N11188
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO. 1717 OF 2015

BETWEEN
HABOLO BUILDING & MAINTENANCE LIMITED
Plaintiff

AND
HELA PROVINCIAL GOVERNMENT
First Defendant

AND
WILLIAM BANDO, Acting Provincial Administrator, Hela Provincial Administration
Second Defendant

WAIGANI: MAKAIL J
18 MAY 2023; 18 MARCH 2025

DAMAGES – Assessment of damages – Award of damages – Mesne profit – Occupation and use of land – State Lease – Period of occupation and use – Proof of – Corroboration of – Valuation report – Market value of land – Reliability of  

Cases cited
Rupundi Maku v Steven Maliwolo (2011) SC1171 
Wapi v Ialy (2014) SC1370
Mekere v Board of Directors of PNG Federation of Corporative Associations Ltd (2007) N3203
Mudge v Secretary for Lands [1985] PNGLR 387 
Emas Estate Development Pty Limited v John Mea & Ors [1993] PNGLR 215 
Koitachi Limited v Walter Schnaubelt (2007) SC870
Pacific Trade International Limited v James Waisime & Ors (2020) SC1935
James Waisime v Auskoa Enterprises Ltd & & Ors (2019) N7727
PNG Port Corporation Ltd v Charles Inni (2012) N4717
Albert Baine v The State (1995) N1335
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Peter Wanis v Fred Sikiot and The State (1995) N1350

Counsel
Mr Jimmy Apo, for plaintiff
Mr Greg Manda with Mr Max Aylata for first defendant
No appearance for second defendant

JUDGMENT

1.	MAKAIL J: This is a trial on assessment of damages following entry of summary judgment on 29th June 2022.

Parties’ Evidence 

2.	At the trial, the parties tendered the following:

(a)	affidavit of Newman Yuwi sworn on 25th July 2022 and filed on 26th July 2022 and marked as exhibit “P1”,

(b)	affidavit of Newman Yuwi sworn on 20th November 2015 and filed on 2nd December 2015 and marked as exhibit “P2”,

(c)	affidavit of William Bando sworn on 5th February 2016 and filed on 9th February 2016 and marked as exhibit “D1”,

(d)	affidavit of Peter Yuwi sworn on 9th February 2018 and filed on 12th February 2018 and marked as exhibit “D2”,

(e)	affidavit of William Bando sworn on 18t July 2017 and filed on 12th February 2018 and marked as exhibit “D3”,

(f)	supplementary affidavit of William Bando sworn and filed on 13th March 2018 and marked as exhibit “D4”, and

(g)	affidavit of Max Alyata sworn on 29th October 2021 and filed on 1st November 2021 and marked as exhibit “D5”.

Findings of Fact

3.	I have read the affidavits and excluding the non-essential assertions of fact, irrelevance and hearsay, I find the following to be the facts:

•	the plaintiff is a duly incorporated company under the Companies Act, 1997.

•	it was incorporated on 15th October 2007.
•	according to the Company Extract as of 26th October 2015 the plaintiff’s shareholders are Matiabe Yuwi and Angawai Habolo.

•	Matiabe Yuwi is a Knight. 

•	Newman Yuwi and Margaret Yuwi are directors of the plaintiff.

•	Newman Yuwi is the son of Sir Matiabe and Margaret Yuwi is the wife of Sir Matiabe.  

•	Sir Matiabe was a leading member of the Hela Transitional Authority (“Authority”) since 2009 upon which the Authority was established under the Hela Transitional Authority Act 2009.

•	during the transition period from 2009 to 2012 the land described as Allotment 4 Section 2 in State Lease Volume 16 Folio 223, Tari in the Tari Township was a vacant State land.

•	during the transition period the Authority moved onto the land, built its offices and operated from there to prepare for the new Hela Province.

•	on 20th January 2012, the plaintiff was granted a State Lease (Business (Commercial) Lease) for the land for a term of 99 years.

•	 on 17th May 2012 the Hela Province was declared with the subsequent establishment of the Hela Provincial Government herein the first defendant. 

•	the first defendant remained and continued to use the land for its administration and operations.

•	on 22nd August 2012 Sir Matiabe wrote to the defendants expressing the plaintiff’s disappointment that the defendants took possession of the land and developed it without the express authority or consent of the plaintiff and proposed a negotiation to settle the use of the land.

•	having received no response for almost a year, on 14th August 2013 Sir Matiabe wrote another letter to the defendants proposing a lease agreement be entered between the parties with a rental fee of K20,000.00 per month to be paid by the defendants for the use of the land.

•	on 11th October 2013 the first defendant under the leadership of the then Governor late Anderson Agiru with the initiative of the National Government, contracted Curtain Bros (PNG) Ltd and constructed three high rise buildings on the land to house the first defendant at the cost of more than K80 million.

•	on 6th May 2014 Sir Matiabe died due to illness.

•	on 26th August 2014 Newman Yuwi wrote to the defendants following up on the proposal to pay compensation for the use of the land and outlining the heads of damages in the total sum of K5.490 million.

•	after almost one year with no response, on 11th June 2015 the plaintiff’s lawyers issued a letter of demand for payment of compensation to the defendants for the use of the plaintiff’s land and proposed a sum of K1,144,000.00. 

•	after receiving no favourable response, on 30th November 2015 the plaintiff filed these proceedings to recover damages from the defendants for the use of its land.

•	on 29th June 2022 after an inter parte hearing, the National Court entered summary judgment against the defendants with damages to be assessed for mesne profit. 

•	the plaintiff produced a valuation report prepared by the Valuer General dated 11th July 2022.  The date of valuation is 31st December 2015 and date of inspection is 14th January 2022.

•	the Valuer General assessed the monthly market value of the land at K35,000.00. 

Authority to commence proceedings

5.	Before I address the parties’ submissions on the appropriate sum to award as damages to the plaintiff, I respond to the first defendant’s invitation to revisit the issue of liability.   

6.	Relying on the Supreme Court cases in Rupundi Maku v Steven Maliwolo (2011) SC1171 and Wapi v Ialy (2014) SC1370 which held that the Court has discretion to refuse to award damages even where liability has been determined by entry of default judgment or otherwise, the first defendant argues that this Court can revisit the issue of liability and refuse to award damages to the plaintiff because first, Newman and Margaret Yuwi did not have the authority of the surviving shareholder Mr Habolo to commence these proceedings.  

7.	Secondly, they did not have the consent and authority of the surviving beneficiaries of late Sir Matiabe to commence these proceedings.  Thirdly, they did not have the consent and authority of the other surviving shareholder Mr Habolo and surviving beneficiaries of late Sir Matiabe to appoint themselves as directors of the board of the plaintiff and change the company records to confirm their appointment.

8.	The Court’s findings above shows that the summary judgment was regularly entered because the defendants attended the hearing through their counsel and responded to the application for summary judgment on 29th June 2022.  

9.	Given this, I am of the view that it is not open to the defendants to revisit the issue of liability where they raise serious allegations of fraud and illegality against Newman and Margaret Yuwi touching on the merits of the proceedings, thus would have otherwise been raised and considered by the presiding Judge at the hearing of the summary judgment application.  

10.	The remedy for the defendants is to take up these allegations in the Supreme Court by way of an appeal. To bring them up again in the guise of responding in defence to the action for mesne profit is an abuse of the Court process.  This defence is dismissed.

11.	As to the allegation that Newman and Margaret Yuwi did not obtain the consent and authority of the surviving beneficiaries of late Sir Matiabe to commence these proceedings, it is dismissed for the same reasons as above. 

12.	Alternatively, these allegations raising serious questions in relation to authority and standing of the plaintiff to commence these proceedings are irrelevant because they are not properly before the Court for determination.  If these kind of information and grounds were available to the defendants, the defendants did nothing to contest the validity of Newman and Margaret Yuwi’s appointment as directors of the board of the plaintiff and further, their authority to commence these proceedings in the name of the plaintiff as was done in the case of Mekere v Board of Directors of PNG Federation of Corporative Associations Ltd (2007) N3203.  To take up these allegations in defence to the action of mesne profit is an abuse of process.

13.	On the other hand, the Court will accept the Company Extract of the shareholding and directorship of the plaintiff showing Newman Yuwi and Margaet Yuwi as directors of the board of the plaintiff as sufficient authority on which to act by and on behalf of the plaintiff and thereby giving them the plaintiff the requisite authority and standing to bring these proceedings in the name of the plaintiff. 

Procurement of Title by Fraud

14.	Finally, the first defendant argues that the plaintiff procured the title to the land by fraud, and it is questionable whether the plaintiff should be awarded damages for the defendants’ occupation and use of the land.  For the reasons given at [8], [9] and [10] above, this defence is dismissed.

15.	Alternatively, it will be observed that we have adopted a Torrens Titles system of land registration and land transfer where registration of title on the Register of Titles per the certificate of title is conclusive evidence of title.  A registered proprietor’s title can be set aside if fraud is proved under Section 33(1)(a) of the Land Registration Act.  The cases of Mudge v Secretary for Lands [1985] PNGLR 387, Emas Estate Development Pty Limited v John Mea & Ors [1993] PNGLR 215 and Koitachi Limited v Walter Schnaubelt (2007) SC870 reinforce this legal position.

16.	It was, therefore, necessary for the first defendant to contest the grant of the State Lease to the plaintiff in a separate legal proceeding and until and unless the State Lease is set aside on account of fraud under Section 33(1)(a) of the Land Registration Act, the State Lease is conclusive evidence of the plaintiff’s title, and the Court will uphold it.

Proof of Mesne Profit

17.	As to the proof of damages, it will be noted from the allegations of fact pleaded at paragraphs 1 to 14 of the statement of claim that the plaintiff does not sue for trespass, but mesne profit from 2012 to 2015.  The plaintiff’s cause of action is further reinforced by the summary judgment wherein the National Court further ordered the assessment of damages will be for mesne profit.  Accordingly, in an action for mesne profit, damages will be awarded for profit or value of the land during the time someone was wrongfully occupying the land: Pacific Trade International Limited v James Waisime & Ors (2020) SC1935 and James Waisime v Auskoa Enterprises Ltd & & Ors (2019) N7727.

18.	The normal measure of damages is the market value of the property occupied or used for the period of wrongful occupation or use including rental variations due to market fluctuations.  Also, where the defendant makes improvements on the land, the rental value should be assessed upon the unimproved value: PNG Port Corporation Ltd v Charles Inni (2012) N4717.

19.	In the present case, it is common ground between the parties that mesne profit is awarded for the period of occupation and use by the defendants. As to when it starts and ends, the first defendant argues that the plaintiff is bound by the pleadings in the statement of claim where it alleges that the period of the defendants’ occupation and use was between 2012 and 2015, thus mesne profit should be awarded for this period and not beyond that.

20.	The plaintiff submits that while the pleadings fixed a period of three years from 2012 to 2015, the Court is not bound by it but the evidence.  The evidence establishes that the defendants occupied and used the land from 2012 to date of trial, thus it is open to the Court to award mesne profit for this period.

21.	As to the sum to adopt to assess mesne profit, except for the assertion by Newman Yuwi that the plaintiff plans to build a hotel or lodge on the land at [6] of Exhibit “P2”, there is no evidence of plans to build on the land by the plaintiff such as a sketch plan of the building of a lodge from an architectural company and statement of the projected revenue from an accountant to corroborate the plaintiff’s assertion that it plans to build a hotel or lodge.  

22.	As was held in Albert Baine v The State (1995) N1335, Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331 and numerous subsequent cases, corroboration is required and corroboration must come from an independent source, even when a defendant fails to present any evidence disputing the claim: Peter Wanis v Fred Sikiot and The State (1995) N1350.

23.	Consequently, there is no evidence to establish that the plaintiff plans to build a hotel or lodge on this piece of land and how much it will make from this type of business enterprise to adopt to assess mesne profit.  On the other hand, as the Court has found, the land was developed by the defendants at their own costs.  They spent over K80 million to develop the land which included construction of three high story buildings to house the first defendant’s administration and operations when Hela was declared a province by the National Government on 17th May 2012.
24.	The sole available evidence to corroborate the plaintiff’s claim for mesne profit is the Valuation Report by the Valuer General dated 11th July 2022 giving a market value of K35,000.00 per month.  I have read the Report and identified four key aspects lacking in it:

(a)	it lacks information of the source of the market valuer.  This information is important to support the market value of K35,000.00 per month,

(b)	as a claim for mesne profit is based on a lease agreement between the lessor and lessee or landlord and tenant, in this case, there is no lease agreement between the parties to indicate the rental fee per month.

(c)	it does not include the variation in the market value due to inflation.

(d)	it lacks the unimproved value of the land.  This information is important because as found, the defendants were the parties responsible for putting up improvements on the land at significant costs.

25.	Given this, there will be no award for the unimproved value of the land.  As to the market value, considering the lack of source of the market value and fluctuation, I will adopt a sum of K20,000.00 to assess mesne profit.  As to the period of occupation and use of the land by the defendants, while I note the first defendant’s strong submission for three years (2012 to 2015), I adopt the period proposed by the plaintiff because the evidence supporting the Court’s finding above strongly support the plaintiff’s claim that defendants are guilty of ignoring and refusing to accept the numerous demands and/offer for settlement by the plaintiff over the years of their occupation and use of the land. 

26.	Computing mesne profit at K20,000.00 per month per annum in 2012 is K240,000.00. From 2012 to 2021 (date of trial) is a period of 9 years.  K240,000.00 per annum multiply by 9 years is K2,160,000.00. From January 2022 to date of trial of 18th May 2023 is approximately 5 months.  K20,000.00 per month multiply by 5 months is K100,000.00.  Total sum awarded is K2,160,000.00 plus K100,000.00 is K2,260,000.00.  I award this sum for mesne profit.

Relief 

27.	The plaintiff further seeks an order to evict the defendants from the land and to restrain the defendants from occupying and using the land, but they will not be granted because these orders inappropriate and unjust given that the defendants have spent their own money to improve the land.  They have spent substantial sum of money in the light of the buildings put up on the land.  Moreover, the land is where the headquarters of Hela Province is on and to order the defendants to vacate will cause chaos and disorder in the province.

28.	Instead, this is an appropriate case where the Court will invoke its inherent powers under Section 155(4) of the Constitution to do justice to the parties by ordering the defendants to pay a rental fee for the occupation and use of the land under a Lease Agreement to be negotiated by the parties within three months of this Order.  When negotiating a rental fee, parties must consider amongst others, the significant improvements made on the land by the defendants.

Interest

29.	As the State is not a party (defendant) and no submissions were made to award interest at the rate of 2% per annum on the total judgment sum, I order that the defendants shall pay interest at the rate of 8% per annum on the total judgment sum of K2,260,000.00 from the date of issue of writ of summons of 30th November 2015 to date of judgment and until final settlement under Sections 4(1) and 6(1) of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

Order

30.	The orders of the Court are:

1.	Judgment is entered in the total sum of K2,260,000.00 as mesne profit.

2.	The order sought to evict the defendants and to restrain the defendants from occupying and using the land described as Allotment 4 Section 2 in State Lease Volume 16, Folio 223, Tari in Tari Township of Hela Province is refused.

3.	Pursuant to the powers under Section 155(4) of the Constitution the defendants shall pay a rental fee for the occupation and use of the land under a Lease Agreement to be negotiated by the parties within three months of this Order.

4.	When negotiating a rental fee, parties must consider amongst others, the significant improvements made on the land by the defendants.

5.	The defendants shall pay interest at the rate of 8% per annum on the total judgment sum of K2,260,000.00 from the date of issue of writ of summons of 30th November 2015 to date of judgment and until final settlement under Sections 4(1) and 6(1) of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

6.	The defendants shall pay the costs of the proceedings, to be taxed, if not agreed.
________________________________________________________________
Lawyers for plaintiff: Apo Lawyers		
Lawyers for first defendant: Greg Manda Lawyers