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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO 142 0F 2004
BETWEEN
THE PAPUA CLUB INC
Appellant
AND
NUSAUM HOLDINGS LIMITED
First Respondent
AND
INVESTMENT CORPORATION OF PAPUA NEW GUINEA
Second Respondent
AND
REGISTRAR OF TITLES
Third Respondent
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Respondent
AND
THE MINISTER FOR LANDS
Fifth Respondent
WAIGANI: LOS J, DAVANI J, CANNINGS J
29 AUGUST, 2 DECEMBER 2005
REAL PROPERTY – land – State Leases – deeds to transfer lease – subleases – 66-year State Lease – effect of – deed for entry into sublease – sublease – whether deed or sublease providing for continuance of interest in land in perpetuity void for uncertainty – need for proper definition of leased premises.
REAL PROPERTY – State Leases – whether a lessee or sublessee under a State Lease can have rights or interests beyond the expiry of the date of the State Lease – scheme of the Land Act.
REAL PROPERTY – State Leases – procedure upon expiry of lease – rights and interests of lessee and sublessee – whether Land Act provides for State Lease compensation and renewal rights – whether lessee holds rights in trust for sublessee – whether lessee holds interests in trust for sublessee.
SUPREME COURT – appeals – notice of appeal – whether appellant permitted to argue points beyond those relied on in notice of appeal – whether appellant can raise points of law not raised at trial – whether appellant can seek orders not sought at trial – whether Supreme Court can make orders beyond those sought in a notice of appeal.
The appellant is an incorporated social club. In 1939 it was granted a 66-year State Lease over a block of land in Port Moresby. In 1978 it entered into a deed with the second respondent with a view to transferring its lease to the second respondent, on condition that amongst other things the second respondent build a high-rise office building on the land and grant the appellant a sublease for a peppercorn rental. The transfer and sublease were executed, the building was built and the appellant occupied the top floor of the building; and has done so since 1980. In 1998 the second respondent transferred the lease to the first respondent. The first respondent then informed the appellant that its sublease would expire on 19 December 2005 and that it could not thereafter occupy the top floor of the building for the peppercorn rental. The appellant commenced proceedings in the National Court seeking amongst other things a declaration that it was entitled to continue occupying the top floor after 19 December 2005 in accordance with the sublease. The National Court decided the case against the appellant. The appellant appealed to the Supreme Court.
Held:
(1) A lease or sublease can be rendered void and unenforceable if it is uncertain as to the period of the lease or its description of the property to which it purports to relate.
(2) The lease must clearly identify the start-time and end-point of the lease. A lease that purports to operate in perpetuity is contrary to public policy, and void.
(3) The scheme of the Land Act is that no one other than the State is capable of having any interest in land that is subject to a State Lease after it expires, unless and until a new interest is granted under the Land Act.
(4) An outgoing lessee’s interests in the land are extinguished upon the expiry of the State Lease. Therefore a sublessee has no right to have its sublease renewed or to be granted a new sublease.
(5) An appellant can raise an issue of law before the Supreme Court that was not raised in the trial provided it is set out in the notice of appeal and it does not concern a question of fact only and the leave of the court is obtained to argue the point.
(6) In the circumstances, the trial judge properly declared that the sublease was void and unenforceable due to its uncertainty and being contrary to the scheme of the Land Act. The appeal was accordingly dismissed.
Cases cited:
The following cases are cited in the judgment:
Awoda v The State [1984] PNGLR 165
Birch v The State [1979] PNGLR 75
Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
Charles Ombusu v The State [1996] PNGLR 335
Connecticut Fire Insurance Co Ltd v Kavanagh [1892] UKLawRpAC 39; [1892] AC 473
Dianne McGrath Fingleton v The Queen [2005] HCA 34
Dinge Damane v The State [1991] PNGLR 244
Emas Estate Developments v John Mea and Others [1993] PNGLR 215
Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705
Keko Aparo and Others v The State (1983) SC249
North Staffordshire Railway Co v Edge [1920] AC 254
Peter Ipu Peipul v Sheehan J, Orim Karapo and Iova Geita, constituting the Leadership Tribunal and Others (2001) N2096
Prudential Assurance Co Ltd v London Residuary Body and Others [1991] UKHL 10; [1992] 3 All ER 504
Rolf Schubert v The State [1979] PNGLR 66
Sacred Heart Mission (New Britain) Property Trust v Nambumutka Simbali on behalf of the Denangi Lineage and The Director of District
Administration (Re Toriu) (1972) FC29
Sutherland v Thomson [1905] UKLawRpAC 67; [1906] AC 51
The Papua Club Inc v Nusaum Holdings Limited and Others (2002) N2273
The Papua Club Inc v Nusaum Holdings Ltd and Others (2004) N2603
University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481
Van Der Kreek v Van Der Kreek [1979] PNGLR 185
Abbreviations:
The following abbreviations appear in the judgment:
Inc – Incorporated
Ltd – Limited
PNG – Papua New Guinea
Pty – Proprietary
APPEAL
This was an appeal from a judgment of the National Court refusing an application for a declaration regarding the appellant’s interest in land.
Counsel:
N M Cooke QC and B Frizzell for the appellant
J A Griffin QC and M M Varitimos for the 1st respondent
G Egan and F Waleilia for the 2nd respondent
No appearance for the 3rd, 4th or 5th respondents
BY THE COURT:
This is an appeal against a judgment of Gavara-Nanu J in the National Court in which his Honour refused an application by the appellant for a declaration and other remedies aimed at upholding its interests in land. (The Papua Club Inc v Nusaum Holdings Ltd and Others (2004) N2603.)
THE PARTIES
The appellant is the Papua Club Inc. It was the plaintiff in the National Court. Its club premises are on the top floor of a building in Port Moresby. It has been there a long time under a lease that will soon expire. It claims a right to remain there after the lease expires.
The first respondent is Nusaum Holdings Ltd. It is the registered proprietor of the land on which the building stands – Monian Tower – which includes the Papua Club’s premises. The first respondent became the owner, or put correctly, the registered proprietor of the State Lease, in 1998, by acquiring the title from the previous registered proprietor, the Investment Corporation. Nusaum Holdings Ltd was the first defendant in the National Court.
The second respondent is the Investment Corporation of Papua New Guinea. It acquired the State Lease over the property in 1978 from the Papua Club, then erected the building on it and leased a part of the building back to the Club. The Investment Corporation transferred the State Lease to Nusaum Holdings Ltd in 1998. The Investment Corporation was the second defendant in the National Court.
The third respondent is the Registrar of Titles. This person is a statutory office-holder appointed under the Land Registration Act and has been responsible for registering the title to and interests in the land.
The fourth respondent is the Independent State of Papua New Guinea. It is the owner of the land. It is the lessor in the State Lease that was granted under the Land Act, initially to the trustee of the Papua Club (in 1939), and then transferred to the Investment Corporation (in 1978) and to Nusaum Holdings Ltd (in 1998).
The fifth respondent is the Minister for Lands. This person is a member of the Parliament, appointed by the Prime Minister to be a member of the National Executive Council with political responsibility for land matters and statutory responsibilities under various legislation including the Land Act.
The main protagonists are the appellant and the first respondent. The second respondent had a lot at stake in the National Court but in this appeal its role is limited. The third, fourth and fifth respondents, though they have been parties throughout, have had no active involvement in either the National Court or the appeal proceedings.
FACTS
The facts of this case are no longer in dispute.
The appellant is an incorporated social club. In 1939 its then trustees were granted a Crown Lease over a block of land in Port Moresby: Section 3, Allotment 4, Milinch Granville, Volume 5, Folio 1027. This is on the northern side of Douglas Street, downtown Port Moresby, between Hunter and Musgrave streets. The term of the lease is 66 years and 175 days: from 29 June 1939 to 20 December 2005.
In 1975 the appellant was incorporated and the lease was vested in it under the Land Registration Act.
In 1977 the appellant started negotiations with the second respondent, a governmental body established to promote investments. They negotiated a plan to develop the site. The lease would be transferred to the second respondent, which would dismantle the appellant’s old premises and erect a high-rise office building. In return, the second respondent would pay the appellant a lump sum and lease back to the appellant a part of the building for its exclusive use as club premises, at a peppercorn (ie nominal) rental.
That plan came to fruition.
On 5 July 1978 the appellant and the second respondent executed a deed, which gave effect to the negotiations. The lease over the property was subsequently transferred to the second respondent.
On 29 August 1978 the parties executed a sublease, by which the leaseback arrangement was put in place: the appellant became the sublessee of a portion of the building for its new club premises, liable for a peppercorn rental of K1.00 per annum.
The building, called Invesmen Haus, was completed in 1980. The appellant occupied part of the top floor of the building and has been using it ever since as its club premises.
In 1984 the sublease was registered.
On 2 July 1998 the second respondent transferred the lease to the first respondent, which renamed the building Monian Tower. The first respondent then informed the appellant that its sublease would expire on 19 December 2005 and that it could not thereafter occupy the top floor for the peppercorn rental. The appellant was aggrieved by that information.
In 1999 the appellant commenced proceedings in the National Court, seeking amongst other things a declaration that it was entitled to continue occupying the top floor after 19 December 2005 in accordance with the deed and the sublease.
In 2002 the trial was held over nine sitting days. On 3 September 2004 his Honour gave judgment against the appellant, concluding that it had no right to occupy the top floor after 19 December 2005. The appellant appealed to the Supreme Court.
KEY DOCUMENTS
Central to the National Court proceedings was the interpretation and application of two instruments executed by the appellant and the second respondent in 1978: the deed and the sublease. These documents are also prominent in this appeal. Both documents address the leaseback arrangement, but not in identical terms.
The deed
Clause 2(i) of the deed dealt with the property itself and stated:
Investcorp [the second respondent] covenants and agrees: ...
It will construct on the property a development in accordance with the Plans (“the Building”) which have been made available to and have been inspected by the Club and such development shall provide for a roofed building area, concrete veranda and open space (called “New Premises”).
Clause 2(ii) of the deed dealt with the period of the sublease and stated:
Investcorp [the second respondent] covenants and agrees: ...
It will lease to the Club at a nominal rental of One Kina (K1.00) per annum the new premises for the term of the unexpired portion of the Crown Lease over the property and for such period of any extension renewal or substitution therefore of such Lease, provided that it shall be a condition of such Lease that the New Premises are to be used solely for the operation of the Papua Club and for no other purpose.
The “Crown Lease” means the same thing as “State Lease”, in both documents.
The sublease
The property being subleased and the period of the sublease were dealt with in the preamble and the first and second schedules.
The preamble stated that the Investment Corporation of Papua New Guinea (the second respondent), being the registered proprietor:
... does hereby lease unto the Papua Club Inc [the appellant] ... all that portion of the building known as Investment [sic] Haus ... set out in the first schedule hereto ... to be held by the lessee as sub-tenant for the term described in the second schedule hereto at an annual rental of K1.00 payable annually in advance on the first day of September of each and every successive year during the term hereby reserved.
The first schedule stated:
All that area on the fourteenth floor of the building delineated and edged red on the plan annexed hereto.
The second schedule stated:
For the unexpired term of the Crown Lease over the subject property being Crown Lease, Volume 5, Folio 1027, less one day together with any additional period of any extension thereof or for any period of any alternating or substituted Lease or License over the subject property in favour of the Investment Corporation of Papua New Guinea or any nominee thereof over the said property.
Differences in description of premises
One difference between the two documents was in the description of the property being subleased:
The problem is: there is no 14th floor, and never has been. The building erected by the second respondent only has nine floors. The significance of this anomaly has become an issue in the appeal.
Differences between the descriptions of the period of the sublease
There were two differences in the way the documents described the term or period of the appellant’s sublease.
First:
The deed was therefore contemplating that the sublease would run until 20 December 2005, while under the sublease itself, the last day is 19 December 2005.
Secondly:
The deed was therefore contemplating that the sublease might be extended, renewed or substituted, while under the sublease itself, future events were contemplated as being an extension of the lease or an alternating or substituted lease or licence.
The relationship between the two documents and the different ways that they described the period of the sublease became significant issues in the National Court; and they remain so in the appeal.
THE NATIONAL COURT PROCEEDINGS
Statement of Claim
The trial was protracted by an application by the plaintiff, made on the third day of the trial, to amend the statement of claim. The application was vigorously opposed but the trial judge granted it. His reasons for doing so are set out in a detailed and considered judgment, which has since become a leading case on amendment of pleadings (The Papua Club Inc v Nusaum Holdings Limited and Others (2002) N2273).
Relief sought
The plaintiff sought the following relief:
In short, the plaintiff sought a declaration that it had a right to remain in the building under the arrangements put in place by the sublease in 1978, ie the Papua Club could stay there as long as it liked, paying a peppercorn rental for the top floor. In the alternative, the plaintiff wanted damages.
The plaintiff’s claims
His Honour summarised the plaintiff’s claims as follows:
(N2603, pp 27-29.)
The defendants’ defences
His Honour summarised the defences as follows:
1 The Deed and the Sublease are void for uncertainty.
(N2603, pp 29-30.)
The principal issues
His Honour considered that the plaintiff’s claims and the defendants’ defences could be distilled into four principal issues:
(N2603, pp 32-33.)
Collateral issues
His Honour considered that there were a number of other issues which should be specifically addressed. He called them collateral issues. (N2603, p 128.) We number them to follow on from the four principal issues:
His Honour’s conclusions on these eight issues are summarised below.
Issue No 1: Are the deed and the sublease void for uncertainty?
Yes, in two respects.
First, a lease must have a definite start-time and a definite end-point. The deed and the sublease lacked both. Neither document specified when the sublease would commence. Both documents left the end-point vague, open-ended and indeterminate. They purported to grant an interest in perpetuity (ie forever) and to fetter the right of the landlord (the sublessor, the second defendant) to determine the lease. His Honour found that the manner in which both documents was drafted offended against established principles of property law. Copious authority was cited in support of that conclusion. (N2603, pp 41-56.)
Secondly, the leased premises must be properly defined. Both the deed and the sublease breached this requirement. The description of the property in the deed, by referring to a “development”, a “building” and “new premises”, was scanty and insufficient. The sublease was not much better. The first schedule referred to an annexed plan of a level of the building, with “Papua Club” written over a shaded area. That was too vague. Furthermore it referred to the fourteenth floor, when the building had only nine floors. (N2603, pp 56-58.)
Issue No 2: Did the deed merge in the sublease?
Yes.
The deed was a preparatory or preliminary agreement, made in anticipation of the sublease. The sublease fulfilled the intentions and purposes of the deed. It enlarged upon the deed. The sublease was also materially different to the deed in its description of the period of the sublease. Under the deed, the end-point of the first period of the sublease (before any question of extension arose) was the unexpired portion of the Crown Lease, ie up to and including 20 December 2005. Under the sublease the period was the unexpired term of the Crown Lease less one day, ie only up to and including 19 December 2005. His Honour concluded that this was a material qualification to the period of the lease provided for in the deed.
This was further evidence that the sublease is the superior and dominant agreement and that the deed had merged into and was absorbed by it. His Honour held that the deed was no longer relevant and the plaintiff’s claims would be determined only by reference to the sublease. (N2603, pp 59-66.)
Issue No 3: Was the defendants’ conduct fraudulent or unconscionable?
No.
As to fraud, the first defendant was a bona fide purchaser for value of an interest in property that had no notice of the plaintiff’s purported interest in the property. There was no actual fraud. Nor was there any serious breach of procedures under the Land Act regarding transfer of title that could establish fraud under the principles in Emas Estate Developments v John Mea and Others [1993] PNGLR 215, (Supreme Court, Amet J, Brown J, Salika J). Furthermore, the particulars of the alleged fraud were not pleaded, as required by the National Court Rules. (N2603, pp 66-105.)
As to the defendants’ alleged unconscionable conduct, the claim had no substance as the plaintiff was legally represented and did not suffer any special disadvantage. The dealings between the plaintiff and the defendants were on an equal footing. Furthermore, the claim was misconceived. It could only properly arise between the negotiating parties: the first and second defendants. Not between the plaintiff and the defendants as the plaintiff was not a party to the negotiations. (N2603, pp 105-114.)
Issue No 4: Does the plaintiff have the right to renew its lease or to have rights and interests in the property after 20 December 2005?
No, for two reasons.
First, the way in which the deed and, in particular, the sublease, purport to convey an interest in perpetuity is against public policy. If given effect, this would fetter the right of the registered proprietor, the first defendant, to determine the lease. It would be contrary to sound commercial practices and dealings regarding the sale of properties. If such arrangements were sanctioned it would make landlords subject to the whims and wishes of tenants. (N2603, pp 114-120.)
Secondly, to allow the plaintiff to claim any rights or interests beyond the expiry of the current State Lease would be contrary to the scheme of the Land Act, which is that:
His Honour concluded that it is impossible for any person, other than the State, to have a perpetual right or interest over or in land subject to a State Lease. The outgoing lessee’s interests in the land are extinguished upon the expiry of the State Lease. Therefore a sublessee has no right to have its sublease renewed or to be granted a new sublease. (N2603, pp 120-127.)
Issue No 5: Did the first defendant induce the second defendant to breach the contract between the second defendant and the plaintiff?
No, for three reasons.
First, working on the presumption that the contract allegedly breached was that arising from the deed or the sublease, there was no evidence of such inducement. The second defendant’s board of directors decided to sell the property, put it up for tender and the first defendant bid for it. Secondly, there was no false and fraudulent misrepresentation by the first to the second defendant. The sale of the property was a genuine commercial deal. Thirdly, the claim failed to comply with the National Court Rules, Order 8, Rule 30. (N2603, pp 128-136.)
Issue No 6: Were the first defendant’s lawyers in a conflict of interests, such that it invalidated the first defendant’s title in the property?
Yes, there was a conflict of interests but no, it did not affect title.
There was a conflict of interests on the part of the law firm, Blake Dawson Waldron. It had lawyers acting for both the plaintiff and the first defendant in relation to the property. The parties had conflicting and incompatible interests in the property. The firm breached Section 10 of the Professional Conduct Rules 1989. However, its conduct was not fraudulent and neither the plaintiff nor the first defendant had suffered real prejudice; so there could be no action against the firm. Furthermore the first defendant’s title could not be invalidated by reason of the improper conduct of its lawyer, as title in the property was not obtained by fraud. (N2603, pp 136-158.)
Issue No 7: Did the second defendant, prior to transferring the lease to the first defendant, hold the State Lease compensation and renewal rights in the property in trust for the plaintiff?
No, for two reasons.
First, there is no such thing as State Lease renewal and compensation rights. The Land Act does not allow for them. Secondly, there was no trust relationship between the second defendant and the plaintiff. Their relationship was simply as landlord/ tenant or lessor/lessee. (N2603, pp 158-162.)
Issue No 8: Does the first defendant hold its registered interests subject to the rights and interests of the plaintiff?
No.
The word ‘nominee’ in the second schedule to the sublease does not include the first defendant. Therefore the question of the first defendant holding its interests subject to those of the plaintiff does not arise. (N2603, pp 158-162.)
Conclusion
His Honour concluded:
I have found that both the Deed and the Sublease are void for uncertainty. But assuming that they are not void for uncertainty, only the Sublease would remain to be determined because the Deed had merged in the Sublease. But even assuming that the Deed did not merge in the Sublease, the Deed and the Sublease cannot give the plaintiff the right to renew its lease or to have rights and interests in the property after 20th December 2005, as that would be against public policy and the scheme of the Land Act.
The effect of all these findings is that the plaintiff has failed to prove all its claims against the defendants.
Also, this action is not genuine and the proceedings are frivolous and vexatious and having no reasonable cause of action. Thus, the proceedings are an abuse of process. The primary reasons being, the concession by the plaintiff that the Subleases for the architects’ area, which are similar to the Sublease for the Club premises and the Deed, did not protect its interests in the property after 20th December 2005; and furthermore, the claims or the allegations of fraud made against the first defendant are based on the conduct of its lawyers, which by law cannot constitute actual fraud or fraud by the first defendant, as the registered proprietor. In those circumstances, the Court has the power to dismiss the proceedings, pursuant to Order 12, Rule 40 of the National Court Rules. ... But apart from that power, the Court also has the inherent power to dismiss the action where there is abuse of its processes.
It follows that all the claims in this action by the plaintiff against the defendants must be dismissed.
(N2603, pp 163-164.)
Orders
His Honour made three substantive orders:
(N2603, pp 163-164.)
THE APPEAL
On 11 November 2004 the appellant instituted an appeal against the whole of Gavara-Nanu J’s judgment.
Grounds in notice of appeal
The notice of appeal sets out six grounds of appeal. It is argued that the trial judge erred in law:
(a) in holding that the deed and sublease for the club premises by virtue of their respective terms in clause 2(ii) and the second schedule were void for uncertainty;
(b) in construing clause 2(ii) of the deed and the second schedule to the sublease as conferring a right on the appellant to renew its lease in perpetuity;
(c) in finding clause 2(ii) of the second schedule to the sublease to be unenforceable as being against public policy and against the scheme of the Land Act;
(d) in finding that the first respondent acquired title over the property which was indefeasible except for fraud;
(e) by failing:
(i) to find that the first respondent was bound by the terms of the registered sublease;
(ii) to construe the second schedule to the sublease as conferring on the appellant a contractual right to have a sublease for any additional period or any extension of the State Lease obtained by the registered proprietor;
(iii) to construe the phrase any extension to the State Lease in the second schedule to include any further lease obtained by the first respondent pursuant to Section 69(2)(c) of the Land Act 1996;
(iv) to construe the schedule so as to apply to one extension or further lease only;
(v) to construe the words “any nominee” in the second schedule to include the first respondent as assignor of the second respondent.
(f) not construing the second schedule as referring to:
(i) one sublease for the duration of the existing State Lease; plus
(ii) a contractual obligation to have another registered sublease issued to the appellant if and when the registered proprietor obtained any further State Lease over the property on the same terms and conditions as in the present registered sublease.
Orders sought by notice of appeal
The appellant asks the Supreme Court to make two substantive orders:
Orders sought at the hearing of the appeal
In its written submission the appellant asks the Supreme Court for these orders:
PRELIMINARY POINTS
At the hearing of the appeal the first and second respondents raised three preliminary points. They argued:
These points give rise to a number of procedural and jurisdictional issues, which we will resolve in light of the Supreme Court Rules, the Constitution and the Supreme Court Act. We will return to the respondents’ three preliminary points after addressing these issues in general terms.
Supreme Court Rules
The requirements of a notice of appeal are set out in Division 7.3 (Rules 6-13) (notice of appeal) of the Supreme Court Rules.
Order 7, Rule 8 states:
The notice of appeal shall—
(a) state that an appeal lies without leave or that leave has been granted and or annex the appropriate order to the notice of appeal;
(b) state whether the whole or part only and what part of the judgment is appealed from;
(c) state briefly but specifically the grounds relied upon in support of the appeal;
(d) state what judgment the appellant seeks in lieu of that appealed from;
(e) be in accordance with form 8;
(f) be signed by the appellant or his lawyer; and
(g) be filed in the registry.
Order 7, Rule 9 states:
Without affecting the specific provisions of Rule 8, it is not sufficient to allege that a judgment is against the evidence or the weight of the evidence or that it is wrong in law, and the notice must specify with particularity the grounds relied on to demonstrate that it is against the evidence and the weight of the evidence and the specific reasons why it is alleged to be wrong in law.
Amendment of a notice of appeal is dealt with in Division 7.8 (Rules 24-25) (amendment by supplementary notice) of the Supreme Court Rules.
Order 7, Rule 24 states:
A notice of appeal may, before the date of appointment to settle under Rule 42 be amended without leave by filing a supplementary notice.
Amendment of the proceedings generally is dealt with in Division 11.8 (Rule 11) (adding parties and amendment) of the Supreme Court Rules.
Order 11, Rule 11 states:
The court or a Judge may order that any person be added as a party to proceedings under these rules or that the proceedings be amended and may impose such conditions as appear just, and give all consequential directions.
Constitution
Section 155(2) (the national judicial system) of the Constitution states:
The Supreme Court—
(a) is the final court of appeal; and
(b) has an inherent power to review all judicial acts of the National Court; and
(c) has such other jurisdiction and powers as are conferred on it by this Constitution or any other law.
Section 155(4) (the national judicial system) of the Constitution states:
Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.
Supreme Court Act
Section 6 (appeal to be by way of rehearing) of the Supreme Court Act states:
(1) An appeal to the Supreme Court shall be by way of rehearing on the evidence given in the court the decision of which is appealed against, subject to the right of the Supreme Court—
(a) to allow fresh evidence to be adduced where it is satisfied that the justice of the case warrants it; and
(b) to draw inferences of fact.
(2) For the purposes of hearing and determining an appeal, the Supreme Court has all the powers, authority and jurisdiction of a Judge exercising the jurisdiction of the National Court.
Section 16 (decision etc on appeal) of the Supreme Court Act states:
On the hearing of an appeal, the Supreme Court shall inquire into the matter and may—
(a) adjourn the hearing from time to time; or
(b) affirm, reverse or modify the judgement; or
(c) give such judgement as ought to have been given in the first instance; or
(d) remit the case in whole or in part for further hearing; or
(e) order a new trial.
The respondents’ preliminary points raise seven distinct issues, which we now will identify and resolve.
Yes, subject to two provisos.
First the relief sought must be set out clearly in the notice of appeal in accordance with Order 7, Rule 8(d) of the Supreme Court Rules. Secondly any new relief sought by the notice of appeal must not depart so substantially from that sought at trial that the appeal becomes the prosecution of a different cause of action. Provided these requirements are met we can see nothing in the Supreme Court Act or the Supreme Court Rules to prevent the appellant asking the Supreme Court for relief different to that sought at the trial. To rigidly confine the appellant to ask for the relief sought at trial would curtail the jurisdiction of the Supreme Court under Sections 6 and 16 of the Supreme Court Act and Section 155 of the Constitution.
No, not unless leave is granted to amend the notice of appeal. The notice of appeal consists of two substantive components: the grounds of appeal and the relief sought on appeal (or specifically: the judgment the appellant seeks in lieu of that appealed from). Those components set the parameters of the appeal. The appellant should not be permitted to depart from them.
Yes, but it should be cautious in doing this and ensure that it only grants relief that all parties have had an opportunity to make submissions on. There is no appeal against a decision of the Supreme Court and it must be acutely aware of its duty to accord procedural fairness to all parties.
Yes, subject to the following:
That is the scheme set in place by the Supreme Court Rules, Order 7, Rule 24. (Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112, Supreme Court, Kapi DCJ, Sheehan J, Brown J.)
In the earlier cases dealing with applications to amend notices of appeal, the court voiced its strong displeasure at the practice of counsel asking for last minute amendments to a notice of appeal. Leave would only be granted in exceptional circumstances and at the discretion of the court, eg a sudden late change of counsel for the appellant, where the point to be raised seemed broadly to have merit (Rolf Schubert v The State [1979] PNGLR 66, Supreme Court, Prentice CJ, Raine DCJ, Andrew J). Leave to add new grounds of appeal should not be granted on the day set for hearing where such grounds should properly have been included in the notice of appeal and where further adjournments would unduly delay the hearing of the appeal, unless adequate reasons were shown. (Birch v The State [1979] PNGLR 75, Supreme Court, Prentice CJ, Raine DCJ, Kearney J). Applications to add grounds of appeal in the course of an address in reply should not be entertained (Van Der Kreek v Van Der Kreek [1979] PNGLR 185, Supreme Court, Prentice CJ, Pritchard J, Andrew J).
In a criminal appeal, exceptional circumstances existed when the appeal was originally filed as a ‘prisoner appeal’, it took two years for the Public Solicitor to assign the appellant legal representation and the Public Prosecutor had adequate notice of the proposed amendment and did not oppose it (Dinge Damane v The State [1991] PNGLR 244, Supreme Court, Kapi DCJ, Amet J, Woods J).
In Charles Ombusu v The State [1996] PNGLR 335, Supreme Court, Amet CJ, Kapi DCJ, Los J, Injia J, Sawong J, the court indicated that the focus should be more on “special circumstances” than “exceptional circumstances”.
The test is ... whether there are special circumstances in a particular case, which would make the case an exceptional case that should warrant the grant of leave to amend the notice of appeal. It is not whether there are exceptional circumstances that would warrant the grant of leave. The majority in Dinge Damane fell into this error, of referring to the special circumstances as exceptional circumstances.
The Ombusu test is less restrictive than the test applied in the previous cases. It was formulated in an unanimous decision of a five-member bench, and must now be regarded as circumscribing the circumstances in which the Supreme Court will grant leave for amendment of a notice of appeal.
Yes, provided it is set out in the notice of appeal and it does not concern a question of fact only and the leave of the court is obtained to argue the point.
In saying this we are mindful that the Supreme Court’s position on the practice of appellants raising new points that were not raised in the National Court has not been entirely uniform. In Van Der Kreek v Van Der Kreek [1979] PNGLR 185 the court sanctioned the practice. However, in Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705, Supreme Court, Amet CJ, Sawong J, Kandakasi J, the opposite view was taken. The court stated:
It is settled law that, unless a party has raised an issue in the court below, he is not at liberty to raise it on appeal. There are many authorities on point. An example of that is Motor Vehicles Insurance (PNG) Trust v John Etape [1994] PNGLR 596 ... which followed and reaffirmed an earlier decision of the Supreme Court in Motor Vehicles Insurance (PNG) Trust v James Pupune [1993] PNGLR 370.
We note that a member of the court in the Fly River case, Kandakasi J, had earlier taken the same approach in the National Court when determining an application for leave to seek judicial review of a decision of a leadership tribunal, ie in an appeal or review a party is precluded from raising a point that could have been raised in the lower court or tribunal: Peter Ipu Peipul v Sheehan J, Orim Karapo and Iova Geita, Constituting the Leadership Tribunal and Others (2001) N2096.
With respect, we consider that in the Fly River case the court applied the principles in Etape and Pupune rather too broadly. Those cases were concerned with appeals in which points of evidence – as distinct from issues of law – had not been taken at the trial. In such a situation the Supreme Court took the view that the appellant was hard pressed to argue that the trial judge had erred. We do not consider that Etape or Pupune stand for the proposition that a party in an appeal is prevented from raising any issue of law that could have been raised during the court or tribunal below.
The better view is that if a notice of appeal raises a question of law which could not have been cured by evidence at the trial the appellant is not prevented from raising it, even if entirely new issues are involved, provided the court is informed and grants for the question to be argued. We find support for that proposition in decisions of the Supreme Court in Sacred Heart Mission (New Britain) Property Trust v Nambumutka Simbali on behalf of the Denangi Lineage and The Director of District Administration (Re Toriu) (1972) FC29, Frost ACJ, Kelly J, Raine J; Awoda v The State [1984] PNGLR 165, Kapi DCJ, Pratt J, Bredmeyer J; and, of course, Van Der Kreek v Van Der Kreek [1979] PNGLR 185. In the latter, Pritchard J, with whom Prentice CJ and Andrew J agreed, extensively considered the issue and followed the approach taken by the House of Lords in cases such as Connecticut Fire Insurance Co Ltd v Kavanagh [1892] UKLawRpAC 39; [1892] AC 473; Sutherland v Thomson [1905] UKLawRpAC 67; [1906] AC 51; and North Staffordshire Railway Co v Edge [1920] AC 254.
The issue of whether it is proper to allow parties to raise questions of law for the first time in an appeal has recently been ventilated in the High Court of Australia’s decision in Dianne McGrath Fingleton v The Queen [2005] HCA 34. The appellant was the Chief Magistrate of Queensland when she was convicted of unlawful retaliation against a witness, a fellow magistrate, and was sentenced to a term of imprisonment. She appealed unsuccessfully to the Queensland Court of Appeal. Then she appealed to the High Court and raised an issue that had never before been raised: that she had a statutory immunity from criminal liability for acts performed in the course of exercising her administrative functions. There had been directions hearings (when it could have been raised by challenging the indictment); two trials (the second one, at which she was convicted, was necessitated after the jury in the first could not reach a verdict); and the appeal to the Court of Appeal. The High Court allowed the point to be raised and unanimously upheld the appeal based on it. Kirby J discussed the issue at length and noted that in both civil and criminal appeals there is no blanket prohibition against allowing parties to raise new points at an appeal. It is a matter for the discretion of the court. It is not a right. The party seeking to agitate the new point must still establish special or exceptional circumstances to warrant its determination. In criminal appeals the court is generally more disposed to allow a party to raise a new argument. In civil appeals the High Court has repeatedly refused leave to parties to propound new points, argued for the first time before it, relying on what has been described as ‘the elementary rule of law that a party is bound by the conduct of his or her case’ (eg University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481).
We consider that Kirby J’s approach to the issue, though developed in the context of the unique constitutional position of the High Court of Australia, is equivalent to the approach that was recognised in Papua New Guinea in Van Der Kreek’s case. The approach should again apply now.
No, not without being granted leave to amend the notice of appeal.
Yes, but only in exceptional circumstances and only if the point is debated before it and to ignore the point would amount to a miscarriage of justice, eg arising from a convicted person not having legal representation (Keko Aparo and Others v The State (1983) SC249, Supreme Court, Pratt J, Bredmeyer J, Gajewicz J).
The respondents’ three preliminary points
We will now determine the respondents’ preliminary points. Central to them is the claim that the appellant is seeking different relief, in both its notice of appeal and in its submissions to this court, to that sought in the National Court. It is clear that there are such differences, as shown in table 1 below. Their effect on the conduct of the appeal is, of course, a separate issue, which will be addressed below.
TABLE 1: RELIEF SOUGHT BY THE APPELLANT
| TRIAL | NOTICE OF APPEAL | SUBMISSION |
| a declaration that: it holds registered indefeasible interests in the ‘reversion of the sublease’ or ‘State Lease renewal and compensation
rights’; or the first defendant holds the ‘reversion of the sublease and the State Lease renewal and compensation rights’ on trust
for it; OR damages: against the first defendant for inducing a breach of contract or for knowingly receiving trust property transferred in breach of trust;
and against the second defendant for breach of contract and/or breach of trust. | a declaration that upon the first respondent obtaining a further State Lease for the property the appellant be entitled to a registered
sublease for any additional period of the further lease on the same terms as the present registered sublease. | a declaration that upon the first respondent or its nominee obtaining a new State Lease for the property on Allotment 4, Section 3,
Granville, the appellant is entitled to a registered sublease for the period of the new State Lease at a nominal rent of K1.00 per
annum payable in advance on the same terms and conditions as contained in the present registered sublease. |
Is the appeal misconceived because the appellant is by its notice of appeal seeking relief different to that sought before the trial judge?
No.
We agree that there are differences in the relief sought, as shown in table 1. However the two provisos to allowing an appellant to seek different relief to that sought at the trial, are satisfied. First, the ‘new’ relief is clearly set out in the notice of appeal. Secondly, it does not depart so substantially from the relief sought at the trial that the appeal has become the prosecution of a new cause of action. The appellant wants to be able to stay in its present premises under the present arrangements after the State Lease expires. Obtaining an order or declaration from the court to that effect was its primary aim in the trial. It remains its primary aim. The cause of action is therefore essentially the same.
Is the appeal misconceived because the appellant is raising issues that were never litigated before the trial judge?
No.
There are some new issues being raised in the appeal and we will be conscious of them when we address the grounds of appeal. However, the respondents did not particularise this objection to the appeal. Therefore we will not uphold it.
Is the appeal misconceived because at the hearing of the appeal the appellant is seeking different relief again, ie different to the relief sought before the trial judge and different to that sought by the notice of appeal?
No.
The conduct of the appeal is certainly open to criticism. The appellant is, through its submissions, departing from its notice of appeal in so far as the relief it is seeking is concerned. The submissions seek a declaration that the appellant is entitled to a registered sublease in the event that the first respondent or its nominee obtains a new State Lease. The notice of appeal seeks such a declaration only in the event that the first respondent (with no mention of its nominee) obtains a further State Lease. The submissions overreach the notice of appeal and leave has not been sought to amend the notice of appeal. We will bear this in mind in the event that one or more of the grounds of appeal is upheld. We will not consider granting the extra relief sought by the submissions without satisfying ourselves that the respondents have had the opportunity to make submissions on the issue. If we reach that stage of satisfaction, we will also have to take this issue into account when deciding on the matter of costs. However, the fact that the submissions go beyond the notice of appeal is not necessarily fatal to the appeal or something that makes it misconceived.
Conclusion re preliminary points
None of the preliminary points raised by the respondents are sustained.
OVERVIEW OF GROUNDS OF APPEAL
We now return to the six grounds of appeal. Some are not clearly expressed and need to be paraphrased before we determine them. The written and oral submissions of all parties failed to systematically deal with the grounds of appeal. This has made the task of the court in gleaning the actual areas of contention needlessly complicated.
Ground (a) – the trial judge erred “in holding that the deed and sublease for the club premises by virtue of their respective terms in clause 2(ii) and the second schedule were void for uncertainty” – is clear enough. The first of the four principal issues at the trial was whether the deed and the sublease were void for uncertainty. The trial judge ruled in favour of the respondents. It is a proper point of appeal. We paraphrase it as ‘are the deed and the sublease void for uncertainty?’.
Ground (b) – the trial judge erred “in construing clause 2(ii) of the deed and the second schedule to the sublease as conferring a right on the appellant to renew its lease in perpetuity” – is also clearly expressed. However, it is better dealt with as part of ground (a). The trial judge construed the deed and the sublease as purporting to confer a right in perpetuity as part of his resolution of the first principal issue. Ground (b) is therefore subsumed by ground (a): are the deed and the sublease void for uncertainty?
Ground (c) – the trial judge erred “in finding clause 2(ii) of the second schedule to the sublease to be unenforceable as being against public policy and against the scheme of the Land Act” – is also clearly expressed. However, the first limb of this ground is dealt with in ground (a). The fourth principal issue at the trial was whether the appellant had any right to renew its sublease or had any rights or interests in the property after 20 December 2005. The trial judge said no, for two reasons. First, by purporting to convey an interest in perpetuity the sublease was against public policy and therefore unenforceable. Secondly, no one other than the State has any interest in land after the expiry of a State Lease. The perpetuity issue will be dealt with in ground (a). Whatever the outcome, it will not be necessary to deal with it again. By contrast the second limb of ground (c), regarding the scheme of the Land Act, is a standalone and critical issue. We paraphrase it as ‘is the sublease contrary to the scheme of the Land Act?’.
Ground (d) – the trial judge erred “in finding that the first respondent acquired title over the property which was indefeasible except for fraud” – is a curious ground of appeal. We are unable to make much sense of it. In its written submission the appellant states: “The trial judge was distracted from the main question by allegations of fraud. The appellant does not raise any issues on appeal related to fraud. The only point the appellant makes is that the first respondent became registered proprietor subject to the terms of the registered sublease by which it is bound. We take it from this that ground (d) has been abandoned. We will not deal with it further except to say that at the trial, fraud on the part of the first defendant and its lawyers was raised as an issue by the plaintiff, now the appellant. The trial judge can certainly not be criticised for dealing with it.
Ground (e) – is rather convoluted. It contends that the trial judge erred in five ways, by failing:
(i) to find that the first respondent was bound by the terms of the registered sublease;
(ii) to construe the second schedule to the sublease as conferring on the appellant a contractual right to have a sublease for any additional period or any extension of the State Lease obtained by the registered proprietor;
(iii) to construe the phrase any extension to the State Lease in the second schedule to include any further lease obtained by the first respondent pursuant to Section 69(2)(c) of the Land Act 1996;
(iv) to construe the schedule so as to apply to one extension or further lease only;
(v) to construe the words “any nominee” in the second schedule to include the first respondent as assignor [sic] of the second respondent.
Sub-ground (e)(iv) is already covered by the perpetuity issue which is part and parcel of ground (a). The other sub-grounds ((e)(i), (ii), (iii) and (v)) invite us to find error in the trial judge’s interpretation of the sublease. They will only be relevant if the grounds regarding the sublease being void and unenforceable due to uncertainty ((a) and (b)) and being contrary to the scheme of the Land Act (ground (c)), are sustained. We paraphrase ground (e) as: ‘does the sublease, on its terms, confer a right on the appellant to have a sublease for the term of any further State Lease or extension obtained by the first respondent?’
Ground (f) – is closely related to ground (e). It argues that the trial judge erred by not construing the sublease as referring to:
(i) one sublease for the duration of the existing State Lease; plus
(ii) a contractual obligation to have another registered sublease issued to the appellant if and when the registered proprietor obtained any further State Lease over the property on the same terms and conditions as in the present registered sublease.
As with ground (e), ground (f) raises questions about interpretation of the sublease that will only be relevant if the grounds of appeal relating to the sublease being void and unenforceable due to uncertainty ((a) and (b)) and being contrary to the scheme of the Land Act (ground (c)), are sustained. Ground (f) is epexegetically related to ground (e). It raises the question of whether there was a conditional contract in place between the appellant and the second respondent, and, therefore, between the appellant and the first respondent. Ground (f) is therefore subsumed by ground (e).
To sum up, the six grounds and various sub-grounds of appeal can be reduced to three. Did the trial judge err by:
DID THE TRIAL JUDGE ERR BY FINDING THAT THE DEED AND THE SUBLEASE ARE VOID FOR UNCERTAINTY?
His Honour concluded that the deed and the sublease were void for uncertainty in two respects. First, there was no definite start-time or end-point. Secondly, the property to be subleased was not properly defined. His Honour concluded, by determination of the second principal issue at the trial, that the deed merged into and was subsumed by the sublease.
The appellant has not taken issue with that conclusion, though it says that the deed remains relevant as an extrinsic aid to interpretation of the sublease in the event of ambiguity. This ground of appeal must therefore focus on the sublease. The appellant has expressed no disagreement with his Honour’s recitation of the authorities or principles of law to be applied. It contends, however, that he erred in his analysis of the sublease and therefore misapplied the principles enunciated by the House of Lords in the leading case, Prudential Assurance Co Ltd v London Residuary Body and Others [1991] UKHL 10; [1992] 3 All ER 504.
Start-time and end-point
Start-time
His Honour dealt with the uncertainty surrounding the commencement date of the sublease at N2603, pp 55-56:
... it is noted that the commencement dates for the terms of the leases provided in both the deed and the sublease were not stated. Mr Batch has conceded this point in respect of the sublease in his final address to the Court. ... This is also a factor which would render the two lease agreements void for uncertainty. See Lace -v- Chandler (supra) at 370 and Prudential Assurance Co. Ltd -v- London Residuary Body and Others (supra) at 506. From the deed, the court is left to assume that the sublease would have commenced from 19th June 1978, because pursuant to clause 1 of the deed, that was the date by which the plaintiff was to have delivered a duly approved ‘transfer’ in registrable form to the second defendant or if not by that date within a reasonable time thereafter. The question then is, was the ‘transfer’ delivered on 19th June 1978, and if it was not delivered on that date, was it delivered within a reasonable time thereafter? The court is left to speculate.
End-point
As to the end-point of the sublease it is worthwhile to restate that the second schedule provided that it was to be:
For the unexpired term of the Crown Lease over the subject property being Crown Lease, Volume 5, Folio 1027, less one day together with any additional period of any extension thereof or for any period of any alternating or substituted Lease or License over the subject property in favour of the Investment Corporation of Papua New Guinea or any nominee thereof over the said property. [Emphasis added.]
His Honour dealt with the uncertainty surrounding the end-point of the sublease at N2603, pp 42-43 and 54-55:
It should be noted that although the language in the pertinent parts of Clause 2(ii) of the Deed and the Second Schedule to the Sublease above do not in their expressed terms give the plaintiff the right to lease and occupy the demised premises in perpetuity, or to have rights and interests in the property after 20th December 2005, the plaintiff has argued that on their true and proper constructions, they give the plaintiff such rights.
In my opinion, the words – ‘alternating or substituted leases or licences’ in Clause 2(ii) of the Deed and the Second Schedule to the Sublease, in the pertinent parts, create definite uncertainty as they suggest or envisage changes in the status and effect of the current State Lease prior to its expiration. In regard to the words – ‘any extension renewal’, and ‘any additional period of any extension thereof’ in the pertinent parts, in my opinion also create definite uncertainty because they purport to suggest unending rights and interests for the plaintiff in the demised premises or the property. In other words, these words purport to give the plaintiff the right to renew its lease or to have rights and interests in the property in perpetuity or without end or forever. In that regard, the words must render the Deed and the Sublease void for uncertainty because a lease cannot be open ended. A lease must have a definite end.
The above uncertainties arise in the first instance, from the expressed words in Clause 2(ii) of the Deed and the Second Schedule to the Sublease and in the second instance, from the purport of the words. In both instances, the two provisions stand to offend against the well-established principle that a lease without a definite end or period is void for uncertainty. No lease can be created in such a case. A lease must have a definite beginning and a definite end. Thus, the term of a lease must be specified and definite. [pp 42-43]
... the pertinent parts of Clause 2(ii) of the Deed and the Second Schedule to the Sublease as referred to above, clearly create uncertainty, because they do not specify the term of the lease, as they purport to give the plaintiff the right to lease the demised premises in perpetuity or without end or forever.
The pertinent parts of Clause 2(ii) of the Deed and the Second Schedule to the Sublease therefore stand to offend against the following principles which emerge from Prudential Assurance Co. Ltd -v- London Residuary Body and Others (supra). Firstly, the term of a lease must be clearly and specifically expressed so that the beginning and the end of the lease are ascertainable. In that regard, the end of the lease cannot be left for some unspecified future event to define. Secondly, a lease cannot be limited in perpetuity or open ended such that the lessee is given the right to lease and occupy the property indefinitely or forever. Thirdly, a lease cannot fetter the right of the landlord from determining it. [pp 54-55]
Argument re start-time
The appellant seems to argue that the trial judge erred by finding uncertainty as to the date of commencement because he looked at the existing sublease rather than the ‘new’ sublease, which may take effect when the existing State Lease expires. That argument is misconceived. It was the sublease in its existing form that was in issue in the National Court. We agree with the conclusion reached by his Honour that the date of commencement was uncertain. We differ, in some respects, in that we do not consider that such uncertainty by itself rendered the sublease void. However, as far as the conclusion that the date of commencement is uncertain is concerned, we find no error.
Argument re end-point
On this issue the appellant has changed tack significantly. In the National Court, as plaintiff, it argued that that the sublease gave it the right to continued occupation after 20 December 2005 in perpetuity, ie it had perpetual rights and interests in any alternating or substituted leases and licences over the property (see N2603, pp 41-42). In the appeal it is urging a construction of the sublease that would allow one extra term only.
We have carefully examined the trial judge’s treatment of this issue and can find no error in it. The construction put upon the second schedule by the plaintiff (as distinct from the appellant) seems to be the correct and ingenuous one. The Papua Club Inc clearly wished and intended to remain on the premises indefinitely, paying a peppercorn rental. The Investment Corporation may have shared those aspirations. The problem, however, is that the law of Papua New Guinea did not, and does not, permit such open-ended arrangements to be made in relation to the transfer of interests in real property.
Conclusion
No, the trial judge did not err by finding that the deed and the sublease were void for uncertainty.
We accordingly dismiss grounds of appeal (a) and (b) and the first limb of ground (c).
DID THE TRIAL JUDGE ERR BY FINDING THAT THE SUBLEASE IS CONTRARY TO THE SCHEME OF THE LAND ACT?
This ground of appeal was essentially abandoned at the hearing of the appeal. We say that in view of part 8 of the appellant’s written submission, headed ‘Land Act’, which states:
Basically the appellant agrees with the analysis of the Land Act by the learned trial judge.
If the agreement to grant an additional term is properly regarded as conditional upon Nusaum obtaining a new State Lease over the property, there can be no suggestion that the agreement is contrary to the scheme of the Act.
In practical terms, it would be unlikely that the Minister would grant a new lease to another party because that would expose the State to the payment of substantial compensation for the value of improvements, viz Invesmen Haus.
The appellant’s contention is that it is entitled to an additional sublease if, but only if, Nusaum or its nominee obtains a new State Lease over the property.
We find this aspect of the appellant’s submission contradictory. On the one hand – despite the wording of ground of appeal (c) – it submits that the trial judge’s treatment of the scheme of the Land Act, which reaches the critical conclusion that no one other than the State is capable of having any interest in land that is subject to a State Lease after it expires, is unobjectionable. On the other hand, it says that if the agreement in the second schedule to the sublease to grant an additional term to the appellant is interpreted as being conditional on the first respondent or its nominee getting a new State Lease there can be no suggestion that the agreement is contrary to the scheme of the Land Act.
Those two propositions are irreconcilable. Accepting, for the sake of argument, the correctness of the proposition that the second schedule to the sublease only operates in the event that the registered proprietor is granted a new State Lease and grants a sublease for one additional term only (thus avoiding the issue about perpetuity), that interpretation still runs counter to the proposition, that no one, other than the State can acquire, through a State Lease, any interests in the property, the subject of the lease beyond the date of expiry of that State Lease. The appellant cannot have it both ways. It cannot, to run a successful appeal, concede the correctness of a proposition of law pronounced by the trial judge, then base its appeal on a proposition of law that is contradictory to it. This suggests that the appellant does not appreciate or understand what his Honour decided.
Be that as it may, we propose to address his Honour’s findings regarding the scheme of the Land Act. We summarised them earlier in this judgment. We have considered his Honour’s careful and methodical process of reasoning. We find no fault with it. We endorse it as correct.
Conclusion
No, the trial judge did not err by finding that the sublease was contrary to the scheme of the Land Act. We accordingly dismiss the second limb of ground of appeal (c).
DID THE TRIAL JUDGE ERR BY FINDING THAT THE SUBLEASE, ON ITS TERMS, DOES NOT CONFER A RIGHT ON THE APPELLANT TO HAVE A SUBLEASE FOR THE TERM OF ANY FURTHER STATE LEASE OR EXTENSION OBTAINED BY THE FIRST RESPONDENT?
Putting to one side the trial judge’s findings that the sublease was void for uncertainty, and presuming for the time being that it is to be applied on its terms, the appellant’s argument is that:
The appellant’s argument is founded not on contract but on the privity of estate between the appellant and the first respondent. This is explained in part 6 of the appellant’s written submission, headed ‘first respondent’s notice of contention – no privity of contract’, which states:
The learned trial judge was correct in finding that the issue of privity of contract did not arise.
It is irrelevant to the outcome of this appeal. The appellant’s case is based squarely on the proper construction of the relevant clause of the registered sublease which is binding on the first respondent under the provisions of Section 33 of the Land Registration Act as the assignor of the second respondent. [sic]
In addition, the right of the appellant to enforce rights under the sublease against the first respondent does not depend on privity of contract but on privity of estate, which is an exception to the general principle of privity of contract.
It is clear therefore that the appellant’s case is not based on contract. It is not contending that there is any contractual relationship between it and the first respondent. Its case is based on a privity of estate arising from the existing tenant/landlord relationship between it and the first respondent. It has rights and interests arising from its existing lease, which is a registered encumbrance on the title held by the first respondent. In the event that the first respondent obtains a new State Lease, these rights would crystallise and enable it to sue the first respondent in a specific performance action for a grant of another registered sublease.
When the appellant’s argument is set out in those terms it becomes apparent that it is, as indicated earlier, fundamentally flawed. It fails to accommodate the trial judge’s conclusion – which we have already endorsed – that the Land Act does not allow for any interests in property granted under a State Lease to continue beyond the expiry of the State Lease. When the lease ends, all interests in the property to which it relates are extinguished. There can be no privity of estate beyond the date of expiry. This is the case irrespective of whether the outgoing lessee is granted a new lease.
Conclusion
No, the trial judge did not err by finding that the sublease, on its terms, does not confer a right on the appellant to have a sublease for the term of any further State Lease or extension obtained by the first respondent. We accordingly dismiss grounds of appeal (e) and (f).
APPEAL DISMISSED
All grounds of appeal that were maintained have been dismissed. The appeal will therefore be dismissed.
COSTS
The general rule is that costs follow the event, ie a successful party has its costs paid for by the losing party. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.
REMARKS
This appeal has taken longer than expected to resolve because the appellant’s notice of appeal was not clearly drafted and its written submission did not mesh with the grounds set out in the notice of appeal. The respondents acted reasonably in raising some preliminary points, though ultimately they were unsuccessful and the appeal was fully heard.
It defeats the purpose of having a controlled appeal, in which an appellant is expected to concisely state the grounds of appeal and the orders sought on the appeal and is subject to constraints as to when and whether leave is to be sought to amend the notice of appeal, if the appellant makes submissions that seem to forget about the grounds of appeal. An appellant’s written submission is constrained by and should dovetail into the grounds of appeal. The primary task of the Supreme Court, which is to identify and expeditiously resolve the issues in dispute, is made harder when, as in this case, the respondents also do not follow the grounds of appeal. When this happens the hearing of the appeal is at risk of becoming a confabulation about the merits of the case rather than a rigorous and intense determination of clearly defined issues. It makes the task of the Supreme Court unnecessarily burdensome and time-consuming.
JUDGMENT
The Supreme Court will direct entry of judgment in the following terms:
Judgment accordingly.
_______________________________________________________________________
Lawyers for the appellant : Warner Shand
Lawyers for the 1st respondent : Young & Williams
Lawyers for the 2nd respondent : Posman Kua Aisi
Lawyers for the 3rd, 4th and 5th respondents No representation
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