PNG International Hotels Ltd and Dorado Pty Ltd and Associated Investments Ltd v Registrar of Titles and Chairman of PNG Land Board and Secretary for Lands Department and Minister for Lands and Independent State of Papua New Guinea (2012) N4618

• Jurisdiction: Papua New Guinea
• Judge: Gavara-Nanu J.
• Judgment Date: 16 March 2012
• Court: National Court
• Citation: (2012) N4618
• Docket Number: OS 48 of 1997
• Year: 2012
• Judgement Number: N4618

Full Title: OS 48 of 1997; PNG International Hotels Ltd and Dorado Pty Ltd and Associated Investments Ltd v Registrar of Titles and Chairman of PNG Land Board and Secretary for Lands Department and Minister for Lands and Independent State of Papua New Guinea (2012) N4618

National Court: Gavara-Nanu J.

Judgment Delivered: 16 March 2012

N4618

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 48 of 1997

BETWEEN:

PNG INTERNATIONAL HOTELS LTD

First Plaintiff

AND:

DORADO PTY LTD

Second Plaintiff

AND:

ASSOCIATED INVESTMENTS LTD

Third Plaintiff

AND:

REGISTRAR OF TITLES

First Defendant

AND:

CHAIRMAN OF PNG LAND BOARD

Second Defendant

AND:

SECRETARY FOR LANDS DEPARTMENT

Third Defendant

AND:

MINISTER FOR LANDS

Fourth Defendant

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA

Fifth Defendant

Waigani: Gavara-Nanu J.

2011: 12 August

2012: 16 March

PRACTICE AND PROCEDURES - State Lease – Improvement covenants- Lessee not complying with improvement covenant – Forfeiture of the Lease by the Minister – Land Act 1996, s.122 - Lessee failing to appeal the forfeiture of the Lease – Land Act 1996, s.142 (2) (b) - Ministers power to forfeit a Lease for non compliance with improvement covenant.

PRACTICE AND PROCEDURES – State Lease – Forfeiture of Lease – Lessee having no existing rights and interests in the land after Lease is forfeited – A State Lease granted after the forfeiture of the original Lease is a completely a new Lease.

Cases cited

Jubilee Hambru N3193

MVIT v. Pupume [1993] PNGLR 370

Counsels

N. Kubak, for the plaintiffs

E.Geita, for the defendants

16 March, 2012

1. GAVARA-NANU J: The first plaintiff seeks review of certain decisions made by the defendants regarding the land described as Section 7 Lot 44 Granville, NCD.

2. In its Notice of Motion filed pursuant to Order 16 r 5 of the National Court Rules (‘NCR”), the plaintiffs seeks the following relief:-

1. Pursuant to Order 12 r 8 (4) and (5) of the NCR and s. 155 (4) of the Constitution the defendants be restrained from issuing or advertising or accepting Tenders for or any new lease of the subject land namely Allotment 44 Section 7, Granville, NCD until further orders of the Court.

2. Pursuant to s. 155 (4) of the Constitution, an order that the defendants issue the lease title documents to the plaintiffs.

3. Pursuant to Order 12 r 8 (4) and (5) of the NCR and s. 155 (4) of the Constitution an order restraining the Registrar of Titles from registering and accepting for registration or otherwise dealing in whatever manner the property namely, Allotment 44 Section 7, Granville, NCD, until further orders of the Court.

4. An order that the Notice of Forfeiture issued on the subject land is null and void and of no legal effect.

5. Damages.

6. Interest

3. It is noted that damages are being claimed pursuant to an Order made by the Court on 16 November, 2010, the Order was to amend the Statement in Support pursuant to Order 8 r 50 (1) and (2) of the NCR. The Order was made in respect of a similar relief sought in a Notice of Motion filed by the plaintiff on 10 November, 2010. Leave to amend the Statement in Support was granted and amendments were made in accordance with the amendments which were already contained in the Statement in Support filed on 16 November, 2010.

4. In the amended Statement in Support, the plaintiff also seeks interest and costs. The plaintiff in paragraphs 3 (1) and (2) of the amended Statement in Support gives reasons for seeking damages. It is noted that in paragraph 3 (1) of the amended Statement in Support, the plaintiff claims that because the defendant failed to issue a replacement Business Lease over the property in its favour after its original Lease was lost in the Department of Lands, it (the plaintiff) could not make improvements on the land. The plaintiff claims that despite its continued requests for a replacement Lease, the defendants failed to issue a replacement Business Lease to it. The plaintiff also claims that the defendants failed to respond to its letters which it says resulted in it not making financial arrangements to make improvements to the land.

5. The plaintiff also claims that no notice to show cause was served on him when in August, 1991, a forfeiture notice to forfeit its Business Lease was served on him by the State for not developing the land as required in the improvement covenant of the Lease.

6. The plaintiff claims that it has spent funds in excess of K1, 500,000.00.

7. The amendments in the Statement in Support i.e paragraph 3 (1) and (2) form the grounds for the plaintiff’s claim for damages.

8. This case has a long history. The plaintiff was granted a Business Lease over the subject land on 06 August, 1987, to build a hotel under the improvement covenant of the Lease. Under that covenant the plaintiff was required to erect improvements for business purposes to a minimum value of K5m within one year from the date of the grant of the Lease. The evidence before the Court shows that the property was mortgaged to the ANZ Bank on 30 December, 1987, the mortgage was entered at the Titles Office on 9 March, 1988, with Entry No. 62949.

9. On 7 April, 1995, the plaintiff’s Lease was forfeited by the Minister for Lands and Physical Planning for non compliance with the improvement covenant of the Lease. The forfeiture was gazetted in Gazettal Notice G40, dated 20 April, 1995.

9. It is noted that the land was mortgaged to the ANZ Bank for a loan for the plaintiff to fund developments on the Land in compliance with the improvement covenant of the Lease.

10. According to the plaintiff’s affidavit sworn on 26 November, 2010, in paragraph 11, the plaintiff says it paid K446,513.64 to the ANZ Bank to settle its loan and for the mortgage to be discharged. In the same paragraph, the plaintiff claims that when its copy of the Lease was lodged at the Titles Office for the mortgage to be discharged, the Titles Office lost the Lease.

11. According to paragraph 12 of the same affidavit, the plaintiff was exempted by the State from paying lease rentals over the land for two years from 1988, then for further five years. Those exemptions expired in 1995, and on 20 April, 1995, the Lease was forfeited due to the failure by the plaintiff to comply with improvement covenant.

12. The plaintiff in its affidavit says that between 1988 and 1996 numerous correspondences were sent to the Department of Lands for the return of its Lease but those correspondences went unanswered.

13. The plaintiff decided to challenge the forfeiture of its Lease by way of a writ in proceedings WS 906 of 1996, however, the proceedings were struck out on 11 December, 1996 by the Court, and as a result the current proceedings were commenced on 12 February, 1997.

14. On 16 September, 2006, a Business Lease was issued to the plaintiff over the subject land. The plaintiff’s mortgage was discharged on 15 May, 2007. It is to be noted that on 28 May, 1997, a Business Lease was issued to another company i.e Beecroft No. 20 Pty Ltd over the same property. The company was granted Lease after the property was put on tender and after it had put in a bid for the land.

15. It is to be noted that between 6 August, 1987 to 7 April, 1995, no improvement was done to the land by the plaintiff although it had a clear title to the land in that period.

16. When plaintiff’s Lease was forfeited in 1995, the plaintiff failed to appeal the forfeiture as required under s. 142 (2) (b) of the Land Act 1996. Thus from 7 April, 1995 to 16 September, 2006, which is when a Business Lease was granted to the plaintiff, the plaintiff had no interests in the land. It also had no rights and obligations over the land. The Business Lease that was issued to the plaintiff on 16 September, 2006 over the land was a new Business Lease because the plaintiff’s old Business Lease was forfeited for a cause i.e breach of the improvement covenant of the Lease.

17. It is noted that when a Business Lease was granted to Beecroft No. 20 Pty Ltd, in 1997, the company (Beecroft) had a clear title to the land because the plaintiff did not have title to the land. That Lease (Beecroft’s Lease) remained current until 2007, when it was cancelled. This means from 16 September, 2006, when the plaintiff was granted a Business Lease to 2007, when Beecrfot’s Lease was cancelled, the plaintiff did not have a clear title to the land because Beecroft No.20 Pty Ltd also had title to the same land. It was only after Beecroft’s title was cancelled that the plaintiff had clear title to the land. It is however clear that from 2008 or from when Beecrfot’s lease was cancelled to the date of trial which 12 August, 2011, the plaintiff had clear title, and the plaintiff has conceded that in that period it made no improvements to the land, except the erection of the perimeter fence.

18. It is also noted that when a new Business Lease was issued infavour of the plaintiff in 2006, the period in which the plaintiff was to make improvements on the land was relaxed and extended from 2008 to 2013, and the minimum value of improvements...