N9249
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 209 OF 2018

BETWEEN
WILSON TEN
Plaintiff

AND
LESLIE ALU as CITY MANAGER of the NATIONAL CAPITAL DISTRICT COMMISSION
First Defendant

AND
NATIONAL CAPITAL DISTRICT COMMISSION
Second Defendant

AND
MINISTER FOR LANDS AND PHYSICAL PLANNING
Third Defendant

AND
SECRETARY FOR LANDS AND PHYSCIAL PLANNING
Fourth Defendant

AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Waigani: Makail, J
2021: 25th May & 4th November
 
LIABILITY – Compulsory acquisition of land by State – State Leases – Interest in land converted to compensation – State liable to pay compensation – Agreement entered between State and registered proprietor by deed of release for payment of compensation – Enforceability of deed of release – Land Act, 1996 – Sections 7(b), 12, 13, 14, 22, 23 & 26

COMPENSATION – Compensation for interest in land – Compensation prescribed by statute – Principles of compensation – Value of land – Value of interest in land – Appreciation and depreciation of value of land and interest in land – Land Act, 1996 – Sections 22, 23 & 26

Cases Cited:
Baleen No 28 Limited v. Hon. Benny Allan, Minister for Lands and Physical Planning and The State (2019) SC1868

Counsel:

Mr. D. Kipa, for Plaintiff
Mr. M. Mukwesipu, for Defendants 

JUDGMENT 
4th November, 2021

1.	MAKAIL J: This is a trial on liability and assessment of damages.

2.	The action is based on Statute for compensation for compulsory acquisition of land by the defendants to build the Kookaburra Flyover from Jacksons International Airport/Erima to Waigani in the city of Port Moresby under Section 7(b) of the Land Act, 1996 (“Land Act”).

Brief Facts

3.	The brief facts which can be extracted from two affidavits of the plaintiff, one filed on 17th August 2018 and the other filed 27th April 2020 and the defendants by Augustine Ravi filed 6th September 2018 and Benjamin Samson filed 28th August 2020 are materially uncontested and are as follows:

•	The plaintiff was the registered proprietor of two properties located at Kookaburra Street, Erima:

•	Allotment 3 Section 116 Hohola, State Lease Volume 13 Folio 3058, and
•	Allotment 4 Section 116 Hohola, State Lease Volume 13 Folio 3059.

•	The plaintiff put up improvements on the properties up to the value of K109,600.31 by building units for accommodation.  Each unit was put up for rent of K6,000.00 per month and generated a total of K343,000.00.  The first and second defendants paid a sum of K104,000.00 and a balance of K244,000.00 is due and outstanding. 

•	On 5th December 2013 the fourth defendant served a Notice to Treat pursuant to Section 13(1) and (2) of the Land Act 1996 on the plaintiff on behalf of the second defendant to acquire the subject properties to allow for the construction of the Flyover.

•	The Notice to Treat required the plaintiff to state:

•	The interests claimed by the plaintiff in the land;
•	The amount for which the plaintiff was agreeable to sell the interests in the land; and
•	The name and address of any other person known to the plaintiff to have an interest in the land and the nature of the interest.

•	On 22nd January 2014 Jema Lawyers on behalf of fourteen property owners along Kookaburra Street submitted their response to AKT Associates Ltd as agent of the second defendant, inter alia, a proposal for a round table discussion with the property owners.

•	On 28th January 2014 Jema Lawyers on behalf of fourteen property owners along Kookaburra Street submitted another response to the fourth defendant.

•	 On 24th February 2014 the fourth defendant rejected the property owners’ proposal.

•	The plaintiff was offered the purchase price of his property at the value determined by the Valuer General plus a payment equivalent to 6 months’ rent at K650.00 per week.

•	Eventually, on 25th June 2014, the plaintiff attended at the office of the first and second defendants’ lawyers and signed a deed of release and received by a cheque in the sum of K1,598,913.42.  He also received K52,000.00 as payment for rental accommodation pending transfer of two blocks of unused land and two blocks of unused land of about 900 square metres in total.  He also received K68,086.58 paid to Kina Finance Ltd for mortgage repayment and K42,386.60 paid to ANZ Bank for mortgage repayment.

ilDeed of Release

4.	At the heart of this action is the deed of release.  The deed was signed by the parties pursuant to Section 26 (Agreement after Acquisition as to Compensation) of the Land Act.  The plaintiff contended that it is not binding on the parties because he signed it under duress.  The first and second defendants rejected these submissions and contended that the plaintiff signed the deed of release on his own free will.  

Duress

5.	As to this issue, it is noted that there are no expressed allegations of fact in the statement of claim to establish that the defendants forced, or coerced or that the plaintiff acted under duress to accept the sum offered as compensation for the acquisition of the land.  Even the statement at paragraph 23 of the statement of claim that “……. the then Secretary for DL&PP Romilly Kila Pat again on behalf of the Second Defendant refused the settlement proposal of the Plaintiff and maintained its client’s (Second Defendant’s) offer alluded at paragraphs 19 and 20 herein and warned the said offer was to expire on 11th March 2017 with compulsory acquisition of the properties to occur thereafter…” is insufficient to establish a cause of action. 

6.	Furthermore, the statement at paragraph 37 that “The failure by the servants and agents of the Second Defendant to comply with the terms of the Notice to Treat issued to the Plaintiff and forcing them to accept the terms and conditions as proposed by the said Defendants was unfair, unjust and therefore unlawful” and the statement at paragraph 45(b) of the statement of claim that “The manner and treatment he received from compulsory acquisition of his property was unwarranted in the circumstances.  He was forced to accept terms and conditions imposed upon him, with no consideration of his interest” are insufficient to establish a cause of action by which relief may be sought. 

Compensation

7.	Even if the allegations of fact demonstrate a case of duress, it is misconceived because the true nature of the cause of action is one of right to compensation by virtue of an interest in land conferred by Statute under Section 14 of the Land Act.  Section 14 states:

	“14.	Conversion of interests into claims for compensation.

(1)	Subject to Subsection (2), the interest of every person in land or a chattel to which a notice of acquisition applies is, on the date of acquisition, converted into a right to compensation under this Act.

(2)	Where an easement, right, power, privilege or other interest in, over or in connection with land that did not previously exist as such is acquired, the interest of every person in the land is, on the date of acquisition, and to the extent to which the interest is affected by the acquisition, converted into a right to compensation under this Act.”

8.	As noted from the facts, the plaintiff held an interest in Allotment 3 Section 116, Hohola and Allotment 4 Section 116, Hohola as the registered proprietor.  When each allotment where the land was located was acquired by compulsory process, the plaintiff’s interest in land was converted to compensation.  Where the plaintiff has made an offer for compensation and the Minister for Lands and Physical Planning rejects it, the plaintiff may bring an action against the State in the National Court to claim compensation.  Section 22 states:

	“22.	Proceedings where claim rejected.

(1)	Where a claim for compensation has been rejected by the Minister, the claimant may bring an action against the State in the National Court claiming a declaration that he was, immediately before the date of acquisition of the land, entitled to the interest specified in the claim.

(2)	After notice to such persons as it directs, the National Court shall hear the action, and may —

(a)	declare that the claimant was entitled to the interest specified in his claim or to some other interest; or

(b)	dismiss the action.

(3)	For the purposes of this Act, an order of the National Court under this Section is binding on the State and on all persons who had interests in the land immediately before the date of acquisition of the land, whether or not it or they were represented before the court on the hearing of the action.

(4)	Where the National Court declares under this Section that a claimant had an interest in land —

(a)	compensation in respect of the interest shall be determined in accordance with this Act as if the claim had been accepted by the Minister; and

(b)	if the interest declared by the court differs from the interest specified in the claim—the claim shall be deemed to be amended accordingly.

(5)	Where, in relation to a claim for compensation that has been rejected by the Minister —

(a)	the claimant does not, within one month after service on him of the notice of rejection of the claim or within such further time as the Minister or the National Court allows, institute an action under this Section in relation to the claim; or
(b)	the claimant has so instituted an action and —

(i)	the action has been dismissed; and

(ii)	a period of not less than one month has elapsed since the dismissal of the action and no appeal or further appeal by the plaintiff (including an application for leave) is pending,

the State may pay compensation in respect of the acquisition on the basis that the claimant was not, at the date of acquisition, entitled to the interest the subject of the claim.

(6)	In a case to which Subsection (5) applies, where compensation is paid in respect of an interest that is inconsistent with the interest the subject of the claim no compensation is payable in respect of the last-mentioned interest.

(7)	On the application of —

(a)	the State; or

(b)	the claimant; or

(c)	any other person appearing to the court to have a sufficient interest to justify the application,

made at any time after the issue of the writ in the action, whether before or after the making of a declaration under Subsection (2), the National Court may order that the action be treated as including proceedings duly instituted under Section 30 for determination of the amount of compensation under this Act in respect of the interest (if any) that the court declares the claimant to have held.

(8)	Section 30 (other than Subsections (2), (3), (7) and (10)) applies to and in relation to proceedings consequent on the making of an order under Subsection (7).”

9.	It follows that the plaintiff has proved that he has a claim for compensation.  However, he has also received compensation for the “interest” in the land.  Given that the right to claim compensation is conferred by Statute and he has received it, it is irrelevant if he was forced, or coerced or acted under duress by the defendants to receive the counter-offer as compensation.  If he believed that he was entitled to more than what was offered to him by the defendants, he had the option of commencing proceedings in the National Court to claim compensation under Section 22 of the Land Act.  He chose otherwise and has now barred himself from making a further claim for compensation in these proceedings.

Action for Compensation

10.	If the current action is treated as an action for compensation under Section 22, it must be pointed out that it is not a license to make all manner of claims for compensation.  This is because in assessing compensation for land which has been acquired by compulsory process, the Court is guided by the principles of compensation set out in Section 23 of the Land Act.  Section 23 states:

	“23.	General principles.

(1)	In the determination of the amount of compensation payable in respect of land acquired by compulsory process under this Act, regard shall be had to —

(a)	the value of the land at the date of acquisition; and

(b)	the damage (if any) caused by the severance of the land from other land in which the claimant had an interest at the date of acquisition; and

(c)	the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

(2)	In determining the value of land acquired under this Act, regard shall not be had to any increase in the value of the land arising from the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

(3)	Where the value of the interest of the claimant in other land adjoining the land acquired is enhanced or depreciated by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, the enhancement or depreciation shall be set off against, or added to, as the case requires, the amount of the compensation otherwise payable to the claimant.”

11.	According to Section 23, the amount of compensation payable in respect of land acquired by compulsory process shall be based on:

(a)	Value of the land at the date of acquisition: Section 23(1)(a).  In Baleen No 28 Limited v. Hon. Benny Allan, Minister for Lands and Physical Planning and The State (2019) SC1868, it was held that (see head notes):

“2.	The requirement of S23 (1) (a) of the Land Act, 1996 is for regard to be had to “the value of the land” at the acquisition date, and not to a valuation of the land at the acquisition date.  This is plainly because it would be almost impossible for a notice of compulsory acquisition to be published in a Government Gazette on a certain date, and for a valuation to then be carried out on that same date.  

3.	…….

4.	When valuing the land at the date of acquisition, some of the matters that may be taken into account are:

•	The unimproved value of the land at the date of issue of the State Lease, 
•	The value shown by the purchase price which would have been paid by the current title holder of the State Lease
•	The values shown by the sale prices of other comparable properties from around the period of sale and purchase of property, in particular comparable land area.
•	The compliance or non-compliance of improvement covenant of the State Lease by the title holder.”

(b)	damage (if any) caused by the severance (ending) of the land from other and in which the claimant had an interest at the date of acquisition: Section 23(1)(b); and 

(c)	the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed (ended) from the acquired land as a result of the work or proposed work for the public purpose for which the land was acquired: (Section 23(1)(c).

12.	In the case of assessing the value of land, an additional principle to guide the Court is that if work has been done or proposed work to be done for the public purpose for which the land was acquired, no consideration shall be given to any increase in the value of the land: Section 23(2).  

13.	Finally, in the case of assessing the value of the interest of the claimant in other land adjoining the land acquired, the additional principle is that, where the land acquired is enhanced or depreciated as a result of work done or proposed work to be done, the enhancement shall be set-off against the amount of compensation otherwise payable to the claimant or depreciation shall be added to the amount of compensation otherwise payable to the claimant: Section 23(3). 

14.	In summary by law, the plaintiff is entitled to compensation for the following:

	(a)	Value of the land.
	
(b)	Value of improvement put up on the land.

(c)	where the claimant has other land adjoining land acquired, the value of the interest will be added where the work done or proposed work will depreciate the value of the interest in the other land or the value of the interest will be set-off where the work done or proposed work to be done will enhance the values of the interest in the other land.

15.	Any relief sought as compensation by the plaintiff must be restricted to the value of the land, value of the interest in land and any appreciation or depreciation of the value in both as prescribed by Section 23. Where the plaintiff seeks a relief which is outside those matters set out in Section 23, it will not be granted.

Relief Sought

16.	According to the amended writ of summons filed 11th September 2019 the plaintiff seeks:

	(a)	Loss of Past Rental Income – K244,000.00

	(b)	Loss of Future Rental Income – K720,000.00	

	(c)	Loss suffered from Valuation – K4,027,386.60

		Total					K4,991,386.60

	(d)	Damages for breach of Constitutional Rights:

		(i)	Proscribed acts – Section 41 of the Constitution
(ii)	Unjust deprivation of property – Section 53(2) of the Constitution
(iii)	Protection of the law – Section 37(1) of the Constitution

(e)	General damages for stress, depression and frustration 

17.	Relief sought as outlined at paragraph 16(a),(b),(d), (d) (i),(ii) & (iii) and (e) above are not forms of compensation and fall outside those set out in Section 23.  They are refused. 

Breach of Constitutional Rights 

18.	Let me further explain, damages sought for breach of constitutional rights based on failure to accord the plaintiff full protection of the law, proscribed acts and unjust deprivation of property under Sections 37, 41 and 53 of the Constitution do not arise and will not be awarded because the land was compulsorily acquired by the State under Section 7(b) of the Land Act.  In other words, the acquisition of the land by the State did not constitute an unlawful act because it was authorised by law.  This is the distinction between a claim for compensation under Section 22 of the Land Act and an action for trespass. Damages sought in this regard are misconceived.
General damages for stress, depression and frustration 

19.	In addition to the reasons given in the preceding paragraph, the plaintiff has received compensation.  The defendants did not leave him with nothing.  Damages sought in this regard are misconceived.

Valuation of Land

20.	Relief sought at paragraph 16(c) above is based on valuation.  There are two valuation reports produced; one by the plaintiff and the other by defendants.  The one by the plaintiff was done by Dominic Kenga of Undieri Management and Property Consultants (UMPC) dated 3rd December 2013 where a total sum of K2.8 million was stated as the value of land and improvement.  The one produced by the defendants was done by Valuer General dated 11th February 2014 where a total sum of K845,000.00 was stated as value of land and improvement.    

21.	There is evidence in Mr Ravi’s affidavit that a notice of compulsory acquisition was blushed in the National Gazette on 12th March 2014. It is arguable that both valuation reports support the value of the land at the date of acquisition as they were prepared in close proximity to it.  Notably, the State’s valuation report was about a month or so before the publication of the notice of compulsory acquisition.

22.	Unlike the plaintiff’s, the defendants’ valuation report is preferred because it separates the value of the land of K215,000.00 from the value of interest in land (improvements) of K630,000.00 giving a total of K845,000.00.  It is also within the purchase price range of the two allotments (K350,000.00 and K365,000 respectively) when the plaintiff purchased them two years earlier in 2012.  

23.	Pursuant to the deed of release, the plaintiff received more than the sum of K845,000.000.  He ended up receiving a sum of K1,598,913.42 which was K753,913.42 more than the sum stated in the valuation report.  Not only that, he received a further K52,000.00 as payment for rental accommodation pending transfer of two blocks of unused land and two blocks of unused land (still awaiting transfer of titles).  Finally, he received K68,086.58 paid to Kina Finance Ltd for mortgage repayment and K42,386.60 paid to ANZ Bank for mortgage repayment.

24.	All in all, the sums of money he received were not only to compensate him for the loss of land and improvements but also to support him to restart his life and business.  He has been adequately compensated.  Damages sought in this regard are dismissed.  

Allocation of two unused blocks of land

25.	Finally, there is evidence in Mr Ravi’s affidavit of two titles of land: Allotment 12 Section 598, Hohola and Allotment 13 Section 598, Hohola issued on 15th August 2018 in favour of the plaintiff.  They go towards establishing that the defendants had facilitated the allocation and transfer of titles of these blocks of land to the plaintiff.  It is now for the plaintiff to honour his side of the agreement.  It would follow that it is not necessary for the Court to intervene.  

Conclusion

26.	The net effect of all these is that, the plaintiff’s land was acquired by compulsory process authorised by law.  The act of acquisition is not illegal. To compensate the plaintiff, he received compensation for that.  The defendants do not owe him any further compensation and the claim for loss of rentals, claim for value of land and improvements, etc are misconceived.

Order

27.	The proceedings are dismissed.  As the first and second defendants participated and defended the action, they will be awarded costs, to be paid by the plaintiff, to be taxed, if not agreed.
________________________________________________________________
Wang Dee Lawyers: Lawyers for Plaintiff 
Mukwesipu Lawyers: Lawyers for Defendants