Unreported National Court Decisions
N1568
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
O.S. NO. 149 OF 1995
BETWEEN:
MICHAEL MAKI acting for and on behalf of Moge Nambuka Milemp Clan - Plaintiff
And:
THE MINISTER FOR LANDS & PHYSICAL PLANNING - First Defendant
And:
THE MANAGING DIRECTOR OF PAPUA NEW GUINEA WATER BOARD - Second Defendant
And:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA - Third Defendant
Mount Hagen
Injia J
11 November 1996
9 May 1997
LAND - Acquisition by Government - Compulsory acquisition of land for public purpose - Land required for town water supply - Whether land properly acquired by compulsory acquisition process - Whether adequate compensation paid - Land Act (Ch. No. 185), SS. 16, 17, 19, 21, 86, 87, 88, 89, 90, 91, 92, 94, 108 - 111.
LAND - Registration of land acquired by compulsory process under Land Act (Ch. No. 185) - Failure to register acquisition under Section 21 of Land Act  - Whether acquisition invalid - Land Act (Ch. No. 185), SS. 17 (2); 21; Land Registration Act (Ch. No. 191), S. 26, 33
Cases Cited:
Minister for Lands v William Robert Frame [1980] PNGLR 433
Mudge & Mudge v The Secretary for Lands & The State [1985] PNGLR 387
NTN Pty Ltd v PTC [1987] PNGLR 70
PNG v Lohia Sisia [1987] PNGLR 102
Mamun Investment Pty Ltd & Ors v Paul Ponda Unreported Supreme Court Judgment SC 490 dated 31st August 1995
Counsel:
P Kunai for the Plaintiff
J Kawi for the First and Third Defendants
DL O’Connor for the Second Defendant
9 May 1997
INJIA J: The Plaintiffs claim to be the traditional landowners of the land in which the water reservoir for Mount Hagen city is situated.  The Land is described as Portion 1282C Fourmil of Ramu, Milinch of Mount Hagen, Western Highlands Province.  The land is occupied and used by the Second Defendant, the PNG Water Board, to supply water to the residents of Mount Hagen city.
On 18 December 1979, the land was compulsorily acquired by the First and Third Defendant for public purpose, namely “water reservoir, aqueduct or water course” under S. 17 of Land Act Ch. No. 185 (S. 18 of the Land Act 1962).  In these proceedings, the Plaintiffs challenge the legality of the compulsory acquisition process and seek certain declaratory orders as follows:
(i)       A declaration that the land known as Kugmul Hill and described as Portion 1282C Fourmil of Ramu & Milinch of Hagen, Western Highlands Province was leased to the Third Defendant by Plaintiff for the benefit of the Second Defendant for a period of ten years with option to renew and not otherwise.
(ii)      A declaration that the said lease is deemed to have ended by affliction of time in December of 1989.
(iii)     A Declaration that the circumstances prevailing at the time regarding the said land did not warrant the Third Defendant to use Section 18 of the Land Act Chapter 185 to acquire the said land by compulsory process.
(iv)     A declaration that the use of Section 18 of the Land Act by the Third Defendant to acquire the land by Compulsory process is null and void and of no effect because the Third Defendant failed to comply with the procedures to acquire land by Compulsory process as prescribed by Section 18 of the Land Act.
(v)      If the Court finds that the acquisition of the said land by Compulsory process was valid then to declare that no adequate Compensation was paid to the Plaintiff and his clansmen by the Third Defendant.
THE EVIDENCE
The Plaintiffs have filed ten (10) affidavits to support their claim.  They are the affidavits of John Kauga sworn on 23rd February 1995, Reng Maip sworn on 8th March 1995, William Kakupa Kauga sworn on 8th March 1995, Luke Rupa sworn on 11th March 1995, Michael Maki sworn on 21st April 1995, John Pamunda sworn on 22nd June 1995, Awap Rumints sworn on 23rd May 1996, Dominic Yaga sworn on 29th April 1996, Michael Maki sworn on 27th May 1996, and Simon Noki sworn on 27th May 1996.
The Defendants have filed only one affidavit and that is of Silas Peril sworn on 31st January 1996.  He is the Acting Secretary for the Department of Lands with the National Government.  In addition, both parties, by consent, produced the Lands Department file pertaining to the land for the Court’s perusal.
There is no dispute that the land was customary land and it was acquired by the government under the Land Act (“the Act”).  Under the Act, customary land may be acquired by the Minister for Lands by agreement or by compulsory acquisition under S. 17:  S. 13.  Where land is acquired by agreement, it may be by way of lease or outright purchase:  S. 15.  The declarations sought in para. (i) to (iv) inclusive raise the main issue of whether the land was acquired by the government by agreement by way of a lease for a term of years or outright purchase “or” by compulsory process under the Land Act.  These are the only two methods of acquisition of land under S. 13 of the Act.  There cannot be a contemporaneous acquisition of the same land by both methods - it has to be one method or the other.  If I find that the land was acquired by compulsory process or by agreement, and properly so, then the next issue raised by the declaration sought in para. (v) is to consider whether compensation or lease purchase payments was properly and adequately paid to the customary landowners in accordance with the Land Act.  If I find that the land was not properly acquired by compulsory process or by agreement in accordance with the Act, then it will become necessary to consider the present and future ownership status of the land.
The defendants say the land was acquired by compulsory process.  Therefore, it is necessary to set out the relevant provisions under the Land Act relating to compulsory acquisition.
The procedure for compulsory acquisition is prescribed by Section 16-17.  The pertinent parts of these provisions are:
“S.      16 (1)
(2)      The State shall not acquire land by compulsory process under this Act unless the Head of State, acting on advice, has first caused to be served on each of the owners of the land, or such of them as can, after diligent inquiry, be ascertained, a notice inviting the person on whom the notice is served to treat with the Minister for the sale to the State of the interest of that person in the land.
(3)      A person served with a notice to treat in respect of land may, not later than two months after the service of the notice, furnish to the Minister particulars of:
(a)      the interest claimed by him in the land; and
(b)      the amount for which he is agreeable to sell to the State his interest in the land; and
(c)      the name and address of any other person known to him to have an interest in the land and the nature of that interest;
(4)      On receipt of the particulars referred to in Subsection (3), the Minister may:
(a)      treat with the person furnishing the particulars for the acquisition of his interest by the State by agreement; and
(b)      notwithstanding anything in this Act enter into an agreement with that person for the acquisition.
(5)      The Minister may, by written notice to a person served with a notice to treat, withdraw the notice to treat.
(6)      Where the owner of an interest in land, being a person who has furnished the particulars referred to in Subsection (3), suffers loss by reason of the notice to treat having been given and withdrawn, the State is liable to pay to him such compensation as is determined by agreement between the owner and the Minister or, in the absence of agreement, by action by the owner against the State in a court of competent jurisdiction.
(7)      This section does not apply in a case where the Minister certifies that there are special reasons why the section should not apply.
17.     Compulsory acquisition
(1)      Where:
(a)      a period of two months has expired after service of a notice to treat, or of notices to treat, in relation to any land; or
(b)      the Minister has given a certificate under Section 16(7) in relation to any land, the Minister may, by notice in the National Gazette, declare that the land, other than any interest in respect of which a notice to treat has been withdrawn, is acquired by compulsory process under this Act for a public purpose specified in the notice.
(2)      On the publication of a notice under Subsection (1), the land to which the notice applies is:
(a)      vested in the State; and
(b)      freed and discharged from all interests, trusts, restrictions, dedications, reservations, obligations, contracts, licences, charges and rates, to the intent that the legal estate in the land and all rights and powers incident to that legal estate or conferred by this Act are vested in the State.
(3)      The land acquired under this section may be an easement, right, power, privilege or other interest that did not previously exist as such in, over or in connexion with the land.”
These provisions gives the State wide powers to acquire land by compulsory acquisition for public purposes.  It is clear from S. 17 (2) that the publication of the notice in the National Gazette constitutes the “acquisition” and it operates to vest the legal title of the land in the government by operation of law.
Upon the date of publication of the notice under S. 17, upon which the land is vested in the government, any interest or right of the owner over the land is “converted” into a right to compensation under the Act:  S. 19(1).  Upon land being compulsorily acquired, the Departmental head must, as soon as practicable after the date of acquisition, cause a copy of the notice of acquisition to be served on the customary landowners: S. 20.
Also upon acquisition of the land by compulsory process, the Departmental head is required to lodge with the Registrar of Titles a certified copy of the notice of acquisition.  The Registrar of Titles then “register(s) the acquisition in the manner, as nearly as may be, in which dealings with land are registered; and deal with and give effect to the copy of the notice as of acquisition as if it were a duly executed grant, conveyance, memorandum or instrument of transfer of land to the State”: S. 21.  Such registration of title by the Registrar would be done under the Land Registration Act (Ch. No. 191).  In accordance with well established principles, upon registration of title, the State would acquire an indefeasible title to the land: Mudge & Mudge v The Secretary for Lands & the State [1985] PNGLR 387; Mamun Investment Pty Ltd & Ors v Paul Ponda & Elias Kuabo representing Mount Hagen YMCA, Unreported Supreme Court Judgment SC 490 dated 31st August 1995.  However, failure to register the acquisition under S. 21 should not, in my view vitiate the acquisition.  This is because upon publication of the notice under S. 17 (2), the legal title of the land is vested in the State by operation of law, and registration under S. 21 would only be a formality for title record purposes.  The situation under the Land Registration Act is different.  Upon registration, the transferee acquires an indefeasible title to the land: Land Registration Act, SS. 26 & 33.
The undisputed facts in the present case are that in as early as 1968, the colonial government identified this land as being suitable for use to develop water supply for Mt. Hagen.  Negotiations between the National and Provincial Governments on one hand and the customary landowners on the other took place between 1968 - 1978 as to how the land should be acquired by the government for that purpose.  Various options were considered.  Among them was a recommendation by a Lands Officer, one L.W. Rupa on 16 June 1978 that the land be acquired by agreement for a lease of thirty (30) years.  The government considered all the options including acquisition by agreement by lease for a term of years or outright purchase, and compulsory acquisition.  Because of the ongoing dispute and opposition by the landowners as to the method of acquisition and the amount of compensation or lease payments, the negotiations lasted some ten (10) years without any final resolution.  At the same time, the need for a permanent water supply for the Mt. Hagen increased with the increase in development of the town coupled with growth in population.  Then there was the additional pressure from overseas finance lending sources.  Loan finance from the Asian Development Bank in 1978 had been secured by the government for the project.  The Bank gave the government an ultimatum to resolve the land dispute by acquiring the land or face the risk of loosing the loan fund.  So the government decided to acquire the land by compulsory acquisition process. That approach had the backing of the Western Highlands Provincial Government:  See Minute of Meeting of 7 May 1979 (Annexure “A” of Mr Peril’s affidavit).
On 18 December, 1979 the then Minister for Lands, Mr Boyamo Sali, issued two notices of compulsory acquisition in respect of the two pieces of land under S. 17 (1) (b).  He also issued two certificates under S. 16 (7) which certified that S. 16 provisions did not apply in respect of these lands.  The two notices of compulsory acquisition were published in National Gazette No. G8 dated 27 December 1979.  From copies of correspondences on the Departmental file, some of which are annexed to Mr Peril’s affidavit, it is clear that the customary landowners were made aware of the publication of the compulsory acquisition notice. Upon my perusal of the Lands Department file, it seems that the Department Head did not however, cause the registration of the compulsory acquisition with the Registrar of Titles as required by S. 21.  After the publication of the notice, discussions took place between government officials and the landowners for compensation and compensation was paid by the State.  The compulsory acquisition process however, was not challenged in Court up until these proceedings have been filed, which is more than 14 years later.
In those fourteen (14) years, negotiations took place as to appropriate compensation and certain payments were made by the government and accepted by certain groups of landowners.  Since then, in these proceedings, certain landowner groups with the support of those who received the earlier payments such as the group headed by Dominic Yaga, are challenging the payments.  They say the payments were for lease of the land for a term of 30 years or alternatively, that if it was compensation for compulsory acquisition, the amounts paid is inadequate.
It is submitted for the Defendants that the land was clearly and properly acquired by compulsory process under the Act.  They submit the government complied with all the necessary procedural requirements in SS. 16 & 17 and that upon publication of the two notices in the National Gazette, all legal interest in the two lands vested in the State.  They submit, by operation of S. 17 (2), the State acquired an indefeasible title to the two lands.  Further, it is submitted, the affected landowners did not challenge the acquisition in Court soon after the acquisition and it is too late now because the State has fully developed the site at substantial cost.  The Plaintiffs’ counsel makes submissions in direct contradiction to these submissions.
For my part, I agree with the submission of the Defendants’ counsels.  It is clear from the evidence that the landowners, including the Plaintiffs, were aware of the compulsory acquisition, that the legal title to the land had been vested in the State upon publication of the notices in the National Gazette by operation of law and that their interest in the lands had been converted to a right to compensation.  Knowing these facts, they proceeded to negotiate for compensation and received certain payments.  The fact that they did not challenge the acquisition in Court until more than fourteen (14) years later further goes to show that they accepted the compulsory acquisition.  The need to promptly apply for judicial review of an executive action is well recognized: NTN Pty Ltd v PTC [1987] PNGLR 70; PNG v Lohia Sisia [1987] PNGLR 102.  This Court cannot properly and fairly review an executive decision made more than 14 years ago in different socio-political and economic circumstances unless there are very compelling reasons to do so.  In the present case, there are no such compelling reasons.  The fact that the State may have failed to register the acquisition with the Registrar of Titles does not vitiate the acquisition because registration is only a matter of formality:  see my discussions at p. 7, ante.
For these reasons, I find that the two lands were properly acquired by the government by compulsory process under the Act.
The next issue is whether proper compensation was paid for the acquisition.  Right to compensation for customary land compulsorily acquired is given by S. 19.   Part XI sets out the principles and procedure for dealing with compensation claims.  The underlying principle is that reasonable compensation must be paid:  Minister for Lands v William Robert Frame [1980] PNGLR 433.  The important features of Part XI are:
1.       The person lodges a claim for compensation with the Department of Lands under the procedure provided in S. 86 (1) & (2).
2.       The Minister considers the claim.  He may either accept or reject the claim:  S. 86 (3) - The Claimant is notified of the decision within three (3) months of the Minister’s decision: S. 86 (4).
3.       If the Minister accepts the claim, the amount of compensation is assessed under Division 8 (SS. 108 - 111).  If the Minister rejects the claim, the claimant may bring an action in the National Court claiming a declaration as to his entitlement to compensation: S. 87.  The National Court procedures for dealing with such action is provided by S. 87.
4.       If the claim is accepted by the Minister, the amount of compensation may be reached by agreement between the Minister, on behalf of the State, and the Claimant or “owner of the land” either before or after the acquisition of the land by compulsory process: S. 90 - 91.
5.       If the Minister and the parties disagree on the amount of compensation, they may, by consent, refer the matter to arbitration: S. 92.  The claimant may also bring an action in the National Court to determine the amount of compensation: S. 94.  The Court procedures for dealing with this claim is set out in S. 94.
The guiding principles to be used by the Government and the claimant in agreements or by the Court, in determining a reasonable amount of compensation are set out in SS. 88 - 89.  These Sections provide:
“88.    General principles
(1)      In the determination of the amount of compensation payable in respect of land acquired by compulsory process under this Act, regard shall be had to:
(a)      the value of the land at the date of acquisition; and
(b)      the damage (if any) caused by the severance of the land from other land in which the claimant had an interest at the date of acquisition; and
(c)      the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
(2)      In determining the value of land acquired under this Act, regard shall not be had to any increase in the value of the land arising from the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
(3)      Where the value of the interest of the claimant in other land adjoining the land acquired is enhanced or depreciated by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, the enhancement or depreciation shall be set off against, or added to, as the case requires, the amount of the compensation otherwise payable to the claimant.
89.     Value of land in certain cases
Where, for a purpose:
(a)      connected with the defence of Papua New Guinea; or
(b)      for securing the public safety of Papua New Guinea; or
(c)      connected with navigation by air, the State, a former administration, any other government or a person or authority acting for or on behalf of the State, a former administration or any other government has, whether before or after the commencement date, done or caused to be done work on, or in relation to, land or has placed anything on, under or over land, and the land is subsequently acquired by compulsory process under this Act, the value of the land shall, for the purpose of determining the compensation payable in respect of the acquisition, be assessed without reference to the enhancement or depreciation (if any) in value arising from the work so done on, or in relation to, the land or the thing so placed on, under or over the land.”
In the present case, there is no dispute that the sum of K65,000.00 was paid for both pieces of land as compensation.  This amount was arrived at by agreement between the State and the claimants or customary landowners after the compulsory acquisition.  This amount was comprised as follows:
Loss of property and business for Intake Site	K35,000.00	
Land on intake site	K15,000.00	
Land on Reservoir	K15,000.00	
Total	K65,000.00	
The amount was agreed upon between the parties after lengthy negotiations which also involved valuation of the lands by the Valuer General.  The State made the payments by instalments.  The last of these payments was made in October 1980.  There is however, no evidence of any comprehensive formal written agreement.  It appears that most of the negotiations and agreements were done orally and in a few instances, reduced to writing.  Some assistance as to the terms of the agreement may be derived from a copy of a written agreement between the State and the Claimants dated 10 October 1980 in respect of the sum of K15,000.00 for the reservoir site.  The agreement is reproduced below:
“CONDITIONS OF ACCEPTING K15,000.00 FOR THE LAND AT THE RESEVOIR SITE - BY MOGEI NAMBUGA CLAN
1.       First preferences be given to the Mogies for Land Leases in time:
(a)      Town of Hagen any commercial and Residential purposes.
(b)      Agricultural leases outside the town of Mount Hagen.
2.       Loss of water supply to be collected by the Mt. Hagen Council.
3.       That fresh water be freely supplied to surroundings villages at the water Resevoir site.
4.       If a new site is located in the future we would want our land be returned to us.
Spokesman: (Signed) Mogei Nambuga Clan
Spokesman: (Signed) “......”
Spokesman: (Signed) “......”
National Government Ref: (Signed by Secretary)
Provincial Government Ref: (Signed by Premier)
Date: 10/10/80 Place: Premiers Office Mount Hagen”
The uncontested evidence from the State is that the State has fully satisfied the additional conditions set out in para. 1 and 3 of this agreement, in particular:
(i)       A prime agricultural land consisting of Portions 1-1194, 2-1195 and 3-1196 in the Waghi Valley totalling some 84.069 hectares was bought by the State and given to the landowners via their landowner company, Moge Development Corporation.  This land is now fully developed with a Coffee Plantation.
(ii)      A big prime commercial site described as Allotment 2, Section 17, Mt. Hagen Town was also bought by the State and given to the Landowners via their landowner company, the Moge Nambuga Millimp Corporation.  This site has been divided into various Allotments, some of which are yet to be developed.  On one of this Allotments stands a modern fuel service station directly opposite Mt. Hagen’s Highlander Hotel.
After the payments in the form of cash and in kind, various groups of landowners laid claim to further compensation between 1980 and early 1995 which culminated in these proceedings.  These proceedings were initiated by a group led by the present principal Plaintiff, Mr Michael Maki.  It appears that the present Plaintiff’s group is one of five (5) groups of landowners who laid cliam to further compensation.  The other groups are led by Messrs John Pamunda, Phillip Num Maip, Wai Pok and Dominic Yaga.  The group led by Dominic Yaga was a principal beneficiary in the 1980 payment.  He has now aligned himself with Mr Maki to support him in these proceedings.  Different groups have claimed different amounts.
Upon carefully considering the whole of the evidence, I am satisfied that the amount of compensation arrived at by agreement and paid to the claimants in 1980 was fair and reasonable.  I do not find any breach of the provision of the Act designed to ensure payment of reasonable compensation to the customary landowners.  The State has fully complied with its side of the bargain and there is nothing more to be done by the State.  If the parties want to re-negotiate the agreement to allow for further compensation, it is up to the State to open its doors to further or fresh negotiations.  Further it is up to the State to return the land to its traditional landowners if the State no longer requires the land for the purpose for which it was acquired.
For these reasons, I dismiss the Plaintiffs claim with costs to the Defendants.
Lawyer for the Plaintiff: Kunai & Co Lawyers
Lawyer for the First and Third Defendants: Solicitor General
Lawyer for the Second Defendant: DL O’Connor Lawyers