SABL leases null and void: Mota -V- Camillus and Akami Oil Palm

The leases

In 2008, the Minister for Lands and Physical Planning granted 99-year Special Agriculture and Business Leases over two portions of land in the Nakanai area of West New Britain, close to Mt Pago.

_{Image: Areas of oil palm planting can be clearly seen around Mt Pago}

The leased areas were Portion 104C (231 hectares) and Portion 2628C (346 hectares). Both areas were formerly customary land.

The leases were granted to Akami Oil Palm Limited, the second defendant. The first defendant, Albert Camillus [aka Albert Kamilus], is the sole shareholder and a director in the second defendant. The other directors are all members of the Kamilus family.

The second defendant, Akamai Oil Palm Limited changed its name in September 2012, to Akami Development Limited.

The claim

The ten plaintiffs comprised four incorporated land groups, five clans and a group of lessees.

They claimed they were the genuine customary owners of the land subject to the leases and that they were not consulted on and did not agree to the leases being granted.

They claimed the circumstances surrounding the granting on the leases to Akamai Oil Palm involved actual and constructive fraud.

They sought declarations that the leases were null and void and an order that the leases be quashed.

No grounds to dismiss the claim

The first and second defendants argued that the proceedings should be summarily dismissed on three preliminary grounds:

1. non-compliance with Section 5 of the Claims By and Against the State Act;
2. being time-barred by Section 16 of the Frauds and Limitations Act; and
3. non-compliance with a deed of release.

All three arguments were dismissed. The court found:

(a) Section 5 of the Claims By and Against the State Act did not apply as the plaintiffs were not making a monetary “claim” against the State;

(b) the proceedings were not time-barred by Section 16(1) of the Frauds and Limitations Act as: (i) this was not an action founded on simple contract or tort or any other form of action covered by Section 16(1); and (ii) the proceedings are properly regarded as a claim for declarations and other forms of equitable relief, in which case Section 16 does not apply; and

(c) the deed of release did not apply as it was not executed by most of the plaintiffs.

Defence

On the substantive question of whether fraud was involved in granting of the two leases, the first and second defendants denied the allegations. They asserted that the genuine former customary landowners had agreed to their land being transferred, by signing purchase agreements, and had been paid accordingly.

The third, fourth and fifth defendants, the Registrar of Titles, the Departments of Lands and the State of Papua New Guinea did not enter a defence and made no appearance at the trial.

Findings

Under Papua New Guinea’s Torrens Title system of land registration the general principle is that once a lease of land from the State, including a Special Agricultural and Business Lease, is registered, an indefeasible title is conferred on the registered proprietor, subject only to the exceptions in Section 33(1) of the Land Registration Act, which include “in the case of fraud”.

In this context, “fraud” means actual fraud or constructive fraud i.e. where it is proven that the circumstances in which a person has obtained title are so unsatisfactory, irregular and unlawful as to warrant the setting aside of title.

In this case the court found the plaintiffs failed to prove actual fraud, but did prove constructive fraud.

Constructive fraud was found proved as:

“none of the elaborate procedures under Sections 10, 11 and 102 of the Land Act for acquisition by the State, by lease, of customary land, and granting of Special Agricultural and Business Leases over such land to third parties, were complied with. This was a case of extensive violation of statutory procedures for transfer of interests in customary land. It was proven that the circumstances in which the second defendant obtained title were so unsatisfactory, irregular and unlawful as to amount to constructive fraud, warranting the setting aside of title”.

The court noted that a strict interpretation of the provisions in the Land Act was necessary “to reflect the cultural, social and economic significance of customary land in Papua New Guinea” and ‘to ensure that leases over customary land are granted only after a thorough identification and investigation of the land and the customary landowners and their agreement to what is proposed’.

The court also noted:

“The issue of Special Agricultural and Business Leases has been very controversial in recent years, so much so that the Prime Minister instituted a Commission of Inquiry to inquire into the circumstances in which large tracts of customary land throughout the county have been made the subject of Special Agricultural and Business Leases, many of which are controlled by non-citizen interests”.

Decision

The principal relief sought by the plaintiffs was granted; the two leases over Portion 104C and Portion 2628C were declared null and void and quashed.

The Registrar of Titles was ordered to amend the Register of State Leases and all other records of the State under his control to give effect to the declarations.

The first and second defendants were ordered to pay the plaintiff’s legal costs.