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National Court of Papua New Guinea |
PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE
OS (JR) NO 88 OF 2008
WEST NEW BRITAIN PROVINCIAL GOVERNMENT
Plaintiff
V
PEPI S KIMAS, SECRETARY,
DEPARTMENT OF LANDS AND PHYSICAL PLANNING
First Defendant
FRANCIS TANGA, CHAIRMAN, LAND BOARD, & MEMBERS OF THE LAND BOARD
Second Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant
QUNQING TRADING LTD
Fourth Defendant
Kimbe: Cannings J
2009: 25 June, 30 December
LAND – State Leases – certificate authorising occupancy – licence to occupy – exemption of land from advertisement – indefeasibility of title.
LAND – State Leases – exemption of land from advertisement – Land Act, Section 69 – circumstances in which land can be exempted from advertisement – Section 69(2)(d): where the State has agreed to provide land – manner of making, executing, evidencing an agreement by the State.
LAND – State Leases – principle of indefeasibility of title – exceptions under Land Registration Act – Section 33(1)(a: in the case of fraud – meaning of fraud.
The Secretary for Lands granted a 99-year State Lease to a company over land in a provincial capital. The provincial government was aggrieved by the Secretary's decision and other decisions leading up to it and sought judicial review of those decisions on various grounds including error of law (constituted by breaches of the Land Act), breach of the principles of natural justice, abuse of power and fraud. The company argued that none of the grounds of review had merit but even if they had merit the company now has indefeasible title to the land subject only to actual fraud, which the plaintiff has not proved.
Held:
(1) Notice must be given by notice in the National Gazette of all Government land available for leasing unless the land has been exempted from advertisement.
(2) The Minister may only exempt land from advertisement in one of the circumstances prescribed by Section 69(2) of the Land Act.
(3) If Section 69(2)(d) is relied on ("where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking"), there must be evidence of an agreement by the State executed or entered into by an authorised person on behalf of the State.
(4) A decision to grant a State Lease over land that has been unlawfully exempted from advertisement is affected by error of law and is unlawful.
(5) In the present case the land was unlawfully exempted from advertisement and therefore the decision to grant the State Lease over it to the fourth defendant was unlawful.
(6) Given the circumstances in which the State Lease was unlawfully granted it was a case of fraud for the purposes of Section 33(1)(a) of the Land Registration Act. The granting and registration of the Lease were ineffective at law and should not be allowed to stand.
(7) Declarations and orders made accordingly.
Cases cited
The following cases are cited in the judgment:
Dale Christopher Smith v Minister for Lands (2009) SC973
Elizabeth Kanari v Augustine Wiakar (2009) N3589
Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215
Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80
Isaac Lupari v Sir Michael Somare (2008) N3476
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Rental Homes Ltd v Viviso Seravo (2003) N2483
Mudge v Secretary for Lands [1985] PNGLR 387
NCDIC v Crusoe Pty Ltd [1993] PNGLR 139
Ramu Nickel Ltd v Temu (2007) N3252
Steamships Trading Co Ltd v Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603
Yakananda Business Group Inc v Minister for Lands (2001) N2159
Counsel
R Bradshaw, for the plaintiff
Z Gelu, for the 4th defendant
30 December, 2009
1. CANNINGS J: There is a vacant block of land in the centre of Kimbe, the capital of West New Britain Province, which has become the subject of considerable controversy. Allotment 3, Section 31 is half a hectare in area and located adjacent to the provincial government headquarters, across the road from the town market.
2. On 14 December 2006 the Secretary for Lands, the first defendant Mr Pepi S Kimas, a delegate of the Minister for Lands, granted a 99-year State Lease over the land to Qunqing Trading Ltd, the fourth defendant, for business/commercial purposes. The West New Britain Provincial Government is aggrieved by the Secretary's decision to grant the State Lease. It says that proper procedures were not followed, that the land was zoned for public institutional, not business or commercial, purposes, that fraud was involved, that it was not consulted and that preferential treatment was given to a foreign company.
3. The provincial government has been granted leave to seek judicial review of the Secretary's decision to grant the State Lease and some other decisions leading up to it. This is a trial of the substantive application for judicial review.
HISTORY OF ALLOTMENT 3, SECTION 31, KIMBE
1993
4. On 25 October 1993 a delegate of the Minister for Lands issued a certificate authorising occupancy of the land to the Department of Lands and Physical Planning. It was commonly understood that the Provincial Lands Office wished to occupy the land. However, the land remained vacant.
2000
5. On 2 February 2000 the provincial administrator requested that the land be transferred to the Kimbe Urban Local-level Government for the purposes of a new council chambers but nothing came of the request.
2004
6. On 28 October 2004 Qunqing Trading Ltd expressed interest in acquiring the land for a supermarket. The company had been incorporated on 18 September 2003. Its sole shareholder and director is Wei Qun Lin, also known as Roger Lim and Roger Lin, a Chinese national aged in his 30s. Mr Lin runs a mini-supermarket at Nahavio, 10 km from Kimbe. In a letter to the Deputy Secretary of the Department of Lands and Physical Planning he said he was having difficulty with landowners and had been threatened with eviction so he said he needed to urgently find suitable land in town and relocate his business.
7. On 12 November 2004 Deputy Secretary Romily Kila Pat, a delegate of the Minister, executed a licence in favour of the company authorising it to enter upon and occupy the land for the purpose of "temporary occupancy to do feasibility studies for business (commercial) purposes". The fee was K360.00.
8. On the same day, 12 November 2004, the company applied for a Business (Commercial) State Lease over the land and paid the fee of K100.00. The proposed purpose was stated as:
Improvements will include duplex costing over K500,000.00. Full fencing, footpath and other related surroundings.
9. On 18 November 2004 the Provincial Lands Adviser, Ben Madiu, wrote a letter in support of the company's proposal, which he said was to invest K500,000.00 and build a two-storey office complex.
10. On 26 November 2004 Mr Pat wrote a minute to Mr Kimas, advising him to revoke the certificate of occupancy and exempt the land from public advertisement. Mr Kimas acted immediately on that advice by executing two instruments that day, 26 November 2004. One was a 'revocation of setting aside', which revoked the certificate of occupancy. The other was a notice under the Land Act, which stated:
NOTICE UNDER SECTION 69(2)(d)
I, PEPI S KIMAS, a delegate of the Minister for Lands & Physical Planning by virtue of the powers conferred in by Section 69(2)(d) of the Land Act 1996 and other powers me enabling under this division notwithstanding that the land has not been offered for lease by tender. [sic]
The special reason attached to this decision is that the land is required by Qun Qing Trading Limited for Business (Commercial) purposes. The applicant urgently requires a State Land to relocate their existing business activities, which currently exists on a customary. [sic]
The land has been exempted from advertisement, hence 60% of the unimproved value as being the tender price shall be charged on the successful applicant. [sic]
SCHEDULE
All that piece of land described as Allotment 3, Section 31, Kimbe – West New Britain Province.
That notice was not published in the National Gazette.
2005
11. On 28 April 2005 the revocation of the certificate of occupancy was published in the National Gazette.
12. On 15 September 2005 a notice was published in the National Gazette that the application for a State Lease over the land by "Linquing Trading Ltd" [sic] would be an additional item for consideration by the PNG Land Board at its meeting on 27-28 September 2005.
13. On 27-28 September 2005 the Land Board considered the application by Qunqing Trading Ltd and recommended that it be granted a State Lease over the land for business/commercial purposes.
14. On 24 November 2005 Mr Kimas published a notice in the National Gazette stating that "Linquing Trading Ltd" [sic] was the successful applicant for a State Lease over the land.
15. During 2005 Qunqing Trading Ltd made three unsuccessful applications to the National Physical Planning Board to have zoning of the land changed from public institutional to commercial.
2006
16. On 5 July 2006 Qunqing Trading Ltd appealed against the refusal of its rezoning applications to the National Physical Planning Appeals Tribunal.
17. On 20 September 2006 the Minister for Lands & Physical Planning, Dr Puka Temu, acting on the recommendation of the Appeals Tribunal, upheld the appeal by changing the zoning to allow commercial use of the land.
18. On 12 December 2006 Qunqing Trading Ltd paid K39,600.00 to the Department of Lands & Physical Planning, being the tender price for the State Lease.
19. On 14 December 2006 Qunqing Trading Ltd was granted a 99-year State Lease over the land with effect from 24 November 2005, which is subject to the following main conditions:
(a) The lease shall be used bona fide for business/commercial purposes.
(b) Rent shall be K3,300.00 pa for the first ten years and then reassessed every ten years.
(c) Improvements being buildings for business/commercial purposes to a minimum value of K500,000.00 shall be erected within five years of the date of grant of the lease.
(d) The lessee shall not enter into any agreement to sell, lease or sub-lease the land prior to complying with the improvement conditions.
20. On 15 December 2006 the Deputy Registrar of Titles registered the State Lease in the Register of State Leases as Volume 16, Folio 210.
2007
21. In May 2007 Qunqing Trading Ltd applied to the Provincial Planning Board for approval to build a shop on the land.
22. On 27 June 2007 the Minister's ruling of 20 September 2006 on the rezoning appeal was published in the National Gazette.
2008
23. On 17 January 2008 the Provincial Planning Board issued a building permit to Qunqing Trading Ltd to build a shop.
24. On 29 January 2008 the Provincial Government filed its application for leave to seek judicial review of the decisions concerning the land.
25. On 17 March 2008 the National Court (Injia DCJ) granted leave for judicial review.
26. On 8 April 2008 the National Court (Davani J) ordered that no work be undertaken on the land pending determination of the substantive proceedings.
DECISIONS BEING REVIEWED AND RELIEF SOUGHT
27. The plaintiff's statement under Order 16, Rule 3(2)(a) of the National Court Rules – the document which is supposed to concisely state the decisions to be reviewed, the grounds on which the plaintiff relies and the relief being sought – is prolix. Nine grounds of judicial review are propounded but each one is divided into sub-grounds, which add up to 46 grounds. Many of them are repetitious or overlap. It would be a tedious and tortuous process to determine each one of them. I do not propose to do that.
28. Likewise the actual decisions the subject of review could have been more clearly described. Some decisions appear to be under challenge in the Order 16, Rule 3(2)(a) statement but insufficient attention has been paid to them in submissions to warrant judicial determination of the issues alluded to. In that category are the Deputy Secretary's decision of 12 November 2004 to execute a licence in favour of Qunqing Trading Ltd, the Land Board's decision of 27-28 September 2005 to recommend to the Minister that Qunqing Trading Ltd be granted a State Lease over the land and the Minister's decision of 20 September 2006 to rezone the land. I will not determine whether any errors of law were made in those decisions.
29. Instead I will focus on three decisions of the Secretary for Lands that the Provincial Government is clearly arguing were affected by error and unlawful:
30. The Provincial Government wants all of those decisions quashed and Qunqing Trading Ltd ordered to surrender its Lease and the Registrar of Titles ordered to cancel the Lease.
ISSUES
31. The issues necessary for determination boil down to these:
32. Mr Kimas explained the status of certificates of occupancy in his affidavit. They do not vest any registrable interest under the Land Act. They are an administrative convenience. In any event the certificate of occupancy was in favour of the Department of Lands & Physical Planning, not in favour of the Provincial Government. I find no error in the decision to revoke the certificate.
33. This is the critical issue. It requires consideration of the law on granting State Leases in Part X (State Leases) of the Land Act 1996. Key features are:
(a) where the lease is granted to a governmental body for a public purpose; or
(b) where it is necessary to relocate persons displaced as a result of a disaster as defined in the Disaster Management Act (Chapter 403); or
(c) where a lessee applies for a further lease; or
(d) where the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking [the circumstance relied on in the present case]; or
(e) where the land applied for adjoins land owned by the applicant and is required to bring the holding up to a more workable unit, providing that the claims of other neighbouring landowners are considered and their views taken into account in deciding whether to exempt the land from advertisement in favour of the applicant; or
(f) where the Department responsible for foreign affairs recommends that land be made available to the applicant for consular premises; or
(g) where the land is required for the resettlement of refugees; or
(h) where the applicant has funded the acquisition of the land from customary landowners in order to acquire a State lease over it; or
(i) where a lease is to be granted under Section 99 or 102; or
(j) where a new lease is granted under Section 110, 130 or Section 131.
34. In the present case Mr Kimas, a delegate of the Minister, exempted the land from advertisement under Section 69(2)(d) which requires that "the State has agreed to provide land for the establishment or expansion of a business, project, or other undertaking".
35. Did the State agree? Mr Gelu for Qunqing Trading Ltd submits that yes, the State agreed, as Mr Kimas, being the Secretary for Lands and an agent of the State, agreed. Mr Kimas considered that the land should be provided for establishment of a business or undertaking. Qunqing Trading Ltd was faced with eviction from its existing place of business, which was detrimental to the economic well being of the company and its employees, so Mr Kimas agreed, on behalf of the State, to exempt the land from advertisement in order to enhance the purposes of the Land Act.
36. I find no merit in that submission. Section 69(2)(d) requires that "the State" has agreed to provide land. Not "the Minister" or "the Departmental Head" or the "Land Board" or "a delegate of the Minister". Agreements are usually executed for and on behalf of the State by the Governor-General, acting with and in accordance with the advice of the National Executive Council (see, for example, the Public Finances (Management) Act 1995, Section 47, which deals with execution of agreements on behalf of the State). As the Land Act is silent on how an agreement by the State to provide land should be made, executed or evidenced I think the usual practice regarding agreements by the State should apply. The Governor-General, as personal representative of the Queen and Head of State under Section 82(2) (Queen and Head of State) of the Constitution, should sign the agreement acting with and in accordance with the advice of the National Executive Council. And there should be an instrument – a memorandum of agreement – which records the terms of the agreement. This instrument should be separate and distinct from the notice of the agreement.
37. I do not see any reason that Section 69(2)(d) should be read down to allow an agreement on the part of the State to be executed by any person or authority other than the Governor-General. Mr Gelu submits that such an interpretation would be impractical and defeat the purpose of the Land Act, which is to make "land available to citizens for economic development so that they may share in the economic progress of Papua New Guinea".
38. Apart from the ironic twist in that submission (Qunqing Trading Ltd is a foreign enterprise and its sole shareholder and director is a non-citizen) the real difficulty I have with it lies in the argument that giving the words "the State has agreed" a strict interpretation would defeat the purpose of the Act. It can be seen from the other paragraphs in Section 69(2) that the Minister's power to exempt land from advertisement is meant to be tightly controlled, subject to strict limits and available to be used only in special circumstances. The policy behind similar provisions in the former Land Act Chapter No 185 (repealed and replaced by the Land Act 1996) was explained by Brunton J in NCDIC v Crusoe Pty Ltd [1993] PNGLR 139:
The public policy behind an open tendering system is important. Open tendering ensures that the State receives a price which is a reflection of the market. ... Public tendering generates competition, not only in the market, but in ideas. It cultivates innovation, invention, new ideas, and change. It is in the public interest that business, commerce, and bureaucracy, be encouraged to develop. The opposite of competition is monopoly, oligopoly, and autocracy. Under those conditions, change is inhibited.
39. Sheehan J addressed the importance of advertising lands available for leasing in Steamships Trading Co Ltd v Garamut Enterprises Ltd (2000) N1959:
The content and directives of the Act plainly demonstrate that the intention and purpose of the Act is to provide an open transparent system of access to State lands, and an orderly and fair process of disposition of those lands by the Minister on behalf of the State. Citizens, given due and adequate notice as to the availability of State land, are able to compete on an equal footing with one another by public open tender for a State Lease.
40. Only in the special circumstances prescribed by Section 69(2) does the Minister have the power to exempt land from advertisement. So it makes sense, and it advances – not defeats – the purpose of the Land Act to give Section 69(2)(d) a strict or narrow interpretation rather than the broad one contended for by Mr Gelu.
41. Upholding Mr Gelu's submission would see the Secretary for Lands able to freely do what he did in this case: see a company or any business in trouble (a foreign enterprise at that) and decide almost on a whim that the land should be exempt from advertisement so that it can be granted to the company. This is a very dangerous scenario indeed. It would leave senior public officials such as the Secretary for Lands exposed to the risk of being offered favours, kick-backs, bribes or other forms of lubricating agreements on behalf of the State.
42. Another problem with what happened in this case is that although the instrument signed by Mr Kimas was expressed to be an exemption under Section 69(2)(d) it did not use the words of that provision to describe how and why the land was exempt. The justification for the exemption was stated as:
The special reason attached to this decision is that the land is required by Qun Qing Trading Limited for Business (Commercial) purposes. The applicant urgently requires a State Land to relocate their existing business activities, which currently exists on a customary. [sic]
43. No mention was made of the State agreeing to provide land. The instrument did not say, as it should have if Section 69(2)(d) was to be anywhere near approaching a lawful basis for the exemption, that "the State has agreed to provide land for the establishment ... of a business, project or other undertaking". The instrument did not say that Mr Kimas or the Minister or anyone agreed to provide land or agreed to provide or do anything. It referred to a "special reason attached to this decision". This is a confusing and irrelevant statement as Section 69(2)(d) does not allow the Minister to exempt land from advertisement if a special reason can be attached to the decision.
44. There are other typographical and grammatical errors that render the instrument virtually meaningless. It bears all the hallmarks of being cobbled together by a non-lawyer rather than a precisely expressed instrument couched in the terms of the enabling legislation drafted by a lawyer in the State Solicitor's Office or Office of Legislative Counsel (from where important documents evidencing an agreement on the part of the State should, I suggest, emanate).
45. I conclude that there were two errors of law in the decision to exempt the land from advertisement. First, the Secretary for Lands purported to agree on behalf of the State to provide land to a company when he had no power to do so. Secondly, on its terms the instrument of exemption was a nullity. It did not represent a valid exercise of power under the Land Act.
46. As the land was exempted from advertisement without any proper legal basis the decision of the Secretary to grant a State Lease to Qunqing Trading Ltd was also made without any proper legal basis and was wrong in law.
47. It is now time to consider the consequences of the finding that the decision to grant the exemption from advertisement and therefore the decision to grant the lease were affected by error of law. It does not necessarily follow that the court will make the declarations and orders sought by the plaintiffs, for two reasons.
48. First, as in any judicial review the court's determination of the review proceeds in two stages: (a) determining whether the plaintiff has proven one or more grounds of review and if it has (b) deciding as a matter of discretion what remedy, if any, should be granted (Dale Christopher Smith v Minister for Lands (2009) SC973; Isaac Lupari v Sir Michael Somare (2008) N3476).
49. Secondly, the principle of indefeasibility of title must be considered. Qunqing Trading Ltd was granted a State Lease which was registered on 15 December 2006. It thereupon became and still is the registered proprietor of Allotment 3, Section 31. Under Papua New Guinea's Torrens Title system of land registration for alienated government land registration of a lease vests an indefeasible (unforfeitable) title in the registered proprietor subject only to the exceptions in Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387).
50. The question therefore arises whether any of those exceptions apply. The only exception that might apply in this case is Section 33(1)(a): in the case of fraud.
51. I addressed the meaning of "fraud" in a recent Kimbe case, Elizabeth Kanari v Augustine Wiakar (2009) N3589 and noted that there are two schools of judicial thought. On the one hand, in Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215 the Supreme Court (Amet J and Salika J, Brown J dissenting) held that if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.
52. In that case the registered proprietor of a State lease had his lease forfeited in dubious circumstances. The Minister for Lands then exempted the land from public advertisement and a new lease was granted to another person. This all happened in a short space of time while there was an appeal pending against the Minister's decision to grant the lease to a new lessor. Amet J, as he then was, said:
The issues in this case raise for consideration the principle of indefeasibility of title under the Torrens land registration system that hitherto has been applied in this jurisdiction. I do not believe that the system is necessarily appropriate in circumstances such as this, where an individual landowner is deprived of his title to land by irregular procedures on the part of officials and of the department of the State, to the advantage of a private corporation. I do not accept that quite clear irregularities and breaches of the statutory provisions should remain indefeasible. I believe that, although these irregularities and illegalities might not strictly amount to fraud, they should nevertheless, still be good grounds for invalidating subsequent registration, which should not be allowed to stand. To not do so would be harsh and oppressive against the innocent individual leaseholder ...
53. This wide view of "fraud" – it includes irregularities that are tantamount to fraud and constructive fraud – has been followed in the National Court decisions of Sheehan J in Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959, Sevua J in Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80 and Injia DCJ in Ramu Nickel Ltd v Temu (2007) N3252. The view that the National Court has an important role in its judicial review jurisdiction of correcting errors of law made in connection with State Leases is supported by the decisions of Sevua J in Yakananda Business Group Inc v Minister for Lands (2001) N2159 and of Kirriwom J in Lae Rental Homes Ltd v Viviso Seravo (2003) N2483.
54. On the other hand, a narrower view was recently favoured by the Supreme Court (Gavara-Nanu J, Mogish J and Hartshorn J) in Koitachi Ltd v Walter Schnaubelt (2007) SC870. The Court held that the Emas Estate case was distinguishable on its facts as it concerned a registered proprietor whose State Lease was forfeited and then allocated and registered in the name of a third party. As to the Garamut case, that was said to concern a challenge to the issue of a State Lease on the grounds that procedures in the Land Act were not complied with. The Court adopted the view of fraud taken in the National Court decision of Gavara-Nanu J in The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603, where his Honour stated:
The word 'fraud' in Section 33(1)(a) of the Land Registration Act, is not defined anywhere in the Act, but Section 45(1) makes it clear that fraud means more than constructive or equitable fraud. ...
It is implicit from these provisions that "fraud" ... means fraud committed by the registered proprietor or actual fraud. That is the only ground upon which a registered proprietor's title can be rendered invalid.
55. Which of the two views of fraud should be applied in the present case? The wide view pioneered by the Supreme Court in Emas Estate and followed in Garamut, Hi-Lift and Ramu Nickel? Or the narrow view propounded by the Supreme Court in Koitachi?
56. Mr Bradshaw for the Provincial Government submits that the wide view should be followed and that the way in which decisions were made in favour of Qunqing Trading Ltd constituted a fraud on the statute so Section 33(1)(a) of the Land Registration Act should be invoked to cancel the lease.
57. Mr Gelu for Qunqing Trading Ltd submits that the narrow view should prevail. He suggests that Emas Estate and the cases that followed it were wrongly decided because the Judges interpreted the law in a way that they thought it ought to be interpreted rather than just applying the law as it is. He suggests that if the court continues to take that approach it will infringe on the independence of Parliament and encroach on the separation of powers which is one of the foundations of our democracy. He urges the court to insist on the strict meaning of fraud, which means it is incumbent on the plaintiff to prove actual fraud by Qunqing Trading Ltd: prove by hard evidence that bribes were paid or sweetheart deals were done behind closed doors. There is no such evidence in this case, Mr Gelu submits, so the title that Qunqing Trading Ltd has obtained must be left undisturbed.
58. This is a bold submission but it is fundamentally flawed as Section 33(1)(a) of the Land Act does not say that actual fraud must be proven. Nor does it say anything about who must be proven guilty of fraud. Section 33(1)(a) is an inherently ambiguous provision so the Judges in the Emas Estate case, like the Judges in all the other National Court and Supreme Court cases that have grappled with this issue, have set about the task of interpreting it by applying conventional principles of statutory interpretation. In Emas Estate the Court looked at the policy and purpose of the Land Act. It considered the importance of the principle of indefeasibility but also recognised that in PNG we are facing special challenges brought about by a comparatively low level of compliance with land laws. Our public officials are exposed to the temptations of corrupt practices to a greater degree than in many other jurisdictions that have a Torrens Title system of land registration. So the Court arrived at an interpretation that it considered was appropriate and applicable to the modern day circumstances of the country. This was not an affront to the Parliament or an undermining of the doctrine of separation of powers. If the Parliament was aggrieved by the Supreme Court's interpretation of the law it could have amended the legislation. But 16 years have passed and no amendment has been made so the inference can be drawn that the Parliament agrees with the decision in Emas Estate. Besides that, it is a decision of the Supreme Court. Unless it has been overturned by a subsequent Supreme Court decision I am bound by Schedule 2.9(1) of the Constitution – even if I were inclined to accept Mr Gelu's submission – sitting as a Judge of the National Court, to follow it.
59. In that regard it must be observed that in the Koitachi case the Supreme Court did not seek to overturn or expressly disapprove of the view taken by the majority in Emas Estate, or by the National Court in Garamut, preferring instead to confine those cases to their facts. The decision in Emas Estate must therefore still be regarded as good law.
60. There are, however, competing interpretations to be placed on Section 33(1)(a). It may well be that the best way to bring more certainty into its practical application is for the issue to be the subject of full argument before a five-member Supreme Court bench. Until that happens, I think the best thing for the National Court to do is follow the Supreme Court decision that is based on facts which bear the closest similarity to the facts before the National Court.
61. In Koitachi the dispute arose between two different parties who claimed to have purchased the land from a vendor. One of the purchasers lodged a caveat on the title to the property. The Registrar of Titles cancelled the caveat and registered the transfer to the other purchaser. The purchaser who had his caveat cancelled then applied to the National Court by way of judicial review for registration of the transfer to be set aside and for his caveat to be reinstated. He succeeded in the National Court but the other purchaser won the appeal in the Supreme Court. It was in that context that the Supreme Court took the narrow view of fraud and decided that actual fraud had neither been pleaded nor proven.
62. I consider that the facts in Emas Estate are more akin to those of the present case: there were obvious irregularities and breaches of statutory procedures of the sort that were found to exist in the subsequent National Court cases of Garamut, Hi-Lift and Ramu Nickel. I consider that the view of fraud I should apply in the present case is the view of the Supreme Court in Emas Estate: if the circumstances of a forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting side of registration of title. The corollary is that if the circumstances of a granting of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting side of registration of title.
63. I now revert to what I concluded earlier. The Secretary's decision of 26 November 2004 to exempt the land from advertisement had no proper legal basis. It was irregular and unlawful. That erroneous decision infected every subsequent decision made under the Land Act and the Land Registration Act concerning the land, including, especially, the decision to grant a State Lease to Qunqing Trading Ltd and the decision to register the Lease. The circumstances in which it was registered are so unsatisfactory, dubious and irregular as to be tantamount to fraud. Actual fraud has not been proven but I am satisfied that there is constructive fraud. Therefore it is a "case of fraud" for the purposes of Section 33(1)(a) of the Land Registration Act. It follows that the granting and registration of the Lease is ineffective at law and should not be allowed to stand.
64. I will therefore as a matter of discretion make declarations and orders to correct the errors of law that have been made.
COSTS
65. The usual practice is that the Court orders that the losing party pay the costs of the successful party. This case has not been defended by the first three defendants. It has only been defended by the fourth defendant, Qunqing Trading Ltd, which is the losing party. I see no reason that the usual practice should not apply. Qunqing Trading Ltd will pay the plaintiff's costs.
ORDER
(1) The application for judicial review is granted.
(2) The decision of the Secretary for Lands dated 26 November 2004 to exempt Allotment 3, Section 31, Kimbe, from advertisement is declared null and void and is quashed.
(3) The decision of the Secretary for Lands to grant a State Lease over Allotment 3, Section 31, Kimbe on 14 December 2006 to Qunqing Trading Ltd is declared null and void and is quashed.
(4) The State Lease granted over Allotment 3, Section 31, Kimbe to Qunqing Trading Ltd dated 14 December 2006 is declared null and void and is quashed.
(5) Qunqing Trading Ltd shall within 14 days return its official copy of the State Lease over Allotment 3, Section 31, Kimbe to the Secretary for Lands.
(6) The Secretary for Lands, as a delegate of the Minister, shall within 21 days after the date of this order:
(a) execute a notice of forfeiture of the State Lease granted over Allotment 3, Section 31, Kimbe to Qunqing Trading Ltd, stating that the State Lease is forfeited by order of the National Court at Kimbe in OS (JR) No 88 of 2008 on 30 December 2009; and
(b) publish the notice of forfeiture in the National Gazette; and
(c) forward the notice of forfeiture to the Registrar of Titles; and
(d) forward a certified copy of the notice of forfeiture to the Assistant Registrar of the National Court at Kimbe.
(7) The Registrar of Titles shall within 7 days after receiving the notice of forfeiture amend the Register of State Leases and all other records of the State under his control to reflect forfeiture of the State Lease and all the orders of the Court.
(8) The Secretary for Lands shall within 14 days after amendment of the Register of State Leases cause to be refunded to Qunqing Trading Ltd the tender price it paid to the State less any reasonable expenses and costs incurred by the State in dealing with the matter.
(9) Costs of these proceedings shall be paid by Qunqing Trading Ltd to the West New Britain Provincial Government on a party-party basis, to be taxed if not agreed.
(10) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.
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Bradshaw Lawyers: Lawyers for the Plaintiff
Patterson Lawyers: Lawyers for the Fourth Defendant
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URL: http://www.paclii.org/pg/cases/PGNC/2009/256.html