N4403

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1075 OF 2009

BETWEEN:

JIM TAPAKO
First Plaintiff

AND:

J.T INVESTMENTS LIMITED
Second Plaintiff

AND:

GEORGE IPI
First Defendant

AND:

PNG TONER & INK SUPPLIES LIMITED
Second Defendant

AND:

RAGA KAVANA – REGISTRAR OF TITLES
Third Defendant

AND:

PEPI KIMAS – SECRETARY FOR LANDS DEPT
Fourth Defendant

AND:

HON. PUKA TEMU – MINISTER FOR LANDS
Fifth Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Sixth Defendant

Waigani: Thompson, AJ
Hearing: 7 September
2011: 20 September

LAND LAW – application for an order recognizing first plaintiff as legal proprietor to land – relief also include general and exemplary damages - Plaintiff's claim based on allegation of fraud - registered proprietor of land has indefeasible title except, relevantly, in the case of fraud or the interest of a proprietor claiming the same land under a prior Instrument of Title - Statement of Claim does not make any reference to a claim based on the interest of a proprietor claiming the same land under a prior Instrument of Title - plaintiffs have failed to produce evidence of fraud – plaintiffs claim is dismissed – s.33 Land Registration Act

Facts

The plaintiffs were proprietors of a title to land which was forfeited in mid 2004 (pursuant to a notice to show cause issued in 2002) for failure to pay the land rent (since 1996) and failure to fulfil the improvement covenant. In late 2005, title to the land was awarded to the first and 2nd defendants and a State Lease issued in early 2007. Subsequently the plaintiffs commence these proceedings to set aside the issue of that State Lease for fraud.

Held

1. An inference of fraud cannot be drawn from the sequence of events and no fraud was proven, consequently there was no right to have the title set aside pursuant to the Land Registration Act Section 33;

2. An action against the Registrar for misfeasance cannot lie unless written notice of the action is given one month beforehand pursuant to Land Registration Act Section 151 at [17 & 18].

Cases Cited:

Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215
Koitachi Ltd v. Walter Schnaubelt & Ors (2007) SC870

Counsel:
Mr. N. Kiuk, for the Plaintiff 
Mr. S. Japson, for the first and second Defendants
Mr. E. Geita	, for the third, fourth, fifth and sixth Defendants

20 September, 2011
DECISION

1.	THOMPSON AJ: On 27 August 2009 the Plaintiffs filed these proceedings alleging fraud against the Defendants in the forfeiture of the Plaintiff's lease and the issue of a new lease to the Second Defendant. 

2. The proceedings are not judicial review proceedings, and nor do they seek any declaratory orders. The Plaintiffs claim "an order that the First Plaintiff is the legal proprietor of the State Lease …" and "claims the Third Defendant to forthwith perfect the entries in the register of titles to reflect the First Plaintiff as the legal proprietor of the state lease …" The relief goes on to include claims for general and exemplary damages. 

3. After the hearing concluded, a chronology of events was established. The relevant events are as follows:

•	On 27 May 1993 a State Lease over Lot 27 Section 2 Lae was registered in the name of the National Housing Corporation. 

•	Annual land rentals had not been paid on the property since about 1996.

•	Following a (disputed) Contract of Sale and Transfer, the transfer of the land from the National Housing Corporation to the First Plaintiff was entered on the Certificate of Title on 12 October 2001. 

•	The records relating to the land were not properly maintained at either the office of the Registrar of Title or the Department of Lands & Physical Planning.

•	On or about 4 November 2002 the Fourth Defendant served a Notice to Show Cause to the National Housing Corporation, giving notice that land rentals had been unpaid for about six years and that the lease covenant had not been complied with, so that the land was subject to forfeiture.

•	The Notice to Show Cause was not served on the Plaintiffs.

•	On 28 May 2004 the Fourth Defendant published a Gazettal notice showing forfeiture of the lease for failure to comply with the improvement covenant, failure to pay the outstanding land rent and failure to comply with the Notice to Show Cause.

•	In February 2005 the First and Second Defendants applied for the forfeited land to be exempted from tender and to be transferred to the Second Defendant.

•	In August 2005 the land was exempted from advertisement and awarded to the Second Defendant.

•	In May 2006 the Plaintiffs were informed by the First and Second Defendants that they were the new owner of the land.

•	On 19 January 2007 a new State Lease was issued to the Second Defendant which commenced on 24 November 2005.

•	On 4 July 2007 the Plaintiff issued judicial review proceedings against the Defendants with which were dismissed for want of prosecution on 12 August 2009.

4. It is plain from the Statement of Claim that the Plaintiffs are seeking orders in the nature of certiorari and mandamus, and a declaration, notwithstanding that those words have not been used. Nevertheless, no objection was taken to the form of the proceedings.

5. The basis of the Plaintiff's claim as set out in the Statement of Claim, is an allegation of fraud. Section 33 of the Land Registration Act is quite clear. The registered proprietor of land has indefeasible title except, relevantly, in the case of fraud or the interest of a proprietor claiming the same land under a prior Instrument of Title. The Statement of Claim does not make any reference to a claim based on the interest of a proprietor claiming the same land under a prior Instrument of Title. The Statement of Claim refers only to the case of fraud. Nevertheless, I am obliged to consider the facts pleaded in the Statement of Claim, to determine whether or not they disclose the existence of an interest under a prior Instrument of Title. 

6. When dealing with allegations of irregularities in the prescribed procedures under the Land Registration Act and whether or not they amount to fraud, there were previously some cases in support of the proposition that such irregularities could amount to a constructive fraud, which was sufficient to overturn the registered proprietor. However, the issue has now been conclusively determined by the Supreme Court in the case of Koitachi Ltd v. Walter Schnaubelt & Ors (2007) SC870. In that case, the Court unanimously determined that fraud in Section 33 of the Land Registration Act means actual fraud by the registered proprietor; "... once the land is registered, the owner obtains indefeasibility of title which cannot be invalidated by any unregistered interests or mere irregularities except fraud by the registered proprietor or actual fraud." 

7. In the Statement of Claim, the Plaintiffs identify a number of actions which they say were fraudulent. They are as follows: 

Para 22 –

(a)	the Third and Fourth Defendants issued the Notice to Show Cause under dubious circumstances. 

(b)	the Third and Fourth Defendants failed to serve the Notice to Show Cause on the Plaintiffs.

(c)	the conduct of the Third, Fourth and Fifth Defendants in issuing the Notice to show Cause to a former owner, was fraudulent.

(d)	the Third, Fourth, and Fifth Defendants failed to serve the Notice to Show Cause on the National Housing Corporation.

(e)	the First Plaintiff, (which I presume to be an error for the First Defendant), 	colluded with the Third Defendant to alter the register.

(f)	the First and Second Defendants colluded with the Third and Fourth Defendants to alter the records and make improper entries in the Register of Titles.

8. The Second Defendant is the registered proprietor of the land. It can be seen that the only allegation of fraud against the Second Defendant is that it colluded with the Third and Fourth Defendants to alter the records in the Register of Titles.

9. The Plaintiffs have failed to establish this allegation of fraud. The Plaintiffs have certainly established that there were irregularities in the government records. The facts here have some similarity with the facts in the case of Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215, where the Appellant's lease was forfeited following a Notice to Show Cause, and then subsequently exempted from tender and allocated to another person. However, the Notice to Show Cause had been in-validly issued, because there had in fact been compliance with the payment of land rent and the improvement covenant. It was found that the fact that the land was exempted from advertisement within six days of the forfeiture, and that the new lease was issued while the former owner still had an appeal pending against the forfeiture, gave rise to a reasonable inference of fraud. However, Koitachi's case makes it clear that this is now insufficient to amount to fraud, unless it can be established against the registered proprietor. 

10. The Plaintiffs have not produced any evidence of actual fraud, only possible inferences to be drawn from irregularities. Further, they have not produced evidence of any fraud by the Second Defendant. 

11. The Plaintiffs did not establish that the Third and Fourth Defendants had issued the Notice to Show Cause "under dubious circumstances". It was uncontested that the land rent had been in arrears since 1996, and there had not been compliance with the improvement covenant. These are the two statutory grounds provided for the issue of a Notice to Show Cause. 

12. The Plaintiffs did not establish that the Third, Fourth and Fifth Defendants had failed to serve the Notice on the National Housing Corporation. The Defendants proved that it had in fact been served on the National Housing Corporation. 

13. The Plaintiffs did establish that the Third and Fourth Defendants failed to serve the Notice on the Plaintiffs. However, they did not show that this was due to fraud, and therefore did not show that the conduct of the Third, Fourth and Fifth Defendants in issuing the Notice to a former owner, was fraudulent.

14. The explanation for the notice being served on the National Housing Corporation and not on the Plaintiffs was given by Henry Wasa, the Registrar of Titles and Third Defendant. His explanation was that the records were not properly maintained, and some staff had failed to carry out proper searches. As a result, the First Plaintiff was not shown in the records as the owner, which was still shown as the National Housing Corporation. Mr. Wasi's evidence was not challenged, and I found him to be a credible witness. The Plaintiffs therefore did not establish that the issue of the notice to the National Housing Corporation instead of the First Plaintiff, was done fraudulently. The evidence was that it was due to omissions and mistakes in the Defendant's records. 

15. The Plaintiffs did not establish that there was collusion between the Defendants to alter the Lands Department records. The land was not forfeited immediately following the issue of the Notice to Show Cause, and the land was not exempted from tender immediately following the forfeiture. On the contrary, the Notice to Show Cause was issued in November 2002, the land was forfeited in May 2004, and was exempted from advertisement in August 2005. No inference of fraud can be made from this sequence of events.

16. The Plaintiffs having failed to establish fraud, are not entitled to set aside the registered title, and are not entitled to claim any other relief. 

17. There are two other issues. First, the Plaintiffs have established that there were omissions or mistakes in the Registrar's office. The Plaintiffs have gone further and have alleged that there was in fact misfeasance in the Registrar's office. Section 151 of the Land Registration Act provides a remedy to the Plaintiffs, for any such claim. Section 151 says that an action to recover damages for loss caused by an omission, mistake or misfeasance of the Registrar's office, shall be brought against the Registrar, provided that written notice of the action is given one month beforehand.

18. In this case, there is no evidence that the Plaintiffs gave prior written notice to the Third Defendant of their intention to bring this action to recover damages caused by the Third Defendant's omission, mistake or misfeasance. The proceedings are clearly an action to recover damages caused by an omission, mistake or misfeasance by the Third Defendant. As the condition precedent for giving prior notice was not complied with, no such action can lie against the Third Defendant.

19. Secondly, is there nevertheless a case that the Plaintiffs had an interest under a prior instrument of title, within the meaning of Section 33 of the Land Registration Act? 

20. I accept the evidence which shows that the First Plaintiff was the registered proprietor of the land in 2001. However, I do not accept that he was still the registered proprietor at the time when the new lease was issued.

21. The actual grounds for forfeiture set out in the Notice to Show Cause were valid, as it is not in dispute that the land rent had remained unpaid, and there had not been compliance with the improvement covenant. There was also no response to the Notice. The Fourth Defendant therefore proceeded to forfeit the lease.

22. Section 123 of the Land Act says that where a State Lease has been mistakenly forfeited, it can be revoked provided that a notice under Section 75 has not been published in the Gazette in respect to another applicant. In the present case, a notice under Section 75 was published in the National Gazette in November 2005. The Plaintiffs did not make any application to revoke the forfeiture notice before the gazettal was published. That remedy is no longer available, and the forfeiture remains in effect. Accordingly, from the date of the Gazettal of the forfeiture on 28 May 2004, the Plaintiffs no longer had an Instrument of Title.

23. This in turn means that at the date of registration of the new Instrument of Title on 19 January 2007 or on its commencement on 24 November 2005, there was no prior title held by the Plaintiffs. The First Plaintiff did not have an interest under a prior Instrument of Title within the meaning of Section 33 of the Land Registration Act. 

24. If the Plaintiffs had acted earlier, when the land was forfeited in May 2004, or even when they were informed by the Defendants of the change of ownership in May 2006, they may have been able to prevent a new State Lease from being issued. However, once the new lease was issued, the Second Defendant acquired indefeasible title subject to the exceptions in Section 33 of the Land Registration Act. The Plaintiffs have not proved any actual fraud, and have not proved any actual fraud by either the Second Defendant or any of the other Defendants.

25. The Plaintiff's claim is therefore dismissed. The plaintiffs are to pay the Defendants' costs.

____________________________________________________________
Nixon Kiuk Lawyers: Lawyer for the Plaintiff 
Mr. S. Japson: Lawyer for the first and second Defendants
Solicitor-General: Lawyers for the third, fourth, fifth and sixth Defendants