DC762

PAPUA NEW GUINEA
[DISTRICT COURT OF JUSTICE]

DCCi NO 851 OF 2006

BETWEEN

MICHAEL MANGAL
COMPLAINANT

AND

JOSEPH KAIMAN
FIRST DEFENDANT

AND

NATIONAL HOUSING CORPORATION
SECOND DEFENDANT

Port Moresby: S GORA

2008: 20 MARCH

Cases Cited

Papua Club Incorporation –v- Nusaun Holding Limited N 2603
Pama Anio –v- Aho Baliki and Bank of South Pacific [2004] N 2719

Statutes Cited

Nil 

Counsel

Complainant appeared for himself
 L Gavara Nanu (Jnr) for the first Defendant
Jonah Sassingian for the second Defendant

DECISION

GORA. S This is an action by the complainant Michael Mangal against the first defendant Joseph Kaiman and second defendant the National Housing Corporation over property described as section 67, allotment 11, Horse camp, Kilakila, National Capital District.

2. At the outset, the property in subject is a State Lease in an Urban settlement under the ownership and management of the second defendant, the National Housing Corporation. The method or scheme applied in qualifying for a transfer of title over a State Lease in Urban settlements is by way of signing a two (2) year Tenancy Agreement with the National Housing Corporation with conditions to do certain improvements in the property, particularly the construction of a standard – medium type residential house which is the objective of this scheme under a Self-Help Housing Policy designed for low income earners living in the settlements. Upon construction of a residential (standard medium type) house and prompt land rental payments within the first two years of tenancy, the tenant becomes eligible for a title over the Lease/property. Under this scheme, the National Housing Corporation appoints Settlement Committees for each settlement to oversee and report on the implementation of the self help housing program. 

3. In this case the complainant alleges that the first defendant fraudulently conspired with the National Housing Corporation (second defendant) to sign a new Tenancy Agreement over the property in subject between themselves when in fact there was already in existence a Tenancy Agreement over the same property between himself (the complainant) and the National Housing Corporation.

4. The complainant further alleges that consequential to this fraudulent acts of the first defendant, the National Housing Corporation unlawfully terminated his existing Tenancy Agreement over the property allowing the first defendant to be the new tenant of the property.

5. The complainant therefore claims general and special damages for the loss of property, suffering and humiliation. He also seek declaratory orders that:

a)	The Tenancy Agreement made between the first defendant and the National Housing Corporation on the 24 April 2004, over the subject property be declared null and void, and

b)	The "Tenancy Agreement" made between himself and the National Housing Corporation on 28 August 1989 be declared as current and still in force.

6. And further that the first defendant be evicted from the subject property by order of this court.

THE FACTS

7. The facts in brief are that in mid 1989 the complainant purchased the subject property described as section 67, allotment 11, Horse camp Kilakila from one Alphonse Kafae for the sum of Four thousand Kina (K4, 000.00). At the time of the purchase, the property had improvements, a standard medium type house and a trade store building, the value of which over time had increased to about Twenty Five Thousand Kina (K25, 000.00) as claimed by the complainant.

8. The purchase was concluded with the full knowledge of the National Housing Corporation having been advised by the Settlement Committee of Horse Camp, Kilakila. And on the 28 August 1989 the National Housing Corporation signed a Tenancy Agreement over the property with the complainant.

9. In 1990, the complainant contested the Enga Provincial Government elections and was subsequently elected into the Enga Provincial Assembly. He was also appointed as a Provincial Minister hence being required full time in the province. He subsequently left the subject property in the care of a relative and did not return until year 2000. Upon his return, the complainant found that the first defendant had taken possession of the property and was residing there. He made several attempts to evict the first defendant by writing to him but without success. Community leaders were brought in to settle the matter but again the settlement failed. Complainant’s wife was subsequently assaulted by the first defendant and no further attempts were made after that to settle the matter.

10. On the 20 April 2004, the National Housing Corporation represented by one Cecilia Kemau caused a Land rental notice to be issued to the complainant for outstanding land rentals up to a total of Five Hundred Kina (K500.00). The Land rental notice was not served on the complainant but some how came into the possession of the first defendant. A day later on the 22 of April 2004, the first defendant took the complainant’s Land rental notice to the National Housing Corporation office and paid Four Hundred Kina (K400.00) for which a payment receipt was issued under his own name and not under the complainant’s name.

11. This was done without the complainant knowing and on the same day (i.e. 22 April 2004) the first defendant and National Housing Corporation signed a new Tenancy Agreement over the subject property without the complainant knowing and without due regard to the existing Tenancy agreement between the complainant and the National Housing Corporation.

12. Consequential to signing of the new Tenancy Agreement between the first defendant and the National Housing Corporation, the National Housing Corporation made a decision to terminate its tenancy Agreement with the complainant on the 28 April 2004. No formal notice of termination was given to the complainant stating the reasons or grounds for the termination. The complainant therefore claimed fraud and unlawful termination of his Tenancy Agreement.

THE ISSUES 

13. There are many issues arising from these set of facts and circumstances but are centered around two main issues, and these are:

1)	Whether or not the first defendant’s Tenancy Agreement with the National Housing Corporation was made fraudulently.

2)	Whether or not it was lawful for the National Housing Corporation to terminate the complainants Tenancy Agreement and enter into a new Tenancy Agreement with the first defendant.

14. On the first issued of whether or not the first defendants Tenancy Agreement was entered fraudulently, let me state from the outset that allegations of fraud is a very serious matter and the onus of proving these allegations rests with the person who makes them. The courts have persistently stressed this point on many occasions. Counsel for the first defendant referred this court to a National Court decision in the case of The Papua Club Incorporations –v- Nusaun Holdings Limited (N.2 N. 2603 in which Woods J stated: 

"An allegation of fraud is a very serious allegation and the courts have required strict adherence to requirements for pleading in such cases. Courts have never allowed general allegations of fraud.

Courts have required that a person pleading fraud should set out facts, matters and circumstances relied on to show that a party was actuated by fraudulent intentions. 

The acts alleged to be fraudulent must be stated fully and precisely with full particulars."

15. The question is, has the complainant pleaded fraud sufficiently stating fully and precisely the full particulars of the fraud alleged? I note that in his amended statement of claim in paragraphs ( c ), (d) and (e), the complainant claims that the first defendant unlawfully allowed himself to have access to and had in his possession an official but private notice for payment of outstanding Land rentals of Five Hundred Kina (K500.00) from the National Housing Corporation. He claims that this Land rental notice dated 20 April 2004 was addressed to him alone and not to the first defendant. He claims that the National Housing Corporation in allowing the first defendant to have access to this notice without his knowledge was designed to commit an illegal act to harm or damage him. He says this is an act of conspiracy.

16. The complainant further claims that the Land rental notice which was addressed to him was hijacked by the first defendant and that the said first defendant collaborated and or colluded with the National Housing Corporation to make a payment of Four Hundred Kina (K400.00) in settlement of the Land rental and receipt of payment was issued under his own name on 22 April 2004 which resulted in a new Tenancy Agreement being signed on the same day between himself (first defendant) and the National Housing Corporation.

17. He claims this was all conspiracy between first defendant and National Housing Corporation to purposely damage his tenancy over the subject property.

18. He claims all these transaction occurred between 20 April 2004 and 22 April 2004, a duration of only three (3) days, hence raising doubts and suspicion of fraud and conspiracy.

19. Whilst this may be the case, there are no evidence before this court of any conspiracy or fraud and therefore the onus is on the complainant to provide detailed particulars of such fraud or conspiracy. Mere suspicion arising from circumstances is not sufficient to establish occurrence of fraud. There must be hard factual evidence to show elements of fraud or conspiracy. 

20. I find that the complainant has failed to sufficiently provide particulars of fraud involved. Although circumstances may suggest occurrence of fraud, but these will only lead to assumptions unless detailed and precise particulars are given.

21. Under the circumstances, I cannot sustain the allegation of fraud and conspiracy in this case; I therefore dismiss the allegations and consequently I refuse to declare the Tenancy Agreement between the first defendant and National Housing Corporation null and void.

22. This also mean that I cannot find and declare that the Tenancy Agreement between the complainant and National Housing Corporation dated 28 August 1989 is still current and in force. This Agreement was already terminated by the National Housing Corporation on the 28 April 2004.

23. This lead us to the second issue of whether or not it was lawful for the National Housing Corporation to terminate the complainants Tenancy Agreement and enter into a new Tenancy Agreement with the first defendant.

24. Counsel for both the first defendant and the National Housing Corporation argued that the termination of the complainants Tenancy Agreement on 28 April 2004, by the National Housing Corporation was proper and lawful by reason that the complainant had failed to comply or adhere to the conditions of the Tenancy Agreement. The particulars of the breach as argued by the defence counsels are summarized as follow:

•	That the complainant failed to pay land rentals for thirteen (13) years at fifty kina (K50.00) per year

•	That the complainant did not reside in the property for thirteen (13) years 

•	That the complainant failed to inform the National Housing Corporation that he was going to be away from the property for a long period of time.

•	That the complainant failed to appoint a care taker to take care of the property in his absence.

25. Counsel for the first defendant further argued that by reason of these breach of conditions, the complainants Tenancy Agreement had in fact lapsed or ceased to exist after two (2) years being the actual term of the Tenancy Agreement. 

26. I will come back to this issue but firstly lets look at the relevant conditions of the Tenancy Agreement which the complainant is said to have breached:

The Tenancy Agreement is annexed "C1" to the affidavit of the complainant filed on the 14 November 2006. Copies are also annexed to several other affidavits in the file. As alluded earlier, it was signed/executed on the 28 August 1989. I quote the relevant provisions as follows:

Clause 1

The tenant shall pay rent on the land, on yearly rental of fifty kina (K50.00) to the Department of Housing (now the NHC)

Clause 2

The terms of the Agreement with the Department of National Housing Corporation (NHC) is as follows:

a)	May occupy the land immediately after signing the Agreement and to remain their for two (2) years subject to the right of the National Housing Corporation to determine the tenancy under clause 7.

b)	To start work on a permanent house within six (6) months after signing the agreement.

Clause 3

To let the Department, National Housing Corporation (NHC) know if the tenant expects to be away from the land for more than three (3) months and to name the person to act on his behalf in his absence.

Clause 5

The National Housing Corporation agrees that as long as the tenant pays rent on time and keeps all the terms and conditions stated in this Agreement, he has the right to keep the Land for two (2) years without interferences.

Clause 7

It is agreed that if the tenant fails to pay rent and service charges on the due dates, the National Housing Corporation (NHC) can claim the land back after giving one (1) months notice."

27. These are the provisions the complainant is said to have breached. I have quoted them basically to ascertain and to determine on the face of all available evidence the breach of these conditions by the complainant.

Analysis of Evidence

28. Firstly in relation to clause 1, the defendants argue that the complainant failed to pay annual Land rentals of fifty kina (K50.00) per year for thirteen (13) years, meaning that he had unpaid rentals of six hundred fifty kina (K650.00). The complainant on the other hand stated in his affidavit filed on 10 April 2006, at paragraph 11 that from 1990 to 1994, he made sure that the annual Land rental fee was paid promptly but then left unattended from 1995 to 2004, a period of ten (10) years.

29. I tend to believe the complainants evidence in this regard because the Land rental notice issued by the National Housing Corporation on the 20 April 2004 shows only five hundred (K500.00) as outstanding Land rentals which is for a period of ten (10) years and not thirteen (13) years as submitted by the defendants.

30.So in reality the complainant’s default was only five hundred kina (K500.00), which he subsequently paid to the National Housing Corporation on the 02 July 2004. But apparently that was well after his Tenancy Agreement had be terminated (Receipt of payment Annexure 46 of complainants affidavit filed 10 April 2006).

31. In regard to clause 2 (a), the defendants submitted that the complainant failed to reside in the property for thirteen (13) years. However evidence shows that he resided in the property from 1989 to 1990, before leaving for Wabag, Enga province. He was actually away for about nine to ten (9 – 10) years by reason of the fact that he was elected a Minister in the Provincial Assembly and was required to be in the province full time.

32. Clause 2 (d) talks about construction of a residential house. I consider this to be the main condition of the Tenancy Agreement but the defendants did not take issue in it. However the complainant stated in his evidence that this condition did not apply to him as he already had a residential house and other improvements on the property valued at about Twenty five Thousand Kina (K25, 000.00).

33. In regard to clause 3(d), the defendants argued that the complainant failed to inform the National Hosing Corporation that he was going away for more than three (3) months and that there was no one appointed to take care of the property. And that he had not resided in the property for thirteen (13) years. The complainant however produced evidence that he did write to the National Housing Corporation on the 26 June 1991 advising that he had appointed one JACK TEMOK to take care of the property in his absence. I note that this letter is annexed "B" in the complainants affidavit filed on 10 April 2006. I am satisfied the complainant had taken appropriate steps to inform the National Housing Corporation of a caretaker being appointed. I therefore do not think the complainant had breached clause 3(d) of the Tenancy Agreement.

34. In so far as clause 5 is concerned, I am satisfied that the complainant had promptly paid Land rentals from 1990 to 1994, hence complying with rental conditions of the Tenancy Agreement in the first two (2) years, and further three (3) years thereafter. I therefore, do not agree with the first defendant’s counsel that the complainants Tenancy Agreement had ceased to exist after two (2) years. This is supported by the fact that the National Housing Corporation did not issue any notice to the complainant to terminate the Tenancy Agreement at that point in time. Instead it allowed the tenancy to continue until the 28 April 2004 when it was terminated.

35. Finally, in relation to clause 7, the complainant admits that he did not pay rentals from 1995 to 2004 amounting to Five Hundred Kina (K500.00) for which the National Housing Corporation issued a Land Rental Notice addressed to him but somehow went into the possession of the first defendant. Evidence shows that he did eventually pay up the Five Hundred Kina (K500.00) on the o2 July 2004 but this was well after his Tenancy Agreement was terminated by the National Housing Corporation.

36. Having made these observations, it appears the complainants only breach of the Tenancy Agreement were that he failed to pay annual land rentals of Fifty Kina (K50.00) per year for the years 1996 to 2004 (10 years) amounting to Five Hundred Kina (K500.00) which he did later pay. And further that he did not reside in the property for ten (10) years.

37. Are these reasons sufficient to justify the termination of the Tenancy Agreement by the National Housing Corporation? Counsel for the National Housing Corporation (NHC) submitted that it is a trite law that construction of written contracts must be interpreted within the four corners of the contract itself to work out the meaning and intent of the parties to a contract. He referred the court to the case of Pama Ario –v- Aho Baliki and Bank South Pacific [2004] N2719 in which the court held:

"It is settled Law that, generally where parties have reduced their agreement into writing, the document should be allowed to speak for itself. No extrinsic evidence can be allowed to add to, subtract from or contradict what is stated in the document"
 
38. The counsel therefore submitted that the complainant had breached fundamental clauses of the Tenancy Agreement and that has put the National Housing corporation in a position to exercise its right on the complainant by terminating the tenancy Agreement.

39. I do concur with the submissions made by the learned counsel but I am somewhat puzzled over couple of crucial issues. Firstly, why didn’t the National Housing Corporation notice in the first place the complainant’s breach of the Tenancy conditions? I am led to believe that it became aware of the situation only when the first defendant visited their office on the 20 April 2004. This is when it became interested in the property, which is after thirteen (13) years in existence of the Tenancy Agreement between itself and the complainant. I can only conclude that the National Housing Corporation did not carry out any inspection of the property in the last thirteen (13) years to ascertain its status. This was in fact confirmed by National Housing corporation witness Mr. Kume Kamewo. He was asked during cross-examine if he could provide details and descriptions of the property in subject. He answered, "I don’t know"

40. When asked why? He replied, "I have never been there" Mr. Kamewo is National Housing Corporation’s Settlement Officer. He is the person who maintains records of all land owned by National Housing Corporation including the one which is the subject of this proceeding, in the Urban Settlements. As to why he had no slightest idea about the property in subject is quite ridiculous. This just confirms that the National Housing Corporation did not sufficiently administer and monitor the Tenancy Agreement between itself and the complainant. Added to this is the fact that the first defendant occupied the premises illegally without any legal authority from years 2000 to 2004, a total of five (5) years, unnoticed by the National Housing Corporation.

41. Secondly, why didn’t the National Housing Corporation take into consideration the improvements on the subject property before deciding to terminate the Tenancy Agreement? There was already a semi-permanent residential house in the property and a trade store building all belonging to the complainant and valued at about Twenty Five Thousand Kina (K25, 000.00). How could the National Housing Corporation just ignore all these improvements worth more then the Five Hundred Kina (K500.00) annual land rental fees it was claiming and all of a sudden decide to terminate the complainants Tenancy Agreement instantly. This also confirms that the National Housing Corporation did not at any one-time cause an inspection to the property to ascertain its status during the lifetime of the Tenancy Agreement. Not even before the termination of the Tenancy Agreement on the 28 April 2004.

42. Construction of a residential house is the most fundamental condition of the Tenancy Agreement and in fact this is the whole purpose of the self Help Housing Scheme. This condition was complied with in that there was already a residential house and other improvements on the property. I just cannot understand why the National Housing Corporation failed to take into account all these improvements on the property before terminating the Tenancy Agreement. The complainant had legal ownership of these improvements particularly the house and other fixtures there on. In my view it was erroneous for the National Housing Corporation to deny the complainant the right to re-possess these properties by reason of terminating the Tenancy Agreement.

43. Counsel for the first defendant however argued that as a matter of Public Policy the court should find that the complainant is estoppel from further asserting any legal right over the property including the improvements. He argued that under the principles of "equitable estoppel" the complainant had by his own actions created an estoppel, which now prevents him from asserting that he still has legal rights to the property. He had abandoned the property for more than ten (10) years.

44. Evidence before this court shows that the complainant did not abandon the property. He had appointed a caretaker to look after the property in his absence and this was brought to the attention of the National Housing Corporation in a letter dated 26 June 1991, which I had mentioned earlier in this judgment. More so, even after the complainant had left the property he continued to pay land rentals from 1990 to 1994, a fact which has not been disputed by National Housing Corporation. 

45. Also in 2002, the complainant upon learning that the first defendant had taken possession of the property issued him several notices to vacate same but the first defendant refused to vacate. He even went to the extent of getting community leaders to assist in mediating this dispute over the property, but again without success.

46. So, it is not quite correct to say that the complainant abandoned the property whereby he would now be estopped from claiming his legal rights over the property and all improvements there on. Therefore I do not think the principle of "equitable estoppel" applies in this situation. The complainant, in my view is entitled to claim his legal rights over the property. He has legal interest in the property.

47. The third question is why wasn’t the complainant given notice by the National Housing Corporation before terminating the Tenancy Agreement. Counsel for the first defendant argued that the Tenancy Agreement was only for two (2) years and had already expired in 1991. There after the complainant had "only a tenancy at will", which was determinable at the will of either party. That I agree in so far as the principle of "tenancy at will" is concerned but the two (2) year term of the Tenancy Agreement was open to extension subject to the tenant satisfying the fundamental conditions of the tenancy. And as observed earlier, the complainant had satisfied these conditions in the first two (2) years of the tenancy. He already had a residential house and other improvements on the property. He had paid annual land rental from 1990 to 1994, and he had notified the National Housing Corporation in a letter dated 26 June 1991 of his going away for a longer period and that he had appointed a care taker one Jack Temak to take care of the property in his absence. The nature of his job as Provincial Minister at that time required him to be in the Province (Enga Province) full time and for a longer period of time.

48. So in my view the complainant was entitled to have his tenancy Agreement extended at that point in time. Although this was not expressed by the parties, it is implied that the Tenancy Agreement was to continue, the complainant having complied with the conditions. Under the circumstances I do not think the complainant had only a tenancy at will. He had a legitimate and properly constructed Tenancy Agreement and therefore had a right to be properly notified or informed by the National Housing Corporation of its intention to terminate the Agreement. This is clearly stipulated under clause 7 of the Tenancy Agreement that the National Housing Corporation is required to give one (1) months notice before terminating the Agreement.

49. The National Housing Corporation did not give such notice, hence denying the complainant the right to present his case and be heard before termination of the Agreement. He has been denied natural justice. Not only that, but there is no evidence before this court that a formal notice of termination was issued to the complainant stating out the reasons for such termination. The complainant was entitled to know the reasons for such termination. The only time he learnt about the reasons for the termination of the Agreement was when he received a letter from the National Housing Corporation’s Legal officer Mr. Anthony Waira dated 28 April 2004.

50. As to why no such notice of termination was given to the complainant remains a mystery. This is only within the knowledge of the National Housing Corporation. But the crux of the whole issue is that before signing the new Tenancy Agreement with the first defendant, the National Housing Corporation failed to firstly ascertain the status of the property and the nature and extent of the complainants’ interest in the said property. This could have been done by carrying out a physical inspection of the property and all improvements there on before making up its mind to terminate the Agreement. 

Further to that the complainant could have been summonsed to show cause why his tenancy should not be terminated. This would have given him an opportunity to be heard, but all these were not done.

51. As it now appears, the National Housing Corporation acted only on the representations made by the first defendant on the 20 April 2004 and then a day later a new Tenancy Agreement was signed on 22 April 2004 between the first defendant and the National Housing corporation. This in my view was a swift decision. The National Housing Corporation did not take time to appraise itself of the circumstances surrounding the status of the property and also to ascertain whether the first defendant was coming with clean hands in making representations given the fact that he was in illegal occupation of the property from years 2000 to 2004.

51. Given all these circumstances I am satisfied on the balance of probabilities that the National Housing Corporation failed to properly ascertain the exact status of the property, the subject of this proceeding in so far as the compliance of the fundamental conditions of the Tenancy Agreement by the complainant is concerned.

52. And furthermore, the National Housing Corporation also failed to give sufficient notice to the complainant to show cause, why the Tenancy Agreement should not be terminated before terminating the Agreement. He was entitled to be heard but he was denied that right, hence denial of natural justice.

53. I am also satisfied, that the National Housing Corporation failed to give proper and formal notice of terminating the Tenancy Agreement and the reasons for such termination.

54. Considering all these factors, I find that the National Housing Corporations’ termination of the complainants Tenancy Agreement was wrong and contrary to principles of natural justice, hence unlawful.

55. I also find that the first defendant's continuous occupation of the subject property from years 2002 to 2004 without right, title or license denied the complainant from repossessing the property in year 2000 upon his return from Wabag. 

56. As a result of these unlawful actions and or omissions of the National Housing Corporation and the first defendant, I am convinced and am satisfied that the complainant and his family did suffer loss and faced a lot of hardship consequential to the loss of the property in subject and therefore are entitled to the relief sought for damages.

57. Accordingly, I find both defendants liable to pay damages to the complainant.

Damages to be assessed.

Costs awarded to the complainant.

____________________________________________

Complainant appeared for himself
Blake Dawson Waldron Lawyers for the first Defendant
National Housing Corporation Lawyers for the second Defendant