N3208

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 689 OF 2006

BETWEEN:

RAGA KAVANA,
Registrar of Titles, Department of Lands & Physical Planning
Plaintiff

AND:

COLLIN EDWIN HUNTER
Defendant

Waigani: Davani .J
2007: 13, 14 August

LAND REGISTRATION – delivery of Title Deed to Registrar – Registrar exercised powers under Land Registration Act – apparent irregularities in the manner in which title was transferred – s. 160 of 	Land Registration Act.

LAND REGISTRATION – Summons to show cause – non-compliance with summons – court can order party to appear and show cause why title should not be delivered up – s. 160 (4) of Land Registration Act.

LAND REGISTRATION – indefeasibility of title does not apply where there is clear and apparent fraud – s. 33 (1) (a) of Land Registration Act.

Cases cited:

Mudge v Secretary for Lands [1983] PNGLR 387; 
Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215.

Counsel:

I. Shepherd, for plaintiff
L. Gari, for person summoned

DECISION

14 August, 2007

1. DAVANI .J:	 Before me is Summons ordering one Priscilla Winter to appear before the National Court of Justice at Waigani to "show cause why the owner’s copy of State Lease Vol. 38, Fol. 9502 with respect to property known as Allotment 3, Section 20, Boroko (‘the property’) should not be delivered up to the plaintiff."

2.     Priscilla Winter is represented by Mrs L. Gari of the firm Posman Kua Aisi Lawyers. Mrs Gari submits that her client is the registered proprietor of the property and need not deliver up title to the plaintiff. 

3.   Additionally, although not a party to the proceedings, the court on 8 December, 2006, ordered that plaintiff have leave to issue summons for production of owner’s copy of State Lease to the property, by Priscilla Winter. Therefore, submissions by Mrs Gari that Priscilla Winter is not a party to the proceeding and should not be summoned, must fail because of leave granted by this court on 8 December, 2006. 

4.     I adjourned to consider this application. This is my ruling. 

Background

5.     It is necessary that I set out a brief background of this matter which is to a large extent, undisputed.

6.     First, the application for delivery of the Title Deed to the property is made under s. 160 (1) of the Land Registration Act 1981 (LRA). This section reads;

"160.	Production of instruments wrongly issued, etc.

(1)	Where it appears to the satisfaction of the Registrar that—

(a)	an instrument has been—

(i)	issued to a person in error; or

(ii)	fraudulently or wrongly obtained by a person; or

(b)	an instrument is fraudulently or wrongly retained by a person; or

(c)	an instrument held by a person contains a misdescription of the boundaries, area or position of land; or

(d)	an instrument held by a person contains an entry or endorsement—

(i)	made in error; or

(ii)	fraudulently or wrongly obtained; or

(e)	an instrument of title is held by a party to an ejectment action whose right to the land has been determined,

he may summon that person to deliver up the instrument."

7.     By originating summons filed on 27 September, 2006, the plaintiff sought orders that the defendant appear before this court to show cause why the owner’s copy of the State Lease to the property should not be delivered up to the plaintiff.

8.     The plaintiff is the Registrar of Titles. By his affidavit sworn on 25 September, 2006, he deposes that he received a letter dated 8 March, 2005 from Blake Dawson Waldron, lawyers advising that it acts for Eragedoni Limited (‘Eragedoni’) which company is the lawful registered proprietor of the property. Mr Kavana deposes that the property was purchased by Eragedoni in 1988 after which it was mortgaged to the Papua New Guinea Banking Corporation and later the Bank of South Pacific. The loan was paid out in November, 2002, and the State Lease was held by the bank in their safe custody until September, 2003, when it was released by the bank to one Vincent Toba, on his instructions. The bank released the Title Deed to Vincent Toba because Vincent Toba had made representations that he acted for Eragedoni and had Eragedoni’s authority to receive the Title Deed. He did this by presenting to the Bank an authority signed by Eragedoni authorizing the release of the State Lease to him. Copy of the authority is before me.

9.     After receipt of the Title Deed, Mr Toba then sold the property, without Eragedoni’s knowledge, to the defendant in these proceedings. The defendant paid K115,000.00 to Mr Toba. Before me is true copy of the Contract of Sale of the property by Eragedoni to the defendant. Also attached is copy of the transfer to the defendant by Eragedoni but executed by Vincent Toba as Eragedoni’s Director. On perusal of these documentation together with copy of company search of Eragedoni showing that Vincent Toba is not a director of Eragedoni and the Statutory Declaration signed by Vincent Toba as a director of Eragedoni, delivered to the defendant at settlement of the sale of the property, the plaintiff was satisfied that this transfer from Eragedoni to the defendant was fraudulent. Relying on s. 160 of the LRA, the plaintiff then summoned the defendant to deliver the State Lease to him in his capacity as Registrar of Titles.

10.     Because the defendant did not comply with the summons, the plaintiff applied for orders pursuant to s. 161 of the LRA for the defendant to appear and show cause why he should not deliver the State Lease to the plaintiff for cancellation of the transfer to him. However, the plaintiff later discovered that the defendant no longer had title to the property, property having been sold to one Priscilla Winter. This is shown by the defendants affidavit sworn on 4 December, 2006, where the defendant deposed, that in May, 2004, he sold the property to Priscilla Winter for K115,000.00. A copy of the last notation/entry on the State Lease before me shows transfer to Priscilla Winter produced on 25 May, 2004 and entered on 25 May, 2004.

11.     On 8 December, 2006, the plaintiff applied for and was granted orders giving him leave to issue a summons to one Priscilla Winter to show cause why the owner’s copy of the State Lease to the property should not be delivered up to the plaintiff. 

12.     By order of 19 March, 2007, the plaintiff obtained orders to have this summons advertised in the Post Courier on 21st and 22 March, 2007, because Priscilla Winter could not be located to effect service of the summons upon her. This summons is now before me. 

Summons to Priscilla Winter

13.     The summons dated 19 March, 2007 requires that Priscilla Winter appear before this court to show cause why the owner’s copy of the State Lease to the property should not be delivered up to the plaintiff. 

14.     Priscilla Winter through her lawyers relies on her affidavit sworn on 3 April, 2007. She deposes that she is the current owner of the property, having purchased from Collin Edwin Hunter, for K115,000.00. She then rented the property to Joshua Bakiri at K500.00 per week which he occupied up until 16 March, 2007 when Priscilla Winter gave notice that she would sell the property.

15.     She deposes further that the sale was completed on 30 March, 2007, however, settlement was deferred because of the summons that was issued to her, now before me. 

16.     Mr Shepherd for the plaintiff relies on s. 160 (4) of the LRA asking for orders that Priscilla Winter deliver up the Title Deed to the property. This section reads;

"160.	Production of instruments wrongly issued, etc.
…
(4)	On the appearance before the Court of a person summoned under Subsection (2), or apprehended by the warrant under Subsection (3), the Court may examine him on oath and order him to deliver up the instrument."

17.     Priscilla Winter did not appear but filed an affidavit, with the plaintiff’s lawyers consent. Mrs Gari submits that her client is protected under s. 33 of the LRA, as the registered proprietor of the estate. The position at law is that registration of leases under the provisions of the LRA is effective to vest indefeasible title in the registered proprietor subject to the exceptions enumerated in s. 33 of the LRA. This was held in Mudge v Secretary for Lands [1983] PNGLR 387. The contrary view was taken in Emas Estate Development Pty Ltd v. John Mea [1993] PNGLR 215 where the Supreme Court said that because of consequences of breaches of Statutory procedures, whilst acknowledging the principles of indefeasibility of title, nonetheless, irregularities in the issuing of title deed was tantamount to fraud and was sufficient to overturn a registered title.

18.     Is Priscilla Winter protected by s. 33 of the LRA?

19.     Based on the affidavit material before me, there is on the face of it, apparent irregularities in the manner in which title was transferred from Vincent Toba to Collin Hunter, the defendant. Exercising his powers under s. 160 of the LRA, the Registrar is satisfied that the State Lease was fraudulently or wrongly obtained by one Vincent Toba. This section states further that when the Registrar is satisfied that this is the case, "…he may summon that person to deliver up the instrument".

20.     Furthermore, the Registrar is satisfied that the State Lease was issued to a person "in error," and so issued the Summons now before me for that person to deliver up the instrument. The summons was then issued to the defendant. 

21.     But this is a situation where the property has now been sold to Priscilla Winter who is now in the process of selling it to another person. I asked Mr Shepherd what would occur once the title is delivered up. Mr Shepherd referred the court to s. 161 of the LRA that the Registrar may cancel or correct instrument delivered up under s. 160 and also correct errors or omission. Section 161 of the LRA reads;

"161.	Cancellation and correction of instruments and entries.

(1)	Subject to Subsection (2), the Registrar may—

(a)	cancel or correct an instrument delivered up under Section 160; and

(b)	in any other case, on such evidence as appears to him sufficient, correct errors or omissions in—

(i)	the Register or an entry in the Register; or

(ii)	the other duplicate certificate of title or an entry on that duplicate."

22.     The Registrar has exercised an administrative function under s. 160 of the LRA. He found to his satisfaction that the State Lease was fraudulently or wrongly obtained by Vincent Toba. No doubt, the BSP may have been careless when handing over the State Lease to Mr Toba, but that is a matter for evidence, if it does get to that stage. But if there are any remedies or redress for Priscilla Winter and Collin Edwin Hunter, it would be against Vincent Toba and the bank. Without a proper application before it, this court cannot and should not put a stop to steps taken by the Registrar of Titles, exercising powers available to him under the LRA. 

23.	It appears Priscilla Winter is not protected by s. 33 of the LRA because the Registrar of Titles has found there to be fraud in the manner in which title was transferred from Eragedoni to Collin Hunter. Section 33 (1) (a) of the LRA is clear, that "…the registered proprietor of an estate or interest holds it absolutely free from all encumbrances except in the case of fraud."

24.	The Registrar wishes to rectify this fraud and is calling for the return of the Title Deed. If this is not done, the property will continue to change hands for consideration but which purchases are all as a result of an earlier ‘fraudulent’ conveyance. The court must assist by putting a stop to this until after this ‘fraudulent’ conveyance is rectified by the Registrar, by the calling of the Title Deed.

25.     The Title Deed must be returned to the plaintiff. If Priscilla Winter is aggrieved with the steps taken by the Registrar of Titles, then she can file an action to judicially review the Registrar’s actions. Alternatively, she can file an action for damages or for fraud. As I am not familiar with the defendant and Priscilla Winter’s claims to the property apart from what is already before me, I can only suggest that.

26.     What about the fact that both Priscilla Winter and Collin Hunter have paid large sums of money for the property?

27.     If this court were to refuse this application and suggest that Eragedoni lodge a claim against either Vincent Toba and/or the Bank of South Pacific for fraud and negligence, the court will be left with an administrative decision by the Registrar of Titles which has yet to be complied with. This court cannot undermine such processes which have been designed to ensure the proper, correct and smooth running of a department. Administrative processes should not be disturbed by the court unless properly challenged. In this case, no such challenge is before the court.

28.     Therefore, as I pointed out earlier, both Priscilla Winter and Collin Hunter may have a claim either for judicial review against the Registrar of Titles or for damages and Negligence against the Bank of South Pacific and Vincent Toba. That is a matter for them to consider.

Court’s formal orders

29.     These are the court’s formal orders

1.	That Priscilla Winter deliver to the plaintiff owner’s copy of the State Lease Vol. 38 Fol. 9502 with respect to property known as Allotment 3, Section 20, Boroko;
2.	Time is abridged to time of settlement to take place forthwith;
3.	All parties shall pay their own costs of this application.

____________________________

Blake Dawson Waldron Lawyers: Lawyer for plaintiff
Posman Kua Aisi Lawyers: Lawyer for person summonsed