H.Q.H Enterprises Limited v Wangbao Trading Limited and Others

• Jurisdiction: Papua New Guinea
• Judge: Gavara-Nanu J,Collier J,Frank J
• Judgment Date: 28 April 2023
• Neutral Citation: SC2419
• Citation: SC2419, 2023-04-28
• Counsel: G. Garo with S. Supro, for the Appellant,F. Kuvi, for the First Respondent,N. Yano, for the Second to Fifth Respondents
• Docket Number: SCM NO. 21 OF 2022
• Hearing Date: 27 March 2023,28 April 2023
• Court: Supreme Court

SC2419

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCM NO. 21 OF 2022

Between

H.Q.H Enterprises Limited

Appellant

v.

Wangbao Trading Limited

First Respondent

and

Ala Ane as Registrar of Titles, Department of Lands and Physical Planning

Second Respondent

and

Benjamin Samson as Secretary for Lands & Physical Planning

Third Respondent

and

Hon. John Rosso as Minister for Lands & Physical Planning

Fourth Respondent

and

Independent State of Papua New Guinea

Fifth Respondent

Waigani: Gavara-Nanu J, Collier J & Frank J

2023: 27^th March & 28^th April

APPEAL — Practice & Procedure — State Lease — Transfer of title by contract of sale and Ministerial Approval — Validity of title — Forfeiture of lease — Land Act, 1966; s. 122 — Mandatory statutory requirements not complied with.

APPEAL — Practice & Procedure — Land Registration Act, Chapter No. 91; ss. 33; 160 and 161 — Meaning of fraud — Power to cancel an invalid title.

Cases Cited:

Allolim v. Kirokim (2018) SC1735

Beecraft No. 20 Ltd v. Minister for Lands (2001) N125

Davis v. Pitzz [1988–89] PNGLR 143

Dent v. Kavali [1981] PNGLR 488

Elisha Timothy & Ors v. Joshinta Timothy (2022) SC2282

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

Jaro Investments Ltd v. Ane (2022) SC2192

John Mur v. Les Kewa (2010) N4016

Kekedo v. Burns Philp (PNG) [1988–89] PNGLR 122

Koitachi Ltd v. Walter Schnaubelt (2007) SC870

Kwayok v. Singomat (2017) N7097

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

Mudge v. Secretary for Lands [1985] PNGLR 387

Noko No. 96 Limited v. Sir Puka Temu; Minister for Lands and Physical Planning (2013) N732

Paga No. 36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation [2018] PGSC 17; SC1671

Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603

PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126

PNG Power Ltd v. Reipi (2018) N7442

PNG Sustainable Development Program Ltd v. Rosso (2022) SC2230

Ombudsman Commission v. Yama (2004) SC747

Somare v. Manek (2011) SC1118

Steamships Trading Company v. Hon. Benny Allen & Ors (2021) N9334

The National Council of Young Mens' Christian Association of Papua New Guinea Inc. Firms Services Ltd & Ors (2017) SC1596

University of Papua New Guinea v. Ofoi (2016) N6303

Yakamanda Business Group Inc. Minister for Lands and Physical Planning (2001) N2195

Counsel:

G. Garo with S. Supro, for the Appellant

F. Kuvi, for the First Respondent

N. Yano, for the Second to Fifth Respondents

Dentons PNG: Lawyers for the Appellant

Francis Kuvi & Associates Lawyers: Lawyers for the First Respondent

Solicitor General: Lawyers for the Second to Firth Respondents

28^th April, 2023

1 Gavara-Nanu J: I have read the judgments of Collier J and Frank J and I respectfully agree with the conclusions reached by their honours. I would however like to add some comments of my own.

2 The background facts and the grounds of the appeal have been succinctly summarized by Collier J in her judgment, it is therefore unnecessary for me to repeat them here.

3 My comments relate to the requirements of s. 122 of the Land Act 1966; ss. 33, 160 and 161 of the Land Registration Act, Chapter No. 191.

4 I deal firstly with s. 33 of the Land Registration Act as it relates to fraud. It was argued before the court below on behalf of the first respondent who was the plaintiff in the proceeding that appellant obtained its title through constructive fraud. It was claimed that this happened when certain requirements under the Land Act were not complied with when the appellant obtained its title, thus resulting in the appellant's title being allegedly obtained irregularly. Based on these arguments the court below went on to find that appellant obtained its title through constructive fraud and held that appellant's title was invalid.

5 It has however been affirmed by the Supreme Court in a long line of cases that fraud under s. 33 under Torrens system of land registration means actual fraud, viz; fraud by the registered proprietor. It does not mean constructive fraud. In Papua Club Inc. v. Nusaum Holdings Limited (No.2) (2004) N2603, the court gave the historical development of the law on this point with a comprehensive survey of decided cases in jurisdictions similar to Papua New Guinea regarding land ownership under Torrens system particularly England, Australia, and New Zealand. The decision of the Supreme Court in Mudge v. Secretary for Lands [1985] PNGLR 387 in which it was pronounced for the first time in this jurisdiction that “fraud” under s. 33 of the Land Registration Act meant actual fraud was among others, based on the cases cited in Papua Club Inc.

6 The notion of constructive fraud has its genesis in Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 219, with the greatest of respect, the decision in my view lacked proper legal reasoning. I was indeed critical of the decision in The National Council of Young Mens' Christian Association of Papua New Guinea Inc. v. Firms Services Ltd & Ors (2017) SC1596. The decision in Papua Club Inc. was approved by the Supreme Court in Koitachi Ltd v. Walter Schnaubelt (2007) SC 870. It has been cited with approval in other subsequent Supreme Court decisions. See, for example Elisha Timothy & Ors v. Joshinta Timothy (2022) SC2282 and Paga No.36 Limited v. Joseph Eleadona, Managing Director of National Broadcasting Corporation [2018] PGSC 17; SC1671.

7 Notably, subsequent Supreme Court decisions have expressly overruled Emas in which the notion of constructive fraud was used to describe failure by officers and authorities in the Department of Lands to comply with mandatory statutory requirements for grant of a title. In Elisha Timothy & Ors v. Joshinta Timothy (supra) the Court in its deliberation of the majority decision in Emas, with which the Court disagreed said:

“Against this background of cases consistently decided at ultimate appellate level over the course of the 20th century in relation to the Torrens system of title by registration, the conclusion unanimously reached by this court in Mudge v The Secretary for Lands [1985] PNGLR 387 that, notwithstanding that a State lease issued under the Land Act may have been issued irregularly and in breach of the provisions of that Act, the resultant registration of an interest in that lease conferred indefeasibility in respect of that interest was, with respect, completely congruent and orthodox. The court adopted and applied Assets Co, Frazer v Walker and Breskvar v Wall in reaching that conclusion. Explicitly in the judgment of Pratt J and, by their application of these cases implicitly in the case of Kidu CJ and Woods J, the court also accepted that, in s 33 of the Land Registration Act, fraud meant actual fraud. Thus, Kidu CJ held (at 390):

“Under legislation based on the … [Torrens] system (in Australia and New Zealand) it is now settled law that, apart from the exceptions mentioned in the relevant legislation, once land is registered under the Torrens system the owner acquires an indefeasibility of title”.

To a like effect is this statement by Pratt J (at 397):

“The end result of all this is that even if I were to find in the appellants' favour that the lease was void because of serious irregularities concerning the way in which it was issued prior to registration, such registration, in the absence of fraud, achieves an immediate indefeasible title. I agree with the learned trial judge that “whilst the Court could have been of assistance to the plaintiff prior to the day of registration because of failure in issuing a lease to observe the provisions … under the Land Act, but time had moved on”.

It must follow that, as at Independence, and as at the time the Land Registration Act was enacted, the fraud exception to the indefeasibility otherwise conferred by registration did not mean constructive or equitable fraud. Parliament must be taken to have enacted the Land Registration Act against the background of settled authority as to the meaning of the fraud exception. For fraud to carry the meaning constructive or equitable fraud would have required a special definition of fraud in that Act. There is no such definition. The Land Registration Act is a conventional, Torrens title system statute.

Mudge has been followed and applied by this court on numerous occasions: Keindip v The State of Papua New Guinea [1993] PNGLR 28; Timano v Timano [1993] PNGLR 334; Mamun Investments v Ponda [1995] PNGLR 1; Kiso v Otoa [2013] PGSC 3; SC1222; Paga No 36 Ltd v Eleadona [2018] PGSC 17; SC1671; Soto v Our Real Estate Ltd [2018] PGSC 55; SC1701. More than once, it has been stated that fraud for the purposes of s 33(1)(a) of the Land Registration Act means actual, not constructive, fraud. There are numerous examples of adherence to this view in the National Court, the most notable of which is Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178; N2603, in which Gavara-Nanu J offers a comprehensive survey of authority on the subject in this and other jurisdictions.

…The origins of the constructive fraud line of authority may be traced to Emas Estate Development Pty Ltd v Mea [1993] PNGLR 215. In that case, the respondent (Mea) was the registered proprietor of a State Lease. The relevant Minister purported to forfeit Mea's lease on the basis of alleged breaches of certain covenants. Rival applications for grant of a lease in respect of the land previously leased to Mea were made by Emas Estate and another party. The Land Board recommended that the relevant land be leased to Emas Estate. Mea appealed to the Minister against the Land Board's decision. While that appeal was pending the land was leased to Emas Estate. Emas Estate became the registered proprietor of the State Lease.

The Supreme Court (Amet and Salika JJ; Brown J dissenting) was divided in Emas Estate Development Pty Ltd v Mea on the question as to whether the fraud exception in s 33(1) of the Land Registration Act...