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Rifu v Dun Lavin Ltd [2021] PGNC 99; N8847 (27 January 2021)

N8847

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 166 OF 2020

BETWEEN:
JONAH RIFU, WALTER GIZE, KEVIN ABOTOBON, HAROLD KAIPA and their servants and/or agent currently occupying the property described as Portion 695, Milinch Grandville, Fourmil Moresby, National Capital District
Plaintiff

AND:
DUN LAVIN LIMITED
Defendant

Waigani: Tusais A J
2020: 20^th November, 23^rd December
2021: 27^th January

PRACTICE AND PROCEDURE – Civil -Notice of Motion - Application by defendant to dismiss case for frivolous, vexatious and failing to show a reasonable cause of action- O12 r 40 NCR -.

Cases Cited:
John Kameku v Patilias Gamato (2004) N2512
Maso v Pat (2016) N6550
Mudge v. Secretary for Lands [1985] PNGLR 387 National Executive Council v Public Employees Association of PNG [1993] PNGLR 264
Nambawan Super Ltd v Occupants Portion 2157 Milinch Granville Fourmil Port Moresby [2020] PGNC 295
Philip Takori v Simon Yagari (2008) SC905
PNG Forest Product v The State [1992] PNGLR 85
Ronny Wabia v BP Exploration Operating Co Ltd (1998) N1697

Counsel:
Mr. l. Manua, for the Applicant / defendants
Mr H Namani, for the Respondents / Plaintiff

RULING ON MOTION

25^th January, 2021

1. TUSAIS AJ: INTRODUCTION: Before me is a Notice of Motion filed 12^th November 2020 by the defendant seeking dismissal of the proceedings pursuant to Order 12 Rule 40 (I) of the National Court Rules. This is my ruling on that application.
   

Facts

2. Facts in this case are established from an affidavit of Jimmy Lin, operations manager of defendant company, dated 17^th November 2020 and two affidavits filed by Mr Manua of counsel for Dunlavin Limited, the applicant/ defendants (hereinafter ‘Dunlavin’). The first affidavit was filed on the 12^th of November 2020 and a supplementary affidavit filed on the 13^th November 2020. A chronology of significant events and actions in the matter now before the court is usefully set out in the Supreme Court judgement case SCA 10 of 2014. Salika CJ on behalf of Yagi J and Pitpit J handed down a summary judgment which is copied in full below.

“The appellant is an incorporated association whose membership comprised of over 1,000 people who originally come from Oro Province and are residing on a block of land within the National Capital District. The land is a registered State Lease described as Portion 695, Milinch Granville, Fourmil Moresby, National Capital District contained in Volume 19 Folio 206. It is commonly known as Oro Block and is situated opposite the PNG Defence Air Transport Squadron Facility at the Jacksons International Airport (Portion 695).

The members of the association have been residing on the land for many years. They wanted to have the land registered in their favour and have engaged with various government entities.

On 6^th March 2008, the title of Portion 695 was transferred and registered in favour of the respondent.

The respondent is a company incorporated in Papua New Guinea. At the time of incorporation and as a matter of law it attained a status as a “national enterprise” by virtue of s.3(1) of the Investment Promotion Act (the Act). In other words, the shareholding in the company held by citizens was more than 50%. In the course of the company carrying on business as such it purchased and registered its rights, interests and title over Portion 695 in March 2008. A little more than 2 ½ years later, the company’s status as the “national enterprise” changed to “foreign enterprise” following the acquisition and transfer of 100% shareholding interest to foreign investors. The change in the status eventuated on 14^th October 2010.

On 20^th December 2010, the respondent submitted to the Investment Promotion Authority an application for certification as a foreign enterprise pursuant to ss. 32 and 28 of the Act. The application has been pending consideration over a number of years including the time when the decision, the subject of this appeal, was made. It was brought to this Court’s attention at the hearing that the application was finally approved and a certificate permitting the respondent to carry on business as a foreign enterprise was issued on 1^st April 2014.

On 29^th January 2011, the respondent served on the members of the Association a notice to vacate Portion 695. This action resulted in court battles between the two groups.

In that year (2011), there were two separate but related proceedings filed in the National Court in relation to Portion 695. The proceedings were OS No. 105 of 2011 and OS No. 145 of 2011. In the earlier proceeding, the members and supporters of the Association sought amongst others, principally declaratory orders to the effect that the lease be forfeited by the State and that the notice to vacate is illegal and therefore null and void. The later [proceeding was at the suit of the respondent where it sought declarations, amongst others, to validate its legal rights to the title in Portion 695, permanent injunction to restrain the members of Association from erecting buildings and claim the vacant possession. Both proceedings were consolidated and heard by Justice Davani and a decision was delivered by Her Honour on 15^th April 2012 in favour of the respondent. The Court declared that the respondent had indefeasible title to Portion 695 and the settlers including the members of the appellant were ordered to vacate the land.

Despite the orders to vacate, the members of the appellant acted in defiance and continued to reside on the land. The matter was then resurrected before the National Court and on 22^nd November 2012, the court, with the consent of all parties, ordered that all settlers residing on Portion 695 must vacate the land within 3 months, the deadline being 21^st February 2013.

The settlers continued defiance of the second Court order prevailed and consequently, the respondent engaged Police to remove the settlers, including members of the appellant, residing on Portion 695. At this point the appellant took up the fight on behalf of its members and commenced a fresh action in the National Court in OS No. 205 of 2013. In that action the appellant claimed that, pursuant to the relevant provisions of the Investment Promotion Act 1992, the respondent is a “foreign enterprise” and is prohibited from “carrying on business” in Papua New Guinea including acquiring property rights over Portion 695 and instituting legal proceedings in OS No. 145 of 2011.

Upon commencing the proceeding, the appellant obtained an order ex parte preventing the respondent from evicting the settler residing on Portion 695. In response the respondent filed on 9^th May 2013 an application seeking orders to set aside the ex parte order and for a dismissal of the proceeding. The appellant countered by filing on 18^th June 2013 an application for judgement.

Both applications came before the learned primary judge for hearing on 12^th December 2013. The parties agreed for the respondent’s application to be heard first. The Court accordingly heard the application by the respondent to dismiss the action under Order 12 Rule 40 of the National Court Rules and gave its decision on 17^th January 2014. The learned primary judge dismissed the proceeding holding that notwithstanding the undisputed fact that the respondent was a foreign enterprise, the definition of “carrying on business” under s. 3 of the Act does not include a foreign enterprise “investing any of its funds or holding and real of personal property” and consequently having found that the claims by the appellant rested entirely on the premise that holding land is carrying on business ruled that its substantive claim cannot succeed and is bound to fail because the respondent is the registered proprietor having indefeasible title which legal right is paramount and overrides any equitable title or interest.

The appellant appealed against that decision and raised 3 grounds in its appeal. The central issue in the appeal turns to the true meaning of the phrase “carrying on business” as defined under the provisions of the Act.

Having reviewed the principles pertaining the statutory interpretation and having regard to the relevant provisions of the Act, the Court is of the opinion that the meaning of “carrying on business” given by the learned primary judge in the circumstances of the case was correct in law. Furthermore, the meaning finds harmony with the established principle in indefeasibility of title.

Consequently the Court is of the opinion that the learned primary judge did not commit any error of law or fact in upholding the respondent’s application and dismissing the proceedings pursuant to Order 12 Rule 40 of the National Court Rules.

For these brief reasons, and which the full written reasons will follow suit in due course, we dismiss the appeal with cost."

3. After the Supreme Court handed down its decision, Dunlavin took steps to enforce its right to vacant possession and obtained eviction orders from the Port Moresby District Court on 13^th July 2020. When it sought to enforce this order on the 05^th of October 2020, with the assistance of police, the plaintiffs filed these proceedings and obtained interim restraining orders. However, those orders were not extended after the plaintiffs failed to explain why they had not appealed against the eviction orders issued by the District Court.
   
4. The plaintiffs seek the following declarations and consequential orders in the Originating Summons:
   

1. A declaration that the Defendant does not have a clear title over the land described as Portion 695, Milinch Granville, Fourmil Moresby, National Capital District (Portion 695).

2. An order in the nature of permanent injunctions be granted against the Defendant, its servants and/or agents including the Royal Papua New Guinea Constabulary (Police) from giving effect to the Port Moresby District Court Order of 13 July 2020 for the eviction of the Plaintiffs until the determination of the substantive matter.

3. A declaration that the Order of the Port Moresby District Court of 13 July 2020 are stayed pending the determination of the issues concerning the title to Portion 695 by the Department of Lands and Physical Planning (DLPP).

4. The Defendants to pay the Plaintiff's costs.


Issues

5. The main issue in this case is whether these proceedings should be dismissed for being frivolous and vexatious, and for not disclosing a reasonable cause of action.
   

The law

6. Order 12 Rule 40 (1) of the National Court Rules provides: -
   

“(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings –

(a) no reasonable cause of action is disclosed; or

(b) the proceedings are frivolous and vexatious; or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.”


Defendants' arguments

7. The applicant / defendant argued that this case has run its course. It has gone from the National Court all the way up to the Supreme court which handed down its decision in 2019 in favour of Dunlavin. There are no more issues between the plaintiffs and the defendant.
   
8. Mr Manua argued that the letter to show cause issued by the Minister for lands to the defendant is a controversy between the two parties. It has nothing to do with the plaintiffs.
   
9. It was argued that the plaintiffs do not have a cause of action. No primary right had been pleaded. Plaintiffs have no rights at all and have been found to be illegal settlers on the defendant’s land. There are no real issues to be tried apart from the plaintiff’s assertion that title is uncertain and will be revoked any time soon. This it was argued was highly speculative.

The plaintiff's response

10. The plaintiffs oppose the defendants' application. Mr Namani raised the following arguments on their behalf.
    
    1. The defendant no longer has clear title because the Minister for Lands had written a letter asking the defendant to show cause why it had not developed the land under the lease covenants. In that situation he submitted that the ‘dynamics’ had changed dramatically, and the defendant was no longer in the same legal position it was in prior to the issuance of this notice. The plaintiffs should therefore be allowed to remain on the land because at any time, the Lands Minister could revoke title. Mr. Namani argued that the notice letter issued under section 122 (2) of the Land Act (Forfeiture of State Lease) rendered the title as tainted and prejudiced or compromised so the defendant can no longer seek relief like eviction under it. Mr. Namani when asked for any authority for this argument said there were none so far but that this court could nevertheless find that this was so.
       
    2. The plaintiffs had acquired equitable title to the land after residing for many years some as early as 1995 or so.
       
    100. The defendant was a foreign entity. I think it was suggested that because the company was foreign owned, it should not be allowed to interfere with the rights of native Papua New Guinean citizens. Again, no case authority or provisions in the Constitution or other legislation was cited in support of this contention.

Analysis of arguments

11. Arguments submitted by the defendant are based on principles of law that have been judicially considered and are now well settled. Sheehan J stated the principle concisely in the case of PNG Forest Product v The State [1992] PNGLR 85 where he said:
    

“A party has the right to have his case heard, as guaranteed by the constitution and the laws of this country. Such a right cannot lightly be set aside. Hence the National Court Rules are designed to enhance those rights and to ensure the fair disposal of matters coming before the court. For the same reason in the interest of justice, the rule includes prohibitions against abuse to the process of the court.”

12. Is there a reasonable cause of action in this case? To determine that I go back to the arguments put forward by the plaintiffs. They conceded from the outset that they accepted the eviction orders issued by the District Court as lawful court orders. They did not appeal against it because they had no legal basis to do so. Only when they discovered the letter to the defendant to show cause under section 122 of the Land Act they now argue that they have a cause of action based on that fact alone. It was submitted emphatically that the Show cause letter has somehow rendered the title defective.
    

Compromised land title

13. Section 122 of the Land Act reads:
    

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.

14. I reproduced the whole section to show that there is no provision or language in there that says that the issuance of notice to show cause under section 122 (2) makes that title invalid, tainted or compromised to such an extent that the title holder is no longer able to claim his full rights under law, including the right to vacant possession.
    
15. For all intents and purposes a title holder to leasehold land holds clear indefeasible title against the rest of the world until his title expires or is forfeited under section 122 of the Land Act. The law relating to this is stated in the Supreme Court case of Mudge v. Secretary for Lands [1985] PNGLR 387 as follows:
    • (1) Registration of leases under the provisions of the Land Registration Act (Ch No 191) is effective to vest an indefeasible title in the registered proprietor subject only to the exceptions enumerated in s 33.
      
16. In the case of Nambawan Super Ltd v Occupants Portion 2157 Milinch Granville Fourmil Port Moresby [2020] N8632 Anis J said:
    

“Papua New Guinea, by statute, adopts and follows the Torrens system of land registration. The enabling legislation is the Land Registration Act Chapter No. 195. As soon as the registration process of a land is complete and title is issued, the registered proprietor shall have an indefeasible title. The Torrens system is not a system of registration of title but a system of title by registration.”

17. None of the exceptions listed in section 33 of the Land Registration Act have been established in this case. The Minister also has not yet published a notice in the National Gazette forfeiting the state lease pursuant to s 122 (1) of the Land Act. At the present time, the defendant is still the registered title holder of the state lease to portion 695. I find in those circumstances that Dunlavin still has clear legal title and it has not been compromised or otherwise rendered defective simply because of the issuance of the show cause letter. Consequently, the plaintiffs do not have a reasonable cause of action based on this ground.

Equitable Rights

18. The plaintiffs argued that they had acquired equitable rights after residing uninterrupted for a long time since as early as 1995. Is this a reasonable cause of action sufficient for the court to allow it to proceed to full trial for that issue to be determined?
    
19. This case, as evidence clearly shows, has been through the court system up to the Supreme court. The judgement set out in full earlier clearly shows that this issue has been determined in favour of the defendant. Equitable rights of the plaintiffs as illegal settlers only apply to the issue of notice period within which to vacate. Sufficient period should be given to them to move. I refer to the case of Ready Mixed Concrete Pty Ltd v The State, Samana and Kiamba [1981] PNGLR 396. Miles J in that landmark case held (headnotes):
    
    1. “The State having raised no objections to the presence of the occupants, they should be regarded as having acquired an equitable interest analogous to a licence.
       
    2. In the circumstances therefore the applicant, as holder of the legal estate, was estopped from insisting on his full legal title;”
       
20. The equitable right was given effect to in that case by the court granting the settlers sufficient time to dismantle their homes and move out.

Again, I have difficulty in finding a reasonable cause of action is disclosed on this ground. The plaintiffs themselves have stated in affidavits filed in this proceeding that they accepted the eviction orders issued by the District court, as lawful and in order. They have been given plenty of notice as far back as 2011 when the defendant first filed proceedings in the National court seeking vacant possession. The court granted orders as sought but the plaintiffs through their umbrella organisation, Oro Development Inc, took out further court proceedings challenging Dunlavin on whether it was allowed under law to carry on a business. When this case was dismissed by the National Court, Oro Development Inc appealed to the supreme court. The Supreme Court dismissed the appeal and confirmed the National Court decision ordering the plaintiffs to vacate the land failing which the police would forcefully evict them.

There is an old adage in law that “those who come to equity must do so with clean hands”. The plaintiffs in this case do not come to court with clean hands. They have had clear orders and directions issued against them for many years but have deliberately ignored and defied those orders including those issued by the highest court in PNG, the Supreme court.

21. For those reasons I find that there is no reasonable cause of action disclosed or made out under the heading of ‘equitable right’.
    

Defendant foreign owned company

22. I reject this argument outright. The issue was canvassed by the supreme court where this issue was argued. It was dismissed as not supported by law. If the plaintiff is asking this court to discriminate against the defendant because it is a foreign owned company, I refuse to accede.
    

Conclusion

23. So, is this case frivolous and vexatious? Does it fail to disclose a reasonable cause of action? In the case of Ronny Wabia v BP Exploration Operating Co Ltd (1998) N1697 Sevua J referred to frivolous, vexatious and abuse of process defined by Rule 5 of the New South Wales Supreme Court Rules 1970:
    

“Frivolous”, by its ordinary meaning means, “not worth serious attention or manifestly futile.” Proceedings which disclose no reasonable cause of action as well as proceedings which are otherwise unsustainable are frivolous in this sense. In its ordinary meaning, ‘vexatious’ means, ‘causing vexation or harassment.’ It is used to describe the harassment of a defendant being put to the trouble and expense of defending proceedings which are either a mere sham, or which cannot possibly succeed. As to the abuse of process argument, it is ... the use of the court process to pursue proceedings which disclose no reasonable cause of action, or which are frivolous or vexatious, is clearly an abuse of that process.”

24. I find that the proceedings do not disclose a reasonable cause of action for the reasons stated above. I also find that the proceedings are frivolous and vexatious. The plaintiffs have exhausted all their arguments. What they are hoping for now is for the lands minister to revoke the lease and so no one will have the right under that lease to evict them. The reason the minister may forfeit the lease is because of his view that the defendant has not developed the land since acquiring title in 2010. The defendant has given evidence of a letter it wrote to the minister immediately after becoming aware of the forfeiture notice which was when these proceedings were filed. Dunlavin explained that it was unable to develop the land because of the presence of illegal settlers who had refused to move out even after court orders were issued.
    
25. In my view the plaintiff’s refusal to give up vacant possession is illegal conduct. It is in direct contempt of court orders issued by the Supreme Court down to the District Court. This court cannot allow the plaintiffs to benefit from their own wrongful conduct. In the supreme court case of PNG Bible Church Inc v Mandi [2018] PGSC 82; SC1724, Kandakasi J (as he was then), Bona and Toliken JJ said this:

“It is trite law that no person can be allowed to gain from his or her own crime or illegal conduct. The recent decision of the Supreme Court in Rimbunan Hijau (PNG) Ltd v. Ina Enei (2017) SC1605, restated the law in these terms:

Secondly, we note that, none of the English cases as followed and applied in PNG and elsewhere appear to discuss and take into account the principle that a person cannot be allowed to gain from his or her illegal or criminal conduct.”

RULING

26. For the reasons outlined above the court finds that this case is frivolous, vexatious and does not disclose a reasonable cause of action. It is also an abuse of the courts process. The Court has an inherent jurisdiction to protect and safeguard its own processes and protect its dignity and integrity from any possible abuse by litigants: National Executive Council v Public Employees Association of PNG [1993] PNGLR 264, Philip Takori v Simon Yagari (2008) SC905.
    
27. In the exercise of my discretion, I dismiss the proceedings. However, I will give the plaintiffs some more time to allow them to dismantle their homes and other structures. In the recent case of Nambawan Super Ltd v Occupants Portion 2157 Milinch Granville Fourmil Port Moresby (supra), Anis J dealt with a similar case to this of people occupying portions of land not far from the land in this case. He gave time to the settlers to move and said this.
    

“In my view, the appropriate vacation period should be ordered at 120 days from the date of the Court’s order. This would amount to a 4-month period. I believe that the said timeframe is reasonable under the circumstances of the 3 proceedings. Some of the defendants have erected houses or made improvements to their blocks which they must now remove. It may seem that a period of 2 months or less may not be sufficient to enable the defendants to vacate the land. The 4-month period also takes into account the time within which the defendants could use to find new locations to settle. I also consider that if I am minded order a lesser vacating period, it may be considered as a harsh and oppressive treatment against these defendants by the registered proprietor who nevertheless has lawful rights over the land.”

28. Section 155 (4) of the Constitution gives inherent power to the Supreme court and National court to make orders as it sees fit to do justice in a case. It reads:
    

“(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.

29. Pursuant to section 155 (4) I will allow a period of three months within which the plaintiffs must vacate the land described as portion 695. Plaintiffs are given until the 27^th of April 2021 to dismantle their homes and other structures, if they want to, and vacate the land. I do not give these orders lightly because a lot of them have spent a considerable period of their lives on that piece of land. However, the rule of law is paramount in this country. Nations other than repressive regimes find it very difficult to operate in its absence. I also echo Justice Anis comments in the recent case of Nambawan Super Ltd v Occupants Portion 2157 (supra) when he advised the public to be very cautious when buying land from dubious vendors. In this case I add the further caution to people not to settle on any unoccupied land without first obtaining permission. All land in PNG whether alienated or customary belongs to someone. Currently with its vastly increased population there is no such thing as “terra nullius” the Latin phrase translated as ‘nobody’s land’, in Papua New Guinea.
    

ORDERS

30. The Court’s orders are:
    
    1. The defendant’s application to dismiss the entire proceedings is granted
    2. The entire proceedings are dismissed.
    3. The plaintiffs and all other unauthorized occupants of land described as portion 695, Milinch Granville, Fourmill Moresby are ordered to vacate the property within 3 months which time will expire on the 27^th of April 2021.
    4. The plaintiff is to pay the defendants costs on a party / party basis to be taxed if not agreed.
    5. Time is abridged.

Orders Accordingly.

Namani & Associates Lawyers: Lawyer for the Plaintiffs
Rageau Manua & Kikira Lawyers: Lawyer for the Defendant