Papindo Trading Co Ltd v Tolopa [2023] PGNC 97; N10211 (21 April 2023)

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AND
OSWALD TOLOPA, ACTING SECRETARY, DEPARTMENT OF LANDS & PHYSICAL PLANNING
First Defendant

LAND LAW – state lease -– plaintiff seeking declaratory relief of ownership of state lease –seeking orders to compel Lands Department to comply with orders in OS 84 of 2014-nullifying forfeiture Notice and cancellation of second state lease and restoration of original title to the plaintiff.

Whether Court can compel cancellation of forfeiture and nullification of second state lease on grounds of constructive fraud-Whether administrative process for grant of second state lease was fraudulent-Onus of proof lies with the plaintiff- Whether innocent third party obtained good title-Indefeasibility of title under section 33 of Land Registration Act-

What is the effect of valid court orders-whether orders have retrospective effect-and whether alternative relief for damages sufficient compensation where compliance of court orders not possible and where substantive reliefs not available. All main reliefs refused but judgment entered for plaintiff for the alternative remedy for damages (to be assessed awarded).

Attorney-General Act-Solicitor-General has statutory duty to act on instructions from Attorney- General and specific instructions from state departments to represent them.
Preliminary issue-Claims by and Against the State Act-Whether lack of notice under section 5 of the Act can be raised by a party other than the State-held a party other than the State can raise the issue as it goes to the competency of the proceedings where the State isa party.

Cases Cited.
OS No.84 of 2014 – Papindo Trading Co. Ltd -v- Romily Kila Pat & Ors
OS 678 of 2015- Tiklim Coffee Estates Ltd v Council John Zakli and other
Yaferaka Incorporated Land Group -v- Nama-Aporo Landners Association (2020) N8303.
Kopyota Investment Ltd -v- National Housing Commission (2022) SC2339
Mamun Investment Limited -v- Koim (2015) SC1409
Mudge v Secretary for Lands [1985] PNGLR 387
Pius Tikili v Home Base Real Estate Ltd (2017) SC1563
PNG Bible Church Inc v Carol Mandi (2018) SC1724
Rosemary John v James Nomenda (2010) N3851
Toki v Helai (2016) SC1558
Vaki Vailala v NHC (2017) N6598
Mota v Camilus (2017) N6810
Ramu Nickle v DR Temu (2007) N3252
Polem Enterprise Ltd v Attorney General (2008) SC911
Yap v Tan [1987] PNGLR 227
Daiva v Pukali (2002) N2289
Tasman Building Company v Genia (2011) N4412
Augwi Ltd v Xun Xin Xin (2014) SC1616
Angoman v Independent Public Business Corporation of PNG (2011) N4363
Kisombo v Apore (2020) N8683
Derwent Ltd v Pakena (2020) N8294
Berr v Yango (2015) N5859
Papua Club Inc v Nusaum Ltd (2005) SC812
Niugini Table Birds v Nasap (2000) N2018
Anego Company Ltd v Finance Corporation Ltd 2013) N5391
Augerea v Kelola (2014) N5582
Finance Corporation Ltd v Kombra (2020) N8285
Ross Bishop v Bishop Brothers [1988-89] PNGLR 533
Vaki v Damaru (2016) SC1557
Mondo Merchant Ltd v Melpa Properties Ltd (1999) N1863
Opi v Telikom PNG Ltd (2020) N8290
Philipae v Igaso (2011) PNGNC N4366

K Keindip, for the Plaintiff
S Maliaki, for the First, Second, Fifth & Sixth Defendant
R Mannrai, for the Third Defendant
C Kos, for the Fourth Defendants

1. DOWA J. The Plaintiff seeks reinstatement of its Title (First State Lease) and cancellation of the title (Second State Lease) issued to the third Defendant over property described as Allotment 12 Section 1 Mt Hagen on grounds of constructive fraud.

2. Since 1996 the Plaintiff, Papindo Trading Co. Ltd, was the registered proprietor of the property, described as Allotment 12 Section 1 Mt Hagen, on State Lease volume 110 Folio 146. On 20^th March 2013, Papindo’s title to the land was forfeited and cancelled by Department of Lands and Physical Planning principally on the grounds that the Papindo failed to comply with the improvement covenants in the State Lease.

3. In February 2014, Papindo filed a Judicial Review application challenging the decision for the forfeiture in proceedings, OS No. 84 of 2014 – Papindo Trading Co. Ltd -v- Romily Kila Pat, and others. On 9^th May 2014, the National Court in Mt Hagen granted leave for Judicial Review and issued an interim restraining order against the Department of Lands and Physical Planning from dealing with the land until final determination of the substantive proceedings. On 12^th May 2016, the National Court in Lae made a final decision on the substantive proceedings, declaring the forfeiture of the Plaintiff’s title as void and of no effect, quashed the forfeiture notice and the decision of the Lands Secretary and Minister for Lands, and ordered the cancellation of the forfeiture on the Title Deed and to enter Papindo’s name on the Title Deed.

4. Meanwhile, on 11^th June 2014, while the proceedings in OS 84 of 2014 were on foot, a new State Lease Volume 17 Folio 175 over the same property was issued to Tiklim Coffee Estates Ltd, the third Defendant. On 21^st June 2018, the third Defendant sold and transferred the property to Tarina Limited, the Fourth Defendant.

5. Papindo alleges that the Defendants either collectively or severally: i) wrongfully dealt with the subject property in granting a new State Lease to Tiklim whilst there was an interim restraining order in place; and ii) failed to reinstate the State Lease to Papindo after the Court declared the forfeiture invalid and iii) unlawfully facilitated the transfer and registration of the new State Lease from Tiklim to Tarina.

6. The Plaintiff therefore seeks amongst others, orders for: i) Cancellation of the forfeiture of Papindo’s Title (enforcement of the National Court decision), ii) Reinstatement of Papindo’s Title (enforcement of the National Court decision), iii) nullification of the new State Lease issued to Tiklim Coffee Estate Ltd, iv) nullification of Transfer of the Title from Tiklim to Tarina Ltd and other consequential orders including an alternative relief for damages.

7. The Defendants deny the claim, pleading in their respective defences that: i) they were not aware of the proceedings in OS 84 of 2014 including the orders of the Court; ii) the Plaintiff misled the Court in OS 84 of 2014 in obtaining a decision that is questionable, iii) all due process under the Land Act was followed in the grant of the new State Lease to the third defendant, iv) No fraud was committed in the issuance of the new Title to the third Defendant and the subsequent transfer of Title to the fourth Defendant and v) the fourth defendant is an innocent bona fide purchaser in good faith and the Title acquired by the fourth Defendant is indefeasible.

8. Apart from the defence on the merits, the defendants have raised a preliminary competency issue that the proceedings are incompetent for lack of notice to the State under section 5 of the Claims by and Against the State Act.

Issues
9. The pleadings, evidence and submissions of the parties pose the following issues for determination:

iv) Whether the substantive Orders of 12^th May 2016 affect the indefeasibility of title under section 33 (1)(c) of the Land Registration Act.

10. The trial was conducted over two days. The parties presented affidavit evidence as well as oral examination.

11. Apart from oral evidence, the Plaintiff relies on the Affidavits filed by i) Sir Soekandar Tjandra sworn and filed 17 May 2021 marked as “Exhibit P1” and ii) Affidavit of David Gera sworn December 2019 & filed 11 February 2020 marked as “Exhibit P2”.

12. The Plaintiff’s evidence is led by Sir Soekandar Tjandra, KBE, Managing Director of the Plaintiff, Papindo Trading Company Ltd. This is the summary of his evidence. Papindo is the registered proprietor of the property, Allotment 12, Section 1, Mt Hagen. Papindo purchased the property from Melpa Properties Ltd in December 1996. The property was initially mortgaged to Public Officers Superannuation Fund (POSF) and subsequently to ANZ Bank. Papindo attempted to develop the property but was stopped by disgruntled landowners and as a result it remained undeveloped.

13. In December 2012, Papindo received Notice to Show Cause issued by the Department of Lands and Physical Planning dated 17^th December 2012. On 15^th January 2013, the Plaintiffs lawyers, Gamoga & Co, responded to the Notice to Show Cause. On 2^nd April 2013 the Lands Department wrote to their lawyers confirming that the title was forfeited. The forfeiture was gazetted on 20^th March 2013.

14. Aggrieved by the decision, Papindo filed a Judicial Review Application proceeding – OS No.84 of 2014 – Papindo Trading Co. Ltd -v- Romily Kila Pat, Benney Allen and the Independent State of PNG. On 9^th May 2014, Justice Goodwin Poole (as he then was), granted leave for judicial review application, and issued an interim restraining order against the Secretary, Romily Kila Pat and the Minister for Lands from dealing with the subject land pending the final determination of the substantive proceedings. The judicial review application was heard by Justice Sawong (as he then was) on 4^th April 2016, and a decision was made on 12^th May 2016 whereby the Court declared that the forfeiture of the property as gazetted was null and void and quashed the forfeiture Notice and directed the Minister and his delegate to cancel the forfeiture and reinstate Papindo’s name on the Title Deed.

15. In early December 2018, Papindo learnt another group claiming ownership of the land. At the same time, Papindo received a letter from Detective First Constable David Gera from National Fraud and Anti-Corruption Directorate, who wanted further information to verify Papindo’s claim of ownership. Papindo’s lawyers sent copies of the Title and the National Court Orders in proceedings OS 84 of 2014 to David Gera.

16. With the assistance of Detective Constable Gera, Papindo learnt that; i) a State Lease over the same property was issued to Tiklim Coffee Estates Ltd; ii) Court proceedings in OS678/2015- Tiklim Coffee Estates Ltd v Council John Zakli and others over the land; and iii) Transfer of the State Lease from Tiklim to Tarina Ltd. Sir Soekandar concludes his evidence deposing that the title to their property was awarded to Tiklim when the Interim Orders were in place and the subsequent transfer to Tarina in July 2018 was done after the substantive orders were made on 12 May 2016. Sir Soekandar gave further evidence during cross-examination.

17. DAVID GERA-David Gera is a policeman, with the rank of Detective First Constable attached to National Fraud and Anti-Corruption Directorate in Port Moresby. He gives evidence for the Plaintiff both orally and by Affidavit. In 2017, he was seconded to the Department of Lands and Physical Planning to investigate claims of fraudulent land transfers. In December 2018 he was assigned to investigate an alleged fraudulent transfer of land described as Allotment 12 Section 1 Mt Hagen.

18. The summary of Detective Constable Gera’s findings is contained in paragraph 8 of his affidavit, which is set out below:

Date	Particulars of Title One
31/05/88	The land was granted by the Lands Department to the Western Highlands Provincial Government who built their Provincial Head Quarters on this land.
1995	The building was destroyed by fire in or about 1995.
27/08/96	The Government transferred the land to its business arm Wamp Nga Ltd.
16/12/96	The land was transferred to Papindo Trading Co.
19/03/13	The Lands Department forfeited the land due to non-improvements after an unsuccessful, show cause by Papindo.
19/02/14	Papindo filed proceedings for Judicial Review against the State and Lands Department in respect of the said Forfeiture Notice.
09/05/14	Justice Poole of National Court Mount Hagen issued Interim Orders against the Lands Department and Lands Minister restraining them from dealing with the land pending hearing of the Review.
12/05/16	The substantive trial of the Judicial Review was heard by Mr Justice Sawong in Lae who declared the Forfeiture Notice Void and directed the Lands Department to reinstate the land to Papindo Trading Co. (the Substantive Order).
May 2013	Immediately after the forfeiture Notice, the Land was placed on Tender by the Lands Department.
10/06/14	Lands Department advised Tiklim Coffee Estates Ltd as the successful applicant, when the Interim Order of Justice Poole dated 9^th May 2014 was in force.
11/06/14	Tiklim Coffee Estates accepted the offer and paid necessary fees to formalize its application, while the said Interim Order was in place.
22/10/15	Tiklim Coffee Estate Ltd filed legal proceedings OS 678/2015 in Mount Hagen National Court against Council John Zakli, Peter Noki and others to restrain them from interfering in the land, which they had recently acquired.
15/07/16	The parties entered into Mediation through the ADR process to settle the dispute by Order of the Court by Justice Poole. (Annexure “A”)
16/03/18	The Parties entered into a Consent Order for Tiklim Coffee Estate to sell the land to the landowners. The Order was sanctioned by Justice Kandakasi. (Annexure “C” is the copy of the Transfer Instrument)
27/03/18	Consequently, Tiklim Coffee Estate Ltd sold the land to Tarina Ltd for K8 Million. (Annexure “C” is the copy of the Transfer Instrument)
21/06/18	The Registrar of Titles entered on the Registrar and on the Title Deed the interest of Tarina Ltd No. H. 19067 with Westpac Banks PNG Ltd mortgage interest No. H. 19068. (Annexure “D”)”

19. He deposes further that he gave a copy of the Investigation Report to Papindo. He also reported to his Superior, Mr Peter Kila Pat who then wrote a letter to the Secretary for Lands and the Minister recommending cancellation of the Title issued to Tiklim Coffee Estates and reinstate Papindo’s title to the land. Detective Constable Gera was cross-examined by counsel for the Defendants where he gave further evidence.

20. Benjamin Samson is the Fifth Defendant. He is the Secretary for Department of Lands and Physical Planning. He gives evidence for himself and on behalf of the First, Second and the Sixth Defendants. He relies on three affidavits; i) Affidavit of Benjamin Samson sworn 20 February 2020 & filed 2 March 2020 marked as “Exhibit 5D1”, ii) Affidavit of Benjamin Samson sworn 14 October 2020 & filed 16 October 2020 marked as “Exhibit 5D2”; and iii) Affidavit of Benjamin Samson sworn 14 October 2020 & filed 15 October 2020 marked as “Exhibit 5D3”. I note the affidavit 5D2 and 5D3 are one and same document.

21. This is the summary of his evidence. The title to the land, Allotment 12 Section 1, Mt Hagen was held by Papindo since 1996. On 17^th December 2012, the Department of Lands issued a Notice to Show Cause to Papindo why the State Lease should not be forfeited for failing to comply with the improvement covenants on the State Lease. On 15^th January 2013 Papindo’s lawyers wrote a letter showing cause. On 19 March 2013, the Papindo’s State Lease was forfeited for non-compliance of the improvement covenants. After the forfeiture, the land was re-allocated for public tender following the administrative Land Board allocation process. In this process, the Third Defendant, Tiklim Coffee Estates Ltd, was recommended as the successful applicant and eventually became the new registered proprietor under State Lease Volume 17 Folio 175.

22. Mr. Samson deposes, while the administrative process was on foot, there were no restraining Court Orders served on the Department and they were not aware of the orders and the proceedings. Mr. Samson said that Papindo failed to register the orders of the Court with the Registrar of Titles. They have entry forms or Instruments for registering Court orders on the Title Deed which Papindo failed to utilize. The Third Defendant then sold and transferred the property to the Fourth Defendant who is now the registered proprietor.

23. In respect of the Court proceedings – in OS 84 of 2014, Mr. Samson says, the Plaintiff misled the Court in obtaining the Court Orders. He says, the Plaintiff relied on an owner’s copy of the State Lease which did not have the full and correct entries. The copy of the title produced in Court then had entries of undischarged Mortgages to Public Officers Superannuation Fund Board and ANZ Bank, when in fact those Mortgages were discharged in 2001 and 2005 respectively. Photocopies of Owners copy of the State Lease used by Papindo in the proceedings did not have the corresponding entries. Had the Court been shown the correct copy of the Title Deed, the Court would not have made the orders it made as there were no mortgages in place when the land was forfeited. Samson deposes they would have defended the proceedings in OS 84 of 2014, had they been informed. Due to lack of communication with the State Lawyers, they did not give instructions.

24. In response to evidence given by Detective First Constable David Gera, Mr. Samson says Constable Gera’s secondment and investigation was not sanctioned by the Department of Lands and the Minister responsible for land matters. That the alleged findings summarized in paragraph 8 of First Constable Gera’s affidavit be rejected as they are not official and made in isolation from the NCD Metropolitan Command. They contain hearsay material disputed by the Lands Department especially the Court Orders which were not served on them. Mr. Samson deposes further that Constable Gera is not a qualified Lands Officer to make an assessment on whether there were breaches of the Land Act.

25. Chin Hieng Ho is the Managing Director for Tiklim Coffee Estates Limited, the Third Defendant. He gives evidence for the Third Defendant. He relies on his affidavit filed 19^th May 2021, Court Exhibit 3D1; and gave oral evidence as well.

26. This is the summary of his evidence. Tiklim denies the Plaintiffs’ claim that the Title to the land, Section 1, Allotment 12 Mt Hagen, State Lease Volume 17 Folio 175 was granted to Tiklim through fraud and collusion between the First, Second, Third and Fifth Defendants. Tiklim maintains its position that at all material times it was the registered proprietor of the property before transferring it to the fourth Defendant.

27. Papindo was the previous registered proprietor. On 19^th March 2013, Papindo’s Title over the land, Allotment 12 Section 1 Mt Hagen, State Lease Volume 110 Folio 146 was forfeited for failing to comply with improvement conditions. The land became available for public tender as advertised in National Gazette dated 23 May 2013. On 4^th June 2013, Tiklim expressed its interest by submitting its tender application.

28. Tiklim was one of the five interested applicants for the subject land published in the National Gazette 9551, dated 5^th December 2013. The other applicants were: 1) Double rock Ltd, 2) Kraip Energy Ltd, 3) Saki Aki and 4) Siar Contractors Ltd.

29. By letter dated 19^th December 2013 from the Chairman of PNG Land Board, Tiklim was informed that a PNG Land Board meeting would be held at the Department of Lands and Physical Planning Conference Room, Eda Jano Building, Waigani, commencing 8:30am from 20^th to 24^th January 2014 when Tiklim’s application for the Business Lease would be considered. At that meeting, Tiklim was required to present certain documents including financial evidence in support of the application.

30. Tiklim’s application for the Business (Commercial) Lease was presented and heard at the PNG Land Board meeting during its sittings on 20^th – 24^th January 2014. On 20^th March 2014 Tiklim received a letter dated 12^th March 2014 from PNG Land Board enclosing a recommendation that a Business (Commercial) Lease for 99 years over the subject land was granted to Tiklim.

31. On 4^th June 2014, a notice was published in the National Gazette confirming Tiklim as the successful applicant for the Business (Commercial) lease over Section 1 Allotment 12 Mt Hagen. On 10^th June 2014, notice under section 75 and 76 of the Land Act were issued to Tiklim. On 11^th June 2014, Tiklim returned the Lease Acceptance Form (LAF) together with payment of all necessary fees and annual rents, and thereafter the State Lease Volume 17 folio 175 was granted to Tiklim.

32. Mr. Ho says the administrative processes under the Land Act were followed before the Business (Commercial) Lease was granted to Tiklim. The process administered by the Department of Lands and Physical Planning were transparent and denies the allegations of foul play or collusion between Tiklim and any officers of the Lands Department. In response to the Plaintiff’s allegations that the new State Lease was processed in record time giving impression of foul play, Mr. Ho denies the allegation. He said the administrative process took time, more than 12 months to complete. The property was advertised for public tender in May 2013. Tiklim presented its tender application on 4^th June 2013. Tiklim was notified of PNG Land Board meeting in December 2013. The substantive application was heard in January 2014. Tiklim received notice of recommendation of the PNG Land Board decision on 20^th March 2014 and Notice of decision was published on National Gazette on 4^th June 2014, before the State Lease was finally signed and issued on 11^th June 2014. Putting it in context it was not on record time.

33. In respect of the Court proceedings in OS No 84 of 2014, Mr. Ho deposes Tiklim was not a party. Tiklim was not served any interim orders referred to in the Statement of Claim and did not know and was not aware of the orders. He did not know that the land was subject matter of a Court proceeding and did not conspire with the first and second defendants to defraud the Plaintiff as alleged. Mr. Ho was cross examined and remained firm in his evidence.

35. Paul Ring is the Managing Director for Tarina Ltd, the Fourth Defendant This is the summary of Mr. Ring’s evidence. Tarina is the current registered proprietor of land described as Allotment 12 Section 1 City of Mt Hagen, State Lease Volume 17 Folio 175. Tarina bought the property from Tiklim Coffee Estates on 21^st June 2018 for a sum of K8 million and subsequently mortgaged it to Westpac Bank Limited.

36. Prior to the purchase, Tarina carried out relevant searches at the Lands Department and found no caveats or encumbrances including any Court orders affecting the transfer of title from Tiklim to Tarina.

37. Tarina is not privy to the allegations of impropriety or irregularity levelled against the Lands Department and Tiklim in the issuance and registration of the new State Lease. Tarina was not a party to the proceedings in OS 84 of 2014 and was not aware of any Court orders issued in that proceeding. Tarina acquired the property as a bona fide purchaser for value, funded by Westpac Bank (PNG) Ltd under a loan advance.

38. Mr. Ring deposes that the purchase of the subject land was endorsed initially by the National Court through a Court -annexed mediation before his Honour, Kandakasi J (as he then was) in proceedings OS 678 of 2015 – Tiklim Coffee Estates Ltd -vs Council John Zakii, Peter Noki and all clan members of Moge -Anda- Aklimp. Mr. Ring is a member of the Anda-Aklimp clan. On 15^th March 2018, the parties to the proceedings in OS No. 678 of 2015, signed a consent order which was endorsed by the National Court. One of the terms of the order was for Tiklim to sell the property to Tarina for K8 million.

39. Mr. Ring explains that Tarina became the purchaser, because there was no prospective purchaser identified amongst the defendants’ clansmen to buy the property on their behalf at the price stipulated in the agreement, and all clansmen agreed for his company to buy the land. On 21^st June 2018, Tarina concluded the purchase by payment of K8 million to Tiklim and mortgaged the Title to Westpac Bank. On 28^th June 2018 the Court proceedings in OS 678/2015 was concluded with the issuance of a Mediation Certificate.

40. Finally, Mr. Ring says that the Plaintiff’s notice of claim under section 5 of the Claims by and Against the State Act was issued outside of the six months and therefore the proceeding is incompetent.

41. Joshua Suma is a para-legal in the employ of Master Freelance Services, and city agent for Charles Kos Lawyers. He was instructed by Charles Kos Lawyers to conduct a title search. He says on 23^rd 2018, he conducted a title search at the Department of Lands and Physical Planning on the property, Allotment 12 Section 1 Mt. Hagen, State Lease Volume 17 Folio 175. His search on the relevant file revealed that Tiklim Coffee Estates Ltd was the registered proprietor, and there was no registered mortgage, caveat encumbrance, any Court order or declaration in place affecting the third Defendant’s Title. He communicated his search results to Charles Kos Lawyers.

42. The Third and Fourth Defendants contend that the Plaintiff failed to serve notice of claim on the State within six (6) months prior to instituting the proceedings as required by section 5 of the Claims by and Against the State Act.

(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to–

(a) the Departmental Head of the Department responsible for justice matters; or

(a) within a period of six months after the occurrence out of which the claim arose; or

(b) where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or

....”
44. The Solicitor- General who acts for the first, second, fifth and sixth defendants raised the issue in their defence. However, by a consent order issued on 4^th September 2020, the State withdrew the relevant parts in the Defence and decided not to pursue the issue since. This poses the question whether a party other than the State or State instrument or entity can raise the competency issue under section 5 of the Claims by and Against the State Act.

45. Mr. Kos, counsel for the Fourth Defendant, submits any party to a proceeding can raise the issue of want of Section 5 notice, relying on the case authority of Yaferaka Incorporated Land Group -v- Nama-Aporo Landowners Association (2020) N8303.

46. In Yaferaka ILG (supra), Anis J addressed this issue at paragraphs 18 of the judgment:

“18.... In my view, there is no law that says that only the State or the Solicitor General can enquire in a Court proceeding of whether or not a party has given a section 5 notice as required under the CBAS Act. Any person having an interest in a matter that is before the Court including a judge, can, in my view, enquire and find out whether a plaintiff has given such a notice. See case: Eddie v. Kirokim (2012) N4932. The reasons for that are obvious and they are also settled by case law. Firstly, section 5 of the CBAS Act is express. It requires notice to be given to the State before a person could sue the State. The case law is also settled on this point. It states that it is a pre-condition that any person or entity that wishes to make a claim against the State, other than in a judicial review proceeding, must give notice of his, her or its intention to the State pursuant to section 5 of the CBAS Act...”
47. I agree with his Honour. Want of compliance of prior notice under section 5 of the Claims by and Against the State Act is a competency issue and can be raised by any party to the proceedings, even the Court at its own volition. I refer to the recent case – Kopyota Investment Ltd -v- National Housing Commission (2022) SC 2339, where the Court said this at paragraphs 5 and 8 of the judgment:

“5. At the first hearing of the appeal, pursuant to its inherent jurisdiction, the Court of its own volition required the parties to make submissions on whether s. 5 Claims by and Against The State Act (Claims Act) and s. 25 National Housing Corporation Act (NHC Act) were applicable in the circumstances of the case and if so whether those provisions had been complied with. The appellant took no issue with the Court of its own volition raising the issue of s. 5 Claims Act and cited Bluewater International Ltd v. Mumu (2019) SC1798 in this regard. We refer to State v. Nimbituo (2020) SC1974, as an example of this Court of its own volition, raising the s. 5 Claims Act issue.

48. Turning to the present case, the evidence shows the Plaintiff served notice of claim on the State on 14^th August 2019. The Plaintiff says, the cause of action arose on or around 4^th December 2018 when they were alerted to the encroachment of the land by the Fourth Defendant’s agents. The Third and Fourth Defendants submit that the cause of action arose in the first instance on 4^th June 2014 when the State Lease was awarded to Tiklim, and next on 21^st June 2018 when the Title was transferred to Tarina. By computation, they submit Notice should have been given on or by 11^th December 2014 for the issue of Title, and in respect of the subsequent transfer to Tarina, Notice should have been served on 21^st December 2018.

49. The Plaintiff’s principal cause of action is based on fraud. The allegation of fraudulent grant of the second State Lease to the Third Defendant took place between May 2013 and 11^th June 2014. In my view, the cause of action commenced on 11^th June 2014, being the day when the State Lease was signed and registered. Notice to institute proceedings for the nullification and cancellation of the State Lease Volume 17 Folio 175 should have been given by 11^th December 2014.

50. The allegation of fraudulent transfer of title between the Third and Fourth Defendant facilitated by the First, Second and Fifth Defendants took place on or about 21^st June 2018. The alleged cause of action therefore commenced on 21^st June 2018. Notice of intention to sue the State should have been given by 21^st December 2018 in this case.

51. Even if the time for cause of action is to be computed from the date of discovery of the alleged fraud, notice should have been served by 4^th June 2019. However, in this later case, the law is also settled by the Supreme Court in Mamun Investment Limited -v- Koim (2015) SC 1409, that a cause of action does not accrue from the date of the discovery of the alleged fraud but accrues regardless, with or without the knowledge of the fraud by the aggrieved party from the day of commission.

52. The Plaintiff claims several reliefs in the Statement of Claim including an order for Mandamus, seeking enforcement of the substantive order of 12^th May 2016 in proceedings OS 84 of 2014. In my view, the cause of action for an order for Mandamus is continuous and is competent to be determined on the merits. The Plaintiff is also claiming damages as an alternative relief. In respect of the alternative relief for damages, I find this cause of action is also continuous, because if the Court is not able to grant the main reliefs, it is arguable the Court can consider damages in the alternative. In addition, it is arguable that the action for contempt of Court is also continuous as the Court did not fix any time limits for compliance.

53. Although notice of claim on the allegations of fraudulent issuance of a new State Lease to the third defendant and the subsequent transfer to the Fourth Defendant was given out of time, there are other reliefs sought in the proceedings that are competent. In the interest of justice, I will proceed to consider the merits of the case on all issues raised in the substantive proceedings.

Issue No. 2. Whether the issuance of the second State Lease by the first, second, fifth and sixth Defendants to Tiklim Coffee Estates Ltd is fraudulent.

54. Mr. Keindip, counsel for the Plaintiff, submits that constructive fraud was committed by the Defendants in two respects. Firstly, the issuance of the second State Lease to the Third Defendant by the First, Second and Fifth Defendants in defiance of an interlocutory interim restraining order issued on 09^th May 2014. The Plaintiff submits that the interim orders were served, and the defendants were aware of the orders, if not personally at least through their lawyers in or around May 2014. The defendants proceeded with the tender process while the interim orders were in place and issued a new title on 11^th June 2014 about three weeks after the issuance of the restraining orders. Secondly, the Plaintiff submits that constructive fraud was also committed by all the Defendants when the new State Lease was subsequently transferred to the Fourth Defendant in defiance of the substantive orders made on 12^th May 2016 in OS 84 of 2014.

55. Ms. Maliaki, counsel for the First, Second, Fifth and the Sixth Defendants submits that no fraud was committed when the defendants issued a new title to the Third Defendant. The Defendants followed due process under the Land Act and the Land Registration Act to forfeit the Plaintiffs State Lease Volume 10, Folio 146 and thereafter issued a new State Lease Volume 17 Folio 175 to the Third Defendant. She submits the Defendants were not served, with the interim restraining orders, and were not aware of the proceedings in OS 84 of 2014. In respect of the substantive Order of 12^th May 2016, Ms. Maliaki submits that the Plaintiff misled the Court by issuing an incorrect copy of the State Lease to obtain the orders. She submits that this Court revisit the order of 12^th May 2016 and set it aside.

56. Mr. Mannrai, counsel for the Third Defendant, submits there is no evidence of service of the restraining orders on the First and Second Defendants. That Tiklim, the third defendant was not a party to the proceedings in OS 84 of 2014 and was not served a copy of the interim orders of 9^th May 2014. The Plaintiff failed to register a copy of the restraining order on the Register of Titles. In the absence of service of the restraining orders, the tender process under the Land Act proceeded lawfully uninhibited resulting in the grant of the State Lease to the Third Defendant. Mr. Manrai submits that there was no actual or constructive fraud committed by the First, Second or the Third and the Fifth Defendants. The Third Defendant applied for and was granted the State Lease over Allotment 12 Section 1, Mt Hagen on merit through a transparent administrative tender process, and thereafter transferred good title to the Fourth Defendant, a bona fide purchaser of the said State Lease for value.

57. Mr. Kos, counsel for the Fourth Defendant, submits that there is no evidence of actual or constructive fraud committed by the defendants when the First and Second Defendants issued a State Lease to the Third Defendant. The Plaintiff’s title was forfeited, and a new title was issued to the Third Defendant by following the tender process under the Land Act. There is no evidence of the restraining order of 9^th May 2014 being served on the defendants nor were they made aware of the orders which would inhibit the grant of the State Lease.

58. Mr. Kos submits further that the Fourth Defendant is an innocent third party. The Fourth Defendant is not a party to the proceedings in OS 84 of 2014 and is not aware of the proceedings. It has not been served with both the interim orders of 9^th May 2014 and the substantive orders of 12^th May 2016. The Fourth Defendant is a bona fide purchaser and has indefeasible title over the property under section 33 of the Land Registration Act.

59. Counsel for the parties have been helpful in providing detail submissions. In the light of the submissions of counsel and evidence presented by the parties, the following matters are considered in determining this issue:

60. The proven facts surrounding the forfeiture of Papindo’s State Lease and the grant of the new State Lease are common and not disputed. The land, Allotment 12 Section 1, Mt Hagen, was initially granted to Western Highlands Provincial Government. In August 1996, the land was transferred to its business arm, Melpa Properties Ltd. In December 1996 Melpa Properties Ltd sold the property to Papindo Trading Co. Ltd. On 19^th March 2013, Papindo’s title to the land was forfeited for failing to comply with the improvement covenants.

61. In February 2014, the Plaintiff filed proceedings for judicial review against the Lands Department and the State. On 9^th May 2014, the National Court in Mt Hagen granted leave for the application for judicial review. In granting leave, the Court also granted an interim restraining order against the Lands Department from dealing with the land until final determination of the proceedings. The substantive proceedings were transferred to the National Court in Lae. On 12^th May 2016 a decision on the substantive matter was made whereby the Court nullified the forfeiture and directed the Lands Department and its officers to reinstate Papindo’s title.

62. After the forfeiture, the property was advertised for public tender in May 2013. The Third Defendant, Tilkim amongst four other applicants bided for the property in June 2013. The third Defendant was notified of the PNG Land Board hearing in December 2013.The PNG Land Board hearing was conducted in January 2014 at the Conference Room of the Head Office, Lands Department, Waigani. Tiklim was the successful applicant in the PNG Board decision. In March 2014 Tiklim was notified of the Lands Board recommendation and was eventually issued a State Lease Volume 17 Folio 175 in June 2014. The property was then transferred to Tarina Limited, the Fourth Defendant in June 2018.

63. Tarina is the current registered proprietor of Allotment 12 Section 1, Mt Hagen. Section 32 of the Land Registration Act provides that where an instrument of title describes a person as the proprietor of an estate or interest, that person is the registered proprietor of the estate or interest. Section 33 of the Land Registration Act provides that a registered proprietor of an estate or interest holds it absolutely free from all encumbrances except for fraud and other exceptions set out in subsection (1)(a) to (f). Refer Mudge v Secretary for Lands (1985) PNGLR 387.

64. The Plaintiff challenges the title currently held by the Fourth Defendant under section 33 (1)(a) and (c) of the Land Registration Act. Section 33 (1) (a) and (c) reads:

(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;

The Law on Fraud
65. The law on fraudulent land dealings is settled in this jurisdiction. Refer to Pius Tikili v Home Base Real Estate Ltd (2017) SC1563, PNG Bible Church Inc v Carol Mandi (2018) SC1724 and Rosemary John v James Nomenda (2010) N3851, Toki v Helai (2016) SC1558, and Vaki Vailala v NHC (2017) N6598 and Mota v Camilus (2017) N6810.

66. In the case Kittika v Kavana (2010) N4051, Makail J in examining the meaning of the fraud said this at paragraph 13 of the judgment:

“13. Given the strict requirement to plead fraud, what then is fraud? The Australian Pocket Oxford Dictionary (5th ed, 2001) defines the word fraud as:

"(1) deception, use of false representation to gain an unjust advantage, (2) dishonest artifice or trick, (3) person who or thing which is other than he, she as it claims to be."

14. In John James Stroud’s Judicial Dictionary of Words and Phrases - Volume 2, the word fraud is defined as:

"(1) A ‘Fraud’, in my opinion, is a term that should be reserved for something dishonest and morally wrong, and much mischief, is a thing, done, as well much pain inflicted, by its use where ‘illegality’ and ‘illegal’ are the really appropriate expressions." (per Will, J Ex p. Watson [1888] UKLawRpKQB 134; , 21 QBD, 301).

15. It is clear from these definitions that fraud means being dishonest, and taking something by dishonest means thereby inflicting pain or injury on the victim. In relation to proving fraud to overturn a title of a registered proprietor under section 33 of the Land Registration Act, Ch 191, there are two views held by the Court. There is one view, that a party who alleges fraud must proven actual fraud. There is the other view, that there need not be actual fraud. A proof of irregularities in the process of registration of title is sufficient. This is the constructive fraud.”

67. Constructive fraud is defined in the head notes of the judgment of Pius Tikili v Home Base Real Estate (supra) to mean “actual fraud or constructive fraud. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

68. The Supreme Court in the most recent case of PNG Bible Church v Carol Mandi (supra) emphasised that a failure to follow the process under the Land Act and the National Housing Corporation Act can render all dealings invalid based on constructive fraud. At paragraph 18 of the judgment, the Court said this:

“It is now well-established law in PNG that a failure to follow the process provided under the Land Act when dealing with State land amounts to fraud capable of undoing any title secured outside the statutorily prescribed process. The decision of the Supreme Court, drawn to our attention by learned counsel for the Church in Pius Tikili v Home Base Real Estate Ltd (2017) SC1563 is a case on point. There the Court comprising of Cannings, Yagi and Neill JJ., said:

“His Honour, we consider, should have addressed the meaning of “fraud” in Section 33(1)(a) of the Land Registration Act more rigorously. There is now a strong line of Supreme Court decisions that have substantially qualified the concept of indefeasibility of registered title set out Mudge v Secretary for Lands [1985] PNGLR 387. Cases such as Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215, PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126 and Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120 support the proposition that in many situations it will not be appropriate to insist on proof of actual fraud before the National Court considers cancelling the registered proprietor’s title. It will be sufficient if constructive or equitable fraud is proven. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

69. A grant or transfer of title in breach and defiance of Court Orders can amount to constructive fraud. Toki v Helai (supra) and Memafu v National Housing Corporation (2020) N8736.

70. The onus of challenging the validity of title rests with the Plaintiff. In Godowan Investment Ltd -v- Wambea (2018) N7263, Cannings J said this at paragraph 9 of his judgment.

“9. The fact that the leases were granted to and registered in the name of the plaintiff gives rise to the presumption that it has good and indefeasible title subject only to the exceptions prescribed by Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The onus of proving a case of fraud or that any of the other exceptions in Section 33(1) applies rests with the person who challenges the title of the registered proprietor (Niugini Properties Ltd v Londari (2014) N5727).“

71. I will apply the above principles to the present case to determine whether the Plaintiff has established fraud, whether actual or constructive, with credible evidence.

Did the first, second and fifth Defendants comply with the administrative process under the Land Act in issuing a State Lease to the third Defendant..

72. In the present case, there is clear and strong evidence from Benjamin Samson and Ching Hieng Ho that the administrative tender process under the Land Act was followed and complied with in granting the new State Lease to Tiklim.

73. Notice to Show Cause was served on Papindo before Papindo’s title was forfeited in compliance with section 222 of the Land Act. After the forfeiture, the land was advertised for public tender by notice in the National Gazette dated 23^rd May 2013, Gazette No. 9215. On 4^th June 2013, Tiklim expressed its interest by submitting its application together with its application fee of K100.00 (refer Annexure “D” to Affidavit of Chiung Ho). Tiklim was advised of the PNG Land Board meeting by letter dated 19^th December 2013. In that letter it enclosed a gazettal notice of the venue of the meeting together with the items for PNG Lands Board meeting to be conducted for the period 20^th to 24^th January 2014. Apart from the Third Defendant, four others applied for the same land. The PNG Land Board hearing was conducted at the Department of Lands and Physical Planning Conference Room. From the evidence of Mr. Ho, the Third Defendant, amongst other documents presented to the PNG Land Board was a letter from Westpac Bank supporting the application (Annexure “G” to Mr. Ho’s affidavit). The subject land was amongst 382 matters/applications the PNG Land Board dealt with over a span of 5 days.

74. On 20^th March 2014, Tiklim was advised of the PNG Land Board’s recommendation that Tiklim was the successful applicant. (Annexure H to Mr. Ho’s affidavit). On 4^th June 2014, notice in Gazettal Notice was published confirming that Tiklim was the successful applicant. Tiklim paid for the fees and signed the Lease Acceptance Forms (LAF) on 10^th & 11^th June 2014 respectively and Tiklim was issued the State Lease thereafter on the same day 11^th June 2014.

75. Clearly the administrative process for the grant of State Lease from the publication of public tender to issue of lease under sections 68 to 76 of the Land Act were administered and fully complied with. There is no evidence of a breach or failure to follow the administrative procedure under the Land Act.

76. There is no evidence of Papindo seriously challenging the process involved in the grant of the new title to Tiklim nor the subsequent transfer to Tarina Ltd. Papindo’s main complaint is that Tiklim was granted the new State Lease while the restraining orders were in place, amounting to constructive fraud.

77. This leads to the next important question, that is, whether the above-described administrative process was carried out in defiance of the restraining orders of 9^th May 2014.

Whether the administrative process was carried out in defiance of the restraining orders of 9^th May 2014 to amount to constructive fraud for the purposes section 33 (1) (a) of the Land Registration Act.
78. The Plaintiff contends that the issuance of the second title to Tiklim, the Third Defendant, was done while the interim restraining order of 9^th May 2014, was in force/place and therefore the actions of the First, Second, Third and Fifth Defendants are fraudulent. Papindo argues that the State Lease issued initially to Tiklim and now with the Fourth Defendants be set aside, and Papindo’s title be restored as per the final decision of the National Court given 12^th May 2016.

79. The Plaintiff seeks to rely on the Affidavit of Service by Marex Pou, the evidence of Detective Constable David Gera and Sir Soekander Tjandra and the inferences to be drawn from the involvement of Solicitor General as lawyers for the State, to prove its allegations. I will discuss and consider the strength and credibility of the evidence in determining whether the Plaintiff has discharged the onus of proof.

80. The Plaintiff sought to rely on the Affidavit of Service of Marex Pou sworn and filed on 14^th May 2020 to prove service of the interim injunctive orders of 9^th May 2014 on the first, second and fifth defendants. The deponent, Marex Pou, has since passed away prior to the hearing and could not be called for cross-examination. During the trial, the Plaintiff applied under section 36 of the Evidence Act for the admission of the Affidavit of Service. The Defendants objected to the use of the Affidavit of Service.

81. The Court upheld the defendants’ objection and refused the tender of Affidavit of Service into evidence for several reasons. Firstly, the Defendants have pleaded in their defence that they were not served and not aware of the restraining orders of 9^th May 2014. They have filed notice under section 35 of the Evidence Act requiring the Plaintiff to produce the deponent for cross-examination. Service of the Orders of 9^th May 2014 was vigorously contested and the production of the witnesses was necessary for cross-examination. Secondly, the Court noted there were significant discrepancies in the Affidavit of Service in that i) the deponent did not state in the main body of the affidavit the date of service, ii) the Process Server’s name was not recorded on the proof of service form. Thirdly, the deponent stated in the Affidavit that he did not file any previous affidavit of service in respect of service of the restraining orders in proceedings-OS 84 0f 2014. That is, this affidavit of service is the first, done six years later, after service which casts doubt on its credibility. It has been held in Philipae v Igaso (2011) PNGNC N4366 that where the proof of service does not state on whom a document was served and the date of service, there is no proof of service.

82. That being the case, there was no direct evidence before the Court that the restraining orders of 9^th May 2014 were served on the First, Second, Fifth and Sixth Defendants.

b) Evidence of Detective Constable David Gera
83. The Plaintiff sought to establish the allegations based on an investigation report by Detective Constable David Gera. Paragraph 8 of Constable Gera’s affidavit sets out his findings. Mr. Samson’s evidence was that the engagement of Detective Constable Gera on secondment from the Department of Police was not sanctioned by the Department of Lands. If he was not officially invited by the Lands Department engaged how did Detective Constable Gera become involved. I suppose as a police detective he is authorized by the Constitution to investigate complaints of crime and acts which are criminal in nature. I note from paragraph 28 of the Soekandar Tjandra’s Affidavit, that the initial complaint to the police was made by Sir Soekandar by letter dated 4^th December 2018 which resulted in a response from Detective Constable Gera. The evidence shows Detective Constable Gera wrote a letter dated 6^th December 2018 to Papindo requesting information on the status of the subject land. Next day, on the 7^th of December 2018, Papindo’s lawyers wrote to him enclosing all the information, including all the Court documents and Orders issued in proceedings OS 84 of 2014. Under paragraph 9 of his affidavit, he deposes, he gave his report to Papindo CEO, Wilson Chan.

84. Most of the information contained in paragraph 8 of Gera’s Affidavit were provided by Papindo’s lawyers on 7^th December 2018, especially the Court Orders. Detective Constable Gera did not state in his affidavit citing the restraining orders in the relevant Lands Department file. During cross-examination Detective Constable Gera conceded that he did not know whether the orders in OS 84 of 2014 were served on the defendants. After completing the investigation, he did not give copies of his findings to the Third and Fourth Defendants apart from Papindo. Constable Gera was cross-examined, and he was evasive at times during cross-examination. His evidence lacks weight and does not assist in proving service of the Court Orders nor does it assist in proving the allegation of fraud against the Defendants.

c) Sir Soekander Tjandra
85. Sir Soekandar gives general evidence of facts that are common to the parties and are of like Detective Constable David Gera. He gives no direct evidence on the service of the restraining orders on the Defendants. He was of the view that the Lands Department was represented by Solicitor General’s Office, and they would be aware of the orders. Papindo’s lawyers have taken upon this point in their submission.

86. However, the Court was not impressed with his answers during cross-examination in respect of the Title Deed produced in Court. He annexed to his affidavit a copy of Papindo’s Title Deed marked as Annexure ‘B’. The entries made to the owner’s copy are not updated to reflect and correspond with the Title Deed kept by the Registrar of Titles. A copy of the Title Deed kept by the Lands Department was annexed to the Affidavit of Benjamin Samson (Exhibit 5D2) marked as Annexure ‘A’.

87. I have compared the two titles. The entries made to the Title Deed kept by the Register of Titles shows the mortgage to POSF was discharged on 26^th June 2001 and the mortgage to ANZ Bank was discharged on 29^th September 2005. There is also confirmed in a letter sent by POSF to the fourth Defendant dated 2^nd September 2020 that the mortgage to POSF was discharged in 2001. (Annexure “PR 12” to Affidavit of Paul Ring dated 25/9/22 4D2).

88. During cross-examination, Sir Soekandar was asked several times why the Plaintiff did not produce the correct and updated Owner’s copy of the title to Court in these proceedings and the proceedings in OS 84 of 2014, which would have shown that the mortgages were discharged. Sir Soekandar repeatedly said, the title was kept by POSF and then with Westpac Bank and now with ANZ Bank and it was the responsibility of the bank, and he had no knowledge on the status of the Title.

89. It is reasonably expected of Sir Soekandar, as owner of the Plaintiff company, to know the status of the Title Deed and produce the correct Title before the Court, but that did not happen. He deposed in paragraph 13 and 14 of his Affidavit, Exhibit P1, that the title was still under mortgage to POSF and ANZ Bank but that was proved to be otherwise. Whether it was due to an inadvertence or a genuine mistake, we will never know as there is no proper explanation. What is clear though, is that the Court in the proceedings OS No 84of 2014, made its decision based on incorrect copy of the owner’s copy of the Title Deed.

90. This may have no bearing on the issue of service of the restraining orders, but it does add weight to the submissions of the State that the Plaintiff misled the Court with an incorrect copy of the Title to obtain judgement in its favour in proceedings OS 84 of 2014. This argument is based on the finding by His Honour that the forfeiture was wrongful because the Lands Department failed to give Notice to Show Cause to the Mortgagees in respect of the registered mortgages shown on the title deed, when in fact those Mortgages were discharged many years back.

91. In paragraph 33 of his Affidavit, Sir Soekandar lists about 13 documents they have uncovered and retrieved from the Department of Lands through Detective Constable David Gera concerning the subject property. None of these documents relate to the Court proceedings in OS No 84 0f 2014, especially the Orders of 9^th May 2014 and 12^th May 2016. This adds weight to the defendants’ contention that they were not served the documents, especially the Court Orders.

92. In the final analysis, I find the evidence given by Sir Soekandar Tjandra lacking weight in so far as it seeks to establish the allegation of fraud on the part of the Defendants.

93. I now turn to the issue of whether the involvement of the Solicitor General in the proceedings OS No. 84 of 2014 has any bearing on the service of the Court Orders.

94. Counsel for the Plaintiff urges the Court to take judicial notice of the proceedings in OS 84 of 2014. Papindo Trading Co Ltd v Romily K Pat and Others, pursuant to section 44 of the Evidence Act. Counsel submits further that the Lands Department including the Secretary and the Minister responsible at the material time were represented by the Office of the Solicitor- General and therefore imply that the Defendants knew or ought to have known the existence of the Court order through their lawyers under Order 2 Rule 33 of the National Court Rules. The Plaintiff relies on a Supreme Court decision in Singat vs Commissioner for Police (2008) SC 910.

95. At the outset it is instructive to state that the Court has taken judicial notice of the proceedings in OS 84 of 2014, where a restraining order was issued in the Mt Hagen National Court on 9^th May 2014, a substantive order was made by the National Court in Lae on 12^th May 2016 and that the Solicitor- General represented the Secretary and Minister for Lands and the State in the proceedings.

96. However, the issue remains to be determined is whether the first, second, fifth and sixth defendants were aware or made aware of the orders through the Solicitor- General who is deemed to have authority to act for them by virtue of Order 2 Rule 33 of the National Court Rules.

(1) Every matter or thing which under an Act or these Rules is required or allowed to be done by a party may be done by his solicitor.

(2) Sub-rule (1) does not apply where the context or subject matter otherwise indicates or requires.”
98. The Solicitor General filed its Notice of Intention to Defend on behalf of the Defendants on 28^th May 2014. This was about 18 days after the restraining orders of 9^th May 2014 were issued. Apart from filing Notice of Intention to Defend, there is nothing to show that the Solicitor- General was actively engaged in defending the matter.

99. It seems the Solicitor- General entered appearance for the State by virtue of section 13(1) of the Attorney- General Act. Section 13 reads:

(1) The primary function of the Solicitor-General is to appear as an advocate for the State in matters coming before the courts in Papua New Guinea.

(2) In the exercise of his function under Subsection (1), the Solicitor-General shall accept instructions only from the Attorney-General.”

100. The Supreme Court in the State v Zacchary Gelu and Manorburn Earthmovers Limited (2003) SC 716 provided a binding opinion on the application of section 13 of the Act that the Solicitor- General is required to act only upon instructions of the Attorney- General in each case in which the State is a party. The Manorburn decision conflicts with the other Supreme decisions like Simon Mali -v- State & Others (2002) SC690 and Singat v Commissioner for Police (2008) PGSC52, SC910. The conflict in the decisions will have to be resolved by a five or seven -member panel of the Supreme Court as highlighted in the most recent Supreme Court decision in Church of Jesus Christ of Latter-Day Saints v Kimas (2022) SC 2280.

“Until the conflict in the Supreme Court’s decisions in the matter of The State v. Zacchary Gelu & Manorburn Earthmoving Limited (2003) SC716 and Simon Mali & Others v. The State (2002) SC690 is resolved by a five or more-member Supreme Court, the Solicitor General is required to act only upon instructions of the Attorney General in each case in which the State or a State department, agency or authority is involved and as such the Solicitor General or any officer from his office is precluded from appearing in Court without such instructions.”

102. Pending the resolution of the conflict on the proper construction of section 13 of the Attorney-General Act, what is clear from the Manorburn decision is that the instructions must first come from the Attorney -General. Leaving aside the soundness of the Manorburn decision, what is of utmost importance is that where the Solicitor- General enters appearance for the State or a State entity involved in litigation, he must seek and receive specific instructions from the relevant State departments or entity concerned to continue the representation. This is because the Solicitor -General and his lawyers cannot effectively and meaningfully defend or represent the State and its agencies without instructions. The Solicitor-General has a statutory duty to the State and a professional duty to the Court and the parties in litigation.

103. In the present case, there is no such instructions coming from the Attorney- General nor the Department of Lands. I note from the judgment of Sawong J (as he then was) that the defendants did not present evidence in rebuttal. There is no evidence that the Solicitor- General sought any instructions from the Lands Department. There is no evidence of the Solicitor- General being served with the interim restraining orders. There is no evidence of the Solicitor- General advising the defendants of the orders of the Court. The only undisputed fact is that the lawyers from the Solicitor-General’s office entered appearance. Should their appearance be sufficient to assume service of the Court orders on the Defendants.

104. In my considered view, it is not safe to infer that the Defendants knew or became aware of the existence of the Court Orders through the Office of the Solicitor- General just because the later entered appearance for them. The Defendants contended vigorously that they were not served and not aware of the restraining Orders of 9^th May 2014, at the time when the administrative process was in place for the issuance of the new State Lease. They did not defend the proceedings in OS 84 of 2014 as they were not properly served or advised of the proceedings. They could not instruct the Solicitor- General then. Mr. Benjamin was cross-examined on this issue, but he remained firm in his evidence. I accept the evidence of Mr. Samson and the other defendants that the Lands Department was not aware of the restraining orders of 9^th May 2014 when they granted the new State Lease to the third defendant. I reiterate that it is not just to assume that the involvement of the Solicitor -Generals in the proceedings as sufficient service of the proceedings on the Defendants.

105. There is still another matter to consider on this issue. There is clear and undisputed evidence that the decision by the PNG Land Board to issue a new State Lease to the third Defendant was made on or about 20^th March 2014, that is about two (2) months before the interim restraining Orders were issued (on 9^th May2014). Although the State Lease was signed on 11^th June 2014, it appeared to be only an administrative formality to conclude the process.

106. Fraud is a serious allegation. It is the use of deceit or dishonest means to gain something at the expense or loss of or injury to the victim. It is morally, legally and ethically wrong and mischievous. The Plaintiff has the onus of proving the allegations with clear and credible evidence.

107. I conclude from the analysis of evidence that the Plaintiff failed to prove with credible evidence that fraud whether actual or equitable was committed by the first, second, third and fifth Defendants when they issued a new State Lease over Allotment 12, Section 1, Mt. Hagen to the third Defendant.

Issue No 3. Whether the subsequent transfer of the State Lease to Tarina, the fourth Defendant, is fraudulent.

108. The State Lease is now vested with a third party, Tarina Ltd. Mr. Kos, counsel for the fourth defendant, argues that Tarina Ltd, is an innocent third party, a bona fide purchaser for value. It acquired the title in good faith and has indefeasible title under section 33 of the Land Registration Act and it should not be disturbed.

109. The Plaintiff submits that the Fourth Defendant is not an innocent party. The Plaintiff argues that although Tarina Ltd was not aware of the proceedings in OS 84 of 2014, it was involved in proceedings OS 678 of 2015- Tiklim Coffee -v- Council John Zakel and others. In that case, a Consent Order was signed for Tiklim to sell to the property to the defendants and Tarina Ltd who was not a defendant in that proceeding intercepted and purchased the property from Tiklim. The Plaintiff argues that the actions of Tarina is tantamount to constructive fraud.

110. The Plaintiff’s submissions are misconceived in relation to Tarina’s involvement in proceedings in OS 678 of 2015. It has no relevance to the issues under consideration. Besides, it has been explained by Paul Ring, that he is a defendant in that proceeding by virtue of being a membership of Moge Anda- Aklimb clan. It was the consensus of the defendants in that proceeding for Tarina to buy the property from Tiklim. The Consent Order endorsed by Kandakasi J (as he then was) on 15^th March 2018, (annexure PR4 in Paul Ring’s Affidavit, 4D2), shows that the property was to be sold by Tiklim to Tarina for K8 million. The property was eventually sold and transferred to Tarina through a Court-annexed mediation process.

111. There is no evidence that Tarina was involved in any fraud be it actual or constructive. Tarina was not a party and was not aware of the proceedings in OS 84 of 2014. It was not aware of the interim orders of 9^th May 2014 nor the substantive Orders of 12^th May 2016. It purchased the property for value through a Court- annexed mediation order issued on 15^th March 2018.

112. The affidavit of search by Joshua Lapa shows, prior to the purchase, Tarina conducted a search at the Lands Department. The search revealed that Tiklim had good title to transfer. There were no encumbrances, caveats or orders of Court registered against the title held by Tiklim. Mr. Benjamin Samson, who is a former Registrar of Titles, gave evidence that the Lands Department has Instruments for registering Court orders onto Title Deeds, which the Plaintiff failed to utilize.

113. There is no evidence of any wrongdoing on the part of Tarina when it purchased the property from Tiklim. Tarina is therefore an innocent third party, a bona fide purchaser, who bought the subject property for value. By registration of the transfer, Tarina is now the owner of the property and has indefeasible title under sections 32 and 33 of the Land Registration Act.

114. In conclusion, I find the Plaintiff failed to prove that the subsequent transfer of title from the third defendant to the fourth defendant was done fraudulently.

Issue No. 4. Whether the substantive Orders of 12^th May 2016 affect the indefeasibility of title under section 33 (1)(c) of the Land Registration Act.

115. The next question is whether the substantive Orders of 12^th May 2016 affect the indefeasibility of title under section 33 (1)(c) of the Land Registration Act.

116. The Plaintiff claims an order in Mandamus to compel the first, second and fifth defendants to comply with the substantive Orders of 12^th May 2016. Counsel for the Plaintiff argues that the third Defendant’s title was nullified and became invalid on the day of the substantive decision of the Court made on 12^th May 2016 where it annulled the forfeiture and restored Papindo’s Title. Counsel argues that the Court restored Papindo’s title it held first in time and preserved by the interim restraining Orders of 9^th May 2014. The Plaintiff submits that the defendants be compelled to comply with the Orders of 12^th May 2016. Counsel relied on a National Court decision, Ramu Nickle & Ors v Dr P Temu (2007) N3252 in support of the submission.

117. Ms. Maliaki, counsel for the first, second and fifth Defendants, submits that the Plaintiff misled the Court when it obtained the orders in OS 84 of 2014. She urges the Court to revisit the orders of 12 May 2016 and nullify them.

118. Mr. Mannrai, counsel for the Third Defendant, argues that the final orders of 12^th May 2016 in OS 84 of 2014 do not have retrospective effect on the tender process facilitated by the Department of Lands and Physical Planning which commenced on 23^rd May 2013 when the subject land was advertised for tender. He submits that the decision made on 12^th May 2016 was not expressly stated to operate retrospectively. He relies on the authority of the Supreme Court decision in Polem Enterprise Ltd v Attorney General (2008) SC 911 in support of his submissions.

119. Mr. Kos, counsel for the Fourth Defendant, submits the land subject of Papindo’s State Lease Volume 110 Folio 146 is no longer available after the new State Lease, Volume 17 Folio 175, was issued to the Third Defendant. Mr. Kos submits further that enforcing the decision for the nullification of the forfeiture and reinstatement of the title to Papindo is a futile exercise where the land the subject of Papindo’s title is no longer available. It is akin to seeking specific performance of a contract where the subject matter of the contract no longer exists. He refers to the case, Augwi Ltd v Xun Xin Xin (2014) SC 1616, as authority for his submissions.

120. I will deal with the submissions of the counsel for the first, second and fifth defendants first. I note the reasoning behind the State’s complaint. The order of 12^th May 2016 quashing the forfeiture and reinstatement of Papindo’s title was based on two grounds: i) there was compliance of the improvement covenant and ii) the notice of forfeiture was no served on Nambawan Super (POSF) and ANZ Bank as Mortgagees. As I have found in the assessment of evidence, the entries on the Title Deed kept by the Registrar of Titles show the mortgage to POSF was discharged in 2001, and the mortgage to ANZ Bank was discharged in 2005. However, the State failed to produce the relevant evidence in proceedings-OS 84 of 2014. Had the State presented this evidence, His Honour may have taken this into consideration. It is too late to complain about the decision now.

121. The submissions for the State are therefore misconceived. The orders of 12^th May 2016 are substantive orders made by a Court of competent jurisdiction. This Court has no jurisdiction to review or revisit or set aside the final decision. It can only be set aside by the Supreme Court in an appeal. There is no record of appeal against the decision and the decision is current, effective and in force. The law is settled. A substantive order made by a Court of competent jurisdiction remains in force until it is discharged, set aside or varied rendering compliance unnecessary. Refer: Yap v Tan (1987) PNGLR 227, Daiva v Pukali ((2002) N2289, and Tasman Building Company v Genia (2011) N4412.

122. That said, however, the question remains, is whether the first, second and fifth defendants can be compelled to comply with the Orders of 12^th May 2016.

123. The evidence is clear. Papindo’s Title, State Lease Volume 110 Folio 146, to the property Allotment 12 Section 1, Mt Hagen was forfeited on 19^th March 2013. The administrative process for the grant of the new lease commenced earlier, on 13^th May 2013. The PNG Land Board made its decision to grant a State Lease to the third defendant in March 2014, about two months before the restraining orders were made. The interim restraining order, issued on 9^th May 2014, meant to preserve the status quo was not served. Nothing inhibited the first, second and fifth Defendants from issuing a new Title, State Lease Volume 17 folio 175 over the subject land to the third Defendant, which was granted on 11^th June 2014.

124. When the substantive decision in OS 84 of 2014 was made on 12^th May 2016, Papindo’s Title, State Lease Volume 110 Folio 146, no longer existed for the purposes of the exception to the indefeasibility of the title under section 33 (1)(c) of the Land Registration Act.

125. The case Ramu Nickle & Ors v Dr P Temu (supra) referred to by counsel for the Plaintiff is distinguishable. In that case, a SABL was issued later in time over the same land which the Plaintiff had a Special Mining Lease. The Court nullified the later lease, the SABL, under the section 33 (1)(c) of the Land Registration Act.

126. In the present case, Papindo’s State Lease did not exist when the new State Lease was issued to the Third Defendant and the substantive decision of the Court was made after the grant of the new State Lease. The State Lease issued to the third defendant cannot be nullified under section 33 (1) (c) of the Land Registration Act by reason of the Court Order of 12^th May 2016.

127. It is my firm view that the final orders of 12^th May 2016 do not have retrospective effect. The orders were not meant to have retrospective effect. At the time the substantive orders were made, Papindo’s Title was forfeited and ceased to exist. As I have found, it was not saved or preserved by the interim restraining Orders. A new Title over the property was issued to the third Defendant. The new title was issued in accordance with the administrative process allowed by law and is protected by law under section 33 of the Land Registration Act. The subsequent Orders of 12^th May 2016 cannot set aside the lawful decisions of the defendants.

128. The law on retrospectivity is settled in the case Polem Enterprise Ltd v Attorney General (2008) SC 911. The Court said this at paragraphs 38 – 43 of the judgement.

“38. The respondents’ counsel, Mr Steven and Mr Gawi, submitted that his Honour made no error in applying Manorburn to the facts of this case. The Supreme Court in Manorburn held that the Solicitor-General had no power to settle cases without the Attorney-General’s approval and stated clearly that the Aigilo and Mali cases, which held that the Solicitor-General did have such a power, were wrongly decided. Manorburn was the most recent decision. It was a Supreme Court decision, and the trial judge was obliged to follow it. The law which makes it clear that the Solicitor-General has no power of his own volition to settle cases (Section 13 of the Attorney-General Act) has never changed. It is the same law and it should not be applied differently according to the date of its breach.

129. I will adopt and apply the principles of law enunciated in the above case to the present case.

130. Prior to the final decision of 12th May 2016, the first, second and fifth Defendants followed a lawful tender process to grant a new State Lease to the third Defendant. The title granted to the third defendant is protected by law pursuant to section 33 of the Land Registration Act. It can only be set aside on grounds of fraud and other exceptions in sub-section (1). There is no evidence of fraud on the part of the first, second, third, fifth or the sixth Defendants. The lawful actions of the Defendants cannot be rendered unlawful by the subsequent decision of 12^th May 2016.

131. What the Plaintiff is asking is akin to an order for specific performance of a contract. Specific performance is an equitable remedy, compelling a person to perform its obligations under a contract. The law on equitable remedy is settled in the cases: Angoman v Independent Public Business Corporation of Papua New Guinea (2011) NV363; Kisombo v Apore (2020) N8683, Derwent Ltd v Pakena (2020) N8294 and Augwi Ltd v Xun Xin Xin (2014) SC 1616. The principles that emanate from the above cases is that:

132. The Plaintiff failed to prove its allegations of fraud and conspiracy. The Plaintiff’s claim based on fraud is on the premise that the interim orders of 9^th May 2014 in OS 84 of 2014 had been served on all the Defendants and that the Defendants (in particular the Secretary for Lands, Minister for Lands and Tiklim) knowingly went ahead with the tender process resulting in the successful grant of the State Lease of Allotment 12 Section 1, Mt Hagen, to Tiklim despite being served or being aware of the interim orders of 9^th May 2014. As I have found, the defendants were not served and not aware of the interim orders meant to preserve the status quo pending the final determination. The final Order of the Court was made when the land was no longer available to be restored because the third Defendant had already acquired an indefeasible title on 11^th June 2014 through an administrative process that commenced a year earlier in May 2013. Tiklim, having an indefeasible Title, subsequently disposed of the land by selling it to Tarina. Therefore, the State Lease over Allotment 12 Section 1, Mt Hagen, no longer exists for this Court to restore it to the Plaintiff.

133. The Plaintiff has itself to blame for not serving the interim orders of 9^th May 2014, in OS 84 of 2014. The Plaintiff’s State Lease was forfeited in March 2013. The Plaintiff did not do anything until it filed proceedings in early 2014. The Plaintiff failed to register the interim orders or caveat on the Title Deed kept with the Registrar of Titles. The final orders were made on 12^th May 2016. The Plaintiff, again, made no attempt to register the orders with the Registrar of Titles. After 12^th May 2016, the Plaintiff did not make any further representation or enquiries with the Lands Department on the status of the land until December 2018. It is clear the Plaintiff is guilty of laches and the subject matter (the land) for which it seeks restoration is no longer available.

134. Even if the initial title granted to Tiklim was affected by any fraud or illegality, which I have found none, Tarina remains innocent, and its interest should not be affected. The law is settled. The Court must exercise caution and judicial discretion in setting aside an innocent party’s interest. Refer: Berr v Yango (2015) N5859, Papua Club Inc v Nusaum Ltd (2005) SC 812, Niugini Table Birds v Nasap (2000) N2018, Anego Company Ltd v Finance Corporation Ltd 2013) N5391

135. The case Berr v Yango (Supra) is like the present case. Canning J said at paragraph 15 of his judgement:

“15. ...when the Court is asked to consider making a finding of constructive fraud and consider setting aside the registration of title, it must exercise a discretion and it must exercise the discretion judicially, not arbitrarily, and take into account principles of equity and fairness. “

136. The Fourth Defendant is an innocent third party who purchased the property for a considerable value, of K8 million. The money has been paid to Tiklim Ltd under the terms of a binding contract. The property has been mortgaged to Westpac (PNG) Ltd. It is not just, fair, and equitable to reverse a series of transactions under which the fourth defendant has acquired ownership of the property. In comparison with the Fourth Defendant, the Plaintiff has had the property for 17 years, that is from 1996 to 2013 when the title was forfeited for failing to improve the property. The evidence shows although the property had buildings built, it was burnt down, and the Plaintiff purchased the land without any improvements. The land remained undeveloped until it was forfeited. In determining who is the most innocent or less culpable party, it is Tarina Ltd compared to Papindo. For these reasons, the title currently held by Tarina Ltd shall not be disturbed.

137. In conclusion, I find, although the substantive order of 12^th May 2016 is current and in force, it cannot be lawfully enforced in terms of the Orders. The Orders do not have retrospective effect. The first, second, fifth and sixth defendants cannot be compelled to comply with the orders as the subject matter of the Court Order has not been preserved and no longer exists.

138. The Plaintiff argues that the Defendants be charged with Contempt of Court for failing to comply with the Orders of 9^th May 2014 and the 12^{th of} May 2016.

139. Mr. Mannrai, counsel for the third defendant, submits that the orders of 9^th May 2014 and 12^th May 2016 were not served on the defendants and therefore are not guilty of contempt. Counsel relies on the case authority in Augerea v Kelola (2014) N5582 and Finance Corporation Ltd v Kombra (2020) N8285.

140. Mr. Kos, counsel for Fourth Respondent, submits that the Defendants are not guilty of contempt for several reasons: i) the alleged contemnors were not served the orders of both 9^ths May 2014 and 12^th May 2016, ii) the defendants named in OS 84 of 2014 are different from the ones named in the current proceedings and iii)the contempt relief sought is procedurally flawed as it ought to have been pursued by way of Notice of Motion under Order 14 Rule 42(1) of the National Court Rules.

141. Order 14 Rule 38-50 of the National Court Rules sets out the procedure for contempt proceedings. Basically, where allegations for contempt is made in connection with the proceedings, it must be commenced by Notice of Motion in the proceedings, and where it is not connected with the proceedings, it must be commenced by Originating Summons. The Plaintiff failed to adopt any of the prescribed procedure. In my view, the Plaintiff should have filed proceedings by Notice of Motion in the original proceedings-OS No 84 of 2014 or alternatively by way of Originating Summons in a separate proceeding as prescribed by the National Court Rules.

142. Turning to the merits, the Plaintiff’s relief for contempt should also fail. The law is settled. For a successful prosecution of contempt of Court, the Plaintiff must prove that: i) the alleged contemnors have been personally served with copies of the Court Order(s), ii) the orders are clear and unambiguous and iii) there must be a deliberate failure to comply. Refer: Ross Bishop v Bishop Brothers (1988-89) PNGLR 533; Augerea v Kelola (2014) N5582 and Finance Corporation Ltd v Kombra (2020) N8285. Vaki v Damaru (2016) SC1557.

143. In the present case, the names of the alleged contemnors are different from the parties named in the proceeding in OS 84 of 2014. Besides, there is no evidence that the defendants named in this proceeding were served with the Orders of 9^th May 2014 and 12^th May 2016. There is no evidence that there is a deliberate failure by the defendants to comply. For these reasons, the relief sought for contempt of Court against the defendants be refused.

144. In the end, it is clear the Plaintiff has not proved its claim for the substantive reliefs sought in the statement of claim. The substantive reliefs A, B, C, D, E, F, G, H and L sought in the statement of claim shall therefore be dismissed.

145. The Plaintiff submits that the orders issued on 12^th May 2016 are in force and seeks enforcement in the various reliefs claimed in the Statement of Claim. Amongst the reliefs sought is an order for damages in the alternative.

146. Ms. Maliaki, counsel for the State, submits that the Plaintiff’s entire claim be dismissed. The State’s position is supported by Mr. Mannrai, counsel for Tiklim, the third Defendant.

147. Mr. Kos, counsel for the fourth Defendant, submits that damages are an appropriate remedy for Papindo against the State.

148. The Plaintiff’s allegation of fraud has not been proved. The request by the State to nullify the orders of 12^th May 2016 is misconceived. The Orders of 12^th May 2016 are still valid and in force. However, the orders do not have retrospective effect and cannot apply retrospectively. The first, second, fifth and sixth defendant cannot be compelled to comply with the orders “as the subject matter for the Specific Performance is not available.”

149. Should the Court then dismiss the proceedings without a remedy. The Plaintiff has a valid Court order in its favour. The Orders of a Court are a serious matter. They must be given effect. The fact that the first, second, fifth and sixth defendants cannot be compelled to obey the orders of 12^th May 2016 does not necessarily relieve them from responsibility. The party against whom the orders are directed has the obligation to respect and honour them and where compliance is not possible in terms of the Orders like the present case, an order for damages must be considered. In the present case the Plaintiff has sought damages as an alternative relief. Although the substantive reliefs sought by the Plaintiff are refused, the Plaintiff should be entitled to the damages. The principles regarding the grant of alternative reliefs are settled in the cases, Mondo Merchant Ltd v Melpa Properties Ltd (1999) N1863, Augwi Ltd v Xun Xin Xin (2014) SC 1616 and Dervent V Pakena (2020) N8294. Although counsel for the Plaintiff did not press for damages during submissions, the Court has a discretion to do justice in the circumstances by granting the alternative remedy of damages and retribution against the first, second, fifth and sixth defendants.

150. I am therefore inclined to grant the alternative order for damages against the first, second, fifth and sixth Defendants. A trial on assessment of damages shall be fixed on a date to be agreed by the parties.

151. The proceedings brought against Third and Fourth Defendants are not proven, and the reliefs sought against them are accordingly refused. The third and fourth defendants were not parties to the proceedings in OS 84 of 2014. Therefore, the entire proceedings against the third and fourth defendants be dismissed.

152. The parties to the proceedings have all sought cost. Cost is discretionary. The Plaintiff has succeeded in the alternative relief for damages against the First, second, fifth and sixth defendants and is therefore entitled to cost. The reliefs claimed against the third and fourth defendants have been refused. In the circumstances, the third and fourth defendants are entitled to their cost against the Plaintiff to be indemnified by the sixth Defendant. For clarity and convenience, the third and fourth defendants’ cost shall also be paid by the sixth Defendant. The Plaintiff sought costs on indemnity basis. In my view, this is not an appropriate case for cost to be awarded on indemnity basis in accordance with the principles on indemnity cost discussed and applied in Opi vs Telikom (PNG) Ltd (2020) N8290 and other decided cases. Rather, cost shall be awarded on party-party basis to be taxed if not agreed.

Solicitor General Lawyers: Lawyers for the First, Second, Fifth & Sixth Defendants

National Court of Papua New Guinea

Papindo Trading Co Ltd v Tolopa [2023] PGNC 97; N10211 (21 April 2023)