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Raina No.1 Ltd v Elisha [2015] PGNC 158; N6051 (21 August 2015)

N6051

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO 560 OF 2009

BETWEEN

RAINA NO. 1 LIMITED
Plaintiff

AND

NAOMI ELISHA
First Defendant

AND

MR. RAGA KAVANA AS REGISTRAR OF TITLES
Second Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Makail, J
2013: 09th October &
2015: 21st August

JUDICIAL REVIEW – Review of series of actions of Registrar of Titles – Issuance of notice to cancel caveat on State lease – Issuance of summons to produce owner's copy of title deed – Grounds of – Actions arbitrary and harsh – Denial of natural justice – Failure to give reasons – Unreasonableness of exercise of power – Constitution – Sections 41 & 59 – Sections 89 & 160 – Land Registration Act, Ch 191.

JUDICIAL REVIEW – Exercise of statutory power – Cancellation of caveat –Summons to produce owner's copy of title deed – Right to be heard and given reasons – Whether duty to accord right of hearing and reasons expressed or implied – Constitution – Sections 41 & 59 – Sections 89 & 160 – Land Registration Act, Ch 191.

LAND LAW – State leases – Caveat on State lease – Summons to produce owner's copy of title deed – Sections 89 & 160 – Land Registration Act, Ch 191.

Facts
This is an application for judicial review of a series of actions of the second defendant (the Registrar of Titles) concerning a property described as State Lease Volume 31 Folio 139 being Allotment 92 Section 449 Hohola in the National Capital District. They are firstly the issuance of a notice of intention to cancel within seven (7) days the Caveat No. S.52691 registered over the property dated 15th September 2009 pursuant to Section 89(2) of the Land Registration Act, Ch 191 and secondly, issuance of a summons in a letter dated 21st September 2009 to the plaintiff to produce owner's copy of the title deed for the property pursuant to Section 160(1) of the Land Registration Act, Ch 191. The plaintiff as the aggrieved party alleges, amongst other things, that the second defendant acted arbitrarily and without proper reasons contrary to Sections 89(1) and 160(2) of the Land Registration Act, Ch 191. It further alleges that the actions are unreasonable under the Wednesbury principle of unreasonableness. It seeks orders to firstly declare the actions of the second defendant null and void and secondly, certiorari to quash them. It seeks a further order that the second defendant be permanently restrained from further exercising his powers under Sections 89(2) and 160(1) of the Land Registration Act, Ch 191 and finally, an order in the nature of mandamus to compel the defendants to facilitate and give effect to a contract of sale between the plaintiff and the first defendant.

Held:
1. A caveat is defined as a warning: an entry made in the books of the offices of a registry or court to prevent a certain step being taken without previous notice to the person entering the caveat.

2. There is no expressed duty in Section 89 of the Land Registration Act, Ch 191 for the Registrar to give a caveator a right of hearing before he cancels a caveat. Neither can it be implied under the principles of natural justice under Section 59 of the Constitution.

3. The only expressed duty imposed on the Registrar is to serve a notice on the caveator at least seven (7) days before cancelling it. There is no dispute that the second defendant served a notice pursuant to the letter dated 15th September 2009 on the plaintiff and in that respect, he has discharged that duty: Section 89(2) of the Land Registration Act, Ch 191.

4. Implicit in the duty to notify the caveator is also a duty to give reasons. In this case, the second defendant gave reasons for cancelling the caveat. The reason is set out in the letter to the plaintiff dated 15th September 2009 and the reason is clear, proper and satisfactory.

5. In Section 160 of the Land Registration Act, Ch 191, there is no expressed or implied duty imposed on the Registrar to accord a party in possession of the Transfer Instrument or title deed a right of hearing before he issues a summons for the production of the document.

6. Further, there is no expressed duty imposed on the Registrar to give reasons for issuing a summons for the production of the document. However, given that a party's estate or interest in the property may be adversely prejudiced by the summons, the duty to give reasons can be implied under the principles of natural justice under Section 59 of the Constitution. In this case, the second defendant gave reasons for issuing the summons and it is set out in the letter to the plaintiff dated 21st September 2009.

7. Notwithstanding the implied duty to give reasons, under Section 160(2) of the Land Registration Act, Ch 191, the second defendant has the option of applying to the Court to issue a summons for the caveator to appear before the Court and show cause why the title deed should not be delivered up. This is when the plaintiff is accorded the right to be heard and its reasons for not delivering up the title deed.

8. The grounds of review are either misconceived or not proven and the plaintiff is not entitled to the relief sought.

9. The application for judicial review is dismissed.

10. The plaintiff shall pay the costs of the proceeding, to be taxed, if not agreed.

Cases cited:
Steamships Trading Co Limited v. Garamut Enterprises Limited & Ors (2000) N1959
Robert Kittika v. Raga Kavana & Ors (2010) N4051
Koitachi Ltd v. Walter Schnaubelt (2007) SC 870

Other Reference & Texts:
Osborn's Concise Law Dictionary, 9th ed, (2001) London, Sweet & Maxwell, A Thompson Company

Counsel:
Mr D Mel, for Plaintiff
Mr T Tape, for First Defendant
Ms I Mugugia, for Second & Third Defendants

JUDGMENT

21st August, 2015

1. MAKAIL, J: This is an application for judicial review of a series of actions of the second defendant (the Registrar of Titles) concerning a property described as State Lease Volume 31 Folio 139 being Allotment 92 Section 449 Hohola in the National Capital District. They are:

1.1. issuance of a notice of intention to cancel within seven (7) days the Caveat No. S.52691 registered over the property dated 15th September 2009 pursuant to Section 89(2) of the Land Registration Act, Ch 191; and

1.2. issuance of a summons in a letter dated 21st September 2009 to the plaintiff to produce owner's copy of the title deed for the property pursuant to Section 160(1) of the Land Registration Act, Ch 191.

2. The plaintiff as the aggrieved party alleges, amongst other things, that the second defendant acted arbitrarily and without proper reasons contrary to Sections 89(1) and 160(2) of the Land Registration Act, Ch 191. It further alleges that the actions are unreasonable under the Wednesbury principle of unreasonableness. It seeks orders to firstly declare the actions of the second defendant null and void and secondly, certiorari to quash them. It seeks a further order that the second defendant be permanently restrained from further exercising his powers under Sections 89(2) and 160(1) of the Land Registration Act, Ch 191 and finally, an order in the nature of mandamus to compel the defendants to facilitate and give effect to a contract of sale between the plaintiff and the first defendant.

Background Facts

3. The undisputed facts are, the first defendant is an employee of the Department of Lands and Physical Planning and registered proprietor of the property. The plaintiff and the first defendant had been in discussions since May 2009 as to the purchase of the property. On 09th September 2009 the plaintiff and the first defendant entered into a contract for sale of land. The purchase price was K50,000.00. The first defendant was paid K50,000.00 in full. On the same date, the Transfer Instrument was also executed. Both the contract and the Transfer Instrument were stamped by the Stamp Duties Office.

4. Following the signing of the contract and pending settlement, the plaintiff lodged a caveat over the property. It appears this caveat was registered by the second defendant on 14th September 2009. The plaintiff had obtained the necessary approvals from relevant authorities within the National Capital District ("NCD") and engaged architects to draw up development plans of the property. It spent well in excess of K180,000.00 so far in developing the property including arranging development proposals and payment of various fees to authorities.

5. By letter of 15th September 2009 the second defendant notified the plaintiff of his intention to cancel its caveat within seven (7) days and further by letter of 21st September 2009 the second defendant summoned the plaintiff to produce the owner's copy of the title deed.

Grounds of Review

6. The second defendant exceeded his powers in purporting to cancel the caveat and summoned the plaintiff to produce owner's copy of the title deed (State Lease), denied the plaintiff natural justice – right to be heard, failed to give reasons and/or acted so harshly and unreasonably as to attract relief under the Wednesbury principle of unreasonableness and the provisions of the Constitution, Sections 41 and 59. The actions are also tainted with bias.

Plaintiff's Case

7. Based on the affidavit of Rimbink Pato filed on 29th September 2009, affidavit of Henry Vue Henry filed on 30th October 2012 and further affidavit of Henry Vue Henry filed on 23rd January 2013 the plaintiff's case is that the first defendant had agreed to sell the property to the plaintiff. A total sum of K50,000.00 was paid by the plaintiff to the first defendant as consideration for the property. There was a valid contract of sale between the parties and should be performed. The first defendant changed her position and attempted to sell the same property to a third party. This prompted the plaintiff to place a caveat on the property.

Defence Case

8. Based on the affidavit of the first defendant filed on 29th November 2012, another affidavit of the first defendant filed on 10th December 2012 and a further affidavit of the first defendant filed on 01st July 2013 the defence case is that the first defendant is the registered proprietor of the property and there is no enforceable contract of sale between the plaintiff and the first defendant because amongst other grounds, the first defendant did not sign it. It was signed by persons other than the first defendant. This was one of the reasons the second defendant cancelled the caveat and summoned the plaintiff to return the owner's copy of the title deed. The first defendant admitted receiving money from Mr Pato but said that it was not for the purchase of the property.

Caveat

9. A caveat is defined in Osborn's Concise Law Dictionary, 9th ed, (2001) London, Sweet & Maxwell, A Thompson Company at 74 as "[a] warning. An entry made in the books of the offices of a registry or court to prevent a certain step being taken without previous notice to the person entering the caveat."

10. In the context of an interest in a State lease, a party who seeks to place a caveat on it must first lodge the caveat in an approved form under Sections 82 and 84 of the Land Registration Act, Ch 191. Under Section 85(1), a caveat does not come into force until it is accepted by the Registrar. Under Section 87, upon receipt of a caveat, the Registrar shall notify the receipt to the person against whose right to deal with the land the caveat is lodged. The notice is sent by post in a prepaid registered letter to the last known address of the person entitled to the notice.

11. Relevant for the present purposes is Section 89. It sets out the grounds of cancellation of a caveat by the Registrar. It states:

"89. Cancellation by Registrar.

(1) Where it is proved to the Registrar's satisfaction —

(a) that the estate, interest or claim of the caveator has ceased or been abandoned or withdrawn; or

(b) that the caveator's rights are satisfied or arranged; or

(c) subject to Subsection (2), that the nature of the caveator's estate, interest or claim does not entitle him to forbid the sale or mortgage or other dealing with the land, estate or interest referred to in the caveat,

the Registrar may cancel the caveat.

(2) At least seven days before cancelling a caveat on the ground specified in Subsection (1)(c), the Registrar shall cause notice to be served, in accordance with Section 94, on the person who lodged the caveat." (Emphasis added).

12. The plaintiff submits that although it is not specifically stated, the second defendant purportedly relied on the ground in Section 89(1)(c) to cancel the caveat. The second defendant stated that "I have studied the reasons for the registration of the caveat you lodged and I am of the opinion that the nature of your caveat registration does not warrant a caveat to be registered." The plaintiff submits that the second defendant gave no reasons for this decision when the nature of the case required him to provide proper or satisfactory reasons as to why the caveat was to be cancelled especially when it was him who accepted the caveat in the first place merely a day before he decided to cancel it.

13. The circumstances also required that the plaintiff be given a reasonable opportunity to be heard before such decision was made. This was not done which resulted in the plaintiff being denied natural justice under Section 59 of the Constitution. Furthermore, the second defendant acted so harshly and unreasonably as to attract relief under the Wednesbury principle of unreasonableness and Section 41 of the Constitution.

14. Finally, the actions of the second defendant are also tainted with bias because the first defendant was an officer of the Department of Lands and Physical Planning and worked in tandem and/or colluded with the second defendant to ensure that the caveat was cancelled.

15. The first defendant maintains that the contract of sale is flawed in many respects, one of them being that it was not executed by her, hence, it is unenforceable. This raises the question of authenticity of the contract of sale. For this reason, it was open to the second defendant to review the caveat and cancel it. The first defendant also submits that the contract of sale was in breach of the Fairness of Transactions Act 1993. Mr Pato as a prominent lawyer and the person behind the plaintiff used his power and position to secure the transfer of title of the property to the plaintiff. Such conduct is unfair and unconscionable.

16. No submissions were made on behalf of the second and third defendants although at the centre of the dispute are the actions and exercise of statutory power by the second defendant and one would have thought that they would be the first to take steps to response to the allegations, especially submissions on the exercise of statutory power granted to the Registrar of Titles when he is administrating the Torrens System of Title where title is by registration: Steamships Trading Co Limited v.Garamut Enterprises Limited & Ors (2000) N1959.

17. Notwithstanding this, what must be appreciated at the outset is that there is no expressed duty in Section 89 for the Registrar to give a caveator a right of hearing before he cancels the caveat. Neither do I consider that it can be implied under the principles of natural justice under Section 59 of the Constitution. This is because it is accorded at the time of making the application for a caveat. A caveator as the party who lodges a caveat in the first instance would give reasons why there should not be any dealings over the subject property without notice to it as the person entering the caveat. In essence, it is more or less an ex parte hearing.

18. In this case, according to the caveat dated 08th September 2009, the following was the reason for the application for caveat:

"Raina No. 1 Limited ............. claiming an interest as Purchaser pursuant to a Contract for Sale and Purchase of land and in pursuance of which an amount of K16,000 has been paid to the former owner, NAOMI ELISHA and whereas the Contract and Transfers are pending stamping and resolution ........."

19. Based on this reason, the second defendant placed a caveat on the property. In my view the only expressed duty imposed on the Registrar is to serve a notice on the caveator at least seven (7) days before cancelling the caveat. There is no dispute that the second defendant served a notice pursuant to the letter dated 15th September 2009 on the plaintiff and in that respect, he has discharged that duty.

20. Secondly, I consider that implicit in the duty to notify the caveator is also a duty to give reasons. In this case, the reason is set out in the letter to the plaintiff dated 15th September 2009. It was "the reasons for registration of the caveat did not warrant a caveat to be registered." On this evidence, I am satisfied that the second defendant did give reasons.

21. I am further satisfied that the reason is clear, proper and satisfactory because the plaintiff claimed that it entered into a contract of sale of the property with the first defendant and further claimed that the parties must perform it. The second defendant gave notice to cancel it because the reasons for the registration of the caveat namely the contract of sale between the parties did not warrant a caveat.

22. It follows that the plaintiff's submissions based on the grounds of denial of natural justice – right to be heard and failure to give reasons are misconceived. Similarly, the plaintiff's submission that the conduct of the second defendant was arbitrary, harsh and unreasonable is also misconceived and is dismissed.

23. Thirdly, under Section 91(1), subject to Subsection (2), a caveat lapses after the expiration of three months from the time it came into force. Under Subsection (2), there are three exceptions to the time limit of three months. First is where the caveat is lodged with the written consent of the equitable mortgagee, second where it is lodged with the written consent of the registered proprietor of the land affected by the caveat and third, where the caveator has within that period instituted proceeding in Court to establish his title to the estate or interest specified in the caveat and has given written notice of the proceeding to the Registrar: see also Robert Kittika v. Raga Kavana & Ors (2010) N4051.

24. What this means is that the caveat is a temporary form of relief to prevent the other party from registering its estate or interest over the property until the dispute is either settled by the parties or decided by the Court. In the case of the latter, the caveator must institute proceeding in Court to assert its title or interest. If the caveat is cancelled, even then, the caveator has recourse to other remedies. One of them is for the caveator is to commence proceeding in Court for specific performance based on the contract of sale and seek a temporary or interim restraining order against the other party from dealing with the property. The other is where if fraud is alleged against the registered proprietor under Section 33(1) of the Land Registration Act, Ch 191, a judicial review proceeding may be appropriate: see Koitachi Ltd v. Walter Schnaubelt (2007) SC 870.

Summons for Production of Title Deed

25. As our land title system is one of title by registration, a title deed is crucial and must be produced for registration of title. Where the Registrar cancels a caveat and where the owner's copy of the title deed is with the party who lodged the caveat, it must be returned to the registered proprietor. If it is not voluntarily surrendered, this is where the procedure under Section 160 of the Land Registration Act, Ch 191 comes into play. It states:

"160. Production of instruments wrongly issued, etc.

(1) Where it appears to the satisfaction of the Registrar that —

(a) an instrument has been —

(i) issued to a person in error; or

(ii) fraudulently or wrongly obtained by a person; or

(b) an instrument is fraudulently or wrongly retained by a person; or

(c) an instrument held by a person contains a misdescription of the boundaries, area or position of land; or

(d) an instrument held by a person contains an entry or endorsement —

(i) made in error; or

(ii) fraudulently or wrongly obtained; or

(e) an instrument of title is held by a party to an ejectment action whose right to the land has been determined,

he may summon that person to deliver up the instrument.

(2) Where a person refuses or neglects to comply with a summons under Subsection (1), or cannot be found, the Registrar may apply to the Court to issue a summons for that person to appear before the Court and show cause why the instrument should not be delivered up.

(3) Where a person served with a summons issued under Subsection (2) refuses or neglects to attend before the Court at the time appointed by the summons, the Court may issue a warrant directing the person so summoned to be apprehended and brought before the Court for examination.

(4) On the appearance before the Court of a person summoned under Subsection (2), or apprehended by the warrant under Subsection (3), the Court may examine him on oath and order him to deliver up the instrument.

(5) Where a person refuses or neglects to comply with an order under Subsection (4), the Court may commit him to a corrective institution for a period not exceeding six months unless the instrument is sooner delivered up.

(6) Where a person —

(a) has absconded or keeps out of the way so that a summons under Subsection (2) cannot be served on him; or

(b) has refused or neglected to comply with an order under Subsection (4),

the Registrar shall, if the circumstances of the case so require —

(c) issue to the proprietor of the land an instrument as provided in this Act in the case of a certificate of title lost or destroyed; and

(d) enter in the Register —

(i) notice of the issue of an instrument and the circumstances under which it was issued; and

(ii) such other particulars as he thinks necessary."

26. The plaintiff advances the same arguments he made in support of the issuance of notice to cancel the caveat. I consider that in Section 160, there is no expressed or implied duty imposed on the Registrar to accord a party in possession of the Transfer Instrument or title deed a right of hearing before he issues a summons for the production of the document. Further, there is no expressed duty imposed on the Registrar to give reasons for issuing a summons for the production of the document. However, given that a party's estate or interest in the property may be adversely prejudiced by the summons, the duty to give reasons can be implied under the principles of natural justice under Section 59 of the Constitution.

27. In this case, based on the letter of the second defendant to the plaintiff dated 21st September 2009 where the second defendant stated that "[t]he reason being that the Original contract of sale you signed was never compiled (sic) with", I am satisfied that the second defendant did give reasons for issuing the summons. The issuance of the summons was prompted by the plaintiff's failure to return the title deed when requested. I refer to paragraphs 23, 25 and 93 of the affidavit of the first defendant filed on 29th November 2012 where the evidence established that in May 2009 at the request for Mr Pato, the first defendant delivered the owner's copy of the title deed to him. Subsequently, she requested for its return but neither the plaintiff nor Mr Pato obliged. To date, it has not been returned.

28. Notwithstanding the implied duty to give reasons, under Section 160(2), the second defendant has the option of applying to the Court to issue a summons for the plaintiff or Mr Pato to appear before the Court and show cause why the title deed should not be delivered up. May I add by observing that the summons issued by the Court has force of a Court order because in the event of non-compliance, the Court may commit the defaulting party to a corrective institution for a period not exceeding six months. There is no evidence that the second defendant has taken this option. Be that as it may, this recourse is available to the second defendant and the plaintiff will have the opportunity to show cause why the title deed should not be delivered up. This is when the plaintiff is accorded the right to be heard and its reasons for not delivering up the title deed.

29. On the other hand, the issues of contention between the parties are matters that this Court should not delve into in this proceeding. The issues of enforceability of the contract of sale, unfairness of the transaction between the plaintiff and the first defendant or unconscionable conduct of Mr Pato, etc. are and should be appropriately raised and dealt with in the proceeding for specific performance of the contract of sale or fraud, whichever the case, may be.

Conclusion

30. In the end, I find the grounds of review are either misconceived or not proven and the plaintiff is not entitled to the relief sought.

Order

31. The orders are:

1. The application for judicial review is dismissed.

2. The plaintiff shall pay the costs of the proceeding, to be taxed, if not agreed.

_______________________________________________________________
Steeles Lawyers: Lawyers for the Plaintiff
Japson & Associates Lawyers: Lawyers for the First Defendant
Acting Solicitor-General: Lawyers for the Second & Third Defendants