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Malai v Lucky Strike No. 7 Ltd [2021] PGNC 494; N9292 (9 November 2021)

N9292

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 197 OF 2019

BETWEEN
ROSE MALAI
First Plaintiff

AND
NATIONAL HOUSING COPROATION LIMITED
Second Plaintiff

AND
LUCKY STRIKE NO. 7 LIMITED
First Defendant

AND
TUSA MEDICAL CENTRE
Second Defendant

Waigani: Linge AJ
2021: 15^th October & 9^th November

PRACTICE AND PROCEDURE – Whether actual fraud must be proven – whether proof of constructive fraud or equitable fraud is sufficient – indefeasibility of title – Land Registration Act

Cases Cited:

Mudge v Secretary for Lands [1985] PNGLR 387
Papua New Guinea Club Inc. v Nasaun Holdings Limited (2004) NZ603 and Koitachi Ltd v Walter Schnaubelt (2007) SC 870
National Council of Young Men Christian Association v Firms Services Ltd, (2017) PGSC 20; SC 1596
Pius Tikili & ors v Home Base Real Estate Ltd PGSC1; SC1563

Counsel:

Laken Lepatu Aigilo, for the Plaintiffs

9^th November, 2021

1. LINGE A J: This proceeding relates to property located at Section 186 Allotment 14, Lae, Morobe Province.
   
2. The First Plaintiff with her deceased husband, Dr. Kuam Malai were the former tenants who have converted their rental to purchase. They paid total purchase price of K89,140.00 which is more than the K65,000.00 they agreed with the Second Plaintiff in 1989.
   
3. The First Plaintiff was forcefully evicted in January 2019. At the time of the eviction, the Plaintiff was in the process of reconciling the rental purchase payments with the Second Plaintiff for purposes of effecting a formal transfer to her name.
   
4. These proceedings are converted into Statement of Claim on the 27 August 2019 by Rose Malai, the First Plaintiff claiming as the main order a declaration that she is the legal tenant of Section 186, Allotment 14, Lae, Morobe and fraud against Lucky Strike No. 7 Limited.
   

Issue

5. Whether the Defendants had acquired the title of property at Section 186, Allotment 14, Lae, otherwise described as Volume 87, Folio 244, Lae, Morobe Province through proper process.
   

Evidence

6. Plaintiffs rely on three (3) Affidavits of Rose Malai filed at different times being 3 April 2019, 9 April 2019 and 8 November 2019.
   
7. The Affidavits basically recounts the chronology of when her late husband entered into agreement with the Second Plaintiff in 1989 for rental agreement. Later the rental payments were changed to purchase agreement so that all rental payments were converted to instalment payments for the purchase of the property.
   
8. She also deposes that Lucky Strike No.7 produced a purported title during the District Court ejectment proceeding in Lae showing it as the title holder to Section 186, Allotment 14, Lae, Morobe.
   

9. That purported transfer show a transfer from National Housing Corporation on the 16 July 2018 to Tusa Medical Centre and subsequently from it to Lucky Strike No.7 on the 26 July 2018.

10. The evidence shows interestingly that a contract of sale between Tusa Medical Centre and Lucky Strike No.7 was dated 31 July 2018 meaning that transfer had already taken place before the execution of the Contract of Sale.

11. The evidence also show that the National Housing Corporation had not sold and no record of sale of the subject property to Tusa Medical Centre.

12. The First and Second Defendants had not filed any affidavits for consideration by the Court.

Consideration

13. Rose Malai and her deceased husband Dr. Malai had made rental payments on the property for K89,000.00.

14. As to whether the payment is sufficient to give Rose Malai the legal right to Section 186, Allotment 14, Lae, this must be considered in accordance with law.

15. The First Defendant, Lucky Strike No. 7 Limited successfully evicted Rose Malai and her dependants on the strength of a purported Lease Title.

The Law

16. Ownership of land in Papua New Guinea follows the principle known as the Torren System. Apart from customary land ownership, which is not the case here, landownership and transfers in alienated/State land is procured under the Torren System.

17. A person who holds a registered title is said to have an indefeasibility of title. It is settled law in this jurisdiction: Mudge v Secretary for Lands [1985] PNGLR 387. It means that a title cannot be annulled except in certain circumstances provided for in Section 33 of the Land Registration Act.

18. Fraud must be pleaded sufficiently. It is one of the exceptions recognized under the Land Registration Act to invalidate an otherwise good title.

19. Courts in this country have defined “fraud” in two (2) ways. First category is actual or narrow fraud. This narrow view has been used in Papua New Guinea Club Inc. v Nasaun Holdings Limited (2004) N2603 and in Koitachi Ltd v Walter Schnaubelt (2007) SC 870.

20. The wider view/constructive fraud is followed in Emas Estate v Mea [1993] PNGLR 219. Numerous other cases subscribe to this view including, National Council of Young Men Christian Association v Firms Services Ltd, (2017) PGSC 20; SC 1596 and Pius Tikili & ors v Home Base Real Estate Limited (2017) SC1563.

21. Both constructions are equally relied on depending on the circumstances of each case.

22. Transfer of land is governed by the Land Registration (Act). Section 42 of the Act sets out the legal requirements for transfer and it includes execution of transfer instrument, consideration, and lodgement at the Registrar of Titles office and stamp duties.

Findings

23. The First Plaintiff, Rose Malai is challenging the title of Lucky Strike No. 7 Limited, based on the allegation of fraud.

24. In this case, the Plaintiff does not have a registered title. She was only a tenant and had equitable right or limited right as a prospective purchaser pursuant to an agreement she and her deceased husband had with the Second Plaintiff.

25. She can be displaced or evicted by a person who has a clear or registered title over the same parcel of land.

26. The First Defendant assert that it has a registered title over the property. It was on that basis that it evicted the Plaintiff from Section 186, Allotment 14, Lae, Morobe Province in January 2019.

27. I have considered the transfer between the National Housing Corporation, Tusa Medical Centre and Lucky Strike No. 7 Limited and there is something about these transfers that give me cause for concern.

28. A critical matter is that the National Housing Corporation had denied it had transferred the property to Tusa Medical Centre.

29. This means that the title is defective ab initio.

30. The timing of the transfers and contract of sale in relation to the purported transfer from Tusa Medical Centre to Lucky Strike No.7 appear to be disjointed.

31. Either there was fraud or irregularity in dealing between the First and Second Defendant.

32. The Internal Revenue Commission, to which Stamp Duties is normally paid, had denied any record of payment of Stamp Duties and the transfers.

33. It is my conclusion that the purported transfers from the National Housing Corporation to Tusa Medical Centre and ultimately to Lucky Strike No.7 Limited have been fraught with uncertainty and irregularity. Therefore, I find that there is constructive fraud and rule accordingly.

Order

1. Declaration that the transfer of Title for Section 186 Allotment 14, Lae from National Housing Corporation to Tusa Medical Centre is null and void ab initio.
2. Further Declaration that the transfer of Title for Section 186, Allotment 14, Lae from Tusa Medical Centre to Lucky Strike No. 7 Limited is also null and void.
3. An Order that the Registrar of Titles cancels the entries in the Registry showing Tusa Medical Centre and Lucky Strike No. 7 Limited in relation to Section 186, Allotment 14, Lae as registered proprietors.
4. Order that Rose Malai is entitled to apply to the National Housing Corporation for the Transfer of Title for Section 186, Allotment 14, Lae to her name forthwith.
5. Time is abridged.

___________________________________________________________
Gibson Bon Lawyers: Lawyers for the Plaintiffs