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Leahy v Otri [2009] PGNC 314; N3860 (27 June 2009)

N3860

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 983 OF 2008

BETWEEN

JOHANNES LEAHY
Plaintiff

AND

TOM OTRI alias TOM KONDUP
First Defendant

AND

JOEL OTRI alias JOEL KONDUP
Second Defendant

AND

GOIMBA KOT
Third Defendant

AND

THE REGISTRAR OF TITLES
Fourth Defendant

AND

LAND TITLES COMMISSION
Fifth Defendant

Mount Hagen: Makail, J

2009: 2nd May & 27th June

CONTRACT - Contract of sale of land - Dispute over terms of contract - Contract partly oral, written and by conduct - Whether contract was breached - Whether contract was repudiated - Effect of.

REAL PROPERTY - Dispute over land - Customary land - State lease - Agricultural purposes - Customary land converted to State lease - Lease/lease back lease - Registration of title - Indefeasibility of title - Land Act, 1996 - Sections 7,8,9,10,11,33 & 102 - Land (Tenure Conversion) Act, 1963 - Sections 7,8,9,10 & 11.

FRAUD - Claim of fraud - Proof of - Statutory breaches and irregularity - Tantamount to fraud - Land Act, 1996 - Sections 7,8,9,10,11& 102 - Land Registration Act, Ch 191 - Section 33.
PRACTICE & PROCEDURE - Pleadings - Claim of fraud - Whether fraud sufficiently pleaded - Effect of - National Court Rules - Order 8, rule 30.

Cases Cited:

Andrew Madiu -v- Mineral Resources Development Company Limited (2004) N2601
William Maki -v- Michael Pundia & PNG Motors [1993] PNGLR 337; (1993) N1137
Arnold Ningiga -v- Peter Lare Koavea [1988-89] PNGLR 312
Jacobs -v- Kwaindu [1991] PNGLR 366
Mondo Merchants Pty Ltd v Melpa Properties Pty Ltd and Koang No 47 Pty Ltd (1999) N1863
Koang No 47 Pty Ltd -v- Mondo Merchants Pty Ltd (2001) SC627
Mudge -v- Secretary for Lands [1985] PNGLR 387
The Papuan Club Inc -v- Nusuam Holdings Limited (No. 2) (2004) N2603
Koitachi Limited -v- Walter Schnaubelt (2007) SC 870
Emas Estate Development Pty Limited -v- John Mea & Ors [1993] PNGLR 215
Steamships Trading Company Limited -v- Garamut Enterprises Limited & Ors (2000) N1959
Hi Lift Co Pty Limited -v- Miri Setae & Ors [2000] PNGLR 08; (2000) N2004
Ramu Nickel Limited & Ors -v- Honourable Dr Puka Temu & Ors (2007) N3252
Elizabeth Kanari -v- Augustine Wiakar & Registrar of Titles (2009) N3589
The Application of Rimbo Susu on behalf of Himself and Other Finschafen Landowners [1992] PNGLR 37
Yanta Development Association Inc & 3 Ors -v- Piu Land Group Inc & 3 Ors (2005) SC798

Legislations:

Land Act 1996
Land (Tenure Conversion) Act 1963
Land Registration Act, Ch 191

Texts:

GH Treitel, The Law of Contract, Sweet & Maxwell (11th ed 2003),
FH Lawson, Remedies of English Law, Butterworths (2nd ed 1980),
Osborn's Concise Law Dictionary, Sweet & Maxwell (9th ed 2001)
Peter Butt, Land Law, Law Book Co (5th ed 2006)

Counsel:

Mr M. Tamutai, for Plaintiff
Mr S. Norum, for Defendants

JUDGMENT

27th June, 2009

1. MAKAIL, J: This case is about a dispute over a land called "Gipna" registered as a State lease, Portion 2488, Volume 13, Folio 124 in Mt Hagen Central of the Western Highlands Province, (the "land"). It is 4.1 ha big and is also known as "Goga". On it is a coffee wet factory built by the plaintiff, a re-known coffee grower in the Western Highlands Province. The plaintiff says that the land is a customary land and he had purchased it from the first defendant and other customary landowners sometimes in 2000 for K116,000.00 under a contract of sale and is the owner of the land. He is aggrieved by the actions of the first, second and fourth defendants to, first, convert the land to a State lease and secondly, transfer its title to the third defendant.

PLAINTIFF'S CLAIM

2. In his writ of summons filed on 27th August 2008 and further amended on 30th April 2009, he seeks the following orders:

"(a). A declaration that the conversion order (if any) issued by the LTC in favour of the First and Second Defendants to convert the customary Gipna Land to State Land under the name of the First and Second Defendants was made contrary to the LTCA [and] is therefore and null and void.

(b). A declaration that the Plaintiff is the owner of the customary land known as Gipna Land Kenta village Western Highlands Province as of 20th March 2000 or soon thereafter.

(c). A declaration that the First Defendant and the Second Defendant and any other former customary landowner of Gipna Land do not have anymore customary interest on the Gipna Land to State Land and are not entitled to enter or use the Gipna Land.

(d). An Order that the State Lease Title initially issued in the name of TOM OTRI and JOEL OTRI and later transferred to GOIMBA KOT by the Fourth Defendant in respect of Customary Land called GIPNA Land and now purportedly described as State Lease Volume 13 Folio 124 Portion 2488 Mount Hagen BE SET ASIDE forthwith.

(e). An Order for Specific Performance that the First Defendants with other Landowners corporate by all means with the Plaintiff to facilitate the issuance of State Lease to the Plaintiff pursuant to the Land Tenure Conversion Act 1963.

(f). An Order restraining the First and Second Defendants and the Third Defendant from interfering, intimidating, threatening with the Plaintiff, his agents or servants from conducting business or dealing with Gipna Land in whatsoever manner.

(g). Further and in the alternative, in respect of the First Defendant and the Third Defendant's breach of Contract and/or interference with economic relations:-

(i) K115,000.00 for loss of purchase price.

(ii) A K300,000.00 for loss of Improvements.

(iii) Future Economic loss of K14,000.00 per month of mesne profits from 10th December 2004 (when title was obtained to 31st of March 2013 (the expected rental period) at a sum of K1,395,483.00.

(h). Any other orders this Court deems fit.

(i). Interest on damages at 8% per annum pursuant to the Judicial Proceedings (Interest in Debts and Damages) Act, Ch 52.

(j). The First, Second and Third Defendants pay the cost of these proceedings."

3. On 20th January 2009, the plaintiff applied and obtained an ex parte interim injunction restraining the defendants, their agents and servants from entering and interfering with the operations of the wet factory and property on the land. It remains on foot until the determination of the substantive dispute. Subsequent to the grant of the interim injunction, on 25th March 2009, the plaintiff applied and obtained leave of the Court to join the Land Titles Commission as fifth defendant in the proceeding as it was considered the involvement of the Land Titles Commission was necessary and relevant to the grant of title by the fourth defendant to the third defendant.

DEFENDANTS' DEFENCE & CROSS CLAIM

4. By their amended defence and cross claim filed on 28th April 2009 the defendants first, admit that the first and second defendants' other surname is "Kondup" and secondly, the third defendant purchased the land in dispute from the first and second defendants. But they deny there was interalia that any fraud on their part in the conversion of the land from customary land to a State lease and subsequently transfer its title to the third defendant. They also claim that the plaintiff had breached certain conditions of the contract of sale of land between him and the first and second defendants, when he did not fulfill them hence they repudiated the contract of sale and proceeded to sell the same land to the third defendant.

5. In their cross claim, they claim that the third defendant is the registered proprietor of the land under a State lease, therefore entitled to collect rent from the land for the lease between the plaintiff and OK Corporation Limited. They claim a total sum of K660,000.00 from 9th February 2005 to 31st December 2008 as unpaid rent due to the third defendant.

PLAINTIFF'S EVIDENCE

6. In terms of evidence, the plaintiff relies on the following affidavits:

1. His affidavit sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1");

2. His supplementary affidavit sworn and filed on 19th March 2009 (exhibit "P2"); and

3. His further supplementary affidavit sworn and filed on 27th April 2009 (exhibit "P3").

7. He also gave brief oral evidence and was cross examined by counsel for the defendants on his oral and affidavit evidence. Further documentary evidence and affidavits were admitted by consent and they are:

4. Map of Gipna land of 4.1 ha (exhibit "P4");

5. Affidavit of Conrad Fox sworn and filed on 23rd March 2009 (exhibit "P5");

6. Affidavit of Raim Kunjil sworn and filed on 27th April 2009 (exhibit "P6");

7. Affidavit of Marcus Pup sworn and filed on 27th April 2009 (exhibit "P7");

8. Affidavit of Kare Makinta sworn on 19th March 2009 and filed on 20th March 2009 (exhibit "P8");

9. Affidavit of James Leahy sworn and filed on 01st May 2009 (exhibit "P9"); and

10 Affidavit of Cecelia Leahy sworn and filed on 29th May 2009 (exhibit "P10").

DEFENDANTS' EVIDENCE

8. As for the defendants, they rely on the following affidavits:

1. Affidavit of Tom Otri sworn and filed on 20th March 2009 (exhibit "D1");

2. Affidavit of Tom Otri sworn and filed on 28th April 2009 (exhibit "D2");

3. Affidavit of Tom Otri sworn and filed on 9th May 2009 (exhibit "D3");

4. Affidavit of Goimba Kot sworn on 24th February 2009 and filed on 26th February 2009 (exhibit "D4");

5. Affidavit of Goimba Kot sworn on 6th March 2009 and filed on 10th March 2009 (exhibit "D5");

6. Affidavit of Goimba Kot sworn on 31st March 2009 and filed on 31st March 2009 (exhibit "D6");

7. Affidavit of Goimba Kot sworn and filed on 28th April 2009 (exhibit "D7"); and

8. Affidavit of Raga Kavana sworn on 30th April 2009 and filed on 1st May 2009 (exhibit "D8").

9. As the affidavits were admitted into evidence by consent, none of the deponents were cross examined on their affidavits. The defendants' counsel also sought to tender a further affidavit of Kare Makinta sworn and filed on 20th March 2009, which was prepared by the defence counsel but I rejected it following the plaintiff's objection that Kare Makinta is a witness for the plaintiff as he had sworn an affidavit for the plaintiff: see Exhibit "P8". For that reason, he could not be a witness for the defendants.

10. Further, if the defence counsel wished to raise any new factual matters which this witness has not deposed in his affidavit or matters disputing the evidence of this witness, counsel had, had the right and opportunity to cross examined this witness on his affidavit during the trial. Since he had not, he has waived that right, therefore cannot raise any factual matters or dispute the evidence of this witness in a subsequent affidavit of the same witness. For those reasons, I rejected the tendering of this witness's affidavit for the defence case. In my view, the omission by defence counsel to cross examine this witness is fatal to the defence case, a matter I will elaborate later on.

ISSUES

11. The parties through their counsel have filed extensive written submissions in accordance with the Court's direction of 2nd May 2009 and I have considered them in my deliberations. From the evidence and the submissions, I consider the following as issues in this proceeding:

1. Whether the plaintiff has standing to sue the defendants in this proceeding;

2. Whether the pleadings of the plaintiff in the further amended statement of claim of 30th April 2009 sufficiently pleaded fraud;

3. What are the terms of the contract of sale of land?

4. Did the plaintiff breach any of the terms of the contract of sale of land?

5. If so, what is the effect of the breach?

6. Whether the plaintiff has proven fraud in the transfer of title of the land by the first and second defendants to the third defendant.

7. If so, what is the effect of fraud?

REASONS FOR DECISION

12. Since there are a number of issues raised in this proceeding, I consider it appropriate that I should deal with each of them in the order that I have listed above.

Standing of plaintiff to sue

13. I deal first with the issue of whether the plaintiff has standing to sue the defendants in this proceeding. It is the defendants' submissions that the plaintiff has no standing to bring this proceeding against the defendants because he is not a party to the contract of sale of land with the first and second defendants. The person who would have standing to bring this proceeding is the son of the plaintiff, one James Leahy. Counsel for the defendants referred me to the following documents to support this proposition:

1. Agreement of the first payment annexed as "D4" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), where the plaintiff was only named as a witness and not a party to the agreement. Further, the plaintiff had not signed the agreement.

2. The Ownership Agreement of 25th October 2000, marked as annexure "F" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), one James Leahy signed as the new owner of the land along with four customary landowners.

3. In a document annexed as "I" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), the plaintiff confirmed that James Leahy was the new landowner of the land. Further, James Leahy had paid the outstanding K1,000.00 to the first defendant under the title of new landowner.

14. The defendants submit that under the law of contract, a party not party to a contract is not entitled to sue for breach of contract and in this case, from the above documentary evidence, it is clear that the plaintiff is not a party to the contract of sale of land, therefore has no standing to sue the defendants in this proceeding. For this reason, they ask that the entire proceeding be dismissed.

15. I think this issue is pretty much straight forward and can be disposed off without much difficulty, even though I have not received submissions from the plaintiff on this issue. Whilst I accept under the law of contract, a party who is not a party to a contract has no right to enforce it, that is, standing to sue for breach of contract, I am of the view that the doctrine of privity of contract does not arise in this case. This is because this is a case where the contract of sale of land is partly oral and written. It is also based on conduct of parties, which I will elaborate further when I consider the alternative argument of the plaintiff below.

16. Where it is oral, it was the plaintiff who spoke to the first defendant including the other customary land owners like, Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga of purchasing the land for K120,000.00. In fact, the original contract of sale was made orally between these customary landowners and the plaintiff for a consideration of K120,000.00. That is why I cannot find any written contract of sale of the land for K120,000.00 in evidence before me. (Emphasis added).

17. It is in writing in so far as confirmation of the payment of K120,000.00 to the first and second defendants, including Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga are concerned because the K120,000.00 was paid by the plaintiff by way of three installments. That is why written documents have been signed by the parties to verify these payments. These documents are the ones the defendants have referred to in their submissions above like first, the document under the letter head of Nebilyer Trading Pty Ltd of the first payment of K30,000.00 annexed as "D4" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), where the plaintiff was only named as a witness and not a party to the agreement. Further, the plaintiff had not signed the agreement.

18. Secondly, the Ownership Agreement of 25th October 200, annexed as "F" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), where James Leahy signed as the new owner of the land along with four customary landowners and finally, a document annexed as "I" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), where the plaintiff confirmed that James Leahy was the new landowner of the land. Further, where James Leahy had paid the outstanding K1,000.00 to the First defendant under the title of new landowner.

19. In any case, the first defendant including Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga had always dealt with the plaintiff during the negotiation stage in relation to the sale and purchase of the land. These persons seemed to be the principal landowners because their names appear to be mentioned frequently by the plaintiff and were the persons who had received the money for the land from the plaintiff. They were the persons had who organized a feast with the plaintiff to witness the sale of the land in 1995 at Kenta village. So, how could they now turn around and say that the plaintiff was not a party to the contract of sale of land? After all, they benefited from the sale of land. They received monetary benefits.

20. For example, the first defendant received a total of K36,000.00 (excluding K4,000.00 foregone by him) from the plaintiff whilst the other customary landowners, like Joseph Raim received a total of K20,000.00, Koim Koi received a total of K30,000.00, Ronom Kansol and Joseph Meninga together received a total of K30,000.00 giving a total sum of K120,000.00: see paragraph 22 of the supplementary affidavit of the plaintiff sworn and filed on 19th March 2009 (exhibit "P2") and annexure "D2" to the affidavit of the plaintiff sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"). So why are they now objecting to the very person who has all along given them the money to assert his right of ownership to the land in question? It doesn't make sense at all, does it? That is why, in my view, the mention of James Leahy in these written documents does not change the parties to the original contract. It only confirms the objective and intention of the plaintiff as far as the future of the business is concerned, and that is for his son, James Leahy, to take over from him and manage the business at some future date. This view is further confirmed by the plaintiff at paragraph 15 of his supplementary affidavit sworn and filed on 19th March 2009 (exhibit "P2") where he states; "the involvement of my son James Leahy occurred after he returned from school in Australia and I told him to run the Factory as my Manager. I introduced him to the first defendant and the landowners and they accepted him as a relative. It was my intention to transfer my interest in the company Nebilyer Trading Limited to my son at a later stage."

21. In the alternative, the plaintiff also pleads at paragraph 9 of the further amended statement of claim that, the contract was formed by conduct of the parties in the following manner:

"(a) In 1995 pigs and chicken were killed and given during the discussions and eaten together at Kenta village signifying customary ratification of the agreement.

(b) On 12th January 1996, the Landowners signed Land Users agreement authorize the Plaintiff to the use of the land for the whole of his lifetime.

(c) Subsequently in 1997 the Plaintiff then proceeded to build a Wet Factory with coffee pulper, washing machine pump and drying area which cost the Plaintiff at that time a sum of K300,00.00 with no objections from the landowners.

(d) From 1998 - 2000 acceptance of part payments of the purchase price of the Gipna Land as pleaded above.

(e) The landowners never disturbed or interfered with the Plaintiff's quite possession and occupation of the Gipna Land, which continues to date."

22. What these pleadings mean is that, the first defendant including the other customary landowners have not taken issue with the contract of sale of land when they accepted part payments of the purchase price until the final payment of K66,000.00 on 25th October 2000. They have also not opposed the plaintiff's establishment of a coffee wet factory on the land. They simply allowed him to conduct business on it without any disturbances and interferences. Thus, in my view, the documents signed by James Leahy which I have referred to above are not contracts per se. They are simply documents evidencing the installment payments. The fact remain, the first defendant and others accepted the installment payments from the plaintiff and benefited from the deal. They cannot now say that the plaintiff was not a party to the deal. Their conduct shows to me that they have a contract of sale of land with the plaintiff. On that basis alone, it renders their argument that the plaintiff was not a party to the contract not only ridiculous but without merits.

23. Further, I reject the defendants' submission that there is no evidence to show that the James Leahy is an agent or had ostensible authority to bind the plaintiff and the first defendant and other customary landowners in the contract of sale. In my view, whether James Leahy is an agent of the plaintiff or had ostensible authority to bind the plaintiff to the contract of sale with the first defendant and other customary landowners is irrelevant and inapplicable in this case. For all these reasons, I am not satisfied that the defendants have made out a case for the Court to dismiss the entire proceeding for want of standing of the plaintiff and I dismiss the preliminary application.

Sufficiency of pleadings

24. I turn to the second issue, which is whether, the plaintiff has sufficiently pleaded fraud in the further amended statement of claim. It is the defendants' submission that the plaintiff has not sufficiently pleaded fraud in the further amended statement of claim. They ran their argument on the basis that first since the State is the registered proprietor of the State lease because the land had been converted to a State lease and the title of the land has been subsequently transferred to the third defendant, the plaintiff has not sufficiently pleaded fraud against the fourth defendant. Therefore, the proceeding against the first and second defendants is misconceived.

25. Secondly, they argue that the first and second defendants has complied with the requirements under sections 10 and 11 of the Land Act, 1996 to convert the land to a State lease and subsequently lease it to the third defendant, hence they question the merits of the plaintiff's allegations of fraud against them. They say, there are no allegations of fraud against them based on the current state of the pleadings.

26. To appreciate the submissions of the defendants, I set out the relevant parts of the amended statement of claim relating to fraud hereunder:

"14. Nevertheless, on or before 10th December 2004 the First and Second Defendants and Third Defendant wrongfully and with intent to injure the Plaintiff or to cause loss to the Plaintiff by unlawful means, conspired and combined together and defraud the Plaintiff and other persons responsible for issuing of Titles, and, concealed such fraud in obtaining a title under the First and Second Defendants' name and transferring it to the Third Defendant.

15. Particulars of Fraud are as follows:

(a) The First and Second Defendants with or without assistance of the Third Defendant falsely represented to authorities in order to obtain Title to Land described as Agriculture and Business Lease Volume 13 Folio 124 Portion 2488, that they were customary landowners of Gipna Land after they had sold the land to the Plaintiff.

(b) The title to the Land now described as Agriculture and Business Lease Volume 13 Folio 124 Portion 2488 was unlawfully issued to the First and Second Defendants without complying with the provisions of the Land (Tenure Conversion) Act 1963 (hereunder "LTCA"), interalia Sections 7, 8, 9, & 10 in respect of conversion of Customary Land to State Land.

(c) Further and in the alternative, if the First and Second Defendants did purport to comply with the LTCA (which is denied), the First and Second Defendants falsely represented themselves to the Land Titles Commission (hereinafter "LTC") to induce the LTC to believe that Section 9 of the LTCA had been complied with for the LTC to make a conversion order on the basis that:-

(i) The First and Second Defendants still held interest in the Gipna Land.

(ii) They were exclusively the Landowners of Gipna Land.

(iii) All persons interested in the Gipna Land the subject of the application.

(iv) Adequate provision or compensation has been paid to all persons with interest in the Gipna Land.

(v) In all the circumstances, it was proper for the application for conversion to be granted, especially the fact that the Gipna Land was already sold to the Plaintiff.

(d) The First and Second Defendants used different names, namely Tom Otri and Joel Otri instead of Tom Kondup and Joel Kondup respectively to obtain the title instead of their usual names to conceal that they had sold the Gipna Land to the Plaintiff.

(e) In so far as the Fourth Defendant was concerned, there was no conversion order made pursuant to Section 5 of LTCA before it issued a Title to the First and Second Defendants.

(f) There was never a LTC hearing or proper enquiry pursuant to Section 10 of the LTCA whereby objection to the First and Second Defendants application can be raised.

(g) The Second Defendant is a minor and does not have the legal capacity to enter into a contract of sale with the Third Defendant and this was not revealed.

(h) The order to obtain the Title the First and Second Defendants concealed to the Fourth Defendant, his agents or servants that:-

(i) the Gipna Land was not sold to the Plaintiff.

(ii) and the particulars of the other landowners.

(i) Whilst the Plaintiff was contemplating to convert the land to a State Land and get a Title issued under his name, the First and Second Defendants and the Third Defendant without the knowledge of the Plaintiff proceeded to organize a title under the names of Tom Otri and Joel Otri and the State lease and Title was issued on the 08th and 10th of December 2004 by the Fourth Defendant.

(j) Within two months, without knowledge if the Plaintiff, on the 9th of February 2005 the First and Second Defendants transferred the land to the Third Defendant and the Fourth Defendant registered the Title under the Third Defendant and the Fourth Defendant registered the Title under the Third Defendant's name in 9th of February 2005".

27. Order 8, rule 30 of the National Court Rules requires a party who alleges fraud against another to plead particulars of fraud. It states, "A party pleading shall give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which he relies". This is because it is trite law that pleadings enable parties to identify issues of fact and law, and the kind of evidence to be led and most importantly, to enable parties to know what to meet at the trial: see Andrew Madiu -v- Mineral Resources Development Company Limited (2004) N2601. It is also because an allegation of fraud is a serious matter, especially where it is made in order to overturn a certificate of title to a land and I agree with the reasoning by Woods, J in William Maki -v- Michael Pundia & PNG Motors [1993] PNGLR 337; (1993) N1137 where he said:

"An allegation of fraud is a very serious allegation, and the courts have required strict adherence to requirements for pleadings in such cases. Courts have never allowed general allegations of fraud. Courts have required that a person pleading fraud should set out the facts, matters, and circumstances relied on to show that the party charged had or was actuated by a fraudulent intention. The acts alleged to be fraudulent must be stated fully and precisely with full particulars. It is not enough just to say that the person lied or swore a false affidavit. The facts, matters and circumstances which make such statements lies must be particularised. Also, this being a challenge to the procedures under the Land (Tenure Conversion) Act, the fault or fraud in those procedures should be particularised. In such a challenge to a certificate of title to land, the court has traditionally insisted on strict rules for the protection of persons who are in possession of land against attacks from persons who, hoping to find some blot on the title, bring actions against them without any reasonable cause. I am not saying that this action may be being brought without reasonable cause, but if these rules which protect persons in possession of land from being wrongfully and improperly attacked work hardship on the plaintiffs, that is part of the general purpose of protecting property and persons from being improperly vexed. Surely, the rule is no such hardship. If the plaintiffs know anything, then they can and should plead it."

28. Bearing in mind the purpose of pleadings in civil cases, can it be said that the pleadings in the present state as set out above do not sufficiently plead fraud or particularized the fraud, hence depriving the defendants from identifying the issues of fact and law and preparing their defence and evidence for their case? Having reviewed the above pleadings in the further amended statement of claim, I am not persuaded by the submissions of the defendants that the plaintiff has not sufficiently pleaded fraud. It is clear from the above pleadings that the first allegation the plaintiff makes against the defendants is that, the first and second defendants knew very well that they had a contract with the plaintiff to sell the land to him. Yet they went ahead and converted the land to a state lease and transferred the title of the land to the third defendant.

29. Secondly, in so doing, they did not inform or advise the plaintiff. Thirdly, they did not inform or advise the fourth defendant of the contract of sale of the same land with the plaintiff prior to the registration of the title of the land under their names by the fourth defendant. Thirdly, they did not comply with the procedures for converting customary to State lease under the Land (Tenure Conversion) Act, 1963. Finally, the plaintiff gives the dates of the events surrounding the alleged fraudulent conversion of land from its customary status to a State lease like in paragraphs 14 and 15(l)&(j) of the statement of claim.

30. In my view, these allegations are sufficiently clear for the defendants to make out the kind of fraud they are facing in this case. These allegations of fact first, present a case of fraudulent misrepresentation and secondly a case of statutory breaches and irregularity. Whether or not the plaintiff will succeed in proving these allegations against the first, second, a third and fourth defendant is a matter for trial. I do not have to decide whether they have merits or not now. Nevertheless, fraud is one of the issues I am being asked to determine here apart from the allegation of breach of contract of sale by the plaintiff, hence I must allow that to take place.

31. This is where I reject the submission of the defendants that the plaintiff did not sufficiently plead fraud against the first, second, third and fourth defendants. In my view, to accept the submission of the defendants is to take a narrow approach of the entire circumstances of the case and down play the gravity or seriousness of the allegations against them. For these reasons, I dismiss the application of the defendants to dismiss the plaintiff's proceeding for want of better pleadings.

Terms of the contract

32. I now turn to the substantive issues. As I said above, there is a contract of sale of land between the plaintiff, the first defendant and other customary landowners. The contract is partly oral, written and by conduct of parties. The original agreed price for the land is K120,000.00 but was subsequently varied to K116,000.00. However, the first and second defendants alleged that there were other conditions of the contract. These conditions are:

1. Purchase of four motor vehicles for the first defendant and other customary landowners;

2. Payment of K10,000.00 each to the first defendant and other customary landowners; and

3. the sending of the son of the first defendant (namely the second defendant) to school in Australia.

33. The first and second defendants alleged that these three conditions of the contract had to be fulfilled before sale is completed and the title of the land is to be transferred to the plaintiff. For convenience purposes, I shall refer to these three conditions as "additional conditions". In the meantime, it is not disputed that the plaintiff was given vacant possession of the land and allowed to do business on it including the establishment of a coffee wet factory. It was built by the plaintiff at an estimated cost of K300,000.00. Therefore, the first issue is; what are the terms of the contract of sale of land between the plaintiff and the first and second defendants?

34. It is the plaintiff's evidence in his affidavit sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"), that when he and the first defendant, Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga agreed back in 1995 at Kenta village that he purchase the land from them at K120,000.00, there were no other conditions of the contract. He was given vacant possession of the land and allowed to do business on it. The only conditions which he agreed to with the first defendant and the other customary landowners were to pay them K116,000.00 on an installment basis. Further, he was to provide employment opportunities to the customary landowners and pay their coffee to process at the coffee wet factory. On the other hand, the first and second defendants allege that there were additional conditions of the contract of sale which I have stated above.

35. Obviously, there are two slightly different versions of what the parties considered as the terms of the contract. In such a situation, the Court has to decide which version it should accept. This will require the Court to assess the demeanour of the witnesses who came and testified for and against the plaintiff's claim and also on logic and common sense. It will also depend on any consistencies and contradiction in the evidence of each witness. This will enable the Court to say at the end of the day what were the terms of the contract or in other words, the additional conditions were part of the contract.

36. I have had the benefit of seeing the plaintiff give evidence and subjected to cross examination by counsel for the defendants unlike the defendants and their witnesses. He was calm and confident. When counsel for the defendants suggested in cross examination that at the meeting at Kenta village in 1995, he promised the first defendant and other customary landowners that he would purchase them motor vehicles, he replied that they had lied because he had not made such a promise. When it was further suggested by counsel for the defendants that the first defendant and other customary landowners withdrew their agreement to sell the land to him because he had not kept his side of the promise, he said that the first defendant and the others came up with those conditions recently when the third defendant got involved.

37. From these answers, it appears that the plaintiff vigorously maintains that there are no additional conditions like the ones that the first and second defendants have claimed above at the time of the making of the contract of sale. On the other hand, I did not have the benefit of seeing the defendants and their witnesses being cross examined in order for me to make my own assessment of their credibility. They have only filed affidavits and what they have stated in those affidavits is all I know of these witnesses. Therefore, it is difficult for me to say whether or not they are credible witnesses. In such a case, I must treat their evidence and that of their witnesses with some reservation. In other words, I must not place too much weight on them because their evidence was not tested in cross examination.

38. Proceeding on this premise, and of course noting that I did have the benefit of seeing the demeanour of the plaintiff during cross examination, I must say, I am inclined to accept the evidence of the plaintiff that there were no other conditions of the contract of sale because generally, I find him to be a truthful witness. As I said above, he vigorously maintains that there are no additional conditions during cross examination and I can say the defence counsel did not discredit or destroy the plaintiff during cross examination. Thus, I have no reason to doubt his evidence.

39. Secondly, logic and commonsense as well as custom and usage in contract negotiations between two parties would also require and dictate that if anything, all the terms and conditions of the contract of sale of land would be publicly spelt out by the parties to the contract at the time of the formation of the contract. In other words, there are no secrets when parties are negotiating a contract. Given this background, I do not believe the evidence of the first defendant in his supplementary affidavit sworn and filed on 09th May 2009 (exhibit "D3"), where he states at paragraphs 3 and 4 that; "[t]here should not be any misunderstandings about where, when and why the Plaintiff made the alleged promises which he had to fulfill prior to events giving rise to this proceeding. It is strongly stated here that the promises made to me and my other brothers (vendors), apart from my outstanding amount of K4,000.00, was not meant for the whole village or public to hear." (Emphasis added).

40. If the first defendant is referring to the four additional conditions which I think is what he is referring to here, then what a way to enter into a contract! Surely and generally speaking, this is not the way parties enter into contracts, that is in secret, especially where the contract would concern a large number of people and in this case, it must be remembered, we are dealing with a group of customary landowners and as far as they are concern, the contract of sale was entered in public and concluded with a feast at Kenta village in 1995.

41. Further, what the first defendant has stated in his supplementary affidavit sworn and filed on 9th May 2009 (exhibit "D3") is in direct contradiction to what he had said earlier at paragraphs 6 to 13 of his affidavit sworn and filed on 20th May 2009 (exhibit "D1"). This is what he said:

"6. At that time, the Plaintiff called us the land owners for a meeting. We then met with him and discussed about the land. The Plaintiff told us that he wanted to buy off the land.

7. We told him that we do not want to sell the land. What we want is for you to use the land only and pay us rent.

8. The Plaintiff however, replied and said that some times coffee prices rise and fall and therefore this might cause problem so I will have to buy the land off.

9. He further told us that upon buying off the land, I will buy four (4) new trucks and give each landowners K10,000.00 each to start up your own business.

10. It was further agreed that he would pay for school fees and send my son to Australia to attend school and would also compensate for all food gardens that were destroyed.

11. With those terms and conditions a monetary value of K120,000.00 was promised for purchase of land. This payment was not paid in full as agreed. The Plaintiff then moved into the land and built the coffee wet factory since 1995.

12. The payment of K120,000.00 were paid in 3 separate installments and in year 2000, he paid the last payment. By then the Plaintiff had K4,000.00 outstanding including all the promises made. Only K116,000.00 was paid." (Emphasis added).

42. Given the evidence of the first defendant in his earlier affidavit (exhibit "D1") and in his subsequent supplementary affidavit (exhibit "D3"), it is clear that he has contradicted himself as to where and when the plaintiff agreed to these additional conditions of the contract of sale of land. In other words, earlier, he said that at the gathering or feast at Kenta village in 1995, the plaintiff publicly told him and other customary landowners that he (the plaintiff) would purchase the land for K120,000.00 and buy four new motor vehicles, pay K10,000.00 to each customary landowner and sent the first defendant's son to school in Australia. Later, he changes his story and says that the plaintiff had told him privately on an unknown date and place that he (the plaintiff) would purchase four new motor vehicles, give K10,000.00 to each landowners and sent his son (the second defendant) to school in Australia.

43. In my view, the contradiction in the evidence of the first defendant goes to fortify my initial view that the plaintiff did not agree to these additional conditions when the contract of sale of land was discussed and concluded at Kenta village in 1995. On the other hand, I think these additional conditions of the contract of sale were recently invented by the first defendant alone after he realized that the plaintiff was very slow in paying the K116,000.00 to him and the other customary landowners, especially where, it took about five years from 1995 to 27th October 2000 for the plaintiff to finally pay in full the amount of K116,000.00.

44. Next, if what he says about the additional conditions is true, why have the other customary landowners like Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga been left out of this case? Why haven't they come forward to give evidence? Surely, they would have same information about these additional conditions and would have been able to shed some light on them. But they neither came forward nor filed affidavits to support the first defendant's claim. Their silence or non involvement leaves a lot to be desired. It not only makes me doubt the first defendant's assertion, but also find that there are no witnesses to corroborate his evidence to give more weight to his assertion. I will comment further on this point a little bit later.

45. This leads me to the third reason for accepting the evidence of the plaintiff that he did not agree to these additional conditions and that is, the witness Kare Makinta, seems to find himself almost in a "no man's land" as a result of the defendants' intention to call him as one of their witness. This brings me back to the point I raised earlier when I rejected the tendering of an affidavit of this witness because I said that this witness had earlier on given evidence by way of further affidavit sworn on 19th March 2009 and filed on 20th March 2009 (exhibit "P8") for the plaintiff, hence could not give evidence for the defendants.

46. In my view, the calling of this witness to give evidence for the defendants raises a matter which needs further comment. To my mind, it shows that this witness is not sure which side he is on. Is he on the plaintiff's side or the defendants' side? It implies that he may have been unduly influenced by either the plaintiff or the defendants to give evidence for or against the plaintiff, hence, his evidence must be treated with extreme caution.

47. And I think my suspicion is confirmed by the evidence of Cecila Leahy in her affidavit sworn and filed on 20th March 2009 (exhibit "P10") where she stated that on the afternoon of 13th March 2009 at the front of Mount Hagen Plaza building in Mt Hagen town, she was with the plaintiff and some relatives and saw Kare Makinta meet the first defendant. She saw them talk and then they crossed the road to the car park near the Mt Hagen Bowling Club. Then, she saw Kare Makinta and the first defendant meet Marcus Pup after they went inside the bowling club and then they got into a motor vehicle and drove off. She said that the motor vehicle belonged to the third defendant and as they drove off, she saw Kare Makinta seated on the off side seat of the driver and the first defendant at the back seat.

48. It should be noted that the evidence of Cecila Leahy has not been refuted by the defendants. Therefore, I find as a fact that on the afternoon of 13th March 2009, Kare Makinta and the first defendant were seen together earlier on outside Mount Hagen Plaza building and later with Marcus Pup at the Mt Hagen Bowling Club. I also find as a fact that these three men got into the third defendant's motor vehicle and drove off. What all these mean is that, given the uncertainty of this witness as to which side he is on and that fact that he was in the company of the first defendant raises doubt in my mind whether this witness is a witness of truth. Therefore, I will place little weight on his evidence in so far as whether the plaintiff had agreed to the additional conditions of the first and second defendants.

49. Fourthly, the evidence of the plaintiff that he did not agreed to the additional conditions of the first and second defendants was corroborated by witnesses Raim Kunjil and Marcus Pup. Raim Kunjil in his affidavit sworn and filed on 27th April 2009 (exhibit "P6") states that he is the chairman of land mediators and was present at Pupral at the "singsing" place near Kenta village in 1995 and witnessed the sealing of the contract of sale to wit, parties held a feast to mark the occasion.

50. He also states that under the customary law of land tenure of the Mt Hagen central area of the Western Highlands Province, once a customary land is sold, it cannot be resold. He also states that at the material time, the first defendant was not the sole customary landowner. There were other customary landowners like, Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga who also received payment for the sale of the land. Finally, he states that land mediators do not witness agreements for lease of customary land but for sale of customary land only on behalf of the State.

51. Raim Kunjil's evidence is also corroborated by Marcus Pup where this witness states in his affidavit sworn and filed on 27th April 2009 (exhibit "P7") that he is a land mediator and was present at Pupral at the "singsing" place near Kenta village in 1995 and witnessed the sealing of the contract of sale to wit parties held a feast to mark the occasion.. He also states that under the customary law of land tenure of the Mt Hagen central area of the Western Highlands Province, once a customary land is sold, it cannot be resold. He also states that at the material time, the first defendant was not the sole customary landowner. There are other customary landowners like Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga who also received payment for the sale of the land. Finally, he states that land mediators do not witness agreements for lease of customary land but for sale of customary land only on behalf of the State.

52. The evidence of Raim Kunjil and Marcus Pup were not tested in cross examination hence, their evidence stands uncontroverted and I accept them. They are also consistent with the evidence of the plaintiff in respect of the payment of the land by installment on different dates where they were present with the plaintiff, the amount paid, and the purpose of the purchase of the land by the plaintiff from the first defendant and the other customary landowners.

53. Further still, in relation to the evidence of Marcus Pup, his evidence is unequivocal even though he did meet the first defendant on 13th March 2009 at Mt Hagen Bowling club and there maybe a suggestion here that he may have been unduly influenced by the first defendant to give evidence for the defendants in this proceeding. But I also note that the defendants did not take any issue hence, I find his evidence consistent with the plaintiff's evidence. I am therefore, inclined to believe his evidence which in turn goes to support the plaintiff's evidence that there were no additional conditions to the contract of sale of land between the parties.

54. The last reason for me to accept the evidence of the plaintiff that he did not agree to the additional conditions is that, the former District officer for Lands in the Mt Hagen Central District, Mr Conrad Fox says in his affidavit sworn and filed on 23rd March 2009 (exhibit "P5") inter-alia that he was responsible in putting the documentation together for the parties to sign at the gathering at Kenta village on 27th April 1998 where the plaintiff paid cash of K30,000.00 to the first defendants and other customary landowners. The cash of K30,000.00 was in addition to K11,900.00 which was paid to the first defendant and others earlier.

That brought the total amount paid by the plaintiff on 27th April 1998 to K41,900.00. The payment of that amount was reduced into writing and signed by the first defendant and the other customary landowners in the Private Land Dealing/Local Land Purchase document marked as annexure "D3" to the affidavit of Johannes Leahy sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"). This witness and the Land mediators in the likes of Raim Kunjil, Marcus Pup and Kare Mintaka witnessed the payment and also signed the document.

55. He also unequivocally states that, at that gathering, he did not hear the plaintiff tell the first defendant and other customary landowners that he would buy four new motor vehicles for them and give each customary landowner K10,000.00. That is why he did not put these terms in the Private Land Dealing/Local Land Purchase document referred to above.

56. Thus, here is another witness who, as a representative of the State in the capacity of a District officer at the relevant time not only witnessed the formation of the contract between the plaintiff and the first defendant and other customary landowners but also witnessed the installment payments over a period of time. I have no reason to doubt his evidence because his evidence is consistent with the evidence of witnesses, Raim Kunjil and Marcus Pup. The combine effect of their evidence is that, they corroborate the evidence of the plaintiff and add weight to that plaintiff's claim that there are no additional conditions of the contract of sale of the land. This is another reason for me to find that there are no additional conditions as those suggested by the first and second defendants in the contract of sale of land.

57. On the other hand, I have every reason to doubt the evidence of the first defendant that the plaintiff had agreed as part of the sale of the land that he would purchase four new motor vehicles, pay K10,000.00 to each customary landowner and sent the first defendant's son to school in Australia. First, his evidence has not been tested in cross examination hence, I am unable to determine his credibility in order to help me decide whether he is a witness of truth. This is very important because even though he has sworn several affidavits attesting to these additional conditions of sale, his evidence on these additional conditions of sale has been denied out rightly by the plaintiff and his witnesses. Thus, the only way I can be certain whether he is telling the truth is to have him cross examined. This is another reason for me to accept the evidence of the plaintiff that there are no additional conditions of sale of land.

58. Secondly, and returning to the point I made earlier on the first defendant's evidence not being corroborated by other customary landowners, I emphasize here that the first defendant's evidence in relation to the additional conditions of sale of land has not been corroborated by any other witnesses. In this respect, it is not disputed that there are other customary landowners of the land, like Joseph Raim, Koim Koi, Ronup Kansol and Joseph Meninga.

59. In my view, they ought to have been called to give evidence to verify the first defendant's claim in relation to the additional conditions. Why have they been left out of this proceeding? Why have they not been called by the first defendant to verify his claim? I think these are important questions that go to the veracity of the first defendant's evidence in relation to the additional conditions of the sale of land. They have not been answered and in my view raise very serious doubts in relation to the first defendant's claim.

60. I note in passing that one of the customary landowners Koim Koi had filed an affidavit on 20th March 2009 but for reasons only known to the counsel for the defendants and the defendants, Koim Koi's affidavit was not tendered in evidence for the defence. Hence, I have not taken it into account in my deliberations, but the adverse inference I make is that, he may have known more than what the first defendant had and has given to the Court.

61. In the end, I do not believe the evidence of the first defendant that the plaintiff did agree to these additional conditions of the contract of sale of land. I find as a fact that the terms of the contract of sale of land was that the first defendant and the other customary land owners sold the land to the Plaintiff for a consideration of K120,0000.00 which was subsequently varied or reduced to K116,000.00 after the first defendant agreed to deduct K4,000.00 from his share. The plaintiff was to build a coffee wet factory on the land and provide employment to the customary landowners.

62. As it is not disputed by the parties, I also find that the plaintiff was given vacant possession of the land and allowed to take possession of it. I further find that it was also agreed between the plaintiff and the first defendant and other customary landowners that the payment of the land shall be by installments and that there was no cut off date or fixed date for completion of payment. As a result, the last payment of K67,000.00 was paid to the first defendant and others on 27th October 2000. That payment completed the contract of sale. In my view, the end result is that, the plaintiff became the owner of the land as of that date.

Was there a breach of contract?

63. It follows also that the plaintiff did not breached any conditions of the contract of sale, hence there was no basis for the first and second defendants to treat the contract of sale as being repudiated. This leads me to the next ground of defence raised by the defendants and that is that the contract of sale between the plaintiff and the first defendant and the other customary landowners was repudiated.

Repudiation of contract

64. The defendants also raise in their defence and argue here that the contract of sale was repudiated. It was repudiated because the plaintiff failed to meet the additional conditions of the contract of sale. Therefore, the first and second defendants were entitled to treat the contract has being breached and terminated it by repudiation. They were entitled to subsequently lease it to the third defendant under the lease-lease back lease scheme. In so doing, they maintain that they had good title to the land.

65. I note that the defendants' submissions proceeds on the basis that there are additional conditions of the contract of sale which were breached by the plaintiff. As noted above, I have already found that there are no additional conditions of the contract of sale therefore there is no basis for the first and second defendants to terminate the contract of sale with the plaintiff. But since the defendants have raised the issue of repudiation of the contract of sale, I shall consider it too.

66. As I said, the defendants' submissions raise the next issue, which is whether the contract of sale was repudiated by the first and second defendants and if so, was there a basis for the repudiation of the contract. Under the law of contract, parties to a contract may terminate a contract in the following manner:

1. by mutual agreement;

2. by breach of a fundamental term of the contract; and

3. by repudiation.

67. It is said that "a breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under the contract or performs defectively or incapacitates himself from performing": see GH Trietle, The Law of Contract, Sweet & Maxwell (11th ed 2003), at p 832.

68. In my view, from the defendants' submissions I can see that they are attempting to show that this is a case where they repudiated the contract of sale between the plaintiff and the first defendants and other customary landowners after the plaintiff failed to fulfill these additional conditions. In effect, they are saying that this is a case of anticipatory breach of contract. In GH Treitel, The Law of Contract, (supra) at pp 857- 858, stated:

"An anticipatory breach is said to occur when, before performance is due, a party either renounces the contract or disables himself from performing it. Renunciation requires a 'clear' and 'absolute' refusal to perform; this need not be express but can take the form of conduct indicating that the party is unwilling, even though he maybe able to perform. A repudiation may even be inferred from silence where it is a 'speaking silence': for example, the previous conduct of a party in refusing to perform another related contract may give rise to the inference that he will refuse to perform the contract in question. His silence or inactivity can then be a repudiation of that contract unless he takes positive steps to dispel the inference. The conduct must indicate to the other party that the party alleged to have renounced the contract is about to commit a breach of it: an indication given to a third party of an intention to commit a breach at an unspecified time in the future has been held not to amount to a renunciation.

Disablement need not be 'deliberate', in the sense that there may be an anticipatory breach even though it was not the party's intention to disable himself from performing; but the disablement must be due to the party's 'own act or default'. Such disablement is most clearly illustrated by cases in which a party does a positive act which is certain to prevent performance, such as disposing elsewhere of the specific thing which forms the subject matter of the contract." (Emphasis added).

69. How does one know that there is an anticipatory breach? There are two instances where an anticipatory breach may occur. They are; one by renunciation, and the other by prospective inability. Again in, GH Treitel, The Law of Contract, (supra) the learned author explained them in this way at p 862:

"Renunciation. The first form of anticipatory breach is by renunciation, ie, by 'clear' and 'absolute' refusal to perform. This may be inferred from conduct where the party in breach has 'acted in such a way as to lead a reasonable man to conclude that [he] did not intend to fulfill [his] part of the contract'. Whether conduct has this effect 'is to be considered as at the time when it is treated as terminating the contract, in the light of the then existing circumstances'. The court therefore looks to the time of rescission to determine whether the injured party reasonably took the view that the refusal was sufficiently clear and absolute to give him the right to rescind.

Prospective inability. Where a party is alleged to have committed an anticipatory breach by disabling himself from performing, the question whether the other party is entitled to rescind will generally depend on the seriousness of the resulting failure in performance. That failure being wholly prospective, its seriousness is more than usually a matter of speculation; but the injured party may nevertheless seek to rescind before the time fixed for performance."

70. A breach of contract occurs when a fundamental term of the contract or usually referred to as "condition" is breached by a party. In cases of anticipated breach, the breach of a fundamental term of a contract is very important to determine whether there is indeed or actual breach of the contract to enable the aggrieve party to enforce it. Again, in GH Treitel, The Law of Contract, (supra) the learned author puts it this way at p 861:

"The same is true of a breach of a 'condition' in the sense of a term any actual breach of which justifies recession; and Lord Diplock's suggestion in the The Afovos, that there can be no right to rescind for anticipatory breach of condition may, with respect be doubted. In part, the question whether there can be such a right is one of terminology. Lord Diplock has elsewhere defined 'conditions' as terms the breach of which gives rise to the right to rescind because the parties have so 'agreed, whether by express words or by implication of law'. Under this definition, express provisions for determination on non-performance are 'conditions''; but a term is often classified as a 'condition' by statute or by judicial decision even though the parties have not expressly agreed that any breach of it is to give rise to the right to rescind. This group of conditions is in practice the more important group of such terms: and it is submitted that the right to rescind for anticipatory breach does extend to conditions of this kind. Thus, in one leading case on anticipatory breach, the court asked first whether the prospective breaches were breaches of conditions and (having reached the conclusion that they were not) proceeded secondly to question whether they were sufficiently serious to justify recession for anticipatory breach. The first enquiry would have unnecessary if the doctrine of anticipatory breach could never apply to breaches of condition."

71. I have laboured to lay down the law in respect of repudiation of contract in cases of anticipatory breaches because I do not think the defendants have appreciated its application in their submissions to the Court and of course for future references. From the above discussions, it is clear that, in order for the first and second defendants in this case to establish that the contract of sale was repudiated, they must prove the following:

1. The additional conditions are fundamental terms of the contract of sale; and

2. If they are, these additional conditions were breached by the plaintiff; and

3. The defendants either expressly or by conduct renounced the contract of sale to the plaintiff; or

4. The defendants disabled themselves from the contract with the plaintiff.

72. Assuming that the plaintiff did agree to the additional conditions and that these additional conditions are fundamental conditions of the contract of sale, could it be said that an anticipatory breach has occurred as a result of the plaintiff's failure to meet these additional conditions of the contract of sale?

73. It is the defendants' case that the plaintiff should have met these additional conditions of the contract of sale at the completion of the contract of sale, that is after paying in full the purchase price of K116,000.00 to the First defendant and other customary landowners. The evidence supporting this assertion is found at paragraphs 9 and 10 of the affidavit of the first defendant sworn and filed on 20th March 2009 (exhibit "D1") where he states:

"9. He further told us that upon buying off the land, I will buy four (4) new trucks and give each landowner K10,000.00 each to start up your own business.

10. It was further agreed that he would pay for school fees and send may son to Australia to attend school and would also compensate for all food gardens that were destroyed." (Emphasis added).

74. The first defendant goes on at paragraphs 13 and 14 of the same affidavit (exhibit "D1"):

"13. The Plaintiff never fulfilled his promises of buying us four (4) new vehicles and giving us the sum of K10,000.00 each. He further did not compensate for the food crops (gardens) that were destroyed nor did he pay for my son's school fees to attend school in Australia.

14. Since 2000, I have been trying to discuss with the Plaintiff to consider his promises but he avoided me and have not settled same."

75. From the above evidence, can it be said that the first and second defendants have established a case of anticipatory breach, hence entitling them to repudiate the contract of sale with the plaintiff? In my respectful opinion, I do not think so. It is clear that the plaintiff and the first defendant including the other customary landowners have agreed that he would meet these additional conditions at the completion of the contract of sale. In other words, once he pays in full and final settlement the purchase price of K116,000.00. After that is done, he would meet these additional conditions for them. To put it the other way around to emphasize the point, the fulfillment of these additional conditions is not to take place during the currency of the contract of sale but after its completion.

76. The completion of the contract of sale took place on 27th October 2000, when the plaintiff made the final payment of K67,000.00 to the first defendant and other customary land owners represented by Joseph Raim, Koi Koim, Ronup Kansol and Joseph Meninga. It is clear that the first defendant purportedly repudiated the contract of sale after the contract of sale was completed on 27th October 2000. I say this because that is what the first defendant says at paragraphs 16-18 of his affidavit sworn and filed on 20th March 2009 (exhibit "D1").

"16. I waited but nothing was forthcoming so in 2003 before applying for registration of title, I told the Plaintiff and his son that I will apply and obtain title over the said property.

17. That in December 2004 the title was registered and a copy issued to me. Upon receipt of same, I gave the Plaintiff the copy of the title as well as the Provincial Lands office and the land mediators.

18. The Plaintiff since 1995 operated on the land and has made a lot of money but failed to honour his promise which is a condition attached to in the purchase of the land."

77. From the above evidence, it is clear that the purported anticipatory breach occurred after the contract of sale was completed on 27th October 2000. Thus, it is also clear that the first defendant renounced the contract of sale when he told the plaintiff and his son that he was going to apply for registration of the title of the land and by his conduct when he approached the third defendant and invited the third defendant to purchase the same land from him.

78. But as noted in the discussions above, a repudiation of a contract may occur only when the contract subsists or is current and one of the parties to it anticipates that the other party is likely to breach it at some point during its currency. That being the law, and given the circumstances in the present case, I am unable to find that this is a case where an anticipatory breach has occurred, thus giving the first and second defendants the basis to repudiate the contract of sale with the plaintiff.

79. On the other hand, I find that the first and second defendant proceeded on the wrong assumption that the plaintiff has breached the additional conditions of the contract of sale during its currency and wrongly repudiated it without proper basis. I find that they did not have any right or basis to repudiate the contract of sale with the plaintiff. Thus, I find their defence of repudiation of the contract of sale misconceived and dismiss it. It follows that the contract of sale was not repudiated at all.

80. It was binding at that time between the plaintiff and the first defendant and the other customary landowners until the plaintiff made the final installment payment of K66,000.00 on 27th October 2000 and it came to an end. In other words, the plaintiff did perform the contract of sale. I find that the plaintiff is entitled to enforce it against them in this case. In this respect, I note one of the reliefs the plaintiff seeks in this proceeding is an order for specific performance: see paragraph (e) of the prayer for reliefs in the statement of claim above.

81. This is an important aspect of the plaintiff's case because since I have found that the contract of sale was performed by the plaintiff, that is consideration exchanged hands and he became owner of the land, I will need to consider whether or not to order specific performance of the contract of sale now that it is clear that the first and second defendants have converted it to a State lease and transferred the title to the third defendant. Therefore, it is necessary and appropriate that I expound on the law on specific performance. Specific performance is an equitable relief. It is one of the remedies available under the law of contract to remedy a breach against an offending party. It is granted where damages would not be an adequate remedy or in addition to damages.

82. It is said that, "........if a party to a contract had promised a performance, he ought to perform without the option of paying damages; and also that if he does not perform he should be made to perform. In other words, the normal remedy for breach of contract should be specific performance." see FH Lawson's Remedies of English Law Butterworths (2nd ed, 1980) at p 211.

83. It is also said that, "[t]here are two general limitations of this remedy. It is not available where am adequate remedy exists at common law and it will not be ordered where the task of judicially supervising the execution of the order would be too difficult. The typical case where damages are inadequate is where the contract is for the purchase or sale of land; for each piece of land is unique and, on the other hand, the purchase and sale of it is usually a fairly leisurely business." see FH Lawson's Remedies of English Law, Butterworths (2nd ed 1980) at pp 211 and 212.

84. There is a long line of case authorities in our jurisdiction where the Courts have ordered specific performance of a contract in sale and purchase of land cases, especially leaseholds. An example of such case is Arnold Ningiga -v- Peter Lare Koavea [1988-89] PNGLR 312 where Los, J ordered the defendant to complete the contract of sale of a land by obtaining Ministerial approval under section 69 of the old Land Act, (Ch185).

85. This is how his Honour came to that decision; "[i]f the Court cannot order specific performance, it must order damages for breach of the contract for sale against the defendant. To order damages for breach of contract would be to make the plaintiff lose badly. He would lose the house as well as being unable to recover any damages because the defendant is not financially secure. This would not be equitable to the plaintiff who has been ready and willing to honour the agreement and who has, in good faith, done so much in renovating the house. On the other hand, if I order specific performance both parties will benefit from the order."

86. Another is the case of Jacobs -v- Kwaindu [1991] PNGLR 366 where Los, J followed his earlier decision in Arnold Ningiga's case (supra) and ordered the defendant to complete the contract of sale of a land by obtaining Ministerial approval under section 69 of the old Land Act (Ch185), because the defendant as the vendor failed to complete the sale of the land. see also Mondo Merchants Pty Ltd -v- Melpa Properties Pty Ltd and Koang No 47 Pty Ltd (1999) N1863 and also the Supreme Court decision of Koang No 47 Pty Ltd -v- Mondo Merchants Pty Ltd (2001) SC627.

87. From these cases, it is obvious that the Court may grant specific performance of the contract of sale of land where it is just and equitable to do so in a given case. Can it be said that the Court should order specific performance of the contract in this case? In my respectful opinion, the answer is "yes". First, it is not disputed by the defendants that the plaintiff has made improvements on the land. He has established a coffee wet factory on the land and it is also not disputed or denied by the defendants that it was built at an estimated costs of K300,000.00.

88. It is also not disputed or denied by the defendants that the plaintiff has any chattels and property on the land. In fact, the first defendant admits at paragraph 22 of his affidavit sworn and filed on 20th March 2009 (exhibit "D1") that around 2004, a company called OK Corporation Limited moved onto the land under a lease with the plaintiff to use the coffee wet factory. Further, the first defendant says at paragraph 23 of his affidavit (exhibit "D1") that although he advised OK Corporation Limited to pay him rent, it failed to pay him, therefore, owes him rent up to January 2009.

89. That being the case, it would not be just and equitable for the Court to order the first and second defendants to pay damages to the plaintiff to compensate for the costs of improvements made on the land. Besides, there is no evidence placed before me that the first and second defendants have that kind of money to pay the plaintiff if the Court were to order repayment of the costs of the improvements.

90. Secondly, as far as I can see, an order for specific performance would not required a lot of judicial supervision because it will be a matter of getting the first and second defendants to go back to the fourth defendant and get him to deregister or revoke the title of the land currently under a State lease and issued to the third defendant and have it restored to the plaintiff in its original state as a customary land.

91. For these reasons, as I have found that the contract of sale was not repudiated but was performed by the plaintiff, I am incline to make an order for specific performance against the first, second, third and fourth defendants in the circumstances and I do so. The details of the terms of the order for specific performance will be set out at the end of the judgment.

Fraud against the first, second and third defendants

92. The plaintiff also bases his case against the defendants on the ground of fraud and seeks an order to declare the conversion of the land to a State lease and transfer its title from the first and second defendants to the third defendant null and void. Therefore, the sixth issue is, whether the plaintiff has proven fraud in the transfer of title of land between the first and second defendants and the third defendant.

93. It is the plaintiff's case that the first and second defendants colluded or collaborated with the third defendant to sell the land to the third defendant after the plaintiff failed to meet the alleged additional conditions of the contract of sale (which I have already found not to be the case). In colluding or collaborating amongst themselves, they committed fraud. How they committed fraud can be seen from the following circumstances.

94. First, the first and second defendants did not inform or advise the plaintiff of the lease of the land to the third defendant. In other words, they did not inform the plaintiff of the conversion of the land to a State lease and subsequently leasing it to the third defendant under the lease-lease back lease. Secondly, the first and second defendants used different names to register the land as a State lease. For example, the first defendant used "Tom Otri" instead of "Tom Kondup" and the second defendant used "Joel Otri" instead of "Joel Kondup."

95. Thirdly, the first and second defendants did not disclose to the fourth defendant that the second defendant was a minor at the time of the registration of the land from a customary land to a State lease. Fourthly, the defendants did not follow proper procedures in converting customary land to a State lease under the Land (Tenure Conversion) Act, 1963.

96. On the other hand, the defendants submit that, first the process under the Land (Tenure Conversion) Act, 1963 did not apply in this case because the land is leased to the third defendant under a lease-lease back lease under sections 10, 11 and 102 of the Land Act, 1996. They say, under a lease-lease back lease, there is no need for them to apply to the Land Titles Commissions to determine ownership of the land under section 9 of the Land Act, 1996 and it is wrong for the plaintiff to suggest so when ownership is not in issue amongst the customary landowners.

97. Further, they submit that the first defendant and the other customary landowners agreed to lease the land to the State. Based on this agreement, the Minister for Land exercised his power under section 7(a) of the Land Act, 1996 to acquire it from them. Secondly, the defendants, in particular the first and second defendants have complied with the requirements of a lease-lease back lease under sections 10, 11 and 102 of the Land Act, 1996, hence the lease was duly transferred and registered to the third defendant. It follows that the third defendant has good title and the Court should not disturbed it.

98. At the outset, I must make it clear that there is a difference between registration of a customary land under the Land (Tenure Conversion) Act, 1963 and registration of a customary land under the Land Act, 1996. This is because the processes involved are different although they achieve the same desired effect and that is, security or certainty of title of the land. This difference will be appreciated when the issue of procedural irregularity is considered later in the judgment.

99. But first, I need to determine if the plaintiff has proven fraud against the defendants. It has been held by the Court that allegations of fraud must be strictly proven: see William Maki's case (supra). In cases where there is a challenge to the title to land, it is said that a registered proprietor or holder shall hold the title free of any encumbrances: see section 33 of the Land Registration Act, Ch 191. This is the doctrine of indefeasibility of title under the Torrens title system. However, there are exceptions to this doctrine of indefeasibility of title. The exceptions maybe found under section 33 of Land Registration Act, Ch 191. One of them is fraud.

100. The law in relation to establishing fraud affecting a registered title under section 33 of the Land Registration Act, Ch 191 seems pretty much settled in this jurisdiction, although I note there appears to be two differing views on this issue. First, there is the Supreme Court decision in Mudge -v- Secretary for Lands [1985] PNGLR 387 which stands for the proposition that registration of title is final on all issues, and that, only the exceptions provided under the Land Registration Act, Ch 191 can be invoked to overturn a registered title. As noted above, one of these exceptions is fraud. This view was followed in the National Court decision of the The Papua Club Inc. -v- Nusaum Holdings Limited (No. 2) (2004) N2603 and a subsequent Supreme Court decision of Koitachi Limited -v- Walter Schnaubelt (2007) SC870.

101. Then, there is Emas Estate Development Pty Ltd -v- John Mea & Ors [1983] PNGLR 215, where the Supreme Court took a contrary view of the consequences of breaches of statutory procedures. In that case, the Supreme Court, while acknowledging the principles of indefeasibility of title nonetheless did (by a majority) consider irregularities tantamount to fraud as sufficient to over turn a registered title. The view expressed by the Supreme Court in Emas Estate's case (supra) was followed by Sheehan, J in Steamships Trading Company Limited -v- Garamut Enterprises Limited & Ors (2000) N1959, Sevua, J in Hi Lift Co Pty Limited -v- Miri Setae & Ors (2000) PNGLR 08; (2000) N2004, Injia, DCJ (as he then was) in Ramu Nickel Limited & Ors -v- Honourable Dr Puka Temu& Ors (2007) N3252 and very recently by Cannings, J in Elizabeth Kanari -v- Augustine Wiakar & Registrar of Titles (2009) N3589.

102. In the present case, I have no doubt in my mind that there was fraud in the transfer and registration of title of the land to the third defendant. There is evidence that the first defendant did collude or collaborate with the third defendant to deprive the plaintiff of the title to the land. First, there is uncontroverted evidence from Cecila Leahy in her affidavit sworn and filed on 20th March 2009 (exhibit "P10") that the first defendant was seen getting into the third defendant's motor vehicle outside the Mt Hagen Blowing club on the afternoon of 13th March 2009. With them were witnesses for the plaintiff, Kare Makinta and Marcus Pup. Why would the first defendant and the two witnesses for the plaintiff, Kare Makinta and Marcus Pup hang around together? The only reason I can think of apart from an attempt to unduly influence them from giving evidence before this Court is that, they colluded or collaborated to take the land from the plaintiff without his knowledge.

103. The first and second defendants set in motion their intention when they went about surveying the land and used the map to apply for the land to be converted to a State lease. While this was happening, there was no mention of the third defendant until around 2003. It was around this time that the first defendant says that he applied for the land to be converted to a State lease and title issued to him and the second defendant, knowing fully well that they had previously sold the same land to the plaintiff: see paragraphs 16 and 17 of his affidavit sworn and filed on 29th March 2009 (exhibit "D1").

104. In all his affidavits (exhibit "D4", "D5" & "D6"), the third defendant did not say a single word as to how he came across the land, who told him to purchase it and if he did inspect the land before purchasing it. He only says at paragraphs 4 and 5 of his affidavit sworn on 24th February 2009 and filed on 26th February 2009 (exhibit "D4") that, "in December 2004, I entered into an agreement with TOM OTRI (First Defendant) and JOEL ORTI (2nd Defendant) to buy the said property for the total selling price of K240,000.00). The said MESSRS JOEL OTRI AND TOM OTRI agreed so I purchased the said property and on the 9th of February, 2005 the title to the said property was transferred to me."

105. All I can say by reading paragraphs 6 to 10 of the affidavit of the third defendant (exhibit "D4") is that, he tries to avoid the issue by "painting a picture" that he did make due inquiries in relation to the availability of the land before he went ahead to purchase it from the first and second defendants. Common sense and logic would dictate as well as custom and usage for buying and selling of property like land that the intending purchaser first expresses an interest in the property after becoming aware of its availability and secondly, would inquire of its value and would inspect it. The whole idea of undertaking these tasks is to ensure that one is putting the money where its' worth. In other words, there is no point in throwing big money where it will be wasted.

106. In the present case, I do not believe the third defendant's evidence that he made due inquiries and found that the land was vacate and had clear title. If he did, or what he has said in his affidavit (exhibit "D4") is true, he would have discovered that the land was not vacated and that it was purchased by the plaintiff. Secondly, it is clear to me that the first and second defendants did not inform or advise the plaintiff of their intention to sell the land to the third defendant by way of a lease-lease back lease. They secretly arranged for the land to be converted to a State lease and subsequently with the approval of the Minister for Lands had it leased to the third defendant under the lease-lease back lease scheme. In my view, it was a cunningly but well planned exercise, successfully executed "behind the plaintiff's back" with the intention of depriving him from the land.

107. Thirdly, it is also clear that the first and second defendants used different names to register the land as a State lease. The first defendant used "Tom Otri" instead of "Tom Kondup" and the second defendant used "Joel Otri" instead of "Joel Kondup". They did not explain in their evidence why they used different names. Further, they did not inform the Minister for Lands or the officers of the Department of Lands including the fourth defendant that they are also known as "Tom Kondup" and "Joel Kondup". The significance of pointing all these matters out is that, they used two different sets of names when dealing with the plaintiff and the third defendant in the sale of the same land. To my mind, it establishes their intention to trick and mislead the plaintiff and the officers of the Department of Lands including the Minister and the fourth defendant to transferring and registering the land as a State lease and subsequently leasing it to the third defendant as if they were two different persons.

108. Further, they did that to avoid the plaintiff and the officers of the Department of Lands, including the Minister and the fourth defendant from discovering that the same land, the subject of the lease-lease back lease is also being sold to the plaintiff as a freehold land through a contract of sale by the same people, namely the first and second defendants.

109. Finally, it is also clear that the first and second defendants did not disclose to the officers of the Department of Lands including the Minister and the fourth defendant that the second defendant was a minor at the relevant time, hence lack the capacity to enter into any transaction concerning the land. To my mind, it establishes the first and second defendants' intention to trick the plaintiff and deprive him from obtaining title to the land. For these reasons, I am satisfied on the balance of probabilities that there was fraud involved in the transfer and registration of title to the third defendant by the first, second and third defendants.

110. Even if the evidence is not strong enough to establish a case of actual fraud against the first, second and third defendants, I would still find that there was constructive fraud against the defendants in the transfer and registration of title to the third defendant, sufficient to over turn the registration of title. This is where the second ground of the plaintiff's case on procedural irregularities or breaches by the defendants in this case becomes relevant. First, I refer to the case of The Application of Rimbo Susu on behalf of Himself and Other Finschafen Landowners [1992] PNGLR 37 where the question of how customary land maybe bought and sold by custom was raised. Woods, J acknowledged that there is no specific legislation to guide parties in the purchase of customary land by custom although he noted that under section 132 of the Land Act Ch 185 (the old Land Act), a customary landowner is entitled to sell, lease, or dispose of his customary land or customary rights to a citizen. In the absence of a clear legislative guideline, his Honour proposed some guidelines as follows:

"Firstly, it suggests that there must be some customary rule which recognises that sale is possible, so perhaps that should be recited in any agreement. Then for long-term certainty, perhaps there should be similar protections as when the State buys customary land, namely a recognition of who are all the owners or persons who have some interest by custom in the land and the nature of their interests and how such interests can be traded. The vendors would have to recite and acknowledge publicly that they are the sole vendors or act on behalf of the named owners, who should presumably be listed somewhere in the document. It would almost be necessary for certainty to have a resolution of the ownership in the form of an agreement after appropriate publicity before the Local Court or Local Land Court, with the use of the appropriate land mediators for the area involved. Because of the importance placed on land by custom, one should always be very careful in any negotiation for sale, especially when people from a completely different area of the country are involved.

To merely produce a document which suggests an agreement between some purported landowners cannot be sufficient protection against other members of the original land owning group. To say that one man would have the power and authority to negotiate by himself without reference to other members of the clan the sale of some customary land by custom goes against the whole history of the dealings with and acquisition of land in Papua New Guinea." (Emphasis added).

111. From what his Honour had proposed as guidelines, I consider that, for there to be a valid sale and purchase of a customary land by custom to a citizen, there must be an agreement in writing or in a document form and must be witnessed publicly by the land mediators and must contain the following:

1. Recognition of all owners or persons who have such interest can be traded; and

2. The vendors must recite in public that they are the sole vendors.

112. I think what his Honour had proposed as guidelines in the Rimbo Susu's case (supra) was a foreshadow of what was to happen in future, as when the old Land Act (Ch 185) was repealed and replaced by the current Land Act in 1996, the (new Land Act), it made provision for the process and requirements that must be met by customary landowners intending to dispose of their customary land for agricultural and business purposes before title can be validly transferred to the new holder. The process and requirements are now found in sections 10, 11 and 102 of the Land Act, 1996. This is where the lease-lease back lease scheme came into being. I set out these provisions in full hereunder because first, it will help us understand their application in this proceeding and secondly, their relevance to the determination of the issue of whether or not the first, second and fourth defendants had complied with these provisions before the land was leased to the third defendant.

113. First, section 10 states:

"10. Acquisition of Customary Land by agreement.

(1) Subject to Section 11, customary land shall be acquired in accordance with this Section and shall be authenticated by such instruments and in such manner as are approved by the Minister.

(2) The Minister, on behalf of the State, may acquire customary land on such terms and conditions as are agreed on between him and the customary landowners.

(3) Subject to Subsection (4), the Minister shall not acquire customary land unless he is satisfied, after reasonable inquiry, that the land is not required or likely to be required by the customary landowners or by persons on whom the land will or may devolve by custom.

(4) Where the Minister is satisfied, after reasonable inquiry, that any customary land is not required or likely to be required for a certain period but is of the opinion that the land may be required after that period, he may lease that land from the customary landowners for the whole or a part of that period."

114. Breaking down section 10, the following matters become apparent:

1. section 10 is subject to section 11;

2. the acquisition must be authenticated by some kind of instruments and approval by the Minister;

3. there must be an agreement entered between the Minister and the customary landowners setting out the terms and conditions of the acquisition; and

4. the process of acquisition itself must require the Minister to conduct a reasonable inquiry to ascertain whether the land is not required by the customary landowners for other purpose.

115. Secondly, section 11 states:

"Division 4.-Acquisition of Customary land for Lease-leaseback purposes.

11. Acquisition of Customary Land for the grant of special agricultural and business lease.

(1) The Minister may lease customary land for the purpose of granting a special agricultural and business lease of the land.

(2) Where the Minister leases customary land under Subsection (1), an instrument of lease in the approved form, executed by or on behalf of the customary landowners, is conclusive evidence that the State has a good title to the lease and that all customary rights in the land, except those which are specifically reserved in the lease, are suspended for the period of the lease to the State.

(3) No rent or other compensation is payable by the State for a lease of customary land under Subsection (1)."

116. Again, breaking down section 11, the following matters become apparent:

1. the Minister may lease customary land;

2. the lease is for special agricultural and business purposes;

3. the lease must be an instrument of lease in approved form; and

4. the lease must be executed by or on behalf of the customary landowners.

117. In my opinion, all the above requirements must be duly met because they lead to the registration of title which confers indefeasible title to the registered proprietor or holder. This is evident in section 11(2) where it states that an instrument of lease executed by or on behalf of the customary landowners is conclusive evidence that the State has good title to the lease and all rights in the land, except those which are specifically reserved in the lease, are suspended for the period of the lease to the State. Further, I am of the view that, a failure to comply with these requirements will invalidate the State's title to the lease. And in so far as the actual grant of title of special agricultural and business lease is concerned, it is made under section 102. Section 102 states:

"Division 9. - Special Agricultural and Business Leases.

102. Grant of special agricultural and business leases.

(1) The Minister may grant a lease for special agricultural and business purposes of land acquired under Section 11.

(2) A special agricultural and business lease shall be granted -

(a) to a person or persons; or

(b) to a land group, business group or other incorporated body,

to whom the customary landowners have agreed that such a lease should be granted.

(3) A statement in the instrument of lease in the approved form referred to in Section 11(2) concerning the person, land group, business group or other incorporated body to whom a special agricultural and business lease over the land shall be granted, is conclusive evidence of the identity of the person (whether natural or corporate) to whom the customary landowners agreed that the special agricultural and business lease should be granted.

(4) A special agricultural and business lease may be granted for such period, not exceeding 99 years, as to the Minister seems proper.

(5) Rent is not payable for a special agricultural and business lease.

(6) Sections 49, 68 to 76 inclusive, 82, 83, 84 and 122 do not apply to or in relation to a grant of a special agricultural and business lease.

(7) Notwithstanding anything in this Act, a special agricultural and business lease shall be effective from the date on which it is executed by the Minister and shall be deemed to commence on the date on which the land subject to the lease was leased by the customary landowners to the State under Section 11."

118. In my opinion, sections 10 and 11 of the Land Act, 1996 must be read in conjunction with or together with section 102 of Land Act, 1996 to achieve the desired effect, that is, the acquisition of customary land by the State from the customary landowners and its registration as a State lease for agricultural and business purposes under the lease-lease back lease scheme. Thus, under section 102 above, it is the Minister for Lands who grants the lease but there is a catch and the catch is this, the Minister shall grant the special purpose agricultural and business lease, "to whom the customary landowners have agreed that such a lease should be granted." In other words, it is the customary landowners who shall make representation to the Minister for Lands as to whom they desire to be granted the lease. Section 102(2) gives the customary landowners the right to express their views as to whom the Minister may grant the special purpose agricultural and business lease because generally, the customary landowners would have identified a suitable prospective purchaser interested in developing the land to lease it to for commercial development purposes.

119. This process of acquisition of customary land by the State and subsequent registration and lease back to a registered proprietor is an area of law that has not come to the fore front of the Courts since the introduction of the lease-lease back lease scheme in 1996 because I have looked up past reported cases that might have discussed the process and requirements in lease-lease back lease cases and I have not been able to find any, although I am aware a similar case involving a lease-lease back lease with the State and customary landowners of the Collingwood Bay area of the Oro Province for establishment of an Agro-forestry project came before the National Court in 1999 and a decision was made but no written decision was published. I am aware of that case because I was State counsel at the preliminary stages of the case then.

120. The nearest one I have been able to find though, is the Supreme Court decision by their Honours Kirriwom, Batari & Mogish, JJ in the case of Yanta Development Association Inc & 3 Ors -v- Piu Land Group Inc & 3 Ors (2005) SC798. This was an appeal by the appellants who were aggrieved by the actions of the first respondent in registering a very big customary land in the Watut mountains of Mumeng District in the Morobe Province as a lease under sections 11 and 102 of the Land Act, 1996. The land comprised of 50,000 ha of mountainous terrains described as Portion 8C Milinch of Waus and Fourmil of Markham. Inside it is the Wafi Gold Mine Project of some 6,240 ha in size.

121. The Supreme Court held inter-alia that, no valid title passed to the first respondent in respect of the lease granted by the delegate of the Minister for Lands for failing to comply with the requirements of the Land Act, 1996 under sections 11 and 102. In reaching that decision, the Supreme Court generally observed that the lease-lease back lease process was an elaborated one after considering sections 11 and 102 of the Land Act, 1996. Their Honours observed:

"Another equally strong reason is that, the application for the lease made on 22nd January 2001 did not have the knowledge, approval, or consent of all the landowners in the affected areas. It was all done in secret, with undue haste and ulterior motive driven by greed. Evidence provided in the affidavit of Lawrence Billy alluded to earlier shows clearly that none of the requirements of the Act were complied with............."

122. They went on:

"The Affidavit of Lawrence Billy sets out the procedure for compliance in respect of application for lease-lease back leases provided under ss 11 & 102 of the Act in paragraphs 7 to 18 at pages 125-126 of the Appeal Book. It is a very elaborate procedure which begins with the consensus of all the landowners with the subject land being first obtained and the involvement of the Provincial Administration from survey of the land to registration and issue if lease and production of certificate of title. There is no short cut to this process. This is quite understandable as land is precious to the people of this country. It cannot be alienated from them in the way it was attempted here by a single group. The overwhelming evidence before the Court is that, there was no discussion involving all the landowners and there was consensus or agreement between the others and Piu Land Group Inc."

123. From their Honours' observations, it is clear that the process of acquiring a customary land and converting it to a lease-lease back lease is elaborate and stringent. Customary landowners intending to enter into a lease-lease back lease of their customary land must comply with the requirements of disposition and registration before a valid title is issued. This is quite understandable because, customary land in Papua New Guinea is generally owned by more than one person and is the foundation of Papua New Guinea's existence. Where customary landowners intend to dispose off or part with their customary land, there must be meaningful consultation and agreement reached before they may dispose off or part with it.

124. Where there is ownership dispute amongst the customary landowners, section 9 of the Land Act, 1996 comes into play. Section 9 of the Land Act, 1996 applies in a situation where there is a need to identify or ascertain the customary landowner where the State intends to acquire the customary land, either by agreement or by compulsion. For example, the land might be very big, (thousand of hectares) with many different landowners or groups of landowners and ownership becomes an issue. In such a situation, the need to properly identify or ascertain the customary landowners and ownership of the land is very important and that is where before the Minister for Lands either acquires the customary land by agreement or compulsion must apply to the Land Titles Commission or Local Land Court to determine ownership of the customary land.

125. According to section 7 of the Land Act, 1996, there are two modes of acquisition of land by the State. One is by agreement and the other is by compulsory process. The person authorized to acquire land on behalf of the State is the Minister for Lands. In my view, these are processes by which the Minister is required to follow before he may acquire land on behalf the State. The processes vary in cases of acquisition by agreement from acquisition by compulsory process. Section 12 of the Land Act, 1996, provides for acquisition by compulsory process by the State. The processes also vary in cases of acquisition of customary land from other types of land.

126. Where the Minister intents to acquire customary land on behalf of the State whether by agreement or compulsory process, section 9 requires him to apply to the Land Titles Commission or Local Land Court for determination of ownership of customary land. Section 9 states that:

"9. Involvement of Land Titles Commission or Land Court where Customary Land acquired.

(1) Where it is intended to acquire customary land under this Act, whether by agreement or by compulsory process, the Minister may apply to the Land Titles Commission or a Local Land Court having jurisdiction over the land that is intended to be acquired, for a determination of the ownership of the land or of interests in the land.

(2) Where the State acquires customary land under this Act, whether by agreement or by compulsory process, the Land Titles Commission or a Local Land Court having jurisdiction over the land that is intended to be acquired, may appoint an agent who may, on behalf of the customary landowners -

(a) execute in his own name all conveyances, transfers, releases and other instruments and do all other acts, matters and things necessary or convenient for effecting that acquisition and vesting the land in the State; and

(b) accept any rent, purchase money, compensation or other moneys or things, and distribute that money or those things to the persons entitled.

(3) A conveyance, transfer, release or other instrument executed, and an act, matter or thing done, in relation to customary land by an agent appointed under Subsection (2) is as valid and effectual for all purposes as if executed or done by all the customary landowners.

(4) The State, or a person taking under the State, is not bound to see to the application of any rent, purchase money, compensation or other moneys or things paid or given to an agent under Subsection (2), and the receipt of the agent is a sufficient discharge."

127. From my reading of sections 9, 10, 11 and 102 of the Land Act, 1996 cited above, I consider that the following as the process for acquiring customary land for leasing under the lease-lease back lease scheme:

1. Where the State intents to acquire customary land, the Land Titles Commission or Local Land Court maybe involved in the determination of the ownership of the customary land prior to its acquisition if ownership is in issue or disputed, (section 9);

2. The Land Titles Commission or the Local Land Court after due inquiry may appoint an agent on behalf of the customary landowners to execute all the documents necessary for acquisition, (section 9);

3. If ownership of the customary land is not in issue or disputed, the Minister is independently required to conduct a reasonable inquiry to ascertain whether the customary land is not required by customary landowner for other purposes, (section 10(3));

4. Where the Minister after a reasonable inquiry is satisfied that the customary land is not required by the customary landowners for other purposes may lease it from the customary landowners, (section 10(4));

5. The acquisition of the customary land shall be by agreement signed by the Minister on behalf of the State with the customary landowners setting out the terms and condition of the acquisition, (section 10(1) & (2)); and

6. The Minister shall execute the lease on behalf of the customary landowners and lease the customary land exclusively for special agricultural and business purposes, (sections 11(1) & (2) & 102).

128. This is where I think the plaintiff may have misunderstood the lease-lease back leases under the Land Act, 1996 from a conversion of customary land to a freehold under the Land (Tenure Conversion) Act, 1963. Section 7 of the Land (Tenure Conversion) Act, 1963 provides for registration in the following terms, "[s]ubject to this Act, a citizen may apply to the Commission in the prescribed form for registration in his or its name of any customary land or of an interest in customary land."

129. And going by section 1, this means that a "citizen" includes -

(a) a business group; and

(b) a land group; and

(c) a customary kinship group; and

(d) a customary descent group; and

(e) a customary local group or community;

and may apply to the Land Titles Commission to register his or its name of a customary land or of an interest in a customary. The object of registration of the customary land or interest in the customary land is to individualize titles to the land for promoting agricultural development in the country and well being of the people.

130. Since customary land is communally owned, and generally is difficult to get the community to reach an agreement on how to use it as there are many people with differing views, the only way is to have it registered in the name of an individual, or a business group, or a land group, or a customary kinship group, or a customary descent group or a customary local group or community: see preamble of the Land (Tenure Conversion) Act, 1963.

131. In this respect, I can see that the plaintiff has made an application for registration of title in his name as seen in annexure "C" to his affidavit sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"). He has also surveyed the land by engaging a surveyor to do that for presentation with the application for registration to the Land Titles Commission for consideration and decision. The objective of the plaintiff undertaking these tasks is to have the title of the land registered in his name. Once the land is registered in his name, he would become the owner of the land. But it must be noted here and emphasized that a customary land registered under the Land (Tenure Conversion) Act, 1963 is not registered as leasehold. It is registered as a freehold.

132. That is why an application for registration form under section 7 of the Land (Tenure Conversion) Act, 1963 makes that distinction very clear in the following terms, "as the owner(s) of an estate in fee simple in the land known as..................." A copy of the application form may be found at annexure "C" to his affidavit sworn on 16th January 2009 and filed on 21st January 2009 (exhibit "P1"). (Emphasis added).

133. An estate in fee simple is a freehold. A freehold is defined in the Osborn's Concise Law Dictionary, Sweet & Maxwell (9th ed 2001) at p 178 as, "[a] legal estate in fee simple in possession. The most complete form of ownership of land," and there three types of freehold estates. The first is fee simple as the one in this case and the second one is fee tail. The third one is life estate. Under the doctrine of estates in land law, the English law recognized three estates in land, distinguished by their potential duration. An estate that would end on the holder's death was "life estate". An estate that would descend to the holder's heir (the normal estate of feudal and modern times) was an "estate in fee". Estates in fee could be one of two types: unrestricted (simple) or restricted (tailed), depending on the category of heirs who could inherit, hence the terms "estate in fee simple" and "estate in fee tail": see Peter Butt, Land Law, Law Book Co (5th ed, 2006) at pp 87 and 88.

134. On the other hand, a lease is defined by Osborn's Concise Law Dictionary (supra) at p 228 as, "[a] grant of the exclusive possession of property to last for a term of years or periodic tenancy, usually with the reservation of a rent. It is essential that a lease shall specify the period during which the lease is to endure, and the beginning and the end of the term." A leasehold is defined as "[a] term of years absolute (see term of years). One of the two legal estates in land." From these definitions, a lease is characterized by its term or period and payment of rent.

135. What all the above discussions mean is that, there is a difference between freehold and leasehold. As the learned author, Professor Peter Butt stated in his text book, Land Law (supra) at p 92:

"All free hold estates are of uncertain duration and, with the exception of life estates, may last forever. By contrast, the typical leasehold interest is of certain duration. It expires on a given date. A 'term' is set, beyond which it cannot extend."

136. In my view, in order for anyone of the persons listed as a "citizen" in section 1 of the Land (Tenure Conversion) Act, 1963 to apply for a customary land to be converted to a freehold, it is important to first identify the true or legitimate customary land owners and obtain an agreement from them to purchase it. This is where the application for registration is made to the Land Titles Commission under section 7 of the Land (Tenure Conversion) Act, 1963 above, and the Land Titles Commission shall deal with it in accordance with section 8 of the Land (Tenure Conversion) Act, 1963. Section 8 states:

"8. Dealing with application.

(1) [Repealed].

(2) When the Commission decides that an application under the last preceding section should be dealt with, the Commission shall -

(a) prepare a conversion plan of the area in respect of which the application is made; and

(b) publish notice of the application and of the conversion plan by such means as will in the circumstances ensure reasonable notice to all persons affected or likely to be affected thereby, or as is provided in the rules of the Commission; and

(c) specify in the notice a period, not being less than 30 days, within which a person may object to the application on the ground that he claims ownership of or an interest in or in relation to the land in respect of which the application is made and is not included under the application as owning or having that interest, or on the ground that he is incorrectly represented in the application as being agreeable to the registration.

(3) A conversion plan shall show the location and boundaries of the land the subject of the plan, and as far as practicable the ownership, or alleged ownership, of that land.

(4) Before proceeding to a hearing of an application or an objection, the Commission shall, at such times as are determined by it, arrange for any parties interested in the application to be shown the boundaries of the land the subject of the application or of the objection, as the case may be, and any boundary marks placed on the land."

137. It is clear from the above provision that the following must take place:

1. The Land Titles Commission must prepare a conversion plan of the area, the subject of the application;

2. Publish notice of the application and the conversion plan in a manner that all those affected or likely to be affected are informed of the application;

3. The notice must specify the period not less than 30 days for objections to the application to be received by the Land Titles Commission;

4. The conversion plan must contain the location and boundaries of the land and the ownership or alleged ownership;

5. Before proceeding to hear the application or any objection, the Land Titles Commission must be shown or inspect the boundaries of the land and any boundaries marks on the land.

138. After the expiration of the notice of application, the Land Titles Commissions shall proceed to hear the application and may issue a conversion order under section 9 of the Land (Tenure Conversion) Act, 1963. It states:

"9. Conversion order.

(1) After the expiration of the period specified under Section 8(2)(c), the Commission shall consider the application and any objections thereto and, if satisfied that-

(a) subject to Subsections (3) and (4), the land the subject of the application is customary land; and

(b) all persons interested in the land the subject of the application are in agreement with the application; and

(c) subject to Subsection (5), adequate provision has been made, whether by way of a cash payment or otherwise, for compensation to all persons whose interests by custom in the land would be abolished or reduced by the making of a conversion order; and

(d) in all the circumstances it is proper that the application be granted,

the Commission shall, subject to Subsection (2) and to Part III, make a conversion order in accordance with this Division.

(2) The Commission shall not make a conversion order over land which should, in order to meet the need for the production of food for their own consumption by some or all of the owners of the land, remain customary land.

(3) Subject to Subsection (4), the Commission may, with the consent of the Minister, include in a conversion area an area of Government land as though it were customary land the subject of an application under this Part.

(4) The Commission may, with the consent of the Custodian for Trust Land, include in a conversion order trust land as though it were customary land the subject of an application under this Part.

(5) Where -

(a) the applicant is a business group or a land group and all the members of the group owning the land the subject of the application are members of that business group or land group; or

(b) the application has been made by not more than six natural persons who are members of the group owning the land the subject of the application and the Commission is satisfied that a substantial number of that group have expressly waived the requirement of adequate provision for compensation,

the Commission does not require to be satisfied that adequate provision for compensation has been made."

139. Section 10 of the Land (Tenure Conversion) Act, 1963 provides for the procedures of the Land Titles Commission as follows:

"10. Procedure, etc.

(1) For the purposes of Section 9, the Commission may, where it considers it proper so to do, consider a number of applications and objections together, and may -

(a) adjourn consideration of an application or objection in order to allow inquiries to be made as to any further applications or objections in relation to the same or any other land, or to allow any such applications or objections to be made; and

(b) deem a person to have made an application or objection under this Part.

(2) In determining, for the purposes of Section 9, the persons interested in land the subject of an application, the Commission shall have regard to -

(a) any finding by it as to the ownership of land affected by the application; and

(b) any claim made under this Act to any other interest, in or in relation to land affected by the application.

(3) The Commission need not determine the claim of a person other than the applicant to have an interest in or in relation to land affected by an application under this Part if that person agrees to the application.

(4) Before deciding an application or objection or making a conversion order, the Commission shall assure itself that all persons interested understand the effect, or what would be the effect, of the application or objection or of the order, as the case may be, both in relation to the rights by custom which would be abolished and in relation to the rights which would be created."

140. Finally, according to section 11 of the Land (Tenure Conversion) Act, 1963, a copy of the conversion order must be forwarded to the Registrar of Titles (fourth defendant) to register the land in the name of the person given the ownership of land. It states:

"11. Form and contents of conversion order.

(1) A conversion order shall direct the Registrar of Titles –

(a) to register in the Register established under the Land Registration Act 1981 the applicant or another person as the owner of an estate in fee simple in some or all of the land the subject of the application; and

(b) to enter upon the relevant title registered under Paragraph (a) any lease, encumbrance or other estate or interest less than an estate in fee simple in favour of the applicant or some other person which in the opinion of the Commission should be so entered; and

(c) [Repealed].

(d) to take such further or other action in the premises as to the Commission seems just and proper.

(2) On a title registered under Subsection (1)(a), the Registrar of Titles shall endorse a statement that the title is subject to the conditions and restrictions imposed by this Act."

141. Bearing in mind sections 7, 8, 9, 10, and 11 of the Land (Tenure Conversion) Act, 1963, the evidence before the Court suggests that the land was first acquired and converted to a State lease, and secondly, leased to the third defendant under a lease-lease back lease. The evidence supporting a case of a lease-lease back lease following the acquisition of the land and registration as a State lease are found in annexure "C" to the affidavit of the first defendant sworn and filed on 28th April 2009 (exhibit "D2") which is a copy of the State lease which reads, "THE MINISTER ON BEHALF OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA GRANTS TO THE LESSEE: TOM OTRI AND JOEL OTRI" and paragraphs 16 and 17 of the affidavit of the first defendant sworn and filed on 20th March 2009 (exhibit "D1"), where the first defendant stated that he had the land registered jointly in the name of the second defendant and him as registered proprietors.

142. On the other hand, although the plaintiff had the land survey and made an application for registration in respect of the land, first, there is no evidence that he submitted it to the Land Titles Commission for determination. Secondly, there is no evidence that the Land Titles Commission prepared and published the application for registration and a conversion plan in accordance with section 8 above. Thirdly, there is no evidence that the Land Titles Commission heard the application for registration and issued a conversion order directing the fourth defendant to register the land in the name of the plaintiff in accordance with sections 9, 10 and 11 of the Land (Tenure Conversion) Act, 1963.

143. That being the case, I am of the view that the provisions of or the process of registration of customary land as freehold under the Land (Tenure Conversion) Act, 1963 are inapplicable in this case. This means that, the enjoining of the fifth defendant was not necessary after all. Further, there is no requirement for obtaining a conversion order under section 9 of the Land (Tenure Conversion) Act, 1963 to convert a customary land to a State lease for purposes of a lease-lease back lease. In other words, the first and second defendants were entitled to do what they did. In the circumstances, I find that this is a case of a lease-lease back lease under the provisions of the Land Act, 1996. That means, I must decide whether the process of registration of a lease-lease back lease under the provisions of the Land Act, 1996 was complied with by the first, second, third and fourth defendants.

144. Bearing in mind the forgoing discussions and the distinction between registration of customary land as a freehold under the Land (Tenure Conversion) Act, 1963 and registration of customary land as a leasehold (State lease) under the Land Act, 1996, I find based on the evidence before me that the first and second defendants did not comply with the requirements under the above provisions of the Land Act, 1996 and I set them out below:

1. There is no evidence that the Minister conducted a reasonable inquiry as to whether the land is not required by the customary landowners for other purpose. And I am neither satisfied that the land investigation report prepared by Mr Peter Num of the Provincial Lands Office marked as annexure "A" to the affidavit of the third defendant (exhibit "D6"), is incompliance with section 10(4) of the Land Act, 1996 nor a reasonable inquiry conducted by Mr Num. For example, the report did not state if other villagers or interested parties were consulted about the disposing off the land by the first and second defendant and have agreed for its disposition.

2. There is no evidence of an agreement entered between the Minister and the first and second defendants setting out the terms and conditions of the acquisition as required by section 10(1)&(2) of the Land Act, 1996.

145. In my view, the first and second defendants' failure to comply with these mandatory requirements establish a case of statutory breaches and irregularities affecting the title of the land to the third defendant. As I alluded to earlier, customary land in Papua New Guinea is communally owned and in order for a proper alienation to take place, there must be meaningful consultation and agreement reached with the customary landowners in any given case. This is trite and fundamental and in this case, I find that, there is either no or lack of meaningful consultation between the customary landowners and the Minister for Lands. Therefore, I find that the process by which the first and second defendants used to have the land converted and registered as a State lease and subsequently leased to the third defendant as a special purpose agricultural and business flawed. Accordingly, I am satisfied on the balance of probabilities that the first, second and third defendants are guilty of constructive fraud.

What is the effect of fraud?

146. As I have found that the first, second, third and fourth defendants guilty of either actual or constructive fraud, the final issue is the effect of fraud on the title of the land? Section 33 of the Land Registration Act, Ch 191states:

"33. Protection of registered proprietor.

(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except -

(a) in the case of fraud; and

(b) ..............."

147. Going by section 33 above, and the decided cases referred above on the effect of fraud on a registered title of land, the title is ineffective or void and must be overturned. For this reason, I find that the registration of title to the third defendant is void and ought to be overturned.

CONCLUSION

148. As I have found that the plaintiff did perform the contract of sale, the effect of that is, he is the owner of the land. It also means that he did not loose the land. In fact, he is presently occupying the land with the aid of an interim injunction which I have said earlier in the judgment, is still in force to date. Thus, I am not satisfied that he has suffered monetary loss of K115,000.00, which is really his claim for the reimbursement of the purchase price and also his claim of K1,395,483.00 for future economic loss. I dismiss these claims.

149. But what I think he needs at this point in time is a permanent injunction to stop the first and second defendants, other former customary landowners, their servants, agents and associates from interfering or disturbing his right of quite enjoyment of the land. Since the plaintiff has asked for it in the prayer for reliefs in the writ of summons, I will tailor an order in those terms hereunder to reflect the decision of the Court and also for the benefit of the parties.

150. As for the defendants' cross claim, as I have found that there is no basis for the first and second defendants to treat the contract as being repudiated, and that the plaintiff is the owner of the land, I am of the view that there is also no basis for them to claim damages for the outstanding rent from the plaintiff. In other words, the third defendant is not the registered proprietor of the land (State lease), hence not entitled to collect rent from OK Corporation from 09th February 2005 to 31st January 2009 in the total sum of K660,000.00. I dismiss the defendants' cross claim as well.

ORDERS

151. In the end, it is the judgment of the Court that the following orders are granted:

1. An Order in the nature of declaration that the plaintiff is the owner of the customary land known as Gipna land, Kenta village Western Highlands Province as of 25th October 2000 or soon thereafter.

2. An Order in the nature of declaration that the First Defendant and the second defendant and any other former customary landowner of Gipna land do not have anymore customary interest on the Gipna land and are not entitled to enter or use the Gipna land.

3. An Order that the State lease title initially issued in the name of Tom Otri and Joel Otri and later transferred to the third defendant (Goimba Kot) by the fourth defendant in respect of customary land called Gipna land and now purportedly described as State lease, Volume 13 Folio 124 Portion 2488 Mount Hagen be set aside forthwith.

4. An Order for specific performance that the third defendant shall return the original title of the State lease, Volume 13 Folio 124 Portion 2488 Mount Hagen to the fourth defendant within fourteen days of this Order.

5. An Order for specific performance that the fourth defendant shall take all necessary steps to cancel or revoke the registration of the third defendant's title of the State lease, Volume 13 Folio 124 Portion 2488 Mount Hagen on the register of titles forthwith.

6. An Order for specific performance that the first and second defendants with other former customary landowners corporate by all means with the plaintiff to facilitate the issuance of title of the land to the plaintiff pursuant to the Land Tenure Conversion Act, 1963.

7. An Order in the nature of a permanent injunction restraining the First and second defendants including their servants, agents, tribesmen, clansmen and associates and the third defendant from interfering, intimidating, threatening with the plaintiff, his agents or servants from conducting business or dealing with Gipna land in whatsoever manner.

8. The defendants' cross claim filed on 28th April 2009 is dismissed in its entirety forthwith.

9. The first, second and third defendants shall pay the plaintiff's costs of the proceeding to be taxed if not agreed.

10. Time for entry of these orders be abridged to the date settlement by the Registrar which shall take place forthwith.

___________________________________________________________
Tamutai Lawyers: Lawyers for the Plaintiff
Simon Norum & Co Lawyers: Lawyers for the Defendants: