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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS (JR) NO 342 OF 2008
KAPIURA TRADING LIMITED
Plaintiff
V
THOMAS BULLEN, ACTING CHAIRMAN, LAND BOARD
First Defendant
RAGA KAVANA, REGISTRAR OF TITLES
Second Defendant
PEPI KIMAS, SECRETARY,
DEPARTMENT OF LANDS & PHYSICAL PLANNING
Third Defendant
HON DR PUKA TEMU MP,
MINISTER FOR LANDS & PHYSICAL PLANNING
Fourth Defendant
HON DR ALLAN MARAT MP, ATTORNEY-GENERAL,
NOMINAL DEFENDANT FOR THE GOVERNOR-GENERAL
Fifth Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Sixth Defendant
HAMAMAS TRADING LIMITED
Seventh Defendant
Cannings J
Kimbe: 18 July 2012
Waigani: 29 November 2012
JUDICIAL REVIEW – decision of Head of State to uphold appeal against decision of Land Board to recommend grant of State Lease to plaintiff, Land Act 1996, Section 62
LAND – granting of State Leases – duty of Department Head to notify and publicise "successful applicant" – identity of successful applicant
NATURAL JUSTICE – appeals under Land Act, Section 62, against decisions of Land Board – whether a person recommended by the Land Board to be granted a State Lease must be notified of an appeal against the recommendation – whether a right to be heard as to merits of appeal – whether a right to be given reasons – principles of natural justice
LAND – State Leases – whether the Minister can grant a State Lease to a company that does not exist on the date of execution of the Lease
The plaintiff applied for a State Lease over land in a town in response to an advertisement. Its application, amongst others, was considered by the Land Board, which recommended that the lease be granted to it. An unsuccessful applicant (the seventh defendant) lodged an appeal with the Minister under Section 62 of the Land Act against the decision of the Land Board to recommend the grant of the State Lease to the plaintiff. The appeal was upheld and the Minister granted the State Lease to the seventh defendant. The plaintiff applied for judicial review of the decisions to uphold the appeal and to grant the State Lease to the seventh defendant on three grounds: (1) error of law constituted by failure of the Departmental Head (the third defendant) to notify the plaintiff and publish in the National Gazette that the plaintiff was the successful applicant as required by Sections 74 and 75 of the Land Act; (2) breach of natural justice constituted by failure of the Minister (the fourth defendant) and/or the Head of State (the fifth defendant) to notify the plaintiff that there was an appeal and to give the plaintiff an opportunity to be heard and to give reasons for upholding the appeal; and (3) error of law by the Minister in granting the State Lease as the seventh defendant, as at the date of granting the Lease, did not exist.
Held:
(1) The Departmental Head is obliged by Sections 74 and 75 of the Land Act to publish in the National Gazette the name of the successful applicant and to notify and forward a Letter of Grant to the successful applicant. "Successful applicant" in these sections refers to the person whose application has ultimately been successful after completion of the appeal process, which in this case was the seventh defendant. The first ground of review was dismissed.
(2) The existence of a statutory appeal procedure presupposes that it must comply with the principles of natural justice and accordingly: any person whose interests are likely to be affected by the appeal must be notified of the appeal and be given an opportunity to be heard and the persons managing and determining the appeal must act judicially, not arbitrarily, and rationally determine the grounds of appeal and give reasons for determination of the appeal that must be provided to all persons with a genuine interest in the matter (NCDIC v Crusoe [1993] PNGLR 139, Application of Moge Enga [1995] PNGLR 31 applied). Here, the plaintiff had a genuine interest in the appeal but was not notified of the appeal and all other requirements of natural justice were breached. The second ground of review was upheld.
(3) It is necessarily to be implied that the power conferred on the Minister by Section 65 of the Land Act to grant State Leases of government land in accordance with the Act is subject to the precondition that the lessee be a legal person, capable of holding an interest in land. Here, the lessee named in the grant (the seventh defendant) was not a legal person and did not exist on the date of grant. The third ground of review was upheld.
(4) As two grounds of review were upheld the determination of the appeal and the decision to grant the State Lease to the seventh defendant were susceptible to judicial review and it was appropriate as a matter of discretion for the court to declare that both the determination of the appeal and the decision to grant the State Lease to the seventh defendant were unlawful and null and void and of no effect, and further that, 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 and the court granted consequential relief to reflect that conclusion.
Cases cited
The following cases are cited in the judgment:
Application of Moge Enga [1995] PNGLR 31
Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110
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
Koitachi Ltd v Walter Schnaubelt (2007) SC870
Lae Rental Homes Ltd v Viviso Seravo (2003) N2483
Mision Asiki v Manasupe Zurenuoc (2005) SC797
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 Company Ltd v Garamut Enterprises Ltd (2000) N1959
The Papua Club Inc v Nusaum Holdings Ltd (No 2) (2004) N2603
Timothy Alex Aipa v Benjamin Samson, Deputy Registrar of Titles (2012) N4777
West New Britain Provincial Government v Pepi S Kimas, Secretary for Lands and Physical Planning (2009) N3834
William Wandaki v Minister for Lands [1996] PNGLR 116
Yakananda Business Group Inc v Minister for Lands (2001) N2159
Counsel
A Kanu, for the plaintiff
E N Suelip, for the seventh defendant
29 November, 2012
1. CANNINGS J: This is a ruling on an application for judicial review by the plaintiff Kapiura Trading Ltd ("Kapiura").
2. In 2006 Kapiura responded to a notice in the National Gazette advertising a block of government land in Kimbe, described as Section 10, Allotment 33, as available for lease. Its application, amongst others, was considered by the Land Board at its meeting at Kimbe in October 2006, which recommended to the fourth defendant the Minister for Lands and Physical Planning that the lease be granted to it. One of the unsuccessful applicants, the seventh defendant Hamamas Trading Ltd ("Hamamas"), lodged an appeal with the Minister under Section 62 of the Land Act 1996 against the decision of the Land Board to recommend the grant of the State Lease to Kapiura. The appeal was upheld by the authority given the power by Section 62(4) to determine such appeals: "the Head of State, acting on advice", which in practical terms means the Governor-General acting with and in accordance with the advice of the National Executive Council. Notice that the appeal had been upheld and that the lease would be granted to the appellant, Hamamas, was published in the National Gazette on 6 March 2008. The Minister granted a 99-year State Lease to Hamamas on 20 March 2008.
3. Kapiura applied for judicial review of the decisions to uphold the appeal and to grant the State Lease to Hamamas on 11 grounds (set out in paragraphs 10(a) to (k) of its statement under Order 16, Rule 3(2)(a) of the National Court Rules). However, the grounds are repetitious and one (set out in paragraph 3(k)) has not been pursued, and I consider that they can be boiled down to three:
(1) error of law constituted by failure of the third defendant the Secretary for Lands and Physical Planning to notify Kapiura and publish in the National Gazette that it was the successful applicant as required by Sections 74 and 75 of the Land Act (representing the grounds set out in paragraphs 10(a) and (b));
(2) breach of natural justice constituted by failure of the Minister and/or the Head of State to notify the plaintiff that there was an appeal and to give the plaintiff an opportunity to be heard and to give reasons for upholding the appeal (representing the grounds set out in paragraphs 10(c) to (g)); and
(3) error of law by the Minister in granting the State Lease as Hamamas, as at the date of granting the Lease, did not exist (representing the grounds set out in paragraphs 10(h) to (j)).
(1) ERROR OF LAW: LAND ACT, SECTIONS 74 AND 75
4. Kapiura was notified by the Land Board by a letter dated 1 November 2006 that the Board was recommending to the Minister that it be granted a State Lease. It argues that that was insufficient notice. The Secretary for Lands had a duty to publish its name in the National Gazette as the successful applicant and was also obliged to forward to it a Letter of Grant. However, the Secretary did neither of those things, giving rise to errors of law under Sections 74 (publication of names of successful applicants, etc., in the national gazette) and 75 (notice to successful applicants) of the Land Act, which state:
74. The Departmental Head shall publish in the National Gazette–
(a) the name of the successful applicant for each State Lease, together with particulars of the lands to be leased to him; and
(b) in respect of that State Lease and those lands–
(i) the name of the applicant considered the second-choice successful applicant; and
(ii) the name of the applicant considered the third-choice successful applicant,
to whom a Letter of Grant may be forwarded in accordance with Sections 75 and 79.
75. As soon as practicable after the publication of the notice under Section 74, the Departmental Head shall forward a Letter of Grant to each successful applicant (as specified in Section 74(a)) notifying him of–
(a) the date of the publication of the notice in the National Gazette; and
(b) the terms and conditions of the proposed lease; and
(c) details of all fees due, outstanding tender moneys and any other amounts payable in respect of the proposed lease; and
(d) the need to sign and return an accompanying Lease Acceptance Form to reach the Departmental Head within 28 days of the publication of the notice in the National Gazette, or such later date as is stated in the Letter of Grant, in order to accept the grant of the lease.
5. Kapiura's argument is misconceived. The term "successful applicant" in these provisions refers to the person whose application has ultimately been successful after completion of the appeal process, not the person recommended by the Land Board to be granted a State Lease. In many, presumably most, cases the person recommended by the Land Board and the person granted the State Lease will be the same. However, they might be different. The Minister might for good reason not adopt the Land Board's recommendation and decide to grant the Lease to another person. Or, as in the present case, a person not recommended by the Land Board might appeal under Section 62 of the Act and the appeal might be upheld and a decision made to grant the Lease to the appellant. I find no error of law by the Secretary for Lands in the manner contended for by Kapiura. This ground of review is dismissed.
(2) DENIAL OF NATURAL JUSTICE
6. Kapiura argues that it was denied natural justice as it was not notified that Hamamas had appealed and therefore had no opportunity to be heard on the merits of the appeal and was not provided with any reasons for upholding the appeal. Hamamas responds by pointing out that the Land Act imposes no such procedural requirements.
7. Hamamas is correct, to the extent that none of the procedures referred to by Kapiura is expressly prescribed by the Land Act, which simply provides for the right of appeal in Section 62 (appeals) in the following terms:
(1) A person aggrieved by a decision of the Land Board may, not later than 28 days after notice is forwarded under Section 58(10), forward a notice of appeal to the Minister.
(2) An appeal shall be accompanied by a deposit of K500.00, which shall, subject to Subsection (3), be refunded when the appeal has been decided.
(3) If the Head of State, acting on advice, thinks that the appeal has been made on frivolous grounds, the Head of State, acting on advice, may reject the appeal and direct that the whole or any portion of the deposit shall be forfeited to the State.
(4) Subject to Subsection (5), the Head of State, acting on advice, shall determine an appeal under this section, and his decision is final.
(5) Where an appeal under this Section is upheld, the Head of State, acting on advice, may refer the matter back to the Land Board for re-hearing.
8. The argument of Hamamas – that the absence of express provision in the Act for a person interested in an appeal to be given notice of the appeal means that such persons have no right to be notified – can be quickly disposed of. It is not necessary for an Act to expressly make provision for a right to be heard. Such a right will readily be implied. It is an integral part of the common law principles of natural justice that have been adopted as part of Papua New Guinea's underlying law that if a public authority exercising statutory powers proposes to make an administrative decision that will interfere with or remove a person's interests in property that decision is subject to the principles of natural justice (Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110, NCDIC v Crusoe Pty Ltd [1993] PNGLR 139). The decision-maker must before interfering with or removing the person's interests give that person notice of the proposed decision and a right to be heard and act in an impartial and unbiased manner (Timothy Alex Aipa v Benjamin Samson, Deputy Registrar of Titles (2012) N4777).
9. It might be argued that Kapiura had no interest in the land but that does not defeat the genuineness of its interest in the appeal and in the subsequent decision of the Minister to grant the Lease to Hamamas. The very existence of a statutory appeal procedure presupposes that it must comply with the principles of natural justice and accordingly:
10. These are minimum procedural requirements that will be implied in the absence of express provision to the contrary in any statutory appeal process especially where the appeal relates to land (NCDIC v Crusoe [1993] PNGLR 139, Application of Moge Enga [1995] PNGLR 31, William Wandaki v Minister for Lands [1996] PNGLR 116)).
11. Here, Kapiura had a genuine interest in the appeal but was not notified of the appeal. It had no idea of the grounds of the appeal and no opportunity to address the appeal authority on the merits of the appeal. No reasons were given for upholding the appeal or for the decision to grant the Lease to Hamamas. Reasons were vital in this case as Hamamas was not ranked in the top three applicants by the Land Board. Section 58(9) (meetings of the land board, reports, etc) of the Land Act provides:
In respect of each application the Land Board shall recommend–
(a) the applicant to whom, in the opinion of the Land Board, the State Lease should be granted; and
(b) the applicant who, in the opinion of the Land Board, is the second-choice successful applicant; and
(c) the applicant who, in the opinion of the Land Board, is the third-choice successful applicant,
and where the Land Board, in making a recommendation in any case, considers that two or more applicants are of equal merit, it may decide the matter by ballot and shall report on the ballot to the Minister within 14 days.
12. The record of the Land Board meeting shows that Kapiura was the applicant to whom in the opinion of the Board the State Lease should be granted. The second choice was Titus Muramul and the third choice was Lars Investment Ltd.
13. It is clear that the determination of the appeal and the decision of the Minister to grant the Lease to Hamamas breached the principles of natural justice. The second ground of review is upheld.
(3) GRANT OF LEASE TO NON-ENTITY
14. The Minister granted the State Lease to "Hamamas Trading Ltd" on 20 March 2008. There is uncontroverted evidence before the Court that on that date no company of that name was in existence. "Hamamas Trading" had been registered by Momase Business Services Ltd as a business name under the Business Names Act but its registration had expired on 8 January 2008 and it was not renewed until 2 May 2008. Momase Business Services Ltd, which was incorporated on 19 July 1991, changed its name to Hamamas Trading Ltd on 21 May 2008. Kapiura's argument is that the Minister erred in law by granting the lease to a legal non-entity.
15. I uphold the argument. It is necessarily to be implied that the power conferred on the Minister by Section 65 of the Land Act to grant State Leases of government land in accordance with the Act is subject to the precondition that the lessee be a legal person, capable of holding an interest in land. Here, the lessee named in the grant was not a legal person and did not exist on the date of grant. The fact that a company that did exist on 20 March 2008 later changed its name to the name shown as the grantee of the State Lease does not neutralise the error of law that occurred. The third ground of review is upheld.
WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?
16. An application for judicial review proceeds in two stages. First the plaintiff must establish good grounds for judicial review. Secondly if one or more grounds are established the plaintiff must make a case for a remedy, which is a matter of discretion (Mision Asiki v Manasupe Zurenuoc (2005) SC797, Dale Christopher Smith v Minister for Lands (2009) SC973).
17. Here two grounds of review have been established: denial of natural justice and error of law. Each amounts to an excess of jurisdiction on the part of the Minister, which has had a serious effect on Kapiura's legitimate expectation that it be granted the State Lease. By its notice of motion filed on 5 November 2008 Kapiura seeks 20 declarations and orders, including an order in the nature of mandamus requiring the Minister to forfeit the lease granted to Hamamas and to grant the lease to Kapiura.
18. Hamamas responds by arguing that Kapiura has been guilty of undue delay in prosecuting the application for judicial review and should be denied all relief. It also points out that it is now the registered proprietor of the land and it has developed the land in accordance with the five-year improvement covenant in the Lease and that the land is now worth more than K2 million.
19. As to the issue of delay I am not convinced that the delay of four years in having this matter heard is attributable to Kapiura; so delay is ruled out as a reason for refusing relief. As to the fact, it seems, that Hamamas has developed the land and is apparently operating a supermarket on it, Kapiura's response is to point to an order of the National Court (per Paliau AJ) on 17 September 2008 which restrains Hamamas from developing the land until the final determination of these proceedings, and to contend that Hamamas is in contempt of court. I will not at this stage determine the latter contention as the Court's immediate task is to determine how the application for judicial review should be resolved and in particular how to deal with the fact that Hamamas is the registered proprietor.
20. The principle of indefeasibility of title must be considered. 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). The question 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.
21. I addressed the meaning of "fraud" in other Kimbe cases, Elizabeth Kanari v Augustine Wiakar (2009) N3589 and West New Britain Provincial Government v Pepi S Kimas, Secretary for Lands and Physical Planning (2009) N3834, 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 grant, forfeiture or transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title. 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.
22. On the other hand, a narrower view was 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.
23. I consider, as I concluded in both the Kimbe cases referred to above, that the wide view should be followed and that the way in which decisions were made in favour of Hamamas Trading Ltd constituted a fraud on the statute. Determination of the appeal was in violation of the principles of natural justice and the Minister's decision to grant the Lease to a legal non-entity was irregular and unlawful. The circumstances in which the Lease was granted and 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. I will make declarations and orders to correct the errors of law that have been made.
24. Not all relief sought by Kapiura will be granted. It is not appropriate to make an order in the nature of mandamus that would require the Minister to grant the Lease to Kapiura, as that would amount to putting the Court in the shoes of the Minister. The most appropriate relief would be to set aside the appeal and its determination and the grant of the Lease and to reinstate the Land Board's recommendation in favour of Kapiura. As to the status of the order of 17 September 2008 which, by my reckoning, would appear to restrain Hamamas from developing the land and operating a business on it, and what immediate consequences flow from the orders now being made, this is best made the subject of further argument, and the parties will be at liberty to apply for appropriate orders by way of notice of motion.
ORDER
(1) The application for judicial review is granted.
(2) The decision of the fifth defendant published in the National Gazette on 6 March 2008 determining the appeal regarding Section 10, Allotment 33, Kimbe in favour of the seventh defendant is quashed and is declared null and void.
(3) The decision of the fourth defendant to grant a State Lease over Section 10, Allotment 33, Kimbe on 20 March 2008 to the seventh defendant is declared null and void and is quashed.
(4) The State Lease granted over Section 10, Allotment 33, Kimbe on 20 March 2008 to the seventh defendant is declared null and void and is quashed.
(5) The seventh defendant and any other person with possession or control of the official copy of the State Lease over Section 10, Allotment 33, Kimbe shall within 14 days after the date of this order return it 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 Section 10, Allotment 33, Kimbe to the seventh defendant, stating that the State Lease is forfeited by order of the National Court at Waigani in OS (JR) No 342 of 2008 on 29 November 2012; 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 Registrar of the National Court at Waigani and to each of the other parties to these proceedings.
(7) The Registrar of Titles shall within seven 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 Minister for Lands and Physical Planning shall within 28 days after publication of the notice of forfeiture in the National Gazette deal with the recommendation made after Meeting No 9 of 2006 at Kimbe of the Land Board regarding Section 10, Allotment 33, Kimbe.
(9) Other relief sought in the plaintiff's notice of motion filed on 5 November 2008 is refused.
(10) Any claims by any of the parties for consequential relief, including variation or dissolution of the restraining order of 17 September 2008, shall be made by notice of motion.
(11) Costs of these proceedings shall be paid by the seventh defendant to the plaintiff on a party-party basis, to be taxed if not agreed.
(12) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.
Judgment accordingly.
______________________________________________
Warner Shand Lawyers: Lawyers for the Plaintiff
Mirupasi Lawyers: Lawyers for the Seventh Defendant
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