N9310
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
CIA NO. 12 OF 2008

BETWEEN:
STEAMSHIPS TRADING CO. LIMITED
Appellant

AND:
HON. PUKA TEMU, MINISTER FOR LANDS AND PHYSICAL PLANNING
First Respondent

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

AND:
OPENI GENO, LADY WHILHELMINA SIAGURU, GWENDOLINE HATOA TULO, THOMAS KULI WEBSTER, AWASA MATU GEORGE NASINNON, SAM MASAKUMAN TAISON AND THOMAS CHARLES BULLEN AS MEMBERS OF THE PAPUA NEW GUINEA LAND BOARD
Third Respondent

AND:
RAGA KAVANA, THE REGISTRAR OF TITLES
Fourth Respondent

AND:
VITROPLANT ORANGERIE BAY LTD
Fifth Respondent

Waigani: Miviri J
2021: 17th & 18th November

PRACTICE & PROCEDURE – Judicial Review & appeals – Amended Notice of Appeal – Appeal Against Forfeiture of State Lease Section 122 Land Act – No Notice Show Cause Section 122 (2) (a) Land Act – No Notice Compliance of Covenants Section 122 (2) (b) Land Act – No Evidence Failure to Comply Section 122 (1) Land Act – No Evidence Service of Notices on Appellant  – Rental Paid – Covenant Satisfied Complied – No Procedural fairness – Section 122 Land Act breached – Forfeiture of State Lease Illegal – Natural Justice Not Accorded Lessee – Forfeiture Revoked – Appeal Upheld – Cost Follow the Event.

Cases Cited:
Gumdale Limited v John Ofoi & 4 ors [2017] N6696. 
Nambawan Super Ltd v Kimas [2013] PGNC 23; N5062 
Philip v National Education Board [2008] PGNC 248; N4024 
Kasieng v Baigry [2004] PGNC 207; N2562 
Paki v Motor Vehicle Insurance Ltd [2010] PGSC 2; SC1015 
Counsel:

J. Nigs, for Plaintiff
E. Bua, for the Defendants
RULING
18th November, 2021

1.	MIVIRI, J: This is the Ruling on the amended notice of appeal of the 22nd February 2008 of the appellant. The appeal is against forfeiture of State Lease described as Volume 8 Folio 1862, Portion 82, Milinch Abadi Fourmil Abau, Central Province (Mamai Plantation). 

2.	The Appellant seeks a declaration that forfeiture of the Lease by the First Respondent was unlawful and/or invalid. Further an order that the forfeiture be revoked because it is and was invalid null and void ab initio. And that the Respondents pay the Costs on a Solicitor/Client basis, or indemnity basis.

3.	He relies on the following affidavits as basis for the remedies that he seeks. Affidavit filed of the 30th January 2008 of Doris Gedare Steamships Company Lawyer. 

4.	The second is of Kathryn Sheehan lawyer of the firm Blake Dawson Waldron lawyers for Steamships at that time, who has an affidavit filed of the 30th January 2008, another of the 11th April 2008, and yet another of the 06th May 2008.

5.	The third filed of the 14th October 2015, is of Mary–Ann Hill group legal Counsel and now Senior Legal Counsel of Steamships.

6.	And the fourth filed is of the 24th February 2020, of Gordon McMaster, General Manager of the Pacific Palms Properties (PPP). It is the business arm of Steamships responsible for managing all of Steamships real estate.

7.	The fifth filed is of the 11th April 2008, and of the 21st April 2008, and of the 06th May 2008, of Gedeon Kehara, clerk with Blake Dawson Waldron.

8.	The sixth and final filed is of the 21st April 2008, of Tom Pelis, clerk with Blake Dawson Waldron.

9.	Each of the deponents have no evidence counter, filed by the defendants against the facts that they depose to in their respective affidavits. Each deposes to facts of which have come as a result of direct involvement in this matter. This includes the employees of Steamships Doris Gedare, Mary–Ann Hill, Gideon Kehara, Gordon McMaster, and Tom Pelis, who depose to facts in the matter coming to them as employees of the appellant. These facts are set out in the Judgement relevantly as it relates to the issue posed here. There is no evidence to the contrary raised by the defendants in respect of their evidence. In the case of Kathryn Sheehan, a lawyer with the firm Blake Dawson Waldron, are also evidence coming to her in the carriage of this matter within her knowledge. In her case also nothing to the contrary has been raised by the defendants. Essentially the evidence before the court is that of the appellant, there is no evidence nor any material filed by the defendants in their case to the contrary.

10.	And this is borne out through their learned Counsel who acknowledges that there has been breaches in the forfeiture of the subject State Lease contrary to Section 122 of the Land Act. Because there are no affidavit or other material to sway otherwise that all has been consistent and according to the mandatory dictates of section 122, Forfeiture of State Lease of the Land Act 1996. What will be weighed up is what the appellant has before the Court.

11.	In my view the following facts are undisputed and established by these evidence set out above. The forfeiture by the Minister for Lands of State Lease Volume 8 Folio 1862, Milinch Abadi Fourmil Abau, Central Province (Mamai Plantation) took place on the 31st May 2007 and was published in the National Gazette No. G1. This notice stated that the forfeiture was on the grounds that: 

(a)	The improvement conditions imposed by the Act were not fulfilled in respect of the land.
(b)	And the rent remains due and outstanding unpaid for a period of more than six (6) months, and
(c)	And the lessee has failed to comply with a Notice under section 122 (2) of the Act.

12.	Steamships entered into an Agricultural Lease Volume 8, folio 1862, (the lease) with the then Territory of Papua New Guinea, for the Lease of all that piece, or parcel of land known as Mamai Plantation, since the 10th February 1965 for (99) ninety-nine years expiring 2064, annexure “A” to the Affidavit of Doris Gedare sworn and filed of the 30th January 2008. In entering into that Lease, Steamships agreed with the State that during the term of the Lease Agreement, it will observe, perform, and be bound by the several covenants, terms, conditions, and agreements, as stated on the lease agreement in the following terms:

(a)	That he will pay the rent hereby reserved at the times and in the matter aforesaid clear of all deductions;
(b)	That he shall during the said term pay and discharge all and all manner of rates, taxes, duties, charges, assessments, and impositions whatsoever whether the same be payable by the Landlord or tenant or partly by each in respect of the land and shall comply with all Ordinances and Regulations relating to the said land;
(c)	That he shall not, without the prior approval in writing by the Administrator, transfer or enter into a contract or agreement for the transfer of the land, give a mortgage or encumbrance, grant a lease, easement, right, power or privilege of, over, or in connexion with land;
(d)	That he shall of land suitable for cultivation, the following proportions shall be planted in a good and husband like manner with plants approved by regulations under the land ordinance;- one fifth in the first period of five years of the term; two fifths in the first period of ten years of the term; three fourths in the first period of twenty years of the term;

And the proportions respectively to be so planted shall from the expiration of each such period be kept so planted during the reminder of the terms of the lease. Provided always that if at any time during the first five years of the lease it appears to the Land Board that reasonable efforts are not being made to fulfill the improvement conditions, they may recommend the Administrator to cancel the lease; and thereupon it shall be lawful for the Administrator by notice in the Gazette to cancel the lease accordingly.

(e)	That he shall and will at all times during the said term use the said land bonafide for the purposes only for which it was granted or for a purpose ancillary to that purpose;

(f)	That the lessee shall at the expiration or other sooner determination of the said terms peaceably and quietly leave surrender and yield up to the Administrator the said land together with, subject to the provisions of the Ordinance, all the improvements thereon.

13.	These are the conditions of the lease that the Appellant was alleged to have contravened. And so, on the 29th July 2005 the appellant was served a notice to show cause executed on the 29th May 2005. This was the first notice to show cause. It was signed by Pepi Kimas as a delegate of the Minister for Lands. It required the appellant to show cause within one month from the date of the notice, why the lease should not be forfeited to the State on the grounds that; 

(a)	The Appellant has refused or neglected to comply with the terms and conditions as stipulated in the lease.

(b)	The Appellant has failed to pay the rent for a period of more than six (6) months amounting to a total of K 8, 010.00 as of the 1st of January 2005. The annual rent being K 445.00.

14.	The Appellant sent a letter on the 28th February 2006 to the Secretary of the Department of Lands and Physical Planning regarding the Notice to Show Cause on the subject land. This letter explained that the Lands Department had incorrectly recorded Mamai Plantation as belonging to a company, Angus Proprietary Limited. And the land rent receipts were being sent to that Company instead of the Appellant. The Appellant invited the department to correct its records so that rental arrears could be paid.

15.	Acknowledgement was made on the 04th of April 2006 by Mr. Manamb Revenue Administration Officer of the Department of the receipt of the Appellants letter of the 28th February 2006. And on the 29th December 2006 the Appellant paid the outstanding rental to the Department in the sum of K 8, 900. 00. But despite that fact the Appellant was served with a second Notice to Show Cause executed on the 07th December 2006. It was received on the 19th March 2007. It was signed by one Anthony Luben as a delegate of the Minister for Lands. It required the Appellant to show cause within one month from the date of the Notice, why the lease should not be forfeited to the State on the grounds:

(a)	The appellant has refused or neglected to comply with the terms and conditions as stipulated in the lease.

(b)	The appellant has failed to pay the rent for a period of more than six (6) months amounting to a total of K8, 900.00 as of 1st January 2006.

(c)	The lessee Appellant has failed to comply with a notice under section 122 (2) of the Act.

16.	The Appellant sent a letter to the Secretary of the Department of Lands replying to the Notice to show cause on the 17th April 2007. And referred to both Notices to show Cause and explained that there was no deliberate non-compliance on the part of the appellant. That it was waiting on the lands Department to sort out its records issues before it could pay for the outstanding Land Rentals and it had been done. And so therefore the Notice to Show cause in its case should be withdrawn, including any attempt to forfeit the Lease.

17.	But on the 1st November 2007, the Notice to show cause dated the 07th December 2006 was published in the National Gazette No.170.

18.	On the 26th November 2007, Blake Dawson Waldron Lawyers for the appellant sent a letter to the Secretary of the Department of Lands setting out the grounds on which the lease should not be forfeited. The letter also pointed out the two letters previously sent by the Appellant and also no requirement for the publishing of a notice to show cause in the National Gazette.

19.	On the 03rd January 2008, the Notice of Forfeiture dated the 31st May 2007 was published in the National Gazette No. G1. It stated that the Appellant’s lease over Mamai Plantation was forfeited on the grounds that: 

(a)	The improvement conditions imposed by the Act have not been fulfilled in respect of the land; and
(b)	The rent remains due and unpaid for a period of more than six (6) months; and 
(c)	The lessee has failed to comply with a Notice under section 122 (2) of the Act.

20.	Blake Dawson Waldron acting for the Appellant on the 30th January 2008, served a letter on the Attorney General’s Office, giving the Independent State of Papua New Guinea pursuant to section 5 of the Claims by and Against the State Act, the Appellant’s intention to lodge an appeal against the forfeiture of the Lease in the National Court, pursuant to section 142 (1) of the Land Act 1996. And on the same day also filed this Appeal in the National Court.

21.	The issues on appeal are: 

(1)	Whether the Appellant complied with the Lease covenants in the State Lease? 
(2)	Whether the Notice to Show Cause was valid?
(3)	Whether the forfeiture of the State Lease was proper?

22.	To determine these issues the relevant Law is section 122 of the Land Act. I set this Section out in full as follows: 
PART XV. – FORFEITURE OF STATE LEASE AND FINES.
Division 1.
Forfeiture of State Lease.
122. FORFEITURE OF STATE LEASE.
(1) The Minister may, by notice in the National Gazette, forfeit a state lease–
(a) if rent on the lease remains due and unpaid for a period of six months; or
(b) if fees are not paid in accordance with this Act; or
(c) if the amount payable in respect of improvements is not paid in accordance with this Act; or
(d) if–
(i) a covenant or condition of the lease; or
(ii) a provision of this Act relating to the lease; or
(iii) a requirement of a notice under Section 91 relating to the lease,
is not complied with; or
(e) if the granting of the lease has been obtained, in the opinion of the Minister, wholly or partly as a result of statements that were, to the knowledge of the lessee, false or misleading.
(2) Before forfeiting a State lease under Subsection (1), the Minister–
(a) shall serve notice on the lessee calling on him to show cause, within a period specified in the notice, why the lease should not be forfeited on the ground or grounds specified in the notice; and
(b) may, whether or not cause has been shown in accordance with a notice under Paragraph (a), serve on the lessee a notice requiring him, within a period specified in the notice, to comply with the covenants or conditions of the lease or the provisions of this Act.
(3) The Minister shall not forfeit a lease under this Section unless–
(a) the lessee has failed to comply with a notice under Subsection (2)(a) or (b); or
(b) the lessee has failed to show good cause why the lease should not be forfeited.
(4) Copies of a notice of forfeiture and a notice under Subsection (2)(a) or (b) shall be served on all persons who, to the knowledge of the Departmental Head, have or claim to have a right, title, estate, or interest in, to or in relation to the land, or such of them as can with reasonable diligence be ascertained and found.
(5) No acceptance of rent by the State waives a right to forfeit a lease under this Act.
(6) For the purposes of this Section the grant of an application for a State lease shall be deemed to be the grant of the lease.”

23.	Applying the law to the facts, there is clearly very strong evidence here that Annexure G1 of the Affidavit of Gordon McMaster sworn and filed of the 24th February 2020 tab 12 of the Appeal Book, settle that the Appellant had paid the annual rental for the period leading up to and after the show cause notices for the years 2005 to 2019. It is further established by this evidence that, when the first show cause notice was issued 2005, the Appellant did not have an outstanding rental owing because it was already settled. And the explanation of the 28th February 2006 in the letter to the Secretary for lands, the Appellant explained that Mamai Plantation was listed in the lands records as being owned by another company. The listing resulted in some confusion as to the ownership and also resulted in rental invoices being issued to another entity altogether. The payment was done of the outstanding rent after resolution of the issue relating to naming and after the second show cause notice was issued. The Appellant is up to date with the payments of rent for the State Lease Mamai Plantation. 

24.	This ground is made out in favour of the Appellant. And he discharges the balance in his favour. There is no evidence to the contrary before the Court placed by the Defendants to sustain. Section 122 (1)(a) favours the assertions of and sustains in favour of the Appellant because the rent is not outstanding but has been paid.

25.	And after the Appellant received the first notice to show cause it wrote to Lands to rectify the name issue so that payment of rent could be made. The Appellant responded to the Show Cause Notice and showed sufficient cause as not warrant the forfeiture of the State Lease.

26.	The next ground Section 122 (1) (d) compliance with the improvement covenants and or conditions in the Lease. Here also the evidence is overwhelming that paragraphs 9 to 11 of the affidavit of Doris Gedare sworn and filed 30th January 2008, and also the affidavit of Gordon McMaster, sworn and filed of the 24th February 2020 which attaches pictures of the current state of Mamai Plantation. This particularly clear because the notice to show cause was issued after grant of the lease to the Appellant 40 years. And during that time the Appellant complied with the covenants conditions of the lease.

27.	Again, this ground is made out by the Appellant by this evidence to the required balance. There is no evidence to the contrary by the defendants and so section 122 (1) (d) is not in favour of the defendants. The Appellant has discharged compliance and this ground is made out in his favour. The same cannot be said of the defendants who have conceded the appeal. They do not have any material to the contrary nor have they argued but have conceded error and breach in their way against the Appellant.

28.	Even the contention of the defendants that the Appellant has failed to comply with a notice under section 122 (2) of the Act is not made out, because there is no valid notice given set out by the evidence that I have set out above. And in any case, it is evident that there were two (2) notices allegedly issued under section 122 (2) of the Act. The first was on the 29th May 2005 but received by the Appellant on the 29th July 2005. The Second was issued on the 07th December 2006 but received by the Appellant on 19th March 2007.

29.	This is clear evidence that both Notices had already expired by the time they had reached the Appellant as the one (1) month time period to comply had lapsed. They were therefore invalid notices and the Appellant was not obligated to respond to either of them. Because notices to show cause sent to the wrong postal address but received out of time was said not to constitute proper service on the appellant, Gumdale Limited v John Ofoi & 4 ors [2017] N6696. Even then the Appellant complied with the notices of 28th February 2006 and of the 17th April 2007 respectively. Conforming with the process and procedure under section 122 (2) (a), (3) and (4) of the Act will legitimatize forfeiture as without will be illegal to forfeit, Nambawan Super Ltd v Kimas [2013] PGNC 23; N5062 (27 February 2013). Because the evidence here is that section 122 (2) (a) and (b) of the Act were contravened. There was no notice served on the Appellant prior to forfeiture of the Lease. The effect in law is that the forfeiture cannot stand against the Appellant.

30.	Since the 10th February 1965 the Appellant was first accorded and granted the Lease to hold it for ninety-nine (99) years to expire 2064. There is fundamental and mandatory fulfillment of the requirement of section 122 (1) (2) (3) & (4) of the Land Act, that the Minister must satisfy before a forfeiture is proper and discharges the requirements of that section. Here it is evident the notices were not valid and had expired the period to be accorded compliance under section 122 (1) (2) (3) & (4) of the Act. The decision to forfeit of the Minister could not stand because the Appellant had not been given an opportunity to be heard in his defence: Philip v National Education Board [2008] PGNC 248; N4024 (27 June 2008). There was therefore noncompliance of section 122 by the defendants. And the decision that followed to forfeit was ultra vires and illegal. There was no compliance with the enabling Legislation: Kasieng v Baigry [2004] PGNC 207; N2562 (23 June 2004). 

31.	This is a case that should not have gone to trial because there was simply no evidence or materials to counter the allegation of the Appellant. That is clear from the Counsel for the Respondents conceding that there was no basis to contest the Appeal, either by evidence filed, and also in the submissions. There was unnecessary court time drawn out on a matter that could have been administratively resolved by the respondents in favour of the Appellant given. They chose to bring it to trial and it justifies that costs be awarded against them in favour of the Appellant on a Solicitor Client basis. And I make that order as to costs in those terms following Paki v Motor Vehicle Insurance Ltd [2010] PGSC 2; SC1015 (9 February 2010) where it was observed:
“The award of costs on an indemnity basis is discretionary.   An order for costs on an indemnity basis may be made where the conduct of a lawyer or a party to the proceedings is so improper, unreasonable, or blameworthy that he should be so punished by such an order.  The question is whether the conduct of the appellant in this matter is such that it caused the respondent to incur unnecessary costs.”

32.	The formal orders of the Court are that:

(i)	The appeal is allowed
(ii)	It is Declared that the Notices of Forfeiture of the First and Second Respondents all issued to the Appellant are invalid unlawful, of no legal effect.
(iii)	It is Further Declared that the forfeiture by the First Respondent of the State Lease described as Volume 8 Folio 1862, Portion 82, Milinch Abadi Fourmil Abau, Central Province (Mamai Plantation) of the Appellant is of no legal effect, and is set aside forthwith.
(iv)	Cost is awarded to the appellant on a Solicitor Client basis against the Respondents.

Orders Accordingly.
__________________________________________________________________
Denton PNG: Lawyer for the Plaintiff/Applicant		
Office of the Solicitor General: Lawyer for the Defendant