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Konda'lane Properties Ltd v Parkop [2019] PGNC 318; N8095 (6 November 2019)

N8095

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 416 OF 2017

BETWEEN:
KONDA’LANE PROPERTIES LIMITED
Plaintiff

AND
HON. POWES PARKOP in his
capacity as Chairman of & for and on behalf of the
National Capital District Physical Planning Board
First Defendant

AND
AMANDA BINOKA in her
capacity as National Capital District
Commission Chief Physical Planner
Second Defendant

AND
NATIONAL CAPITAL DISTRICT COMMISSION
Third Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Defendant

Waigani: Thompson J

2019: 18^th September, 6^th November

Counsel:

Ms D. Doiwa, for the Plaintiff
Ms L. Raula, for First to Third Defendants
Mr. R. Uware, for Fourth Defendant

6^th November, 2019

1. THOMPSON J: BACKGROUND: These proceedings concern a block of land in Hohola. As a single allotment on Lot 1 Section 416 Hohola, it was zoned as Open Space for Recreational Purposes land, which meant that it could not be developed.

2. In 2012 the Plaintiff applied to re-zone the land and subdivide it for residential development. The application was specifically made on the basis that the land was to be re-zoned as “Residential”, supported by designs showing a low-cost rental accommodation and housing complex for the stated purpose of building low-cost accommodation “for the average Papua New Guineans who are struggling with accommodation problems”. The application was summarized as being to re-zone the land from “Recreational” to “Residential”.

3. The application was rejected by the Defendants, because the proposed re-zoning conflicted with its Physical Planning Regulations (“PPR”). Inexplicably, the decision was headed “ ...... Re-zone from Open Space Zone to Commercial Zone”, when the application had very clearly been only to re-zone from Open Space Zone to Residential, and there had not been any mention of commercial zoning.

4. On 4 December 2012 the Plaintiff appealed to the 1^st Defendant. The Letter of Appeal was headed “Appeal against ..... Determination .... regarding application for subdivision ...... and re-zone from Open Space to Commercial Zone”. Despite this wording, the appeal was specifically stated to be based on the Plaintiff’s proposal to construct low-cost “housing accommodation for the middle to low class income earners”, and repeated the basis of the original submission.

5. On 23 June 2013 the Plaintiff’s appeal was upheld, based on the same documents which all showed the proposed low-cost housing units and the design of each unit.

6. The land was subsequently re-zoned and subdivided. By a Gazettal Notice of 24 October 2013, one of the subdivided lots was advertised for tender as Lot 23 Section 416 being a “Residence (High Covenant) Lease”, subject to a Condition that the lease had to be “bona fide for Residence (High Covenant) Purposes”, and with “improvements being buildings for Residence (High Covenant) Purposes” to be erected within five years. \

7. The Plaintiff responded by submitting a tender form for the purpose of “To construct Residential Units at the cost of Three Million Kina”.

8. On 6 February 2015, the Defendants gave the Plaintiff notice that its “application for a Residence (High Covenant) Lease over Lot 23 Section 416 Hohola” would be considered at its Meeting. On 13 February 2015 the Defendants gave the Plaintiff notice that its tender was accepted, and recommended the grant of a Lease subject to Conditions that it “shall be used bona fide for Residence (High Covenant) Lease, buildings for “Residence (High Covenant) Purposes to a minimum value of K250,000.00 shall be erected” within five years, and the Plaintiff shall not enter into any agreement to ... sell, lease or sublease .... any part of the land .... prior to complying with the improvement conditions....”.

9. On 17 August 2015 the State Lease on Vol 67 Fol 179 Lot 23 Sec 146 was issued to the Plaintiff for “Residence purposes”, and subject to the same conditions as the Recommendation, except that the period for compliance with the improvement covenant was reduced to three years. The Plaintiff could not enter into any transaction to sell, lease or sublease any part of the land, without complying with the improvement covenant.

10. The Defendants did not appeal against or take any action to review either the Minister’s decision to uphold the Plaintiff’s appeal, or the decision to grant the State Lease to the Plaintiff.

11. On 9 October 2015, the Plaintiff submitted to the Defendants an Application for Deemed Planning Permission for the erection of a fence around the land. Although it is not entirely clear, it appears that at some time, the 2^nd Defendant had referred the application to the 1^st Defendant for determination, who appears to have considered it on the basis that it was an application for re-zoning, and not merely a fencing application.

12. On 25 April 2016, the Plaintiff wrote a letter to the 1^st Defendant, referring to the fact that its application for a fencing permit had apparently been refused, and asking to review that decision. In that letter, the Plaintiff stated that the land was “currently designated for Residential Purposes after being formally converted in 2013 from Open Space to a State Lease for residential purposes”. The Plaintiff stated that it had made an application for re-zoning for residential development, and then after its appeal was upheld, the land was re-zoned and subdivided, and Lot 23 was formally converted into a State Lease for Residential Purposes, while the other two lots remained as Open Spaces. The Plaintiff stated that it had applied for a Tender for the State Lease for Residential Development, was successful, and had obtained the Title. The Plaintiff submitted that on this basis, it was entitled to Deemed Planning Permission for the fence.

13. On or about 28 February 2017 the 1^st Defendant informed the Plaintiff that it had resolved to refuse the fencing application. The Plaintiff has pleaded that the 1^st Defendant made a decision on 16 December 2015 to refuse the application, and again on 13 December 2016. Copies of those decisions were not provided, but they were not denied by the Defendants.

14. On 19 April 2017 the Plaintiff issued these proceedings, seeking to review and quash those two decisions, together with consequential relief and damages.

15. The claim for damages in the Statement was based on a pleading that the approved re-zoning was for a development of sixteen residential units, which the Plaintiff could not build because it had not been permitted to fence the land.

16. On 31 October 2017, the Plaintiff amended its Statement. The amendments were significant. The Plaintiff deleted the references to the land being re-zoned into residential allotments, and replaced them with references to the land being re-zoned to a Commercial Zone. The Plaintiff further pleaded that since the Residential State Lease had been issued, the Plaintiff had taken steps to “correct the error” and “change the purpose of the Lease from Residential to Commercial”. This was said to be “to comply with the designated zoning of Lot 23”. The other two subdivided allotments remained as Open Space - Recreation.

Issues

17. The Defendants have opposed the proceedings on the basis that the Minister’s decision to uphold the Plaintiff’s appeal against its refusal of the re-zoning application, was wrong. The Defendants have shown that the decision to re-zone from Open Space - Recreational to Residential was prima facie not in accordance with the requirements of the Physical Planning Act (“PPA”) and Regulations, the NCDC Act, and the NCDC Open Space Policy.

18. However, these are matters which could and should have been raised in an appeal against or review of the Minister’s decision. That decision is not the subject of these Review proceedings, and this court has no power to review the decision or set it aside.

19. The only issue in these proceedings is the Defendant’s decision to refuse permission for the fencing Permit.

20. Under S1 of the PPR, “deemed permission” is defined to mean consent for approval which is determined under S84 of the Act, without deliberation by a Board.

21. Under S84 of the PPA, certain classes of development may be specified by the Regulations for which planning permission is deemed to be granted and for which no specific planning permission is needed. Section 50(3) of the PPR specifies certain classes, including in S50 (3) (b) (i) - the erection of fences. The deemed permission may be subject to conditions established by the Regulations or by an approved redevelopment zone policy, concerning the height and distance of the fencing and so on.

22. It is therefore plain that the 2^nd Defendant had no power to deliberate on the Plaintiff’s fencing application, and no power to refer it to the 1^st Defendant. This position was in fact confirmed by the Supreme Court in an earlier appeal by the Plaintiff against the Court’s initial refusal to grant leave to proceed by way of judicial review. In SCM 43 of 2017, the Court found that the Plaintiff’s fencing application was a deemed permission application under S50 of the PPR and S84 of the PPA. It follows that neither the 1^st nor 2^nd Defendants had the power to consider or refuse the application, or to consider or refuse an appeal against the refusal of the application.

23. The Defendant’s decision to refuse the Plaintiff’s fencing application was ultra vires their powers under the PPA and PPR.

Relief

24. The Plaintiff has established an error of law, entitling the Defendants’ decisions to be quashed.

25. The Plaintiff has established an entitlement to an order for mandamus, compelling the Defendants to issue a Certificate of Deemed Planning Permission for fencing of the land, subject to any conditions or limits which may be appropriate.

26. The Plaintiff has further sought Declarations that the original land zoned as Open Space has been re-zoned and subdivided into three allotments for Residential purposes, “one of which is the Residential State Lease for Allotment 23 Sec 416 in State Lease Volume 7 Folio 170”, and that it is the registered proprietor of this land. However, the evidence surrounding the issue of the original Residential State Lease in Volume 67 Folio 179, in the context of the apparent issue of a subsequent Commercial State Lease in Volume 7 Folio 170, is not sufficiently clear to enable such Declarations to be made.

27. The Plaintiff also claims damages for “deprivation of use, enjoyment and development” and for “unlawful use of the property”. The evidence produced by the Plaintiff in support of this part of the claim, was inconsistent with the pleadings, and was not entirely satisfactory.

28. The Plaintiff pleaded that the delay of up to eighteen months between submitting the fencing application in October 2015 and formal refusal in December 2016 or March/April 2017, prevented it from improving the land in accordance with the improvement covenants in the State Lease. The Plaintiff pleaded that its Planning Permission was for the construction of sixteen residential units, which it could not do because it could not fence the land. This was unsupported, and partly contradicted, by the Plaintiff’s evidence.

The change of Lease

29. There is no material showing a basis for the Plaintiff’s assertion that the State Lease was mistakenly issued for Residential (High Covenant Purposes) instead of for commercial purposes. All the documents leading up to and including the grant of the State lease make it clear that the application and subsequent re-zoning and subdivision were only for residential purposes, for low-cost housing.

30. The evidence produced by the Plaintiff was that it wrote to the Land Board on 13 June 2016, saying that the land had been “incorrectly advertised for public tender ........” as Residential State Lease (High Covenant), it should have been Commercial, this “error” was caused by the Lands Department, and should be corrected by the Minister.

31. The Plaintiff produced a letter dated 5 October 2017 from the Lands Department purporting to acknowledge the error and advising the Plaintiff to lodge a formal application to the Land Board, with the relevant fee, to vary the Lease from the Residential to Business Commercial. The letter stated that this would “merely be a correction to the lease” and would “not in any way affect your title”.

32. There was no evidence of any formal application for variation or of a fee payment, or of any decision by the Land Board to vary the Lease. However, the Plaintiff produced a photocopy of a new State Lease issued to the Plaintiff on 8 October 2018.

33. This document was completely different from the 2015 State Lease. It showed a different spelling of the Plaintiff’s name, a different Volume and Folio number, a different commencement date, a different purpose, and different Conditions. It was stated to be a Business Lease for Commercial purposes, commencing on 16 July 2018, more than three years after the original Lease commencement date, with an improvement covenant being building for business purposes to be made, but without any time limit, and without any condition preventing the sale or lease of any part of the land before compliance with the covenant.

34. There was no evidence of how this document came to be issued. It was just an unsealed photocopy, not identified by the Registrar of Titles, which did not comply with S7 of the Land Registration Act. There was insufficient evidence for the Court to find that this document was the current valid Certificate of Title for the same land on Lot 23 Sec 416 Hohola.

Damages

35. The Plaintiff gave evidence that in August - September 2015, it negotiated with a business known as Friendly Hire Cars (“FHC”) to lease the whole of the land for ten years for the purpose of operating several businesses on it. The Plaintiff’s evidence was that on 14 September 2015 it signed a Commercial Lease with FHC to lease the whole land for ten years commencing on 1 January 2016 at a rental of K40,000.00 per month. The lease document is completely inappropriate for the transaction, as it was a standard lease document for the rental of a building (not land), requiring the lessee to maintain the building in good condition, insure the building including its plate glass, and so on. There was of course no building, as the land was unimproved.

36. No satisfactory evidence was produced showing how FHC would have had the financial capacity to enter into a lease of the vacant land for K500,000.00 per annum plus incur the substantial expense of constructing multiple buildings including a workshop, offices and a shop, when it had only been registered in September 2014, twelve months before signing the lease, and when its total assets were said to be motor vehicles with a value of about K1.5 m.

37. The Plaintiff’s evidence was that FHC terminated the lease in June 2016, because the land had not been fenced. The Plaintiff therefore claims a minimum economic loss of K40,000.00 per month from January 2016 to December 2025, being K1.8 m to date, and continuing to accrue.

38. The Plaintiff claims for the value of the commercial improvements which FHC would have built on the land. This claim is untenable, when no commercial improvements could lawfully have been built on the land, and it was the Plaintiff’s obligation under the 2015 Lease to erect residential buildings to a minimum value of K250,000.00 before the land could be leased.

39. The Plaintiff also claims damages for the loss of use of the land, by way of mesne profits, which are effectively damages for wrongful occupation or trespass (see Nomgui v Administration (1974) PNGLR 349, and Magregor on Damages, para 1136) - “the normal measure of damages is the market value of the property occupied .... for the period of the wrongful occupation ...”. Using the evidence of the market appraisals, the Plaintiff claims K129,000.00 per month, totaling over K5.8m to date. However, there was no evidence of the Defendants wrongfully occupying the land.

40. The Plaintiff is claiming damages for both actual loss of rental income of K1.8m, plus K5.8m for being deprived of the use of the land. This is clearly double -dipping. If there had been a valid lease agreement for ten years, the Plaintiff would have been deprived of the use of the land for the whole of that period. If the Plaintiff used the land by renting it out, the Plaintiff cannot also recover damages for being deprived of the use of the land.

41. The Plaintiff further claims a “weekly unlawful usage fee” from the Defendants, of K40,000.00 per month from October 2015, totaling over K2.04 m to date. However, there was no evidence of any unlawful usage by the Defendants.

42. The Plaintiff cited a number of authorities in support of the proposition that a trespasser cannot be allowed to gain from his criminal or unlawful conduct. These cases do not support the Plaintiff’s claim to be entitled to either mesne profits or a wrongful usage fee, because the Defendants were not trespassers and did not criminally or unlawfully occupy the land, or make any gain from it.

43. The Plaintiff also claims K150,000.00 for general damages for distress. I do not accept the claim that a company can suffer distress, pain or suffering. A company can only suffer economic loss, which is a claim for special damages, and has to be proved in the usual way.

44. Finally, the Plaintiff has not shown that it had a legal entitlement to lease the land to FHC, or to any other business, in the first place. At the time in 2015 when the lease was said to have been negotiated and signed with FHC, the Condition of the 2015 State Lease prohibited any lease or sublease of the land until the Plaintiff had complied with the Improvement Covenant to build Residential (High Covenant) buildings. The Plaintiff had not built any buildings at that time, or at all.

45. Further, the 2015 Lease was only for Residential purposes, not for Commercial, and the Plaintiff was not entitled to lease the land to FHC or anyone for commercial purposes.

46. Any lease to FHC in 2015 was invalid as being in breach of the Conditions of the 2015 State Lease, and would have resulted in the Plaintiff being liable to have the title forfeited for non-compliance.

47. Even if the validity of the new 2018 State Lease document was accepted, the Plaintiff could only have been entitled to use the land for commercial purposes from its issue in October 2018, which was eighteen months after the issue of these proceedings, and two years after the fencing application was refused.

48. The economic losses claimed by the Plaintiff are based on the commercial use of the land, which was prohibited by the terms of the 2015 State Lease.

49. The Plaintiff has suffered some delay in being able to develop the land, since the date on which the Defendant would have reasonably been expected to make a decision on the fencing application. However, this delay could only have been relevant to the Plaintiff’s obligation to construct residential housing units, in accordance with the Conditions of the 2015 State Lease and Planning Permission.

50. There was no evidence that the Plaintiff ever intended to commence residential construction. In the very same month that the original 2015 Residential State Lease was issued to it, the Plaintiff was negotiating with FHC to lease the vacant land for commercial development, in breach of the conditions of the State Lease. The evidence does not establish that the Plaintiff has suffered any loss from a failure to construct residential housing units.

51. The evidence of:

(a) the way in which the Plaintiff had the Open Space Recreation land re-zoned to Residential and obtained the original State Lease in 2015 for the specific purpose of Residential development, but then says that it obtained a completely different State Lease for the same land in 2018 for Business/Commercial Development, and

(b) the way in which the Plaintiff says that it immediately leased the residentially-zoned land in 2015 for commercial purposes, in breach of the State Lease conditions,

is sufficient to show that the Plaintiff has not come to Court with clean hands.

52. Even if a Plaintiff successfully establishes his grounds of judicial review, he is not automatically entitled to the relief sought. He must make a case for a remedy, which is a matter of discretion - (see Mision Asiki v Manasupe Zurenuoc (2005) SC 797 and Tzen Pacific Ltd v Pouru (2016) PGSC 68).

53. As the Supreme Court said in Dale Smith v Minister for Lands (2009) PGSC 60, when quoting from Mision Asiki’s case: “It is one thing to establish an error of law or a breach of natural justice and for the Court to uphold an application for judicial review. It is another separate step to establish a case for a remedy. In judicial review proceedings, the remedies to be granted are at the discretion of the Court.”

54. Again, when quoting from Tohian v Geita and Magugia (No. 2) (1990) PNGLR 479, the Court said “ ..... in judicial review, even though the Court might find there has been an error, even an error affecting matters of jurisdiction, the court would not thereby be obliged automatically to quash the ..... proceedings. The remedies available under judicial review remain always at the discretion of the court and will only be granted to avoid injustice.

The court must therefore look at all the circumstances of the case and decide whether it is appropriate to grant a remedy ......”

55. In Peter Pagi v Mindili (2009) PGNC 135, the Court considered a claim that the Plaintiff had not come to court with clean hands. The court proceeded on the basis that this was to be determined by reference to the conduct of the parties.

56. In the present case, the Plaintiff’s conduct in relation to its application to re-zone Open Space land which was used for recreational purposes by members of the public, to Residential use, to apply for a title on the basis of proposed residential development, to be granted title in 2015 for the sole purpose of residential development, but to lease the land for commercial development in 2015, to obtain a different title 3 years later allowing commercial development, and then make a claim based on that alleged loss of commercial use, shows that the Plaintiff has not come to Court with clean hands.

57. I find that the Plaintiff has not established an entitlement to damages for loss arising from the Defendants’ decision, and that even if there had been a loss, it arose out of the Plaintiff’s unsatisfactory conduct in purporting to lease or develop the land for commercial purposes in breach of the 2015 State Lease, and its conduct in apparently obtaining a subsequent different Lease for commercial purposes over the same land in 2018, after the issue of these legal proceedings.

58. In relation to costs, the evidence shows that the Defendants’ decisions which were the subject of the review, were not motivated by improper purposes. They were motivated by protecting the public interest in Open Space Recreational use land, and say that they were unaware of the re-zoning or the issue of the 2015 residential Lease or the issue of the 2018 commercial Lease.

Conclusions

59. Having had regard to all the circumstances of the case, I therefore make the following orders:

(a) The decisions of the 1^st Defendant made on 16 December 2015 and confirmed on 13 December 2016 in relation to the Plaintiff’s Deemed Planning Permission Application for Fencing Permit, are removed into this court for the purpose of being quashed.

(b) The Defendants’ said decisions of 16 December 2015 and 13 December 2016, are quashed.

(c) An order in the nature of mandamus is made, compelling the 2^nd Defendant to issue a S84 Certificate of Deemed Planning Permission to the Plaintiff for fencing of the property described as Lot 23 S416 Hohola, subject to any conditions established by the Regulations or by an approved redevelopment zone policy.

(d) The applications for damages and further declaratory relief, are refused.

(e) Each party is to pay its own costs.

_____________________________________________________________
Makap Lawyers: Lawyers for the Plaintiff
National Capital District Commission: Lawyers for the First to Third Defendant
Solicitor General: Lawyers for the Fourth Defendant