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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO 479 OF 2010
MARIANNE MOSORO & MICHAEL MOSORO
Plaintiffs
V
KINGSWELL LIMITED
First Defendant
PUKA TEMU, MINISTER FOR LANDS & PHYSICAL PLANNING
Second Defendant
PEPI S KIMAS, SECRETARY,
DEPARTMENT OF LANDS AND PHYSICAL PLANNING
Third Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant
Madang: Cannings J
2011: 17 June, 12 August, 18 November
LAND – State Leases – exemption of land from advertisement – Land Act, Section 69 – circumstances in which land can be exempted from advertisement – Section 69(2)(d): where the State has agreed to provide land – manner of making, executing, evidencing an agreement by the State.
LAND – State Leases – principle of indefeasibility of title – exceptions under Land Registration Act – Section 33(1)(a: in the case of fraud – meaning of fraud.
The Secretary for Lands granted 99-year State Leases to the first defendant over two allotments of land adjacent to an allotment over which the plaintiffs had a State Lease. The plaintiff was aggrieved by the granting of the leases and sought judicial review on various grounds including error of law (constituted by breaches of the Land Act) and breach of the principles of natural justice. The first defendant argued that none of the grounds of review had merit and that it has indefeasible title to the land subject only to actual fraud, which the plaintiff has not proven.
Held:
(1) There must be notice in the National Gazette of all Government land available for leasing unless the land has been exempted from advertisement.
(2) The Minister may only exempt land from advertisement in one of the circumstances prescribed by Section 69(2) of the Land Act. If Section 69(2)(d) is relied on ("where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking"), there must be evidence of agreement by the State executed or entered into by an authorised person on behalf of the State.
(3) A decision to grant a State Lease over land that has been unlawfully exempted from advertisement is affected by error of law and is unlawful.
(4) The land was unlawfully exempted from advertisement and therefore the decision to grant the State Leases over it to the first defendant was unlawful.
(5) Given the circumstances in which the State Lease was unlawfully granted it was a case of fraud for the purposes of Section 33(1)(a) of the Land Registration Act. The granting and registration of the Lease were ineffective at law and should not be allowed to stand. Declarations and orders made accordingly.
Cases cited
The following cases are cited in the judgment:
Dale Christopher Smith v Minister for Lands (2009) SC973
Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215
Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80
Isaac Lupari v Sir Michael Somare (2008) N3476
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Rental Homes Ltd v Viviso Seravo (2003) N2483
Mudge v Secretary for Lands [1985] PNGLR 387
NCDIC v Crusoe Pty Ltd [1993] PNGLR 139
Ramu Nickel Ltd v Temu (2007) N3252
Steamships Trading Co Ltd v Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603
West New Britain Provincial Government v Pepi S Kimas (2009) N3834
Yakananda Business Group Inc v Minister for Lands (2001) N2159
Counsel
B W Meten, for the plaintiffs
P Wariniki, for the first defendant
18 November, 2011
1. CANNINGS J: This case concerns two allotments of land in Wewak, East Sepik Province, Section 30, Allotments 28 and 29, over which the Secretary for Lands and Physical Planning granted State Leases to the first defendant, Kingswell Ltd. The plaintiffs, Marianne and Michael Mosoro, hold a State Lease over an adjoining allotment, Section 30, Allotment 40, and have lived there, in Boram Road, for 23 years. They are aggrieved by the granting of the State Leases to Kingswell, as they had expressed interest in themselves acquiring Allotments 28 and 29 and they object to Kingswell's proposed use of the land as a fuel depot. They say that the State Leases were granted contrary to the Land Act as the Secretary did not give notice by advertisement in the National Gazette that the allotments were available for leasing. The plaintiffs were granted leave to seek judicial review of the Secretary's decision to grant the State Leases. This is a trial of the substantive application for judicial review.
2. The plaintiffs put forward six grounds of review but some overlap and others are not supported by the evidence. Grounds (a) and (b) are the most significant, alleging that the granting of the State Leases was contrary to Section 68 of the Land Act as the allotments were not advertised and had been unlawfully exempted from advertisement. Ground (c) alleges that there was no Land Board decision recommending the granting of the State Leases to Kingswell. But this was not the case. There was a Land Board decision, so ground (c) has no substance and is dismissed. Ground (d) alleges that the plaintiffs were denied natural justice as they had applied for a 'closed tender' under Section 69(2)(e) of the Land Act. This argument has little substance as there is no provision in the Land Act allowing for the sort of application referred to. Ground (d) is dismissed. Grounds (e) and (f) relate to alleged decisions of the Secretary and the Minister for Lands and Physical Planning to rezone the disputed allotments from residential to light industrial. The evidence required to support these grounds is vague and inadequate. It is not clear how, when or by whom the rezoning was done. Grounds (e) and (f) are dismissed.
3. Only grounds (a) and (b) warrant detailed consideration. They overlap and raise these issues: was the granting of the State Leases affected by error of law, given the circumstances in which the lands were exempted from advertisement? If yes, what are the consequences: what orders should the court make? Before determining those issues there are some preliminary matters raised by the first defendant that need to be addressed.
PRELIMINARY MATTERS
4. Mr Wariniki, for Kingswell, submitted that the application for judicial review was defective and should be refused as it:
(1) seeks review of the decisions to grant the State Leases, rather than the decision-making process;
(2) erroneously refers to "Section 40, Allotments 28 and 29", as if the allotments were consolidated into one lease;
(3) erroneously refers to the singular expression "State Lease", when there are two separate State Leases involved;
(4) refers only to "the Land Act", and it is not clear whether this is a reference to the Land Act Chapter No 185, the Land Act 1996 or the Land Regulation 1999;
(5) refers to a decision "to grant State Lease", which does not make it clear whether the Lease has been granted, and thus is confusing;
(6) wrongly 'lumps up' the second and third defendants, thus presuming that the Secretary has power to grant State Leases when only the Minister has this power;
(7) fails to comply with Order 16, Rules 3(3) and 9(2) of the National Court Rules, in that there is no evidence that the Secretary for Justice was notified of the application;
(8) does not demonstrate that the plaintiffs have a sufficient interest in the subject matter of the proceedings or that they exhausted their administrative remedies.
5. None of these submissions is persuasive. As to (1), this is a judicial review of administrative decisions, and by its nature focuses on reviewing the decision-making process. As to (2) and (3) no confusion arises from the wording of the plaintiffs' originating statement: it is clear that there are two State Leases and two allotments. Likewise with (4) and (5). Mr Wariniki's submissions appear calculated to create confusion where none exists. It is clear that the Land Act 1996 is the legislation that is at the centre of this case. There is no uncertainty about granting of the State Leases, on 21 August 2009. As to (6), the 'lumping up' of the Minister and the Secretary is justifiable as it is unclear on the facts who actually decided to grant the leases to Kingswell (was it the Minister or the Secretary or some other official?). The leases state that the Minister is granting the leases but are not signed by the Minister; and the person who has signed as a delegate of the Minister is not named. Only a signature appears on the leases. As to (7) there is an affidavit of service on the court file showing that the Secretary for Justice was given notice of the application for leave to seek review, putting beyond doubt the question of compliance with Order 16, Rule 3(3). As to Order 16, Rule 9(2) it appears that there has been a failure to comply with the requirement that the plaintiffs lodge with the Secretary for Justice a copy of the notice of motion under Order 16, Rule 5 by which the application for judicial review was required to be made. However, this is a minor procedural defect as Mr Tanuvasa of the Office of Solicitor-General appeared for the fourth defendant, the State, at a directions hearing for this trial, so I am satisfied that the State and therefore the Secretary for Justice has been given an adequate opportunity to be heard, that there has been no prejudice to any of the second, third or fourth defendants and that the plaintiffs have accounted for their failure to comply with Order 16, Rule 9(2) to the satisfaction of the court. As to (8) both of these issues were determined in favour of the plaintiffs at the hearing on the application for leave. Nothing advanced here causes me to think that the granting of leave was unwarranted. The application for judicial review is therefore not defective. It will be determined on its merits.
WAS GRANTING OF THE STATE LEASES AFFECTED BY ERROR OF LAW?
6. At this point I am going to rely on my decision in West New Britain Provincial Government v Pepi S Kimas (2009) N3834, where the decision to grant a State Lease and the State Lease itself were declared unlawful and void because land had been unlawfully exempted from advertisement. I summarised the key features of Part X (State Leases) of the Land Act 1996:
(a) where the lease is granted to a governmental body for a public purpose; or
(b) where it is necessary to relocate persons displaced as a result of a disaster as defined in the Disaster Management Act (Chapter 403); or
(c) where a lessee applies for a further lease; or
(d) where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking [the circumstance relied on in the present case]; or
(e) where the land applied for adjoins land owned by the applicant and is required to bring the holding up to a more workable unit, providing that the claims of other neighbouring landowners are considered and their views taken into account in deciding whether to exempt the land from advertisement in favour of the applicant; or
(f) where the Department responsible for foreign affairs recommends that land be made available to the applicant for consular premises; or
(g) where the land is required for the resettlement of refugees; or
(h) where the applicant has funded the acquisition of the land from customary landowners in order to acquire a State lease over it; or
(i) where a lease is to be granted under Section 99 or 102; or
(j) where a new lease is granted under Section 110, 130 or Section 131.
7. In the present case the Secretary for Lands and Physical Planning, on 23 January 2009, exempted the lands from advertisement by signing the following instrument:
INDEPENDENT STATE OF PAPUA NEW GUINEA
NOTICE UNDER SECTION 69(2)(d)
I, PEPI S KIMAS, OL, a delegate of the Minister for Lands and Physical Planning by virtue of the powers conferred in me by Section 69(2)(d) of the Land Act 1996 and other powers me enabling, hereby exempt from advertisement the land described in the Schedule referred to hereunder.
The special reason being that the improvement on the Land will be of benefit to the people of East Sepik Province and Parts of West Sepik Province which the development cost is estimated at K5 million. [sic]
SCHEDULE
All that piece of land containing a total area of 0.0800 hectares registered on Cat Plan No 3/585 described as follows:-
ALLOTMENTS 28 & 29 SECTION 40, TOWN OF WEWAK, EAST SEPIK PROVINCE.
Dated this 23rd day of January 2009
PEPI STEVEN KIMAS, OL
Delegate of the Minister for Lands & Physical Planning
8. The notice was not published in the National Gazette, which by itself is inconsequential as the Act does not require such notices to be published. What is more significant is to pose the question, given that the instrument was executed under Section 69(2)(d), whether the State agreed to provide these lands for the establishment or expansion of a business, project or other undertaking? Having considered the evidence, I answer this question in the same way as in the West New Britain Provincial Government case: no.
9. Section 69(2)(d) requires that "the State" agree to provide land. Not "the Minister" or "the Departmental Head" or the "Land Board" or "a delegate of the Minister". Agreements are usually executed for and on behalf of the State by the Governor-General, acting with and in accordance with the advice of the National Executive Council (see, for example, the Public Finances (Management) Act 1995, Section 47, which deals with execution of agreements on behalf of the State). As the Land Act is silent on how an agreement by the State to provide land should be made, executed or evidenced the usual practice regarding agreements by the State should apply. The Governor-General, as personal representative of the Queen and Head of State under Section 82(2) (Queen and Head of State) of the Constitution, should sign the agreement acting with and in accordance with the advice of the National Executive Council. And there should be an instrument – a memorandum of agreement – which records the terms of the agreement. This instrument should be separate and distinct from the notice of the agreement. There is no reason that Section 69(2)(d) should be read down to allow an agreement on the part of the State to be executed by any person or authority other than the Governor-General. Certainly, it is contrary to the policy of open and transparent distribution of Government land evinced through the advertising requirements in Section 68 to allow a delegate of the Minister, the Secretary for Lands and Physical Planning, to unilaterally exempt land from advertisement (NCDIC v Crusoe Pty Ltd [1993] PNGLR 139, Steamships Trading Co Ltd v Garamut Enterprises Ltd (2000) N1959).
10. Another error in the exemption notice (the same error was made in the West New Britain Provincial Government case) is that although the instrument signed by Mr Kimas was expressed to be an exemption under Section 69(2)(d) it did not use the words of that provision to describe how and why the land was exempt. The justification for the exemption was stated as:
The special reason being that the improvement on the Land will be of benefit to the people of East Sepik Province and Parts of West Sepik Province which the development cost is estimated at K5 million. [sic]
11. No mention was made of the State agreeing to provide land. The instrument did not say, as it should have if Section 69(2)(d) was to be anywhere approaching a lawful basis for the exemption, that "the State has agreed to provide land for the establishment ... of a business, project or other undertaking". The instrument did not say that Mr Kimas or the Minister or anyone agreed to provide land or agreed to provide or do anything. It referred to a "special reason". This is a confusing and irrelevant statement as Section 69(2)(d) does not allow the Minister to exempt land from advertisement for a 'special reason'.
12. I conclude that there were two errors of law in the decision to exempt the lands from advertisement. First, the Secretary for Lands purported to agree on behalf of the State to provide lands to a company when he had no power to do so. Secondly, on its terms the instrument of exemption was a nullity. It did not represent a valid exercise of power under the Land Act. As the lands were exempted from advertisement without any proper legal basis the decision of the Secretary to grant the State Leases to Kingswell Ltd was also made without any proper legal basis and was wrong in law.
WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?
13. It is now time to consider the consequences of the finding that the decision to exempt the lands from advertisement and therefore the decision to grant the leases were affected by error of law. It does not necessarily follow that the court will make the declarations and orders sought by the plaintiffs, for two reasons. First, as in any judicial review the court's determination of the review proceeds in two stages: (a) determining whether the plaintiff has proven one or more grounds of review and if it has (b) deciding as a matter of discretion what remedy, if any, should be granted (Dale Christopher Smith v Minister for Lands (2009) SC973; Isaac Lupari v Sir Michael Somare (2008) N3476). Secondly, the principle of indefeasibility of title must be considered.
14. Kingswell Ltd was granted two State Leases which were registered on the same day that they were granted, 21 August 2009. It thereupon became and still is the registered proprietor of Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province. Under Papua New Guinea's Torrens Title system of land registration for alienated government land registration of a lease vests an indefeasible (unforfeitable) title in the registered proprietor subject only to the exceptions in Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The question therefore arises whether any of those exceptions apply. The only exception that might apply in this case is Section 33(1)(a): in the case of fraud. I addressed the meaning of "fraud" in the West New Britain Provincial Government case and noted that there are two schools of judicial thought. On the one hand, in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215 the Supreme Court (Amet J and Salika J, Brown J dissenting) held that if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title. This wide view of "fraud" – it includes irregularities that are tantamount to fraud and constructive fraud – has been followed in the National Court decisions of Sheehan J in Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959, Sevua J in Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80 and Injia DCJ (as he then was) in Ramu Nickel Ltd v Temu (2007) N3252. The view that the National Court has an important role in its judicial review jurisdiction of correcting errors of law made in connection with State Leases is supported by the decisions of Sevua J in Yakananda Business Group Inc v Minister for Lands (2001) N2159 and of Kirriwom J in Lae Rental Homes Ltd v Viviso Seravo (2003) N2483. On the other hand, a narrower view was favoured by the Supreme Court (Gavara-Nanu J, Mogish J and Hartshorn J) in Koitachi Ltd v Walter Schnaubelt (2007) SC870. The Court adopted the view of fraud taken in the National Court decision of Gavara-Nanu J in The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603: "fraud" ... means fraud committed by the registered proprietor or actual fraud.
15. Which of the two views of fraud should be applied in the present case? The wide view pioneered by the Supreme Court in Emas Estate and followed in Garamut, Hi-Lift and Ramu Nickel? Or the narrow view propounded by the Supreme Court in Koitachi? I consider, as I did in the West New Britain Provincial Government case, that the former view is preferable: if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting side of registration of title. The corollary is that if the circumstances of granting of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting side of registration of title is the inevitable result.
16. I now revert to what I concluded earlier. The Secretary's decision of 23 January 2009 to exempt the lands from advertisement had no proper legal basis. It was irregular and unlawful. That erroneous decision infected every subsequent decision made under the Land Act and the Land Registration Act concerning the lands, including, especially, the decision to grant the State Leases to Kingswell Ltd and the decision to register the Leases. The circumstances in which the leases were registered are so unsatisfactory, dubious and irregular as to be tantamount to fraud. Actual fraud has not been proven but I am satisfied that there is constructive fraud. Therefore it is a "case of fraud" for the purposes of Section 33(1)(a) of the Land Registration Act. It follows that the granting and registration of the Leases is ineffective at law and should not be allowed to stand. I will as a matter of discretion make declarations and orders to correct the errors of law that have been made.
COSTS
17. The usual practice is that the Court orders that the losing party pay the costs of the successful party. This case has not been defended by the second, third and fourth defendants. It has only been defended by the first defendant, Kingswell Ltd, the losing party. I see no reason that the usual practice should not apply. The first defendant will pay the plaintiffs' costs.
ORDER
(1) The application for judicial review is granted.
(2) The decision of the Secretary for Lands and Physical Planning dated 23 January 2009 to exempt Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, from advertisement is declared null and void and is quashed.
(3) The decision of the Papua New Guinea Land Board at Meeting No 02/2009, published in National Gazette No G151 of 6 August 2009, to recommend the granting of Business (Light Industry) Leases over Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, to Kingswell Limited, is declared null and void and is quashed.
(4) The granting of State Leases over Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, on 21 August 2009 to Kingswell Ltd is declared null and void and is quashed.
(5) The State Leases granted over Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, dated 21 August 2009 are declared null and void and are quashed.
(6) Kingswell Ltd shall within 14 days return its owner's copies of the State Leases over Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, to the Secretary for Lands and Physical Planning.
(7) The Secretary for Lands and Physical Planning, as a delegate of the Minister, shall within 21 days after the date of this order:
(a) execute notices of forfeiture of the State Leases granted over Section 30, Allotments 28 and 29, Town of Wewak, East Sepik Province, to Kingswell Ltd, stating that the State Leases are forfeited by order of the National Court at Madang in OS No 479 of 2010 on 18 November 2011; and
(b) publish the notices of forfeiture in the National Gazette; and
(c) forward the notices of forfeiture to the Registrar of Titles; and
(d) forward certified copies of the notices of forfeiture to the Assistant Registrar of the National Court at Madang.
(8) The Registrar of Titles shall within 7 days after receiving the notices of forfeiture amend the Register of State Leases and all other records of the State under his control to reflect forfeiture of the State Leases and all the orders of the Court.
(9) Costs of these proceedings shall be paid by the first defendant to the plaintiffs on a party-party basis, to be taxed if not agreed.
(10) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.
____________________________
Meten Lawyers: Lawyers for the Plaintiffs
Wariniki Lawyers: Lawyers for the First Defendant
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URL: http://www.paclii.org/pg/cases/PGNC/2011/151.html