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Gumdale Ltd v Ofoi [2017] PGNC 433; N6696 (5 April 2017)

N6696

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA No. 118 OF 2012

BETWEEN
GUMDALE LTD
Appellant

AND
JOHN OFOI, as DELEGATE OF THE MINISTER FOR LANDS & PHYSICAL PLANNING
First Respondent

AND
HON. BENNY ALLAN, MINISTER FOR LANDS & PHYSICAL PLANNING
Second Respondent

AND
HENRY WASA, REGISTRAR OF TITLES
Third Respondent

AND

INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Respondent

AND
MICHAEL KOIMO
Fifth Respondent

Waigani: Makail, J

2017: 15^th March & 5^th April

CIVIL APPEALS – Appeal against forfeiture of State lease – Residential lease – Grounds of – Breach of right to be heard – Right to be heard mandatory – Notice to show cause – Service of notice to show cause – Notice to show cause served on wrong postal address – Effect of –Land Act – Sections 122 & 142

CIVIL APPEALS – Appeal against forfeiture of State lease – Decision to forfeit made by delegate of Minister – Administrative decision – Whether appeal a rehearing or hearing de novo –Land Act – Section 142

Cases cited:
Commissioner General of Internal Revenue v. Bougainville Copper Limited (2008) SC920
Lavongai Equities Limited v. Hon. Benny Allen, MP, Minister for Lands & Physical Planning & Ors (2016) N6362
Mount Hagen Local-level Government v. PepiKimas, Secretary for Lands & Physical Planning & Ors (2015) N6044
Nambawan Super Limited v. PepiKimas & Ors(2013) N5062
Nokov. Temu (2012) SC1192
SakawarKasieng v. Andrew Baigry (2004) N2562
Raz v.Matane(1986) N525
Yakananda Business Group Inc v. Minister for Lands & Physical Planning and The State (2001) N2159

Counsel:
Mr.D. Wood with Mr. C. Joseph, for Appellant
Ms. B. Kulumbu, for First, Second, Third and Fourth Respondents
Fifth Respondent in person

JUDGMENT

5^thApril, 2017

1. MAKAIL J: This is an appeal against the decision of the first respondent made on or about 15^th October 2015 to forfeit the appellant’s State Lease Volume 76, Folio 199 (the appellant’s State Lease), which comprises a residential lease over the land at Allotment 13 Section 10 Matirogo (Gabutu), (“the Land”).

2. The appeal is brought pursuant to Section 142 of the Land Act which states that “[a]n interested person may appeal to the National Court on the forfeiture of a lease.”

Notice to Show Cause dated 5^th June 2012

3. The facts which are not disputed are these, in the week commencing 10^th September 2012, a Post PNG card was delivered to Gumdale Pty Ltd, P.O. Box 1948, Boroko, National Capital District to notify the appellant to collect an envelope over the counter from the Boroko Post Office. On 13^th September 2012, a driver employed by the appellant was sent to the Post Office and collected the envelope which was addressed to Gumdale Pty Ltd, P.O. Box 1948, Boroko, National Capital District. Inside the envelope was contained a Notice to Show Cause dated 5^th June 2012 (“the Notice to Show Cause”). The Notice to Show Cause was also addressed to Gumdale Pty Ltd, P.O. Box 1948, Boroko, National Capital District.

4. The Notice to Show Cause required the appellant to show cause why its State Lease should not be forfeited and states: “If sufficient cause is not shown one (1) month from the date of this Notice, the lease be declared forfeited.”

5. The one month period stated in the Notice to Show Cause expired on or about 5^th July 2012.

Notice of Forfeiture of State Lease

6. On or about 25^th October 2012, the first respondent by notice in the National Gazette No. G6410 dated 15^th October 2012 forfeited the appellant’s State Lease on the ground, amongst others, on the basis that it was claimed that the appellant had failed to comply with the Notice to Show Cause.

Notice of Appeal filed on 21^stNovember 2012

7. On 21^stNovember 2012, the appellant filed this appeal against the Notice of Forfeiture dated 15^th October 2012.

Court Order dated 13^thDecember 2012

8. On 13^thDecember 2012, the Court made an interim order restraining the respondents from dealing with the appellant’s State Lease over the Land pending the final determination of this appeal.

9. A copy of the interim order of 13^th December 2012 and covering letters from Ashurst were served on all the respondents on 23^rdJanuary 2013, except for the fifth respondent who at the time had not made application for the same subject property and was not a party to the proceeding.

Another State Lease of Land was recently registered in the name of the

fifth respondent on 7^thJuly 2016

10. On or about 24^thFebruary 2015, the Papua New Guinea Land Board recommended that the fifth respondent be granted residential lease over the land. On 14^thMarch 2016 a notice was published in the National Gazette G155 dated 23^rdMarch 2016 by the delegate of the second respondent one Mr Luther Sipison confirming the recommendation to grant to the fifth respondent a residential lease over the land.

11. On 29^thJune 2016, the second respondent or his delegate granted to the fifth respondent a lease over the land. On 7^th July 2016, the third respondent or his delegate registered a lease in Volume 71 Folio 69 over the land in the name of the fifth respondent.

12. On 7^thJuly 2016, the fifth respondent was joined as a party to this appeal.

Judicial review proceeding OS (JR) No. 540 of 2016

13. Regardless of the fifth respondent’s joinder, the appellant filed an originating summons on 19^th August 2016 seeking leave to review the following decisions:

(a) the decision made on or about 24^thFebruary 2015 of the Papua New Guinea Land Board to recommend that the fifth respondent be granted a residential lease over the Land.

(b) the decision made on 14^thMarch 2016 and published in the National Gazette G155 dated 23^rdMarch 2016 of the delegate of the second respondent to confirm the recommendation to grant to the fifth respondent a residential lease over the Land.

(c) the decision made on 29^thJune 2016 of the second respondent or his delegate to grant the fifth respondent a lease over the land.

(d) the decision dated 7^thJuly 2016 of the third respondent or his delegate to register a lease (Volume 71 Folio 68) over the Land in the name of the fifth respondent.

14. On 20^th September 2016, the application for leave for judicial review was heard by Gavara-Nanu J and on 26^thSeptember 2016, his Honour ruled refusing leave on the following grounds:

(a) The central issue in the proceeding OS (JR) No. 540 of 2016 was similar to the issue in this appeal. The issue is whether the appellant’s State Lease was lawfully cancelled.

(b) The relief sought in the proceeding OS (JR) No. 540 of 2016could be sought in this appeal.

Grounds of Appeal

15. The contention that the forfeiture of the appellant’s State Lease is illegal and void based on the ground that the first respondent contravened Section 122(2)(a) and/or (3) and/or (4) of the Land Act and that the appellant was denied natural justice when it was not given the opportunity to show cause within the one month period stated in the Notice to Show Cause. Accordingly, the decision of the first respondent to forfeit the State Lease was in the Wednesbury sense irrational and unreasonable and, therefore, ultra vires.

The Appellant was not given an opportunity to show cause

16. There is no dispute as it is noted from the first to fourth respondents’ conduct that they were required to serve a Notice to Show Cause on a lessee, in this instance, the appellant. Service is a requirement under section 122 (2) (a) of the Land Act. It states“Before forfeiting a State lease under Subsection (1), the Minister 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 or grounds specified in the notice.”

17. The question is whether service of the Notice to Show Cause on Gumdale Pty Limited at the postal address of PO Box 1948, Boroko, National Capital District constituted service on the appellant.

18. As noted the undisputed evidence is that on or about 2^ndSeptember 1998, Gumdale Pty Ltd changed its name to Gumdale Limited. The appellant’s physical address services is the office of Guinn PKF, level 1, Pacific MMI building Champion Parade, Port Moresby, National Capital District. The appellant’s postal address for service is NKA chartered Accountants, PO Box 8062, Boroko, National Capital District. The postal address of one of the directors of the appellant, Thomas Fox is PO Box 1948, Boroko, National Capital District: see the appellant’s company extract.

19. These are the addresses where the respondents should have served or sent the Notice to Show Course. However, the Notice to Show Cause was addressed to Gumdale Pty Ltd, PO Box 1948, Boroko, NCD. As a result it was not received at the appellant’s post office box.

20. Accordingly, the appellant did not receive the Notice to Show Cause until 13^thSeptember 2012 after a Post PNG Card was delivered to the postal address of P O Box 1948, Boroko, NCD in the week commencing 10^thSeptember 2012. This card notified the appellant to collect an envelope over the counter from the Boroko Post Office. By 13^thSeptember 2012 the one month period for the appellant to show cause why its State Lease should not be forfeited had expired and therefore, the appellant had no opportunity to show cause.

21. In Nambawan Super Ltd v. Pepi Kimas&Ors(2013) N5062, a Notice to Show Cause was wrongly delivered to a tenant of the property which was subject of the State Lease when the Notice should have been delivered to the appellants registered address for service, and which appellant had an interest in the State Lease. The Court found that the decision to forfeit the State Lease was premature and erroneous as the decision was reached not in conformity with the requirements of the statutory process under section 122(2)(a), (3) & (4) of the Land Act. Accordingly, the Court held that the forfeiture of the State Lease was unlawful.

22. I am satisfied that the first to fourth respondents served the Notice to Show Cause on a wrong postal address. This did not constitute service on the appellant.

The decision to forfeit the State Lease was ultra vires the Land Act

23. The next question is; what is the consequence of this? It is said that a statutory power must be exercised strictly according to its terms. Otherwise the exercise of power will be ultra vires. In the National Court decision of -SakawarKasieng v. Andrew Baigry(2004) N2562, Justice Kandakasi in granting leave for Judicial Review of the decision of the first defendant as Coroner under the Coroners Act stated (at para 12):

“It is settled law that, a statutory authority must act within the parameters of its enabling legislation...A decision arrived at outside the parameters of the Act would amount to a decision that is ultra vires the Act.”

24. In this instance, given that the Notice to Show Cause was served on the wrong postal address, I am satisfied that the decision was reached in breach of Section 122(2)(a) and/or (3) of the Land Act and ultra vires.

The decision to forfeit the State Lease was in the Wednesbury sense irrational and unreasonable.

25. Even if it is accepted that the Notice to Show Cause was served on the appellant, there is a further problem; the one month period for the appellant to show cause had expired on or about 5^th July 2012. It would follow, in my view, that the first respondent’s decision to forfeit the State lease without giving the appellant an opportunity to show cause was arbitrary.

26. This finding is open to make given that there is evidence from the appellant that the first respondent did not consider matters which should have been considered had the appellant been given an opportunity to show cause. Accordingly the decision was unreasonable to attract Wednesbury principle: see Raz v.Matane (1986) N525. The decision cannot be justified in circumstances where the it has a direct interest in the State lease had no opportunity to show cause why its State lease should not be forfeited.

27. The evidence shows that the appellant has engaged the services of Pacific Architects Limited to draw up plans for a house on the property. In the circumstances, it would be most unfair to the appellant to forfeit its State Lease without giving it an opportunity to show cause.

28. On the other hand, based on the affidavit of Mr. Luther Sipison, the current Acting Secretary of the Department of Lands and Physical Planning, the first to fourth respondents’ case is that the appellant was granted the State lease on 10^th February 1993. One of the conditions of the lease is that, the appellant is to put up improvements. The other is to pay an annual rental fee. Since the grant up until its forfeiture in 2012, it has defaulted in putting up improvements and the land has been undeveloped for the last 19 years. It has also defaulted in paying rent and has an outstanding of K8,200.00.

29. In my view the proposal to build a house on the land by the appellant was not considered by the first respondent before the decision was taken to forfeit the State lease. Similarly, due to the belated service of the Notice to Show Cause, the matters the first to fourth respondents have raised were not put to appellant within the one month period for it to respond.

30. The fifth respondents strongly submitted that the appeal is a fresh hearing or hearing de novo and on this basis it is open to the Court to consider the matters raised by the first to fourth respondents afresh and make a decision.
31. It is my further view that all these matters raised by both parties are relevant to the exercise of power by the first respondent to forfeit the State lease. To a certain degree, they are new matters because each party had not had the benefit of commenting on them before the decision was taken. Forfeiture is an administrative decision made by the Minister or his delegate, the Secretary under Section 122 of the Land Act which has the effect of cancelling the registered proprietor’s interest in the land. It is for these reasons that these matters must be referred to the first respondent to determine: see Commissioner General of Internal Revenue v. Bougainville Copper Limited (2008) SC920, cf Lavongai Equities Limited v. Hon. Benny Allen, MP, Minister for Lands & Physical Planning & Ors (2016) N6362.

32. I would uphold the appeal on these grounds and set aside the decision to forfeit the appellant’s State Lease. But that is not all. There is the further grant of a State Lease to the fifth respondent that must also be resolved. Is it resolved as a matter of course in favour of the appellant on the premise that the forfeiture of the original State lease was void abinitio or is the appellant burdened with the onus of proving the subsequent grant of State lease was also flawed and should be set aside?

The grant of a State Lease to the fifth respondent
33. In Yakananda Business Group Inc v. Minister for Lands & Physical Planning and The State (2001) N2159 the Court held that an illegal and void forfeiture rendered a subsequent grant of State lease a nullity. This decision was followed in Mount Hagen Local-level Government v. Pepi Kimas, Secretary for Lands & Physical Planning & Ors (2015) N6044, also a case of forfeiture of a State lease.

34. The respondents have not submitted a contrary view. I too have not found any reason to hold a contrary view. Thus, I adopt this view. It would follow then that the subsequent grant of State lease to the fifth respondent is a nullity and must be set aside.

The grant of the State Lease to the fifth respondent was in breach of section 142 (3) of the Land Act, and order made on 13^thDecember 2012

35. Notwithstanding this finding and even if the appellant is burden with the onus of proving that the subsequent grant of State Lease was flawed, under Section 142(3) of the Land Act when an appeal is filed against a decision to forfeit a State Lease, that decision has no effect and the lessee may continue to reside on the property pending final determination of the appeal. This principle was applied in the Supreme Court decision of Noko v. Temu (2012) SC1192.

36. The decision to forfeit the appellant’s State lease was dated 15^th October 2012. On 21^st November 2012, the appellant filed this appeal. Pursuant to Section 142 (3) of the Land Act, as of 21^stNovember 2012 and onwards until the determination of this appeal the decision dated 15^thOctober 2012 has no effect and the appellant may continue to reside on the property. In other words, the appellant is the registered proprietor of the property until the final determination of this appeal.

37. Given the statutory protection given to the appellant under Section 142 (3) hence not necessary, nonetheless, on 13^th December 2012 the Court made an interim order restraining the respondents in particular the second respondent or his delegate and the third respondent or his delegate from dealing with the appellant’s State lease over the land pending the final determination of the appeal.

38. Mr. Sipison, in defending the grant of the State lease to the fifth respondent, in my view, wrongly suggested that once the appellant’s State lease was forfeited, the land could be tendered as being available for leasing, despite the fact that this appeal was filed on 21^st November 2012 and is yet to be concluded. The first to fourth respondents proceeded on this erroneous view to grant the State lease to the fifth respondent.

39. I am further satisfied that the second respondent or his delegate and the third respondent or his delegate lacked jurisdiction to grant a State lease to the fifth respondent beginning from 21^stNovember 2012 and onwards pending the determination of this appeal.

40. Furthermore, it is clear that the actions of the second respondent or his delegate and the third respondent or his delegate to grant and register the State lease to the fifth respondent are not only in breach of the interim restraining orders made on 13^thDecember 2012 but are contemptuous because those actions are intended or have a real potential to interfere with the administration of justice.

41. Ultimately, the appellant was the victim of an erroneous exercise of power by the first to fourth respondents and the subsequent grant must also be set aside.

Other aspects

42. Before I close, I respond to the respondents’ joint submission that the appeal should fail because the appellant failed to explain the delay in showing cause why its State lease should not be forfeited after it had received the Notice to Show Cause and given three reminder notices on 28^th July, 29^th August and 8^th September 2012. These reminder notices may be found on the hand written notes on the envelope containing the Notice to Show Cause.

43. First, as was found, the Notice to Show Cause was served (posted) to a wrong postal address. By the time it reached the appellant, the one month period had expired. Further, these notices were not from the first to fourth respondents but the post office and were unnecessary and irrelevant because the time for the appellant to respond had expired.

44. Secondly, according to the stamp on the envelope, the date of postage was 26^th July 2012. This date is well outside the one month period stated on the Notice to Show Cause. Consequently, the appellant had no opportunity to respond to it. And the appellant is under no obligation to respond to it after the one month period had expired even though the decision to forfeit its State lease was not made until 25^th October 2012 (date of Gazettal).

45. For these reasons, I am not satisfied that the appellant is guilty of laches.

46. As to the fifth respondent’s submission that Mr. Frank Kramer has no standing to swear an affidavit in support of this appeal, this submission on premised on the assertion that Mr. Frank Kramer is not a director of the appellant based on the company extract which shows a Mr. Francis Michael Kramer as its director.

47. This submission is misconceived because it is unsupported by evidence and an assumption. The onus is on the fifth respondent who alleges to prove the assertion that Frank Kramer is not the same person as Mr. Francis Michael Kramer.In my view the slight difference in the names in the company extract is not sufficient to find that Frank Kramer is not a director of the appellant.

48. In any case, the appellant is the party appealing the forfeiture of its State lease and not Mr. Frank Kramer. In addition, there is evidence of a company board resolution for the appellant to appeal the forfeiture. It follows that the appellant’s standing is and should not be an issue and the fifth respondent’s submission must be rejected as being misconceived.

49. As to the fifth respondent’s submission that the appellant has not sought any relief against him, thus it is not open to the Court to issue any orders against him, particularly, to set aside his State lease, it is my view that as long as the appellant is able to establish that the forfeiture of its State lease is flawed and/or subsequent grant to the fifth respondent is flawed, it will be within the inherent power of the Court to set aside the subsequent grant.

50. Even then, I am satisfied the appellant has sufficient pleaded the relief at paragraph 7 (c) and (d) of the notice of appeal and it is wide enough to cover the current case as envisaged by the appellant. Thus, it would be within the discretion of the Court to set aside the subsequent grant to the fifth respondent.

51. The fifth respondent’s contention that the appellant’s State lease no longer exists because the description of the land held in the records of the other respondents has changed from Volume 76 Folio 199 and superceded by the subsequent grant of a State lease Volume 71 Folio 68 to him must fail because the land is the same.

52. As to the contention that damages are appropriate remedy for the appellant, it is a discretionary matter. In this instance, given that the first to fourth respondents failed to comply with the procedure for forfeiture, the appellant has a registered title over the land, was not given the opportunity to show cause why its State lease should not be forfeited and that it has plans to build a house on the land, I am of the view that damages would not adequately compensate it for its loss.

Conclusion
53. In conclusion, given that the appellant’s main complaint is about of not being given the opportunity to be heard before the decision to forfeit its State lease was taken, I am of the view that the matter should be remitted to the first respondent to give the appellant the opportunity to be heard on those matters identified at [27] and [28] above.

Order

54. The orders are:

1. The appeal is upheld.
   
2. The decision of the first respondent to forfeit the appellant’s State lease Volume 76 Folio 199 and published on 25^th October 2012 is illegal, null and void.
   
3. The decision of the first respondent to forfeit the appellant’s State lease Volume 76 Folio 199 and published on 25^th October 2012 is quashed.
   
4. The decision of the second and third respondents to grant and register the fifth respondent’s State lease Volume 71 Folio 68 on 7^th July 2016 is illegal, null and void.
   
5. The decision of the second and third respondents to grant and register the fifth respondent’s State lease Volume 68 Folio 68 on 7^th July 2016 is quashed.
   
6. The matter is re-mitted to the first respondent for hearing where the appellant shall be invited to show cause as to why its State lease Volume 76 Folio 199 should not be forfeited within thirty days from the date of this order and a decision is made thereafter.
7. The interim restraining order of 13^th December 2012 shall remain in force until or shall be discharged on the date of the first respondent’s decision.
   
8. Costs shall follow the event.

____________________________________________________________

Ashurst Lawyers : Lawyers for Appellant
Solicitor-General : Lawyers for 1^st, 2^nd, 3^rd& 4^th Respondents