whose area the land the subject of the notice is situated; or
(ii) in whose area the person to be served last, to the knowledge of the Departmental Head, resided; and
(e) is placed in a conspicuous place on the land the subject of the notice.
(3) Where under this Act, a claim, notice or thing is required or permitted to be given to or served on a corporation, the claim, notice or thing may be given or served by registered post to the postal address of the corporation last known to the Departmental Head.

  1. In the present case I note the evidence before his Honour that the purported Notice of Forfeiture was issued to the previous owner of the Property, Christian Books Melanesia Inc, on 20 February 2018, while – inexplicably – a related Notice to Show Cause was apparently issued 1 October 2018. The order in which these documents were issued immediately raises serious questions about the validity of the statutory process. Equally concerning is the complete absence of evidence before the primary Judge of compliance with s 122 (3) and (4) of the Land Act.
  2. As the appellant correctly submitted, compliance with the provisions of s122 (4) of the Land Act is mandatory. Failure on the part of the Minister to comply with s 122 (4) of the Land Act renders any forfeiture void ab initio. As Thompson J observed in PNG Power Ltd v Reipi [2018] N7442:
    1. The requirements of s 122 (4) is mandatory – the notice shall be served. Because it was not served, the Plaintiff was denied the opportunity to take action, and in particular to apply for the land title to be reissued to it. I have not had the benefit of reading the case referred to by the First Defendant’s counsel, but it was said to be a National Court decision and apparently relied on a finding that the Plaintiff was already aware of the forfeiture. That would distinguish it from this case, where the Plaintiff was completely unaware of the forfeiture. The Plaintiff received no notification that its response was considered unsatisfactory and had not shown sufficient cause, did not receive a Notice to comply, and was not advised that the Minister had decided to forfeit the lease.
    2. The failure to comply with the mandatory provision for service of the forfeiture notice under s 122 (4) had the effect that the forfeiture decision was not validly made.
  3. Similarly in University of Papua New Guinea v Ofoi [2016] N6303 Nablu J said:
    1. The question of the validity of forfeiture of State Leases pursuant to the Land Act has been the subject of a number of decisions of the Supreme Court and this Court. The main legal principle applicable is that, the State can lawfully forfeit a State Lease if the mandatory process under Section 122 of the Land Act is complied with. It is trite law that the State has the ultimate power to forfeit a State Lease where the registered proprietor has either failed to comply with the mandatory requirement to pay land rental fees or failed to comply with the land covenants specified in the State Lease. The exercise of this ultimate power of forfeiture can only be validly exercised upon strict observance of the mandatory requirements that are specified under s.122 (2) of the Land Act. The State must give proper notice to the registered proprietor by duly serving a Notice to Show Cause under s.122 (2) of the Land Act.
    2. There is a plethora of authority on the steps or procedure of valid forfeiture of a State Lease under the current Land Act and its predecessor Land Act (Chapter 185) (See Dent v. Kavali [1981] PNGLR 488; Davis v. Pitzz [1988-89] PNGLR 143; Yakananda Business Group Inc.v. Minister for Lands and Physical Planning (2001) N2159; Beecraft No. 20 Ltd v. Minister for Lands (2001) N2125; John Mur v. Les Kewa (2010) N4016).
    3. The State’s failure to comply with the mandatory prescribed provisions under Section 122 of the Land Act, are grounds to invalidate the entire forfeiture process. Accordingly, this Court and the Supreme Court has invalidated and set aside a number of forfeitures for failing to comply with the mandatory requirement to show cause (See Emas Estate Development Pty Ltd v. Mea & The State [1993] PNGLR 215).
  4. These principles have similarly been applied in the Supreme Court. In PNG Sustainable Development Program Ltd v Rosso [2022] SC2230 for example the Court observed:
    1. The exercise of the power under s. 122 of the Act has been judicially considered in numerous cases. These cases reflected a number of fundamental principles such as the requirements of s. 122 are mandatory and must be strictly observed and followed. The exercise of power under s. 122 by the Minister for Lands is not unfettered and must be exercised on proper and good reasons. A failure to comply with these mandatory requirements warrants voiding of or quashing of and setting aside the forfeiture action. ...
  5. While his Honour in the present case was plainly influenced by the fact that the Notice to Forfeit appeared to have been signed by the Minister, the finding at [26] as to the validity of the Notice to Forfeit cannot stand in light of the clear want of compliance with the requirements of s 122 of the Land Act. In this respect I note, again:
  1. His Honour at [30] referred to the absence of explanation concerning the timing of the Notice to Forfeit relative to the issue of the Notice to Show Cause, however while noting that this seemed “illogical or improper” it appears that his Honour did not recognise the clear invalidity of the Notice to Forfeit.
  2. In support of its claim of forfeiture of the appellant’s State Lease, the first respondent submitted that the forfeiture was supported by the evidence of Mr Irurapa and Mr Halbie, who deposed that the Property was undeveloped, that the Land Department file relating to the State Lease purchased by the appellant had gone missing in the Department, and that the State Lease had been forfeited. Counsel for the first respondent submitted that the primary Judge was correct in ascribing weight to the evidence of these witnesses on the basis that they were local Land Department bureaucrats who were aware of circumstances in Popondetta.
  3. Evidence of Mr Irurapa and other Lands Department witnesses concerning the process of issue of title was generally of relevance, however the views of the Provincial Lands Advisers as to the validity or otherwise of the appellant’s title were irrelevant to the proceedings before his Honour. Issues of law in the National Court proceedings were matters for the primary Judge, not witnesses. In my respectful view his Honour ought not have given any weight to the evidence of Mr Irurapa or Mr Halbie in deciding whether the State Lease had been forfeited.
  4. The State Lease held by Christian Books Melanesia Inc and subsequently the appellant was never the subject of a valid Notice to Forfeit under the Land Act. Grounds of appeal (d), (e), (j), (k) and (l) are substantiated.


ADDITIONAL COMMENTS


  1. In my view the determination of these grounds of appeal in favour of the appellant suffices to warrant the appeal being allowed. Before final disposition of the appeal however I consider it appropriate to make a number of additional remarks.
  2. First, in this appeal the first respondent conceded that its title to the Property was not “genuine”. His Honour recognised this admission but did not consider it warranted a finding in the appellant’s favour by reference to the application before the National Court. However, in finding that the claimed titles of both the appellant and the first respondent were tainted by reference to “contradictory and unsatisfactory circumstances”, it appears that the primary Judge failed to take into consideration:
  1. In summary, the contractual arrangement whereby the appellant acquired ownership of the Property and the subsequent registration of its title were in evidence, and were the subject of attestation by the Department which has responsibility for administering the Register under the Land Registration Act. Plainly his Honour ought to have recognised the clear superiority of the appellant’s claim to the Property over that of the first respondent.
  2. Second, to the extent that the first respondent sought cancellation or correction of an entry in the Register of Titles on the basis of fraud or error, a process is set out in ss 160 and 161 of the Land Registration Act for application to the Registrar for the issue of a summons. This process was recently explained by the Supreme Court in Jaro Investment Ltd v Ane [2022] SC2192. It is entirely unclear whether the first respondent sought relief in accordance with those provisions.
  3. Third, ultimately I consider it unnecessary for the Court to decide whether the primary Judge erred in dismissing the competency objections on the part of the appellant to the grounds of review on which the first respondent relied in the National Court proceedings. However, as Nablu J explained in Kwayok v Singomat [2017] N7097:
    1. ...It is imperative that the grounds of review are sufficiently pleaded, succinct and state a legally recognised ground of review. The legally recognised grounds of review as concisely stated by Deputy Chief Justice Kapi (as he then was) in the landmark case of Kekedo v. Burns Philip [1988-89] PNGLR 122 at page 124 which is still applicable today. His Honour stated that:
“The circumstances under which judicial review may be available are where the decision-making authority exceeds its powers, commits an error of law, commits a breach of natural justice, reaches a decision which no reasonable tribunal could have reached or abuses its powers.”

  1. Importantly, Kapi DCJ continued in Kekedo v Burns Philp [PNG] [1988-89] PNGLR 122:
The purpose of judicial review is not to examine the reasoning of the subordinate authority with the view to substituting its own opinion. Judicial review is concerned not with the decision but with the decision-making process.
  1. See also Allolim v Kirokim [2018] SC1735 at [21], Somare v Manek [2011] SC1118 at [114]-[115] and Ombudsman Commission v Yama [2004] SC747.
  2. In the proceedings before his Honour:
  1. Other than possibly in respect of a claim of illegality, it is difficult to identify how these grounds sought orders in the nature of judicial review of a decision-making process.

CONCLUSION


  1. In my view the appeal ought to be allowed. The appellant should be entitled to the orders it has sought, including costs.
  2. FRANK, J: I also agree that this appeal should be allowed. The circumstances which have given rise to this appeal and the grounds for review before his Honour have been given by Collier J in her judgment.
  3. From the evidence before his Honour, a chronology of some of the events surrounding the issuance of the two state leases, volume 12 folio 109 (“First Title Deed”) and volume 24 folio 174 (“Other Title Deed”) over the same piece of land within Popondetta town described as section 12 allotment 4 Popondetta (“subject land”) is as follows:
  4. The grounds for review and the evidence at the trial raised 2 issues to challenge the validity of the First Title Deed; first, whether Ministerial Approval had been granted on the Transfer Instrument for the Registrar of Titles to register it, and second, whether the First Title Deed was forfeited on 20 February 2018.
  5. An issue as to whether special grounds of an urgent or exceptional character existed for the Minister to grant ministerial approval pursuant to ss.128(2) and 129(1)(b) of the Act, which is connected to the first issue earlier noted, was not specifically raised as a ground for review and no submissions were made to address it even though this appears to be the first respondent’s grievance on the basis that it was interested in the subject land and the Provincial Lands Office’s recommendation that the subject land was unimproved.
  6. At the trial, the first respondent did not attempt to challenge the appellant’s evidence that Ministerial Approval had been granted on the Transfer and Contract.
  7. From the entire evidence and the law, particularly Part X of the Act, it is clear that as at 20 February 2018 (the date of the Forfeiture Notice) –
(1) from the chain of title transfers recorded on the First Title Deed that the First Title Deed had not on any occasion from the date of its issue to Peator Enterprises Ltd in June 2004 to 20 February 2018 been surrendered or forfeited. The Forfeiture Notice itself is evidence which corroborates the subsistence of the First Title Deed up to that date;
(2) the only state lease by which the appellant asserted its claim of right as registered lessee over the subject land is the First Title Deed, the same state lease which has registered on its folio the successors in title, namely, CBM and the appellant; and
(3) The state lease the first respondent took issue with is the First Title Deed as it is on the folio of it that the Transfer Instrument has been registered.
  1. Therefore, the subject land was from the date of its issue to the date of the Forfeiture Notice (20 February 2018) not available for lease. This exposes the Other Title Deed as having been issued in breach of the process by which Government land is made available for lease under Part X of the Act. This is the point of grievance raised in Ground 3(f) of the notice of motion instituting this appeal (“Notice of Appeal”). At the hearing of this appeal, counsel for the first respondent conceded that the Other Title Deed was irregularly issued as his Honour had correctly found.
  2. The issue which remained therefore was whether the First Title Deed had been validly extinguished by the Forfeiture Notice.
  3. In considering this issue, his Honour, at para 16 of his reasons for judgment (“Reasons”) found, amongst others, that notices to show cause under s.122(2) of the Act were issued and that such notices had not been complied with which resulted eventually in the issue of the Forfeiture Notice.
  4. To reach this finding, his Honour, at para 24 of the Reasons, observed that the Forfeiture Notice suggests that a notice to show cause had not been complied with, and thereon found, at para 26 of the Reasons, that notices to show cause were issued but were not complied with following which the Forfeiture Notice was issued.
  5. That finding (that a notice to show cause had issued prior to the Forfeiture Notice) was by inference. As to this inference:
  6. Leaving aside the requirement of s.122(1) of the Act for the Forfeiture Notice to be gazetted, his Honour accepted the Forfeiture Notice on its face value and found that the First Title Deed had been extinguished.
  7. When one proceeds from this finding, the question which arises next is, which then is the state lease issued after 20 February 2018 in favour of the appellant after the First Title Deed had been extinguished by the Forfeiture Notice that was the subject of the findings and conclusions of his Honour.
  8. The answer is that there was none. The appellant asserted the validity and currency of the First Title Deed as proof of its interest as the lessee of the subject land. The first respondent was not challenging the validity of any state lease issued after the date of the Forfeiture Notice; it challenged the registration of the appellant on the First Title Deed as lessee, as is evident from the evidence and its reference to “9 May 2018” in the decisions it was aggrieved by as stated in Part D of Amended Statement under Order 16 rule 3(2) of the National Court Rules. And, from the entire evidence, the only documentary evidence of any state lease over the subject land are those of the First Title Deed and the Other Title Deed.
  9. It is clear that his Honour was influenced by the evidence of Mr Irurapa who, at paras 12 to 14 of his affidavit, said:
    1. Similarly, I have now also been shown a 'Title' purportedly by HQH Enterprises Limited. I am surprised as to how such a Title came about. My office does not have any records of HQH having acquired the lease over the property. Our records show that Christian Books Melanesia Inc. is still the leaseholder over the property. I have also requested a search at Headquarters and such search revealed that there is no file of the matter at Headquarters. The only records on the property are the ones kept here in our office in Popondetta.
    2. As the person in-charge of all national land matters in this Province, I am or ought to be aware of statuses of all such lands. In this case, I am aware that the land had been forfeited by the State. It is now only awaiting advertisement for interested parties to apply to acquire title. When it is advertised, parties will apply and the National Land Board will sit to detemine these applications and award the land to the rightful applicant.
    3. It is definitely wrong for HQH to have acquired the land because the lease had been forfeited back to the State. It was therefore not for sale. It must be advertised according to law and that interested parties are to apply.
  10. This is apparent from the Reasons where his Honour, at para 27, observed:

He [Mr Irurapa] says even the [appellant’s] title is “fake” and obtained through fraud, because after the land was forfeited, it was not advertised for interested parties to apply.

  1. Although Mr Irurapa deposed that he was shown a “Title” a copy of it was not adduced in evidence.
  2. His Honour concluded at para 32 of the Reasons that the title of the appellant was irregular as it “...does not seem to have been advertised as required by Section 68 of the Land Act”.
  3. It is from that conclusion that his Honour found at para 37 of the Reasons that the First Title Deed was obtained by constructive fraud.
  4. When his Honour concluded that the First Title Deed was irregular, his Honour erred because the First Title Deed was issued prior to the Forfeiture Notice and therefore could not have been the fake state lease allegedly issued after 20 February 2018 contrary to Part X (particularly ss.68 to 76 and 81) of the Act. His Honour, with respect, erred in misapprehending the First Title Deed as the “fake” state lease and in effect applying against it the requirements of Part X (particularly ss.68 to 76 and 81) of the Act when his Honour declared it as irregular and unlawful, and cancelled it. These errors were the subject of Ground 3 (a) of the Notice of Appeal.

2023_6900.png
The follow-on effect of those errors is that his Honour also erred, as the appellant had contended in Ground 3(n) of the Notice of Appeal, when he found that the First Title Deed was obtained by constructive fraud.


  1. Returning to the Forfeiture Notice, his Honour also erred in finding that the First Title Deed had been extinguished by the Forfeiture Notice because the Forfeiture Notice was on the face of it issued or directed against the Other Title Deed.
  2. This also means that the inference his Honour drew based on the Forfeiture Notice that a notice to show cause was issued prior to 20 February 2018 could not be sustained.
  3. The result is that the First Title Deed was not affected by the Forfeiture Notice.
  4. And, as the first respondent had not sought to review the grant of Ministerial Approval (alluded to earlier in para 64 above), the First Title Deed and the registration on the folio of it of the appellant as lessee stand unaffected.
  5. For these reasons, I would allow the appeal.

ORDERS
87. The Court’s orders are that:


(1) The appeal is allowed.

(2) The whole of the judgment given on 22 July 2022 in the National Court proceedings OS (JR) NO. 864 OF 2019 is set aside.

(3) The First Respondent’s application for judicial review is dismissed.

(4) The First Respondent’s title be cancelled pursuant to ss. 160 and 161 of the Land Registration Act, and the Appellant’s title is affirmed as valid and indefeasible.

(5) The First Respondent to pay the Appellant’s costs of the National Court proceedings and costs of this appeal, which if not otherwise agreed are to be taxed


Dentons PNG: Lawyers for the Appellant
Francis Kuvi & Associates Lawyers: Lawyers for the First Respondent
Solicitor General: Lawyers for the Second to Firth Respondents


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