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Hapoto v Kiage [2017] PGNC 262; N6942 (11 October 2017)

N6942

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 292 OF 2015

BETWEEN
SUSIE HAPOTO FOR HERSELF AND ON BEHALF OF
MATHEW HAPOTO (DECEASED) AS HIS NEXT OF KIN
Plaintiff

AND
SOLOMON KIAGE AS TRUSTEE OF THE INSOLVENT ESTATE OF
SUSIE HAPOTO
First Defendant

AND
NATIONAL DEVELOPMENT BANK
Second Defendant

Madang: Canning J
2016: 21 March, 27 May & 12 August
2017: 11 October

INSOLVENCY – property of insolvent estate – whether real property in respect of which the insolvent held a joint tenancy forms part of the insolvent estate capable of being transferred.

The plaintiff was an insolvent. Part of her insolvent estate was a property she held as joint tenant with her husband. At the time she was declared insolvent her husband was deceased but the plaintiff’s right of survivorship had not been registered on title to the property. The trustee of the plaintiff’s insolvent estate (the first defendant) sold the property to a third party, who became the registered proprietor. The plaintiff then commenced these proceedings against the trustee and the petitioning creditor (the second defendant) seeking a declaration that the sale of the property by the first defendant “was done illegally” and an order that “the defendants reimburse any money received in the sale of the said property to the person from whom the money was received”. The defendants denied the alleged illegality and argued as a preliminary point that the proceedings should be summarily dismissed for failure to clarify the jurisdictional basis for the relief sought.

Held:

(1) An originating summons should generally disclose a reasonable cause of action and the jurisdictional basis of the relief sought (Tigam Malewo v Keith Faulkner (2009) SC960, Westpac Bank PNG Ltd v John Sambeok (2014) N5810). However its failure to do so can be cured if the evidence and submissions clarify those matters. That was the case here. The preliminary point failed.

(2) The plaintiff was the sole surviving joint tenant of the subject property upon the death of her husband and was entitled to be registered as the sole registered proprietor of the property. However, the fact that she had not applied under Section 122 of the Land Registration Act to be so registered and was not so registered, did not make it illegal for the trustee of her insolvent estate to sell and transfer the property to a third party.

(3) The alleged illegality was unproven and there was no basis on which the relief sought could be granted. If the alleged illegality had been proven, the relief sought would still be refused as a declaration of illegality and an order for reimbursement would serve no useful purpose. All relief sought in the amended originating summons was refused.

Cases cited:

The following cases are cited in the judgment:

The State v Central Provincial Government (2009) SC977
Tigam Malewo v Keith Faulkner (2009) SC960
Westpac Bank PNG Ltd v John Sambeok (2014) N5810

TRIAL

This was a trial of an originating summons.

Counsel:
B W Meten, for the Plaintiff
S Ranewa, for the Defendants

11^th October, 2017

1. CANNINGS J: The plaintiff, Susie Hapoto, applies by an amended originating summons for a declaration that a residential property of which she was the joint registered proprietor with her husband, Mathew Hapoto, as joint tenants, was illegally sold without her consent and transferred to a third party (who is not a party to these proceedings).
   
2. The plaintiff was on the date of transfer, an insolvent. Part of her insolvent estate appeared to be the property at Section 44, Allotment 18, Dabel St, in the Nabasa area of the town of Madang. On the date of transfer, her husband was deceased. But the plaintiff’s right of survivorship had not been registered on the title (the State Lease) to the property, which still showed the plaintiff and her deceased husband as joint tenants.
   
3. The trustee of the plaintiff’s insolvent estate (the first defendant, Solomon Kiage) sold the property to a third party, who became the registered proprietor. The plaintiff then commenced these proceedings against the trustee and the petitioning creditor (the second defendant, National Development Bank) seeking a declaration that the sale of the property by the first defendant “was done illegally” and an order that “the defendants reimburse any money received in the sale of the said property to the person from whom the money was received”.
   
4. The defendants denied the alleged illegality and argued as a preliminary point that the proceedings should be summarily dismissed for failure to clarify the jurisdictional basis of the relief sought. There are three issues:
   
   1. Should the proceedings be summarily dismissed?
      
      2. Was the sale of the property illegal?
         
      3. What order should the Court make?
         
1. SHOULD THE PROCEEDINGS BE SUMMARILY DISMISSED?
   
5. An originating summons should generally disclose a reasonable cause of action and the jurisdictional basis of the relief sought (Tigam Malewo v Keith Faulkner (2009) SC960, Westpac Bank PNG Ltd v John Sambeok (2014) N5810). However its failure to do so can be cured if the evidence and submissions clarify those matters. That was the case here. The preliminary point fails.
   
2. WAS THE SALE OF THE PROPERTY ILLEGAL?

The plaintiff was the sole surviving joint tenant of the subject property upon the death of her husband and was entitled to be registered as the sole registered proprietor of the property. Mr Meten for the plaintiff relied on Section 122 (registration of surviving joint tenant) of the Land Registration Act, which states:

(1) Where two or more persons are registered as joint proprietors of the same estate or interest and one of them dies the surviving proprietor or proprietors, as the case may be, may apply to the Registrar to be registered in respect of the estate or interest.

(2) Where the Registrar receives an application under Subsection (1) he may, on proof to his satisfaction, of the death, register the applicant or applicants as proprietor or joint proprietors, as the case may be, of the estate or interest.

6. Mr Meten submitted that at the time the first defendant entered the contract of sale of the property with the third party and immediately prior to the transfer, the plaintiff had not applied to the Registrar of Titles to be registered as the sole registered proprietor, so she did not have sole title in the property and therefore it could not form part of her insolvent estate. Hence the argument that the sale was “illegal”.
   
7. This is an enticing argument. However, Mr Meten did not support it by reference to any statutory provision or decided case. I have decided to reject the argument. The most telling consideration is that the plaintiff had an entitlement to be the sole registered proprietor. In these circumstances there was no bar to the trustee properly regarding the property for all intents and purposes as part of the plaintiff’s insolvent estate. I find that the fact that the plaintiff had not applied under Section 122 of the Land Registration Act to be registered as the sole registered proprietor, and had not been so registered, did not make it illegal for the trustee of her insolvent estate to sell and transfer the property to a third party.
   

3 WHAT ORDER SHOULD THE COURT MAKE?

8. As the alleged illegality is unproven, there is no basis on which the relief sought by the plaintiff can be granted. If the alleged illegality had been proven, the relief sought would still be refused as a declaration of illegality and an order for reimbursement would serve no useful purpose. The Court will not make a declaration if there is no real dispute between the parties that will be solved by the declaration sought (The State v Central Provincial Government (2009) SC977). The subject property has already been transferred to a third party, who has not been joined to these proceedings and against whom no allegation of illegality or fraud has been made.
   

CONCLUSION

9. The plaintiff has failed to prove her case and the proceedings will be dismissed. As to costs, I will order the parties to bear their own costs as the defendants’ preliminary point failed, the plaintiff has raised interesting issues, the proceedings were not frivolous and the relative economic position of the parties and the plaintiff’s financial status may make it harsh and oppressive for her to be subject to a costs order.
   

ORDER

(1) All relief sought in the amended originating summons is refused and the proceedings are dismissed.

(2) The parties shall bear their own costs.

Judgment accordingly.
______________________________________________________________
Meten Lawyers: Lawyers for the Plaintiff
Kawat Lawyers: Lawyers for the Defendants