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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS (JR) NO. 123 OF 2021
BETWEEN:
HENRY KAUNUBA
- Plaintiff-
AND:
HON. JOHN ROSSO
as Minister for Lands & Physical Planning
-First Defendant-
AND:
BENJAMIN SAMSON
As Secretary for the Department of Lands & Physical Planning
-Second Defendant-
AND:
ALA ANE,
As Acting Registrar of Titles
-Third Defendant-
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
-Fourth Defendant-
AND:
MICHAEL JALBARING
-Fifth Defendant-
Waigani: Tamade AJ
2022: 1st September; 11th November
JUDICIAL REVIEW – forfeiture of State Lease – notice to show cause – forfeiture notice – Land Act 1996 – ss 122, 142, and 169 – ultra vires – unreasonableness – failure to advertise in National Gazette – mandatory requirement – misinterpretation of s 69, Land Act – actual fraud – equitable fraud – constructive fraud discussed – Section 33, Land Registration Act – State Lease unlawfully forfeited – granted to another party – judicial review granted
JUDICIAL REVIEW – order 16, National Court Rules – Section 155 (4), Constitution
Cases Cited:
Papua New Guinean Cases
Lae Bottling Industries Ltd v Lae Rental Homes Ltd [2017] PGSC 43; SC1641
Timothy and Ors v Timothy (2022) SC2282
Tagau v Selon Ltd [2018] PGSC 97; SC1755
PNG Power Ltd v Reipi [2018] PGNC 362; N7442
Mosoro v Kingswell Ltd [2011] PGNC 151; N4450
Koti v Susame [2015] PGNC 6; N5860
Innovest Ltd v Pruaitch [2014] PGNC 288; N5949
Overseas Cases
Associated Provincial Picture House v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
Counsel:
Mr. Christopher Karaiye, for the Plaintiff
Mr. Newman Yano, for the First, Second, Third, and Fourth Defendants
11th November, 2022
1. TAMADE AJ: This is a decision on the Plaintiff’s application for judicial review filed on 30 September 2021 seeking to review the following decisions:
2. Leave for judicial review was granted on 29 September 2021.
3. The subject property was transferred to the Plaintiff on 9 May 2000 under the National Provident Fund (NPF) Board of Trustees and purchased through the NASFUND (National Superannuation Fund) home ownership scheme for its members.
4. The Plaintiff is a Plantations Training Manager serving New Britain Palm Oil Limited and his usual residence is in West New Britain Province. The Plaintiff states that at the time the Plaintiff purchased the subject property, he erected a corrugated fence around the property and gradually began to develop the land to build a house.
5. On 23 April 2019, the Plaintiff received a Show Cause Notice through his postal address, C/Bebere Plantation, Private Mail Bag, Kimbe, West New Britain Province. The Notice was delivered to the Plaintiff through a registered post of Post PNG. The Notice to Show Cause is made pursuant to section 122(2) of the Land Act dated 26 February 2019 that the Plaintiff should show cause why the subject State Lease should not be forfeited within a month from the date of notice for failure to comply with the improvement covenant on the State Lease.
6. After receiving the Notice to Show Cause, the Plaintiff states in his affidavit that he was of the view that the notice prompted him to develop the land and therefore he took steps to successfully apply for a home loan using his savings from AON Master Trust and NASFUND and engaged Hardware Haus to build his house until May 2021 when the Fifth Defendant and a group of policemen attended at the subject land and stopped the construction works.
7. The Plaintiff was therefore unaware that on 23 October 2019, the First Defendant by virtue of his powers pursuant to section 122(1) of the Land Act 1996 forfeited the subject land for the following reasons:
8. The forfeiture of the subject land was published in the National Gazette No. G920 on 14 November 2019. The Plaintiff was also unaware of this publication. The Plaintiff states in evidence that he was not informed and or served the notice relating to the forfeiture. The Plaintiff then caused a letter dated 23 November 2020 to the Minister confirming receipt of the Notice to Show Cause and apologised for his failure to respond to the notice within the required time and informed the Minister that he was taking steps to develop the property. Unknown to the Plaintiff, the subject property was granted to Mr. Michael Jalbaring who is an employee of the Department of Land & Physical Planning, the Fifth Defendant. The Plaintiff followed up with another letter dated 23 November 2020.
9. On 16 March 2021, Mr. Michael Jalbaring was notified by the Secretary for Lands & Physical Planning that he was the successful applicant for the subject lease which a decision was published in the National Gazette on 16 February 2021. The new State Lease granted to Mr. Michael Jalbaring over this same portion of land is dated 22 April 2021.
10. Mr. Kaunuba, the Plaintiff states that when he attended at the Lands Department Office to deliver his letter concerning the subject property, he saw Mr. Jalbaring and confronted him regarding the title of the subject property as he states that Mr. Jalbaring is an Officer in the Titles Office in the Department of Lands & Physical Planning and demanded to know why Mr. Jalbaring was interested in his property.
11. Mr. Kaunuba states in evidence that on 31 May 2021, he became aware of the forfeiture of the subject lease when an agent attended at the Revenue Office of NCDC Waigani to settle the land and garbage rates and he was informed that the subject property was updated with the details of the new owner, and he was informed when he later received an email from NCDC. Mr. Kaunuba states that if only he was given an opportunity to explain why the improvement covenant was not complied with in time, his property would not have been forfeited as he has since paid for his outstanding land lease rentals.
12. I am satisfied from the submissions of Mr. Karaiye of the Plaintiff that the Plaintiff was out of time to appeal the decision regarding the forfeiture of the subject State Lease pursuant to section 142 of the Land Act and has therefore proceeded by way of judicial review as the decision in question is an administrative decision pursuant to the Supreme Court case of Lae Bottling Industries Ltd v Lae Rental Homes Ltd[1].
Did the Minister act ultra vires his powers pursuant to the relevant provisions of the Land Act in forfeiting the subject State Lease held by the Plaintiff?
13. Section 122 of the Land Act 1996 is in the following terms with the relevant sections underlined:
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 uphold the submissions of Mr. Karaiye that the First Notice to Show Cause dated 26 February 2019 was in regard to the failure to comply with the improvement covenant on the State Lease only. In the Notice of Forfeiture of the State Lease published in the National Gazette on 14 November 2019, the additional ground for the forfeiture being the Land Rental remaining due and owing for more than 6 months was not included in the Notice to Show Cause to Mr. Kaunuba. I find that the Minister failed to give a Notice to Show Cause pursuant to section 122(2)(a) of the Land Act on the ground of unpaid land rental.
15. Mr. Karaiye of the Plaintiff submits that the Minister also failed pursuant to section 122(4) of the Land Act to issue a Notice of Forfeiture on the Plaintiff as is mandatory.
16. Having read the Affidavit of Mr. Michael Jalbaring filed on 24 February 2022, he states that he is a public servant working with the Department of Lands & Physical Planning as the Titles Registration Examiner for NCDC region. He makes mention that the land was underdeveloped for over 19 years and that the State took the process to forfeit the land on this basis. He applied for the land and was successful. There is no evidence in his Affidavit of a Notice of Forfeiture served on Mr. Kaunuba.
17. I have also read the Affidavit of Mr. Benjamin Samson, the Secretary for the Department of Lands & Physical Planning filed on 1 March 2022, there is no evidence that the Notice of Forfeiture was served on the Plaintiff as per section 122(4) of the Land Act. I uphold the submissions of Mr. Karaiye and also find that the required notice as per section 122(4) was never served pursuant to section 169 of the Land Act.
18. I find that in regard to the forfeiture of the State Lease from the Plaintiff, the Minister has acted ultra vires his powers contrary to section 122(2)(a), section 122(4), and section 169 of the Land Act. I also find that the additional ground for the forfeiture being unpaid land rental was never included in any Notice to Show Cause to the Plaintiff.
19. In the case of PNG Power Ltd v Reipi[2], Justice Thompson (as she was then) ruled that in regard to section 122(4) of the Land Act in failing to serve a Notice of Forfeiture:
20. I find that the Defendants have not served the Notice of Forfeiture so as to leave the Plaintiff unaware that his title had been cancelled and therefore, he would be deprived of the opportunity to re-apply for his title. I find this as dishonest and irregular.
21. I also find that the Plaintiff was denied natural justice to be heard on the ground of unpaid land rental as he was never given a Notice to Show Cause on this ground, yet it was included as a ground for the forfeiture of his State Lease.
22. I am satisfied that the Plaintiff has taken steps to develop the land by taking out a loan from the commercial banks and has erected a dwelling home on the subject land. Annexure HK5 in the Affidavit of the Plaintiff filed on 7 September 2021 shows a house that is almost to completion.
Did the Minister act ultra vires his powers in granting the new State Lease to Mr. Michael Jalbaring?
23. Section 68 and 69 of the Land Act is in the following terms:
68. ADVERTISEMENT OF LANDS AVAILABLE FOR LEASING.
(1) Except where land has been exempted from advertisement under Section 69, the Departmental Head shall give notice, by advertisement in the National Gazette, of all lands available for leasing under this Act.
(2) An advertisement under Subsection (1) shall contain the following information:–
(a) the type of lease available to be granted;
(b) the purpose of the lease;
(c) the length of the lease;
(d) a description of the land to be leased;
(e) the amount of rent (if any) payable for the first period of the lease;
(f) in the case of a special purposes lease–any royalties that are payable;
(g) the terms and conditions of the lease;
(h) the reserve price;
(i) such other information as the Departmental Head thinks fit or the Minister directs.
(3) A statement contained in an advertisement under this Section does not in any way bind the State in the granting of a lease over land the subject of the advertisement or constitute an offer to lease land.
69. DUTY TO ADVERTISE STATE LEASES.
(1) A State lease shall not be granted without first being advertised in accordance with
Section 68 unless the land has been exempted from advertisement under Subsection (2).
(2) The Minister may exempt land from an advertisement for application or tender–
(a) where the lease is granted to a governmental body for a public purpose; or
(b) where it is necessary to relocate persons displaced as a result of a disaster as defined in the Disaster Management Act 1984; or
(c) where a lessee applies for a further lease; or
(d) where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking; or
(e) where the land applied for adjoins land owned by the applicant and is required to bring the holding up to a more workable unit,
providing that the claims of other neighbouring landowners are considered and their views are taken into account in deciding whether
to exempt the land from advertisement in favor of the applicant; or
(f) where the Department responsible for foreign affairs recommends that land be made available to the applicant for consular premises;
or
(g) where the land is required for the resettlement of refugees; or
(h) where the applicant has funded the acquisition of the land from customary landowners in order to acquire a State lease over it;
or
(i) where a lease is to be granted under Section 99 or 102; or
(j) where a new lease is granted under Section 110, 130, or 131.
24. I find no evidence in the Affidavit of Mr. Michael Jalbaring or the Affidavit of Mr. Benjamin Samson stating that the requirement of sections 68 and 69 of the Land Act has been complied with in the grant to the Fifth Defendant. Mr. Samson as the Registrar of the Department of Lands simply restates the fact that the Fifth Defendant is a permanent employee of the Department of Lands & Physical Planning and as he was the sole applicant for this land, the land was granted to him. Mr. Samson also states in his Affidavit that the Minister endorsed a Notice under section 69(2)(d) that the subject land was exempted from advertisement. How convenient is this fact? How can the public at large, including the Plaintiff have known to also apply for this land? Because it was not made known to the public, it was never published in the National Gazette, and this was not land that fell within the categories for exemption under section 69 or section 69(2)(d) of the Land Act for that matter. I find that Mr. Samson as the custodian of the process under the Land Act has the utmost duty to ensure the due compliance of the processes under the Land Act and not to flout and manipulate the process in my view.
25. The stark blatant disregard for the law is found in the Minister’s decision in the Notice of Exemption dated 21 August 2020 which reads as follows:
“I HON. JOHN ROSS, MP Minister for Lands & Physical Planning by virtue of the power conferred on me by section 69(2)(d) of the Land Act 1996 and all other powers enabling me, hereby exempt from advertisement the land described in the Schedule referred to hereunder7.
The special reason being that the applicant; MICHAEL JALBARING who is a permanent employee with the Department of Lands and Physical Planning, has shown his personal interest in developing the said land through successfully completing the due process of forfeiture thus making this land available for Tender.”
26. Section 69(2)(d) refers to a business establishment, project, or other undertaking. The special reason by the Minister is contrary to the intent and purpose of section 69(2)(d) and should take the ire of every Papua New Guinean queuing up to apply for land in this country. There are also public servants seeking to apply for land here in PNG. What makes a lands department officer responsible for Titles special? What is special about their case that the law should bend for them? The decisions by the Minister first and foremost leaves the hands of the Secretary for the Department of Lands or his office. They vet every documentation for the Minister’s approval, and it is the Secretary that recommends to the Minister and advises the minister as to matters that warrant the Minister’s approval. The Minister in my mind cannot act on his own accord, he acts on advice from his Department and from the Secretary for the Department of Lands who is the custodian of the office of the Department of Lands and Physical Planning. I am of the view that the Minister was grossly ill-advised resulting in a decision that has circumvented the true meaning and intent of the law in regard to section 69 of the Land Act for the grant to the Fifth Defendant.
27. Mr. Karaiye of the Plaintiff has made submissions that the Court should find that the actions and omissions of the Defendants in facilitating the forfeiture of the State Lease previously held by Mr. Kaunuba and in granting a new State Lease to Mr. Jalbaring who is the Titles Examiner within the Office of Registrar of Titles of the Department of Lands & Physical Planning, contrary to the due process under the Land Act raises suspicion of an apprehension of bias and in the circumstances, the Defendants actions were deceitful, misleading, non-transparent, dishonest and they amount to bad faith and fraud.
28. Pursuant to section 33(1) of the Land Registration Act, a registered title holder to a State Lease holds it free as to any encumbrance except as to fraud and other limited exceptions. Mr. Karaiye implores the Court to find that the presumption that Mr. Jalbaring holds this new State Lease as granted to him as an innocent title holder or lessee is waived as the circumstances of the forfeiture from Mr. Kaunuba to Mr. Jalbaring is tainted with fraud.
29. In the recent case of Timothy and Ors v Timothy[3], the majority of the Court in Batari and Logan JJ ruled that fraud for the purpose of section 33(1) of the Land Registration Act as to be actual fraud by the registered proprietor or their agent and it cannot be constructive or equitable fraud. Justice Anis on the other hand as the minority in the Timothy[4] case found that as section 33(1) did not spell out whether fraud is actual fraud or equitable or constructive fraud, His Honour in his dissenting decision in the Supreme Court ruled that it is sufficient to show in the absence of actual fraud that there is constructive fraud and or equitable fraud linked to the current registered proprietor which is the wider view of fraud encapsulating the constructive or equitable fraud.
30. In Tagau v Selon Ltd[5], the Supreme Court considered a long line of cases that deal with constructive fraud. The Supreme Court said this:
“Second, we note that the many case authorities that have applied the principle of constructive fraud since the Emas case mostly concern non-compliance with the statutory provisions relating to the process and procedures in respect of the grant of state leases, such that the circumstances of the grant of the State Lease are “so unsatisfactory and irregular that it is tantamount to fraud”. Some of the cases were cited by the primary Judge:
State lease was forfeited and granted to a new lessor in dubious circumstances involving breaches of the Land Act 1996.
Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959
Errors and breaches of the Physical Planning Act 1989 in the rezoning of the disputed land and in the issue of a state lease under the Land Act 1996.
Irregularities and breaches of statutory provisions in the issue of a business/state lease previously zoned public institution.
The state lease was unlawfully forfeited contrary to the mandatory requirements of the Land Act 1996.
The state lease was unlawfully forfeited and then granted to another party contrary to the Land Act 1996.
A State Agriculture & Business Lease (SABL) was issued in respect of land over which a special mining lease already existed.
Irregularities and breaches of statutory procedures in the transfer and registration of the title.
Land was unlawfully exempted from advertisement under Section 69(2) Land Act 1996.
Land was unlawfully exempted from advertisement under Section 69(2) Land Act 1996.
Appeal from the Land Board was decided in breach of the principles of natural justice and the state lease was irregularly and unlawfully granted to a non-legal entity.
The state lease was granted contrary to the Forestry Act 1991 and in breach of the Land Act 1996 and the Land Registration Act (Chapter 191).
Title was issued following flagrant abuse and breaches of the relevant mandatory procedures set out in the Land Act 1996.”
31. I am of the view that given that there are divergent views in the Supreme Court in its various judgments on the issue of fraud as per section 33 of the Land Registration Act and until a higher panel of the Supreme Court decides on this issue, it is open for this Court to find following the long list of authority on constructive fraud cases which includes Supreme Court cases that the wider definition of fraud as to the non-compliance of the provisions of the Land Act and that the circumstances of the forfeiture of the subject State Lease from the Plaintiff and the grant to the Fifth Defendant are so unsatisfactory and irregular that it is tantamount to fraud in my view.
32. Mr Jalbaring as an Officer in Lands Department being the Titles Examiner was privy to the file and information pertaining to the Plaintiff’s State Lease. The Minister’s decision in the Notice of Exemption dated 21 August 2020 is evident that Mr. Jalbaring was personally interested in developing the subject land thereby he successfully completed the forfeiture process thereby making the land available for tender. I find that the forfeiture is therefore contrary to the process under section 122 of the Land Act and therefore, it is a clear case of fraud on the part of the Defendants and also includes elements of constructive fraud.
33. Justice Canning held in the case of Mosoro v Kingswell Ltd[6] in regard to section 69(2)(d) of the Land Act 1996:
(1) There must be notice in the National Gazette of all Government land available for leasing unless the land has been exempted from
advertisement.
(2) The Minister may only exempt land from advertisement in one of the circumstances prescribed by Section 69(2) of the Land Act. If Section 69(2)(d) is relied on ("where the State has agreed to provide land for the establishment or expansion of a business,
project, or other undertaking"), there must be evidence of agreement by the State executed or entered into by an authorised person
on behalf of the State.
(3) A decision to grant a State Lease over land that has been unlawfully exempted from advertisement is affected by error of law and
is unlawful.
(4) The land was unlawfully exempted from advertisement and therefore the decision to grant the State Leases over it to the first
defendant was unlawful.
(5) Given the circumstances in which the State Lease was unlawfully granted it was a case of fraud for the purposes of Section 33(1)(a) of the Land Registration Act. The granting and registration of the Lease were ineffective at law and should not be allowed to stand. Declarations and orders made accordingly.
34. I adopt His Honour’s views in this case that the exemption from advertisement and the reasons for it are unlawful and ineffective at law amounting to fraud and therefore the title granted to the Fifth Defendant and registered to him should not stand as he has obtained it fraudulently and pursuant to section 33(1) of the Land Registration Act, he does not hold an indefeasible title.
35. I uphold the submissions of Mr Karaiye of the Plaintiff that the decisions of the Minister in forfeiting the subject State Lease
and granting it to the Fifth Defendant is unreasonable having regard to all the circumstances that no reasonable decision maker would
have made the decision.[7]
36. I find that it is the Plaintiff who has spent considerable amount of money and has rearranged his affairs to take out a loan and construct a building on the subject land and the Fifth Defendant will not face any hardship at all. The good administration of justice is therefore served in granting judicial review.[8]
37. I will therefore uphold Mr Karaiye’s submissions and grant the orders sought in the application for judicial review accordingly.
38. The Court therefore makes the following orders:
Orders accordingly.
_____________________________________________________________
Morgens Lawyers: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the First, Second, Third, and Fourth
Defendants
[1] [2017] PGSC 43; SC1641 (28 September 2017)
[2] [2018] PGNC 362; N7442 (5 September 2018)
[5] [2018] PGSC 97; SC1755 (19 December 2018)
[6] [2011] PGNC 151; N4450 (18 November 2011
[7] See Associated Provincial Picture House v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 and decision by Cannings J in Koti v Susame [2015] PGNC 6; N5860 (13 February 2015)
[8] See Innovest Ltd v Pruaitch [2014] PGNC 288; N5949 (17 March 2014)
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