Eric Kiso v Bennie Otoa

• Jurisdiction: Papua New Guinea
• Judge: Salika, DCJ; Manuhu, J; Logan, J
• Judgment Date: 25 February 2013
• Citation: (2013) SC1222
• Court: Supreme Court
• Year: 2013
• Judgement Number: SC1222

Full : SCA 95 of 2011; Eric Kiso v Bennie Otoa and Ken Wutnalom (2013) SC1222

Supreme Court: Salika, DCJ; Manuhu, J; Logan, J

Judgment Delivered: 25 February 2013

SC1222

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 95 OF 2011

BETWEEN:

ERIC KISO

Appellant

AND:

BENNIE OTOA

First Respondent

AND:

KEN WUTNALOM

Second Respondent

Waigani: Salika, DCJ; Manuhu, J; Logan, J

2013: 25 February

PROPERTY – Land titles system – Indefeasibility of an estate in land – Exceptions to indefeasibility – Whether any fraud committed by a third party purchaser for value without notice – Land Registration Act 1996

Cases Cited:

Papua New Guinea Cases

Koitachi Ltd v Zhang [2007] PGSC 11; SC870

Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308

The Papua Club Inc. v. Nusaum Holdings Ltd. (No.2) [2004] PGNC 178; (2004) N 2603

The Papua Club Inc v Nasaum Holdings Ltd [2005] PGSC 15; SC812

Overseas cases:

Assets Company Ltd -v- Mere Roihi and Others [1905] AC 176

Breskvar -v- Wall (1971) 126 CLR 376

Brigginshaw v Brigginshaw (1938) 60 CLR 336

Counsel:

Mr. E Kiso, (self-represented) for the Appellant

Mr. L Manua, for the Second Respondent

1 March, 2013

1. BY THE COURT: At the heart of this appeal is the application to the unfortunate circumstances of the appellant, Mr Eric Kiso of well-settled principles concerning the indefeasibility of title conferred on a registered proprietor under the Torrens system of title by registration found in the Land Registration Act 1981 and the limited exceptions to indefeasibility for which that Act provides.

2. The following chronology, as taken from the findings made by the learned primary judge and evidence which was uncontroverted before the court below, summarises the background facts in this appeal:

(a) In 1993, Mr Kiso made an oral agreement with one Bennie Otoa, the first respondent, for the sale by Mr Otoa to him of Mr Otoa’s interest (or, more accurately at that time, prospective interest) in land (the subject land) more particularly described as Allotment 12, Section 295, Hohola, National Capital District, being the whole of the land described in State Lease Volume 91, Folio 84 (the State Lease).

(b) The terms of that oral agreement were that the purchase price for Mr Otoa’s interest was K18,000, payable by an initial instalment of K6,000 with the balance payable when Mr Otoa procured a transfer to him from the National Housing Corporation (NHC) of the State Lease in respect of the subject land.

(c) That transfer of title was necessary because Mr Otoa was not then the registered proprietor of the State Lease. In 1993, the NHC was the registered proprietor. Mr Otoa had been a tenant of the NHC on the subject land and, so he informed Mr Kiso, had an expectation that the title would be transferred to him under an NHC scheme known as the “National Housing Corporation Give Away Scheme”.

(d) Later in 1993, Mr Kiso paid Mr Otoa the instalment of K6,000 and received from him the keys to the house on the subject land. He took possession of that property, paid various outstanding bills relating to it and, over the course of the next 13 years, made various improvements to it.

(e) In the meantime, shortly after receiving the instalment of K6,000 from Mr Kiso, Mr Otoa left Papua New Guinea to take up residence in his wife’s homeland, the Solomon Islands.

(f) The matters rested until 2006 when Mr Otoa returned to Papua New Guinea. He visited Mr Kiso at his workplace. Mr Kiso put it to Mr Otoa that the title needed to be regularised with the NHC before he left to return to the Solomon Islands. Mr Otoa told Mr Kiso he would do this. At the same time, they renegotiated the terms of purchase of the subject land. In the result, they came to sign a contract for the sale of the subject land for the sum of K31,000. That contract recorded that Mr Kiso had made a part payment of K6,000 with the balance of K25,000 being payable on completion of the contract. Completion was to occur within 14 days of Mr Kiso receiving notice from Mr Otoa of the due stamping of the contract. Messrs Kiso and Otoa also executed a related transfer of the State Lease. This was duly stamped.

(g) Messrs Kiso and Otoa came to fix 14 July 2006 at 10:00 am at the Waigani Registry as the date, time and place for completion of their contract. Mr Kiso attended at the appointed time and place; Mr Otoa did not.

(h) In light of this non-attendance, Mr Kiso instituted proceedings in the National Court against Mr Otoa that same day seeking specific performance of the contract or, alternatively, damages. On 17 July 2006, he secured orders from the National Court restraining Mr Otoa from dealing with the subject land pending the trial of the claim for specific performance.

(i) Mr Kiso also lodged with the Registrar of Titles a caveat forbidding dealings with the subject land. That caveat was produced to the Registrar of Titles on 21 July, 2006 at 9.06 am with that production being registered that same day. He likewise notified the Registrar of Titles of his institution of proceedings in the National Court.

(j) The titles register in respect of the State Lease records production of the transfer of title to Mr Otoa from the NHC on 4 July, 2006 at 9:02 am, with that transfer being entered on the titles register on 12 July 2006.

(k) The titles register also records that on 26 November 2008, Mr Otoa was issued with a replacement copy of the certificate of title in respect of the State Lease on the basis that the Registrar of Titles was satisfied that the original had been lost or destroyed (the replacement certificate). Mr Kiso’s caveat is not shown on this replacement certificate.

(l) A notice by the Registrar of Titles of his intention to issue the replacement certificate appeared in The National newspaper on 8 September 2008.

(m) On 7 November 2008, Mr Otoa entered into a contract with Mr Ken Wutnalom for the sale of the State Lease for the sum of K40,000. The titles register records that a related transfer of the State Lease to Mr Wutnalom was produced on 3 February 2009 at 10:56 am and entered on 6 March 2009.

(n) Completion of that contract of sale occurred on 17 December 2008.

3. By the time that the proceeding in the National Court came to trial in April 2011, Mr Wutnalom had been joined as a party. Mr Kiso sought relief only against Mr Otoa. His statement of claim made no allegations at all against Mr Wutnalom, much less fraud on his part.

4. Mr Otoa neither filed a defence to Mr Kiso’s claim nor appeared at trial. The primary judge ordered that Mr Kiso have judgment against Mr Otoa with damages to be assessed.

5. For his part, Mr Wutnalom cross-claimed against Mr Kiso seeking vacant possession of the subject land or, alternatively, damages. It was in his defence to this cross-claim that Mr Kiso alleged that title had passed to Mr Wutnalom because of fraud and a breach of the court’s restraining order. In respect of the cross-claim, his Honour concluded that Mr Kiso had neither proved fraud nor that Mr Wutnalom was aware of the restraining order.

6. Though put in various ways in the notice of appeal and his related submissions, Mr Kiso’s principal challenge on the appeal was against the conclusion of the primary judge that fraud was not proved.

7. Proof of fraud on the part of Mr Wutnalom was necessary for these reasons.

8. Section 36 of the Land Registration Act assimilates the position of the Register of State Leases and State Leases with, respectively, the Register and certificates of title to land. “The Register” (see s 9) is the progressively compiled register of certificates of title to land. Subject to presently immaterial exceptions, a State Lease, on registration, is subject to the provisions of the Land Registration Act, and may be dealt with for the same purposes and in the same manner, subject to the Land Act 1996, as if it had been granted by a registered proprietor and registered in the Register (s 36(2)). Thus, just as with a certificate of title (see s 11(1)), the Registrar’s duplicate on the Register of State Leases of a State Lease is conclusive evidence that the person registered has the proprietary interest in that State Lease. In this fashion, the Land Registration Act creates a system of title by registration which has come to be known as the “Torrens system” after its South Australian originator.

9. Section 33 of the Land Registration Act provides, materially:

33. PROTECTION OF REGISTERED PROPRIETOR.

(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except–

(a) in the case of fraud;

…

10. Further, s 146 of the Land Registration Act materially provides:

146. EJECTMENT AGAINST REGISTERED PROPRIETOR.

(1) Subject to Subsection (2), a certificate of title is an absolute bar and estoppel to an action of ejectment against the person named in the certificate of title as seised of or entitled to the land.

(2)...