N9627

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO.  147 OF 2013 (CC1)

BETWEEN:

MICHAEL YAIPUPU
Plaintiff

AND:
JOSEPH KINTAU, Chief Executive Officer, NATIONAL AIRPORTS CORPORATION LIMITED
First Defendant

AND:
NATIONAL AIRPORTS CORPORATION LIMITED
Second Defendant

Waigani: Tamade AJ
2022: 23rd February, 4th May

STATE LEASE – subject property situated next to the airport – state lease or aerodrome land – the map does not show the subject land to be aerodrome land.

TORT – trespass – Defendants erected a structure on the property – without the consent of the plaintiff. 

CONTRACT – Plaintiff claims he entered into a verbal agreement with the Defendant – Plaintiff claims Defendant failed to meet unpaid rentals - no approval by the board of directors to enter into an agreement or contract to pay rent over the subject property.

LAW ON AGENCY – whether agent entering into the contract has ostensible authority – representation shown agent has authority to enter into a contract – representation was made by a person who had the authority to manage the business with respect to the contract made – contractor was induced by the representation to enter into a contract - chairman did not have express authority of the board to enter into an agreement with the Plaintiff – there is no evidence to corroborate the verbal agreement to pay rent for the subject property.

LAND REGISTRATION ACT – Section 33 – Protection of registered proprietor – registered proprietor holds it free from encumbrances except for fraud - allegations are not pleaded – the court cannot adjudicate on it – no case of fraud.

Cases Cited:

The following cases are cited in the judgement:

Papua New Guinean Cases

Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] PGSC 8; SC694 
Rainbow Holdings Pty Ltd v Central Province Forest Industries Pty Ltd (Provisional Liquidator Appointed) [1983] PNGLR 34
Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387 

Overseas Cases:

ASIC v Rich (2003) 44 ACSR 341

Legislation:
Land Registration Act
Counsels:	

Mr Aaron Benny, for the Plaintiff
Mr Isaac David, for the Second Defendant

04th May, 2022

1. 	TAMADE AJ: This is a decision on the trial of this matter pertaining to a portion of land near the Wapenamanda Airport in Enga Province.

2. 	The Plaintiff claims that he holds a clear State Lease granted to him on 2 June 2006. The property is described as Allotment 9 Section 3, Wapenamanda, Enga Province. The property is situated right next to the Wapenamanda airport.
3. 	The Plaintiff claims that in 2008, the Defendants moved onto the property and built a high post permanent house for its employees without the authority and consent of the Plaintiff. 
4. 	The Plaintiff then approached one Rex Paki who was the Chairman of the National Airports Corporation (NAC) at that time and negotiated with Mr Rex Paki which was agreed verbally that instead of removing the house, the NAC would pay rent to the Plaintiff in the sum of K6 171.67 per month.
5. 	The Plaintiff then started issuing invoices for rentals to the Second Defendant however no payment whatsoever was forthcoming to the Plaintiff. 
6. 	The Plaintiff attempted to evict the Second Defendant by filing court proceedings in the Wabag National Court however the property on the subject land was burnt to the ground due to some electrical fault in 2011.
7. 	The Plaintiff alleges that when the property was burnt down, he was seen by the community as an arsonist and in some way responsible for the fires that burnt the property and claims that he lost his standing in the community as a result and it affected his reputation. The Plaintiff claims a total of K500 000 as compensation for loss of his good name and standing in the community. I enquired with counsel for the Plaintiff during the trial of the matter whether there was such a cause of action in law similar to defamation of character which was not pleaded in the Statement of Claim. The Plaintiff’s counsel did not answer me satisfactorily and therefore I refused this particular aspect of this claim as it has not been made out in law as an identifiable cause of action. A Plaintiff is therefore bound by his pleadings (see Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] PGSC 8; SC694 (27 September 2002) and the cause of action for defamation was not pleaded.
8. 	The Plaintiff’s claim is essentially for trespass to his land by NAC for erecting the structure of a house on his property and for failure to meet unpaid rental he claims to be in the sum of K345 613.52 as verbally agreed with Mr Rex Paki who held the position of Chairman of NAC then.
9. 	The Second Defendant however denies that it is liable to the Plaintiff in the amount claimed for loss of rental and says that Mr Rex Paki was never authorised to enter into any agreement with the Plaintiff and if there was any agreement, such an agreement should be in writing which there is none and should be entered into with the Managing Director and or the management of the NAC. The Second Defendant insist that there was never a Board approval for any rental payments to the Plaintiff over the subject property.
10. 	Essentially, the Second Defendant denies the Plaintiff’s claim and states that the subject land the Plaintiff claims to hold a State Lease over is an aerodrome land and is part of the Wapenamanda Airport which the Second Defendant by virtue of the Civil Aviation Act 2000 is vested with the ownership and authority over to manage and operate. The Second Defendant states that it does not require the consent of the Plaintiff to occupy and use that land as there was a house occupied by a Civil Aviation Authority Safety Officer in 2009 to early 2012.

Is the subject land considered an aerodrome land and or is it subject of a State Lease?
11. 	After hearing parties at the trial of this matter, I ordered that the Plaintiff produce to my Chamber an original copy of the State Lease of the subject land for my perusal and that the Second Defendant also produce to me their records that show that the subject land is an aerodrome land.
12. 	Counsels for the Plaintiff and the Second Defendant did comply with the Court Orders.
13. 	Upon perusal of the copy of the State Lease Title Deed held by the Plaintiff, it shows that the State Lease was granted to the Plaintiff and dated 20 June 2000 from 8 July 1994 to 8 July 2093 as Special Purpose Lease for Office Complex described as Allotment 9, Section 3, Wapenamanda, Enga Province. On the map attached to the Title Deed, the subject land highlighted on the map shows the subject land as situated right next to the Airport runway.
14. 	The Second Defendant however submitted a Gazettal Notice published in the National Gazette on 29 January 2016 No. G39 which is a declaration by the Minister for Civil Aviation in 2016 that the assets and liabilities of the Civil Aviation Authority were succeeded by the NAC including the Civil Aviation Safety Authority and the PNG Air Services Limited. 

15. 	The Second Defendant has tagged the assets succeeded by NAC to include Wapenamanda Airport Portion 494 which includes the Airport carpark, access road, Aerodrome Boundary Security Fence, Leaseholder Blocks, Flight Strip areas, Runway Areas, Taxiway Areas and Airside Perimeter Road.

16. 	The Map submitted by the NAC does not show that Allotment 9 Section 3 Wapenamanda, Enga Province is part of the assets of NAC though the map is the same as the map on the Title Deed produced by the Plaintiff. I am satisfied that the Title Deed produced by the Plaintiff contains the description of the land and the property as being registered to the Plaintiff. 

17. 	The Second Defendant had insinuated allegations of fraud in their submissions in Court as to how the land was obtained by the Plaintiff however those allegations are not pleaded and are not before this Court to adjudicate on. Section 33 of the Land Registration Act therefore protects the registered title holder until a Court of competent jurisdiction finds otherwise as to a case for fraud.
18. 	Section 33 of the Land Registration Act is in the following terms:
33. PROTECTION OF REGISTERED PROPRIETOR.
(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except–
(a) in the case of fraud; and
(b) the encumbrances notified by entry or memorial on the relevant folio of the Register; and
(c) the estate or interest of a proprietor claiming the same land under a prior instrument of title; and
(d) in case of the omission or misdescription of any right-of-way or other easement created in or existing on the same land; and
(e) in case of the wrong description of the land or of its boundaries; and
(f) as to a tenancy from year to year or for a term not exceeding three years created either before or after the issue of the instrument of title of the registered proprietor; and
(g) as provided in Section 28; and
(h) a lease, licence or other authority granted by the Head of State or a Minister and in respect of which no provision for registration is made; and
(i) any unpaid rates, taxes, or other money which, without reference to registration under this Act, are expressly declared by a law to be a charge on land in favour of the State or of a Department or officer of the State or of a public corporate body.
(2) The operation of Subsection (1) is not affected by the existence in any other person of an estate or interest, whether derived by grant from the State or otherwise, which, but for this Act, might be held to be paramount or to have priority.

19. 	The law is settled in this jurisdiction that “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 Section 33” of the Land Registration Act as held in the case of Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387.

Was Mr Rex Paki authorised by NAC at the time to enter into a lease agreement with the Plaintiff as to the subject property?
20. 	The Plaintiff in his evidence as Exhibit P3 stated in his Affidavit that in 2008, the Second Defendant had built a permanent house on the subject property. The Plaintiff and a Mr Rex Paki who was the Chairman of the NAC at that time entered into a verbal agreement for NAC to pay the Plaintiff for rent over that property the sum of K6 171.67 per month.
21. 	Since that time, the Plaintiff has been sending invoices in that sum per month to the Second Defendant for payment however the Second Defendant has never made any payment since.
22. 	The Plaintiff filed eviction proceedings in the National Court in Wabag in 2011 however the house on the property was razed by fire due to electrical faults and those proceedings were abandoned. 
23. 	Mr Rex Paki could be said to have been an agent of NAC at that time however Mr David of the Second Defendant strongly argued at the hearing of the matter that Mr Paki did not have the express authority of the Board of NAC to enter into any such agreement and if any such agreement was agreed upon, it should have been in writing. Perhaps this could have explained why NAC never paid on the invoices raised by the Plaintiff for lease of the subject property since 2011 however the Second Defendant has made submissions that there was no agreement to lease from the Plaintiff and Mr Rex Paki never had any authority to enter into any such agreement.           
24. 	Mr David for the Second Defendant did not make any submissions on the law on agency and or apparent/ ostensible authority whether Mr Rex Paki had any authority to enter into any verbal lease agreement with the Plaintiff. In the absence of actual authority of a person representing a company or his principal, there can exist ostensible or apparent authority to bind the company or the principal to any agreement so entered.

25. 	The Supreme Court in the case of Rainbow Holdings Pty Ltd v Central Province Forest Industries Pty Ltd (Provisional Liquidator Appointed) [1983] PGSC 19; [1983] PNGLR 34 (2 March 1983) held the following principles on ostensible/apparent authority that:
“In the absence of actual authority, apparent or ostensible authority may be found to exist, where it is shown:
(a) that a representation has been made that the agent has authority to enter into a contract of that kind on behalf of the principal;
(b) that the representation was made by a person or persons who had actual authority to manage the business of the principal either generally or in respect of those matters to which the contract related; and 
(c) that the contractor was induced by the representation to enter into the contract.”          
26. 	There is no evidence by Mr Yaipupu to corroborate the fact that he had a conversation with Mr Rex Paki, the Chairman of the Board of NAC in 2008 and that there was a verbal agreement with Mr Yaipupu and Mr Rex Paki to pay rent in the alleged sum for the subject property.
27. 	If there was some payment by NAC in accordance with invoices raised and sent to NAC by Mr Yaipupu, that would give weight to any such verbal agreement entered into by Mr Rex Paki on behalf of NAC and Mr Yaipupu. Mr Rex Paki is not a party to this proceeding and therefore there is no evidence from Mr Paki to admit or deny this fact. NAC in this instance has denied any knowledge of any verbal agreement with Mr Yaipupu over the subject land.
28. 	An agent acting on behalf of his principal and or in this case, a director or chairman of the Board of Directors of NAC acting on behalf of the NAC has a duty to act in the best interest of NAC. A director’s conduct in the course of the discharge of his duties on behalf of a company or his principal maybe seen as exercising the best business judgment for his company however the onus is on the director to prove that he was acting in the best interest of the company.
29. 	The Australian case of ASIC v Rich (2003) 44 ACSR 341 lays down the business judgment rule in Australia on a director’s duty to act in the best interest of a company. The Australian case is persuasive and is used in contrast in this case to show the principle of the use of the business judgment rule. In that case, two of the directors of the company were sued by the Australian Securities and Investment Commission that they failed in their duties as directors of the said company to use their knowledge and skills to a reasonable standard in the best interest of the company to act with due care and diligence.
30. 	In the absence of any evidence from Mr Rex Paki, the uncorroborated evidence of the Plaintiff that any such verbal agreement with Mr Rex Paki did exist in the absence of any written agreement, I find that the evidence of the Plaintiff stands disputed and uncorroborated as to any agreement at all between Mr Rex Paki on behalf of NAC and Mr Yaipupu.
31. 	I therefore find that the Plaintiff stands as the registered proprietor of Allotment 9 Section 3, Wapenamanda, Enga Province having an indefeasible title to the land and therefore is protected by section 33 of the Land Registration Act.
32. 	The Plaintiff’s claim that he had entered into a verbal lease agreement with one Mr Rex Paki who was the chairman of the Board of NAC in 2008 for NAC to pay rent for his property in the sum of K6 171.67   is therefore refused. 
33. 	The matter shall proceed to trial on assessment of damages on the claim in tort for trespass.
34. 	I therefore make the following orders:
1)	Liability is entered for the Plaintiff in accordance with this decision with damages to be assessed for the tort of trespass.
2)	The Second Defendant shall meet the Plaintiff’s party/party costs of these proceedings.

Orders accordingly.
______________________________________________________________
Niuage Lawyers: Lawyers for the Plaintiff
Kalit Legal Consulting: Lawyers for the Second Defendant