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National Court of Papua New Guinea |
PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE
WS NO 1558 OF 2005
LELETE PLANTATION LIMITED
Plaintiff
V
PAUL RAME
First Defendant
SIMON BABA, HERMAN SAHALE & PAUL KAIVA
Second Defendants
TELAMAUTU DEVELOPMENT CORPORATION
Third Defendant
KASIA INCORPORATED LAND GROUP
Fourth Defendant
Kimbe: Cannings J
2006: 4, 19, 20 October, 14, 15 December,
2007: 20 July
LAND – status of registered proprietor – indefeasibility of title – Land Registration Act, Section 33 – exceptions to indefeasibility – fraud – prior interest in land – whether persons who were owners of customary land continue to have equitable interest after conversion to State Lease.
COMPANIES – dispute over shareholding in company – status of verbal agreement as to change in shareholding of company.
A dispute arose as to possession and control of land the subject of a State Lease. The plaintiff, a company in which the shareholders are various clans who were previously amongst the customary owners of the land, sought a declaration that it is the registered proprietor of the land, with absolute control over the land. The defendants, claiming also to be amongst the previous customary landowners, argued that the plaintiff company was not the registered proprietor, but, if it was, that they had an interest in the plaintiff and/or the land by virtue of previous arrangements and agreements entered into regarding the affairs of the company and the use of the land.
Held:
(1) The plaintiff is the registered proprietor of the land and holds it absolutely free of encumbrances except those prescribed by Section 33(1) of the Land Registration Act.
(2) None of the exceptions applied here, in particular there was no fraud and the defendants had no estate or interest in the land.
(3) The defendants did not provide any substantive evidence that they had entered into any arrangements or agreements regarding the affairs of the company or the land.
(4) The court declared that the plaintiff is the registered proprietor and granted an injunction restraining the defendants from interfering with the plaintiff's enjoyment of the land.
Cases cited
The following cases are cited in the judgment:
Dale Christopher Smith v Registrar of Titles, The State and Duna Peoples Association Inc (1998) N1739
Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215
First Assistant Secretary, Department of Prime Minister v Michael James Leahy and Highlands Products Pty Ltd (1981) N311 (L)
Hi Lift Company Ltd v Miri Setae (2000) N2004
Mamun Investments Pty Ltd v Paul Ponda and Elias Kombo [1995] PNGLR 1
Mudge v Secretary for Lands [1985] PNGLR 387
PNG Ready Mixed Concrete Pty Ltd v The State [1981] PNGLR 396
Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959
STATEMENT OF CLAIM
These were proceedings in which a company sought declarations and other relief about its interests in a parcel of land.
Counsel
K S Latu, for the plaintiff
G Linge, for the defendants
20th July, 2007
1. CANNINGS J: This is a case about a portion of State land called Lelete Plantation, which is next to Hoskins Airport, West New Britain. In colonial times Lelete Plantation was owned and run by a Chinese man, Mr Chee. In the early 1970s the colonial administration resumed the land and made it available under a land redistribution scheme to the traditional landowners. Eight clans from three nearby local villages formed a company called Lelete Plantation Pty Ltd. That company is now called Lelete Plantation Ltd (due to changes in the Companies Act) and it is the plaintiff. The three villages are:
2. The clans held the shares in eight equal allotments. The company purchased the land from the government, or more correctly acquired an agricultural lease over the State land. The company paid K30,000.00 for the lease, which started on 1 July 1979 and runs for 56 years. The company ran a coconut plantation on the land for some years before it ceased operations due to management and other problems. The company became non-operational and the plantation became dilapidated. Some people from Kasia village, including those from clans that were not shareholders in the company, set up homes and grew crops on bits of the land. Kasia is on the eastern side of the airport, with Kimbe Bay to the north. They did so thinking that they had a right to be on the land as they were the traditional owners. These people and some of the companies they have formed over the years have come to be the defendants in this case.
3. People from the clans that were shareholders of the company were not too happy about the defendants being on the company land. But not a lot of fuss was made about it and the defendants and their families have been living there for about 20 years. They are wantoks, after all.
4. A few years ago the company was reactivated. The shareholder clans decided to have another go at developing the land. They negotiated with New Britain Palm Oil Ltd to turn the land into an oil palm mini-estate. The plaintiff company signed a 22-year sublease with NBPOL, under which NBPOL would develop the estate and the plaintiff company would receive annual rentals and royalties of 10 per cent of the value of the oil palm sold. The oil palm estate, however, has not been developed. The defendants have voiced their concern that they have been shut out of the project and NBPOL has said it does not want to proceed until all landowner issues have been resolved.
5. The plaintiff company says that people aligned with the defendants have been hassling anybody going on to the land in connexion with the oil palm project and that they want the defendants stopped from interfering. The defendants deny hassling anybody or interfering with the project. They say that they don't want to stop the project. They support it. They just want to make sure they are involved in it. They have a right to be involved, they say, as they are also traditional landowners and they have helped the company get out of trouble over the years, so they have an interest in the company, and therefore in the land and the project. The negotiations with NBPOL started in 2003 so the current dispute over the future of Lelete Plantation has been proceeding for four years.
THE ISSUES
6. In 2005 the plaintiff company commenced this court case. It seeks a declaration that it is the registered proprietor of the land, an injunction to restrain the defendants from interfering with its enjoyment of the land, damages and an order ejecting the defendants from the land. The defendants want the court to refuse the company all those remedies and instead recognise their interests in the company and the land and in the oil palm project. The parties agree that there are four main issues:
7. Issue Nos 3 and 4 are opposite sides of the same coin. As the case proceeded they really became non-issues as the defendants continued to emphasise that they did not want to stop the project, they just wanted to be involved in it. However, as I went to some lengths to get the issues spelt out at the beginning, I will leave Nos 3 and 4 intact and answer them in due course. To those four issues I have added another, which turns on the result of the others:
1 IS THE COMPANY THE REGISTERED PROPRIETOR OF THE AGRICULTURAL LEASE?
8. Mr Linge for the defendants submitted that though the company might appear to be the sole registered proprietor that is not, in law, the case, for two reasons. First there is evidence of fraud. Secondly the defendants have an equitable interest in the land that should be protected by the court. Mr Linge submitted that both of those scenarios – fraud and existence of equitable interests – are included in the exceptions to the principle of indefeasibility of title in Section 33 of the Land Registration Act Chapter No 191. The principle of indefeasibility means that people only have to look at a single instrument of title, the officially registered instrument, to see who has what interests in a particular piece of land. The title is not open to challenge. It cannot be forfeited or annulled. The Supreme Court recognised in Mudge v Secretary for Lands [1985] PNGLR 387 that the principle of indefeasibility applies in PNG. The exceptions referred to by Mr Linge are in Sections 33(1)(a) and (c), which states:
The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except—
(a) in the case of fraud; and ...
(c) the estate or interest of a proprietor claiming the same land under a prior instrument of title; ...
The fraud argument
9. Mr Linge submitted that fraud was evident due to the plaintiff presenting to the court two different instruments of title, ie two versions of the agricultural lease. The first is annexed to the affidavit of company chairman, Willie Vitata. It has a notation on it saying that it is an official copy of the lease issued under Section 162 of the Land Registration Act, it having been shown to the satisfaction of the Deputy Registrar of Titles on 22 August 1989 that the registered proprietor's copy of the lease has been lost or destroyed. The second is annexed to the affidavit of the company's lawyer, Kevin Stevens Latu. It has the same notation on it, but the signature of the Deputy Registrar of Titles is clearly different to the signature on the document annexed to Mr Vitata's affidavit. Other differences between the documents are: the typing is darker on the Latu copy; some words in the Latu copy are typed whereas in the Vitata copy they are handwritten; the date of issue of the lease is shown on the Latu copy as "10/3/1980" whereas on the Vitata copy it is shown as "10.3.80"; and the company's common seal is affixed to the Latu copy, whereas the Vitata copy has no company seal. These discrepancies give rise to suspicion that the title has been tampered with. The only person who gave oral evidence for the company, Mr Vitata, could not explain the discrepancies. Under cross-examination Mr Vitata said that the owner's copy of the lease was destroyed in a fire some years ago and that he obtained a replacement copy in 2005. This evidence was unsatisfactory and only added to the suspicion. The reasonable inference to draw is that the procedures in Section 162 were not followed, Mr Linge submitted. Section 162 prescribes the procedure by which the Registrar of Titles is authorised to issue a replacement instrument of title to a registered proprietor if the original has been lost, destroyed or defaced.
Apparent irregularity
10. I agree with Mr Linge that there are differences between the copies of the titles annexed to the affidavits of Mr Vitata and Mr Latu and that the existence of these two different documents was not fully explained. This seems irregular.
Meaning of "fraud"
11. Mr Linge was also correct to submit that breaches of statutory procedures and other irregularities regarding the issuing of State Leases can be tantamount to fraud, sufficient to overturn a registered title. The Supreme Court in Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215 gave "fraud" an expansive definition, covering not only actual fraud on the part of a registered proprietor but also breach of statutory procedures by, for example, the Department of Lands and Physical Panning. That approach was followed in Steamships Trading Company Ltd v Garamut Enterprises Ltd (2000) N1959 and Hi Lift Company Ltd v Miri Setae (2000) N2004. However, in none of those cases is it stated that the existence of any apparent irregularity is sufficient to amount to fraud. There must be clear evidence of impropriety, eg a failure to advertise a lease when there was a statutory duty to do so, or evidence of an attempt to alter the face of an instrument in such a way that it does not indicate the true state of affairs.
Absence of evidence of fraud
12. Here, although the court has before it two different versions of the same instrument, they are, materially, the same document: an agricultural lease over the same land – "portion 194, milinch Megigi, fourmil Talasea, area 157.62 ha, West New Britain Province" – granted under the Land Act on 1 July 1979, for 56 years, to Lelete Plantation Pty Ltd. The original of the document annexed to Mr Latu's affidavit has been admitted into evidence, and it bears no evidence of being tampered with. It looks, to an objective observer, like a genuine owner's copy of an agricultural lease.
13. Mr Linge's submission that the procedures of Section 162 were not followed in issuing this document was non-specific. It is the defendants who have raised this issue, so they bear the onus of proving the irregularity on which they rely. They have not discharged the onus so I conclude that there was no breach of statutory procedures or irregularity in issuing the document. In any event, Mr Linge did not submit that any person other than the plaintiff company should be shown on the lease to be the registered proprietor. The fraud argument fails.
The equitable interest argument
14. Mr Linge submitted that the company's interest in the land as registered proprietor was subject to the interests in the land of other proprietors, including all the defendants. Their interests are protected by Section 33(1)(c) of the Land Registration Act, he submitted, which makes a registered proprietor's interest subject to "the estate or interest of a proprietor claiming the same land under a prior instrument of title". Mr Linge relied on the definition of "proprietor" in Section 2 of the Act. It means:
a person seized or possessed of a freehold or other estate or interest in land at law or in equity in possession or in futurity or expectancy, and includes a person in possession of or entitled to a charge or encumbrance on land.
15. I understood the argument to be that the defendants, from Kasia village, have actually been in possession of the land (or at least some bits of it) for a considerable time. Their possession of the land means that they are proprietors, as defined. They have a sufficient interest in the land, according to the expansive definition of the term "interest" provided by the Supreme Court's definition of that term in Mamun Investments Pty Ltd v Paul Ponda and Elias Kombo [1995] PNGLR 1. Therefore their interest must be protected. The term "instrument of title", which appears in Section 33(1)(c), is not defined by the Act but should, if I understand the argument correctly, be interpreted broadly to cover equitable interests in the land arising out of the manner in which the proprietor has been allowed to deal with it and any official recognition of the proprietor's interest in the land.
Flaw in foundation of argument
16. I have set out this argument as carefully as possible though with some hesitation as I am not sure, even after considerable rumination since the hearing of the case, that I understand it. I think it has a fatal flaw. It fails to accommodate the fact that for Section 33(1)(c) to operate, there has to be a prior "instrument of title" in existence. An instrument of title is a document – something that appears to be a formal official record of an interest or dealing in land. The term "instrument of title" cannot reasonably be interpreted to mean any form of equitable interest in land that somebody claims by virtue of an oral, implied or notional agreement or arrangement regarding use of the land. An example of the operation of Section 33(1)(c) is Dale Christopher Smith v Registrar of Titles, The State and Duna Peoples Association Inc (1998) N1739. A State Lease was issued to the defendant over land that was already the subject of a State Lease in favour of the plaintiff, Mr Smith. The trial Judge, Woods J, declared that the defendant's apparently indefeasible title that arose by virtue of it being a registered proprietor was subject under Section 33(1)(c) to the plaintiff's prior instrument of title.
17. The defendants have not produced in evidence or referred to anything that could be regarded as a prior instrument of title, so I do not see how Section 33(1)(c) can operate. However, as Mr Linge kept pressing the point that the defendants' interest in the land was an exception to the principle of indefeasibility I will, for the time being, put aside my reservations about the foundation of the argument and consider its finer detail.
The argument in detail
18. Mr Linge submitted that the defendants' interest in the land should be recognised as arising from the following five facts. First, two witnesses gave evidence about subdivision of the land between the Galilo, Kasia and Kwalakesi people, following the collapse of the company and the coconut plantation in 1989. Tony Kulasi Rame, who was the company secretary for some years in the 1980s and is a brother of the first defendant, Paul Rame, gave oral evidence of a board resolution to that effect. An affidavit by Herman Sahale of Kasia village and a member of the Hoskins Local-Level Government Council, attests to the existence of a verbal agreement to that effect.
19. Secondly, there was evidence that in 1999 the fourth defendant, Kasia ILG, paid K9,200.00 in back-rent to prevent the agricultural lease being forfeited to the State.
20. Thirdly, there was evidence that in October 2004 the Surveyor-General, Samuel Kodawara, wrote a letter to Kasia ILG regarding a change in description of the land from portion 194 to portion 2489. The Surveyor-General regarded Kasia ILG as the leaseholder and asked it to present its owner's copy of the lease to the Registrar of Titles for correction.
21. Fourthly, in October 2006, the Director of the Policy Division of the Department of Lands and Physical Planning, Oswald Tolopa, wrote a letter to Kasia ILG outlining the history of Lelete Plantation, which indicated that the Department no longer regarded the company as the registered proprietor. Mr Tolopa wrote:
Due to the effect of the downturn situation in the agriculture sector the company was then de-registered and until now the group has not re-registered the land.
22. Finally, it is undisputed that the defendants have enjoyed possession of bits of the land for almost 20 years, lived on it and improved it, without anybody including the company bringing ejectment proceedings against them.
Flaws in details of argument
23. I do not consider that any of the above alleged facts supports the argument that any of the defendants have a legally recognisable interest in the land. First, the allegation that the various clans agreed some years ago after the collapse of the coconut plantation to subdivide the land, is vague and unsubstantiated. No document was adduced in evidence to support it. Mr Rame said that there was a company board resolution to divide up the land amongst the three villages but produced no document to support what he was saying. The date and place at which the agreement was formed has not been specified. No evidence exists of any attempt to formalise such an agreement by, for example, having a meeting with provincial lands officers. If there was any agreement, I conclude that it was informal and non-binding.
24. Secondly, I find as a fact that Kasia ILG did pay K9,200.00 to the State for back-rent but the motive for doing that is unclear. In the absence of any evidence that the money was paid as part of an agreement with the company to confer some interest in the land on Kasia ILG, the payment is inconsequential.
25. Thirdly, the Surveyor-General's letter is of no consequence. Perhaps the Surveyor-General took the view that Kasia ILG had taken over the lease due to their payment of the back-rent. This is mere conjecture, however. The court must decide on who has an interest in a piece of State land by looking at the registered title.
26. Fourthly, Mr Tolopa's letter is of even less consequence. It is, with respect, vague and meaningless.
27. Finally, the fact that the defendants have been in possession of some bits of the land for a long time is of no consequence. It might assist them in buying time if the company commenced ejectment proceedings against them, as in PNG Ready Mixed Concrete Pty Ltd v The State [1981] PNGLR 396. However, their possession of the land does not give them a permanent interest in the land. The common law doctrine of adverse possession, by which illegal occupiers can repel claims to land by legal owners who have allowed them to stay on the land illegally without objection, does not apply in PNG (First Assistant Secretary, Department of Prime Minister v Michael James Leahy and Highlands Products Pty Ltd (1981) N311 (L)). The equitable interest argument fails.
Conclusion re issue No 1
28. I have rejected the defendants' arguments that challenge the company's status as registered proprietor. I conclude, having sighted the original owner's copy of the lease, that the plaintiff company, Lelete Plantation Ltd, is the registered proprietor of the disputed land and holds the land free of all encumbrances claimed by the defendants. The defendants have no interest in the land capable of protection or enforcement by the National Court.
2 DO THE DEFENDANTS HAVE ANY INTEREST IN THE COMPANY AND/OR THE LAND?
29. Mr Linge submitted that if the court finds that the company is the registered proprietor of the lease the court should nonetheless recognise the defendants' interest in the land arising from their interest in the company or in the company's default in compliance with the law. Four arguments were advanced in support of this proposition.
30. First, that the shareholders in the company are not those deposed to by the company chairman, Willie Vitata. Mr Vitata failed to give the full list of original shareholders, which included an individual, Francis Rame, the father of the first defendant, Paul Rame; so his evidence about the shareholdings is unreliable and should not be accepted.
31. Secondly, the former company secretary, Tony Kulasi Rame, gave evidence that the company ceased operations in 1989 when the plantation collapsed, its assets (including the land) were distributed amongst the shareholders and the company was de-registered. The company could not therefore maintain its interest in the land.
32. Thirdly, the company has been in continuing default of the Companies Act, Mr Vitata having admitted in cross-examination that no annual returns has been submitted since 1989.
33. Fourthly, a recent company search shows that Lelete Plantation Ltd is not an operating entity, as it is now registered as GSD Distributors Pty Ltd.
34. I have found all those arguments to be unconvincing. First, Mr Vitata's evidence, supported by appropriate documentation, is that the following eight clans, have been and continue to be the only shareholders:
35. I cannot discern from the evidence any reasonable cause for confusion about who the shareholders are.
36. Secondly, there is no documentary or reliable evidence before the court that the company is or has been de-registered or liquidated. Mr Rame's oral evidence was vague and unsubstantiated.
37. Thirdly, though there is evidence that the company has been in default of the Companies Act (Mr Vitata appeared to concede that in cross-examination), I consider that that is of no consequence for the purposes of this case. The nature and extent of the default is unclear and Mr Linge has not developed the argument sufficiently to appreciate the flow-on effect of breach of the statutory requirements.
38. Finally, the company search that Mr Linge claimed in his affidavit to show that Lelete Plantation Ltd is now registered as another name, GSD Distributors Ltd, is unreliable and incomplete and does not prove that Lelete Plantation Ltd is not an operating entity.
Conclusion re issue No 2
39. None of the defendants have any interest in the company or the land arising from their interest in the company or in the company's default in compliance with the law.
3 DO THE DEFENDANTS HAVE ANY RIGHT TO STOP OR HINDER THE COMPANY'S ENJOYMENT OF THE LAND?
40. As I indicated earlier, this is an easy issue to resolve. The answer is no, though I add that the defendants have made it clear that it is not their intention to stop or hinder the company's enjoyment of the land. They do not wish to stop the oil palm project going ahead. I take it from that, that they will abide by this court's decision on all matters pertaining to the land, which is commendable.
4 CAN THE COMPANY DEVELOP AN OIL PALM ESTATE ON THE LAND WITH NBPOL?
41. Yes, if that is what the company still wants to do.
5 WHAT REMEDIES (DECLARATIONS AND ORDERS), IF ANY, SHOULD THE COURT GRANT?
42. The company has sought four remedies:
43. I have no difficultly granting the first two remedies. Mr Linge strenuously argued that no declaration should be granted as that would be validating an imperfect title. I reject that argument. This whole case has been about determining who the registered proprietor is and whether the defendants have any interest in the company and the land. To use Mr Linge's words, the title to the land is not imperfect. The court is not validating anything that does not deserve to be validated. A declaration will simply clarify who the registered proprietor is. I will grant the appropriate declaration and the injunction that naturally flows from it.
44. I will not make an award of damages as the company has not made out its case on this issue. No cause of action has been pleaded. It would probably be trespass, but the statement of claim is too vague to say that with confidence. Furthermore, the damage allegedly suffered by the company due to the defendants' actions has been inadequately particularised.
45. As for an order for ejectment, this aspect of the case has also been inadequately particularised. Such an order was not sought in the statement of claim. It would be unfair to the defendants to make an order for ejectment without giving them a right to be heard on this specific issue. A remedy of this sort is best claimed in the first instance in the District Court under the Summary Ejectment Act. If the matter goes to the District Court, then whatever order it makes could be made the subject of appeal to the National Court.
COSTS
46. The plaintiff has prevailed on all major issues so costs will follow the event.
ORDER
47. The order will be:
(1) it is declared that the plaintiff, Lelete Plantation Ltd, is the registered proprietor of the agricultural lease in respect of portion 194, milinch Megigi, fourmil Talasea, area 157.62 ha, West New Britain Province;
(2) all of the defendants in these proceedings, and their servants and agents, are restrained from interfering with the plaintiff's enjoyment of that lease;
(3) the defendants shall pay the plaintiff's costs of these proceedings on a party-party basis, to be taxed if not agreed.
________________________________________
Latu Lawyers: Lawyers for the plaintiff
Linge & Associates: Lawyers for the defendants
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