N703

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

DAVIS

V

PITZZ (SECRETARY FOR LANDS AND PHYSICAL PLANNING)

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Waigani
Bredmeyer J

16 April 1989
28 April 1989

ADMINISTRATIVE LAW - Judicial review of administrative decisions - Rules of natural justice - Breach of - Right to be heard - Right to put case - Ministerial decision - Forfeiture of government lease - Short notice of hearing - Absence of relevant available material before Land Board - Formal notification giving incorrect appeal provisions - Land Act (Ch No 185), ss 9(1), 11, 46(1)(a), 46(2), 112.

ADMINISTRATIVE LAW - Judicial review - Unreasonable delay as bar to relief - Discretion - Delay of two years three months - Forfeiture of government lease - No hardships or prejudice to any person - Continuing negotiations with Minister likely to be successful - Respondent not arguing delay - National Court Rules, O 16, r 4.

REAL PROPERTY - Government leases - Forfeiture - Application of rules of natural justice to - Land Act (Ch No 185), ss 9(1), 11, 46(1)(a), 46(2), 112.

On an application pursuant to s 155(2)(b) of the Constitution for judicial review of a decision of the Minister for Lands and Physical Planning, on the recommendation of the Land Board to forfeit a government lease, subject to the Land Act (Ch No 185), for failure to comply with an improvement covenant and failure to pay rent,

Held

(1) Natural justice had been denied to the lessee by:

(a) the giving of five days prior notice in the National Gazette of the sitting of the Land Board instead of the seven days prior notice required by s 9(1) of the Land Act;

(b) the absence of relevant available material before the Board which showed that no rent was outstanding;

(c) the absence of relevant and available material before the Land Board, which explained that the improvement covenant had been met but had been breached by demolition of the dwelling house for the purpose of erecting units on the land, formal approval for which was being refused while there was an inadequate sewerage system in the area; and

(d) the existence, on official documentation given to the lessee, of incorrect and misleading information as to appeal rights, which were denied on the ground that the law had been amended.

(2) In the circumstances the relief sought should not be refused for undue delay. Whilst there had been a delay of nearly two years and three months in bringing the application:

(a) there would be no hardship or prejudice to anyone else by the grant of relief as no lease had been granted to anyone else;

(b) the lessee had persevered with representations to the Minister for a regrant of the lease which were likely to be successful; and

(c) the State had not argued the question of delay, although delay of over two years in challenging an administrative decision is likely to be detrimental to good administration.

Papua New Guinea v Lohia Sisia [1987] PNGLR 102, applied.
NTN Pty Ltd v Post and Telecommunication Corporation [1987] PNGLR 70, distinguished.

Cases Cited

Dent v Kavali [1981] PNGLR 488.
NTN Pty Ltd v Post and Telecommunication Corporation [1987] PNGLR 70.
Papua New Guinea v Lohia Sisia [1987] PNGLR 102.
Placer Holdings Pty Ltd and the Land Act [1982] PNGLR 326.
Sylvanus Gorio v National Parks Board [1982] PNGLR 364.

Judicial Review

This was an application pursuant to s 155(2)(b) of the Constitution for judicial review of a decision to forfeit a government lease made by the Minister for Lands and Physical Planning.

Counsel

C Karingu, for the plaintiff.
Z Z Gelu, for the defendant.
Cur adv vult

28 April 1989

BREDMEYER J: This is an application for judicial review of a decision by the Minister for Lands and Physical Planning forfeiting a lease. Leave to apply for review was granted by another judge on an ex parte basis.

The story is as follows. In 1948 the Government granted a 99-year lease of Allotment 17, Section 2, Boroko, and the lease included an improvement covenant that improvements to the value of £300 (K600) were to be erected on the allotment within nine months of commencement of the lease and improvements of the same value were to be maintained thereon in good order and repair during the currency of the lease. A four-bedroom house was erected on the land and in 1975 the owners sold it to Irene Davis and Bessie Ellen Schubert as tenants in common in equal shares for K10,000. Irene Davis and her husband, Joe Davis, lived in the house until about 1980. Mrs Davis bought out Mrs Schubert’s share in the property but did not submit the contract of sale or transfer for approval or registration.

In early 1980, Mr Joe Davis decided to build 12 units on the land. He went to see the Town Planner, Mr Easton, who agreed that the units could be built provided the existing house was demolished. Mr Davis then prepared plans which have been tendered to me and submitted them for formal approval to the authorities. At that time the Town Planner, Mr Easton, said that only six units could be connected to the public sewer and the remaining six units must be connected to a holding tank and pumped out regularly to the satisfaction of the Sanitary Engineer. Mr Davis said that he then submitted the plans to the Building Board but was told that approval would not be given because the sewerage system in the area was inadequate and would need to be upgraded to take the sewerage from 12 units and that he should resubmit the plan for approval when the sewerage system in that area had been upgraded. I believe Mr Davis’ evidence on those matters. In the meantime, confidently expecting all necessary government approval for his new units, Mr Davis demolished the house and servant’s quarters. That was a very foolish move because under the terms of the lease he was required at all times to maintain improvements on the land to the value of K600.

In August 1983, the Lands Department sent a valuer to inspect the block and he recorded that the land was vacant and unimproved. Thereupon Mr Dogo Olewale, a delegate of the Minister for Lands, prepared two notices to show cause under s 46(2) of the Land Act (Ch No 185) as to why the lease should not be forfeited. One of the notices he signed and dated 6 September 1983 and posted to Mrs Bessie Schubert in Australia. The other he sent undated and unsigned to Mrs Irene Davis. That notice has been tendered to me. Mrs Schubert wrote to the Secretary, Department of Lands, on 14 September 1983 acknowledging receipt of the notice to show cause and saying that she was endeavouring to contact Mrs Irene Davis about the matter, and that, as that might take some time, she requested a deferral of any action until such time as she or Mrs Davis contacted the Department. Mrs Davis replied to the notice on 11 October 1983 as follows:

"I received your letter on 29 September 1983. The rental has been paid and we have intended to improve this property, but Building Board has not given us the approval because the sewerage is inadequate. We have been told that by the end of the year the sewerage in the area will be upgraded and we will be able to build the flats as we intended originally.

On that block we had a house and we have demolished it only to find that the Building Board did not want to approve our plans to build flats because of the sewerage. Our purpose is not to speculate and try and sell the land, it is simply a plan to fully utilise the land which will have a benefit to us personally and to the country, because we will build a new building which will exceed the covenant by at least 50 times.

I sincerely hope this will help you to make a favourable decision. We thank you and remain,

Yours faithfully

I. Davis."

That letter refers to the payment of the rent. The outstanding rent of K20 had been paid on 20 September 1983 and the receipt has been produced to me. On 23 November 1983, the Secretary for Lands replied to Mrs Schubert’s letter advising that the matter would be referred to the Land Board for its consideration at a future sitting and that further notification of the time and sitting place would be given in due course. A copy of that letter was sent to Mrs Davis.

On 13 February 1984, the Chairman of the Land Board sent a letter to Mrs Irene Davis advising her that the Land Board would meet at 8.30 am on 22 February 1984 to consider the question of forfeiture of her lease and inviting her to attend and give evidence or make representations. Mrs Davis says that that letter was delayed in the mail and only received on 23 February (that is, the day after the Land Board sitting). I accept that evidence. Under s 9(1) of the Land Act, at least seven days prior notice has to be given in the National Gazette of a sitting of the Land Board. In this case notice of the Land Board hearing, including this particular item of business, was published in the National Gazette of 16 February 1984. Under s 11(1) of the Interpretation Act (Ch No 2), in calculating time from the happening of an event, the day of the event itself is excluded. So excluding 22 February, the day of the meeting, the notice should have been given on 14 February to give seven days notice. The notice thus gave five days notice only of the meeting. The Land Board met on 22 February and there was no representation by or for Mrs Davis or Mrs Schubert. A report on the status of the land was submitted to the Land Board. It related that K10 rent was outstanding for 1984. This was the current rent due on 1 January 1984 and by s 46(1)(a) of the Land Act forfeiture for outstanding rent can only be made when the rent is unpaid for six months or more. The report said that an inspection showed that the improvement covenant had not been complied with. It did not state that the property had been improved but the house demolished because the lessee proposed to build flats. The report stated that the lease was for 99 years from 21 December 1948 and that the improvement covenant was the erection of a residence to the value of K600 within one year of the date of the grant. (The report was in error here, the period was nine months.) The report gave the impression that the lessee had failed over 35 years to improve the property. The report quoted from Mrs Schubert’s letter giving her response to the notice to show cause, but it did not quote from Mrs Davis’ letter. In other words, the Land Board did not have before it Mrs Davis’ explanation that the improvement covenant had been initially met but was now breached through the demolition of the house and her failure to get approval to build 12 units. The Land Board recommended that the lease be forfeited and gave written notice of that to Mrs Davis and Mrs Schubert. The letter, which was sent on 11 April 1984, read as follows:

"Land Board No 1474

Please find herewith copy of Land Board recommendation in respect of item 14. Please send no fees or rent until requested. Your attention is directed to the provisions of the Land Act (1962) (as amended) to date set out on the reverse side of this notification.

Yours faithfully,
G. Kilamelona
Chairman

Papua New Guinea Land Board"

On the reverse side are the words "attention is drawn to the following provisions of the Land Act (1962) as amended to date". The full text of ss 12, 36, 37, 37a, 38 and 41 are set out on the reverse side of the letter. Those sections set out, among other things, the appeal rights. Section 12 provides that a person aggrieved by a decision of the Land Board may, not later than 28 days after the notice is forwarded to him, lodge an appeal with the Governor-General. The appeal has to be accompanied by a deposit of K10.

Mrs Davis exercised her appeal rights and, on 27 April 1984, wrote an appeal letter to the Governor-General. In it she said that the land had not been redeveloped because of any unwillingness or neglect but because the sewerage in the area had not been adequate. She said that the notice of the Land Board hearing was not received until 23 February. She said that the house on the land had been demolished in order to build town houses and that prior to demolition the Town Planner had orally agreed that he had no objections to the town houses being built. However, when plans were submitted for approval he declined to approve them and the Building Board put a stop to the proposal on the grounds that there was no adequate sewerage. Her appeal letter was accompanied by the required fee of K10. On 7 May 1984, she received a holding reply from the acting private secretary to the Governor-General. On 7 June 1984, she received a letter from the Deputy Chairman of the Land Board advising that her appeal against the Land Board recommendation had been declared informal because it had been accompanied by a fee of K10 instead of the required fee of K50.

A word of explanation is needed here. Although not stated in the letter, by an amendment to the Land Act, No 51 of 1983, which came into force on 1 January 1984, the fee for appeal had been increased to K50. The amendment was to s 11 of the Land Act (Ch No 185), formerly s 12 of the Land Act 1962.

Between 1984 and 1986, Mrs Davis and her husband, Joe, spent some time making representations to the Land Board and to the Minister trying to reverse the Land Board recommendation. They had some success in that, when the land was advertised in September 1985 (although no forfeiture had taken place) their representations had the advertisement withdrawn. The notification of withdrawal stated that it had been "advertised in error". In early 1986, Mrs Davis made long representations to the then Minister, Mr Paul Torato, and he invited her to resubmit them in writing which she did — a three-page letter dated 10 February 1986. Although the Minister was sympathetic to her plight, on 12 March 1986, he signed a forfeiture notice forfeiting the lease on the basis that the improvement covenant had not been fulfilled and the rent was due and unpaid for a period of more than six months. That forfeiture took effect on gazettal which was done on 17 April 1986.

In July 1986, Mrs Davis and Mr Davis went to see the Minister for Lands, Mr Paul Torato, and according to them he was furious and said,

"I instructed the idiots to submit me a report and instead of doing that they brought a forfeiture notice in front of me and without explaining to me that it is the same land that I requested an inquiry, I signed the forfeiture notice".

The Minister then showed them a minute which he had just received from the Secretary for Lands dated 26 June 1986 which is very sympathetic to Mrs Davis. The memo includes the following:

"This file is full of applications from various interested people. However, what I am unable to work out is the fact that all letters and correspondence relating to the subject by the previous lessee are not on file."

That is a true statement as the file has been produced to me and folios 92, 93, 95 and 96 are missing. The Minister endorsed that memo and also told Mrs Davis to forward an application for licence and he would grant an application for exemption so that she could be given a licence of the land. On 18 July 1986, the Minister wrote a minute to the Secretary for Lands to that effect. I quote from part of it:

"In accordance with your minute of 6 June 1986, I have decided after considering all the facts raised that the applicant who was the former lessee to be granted a licence under exemption for a possible regranting of a lease by the Land Board.

This decision stems from the fact that the applicant who was the former lessee had suffered unduly to faults of not her own [sic].

Circumstances have prevented the lessee from actual development of the property which led to the eventual forfeiture of the lease. From the records of all correspondences [sic], it is beyond reasonable doubts that it was not the fault of the former lessee who was now lodging this application.

Immediately ascertain the status of this parcel of land and, if all is in order, grant the licence under exemption in favour of Irene Davis."

It is clear that a number of legal errors were made in the forfeiting of this lease. It is not every breach of a statute which will result in a remedy for the person affected by that breach. Some breaches are minor and can be overlooked. Other breaches which affect a person’s rights, cannot be overlooked. The subject is discussed in more detail in Sylvanus Gorio v National Parks Board [1982] PNGLR 364 at 367-368. In this case I consider that I can ignore one minor breach but that the other breaches are important. The minor breach was that the notice to show cause under s 46(2) of the Act which was sent to Mrs Irene Davis was unsigned and undated. In the circumstances I consider that a minor technical breach only because Mr Dogo Olewale, a delegate of the Minister, did sign and date the same notice to show cause which was sent to the co-lessee, Mrs Schubert. Thus Mr Olewale did decide to serve a notice to show cause on the co-owners of the block and it is only a minor mistake that he failed to sign and date one of those notices. The position would have been different if the only notice sent out was undated and unsigned as that would indicate it was not sent by a person with authority to do so.

I consider that the officials made four major mistakes which go to the question of natural justice and Mrs Davis’ rights as a lessee. The first is that five clear days notice of the hearing of the Land Board was given in the Gazette instead of seven. That is an important breach as obviously Parliament thought at least seven days notice in the Gazette was necessary in case the tenant did not get the notice by mail as was the case here. Secondly, the Land Board was not told that the rent was paid and was not outstanding at its meeting held in February 1984; and thirdly, it was not told of Mrs Davis’ explanation as to why the land was unimproved. It may be that the Land Board would have rejected that explanation. Clearly Mrs Davis could have left the domestic quarters or a carport or something on the block to the value of K600 or more and avoided forfeiture. Nevertheless, natural justice requires that her explanation which I find as a fact was sent in her letter of 11 October 1983 be put before the Land Board. I consider that letter was received by the Secretary for Lands but for some reason was missing on the file and hence not put to the Land Board.

The fourth failure, which I regard as very serious indeed, is that Mrs Davis was misled as to her appeal rights. As I said, she was given an official letter dated 11 April 1984 advising her of her right to appeal to the Governor-General within 28 days on payment of a K10 deposit. A person is entitled to rely on an official letter from a government department setting out appeal rights and it is grossly unfair later to tell that person that the letter was incorrect, that the law had been amended and that the appeal was invalid. I regard those breaches of natural justice as very serious and am very sympathetic to the application for judicial review.

DELAY

I need to consider the question of delay. The lease was forfeited by a notice published in the Gazette on 17 April 1986. This action was brought on 5 July 1988. Under s 112 of the Land Act, a person can appeal against forfeiture of a lease "within 28 days ... or such further time as the National Court shall allow". In Placer Holdings Pty Ltd and the Land Act [1982] PNGLR 326, the applicant knew of the forfeiture but chose not to appeal within the time limit. The applicant’s lawyer thought that he could persuade the Land Board to regrant the lease. That course of action was unsuccessful and the trial judge held that the applicant’s lawyer had not been lulled into any sense of false security by the Lands Department. The applicant applied to extend the time in which to appeal seven months later and the application was refused as being out of time.

A tenant who has had his lease forfeited can sidestep the 28-day appeal time limit by applying for a review of the decision by way of a declaration, see Dent v Kavali [1981] PNGLR 488, or by applying for judicial review, as had been done in this case. However, both of those remedies can be refused if there is undue delay. Order 16, r 4(1) and (2), of the National Court Rules requires an application for judicial review to be brought within four months of the decision made. Where there has been undue delay, whether within the four-month period or outside it, that can be a reason for refusing the relief sought if the court considers the granting of the relief sought would be likely to cause substantial hardship to any person, or substantially prejudice the rights of any person or would be detrimental to good administration. In NTN Pty Ltd v Post and Telecommunication Corporation [1987] PNGLR 70, a 16-month delay was rejected as unreasonable. In Papua New Guinea v Lohia Sisia [1987] PNGLR 102, which was an application for a declaration, a delay of five-and-a-half years was rejected as unreasonable. In this case the delay is nearly two years three months but I propose to overlook the delay and grant the relief sought for the following reasons. First, the land has not been leased to anyone else so the grant of the relief will not cause hardship or prejudice to anyone else. This distinguishes it from the situation in the NTN case where the TV licensee spent large sums of money on its broadcast operation in the 16 months after the grant of the licence. Secondly, Mrs Davis was given some hope that her alternative method of redress, namely lobbying with the Minister to have the land regranted to her, was likely to be successful as per the Minister’s minute of 18 July 1986 which I have already quoted. Thirdly, although delay of over two years in challenging an administrative decision is likely to be detrimental to good administration, in this case the State chose not to argue the question of delay.

I quash the Minister’s decision declaring the lease forfeited and I grant costs of this case to the plaintiff against the second defendant. I also dissolve the interim injunction granted herein on 22 February 1989 and successively extended to date, as it is now no longer necessary.

Ministerial decision to forfeit lease quashed

_________________

Lawyers for the plaintiff: Karingu Sitapai Kemaken and Associates.
Lawyer for the defendant: Pomat Paliau, Acting State Solicitor.