Paul Berr v Robin Yango (No 2)

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 11 February 2015
• Citation: (2015) N5859
• Court: National Court
• Year: 2015
• Judgement Number: N5859

Full : OS No 471 of 2010; Paul Berr v Robin Yango (No 2) (2015) N5859

National Court: Cannings J

Judgment Delivered: 11 February 2015

N5859

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO 471 OF 2010

PAUL BERR

Plaintiff

V

ROBIN YANGO (No 2)

Defendant

Madang: Cannings J

2014: 18 November, 8 December,

2015: 11 February

LAND – State Leases – principle of indefeasibility of title – exceptions under Land Registration Act – Section 33(1)(a): in the case of fraud; Section 33(1)(b): encumbrances notified on the Register; Section 33(1)(i): unpaid rates, taxes etc – whether the title of registered proprietor should be quashed.

After obtaining a declaration that the transfer of land by the National Housing Corporation to the defendant was a case of fraud, the plaintiff by notice of motion applied for a declaration that the transfer of title by the defendant to a third party was also a case of fraud and null and void, and an order that the third party’s title be cancelled and that title be issued to him. The plaintiff argued that he should be granted that relief as (1) the transfer to the third party was a case of constructive fraud and able to be set aside under Section 33(1)(a) of the Land Registration Act; (2) the third party had benefited from non-compliance with Section 33(1)(b) of the Land Registration Act, in that the “encumbrance” constituted by this court proceeding was not notified on the Register; (3) Section 33(1)(i) of the Land Registration Act, which makes the title of a registered proprietor subject to unpaid taxes, had not been complied with as there were rates and taxes relating to the land that were unpaid.

Held:

(1) To prove that the transfer from the defendant to the third party was a case of constructive fraud, the plaintiff would need to prove that the circumstances of a transfer of title were so unsatisfactory, irregular or unlawful, as to be tantamount to fraud. However, at the date of transfer, although the third party knew of the court proceedings challenging the defendant’s title, there was no court order or declaration in place affecting the defendant’s title or preventing the transfer and no registered caveat stopping or otherwise affecting the transfer and the third party was a bona fide purchaser of the land and not involved in the constructive fraud that pertained to the transfer from the NHC to the defendant. Section 33(1)(a) of the Land Registration Act did not apply.

(2) The court proceeding under which the plaintiff was challenging the defendant’s title was capable of being notified on the Register, but it was not the obligation of the defendant or the third party to ensure that it was so notified. There was no breach of Section 33(1)(b) of the Land Registration Act.

(3) The plaintiff failed to prove that rates and taxes relating to the land were not paid by the defendant or the third party, but even if he had proven that, it would have had no effect on the third party’s title, other than being an encumbrance that was the responsibility of the third party to pay, under Section 33(1)(i) of the Land Registration Act.

(4) All relief sought by the plaintiff was refused and the proceedings were dismissed.

Cases cited

The following cases are cited in the judgment:

Anego Company Ltd v Finance Corporation Ltd (2013) N5391

Elizabeth Kanari v Augustine Wiakar (2009) N3589

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

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

Kapiura Trading Ltd v Bullen (2012) N4903

Lae Rental Homes Ltd v Viviso Seravo (2003) N2483

Mosoro v Kingswell Ltd (2011) N4450

Niugini Tablebirds Pty Ltd v Nasap (2000) N2018

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

Papua Club Inc v Nusaum Holdings Ltd (2005) SC812

Paul Berr v Robin Yango (2012) N4706

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

West New Britain Provincial Government v Pepi S Kimas (2009) N3834

NOTICE OF MOTION

This was an application by the plaintiff for declarations and orders regarding title to land held by a third party.

Counsel

W Akuani, for the plaintiff

B W Meten, for the third party, Mr B Kelimbua

11th February, 2015

1. CANNINGS J: The plaintiff Paul Berr applies by notice of motion for declarations and orders concerning a residential property in Madang town, Section 144, Allotment 2, Tarangau St, Newtown. The registered proprietor of the property is Mr Benjamin Kelimbua. Mr Kelimbua is not formally a party to these proceedings, which were commenced by Mr Berr in 2010 against the defendant, Robin Yango. After commencement of the proceedings, Mr Yango sold the property to Mr Kelimbua. Mr Berr claims that he is a legitimate purchaser of the property and that he is the innocent party in the set of transactions that has seen the property in recent years transferred from the National Housing Corporation (NHC) to Mr Yango and from Mr Yango to Mr Kelimbua.

2. Earlier in these proceedings Mr Berr obtained a judgment declaring that the transfer from the NHC to Mr Yango was a case of fraud (Paul Berr v Robin Yango (2012) N4706). He now applies in accordance with the procedure set out in that judgment for similar relief in relation to the transfer from Mr Yango to Mr Kelimbua. Mr Kelimbua opposes the motion and has adduced evidence in support of his position, which is that he is the registered proprietor and has good title to the property.

3. Mr Berr had occupied the property, as a tenant of the NHC, from 1979 to 2009. In 1994 the NHC offered to sell him the property. He then commenced paying the purchase price by instalments, which he completed, with the assistance of Mr Yango, in 2006. He had allowed Mr Yango to move in and occupy a part of the property in 2000. Mr Berr was expecting to have the title transferred to him, however, without his knowledge or consent the title was transferred to Mr Yango on 2 November 2009.

4. On 24 August 2010 Mr Berr commenced proceedings against Mr Yango. A trial was conducted in the period from November 2011 to March 2012. Judgment was delivered on 25 June 2012: Paul Berr v Robin Yango (2012) N4706. In the meantime, Mr Yango had sold the property to Mr Kelimbua. A contract of sale was signed on 4 November 2010 and the transfer to Mr Kelimbua was registered on 14 December 2010.

NOTICE OF MOTION

5. Mr Berr’s notice of motion was filed on 5 September 2014. He seeks:

· a declaration that the transfer by Mr Yango to Mr Kelimbua was a case of fraud and is null and void;

· an order that Mr Kelimbua’s title be cancelled; and

· an order that title in the property be issued to him (Mr Berr).

6. Counsel for Mr Berr, Mr Akuani, has submitted that he (Berr) should be granted that relief as:

(1) the transfer to Mr Kelimbua was a case of constructive fraud and should be set aside under Section 33(1)(a) of the Land Registration Act;

(2) Mr Kelimbua benefited from non-compliance with Section 33(1)(b) of the Land Registration Act, in that the “encumbrance” constituted by these court proceedings was not notified on the Register;

(3) Section 33(1)(i) of the Land Registration Act, which makes the title of a registered proprietor subject to unpaid rates and taxes, had not been complied with.

1 CONSTRUCTIVE FRAUD: SECTION 33(1)(a) LAND REGISTRATION ACT

7. This argument is based on Section 33(1)(a) of the Land Registration Act, which states:

The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except—

(a) in the case of fraud.

8. Mr Akuani submitted that in his acquisition of title Mr Kelimbua was guilty of the same sort of constructive fraud that featured in the transfer of the property from the NHC to Mr Yango. It is submitted that Mr Kelimbua knew, when he was negotiating with Mr Yango to purchase the property, that the property should have been transferred to Mr Berr and he knew that Mr Berr had commenced court proceedings challenging Mr Yango’s title. Yet he went ahead with the purchase. He knowingly accepted a fraudulent title. It was not a clean title. The flow-on effect of the Court’s declaration on 25 June 2012 that the transfer from the NHC to Mr Berr was a case of fraud, was that the transfer to Mr Kelimbua was also a case of fraud.

9. Mr Akuani submitted that another unsatisfactory aspect of the transfer to Mr Kelimbua was that there was no evidence that he paid the full purchase price of K100,000.00 under the contract of sale with Mr Yango. Only K60,000.00 was paid. The balance of K40,000.00 was not paid. As the contract provided that title would not be transferred without payment of the full purchase price, the transfer was defective.

10. I will deal with the last argument first. It is entirely without merit. Mr Berr was not a party to the contract between Mr Yango and Mr Kelimbua and it is none of his business whether the full purchase price has been paid. It has no effect on Mr Kelimbua’s title. It is irrelevant to the question of whether constructive fraud was involved in the transfer to Mr Kelimbua.

11. As to the assertion that Mr Kelimbua knew...