Highlands Produce Buyers Ltd; Re the Forfeiture of Lease of Portion 67 Milinch Goroka FourmiL, Karimui [1988] PGLawRp 41; [1988] PNGLR 39 (25 March 1988)

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[1988] PNGLR 39 - Application of Highlands Produce Buyers Ltd; Re the Forfeiture of Lease of Portion 67 Milinch Goroka FourmiL, Karimui

REAL PROPERTY - State leases - Forfeiture of - Procedure on - Notice to show cause - Any cause shown to receive proper consideration - Requirement of service on all persons having interest - Effect of failure to serve registered mortgagee - Land Act (Ch No 185), s 46(2), (3), (4).

The Land Act (Ch No 185), s 46(2), provides that before forfeiting a State lease the Minister “(a) shall serve notice on the lessee calling on him to show cause ... why the lease should not be forfeited ...” and subs (3) provides that the lease shall not be forfeited unless the lessee fails to comply with the notice or fails to show good cause why the lease should not be forfeited. Subsection (4) provides that copies of all notices relating to forfeiture shall be served on “all persons who, to the knowledge of the Departmental Head, have or claim any right, title estate or interest in, ... the land”.

On an application for judicial review of the actions of the Minister for Lands in forfeiting a State lease,

N1>(1) Failure to notify a mortgagee, the interest of whom was clearly noted on the registered lease, of a notice to show cause and a notice of forfeiture in accordance with the provisions of the Land Act, s 46(4), was sufficient to ground a review of the decision to forfeit the lease.

N1>(2) (Obiter) The requirement in s 46(3) that the lessee show cause why the lease should not be forfeited requires the Minister to give proper consideration to any cause shown and failure to do so may ground an application for judicial review.

This was an application for judicial review of a decision by the Minister for Lands to forfeit a State lease pursuant to the provisions of the Land Act (Ch No 185), s 46.

WOODS J: This is an application to review the actions of the Minister for Lands in forfeiting a lease of portion 67 Milinch Goroka Fourmil Karimui being approximately 68 acres of coffee plantation.

The applicant applied for and acquired the property in 1953 on a 99 year lease from the State for agricultural purposes. The lease itself was not issued until January 1971 and was registered, volume 43, folio 31. It was a requirement of the lease that the land be improved by the lessee and be kept so improved. There is no dispute that the land has been planted by the applicant with over 15,000 coffee trees and there is no dispute that these trees are still there and are producing coffee.

On 26 June 1987 the delegate of the Minister for Lands gave notice to the lessee to show cause “why the lease should not be forfeited on the grounds that you have refused or neglected to comply with the improvements covenant or condition in that lease and you have failed to pay the rent for a period of more than six months”. This notice was served on the applicant on 9 July 1987.

With respect to the notice, s 46(2), (3) and (4) of the Land Act (Ch No 185) says:

N2>“(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 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.

(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.

N2>(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.”

There is no dispute that the PNG Banking Corporation who is noted on the lease as being the holder of a mortgage over the property was not served with this notice.

“I make reference to ‘Notice To Show Cause’ dated 26th June, 1987 which was served on the writer on 9th July, 1987 at 1117 hours.

The Lessee has meet [sic] the covenants and has paid the rents up to date. We have planted coffee trees on the said Portion. We have been trying to sell the Coffee Plantation on Portion 67 as far back as November 1984 but there is a dispute among the village people as to who are the traditional owners. As a result of this dispute various groups in that area cannot allow us to get on the land and maintain the plantation as required.

As for the land rents we would require your departments statements because our records indicate that we have paid all the outstanding rents already.”

The background of this is as deposed by the manager of the applicant as follows:

“In 1984 a confrontation developed between the Applicant and its employees and persons who describe themselves as ‘traditional land owners’ of this land. The Applicant and its employees were systematically harrassed [sic] by these people and it became unsafe for the Applicant’s sub-manager to work at the plantation. Because of the physical danger to the Applicant’s employees, since 1984 the Applicant has not maintained the plantation to the same standard as previously. As well, much of the fencing has been stolen.

In 1984, negotiations for the purchase of the land were entered into with the Applicant and ‘traditional land owners’ but it seems that this group has now fragmented into a number of sub groups and these negotiations have broken down. More recently, some of these persons have come forward to purchase the property and the applicant believes that it is possible for a sale to be negotiated with them. Annexed and marked with the letter ‘H’ is a copy of a letter of 9 November 1987 sent by people from the Korepa and Yamiufa villages to the Minister for Lands.”

The next thing the applicant knew was a notice of forfeiture dated 8 September 1987 which was gazetted on 1 October 1987. The applicant immediately took these proceedings.

There is an inherent jurisdiction in the National Court to review administrative decisions and ensure that decision making bodies act fairly and in accordance with the law.

The question is therefore, has the Minister acted property in accordance with the provisions in the Land Act?

There is no argument that the State has the power to forfeit a lease if the conditions in a lease are not complied with. But at all times it is expected that people will act reasonably and responsibly. A person shall not be dispossessed of his land without proper procedures according to law. Were the discretion and powers of the Minister exercised according to the provisions of the Act and according to provisions of natural justice and fairness?

I do not see any real basis for the forfeiture for non-payment of rent. That was paid each year. The State seems to be basing its ground on the maintenance of the plantation in a good husbandlike manner - there is no argument that the original improvement covenant has been complied with.

Without going into what is meant by properly maintaining the property once the improvement covenant has been complied with the Act specifically provides for notice to be given to show cause. If the law provides an opportunity for the person to explain then the law must mean that any explanation will be given proper consideration. This does not seem to have been done. The officers who advise the Minister for Lands appeared to have given no consideration to the explanation or made any attempt to investigate the explanation. Instead the Minister just rushed with rather inordinate haste to forfeit. In the circumstances of this explanation it would be encumbent on the State as lessor to investigate carefully this explanation to ensure that a situation is not created whereby people are able, by an unlawful act (the occupation of land contrary to s 113 of the Land Act) to take the law into their own hands and in due course gain a claim to land by that unlawful act. This would create a dangerous precedent. Whilst one can ask why the applicant did not press the State as lessor to help it resolve the problem, it does appear that the applicant was trying to resolve the problem with so called descendants of the original traditional owners of the land.

Whilst I am satisfied that the Minister has acted harshly and contrary to the reasonable requirements of the Land Act in his consideration or lack of consideration of the explanation given following the notice to show cause, it is quite clear that the Minister has not complied with a fundamental provision of proper notice, namely notice to a mortgagee who has his interest clearly noted on the lease.

I am therefore satisfied that this is a matter in which the National Court should review the action of the Minister for Lands and I find that the provisions of the Land Act have not been complied with.

I therefore order that the notice of forfeiture dated 8 October 1987 be set aside and I order that the Register of Titles remove any reference to the notice of forfeiture from the State Lease volume 43 folio 31.

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Papua New Guinea Law Reports

Highlands Produce Buyers Ltd; Re the Forfeiture of Lease of Portion 67 Milinch Goroka FourmiL, Karimui [1988] PGLawRp 41; [1988] PNGLR 39 (25 March 1988)

Papua New Guinea Law Reports - 1988-89