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Markham Realty Development Ltd v Orognaron Land Group Inc [2023] PGSC 181; SC2845 (27 November 2023)

SC2845


PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]


SCA NO. 18 OF 2023


BETWEEN:
MARKHAM REALTY DEVELOPMENT LIMITED
Appellant


AND:
OROGNARON LAND GROUP INC
First Respondent


AND:
MICHAEL MALIAKI, MALIAKI MICHAEL, JOHN MOARU, KEPI MICHAEL, SASA MICHAEL AND YAZOM MICHAEL
Second Respondent


AND:
ANDIE MALO in his capacity as Director Customary Land Registration
Third Respondent


AND:
HENRY WASA IN HIS CAPACITY AS REGISTRAR OF TITLES
Fourth Respondent


AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Respondent


WAIGANI: GEITA J, NAROKOBI J, PURDON-SULLY J
27 NOVEMBER 2023


SUPREME COURT - Appeal – against the whole of the final decision and orders of National Court – lies without leave pursuant to section 14(1)(a) and (b) of the Supreme Court Act 1975 – raises questions of law or questions of mixed facts and law


LAND – Special Agricultural and Business Lease (SABL)– pre-existing title must be surrendered before it can be cancelled and new title issue - Lease was not surrendered or cancelled -– natural justice not accorded to the appellant before issuing of Certificate of Title – error of law found.


Facts


On the 6 August 2006 the appellant entered into a Customary Land Sale Agreement with the second respondents on behalf of the Orognaron clan to purchase the subject land. On the 12 August 2009 a SABL was issued in favour of the first respondent for a period of 99 years. On 28 November 2009 the appellant entered into a lease agreement on terms and for consideration to lease the land for a period of 99 years. The lease was registered on the SABL title. While the SABL was under the lease agreement the first and second respondents requested the third and fourth respondents to convert the SABL into a Certificate of Title under s 34 of the Land Registration (Amendment) Act 2009. On 20 December 2016 a Certificate of Title issued in favour of the first respondent, the issuing occurring on the same day the National Executive Council made a decision that then current SABLs be converted into Certificate of Title through the Voluntary Land Registration process and for SABLs to be surrendered. The SABL title issued over the land in favour of the appellant was not surrendered.


On the basis of the Certificate of Title issued on 20 December 2016 the first and second respondents entered into arrangements in breach of the lease agreement in favour of the appellant. The appellant initiated proceedings in the National Court seeking declarations to resolve the competing titles and inter alia that the SABL title issued over the land was valid. On 12 January 2023 the appellant’s application was dismissed by the National Court.


Held


  1. The SABL was not ineffective by operation of law or the National Executive Council decision: Limawo Holdings Ltd v Numapo [2015] PGNC 155 followed.
  2. The SABL was not deemed surrendered and cancelled at the issuance of the Certificate of Title in favour of the first respondent by the fourth respondent, the SABL still current and the lease registered in favour of the appellant valid and effective.
  3. The appellant was denied natural justice prior to the issuing of the Certificate of Title by the fourth respondent in that it was not afforded an opportunity to be heard: Jarro Investment Limited v Ane & Anor [2022] PGSC 5, SC2192 applied.
  4. The evidence did not support a finding that it was not the intention of the second respondents to part with all of the subject land nor that the sub-lease in favour of the appellant was oppressive and the benefits of consideration too remote and as such not worthy of the Court’s endorsement.

Cases cited


Limawo Holdings Ltd v Numapo [2015] PGNC 155
Markham Realty Development Limited v Maliaki [2023] PGNC 12; N10101
Jarro Investment Limited v Ane & Anor [2022] PGSC 5, SC2192
In re Reference to Constitution section 19(1) by East Sepik Provincial Executive [2011] PGSC 41; SC1154
Klapat v National Executive Council [2014] PGNC 186; N5536
Titus Makalminja v The State (2004) SC726
Kawage v The State

The Russian Commercial and Industrial Bank v British Bank of Foreign Trade Ltd [1921] 2 AC 438

G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251


Counsel


J. Holingu, for the appellant
No Appearance for the first, second, respondents
K. Kipongi for the third, fourth and fifth respondents

REASONS FOR JUDGEMENT


  1. BY THE COURT: This is an appeal against the judgment and orders made by a primary judge of the National Court given on 12 January 2023 in proceedings titled OS No 63 of 2018 (the National Court proceedings).
  2. The appeal lies without leave pursuant to s 14(1)(a) and (b) of the Supreme Court Act 1975 (SCA) on the basis that the judgment is a final decision of the National Court and raises questions of law or questions of mixed facts and law.
  3. For the purposes of hearing and determining an appeal and save as provided, the appeal is by way of rehearing on the evidence given in the National Court proceedings and as such the Supreme Court has all the powers, authority and jurisdiction of a Judge exercising the jurisdiction of the National Court.[1]
  4. At all material times:
    1. The appellant was a registered Papua New Guinea company and Plaintiff in the National Court proceedings. Mr. Reginaldo Melis was its principal shareholder, Chairman and Managing Director.
    2. The first respondent was an Incorporated Land Group (ILG) from Nadzab, Markham District, Morobe Province, incorporated on 12 August 2009.
    1. The second respondents, who are members of the first respondent, were customary landowners of a large tract of land adjacent to the Nadzab Airport separated by the Okuk Highway on its northern side and described by its customary name as Naier Land.[2]
    1. The Chairman of the first respondent was Mr Michael Maliaki, a second respondent.
    2. The third respondent was the Director Customary Land Registration.
    3. The fourth respondent was the Registrar of Titles.
    4. The fifth respondent was the State.

RELEVANT BACKGROUND FACTS

  1. Before turning to the decision of the primary Judge and the grounds of appeal it is necessary to outline the relevant background facts which are taken from the appellant’s submissions and are unchallenged.
  2. On or about June 2006 the appellant’s Managing Director, Mr. Melis, who is fluent in the English and Pidgin language (amongst others) had a discussion with Ms Jenny Seth a member of the customary landowners of the Gabsongkeg Village, headed by her grandfather the second respondent Mr Maliaki. Ms Seth and Mr Maliaki wanted to sell land to Mr Melis, Mr Maliaki expressing a desire to purchase a 25-seater bus to freight garden produce and passengers to Lae. Mr Melis initially wanted land for agricultural purposes but later for commercial and residential use.
  3. On 6 October 2006 Mr Melis entered into a Customary Land Sale Agreement with the second respondents on behalf of the Orognaron clan of the Gabsongkeg Village to purchase the Naier Land. The land was identified in the agreement[3] as follows:

NAIER, Portion 78C, Cat No 90/1000 having an area of about 860 hectare as delineated and edged in red on the plan annexed hereto and marked with the letter “A” herein after referred to as the said land

  1. Under the Customary Land Sale Agreement, the landowners[4] warranted that they were satisfied that the terms of the agreement were explained to them by a person of their choice, in their language of choice, and that the terms were clear and that they accepted the terms of agreement. The agreement was witnessed by Mr. John Aria, the then Provincial Customary Lands Officer employed by the Department of Land and Physical Planning (DLPP).
  2. On 14 November 2006 Mr Melis purchased a new PMV bus valued at K170,000 for Mr Maliaki.
  3. On the advice of the DLPP, and commencing in about December 2006, a number of steps were taken to convert the land into a State Lease. This process was funded by Mr Melis.
  4. On 14 August 2008, the first respondent’s application for recognition as an Incorporated Land Group (ILG) was published in the National Gazette No G144.
  5. On 24 August 2008, a Certificate of Recognition as an ILG was issued to the first respondent by a delegate of the Registrar of Incorporated Land Groups.
  6. The appellant and the first respondent thereafter commenced a process of converting Naier Land into a Special Agricultural Business Lease (SABL) title. The processes taken to register the land included:
    1. conducting a land investigation and compilation of a Land Investigation Report
    2. surveying the land
    1. certification of the Custodian of Customary Lands
    1. making application to the DLPP for a lease and lease-back to the landowner nominee
    2. Lease-lease back agreement with the fifth respondent.
  7. The first and second respondents do not challenge the evidence of the appellant that between December 2006 and December 2007, and without the involvement of Mr Melis other than by way of financial assistance, Mr Maliaki and/or members of his clan directly engaged with the Morobe Provincial Lands Department on numerous occasions to register and obtain title to the land and that it was only when they were unable to do so that they sought the assistance of Mr Melis to advance matters.
  8. On 12 August 2009, the DLPP issued a SABL in favour of the first respondent for a period of 99 years described as Volume 17 Folio 112, Portion 78C, Milinich Erap, Fourmil Markham, Morobe Province containing an area of 862.44 hectares.[5]
  9. For the purposes of driving the development of the land the appellant incorporated on 4 September 2009.
  10. On 28 November 2009 the appellant entered into a lease agreement with the first and second respondents to lease Portion 78C (Lease Agreement).[6] The Lease Agreement inter alia provided:
    1. The purpose of the lease at [4] in the following terms:

The Project Company will subdivide the land into smaller parcels and turn to account all of the said smaller parcels of land as the prevailing land market determines, which shall include but not be limited to business or commercial leases, industrial estates, residential allotments and special purpose allotments for community use.[7]

  1. The term of the lease at [5], namely for a period of 99 years commencing on 15 April 2009 expiring on 13 April 2018.
  1. The consideration at [6], namely K250,000 together with the bus at K170,000, the parties agreeing it was valid consideration for the lease.
  1. A right at [7] to annual lease payments as calculated by the State for the use of State land but not less than 5% of the unimproved value of any parcel or portion of the land with a penalty of 20% for non-payment.
  2. A right at [11] to a premium on renewal of the lease.
  3. An entitlement at [13] to equity in the project of 5% of all profits net of costs.
  4. At [16] a community contribution of 5% of profits towards the establishment of a community fund.
  5. At [17] the construction on land to be identified by the Lessor of a church, a school, a health centre and a permanent residence for the principal leader of the Orognaron Land Group.
  6. A description of the land which included the number of hectares as being 862.44.
  1. The terms of the Lease Agreement were explained to Mr Maliaki and his clansman, members of the first respondent, in Tok Pisin and their local language.
  2. A sub-lease was then registered on the SABL title in favour of the appellant with registration journal number N-15662 dated and entered on 10 January 2010.
  3. Following the obtaining of the sub-lease the appellant spent money to develop the land the subject of the sub-lease. On 17 September 2010 the appellant caused the Wampar Town Strategic Plan to be drawn up and submitted to the Morobe Province Physical Planning Board (MPPB). On 23 September 2010 the MPPB approved the Plan and assigned an approval number TRP No 2/44. The appellant obtained a valuation report dated 11 April 2011, sought and secured development financing and obtained soil testing. By 2016 the development project was ready with a detailed town development plan (the Master Plan).
  4. In pursuit of the Master Plan and the Lease Agreement the appellant spent more than K8,000,000.
  5. While the SABL was under the Lease Agreement in favour of the appellant, the first and second respondents requested the third and fourth respondents to convert the SABL into a Certificate of Title under s 34L of the Land Registration (Amendment)Act 2009. On 20 December 2016 a Certificate of Title under Volume 1, Folio 23 was issued on Portion 78C in favour of the first respondent. The issuing of the Certificate of Title occurred on the same day that the National Executive Council (NEC) made various decisions on SABLs in its Decision No 344/2016. The relevant part of the NEC Decision, reproduced by the primary Judge at [42] of his judgment,[8] and which followed a Commission of Inquiry (COI) established by the National Government, was for then current SABLs to be converted into Certificate of Title through the Voluntary Land Registration process and for SABL’s to be surrendered.
  6. It is unchallenged that the SABL title issued over Portion 78C, the subject of these proceedings, was not surrendered. In his affidavit sworn 16 July 2021, Mr Andy Malo, the third respondent, deposed to the SABL title that had issued to the appellant as not having been surrendered or cancelled by the fourth respondent, the Registrar of Titles. He confirmed that the SABL was current, and that there was a sub-lease registered in favour of the appellant.
  7. In 2017, after noticing continuing activities on the land, Mr Melis spoke with the then Acting Registrar of Titles, Ms Shirley Pohei, to verify if the SABL was still active or if anyone had attempted to register purchased land in Nadzab.
  8. By letter dated 3 February 2017 the Acting Registrar confirmed to the appellant that the SABL title issued over Portion 78C was active. She also confirmed that sub-lease No 15662 over Portion 78C to the appellant was duly registered and current.
  9. The evidence is however that armed with a Certificate of Title issued on 20 December 2016, the first and second respondents entered into side deals with respect to the land in breach of the Lease Agreement. It included constructing a marketplace on the northern parts of Portion 78C, placing billboards in different sizes on the land border along the highway and entering into dealings over other parts of the land. This concerned not only the appellant, who had expended funds on the project, some of which had already been paid to Mr Maliaki. In an affidavit filed on 10 May 2021, Ms Elsie Loth, the interim Chair of Gabsongkeg Development Foundation Inc., representing nine (9) clans from which Naier Land is derived, deposed to community dissatisfaction with Mr Maliaki allowing squatters to settle on the land in breach of the Lease Agreement with consequential deleterious impacts for the community.
  10. On 9 February 2018, the appellant initiated the National Court proceedings by way of Originating Summons seeking inter alia ordinary declarations over Portion 78C and specific performance of the Lease Agreement.
  11. In related proceedings, the second respondents each pleaded guilty and were dealt with for contempt of court for disobeying an order of the National Court in the form of interlocutory injunctive orders restraining them jointly and severally from dealing with Portion 78C as provided by court order. Mr Maliaki, who deposed to selling portions of the land to third parties, was given a suspended sentence on condition that he paid a fine. The remaining respondents were ordered to pay a fine.[9]
  12. In 2020, while the National Court proceedings were on foot, the appellant received information that the first and second respondents had converted the SABL into a Certificate of Title under s 34L of the Land Registration (Amendment)Act 2009.
  13. On the 18 August 2020, the appellant filed an amended Originating Summons in the National Court Proceedings to include the issue of competing title and declarations to the effect that the SABL title that had been issued over Portion 78C was still valid.
  14. The trial of the National Court proceedings was conducted on 3, 4, 16 and 19 August 2021 (the trial).
  15. On 12 January 2023 the primary judge handed down a decision refusing all of the reliefs sought and dismissing the appellants claim.

HEARING BEFORE THE PRIMARY JUDGE

  1. At the trial the parties were legally represented. The trial before the primary Judge was conducted without cross-examination, the parties agreeing to rely upon their respective affidavits and other documents filed in the court. Submissions before the primary Judge were made orally and in writing.

DECISION OF THE PRIMARY JUDGE

  1. For present purposes the parties before the primary Judge will be referred to as described in this appeal.
  2. After setting out the background facts the primary Judge found the issues to be as follows:
  3. The primary Judge then summarized the evidentiary facts as deposed to on behalf of the witnesses for the parties before turning to a consideration of each of the issues as identified.
  4. The substantive findings of the primary Judge relevant to the grounds of appeal can be summarised as follows:
    1. The SABL over Portion 78C issued on 14 August 2009 was not valid and in force because it became obsolete and ineffective by operation of the law and National Government policy pursuant to the NEC Decision (No 344/2016) to protect customary land issues.
    2. The issuing of the Certificate of Title on 20 December 2016 in favour of the first respondent was valid and effective, the first respondent the absolute owner of Portion 78C and the first and second respondents able to deal with the land as they determined.
    1. The Lease Agreement was no longer valid and in force becoming a nullity on 20 December 2016 on the issue of the Certificate of Title in favour of the first respondent, which displaced the interest created under the SABL.
    1. The issue of Certificate of Title in favour of the first respondent was conclusive ownership of Portion 78C under s 34M of the Land Registration (Amendment) Act 2009 and the actions taken by the first respondent in issuing the Certificate of Title to replace the SABL consistent with the NEC decision in protecting and securing perpetual succession of customary land usage.
    2. The Lease Agreement in favour of the appellant appeared to be oppressive, the benefits or consideration too remote, unpredictable and unquestionable.
    3. It was not the intention of the second respondents to part with the entire Naier land containing 862.44 hectares for 99 years, neither did they understand nor were the terms of the lease properly explained to them, and the Lease Agreement was not a fair agreement worthy of the endorsement of the court.

GROUNDS OF APPEAL

  1. The appellant appeals the primary Judge’s decision on the following grounds as set out in the Notice of Appeal filed 20 February 2023:
  2. The appellant did not press ground 3(a) of the hearing of the appeal.
  3. The appellant sought the following orders:
    1. The whole of the judgement given on 12 January 2023 in the National Court at Lae in proceedings OS No. 63 of 2018; Markham Realty Development Limited v. Orognaron Land Group Inc and Ors be quashed.
    2. The appeal be upheld.
    3. Pursuant to ss 6(2) and 16(c) of the SCA, the relief sought in the Amended Originating Summons filed on 18 August 2020 in the National Court be granted.
    4. Pursuant to s 16 of the SCA such other Orders as this Honourable Court deems necessary.
    5. The respondents to pay the costs of the appeal.

SUMMARY OF SUBMISSIONS OF THE PARTIES

  1. There was no appearance for the first and second respondents who were served. The only active parties to the appeal were the appellant and the third, fourth and fifth respondents. Mr Holingu appeared for the appellant and Mr Kipongi for the third, fourth and fifth respondents.
  2. The main contention on behalf of the appellant arising out of the appeal grounds can be summarised as follows:
    1. The primary Judge erred in relying on the NEC Decision where that decision took note of the recommendation of the COI into SABL’s and also the NEC Decision No. 187/2014, when that NEC Decision, i.e. NEC Decision No. 187/2014 and COI Reports into SABL’s had been quashed by the National Court in Limawo.
    2. The SABL title to which the appellant has a registered sub-lease and also from which it has a Lease Agreement had not been surrendered nor cancelled in accordance with s 38 of the Land Registration Act 1981 such that the SABL was still valid.
    1. On the question of two (2) competing title interests over the same portion of land, the title registered first in time takes precedence over the title registered later and to the extent of inconsistency, the title interest registered later is ineffective and invalid (ss 33(1)(c) and 34M(2)(a) and (c) of the Land Registration Act 1981).
    1. The primary Judge erred in considering and making a determination on the validity of the Lease Agreement between the appellant and the first/second respondents when that was not the issue for consideration before the court. If the first and second respondents desired to challenge the validity of the Lease, they should have initiated a separate cause of action, the evidence before the National Court otherwise supporting the position that the first and second respondents willingly participated in the negotiations, signing and executing the sub-lease and the Lease Agreement with the appellant.
  3. Counsel for the third, fourth and fifth respondents did not oppose the appeal. It was contended on their behalf that there was no evidence that the SABL had been surrendered or cancelled prior to the issuing of the Certificate of Title and as such it remained valid. He referred the court to the Supreme Court decision of Jaro Investment Limited v Ane & Anor [2022] PGSC 5, SC2192 (Jaro) concerning the mandatory process to be followed under ss 161 and 162 of the Land Registration Act with regard to the surrender and cancellation of a pre-existing title such as an SABL before a new Certificate of Title can issue. It was his submission that this process not followed.

LEGISLATION

  1. Before considering the grounds of appeal it is convenient at this juncture to set out the relevant legislation.
  2. Section 102 of the Land Act 1996 provides for the grant of SABL’s as follows:
    1. 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.

  1. Part XIV of the Land Act provides for surrender of state lease. Section 121 provides as follows:

(1) A lessee may, with the written consent of the Minister, surrender his lease or any part of his lease.

(2) For the purposes of this section, the grant of an application for a State lease shall be deemed to be the grant of the lease.

  1. Section 33 (1)(c) and (2) of the Land Registration Act 1981 provides:

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) the encumbrances notified by entry or memorial on the relevant folio of the Register; and

(c) the estate or interest of a proprietor claiming the same land under a prior instrument of title; and

(d) in case of the omission or misdescription of any right-of-way or other easement created in or existing on the same land; and

(e) in case of the wrong description of the land or of its boundaries; and

(f) as to a tenancy from year to year or for a term not exceeding three years created either before or after the issue of the instrument of title of the registered proprietor; and

(g) as provided in Section 28; and

(h) a lease, licence or other authority granted by the Head of State or a Minister and in respect of which no provision for registration is made; and

(i) any unpaid rates, taxes, or other money which, without reference to registration under this Act, are expressly declared by a law to be a charge on land in favour of the State or of a Department or officer of the State or of a public corporate body.

(2) The operation of Subsection (1) is not affected by the existence in any other person of an estate or interest, whether derived by grant from the State or otherwise, which, but for this Act, might be held to be paramount or to have priority.

(Underlining ours)

  1. The process of registering customary land through an ILG is provided for under ss 34A-34Q, amendments to the Act having been introduced by the Land Registration Act (Amendment) Act 2009 to inter alia allow development to take place primarily through the use of ILG’s and to promote and facilitate the registration of land held under customary law. The process can be summarised as follows:
    1. Representatives of the ILG may apply to the Director in the prescribed form for registration of ownership of customary land or an interest in customary land (s34D(1)).
    2. The application shall include a registration plan with a description of the land, including its boundaries (s 34D(2)(a)).
    1. The registration plan shall where necessary, include names of individuals or customary groups which established derivative interests in the land and the nature of that interest (s 34D(2)(b)).
    1. The Director shall then commence verification of the registration plan (s 34E(1)) which includes investigations and inspection of the land and of the customary groups (s 34E(2)).
    2. Upon the completion of his investigation, the Director shall, as soon as practicable, prepare a Registration Plan (s 34F(1)).
    3. The Director shall then forward a copy of the Plan to the Regional Surveyor (s34G(1)(a) and give notice to the public (s 34G(1)(b)).
    4. The Regional Surveyor shall then, where necessary, prepare an Adjusted Registration Plan showing necessary adjustment (s 34H).
    5. Objections to the registration may be made pursuant to s34I. These must be made within a period of no longer than 90 days.
    6. Taking into account all of the above, the Director then prepares a final registration plan (s 34J).
    7. Clan land may then be registered pursuant to s 34L and upon payment of a prescribed fee, the Registrar of Titles shall prepare and issue a Certificate of Title in the prescribed form in the name of the group.
  2. Following the completion of the above process, an ILG will then have the power to grant derivative rights and interests in the land or portion to itself, any land group, unincorporated or incorporated, an individual or any entity on payment of a rent or rent free (ss 34O and 34P of the Land Registration Act).
  3. For discussion purposes we set out the provisions of ss 34L and 34M in full.

34L. ISSUE OF CERTIFICATE OF TITLE.

(1) Where the customary group has been registered as the owner of land, the Registrar of Titles shall, upon payment of a prescribed fee, prepare and issue a Certificate of Title in the prescribed form in the name of the group.

(2) In preparing a Certificate of Title under Subsection (1), the Registrar of Titles shall prepare a copy of the title for the purposes, of registration in the Register.

34M. EFFECT OF REGISTRATION.

(1) An entry in the Register –

(a) is conclusive of the facts; and

(b) unless endorsed otherwise, shall be deemed to guarantee the area and the boundary of the land to which the entry relates; and

(c) shall be subject to such rights and interests as are recorded in the register.

(2) Registration of ownership which is inconsistent with –

(a) a title previously registered under the provision of this Act; or

(b) a reservation, easement or other such interest made by the State for public purposes under any law; or

(c) an estate, right, title or interest granted by the State under any law, shall be ineffective to the extent of the inconsistency.

  1. Section 38(2) of the Land Registration Act 1981 provides for the surrender of state lease as follows:

(2) Subject to this section, where a State lease has been surrendered –


(a) by an instrument in the approved form; or

(b) subject to Subsection (3), by endorsement on the State lease or its counterpart; or

(c) subject to Subsection (5), by operation of law,

an application may be made to the Registrar for registration under Subsection 5 in relation to that State Lease.

  1. Section 38(3) provides:

(3) The endorsement made under Subsection (2) shall be-


(a) expressed in the word ‘surrendered’ with the date of the surrender; and

(b) signed by the lessee and by the lessor as evidence of acceptance of the surrender; and

(c) attested in accordance with Section 19.

  1. Section 161 and 162 of the Land Registration Act 1981 provides for the cancellation and correction of instruments and entries and the replacement of instruments of title as follows:

161. CANCELLATION AND CORRECTION OF INSTRUMENTS AND ENTRIES.

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

(a) cancel or correct an instrument delivered up under Section 160; and
(b) in any other case, on such evidence as appears to him sufficient, correct errors or omissions in–

(i) the Register or an entry in the Register; or
(ii) the other duplicate certificate of title or an entry on that duplicate.

(2) Where a correction is made under Subsection (1)–

(a) the Registrar–

(i) shall not erase or render illegible any words; and
(ii) shall affix the date on which the correction was made together with his initials; and

(b) the Register or other duplicate certificate of title so corrected has the same validity and effect as if the error had not been made except as regards an entry made in the Register before the time of correcting the error.

(3) Where the Registrar is satisfied that a matter in a certificate of title does not affect the land to which the certificate relates, he may record on the title the cancellation of that matter in such manner as he considers proper.

162. REPLACEMENT OF INSTRUMENT OF TITLE.

(1) Where an instrument of title has been lost, destroyed or defaced, the registered proprietor or, if he is dead, his legal personal representative, may apply to the Registrar for a replacement instrument of title or official copy.

(2) An application under Subsection (1) shall be accompanied by–
(3) The Registrar may–

(a) on receipt of an application made in accordance with Subsections (1) and (2), together with the prescribed fee; or

(b) on his own volition,

if he considers it necessary, replace an instrument of title by making a new instrument of title or official copy, as the circumstances require.

(4) When an application under this section relates to a lost or destroyed instrument of title the Registrar shall 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.

(5) A new certificate of title or official copy made under this section shall be–

CONSIDERATION
Whether the primary Judge erred in finding that the NEC Decision No 344/2016 halted all SABL transactions in the country (Ground 3(b))


  1. At [27] to [29] of the judgment, the primary Judge summarised the evidence of the third respondent Mr Malo in his affidavit filed 19 July 2021 in the National Court proceedings as follows:
    1. Andie Malo is the Third Defendant. He is the Director-Customary Land Registration, Department of Lands and Physical Planning. He deposes on 15th April 2009, a Special Agriculture and Business Lease (SABL) was granted in favour of the First Defendant for Portion 78C, and the title was registered on 14th August 2009. That on 10 January 2010, a sub-lease was registered in favour of the Plaintiff. While the SABL was still under sub-lease, the Plaintiff and the First Defendant after some mutual understanding applied for the same land to be issued a Certificate of Title in place of the SABL under the Voluntary Customary Land Registration process pursuant to section 34L of the Land Registration (Amendment) Act 2009. On 20 December 2016, a Certificate of Title was issued over Portion 78C in Certificate of Title Volume 01, Folio, 23.
    2. Mr Malo gives additional evidence on voluntary customary land registration and the status of SABL’s in the country. He deposes that in 2011, a Commission of Inquiry into SABLs was established by the National Government.
  2. At [41] the primary Judge referred to the evidence of Mr Malo as being relevant and helpful.[10] Annexed to the affidavit of Mr Malo and marked as ‘C’ is a copy of the NEC Decision. His Honour then said:

.... There is incontrovertible evidence that in 2011, there was a Commission of Inquiry into SABLs established by the National Government. After the Commission of Inquiry, the National Government through the National Executive Council (NEC) on (sic) made various decisions SABLs on 20th December 2016 in its Decision No 344/2016.

  1. His Honour reproduced the relevant parts of the NEC Decision at [42] of the judgment as follows:

On 20th December 2016, Council:


  1. noted the content of policy Submission No. 248/2016.
  2. took note of the enormity of interests by landowners to seek Land Titles over their customary lands through the new Voluntary Customary Land Registration system and acknowledged the involvement of the Courts in the mediation over disputes.
  3. took note that since the recommendations of the COI and NEC Decision No. 187/2014 no new SABL are issued to date, however customary Leases are administered through ILGs and VCLR under the Incorporated Land Groups Act and Customary Land Registration Act 2009.
  4. took note of the surrender of SABL’s over, Portion 248C, Aitape West Sepik and Kandrian Closter, West New Britain which have been successfully converted and reverted back to the traditional landowners.
  5. approved that under the Legislative Review exercise carried out by Lands Department Special Agriculture and Business Lease are completely repealed and existing SABLs are administered according to their status of implementation.
  6. approved the Ministerial Statement to be presented in Parliament and that the NEC approved the following as National Government position on SABL.
    1. surrender the Special Agriculture and Business Lease to the Department of Lands and Physical Planning.
    1. recognized the perpetual rights and interest of the customary landowners and for the developer to protect these rights and interests.
    2. process the ILGs through the ILG Office and process and issue land titles under the new Voluntary Customary Land Registration System; and
    3. allow the ILGs to develop leases out of their land titles, negotiate with the developer on the terms of the leases, and once agreement is reached, lease their land to the developer. The ILGs also invite the government to assess the leases to ascertain the application of the required fees and charges.
  7. approved the establishment of a Customary land Advisory Committee to advise landowners covered under the existing Special Agriculture and Business Leases and those who have interests in registering their lands under the new Voluntary Customary Land Registration System to obtain Titles.
  8. The primary Judge then made the following finding at [43] of the judgment:

It is clear one of the NEC decisions was for the current SABLs to be converted into Certificate of Title (CT) through the Voluntary Customary Land Registration (VCLR) process and for SABLs to be surrendered. The National Executive Council Decision No.344/2016 has also permanently halted all SABL transactions by placing a moratorium which included the First Defendant’s SABL issued in 2009.

  1. It is submitted on behalf of the appellant that decisions of the NEC in regard to policy matters are ‘executive decisions’[11] and by reason of the principle underpinning the doctrine of the separation of powers the courts are slow to review such decisions unless there are exceptional circumstances.[12] However, it is further submitted that the court has the power to correct executive action where in this case if the primary Judge’s interpretation of the NEC decision and its effect were to be accepted, it would have serious consequences including:
    1. enabling the NEC to usurp a power only exercisable by the Parliament, namely the power to make laws effectively to halt, suspend and/or repeal statutory rights and interests conferred by statute;
    2. unilaterally cancelling an interest created by statute, in which only the Parliament has the prerogative to do, by passing, amending and repealing the relevant statute or statutory provisions; and
    1. assuming the statutory power conferred on the relevant implementing agency, being the DLPP as the custodian of all State leased land in Papua New Guinea.
  2. We accept the appellant’s submissions. Whilst the separation of the powers between the three arms of government should be respected and upheld, we are of the view that this is an appropriate case for judicial intervention. We are satisfied that the learned primary Judge erred in finding that the NEC decision halted all SABL transactions in the country. We find that the NEC Decision (No 344/2016 No 5) is a nullity for the following reasons.
  3. The functions of the NEC are set out at s 149 (3) of the Constitution as follows:

The functions of the Council are–

(a) to be responsible, in accordance with this Constitution, for the executive government of Papua New Guinea; and

(b) such other functions as are allocated to it by this Constitution or any other law.

  1. It is not the function of NEC, nor does it have the power, to approve a legislative review exercise that purports to unilaterally repeal SABLs which are created under s 102 of the Land Act. That is the role of Parliament, an independent institution, its functions not to be confused with the duties of the individual members who comprise NEC.
  2. As to the court’s power to correct mistakes made by NEC, pursuant to s 155(4) of the Constitution, the Supreme Court, as the final court of appeal has “....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” (In re Reference to Constitution section 19(1) by East Sepik Provincial Executive [2011] PGSC 41; SC1154 (12 December 2011), Salika DCJ at [362-363] (East Sepik Provincial Executive)).
  3. In East Sepik Provincial Executive, Salika DCJ (as he then was) went on to say at [372]:

The Courts have power to control Executive acts and take up such issues without fear or favour within the strict confines of the powers given by the Constitution, bearing in mind that the Courts are co agents of the people. Where the Constitution or a statute gives the NEC powers and it acts outside those powers a Court action may lie against it. Abuse of power by the NEC must not be tolerated by the Court.

  1. In Klapat v National Executive Council [2014] PGNC 186; N5536 Makail J said at [31]:

...the Court as guardian of the law is duty bound to speak out and enforce the law where the Legislature or Executive has abused its power or acted unfairly.....

  1. We accept the submission of the appellant that to the extent the learned primary Judge relied on Decision No 3 in the NEC decision, the findings and recommendations of the COI into SABLs contained in the Interim Report and Final Report dated 24 June 2013 and also NEC Decision No. 187/2014 were invalidated and quashed by an order of the National Court in Limawo.
  2. We accept that the other decisions in NEC Decision No 344/2016, except for NEC Decision No 5, are not self-executing decisions in that they require administrative actions by relevant implementing agencies such as the Department of Lands or the Minister for Lands.
  3. We uphold Ground 3(b) of the appeal.

Ground 3(c) – Error of law and fact in finding at [46] that the SABL was deemed surrendered and cancelled at the instance of the voluntary registration and issuance of the Certificate of Title

  1. In relation to Ground 3(c), it is submitted on behalf of the appellant that the primary Judge erred in law and fact and in the exercise of his discretion in finding at [46] that there is nothing to suggest that the issuance of the Certificate of Title issued to the first respondent was inconsistent with the interests created in the SABL as the latter was deemed surrendered and cancelled at the instance of the voluntary registration and issuance of the Certificate of Title.
  2. It is contended by the appellant that there was no surrender and cancellation of the SABL title by the fourth respondent, the only finding open to the Court being that the SABL was current and the sub-lease registered in favour of the appellant valid and effective for all intents and purposes.
  3. Counsel for the third, fourth and fifth respondents conceded that the contention on behalf of the appellant there being no evidence that the existing title was cancelled in accordance with the process outlined in ss. 161 and 162 of the Land Registration Act. The Registrar may only replace an instrument of title under s 162 if it has been lost, destroyed or replaced and the registered proprietor applies under s 162(1) for a replacement instrument of title and the procedures set out in s 162(2) are followed.
  4. We accept the submissions advanced on behalf of the appellant and uphold this ground of appeal.
  5. Section 38(2) of the Land Registration Act is clear, namely that where a state lease is surrendered either expressly by instrument or by operation of the law, an application may be made to the Registrar of Titles to register the surrender. There was no evidence before the primary Judge that the appellant had surrendered the lease or any part of it. Nor as required by s.38(3)(b) of the same Act was there evidence of any endorsement for such transfer signed by the lessee and by the lessor as evidence of acceptance of a surrender.
  6. The fact that the SABL title was not surrendered nor cancelled by the Office of the Registrar of Titles is a finding supported by the following evidence before the primary Judge:
    1. The evidence of Mr Melis in his affidavit filed 29 July 2023[13]wherein he deposed to having been informed by both Mr Malo and the then Minister for Lands & Physical Planning, Hon Justin Tkatchenko, that the government’s decision on SABLs only related to SABLs covering over 1000 hectares.
    2. The letter dated 3 February 2017 from the DLPP Acting Registrar of Titles, Shirley Pohei, to the plaintiff confirming the validity of the SABL title which commenced on 15 April 2009 with an expiration date of 14 April 2108 with a sub-lease to the plaintiff registered on 11 January 2010, supporting a finding that SABL was not surrendered and cancelled nor could it be automatically extinguished because of the provisions of s 102 of the Land Act.
    1. The NEC Decision did not envisage or apply to SABLs that were issued prior to 2014 to Incorporated Land Groups, which have prior registered sub-leases/interests to third parties.
  7. Relevantly, and according to the National Court transcript of the trial before the primary Judge on 4 August 2021, the first and second respondents acknowledged that there was no surrender and that this had come about because the NEC Decision had unilaterally cancelled and nullified it. Counsel for the first and second respondents, Mr Tomake, in referring to Mr Malo’s affidavit recorded his client’s the position as follows:[14]

Mr Tomake: Thank you, your Honour, Basically, Andy Malo, who is the director of customary land registration confirming the issuance of the special agriculture and business lease which is the first State lease, Volume 17, fFlio 112 that was issued on 14 August. That is under paragraph 4. And also he is confirming the issuance of the Certificate of Title under paragraph 8. Certificate of Title volume 1 folio 23 which was issued on 20 December.

His Honour: Which one is that, paragraph?

Mr Tomake: Paragraph 8.

His Honour: Yes.

Mr Tomake: And both were issued and SABL was not surrendered nor was it cancelled by the office of the Registrar of Titles. And your Honour, the reason for the issuance of the second Certificate of Title or the lease to the first defendant is that your Honour would note, there is a canvass ban or relinquishment of the SABL. And that is captured under the NEC decision number 344 of 2016....under Annexure C of Mr Andy Malo’s affidavit.

(Underlining ours)

  1. We accept the submissions on behalf of the 3, 4 and 5 respondents that the process as outlined in Jaro was not followed, that process a mandatory one prior to the cancellation and replacement of Certificates of Title under the Land Registration Act. Further, the appellant was denied the opportunity to be heard before the issuing of the new Certificate of Title, a fundamental error on the part of the fourth respondent in circumstances where the appellant had a pre-existing SABL and the evidence of the third respondent was to the effect that the SABL had not been surrendered or cancelled, a circumstance that should have been known to the fourth respondent.[15]
  2. There being no surrender and cancellation of the SABL title, the only finding open to the primary Judge was that the SABL was current and the sub-lease registered in favour of the appellant valid and effective.
  3. This ground is upheld.

Ground 3(d) – Error of law and fact in finding that upon issuance of the Certificate of Title under section 34L of the Land Registration (Amendment) Act 2009, the SABL Lease became obsolete and ineffective by operation of law and the National Government policy via NEC Decision No 344/2016

  1. We find this ground upheld and rely upon our earlier discussion relevant to Ground 3(b) of the appeal with respect to the effect of the NEC Decision No 344/2016, and the primary Judge’s reliance on same. It is not necessary to repeat our findings.
  2. Counsel for the appellant however further submits that the primary Judge misguided himself in his application of Section 34L of the Land Registration (Amendment) Act. It is contended that His Honour’s conclusion that upon issuance of the Certificate of Title under section 34L of the Land Registration Act, the SABL Lease became obsolete and ineffective by operation of law and the National Government policy via NEC Decision No 344/2016 was misconceived because the process required before a Certificate of Title issued under s.34L was not followed. The appellant does not seek to challenge the failure to follow the process as asserted rather it seeks declarations over its interests in the land.
  3. In this case there was no evidence before the primary Judge that the first respondent had followed the process as outlined. The SABL was neither surrendered nor cancelled under the provisions of the Land Registration Act at any time prior to and after the grant of the Certificate of Title, a surrendered State Lease required to be registered by the Registrar of Titles by virtue of the provisions of s.38 of the Land Registration Act.
  4. This ground of the appeal is upheld.

Ground 3(e) - Error in law and fact in finding (at [51]) that the Lease Agreement became a nullity, the moment the Certificate of Title was issued

  1. In relation to Ground 3(e) of the Notice of Appeal, it is contended that the primary Judge erred when he found at [51] of the judgment of the primary Judge found as follows:

I have considered the arguments of the parties and find that the lease agreement became a nullity, the moment the Certificate of Title was issued. It displaced the interest created under the SABL on 20 December 2016. The lease agreement is no longer valid and in force.

  1. We accept the submissions on behalf of the appellant that in so finding the primary judge erred as there could only be one valid title over the relevant land, the prior instrument of title taking precedence over any subsequent estate or interests. In the present case, the SABL title was registered first time for the purposes of s.33(1)(c) of the Land Registration Act on 12 August 2009 (and subsequently sub-leased to the appellant). As such it superseded the Certificate of Title issued on 20 December 2016 and remained valid and effective for all intents and purposes.
  2. This ground of appeal is upheld.

Ground 3(f) – Error of law and fact in considering (at [53]) that the Lease Agreement appeared to be oppressive, and the benefits or consideration are too remote and unpredictable

  1. In relation to Ground 3(f) of the Notice of Appeal, it is submitted on behalf of the appellant that the primary Judge erred in law and fact in finding (at [53] of the judgment) that the Lease Agreement appeared to be oppressive and the benefits or consideration too remote and unpredictable and unquestionable.
  2. It is submitted on behalf of the appellant that there was no evidence that the appellant had influenced or coerced members of the first respondent into signing the lease agreement. It was mutually agreed between all parties that the sum of K250,000 expended by the appellant to assist the second respondent in the land acquisition process, as well as the sum of K170,000 provided by the appellant for the purchase of a public motor vehicle was valid consideration for the Lease.[16] It is submitted that the parties clearly intended to be bound by the terms of the Lease Agreement and as a matter of contract law, it is the duty of the Court to uphold that agreement which the primary Judge failed to do.
  3. The second respondents did not engage in the appeal and accordingly did not seek to uphold the finding of the primary Judge on oppression.
  4. Before we turn to this ground of appeal some preliminary observations are necessary to provide context to our consideration of this ground and the remaining grounds of the appeal.
  5. As noted at the commencement of these reasons, the appeal to this court is by way of rehearing and pursuant to s 6(2) of the SCA this court may substitute a finding on evidence before the trial Judge.[17] This means that it is open to this court to revisit the evidence before the primary Judge and make findings of fact which may or may not be the same as those made where a primary Judge has misconstrued the evidence, has put lesser or greater emphasis on the evidence or has overlooked evidence.[18]
  6. Referring to this principle the Supreme Court in Titus Makalminja v The State (2004) SC 726 (Injia DCJ, Jalina & Gavara-Nanu JJ) said:

This approach was broadly stated in the case of Director of District Administration -v- Custodian of Expropriated Property (Re Wangaramut) (No. 2) [1969-70] PNGLR 410. The Supreme Court in that case was hearing an appeal under s.38 of the Land Titles Commission Ordinance, 1962 – 1968, from the decision of a single judge who set aside parts of the decision of the Land Titles Commission. The appeal was on the ground that the decision was against the weight of the evidence. The Supreme Court while exercising powers similar to those granted under s.6 of the Supreme Court Act, held that the appellant was entitled to appellate court’s review of all the evidence, its consideration of their probative values, its evaluation on the inferences drawn from such evidence and its consideration of the relevant laws so far as they affected such evidence. The Supreme Court held that the appellate court was not simply to substitute its own conclusions for those of the decision under appeal if it disagreed with them.

This principle is expressed at the footnote:


"Upon an appeal under s.38 on the ground that the decision under appeal is against the weight of the evidence, the appellant is entitled to the appellate Court’s review of that evidence, its consideration of its probative value, its evaluation of the inferences drawn from that evidence and its consideration of the relevant law so far as it affects that evidence. The appellate Court is not simply to substitute its own conclusions for those of the decision under appeal if it disagrees with them..." (see also at page 416).


Then at page 439, the Supreme cited a passage from the decision of the Privy Council on the West African Court of Appeal decision in Ibrahimah v Gariba [1954] W.A.C.A 174.


"An Appeal Court is not barred from coming to its own conclusion on the facts, and where a judgment has been appealed from on the ground of the weight of evidence, the Appeal Court can make up its own mind on the evidence, not disregarding the judgment appealed from, but carefully weighing and considering it ..."


Applying the principle to this case, this Court has the power, to review the evidence that was before the trial judge and make such findings and draw inferences from the evidence that were before the trial judge.

  1. With respect to this rationale, in Kawage v The State [2002] PGSC 50; SC2241, the court (Batari, Geita & Toliken JJ) said:
    1. The rationale entails the notion that, the appellant is entitled to the appellate court’s review of all the evidence, the inferences to be drawn from the evidence and its consideration of their probative values, and its consideration of the relevant laws so far as they affected such evidence and draw its own conclusions: Director of District Administration -v- Custodian of Expropriated Property (Re Wangaramut) (No. 2) [969-70] PNGLR 410.
    2. The duty of the appellate court to review the decision of the primary court is onerous. A rehearing on the evidence given in the primary court, or fresh evidence and to draw inferences of fact from the evidence is not a simple exercise by the appellate Court to affirm or substitute its own conclusions. The appellate court must carefully weigh up and consider the whole of the evidence in its conclusions that affirms or substitutes its own conclusions for those of the decision under appeal if it disagrees with them.
  2. We adopt and follow these principles in this appeal, the application of s 6 of the SCA and the principles to be followed in the rehearing of the appeal as outlined above providing the legislative and procedural basis for this court to determine an issue of fact or law irrespective of whether it was raised in the court below.[19]
  3. With those principles in mind, we now turn to the primary Judge’s reasons and the evidence which comprised the sworn affidavits of a number of witnesses, together with documentary evidence.
  4. The primary Judge detailed the appellant’s evidence at [12] of the judgment and the first and second’s respondent’s evidence at [20] before providing a brief overview of the evidence of each witness at [14] to [29] of the judgment.
  5. The relevant part of the primary Judge’s finding with respect to the ground under consideration is found at pages 415 to 417 of the Appeal Book where at [49] to [55] of the judgment the primary Judge addressed whether the first and second respondents were bound by the Lease Agreement executed on 28 November 2009.
  6. At [50] the primary Judge outlined the parties’ submissions as follows:

The Plaintiff submits that the lease agreement was fair and freely entered by the parties and is binding. The First and Second Defendants submit that the agreement is not binding on them for various reasons: (i) the terms were uncertain and they were not told they were parting with their entire land to the Plaintiff for 99 years; (ii) that the original purposes of leasing portion of land to the Plaintiff was for agriculture, and not for a township development; (iii) uncertainty as to the consideration or earnings from the use of the land; and (iv) that the original SABL is cancelled and that the land is reverted to the landowners by virtue of the Certificate of Title issued on 20 December 2016....

  1. With respect to the primary Judge’s finding at [52] that the lease became a nullity on the issuing of the Certificate of Title which displaced the interest created under the SABL on 20 December 2016, we need say nothing further having earlier addressed that question.
  2. The primary Judge went on to say that the terms of the Lease Agreement were rigorously disputed by the first and second defendants. We pause here to note that whilst four of the second respondents filed affidavits at the trial, only Mr Michael Maliaki gave direct evidence on the disputed terms of the Lease Agreement. The contents of the short affidavits of Mr John Moaru and Mr Maliaki Michael were unlikely to assist the primary Judge on this question. Neither affidavit provided any helpful particularity that went to the issue of the land to be leased. Neither deposed to any conversations with Mr Melis or as having being present when the issue of the land to be leased was discussed by Mr Melis and Mr Maliaki. Their evidence otherwise involved speculation and comment, the relevance of their evidence on matters to do with Ms Seth’s family history unclear on the issues before the primary Judge. In the case of Mr Moaru, he deposed to whether Mr Maliaki had signed his affidavit. The affidavit of Mr Kepi Michael does not form part of Appeal Book however the summary of his evidence by the primary Judge at [25] of the judgment does not suggest any particular relevance to the finding under consideration, namely the issue of oppression.
  3. The primary Judge then went on to find at [52] of the judgment that where the facts were disputed it was not safe to grant the declaratory relief sought by the appellant and that the originating process commenced by the appellant was not appropriate to grant the relief sought on the face of substantial disputes of fact. With respect to the later, the primary Judge had dealt with the issue of the competency earlier in the judgment and for the reasons given determined that the court could proceed to hear the merits of the case (at [38]).
  4. With respect to the former finding, whether it was unsafe to grant the relief sought by reason of disputes of fact, this would depend upon the nature and strength of the evidence before the primary Judge. The primary Judge did not have the advantage of hearing and observing a witness give evidence where the personal observations and experience by a trial Judge on appeal can be invaluable and relevant to the weight an appeal court should properly attach to any findings of fact made by the trial Judge.[20] In the absence of cross-examination of the witnesses at trial, the nature of the evidence relied upon by the first and second defendants, their unexplained delay and failure to challenge the validity of the agreement on a timely basis and the existence of contemporary documents that called into question their evidence was highly relevant given the primary Judge’s finding at [54] of the judgment with respect to the understanding of the second respondents. The primary Judge, respectfully, did not address these matters.
  5. It required a consideration of the consistency of the evidence of the second defendants with other witnesses, the inherent probability or improbability of the evidence given by the parties and in the circumstances of this case, the significance of the delay and probability of recent invention where the unchallenged evidence was that over a number of years the parties actions supported a conclusion that they were content with the Lease Agreement and intended to be bound by its terms.
  6. It was a process that required an engagement by the primary Judge with the submissions made at trial on behalf of Counsel for the appellant where it was submitted that:
    1. the customary sale agreement had been signed 14 years earlier, during which time the respondents had not only received a financial benefit but failed to suggest that they had either been deceived by the appellant or sought to challenge the validity of the lease agreement;
    2. the first and second respondents were raising complaint after K8M had been spent by the appellant, the only reason for the complaint being greed on the part of Mr Maliaki who wanted more than the 5% share under the Lease Agreement, rather that the entire 10% (including the 5% for the Community) be paid to him;
    1. the Lease Agreement had been explained to the first respondent Mr Michael Maliaki and was understood, the first and second respondents claims to the contrary a recent fabrication to cover their unlawful actions of breach by inter alia entering into land sales and dealings, constructing a marketplace on the northern parts of the land, placing billboards on the land border along the highway over parts of the land in asserted breach of the Lease Agreement and then obtaining of a second title;
    1. the first and second respondent’s assertion that they did not know what they were signing was not supported by the evidence of the witnesses Ms Seth and Mr Melis.[21]
  7. Ms Seth, the grand-daughter of the first respondent Mr Michael Maliaki was an important witness given that her evidence not only supported the evidence of Mr Melis but was not substantively challenged on matters relevant to the issue of the second respondent’s understanding of terms of the Lease Agreement.
  8. In her affidavit filed 15 July 2021 Ms Seth gave the following evidence:
    1. That in 2006 in her presence and in the office of Mr Melis, Mr Maliaki was shown a map of the Naier land and was clear that he wanted to sell the entire land to Mr Melis for the bus and that if Mr Melis bought him the bus he would assist Mr Melis to gain title to the land which at that time was unregistered.[22]
    2. She witnessed the signing of the Customary Land Sale Agreement on 6 October 2006 and that eight (8) days later Mr Melis delivered the bus to Mr Maliaki. [23]
    1. She was otherwise present at every event from 2006 until the SABL was issued by the first respondent[24] and that at every stage of the proceedings she explained to Mr Maliaki in English, Pidgin and his native tongue the steps that were to be taken with respect to the Naier land, including in 2008 that it was to be leased to the State, leased back to the ILG and then leased to Mr Melis, to which he agreed.
    1. That with respect to the Lease Agreement, along with Alex Nagon and Andrew Koloa, they explained the Lease Agreement to Mr Maliaki and his family in English and Pidgin and their local language and the second defendants understood, appreciated and willingly signed the Lease Agreement on 28 November 2009.[25]
  9. Mr Maliaki did not seek to rebut that evidence. He filed one affidavit on 15 April 2021. Whilst he denied knowing that the whole of the Naier land was the subject of the agreement[26] it was his evidence that:
    1. In 2006 he was aware that Mr Melis wanted to acquire land, that he had agreed to him doing so, Mr Melis agreeing to give him a bus to start a PMV business and ‘take care of the necessary paper work’ with the Department of Lands.[27]
    2. In early 2007 he took possession of a 25 seater bus purchased by Mr Melis, with no suggestion that Mr Melis did not wholly fund the purchase at a cost of K170,000 or that Mr Maliaki did not derive a benefit from the purchase, or that the bus was not used by Mr Maliaki to start a PMV business from which it was intended to derive an income.[28]
    1. In furtherance of the arrangement and without apparent question or demurrer by any of the second respondents, including by reason of undue influence or coercion on the part of the appellant or any other person or persons, documents were signed by the parties and steps taken to bring the land arrangement to fruition, this happening over a period of years culminating on 28 November 2009 in the second respondent’s signing the Lease Agreement in favour of the appellant for 99 years.
  10. The affidavits of the second respondents are silent on their willingness to sign documents without purportedly understanding what they were signing or their failure over many years to take any active steps to clarify the land arrangement, if they were unclear, including the description of the land to be leased. None of the second respondents raised age, health, education, language, social status or cultural factors as an explanation for this failure. Each signed their affidavit in English without a notation that the document was required to be read to them or translated into their native tongue, suggesting that neither language, literacy or issues of capacity were barriers to their ability to read and understand the documents signed.
  11. In short there is no evidence from Mr Maliaki, Mr Michael and Mr Moaru that suggested a lack of understanding, power imbalance or lack of free will on their part in entering into the agreement they did or that they did not view the arrangement agreed to as providing them with a satisfactory financial benefit.
  12. Like beauty, which is in the eye of the beholder, the benefits of a contractual arrangement do not exist on their own. They are created by the participants who may see or experience an advantage not otherwise seen by others.
  13. Relevantly, none of the second respondents gave evidence to the effect that they viewed the consideration for the land as unfair and the terms of the lease as otherwise impacting them individually or their clan or community in a harsh and unjustly burdensome way.
  14. For these reasons we are unable to find a sufficient evidentiary basis for the finding of the primary Judge at [53] of the judgment that the Lease Agreement was oppressive and the benefits or consideration remote and unpredictable and questionable where the evidence before the primary Judge was:
    1. the appellant would subdivide Portion 78C into smaller parts which was to include business or commercial leases, industrial estates, residential allotments and special purpose allotments for community use (Clause 4 of the Lease Agreement);
    2. the first respondent would be entitled to earn 5% of the net profit of the appellant, apart from other community development assistance (Clause 13 of the Lease Agreement;
    1. the first respondent would be entitled to collect rental for the lease fixed at 5% on the unimproved value of the whole land or parcels of the land leased out (Clause 7 (a) of the Lease Agreement); and
    1. the appellant would contribute 5% of its profit towards establishment of a community fund for the purpose of serving the community (Clause 16 of the Lease Agreement.
  15. Further, on the evidence before the primary Judge, Sakiria Foundation for the first respondent was registered on 10 August 2012 to hold the 5% of the profits generated by the project. On 26 October 2017, the Gabsongkeg Development Foundation was registered representing 5% of the profits from the project for the community. The first respondent did not contribute any funds or capital. [29]
  16. In summary, the circumstances of the parties before, at and after the entering into of the transaction do not permit a conclusion that the immediate benefits of a PMV bus to conduct a business otherwise unavailable to the respondents and the potential future benefits of rental income on unimproved previously unregistered land together with a community fund, where the development and establishment costs were wholly funded by the appellant was prima facie oppressive representing a significant imbalance between the rights and obligations of the parties under the agreement.
  17. On a careful review of the substance of the evidence and the inferences that may be reasonably drawn from the evidence we are unable to find that the parties did not intend to enter into a legally binding agreement with respect to whole of the Naier land for a consideration viewed as beneficial by the parties to it. It was an intention they acted upon in the clearest manner over a lengthy period, including by formalising the arrangement legally. Where the object of the court is to do justice between the parties, and where the court is satisfied there was an agreement the court should give effect to it.[30]
  18. We are accordingly unable to conclude that it was open to the primary Judge to make the finding he did. We uphold this ground of the appeal.

Ground 3(g) – Error of law and fact in accepting (at [54]) the evidence of the Second Respondent that it was not their intention to part with the entire Nair land containing 862.44 hectares for 99 years

  1. It is submitted on behalf of the appellant that the primary Judge erred in law and fact when he accepted (at [54]) the evidence of the second respondent that it was not their intention to part with the entire Naier land containing 862.44 hectares for 99 years in that:
    1. The approach taken by His Honour was wholly contradictory and legally incorrect in that having noted that where the facts are substantially disputed and it was not safe to grant the declaratory orders sought by the appellant, His Honour ought to have proceeded with caution so as not to delve into and determine the substantive matters on the face of substantial dispute of facts.
    2. The evidence adduced by the second respondents, which the primary Judge relied on were scandalous and unreliable and His Honour ought to have placed a caveat on the weight and credibility of the evidence, in circumstances where:
      1. The second respondents’ affidavits were all filed in 2021 – three years after the proceeding was commenced and may have substantially been influenced based on the purported acquisition of the Certificate of Title, which the appellant maintains if sake and invalid.
      2. At all material times, the first and second respondents had the option of commencing separate court proceedings challenging the validity of the Lease Agreement and/or terminated the same which they never did.
  2. For the reasons earlier discussed with respect to Ground 3(f) we uphold this ground of the appeal, the finding of the primary Judge against the weight of the evidence.

Ground 3(h) – Error of law and fact (at [54]) in considering that the Lease Agreement was not worthy of endorsement by the Court

  1. It is contended on behalf of the appellant that the primary Judge erred in law and fact in considering that the Lease Agreement was not worthy of endorsement by the court and that this was the kind of Lease Agreement and land dealings that the National Government had endeavoured to discourage by moratorium in its NEC decision of 20th December 2016, when:
    1. On the face of the NEC decision, it had no legal effect and/or bearing on the enforceability or validity of the Lease Agreement for reasons set out in paragraph 3(b) hereof.
    2. The first respondents had been selling off portions of the subject land to third party settlers in flagrant breach of the provision of the Land Act and Land Registration Act, which ought to be a cause for concern which the primary Judge overlooked.
  2. It is further submitted that there was no evidence that the appellant had influenced or coerced the members of the first respondent into signing the Lease Agreement where:
    1. Pursuant to Clause 6 of the Lease Agreement, the sum of K250,000 expended by the appellant to assist the second respondents in the land acquisition process, as well as the sum of K170,000 provided by the appellant for the purchase of a public motor vehicle were agreed to be valid consideration for the Lease; and
    2. The parties intended to be bound by the terms of the Lease Agreement and as a matter of contract law, it is the duty of the court to uphold that agreement which the primary Judge failed to do.
  3. In relation to Ground 3(h), our earlier discussion with respect to the effect of the NEC Decision of 20 December 2016 is repeated. As such and given our conclusion with respect to the impact of the NEC decision on the validity of the lease agreement this ground must succeed.
  4. Further, the conclusion of the primary Judge that the Lease Agreement was not worthy of endorsement by the court is not supported given the strength of the evidence before the court.
  5. It is clear from [53] of the judgment that the primary Judge was concerned with not only the consideration but the whether the agreement was properly explained. Contractual arrangements can be struck down if the terms are unfair or have not been understood by a party. [31] However the evidence does not permit a conclusion that the transactions entered into were not genuinely mutual or was manifestly unfair to a party including by reason of a party inter alia not understanding the transaction or where the other party was in such a predominant position (whether economically, socially, personally or otherwise), that an ordinary person with the background of the complainant was not likely to exercise a true freedom of choice in relation to the transaction.
  6. Whilst the primary Judge found at [54] of his reasons that the respondents did not understand nor were properly explained the terms of the lease rendering the agreement unfair and not worthy of enforcement by the court the weight of the evidence did not support the finding given the paucity of evidence on the issue lead by the second respondents as earlier identified and given the evidence of Ms Seth and documentary evidence which corroborated her testimony. We repeat and rely upon our discussion with respect to Ground 3(f).
  7. The primary Judge did not engage with Ms Seth’s evidence other than in a general sense at [18] of the judgment. Ms Seth’s evidence as to the respondents’ understanding of the Customary Land Agreement was supported by the original Agreement signed on 6 October 2006 which recorded the parties’ respective intention at the time. Pursuant to clause (d) of the Agreement, the second respondents and the appellant’s Managing Director Mr Melis, acknowledged that:

[t]hey are satisfied that the terms of this Agreement have been explained to them by a person of their choice and in the language of their choice and that the terms of this Agreement are clear to them and they accept them.

  1. We repeat and reply upon our earlier discussion of the failure of the primary Judge to address what weight could properly attach to the evidence of the first respondents and/or what inferences could properly be drawn from their failure to raise their complaints fourteen (14) years after signing the Customary Land Sale Agreement together with the evidence that Mr Maliaki and his family understood the terms of the agreement in Pidgin and their local language before signing both the earlier Customary Land Agreement and the Lease Agreement and confirmation of that by the second respondents in the Customary Land Sale Agreement signed on 6 October 2006.
  2. We are accordingly unable to conclude that the primary Judge could be satisfied that the Lease Agreement was not genuinely mutual or could be deemed manifestly unfair by reason of the respondents not understanding the transaction and that there had been no genuine effort to explain its terms to the respondents prior to entering into the transaction.
  3. We uphold this ground of the appeal.

CONCLUSION

  1. We consider that the appeal should be allowed, and the decision of the primary Judge set aside.
  2. In the event the appeal was successful the appellant sought the court invoke its powers under s 16(c) of the SCA and make the orders sought in its amended Originating Summons, with costs to be paid by the respondents to be taxed if not agreed.
  3. Section 16 of the SCA provides as follows:

16. DECISION, ETC., ON APPEAL.


On the hearing of an appeal, the Supreme Court shall inquire into the matter and may–

(a) adjourn the hearing from time to time; or
(b) affirm, reverse, or modify the judgement; or
(c) give such judgement as ought to have been given in the first instance; or
(d) remit the case in whole or in part for further hearing; or
(e) order a new trial.
  1. We do not view it as necessary to remit the matter back to the National Court and will invoke the power in s 16(c) aforesaid. After taking into consideration the submissions of the appellant we are of the view that the orders sought on behalf of the appellant are orders we should make being orders which will achieve a just outcome.

ORDERS

  1. The court makes the following orders:
    1. The appeal is allowed.
    2. The order of the National Court of 12 January 2023 in OS No 63 of 2018 is set aside.
    1. A declaration that the State Lease Volume 17, Folio 112, issued on 14/08/2009 to the first respondent over Portion 78C, Milinch of Erap Fourmil of Markham in Morobe Province of Papua New Guinea containing an area of 862.44 hectares or thereabouts as delineated and registered on the registered survey plan Rural class 4 catalogued No. 31/1374 of the Surveyor Generals Register of Surveys (State Lease Vol. 17 Folio 112) is valid and effective for all intents and purposes.
    1. A declaration that the Lease Agreement executed on 28/11/2009 between the appellant and the first respondent with respect to all that piece of land comprised in the State Lease Volume 17, Folio 112 (The Land) and registered on the said Stale Lease Volume 17, Folio 112, per Journal entry No. N-15662, produced and entered on 11/01/2010 (Lease Agreement) is valid and effective for all intents and purposes.
    2. A declaration that any dealings in any manner whatsoever entered into between the first and second respondents and third parties over The Land, including leasing or sub-leasing, selling or sub-dividing into allotments for the purpose of selling or leasing or sub-leasing, licensing or giving permission of any kind for the occupation or partial occupation of The Land are null and void.
    3. A declaration that the Certificate of Title Volume 1, Folio 23 registered on 20/12/2016 and issued to the first respondent pursuant to Section 34L of the Land Registration Act 1981, over Portion 78C, Milinch of Erap Fourmil of Markham in Morobe Province of Papua New Guinea containing an area of 862.44 hectares or thereabouts as delineated and registered on the registered survey plan Rural class 4 catalogued No. 31/1374 of the Surveyor Generals Register of Surveys (Certificate of Title Volume 1 Folio 23) is null and void and of no effect.
    4. A declaration that any other State Lease(s) or Certificate(s) of Title issued, or interest(s) created that are inconsistent with the said State Lease Volume 17, Folio 112 and Lease Agreement are null and void and of no effect.
    5. Consequent to orders made in preceding paragraphs an order in the nature of a mandatory injunction that: -
      1. the first and second respondents forthwith deliver up to the Director of Customary Lands Registration or the Registrar of Titles the owners copy of the said Certificate of Title Volume 1, Folio 23; and
      1. the Director of Customary Land Registration or the Registrar of Titles shall forthwith cancel the said Certificate of Title Volume 1, Folio 23; and
      2. the Director of Customary Land Registration or the Registrar of Titles shall forthwith cancel any other subsequent State Leases and/or Certificates of Title that is inconsistent with the said State Lease Volume 17, Folio 112, and the said Lease Agreement; and
      3. the Director of Customary Land Registration and the Registrar of Titles shall correct the entries on the Register of Customary Land and on the Register of Titles showing the cancellation of the said Certificate of Title Volume 1, Folio 23; and
      4. the Director of Customary Land Registration and the Registrar of Titles shall register a minute of these orders on the Registrar of Titles office copy and the owners copy of the said State Lease Volume 17, Folio 112.
      5. until registration of a minute of these orders as provided hereof, the Director of Customary Land Registration and the Registrar of Titles shall not register any dealing by any person other than the appellant in the said State Lease Volume 17 Folio 112.
    1. An order in the nature of a mandatory injunction that first and second respondents jointly and severally
      1. except where expressly provided for by the Lease Agreement, are permanently restrained from dealing in any manner whatsoever with, including leasing or sub- leasing, selling or sub-dividing into allotments for the purpose of selling or leasing or sub-leasing, licensing or giving permission of any kind for the occupation or partial occupation of the whole of the land comprised in State Lease Volume 17, Folio 112, and in Certificate of Title Volume 1, Folio 23 respectively being Portion 78C containing an area of 862.44 hectares or thereabouts as delineated on the registered survey plan Rural Class 4 catalogued No. 31/1374 of the Surveyor Generals Register of Surveys at the Department of Lands and Physical Planning, Waigani, National Capital District Papua New Guinea (The Land Portion 78C).
      2. are compelled to specific performance of their joint and several contractual obligations pursuant to the said Lease Agreement and more specifically to forebear from and refrain from obstructing, hindering, interfering with, and/or preventing the appellant from carrying out the development upon, over and in connection with the urban development intended in the said Lease Agreement; and
      3. cancel all dealings as aforesaid in respect of the said Land Portion 78C in whole or in part with any person or entity both natural and created by law or of any nature whatsoever and dismantle and remove all buildings, fences and structures of any nature whatsoever from the said Land Portion 78C within fourteen (14) days of this order.
    1. The first, second and fourth respondents shall pay the appellant’s costs of the appeal on a party-party basis which shall if not agreed be taxed.

__________________________________________________________________
Lawyers for the appellant: Holingu Lawyers
No appearance for the first and second respondents
Lawyer for third, fourth and fifth respondents: Solicitor-General


[1] s 6(2) SCA
[2] Described variously in the Appeal Book documents as Naier, Ngahile, Ngaer, Naer.
[3] AB, Vol 1, page 197
[4] The second respondents Michael Maliaki, Maliaki Michael and John Moaru together with Enob Alex and Eliakim Sab
[5] AB, Vol 1, page 66
[6] AB, Vol 1, page 48
[7] AB, Vol 1, page 51
[8] AB, Vol 2, pages 412 and 413
[9] Markham Realty Development Limited v Maliaki [2023] PGNC 12; N10101 (12 January 2023)
[10] AB, Vol 1, at p235 – 251
[11]See Baki v Koim [2017] PGNC 165; N6840 (1 August 2017) at [37]
[12] Klapat v National Executive Council [2014] PGNC 186; N5536 at [30]
[13] See AB, Vol 1, pp. 260 – 271
[14] AB, Vol 2, p371
[15] See also Affidavit of Mr Kipongi sworn 24 November 2023 filed by leave on 27 November 2023
[16] pursuant to Clause 6 of the Lease Agreement
[17] MVIT v John Etape v MVIT [1994] PNGLR 596
[18] Titus Makalminja v The State (2004) SC 726
[19] Titus at [11]
[20] John Kaina v The State [1990] PNGLR 292
[21] AB, Vol 1, pp 374 – 375
[22]
[23] AB, Vol 1, p 221 at [15]
[24] AB, Vol 1, p 222 at [23]
[25] AB, Vol 1, p 222 at [24]
[26] Ibid at [21]
[27] AB, vol 1 p 163 at [6] – [7]
[28] Ibid at [12]
[29] AB, Vol 1, pp 184 – 185
[30] G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251 at [268] per Lord Wright.
[31] See for example the Fairness of Transactions Act 1993

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