SC1048

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 15 of 2009

Between:

RICHARD WAPUA
Appellant

And:

POSS LOPKOPA & FOUR OTHERS
Respondents

Waigani: Injia, CJ
2009: 27th April

PRACTICE AND PROCEDURE – application for stay of National Court Order – National Court order dismissing applicant’s action for not disclosing a reasonable cause of action – principles of grant of stay considered - applicant’s action founded on constructive fraud but fraud not pleaded - wrong mode of originating process used - action alleging fraud required to be commenced by Writ of Summons - registered title-holders title is indefeasible and is entitled to the unfettered use and occupation of property - based on totality of all other factors and overall interest of justice application seeking grant of stay refused – applicant only entitled to refund of K10,000 with interest at 8 % - s 33 (1) Land Registration Act, Order 4 r 2 (b) National Court Rules

Cases Cited

Gary McHardy v Prosec Security and Communication Ltd [2000] PNGLR 279 (McHardy case)

Counsel

R Habuka, for the appellant/applicant
J Kais, for the fourth respondent.
No appearance for other respondents

27th April, 2009 

1. INJIA, CJ: The appellant applies for stay of the order of the National Court made on 18th March, 2009 in which the National Court sitting in Lae dismissed the appellant’s action as disclosing no reasonable cause of action. The order is sought pending the hearing and determination of the appeal filed against the decision. The application is contested by the 4th respondent. 

2. I have considered the material in the form of affidavits relied on by the parties and submissions made by both counsel. 

3. The principles on grant of stay are set out in Gary McHardy v Prosec Security and Communication Ltd [2000] PNGLR 279 (McHardy case). The grant or refusal of stay is discretionary and it is exercised on proper principles and on proper grounds. The Court must start from the basic premise that the judgment creditor is entitled to enjoy the benefit of the judgment. There are ten (10) other considerations which are enumerated in that case. In exercising its discretion, the Court must consider all relevant and appropriate circumstances in determining whether it is just and reasonable that the order ought to be stayed. It is not intended that the discretion should be exercised on all or selected considerations and factors enumerated in McHardy; rather the Court is required to consider the totality of those relevant factors and circumstances, in order to dispense substantive justice in the circumstances of the case before it. The circumstances of a particular case may warrant greater or less or even no weight to a particular relevant factor(s) and then again, that is a matter of discretion. I apply the various considerations set out in McHardy in the following manner.

Whether leave to appeal is required and whether it has been obtained.

4. Leave to appeal is not required. This consideration favors the applicant.

Whether there has been delay in making the application.

5. Delay is not in issue. This application favors the applicant.

The nature of the judgment sought to be stayed. 

6. In an action commenced by the applicant by Originating Summons, he sought declaratory orders, inter alia, that the registered State Lease in respect of the property situated on Allotment 5 Section 81, Lae which was issued by the Registrar of Titles to one John Raima on 9th August 2007 be declared null and void. He also sought an order for specific performance of a Tenancy Agreement and agreement for sale of the property between Kulaiya Business Group Inc. (as Landlord and registered owner of the property) (third respondent) and the applicant (as tenant and purchaser) which was made prior to the transfer of the property to the fourth respondent (John Raima) on 11th May 2006 for a period of five (5) years. The applicant who is in continued occupation of the property has refused to deliver vacant possession of the property to the fourth respondent and has stopped paying rent in the last 2 years. Upon application of the fourth respondent, the action was dismissed for want of reasonable cause of action. The trial judge also ordered the third respondent to refund the sum of K10,000.00 which it received as purchase deposit money at the time the Tenancy Agreement was entered into and to vacate the property forthwith. The applicant has appealed the whole of this decision and seeks a stay of these orders pending the appeal. If the stay is granted, the applicant will have the benefit of remaining in occupation of the property under the Tenancy Agreement without paying rent to the previous or the new registered owners of the property. Further and more importantly, and the fourth respondent who is not a privy to the Tenancy Agreement will continue to be deprived of possession and use of the property as it is entitled to by law. 

Whether on the face of the record of the judgment there may be indicated apparent error of law or procedure. 

7. There are two main grounds of appeal. The first relates to the trial judge’s refusal to disqualify himself from hearing the application to dismiss the action after having disqualified himself from hearing the application on two previous occasions. The second ground of appeal relates to the judge’s exercise of discretion in granting the orders. In relation to the first ground, it is not suggested that the trial judge had a personal interest in the matter or that he was well acquainted with a party to the case such that his impartiality would stand to be compromised. The allegation is that because the judge expressed an opinion on the strength of the case for one of the parties in the same matter previously, later disqualified himself from dealing with the same application on two occasions and proceeded to change his mind and heard and determined the application. 

8. In terms of error of law or procedure on the face of the record, there is no suggestion of breach of any prescribed procedure or statutory provision. The matter raised here is a matter within the judge’s discretion. The fact that he disqualified himself twice previously from dealing with the same application on the face of it suggests an apparent error on the face of the record.

9. In relation to the second ground of appeal, the matters raised in this ground touch on the exercise of discretion and I do not see any apparent error on the face of the record. 

Preliminary assessment about whether the applicant has an arguable case on the proposed appeal.

10. In relation to the first ground of appeal, I have studied the transcript of proceedings for the various days’ proceedings. The main point was the judge’s view expressed in 2008 on the legal status of 4th respondent’s registered title in terms of its indefeasibility. But I do not see any conclusive determination reached by the judge on the application itself. This judge or any judge would have expressed an opinion on a settled legal position on a point in contention. It is the assessment of a party’s case on a disputed interpretation of a statutory provision or the assessment of the materials placed before the court by the parties and reaching a conclusion before hearing and deciding the whole case, prematurely as it may seem, that a judge should avoid doing. None of that is suggested in this case the judge did. The judge sufficiently explained to the parties why he decided to deal with the case. I do not think this ground is an arguable ground of appeal. 

11. The applicant’s action was founded on constructive fraud. But fraud was not pleaded at all because the wrong mode of originating process was used. The action alleging fraud is required to be commenced by Writ of Summons. Order 4 r 2 (b) of the National Court Rules. The point about pleading fraud and s 33 (1) of the Land Registration Act was raised by Mr Janson of counsel for the defendants in his submissions and dealt with by the judge. Therefore there was no reasonable cause of action disclosed and the proceedings were liable to be dismissed on the pleadings.

12. On the face of the evidence, an important irregularity was disclosed and this was pointed out to the judge. That the Contract of Sale of Land and Transfer instrument which received statutory approval were in the name of one Bito Raima as purchaser but the transfer was registered in the name of John Raima. Evidence was placed before the judge that John Raima was the father of Bito Raima and he financed the purchase through a bank loan and he is holding the property in trust for his son Bito. The Westpac Bank has a registered mortgage in the name of John Raima as mortgagor. I am now told by the 4th respondent’s counsel that the Transfer Instrument was altered by someone to permit John Raima’s name to be registered on the State Lease title. Apart from this material irregularity which could affect the registration of title either in Bito’s name or John’s name, and this error could be a rectifiable mistake on the title document, the purchase of the property by John Raima or his son Bito Raima is not in doubt. 

13. In law the legal title of a registered proprietor of land is superior to a person claiming an equitable interest or some other interest such as those arising from a Tenancy Agreement or an unwritten agreement to enter into a Contract of Sale of the same land. The registered title-holders title is indefeasible and he is entitled to the unfettered use and occupation of the property. He should only be deprived of his rights upon proper proof and judgment by a Court of law of any of the grounds enumerated in s 33 (1) of the Land Registration Act which includes fraud.

14. In the present case the pleadings did not allow for a trial on the issue of fraud and a proper determination of fraud was not possible. Therefore Mr John Raima’s registered title over the property was never properly challenged in those proceedings and his title remains intact to this day. As the registered owner of the property, he is entitled to benefit of possession and usage rights.

Possible hardship, inconvenience or prejudice to either party. 

15. The 4th respondent stands to suffer enormous hardship and inconvenience in being deprived of occupation and use of the property. He is repaying a bank loan without the benefit of possession and occupation of the property. The applicant stands to suffer no prejudice except being deprived of occupational rights.
 
The financial ability of the applicant 

16. The only financial consideration involved here is the cost of securing alternate accommodation if he or other tenants are to be evicted to allow the 4th respondent to take vacant possession of the property. But that should be recovered through an action in damages and not by continued occupation of the property at no rent. 

Balance of convenience.

17. The balance of convenience favors the 4th respondent.

Whether damages would be sufficient remedy

18. The judgment for refund of K10,000 plus 8% interest is sufficient damages. The applicant could file Writ of Summons and obtain judgment in respect of other damages for breach of the Tenancy Agreement. 

The overall interest of justice

19. Notwithstanding the small number of factors which favor the appellants, based on the totality of all other factors, in the exercise of my discretion, and the overall interest of justice that the rights of a registered proprietor of land must be protected, I refuse to grant the stay. Costs of the application shall be in the cause of the appeal.

__________________________________________

Daniel & Associates Lawyers: Lawyer for the Appellants
Pryke & Janson Lawyers: Lawyer for the Respondent