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Fragili v Karup [2011] PGNC 306; N4200 (18 January 2011)

N4200

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 1079 OF 2007

HENRY FRAGILI
Plaintiff

V

GABRIEL KARUP
First Defendant

RAGA KAVANA, REGISTRAR OF TITLES
Second Defendant

MARK TOLA, DEPUTY REGISTRAR OF TITLES
Third Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Kimbe: Cannings J
2009: 11 December,
2010: 28 January, 9 April, 18 June,
2011: 18 January

JUDGMENT

LAND – three conflicting certificates of title – different registered proprietors – which should prevail – indefeasibility of title – exception in the case of fraud – meaning of fraud.

The plaintiff sought a declaration that he was the only valid registered proprietor of a State Lease, which he claimed had been transferred to him by his father. A certificate of title showed that the transfer was registered on 17 March 2006. The first defendant claimed, however, that he had purchased the land from the plaintiff's father on 23 February 2006. A certificate of title showed that a transfer to the first defendant was registered on 13 September 2006. A third instrument of title, held by the Registrar of Titles, was adduced in evidence, which showed that a transfer to neither the plaintiff nor the first defendant had been effected and that the plaintiff's father was still the registered proprietor.

Held:

(1) The 17 March 2006 transfer to the plaintiff was a nullity as the Deputy Registrar of Titles cancelled the transfer.

(2) Even if that transfer had not been cancelled, it was of dubious validity as, although the transfer was registered on the instrument of title, it was not supported by a registered instrument of transfer and there was insufficient evidence that the requirements for obtaining a replacement certificate of title under Section 161 of the Land Registration Act were complied with.

(3) The 13 September 2006 transfer to the first defendant appeared to be a valid transfer of title, as the transfer was registered on the instrument of title and supported by a registered instrument of transfer, and there was insufficient evidence of fraud surrounding it.

(4) The third certificate of title that was adduced in evidence (the Registrar's duplicate), was, although by virtue of Section 11(1)(b) of the Land Registration Act "conclusive evidence" that the plaintiff's father was still the registered proprietor, inaccurate on its face, and therefore subject to the valid transfer of title registered on 13 September 2006.

(5) The certificate of title showing the 13 September 2006 transfer to the first defendant therefore prevailed.

(6) Under the principle of indefeasibility of title enshrined in Section 33 of the Land Registration Act, the registered proprietor of a State Lease holds it "absolutely free of all encumbrances" subject to limited exceptions, including in the case of fraud and encumbrances notified by entry or memorial on the relevant folio of the Register of Titles.

(7) Here, no encumbrances were on the relevant title held by the first defendant and the absence of such encumbrances was not due to fraud.

(8) The first defendant, being the current registered proprietor, has unencumbered title to the land and it was appropriate to grant a declaration to that effect and to order that the plaintiff give up vacant possession to him.

Cases cited

The following cases are cited in the judgment:

Dale Christopher Smith v Registrar of Titles (2007) N3252
Elizabeth Kanari v Augustine Wiakar (2009) N3589
Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215
Maki v Pundia [1993] PNGLR 337
Mudge v Secretary for Lands [1985] PNGLR 387
Ramu Nickel Ltd v Dr Puka Temu (2007) N3252
Safe Lavao v The State [1978] PNGLR 15

WRIT OF SUMMONS

This was a writ of summons in which the plaintiff sought orders to nullify another person's interest in land and enforce his interest in that land.

Counsel

G Linge, for the plaintiff
A Kalandi, for the first defendant

18 January, 2011

1. CANNINGS J: This case involves a dispute over ownership and possession of a block of land covered by a State Lease, in which there are three conflicting certificates of title. The block is in the Sarakolok oil palm settlement near Kimbe. It is formally described as Portion 967, Milinch Megigi, Fourmil Talasea, Volume 38, Folio 20. It is 7.90 hectares in area.

2. Thomas Fragili, who came from the Maprik area of East Sepik Province, became the registered proprietor on 26 May 1988. He lived on the block with his family and harvested oil palm from it until his death in 2009.

THREE CONFLICTING CERTIFICATES OF TITLE

3. One certificate of title is held by Thomas Fragili's son – the plaintiff, Henry Fragili. It shows that he is the registered proprietor as the State Lease was transferred to him by his father on 23 February 2006.

4. Another certificate of title is held by the first defendant, Gabriel Karup. It shows that he is the registered proprietor as the State Lease was transferred to him by Thomas Fragili on 13 September 2006.

5. The third certificate of title is held by the second defendant, the Registrar of Titles, Raga Kavana. It shows that as at 9 November 2007 a transfer to neither the plaintiff nor the first defendant had been registered and that Thomas Fragili was still the registered proprietor.

THE PLAINTIFF'S POSITION

6. The plaintiff, Henry Fragili, commenced these proceedings in 2007 after Gabriel Karup claimed that he had purchased the block from Thomas Fragili and said that he wanted to move in. Henry Fragili says the certificate of title showing Mr Karup as the transferee was obtained by fraud, to which Henry's younger brothers, Glemus Fragili and Joachim Fragili, were a party.

7. Henry says that in his later years his father suffered from dementia and that Glemus and Joachim took advantage of that, stole their father's copy of the certificate of title and made a secret arrangement to sell the block to Mr Karup. Henry says that Mr Karup paid money to Glemus and Joachim but not to their father. Henry says that, in any event, his father transferred his interest in the block to him (Henry) and that the transfer is now registered on the certificate of title, dated 23 February 2006. It pre-dates the purported transfer to Mr Karup, dated 13 September 2006, and must take priority over it. Henry has also adduced evidence that according to the records of the Registrar of Titles, as at 9 November 2007, Thomas Fragili was still the registered proprietor.

8. Henry is seeking orders that the purported transfer to Mr Karup is null and void and that the transfer to him is valid and effective. In the alternative, he asks for a declaration that his father, Thomas, is still the registered proprietor.

THE FIRST DEFENDANT'S POSITION

9. The first defendant, Mr Karup, denies the claims of fraud against him, Glemus and Joachim. He says that he purchased the block from Thomas Fragili in good faith in February 2006 for K28,648.00, that he paid with a bank cheque and that the proceeds were distributed amongst the members of the Fragili family.

10. He says that if there was any fraud surrounding the certificates of title, Henry was the guilty party as he somehow managed to get a replacement certificate of title, showing that the lease was transferred to him, all on the one day, 17 March 2006, even though there was no instrument of transfer. 11. Mr Karup asserts that, in any event, the third defendant, the Deputy Registrar of Titles, Mark Tola, cancelled the transfer to Henry in August 2006, leaving the way open for the transfer to him (Mr Karup) to take effect on 13 September 2006. The fact that the Registrar of Titles had no record of that transfer in November 2007 is of no consequence, says Mr Karup.

ISSUES

12. As there are three conflicting certificates of title the best way of assessing their validity is to consider each in turn. Then a determination will be made as to which should prevail. Orders will then be made to give effect to that determination. The issues are:

1. What is the status of the 17 March 2006 transfer from Thomas Fragili to Henry Fragili?
   
2. What is the status of the 13 September 2006 transfer from Thomas Fragili to Gabriel Karup?
   
3. What is the status of the certificate of title held by the Registrar in November 2007 showing that Thomas Fragili was still the registered proprietor?
   
4. Which certificate of title prevails?
   
5. What orders should the court make?
   

1 WHAT IS THE STATUS OF THE 17 MARCH 2006 TRANSFER FROM THOMAS FRAGILI TO HENRY FRAGILI?

13. There is in evidence a letter to Henry Fragili from the Deputy Registrar of Titles, Mr Tola, dated 8 August 2006, in which Mr Tola clearly indicates his intention to cancel the State Lease issued to Henry Fragili. Mr Tola states:

The issuance of official copy and transfer to Henry Fragili was done improperly due to wrong information provided to be me by Lands Office Kimbe and Islands Region Office Headquarters.

The original State Lease is now in my custody with executed transfer between Thomas Fragili and Gabriel Karup which I believe is registrable.

In this regard I am placing you on notice to surrender the official copy of Title to the Registrar of Titles office. Failure to comply will result in cancellation of official copy in your possession after 14 days notice.

14. Bearing in mind that the transfer from Thomas Fragili to Mr Karup was registered a little over a month after the date of that letter and that it was Mr Tola, who, as Deputy Registrar of Titles, endorsed the certificate of title with that transfer, it must be presumed that Mr Tola did, in late August or early September 2006, what he indicated in the letter he would do: he cancelled the official copy of the State Lease that had been issued to Henry Fragili. He had power to do so under Section 161 (cancellation and correction of instruments and entries) of the Land Registration Act. I find as a fact, therefore, that the transfer from Thomas Fragili to Henry Fragili was cancelled by the Deputy Registrar of Titles.

15. If I had not reached that conclusion I would still not have concluded that the transfer of 17 March 2006 was valid, for three reasons.

16. First, the procedures in Section 162 (replacement of instrument of title) of the Land Registration Act were not followed. Section 162 prescribes what must be done if a certificate of title has been lost, destroyed or defaced. In this case, Henry Fragili was claiming that in early 2006, his father's copy of the certificate of title had been stolen by his brothers, Glemus and Joachim. It was necessary for an application to be made to the Registrar for a replacement certificate of title. It was also necessary for the Registrar to give at least 14 days' notice of his intention to make a new instrument of title or official copy by advertisement in the National Gazette and in at least one newspaper circulating in the country. There is no evidence that any of these requirements were met.

17. Secondly, there is no evidence of any instrument of transfer between Thomas Fragili and Henry Fragili that would meet the requirements of Section 55 (transfer of lease) of the Land Registration Act. The absence of such an instrument creates doubt as to whether a transfer actually took place. It was important that there be evidence of an instrument given that the transferor, Thomas Fragili, was suffering from dementia and there had been an ongoing dispute in the family about who should get the block.

18. Thirdly, the very short timeframe within which the replacement certificate of title was issued (on 16 March 2006) and the transfer to Henry Fragili was endorsed on it (on 17 March 2006) creates doubt as to the legitimacy of the procedures and transactions. This collection of circumstances would have supported a conclusion that the circumstances of the transfer of title were so unsatisfactory and irregular or unlawful as to be tantamount to fraud, warranting the setting aside of the transfer (Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215, Elizabeth Kanari v Augustine Wiakar (2009) N3589).

19. In all the circumstances the transfer of 17 March 2006 is a nullity.

2 WHAT IS THE STATUS OF THE 13 SEPTEMBER 2006 TRANSFER FROM THOMAS FRAGILI TO GABRIEL KARUP?

20. Mr Linge, for Henry Fragili, submits that this transfer is unsatisfactory, irregular and therefore fraudulent for various reasons:

(a) It is dated after the transfer from Thomas to Henry and therefore must 'give way' to the prior transfer.

(b) It was only able to be effected because Glemus and Joachim stole their father's copy of the certificate of title from the Oil Palm Industry Corporation, with whom Thomas Fragili had entrusted custody of it.

(c) The transfer was done in secret, without the knowledge of Thomas or Henry.

(d) The proceeds of the transaction were not received by Thomas.

(e) There is no clear evidence that Thomas ever executed the instrument of transfer.

(f) The transfer was endorsed on the 'resurfaced' owner's copy of the certificate of title, despite the Deputy Registrar of Titles having issued a replacement certificate of title six months previously, on 16 March 2006.

21. My determination of these submissions is as follows:

(a) A prior transfer would normally take precedence over a later one (Dale Christopher Smith v Registrar of Titles (2007) N3252, Ramu Nickel Ltd v Dr Puka Temu (2007) N3252) but the prior transfer must be a valid one and here I have found that the prior transfer is a nullity.

(b) I find no evidence that Glemus and Joachim stole their father's copy of the certificate of title. Glemus has sworn an affidavit that that copy of the certificate of title was held by OPIC and that Land Project Officer, Sawi Lawila, handed it over to Thomas on Thomas's request.

(c) There is no evidence that it was a secret transfer. Glemus states on oath that Thomas wanted to dispose of the block as Henry was becoming too possessive about it and it was causing fights and problems within the family. Also in evidence is a statutory declaration by Thomas to the effect that he wanted to get rid of the block as he was sick of family members fighting over it.

(d) As to who got the proceeds of the sale of K28,648.00, it must be noted that the bank cheque for that amount, dated 23 February 2006, was drawn in favour of Glemus only – not Thomas – and this raises suspicion that it was only Glemus who received the money. Against that, however, is a statutory declaration by Thomas, dated 2 March 2006, and witnessed by Lands Officer, Maxwelline Ganubella, that provides a break-up of the proceeds. This suggests that the proceeds of the sale were divided equally (K3,183.11 each) among nine family members: Thomas and his wife and three sons (Henry, Glemus and Joachim) and four daughters.

(e) Unlike the transfer from Thomas to Henry, there is an instrument of transfer from Thomas to Mr Karup. It was executed by Thomas, by affixation of his "X" mark, and this was accepted and registered by Mr Tola on 13 September 2006.

(f) As for the transfer being endorsed on the original owner's copy, this makes sense as Mr Tola, as I have already found as a fact, had, prior to then, cancelled the replacement certificate of title.

22. I am thus not persuaded by the contention that the transfer of 13 September 2006 was brought about by actual fraud or that the circumstances of the transfer were so unsatisfactory and irregular as to amount to constructive fraud. There are two other aspects of this case that support the conclusion that the 13 September 2006 transfer is valid. First, the plaintiff's statement of claim did not provide sufficient particulars of the alleged fraud and failed to comply with Order 8, Rule 30 of the National Court Rules (Maki v Pundia [1993] PNGLR 337). Secondly, there is evidence that provincial authorities, including the Provincial Administrator (who on 10 April 2007 issued a notice to quit to Henry Fragili) and the Lands Adviser in the West New Britain Provincial Administration (who on 11 April 2007 wrote to the Registrar of Titles to confirm the transfer from Thomas Fragili to Mr Karup) have taken the view that Mr Karup is the legitimate registered proprietor of the block.

23. On the face of the evidence, and subject to consideration of the effect of the Registrar's 'original' certificate of title, the 13 September 2006 transfer is therefore valid.

3 WHAT IS THE STATUS OF THE CERTIFICATE OF TITLE HELD BY THE REGISTRAR IN NOVEMBER 2007 SHOWING THOMAS FRAGILI AS REGISTERED PROPRIETOR?

24. There are many peculiar aspects of this case and one of them is that in November 2007 the Registrar of Titles, Mr Kavana, stated that the certificate of title showed no entries appearing after 26 May 1988 (the date of transfer to Thomas Fragili). This evidence came via an affidavit by the plaintiff's lawyer, Mr Linge, who deposed that he had a telephone conversation with Mr Kavana on 9 November 2007 and that Mr Kavana wrote him a letter of the same date confirming that information.

25. The certificate of title held by the Registrar should have – if the system of registration of titles was operating properly – been endorsed with the two transfers that had, by November 2007, appeared on the two owner's copies: the transfer of 23 February 2006 from Thomas Fragili to Henry Fragili and the transfer of 13 September 2006 from Thomas Fragili to Gabriel Karup. Why did neither of them appear on the Registrar's certificate? It is not known.

26. Whatever the reason for Thomas Fragili still being shown as the registered proprietor, the fact is, that is what the Registrar's certificate of title stated. This has special significance in light of Section 11 (certificate of title to be evidence) of the Land Registration Act, which states:

(1) The Registrar's duplicate of a certificate of title, when registered—

(a) is evidence of the particulars it specifies; and

(b) is conclusive evidence, in relation to the land it describes, that the person named in the certificate of title—

(i) as seized of an estate in land; or

(ii) as taking or otherwise entitled to an estate or interest in the land,

is seized of, possessed or entitled to that estate or interest, as the case may be; and

(c) is conclusive evidence that the property comprised in the certificate of title is under this Act.

(2) The other duplicate of a certificate of title, when registered, is evidence of the particulars it specifies and of those particulars being entered in the Register. [Emphasis added.]

27. In this case, the Registrar's duplicate, being registered, is therefore "conclusive evidence" that the person named as seized of an estate in portion 967 – Thomas Fragili – is seized of that estate, or at least was so seized in November 2007. What does "conclusive evidence" mean? Does it mean that the object or issue in respect of which there is conclusive evidence cannot be challenged? Does it mean that the proposition that Thomas Fragili was, in November 2007, the registered proprietor, is unchallengeable?

28. In Safe Lavao v The State [1978] PNGLR 15, a case concerning a challenge to acquisition by the colonial Administration of customary land at Kerema, Gulf Province, Pritchard J addressed the meaning of the term "conclusive evidence" for the purposes of the Land Titles Commission Act. His Honour examined how the term had been applied in a number of overseas cases and concluded that it means that, generally, no contrary evidence will be effective to displace the object or issue in respect of which something is said to be conclusive evidence, unless the so-called conclusive evidence is inaccurate on its face or fraud can be shown. So, use of the term "conclusive evidence" in a statutory provision does not give rise to an incontrovertible proposition. Contrary evidence can be adduced.

29. I will follow Pritchard J's approach in the present case. To give the term "conclusive evidence" its literal meaning could lead to unjust or absurd consequences. The term should be applied liberally. This approach is consistent with Section 158(2) of the Constitution, which provides that in interpreting the law the court shall give paramount consideration to the dispensation of justice.

30. Here, the certificate of title held by the Registrar of Titles in November 2007, showing that Thomas Fragili was still the registered proprietor, was obviously, on its face, inaccurate; and therefore it is not conclusive evidence that Thomas Fragili was at that time the registered proprietor.

31. I conclude that the certificate of title held by the Registrar in November 2007 is an inaccurate and unreliable instrument of title and should be disregarded for the purposes of determining the bundle of interests in the land at that time.

4 WHICH CERTIFICATE OF TITLE PREVAILS?

32. I have found that the first certificate of title, showing Henry Fragili as the registered proprietor, was cancelled and that the third certificate of title, showing Thomas Fragili as the registered proprietor, is inaccurate and unreliable and should be disregarded. That leaves the second certificate of title, showing Gabriel Karup as the registered proprietor, which I have concluded is a valid instrument of title, as the only valid, and therefore dominant, certificate of title. It is the one that prevails. This means that Gabriel Karup has an indefeasible title in the land (Mudge v Secretary for Lands [1985] PNGLR 387), in accordance with Section 33 (protection of registered proprietor) of the Land Registration Act.

5 WHAT ORDERS SHOULD THE COURT MAKE?

33. As Mr Karup is the registered proprietor, with unencumbered title to the land, the Court should grant a declaration to that effect and order that the plaintiff give up vacant possession to him. As to the date on which the Court's order will come into effect, I will allow a grace period of one month.

34. Costs normally 'follow the event', ie the party that loses a case has to pay the costs of the winning party. But this is always a matter of discretion. In view of the nature of this dispute and the circumstances of the case, I will order that the parties bear their own costs.

ORDERS

(1) The registered proprietor of Portion 967, Milinch Megigi, Fourmil Talasea, Volume 38, Folio 20 – "the land" – is Gabriel Karup.

(2) Henry Fragili and all his family, agents, servants and all other associates, shall, by 18 February 2011, vacate the land and give up peaceful possession of the land to Gabriel Karup.

(3) Henry Fragili and all his family, agents, servants and all other associates, shall not at any time damage or destroy oil palm or any other crops or any other property of economic value on the land, including any dwellings or other structures.

(4) Henry Fragili and all his family, agents, servants and all other associates, shall not after 18 February 2011 enter the land or interfere in any way with Gabriel Karup's peaceful enjoyment of the land.

(5) Gabriel Karup shall be entitled to occupy the land with effect from 19 February 2011 and shall not before that date enter the land or interfere in any way with Henry Fragili's enjoyment of the land.

(6) The Sheriff and the Police are authorised, from 19 February 2011 onwards, to take such reasonable steps as are necessary to give effect to these declarations and orders.

(7) The Oil Palm Industry Corporation and New Britain Palm Oil Ltd shall take all such steps as are necessary to give effect to these declarations and orders.

(8) The parties will bear their own costs.

(9) Time for entry of this order is abridged to the date of settlement by the Registrar, which shall take place forthwith.

Judgment accordingly.

___________________
Linge & Associates: Lawyers for the Plaintiffs
Public Solicitor: Lawyer for the first Defendant