Papua New Guinea Law Reports - 1988-89
[1988] PNGLR 53
N666
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
FLETCHER MOROBE CONSTRUCTION PTY LTD
V
MINISTER FOR LANDS
Waigani
Cory J
2 May 1988
1 June 1988
REAL PROPERTY - State land leases - Compensation for improvements - Refusal to renew lease - Compensation claimable pursuant to repealed Act under which lease granted - Land Ordinance 1911, s 54 - Land Act (Ch No 185), (formerly Land Act 1962), ss 4(1)(2), 55(2).
The lessee of a State Land Lease granted under the Land Ordinance 1911 is entitled, on refusal of renewal of the lease, to claim compensation from the incoming lessee for the value of improvements erected on the land by him pursuant to s 54 of that Act, because that right was preserved by s 4(1) of the Land Act 1962 (now the Land Act (Ch No 185)) and a claim for compensation under s 55(2) of the Land Act 1962 was specifically excluded by s 4(2A).
Summons
This was an application for a declaration that the plaintiff (a former lessee under a State Lease) was entitled to receive compensation for the value of certain improvements made to the land during his tenure.
Counsel
I M Molloy, for the plaintiff.
Z Gelu, for the defendant.
Cur adv vult
1 June 1988
CORY J: The plaintiff seeks a declaration that it is entitled to receive payment for the value of improvements to certain land amounting to K72,400.
The facts are as follows:
The plaintiff was the lessee of a “Special” State Lease granted under s 40 of the Land Ordinance 1911. The lease was for 20 years and expired on July 1980. The plaintiff applied for a further lease of the land but the application was refused. During the term of the plaintiff’s lease the plaintiff had erected certain improvements on the land. In 1963 the Land Ordinance 1911 had been repealed and replaced by the Land Ordinance 1962 which contained certain saving provisions in relation to leases granted under the Land Ordinance 1911. The plaintiff claims that by virtue of s 48(3) of the Land Act (Ch No 185) he is entitled to claim from the defendant for the value of the improvements erected. After the plaintiff’s application for a renewal of the lease had been refused, a new lease was issued to another lessee.
The plaintiff’s lease was a special lease under s 40 of the Land Ordinance 1911. Section 40 was as follows:
“40.    Special leases may be granted by the Lieutenant-Governor of any Government building not required for Government purposes or of any lands the property of the Crown for any term not exceeding fifty years from the date thereof at such rent with or without royalty and upon such terms and conditions as may be prescribed by regulation under this Ordinance or as may be otherwise directed by the Governor in Council for any of the following purposes that is to say ...”
Under the Land Ordinance 1911, s 54 provides for the payment of compensation on the expiration of the lease and reads as follows:
“54.    If a lease is forfeited there shall be no compensation for improvements. If a lease expires by affluxion of time the value of the improvements shall be paid by the incoming to the outgoing tenant; and if there is no incoming tenant the Lieutenant-Governor may if he thinks fit order that a sum not exceeding the value of the improvements shall be paid to the outgoing tenant.
Compensation for improvements under this section shall be arrived at in manner to be provided by regulation.”
When the Land Ordinance 1911 was repealed by the Land Ordinance 1962, it contained the following saving provisions as amended in relation to rights created by or acquired under the Land Ordinance 1911 subject to the provisions of s 4 as follows:
“4(1)   Subject to the succeeding provisions of this Section, the repeal of an Ordinance by the last preceding section does not affect a grant, granted application, lease, license or permit made, granted or preserved by or under that Ordinance and in force immediately before the commencement of this Ordinance, or an estate, right, title, interest, power, duty, obligation or liability created by, acquired under, or at any time existing under, or by virtue or in respect of, any such grant, granted application, lease, license or permit or any such Ordinance, and all such grants, granted applications, leases, licences, permits, estates, rights, titles, interests, powers, duties, obligations and liabilities shall continue to be of the same force and effect as if that Ordinance had not been repealed.
(2)      Except where the contrary intention appears, and subject to subsection (2A) of this section, the provisions of this Ordinance apply to a grant, granted application, lease, license, permit, estate, right, title, interest, power, duty, obligation or liability referred to in the last preceding subsection.
(2A)    Part V (other than Sections 53, 54 and 54A) of this Ordinance does not apply to a grant, granted application, lease, license, permit, estate, right, title, interest, power, duty, obligation or liability referred to in Subsection (1) of this section.” (My emphasis.)
In the Revised Laws, the above s 4 corresponds to s 2 which reads as follows:
“2.      Application of Act to interests under former legislation.
(1)      Except where the contrary intention appears and subject to Subsection (2), this Act applies to a grant, granted application, lease, license, permit, estate, right, title, interest, power, duty, obligation or liability referred to in Section 4(1) of the pre-Independence Land Act 1962.
(2)      Part VI. (other than Sections 45, 46 and 47) does not apply to a grant, granted application, lease license, permit, estate, right, title, interest, power, duty, obligation or liability to which Subsection (1) applies.”
In the Land Ordinance 1962 the relevant provision in relation to payment of compensation on the expiration of a lease which is excluded by the above s 4(2A), is s 55(2) which reads as follows:
“55(2) Subject to this section, where, on the expiration of the term of an Administration lease of land on which there are improvements, the lessee applies for and is not granted a further lease of that land or is granted a further lease which includes part only of that land, the Administrator shall, within six months after the expiration, pay to the outgoing lessee the value of those improvements on the land, or on the part of the land not included in the further lease, as the case may be.”
This s 55(2), corresponds with s 48(3) in the Revised Laws.
The plaintiff submits that when the Land Ordinance 1911 was repealed by the Land Ordinance 1962, the plaintiff’s statutory right to claim the value of the improvements had not arisen because the lease had not yet expired and the plaintiff had not made a claim for renewal. I reject this submission, the Land Ordinance 1911 had created in the plaintiff the statutory right to claim compensation for the value of the improvements on the expiration of the lease. This right was preserved by s 4(1) of the Land Ordinance 1962 and by s 4(2A), a claim for compensation under s 55(2) of the Land Ordinance 1962 was excluded. It would seem that the plaintiff is entitled to claim compensation from the incoming lessee under s 54 of the Land Ordinance 1911.
The plaintiff’s claim is refused and I order the plaintiff to pay the defendant’s costs.
Declaration refused
Lawyer for plaintiff: Blake, Dawson Waldron.
Lawyer for defendant: State Solicitor.