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National Housing Corporation v WPCC Investments Ltd [2024] PGNC 113; N10774 (1 May 2024)

N10774

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 397 OF 2023

NATIONAL HOUSING CORPORATION
Plaintiff

V

WPCC INVESTMENTS LIMITED
First Defendant

DAVID CHAN
Second Defendant

ALOIS KINGSLEY
Third Defendant

&

OS NO 59 OF 2023

WPCC INVESTMENTS LIMITED
Plaintiff

V

DARIUS FUXTON WA’AU
& OTHER OCCUPIERS OF SECTION 8 ALLOTMENT 12 MADANG
Defendants

Madang: Cannings J
2023: 25^th October
2024: 22^nd March, 1^st May

LAND – State leases – whether registered proprietor’s title affected by fraud – meaning of fraud in Land Registration Act, s 33 – effect of approved subdivision of land covered by State lease.

PRACTICE AND PROCEDURE – joint trial of originating summons and writ of summons – determination of respective positions of registered proprietor and occupiers of land – remedies.

This was the joint trial of two proceedings regarding one piece of land. In proceedings commenced by writ of summons the plaintiff sought declarations that it was the lawful owner of the land and that the first defendant had with assistance of other defendants acquired its State lease over the land by fraud and an order setting aside the first defendant’s title. In proceedings commenced by originating summons the plaintiff sought a declaration that it was the registered proprietor of a State lease over the land and an order for eviction of the defendant and other occupiers of it.

Held:

As to the writ of summons proceedings:

(1) The plaintiff failed to prove that it was the legal owner of the land as its interest in it had been transferred to the third defendant in 2001, who transferred his interest in it to the first defendant in 2006.

(2) The plaintiff failed to prove that the first defendant had acquired its State lease over the land by fraud.

(3) The proceedings were dismissed.

As to the originating summons proceedings:

(4) The plaintiff was the registered proprietor of the State lease over the land and there was no good reason not to grant a declaration to that effect.

(5) The defendants were unauthorised occupiers of the land and there was no good reason not to order that they be required to vacate the land.

(6) Relief sought in the originating summons was granted.

Cases Cited
Awaincorp Ltd v Kas (2015) N5862 Open Bay Timber Ltd v Minister for Lands & Physical Planning (2013) N5109
Berr v Yango (2015) N5859
Elizabeth Kanari v Augustine Wiakar (2009) N3589
Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215
Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222
Kapiura Trading Ltd v Bullen (2012) N4903
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Kol Toki v Moeka Morea Helai (2016) SC1558
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120
Mosoro v Kingswell Ltd (2011) N4450
Muku v Yama (2019) N7948
National Council of Young Men’s Christian Association of PNG (Inc) v Firms Services Ltd (2017) SC1596
PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126
Tikili v Home Base Real Estate Ltd (2017) SC1563
Wauwe v NHC (2022) N9382
West New Britain Provincial Government v Kimas (2009) N3834

Counsel
D F Waáu, for the Plaintiff in WS 397 of 2023 and the Defendants in OS 59 of 2023
R Saulep, for the First and Second Defendants in WS 397 of 2023 and the Plaintiff in OS 59 of 2023

1^st May 2024

1. CANNINGS J: This has been a joint trial of two proceedings concerning one piece of land at Coastwatchers Avenue in Madang town. The land is on the same side of the street as the Madang Resort hotel, between the hotel and the Governor’s residence near the Coastwatchers lighthouse. It has an area of 0.963 hectares.

2. I am describing the land in that way as its official description is one of the matters in dispute in these two proceedings. The parties agree that it is government land but disagree about how it is properly described. They have also agreed to the joint trial of the two proceedings.

3. The disputing parties fall into two groups:

• In one group is a company called WPCC Investments Ltd (WPCC) and David Chan. (Mr Chan says he is a director of WPCC but I cannot see evidence of that. He is in any event closely connected with WPCC.) They are represented by Saulep Lawyers and their counsel is Mr Saulep.
  
• In the other group is the National Housing Corporation (NHC) and Darius Fuxton Wa’au, who is one of the occupiers of the land on which he conducts his legal practice, DFW Lawyers. They are represented by DFW Lawyers and their counsel is Mr Waáu.
  

4. Let me now describe the two proceedings:

• In WS 397 of 2023 the NHC is the plaintiff and WPCC is first defendant, David Chan is second defendant and Alois Kingsley is third defendant. The primary relief sought by NHC is a declaration that the State Lease acquired by WPCC was obtained by fraud and an order that the lease be surrendered and returned to the NHC and given its correct description, which is Section 8 Allotments 15, 16, 17, 18, 19, 20 and 21 Madang.
  
• In OS 59 of 2023 WPCC is the plaintiff and Mr Waáu and other occupiers of the land are defendants. In this proceeding the primary relief sought by WPCC is a declaration that it is the registered proprietor of the State Lease (and therefore the owner) of the land, which is properly described as Section 8 Allotment 12 Madang, and an order for eviction of Mr Waáu and other occupiers.
  

ISSUES

5. There are three issues that will settle the merits of the two proceedings; and then a fourth, which will settle the issue of remedies:

1. What is the correct description of the land?
   
2. Who is the registered proprietor?
   
3. Is title affected by fraud?
   
4. What orders should be made?
   

1 WHAT IS THE CORRECT DESCRIPTION OF THE LAND?

6. The NHC argues that after being granted a 99-year State Lease over the land, then known as Section 8 Allotment 12, in 1994, its proposed subdivision of the land was approved in 2002. Then in 2005 a new survey catalogue No 12/718 was created and the land was to be subdivided into Section 8 Allotments 15, 16, 17, 18, 19, 20 and 21.

7. There is sufficient evidence in support of those assertions of fact. However, none of this is reflected on the State Lease for the land, which shows the following history:

• On 29 August 1994 a 99-year State Lease for residence purposes was granted over Section 8 Allotment 12 Madang by the Minister for Lands to the NHC under s 61 of the Land Act and s 5 of the National Housing Corporation (Grant of Leases) Act 1990. The lease took effect from 28 July 1988.
  
• On 1 August 2001 the lease was transferred from the NHC to Alois Kingsley (the third defendant in WS 397 of 2023).
  
• On 3 May 2006 the lease was transferred from Alois Kingsley to WPCC.
  
• On 8 September 2006 the land was mortgaged to Westpac Bank PNG Ltd.
  

8. That is the sum total of all transactions recorded under the Land Registration Act for this land since 1994. All documents in evidence including instruments of transfer show the land described as Section 8 Allotment 12. None refer to the alternative description, Section 8 Allotments 15, 16, 17, 18, 19, 20 and 21, contended for by NHC.

9. I conclude that the correct description of the land is and has been, at least since 1994, Section 8 Allotment 12 Madang.

2 WHO IS THE REGISTERED PROPRIETOR?

10. The registered proprietor of the State Lease over Section 8 Allotment 12 Madang is WPCC Investments Ltd.

3 IS TITLE AFFECTED BY FRAUD?

11. The NHC and Mr Waáu argue that WPCC’s title is affected by fraud due to the following suspicious and irregular train of events:

• there is no evidence of any contract of sale between the NHC and Alois Kingsley or any transfer instrument;
• Alois Kingsley acquired the land for only K12,000.00 (the instrument of transfer to WPCC dated 3 May 2006, which is in evidence, shows that the land was sold to WPCC for K550,000.00);
• all negotiations took place in Port Moresby involving officers of the Department of Lands without the knowledge of the NHC;
• Alois Kingsley never resided on the land he somehow acquired;
• there were various houses on the land and they remained occupied by tenants of the NHC and the occupiers had tenancy agreements and paid rent to the NHC;
• transfer of the land to Alois Kingsley was contrary to the registered subdivision of the land as proposed by the NHC;
• the transfer of the land to Alois Kingsley was contrary to s 37 of the National Housing Corporation Act 1990 as he was not a sitting tenant and not eligible to purchase the property from the NHC;
• Alois Kingsley only intended to purchase one part of the property – the part which was registered as Allotment 12C – but somehow he was transferred the whole of the property.
  

12. It is argued that the above irregularities in the purported transfer from the NHC to Alois Kingsley show there was constructive fraud involved, sufficient to invalidate the title held by Alois Kingsley.

13. It is also argued that David Chan has not produced sufficient evidence to demonstrate that WPCC Investments Ltd properly obtained the property. In 2006, when the State Lease was transferred from Alois Kingsley to WPCC Investments Ltd, Section 8 Allotment 12 had ceased to exist.

14. The NHC and Mr Waáu further argue that there is a lack of evidence to support WPCC’s case that its title was acquired by legitimate means. The only reasonable inference to be drawn from the evidence is that the title to the property was “hijacked” and resold to WPCC for a better price.

15. Mr Waáu submits that the entire series of transactions was fraught with irregularities from the beginning and affected by constructive fraud such that WPCC’s title must be invalidated as it was improperly and irregularly obtained.

16. Before going further, I make two important points.

17. First, the principle of indefeasibility of title in regard to government land in Papua New Guinea dictates that under our Torrens Title system of land registration, once grant or transfer of a State Lease is registered, indefeasible title is conferred on the registered proprietor. Ours is a system of title by registration, not registration of title. This is subject only to the exceptions in s 33(1) (protection of registered proprietor) of the Land Registration Act, including s 33(1)(a), which states: “The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except ... in the case of fraud”.

18. The registered proprietor is in a very strong position whenever there is a dispute over title to land. It is presumed that the registered title is good title. Those who dispute registered title bear the onus of proving that one of the exceptions in s 33(1) applies and the most common one is fraud.

19. What does “fraud” mean? Is it confined to actual fraud? Or does it extend to constructive fraud? That question has been burning in PNG since the decision 30 years ago in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215, which was the genesis of the notion of constructive fraud. The principle has been developed and applied in the Supreme Court in cases such as PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126, Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120, Kol Toki v Moeka Morea Helai (2016) SC1558 and Tikili v Home Base Real Estate Ltd (2017) SC1563.

20. I have applied the principle in numerous National Court cases in which the question has arisen whether the circumstances of registration of an interest in land are so irregular, unlawful, dubious or unsatisfactory as to be tantamount – in the absence of actual fraud – to fraud, eg Elizabeth Kanari v Augustine Wiakar (2009) N3589, West New Britain Provincial Government v Kimas (2009) N3834, Mosoro v Kingswell Ltd (2011) N4450, Kapiura Trading Ltd v Bullen (2012) N4903, Open Bay Timber Ltd v Minister for Lands & Physical Planning (2013) N5109, Awaincorp Ltd v Kas (2015) N5862.

21. But it seems that as many times as the Supreme Court upholds the principle of constructive fraud, differently constituted Supreme Court benches say the opposite: fraud means actual fraud. Cases in this category include Koitachi Ltd v Walter Schnaubelt (2007) SC870, Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222 and National Council of Young Men’s Christian Association of PNG (Inc) v Firms Services Ltd (2017) SC1596.

22. The second point is that whichever approach is taken to the meaning of fraud, it needs to be proven that the registered proprietor was involved in it. A plaintiff might be able to prove constructive fraud, or even actual fraud, in transactions that preceded the transfer of title to the registered proprietor. But if there is no proof of involvement in the fraud by the registered proprietor, the plaintiff’s case will fail. Examples of application of this principle are found in my decisions in Berr v Yango (2015) N5859, Muku v Yama (2019) N7948 and Wauwe v NHC (2022) N9382.

23. In the present case the plaintiff has presented a strong case that the circumstances of the transfer of the State Lease over Section 8 Allotment 12 from the NHC to Alois Kingsley were dubious, irregular and suspicious. How could it be that land held by the NHC in a prime location in Madang town, used for public housing and tenanted to a number of different people could be transferred to one individual? Mr Kingsley has been joined to the WS proceedings as third defendant. He has been served with the writ of summons and statement of claim in which the allegations of fraud were clearly pleaded. He has had the opportunity to be heard but has not exercised it.

24. The only reasonable inference to draw from the evidence presented is that the title in Section 8 Allotment 12 Alois Kingsley held from 1 August 2001 (the date of registration of the transfer to him from the NHC) to 3 May 2006 (the date of registration of the transfer from him to WPCC) was susceptible to being set aside on the ground of constructive fraud.

25. However, it does not follow that the title obtained upon transfer of the State Lease to WPCC is also affected by fraud. The NHC and Mr Waáu have been unable to prove any knowledge or involvement on the part of WPCC in the dubious transfer of the State Lease from the NHC to Alois Kingsley. A case of fraud cannot be founded on mere suspicion or speculation. It is not the only reasonable inference to draw from the evidence that WPCC colluded with Alois Kingsley to obtain the State Lease by irregular means.

26. I find that it has not been proven that the State Lease held by WPCC is affected by fraud.

4 WHAT ORDERS SHOULD BE MADE?

27. The WS proceedings commenced by the NHC against WPCC, David Chan and Alois Kingsley must be dismissed. Costs will follow the event.

28. The OS proceedings commenced by WPCC will succeed. The primary relief sought by WPCC (a declaration as to its title and an eviction order against Mr Waáu and other occupiers) will be granted. There is no good reason not to order the eviction of Mr Waáu and other occupiers of Section 8 Allotment 12. I will allow a reasonable time for the occupiers to vacate the land. If they don’t vacate by that time, the police will be authorised to use reasonable force to evict them.

29. All these orders are made under s 155(4) of the Constitution which authorises the National Court to make such orders as are necessary to do justice in the particular circumstances of this case.

ORDER

30. As to WS 397 of 2023:

(1) The proceedings are dismissed.

(2) The plaintiff shall pay the first and second defendants’ costs of the proceedings on a party-party basis, which shall if not agreed be taxed.

31. As to OS 59 of 2023:

(3) It is declared that the plaintiff WPCC Investments Ltd is the registered proprietor of Section 8 Allotment 12, Coastwatchers Avenue, Madang (the subject property).

(4) The defendants, Darius Fuxton Waáu and all other persons in occupation of the subject property, shall vacate it and remove all their goods and possessions, by 12 noon on 1 July 2024, failing which the plaintiff and members of the Police Force are authorised without further order to use reasonable force to enter the subject property and evict the defendants and all other persons in occupation of the subject property and remove, dismantle or destroy any structures, goods or possessions remaining on the subject property.

(5) All interim orders authorising the defendants’ occupation of the subject property will dissolve at 12 noon on 1 July 2024.

(6) The defendants shall pay the plaintiff’s costs of the proceedings on a party-party basis, which shall if not agreed be taxed.

________________________________________________________________
WS 397 of 2023
DFW Lawyers: Lawyers for the Plaintiff
Saulep Lawyers: Lawyers for the First & Second Defendants

OS 59 of 2023
Saulep Lawyers: Lawyers for the Plaintiff
DFW Lawyers: Lawyers for the Defendants