Part IV of the Land (Ownership of Freeholds) Act exists to solve a practical problem created by section 56(1)(b) of the Constitution: freehold that cannot lawfully be transferred to most buyers is very hard to deal with. Conversion into a State lease unlocks it.
Section 16 — freehold interests and frustrated rights
- a freehold interest means any form of ownership that is freehold ownership for the purposes of section 56(1)(b);
- a frustrated right means what would have been, but for the operation of that section, a right to acquire freehold ownership;
- the holder of a frustrated right is the person who, but for that paragraph, would have had the right to acquire; and
- a substitute lease means a lease granted, or to be granted, under section 22(1).
It covers the person who had a contractual or other right to acquire freehold, which section 56(1)(b) has made impossible to complete. Rather than leaving them with nothing, Part IV lets that frustrated right be converted into a substitute lease.
Section 17 — applying for a substitute lease
The owner of freehold land or the holder of a frustrated right may apply in the prescribed manner to the Minister for the grant of a substitute lease in substitution for the freehold interest or frustrated right.
The application shall be accompanied by the prescribed evidence as to other persons who have interests in the land. That requirement drives the whole of the rest of the Part: the process is built around identifying and adjusting competing interests.
Section 18 — the offer, and the conditions
(1) As soon as practicable after receiving the application, the Minister shall notify the applicant in writing whether he proposes to approve or reject it.
(2) An approval may be made subject to such reasonable conditions as the Minister thinks proper and specifies in the notification — and shall not be unreasonably withheld.
(3) Those conditions include conditions as to the adjustment of rights as between persons who have interests in the land.
This is an unusual and valuable constraint on a Ministerial discretion in PNG land legislation. Approval is not a favour: it must not be unreasonably refused, and the conditions must be reasonable.
A refusal, or unreasonable conditions, can be met by an objection to the National Court under section 20 — and, more generally, by judicial review under section 155(3) and (4) of the Constitution.
Section 19 — acceptance
Within the period specified in the notice, or such further period as the Minister allows, the applicant may accept the proposal by written notice in the prescribed form.
On receipt of the acceptance, the Minister shall cause to be published in the National Gazette details of the proposed approval and any conditions.
Gazettal is what brings other interested parties into the process — it is the trigger for objections.
Section 20 — objection to the National Court
(1) A person aggrieved by — (a) a proposal to grant or refuse an application, or (b) the conditions to which it is to be subject — may, within the prescribed time and in the prescribed manner, object to the National Court.
(2) On an objection, the National Court may by order direct the Minister:
(a) to approve the application or grant a substitute lease; or
(b) to refuse the application; or
(c) to make the grant subject to such further or other conditions as the Court thinks proper for adjusting the rights and liabilities of all persons interested in the land.
This is a genuinely strong provision. The objection goes to the National Court, not to an internal appeal — unlike the Land Board appeal under the Land Act, which is determined by the Head of State on the Minister’s advice. And the Court may direct the Minister to grant, not merely quash a refusal.
Section 21 — withdrawal after a conditions order
If on an objection the Court makes an order under section 20(2)(c) — imposing further or other conditions — then within the prescribed time:
- the Minister may withdraw his proposal; or
- the applicant may withdraw his acceptance,
and the application ceases to have effect.
Neither side is forced into an arrangement the Court has reshaped. It is a sensible safeguard where the Court’s adjustment of competing interests changes the commercial substance of the deal.
Section 22 — grant of the substitute lease
Where a proposal has been accepted, then subject to any order refusing the application and to any withdrawal under section 21, the Minister shall, by notice in the National Gazette, grant a lease from the State in accordance with the section 18 proposal — varied if necessary in accordance with any order under section 20(2)(c). The lease is granted as soon as practicable thereafter.
A State lease, governed from that point by the Land Act 1996 and registered under the Land Registration Act in the Register of State Leases.
That brings the whole leasehold regime with it: implied reservations and the bona fide purpose condition, rent and ten-yearly re-assessment, improvement conditions, forfeiture, and Ministerial approval of dealings. Read the proposed conditions in the section 18 notification carefully before accepting — they become the terms of your lease.
The sequence at a glance
- Application to the Minister, with prescribed evidence of other interests (s 17).
- Notification of proposed approval or rejection, with conditions (s 18).
- Acceptance in the prescribed form, within time (s 19).
- Gazettal of the proposed approval and conditions (s 19(2)).
- Objections to the National Court within the prescribed time (s 20).
- Possible withdrawal by either side after a conditions order (s 21).
- Grant by notice in the National Gazette (s 22).
Sources
- Land (Ownership of Freeholds) Act (Chapter 359) — ss 16–22; Part IV
- Constitution — ss 56, 155
- Land Act 1996 — ss 82, 83, 122, 127–129
- Land Registration Act (Chapter 191) — Part IV
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.