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Iravela v Samson [2018] PGNC 101; N7212 (6 March 2018)

N7212


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


OS (JR) NO. 320 OF 2015


BETWEEN
MARIE IRAVELA as the Administrator of the estate of
late Jophiel Iravela
Plaintiff


AND
BENJAMIN SAMSON, Registrar of Titles
First Defendant


AND
ROMILY KILA-PAT, Secretary for Department of
Lands & Physical Planning
Second Defendant


AND
JOHN DEGE, Managing Director for the National
Housing Corporation
Third Defendant


AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant


AND
REMDY INVESTMENT LIMITED
Fifth Defendant


Waigani: Gavara-Nanu J
2017: 3rd May
2018: 6th March


WILLS PROBATE & ADMINISTRATION – A retired public servant paying off a National Housing Corporation house – House purchased under a Government Home Ownership Scheme – Government Home Ownership Scheme governed and regulated by statute - National Housing Corporation not transferring property to the purchaser – Purchaser dying intestate - Whether property formed part of the deceased’s estate – Whether the Administrator of the estate has rights and interests over the property.


REAL PROPERTY – Sale of National Housing Corporation houses – Formerly Housing Commission houses – Government housing policy – Government home ownership scheme for public servants – Houses to be sold to “approved” and “eligible” tenants – Sale of houses restricted to public servants occupying the houses – Houses declared by the Minister as “special category” houses earmarked for sale to approved and eligible tenants – Special terms and conditions of sale.


REAL PROPERTY – A National Housing Corporation “special category” house – A private lawyer and a businessman offering to purchase the house – National Housing Corporation accepting the offer – National Housing Corporation selling the house to the lawyer and businessman - Whether sale of the house to a person other than an approved and eligible purchaser legal.


REAL PROPERTY - Indefeasibility of title – Fraud – Torrens system of land registration – Common law notion - Whether title obtained by fraud – Whether fraud against the registered proprietor established – Actual fraud – Land Registration Act, Chapter No. 191; s. 33 – Fraud not pleaded - Whether fraud can be relied upon to invalidate registered proprietor’s title – Whether sale of the house to a person other than an “approved” public servant who paid off the house null and void.


EQUITY – Fraud – ‘Actual fraud’ a common law remedy – Land Registration Act; s. 33 – Whether the deceased an “approved person” to buy the house has remedy in equity – Constitution; s. 155 (4) – Court having wide and unfettered discretionary power – Court’s power to make orders in the nature of prerogative writs “and such other orders as are necessary to do justice” – Court’s power to tailor its remedial processes to suit particular circumstances of a particular case.


EQUITY – Vendor and purchaser - Agreement – Special and unique features of the agreement – Agreement giving rise to ‘a fiduciary relationship’ between vendor and purchaser – Vendor an agent of the State – Purpose of the agreement –Implementation of government’s housing policy for public servants – Government home ownership scheme - Good faith – Confidence – Vendor stronger and dominant – Purchaser weak and vulnerable –- Power imbalance between vendor and purchaser - Vendor having fiduciary power and obligations to protect the interests of the purchaser – Abuse of fiduciary power – Purchaser a beneficial owner.


Facts


The plaintiff is a daughter of late Jophiel Iravela (“the deceased”) who died at the Port Moresby General Hospital in 2010. At the time of his death, the deceased was living in a then Housing Commission (“the Commission”) house with his family. The property is described as Section 51 Allotment 41, Boroko, National Capital District (“the property”). The deceased lived in the property for many years.


The deceased was one of the “approved” public servants who were given an offer by the then Department of Urban Development, which was responsible for managing the Commission houses, to buy the houses they were living in. This arrangement was made pursuant to a government home ownership scheme known as “Morgan Home Ownership Scheme”, the purpose of which was to assist public servants own homes. The offers were made in a standard letter which was sent to all the approved tenants. The tenants were given an option to purchase the houses either through fortnightly salary deductions over a period of time or through an outright payment in one lump sum. The deceased chose the first option. He signed an “Irrevocable Salary Deduction Authority” form to pay K46.00 every fortnight from his pay towards the purchase price until he paid off the property.


The Commission houses that were sold to the approve tenants were declared “special category houses” by the Minister for Urban Development and were published in a National Gazette together with the names of the approved tenants and the properties they were buying. The houses were selling at specially reduced prices at K11, 960.00 or K8,060.00. Only a limited number of houses were sold at slightly higher prices.


The deceased, with the assistance of his son, paid off the house in 1992. When National Housing Commission Act, Chapter No. 79 was repealed and superseded by the National Housing Corporation Act, 1990, the powers, functions and liabilities of the Commission were automatically assumed by the Corporation.


On 9 February, 2015, the fifth defendant through its Managing Director, Mr. Turai Elemi, who is a well-known lawyer and businessman, wrote to the Corporation’s Manager responsible for NCD and Central Province, Mr. Edwin Oropa, offering to purchase the property, which he described was in a run-down condition. The fifth defendant offered K380,000.00 for the house. As a result, Mr. Oropa ordered site inspections of the property. Two site inspection reports were submitted to Mr. Oropa, but they contained false and misleading information and they heavily favoured the fifth defendant over the plaintiff, in that the reports stated that the people living in the property were “default tenants” living illegally in the property. These claims were false. The reports strongly recommended that the property be sold to the fifth defendant, which it was claimed was financially capable of developing the property.


On 16 February, 2015, the Corporation’s Acting Managing Director, Mr. John Dege wrote to the fifth defendant offering the property for K512,050.00. The fifth defendant through Mr. Elemi accepted the offer and paid the purchase price in one payment with a bank cheque.


The property was transferred to the fifth defendant on 1 April, 2015. The transfer was made despite a caveat being lodged by the plaintiff.


From 1992 to 2015, the plaintiff, who was on 16 May, 2015, granted Letters of Administration to administer the deceased’s estate, on numerous times tried unsuccessful to get the Commission, then subsequently the Corporation to transfer the property to the deceased and his family.


On 6 March, 2015, a Senior Estate Officer of the Corporation , after making reconciliations on the payments made for the property by the deceased and after confirming that the deceased had paid off the property, recommended to the General Manager of the Properties Division of the Corporation that the property be transferred to the deceased’s next of kin (family). Despite this recommendation, on 1 April, 2015, the Corporation through its’ Acting Managing Director transferred the property to the fifth defendant.


Held


1. There is no evidence of actual fraud, viz, fraud committed by the fifth defendant under s. 33 of the Land Registration Act, Chapter No. 191. The actions of the fifth defendant could at best only draw suspicions. The fifth defendant’s title therefore cannot be invalidated on the basis of fraud under s. 33 of the Land Registration Act, because “fraud” under this section means actual fraud or fraud committed by the registered proprietor: The Papua Club v. Nusaum Holdings Ltd & Ors (No.2) (2004) N2603, discussed and adopted.


2. The conduct of the Acting Managing Director of the Corporation, Mr. John Dege in facilitating the transfer of the property to the fifth defendant was fraudulent in nature and was in breach of s. 47 of the National Housing Corporation Act 1990. The transfer of the property to the fifth defendant was therefore illegal and null and void.


3. The property is part of the estate of the deceased because it constituted a thing or a chose in action in which the deceased had equitable right and interest, enforceable by law. It did not make any difference even if those rights and interests were contingent: John Kasaipwalowa v. The Sate [1977] PNGLR 257; The State v. Francis Kumo Gene [1991] PNGLR 33 and Torkington v. Magee [1902] 2. K.B 430, adopted and followed.


4. The deceased having been vested with the right of ownership over the property, the property could be legally used as a security for a mortgage. The deceased could also legally assign his rights and interests in the property to a third party.


5. The arrangement between the Commission and the deceased for the deceased as an approved purchaser to purchase the property under the government’s home ownership policy constituted a binding agreement between the deceased and the Commission. The agreement formed the basis of a fiduciary relationship between the Commission and the deceased.


6. Pursuant to the fiduciary relationship between the Commission and the deceased, the Commission had fiduciary obligation to always act for and on behalf of the deceased and protect his interests.


7. Under the express terms of the agreement between the Commission and the deceased, the deceased as an approved purchaser was the only eligible person to purchase the property. Thus, there was an existing obligation on the Commission to transfer the property to the deceased as long as the deceased fulfilled his obligations under the agreement and that the agreement remained on foot.


8. The deceased’s primary right to purchase the property and to have the title transferred to him accrued when he started paying for the property through fortnightly deductions: Avia Aihi v. The State [1981] PNGLR 81, discussed and followed.


9. The deceased became beneficial owner of the property upon paying off the property in 1992, and all the ownership rights over the property became vested in him. The Commission no longer had any ownership rights over the property after the property was paid off by the deceased. The only form of right or authority the Corporation had over the property was the authority to hold the property for the deceased then later transfer it to him.


10. Pursuant to s. 47 of the National Housing Corporation Act, once the deceased paid off the property, it immediately became incumbent on the Commission to transfer the property to the deceased. There were no encumbrances of any kind, such as a loan or a mortgage that could operate to stop the transfer.


Cases Cited:
Papua New Guinea Cases


Avia Aihi v. The State [1981] PNGLR 81
Daniel Bali Tulapi v. Aiya James Yapa Lagea (2013) SC1337
Delba Biri v. Bill Ninkama [1982] PNGLR 342
Dent v. Kavali [1981] PNGLR 488
Emas Estae Development v. John Mea and Others [1993] PNGLR 215
Innovest Ltd v. Hon. Patrick Pruaitch (2014) N5949
John Kasaipwalowa v. The State [1977] PNGLR 257
Kiso v. Otoa [2013] PGSC 3; SC1222
Koitachi Ltd v. Schnaubelt (2007) SC870
Kora Gene v. Motor Vehicles Insurance (PNG) Trust (MVIT) [1995] PNGLR 344
Mauga Logging v. South Pacific Oil Palm Development [1977] PNGLR 80
Mudge and Mudge v. Secretary for Lands, The State and Delta Development Pty Ltd [1985] PNGLR 387; SC308
Peter Makeng v. Timbers (PNG) Ltd (2003) N3317
The Independent State of Papua New Guinea v. Lohia Sisia [1987] PNGLR 102
The Papua Club v. Nusaum Holdings Ltd & Ors (No.2), (2004) N2603
The State v. Francis Kumo Gene [1991] PNGLR 33


Other Cases


Assets Company Ltd v. Mere Roihi and Others [1905] UKLawRpAC 11; [1905] AC 176
Associated Provincial Picture House v. Wednesbury Corporation [1974] 2 ALL ER 680
Butler v. Fairclough and Another [1917] HCA 9; (1917) 23 CLR 78
Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9
Hospital Products Ltd v. United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Torkington v. Magee [1902] 2 K.B 430
United Dominion Corporation Ltd v. Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1


Legislation referred to:


The Constitution
Land Registration Act, Chapter No. 191
National Court Rules
National Housing Corporation Act, 1990
Wills Probate and Administration Act, 1996
Housing Commission Act, Chapter No. 79
National Housing Act, 1967 (No. 77 of 1967)
Housing Commission Act, (No.2 of 1967, (No. 13 of 1968)
Housing Commission (Sale of Dwellings) Act, 1969 (No.31 of 1970) and Housing Commission (Approved Applicants) Act, 1971 (No. 26 of 1972)


Counsel:


I. Shepherd, for the Plaintiff
F. Kuvi, for the Fifth Defendant


6th March, 2018


  1. GAVARA-NANU J: Pursuant to a notice of motion filed under Order 16 r 5 (1) of the National Court Rules (“NCR”), the plaintiff seeks the following relief. First, an order in the nature of certiorari quashing the decision of the third defendant made on 23 February, 2015 to transfer the property known as Section 41 Allotment 51, Boroko, being all the land contained in State Lease Volume 38 Folio 9444 (“the property”) to the fifth defendant. Second, an order in the nature of certiorari quashing the decision of the first defendant made on 1 April, 2015 to register the transfer of the property in the name of the fifth defendant. Third, an order in the nature of mandamus directing the third defendant to transfer the property to the plaintiff as the Administrator of the estate of late Jophiel Iravela (“the deceased”). Fourth, an order in the nature of mandamus directing the first defendant to register the property in the name of the plaintiff as the Administrator of the deceased. Fifth, a declaration that the title to the property in the name of the fifth defendant is null and void.
  2. It is convenient at this juncture to set out the background facts of the case. The plaintiff is a daughter of the deceased, who died on 14 March, 2010, at the Port Moresby General Hospital. The property was owned by the then Housing Commission (“the Commission”). The deceased was a public servant for many years and lived in the property (with his family) as a legal tenant. The deceased died intestate. Consequently, on 16 May, 2015, the plaintiff obtained Letters of Administration to administer the deceased’s estate.
  3. In 1971, the then Department of Urban Development, which was responsible for the management of the Commission houses offered to sell the property to the deceased as the “approved” and “eligible” tenant to purchase the property. The offer was made in a standard letter which was sent to all approved tenants of the Commission houses. The offers by the Housing Commission to sell its properties to the approved tenants were made pursuant to the then government’s home ownership policy known as “The Morgan Home Ownership Scheme”. The scheme was aimed at helping the approved tenants to own houses or “dwellings” at standardized prices, which were much lower than prices for similar properties sold in the open market. The properties were declared “special category houses” by the Minister for Urban Development with special terms and conditions of sale. The prices of the properties were fixed at either K11,960.00 or K8,060. 00. Only a limited number of those properties were priced slightly higher. The property the deceased was living in was offered to him for K11,960.00. Like the rest of the approved tenants, the deceased was given an option to purchase the property in instalments over a period of time, or pay it “outright” in one lump sum. The deceased accepted the offer and opted to purchase the property in instalments over a period of time through salary deductions of K46.00 per fortnight.
  4. In the second last paragraph of the letter of offer, it was made clear to the approved tenants that – “Only public servants are eligible for the purchase of these Government houses. Public servants are not eligible to purchase the house they are occupying if they already own another house/property within the town boundaries”. The tenants were told that if they refused the offer, the house they were occupying would be offered to another public servant to buy under the same home ownership scheme. Those special category houses were subsequently gazetted together with the names of the approved tenants in National Gazette No. G48 dated 15 July, 1982.
  5. By 10 April, 1987, the outstanding amount owed by the deceased to the Commission for the property was K7,265.47. By that time the deceased was no longer working, thus by an agreement with the Commission, the deceased’s son Dennis Iravela was allowed to continue paying for the property with fixed fortnightly salary deductions until it was fully paid. An “Irrevocable Salary Deduction Authority” form was signed by Dennis to make the payments. The Salary Deduction Authority specifically stated that the payments were to be made against “J IRAVELA A/C”. Under that arrangement Dennis was to pay K50.00 per fortnight towards the remaining balance of the price of the property.
  6. On 4 February, 1992, the property was fully paid and a “cease deductions A.S.A.P” instruction was issued by the Commission to its Finance Division.
  7. Following the enactment of the National Housing Corporation Act 1990, the Commission ceased to exist but all its assets, rights and liabilities were assumed by the newly established National Housing Corporation (“the Corporation”). Thus, all the assets, rights and liabilities of the Commission became vested in the Corporation by law.
  8. Five years after the deceased died, the fifth defendant on 9 February, 2015, wrote to the Manager of the Corporation, responsible for National Capital and Central regions Mr. Edwin Oropa expressing its interest to purchase the property for K380,000.00. The letter purportedly stated the fifth defendant’s name as its author, although the company is owned by Mr Turai Elemi, a well-known lawyer and the owner of an established law firm, Elemi Lawyers, who are also the lawyers for the fifth defendant. Mr Elemi, who is the Managing Director of the fifth defendant, signed the letter on its behalf without disclosing his name, as the applicant.
  9. After receiving that letter the Corporation’s management ordered site inspection of the property. Two site inspection reports were submitted to Mr. Oropa, on 6 February, 2015. The reports show that the inspection was also made on 6 February, 2015. This is interesting because the letter of offer by the fifth defendant to purchase the property was dated 9 February, 2015. This begs the question, whether the site inspection and the inspection reports were made and prepared before the fifth defendant made its offer to purchase the property on 9 February, 2015. It is hard for one to believe that these dates resulted from typographical errors or careless oversights because the date of the site inspection (6 February, 2015) and the date of the letter of offer by the fifth defendant to purchase the property (9 February, 2015) were confirmed in the two site inspection reports, which were also dated 6 February, 2015.
  10. A related point of interest is the letter by Mr. John Dege, the Acting Managing Director of the Corporation which was dated 16 February, 2015 to the fifth defendant in which Mr Dege offered the property for K512,050.00. What is interesting about this date is seen in the hand written notes on the letter of offer by the fifth defendant (dated 9 February, 2015), to purchase the property for K380,000.00. The hand written notes read:


“Cecilia/John
Please provide me with a status report/Inspection/Photos etc for my
consumption. Possibly will engage Valuer if all is in order.
(Initials S/W?) 18/02/15”


11. As can be noted, these notes were made on 18 February, 2015, which was two days after Mr. Dege’s letter to the fifth defendant dated 16 February, 2015, offering the property for K512,050.00. The question that immediately arises is – Were the letters by the fifth defendant, Mr Dege, the two site inspection reports and these hand written notes a smoke screen, intended to conceal the true nature of the deal? The defendants especially the third defendant also have not adduced any evidence to show that a valuation was in fact done on the property, given that Mr Dege in his letter told the fifth defendant that valuation fee was K500.00.


12. The site inspection reports stated among other things that, the property was - “in the default” (sic.). The reports further stated that the property was owned by the Corporation and was under the Morgan Scheme, but there was no proper record of it in the Corporation’s data system and that people had been living illegally in the property for years. This advice was false in two respects viz; the property and the people living in the property were not in default as the deceased had paid off the property, hence the deceased’s family was also not living illegally on the property. The reports recommended that the property be valued and sold to the fifth defendant at market price under the Corporation’s “Outright Cash Sales Scheme”. The reports stated that all the necessary documentation “would be executed and amended as appropriate” (sic.). It was further stated in the reports that a letter of offer and a contract of sale would be made available, through the Corporation’s normal conveyancing process to the fifth defendant. The reports concluded that the Corporation could take immediate steps “to forfeit the occupancy” of the defaulting tenants/occupants and sell the property to the fifth defendant which had the capacity to develop it.


  1. Four days after Mr Dege offered the property to the fifth defendant for K512,050.00 under its ‘Outright Cash Sales Scheme’; Mr Elemi (on 20th February, 2015), accepted the offer in writing on behalf of the fifth defendant and a Westpac bank cheque number 571620 was raised in favour of the Corporation for the amount K512,050.00. The cheque was clearly for the outright purchase of the property.
  2. The contract of sale was executed by the parties on 23 February, 2015. On the same day, the Transfer Instrument was signed by the parties.
  3. In executing the contract of sale, Mr. Dege signed on behalf of the vendor (Corporation) witnessed by the Corporation’s Principal Legal Officer, Mr. Wemin Boi. Mr. Elemi signed on behalf of the purchaser (fifth defendant), witnessed by another person. The Transfer Instrument was also signed by Mr. Dege on behalf of the Transferor (Corporation), witnessed again by Mr. Boi. Mr. Elemi signed on behalf of the Transferee (fifth defendant).
  4. A number of points are worth noting. Whilst both the contract of sale and the Transfer Instrument were executed on 23 February, 2015, the Ministerial Approval of the Transfer was given by Secretary for Department of Lands and Physical Planning, Mr Romily Kila Pat in his capacity as the Ministerial delegate, on 23 March, 2015. On that same day the contract of sale was purportedly given a Ministerial approval again by Mr Romily Kila Pat (as the Ministerial delegate).
  5. Interesting thing about these documents is that they were forwarded to Mr Romily Kila Pat together with the title deed and other supporting documents by Mr Dege with a covering letter dated 24 March, 2015. For purposes of completeness and easy reference, the letter is reproduced below.


24 March, 2015

The Secretary of Lands & Physical Planning
P.O Box 665
BOROKO
National Capital District
Attention: Registrar of Titles


Dear Sir,


Re: LODGEMENT OF CONTRACT OF SALE AND TRANSFER DOCUMENTS FOR REGISTRATION OF TRANSFER FROM THE NHC TO REMDY INVESTMENT LTD – SECTION 41 ALLOTMENT 51, BOROKO, NCD.


This is to confirm that REMDY INVESTMENT LTD is the legal owner/purchaser of the above property.


REMDY INVESTMENT LTD has settled all the required fees under the NHC Cash Sales Scheme and all is now in order for the registration of transfer only.


To enable the above to be effected, we attach the following documents:-


Copy of K100.00 Transfer Fee Receipt
Grant of Remission of Land Rentals
Application for Remission of Land Rentals
1x Original Transfer Instrument
1x Original Contract of Sale
Copies of Supporting Documents
Owners (sic) Copy (Volume 38 Folio: 9444)

We trust that the above is sufficient to allow for the transfer to proceed as anticipated.


Yours faithfully
(Signed)
John Dege
Acting Managing Director
Attach


  1. Notably, that letter was made to the attention of the Registrar of Titles. A hand written note to the Registrar of Titles on this letter by Mr Romily Kila Pat appears to read -“Proceed to record dealings”. The date of the note appears unclear but it may be 2, 3, 6 or 8 April, 2015. The date does not appear to be 1 April, 2015, which is when the property was purportedly transferred to the fifth defendant. The letter was clearly received by Mr Romily Kila Pat. A number of questions immediately arise from these facts. First, why was Mr Dege personally involved in forwarding these documents to Mr Romily Kila Pat? Second, was not that the work for Corporation conveyancing officers and lawyers? Third, how was it possible for the Transfer to be approved by Mr. Romily Kila Pat on 23 March, 2015, when it was supposed to have been forwarded to him a day later viz; 24 March, 2015? Fourth, why did Mr Dege take it on himself to advise Mr. Romily Kila Pat and the Registrar of Titles that everything was in order for the property to be transferred to the fifth defendant? Fifth, was not that the work for the Corporations conveyancing officers and lawyers? All these questions remain unanswered by the defendants, especially the first, second and third defendants.
  2. The plaintiff lodged a caveat on 4 March, 2015. It is noted that a letter from the plaintiff’s lawyers dated 4 March, 2015, was hand delivered to the first defendant requesting him to proceed and register the caveat given the urgency of the application. A fee for the registration of the caveat was enclosed in the letter together with the caveat. The letter and the caveat were acknowledged by the first defendant. In the caveat, the plaintiff informed the first defendant that she was a beneficiary of the deceased’s estate and the deceased was an approved purchaser of the property. She told the first defendant that the deceased had fully complied with all the conditions of sale, including paying off the property and was therefore entitled to be issued the title to the property. The first defendant was further informed in the letter that the plaintiff was going to apply for Letters of Administration within 14 days.
  3. On 12 March, 2015, the Post Courier published the plaintiff’s notice of intention to apply for Letters of Administration at the expiration of 14 days from the date of that publication.
  4. On 1 April, 2015, the title to the property was transferred to the fifth defendant.
  5. The first defendant deposes in his affidavit sworn on 4 December, 2015, that pursuant to s. 85 of the Land Registration Act 1981, the registration of the caveat was at the discretion of the Registrar of Titles. In the last paragraph of the affidavit he deposes that – “in the plaintiff’s case, despite her lodging the caveat on 4 March, 2015, it was never registered hence it does not have any legal effect”. He however does not explain how he exercised his discretion in refusing to register the caveat.
  6. On 16 May, 2015, the plaintiff was granted Letters of Administration.
  7. On 9 September, 2015, Mr Elemi swore an affidavit in which he deposes that he learnt of the property being on sale through his own sources. He says his searches and enquiries revealed that the property was owned by the Corporation and the records at the Department of Lands and Physical Planning did not reveal any caveat having been lodged. He however does not say when he did those searches and enquiries. He also deposes that he was not aware of the plaintiff’s interest in the property. He nonetheless deposes that the plaintiff did not take any concrete steps since the death of the deceased to obtain title. He also deposes that the Requisitions on the property show clearly that there was no improper conduct on his part. Thus he says the fifth defendant’s title is valid.
  8. A complaint was made to the Fraud Squad against the conduct of Mr Elemi. He was subsequently interviewed by the members of the Fraud Squad and was cleared of any wrong doing. He says this is a further proof that the fifth defendant’s title was acquired legally and is therefore valid.
  9. On 16 December, 2015, the plaintiff swore her second affidavit, in which she deposes to the following. After the property was fully paid in 1992, she started following up on the transfer of the property from the Corporation to the deceased. Every time she checked with the Corporation, she was told by the staff to check again later. She gives the names of a number of officers whom she spoke to during her many visits to the Corporation. In 2007, she spoke to a number of staff, including Topsy, Jim Tepi and Ruby Kaidoga. When she told one of those officers that she had already paid for the registration of the property upon the advice of one of their officers, she was told that that was not proper.
  10. Annexed to the plaintiff’s first affidavit (sworn on 2 June, 2015), is a hand written note. She says the note was written by Jim Tepi during one of her visits to the Corporation. The note reads – “Rubby please assist this Morgan Scheme client before we proceed with conveyancing (Lot. 51 Sect. 41 Boroko)”. The note is dated 6 November, 2007. The plaintiff later managed to speak to Ruby Kaidoga who gave her the names of officers who were dealing with Boroko and Korobosea properties. They were Michael Loi and Cecilia Rupa. She later enquired with Michael Loi about the property, she was told that the title was missing and the Corporation had no records of the property. She was requested by Michael Loi to provide copies of the documents she had for the property. Thus on 9 November 2007, she provided copies of the relevant documents on the property to Michael Loi. She was told to check again after a week. She later saw Michael Loi a couple of times but the documents were not ready.
  11. When she checked again on 30 November, 2007, Michael Loi told her that the documents were with his boss named Morgan for his approval.
  12. The plaintiff deposes in her second affidavit that she continued to go back and forth to the Corporation’s office from 2008 to 2014, and on each occasion, she was told to check again later.
  13. Then on 16 February, 2015 when she visited the Corporation office, she was told by Michael Loi that the documents regarding the property were locked away in a filing cabinet kept by the boss and they could not be accessed. The plaintiff was told to check again later.
  14. It is significant to note that 16 February, 2015, was the day Mr Dege wrote to the fifth defendant offering the property for K512,050.00.
  15. On 17 February 2015, the plaintiff went again to the Corporation office, this time she spoke to a different officer. She gave the officer another set of copies of the documents on the property.
  16. The Corporation staff subsequently did a reconciliation of all the payments made by the deceased for the property. The Corporation’s Acting Credit Controller, Mr. Samuel Vele, later confirmed that the property had been fully paid by the deceased.
  17. Consequently, on 6 March, 2015, a Senior Estate Officer of the Corporation, Mr John Emena made a submission to the General Manager, Properties Division of the Corporation, recommending that the property be transferred to the deceased’s next of kin (family). It is again significant to note that this recommendation was late and meaningless because Mr Dege had already executed the contract of sale and the Transfer Instrument on 23 February, 2015.
  18. The defendants, especially the third defendant, have not denied any of the matters deposed to by the plaintiff in her two affidavits, except the caveat. The effect of this is that her evidence, more notably those deposed to in her second affidavit remain undisputed. The plaintiff has in that affidavit clearly disproved the claim by Mr Elemi that she did not take any concrete steps to obtain the title to the property since the death of the deceased in 2010. There is undisputed evidence that she started enquiring about the title soon after the property was fully paid in 1992.
  19. The first, second, third and fourth defendants did not attend Court at the trial although they were made fully aware of the trial date viz; 3 Mary, 2017, by the plaintiff’s lawyers. Furthermore, evidence from the endorsements on the Court files and other relevant Court documents, which I take judicial notice of, show that lawyers representing each of the defendants appeared in Court in the course of the proceedings prior to trial. The in-house lawyers for the Corporation also appeared in Court at various times as well as their brief-out lawyers. The notice of trial was served on all the defendants but none of the defendants, except the fifth defendant filed affidavits and attended trial, although they each filed a notice of intention to defend. Thus the case was tried only on the evidence adduced by the plaintiff and the fifth defendant. The upshot is except for the fifth defendant, none of the other defendants showed any interest at all to defend the case.
  20. It should also be noted that Mr. Dege, was ordered a number of times by the Court to attend trial and produce the Corporation’s file on the property, and among other things to give evidence on how the Corporation’s Outright Cash Sales Scheme worked and the laws that governed and regulated it. He failed to attend trial let alone produce to the Court the Corporation’s file on the property. Mr. Dege was informed of the trial date.
  21. The only form of response to the Court Orders issued against Mr. Dege was given by the Corporation’s Legal Officer, Mr. Anthony Luke, in a letter Annexed to an affidavit he swore on 11 December, 2015, in which he informed the Court and the plaintiff’s lawyers that he was “having difficulties” in locating the Corporate’s file on the property. He said the file was “misplaced somewhere within the organization” and he needed more time. He said he “anticipated receiving the file from the officer responsible for keeping all the files”. Despite that assurance the Corporation failed to produce the file.
  22. No response at all was received from Mr. Dege in response to the Orders issued against him.
  23. Mr Ian Shepherd of counsel for the plaintiff argued among other things that the sale of the property to the fifth defendant was in breach of ss. 37 and 38 of the National Housing Corporation Act 1990, because the fifth defendant was not an approved person under the Morgan Home Ownership Scheme to purchase the property. It was argued that the sale of the property to the fifth defendant was made fraudulently and therefore was null and void. For the same reason, it was argued that the Corporation had acted ultra vires when it sold the property to the fifth defendant.
  24. Mr Francis Kuvi of counsel for the fifth defendant argued among other things that the fifth defendant, being the registered proprietor of the property, has indefeasible title and the title can only be invalidated if there is actual fraud, viz; the fifth defendant obtaining title by fraud. It was also argued that the plaintiff cannot rely on fraud because it has not been pleaded. He argued that in any event, there is no evidence of actual fraud. Mr Kuvi further argued that the Corporation was the owner of the property with clear title, thus the transfer of the property to the fifth defendant was proper and legal. He submitted that the fifth defendant’s title is therefore valid and indefeasible.
  25. The issue of constructive fraud was raised against the fifth defendant by the plaintiff but I find the argument untenable because fraud under s. 33 of the Land Registration Act, in my view means actual fraud, not constructive or equitable fraud: The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2)(2004)N2603; Koitachi Ltd v. Schnaubelt (2007) SC870 and Kiso v. Otoa [2013] PGSC 3; SC1222.
  26. It is settled law that because the plaintiff has not pleaded fraud, she cannot raise it now nor can she rely on it. Fraud is a serious allegation against the registered proprietor, so to rely on it to invalidate the registered proprietor’s title, it must be clearly pleaded with elements of the alleged fraud fully particularized: The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2) (supra); Kora Gene v. Motor Vehicles Insurance (PNG) Trust (MVIT) [1995] PNGLR 344 and Daniel Bali Tulapi v. Aiya James Lagea (2013) SC1337.
  27. Looking at the overall conduct of the fifth defendant there is no evidence of actual fraud. At best, the fifth defendant’s conduct in my view only raises suspicions.
  28. It was also argued by Mr. Kuvi that the property cannot form part of the deceased’s estate because the title was not transferred to him. However, I have a firm view that the property was part of the deceased’s estate because the deceased had a clear ownership right over it. It is an enforceable right which in my opinion constitutes a thing or chose in action.
  29. Section 36 of the Wills, Probate and Administration Act 1966, defines “estate” as real and personal (estate) and “property”” includes a “thing in action” and “an interest” in a property. Section 68 provides that “assets” are those things that can pay off or settle liabilities of a deceased, including mortgages.
  30. In this case the deceased could in my view properly and legally use the property as security for a mortgage. I am also of the view that the deceased could properly and legally assign his ownership right in the property to a third party if he so wished, as that right became vested in him, once he paid off the property.
  31. It would make no difference in law even if the right was contingent: Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9.
  32. It is not disputed that the deceased had paid off the property, hence had ownership right over it. The right was a thing or a “chose in action” enforceable by law: John Kasaipwalowa v. The State [1977] PNGLR 257 and Torkington v. Magee [1902] 2 K.B 430. Thus, it is a right which the Court can and should in the exercise of its equitable jurisdiction protect: The State v. Francis Kumo Gene [1991] PNGLR 33. This point is discussed more in detail later in the judgment.
  33. The issues before the Court arose out of the actions of the Corporation which is a public body or authority whose powers and functions derive from a statute. Thus those powers and functions are governed and regulated by the statute. The Corporation performs and exercises public powers and functions, which are matters of public law and therefore its actions in this case are amenable to judicial review. The Corporation’s functions include those relating to the sale of its properties under various Government housing policies and schemes.
  34. It follows that the relief sought in the application by way of prerogative writs viz; certiorari and mandamus which are discretionary remedies can in my view properly lie against the first, second, third and fourth defendants, as well as the consequential relief of declaration.
  35. I reaffirm the view I expressed in The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2)(supra), that ‘fraud’ in s. 33 of the Land Registration Act, Chapter No.191, means “actual fraud” or fraud committed by the registered proprietor. Fraud in s. 33 is an exception upon which the title of a registered proprietor may be invalidated. Section 33 is headed: “Protection of registered proprietor”. The clear legislative intent there is to protect the title of a registered proprietor and establish certainty as to ownership. The section incorporates the Torrens System of title by registration, which has become part of our underlying law. In my respectful view the law was correctly stated by Kidu CJ, in Mudge and Mudge v. Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308:

“The third respondent has a State lease registered under the Land Registration Act (Ch No 191) and although the appellants have raised eight questions of law (including constitutional laws) the real question for determination by this Court is whether, apart from exceptions enumerated in the Land Registration Act, s 33, land once registered attracts the principle of indefeasibility of title. This Act and its forerunners — the Real Property Ordinance (Papua) and the Land Registration Ordinance (NG) — are based on Australian Acts. They all reflect what is commonly known as the Torrens system of land registration Under legislations based on this system (in Australia and New Zealand) it is now settled law that, apart from exceptions mentioned in the relevant legislations, once land is registered under the Torrens system the owner acquires indefeasibility of title. The relevant judicial authority in respect of New Zealand is the Privy Council decision in Frazer v Walker [1967] 1 AC 569 and in Australia it is the decision of the High Court in Breskvar v Wall (1971) 126 CLR 376. Counsel for the appellants ignored these authorities. The thrust of his main submission was that as the Land Registration Act had to be read subject to the Land Act any breach or non-compliance of the latter Act rendered registration of any estate or interest in land invalid. The Land Act does not say this. But Mr Donigi relied on ss 36 (2), 37, 38 (1) (c) and 39 of the Land Registration Act. However I consider that these provisions in no way affect the indefeasibility of title of a State lease once it is registered. Section 33 is too clear to have its effect eroded by the provisions relied upon by the appellants' counsel. As Barwick CJ said in Breskvar v Wall at 385-386:


"The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formerly had, or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration, itself has vested in the proprietor. Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void. The affirmation by the Privy Council in Frazer v Walker of the decision of the Supreme Court of New Zealand in Boyd v Mayor of Wellington [1924] NZGazLawRp 58; [1924] NZLR 1174 at 1223 now places that conclusion beyond question. Thus the effect of the Stamp Act 1894 (Qld) upon the memorandum of transfer in this case is irrelevant to the question whether the certificate of title is conclusive of its particulars." (my underlining).


53. The indefeasibility protection accorded by s. 33 of the Land Registration Act, under the Torrens System of land registration, is a common law notion. Thus fraud under s. 33 can only mean actual fraud, which is a remedy based on common law against a registered proprietor.


54. Actual fraud would exist in the following situations viz; where it is committed personally by the registered proprietor or where it is committed by someone else but is brought to the personal notice of the registered proprietor; or where the registered proprietor has direct or personal knowledge of fraud being committed by someone else. The key element in all these situations is that the registered proprietor had personal knowledge of the alleged fraud so that fraud is personalised and attached directly to the conduct and knowledge of the registered proprietor. This principle imports ‘personal’ dishonesty or moral turpitude against the registered proprietor: The Papua Club Inc. v. Nusaum Holdings Limited & Ors (No.2) (supra); Butler v. Fairclough and Another [1917] HCA 9; (1917) 23 CLR 78 and Assets Company Ltd v. Mere Roihi and Others [1905] UKLawRpAC 11; [1905] AC 176.


55. It follows that equitable or constructive fraud cannot be relied upon against a registered proprietor under s. 33 of the Land Registration Act, to invalidate title, because any dishonest conduct or moral turpitude cannot be attached to the personal conduct and or knowledge of the registered proprietor, to constitute actual fraud under s. 33 of the Land Registration Act. Thus in situations where registration of a registered proprietor’s title is done in breach of mandatory statutory procedures or requirements as in this case, and where such breaches are committed by people other than the registered proprietor; the remedy against the registered proprietor must lie elsewhere in equity. It cannot lie under s. 33 of the Land Registration Act, based on (actual) fraud.


56. For these reasons, I would reject any argument by the plaintiff to invalidate the fifth defendant’s title based on fraud under s. 33 of the Land Registration Act.


57. There is undisputed evidence that the title was registered after a caveat was lodged by the plaintiff. However, Mr Elemi deposed in his affidavit that he was not aware of the caveat having been lodged. The first defendant on the other hand deposed in his affidavit that he was aware of the caveat being lodged but because it was not registered it had no legal effect. He therefore went ahead and registered the fifth defendant as the proprietor of the property. This was done against a request by the plaintiff to register the caveat because of the urgency of the application, and that a fee for the registration of the caveat had been lodged together with the caveat.


58. In those circumstances, any dishonest conduct can only relate or attach to the first defendant, not the fifth defendant, because the conduct of the fifth defendant in my view cannot fall into any of the situations discussed above to constitute actual fraud under s. 33 of the Land Registration Act. In other words there is no evidence that the fifth defendant through Mr Elemi had personal knowledge of fraud even from the conduct of the third defendant.


59. What then is the appropriate remedy for the plaintiff? The offer by the Commission to sell the property to the deceased was done in accordance with a government housing policy. The policy was governed and regulated by the Housing Commission Act, Chapter No. 79.


60. To better understand the historical background of the government housing ownership policies and schemes, including the Morgan Home Ownership Scheme, my research led me to the National Housing Act 1967, (No. 77 of 1967) which I consider is the relevant starting point. That legislation was subsequently amended by a number of succeeding legislations, more notably, the Housing Commission Act, (No.2) 1967, (No. 13 of 1968); Housing Commission (Sale of Dwellings) Act, 1969 (No. 31 of 1970) and Housing Commission (Approved Applicants) Act, 1971 (No. 26 of 1972). These legislations formed the source of the Housing Commission Act, Chapter No 79.


61. The common legislative intent disclosed by the schemes of all those legislations was to provide suitable housing for approved public servants at reduced and affordable prices. The Housing Commission Act, Division 2, which was headed - Sale of Dwellings etc; (ss.30 to 38), set out the relevant procedure which governed and regulated the sale of the special category houses.


62. The offer by the Commission to the deceased to purchase the property was made in accordance with this legislative procedure. This arrangement constituted a binding agreement between the parties, for which valuable consideration was then paid.


63. Pursuant to s. 47 of the National Housing Corporation Act 1990, (s. 38 of the repealed Housing Commission Act), the Corporation had an obligation to transfer the property to the deceased once the purchase price was paid off, because by then the deceased was clearly the beneficial owner of the property. The Commission by then was merely holding the property for the deceased.


64. Under s. 20, the Commission was obligated to implement the government’s housing policy directions, and its exercise of powers and functions under the legislative arrangements was to implement the government’s housing policy and to provide suitable housing for approved public servants in accordance with that policy. Those responsibilities now lie with the Corporation.


65. Bearing that in mind, I return now to the question of the appropriate remedy available to the plaintiff. In The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2) (supra), after discussing the decision in Emas Estate Development v. John Mea and Others [1993] PNGLR 215, where it was held that titles issued in flagrant breaches of mandatory statutory procedures or requirements were highly irregular and – “were tantamount to fraud, such that the registration of the title should not be allowed to stand”, I said this:


“I am of the opinion that the principle applied in Emas Estate Development -v- John Mea and Others (supra) is a good and sound principle to be adopted and applied in this jurisdiction, where such breaches are very common and are done deliberately. It is a novel principle providing a judicial precedent which is relevant and significant in the development of the underlying law.


In that regard, it is to be noted that the courts in this jurisdiction have broad equitable supervisory powers given to them by s.155 (4) of the Constitution. Thus, the courts can, in the exercise of such powers, invalidate titles which are issued in gross and serious violation of the mandatory statutory procedures as set out in the Land Act. Section 9 of the Constitution states the supremacy of the Constitution over all other laws, including the statutes. Thus, the courts in the exercise of their inherent powers under s.155 (4) of the Constitution can correct any such anomalies, although they may fall outside of the exceptions stated in s. 33 of the Land Registration Act.


These observations are only academic because in this case, there is no suggestion of any gross or serious violation or breach of the mandatory statutory procedures under the Land Act, by the first defendant in acquiring the title”.


66. In this observation, I was only agreeing with the view held by the Court in Emas Estate Development v. John Mea and Others (supra) that titles issued in flagrant breaches of mandatory statutory procedures or requirements were tainted with irregularity and should be invalidated. I did not agree with the view that such breaches were tantamount to fraud. This can be noted from my discussion of s. 155 (4) of the Constitution. Indeed in the judgment, when discussing s. 33 of the Registration Act, I said fraud in that section meant actual fraud.


67. In other National Court decisions, “fraud” in s. 33 of the Land Registration Act, has been construed to also mean constructive or equitable fraud. That view has been based primarily on the decision in Emas Estate Development v. John Mea and Others (supra). I respectfully differ from that view for the reasons I have already given. I also explained my reasons for the view I hold quite in detail in The Papua Club v. Nusaum Holdings Ltd & Ors (No.2) (supra).


68. As I said in The Papua Club v. Nusaum Holdings Ltd & Ors (No.2) (supra), given the particular circumstances of this case, I am of the view that the equitable supervisory power granted to the Court by s.155 (4) of the Constitution can be properly invoked to determine appropriate remedies for the plaintiff in this case. Section 155 (4) is in these terms:


(4) Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.


69. The National Court and the Supreme Court are given wide and unfettered discretionary powers by this constitutional provision to grant equitable relief as the justice in the circumstances of a particular case requires. This power is also supervisory. Section 155 (4) is not an original source of the Court’s jurisdiction. It is an enabling provision which grants power to both the National Court and the Supreme Court, to protect a primary right of a party conferred by law. This was stated clearly by the Supreme Court in Avia Aihi v. The State [1981] PNGLR 81, per Kearney DCJ:

“I agree with the views of Prentice C.J. and Andrew J. In Constitutional Reference No. 1 of 1979; Premdas v. Papua New Guinea [1979] P.N.G.L.R. 329, at pp. 337, 401.18 that the Constitution, s. 155 (4), involves at least a grant of power to the courts. I consider that the sub-section gives unfettered discretionary power both to this Court and the National Court so to tailor their remedial process to the circumstances of the individual case as to ensure that the primary rights of parties before them are protected. And so, for example, the development of remedial process such as the Mareva injunctionneed not be as tortuous here as in England. But the Constitution, s. 155 (4) cannot affect the primary rights of parties; these are determined by law. In the circumstances of this case, the applicant now has lost the right to have her sentence reviewed. That extinction of her primary right comes about by operation of law; that is, by her failure to comply with s. 27 of the Act. The Constitution, s. 155 (4), cannot be used to re-create a primary right, once extinguished.

Accordingly, I respectfully agree with the Chief Justice that the Constitution, s. 155 (4), does not vest in this Court power to waive a failure to comply with s. 27 of the Act; I would reject the first submission”. (my underlining).


70. In that case, the appellant failed to lodge her appeal within the statutory period. The Supreme Court said the appellant could not invoke s. 155 (4) to re-create her primary right of appeal which had been extinguished by operation of law. See also Delba Biri v. Bill Nikama [1982] PNGLR 342. The basis on which the appellant could invoke s. 155 (4) was to obtain appropriate orders to protect her primary right conferred by law, which was her right to appeal. However, she lost that primary right when she failed to lodge her appeal within the statutory period. From this observation, it is clear that a primary right must be alive or active for s. 155 (4) to be validly invoked: Peter Makeng v. Timbers (PNG) Ltd (2003) N3317 and Innovest Ltd v. Hon. Patrick Pruaitch (2014) N5949. Thus, it is important to also note that s.155 (4) cannot be used to usurp or circumvent a statutory provision. To do so would effectively amount to legislating. Thus, it would amount to intrusion by the courts into the functions of the Legislature.


71. In this case, the common law remedy of actual fraud under the Torrens System of land registration under s. 33 of the Land Registration Act, is not available to the plaintiff, but the Court having supervisory powers under s. 155 (4), can in my view make appropriate orders to grant the plaintiff such relief as are necessary to do justice in the case: Mauga Logging v. South Pacific Oil Palm Development [1977] PNGLR 80. The Court would be doing injustice to the plaintiff if she was left without a remedy, simply because actual fraud has not been made out under s. 33 of the Land Registration Act.


72. The plaintiff has a primary right conferred by the repealed Housing Commission Act, hence the National Housing Corporation Act, which is for the property to be transferred to her. In my opinion, the Court can in the exercise of its inherent powers under s. 155 (4) grant the prerogative writs of certiorari and mandamus as well as a declaration, and such other orders as the Court considers appropriate to do justice in the case: Dent v. Kavali [1981] PNGLR 488.


73. The unfettered discretionary powers granted to the National Court and the Supreme Court by s. 155 (4) enable the courts to tailor their remedial processes to suit the circumstances of a particular case as to protect a primary right conferred to a party by law. These powers are inherent and more significantly they derive from the Constitution, which is superior to a statute and therefore any statutory provision, such as s. 33 of the Land Registration Act, must be read subject to the Constitution, – see s. 10 of the Constitution: The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2) (supra).


74. Significantly, the powers conferred on the Court by s. 155 (4) are unfettered and plenary to grant equitable remedies. This is clear from the words “and such other orders as are necessary to do justice in the circumstances of a particular case” in the section. The words “and such other orders” are used disjunctively, thus orders other than or in addition to prerogative writs may be granted under these powers if it is in the interest of justice to do so. In this regard, the words; “such other orders as are necessary to do justice in the circumstances of a particular case”, in s. 155 (4) as part of a constitutional law provisions, must be given a fair and liberal meaning as required under Sch. 1.5 (2) of the Constitution.


75. Consequently, in my view the Court can pursuant to the powers conferred on it by s. 155 (4) of the Constitution grant relief in equity to the plaintiff: Mauga Logging v. South Pacific Oil Palm Development (supra); The Papua Club Inc. v. Nusaum Holdings Ltd & Ors (No.2) (supra) and Dent v. Kavali (supra). Thus, if s. 33 of the Land Registration Act, will not avail the plaintiff the relief she is seeking, the Court can grant the relief under s. 155 (4) to protect her primary right and to do justice in the case. In The Independent State of Papua New Guinea v. Lohia Sisia [1987] PNGLR 102, the Supreme Court per Bredmeyer J, made similar observations:


“The Constitution is a superior law to a statute, and any statute must be read subject to the Constitution - see s. 10 of the Constitution. Thus s. 155 (4) of the Constitution overrides s 9 of the National Land Registration Act which provides that the Minister's declaration under s 8 shall not be subject to appeal or review nor called in question in any legal proceeding, and s 19 of the Act which states that registration is conclusive evidence of the State's title to the land.


I consider that this power under s 155 (4) of the Constitution to invalidate a Minister's declaration of National Land should be used sparingly. The courts should give some weight and some respect to Parliament's view expressed in s 9 and s 19 that the Minister's decision is not appealable or reviewable and that registration is conclusive evidence of the State's title. The way to do that is to say that the Minister's decision is reviewable by the courts but will only be reviewed in special cases or in exceptional circumstances. I consider that that is the proper way we should exercise our powers under s 155. The courts have normous power under s 155 to review the decision of any minister, tribunal or court. In exercising that power we can ignore any time limits imposed on appeal or review by statute, and any statutory "ouster" provisions excluding review or appeal, of which there are many, such as s 9 of the National Land Registration Act. I consider that in all these cases it is in the public interest that unreasonable (sic.) delay should be a bar to review under s 155. Ministers, officials and tribunals should make their decisions fairly and in accordance with the law, and if they go wrong that can be corrected by the courts, but good government would be frustrated if decisions could be challenged ad infinitum in the courts.


....I know of no local case on delay and declarations under s 155 (4) but there are many analogies which point in the same direction. Section 155 (4) also allows orders in the nature of prerogative writs which in modern terminology are called judicial review. Order 16 of our National Court Rules 1983 provides a procedure for that remedy. By O 16, r 4, the application must be made within four months of the decision under challenge. This time can be extended but not if the court considers that there has been undue delay in bringing the application. The remedies of judicial review and declaration are very similar; they are alternative ways of challenging a decision and the power to grant either remedy comes from s 155 (4). It is thus logical and reasonable that similar principles should apply to each remedy”.(my underlining).
76. Of course, in this case delay does not arise as an issue.


77. I also find from the facts that apart from the power of the Court to protect the deceased’s primary rights, the Corporation also has a fiduciary duty to the deceased which this Court has a duty to protect. This duty also arises from the agreement made between the deceased and the Commission which was based on the Morgan Home Ownership Scheme pursuant to which the deceased purchased the property. Thus there is a fiduciary relationship between the deceased and the Commission, hence, the Corporation. The fiduciary relationship is axiomatic on the facts. The relationship is existing which was based on good faith, mutual trust and confidence, it requires each of them to honour their respective obligations under the agreement.


78. There was an undertaking by the Commission under the terms of the agreement that it would as the fiduciary, at all times act for and behalf of the deceased and protect his interests: Hospital Products Ltd v. United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41. Thus the transaction between the parties was established in a climate of mutual trust and confidence: United Dominions Corporation Ltd v. Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1. These were and still are salient features of the agreement between the deceased and the Commission.


79. The agreement was special and unique in that it allowed the deceased to pay for the property over a long period of time through salary deductions in small affordable amounts. This was a unique feature about the fiduciary relationship between the deceased and the Commission. The agreement placed the deceased in a weak and vulnerable position than the Commission, in that there was a clear power imbalance between them. The deceased placed its complete trust in the Commission that it would even over such long period of time honour its part of the agreement. The Commission therefore had a greater responsibility as the fiduciary to honour the agreement because it could easily use its dominant position to manipulate the system for its own interests or interests of others and disregard or deny the interests of the deceased and abuse its fiduciary powers. In fact that is what happened in this case.


80. The risks presented by such long period were real. For example, possibilities of files and records being lost during that period of time, the management of the Commission changing hands, new policies and laws being made and implemented with adverse effects on the deceased and so on. The deceased therefore had to rely fully on the Commission’s good faith, fidelity and candour to honour its obligations under the agreement and protect his interests until the agreement legally came to an end by the property being transferred to him. In this regard, the Corporation was in serious breach of its fiduciary obligation when it purportedly transferred the property to the fifth defendant. Thus, it is incumbent on the Court to use its equitable supervisory powers to protect the interests of the deceased. The duty of the Court in this regard was stressed by Dawson J in Hospital Products International Ltd v. United States Surgical Corp. [1984] HCA 64; [1984] 58 ALJR 587, where his Honour said:


“It is usual – perhaps necessary - that in such a (fiduciary) relationship one party should repose substantial confidence in another in acting on his behalf or in his interest in some respect. But it is not in every case where that happens that there is a fiduciary relationship...There is however, the notion underlying all the cases of fiduciary obligation that inherent in the nature of the relationship itself is a position of disadvantage or vulnerability on the part of one of the parties which causes him to place reliance upon the other and requires the protection of equity acting upon the conscience of that other.”


81. The good faith, trust and confidence reposed by the deceased in the Commission without doubt require the protection of equity. The deceased had the right to expect the Commission hence the Corporation to protect his interests, as indeed it had a duty so to do. The Corporation instead deliberately failed to honour its fiduciary obligation by selling the property to the fifth defendant. In so doing, it abused the trust and confidence the deceased reposed in it.


82. The Court must therefore use its equitable jurisdiction to also make orders that are necessary for the Corporation to account for its failure to honour its fiduciary obligation to the deceased: Consul Development Pty Ltd v. DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373.


83. The lapse of a long period of time since the completion of payment for the property is not a material consideration. It is irrelevant. It did not in any way alter the Corporation’s continuing fiduciary obligations to transfer the property to the deceased.


84. By law, the Corporation cannot unilaterally alter the agreement with the deceased, let alone deal with the property without his knowledge and informed consent. Especially, any changes which might be adverse to deceased’s interests including where the deceased failed to pay his instalments toward the payment of the property. Such failure may form the basis for the Commission to either terminate or vary the agreement but even such changes should not be unilaterally made. The only exception to this may be where the deceased (purchaser) had failed without any reasonable explanation to honour his obligations under the agreement and that such failures were repeated and chronic, thus amounting to clear breach of the agreement and abandonment of his rights under the agreement. However, that was not the case here.


85. The agreement between the deceased and the Commission was also unique because it was part of a process in the implementation of a government’s home ownership policy for public servants by the Commission. This was the core function of the Commission stipulated clearly under ss. 20 and 21 of the Housing Commission Act, (ss. 27 and 28 of the National Corporation Act,). It was a public function of the Commission governed and regulated by statute.


86. Thus, the Commission in exercising its powers and functions was required to act in accordance with the clear legislative intent and the scheme of the government’s home ownership policy.


87. The loss of records on the property in the office of the Corporation was not the fault or doing of the plaintiff. It was a direct result of the Corporation’s own failure to keep and protect its records. It was an internal management issue for the Corporation. The plaintiff should not in any way be made to suffer for the Corporation’s own mismanagement and incompetence.


88. The mismanagement and incompetency of the Corporation were compounded by deliberate acts of defiance to Court Orders by very senior managers of the Corporation, including Mr. John Dege, who went further by transferring the property to the fifth defendant.


89. The site inspection reports on the property were deliberately false and misleading which heavily favoured the fifth defendant over the plaintiff. The reports referred to the fifth defendant as a corporate client which was financially capable of developing the property. So the reports seriously contradicted the fifth defendant’s letter of 9 February, 2015, to Mr. Oropa that it could not afford to buy a property of a decent standard; the implication of which was that it lacked financial capacity to purchase a decent property. This again raises more suspicious about the propriety of the transfer of the property to the fifth defendant by the Corporation.


90. One glaring irony about the reports is that they confirmed that the property was under the Morgan Home Ownership Scheme. Yet the Corporation’s officers who prepared the reports appear to have deliberately ignored that crucial information.


91. The Corporation’s senior officers confirmed that the deceased had paid off the property and recommended that the property be transferred to the deceased’s next of kin. That recommendation was also ignored by the senior managers of the Corporation including Mr. Dege.


92. The Corporation had clearly acted in breach of its fiduciary obligation to the deceased. The breaches were deliberate, calculated and callous. They were serious breaches because they were perpetrated by very senior managers of the Corporation, including its Acting Managing Director, Mr. Dege.


93. It is important to bear in mind that a fiduciary relationship can exist in varying relationships. It of course exists notoriously in a trustee and cestui qui trust relationship. It can also exist in a relationship between a guardian and warden, or of parent and child relationship or a solicitor and client relationship. In this case, it exists in a relationship between the purchaser and the vendor, viz; the State through the Corporation. The fiduciary relationship in this case was unique and special because it was rooted in a public policy of the government relating to a home ownership scheme for public servants. The rights and obligations arising out of that relationship are continuing, they have not been extinguished. They continue to exist until the property is transferred to the plaintiff by the Corporation. Indeed the Corporation has a mandatory statutory obligation under s. 47 of the National Corporation Act, to transfer the property to the plaintiff.


94. I also find that the decision by the Corporation to transfer the property to the fifth defendant against the advice of its own senior officers was one which no reasonable tribunal or public body or authority could make. The decision was therefore also unreasonable: Associated Provincial Picture House v. Wednesbury Corporation [1974] 2 ALL ER 680. For this and other reasons already given, the transfer of the property to the fifth defendant must be declared null and void, which I now do.


95. In regard to the ‘Outright Cash Sales Scheme’ under which the property was purportedly sold to the fifth defendant, the National Housing Corporation Act, appears silent on such a scheme. In any event, even if there was such a scheme, it would not have made any difference to the conclusions I have reached because the purported transfer of the property to the fifth defendant would for the reasons given be still illegal.


96. I also find the actions of the Acting Managing Director and his Managers fraudulent and deceitful especially the former in withholding the transfer of the property to the plaintiff and in transferring the property to the fifth defendant after they were advised in writing by the senior officers of the Corporation that the deceased had paid off the property and that the property be transferred to the deceased’s next of kin. This view is supported by the Corporation’s file on the property being locked away in the filing cabinet of a “boss” at one stage, thus preventing the file from being accessed even by the staff of the Corporation. This happened after the plaintiff was told by the Corporation staff that transfer of the title to the deceased’s family or next of kin was pending approval by the boss. This evidence also lends support to the view that the decision by the Acting Managing Director of the Corporation to sell and transfer the property to the fifth defendant was fraudulent.


97. Given the conduct of the Corporation’s Managers, more particularly, Mr. Dege, I can see that this may be the basis the plaintiff claimed fraud against the defendants. However, for the reasons given, fraud committed by someone other than the registered proprietor cannot invalidate the registered proprietor’s title. So even if there was fraudulent conduct by the Corporation’s management, such conduct would still not fall within the meaning of fraud in s. 33 of the Land Registration Act.


98. That said, given that the involvement of the Managing Director of the fifth defendant, Mr. Turai Elemi having been the subject of investigation by the members of the fraud squad, the fraud squad members should also investigate the involvement of others, especially those who featured prominently in the transfer of the property to the fifth defendant.


99. For avoidance of any doubt, I make following findings:

(i) Pursuant to s. 155 (4) of the Constitution, the deceased’s (plaintiff’s) primary right to purchase the property accrued when he accepted the offer from the Commission to purchase the property and started paying the purchase price of the property by way of salary deductions. That act also concluded a binding agreement between the deceased and the Commission which is still on foot.

(ii) It was a term of the agreement that the Commission as the vendor and fiduciary undertook to always act in good faith and in the best interests of the deceased.

(iii) Under the terms of the agreement, the Commission as the fiduciary had a duty to fully inform the deceased of any changes to the agreement which might adversely affect his interests. No such changes could be validly made without the deceased’s informed consent.

(iv) That no third party could legally purchase the property as long as the agreement between the parties remained on foot.

(v) In the circumstances, the sale of the property to the fifth defendant was and is null and void, and the plaintiff is entitled to the relief sought viz; certiorari and mandamus to:

(i) quash the decision by the Corporation to transfer the property to the fifth defendant; and

(ii) to compel the Corporation to transfer the property to the plaintiff; and

(iii) to compel the first defendant to cancel the fifth defendant’s title and issue a new title to the plaintiff; and


(iv) to consequently declare the plaintiff as the rightful owner of the property.

100. Orders of the Court are as follows:


  1. The decision of the third defendant made on 23 February, 2015, to transfer the property known as Allotment 51 Section 41, Boroko, being all of the land contained in the State Lease Volume 38 Folio 9444 to the fifth defendant is quashed.

  1. The decision of the first defendant made on 1 April, 2015, to register the transfer of the property in the name of the fifth defendant is quashed.
  2. The third defendant is directed to take immediate actions to transfer the property to the plaintiff, as the Administrator of the estate of late Jophiel Iravela.
  3. The first defendant is directed to register the transfer of the property in the name of the plaintiff as the Administrator of the estate of late Jophiel Iravela.
  4. The title issued in the name of the fifth defendant is declared null and void and is of no legal effect.
  5. The first defendant is directed to immediately take appropriate actions to correct its records to give effect to all the Orders given herein, including cancellation of the fifth defendant as the registered proprietor and cancellation of any title deed issued to the fifth defendant as registered proprietor of the property.

  1. The plaintiff is declared the rightful owner of the property.

  1. Time and entry of these Orders is abridged to the time of settlement by the Registrar which shall take place forthwith.
  2. The plaintiff’s costs of and incidental to the application be paid by the first, second, third and fourth defendants on full indemnity basis. The fifth defendant will pay its own costs.

Orders accordingly.


_____________________________________________________________
Ashurst Lawyers: Lawyers for Plaintiff
Turai Elemi Lawyers: Lawyers for Fifth Defendant


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