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Mulung v Bunam [2024] PGNC 134; N10799 (13 May 2024)

N10799

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 171 OF 2021

BETWEEN:
LUAN MULUNG, for himself and on behalf of Late LADO LUANG
-Plaintiff-

AND:
SIMFORIA M. BUNAM
-First Defendant-

AND:
JOHN NATU
-Second Defendant-

AND:
JOEL BAGIL
-Third Defendant-

AND:
MICHAH MER as the CUSTOMARY LANDS OFFICER OF MADANG PROVINCE
-Fourth Defendant-

AND:
MADANG PROVINCIAL GOVERNMENT
-Fifth Defendant-

AND:
BENJAMIN SAMSON AS THE SECRETARY FOR LANDS AND PHYSICAL PLANNING
-Sixth Defendant-

AND:
REGISTRAR OF TITLES
-Seventh Defendant-

AND:
HARRIET KOKIVA as REGISTRAR OF COMPANIES
-Eighth Defendant-
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUNIEA
-Ninth Defendant-

Madang: Narokobi J
2023: 21st July
2024: 13th May

NEGLIGENCE – accrual of cause of action founded on negligence - whether claim is statute barred.

HUMAN RIGHTS – allegation of breach of rights - whether the aggrieved had any interest to issue proceeding.

COMPANIES – Powers and functions of Registrar of Companies as representative of defunct company: Companies Act, Section 372.

TRUSTS – constructive trusts – whether property of defunct company held in trust for a shareholder.

REMEDIES – whether to order Registrar to transfer defunct company’s interest in property to the shareholder.

HIB Enterprise Pty Ltd was the registered proprietor of Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province (the property). Its sole surviving shareholder is the plaintiff. On 7 September 2010 it was issued a stop-work notice from developing the property by the fourth defendant. Repeated attempts to get the fourth defendant to lift its notice was unsuccessful.

The plaintiff claims declaratory orders for the Registrar of Company to vest the property on him pursuant to s 372 of the Companies Act 1997, negligence, breach of human rights and permanent injunctive orders in this proceeding.

Held:

(1) The claim for negligence is dismissed as it is statute barred pursuant to s16(1) of the Frauds and Limitation Act 1988.

(2) Companies by virtue of s 34 of the Constitution are capable of having their rights and freedoms protected and enforced under the Constitution.

(3) The claim for breach of human rights is dismissed as at the time of the alleged breach of human rights, the plaintiff did not own the property the subject of the proceeding, as it was under the name of a company, being a separate legal entity to its shareholder pursuant to s 16 of the Companies Act 1997.

(4) The property the subject of the proceeding was a state lease and attracted the protection of the doctrine of indefeasibility of title under s 33 of the Land Registration Act 1981, and there was no lawful basis for the fourth defendant to stop the plaintiff from the use and enjoyment of the property.

(5) The deregistered company if it still existed would be equitably bound to transfer the property the subject of the proceeding to the plaintiff by virtue of the existence of a constructive trust.

(6) The eighth defendant is ordered pursuant to s 372 of the Companies Act, to do all things necessary to transfer for nominal consideration the interest of HIB Enterprise Pty Ltd as registered proprietor of Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province to the plaintiff.

(7) A permanent injunction is issued to persons who have no interest in the property from carrying out any transactions over the subject property.

Cases Cited

Dumal Dibiaso ILG v Kola Kuma (2005) SC805
Evangelical Lutheran Church of Papua New Guinea v Gee (2019) N7635

Statutes Cited

Constitution
Frauds and Limitation Act 1988
Land Registration Act 1981

Counsel

Mr B Wak, for the Plaintiff
Mr E Manihambu, for the Fourth, Sixth, Seventh, Eighth and Ninth Defendants
No appearance for the First, Second, Third and Fifth Defendants

DECISION

13th May 2024

1. NAROKOBI J: The plaintiff and his wife were the shareholders of a company described as HIB Enterprise Pty Ltd. The wife is now deceased. That company was the registered proprietor of a property known as Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province (the property). That company has since been de-registered.
   
2. The property has a long history. It came to HIB Enterprise Pty Ltd after the previous owner could not keep up with loan repayments. HIB Enterprise Pty Ltd obtained a loan and bought off the property under a mortgagee sale.
   
3. It is not clear from the facts what exactly happened to HIB Enterprise Pty Ltd. But it is now deregistered. When it was deregistered is not known.
   
4. What concerns the plaintiff is that part of the property has been claimed by the first, second and third defendants as customary land. Their efforts have been supported by the fourth defendant who is the customary lands officer in Madang, presumably with the Lands Department. A stop work notice was issued by the fourth defendant on the plaintiff on 7 September 2010. The plaintiff is aggrieved by this and has initiated this case against all the defendants named in the proceeding.
   
5. The plaintiff claims declaratory orders for the Registrar of Company to vest the property on him pursuant to s 372 of the Companies Act 1997, negligence and breach of human rights. I deal with the claims for negligence first. In my view, the first hurdle the plaintiff must overcome is to demonstrate whether the claim is statute barred or not pursuant to the provisions of the Frauds and Limitation Act 1988 (s 16(1)). The cause of action accrued on 7 September 2010. It expired on 7 September 2016. The case was commenced in 2021. The claim for negligence being a form of tort must be commenced within six years from when the cause of action accrued. This did not happen and therefore the claim for negligence is statute barred and is dismissed.
   
6. I am also not satisfied that there was a breach of the plaintiff’s human rights primarily s 53 (Protection from unjust deprivation of property) of the Constitution, as the property existed under the name of HIB Enterprise Pty Ltd. Companies by virtue of s 34 of the Constitution are capable of enforcing and protecting their rights and freedoms. The plaintiff therefore does not have standing to make these claims. Section 16 of the Companies Act recognises a company as a separate legal entity from its shareholder. The claim for breach of human rights is also refused.
   
7. The property is a registered state lease. It attracts the protection of indefeasibility of title under s 33 of the Land Registration Act 1981. I have considered the contents of the letter dated 7 September 2010. There is no legal basis cited in the letter to stop the use, development and enjoyment of the property by its registered proprietor. The import of the letter runs contrary to the doctrine of indefeasibility of title and is therefore null and void.
   
8. With regards to the claim for declaratory orders, the plaintiff says that there was a constructive trust prior to the deregistration of the company where he was the beneficiary and the company the trustee. I have had regard to the case of Dumal Dibiaso ILG v Kola Kuma (2005) SC805 which defined a constructive trust in the following terms:
   

A constructive trust is a trust raised by construction of law or arising by operation of law, as distinguished from express trust. They do not arise by agreement or from intention of the parties but by operation of the law. Blacks Law Dictionary 6th edition -Centennial Edition (1891-1991) states, ‘where the circumstances of a transaction are such that the person who takes the legal estate in property cannot also enjoy the beneficial interest without necessarily violating some established principles of equity, the court will raise a constructive trust, and fasten it upon the conscience of the legal owner, so as to convert him into a trustee for the parties who in equity are entitled to the beneficial enjoyment’.

9. HIB Enterprises Pty Ltd, prior to its removal from the register of companies, was the registered proprietor of the property described as Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province. There is no opposing evidence that the plaintiff is not the sole shareholder of that company. The plaintiff paid the loan for a clear title to be issued to HIB Enterprise Pty Ltd. The plaintiff now occupies the property and was in the process of developing it until the fourth defendant’s notice on 7 September 2010. HIB Enterprise Pty Ltd in these circumstances held the property for the beneficial interest of the plaintiff.
   
10. I find in the circumstances that there was a constructive trust between HIB Enterprises Ltd and the plaintiff. HIB Enterprises Pty Ltd was the trustee and held the property in trust for the plaintiff as beneficiary. None of the defendants made any opposing submissions. My view is supported by my reading of Evangelical Lutheran Church of Papua New Guinea v Gee (2019) N7635. I find that in that HIB Enterprises Pty Ltd, if it still existed, would be equitably bound to transfer its interest in the property to the plaintiff.
    
11. Having found that there was a constructive trust between the company and the plaintiff, I am persuaded to make similar orders to what the court ordered under s 372 of the Companies Act 1997 in Evangelical Lutheran Church of Papua New Guinea v Gee. I order that the Registrar of Companies transfer the property to the plaintiff Luan Mulung for a nominal consideration.
    
12. I will also issue an order to stop the first, second, and third defendant from conducting any transaction over the property, as it is a state lease.
    
13. Having said all, I have discussed above I will therefore make the following orders and declarations:
    
    1. The plaintiff’s claim for negligence is dismissed as it is statute barred.
       
    2. The plaintiffs claim for breach of human rights is dismissed as at the relevant time the plaintiff did not have standing to now make a claim against the defendants.
       
    3. It is declared that the fourth defendant’s decision to issue a stop work notice contained in the letter dated 7 September 2010 to the plaintiff is without lawful basis and is null and void.
       
    4. It is declared that HIB Enterprises Pty Ltd, prior to its removal from the register of companies, held its interest as registered proprietor of the property described as Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province in constructive trust for the plaintiff, and that HIB Enterprises Pty Ltd, if it still existed, would be equitably bound to transfer that interest to the plaintiff.
       
    5. It is ordered that the eighth defendant, in accordance with the declaration made in term four (4) of the orders made herein, pursuant to Section 372 of the Companies Act, shall do all things necessary to transfer for nominal consideration the interest of HIB Enterprise Pty Ltd as registered proprietor of Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province to the plaintiff.
       
    6. The first, second and third defendants and their servants and agents or any other persons are permanently restrained from entering into any commercial dealings such as selling, sub-leasing, surveying or doing any other commercial transactions with the said property Portion 211, Volume 98, Folio 2, Malas, Karkar, Sumkar District of Madang Province.
       
    7. The matter is considered determined and the filed is closed.
       
    8. Each party will bear their own costs.
       
    9. Time is abridged.
       

Judgment and orders accordingly.

Bradley and Co Lawyers: Lawyers for the Plaintiff
A/Solicitor-General: Lawyers for the Fourth, Sixth, Seventh, Eighth and Ninth Defendants