Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Raumai No.18 Ltd v Country Motors Ltd [2018] PGNC 592; N7952 (28 September 2018)

N7952

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 13 OF 2017

BETWEEN:
RAUMAI NO.18 LIMITED
Plaintiff

AND:
COUNTRY MOTORS LIMITED
First Defendant

AND:
YANJOL APIN AS ACTING REGISTRAR OF TITLES
Second Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Gavara-Nanu, J
2018: 30^th June & 28^th September

JUDICIAL REVIEW – Cancellation of Title – Land Registration Act, Chapter No. 191; ss. 160 and 161 – Power of Registrar of Title – Types of powers to be exercised by the Registrar of Titles – Procedure for cancellation of title.

Cases Cited:
Papua New Guinea Cases

Aipa v. Samson, Deputy Registrar of Titles (2012) N4777
Betty Palaso v. Dr Phillip Kereme & Ors (2016) N6638
Joe Parakas v. The State [1989] PNGLR 224
Kekedo v. Burns Philp (PNG) Ltd & Ors [1988-89] PNGLR 122
NCDIC v. Crusoe Pty Ltd [1991] PNGLR 138
Raga Kavana, Registrar of Titles, Department of Lands and Physical Planning v. Colin Edwin Hunter (2007) N3208

Overseas Cases Cited:

Associated Provincial Picture House v Wednesbury Corporation [1974] 2 ALL ER 680

Counsel:

1. Molloy with Mr. H. Leahy as counsel assisting, for the Plaintiff

N. Yano, for the Defendants

28^th September, 2018

1. GAVARA-NANU J: Pursuant to a Notice of Motion filed under Order 16 r 5 (1) of the National Court Rules, the plaintiff seeks review of the decision of the Registrar of Titles (the second defendant) made on 16 August 2016, to cancel the following previous entries on the duplicate certificate of the title to Allotments 2 and 16, Section 88, Lae, Morobe Province, being the whole of the land contained in State Lease Vol. 36 Fol.64, (land) held by the plaintiff viz; Entry Nos. 13163; 13990; 19955 and 19956, resulting in the cancellation of the title held by the plaintiff over the land.
   
2. The plaintiff seeks restoration of the above entries to its State Lease. In other words, the plaintiff seeks restoration of its title.
   
3. The plaintiff also seeks damages for economic loss resulting from the cancellation of its title.
   
4. The plaintiff is a local company, duly incorporated under the laws of Papua New Guinea on 1 February 1988.
   
5. It is not disputed that the plaintiff was the registered proprietor of the land. What is disputed is the validity of its title. As a result of the dispute, the first defendant through its Managing Director commenced National Court proceedings challenging the sale of the land to the plaintiff. The first defendant alleged fraud in the transfer of the land. According to the affidavit of Damien Chow, the Managing Director of the plaintiff company, the National Court proceeding referenced WS No. 18 of 2016, was withdrawn in its entirety on 7 January 2015.
   
6. On 12 July 2016, the plaintiff received a letter from the second defendant demanding that it deliver up its title within 14 days (for possible cancellation), because of the claim that fraud was involved in the transfer of the land to the plaintiff. The second defendant treated his letter of demand as a "summons" to the plaintiff under s.160 of the Land Registration Act, Chapter No.191 to deliver up its title, which the plaintiff failed to do. The second defendant as a result went ahead and cancelled the plaintiff’s title.
   
7. The defendants argued that the second defendant acted within his powers when cancelling the plaintiff’s title. The plaintiff on the other hand argued that the actions of the second defendant were ultra vires,
   
8. Mr. Ian Molloy, counsel for the plaintiff argued that there was a process which the second defendant failed to follow before cancelling the plaintiff’s title. He submitted that the second defendant also breached principles of natural justice by not giving the plaintiff an opportunity to be heard before cancelling its title.
   
9. The determinative issue before the Court is whether the cancellation of the plaintiff’s title was legal.
   
10. Mr Molloy argued that the procedure the second defendant was supposed to follow is set out under ss.160 and 161 of the Land Registration Act. It is instructive that these two provisions be reproduced for ease of reference.
    
11. Section 160 is in these terms:
    

160. Production of instruments wrongly issued, etc.

(1) Where it appears to the satisfaction of the Registrar that—

(a) an instrument has been—

(i) issued to a person in error; or

(ii) fraudulently or wrongly obtained by a person; or

(b) an instrument is fraudulently or wrongly retained by a person; or

(c) an instrument held by a person contains a misdescription of the boundaries, area or position of land; or

(d) an instrument held by a person contains an entry or endorsement—

(i) made in error; or

(ii) fraudulently or wrongly obtained; or

(e) an instrument of title is held by a party to an ejectment action whose right to the land has been determined,

he may summon that person to deliver up the instrument.

(2) Where a person refuses or neglects to comply with a summons under Subsection (1), or cannot be found, the Registrar may apply to the Court to issue a summons for that person to appear before the Court and show cause why the instrument should not be delivered up.

(3) Where a person served with a summons issued under Subsection (2) refuses or neglects to attend before the Court at the time appointed by the summons, the Court may issue a warrant directing the person so summoned to be apprehended and brought before the Court for examination.

(4) On the appearance before the Court of a person summoned under Subsection (2), or apprehended by the warrant under Subsection (3), the Court may examine him on oath and

order him to deliver up the instrument.

(5) Where a person refuses or neglects to comply with an order under Subsection (4), the Court may commit him to a corrective institution for a period not exceeding six months unless the instrument is sooner delivered up.

(6) Where a person—

(a) has absconded or keeps out of the way so that a summons under Subsection (2) cannot be served on him; or

(b) has refused or neglected to comply with an order under Subsection (4),

the Registrar shall, if the circumstances of the case so require—

(c) issue to the proprietor of the land an instrument as provided in this Act in the case of a certificate of title lost or destroyed; and

(d) enter in the Register—

(i) notice of the issue of an instrument and the circumstances under which it was issued; and

(ii) such other particulars as he thinks necessary.

12. Section 161 is in these terms:

161. Cancellation and correction of instruments and entries.

(1) Subject to Subsection (2), the Registrar may—

(a) cancel or correct an instrument delivered up under Section 160; and

(b) in any other case, on such evidence as appears to him sufficient, correct errors or omissions in—

(i) the Register or an entry in the Register; or

(ii) the other duplicate certificate of title or an entry on that duplicate.

(2) Where a correction is made under Subsection (1)—

(a) the Registrar—

(i) shall not erase or render illegible any words; and

(ii) shall affix the date on which the correction was made together with his initials; and

(b) the Register or other duplicate certificate of title so corrected has the same validity and effect as if the error had not been made except as regards an entry made in the Register before the time of correcting the error.

(3) Where the Registrar is satisfied that a matter in a certificate of title does not affect the land to which the certificate relates he may record on the title the cancellation of that matter in such manner as he considers proper.

13. Mr Molloy argued that as part of the procedure s.161 confers two general powers on the Registrar. First is substantive, and is conferred by s.161 (1) (a). The Registrar exercises this power when cancelling instruments such as State Leases and issuing new ones. The exercise of this power affects rights, such as the title holder’s right to hold title. There are inherent safeguards in the procedure to protect the title holder’s right to be heard and to prevent abuse of power by the Registrar. The safeguards are prescribed by both ss. 160 and 161. Second is limited in scope and is conferred by s. 161(1) (b). The exercise of this power is limited to correcting minor errors and or omissions in the Register or in a certificate of title. The exercise of this power may not affect rights.

14. It was argued that proper and valid exercise of anyone of the two powers by the Registrar can only occur after a summons or a direction had been issued to a title holder to deliver up his title, and that the title had been delivered up.

15. Mr Molloy argued that the word ‘may’ in s.160 (1) relates to the decision the Registrar may make to issue a summons to a title holder to deliver up his title, either for cancellation or to correct an error. It was submitted that the word connotes the exercise of discretion by the Registrar whether to issue a summons or not. For example, a decision the Registrar has to make on whether to issue a summons after it is shown that the title is prima facie free from alleged errors or anomalies.

16. Mr Molloy submitted that in this instance the second defendant exercised the substantive power under s. 161 (1) (a) in cancelling the plaintiff’s title, thus depriving the plaintiff the right to hold title. It was argued that the second defendant should have followed the procedure set out under s.160 (2) so that if the plaintiff neglected or refused to deliver up its title, he could then take the next step which was to make an application to the National Court to seek orders for the plaintiff to show cause.

17. It was submitted that the second defendant acted ultra vires in cancelling the plaintiff’s title without making an application to the National Court to seek orders for the plaintiff to show cause. Thus, it was claimed that the plaintiff was not given an opportunity to be heard on claims of fraud made against it before its title was cancelled. The plaintiff relied on Aipa v. Samson, Deputy Registrar of Titles (2012) N4777. In that case, the National Court held that in a case of this kind, cancellation of an instrument such as a State Lease should be preceded by a summons being issued for the title holder to deliver up his title. That case did not address the issue regarding the need for the Registrar to make an application to the National Court for orders that the title holder show cause.

18. Mr. Yano, counsel for the State argued that once the second defendant was satisfied that fraud was involved in the transfer of the land to the plaintiff, the second defendant had discretion pursuant to the word "may" in s. 161 whether to cancel the title or to apply to the National Court under s. 160 (2) for an order that the plaintiff show cause. He argued that the second defendant properly exercised his discretion in taking the first option to cancel the plaintiff's title. He relied on Raga Kavana, Registrar of Titles, Department of Lands and Physical Planning v. Colin Edwin Hunter (2007) N3208.

19. I find that this case is distinguishable from Raga Kavana, Registrar of Titles, Department of Lands and Physical Planning v. Colin Edwin Hunter (supra). In that case, the plaintiffs applied to the National Court seeking orders for the defendants to show cause after they failed to deliver up their title despite being issued with a summons by the Registrar. This case did not go that far, viz; no application was made by the Registrar to the National Court to seek orders that the plaintiff show cause.

20. Notably, the defendants do not dispute that the second defendant did not give the plaintiff an opportunity to be heard before cancelling its title. To my mind, this was a fundamental error resulting from wrong exercise of discretion by the second defendant. The fact that the second defendant may have thought that fraud was involved in the transfer of the land to the plaintiff is irrelevant. What is relevant is how he exercised his discretion in cancelling the plaintiff’s title.

21. I accept Mr Molloy’s argument that s. 161 (a) and (b) confer two general powers on the Registrar. I also accept his argument that anyone of the two powers can only be validly exercised after a summons or a direction had been issued to a title holder to deliver up his title and that the title had been delivered up.

22. If the summons or direction issued under s. 160 (1) is not heeded, then an application should be made to the National Court under s. 160 (2) for a summons or an order to be issued to the title holder to show cause.

23. In this case, there is no evidence that the plaintiff neglected or refused to deliver up its title. Even if there was such evidence, the second defendant still had discretion to inquire further and ascertain the reasons for the title holder not delivering up its title. Such an approach would ensure that a title holder is given adequate opportunity to be heard.

24. The next step of making an application to the National Court should only be made where there is clear and compelling evidence of neglect or refusal by the title holder to deliver up his title or has disappeared and cannot be found or contacted. This recourse should be invoked as the last resort. Such cautious approach in my view harmonises with the discretionary power conferred by s. 160 (2) on the Registrar to decide whether to seek appropriate remedy in the National Court. It is critically important to appreciate the legislative intent in s.160 (2), which is to give a title holder or a registered proprietor who holds an indefeasible title ample opportunity to be heard. This process protects the title holder from suffering possible penalties including six months gaol term under s.160 (5) if he did not comply with the Court orders.

25. A “summons” issued by the Register under s.160 (1) may be treated as a “direction”. Whereas a “summons” issued by the National Court under s.160 (2) may be treated as an “order”. Thus, in this instance the letter by the second defendant demanding or directing the plaintiff to deliver up its title had been appropriately and properly treated as a “summons” for the purposes of s.160 (1).

26. As to the word “may” in s. 160 (1), I accept Mr Molloy’s submission that it relates to the exercise of discretion by the Registrar whether to issue a summons for the title holder to deliver up his title or not. As to the word "may" in s. 161 (1), in my opinion it relates to the power the Registrar may exercise, viz; whether to cancel the title or to correct it, depending on the type of error or anomaly in the title or instrument after it is delivered up.
27. Generally, once an error or an anomaly is raised against a title under s.160 (1) the matter then becomes subject to the processes set out under ss.160 and 161. This process begins with a summons being issued under s. 160 (1). It is obligatory for the Registrar to state clearly in the summons or direction, the reasons or grounds upon which the summons or direction is issued. This will inform the title holder why he is required to deliver up his title and safeguard his right to be head. Cancellation and or restoration of a title following a court order in a case would be subject to this process.

28. In this case, when the second defendant did not receive a response to his letter of demand for the plaintiff to deliver up its title, he went ahead and cancelled the plaintiff’s title without giving the plaintiff an opportunity to be heard. The second defendant could have as I said earlier, instead of cancelling the title, made further inquiries as to the reasons for the plaintiff’s purported failure to deliver up its title.

29. The second defendant could have applied to the National Court and sought orders for the plaintiff to show cause, if it was shown that the plaintiff neglected or refused to deliver up its title. Such a course would have given the plaintiff a further opportunity to be heard. The failure by the second defendant to avail such opportunity to the plaintiff was a fundamental breach of the plaintiff’s right to be heard as prescribed under s. 160 (1) and (2).

30. The right to be heard or the audi alteram partem rule which is also a key principle of natural justice is accorded to every individual or entity that is affected by a decision of a public body or authority. The right to be heard is embodied in our Constitution. Thus, pursuant to Schedule 2.2 of the Constitution, the audi alteram partem rule or the right to be heard (as a principle of natural justice) is a fundamental part of the underlying law. The terms of Schedule 2.2 are notably very general.

31. Section 59 of the Constitution on the other hand is very specific in its terms. It expressly provides that “principles of natural justice” are the rules of underlying law, developed for control of judicial and administrative proceedings. The section is in these terms:

Division 4.—Principles of Natural Justice.

59. Principles of natural justice.

(1) Subject to this Constitution and to any statute, the principles of natural justice are the rules of the underlying law known by that name developed for control of judicial and administrative proceedings.

(2) The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly.

32. So, s. 59 (2) imposes a “duty” on a public body or authority "to act fairly, and in principle be seen to act fairly". This is a minimum requirement of natural justice, it is a key principle which every public body or authority is obligated to show and reflect in the decision-making process.

33. A failure by a public body or authority to reflect these principles in the decision-making process will provide a clear ground for such decision to be subject to judicial review. Under Order 16 r 13 of the National Court Rules (NCR), this ground of review is covered by ultra vire, and once a decision is found to be ultra vires, the decision would in my opinion be also rendered unreasonable in the Wednesbury sense which is a principle enunciated in the oft. cited case of Associated Provincial Picture House v Wednesbury Corporation [1974] 2 All ER 680, viz; a decision is unreasonable if it is one which no reasonable tribunal could make.

34. The requirements of s. 59 of the Constitution are an integral part of the administrative law in this jurisdiction, they give efficacy to the common law principles of natural justice and safeguard those who are affected by the decisions of public bodies or authorities. They prevent abuse of power by the public bodies or authorities. See, NCDIC v. Crusoe Pty Ltd [1991] PNGLR 138.

35. That said, it is fundamentally important to bear in mind that the principles of natural justice are common law principles. They are not constitutional laws and they do not create or give constitutional rights. The intention of s. 59 is to give efficacy to the principles of natural justice and underscores compliance with the principles by public bodies or authorities as integral to valid and proper decision making processes. Thus when the principles of natural justice are breached, the decision-making processes are flawed, thus vitiating the final decisions or determinations. See, Joe Parakas v. The State [1989] PNGLR 224.

36. In this case, the second defendant has been found to have failed to observe the principles of natural justice in its decision-making process by failing to give the plaintiff an opportunity to be heard before cancelling its title. Therefore, it cannot be said that the second defendant acted fairly in cancelling the plaintiff’s title, nor can it be said that the second defendant was fair in his decision-making process.

37. For the foregoing reasons, I find that the second defendant acted ultra vires or acted beyond his powers in cancelling the plaintiff’s title. The decision was for the same reasons unreasonable in the Wednesbury sense and was an abuse of power.

38. It follows that the application must be upheld, which I now do. The orders of the Court in terms of the relief for the plaintiff are, as those pleaded in the substantive Notice of Motion filed under Order 16 r 5 (1) of the NCR.

39. The defendants will pay the plaintiff’s costs of and incidental to the proceeding which if not agreed, are to be taxed.

Orders accordingly.

_____________________________________________________________
Pacific Legal Group: Lawyers for the Plaintiffs
Solicitor General: Lawyers for the Defendants