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University of Papua New Guinea v Ofoi [2016] PGNC 85; N6303 (26 April 2016)

N6303

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


OS. (JR) NO. 177 of 2013


BETWEEN:
THE UNIVERSITY OF PAPUA NEW GUINEA
Plaintiff


AND:

JOHN OFOI

Acting Secretary for Lands and Physical Planning
First Defendant


AND:
HONOURABLE BENNY ALLEN
Minister for Lands and Physical Planning

Second Defendant


AND:
HENRY WASA Registrar of Titles

Third Defendant


AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant


AND:


EMMA BARATAI & STANLEY BARATAI
Fifth Defendant


Waigani: Nablu, J
2015: 20March
2016: 26 April


JUDICIAL REVIEW – Forfeiture of State Lease – Land Act ss 122 & 169 – Service of Notice to Show Cause – Mandatory requirement of the Land Act – Service of Corporations under Land Act – Failure to serve Notice to Show Cause – Forfeiture of State Lease quashed – Subsequent registration of the land title to a third party null and void – Title reinstated – Judicial Review granted.


LAW OF EVIDENCE – Judicial review proceedings by way of Affidavit evidence – National Court Rules, Order 16 Rule 13(11)(2) - Hearsay evidence must be rejected – Direct and credible evidence of service must be produced – Hearsay evidence of Secretary of the Department of Lands & Physical Planning not admissible to prove proper service of the Notice to Show Cause.


Cases Cited:
Beecraft No. 20 Ltd v. Minister for Lands (2001) N2125
Bougainville Copper Foundation v. Minister for Trade and Industry [1988-89] PNGLR 110
Dale Christopher Smith v. Minister for Lands (2009) SC 973
Dent v. Kavali [1981] PNGLR 488
Davis v. Pitzz [1988-89] PNGLR 143
Emas Estate Development Pty Ltd v. Mea & The State [1993] PNGLR 215
John Mur v. Les Kewa (2010) N4016
Koitachi Ltd v. Walter Schnaubelt (2007) SC 870
Mision Asiki v. Manasupe Zurenouc (2005) SC 797
NCDC v. Crusoe Pty Ltd [1993] PNGLR 139
PNG Deep Sea Fishing Ltd v. Luke Critten & Others (2010) SC1126
The Papua Club Inc. v. Nusuam Holdings Ltd (No.2) (2004) N2603
Yakananda Business Group Inc. v. Minister for Lands and Physical Planning (2001) N2159


Counsel:
D Kamen, for the Plaintiff
M Mai for the First, Second, Third and Fourth Defendants
E Hampaleke, for the Fifth Defendant


26thApril, 2016


1. NABLU, J: The University of Papua New Guinea seeks to review the decision of the Minister for Lands and Physical Planning to forfeit the State Lease for land described as Section 41 Allotment 44, Hohola, National Capital District on the 8thofAugust 2006. The plaintiff also seeks to review various other decisions which stemmed from the decision to forfeit the State Lease. The other decisions subject of review; is the decision to exempt the subject land from public advertisement on 24th November 2005 and the subsequent grant of the State Lease to the fifth defendant on 26th of May 2008.


2. The University of Papua New Guinea was the registered proprietor of the State Lease for the land described as Allotment 44 Section 41, Hohola, prior to the forfeiture on 8 August 2006.


4. The plaintiff seeks various declaratory orders and a writ of certiorari to quash the decision of the Minister to forfeit the State Lease and the decision to exempt the land from advertisement pursuant to section 69(2) of the Land Act 1996, amongst other decisions.


5. The plaintiff also seeks a writ of mandamus to restore the plaintiff as the registered proprietor of the land. They also seek to permanently restrain the defendants from interfering with the plaintiff’s right to quite enjoyment and possession of the property and costs of the proceedings.


6. The plaintiff raised eight (8) grounds of review according to the Statement pursuant to Order 16 of the National Court Rules. The way the grounds of review were pleaded made it difficult for the Court to clearly ascertain the grounds of review. I have attempted to succinctly categorize them under the following main headings for ease of reference.


7. The plaintiff’s main ground of review is that the defendants committed serious errors of law. The particulars of the errors of law are as follows. The plaintiff argued that the Secretary for Lands & Physical Planning committed an error of law and breached the mandatory statutory process stipulated under sections 122(2), (3) and (4) of the Land Act in failing to give the mandatory notice to show cause. The Minister for Lands and Physical Planning through his delegate erred in law when he exempted the State Lease from advertisement on 24th November 2005 contrary to the provisions of the Land Act.


8. The second ground of review flows from the first ground, in particular, the plaintiff argued that they were denied natural justice and procedural fairness when the Minister made the decision to forfeit the State Lease.


9. The third ground of review is that, the defendants improperly exercised their powers under the Land Act and therefore abused their powers. In particular the Minister’s decision to exempt the portion of the land from being advertised and preference given to the fifth defendants, constituted an improper exercise of power and in doing so abused his powers.


10. The fourth ground the plaintiff raised was that the decision was unreasonable within the meaning of the Wednesbury principles.


11. According to the Statement pursuant to Order 16 of the National Court Rules, parties agreed on the following legal issues for determination. I have set them out as follows;

  1. Whether a Notice of Show cause was issued?
  2. If the Notice to Show cause was issued, was it served on the Plaintiff as required by Section 122(2) (a) of the Land Act?
  3. Whether the exercise of discretion as conferred by Section 122 (2)(b) of the Land Act in forfeiting the State Lease as an abuse of power when the Plaintiff was not given notice to comply with the conditions within any specified time?
  4. Whether a forfeiture notice was issued?
  5. If so whether the forfeiture Notice was served on the Plaintiff?
  6. Whether principles of natural justice and procedural fairness were observed when the decision for forfeiture was made?
  7. Was the exemption Notice issued in compliance with the Land Act?
  8. If the mandatory requirements under the Land Act have not been complied with; whether the defendants’ decision and conduct was illegal or amounted to statutory fraud?

12. I am of the view that a number of these issues are repetitious and irrelevant. The pertinent legal issues before this Court for determination are as follows:


(i) Whether the defendants complied with the mandatory process stipulated in section 122(2) (a) of the Land Act, to serve the plaintiff with a Notice to Show Cause?

(ii) If the answer to the first question is in the negative, then the plaintiff has made out that ground of review. However, if the answer is in the affirmative, then the next question posed is whether the defendants complied with the mandatory process stipulated in section 122(2) (b) of the Land Act to issue and serve the Forfeiture Notice?

13. Another ancillary issue to be determined if the answer to the first question is in the affirmative, is whether the Minister complied with the statutory provisions in the Land Act when he decided to exempt the land from advertisement?


14. If it is found that the mandatory process under Section 122 of the Land Act was complied with, it is still open for the Court to determine whether the decisions were unreasonable within the Wednesbury principles of unreasonableness or whether the defendants exercised their statutory powers improperly and abused their powers.


The Law
15. There are two pertinent steps in the process of determining judicial review applications. Firstly, the Court must be satisfied that the plaintiff has proven one or more of its grounds of review. Secondly, if the plaintiff has proven one or more of its grounds of review, then the court has the discretion to determine what is the appropriate remedy or relief to be granted (Mision Asiki v. Manasupe Zurenuoc (2005) SC 797; Dale Christopher Smith v. Minister for Lands (2009) SC 973).


16. The question of the validity of forfeiture of State Leases pursuant to the Land Act has been the subject of a number of decisions of the Supreme Court and this Court. The main legal principle applicable is that, the State can lawfully forfeit a State Lease if the mandatory process under Section 122 of the Land Act is complied with. It is trite law that the State has the ultimate power to forfeit a State Lease where the registered proprietor has either failed to comply with the mandatory requirement to pay land rental fees or failed to comply with the land covenants specified in the State Lease. The exercise of this ultimate power of forfeiture can only be validly exercised upon strict observance of the mandatory requirements that are specified under s.122 (2) of the Land Act. The State must give proper notice to the registered proprietor by duly serving a Notice to Show Cause under s.122 (2) of the Land Act.


17. There is a plethora of authority on the steps or procedure of valid forfeiture of a State Lease under the current Land Act and its predecessor Land Act (Chapter 185) (See Dent v. Kavali [1981] PNGLR 488;Davis v. Pitzz [1988-89] PNGLR 143;Yakananda Business Group Inc.v. Minister for Lands and Physical Planning (2001) N2159;Beecraft No. 20 Ltd v. Minister for Lands (2001) N2125; John Mur v. Les Kewa (2010) N4016).


18. The State’s failure to comply with the mandatory prescribed provisions under Section 122 of the Land Act, are grounds to invalidate the entire forfeiture process. Accordingly, this Court and the Supreme Court has invalidated and set aside a number of forfeitures for failing to comply with the mandatory requirement to show cause (See Emas Estate Development Pty Ltd v. Mea & The State [1993] PNGLR 215).


19. Public officials when exercising statutory powers to make administrative decisions that relate to or are likely to affect a person’s interest in property or land are subject to the principles of natural justice (see Bougainville Copper Foundation v. Minister for Trade and Industry [1988-89] PNGLR 110 and NCDC v. Crusoe Pty Ltd [1993] PNGLR 139).


20. The situation is complicated where the registered proprietor is not served a Notice to Show Cause and sometime later becomes aware of the forfeiture. Then the forfeited State Lease is granted to a third party. In the earlier case of Emas Estate v. The State (supra), the majority view of the Supreme Court was that the principle of indefeasibility of registered title was not applicable if there were irregularities in the process of registration of the new State Lease. The Supreme Court was of the view that failure to personally serve the Notice to Show Cause on the registered proprietor was irregular and therefore the forfeiture was invalid.


21. The Supreme Court later in the case of Koitachi Ltd v. Walter Schnaubelt (2007) SC 870, the Supreme Court, did not specifically override or disagree with the majority in the Emas Case but did state that according to Section 33 of the Land Registration Act, there must be direct evidence of fraud. In interpreting that section, the Supreme Court was unanimous in its view that despite the fact that the term “fraud” was not defined, “fraud” meant“ actual fraud” and not constructive fraud or equitable fraud (for want of a better term). Therefore, if there was convincing evidence of fraud that a registered proprietor and by someone whom the title was acquired had committed such fraudulent acts, then the registration of title may be set aside. The Supreme Court approved the law and adopted the reasoning of Gavara- Nanu J in The Papua Club Inc. v. Nusuam Holdings Ltd (No.2) (2004) N2603.


22. Then in PNG Deep Sea Fishing Ltd v. Luke Critten & Others (2010) SC1126, the Supreme Court discussed the Emas Case and the Koitachi Case and reinforced the view that the law in Emas Case was still good law and applicable. The gist of the majority view of the Supreme Court’s opinion was based on the reason that the law in Emas Case was applicable and appropriate to the peculiar circumstances in Papua New Guinea, for example, the dual system of ownership of land and the administration of the department of lands which is unique to this Country.


23. Given the differences of opinion in the Supreme Court, I am of the view that the law in regard to forfeiture of State Leases and the subsequent registration of the State Lease to another person and entity is not entirely settled. In this jurisdiction, the law is that a registered proprietor holds the title free from any encumbrances according to the Torrens System of Title Registration and the principle of indefeasibility of title. The exceptions to the general rule are provided for under Section 33 of the Land Registration Act. One such exception is that of fraud. Fraud must be actual fraud and not constructive fraud. There must be evidence of fraud before the Court can set aside a registered title. I am of the view that (apart from the other exceptions under Section 33 of the Land Registration Act), where there is evidence of actual fraud by the registered proprietor or person who acquired the title; there must be direct and credible evidence of actual fraud, such as evidence of dishonesty or forgery etc..., then the Court can invalidate the registration of the title. The other exception is where there is evidence of the non-compliance or blatant disregard of the mandatory provisions of the Land Act which could potentially invalidate a registered title. The forfeiture of a State Lease and subsequent grant and registration of the State lease to a third party can be set aside where the mandatory process under s122 of the Land Act is not complied with or where there is credible and direct evidence of fraud.


Evidence
24. The hearing of the substantive judicial review application was by affidavit evidence. The plaintiff relied on the affidavit and supplementary affidavit of Jennifer Popat filed on 8th April 2013 and 9th August 2013. The plaintiff also relied on the Affidavit of Vincent Malaibe which was filed on 9th August 2013.


25. In response, the defendants filed and relied on the affidavit of Romilly Kila-Pat which was filed on the 23rd April 2013. All the evidentiary material was contained in the Review Book.


Ground One: Errors of Law
26. The plaintiff argued that the Secretary for Lands and Physical Planning, Pepi Kimas erred in law by not giving the required Notice to Show Cause on the Plaintiff as the Lessee pursuant to Section 122(2), (3) and (4) of the Land Act 1996 and the Notice of Forfeiture pursuant to Section 122 of the Land Act. The plaintiff further argued that these were serious breaches of procedure under the Land Act. Alternatively, if the Court finds that no errors of law were committed and that the statutory procedure under the Section 122 of the Land Act was complied with, then the defendants erred in law when they breached Section 69 of the Land Act in unlawfully exempting the land from advertisement and consequently granting the State Lease to the fifth defendants.


27. The plaintiff however argued that the notice to show cause was not served and they deny that they received the Notice to show cause.


28. Romilly Kila-Pat in his affidavit which was sworn and filed on 23rd April 2013 deposed to the fact that he was the Secretary of the Department of Lands and Physical Planning (as he then was) and that he had authority to depose to the Affidavit on behalf of the Department of Lands and Physical Planning. The deponent stated that a site inspection revealed that there were remnants of an old brick building on the land. The site inspection was conducted on the 27th of April 2004 by the NCD Lands Unit. A copy of the Inspection Report (marked annexure B of the Affidavit) indicated that the report was compiled by one Sharon Kila. According to the report, it was recommended that a Notice to Show Cause was to be prepared and referred to the proprietor of the Land who was University of Papua New Guinea to show cause, why the land improvement covenant had not been complied with. The Secretary at the time then endorsed a Notice to Show Cause. The Notice was addressed to the plaintiff and the address of service was the plaintiff’s post office box. The Notice to Show cause was dated the 30th August 2004. The defendant annexed a copy of the Post PNG Receipt to the Sender purportedly indicating the receipt of mail addressed to the University of PNG (dated 14th September 2004). There is no proof of what was mailed to the University.


29. On the other hand the evidence tendered by the plaintiff denied receipt of the Notice to Show Cause. The former Registrar of the University of Papua New Guinea, Vincent Malaibe denied that he received a Notice to Show Cause or a Notice of Forfeiture for this property. He also stated that he did not recall been personally served a copy of the Notice to Show Cause. If he had been served, he stated that he would have responded promptly. It is not clear what period he was the Registrar and whether it was during the material times.


30. According to the Affidavit of Jennifer Popat she stated that she is authorized to depose this Affidavit as the Registrar. She stated that the plaintiff was the registered proprietor of the land. She was not aware that the land was forfeited until 25th February 2013. She found out about the forfeiture through a member of the University staff who sent relatives to cut grass at the land, where they were informed by the fifth defendant that the land had been forfeited and granted to them. When she became aware of this, she then requested for a land title search which confirmed that the land had been forfeited and granted to the fifth defendants on or about 17th January 2008. She stated that she did not recall been served a Notice to Show Cause or a Notice of Forfeiture, in relation to this property.


31. The legal issues for determination are what the proper mode of service of such notices is and whether service of notices under Section 122 of the Land Act by way of post was proper?


32. In order to determine these issues, the initial step is to refer to the Land Act and confirm what the proper mode of service is. It is necessary for me to set out the entire Section 122 provision for ease of reference.
“122. FORFEITURE OF STATE LEASE.


(1) The Minister may, by notice in the National Gazette, forfeit a State Lease-

is not complied with; or

(e) if the granting of the lease has been obtained, in the opinion of the Minister, wholly or partly as a result of statements that were, to the knowledge of the lessee, false or misleading.
(2) Before forfeiting a State lease under Subsection (1), the Minister-
(3) The Minister shall not forfeit a lease under this Section unless-

(b); or

(b) the lessee has failed to show good cause why the lease should not be forfeited.
(4) Copies of a notice of forfeiture and a notice under Subsection 2(a) or (b) shall be served on all persons who, to the knowledge of the Departmental Head, have or claim to have a right, title, estate or interest in, to or in relation to the land, or such of them as can with reasonable diligence be ascertained and found.
(5) No acceptance of rent by the State waives a right to forfeit a lease under this Act.

(6) For the purposes of this Section the grant of an application for a State lease shall be deemed to be a grant of the lease.”

33. Service of notices is provided for under Section 169 of the Land Act. Section 169 of the Land Act states that;

“169. Services of notices, etc.

(1) Subject to this section, where, under this Act, a claim, notice or thing is required or permitted to be given to or served on a person (other than a corporation), the claim, notice or thing may be given or served personally or by registered post to his postal address last known to the Departmental Head.
(2) Where-

it is sufficient service if a copy of the claim, notice or thing-

(c) is published in three consecutive issues of a newspaper that is distributed regularly throughout the country; and
(d) is forwarded by pre-paid post to the Local – level Government Council (if any) –
(ii) in whose area the person to be served last, to the knowledge of the Departmental Head, resided; and

(e) is placed in a conspicuous place on the land the subject of the notice.

(3) Where under this Act, a claim, notice or thing is required or permitted to be given to or served on a corporation, the claim, notice or thing may be given or served by registered post to the postal address of the corporation last known to the Departmental Head.”


34. According to Section 169 of the Land Act, service of notices must be served personally on an individual or by registered post to the last known address for service. In instances, where the Secretary is of the view that service cannot be properly effected, there is an array of ways to effect substituted service under the law. For corporations, proper service is effected by way of registered post to the last known address.


35. An issue that comes to my mind, is whether the plaintiff is a corporation? That question is sufficiently answered by reference to the University of Papua New Guinea Act. The plaintiff is a legal entity established under the University of Papua New Guinea Act. Section 3(2) of the University of Papua New Guinea Act states that the plaintiff is a corporation who has perpetual succession, can sue and be sued.


36. Therefore, in my view, the proper service of the notice to show cause and the notice of forfeiture under the Land Act, to a corporation should be effected by way of registered post to the last known address.


37. The meaning of service by post is further clarified in Section 5 of the Interpretation Act. Service of a document by post is effected, unless proved on the contrary, to be deemed to have been effected at the time the letter is delivered “in the ordinary cause of post” (s.5(2) of the Interpretation Act).


38. The plaintiff submitted the case of Emas Estate v. The State (supra) to support their submission that service of Notices of Forfeiture must be provided personally. I am not persuaded by this argument for the reason that the University is a corporation by virtue of the University of Papua New Guinea Act. According to Section 169 (3) of the Land Act, service of a corporation must be done by registered mail to the last known address that the Departmental Head is aware of.


39. The pertinent issue for determination is whether the University was duly served by registered mail as required by the Land Act. According to O. 16 r.13 (11) (2) of the National Court Rules, the hearing of an application for judicial review is tried by affidavit evidence only. In the affidavit of Jennifer Popat and Vincent Malaibe, they deposed to the fact that they did not recall receiving a Notice to Show Cause pursuant to the Land Act. The reason they were able to recall this, was because it related to property owned by the University. They stated that they would have acted promptly upon receipt of such notice.


40. On the other hand, the defendants relied on the Affidavit of Romilly Kila-Pat and submitted that service was duly effected in compliance with the mandatory process under the Land Act. Evidence showed a copy of a receipt for registered mail which was addressed to the University of Papua New Guinea.


41. Upon reading the affidavit of Romilly Kila-Pat, I find that the Secretary’s evidence is hearsay and inadmissible, therefore, I have given no weight to the affidavit. The Secretary is deposing to facts which are not within his knowledge. He did not conduct the site inspection nor did he post the registered mail. There must be direct and credible evidence to establish that the Notice to show Cause was in fact served. Therefore, the Lands officer, who did the inspection and or posted the Notice to show cause, should be the one to depose to the affidavit to prove service. In some instances, the practicality of this is may be an issue, where the officer is no longer employed. However, in such instances, hearsay evidence by necessity can be admissible. An officer can depose to the fact that he or she reviewed the file and state his or her findings after such inspection. In his affidavit, the Secretary did not state if he personally inspected the file and made the findings of what was contained in the file. This is a Court of Law and therefore this Court is compelled to adhere to the strict technical rules of evidence and bound to reject the evidence as hearsay.


42. Even if I am wrong, on the balance of probabilities, I am left wondering what was the content of the mail sent to the plaintiff. A number of possibilities arise and it becomes speculative. The registration of mailed articles, without direct evidence from the person who sent the mail, raises questions. No inference can be drawn, because no witness has stated that they posted the Notice to Show Cause at that time or date. Due to a number of possibilities, it does not prove that the Notice to Show Cause was in fact posted in that mail. Therefore, having disregarded the only affidavit evidence of the defendants, this means that the defendants have no evidence to prove that they complied with the mandatory process to serve the Notice to Show Cause.


43. Due to the reasons above, I am of the view that the Respondents failed to comply with the mandatory process to serve the Notice to Show Cause. It is not necessary for me to consider the other issues or grounds of review. The failure to serve the Notice pursuant to Section 122 of the Land Act is a serious irregularity which renders the whole process of forfeiture invalid and void abinitio.


44. Now, that the plaintiff has made out one ground of review it is necessary to consider whether the relief sought by the plaintiff is appropriate.


45. According to the Notice of Motion the plaintiff seeks a declaration that the plaintiff holds a registered indefeasible title to the portion of land. A declaration that the then Secretary for Lands and Physical Planning arrived at the decisions in contravention of the Land Registration Act and the Land Act. An order in the nature of certiorari to quash the decision to forfeit the State Lease. A writ of mandamus requiring the first, second, third, fourth and fifth defendants to restore the plaintiff as the owner of the land and register the plaintiff as the registered proprietor of the subject land. The plaintiff also seeks permanent injunctions pursuant to Section 155(4) of the Constitution to prevent the defendants and their servants and agents from interfering with the plaintiff’s quite enjoyment of the property.


46. Having found that the forfeiture of the State Lease was irregular because of the failure of the State to comply with the mandatory requirement to serve the Notice to Show Cause, I am of the view that the relief sought in relation to the forfeiture is declared null and void and the situation reverts to the original position meaning the plaintiff is reinstated as the registered proprietor. Consequential orders will be made to order the Register of Titles to reinstate the plaintiff as the registered proprietor. I am not convinced that the plaintiff has made out the relief for a permanent injunction to be granted therefore I refuse the relief sought. The plaintiff’s application for judicial review is granted with Costs to be paid by the first, second and fourth defendants. I make no orders of Costs against the third and fifth defendant, because their involvement in this case, from the evidence before did not imply, they had done any wrong. Their involvement was ancillary. The irregularity was caused by the first, second and fourth defendant in failing to comply with the forfeiture procedure by failing to give notice to the plaintiff.

The Court orders that:

  1. The plaintiff’s application for judicial review is granted.
  2. It is declared that the Second Defendant’s forfeiture of the State Lease for land described as Section 44 Allotment 41, Hohola, Port Moresby, National Capital District on 8th August 2006 is null and void forthwith.
  3. That the decision of the Second Defendant’s forfeiture of the State Lease for land described as Section 44 Allotment 41, Hohola, Port Moresby, National Capital District on 8th August 2006 is brought into this Court and quashed accordingly.
  4. It is declared that the subsequent grant of the State Lease for Land described as Section 44 Allotment 41, Hohola, Port Moresby, National Capital District on 17th January 2008 is null and void forthwith.
  5. That the decision of the Second Defendant to grant the State Lease for Land described as Section 44 Allotment 41, Hohola, Port Moresby, National Capital District on 17th January 2008 is brought into this Court and quashed.
  6. That the Registrar of Titles (The third defendant) is compelled to reinstate the plaintiff as the registered proprietor of the land described as Section 44 Allotment 41, Hohola, Port Moresby, National Capital District within one (1) month of service of this Order.
  7. The First, Second and Fourth defendants are to pay the plaintiff’s costs of and incidental to this proceeding to be agreed if not taxed.
  8. Time is abridged to the time of settlement of this Order by the Registrar forthwith.

Orders accordingly,


Kamen Lawyers : Lawyers for the Plaintiff
Solicitor General’s: Lawyers for the First, Second, Third& Fourth Defendant

Mordelai & Associates: Lawyers for the Fifth Defendant


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