SC2411
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 174 OF 2019

BETWEEN
H.R. HOLDINGS LIMITED
Appellant

AND
DIANNE IKI TAKA substituted by JULIE TAKA
First Respondent

AND
ALEX TONGAYU as Former Registrar of Companies
Second Respondent

AND
INVESTMENT PROMOTION AUTHORITY
Third Respondent

Waigani: Kandakasi DCJ, Cannings & Dowa JJ
2023: 29th May, 28th June

SUPREME COURT – Appeals – strong presumption in favour of the correctness of a decision appealed from - appellants duty - demonstrate clearly identifiable errors or decision is so unreasonable and plainly unjust - by clearly demonstrating trial judge acted upon a wrong principle, or gave weight to extraneous or irrelevant matters, or failed to give weight or sufficient weight to relevant considerations or made a mistake as to the facts.

PLEADINGS – Purpose of - furnish a clear statement of the case, define the issues for determination and calling of evidence and enable a defendant to meet a plaintiff's claim – like prayer for relief, claim of bad faith without factual foundation is not proper pleading.  

PLEADINGS – Claim based on fraud – an allegation of fraud is a serious matter – need to be expressly pleaded with particulars – no expressed pleading – bare claim of bad faith without more – no pleading at all.

PRACTICE & PROCEDURE – Conflicting Supreme Court decision – rule of thumb – latest decision deemed to have overruled earlier decision – effect of Sch. 2.9 (1) – Supreme Court decision not binding itself – no license to readily overrule – need for certainty and consistency in the law for the society’s guidance and for the avoidance of chaos and disorder - the Court cannot readily and easily depart from its earlier decisions - departures within a short space of time are undesirable and should not be encouraged -  departures permissible in exceptional circumstances such as earlier decisions clearly misinterpreted, misconceived, mistook or misunderstood the law which requires correction, the law pronounced in the earlier decisions are no longer appropriate and applicable and as a matter of practice, the Chief Justice is part of a Court comprising of 5 Judges which may decide to depart from an earlier decision

COUNSELS DUTY – Conflicting Supreme Court decision or authorities - duty of counsels – assist court with appropriate submissions on which line of the conflicting decisions to follow or state a case to the Supreme Court to resolve the conflict – Counsels failing – trial judge free to determine.

This was an appeal from the National Court sitting on appeal under s 408(1) of the Companies Act from the decision of the Registrar of Companies (the second respondent), purporting to act under s 373(4) of the Companies Act, to sell a property to the first respondent. The Registrar of Companies was of the opinion that he held the property on constructive trust, as title in the property was held by a deregistered and defunct company. In refusing the appeal and rejecting the appellant’s argument that the respondent’s title should be disturbed, the National Court found that the Registrar of Companies had acted unlawfully and improperly in selling the property to the first respondent, that the appellant’s claim of fraud against the first respondent was not made out, that the first respondent’s title would not be disturbed and ordered the Registrar of Companies to pay K338,906.80 to the first respondent. The appellant appealed against the decision of the National Court, arguing that the National Court erred, having found that the Registrar of Companies acted unlawfully by selling the property to the first respondent, by failing to find constructive fraud against the first respondent and by finding that the appellant had failed to plead and establish actual fraud against the first respondent and by finding that the property was sold for K370,000.00.

Held:

(1)	The primary Judge did not err in finding that the claim of constructive fraud against the first respondent was not made out.

(2)	If fraud is established against one party in a chain of transactions resulting in title being registered with another party, it does not necessarily follow that fraud will be imputed against the registered proprietor. Whether actual fraud or constructive fraud is the test of fraud for the purposes of s 33(1) of the Land Registration Act, it is usually necessary that the first respondent be implicated before their title ought to be disturbed. The National Court made no error in deciding that the first respondent’s title should not be disturbed. 

(3)	The National Court made no error of law or fact in the findings regarding the sale price of the property.

(4)	All grounds of appeal were dismissed, the appeal was dismissed and the decision of the National Court was affirmed. 
   
Cases Cited:

Papua New Guinean Cases
Aihi v. Isoaimo (2013) SC1276
Asuma (trading as Andy Asuma Trading) v. Tiong Juk Chuong (2019) SC1887
Church of Jesus Christ of Latter-Day Saints Inc v. Kimas (2022) SC2280
Central Bank of Papua New Guinea v. Gabriel Tugiau (2009) SC1013
Colbran v. Ilaisa (2022) SC2273
Curtain Bros (PNG) Limited v. UPNG (2005) SC788
Dumal Dibiaso Inc Land Group v. Kola Kuma (2005) SC805
Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215
Eoe v. Maipakai (2013) N5066
Eric Kiso v Bennie Otoa & Ken Wutnalom (2013) SC1222
H R Holdings Ltd v Dianne Iki Taka, Alex Tongayu, former Registrar of Companies & Investment Promotion Authority (2019) N8004
Koitachi Ltd v. Walter Schnaubelt (2007) SC870
Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 
Mudge v. Secretary for Lands & Ors [1985] PNGLR 387
Paga No 36 Ltd v. Eleadona (2018) SC1671
Pius Tikili v. Home Base Real Estate Ltd (2017) SC1563
PNG Bible Church Inc v. Mandi (2018) SC1724
PNG Deep Sea Fishing Ltd v Critten (2010) SC1126
PNG Institute of International Affairs Inc v. Hightech Industries Ltd (2014) SC1577
State v. Gaunede (2005) N3049
Steamships Trading Ltd v. Garamut Enterprises Ltd (2002) N1959
The State & Sam Akoitai v. Central Provincial Government (2009) SC977
Timothy v. Timothy (2022) SC2282
Tony David Raim v. Simon Korua (2010) SC1062
Van Der Kreek v Van Der Kreek [1979] PNGLR 185
Yetuin v. Dominion Information Systems Ltd (2018) SC1729

Overseas Cases
Ratcliffe v. Watters (1969) 89 WN (NSW) Part 1 497

Counsel:
Mr. L. Yandeken, for the Appellant 
Mr. M Gama, for the First Respondent

REASONS FOR JUDGEMENT

28th June, 2023

1.	KANDAKASI DCJ & DOWA J: This is an appeal against a decision of the National Court on an appeal pursuant to s. 408 (1) of the Companies Act 1997. The decision amongst others:

(a)	found the second respondent, Mr Alex Tongayu, then Registrar of Companies (ROC) had acted unlawfully and improperly when he sold a property, described as Allotment 01, section 312, Hohola (Gerehu Stage 4), State Lease Volume 82, Folio 50, NCD (property) to the first respondent, Julie Taka (Taka);

(b)	found a claim of fraud against Taka was not made out and consequently decided against cancelling the title to the property registered in favour of Taka; and

(c)	ordered the ROC to pay the appellant, H.R. Holdings Limited (HR Holdings) K338,906.80 being the purchase price after allowing for deductables.

The Appeal and arguments 

2.	HR Holdings pleaded 17 grounds of its appeal now before this Court. However, in our view, they can be grouped into 3 main grounds only.  These are:

(a)	after having found the ROC acted in bad faith and illegally in selling the property to Taka, the learned trial Judge erred by failing to find there was constructive fraud, sufficient to cancel the title to the property registered in favour of Taka.

(b)	the learned trial judge erred in finding, HR Holding failed to plead and establish actual fraud against Taka and therefore erred in refusing to cancel the title to the property registered.

(c)	the learned trial judge erred in finding the property was sold for K370,000.00 when there was no evidence substantiating it.

3.	In response Taka argues the learned trial did not fall into any error as alleged or at all.  He also points out that, there was evidence supporting the learned trial judges’ finding that the property was sold for K370,000.00 and as such she did not fall into any error.  Overall, Taka submits the learned trial judge’s decision is fair, and reasonable in the whole of the circumstances. Accordingly, he submits the appeal has no merit, and it should be dismissed with costs against HR Holding.

4.	From the grounds of appeal and the parties’ arguments, the issues for determination by this Court are clear.  They are:

(a)	Did the learned trial judge err in having found there was constructive fraud against the ROC, that was insufficient to cancel the title to the property registered in favour of Taka?

(b)	Did the learned trial judge err in finding, HR Holding failed to plead and establish actual fraud against Taka and therefore erred in refusing to cancel the registration of the title to the property in his favour?

(c)	Was there evidence to support of the learned trial judge’s finding that the property was sold for valuable consideration of K370,000.00?

Relevant background and facts

5.	The HR Holding and its shareholder and director were shareholders in a company called Olympic Stationery Ltd (“Olympic”), a company incorporated in 1972. Olympic became the registered proprietor of a property the subject of this proceeding and held the Owners Copy of the State Lease. On 6 August 1997 Olympic signed a contract of sale of the property to the HR Holding, which was duly stamped in 1997. 

6.	In or about 2009, the HR Holding underwent a corporate re-structure, involving the transfer of assets from what were said to be the subsidiary companies of HR Holding, and then winding up the subsidiary companies. A Transfer of the property from Olympic to HR Holding was signed on 3 June 2009, which was duly stamped in 2009 and duly approved by the Minister for Lands and Physical Planning on 27 October 2009, and was said to have been lodged with the Department of Lands for registration.

7.	The transfer did not become registered on the title. The Owners Copy of Olympic’s State Lease was given to HR Holdings, who continued to hold it, overlooking the fact that the transfer had not been registered on it. As Olympic had been wound down and ceased operations, it was removed from the Company Register on 13 May 2011. Throughout this time HR Holdings proceeded on the basis that it was the registered proprietor of the property. It paid annual land rentals for the property, and the latest Lands Department receipt for the annual land rental for the property was issued to it in 2016.

8.	In evidence presented during the trial, HR Holding said in about August 2016, it advertised the property for sale for K300,000.00. Taka said that after contacting a real estate agent, and after confirming bank finance for K370,000.00 following an earlier attempt to buy another property, he was informed that Olympic had agreed to the sale. HR Holding’s former lawyer prepared a contract of sale and transfer, which Taka said showed the vendor as Olympic, while HR Holdings said that it showed the vendor as itself. Neither party assisted by producing a copy of the contract.

9.	Around this time HR Holdings realized that the transfer of title from Olympic to it had not been registered as Olympic was still shown as the registered proprietor.  By this time also Olympic had been removed from the Register of Companies, giving rise to a prima facie presumption that the property had vested in the ROC.  This cause HR Holdings to prepare another contract of sale, showing the vendor as Olympic by its representative the ROC, which Taka signed. HR Holdings’ former lawyer contacted the ROC in or about 12 September 2016 and provided him with the contract which had been signed by Taka and requested the ROC to sign the contract and transfer on behalf of Olympic. No evidence of what information or other documentation was provided by HR Holdings’ former lawyer to the ROC. That included, the provision of no evidence of the ROC being informed of HR Holdings claim that the property had already been sold pursuant to the 1997 contract with transfer instrument signed in 2009, and further that as the transfer had not been registered, the property had been held by Olympic since 2009 on constructive trust for HR Holdings.

10.	On 20 September 2016, Taka’s lawyers wrote to the ROC, informing him that Taka signing a contract with Olympic, had finance for K370,000.00, had found that the company was deregistered, and now wanted to purchase the property from the ROC. On 21 September 2016, the ROC acknowledged receipt and said that he would proceed by invoking his powers under the Companies Act, which Taka accepted on the same day. On 23 September 2016, the ROC wrote, making an offer to sell the property for K250,000.00, plus a sum of K120,000.00 to be paid separately. On 26 September 2016, Taka wrote, accepting the offer.

11.	On 29 September 2016, the ROC signed a Memorandum of the Exercise of his Powers under S.371-372 of the Companies Act to sell Olympic’s property to Taka. The ROC then prepared a contract of sale to Taka, which he signed on 29 September 2016 as Registrar on behalf of Olympic. The purchase price was K370,000.00, but there was a Special Condition that the property was only valued at K250,000.00, the purchaser had approved finance for K370,000.00, and the difference of K120,000.00 would be paid to the purchaser at settlement.

12.	Taka also signed a transfer instrument on 30 September 2016. That instrument did not specify the consideration, which is an offence under S.42 of the Land Registration Act (“LRA”). The transfer was stamped, but there was no evidence of Ministerial approval, and no evidence that it was lodged for registration with the Registrar of Titles (“ROT”).  

13.	By an email of 6 October 2016, the ROC informed HR Holdings’ former lawyer that the contract signed by Taka with Olympic was not valid, that he had invoked his powers under S.373 of the Companies Act, and that HR Holdings had “no jurisdiction” over the property. By an email of 11 October 2019, HR Holdings’ former lawyer informed the ROC that HR Holdings was a former shareholder of Olympic, had an interest in Olympic, and was the beneficiary of the defunct company’s property. He said that on 10 October 2016 they had lodged an application to reinstate the company to the Register, and so no further action on the sale should be taken. It seems that HR Holdings’ former lawyer was referring to action on the sale contract he had earlier sent to the ROC, and he may not have been aware that the ROC had already executed another contract of sale with Taka.

14.	A notice of intention to reinstate Olympic was lodged on 10 October 2016 and a caveat was signed the next day, 11 October 2016 with the lodgement fee paid on 18 October 2016. But the caveat was not entered on the title. Although the ROC had signed the sale documents, he did not have the Certificate of Title. On 27 October 2016 he wrote to the ROT informing him that the Owners Copy of the Title was not available due to the company being defunct and requested a replacement title be issued. On 30 November 2016 the ROT advertised his intention to issue a replacement Title for the property, in a newspaper. On 6 December 2016 the issue of the replacement title was notified in the Government Gazette. On 21 December 2016 the replacement title was registered on the Certificate of Title, and the transfer of the Title to Taka was registered on the same day. The Certificate of Title did not record that the title had been transmitted from Olympic to the ROC, prior to its transfer to Taka.

15.	Settlement appeared to have taken place on 22 December 2016, when various Bank Cheques were distributed. After various payments, the remaining balance of K201,406.80 was paid into the ROC’s Trust Account, pursuant to S.373 (10) of the Companies Act. There was no evidence of what happened between December 2016 and December 2018. On 19 December 2018 HR Holdings obtained leave of the court to proceed with an appeal under S.408 of the Companies Act. On 15 January 2019, HR Holdings filed proceedings CIA 07 of 2019, appealing against the ROC’s decision of 29 September 2016 to sell the property to Taka.

16.	Grounds advanced for the appeal were mainly against the ROC, which the learned the learned trial judge summarised as follows:

“(a) 	Because Olympic had transferred the property to the Appellant two years prior to Olympic’s deregistration, it was not property which immediately before its deregistration was not distributed by the company, within the meaning of S.373 of the Act.

(b) 	As the Transfer had been validly effected by a Contract of Sale and Transfer, the Appellant was entitled to have had the Transfer registered on the title in 2009, the Appellant had an unregistered interest, and until the Title was registered, Olympic held the property on constructive trust for the Appellant.

(c) 	As the property had been held on trust by Olympic since 2009, it did not vest in the ROC when Olympic was deregistered, and the ROC had no power under S.373 to sell the property.
(d) 	Pursuant to S.374, as the property was held in trust for the Appellant by Olympic at deregistration, then the ROC continued to hold the property on trust for the Appellant after deregistration.

(e) 	The ROC did not exercise his statutory powers in a bona fide manner, by excluding the Appellant from the sale process to the 1st Respondent, by failing to act on the application for reinstatement of Olympic, by disregarding the Appellant’s claim to ownership, by “gifting” the property to the 1st Respondent for no consideration, and by informing the Department of Lands that the Owners Copy of Title was not available, when he knew or ought to have known that the Owners Copy was with the Appellant, but he had not asked the Appellant to produce it, thereby causing the Registrar of Titles to wrongly issue a replacement Title.

(f) 	The ROC’s conduct was tantamount to fraud.”

17.	With these background and facts, we turn to a consideration of the issues presented in the appeal.  Since, the learned trial Judge dealt with the issue of fraud against the ROC, the ROT and Taka together we will also deal with this part of the appeal together. 

Findings and decisions on fraud 

18.	We start with the learned trial Judge’s reasons for decision on that point.  The relevant part of the judgment is at [31] – [33] and [35] – [58]. The learned trial Judge found and held at [31]:

“.…in 2009 Olympic was the registered proprietor who executed a written contract and transfer of the property in registrable form to the Appellant, creating a registrable interest, which until registration, conferred on the Appellant a right to registration of the title, which was capable of protection by caveat. The Register of Titles was obliged to register the transfer when produced to him and was obliged to accept the caveat in the prescribed form when lodged with him.”

19.	At the same time, the learned trial judge found however at [32] – [33] that that the Registrar of Titles (ROT) did not register the transfer of title in 2009 and did not accept the caveat in October 2016. The learned trial Judge also found there was no evidence that the 2009 transfer or the 2016 caveat and fee receipt had been lodged and received by the ROT. Consequently, the learned trial Judge found this could not amount to fraud.  At [36] – [38] of her decision, the learned trial judge accepted  HR Holdings had alleged fraud against the ROC and a prior instrument of title by way of a constructive trust over the property.  She also accepted that HR Holdings pleaded irregularities and breaches of statutory procedures by the ROC which it alleged were so serious that they were tantamount to fraud. 

20.	The learned trial judge also noted HR Holdings submissions and reliance on the decision in Emas Estate Development Pty Ltd v. John Mea (1993) PNGLR 215 and Steamships Trading Ltd v. Garamut Enterprises Ltd (2002) N 1959, which say procedural breaches and irregularities which are sufficiently serious could be tantamount to fraud within the meaning of S.33 of the LRA.  

21.	Having considered the submissions and the law on point, the learned trial judge went on to find no fraud pleaded and brought home to the ROT.  Her Honour reasoned:

“41.	In relation to the ROT, even if it had been pleaded, the evidence was insufficient to show fraud by the ROT, because there was no evidence that either the original Transfer in 2009 or the caveat in 2011 had actually been received by him. In relation to the replacement title, the Appellant gave no explanation for not responding to the ROT’s advertisement of intention to issue a replacement title. As no objections were received by the ROT, he correctly proceeded to issue a replacement title.” 

22.	However, as against the ROC, the learned trial judge found there was lack of bona fide on his part.  The learned trial Judge reasoned:

“42.	In relation to the ROC, there was evidence that the property was not “gifted” for no consideration, it was sold for K370,000.00, and the 1st Respondent had paid that amount.

43.	There was evidence of possible breaches and irregularities by the ROC in the process of failing to investigate the Appellant’s claim to ownership of the property, and in the process of selling the property to the 1st Respondent. However, the evidence was not sufficient to satisfy the higher onus of proof required to establish fraud. This is primarily because there was no evidence that the ROC was aware of the Appellant’s claim that the property was held in trust. The only evidence was that the Appellant’s former lawyer had said that the Appellant’s claim was based on being a former shareholder. This was not sufficient under S. 373 (2) of the Act to show that the property had vested in Olympic prior to deregistration, and the ROC would not have been obliged to act on this claim.

44.	There was evidence that the Notice of Intention to Reinstate was received by the ROC, after the Contract of Sale had been signed by the 1st Respondent. The evidence was sufficient to raise an inference of lack of bona fides by the ROC, in failing to act at that time on the Appellant’s application for reinstatement. Section 378 (1) of the Act says that ROC shall, on the application of a prescribed person, restore a company that has been removed in the previous six years. The Appellant, as a shareholder and an aggrieved person, was a prescribed person, and the application was made within six years of the deregistration. The ROC breached his obligation under S378 (1) of the Act to assess the application to restore Olympic to the Register.

45.	The evidence was also sufficient to raise an inference of lack of bona fides by the ROC in requesting the ROT to issue a replacement title on the untrue basis that the Owners Copy was unavailable.”

23.	Turning to Taka, the learned trial Judge found no fraud was pleaded and proven against him.   She reasoned:

“46.	However, there was no evidence that the 1st Respondent was complicit in either of these matters. There was no evidence he even knew that the Appellant had made an application for Olympic’s reinstatement. There was no caveat on that title. There was no reason for him to doubt the correctness of the ROT’s advertisement for a replacement title. Accordingly, even if the evidence was sufficient to amount to fraud by the ROC, it was not sufficient to show fraud of the registered proprietor.

47.	Even if it was accepted that procedural breaches and irregularities could be tantamount to fraud, the evidence was insufficient to show that these breaches and irregularities of the ROC were sufficiently serious so as to warrant setting aside the title under S33 of the LRA. They were also not breaches or irregularities by the 1st Respondent.

48.	Following the Supreme Court authorities referred to earlier, the Appellant has failed to establish, to the higher standard of proof required for fraud, that there was fraud by the registered proprietor or actual fraud.”

24.	Then, allowing herself to be guided by the decisions in PNG Institute of International Affairs Inc v. Hightech Industries Ltd (2014) SC1577 and Dumal Dibiaso Inc Land Group v. Kola Kuma (2005) SC805, the learned trial Judge went on to find Olympic was a constructive trustee of HR Holdings.  Her Honour reasoned:

“51.	The execution of a Contract of Sale and stamped Transfer was a clear expression of Olympic’s intention to transfer title to the Appellant. The failure to complete the transfer by registration meant that the title was in Olympic’s name, but the equitable right to the beneficial enjoyment of the property and the right to registration of title to the property, was in the Appellant. A constructive trust has therefore been raised and “fastened upon the conscience” of Olympic so as to convert Olympic into a trustee for the Appellant.

52.	The evidence is sufficient to show that under S17 of the LRA, the Appellant was the beneficial owner and had a right to registration of the transfer of the property, which was therefore impressed with a constructive trust, so that the property was held by Olympic on trust for the Appellant immediately prior to deregistration.

53.	The Appellant’s beneficial ownership of the property pursuant to the constructive trust, is not sufficient to amount to a “prior instrument of title” within the meaning of S33 (1) (c) of the LRA.

54.	As the property was held by Olympic on trust for the Appellant immediately before Olympic’s removal from the Register it was not “property of a company” within the meaning of S373 of the Act, and so did not vest in the ROC on the deregistration.

55.	Pursuant to S373 (3) of the Act, as the ROC did not apply to the court for the appointment of a new trustee, he continued to act as trustee of the property for the benefit of the Appellant. The ROC should not then have proceeded to sell or otherwise deal with the property, without the Appellant’s consent.”

25.	Was that enough to upset the title that was registered in favour of Taka?   The learned trial Judge answered that question in this way:

“56.	However, this was a matter between the Appellant [HR Holdings] and the 2nd Respondent [ROC], there was no evidence of complicity with the 1st Respondent [Taka], and it was not fraud by him.

57.	The Appellant has established irregularities and breaches of the Companies Act and the Land Registration Act by the ROC, but those breaches do not amount to actual fraud, or fraud of the registered proprietor.

58.	As the Appellant has not established either fraud of the registered proprietor or actual fraud, or an instrument under a prior instrument of title, and as the Appellant’s registrable interest was not notified or protected by entry in the Register, the 1st Respondent’s interest as transferee is not affected, and the Appellant has not shown that it comes within any of the exceptions in S33 of the LRA.”

Consideration and decision 

26.	As this Court has said in many cases as in Colbran v. Ilaisa (2022) SC2273, there is a strong presumption in favour of the correctness of a decision appealed from. Hence, the decision should be affirmed unless the appellate court is satisfied that the decision is clearly wrong. That means an appellant needs to demonstrate to the satisfaction of the Court the existence of a clearly identifiable error in the decision appealed against, or that decision is so unreasonable and plainly unjust which could point to an error: See for examples of cases on point, Curtain Bros (PNG) Limited v. UPNG (2005) SC788 and The State & Sam Akoita v. Central Provincial Government (2009) SC977. This an appellant can do by clearly demonstrating the trial judge having acted upon a wrong principle, or gave weight to extraneous or irrelevant matters, or failed to give weight or sufficient weight to relevant considerations or made a mistake as to the facts: See Asuma (trading as Andy Asuma Trading) v Tiong Juk Chuong (2019) SC1887 and Church of Jesus Christ of Latter-Day Saints Inc v. Kimas (2022) SC2280 as examples of cases on point.

27.	We note the learned trial judge’s decision as against the ROC is not in issue.  Similarly, there is no issue taken against the learned trial judge’s decision on constructive trust in favour of the appellant. What is in issue is two claims by HR Holdings.  First, is its claim that learned trial judge erred in finding there was lack of pleadings and establishment of fraud against Taka.  Second, is its claim that the learned trial judge erred in finding the findings she made against the ROC were not sufficient to upset the title to the property registered in favour of Taka.  

Claim of fraud against Taka

28.	Dealing firstly, with the first of the two claims, we note the only pleading found in HR Holdings’ appeal before the trial Court against Taka was ground 4.4 (d).  That pleading once again read:

“The Second Respondent as the Transferor and the First Respondent as the Transferee, acted in bad faith by executing the Transfer Instrument on 30th September 2016, despite the fact that no consideration for the transfer was specified in the Transfer contrary to section 42 (2) of the Land Registration Act.3

29.	During the hearing before us, learned counsel submitted, fraud was alleged against Taka.  When pressed by the Court to show where that was pleaded, he referred us to the above ground in the notice of appeal. This in our respectful view, is no pleading of the relevant facts with particulars.  Instead, this is a statement of conclusion or opinion. Without any factual foundation laid in the pleadings, such conclusion does not amount to any pleading. This is like praying for a relief without foundation in the main body of a parties pleading.  Such a statement has been held by this Court to be no pleading at all.  The decision of this Court in Central Bank of Papua New Guinea v. Gabriel Tugiau (2009) SC1013 is an example of a case on point. There, the Court relevantly held:

“13.	Except for the special damages totalling K3,650.00, Mr. Tugiau did not plead with any particularity any of the other parts of his claim. The law requires proper pleadings with particulars before any claim or prayer for relief can be granted. For as this Court said in Motor Vehicles Insurance (PNG) Trust v. James Pupune, [1993] PNGLR 370, pleadings with particulars have the useful function to:

‘1. furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;

2. 	define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and

3. 	give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court.’

14. Parties who have failed to observe this requirement of the law have seen their claims disallowed or dismissed. One of the latest examples is the decision of this Court in Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694. There the plaintiff claimed, and the National Court allowed for certain damages not properly pleaded. On appeal the Supreme Court disallowed those damages because of the lack of pleadings with particulars.”

30.	Later at [35] the Supreme Court in the context of a prayer for relief without any foundation in the pleading for a claim of having suffered stress, anxiety, and loss of reputation the Court went on to hold:

“In this case, the plaintiff did not plead with any particularity his claim of having suffered stress, anxiety, and loss of reputation in the Bank and amongst his peers. He only pleaded in the prayer for relief “damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character.” That was no pleading at all. The law is clear that, foundation must be laid in the pleadings to properly ground any prayer for relief. Without any such pleadings there can be no award.”

31.	Specifically on fraud, it is trite law that a claim in fraud is a serious matter.  It is also trite law that, in matters involving allegations of fraud against a registered title holder under s.33 (1) of the LRA, the onus to plead and establish such fraud, or that any of the exceptions in s.33(1) of the LRA exists, lies with the party challenging the title. The seriousness of a claim based on an allegation of fraud, gives rise to two important practice consequences. Firstly, a party alleging fraud must specifically and clearly plead the relevant facts succinctly with sufficient particulars as required by Order 8, Rule 30 of the National Court Rules.  Pleading in that way is critical and necessary to meet the purpose and function of pleadings as stated in the decision in Motor Vehicles Insurance (PNG) Trust v. James Pupune, [1993] PNGLR 370 as noted in the above quotation.  Secondly, because of the seriousness of a claim based on fraud, it cannot be disposed of summarily.  Instead, it must be determined by trial.  At trial depending on the nature of the fraud alleged it may have to be established on the higher standard of prove beyond reasonable doubt and not the normal standard of balance of probabilities in civil proceedings: See Paga No 36 Ltd v. Eleadona (2018) SC1671 and Yetuin v. Dominion Information Systems Ltd (2018) SC1729.

32.	In the present case, the learned trial judge, found there was no pleading of fraud against Taka. A close examination of the notice of appeal which commenced and formed the basis for the proceedings in the National Court, shows no expressed pleading of fraud with particulars, other than the bare mention of bad faith in ground 4.4 (d), against Taka.  Similarly, there is no pleading that pleads facts sufficiently to lead to the inference or conclusion that Taka acted in bad faith and or was complicit to the actions of the ROC. The learned trial judge therefore correctly found there was no foundation in the pleading.  That finding was an inevitable finding and the only finding open to the trial judge.  Accordingly, we find no error in her decision.  

33.	 Having found there was no foundation in the pleadings, there was no need to consider the evidence that was adduced at the trial court.  The law is well settled that, without any foundation in the pleadings, no evidence can be led at a trial, and reliefs granted.  The decision of this Court in Tony David Raim v. Simon Korua (2010) SC1062 is on point. There the Court stated:

“...There is abundance of case authorities on pleadings in this jurisdiction and we need not refer to all, suffice to refer to Papua New Guinea Banking Corporation Limited -v- Jeff Tole (2002) SC694 where the Supreme Court comprising of Amet, CJ (as he then was), Sheehan & Kandakasi, JJ emphasized the need for pleading of particulars in this way:

‘The law on pleadings in our jurisdiction is well settled. The principles governing pleadings can easily be summarized in terms of, unless there is foundation in the pleadings of a party, no evidence and damages or relieves of matters not pleaded can be allowed.’
(Emphasis supplied)

34.	 In the present case, although not required, the learned trial judge did consider the evidence adduced before her.  She then found there was no evidence, pointing to any form of fraud against Taka. Our close examination of the evidence adduced before the trial court does not disclose anything contrary to what the learned trial judge found. If the trial judge was wrong, the onus was on HR Holdings as the appellant to demonstrate to our satisfaction how and where the learned trial judge fell into an identifiable error.  That it failed to do.  HR Holdings claims are therefore baseless and without merit. Accordingly, we dismiss its claim of fraud against Taka.

Constructive Fraud

35.	We now turn to a consideration of the claim of error of judgment by the learned trial judge in not using her findings against the ROC to cancel the registration of title to the property in favour of Taka.  This is in a nutshell, a claim of constructive fraud against Taka. Contrary to learned counsel for HR Holdings’ submissions, the relevant authorities on point are far from settled.  There are two lines of authorities or two schools of thought. One follows the unanimous decision of this Court in Mudge v. Secretary for Lands & Ors [1985] PNGLR 387, per Kidu CJ, Pratt and Wood JJ.  The other follows this Court’s majority decision of Amet and Salika JJ. (as they then were) with Brown J dissenting in Emas Estate Development Pty Ltd v. John Mea (supra).

36.	The case authorities that were put to the learned trial judge and the ones she considered, highlighted the two lines of authority.  These two lines of authorities or schools of thought was noted by this Court in its decision in PNG Deep Sea Fishing Ltd v Critten (2010) SC1126 (PNG Deep Sea Fishing) per the joint judgment of Kandakasi and Sawong JJ (as they then were) with Hartshorn J agreeing in this way at [19] – [20]:

“19.	There is a line of authority led by the decision of the Supreme Court in Emas Estate Development Pty Ltd v. John Mea & Ors … that says, failure to properly follow set procedures for the grant of a State Lease under the Lands Act and all other relevant and applying legislation can result in the nullification of the title. In the case cited, the majority, Amet and Salika JJ., (as they then were) with Brown J. dissenting, held that if a title has been forfeited or issued in circumstances that are so unsatisfactory, irregular or unlawful, that amounts to fraud, warranting the setting aside of registration of title.

20.	That decision widened the view taken in the earlier case of Mudge v. Secretary for Lands,… which stands for the proposition that, actual fraud, must be brought home to the person who eventually acquired the title. That follows the Torrens Title System, which provides for indefeasibility of title upon registration, regardless of how that came about. Only fraud or any of the exceptions listed under s.33 of the Land Registration Act can undo the indefeasibility of title.”

37.	The decision in PNG Deep Sea Fishing, then considered the subsequent decision of this Court in Koitachi Ltd v. Walter Schnaubelt (2007) SC870, per  Gavara-Nanu, Mogish, and Hartshorn, JJ., which reaffirmed the decision in  Mudge. The Court after carefully considering these authorities, noted the decision in Koitachi distinguished the decision in Emas by reference only to the difference in the facts, of forfeiture of title rather than the principles enunciated in that case. On the other hand, the Court noted that the decision in Emas, considered the same subject matter and went on to state:

“…if forfeiture and transfer of title takes place in circumstances that are so unsatisfactory, irregular or unlawful, that amounts to fraud then title ought to be upset.” 

38.	The Court thus opined that the principle enunciated in Emas which was wider than Mudge stands.  It then went on to mention decisions of the National Court which applied the wider view and held at [24]:

“In our view, sense can be made out of the decision in Mudge and Kotachi on the one side and Emas on the other. The decision in Mudge and Kotachi could work well with one complimenting the other. Where title in certain property has passed a number of hands and or a considerable period of time has passed and is hard to trace back what has happened, the need to bring fraud home to the eventual title holder is sensible and could apply. However, where title in a property has not passed hands or the circumstances leading to either grant or transfer of title can easily be traced and established, the requirement to bring fraud as determined by Mudge and Koitachi home to the eventual title holder may be inappropriate. The title holder knowing this position of the law may well have deliberately or by his conduct facilitated a breach or otherwise a failure to follow all relevant processes and requirements for a proper, fair, and transparent grant or transfer of title over State Leases, which may fall short of fraud as held by Mudge and Koitachi to gain from his own illegal, improper, unfair, and questionable conduct. This would no doubt run into conflict with well established principles of law which say that, no one can be permitted to gain from his or her own illegal conduct… Against such possibilities, Emas does make sense.
(Emphasis supplied)

39.	The Court went on further to hold at [25]:

“In our view, the principle enunciated in Emas is a necessary safe guard against the abuse of the process prescribed for the proper, fair, transparent and legal allocation of State Leases. In a jurisdiction like PNG where there is ready abused of legislatively prescribed process particularly over a much sought after resources like land, and other regulatory requirements for safety and well fare of the nation, the decision in Emas becomes very important. The situation in PNG is not the same as in England, Australia or elsewhere, where the state owns most of the land and there is a large supply of land. Also, unlike Australia and England, there is in PNG, a ready resort to abusing legislatively prescribed process particularly in relation to land as much as other important resources. Under Mudge, people who either deliberately or by their own conduct chose not to follow the proper process laid for applying for and being granted State Leases and eventual registration to gain from their own illegal and improper conduct or failures, which cannot be allowed. Hence it makes sense to qualify the application of the decision in Mudge and those following.”

40.	Later in Pius Tikili v. Home Base Real Estate Ltd (2017) SC1563, this Court comprising of Cannings, Yagi and Neill JJ., held:

“There is now a strong line of Supreme Court decisions that have substantially qualified the concept of indefeasibility of registered title set out Mudge v Secretary for Lands [1985] PNGLR 387. Cases such as 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 support the proposition that in many situations it will not be appropriate to insist on proof of actual fraud before the National Court considers cancelling the registered proprietor’s title. It will be sufficient if constructive or equitable fraud is proven. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.”

41.	The most recent decision in Timothy v. Timothy (2022) SC2282, per Batari, Logan and Anis JJ., demonstrates this divided line of authorities with the Court itself divided.  Batari and Logan JJ., opted for the Mudge line of authorities and Anis J opted for the Emas line of authorities. After considering the relevant cases on point, the majority opinion concluded at [47] – [49]:

“47.	Against this background of cases consistently decided at ultimate appellate level over the course of the 20th century in relation to the Torrens system of title by registration, the conclusion unanimously reached by this court in  Mudge  v The Secretary for Lands [1985] PNGLR 387 that, notwithstanding that a State lease issued under the Land Act may have been issued irregularly and in breach of the provisions of that Act, the resultant registration of an interest in that lease conferred indefeasibility in respect of that interest was, with respect, completely congruent and orthodox. The court adopted and applied Assets Co, Frazer v Walker and Breskvar v Wall in reaching that conclusion. Explicitly in the judgment of Pratt J and, by their application of these cases implicitly in the case of Kidu CJ and Woods J, the court also accepted that, in s 33 of the Land Registration Act, fraud meant actual fraud. Thus, Kidu CJ held (at 390):
‘Under legislation based on the ... [Torrens] system (in Australia and New Zealand) it is now settled law that, apart from the exceptions mentioned in the relevant legislation, once land is registered under the Torrens system the owner acquires an indefeasibility of title.’

To a like effect is this statement by Pratt J (at 397):

“The end result of all this is that even if I were to find in the appellants' favour that the lease was void because of serious irregularities concerning the way in which it was issued prior to registration, such registration, in the absence of fraud, achieves an immediate indefeasible title. I agree with the learned trial judge that “whilst the Court could have been of assistance to the plaintiff prior to the day of registration because of failure in issuing a lease to observe the provisions ... under the Land Act, but time had moved on”.

48.	It must follow that, as at Independence, and as at the time the Land Registration Act was enacted, the fraud exception to the indefeasibility otherwise conferred by registration did not mean constructive or equitable fraud. Parliament must be taken to have enacted the Land Registration Act against the background of settled authority as to the meaning of the fraud exception. For fraud to carry the meaning constructive or equitable fraud would have required a special definition of fraud in that Act. There is no such definition. The Land Registration Act is a conventional, Torrens title system statute.

49.	Mudge has been followed and applied by this court on numerous occasions: Keindip v The State of Papua New Guinea [1993] PNGLR 28; Timano v Timano [1993] PNGLR 334; Mamun Investments v Ponda [1995] PNGLR 1; Kiso v Otoa [2013] PGSC 3; SC1222; Paga No 36 Ltd v Eleadona [2018] PGSC 17; SC1671; Soto v Our Real Estate Ltd [2018] PGSC 55; SC1701. More than once, it has been stated that fraud for the purposes of s 33(1)(a) of the Land Registration Act means actual, not constructive, fraud. There are numerous examples of adherence to this view in the National Court, the most notable of which is Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178; N2603, in which Gavara-Nanu J offers a comprehensive survey of authority on the subject in this and other jurisdictions.

42.	Only the Supreme Court comprising of 5 members including the Chief Justice can in an appropriate case consider the conflicting decisions and resolve it.  The conflicting authorities referred to in the foregoing is an issue the Supreme Court will have to consider and determine in due course.  Until then, there are conflicting Supreme Court decisions.  The trial Judge was faced with the dilemma of determine which of the conflicting decisions or authorities she should follow.  Many trial judges have decided to go by the latest decision on point.  That proceeds on the basis that the latest decision overruled the earlier decision.  An example of a case in which that was done is the decision in State v. Gaunede (2005) N3049.  There, his honour, Gavara-Nanu J faced with conflicting Supreme Court decisions, decided to go by the latest of the decisions on point.  His honour reasoned:

“… in my respectful opinion, the latest Supreme Court decision in Brian Laki v. The State had the overruling effect on its earlier decision in Makalmangi v. The State. The reason being, the two decisions had discussed and decided the same issue. The Supreme Court had therefore by its deliberate decision in Brian Laki v. The State impliedly overruled its earlier decision in Makalmangi v. The State. Although Brian Laki v. The State made no express mention of Makalmangi v. The State, that is of no ‘consequence.’”
 
43.	In support of the position his Honour took, he adopted and applied the decision of Street J. (as he then was) in Ratcliffe v. Watters (1969) 89 WN (NSW) Part 1 497.  There, his Honour said at p. 505, said:

“It is part of the ordinary judicial process to examine and consider the effect of precedents. If, in substance, an earlier decision is overruled by a subsequent directly - conflicting decision then it is the subsequent decision that must be applied, notwithstanding that it does not in terms mention the earlier decision...” 

44.	Later in Eoe v. Maipakai (2013) N5066, Cannings J., decided to go by the later in time decision of the Supreme Court.   His Honour reasoned at [19]:

“When in doubt follow the most recent decision is a good rule of thumb for the National Court to adopt when dealing with conflicting Supreme Court authority.”

45.	At the same time, we note that, while it is settled law that by virtue of Schedule 2.9 (1) of the Constitution, the Supreme Court is not bound by its own decisions, this is not a license to readily depart from its earlier decisions or precedent. In the interest of providing certainty and consistency in the law for the society’s guidance and for the avoidance of chaos and disorder, the Court cannot readily and easily depart from its earlier decisions.  Hence, departures within a short space of time are undesirable and should not be encouraged. However, departures are permissible only in exceptional circumstances where, earlier decisions clearly misinterpreted, misconceived, mistook or misunderstood the law which requires correction, the law pronounced or stated in the earlier decisions are no longer appropriate and applicable to the current prevailing circumstances and needs of the country and as a matter of practice, the Chief Justice must be part of a Court comprising of 5 Judges which may decide to depart from an earlier decision: See  Aihi v. Isoaimo (2013) SC1276 at [23] - [27].

46.	The duty of counsel appearing before a trial judge in cases where there are conflicting decisions of the Supreme Court becomes more critical.  Counsel are duty bound to assist with well researched submissions as to which of the conflicting decisions a trial judge should adopt and apply or refer the conflicting decisions to the Supreme Court to resolve.  Where counsels appearing before a trial judge fail in their duty, it would be open to the trial judge decided which line of the conflicting authorities it should follow or refer the issue of conflicting authorities to the Supreme Court to resolved. 

47.	In the present case, counsel for the HR Holdings did not draw our attention as to where and how he assisted the learned trial judge to come to a decision on this point in his client’s favour. The record does not bear any witness to any assistance learned counsel may have provided to the learned trial judge on this point.  There is also no evidence or record of the parties requesting the learned trial judge to refer the conflicting authorities to the Supreme Court to resolve.  This we note was the case, because the learned counsel for HR Holdings took the view that the law was settled in terms of the Emas line of cases when that was not the case. In the absence of such assistance, the learned trial judge decided to go by the Mudge line of authorities.  As the learned trial judge reasoned in her decision, she came to that decision because the latest Supreme Court decisions on point at the time of hear decisions favoured that line of authorities and correctly represented the law. We thus find no error on the part of the learned trial judge when she decided to go by the Mudge line of authorities. 

48.	Nevertheless, if Emas line of authorities was and is the prevailing view, a plaintiff or a party wishing to succeed on that basis, needs to do more than just pleading and demonstrating a case of constructive fraud.  A plaintiff must plead and then produce credible evidence clearly establishing against a registered title holder conduct that is illegal, irregular, improper, or so unsatisfactory that amounts to bad faith and it is tantamount to fraud, warranting the setting aside of registration of title. The decision of this Court in PNG Bible Church Inc v. Mandi (2018) SC1724, citing the decisions in PNG Deep Sea Fishing and Pius Tikili v. Home Base Real Estate Ltd (supra) with approval is on point. There, the Court decided to nullify and a titled to a property that was registered in Mandi’s name on account of construct fraud.  As the Court reasoned this was because:

 “….the due process under the relevant provisions of the NHC Act and the Lands Act were not followed to have the NHC’s interest in the property extinguished. The NHC was yet to complete its process under its Act when the invalid gazettal came about and hijacked the process resulting in the property being granted to Mr. Mandi and title registered in his name. The National Court found him guilty of deceitful conduct when dealing with the NHC. At the relevant time he was a pastor employed by the Church and was for all practical purposes representing the interest of the Church. Then after he ceased to be an employee and pastor of the Church for reasons only known to Mr. Mandi himself and those who facilitated the transfer of the property to him used a process that was clearly contrary to the prescribed process to first extinguish the NHC and the Church’s interest in the property and secondly have the property and its titled transferred to Mr. Mandi. In these circumstances, we find that Mr. Mandi and those within the Lands Department who worked with him committed acts of fraud to enable him to secure the property and its title. Consequentially, we find the title secured and registered in the name of Carol Mandi to the property the subject of these proceeding is invalid and is of no force and effect.”

49.	In the case now before us, HR Holding pleaded with particulars no illegal, irregular, improper, or so unsatisfactory conduct amounting to bad faith that tantamount to fraud, warranting the setting aside of registration of title against Taka with particulars. HR Holdings, also failed to adduce any credible evidence establishing any such conduct against Taka. The pleadings and evidence concentrated against the ROC’s conduct. The learned trial judge correctly found against the ROC, which finding is not challenged at all. The learned trial judge correctly found Taka was not complicit to any of the ROC’s actions to warrant a cancellation of the title registered in his name.  As the learned trial judge correctly found, Taka was an innocent third-party purchaser of the property the subject of this proceeding.

50.	For the foregoing reasons, we find the appeal claiming error in the learned trial judge failing to cancel the title registered in Taka based on the ROC’s conduct is without any foundation in both fact and law and hence without any merit.  Accordingly, we dismiss the grounds of appeal raising this issue. 
	
Finding of Contract for Sale of Property

51.	This takes us to the remaining question of whether the learned trial judge erred in finding there was a contract of sale of the property of the consideration of K370,000.00?

52.	During our hearing of the appeal, it become so clear that HR Holding was so focused on having the title registered in favour of Taka cancelled.  It did not seriously consider the value of the learned trial judge’s decision to order the ROC to pay it K338,906.80. When the Court raised at the hearing, learned counsel for HR Holdings, conceded that was a good judgment and order.  

53.	The correctness, its reasonableness and value of the decision is obvious from this one fact.  HR Holdings through Olympic was prepared and indeed signed a contract of sale of the property to Taka for a consideration of K370,000.00.  In her decision, the learned trial judge allowed for the ROC’s commission for the transaction of K25,000.00 and expenses and she came to the amount of K338, 906.80.  Viewing the whole judgment from that point, HR Holding does not lose out.  All parties gained. HR Holdings gets the purchase price from Taka while, Taka gets the property he contracted to purchase from Olympic at the first place.  Except for the commission of K25,000.00 allowed for the ROC, the ROC gets nothing. That amount would have been paid in commission to real estate agents and or lawyers if this was an ordinary sale between HR Holdings and Olympic. 

54.	When pressed at the hearing of the appeal for HR Holdings to comment on the award, its counsel conceded that was a sound judgment.  Proceeding on that basis HR Holdings through its learned counsel asked the Court to order the current ROC to satisfy the judgement. We declined that request because that was not part of the appeal and the reliefs sought.

Decision and Orders

55.	For the foregoing reasons we find the judgment was reasonable having regard to all the parties conduct and the consequence that should follow logically and as a matter of law. Each of the grounds of appeal pleaded are without any basis and hence without merit. Accordingly, we would make the following orders:

(1)	Each of the grounds of appeal be dismissed as having no merit.
(2)	The Appeal be is dismissed.
(3)	The decision and orders of the National Court in CIA 7 of 2019 given on 18 September 2019 be affirmed. 
(4)	Costs be awarded to the First Respondent to be taxed, if not agreed.
 
56.	CANNINGS J: I have considered the draft judgment of Kandakasi DCJ and Dowa J and agree with the orders proposed by their Honours: to dismiss the appeal and affirm the decision and orders of the National Court and award costs of the appeal to the first respondent. 

57.	However, in my view it is not necessary to delve into the meaning of “fraud” in s 33 of the Land Registration Act in any detail other than to acknowledge that there are conflicting lines of authority. There are Supreme Court decisions that stand for the proposition that actual fraud must be proven, eg 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. Other Supreme Court decisions say it is sufficient to prove constructive fraud, eg Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215, PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126, Lae Bottling Industries Ltd v. Lae Rental Homes Ltd (2011) SC1120 and Toki v. Helai (2016) SC1588. 

58.	The question of which of those interpretations is correct and binding on the National Court can only be properly resolved in my view by a Supreme Court bench constituted by a number of Judges greater than the three-Judge benches that have constituted the Supreme Court in each of those cases. 

59.	This is not the best case to examine the requirements of the National Court Rules regarding pleading of fraud. This was not the usual sort of case in which a plaintiff was prosecuting a case of fraud, such as in proceedings commenced by writ of summons under Order 4 or a judicial review under Order 16 of the National Court Rules. 

60.	The proceeding from which this appeal arises, CIA No 7 of 2019, was itself an appeal under s 408(1) of the Companies Act from the decision of the Registrar of Companies (the second respondent), purporting to act under s 373(4) of the Companies Act, to sell the subject property to the first respondent. 

61.	The originating process in the National Court was a notice of appeal, which contained six grounds of appeal, lodged by the same appellant as the appeal now before the Supreme Court, H R Holdings Ltd. Those grounds of appeal focussed on alleged errors of law by the Registrar of Companies in selling the property to the first respondent. It was argued in the National Court that the Registrar of Companies’ conduct was “tantamount to fraud”. It was not argued as a ground of appeal in the National Court that the Registrar of Titles erred in issuing title to the first respondent. Nor was it argued that the first respondent was implicated in any constructive fraud that had occurred.

62.	The primary judge, Justice Thompson, whose judgment is reported as H R Holdings Ltd v Dianne Iki Taka, Alex Tongayu, former Registrar of Companies & Investment Promotion Authority (2019) N8004, dealt properly and completely with the grounds of appeal before her. 

63.	Her Honour upheld many of the arguments advanced in the grounds of appeal, including that:

•	the property was held on constructive trust by Olympic Stationery Ltd for the appellant since the sale and transfer of the property to the appellant in 2009;

•	the property did not vest in the Registrar of Companies on deregistration of Olympic Stationery Ltd in 2011;

•	the Registrar of Companies had no power to sell the property to the first respondent without the appellant’s consent (which was not given);

•	the Registrar of Companies breached the Companies Act and the Land Registration Act in selling the property to the first respondent.

64.	However, her Honour found that there was no evidence of complicity by the first respondent in the statutory breaches by the Registrar of Companies. Her Honour emphasised that there were no irregularities or fraud alleged or proven against the first respondent, and that in the absence of fraud by the first respondent, his indefeasible title as registered proprietor could not be set aside.

65.	I am unable to detect any error of law in her Honour’s reasoning or conclusions. Whether fraud is regarded as actual fraud or constructive fraud, there almost invariably has to be some involvement of the registered proprietor (in this case, the first respondent) in the fraud. Here, there was none.

66.	I would determine the 17 grounds of appeal as follows:

1.	The primary judge did not err in not declaring the Registrar of Companies’ decision to sell the property to the first respondent, null and void. There was nothing to be gained in making such a declaration. It was neither necessary nor desirable to make it.

2.	Her Honour did not err in holding that the evidence was insufficient to show that the statutory breaches in selling the property to the first respondent were sufficiently serious to warrant setting aside the first respondent’s title. The first respondent was not implicated in any fraud and without fraud being proven against him, there was no case for his title to be disturbed.

3.	Her Honour did not err in failing to find that constructive fraud was sufficient to overturn a registered title. 

4.	Her Honour did not err in failing to find that there was fraud committed by the registered proprietor, the first respondent.

5.	Her Honour did not err in failing to find that the failure to specify the consideration in the instrument of transfer was a serious breach of the Land Registration Act, in which the registered proprietor was implicated. The evidence before the National Court did not support such a finding. Her Honour acknowledged that there was a breach of the Act, and properly concluded that in all the circumstances it was inconsequential.

6.	Her Honour did not err in failing to find that the transfer instrument of 30 September 2016 was not in a registrable form. Her Honour acknowledged that there was a breach of the Act, and properly concluded that in all the circumstances it was inconsequential.

7.	Her Honour did not err in failing to find that the first respondent was guilty of a misrepresentation to the Registrar of Titles. Her Honour acknowledged that there was a breach of the Act, and properly concluded that in all the circumstances it was inconsequential. Furthermore, it was not alleged in the grounds of appeal before the National Court that there was any misrepresentation by the first respondent. This is a new issue introduced in the Supreme Court appeal, which was not raised in the National Court, and it should not now be entertained (Van Der Kreek v Van Der Kreek [1979] PNGLR 185, Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705). 

8.	Her Honour did not err in finding that there was no evidence of complicity by the first respondent in the statutory breaches committed by the second respondent.

9.	Her Honour did not err in finding that there were no irregularities or fraud pleaded or proven against the first respondent. The allegations of fraud (actual or constructive, it does not matter which) are being made now, in the Supreme Court. Such allegations were not included in the grounds of appeal in the National Court.

10.	Her Honour did not err in failing to ascribe fraud to the first respondent. There was evidence that the first respondent was shrewd and clever once he realised that the appellant was not (even though it thought or presumed it was) the registered proprietor. Her Honour correctly concluded that no fraud, actual or constructive, could be reasonably ascribed to the first respondent.

11.	Her Honour did not err in failing to find that the signing by the first respondent of a transfer instrument that did not specify the consideration and without ministerial approval amounted to a gross irregularity warranting setting aside the first respondent’s title.

12.	Her Honour did not err in holding that the lodgement of an instrument of transfer that did  not specify consideration was an offence under s 42 of the Land Registration Act. Her Honour simply stated the law. How can that be an error of law? The maximum penalty for the offence under s 42(4) is K200.00. This suggests that commission of the offence is hardly a gross irregularity evidencing a fraud that warrants setting aside title. 

13.	Her Honour did not err in finding that the appellant’s beneficial ownership of the property pursuant to a constructive trust is not sufficient to amount to a “prior instrument of title” within the meaning of s 33(1)(c) of the Land Registration Act. Only a flight of fancy could regard the equitable interest of the appellant as a prior instrument of title. This is a preposterous argument. 

14.	Her Honour’s decision was not contrary to the “preponderance of evidence” proving fraud. This is another frivolous argument.

15.	Her Honour did not err in failing to hold that registration of title one day prior to settlement was irregular, and warranted setting aside the first respondent’s title.

16.	Her Honour did not err in finding that there was no evidence that the property had been gifted to the first respondent. The evidence demonstrated that the first respondent paid a substantial sum for the property.

17.	 Honour did not err in finding that the contract of sale was not signed by the first respondent. If there were an error in that finding, there was sufficient evidence that the failure to sign was an oversight. It was not evidence of fraud.

67.	I note that amongst the orders of the primary judge was an order that the second respondent, the Registrar of Companies, pay the sum of K338,906.80 to the appellant. I find it baffling that the appellant would run an appeal against a decision of the National Court that included such an order.

68.	I repeat that I agree with and endorse the orders proposed by my learned colleagues. 

Final Decision and Orders of the Court

69.	For the foregoing reasons the decision and orders of the Court are as follows:

1.	Each of the grounds of appeal are dismissed as having no merit.

2.	The Appeal in its entirety is dismissed.

3.	The decision and orders of the National Court in CIA 7 of 2019 given on 18 September 2019 are affirmed. 

4.	Costs are awarded to the First Respondent to be taxed, if not agreed.

__________________________________________________________________
Yandeken Lawyers:   Lawyers for the Appellant 
Niuage Lawyers:       Lawyers for the First Respondent