SC1558
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCM NO 19 OF 2016

KOL TOKI
Appellant

V

MOEKA MOREA HELAI BY HIS NEXT OF KIN 
RAKA HELAI & MATAIO HELAI
First Respondent

NATIONAL HOUSING CORPORATION
Second Respondent

DR MALAI MOMAK
Third Respondent

REGISTRAR OF TITLES 
Fourth Respondent

Waigani: Kandakasi J, Cannings J, Lindsay J
2016: 13, 21 December 

LAND – government land – State Leases – indefeasibility of title – meaning of “fraud” in Land Registration Act, Section 33(1)(a) – whether actual fraud must be proven – whether proof of constructive or equitable fraud is sufficient.
	
GOVERNMENTAL BODIES – National Housing Corporation – two contracts for sale of same land – duty to comply with Court orders. 

The appellant, the registered proprietor of a State Lease over a residential property, appealed against a decision of the National Court made in judicial review proceedings commenced by the children of the first respondent (deceased), which ordered, amongst other things, that the appellant’s title be quashed and that the appellant vacate the property and give up vacant possession to the children of the deceased first respondent. The grounds of appeal were thatthe National Court erred in law by: (1) not dismissing the proceedings due to the children of the deceased not having legal authority to represent the estate of the deceased; (2) setting aside the appellant’s indefeasible title as registered proprietor in the absence of actual fraud by the appellant, contrary to Section 33(1) of the Land Registration Act; (3) enforcing an order in separate National Court proceedings, to which the appellant was not a party. 

Held:

(1)	The proceedings in the National Court were judicial review proceedings in which the first respondent was plaintiff. It was not necessary for the deceased first respondent’s children to show that they were formally the legal representatives of the deceased’s estate. It was sufficient for them to demonstrate that they had a “sufficient interest’ in the subject matter of the application for judicial review. Clearly they had a sufficient interest for the purposes of Order 16, Rule 3(5) of the National Court Rules. Ground of appeal (1) was dismissed. 

(2)	It is not correct to say that the National Court had to insist on proof of actual fraud before quashing the appellant’s title. It is sufficient if constructive or equitable fraud is proven to exist. Constructive or equitable fraud will exist if interests in land are transferred in an obviously unlawful or irregular manner. Here the National Court properly formed the view that all transactions regarding the land that occurred after an order of the National Court in separate proceedings (that the National Housing Corporation transfer title to the first respondent’s children)were illegal and in breach of the order, thus constituting constructive or equitable fraud. Ground of appeal (2) was dismissed. 
	
(3)	The National Court properly took into account in granting relief that in separate proceedings the National Court had ordered that the National Housing Corporation transfer title to the first respondent’s children. It was inconsequential that the appellant was not a party to the proceedings. The critical fact was that the Court had made an order, which had not been obeyed. Ground of appeal (3) was dismissed. 

(4)	Furthermore none of the arguments underpinning the grounds of appeal were put to the National Court, despite there being full opportunity to do so. The appellant was guilty of arguing points of law that were not put to the court below, without seeking or being granted leave to do so. 

(5)	None of the grounds of appeal had merit and in any event raised points of law not raised in the National Court. The appeal was dismissed with costs.

Cases cited

The following cases are cited in the judgment:

Application by Herman Joseph Leahy (2006) SC855
Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Comrade Trustee Services Ltd v Arnold Daugle (2011) SC1105
Curtain Brothers (PNG) Ltd v University of Papua New Guinea (2005) SC788
Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215
Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222
Ezekiel Sigi Anisi v Tony Waterupu Aimo (2013) SC1237
Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705
Helai v National Housing Corporation, Momak, Toki & Registrar of Titles, OS (JR) No 625 of 2015, 26.07.16, unreported
Helifix Group of Companies Ltd v PNG Land Board (2012) SC1150
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120
Mudge v Secretary for Lands [1985] PNGLR 387
Nakun Pipoi v Viviso Seravo (2008) SC909
NTN Pty Ltd v Board of Post and Telecommunications Corporation [1987] PNGLR 70
Papua Club Inc v Nusaum Holdings Ltd (2005) SC812Van Der Kreek v Van Der Kreek [1979] PNGLR 185
Pepi Kimas v Boera Development Corporation (2012) SC1172
PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126
Sakaraias Akap v Kenneth Korakali (2012) SC1179
Telikom PNG Ltd v ICCC (2008) SC906

APPEAL

This was an appeal against a decision of the National Court that quashed registration of the appellant’s interest in Government land.

Counsel:

R Habuka, for the Appellant
A Mana, for the first Respondent

21 December, 2016

1.    BY THE COURT:  Kol Toki, the appellant, was the registered proprietor of a State Lease over a residential property on Government land at Korobosea, National Capital District, Section 77, Allotment 11. He appeals against a decision of the National Court, constituted by Justice Makail, in judicial review proceedings, which quashed the registration of his interest in the property (Helai v National Housing Corporation, Momak, Toki & Registrar of Titles, OS (JR) No 625 of 2015, 26.07.16, unreported). 
	
BACKGROUND

2.    The essential facts are not in dispute. The first respondent, Moeka Morea Helai, was a public servant who occupied the property for more than 30 years as a tenant of the National Housing Corporation. On 18 January 2008 he purchased the property from the NHC under the Morgan Scheme and was recognised as henceforth being the owner of the property. However there was no transfer of the title to Mr Helai. On 4 March 2013, Mr Helai died. Still there had been no transfer of title.

3.    On 15 September 2014, despite having previously acknowledged that Mr Helai was the purchaser and owner of the property, the NHC offered to sell the property to Dr Malai Momak, the third respondent.

4.    On 2 October 2014 the late Mr Helai’s next of kin, his children, Raka Helai and Mataio Helai, commenced proceedings in the National Court, OS No 690 of 2014, seeking orders to compel the NHC to transfer title to them. On 22 October 2014, following an inter partes hearing, the Court (Cannings J) granted orders:

•	compelling the NHC to deliver up its property/conveyance file on the property to the custody of the Court;
•	restraining any dealings in the property without the leave of the Court;
•	referring the matter to mediation.

5.    Despite that order, the NHC, the next day, 23 October 2014, entered into a contract of sale of the property with Dr Momak.

6.    On 14 May 2015 Dr Momak entered into a contract of sale of the property with the appellant, Mr Toki.

7.    On 1 June 2015 the National Court (Kariko J), in OS No 690 of 2014, ordered the NHC to transfer title to Mr Helai’s children.

8.     Despite that order, on 29 June 2015, the NHC transferred title to Dr Momak and later on the same day, Dr Momak transferred title to Mr Toki. 

9.   The late Mr Helai’s children subsequentlycommenced the judicial review proceedings, OS (JR) No 625 of 2015, naming the NHC as first defendant, Dr Momak as second defendant, Mr Toki as third defendant and the Registrar of Titles as fourth defendant. They sought review of the NHC’s decisions, of 15 September 2014 to offer the property for sale to Dr Momak and, of 23 October 2014 to enter into a contract of sale with Dr Momak. They sought orders quashing those decisions and the resultant transactions that took place, including the transfers of the property, first from the NHC to Dr Momak, and secondly from Dr Momak to Mr Toki. They acknowledged that Mr Toki was the registered proprietor but argued that “fraud” had been perpetrated on the title to the property and that Mr Toki’s title should be set aside.

10.    Makail J heard the matter on 22 April, 5 May and 11 and 21 July 2016 and delivered judgment on 26 July 2016. All defendants were legally represented, including the appellant, Mr Toki, who was represented by the same counsel representing him in the present appeal, Mr Habuka. We note, however, that on the last day before judgment, 21 July 2016, at which final submissions were to be made, there was no appearance for any of the defendants. All parties were given proper notice of the hearing. Only Mr Mana, counsel for the plaintiff (and counsel for the first respondent in the present appeal) appeared and made final submissions. 

11.    His Honour took the view that the matter was simple and straightforward in view of the order of Kariko J of 1 June 2015 that required the NHC to transfer title to Mr Helai’s children:

At this juncture let me say this, it cannot be emphasised enough that the Court order [of 1 June 2015] is a Court order and must be complied with or obeyed by all who are parties or referred to in it or required by it to perform or cease to perform an act. In my view the defendants were obliged to comply with or obey the Court order, irrespective of whether some of them may not have been parties to the earlier proceedings or referred to in it. 

12.    His Honour was unpersuaded by the defendants’ arguments that they were unaware of the interest of the late Mr Helai and his children in the property. His Honour also dismissed the argument that Mr Toki was a bona fide purchaser of the property who had no knowledge of any competing interests and that his interest as registered proprietor should be protected. The paramount consideration according to his Honour was the need to enforce the Court order of 1 June 2015.

13.    His Honour granted the relief sought by the plaintiff (the first respondent), in that:

1.	The application for judicial review was granted. 

2.	Various decisions and transactions were declared as illegal and null and void: 

(a)	the decision of the NHC of 15 September 2014 to  offer the property to Dr Momak and the contract of sale between the NHC and Dr Momak of 23 October 2014; 
(b)	the contract of sale between Dr Momak and Mr Toki of 14 May 2015;
(c)	the transfers of title, of 29 June 2015, from the NHC to Dr Momak and from Dr Momak to Mr Toki.

3.	An order of certiorari was granted to quash those decisions and transactions. 

4.	Mr Toki and Dr Momak were ordered to forthwith give vacant possession of the property to the late Mr Helai’s children.

5.	All defendants were ordered to pay the plaintiff’s costs on an indemnity basis. 

THE APPEAL

14.    The appellant appealed on 15 grounds, which are repetitive and overlap, and can be distilled into three: that the National Court erred in law by – 

1.	not dismissing the proceedings due to the children of the deceased not having any legal authority to represent the estate of the deceased; 

2.	setting aside the appellant’s indefeasible title as registered proprietor in the absence of actual fraud by the appellant, contrary to Section 33(1) of the Land Registration Act; 

3.	enforcing an order in separate National Court proceedings, to which the appellant was not a party, to the detriment of the appellant. 

1 	DID THE NATIONAL COURT ERR BY NOT DISMISSING THE PROCEEDINGS? 

15.   The proceedings in the National Court were judicial review proceedings in which the first respondent, Moeka Morea Helai by his next of kinRaka Helai and Mataio Helai, was plaintiff. We have not been made aware of any application by any of the parties to the National Court proceedings to dismiss the proceedings on the ground that Raka Helai and Mataio Helai lacked standing. This is a new argument, not raised in the National Court. We will comment on the significance of that later. For now, we address the merits of the argument. 

16.    Mr Habuka submitted that the property the subject of this case was part of a deceased estate and that, as there was evidence that the late Mr Helai died intestate and no evidence that Raka Helai or Mataio Helai had been granted letters of administration, the property was vested in the Public Curator under the Wills, Probate and Administration Act. This meant, according to Mr Habuka’s submission, that Raka Helai and Mataio Helai had no legal authority to represent the estate in any legal proceedings.

17.    We reject that argument. Even if the factual propositions underpinning it are correct, it must be borne in mind that the National Court proceedings were judicial review proceedings. One of the prerequisites for a person being granted leave for judicial review is that he has a sufficient interest in the subject matter of the decision he wants reviewed. This requirement arises under Order 16, Rule 3(5) of the National Court Rules, which states:

The Court shall not grant leave unless it considers that the applicant has a sufficient interest in the matter to which the application relates. 

18.    The Supreme Court has addressed the criteria to be considered in deciding the question of “sufficient interest” in cases such as NTN Pty Ltd v Board of Post and Telecommunications Corporation [1987] PNGLR 70, Nakun Pipoi v Viviso Seravo (2008) SC909, Helifix Group of Companies Ltd v PNG Land Board (2012) SC1150 and Pepi Kimas v Boera Development Corporation (2012) SC1172. There are no hard and fast rules, however the applicant must show a genuine or legitimate interest in the decision that is sought to be reviewed.  

19.   We consider that it was not necessary for the deceased first respondent’s children to show that they were the legal representatives of the deceased’s estate. It was sufficient for them to demonstrate that they had a genuine or legitimate interest in the decisions they wanted reviewed: the decisions of the NHC to offer the property for sale to the third respondent, and to transfer the property to him, despite having entered into a contract for sale of the property with the first respondent and having received the full purchase price from him. 

20.    Clearly the late Mr Helai’s children had a sufficient interest as their father had occupied the property for more than 30 years and purchased the property five years before he died. Ground of appeal 1 is dismissed. 

2 	DID THE NATIONAL COURT ERR BY SETTING ASIDE THE APPELLANT’S INDEFEASIBLE TITLE IN THE ABSENCE OF FRAUD? 

21.    Mr Habuka submitted that it is settled law that the registered proprietor of a State Lease has an indefeasible title to the land subject only to the exceptions in Section 33(1) of the Land Registration Act, including in a case of fraud; and that if the registered proprietor’s title is to be set aside on the ground of fraud, there must be proof of actual fraud on the part of the registered proprietor. He cites a line of Supreme Court authority in support of those propositions: Mudge v Secretary for Lands [1985] PNGLR 387,Koitachi Ltd v Walter Schnaubelt (2007) SC870 and Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222. Mr Habuka submits that there was in the National Court no evidence of actual fraud by any person, let alone by the registered proprietor, Mr Toki. Therefore the primary Judge erred by quashing Mr Toki’s title.

22.    While we acknowledge that the Supreme Court decisions referred to by Mr Habuka do tend to support the propositions underpinning this ground of appeal, it must be also acknowledged that there are other Supreme Court decisions that do not say the same thing, including Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215, PNG Deep Sea Fishing Ltd v Luke Critten (2010) SC1126 and Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120. These cases support the proposition that in many situations it will not be appropriate to insist on proof of actual fraud before the National Court considers quashing the registered proprietor’s title. It will be sufficient if constructive or equitable fraud is proven, where, for example, interests in land are transferred in an obviously unlawful or irregular manner.

23.    Here the National Court tacitly, and, in our view properly, formed the view that all transactions regarding the land that occurred after the order of the National Court on 1 June 2015 (that the National Housing Corporation transfer title to the first respondent’s children) were illegal and in breach of the order, thus constituting constructive or equitable fraud. Those decisions and transactions included registration of the transfers on29 June 2015 from the NHC to Dr Momak and from Dr Momak to Mr Toki. On this reasoning it was permissible for Mr Toki’s title to be quashed, even though there was no evidence of actual fraud by him. We find no error of law on the part of the National Court. Ground of appeal 2is dismissed. 

3 	DID THE NATIONAL COURT ERR BY ENFORCING AN ORDER IN SEPARATE COURT PROCEEDINGS, TO WHICH THE APPELLANT WAS NOT A PARTY?

24.    Mr Habuka submitted that it was wrong in law for the primary Judge to pay so much attention to a Court order made in separate proceedings, of which Mr Toki had no notice. Mr Toki was not subject to the order of 1 June 2015, so it was unfair and wrong in law to quash his title. 

25.   While we acknowledge that Mr Toki was not a party to the earlier proceedings and there is no clear evidence that he was aware of those proceedings or the orders that were made, we consider that the learned primary Judge gave appropriate weight to those considerations in determining that it was of overriding importance that the National Court’s orders be enforced. His Honour correctly ruled that it was inconsequential that the appellant was not a party to the proceedings. The critical fact was that the Court had made an order, which had not been obeyed, and this rendered all decisions and transactions that resulted in Mr Toki becoming the registered proprietor illegal and null and void. We dismiss ground of appeal 3.

AN IMPORTANT POINT 

26.    Before concluding, there is one significant aspect of this appeal on which we remark. None of the arguments underpinning the grounds of appeal was put to the National Court, despite there being full opportunity to do so. The appellant is guilty of arguing points of law that were not put to the court below. There are two schools of judicial thought on how the Supreme Court should deal with points of law raised in an appeal, which were not raised in the National Court. 

27.    On the one hand, a very strict approach can be taken: if the appellant has not argued the point in the National Court, the point cannot be raised in the Supreme Court. See, for example, Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705, Curtain Brothers (PNG) Ltd v University of Papua New Guinea (2005) SC788, Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853, Sakaraias Akap v Kenneth Korakali (2012) SC1179 and Ezekiel Sigi Anisi v Tony Waterupu Aimo (2013) SC1237.

28.    On the other hand, a less strict approach can be taken: a party can raise in the Supreme Court a point of law not put before the National Court, but only if it seeks and obtains the leave of the Supreme Court to do so. See, for example, Van Der Kreek v Van Der Kreek [1979] PNGLR 185, Papua Club Inc v Nusaum Holdings Ltd (2005) SC812, Application by Herman Joseph Leahy (2006) SC855, Telikom PNG Ltd v ICCC (2008) SC906 and Comrade Trustee Services Ltd v Arnold Daugle (2011) SC1105. 

29.    Whichever approach is applied, the consequences are the same: the appeal cannot succeed. Though we have, as it turned out, considered the grounds of appeal on their merits, we were not obliged to do so as they all involved points of law that were not argued before the National Court and the appellant did not obtain leave to argue them.

CONCLUSION

30.    All grounds of appeal were not properly before this Court and in any event lacked merit. The appeal must be dismissed and the order of the National Court affirmed. Costs will follow the event.

ORDER 

(1)	The appeal is dismissed.

(2)	The order of the National Court of 26 July 2016 in OS (JR) No 625 of 2015 is affirmed.

(3)	Any orders staying that order are dissolved.

(4)	Costs of the appeal shall be paid by the appellant to the first respondent on a party-party basis, which shall, if not agreed, be taxed.

Judgment accordingly,
___________________________________________________
Daniel Kop Lawyers:   Lawyers for the Appellant
Allens Lawyers:          Lawyers for the 1st Respondent