Keindip v The State [1993] PNGLR 28 (29 June 1992)

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[1993] PNGLR 28 - Keimbun Keindip v The State; Hugo Berghuser, Minister for Lands & Physical Planning; and Paul Bengo, Secretary, Department of Lands & Physical Planning

REAL PROPERTY - Torrens system - Indefeasibility of title - Leasehold property - Land Registration Act.

A lease was issued and registered. Later, the Department of Lands subdivided the land and, without forfeiting the lease, granted new leases over the same land. Only one of the new leases was registered.

1. The decision of the Supreme Court in Mudge v Secretary for Lands [1985] PNGLR 387 that registration of title gives indefeasibility of title is followed.

2. Applying Mudge v Secretary for Lands together with Miller v Davy (1889) 7 NZLR 515 and Russell v Registrar-General of Land (1906) 26 NZLR 1223, any later title registered over the whole or part of land for which an earlier title had been registered, and which had not been forfeited, gave the claimant a possible claim against the Assurance Fund under the provisions of the Land Registration Act Ch 191, subject to any negligence by the claimant in not making proper search of the title.

3. Obiter: the subsequent unregistered lessee might have a claim against the registered lessee or the State for an award from the Assurance Fund.

NEWELL AJ: On 5 March 1981 the plaintiff was granted a business lease in respect of allotment 2, section 5, Wasu Government Station, containing an area of 0.1462 hectares. A state lease was granted under volume 91 folio 145. The plaintiff built a trade store on the land and traded until 1984. After that, the building was used for storage purposes. It was stated in evidence that the brother of the plaintiff rented the building and used it as the base for an ice block business. The evidence was rather vague with respect to what usage the land had after 1984.

In 1985, the land was subdivided into allotments 16, 17 and 18, section 5, Wasu Government Station. The plaintiff said in evidence that he was not aware of this occurring, despite there having been a survey, and with relatives supposedly using the land. The plaintiff in 1989 found that the sixth defendant was building a shop on allotment 17, and he refused to stop building when requested by the plaintiff as he thought that he had the title. The manager of the seventh defendant was advised by the plaintiff not to build on allotment 16, and he did not. The land was allotted by notice in the National Gazette, and the plaintiff was allotted allotment 18, though he never made any formal application.

There is no notice of a forfeiture by the Minister under s 46 of the Land Act Ch 185, nor does the plaintiff recall being served with any notice that the Minister intended forfeiting allotment 2, section 5.

There was, according to the plaintiff, never any formal gazettal of the entitlement of the sixth defendant to the land, nor did the sixth defendant ever get a title document. The plaintiff states that a search of the title still shows that he is the sole owner of the title to the land. This appears to show a defect in the computer system used by the Department of Lands, which appears not to formally remove old descriptions of land and up-date them.

The plaintiff submits that he complied with the improvement conditions of the lease and there is no ground for any forfeiture of the lease. He contends that, as he had no notice of any attempt to forfeit the land, any attempt at sub-division of the land was improper and that any title given to the sixth and seventh defendants was improper and should be revoked.

It is alleged that the sixth defendant has irregularly built his shop across the boundary between allotments 17 and 18.

The plaintiff says that he made various approaches to the Lands Department in Lae, but there was no satisfactory resolution of the dispute. It is not clear if the Registrar of Titles was informed at all of the dispute, or whether he has been informed yet. I note that he is not named as a defendant in these proceedings.

The plaintiff argues that Mudge v Secretary for Lands [1985] PNGLR 387 (hereafter Mudge) is a clear statement of the principles of indefeasible title under the Land Registration Act Ch 191 and that, following that decision, I must find in his favour. If I do not find in his favour as to title, he argues that I should award compensation pursuant to ss 84, 87 and 88 of the Land Act Ch 185, together with his costs.

The State contends that, pursuant to s 33 of the Land Registration Act Ch 191, the plaintiff holds an indefeasible title unless one of the clauses in s 33(1) applies, and that the decision in Mudge is a clear statement of indefeasibility, but indefeasibility is subject to s 33. Both the plaintiff and the State agree that the decision in Mudge is different from the facts in this case.

The State concedes that it cannot contest the indefeasibility of this title, and this prevails over the title of the seventh defendant. It also concedes that the sixth defendant has no legal interest in the land.

1. a declaration that the plaintiff is the registered proprietor of the land known and described as allotment 2, section 5, Wasu Government Station, Morobe Province, containing an area of 0.1462 hectares;

2. a declaration that the purported sub-division of the land by the State and its agents and/or servants, first, second, and third defendants into three new allotments, namely allotments 16, 17 and 18, section 5, Town of Wasu, be declared null, illegal, void and of no effect;

3. a declaration that the re-allocation and grant of the new allotment described as allotment 16, section 5, Wasu Government Station, by the Morobe Provincial Land Board and by the agents and/or servants of the third defendant to the Wasu Kabwum Coffee Mill Pty Ltd be declared null, void and of no effect; and

4. a declaration that the grant of allotment 17 to Furewe Isep be declared null, void and of no effect.

The State also contends that, if the sixth and seventh defendants wish to make any claim in the matter against the State, they should bring fresh proceedings.

The sixth and seventh defendants claim that the orders claimed by the plaintiff must fail, but they concede that an order for costs may be made against the first to the fifth defendants. They appear to be making a submission in equity that they have acted in good faith in their dealings with the State and that, on the balance of convenience, the orders should not be granted.

In essence, they argue that the plaintiff's use and occupation of the land is such that compensation for the plaintiff is the appropriate course that should be taken in dealing with this matter.

The seventh defendant says that the decision in Mudge is distinguishable and that, as he holds the title latest in time, the prior registration in favour of the plaintiff cannot go unchallenged. He claims his title gets the benefit of indefeasibility, as none of the exceptions apply to it.

The sixth defendant says that, as a matter of public policy, his rights in the land must be acknowledged and that, as he has encroached on the adjoining allotment, he should be given title to that as well.

In effect, the sixth and seventh defendants contend that they have acted in all good faith and that the plaintiff, by his conduct in managing the land, should be held to have lost his title and merely be given an award of compensation for his loss.

The lease of allotment 2, section 5, Wasu Government Station, to the plaintiff was issued on 14 November 1984 as State Lease Volume 91 Folio 145. The seventh defendant's lawyer enquired about the status of the land in a letter to the Department of Lands dated 7 April 1987. The lawyer acted in the belief that the purchase was from customary landowners. (That lawyer represents the plaintiff in this action, a conflict not brought to my attention during the trial of this matter.)

A lease over allotment 16, section 5, Town of Wasu, was issued to the seventh defendant on 28 February 1989 as State Lease Volume 116 Folio 48. It covered part of the land in the plaintiff's existing lease. There is nothing in the correspondence in any affidavits in the Court file to indicate that before this lease was issued the plaintiff was aware of any lease being considered, nor is there any indication that the lawyer for the plaintiff was aware from requisitions (as lawyer for the seventh defendant) that the proposed lease was over land owned under another lease that had not been forfeited.

There are, in fact, discrepancies between the area and allotments shown in the two titles.

Allotments 16,17 and 18 amount to 0.1991 hectares. Allotment 2 amounts to 0.1462 hectares. It also is apparent that allotment 16 includes part of allotment 5, section 1, as per the plan on State Lease Volume 91 Folio 145.

The sixth and seventh defendants may have title to parts of the land they claim regardless of my decision in this matter, as it is apparent that parts of what was allocated to them are not part of allotment 2, section 5. The plan attached to annexure E on the affidavit of the plaintiff, dated 15 October 1991, appears to indicate that the boundary on the lease to the seventh defendant is incorrect.

My decision is based on the understanding that allotment 2, section 5, Wasu, is virtually the same location as allotments 16, 17 and 18, section 5, Wasu.

In this matter, we have the result of sloppy practice by the State, but with the State admitting that it has caused the problem. The plaintiff, the sixth defendant, and the seventh defendant suffer due to this problem.

Whilst I can see that in equity there might be an argument for the contention of the seventh defendant that a person with a later title should have better title than a person with an earlier title, I cannot see how in equity it can be argued that a person with an unregistered title could be given title to land on which he has encroached, though in equity there may be some argument in his favour in respect of title to the land he was granted, even though a title has not issued.

1. registration of leases under the provisions of the Land Registration Act Ch 191 is effective to vest an indefeasible title in the registered proprietor, subject to the exceptions enumerated in s 33 - adopting and applying Breskvar v Wall (1971) 126 CLR 376 and the decision of the Privy Council in Frazer v Walker [1967] 1 AC 569; and

2. an irregularly issued State Lease in breach of the Land Act Ch No 185 registered under the Land Registration Act will confer an indefeasible title.

The facts in this matter are different. There are two titles apparently partly issued over the same block of land. The original title that would be held to be indefeasible when applying the decision in Mudge is still extant, but this land was sub-divided, apparently without the plaintiff's knowledge, and a further title issued over part of the sub-division, and two unregistered titles issued over the remainder of the land that was part of the original title.

What I must determine in this matter is whether the second registered title also has indefeasibility and prevails, as to part, over the original title.

Pratt J in Mudge at p 395 notes that, "A divergence of views developed between Australia and New Zealand as to whether there was immediate indefeasibility on registration or whether such indefeasibility was deferred". He followed Street J in Mayer v Coe [1968] 2 NSWR 747 in preferring the view of the Privy Council in Frazer v Walker. He notes at p 396 that before the appeal in Mayer v Cole could be dealt with, the High Court in Breskvar v Wall "departed from the general interpretation which had heretofore been given to the decision Clements v Ellis" [1934] HCA 18; (1934) 51 CLR 217 and "accepted the reasoning and conclusion of the Privy Council in Frazer v Walker".

These cases give no assistance to the parties in this matter, except so far as they state that the position on indefeasibility of title in Papua New Guinea is the same as is now the situation in New Zealand and Australia. It should be noted, incidentally that one apparent reason that New Zealand and Australia now have the same situation as Papua New Guinea is that Sir Garfield Barwick sat on both the High Court and Privy Council for their decisions that indefeasibility of title takes effect on registration.

Russell v Registrar-General of Land (1906) 26 NZLR 1223 is a case very much on point. It and the even more apposite decision of Richmond J in Miller v Davy (1889) 7 NZLR 515, neither of which, I may add, were cited by the parties, deal with two titles registered over the same block of land under the Torrens title system. In Russell v Registrar-General of Land, we are dealing with a decision of the New Zealand Court of Appeal. A person had received title to land under the Torrens system, part of which had been already granted under the system to another person. Despite his not having searched the title to ascertain the true picture, the Court determined that he was entitled to be paid out from the assurance fund. In Miller v Davy, the parallel with the matter before me was even more marked. The Registrar-General of Land registered two titles over the same block of land, and a finding was made against the Registrar-General of Land. Unlike in Russell v Registrar-General of Land, it was decided that there was contributory negligence of the second party in not searching the register. I do not consider it is for me in this decision to determine whether contributory negligence occurred, or whether there should be any payout to any person from the State or under the Assurance Fund. That is a matter for a separate action by the sixth and seventh defendants.

The two New Zealand decisions of Russell v Registrar-General of Land and Miller v Davy determine that the registered title of the original holder of the land is not affected by any later title issued over the same land. Mudge states that title is not obtained until it is registered. As Barwick CJ says in Breskvar v Wall at p 385: "The Torrens system of registered title ... is not a system of registration of title but a system of title by registration". In this decision, I am building on Mudge by extending the indefeasibility principle forward beyond the date of registration, a situation that is supported by Russell v Registrar-General of Land and Miller v Davy. Mudge decides that indefeasibility of title subsists from the date of registration for so long as the title has not been removed from the Register of Lands. Russell v Registrar-General of Land and Miller v Davy add the condition that, if a later title is issued over the whole or part of land held under a registered title, the earlier title is not affected, and the registration of a later title may, subject to any negligence by the purchaser, lead to a claim on the Assurance Fund. The determination of any question relating to negligence by the later purchaser, or failure by the Registrar of Titles to take prompt action to rectify the error, which may affect the liability of the Assurance Fund, is, as I rule above, a matter for seperate proceedings by the sixth and seventh defendants.

With respect to any claim by an un-registered lessee, he has no title superior to that of the plaintiff by reason of the decision in Mudge. However, he may still have a claim against the State under the provisions of the Land Act, again subject to any negligence on his part. Negligence is possible in this matter as the plaintiff says that, in 1989, he found that the sixth defendant was building a shop on the land, but the sixth defendant refused to stop building when requested by the plaintiff as he thought that he had title (allotment 17). Because much land is acquired from the State without recourse to independent professional advice from a lawyer, the negligence attributable to a purchaser may vary between whether a lawyer is involved or not.

Perhaps the State should advise all purchasers to get professional legal assistance when purchasing land from it, if what has happened in this matter has occurred before in other matters. Even though it may not be the duty of the Department of Lands and Physical Planning to give such advise, the Minister responsible for consumer protection may need to provide such advice in view of what has occurred in this matter, and the subsequent actions of the sixth defendant.

If there were any suggestion of negligence by the law firm which appears to have acted for the seventh defendant in its purchase from the State (and I do not consider it is for me to make any such finding one way or the other), and if on further investigation there appears to be grounds for such an action, I draw to the attention of the sixth and seventh defendants the decision in Luxmoore - May v Baverstock [1990] 1 WLR 1009. This decision appears to suggest that there is a differential duty of care between a firm of lawyers in a small town and one in the National Capital. Could it be, if there were, in fact, any professional negligence that the firm acting for the seventh defendant in Lae did not owe as much of a duty of care to its client as a firm based in the National Capital, which was able to search the original Lands Department files in Waigani? Or were the original files available in 1987 in Lae? Even if they were, were they searchable by a private law firm?

The plaintiff has by registration of title got an indefeasible title, even if there were defects prior to issue, as in Mudge, or defects after issue, e.g. non-compliance with the improvement covenants. Unless the title were first forfeited, he cannot lose his title.

The plaintiff has the legal title to the land, as conceded by the State, and any later grant cannot prevail against this grant. If there has been a failure to properly follow up alleged breaches of the Land Act by the plaintiff, then this is not a matter that can be taken advantage of by the sixth and seventh defendants. However, the sixth and seventh defendants may have claims against the State, and the seventh defendant may have a claim against the Assurance Fund under the Land Registration Act.

I award costs to the plaintiff and to the sixth and seventh defendants against the State, to be taxed if not agreed. Whilst I agree that the sixth and seventh defendants are not in this decision entitled to any order in respect of any entitlement to an award in their favour under the Assurance Fund, or otherwise, the State concedes that it has made a mistake, and I consider that, in exercising my discretion with respect to costs, I should award them their costs.

I recommend that the State should consider whether it should concede any claim to compensation that may be justifiably due in equity or law to the sixth and seventh defendants, and I recommend that the Registrar of Titles should consider whether any payment out of the Assurance Fund to the seventh defendant is applicable. In addition, the sixth and seventh defendants should, if they had a lawyer acting for them in the grant of the leases to them, consider whether they have any claim against that lawyer for not carrying out proper searches on title. The evidence before me appears to indicate that a search of the Lands Department records at Waigani, and perhaps at Lae, should have indicated that the State did not have disposable title to the land. A detailed search of the Lands Department records and Fourmil or Milinch noting maps should have picked up the fact that the earlier title held by the plaintiff had not been forfeited. It may, of course, be that the Lands Department is not giving all lawyers such access to their records as would pick up this error. If this is the situation, then I consider that such access should be given to lawyers. I am not saying that the Department should make available records of purchases from customary land owners, as in the past unlimited access to records of purchases of customary land has, to my knowledge, given rise to unnecessary claims. But they should, if they are not doing so at present, give access to files relating to dealings, subject to any undertakings as to non-disclosure as they feel should be given by lawyers. A lawyer with conveyancing experience, with access to relevant Lands Department files, noting maps, and plans should have picked up the error before the Land Board made its decision.

Even if there is no negligence by the lawyers for the sixth and seventh defendants when they were purchasing the land (and I make no finding one way or the other on this), what occurred in this matter is a warning to lawyers engaged in conveyancing to look behind the title given to them by the State to ensure that the State has a title it can give. Mere reliance on written advice from the department may not be sufficient.

Many large firms employ search clerks to check Lands Department records. What has happened in this matter may indicate that the Law Society should provide instruction to search clerks and lawyers on what can and cannot be searched at the Department of Lands and other government bodies. For instance, the correspondence files on companies held by the Registrar of Companies are not available for search except by government lawyers prosecuting breaches, but may be available if obtained with approval of the court by a summons issued under O 11 div 1 of the National Court Rules or the corresponding rules in the Criminal Practice Rules.

I would recommend that the Law Society produce professional conduct rules in relation to non-contentious practice matters, as I find that the Professional Conduct Rules 1989, aside from general guidelines applicable to all lawyers, or particular rules for lawyers appearing in court, give no guidance on such matters as conveyancing practice. They do give guidance on such detail as what a lawyer should wear in court. Surely conveyancing practice also should be subject to detailed professional conduct rules for non-contentious work or, alternatively, the Law Society might from time to time, in consultation with the Registrar for Lands and the Department of Lands and Physical Planning, lay down rules for the guidance of lawyers engaged in conveyancing, including what searches can be made of Lands Department records.

The government should, I suggest, consider whether recent developments in the Department of Lands and Physical Planning can prevent the recurrence of what has happened in this matter, or whether there is need of a more fundamental review of the procedures of that department by a person or persons from outside of that department. This should include whether the Registry of Lands should be separated from the department and headed by a lawyer assisted by qualified draftsmen. The State has conceded the error in this case. However, an internal inquiry should, I suggest, be carried out into this matter by the Solicitor-General to determine what went wrong and what action should be taken to ensure that it does not occur again. In addition, it may be necessary for the Department of Lands and Physical Planning to examine all subdivisions of land made in the last five years to ensure that no other land has been subdivided without the knowledge of the registered proprietor.

1. the plaintiff is the registered proprietor of the land known and described as allotment 2, section 5, Wasu Government Station, Morobe Province, containing an area of 0.1462 hectares, and that the State Lease, Volume 91 Folio 145, gives title to Kimbun Keindip in that land; and

2. the purported subdivision of the said land by the State and by its agents and/or servants, the first, second, and the third defendants into three (3) new allotments, namely allotments 16, 17, and 18, section 5, Town of Wasu, is null, illegal, void, and of no effect; and

3. the re-allocation and grant of the new allotment described as allotment 16, section 5, Wasu Government Station, by the Morobe Provincial Land Board by the agents and/or servants of the third defendant to the Wasu Kabwum Coffee Mill Pty Ltd is null, void, and of no effect; and

1. costs be awarded to the plaintiff against the first defendant, to be taxed if not agreed; and

2. costs be awarded to the sixth and seventh defendants against the first defendant, to be taxed if not agreed.

There are a number of matters relating to the practice of this Court that need to be raised, and I raise these now in light of the decision of Sakora AJ in Novau v Mark [1992] PNGLR 229, even though no objection to these errors appears to have been taken at any time by either counsel for the defendants. I raise them so that in future the parties and the Assistant Registrar may have guidance. All references are to the National Court Rules. I note these matters at this stage, though I assume that when the matter was adjourned or when the Chief Justice gave leave for judicial review, these matters were brought to the attention of the plaintiff and the Assistant Registrar.

The originating summons does not specify the occupation of the plaintiff as required by Form 6 (originating summons), as per O 4 r 26.

The statement in support is signed in the name of the firm, whereas O 2 r 30 requires that a statement shall be signed by a lawyer.

There is no requirement that an originating summons be signed by any person or firm. It is not a pleading, but an originating process. Only pleadings are required to be signed; so a writ of summons is not signed. Only the statement of claim is signed.

The statement in support is almost in proper form but wrongly entitled as "Application for Leave for an Application for Judicial Review". It should read "Statement in Support of an Application for Judicial Review".

The "Application for Leave for an Application for Judicial Review" fails to give a description of the applicant (plaintiff) as required by O 16 r 3(2)(a).

The pages on the annexures to the affidavit verifying the "Application for Leave for an Application for Judicial Review" are not properly marked to show the number of pages that make up the annexures.

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Papua New Guinea Law Reports

Keindip v The State [1993] PNGLR 28 (29 June 1992)

PNG Law Reports 1993