Vaki Vailala v National Housing Corporation

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 20 January 2017
• Citation: (2017) N6598
• Court: National Court
• Year: 2017
• Judgement Number: N6598

Full : WS No 799 of 2014; Vaki Vailala v National Housing Corporation and the Honourable Fabian Pok MP and Romilly Kila-Pat, Secretary, Department of Lands and Physical Planning and Independent State of Papua New Guinea (2017) N6598

National Court: Cannings J

Judgment Delivered: 20 January 2017

N6598

PAPUA NEW GUINEA

IN THE NATIONAL COURT OF JUSTICE

WS NO 799 OF 2014

BETWEEN

VAKI VAILALA

Plaintiff

AND

NATIONAL HOUSING CORPORATION

First Defendant

AND

THE HONOURABLE FABIAN POK MP

Second Defendant

AND

ROMILLY KILA-PAT, SECRETARY,

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

Third Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Defendant

Waigani: Cannings J

2015: 3, 11 November,

2017: 20 January

LAND – government land – State Leases – indefeasibility of title – meaning of “fraud” in Land Registration Act, Section 33(1)(a) – whether actual fraud must be proven – whether proof of constructive fraud is sufficient.

GOVERNMENTAL BODIES – National Housing Corporation – sale of dwellings – National Housing Corporation Act 1990 – Corporation’s duty to comply with provisions of Act when deciding whether to sell dwelling house and to whom it can be sold.

REMEDIES – appropriate relief re title to residential property in a case of fraud – whether to order that title be declared null and void – whether appropriate to order that property vested in National Housing Corporation be offered for sale to long-term occupier of property .

The plaintiff claimed that a residential property vested in the National Housing Corporation, which he had occupied for 21 years, was sold by the Corporation (the first defendant) to the second defendant in irregular circumstances, contrary to the National Housing Corporation Act. He claimed that it was a case of fraud, such that the second defendant’s title should be declared null and void and forfeited. He asked that the Corporation be ordered to offer the property for sale to him for the amount at which it had been valued, when the Corporation offered to sell him the property on previous occasions. The defendants argued that the second defendant was the registered proprietor, who had indefeasible title, that there was no fraud, that the Corporation had acted fairly and in accordance with its governing legislation in selling the property to the second defendant who was a bona fide purchaser who had purchased the property in good faith, that the plaintiff was for the bulk of the period of his occupation of the property an illegal and unfaithful tenant and that all relief sought by him should be refused. A trial was conducted to determine whether any relief sought by the plaintiff should be granted.

Held:

(1) Under Papua New Guinea’s Torrens Title system of land registration for alienated government land, registration of a lease vests, subject to limited exceptions, an indefeasible (unforfeitable) title in the registered proprietor subject only to the exceptions in Section 33(1) of the Land Registration Act. Most significantly Section 33(1)(a): “in the case of fraud” (Mudge v Secretary for Lands [1985] PNGLR 387).

(2) “Fraud” means actual fraud or constructive fraud. Constructive fraud exists where the circumstances of a transfer of title are so unsatisfactory, irregular or unlawful, it is tantamount to fraud, warranting the setting aside of registration of title.

(3) The plaintiff proved constructive fraud, as the sale of the property to the second defendant was unlawful (contrary to Division IV.4 (sale of dwellings etc) of the National Housing Corporation Act), the circumstances of sale were peculiar, irregular and suspicious and the offer to the plaintiff in 2013 was unreasonable.

(4) It was in the interests of justice that the sale and the transfer of the State Lease from the Corporation to the second defendant be declared null and void and the Corporation be ordered to again offer the property for sale to the plaintiff.

Cases cited:

The following cases are cited in the judgment:

Elizabeth Kanari v Augustine Wiakar (2009) N3589

Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215

Helifix Group of Companies Ltd v PNG Land Board (2012) SC1150

Hi-Lift Company Pty Ltd v Miri Setae [2000] PNGLR 80

Kapiura Trading Ltd v Bullen (2012) N4903

Koitachi Ltd v Walter Schnaubelt (2007) SC870

Kol Toki v Moeka Morea (2016) SC1588

Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120

Lae Rental Homes Ltd v Viviso Seravo (2003) N2483

Mamun Investment Ltd v Nixon Koi (2015) SC1409

Mark Lakani v Gabe Ikupu (2015) N6067

Mosoro v Kingswell Ltd (2011) N4450

Mudge v Secretary for Lands [1985] PNGLR 387

NCDIC v Crusoe Pty Ltd [1993] PNGLR 139

Open Bay Timber Ltd v Minister for Lands & Physical Planning (2013) N5109

Ramu Nickel Ltd v Temu (2007) N3252

Rosemary John v James Nomenda (2010) N3851

Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959

Tau Gumu v PNGBC (2002) N2251

Vitus Kais v Sali Tagau (2016) N6159

West New Britain Provincial Government v Kimas (2009) N3834

Yakananda Business Group Inc v Minister for Lands (2001) N2159

STATEMENT OF CLAIM

This was an application for declarations and orders regarding a State Lease over a residential property.

Counsel:

B Ovia, for the Plaintiff

J L Talopa, for the first Defendant

M Philip, for the second Defendant

20th January, 2017

1. CANNINGS J: This case is about a residential property in the National Capital District, Section 6, Lot 25, Hanu Place, Boroko. The plaintiff, Vaki Vailala, a former public servant, aged in his 60s, and his family, have occupied the property since 1994. The property was until recently managed by the National Housing Corporation (the first defendant), and the plaintiff was required to pay rent to the Corporation. In late 2013-early 2014 the Corporation sold the property, and transferred the State Lease over it, to Hon Fabian Pok MP, the Minister for Defence (the second defendant), who is now the registered proprietor.

2. The plaintiff commenced proceedings in 2014 against those defendants and the Secretary for Lands and Physical Planning (third defendant) and the State (fourth defendant). He claims that the property was sold by the Corporation to the second defendant in irregular circumstances, contrary to the National Housing Corporation Act, and that it was a case of fraud. He argues that the second defendant’s title should be declared null and void and forfeited and that the Corporation should be ordered to offer the property for sale to him at a reasonable price.

3. The defendants argue that the second defendant is the registered proprietor, that he has indefeasible title, and that there was no fraud as the Corporation acted fairly and in accordance with its governing legislation in selling the property to the second defendant, who was a bona fide purchaser who had purchased the property in good faith. The defendants claim the plaintiff was for the bulk of the period of his occupation of the property an illegal occupier and an unfaithful tenant and all relief he seeks should be refused.

4. A trial has been conducted to determine whether any relief sought by the plaintiff should be granted.

UNDISPUTED FACTS

5. A number of undisputed facts have emerged from the evidence:

· The plaintiff moved into the property in January 1994. He was then an officer of the Department of Lands and Physical Planning. He is a surveyor by profession.

· In 2005 the plaintiff left the Public Service.

· In December 2005 the plaintiff arranged a valuation of the property by the Office of the Valuer-General. It was valued at K70,000.00.

· By a letter dated 28 February 2006, delivered to the plaintiff on 27 July 2006, the Corporation offered to sell the property to the plaintiff for an un-determined price. He accepted the offer, in principle, on 27 July 2006 and said “Please advise next course of action”.

· By a letter dated 18 February 2008 the Corporation again offered to sell the property to the plaintiff, for an un-determined price.

· In July 2009 the plaintiff and the Corporation entered into a written tenancy agreement, for the first time. The rent was K220.00 per fortnight.

· On 18 April 2012 the plaintiff wrote to the Managing Director of the Corporation, pointing out that he had occupied the property since 1994 and accepted two previous offers to sell the property to him but nothing had happened. He again expressed interest in purchasing the property. The Corporation did not respond to the letter.

· On 10 May 2013 the second defendant wrote, under the letterhead “Office of the Minister for Defence”, to the Managing Director of the Corporation expressing his interest in “any property that is available for sale by your organisation”, stating that he has housing allowances and finance and is prepared to pay the market value. He did not mention any particular property that he was interested in purchasing.

· On 30 October 2013 the Managing Director of the Corporation...