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Godowan Investments Ltd v Wambea [2018] PGNC 171; N7263 (11 May 2018)

N7263

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 103 OF 2017

GODOWAN INVESTMENTS LIMITED
Plaintiff

V

MICHAEL WAMBEA
First Defendant

MICHAEL JIAJIALE
Second Defendant

ANTON GAMBU
Third Defendant

Madang : Cannings J
2018:7 November, 5 December 2017, 22, 23 March, 8, 11 May

LAND – STATE LEASES – alleged unlawful occupation of land – alleged unlawful erection of buildings on land – allegation of constructive fraud – onus of proving fraud in obtaining title.

REMEDIES – whether declarations should be made as to registered proprietor of State Leases – whether order for vacant possession should be granted – whether Court can grant declarations and orders not sought by a party – Constitution, Section 155(4).

The plaintiff applied for declarations that it is the registered proprietor of State Leases over three properties. It claimed that at least one of the three defendants was occupying the properties and conducting businesses on them. It sought orders giving it vacant possession of the properties, removing the defendants from the properties and requiring the defendants at their own expense to pull down any buildings or structures on the properties. It also sought damages against the defendants for unlawful occupation and use of its properties. The defendants opposed the relief sought by the plaintiff. They conceded that the second defendant was operating businesses on some parts of the properties, but argued that he was doing so lawfully with the consent of those who have equitable interests in the properties. The defendants argued that the plaintiff had only recently been granted State Leases over the properties and had obtained title by fraud, so it ought not be declared as registered proprietor. In the alternative, they argued that if the plaintiff were declared as registered proprietor, it should not be granted an order for vacant possession as the second defendant had substantially invested in the properties and should be permitted to lease the properties from the plaintiff. They also argued that whatever orders or declarations the court made, no relief should extend to the third defendant, as he is not mentioned in the originating summons and no attempt has been made to amend the originating summons or to apply for any relief against him.

Held:

(1) The plaintiff was granted State Leases over the three properties, which were registered under the Land Registration Act. No good reason was provided for refusing the declaration that it was the registered proprietor. The allegation of constructive fraud raised by the defendants was rejected as it was misconceived (it should have been prosecuted formally by separate proceedings or by a cross-claim in the current proceedings) and unsubstantiated by the evidence.

(2) The plaintiff was entitled to an order for vacant possession of the properties and an order requiring the defendants and all other persons to vacate the properties and remove at their own expense all buildings and structures that they had erected on the properties.

(3) Despite the plaintiff not expressly seeking relief against the third defendant, the Court was not restricted from including the third defendant in the ambit of its orders as it has an inherent power arising from Section 155(4) of the Constitution to make, in such circumstances as seem to it proper, such orders as are necessary to do justice in the circumstances of a particular case; and it was determined that in the circumstances of the present case it was necessary to make orders in general terms that would require all persons in occupation of the properties, including the third defendant, to vacate the properties.

(4) The claim for damages was refused as no reasonable cause of action warranting an order or declaration as to liability was disclosed in the originating summons or articulated in submissions.

(5) The Court declared that the plaintiff was the registered proprietor and ordered all defendants and all other persons in occupation of the properties to, within two months, vacate the properties and remove any buildings and structures erected on the properties. Costs were awarded to the plaintiff.

Cases cited:

The following cases are cited in the judgment:

Awaincorp Ltd v Kas (2015) N5862
Mudge v Secretary for Lands [1985] PNGLR 387
Niugini Properties Ltd v Londari (2014) N5727

ORIGINATING SUMMONS

The plaintiff sought declarations and orders to enforce its position as registered proprietor of three State Leases.

Counsel:

G Pipike ,for the Plaintiff
D F Wa’au, for the Defendants

11^th May, 2018

1. CANNINGS J: The plaintiff, Godowan Investments Ltd, applies by originating summons for declarations that it is the registered proprietor of State Leases over three allotments of land on Baidal Road in the Wagol area of Madang town. It claims that one of the three defendants – the second defendant, Michael Jiajiale – is occupying the properties, with the assistance of the other two defendants – the first defendant, Michael Wambea, and the third defendant, Anton Gambu. The plaintiff claims that the second defendant has without its permission erected buildings and other structures on the properties and is conducting businesses on the properties.
   
2. The plaintiff seeks orders giving it vacant possession of the three properties, removing the defendants from the properties and requiring the defendants at their own expense to pull down any buildings and structures on the properties. It also seeks damages against the defendants for their unlawful occupation and use of the properties.
   
3. The subject properties are Section 173, Allotments 6, 7 and 8, Madang. There is an adjacent property, Section 173, Allotment 5, over which the plaintiff does not seek similar orders. The plaintiff acknowledges that the first defendant, Michael Wambea, is the registered proprietor of that property and seeks a declaration to that effect, apparently to make it clear that it is not making any claim to ownership or occupation of that property.
   
4. The defendants agree that it would be appropriate for the Court to declare that the first defendant is the registered proprietor of Allotment 5. However they oppose all other relief sought by the plaintiff. They concede that the second defendant is operating businesses – a hardware store and a service station – on a part of the subject properties, in particular Allotment 6. They argue that he is doing so lawfully with the consent of those who are entitled to give him consent, in particular, the third defendant, Anton Gambu, who claims to be the long-term occupier of the subject properties with substantial equitable interests in them.
   
5. The defendants argue that the plaintiff only recently, in October 2014, was granted State Leases over the subject properties and obtained title by constructive fraud, so it ought not to be declared as registered proprietor. In the alternative, they argue that if the plaintiff is declared as registered proprietor, it should not be granted an order for vacant possession as the second defendant has substantially invested in the properties and has established businesses on the properties and should be permitted to lease the properties from the plaintiff. They also argue that whatever orders or declarations the court makes, no orders or declarations should extend to the third defendant, as he is not mentioned in the originating summons and no attempt has been made to amend the originating summons or to apply for any relief that would affect him.
   
6. There are three issues:
   
   1. Should it be declared that the first defendant is the registered proprietor of Section 173, Allotment 5?
      
   2. Should it be declared that the plaintiff is the registered proprietor of Section 173, Allotments 6, 7 and/or 8?
      
   3. What other orders and declarations should the Court make?
      
1. SHOULD IT BE DECLARED THAT THE FIRST DEFENDANT IS THE REGISTERED PROPRIETOR OF SECTION 173, ALLOTMENT 5?
   
7. Yes, I will grant this declaration as it has been applied for by the plaintiff and agreed to by the defendants and the evidence clearly shows that the State Lease over the property was transferred to the first defendant and registered on 8 February 2008. A declaration as to Allotment 5 will assist the parties in resolution of their disputes over Allotments 6, 7 and 8.
   
2. SHOULD IT BE DECLARED THAT THE PLAINTIFF IS THE REGISTERED PROPRIETOR OF SECTION 173, ALLOTMENTS 6, 7 AND 8?
   
8. Yes, I will grant this declaration as it has been applied for by the plaintiff and the evidence clearly shows that 99-year State Leases over the three properties were granted to the plaintiff by a delegate of the Minister for Lands and Physical Planning on 8 October 2014 and registered under the Land Registration Act on 3 November 2014.
   
9. The fact that the leases were granted to and registered in the name of the plaintiff gives rise to the presumption that it has good and indefeasible title subject only to the exceptions prescribed by Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The onus of proving a case of fraud or that any of the other exceptions in Section 33(1) applies rests with the person who challenges the title of the registered proprietor (Niugini Properties Ltd v Londari (2014) N5727).
   
10. In this case it is the defendants (in particular the third defendant) who bear the onus of proving that the plaintiff’s title is defective. That onus has not been discharged. No good reason has been provided for refusing the application for a declaration that the plaintiff is the registered proprietor.
    
11. By raising an allegation of constructive fraud against the plaintiff the defendants are arguing that the circumstances of the granting of the State Leases to the plaintiff were so unsatisfactory, irregular or unlawful as to be tantamount to fraud, warranting the setting aside of registration of the plaintiff’s title under Section 33(1)(a) of the Land Registration Act. I have no difficulty with the principle of constructive fraud, as distinct from actual fraud, underlying the defendants’ argument. There is a strong line of Supreme Court authority to support the principle of constructive fraud (Emas Estate Development Pty Ltd v John Mea [1993] PNGLR 215, Kol Toki v Moeka Morea (2016) SC1588).
    
12. However, it is one thing to raise the allegation, it is another thing to prove it. I consider that the allegation of constructive fraud in this case, which is raised mainly by the third defendant (who claims to be a long-term occupier of the properties who did a lot of preparatory work in obtaining title over the properties prior to 2014) is vague, unconvincing and not substantiated by the evidence.
    
13. It is also misconceived. This sort of allegation, to have a realistic chance of being sustained, should have been prosecuted formally by separate proceedings or by a cross-claim in the current proceedings. A person, such as the third defendant, who is resisting an application for a declaration that the plaintiff is the registered proprietor, needs to be able to point to a clear irregularity in the plaintiff’s title, if the Court is to seriously entertain an allegation of constructive fraud.
    
14. Even if the defendants were to have succeeded with their allegation of constructive fraud, the Court will be slow to deny the plaintiff a declaration if the defendants have not acted quickly in raising the allegation after the plaintiff obtained title. That was the situation in another Madang case, Awaincorp Ltd v Kas (2015) N5862. The plaintiff applied for a declaration that it was the registered proprietor of two State Leases in the central business district, presently used as a bus-stop. The defendants (the provincial governor and the provincial government) resisted the application. They alleged that the plaintiff had obtained title through constructive fraud as the availability of the leases had neither been advertised nor exempted from advertisement. The allegation was sustained. The court found that the leases were granted contrary to the Land Act and that it was a case of constructive fraud. The court nevertheless granted the declaration sought by the plaintiff as the defendants had not raised the issue of constructive fraud in a timely manner. Several years had passed since the plaintiff was granted the leases and the defendants had done nothing about it and taken no formal steps to challenge the plaintiff’s title.
    
15. A similar situation exists here. The plaintiff was granted the leases over the three properties in October 2014 and the leases were registered in November 2014. The defendants (in particular the third defendant, who is claiming equitable interests, as a long-term occupier, in the properties) have done nothing formally to challenge the plaintiff’s title. Even after the plaintiff commenced the current proceedings in March 2017 and before the trial commenced in November 2017, the defendants, in particular the third defendant, did not file a cross-claim or otherwise formally challenge the plaintiff’s title. So, even if constructive fraud had been established, the defendants would have been hard pressed to show that the declaration sought by the plaintiff should be refused.
    
16. I reiterate that no good reason has been given to refuse the declaration sought by the plaintiff. It is clearly the registered proprietor of the State Leases over the three properties.
    
3. WHAT OTHER ORDERS SHOULD THE COURT MAKE?
   
17. Three further issues arise here:
    
    • (a) Should the plaintiff be granted an order for vacant possession against the first and second defendants and an order requiring those defendants to remove their properties?
      
    • (b) Should such orders also apply to the third defendant and other persons?
      
    • (c) Should the court award damages to the plaintiff?
      

(a) Should orders be granted against the first and second defendants?

18. These are the type of orders sought in the originating summons, which seeks relief in the following terms:
    
    1. An Declaration that the Plaintiff is the registered proprietor of properties described as Section 173, Allotments 6, 7 and 8, Madang, Madang Province, situated along Baidal Road (State Leases Volume 21 Folio 153, 154 and 155 respectively).
       
    2. A declaration that the First Defendant is the registered proprietor of property described as Section 173, Allotment 5, Madang, Madang Province (State Lease Volume 116 Folio 12).
       
    3. An Order that the First and Second Defendants and their servants, agents, employees, relatives and friends be removed from the land described as Section 173 Allotment 6, 7 and 8, Madang, Madang Province and must give vacant possession of this land to the Plaintiff forthwith.
       
    4. A further order that the First and Second Defendants and their servants, agents, employees, relatives and friends demolish and pull down all or any structure whatsoever including houses, shops and fences that were constructed or are currently constructed on the Plaintiff’s properties described herein at their own costs and be further restrained from constructing any other developments forthwith.
       
    5. An Order that the Defendants jointly and severally pay damages to the Plaintiff for unlawful use and occupation of its properties described herein.
       
    6. Costs of the proceedings
       
    7. Such further or other Orders the National Court sees fit.
       
19. I have no hesitation in granting orders generally in terms of paragraphs 3 and 4. Such orders follow naturally from the declaration that the plaintiff is the registered proprietor of the State Leases over Section 173, Allotments 6, 7 and 8. The person who will be directly affected by such orders is the second defendant. He has erected buildings and other structures on the subject properties and conducts his businesses there. He invested in and improved the properties without the consent of the registered proprietor. That is a risk he voluntarily took and he has to bear the consequences of taking such a risk.
    
20. There is no evidence or suggestion that the plaintiff by its conduct acquiesced in the second defendant’s conduct. In fact the evidence shows the contrary. The plaintiff warned him on several occasions that he was acting unlawfully. He took no notice and continued to develop the properties. There is no good reason for refusing the relief sought in the originating summons.
    

(b) Should the orders apply to the third defendant or other persons?

21. Mr Wa’au submitted that if the court reached the stage of granting relief of the nature sought by the plaintiff, it should confine the relief to what was actually sought by the plaintiff. The originating summons only seeks relief against the first and second defendants. No mention is made of the third defendant.
    
22. Mr Wa’au raises a valid point. No attempt has been made to amend the originating summons. Even in submissions, Mr Pipike, for the plaintiff, did not ask the court to extend the orders to include the third defendant. This is unusual as it seems that the third defendant is the one who has occupied at least part of the properties. He is alleging that Allotments 6, 7 and 8 should belong to him. It would seem natural for the plaintiff to be seeking orders against him, as well as the first and second defendants.
    
23. The explanation for this unusual state of affairs lies to some extent in the way in which the proceedings have been prosecuted. When the plaintiff commenced the proceedings the third defendant was not named as a party. It was a case only against the first and second defendants. The third defendant was only joined when the court granted an application by the first and second defendants for him to be joined.
    
24. Be that as it may, the third defendant is now a party and in my view the order for vacant possession and the mandatory injunction for persons in occupation of the properties to remove their buildings and other property from the properties should extend to him. And to all other persons for that matter. If the court does not extend its orders beyond the first and second defendants it would be providing an opportunity for anybody other than the first or second defendants to occupy the properties without being in breach of the Court’s orders. The plaintiff might be required to commence fresh proceedings against such persons. Such a scenario should be avoided. The best way to do that is to express the orders in broad terms.
    
25. I am not persuaded by Mr Wa’au’s submission that I cannot go beyond what was sought by the plaintiff. I do not subscribe to the view that the National Court can only grant relief sought by a party. That approach does not accommodate the inherent and broad power of the Court under Section 155(4) (the National Judicial System) of the Constitution, which states:
    

Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

26. Despite the plaintiff not expressly seeking relief against the third defendant or any other persons, the Court is not restricted from including the third defendant in the ambit of its orders. It has inherent power, in such circumstances as seem to it proper, to make such orders as are necessary to do justice in the circumstances of a particular case. I determine that in the circumstances of this particular case it is proper, and necessary to do justice, to make orders in general terms that will require all persons in occupation of the properties, including the third defendant, to vacate the properties and remove any buildings and structures that they have erected and their personal property.
    

(c) Should the plaintiff be awarded damages?

27. No. I refuse the claim for damages. No reasonable cause of action warranting an order or declaration as to liability is disclosed in the originating summons. Nor has any discrete cause of action been articulated in submissions.
    

CONCLUSION

28. The plaintiff will be granted the primary relief it sought: vacant possession. However the claim for damages will be refused. I will allow a grace period of two months within which the defendants and all other persons must vacate the properties and remove any buildings and structures that they have erected and remove all their personal property. This has been a strongly contested trial and it is appropriate that the successful party, the plaintiff, be awarded costs.
    

ORDER

(1) It is declared that the first defendant is the registered proprietor of a State Lease over the property described as Section 173, Allotment 5, Madang, Madang Province.

(2) It is declared that the plaintiff is the registered proprietor of State Leases over the properties described as Section 173, Allotments 6, 7 and 8, Madang, Madang Province and is entitled to vacant possession of those properties (“the subject properties”) in accordance with this order.

(3) The defendants and all other persons in occupation of the subject properties shall, unless the plaintiff gives its express consent otherwise, vacate the subject properties, having removed at their own expense all buildings and structures that they may have erected on the subject properties, together with all of their personal property and possessions, by 12 noon on 11 July 2018, failing which the plaintiff and the Police are authorised, from 12 noon on 11 July 2018, to take all reasonable steps necessary to remove the defendants and other persons in occupation of the subject properties, from the subject properties, including the use of reasonable force, and to destroy, demolish, dismantle, seize and/or remove any buildings, structures or personal property or possessions still on the subject properties, provided that such steps are taken under the supervision and control of the most senior member of the Police Force available at that time in the vicinity of the subject properties.

(4) The defendants and all other persons are restrained forthwith from constructing, erecting or installing any further buildings, structures or improvements on the subject properties without the express consent of the plaintiff.

(5) The plaintiff’s claim for damages is refused.

(6) The defendants shall pay the plaintiff’s costs of the proceedings on a party-party basis, which shall, if not agreed, be taxed.

(7) The proceedings are thereby determined and the file is closed.

________________________________________________________________
GP Lawyers: Lawyers for the Plaintiff
Ninerah Lawyers: Lawyers for the Defendants