Evangelical Lutheran Church of Papua New Guinea v Frank Wamahembe Maru & Marina Maru and Gunar Gee (2020) N8173

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 31 January 2020
• Court: National Court
• Citation: (2020) N8173
• Docket Number: WS No 296 of 2019
• Year: 2020
• Judgement Number: N8173

Full Title: WS No 296 of 2019; Evangelical Lutheran Church of Papua New Guinea v Frank Wamahembe Maru & Marina Maru and Gunar Gee (2020) N8173

National Court: Cannings J

Judgment Delivered: 31 January 2020

N8173

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 296 OF 2019

EVANGELICAL LUTHERAN CHURCH OF PAPUA NEW GUINEA

Plaintiff

V

FRANK WAMAHEMBE MARU & MARINA MARU

First Defendants

GUNAR GEE

Second Defendant

Madang: Cannings J

2019: 7th August, 16 October

2020: 31st January

TRUSTS – CONSTRUCTIVE TRUSTS – whether real property of defunct company held in trust for another corporation.

REMEDIES – appropriate relief re title to government land held by defunct company – whether corporation having equitable interest in land held by defunct company ought to be granted order for vacant possession.

The plaintiff, a church entity incorporated by statue, claimed that it had an equitable interest in a State Lease over a residential property by virtue of a constructive trust between it and another company (not a party to these proceedings) that had been the registered proprietor of the State Lease. The other company became defunct in 1996. The plaintiff sought: (a) a declaration that the other company held its interest in the property in constructive trust for the plaintiff; and (b) an order for vacant possession and injunctions that would require the first defendants, who occupy the property, to vacate it and be restrained from interfering with the plaintiff’s enjoyment of the property. The first defendants argued that the proceedings ought to be summarily dismissed as the plaintiff lacked standing to commence the proceedings due to the statute under which the plaintiff was incorporated establishing a church council, which ought to have commenced the proceedings in its (the council’s) name. As to the merits of the case, the first defendants argued that all relief claimed by the plaintiff should be refused as the lease under which they occupy the property is a lawful and enforceable agreement.

Held:

(1) The plaintiff is a legal entity incorporated by statute and though its property must be managed and administered by the church council, the plaintiff is the appropriate entity to commence proceedings in its corporate name, which it has done. The plaintiff has standing. The proceedings are not frivolous or vexatious. The first defendants’ preliminary argument failed.

(2) The defunct company, prior to its removal from the register of companies, held its interest in the State Lease in constructive trust for the plaintiff, and if it still existed would be equitably bound to transfer that interest to the plaintiff. It was appropriate to grant a declaration to that effect.

(3) It is better that the plaintiff takes the necessary steps under the Companies Act and the Land Registration Act to get the property transferred to it and becomes the registered proprietor of the State Lease, before it asserts its rights to possession of the property, given that the first defendants are in occupation of the property and have apparently entered into a lease with the registered proprietor, in good faith.

(4) Accordingly the primary declaration sought by the plaintiff was granted and the order for vacant possession and other orders were refused. The parties were ordered to bear their own costs.

Cases cited:

The following case is cited in the judgment:

Evangelical Lutheran Church of PNG v Gee (2019) N7635

STATEMENT OF CLAIM

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

Counsel

S Gor &B B Wak, for the Plaintiff

B S Lai, for the first Defendants

31st January, 2020

1. CANNINGS J: This case is about a residential property in Cassia Avenue, Kalibobo in the town of Madang. The formal description of the property is Section 38, Allotment 14, Madang Town, Madang District. The first defendants, Frank Wamahembe Maru and Marina Maru, occupy the property under a five-year lease that they entered into on 1 August 2018 with the registered proprietor of the State Lease over the property, Lutheran Church (Madang) Ltd. The lease was negotiated on behalf of that company by the second defendant Mr Gee Gunar (aka Gunar Gee).

2. Lutheran Church (Madang) Ltd is a defunct company. It was removed from the register of companies in 1996.

3. The plaintiff is the Evangelical Lutheran Church of Papua New Guinea (“the Church”), a corporation established by the Evangelical Lutheran Church of Papua New Guinea Act 1992. The plaintiff claims that it has an equitable interest in the State Lease over the property by virtue of a constructive trust between it and Lutheran Church (Madang) Ltd. The plaintiff seeks two types of remedies:

(a) a declaration that Lutheran Church (Madang) Ltd held its interest in the property in constructive trust for the plaintiff; and

(b) an order for vacant possession and injunctions that would require the first defendants to vacate the property and be restrained from interfering with the plaintiff’s enjoyment of the property.

4. The first defendants argue that the proceedings ought to be summarily dismissed as frivolous and vexatious as the plaintiff lacks standing to commence the proceedings due to the statute under which the plaintiff was incorporated establishing a church council, which ought to have approved the court proceedings and commenced the proceedings in its (the council’s) name. As to the merits of the case, the first defendants argue that all relief claimed by the plaintiff should be refused as the lease under which they occupy the property is a lawful and enforceable agreement.

ISSUES

The following issues arise:

1. Should the proceedings be summarily dismissed due to the plaintiff’s lack of standing?

2. Does the plaintiff have an equitable interest in the property by virtue of a constructive trust?

3. What orders should the Court make?

1 SHOULD THE PROCEEDINGS BE SUMMARILY DISMISSED DUE TO THE PLAINTIFF’S LACK OF STANDING?

5. The first defendants argue that the plaintiff lacks standing as, although the plaintiff was established as a corporation under s 2 of the Evangelical Lutheran Church of Papua New Guinea Act 1992, management and administration of its property is the responsibility of the Church Council under ss 3 (Church property), 4 (constitution of the council) and 21 (powers of Church)of that Act, which state:

3. Church Property.

Church Property shall be managed and administered on behalf of the Church by a Council to be known as the "Evangelical Lutheran Church National Council" and the Council may exercise all the powers of the Church in relation thereto.

4. Constitution of the Council.

(1) The Council shall consist of—

(a) the Bishop of the Church; and

(b) the Assistant to the Bishop of the Church; and

(c) the President of each District; and

(d) other Members of the Church appointed by the Synod and as specified by the Constitution and by-laws.

(2) The Bishop of the Church shall be the Chairman of the Council and the Assistant to the Bishop shall serve as Assistant Chairman.

(3) The members of the Council referred to in Subsection (1)(c) and (d) shall retire from office and may be eligible for re-election, in accordance with the Church Constitution. …

21. Powers of Church.

The powers of the Church relating to property may be exercised for and on its behalf by the Council subject to the control and direction of the Synod, and those powers include the power in the name of the Church—

(a) to acquire, hold, manage and control, and grant, transfer, mortgage, demise, sell, surrender, dispose of, create trusts or create or reverse easements in or over or otherwise deal with property of any kind; and

(b) to establish and support, or to aid in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or past employees, or the dependants or connects of any such persons, to grant pensions and allowances, and to make payments towards insurance; and

(c) to borrow or raise or secure the payment of money in such manner as the Church thinks proper, to secure such money or the repayment or performance of any debt, liability, contract, guarantee or other engagement incurred or to be entered into by the Church in any way, and to purchase, redeem and pay off any such securities; and

(d) to take or hold mortgages, liens and charges to secure payment of the purchase price or any part of the purchase price of any Church property sold by the Church, or any money due to the Church; and

(e) to enter into partnership or into an arrangement for sharing of income, union of interest, co-operation, joint venture or reciprocal concession, or otherwise, with any person carrying on or engaged in or about to carry on or engage in any business or transaction that is capable of being conducted so as directly or indirectly to benefit and further the purposes and work of the Church; and

(f) to carry on any business that seems to the Council capable of being conveniently carried on by the Church and calculated directly or indirectly to benefit and further the purposes and work of the Church; and

(g)...