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Equitable Estoppel and the Rights of Squatter Settlement Residents [1998] MLJ 5; [1998-99] 26 MLJ 115 (1 January 1998)

Equitable Estoppel and the Rights of Squatter Settlement Residents

Doug Tennent[*]

A. Introduction

Interventions by courts in equity have historically been confined to traditional legal matters such as land and lease issues. Yet equity is about ensuring that there is fairness and justice in certain relationships, especially where one party in the powerful position is able either to advance the interests of the other party or to undermine them. In short, equity can support people in vulnerable situations. In this context one naturally thinks in Papua New Guinea of the inhabitants of squatter settlements, such as those Port Moresby, Lae, Rabaul, Madang and Wewak.

Squatter settlements have become a distinctive and dynamic feature of many so-called Third World countries - while seen by some observers as a major social problem, others see them as creating a challenge for governments and other agencies to adopt policies to integrate these people and settlements into the core of life of a nation. In Papua New Guinea, these settlements have in them large numbers of people who came from different parts of the country. People are attracted to settlements for a number of reasons, for example the lack of opportunities and basic facilities (health, education etc) in rural areas; the desire to find employment in the city; the need to escape from tribal fights; and the fact that for many public employees the State as employer is unable to provide accommodation. These are all genuine reasons for deciding to live in settlements, and consequently people in this situation should be accorded basic respect and dignity.

In this paper, I would like to outline and clarify the legal position of the residents of squatter settlements. I will begin by examining the principles of equitable estoppel. Then I consider the extent to which these principles have so far been used in this country in relation to squatters. Finally, I will make some suggestions as to how these principles could be further developed so as to advance and improve the legal rights of the residents.

B. The Principles of Promissory or Equitable Estoppel

Promissory or equitable estoppel is an equitable principle that has been developed by the courts for the purpose of ensuring that a party is faithful to a promise or representation made to another party who relies upon this promise or representation. The need for this intervention by the courts comes about to stop the party relying upon the promise from suffering injustice if the promise or representation is being fulfilled. In other words in certain situations it would be unconscionable for a party to be unfaithful to its promise. Equity intervenes therefore in appropriate cases to censure unconscionable conduct.

The need for the development of such a principle in the law of contract arose because the rigid adherence to the common law principle requiring all undertakings in contracts to be accompanied by consideration led to unjust outcomes in a number of cases. This was well illustrated in the famous 1884 case of Foakes v Beer.[1] In this case the defendant Foakes owed the plaintiff £2,050, then a substantial sum of money. Foakes was unable to pay the full amount immediately and so offered to pay Beer £500 immediately and then £150 each six months until the amount was paid in full. Beer agreed to this proposal, stating that if he kept to this schedule of payments, she would not take any legal proceedings against him. Foakes honoured his undertaking, but when the amount had been paid in full Beer demanded interest on the loan and took out an action to enforce this. At the hearing, Foakes’ defence was the promise that Beer had made to him, that no proceedings would be taken against him if he kept to the schedule of repayments. The court found, however, that this promise could not be recognized as it had not been accompanied with the common law requirement of consideration. In his judgment Lord Blackburn expressed his dismay at this result.[3] The decision has been the target of criticism ever since.

Accordingly, the courts saw the need to develop a principle in equity so that in certain circumstances parties could be held to promises which were unaccompanied by consideration. In the development and application of what became known as the principle of equitable estoppel, equity is fulfilling its purpose of complementing the common law by easing some of the harshness caused by rigid adherence to common law principles (such as the requirement of consideration for all promises not made by deed). In so doing, it is not undermining but complementing the common law, rather like Portia’s statement in The Merchant of Venice that “mercy should season justice”.[4] Lord Denning described the principle of promissory estoppel in this way:

“A remedy has been found. The harshness of common law has been relieved. Equity has stretched its merciful hand out to the debtor.”[5]

Although the principle was first referred to in the case of Hughes v Metropolitan Railway Co in 1877,[6] it became more formally established in law by Lord Denning in the case of Central London Property Trust Ltd v High Trees House Ltd,[7] and a full definition of the principle was given by Lord Denning in the case of Combe v Combe.[8]

As the definition given by Lord Denning in Combe v Combe is somewhat complicated, an attempt is made here to explain the principle in simpler terms, by way of an example based on the formal contractual relationship between landlord and tenant. Let us suppose that the tenant is renting a house from the landlord for himself and his family at a cost of $400 per month. The tenant is in employment and is able to meet these rental obligations. The tenancy agreement is for a set term of three years. After one year however the tenant is laid off from his job owing to the economic downturn. He is now clearly worried as he has a family to support, and therefore approaches the landlord with his predicament. The sympathetic landlord, having found him to be a very good tenant and believing that given a modest period of time the tenant should be able to find alternative employment, agrees to alter the tenant’s rental obligations. He tells the tenant that he and his family can live in the property rent free for a month and then at a third of the rental until he establishes himself in employment again. In reliance of this promise the tenant rearranges his budget so that he is able to provide food for his family and focus on finding alternative employment. Two months later when the tenant still has not found employment the landlord without warning informs the tenant that he will have to pay full rental for the house and failure to do so will result in immediate eviction.

Here a promise has been made by the landlord not to impose the strict terms and conditions of the contract. In reliance of that promise the tenant rearranges his affairs. The tenant however has not paid any consideration for the landlord’s promise made within the operation of the contract. The retracting of the promise, if permitted, will obviously have a detrimental effect on the tenant who has been relying upon the promise in good faith. Here, equity through the principle of promissory estoppel may enable the courts to hold the landlord to his promise, to avoid injustice for the tenant and his family. The retraction of that promise would not only deprive the tenant of the “breathing space” to re-establish himself, but at the same time create the practical crisis of how to provide food and shelter for his family, and also cause mental stress to the tenant by having the possibility of coping with the situation removed. This can be seen as unconscionable conduct on the part of the landlord, in response to which equity will intervene to stop the landlord retracting his promise. It is intervening to uphold justice by censuring the unconscionable conduct.

Nevertheless, although estoppel exists to alleviate the harshness of the common law, it is not a principle that can be applied absolutely in all situations. Otherwise, the requirement of consideration in agreements would be undermined. Estoppel is not removing the requirement of consideration. Rather, it is saying that in some circumstances not to uphold a promise for which there is no consideration would create an injustice and this goes against the purpose of the law. Therefore the principle has been made subject to certain qualifications developed by the courts.

These several qualifications are well expressed in the case of Ajayi v Briscoe.[9] The first is that the party to whom the promise is being made must have shown that he or she has restructured his or her affairs in reliance on the promise. This point was spelt out very firmly in the Ajayi case itself. However in the later case of Brikom v Carr, Lord Denning modified this qualification slightly by saying that it was only necessary to show that the promissee has behaved in such a manner which indicates that he or she has relied upon the promise.[10] This first qualification, then, is consistent with the basic purpose of equity in upholding fairness. In other words, a party not relying upon a promise is not going to suffer an injustice if the promise is retracted.

The second and third qualifications complement each other. The second qualification states that it is possible for the promisor to retract the promise if reasonable notice is given to the promisee. The notice does not have to be formal but it must be given in a manner which is fair and appropriate given the particular circumstances.[11] For example with our landlord and tenant situation, it might be fair to re-impose the strict terms and conditions of the rental contract a fortnight after the tenant has commenced new employment when he receives his first payment.

The question of reasonable notice has received considerable discussion in the Tool Metal Manufacturing Co Ltd and Tungsten Electric Case.[12] Sometimes it may follow a certain event such as regaining employment, while at other times a clear statement of the intention to reimpose, and when this will take effect, will be necessary. The third qualification then states that the promise may become final and absolute if the party relying upon the promise is not able resume meeting his or her full contractual obligations. In the Tool Metal Manufacturing case, Lord Cohen noted that the suspension of the strict enforcement of the contractual obligations should come to an end only when in all of the circumstances of the case it would be just and reasonable to do so.[13] Lord Denning however takes matters a step further in the case WJ Alan and Co Ltd v El Nasr Export Co, when he stated that in some circumstances enforcing the strict legal rights would cause an injustice to the party relying upon the suspension, and therefore should not be allowed to occur.[14] In other words the promise not to impose the strict terms and conditions of the contract may become final and absolute if the party is unable to resume meeting those strict conditions. To reimpose them in such circumstances would create an injustice.

The full extent of this third qualification has not yet been fully considered in the case law. However it would be safe to say in our landlord-tenant situation that if the tenant, despite doing everything possible to find employment, is unable to do so, then the promise of the landlord that the tenant only had to pay a third of the full rental might remain effective for the full three year term of the lease. That result could seem somewhat harsh on the landlord but it might be harsher still on the tenant if the strict terms and conditions were reinforced, in that he and his family would find themselves homeless. In summary, these second and third qualifications taken together produce the result that the promise, while in theory not absolute (and it cannot be so without consideration), may become so through equity in situations where the retraction of the promise would cause an injustice to the person relying upon it.

The final point to note about this type of estoppel is that it can only be used as a defence when the party who has made the promise or representation is trying to retract the promise in circumstances which are unjust and unreasonable. It cannot be used to establish a cause of action against the landlord but only as a defence when he tries to reimpose the full rental. Lord Denning makes this point strongly when he refers to the principle as a “shield” rather than a “sword” in the Combe v Combe case.[15]

This then is a summary of how the principle operates within contractual situations. The next issue to consider is whether the principle be applied to promises or representations which lie outside of the contractual relationship. Because equitable estoppel has its basis in trying to censure unconscionable conduct, the courts have acknowledged that equity can be sufficiently flexible as to allow the extension of estoppel by requiring fidelity to certain promises or representations outside of contract.[16] The principle of estoppel has thus been applied in non-contractual situations to certain voluntary promises, and to situations where parties have not enforced their legal rights against another party for a lengthy period of time, leading the other party to believe that they would not do so. The cases which have developed these extensions and associated principles will now be considered.


1. Voluntary Promises

The case which has really broken new ground in enabling the principle of estoppel to enforce voluntary understandings is the decision of the High Court of Australia in Waltons Stores (Interstate) Ltd v Maher.[17] This case concerned an agreement between the two parties whereby Maher would rent a piece of land to Waltons Stores (a major retail business). Before Waltons were prepared to enter into the lease they required that the existing building on the said land be demolished and replaced by a 14,000 square foot building which would be a major retail outlet for them. Waltons required some input into the design of the new building.

Detailed discussions and negotiations had taken place between the parties and their lawyers, but the formal lease had not actually been finalised and signed. In November 1983 Maher, being aware that the new building had to be completed by the end of February 1984, contacted Waltons and said that the lease needed to be signed within the next couple of days. Waltons’ lawyers responded to this communication by saying that apart from certain amendments to the proposed lease everything was in order. Assuming that the finalisation and the signing of the leases was a mere formality, Maher then proceeded to demolish the old building on the property and erect the new one which Waltons had taken a part in designing.

On 19 January 1984 when the new building was almost half completed Waltons informed Maher that it was no longer going to proceed with the lease agreement.[18] The fact that the parties had not formally cemented their legally binding agreement led Waltons to believe that they could do this without being legally liable for any contractual breaches. They had been having second thoughts about the agreement for some time, but had remained silent while Maher was doing the major construction work on the property in order to meet what he thought would be his contractual obligation.

Maher commenced legal proceedings against Waltons and the matter eventually reached the High Court of Australia. The High Court carefully considered whether to extend the principle of promissory estoppel to voluntary promises. The High Court decided that equitable estoppel could be applied to the enforcement of voluntary promises in a situation where one party to a relationship makes a representation to another party that either something is going to happen or not to happen in the future,[19] and the other relies upon this representation and acts accordingly. If the other party decides not to be faithful to this representation, equity justifies the court’s intervention to prevent (estop) this infidelity.[20] In the absence of judicial intervention the party relying upon the representation would be unjustly affected. The court is therefore intervening to uphold justice in a relationship by censuring unconscionable conduct.

In applying this principle to the Maher situation, the High Court held that up until 19 January 1984, when Walton formally withdrew from the agreement, everything in their conduct had led Maher to believe that they were committed to the lease. They passively allowed Maher to demolish an old building and begin the erection of the new one when they were having doubts about the whole agreement. Their silence during all of this activity would have led Maher as a reasonable person to believe that the finalisation of the lease was a mere formality. In the words of Mason CJ and Wilson J:

“The appellant’s inaction, in all the circumstances, constituted clear encouragement to the respondents to continue to act on the basis of the assumption which they had made. It was unconscionable for it, knowing that the respondents were exposing themselves to detriment by acting on the basis of a false assumption, to adopt a course of inaction which encouraged them in the course they had adopted.”[21]

Inaction and silence can therefore amount to encouragement or assurance that something will happen or not happen, and in this case led Maher to rely on the belief that the finalisation of the lease would be a mere formality. This mistaken reliance could have had devastating effects for Maher had not the courts applied equity to assist him. Clearly, this is a very important judgment in that it enables the courts to intervene in certain situations to uphold a voluntary promise. To what extent the court will be prepared to intervene in this way will very much depend upon the circumstances of each particular case.

2. The Failure to Enforce Strict Legal Rights

A significant case in this area, which was referred to at length in the Waltons case is that of Crabb v Arun District Council.[22] In brief, the plaintiff Crabb owned a block of land. To have access to the road from his block the plaintiff required a right of way through another section of adjoining land owned by the Arun District Council. In order to seek the Council’s approval for the right of way, Crabb met with a representative from the Council. At this meeting an assurance was given (at least by implication) that Crabb would be given permission for the right of way. Following the meeting the defendant Council erected a fence with gates at the boundary of their section and the plaintiff’s land, which clearly gave the plaintiff a right of way. The defendant however later removed the gate and closed off the access by building a fence over the gap. The Council then told Crabb that a right of way would cost of £3,000. He refused to pay this amount, and initiated an action against the Council seeking hold them to their undertaking to grant a right of way.[23]

The first issue to be considered is why in this case, and in the Waltons case the plaintiffs were able to commence an action on the basis of estoppel when according to Lord Denning it is only supposed to be used as a defence. The answer to this can be found in the case of Pascoe v Turner where Cumming Bruce LJ noted that in property cases, where the estoppel being claimed is a proprietary estoppel, it is possible to use estoppel to bring a cause of action.[24] As Lord Denning states in the Crabb v Arun case:

“... there are estoppels and estoppels. Some do give rise to a cause of action. Some do not. In the species of estoppel called proprietary estoppel, it does give rise to a cause of action.”[25]

This development again reflects the flexibility of equity. During the hearing of evidence in the Crabb case, it was suggested that at the meeting between Crabb and the representative from the Council there was no direct assurance that the right of way would be granted. However the judges in the Court of Appeal seemed to be prepared to infer that both Crabb and the representative came away from the meeting believing that the right would be granted. This expectation was strengthened when the council erected gates at the boundary of the section.

In summary, the court proceeded on the finding of an understanding or undertaking between the Council and the plaintiff that a right of way would be granted, in reliance on which Crabb structured his affairs. When his land was closed off and rendered useless, the plaintiff inevitably suffered negative effects as he had intended to use the land for commercial purposes.

The Court of Appeal came to the conclusion that the circumstances of the case justified the intervention of the court to assist the plaintiff. The principle that was established to enable it to do so in this situation was set out by Lord Denning as follows:

“Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights - knowing or intending that the other will act on that belief - and he does so act, that again will raise an equity in favour of the other, and it is for a court of equity to say in what way the equity will be satisfied.”[26]

So the words exchanged at the meeting and the erection of the gates led the plaintiff to believe that he would be granted a right of way without having to pay for it and have it officially registered. The council’s lack of fidelity to its assurance created an “equity” in Crabb’s favour. In his judgment Scarman LJ clarified the meaning of this term, saying that the equity arose because it would be unconscionable and unjust to allow the Council to go back on the understanding that they would not enforce their strict legal rights against the plaintiff. He also noted that once the equity has been established it is necessary to determine the extent of that equity and how the equity can best be satisfied. The effect of the defendant’s closing off access to the plaintiff’s piece of land had caused considerable financial loss to the plaintiff.[27] The court therefore felt that the best way to satisfy the equity in this case was to grant the plaintiff the right of way without his having to pay any fee for it.[28]

This case is significant as it establishes the doctrine that an indirect representation that strict legal rights will not be enforced can establish an equity in certain situations. An equity is created in favour of the party relying upon the representation if it will be negatively affected through the unconscionable conduct of the representing party. Other cases have established that this equity can be strengthened if either directly or indirectly a party has been allowed to stay on a certain property by the owner and spend time, energy and money on improvements to the property.[29]

The latter point is well illustrated in the Inwards v Baker case,[30] where a father purchased a bungalow and assured his son that he could remain living there. After the death of his first wife the father married another woman (Miss Inwards) and there were two children to that marriage. When the father died Miss Inwards became the executrix of the estate. She made moves to have the son evicted from the house. The son objected. The Court of Appeal presided over by Lord Denning held that the undertakings of the father created an equity in favour of the son, strengthened by the fact that in reliance of the promise the son had spent a considerable amount of money on the property.[31] In then deciding how the equity could best be satisfied, the court held that the son could remain living in the house for as long as he wished.[32] The subsequent cases of Jones v Jones and Pascoe v Turner have similar fact situations which resulted in the courts making similar orders.

Thus emerges a second important extension of the principle of estoppel. If by conduct, which may include silence, a person gives to a party the impression that a certain state of affairs is acceptable, such as the party’s continuing to live on the person’s land, and that party relies upon this representation, then an equity is created in their favour. This equity is further strengthened if as a result of that representation the party expends money on the property. We can also speak here of the notion of equity by acquiescence. This means that if over a period of time a person fails to enforce a legal right, then a court of equity will be slow to address the person’s claim, or may even refuse to address it at all, if after years of doing nothing the person suddenly decides to take enforcement action.

These are principles of equity developed to support property rights and related matters such as access to property. More generally however equity is based on principles of justice and fairness. The Waltons case has shown how it is possible to hold people to a voluntary promise where infidelity to that promise would cause injustice to the party relying upon it. The Crabb case has illustrated that the failure of a party to exercise strict legal rights against another, leading them to believe that a certain state of affairs is acceptable, may render a subsequent decision to enforce the strict legal rights unconscionable in a way which justifies judicial intervention. These principles seek to uphold justice by holding parties to undertakings that they have made, in situations where the parties relying upon those undertakings are in a vulnerable position and need assistance.

C. Equitable Estoppel in Papua New Guinea – the png Ready Mixed Concrete case (1981)

The principles so far discussed can surely be applied to protect and enforce the human rights of certain vulnerable groups. In Papua New Guinea the issue has arisen in the context of squatter settlements. Here, we are talking about the rights of people to basic accommodation and shelter when they have entered onto land which is not legally theirs. The owners of the land - the State or the customary landowners – may however have raised no objection to their settling there on the land, spending money on the land and establishing a village type community. What happens if after a lapse of time the State or customary owners wish to enforce their rights by evicting the residents, some of whom may have been living there for more than a generation and may have lost contact with their traditional home area? Faced with such issues, the court has resorted to the principle of estoppel as defined in the Crabb case to uphold certain rights of people living in urban squatter settlements. The leading case is that of png Ready Mixed Concrete v State of Papua New Guinea and others,[33] a class action brought on behalf of 511 people living in a squatter settlement on the boundaries of Lae city.

In this case, the land in issue was State land which the State had purchased from some local customary owners referred to as the Ahi Association. A group of Sepik people were living there, initially building houses from traditional materials and then gradually, as they were joined by other people, more permanent houses were erected. Over a decade or so the settlers became a substantial community as more dwellings were erected, trees and vegetable crops were planted and harvested, and the population increased to more than 500. In the words of Miles J:

“Overall the picture is painted of an established urban village which has followed a bona fide existence for a substantial time.”[34]

The dispute arose when png Ready Mixed (the plaintiff in the litigation) wished to acquire the lease of the land in question, which comprised four lots of one section of land.[35] The relevant government authorities were approached and, in accordance with the requirement of the Land Act, the government went ahead and advertised that the land was available for tender. The company png Ready Mix placed its tender before the Morobe Provincial Land Board and was successful. The lease arrangements were finalised and money was paid. The squatters however refused to move. The company then asked the government to issue them with a notice to quit and remove them, but after the government proved reluctant to act[36] the company initiated an action in the National Court to have the residents removed.

The resident defendants were supported in this action by Utula Samana, the then Premier of Morobe. The defendants claimed to have a recognizable interest in the land which should defeat or limit the company’s leasehold rights.[37] In support of this claim, the residents argued that they were bona fide residents who had erected houses and other facilities at considerable expense, and as they had now been living there for a significant period of time (some up to 10 years) a reasonable expectation had been created that they could remain living there for the rest of their lives.[38] Against this the State claimed that the residents were trespassers and should be treated as such.[39]

In evidence it became clear that the State was well aware that the people had been living there for a number of years but had raised no objections. It was noted that the company was also aware of this. As Miles J concluded in his judgment there was no evidence to suggest that there was any objection from the State to the residents living on the land and their unwillingness to issue a notice to quit when requested by the company suggested acquiescence from the State in relation to the whole matter.[40]

In relation to the residents’ claim that they were bona fide occupiers and had a right to remain living there for the rest of their lives, counsel relied upon the principle developed in Crabb’s case, as expressed in the passage quoted above from the judgment of Lord Denning.[41] In particular, it was claimed that as the State was fully aware of the residents’ presence on the land and had allowed them to erect buildings on the property and establish a community there, this amounted to indirect acceptance of the situation. This created an equity in their favour, an equity which was strengthened as the years went on.[42] The State had made no effort to enforce their strict legal rights and their reluctance to do so when approached by the company further suggested that there was no objection to the residents living here. The Inwards v Baker case was also cited in support, to the effect that the State had raised no objection when the residents proceeded to spend considerable sums of money on erecting new buildings and the like.[43] Also relevant here was the doctrine of equity by acquiescence, where the right holder had failed to protect and enforce rights over a long period of time.[44] As indicated in the Waltons case, acquiescence in the form of silence can be taken to be an indirect representation amounting to approval.

Miles J was indeed prepared to recognize the significance of this equity, thereby applying traditional equitable principles in support of the legal rights of squatters. Having acknowledged the relevance and authority of Inwards v Baker and the other cases as part of the underlying law of in Papua New Guinea, the issue for the court was how to give effect to the equity in this case. In this respect, it had to be noted that the lease to the company had already been finalized, and a registered leasehold interest takes priority over an equitable right. Miles J noted that the company had acquired a legal interest, which would only be subject to those equities of which the company had notice. While the resident’s interest had not been registered, and the government had not notified the company of this interest, the company was nevertheless fully aware that the residents were living there. While he does not state this directly, Miles J seems clearly to be applying a form of imputed notice here.[45] In the result, after some very careful and impressive legal reasoning, Miles J made a declaratory order which recognised the company’s right to possession subject to the equitable right of the occupants to remain in possession for a period of time appropriate to the circumstances.[46] Those people who had been living on the land for ten years were given up to a year to vacate the land in question, while those who had been living there for five years were given six months to vacate the land.[47]

D. Discussion and further arguments

In this part of the paper, I would like to reflect on the decision in the png Ready Mixed case, and assess the future potential of estoppel and other relevant arguments in furthering the legal interests of residents of squatter settlements.

In analyzing the png Ready Mixed judgment of Miles J, it has to be acknowledged that the equitable right founded in the Crabb decision was of very limited assistance to the residents. It must however be appreciated that this action came about after the grant of the lease to the company, and the principle of the bone fide purchaser had to take priority. Further, Miles J makes an important observation which suggests that in different circumstances the equitable right in favour of vulnerable squatter settlement residents could have greater force and impact. This observation was to the effect that under the Land Act the Land Board is required to give formal notice of the intention to lease and any interested party is entitled to come and object to the lease.[48] It was acknowledged that although all the statutory obligations as to notice had strictly been complied with, the residents in the case (given their living circumstances) had not in fact had sufficient notice to enable them to object to the granting of the lease. This was one of the factors which led him into recognising the equitable right.[49] Miles J noted that if they had been provided with a real opportunity to object and to put their case to the Land Board, this might have been sufficient to convince the Board that their basic human and equitable rights outweighed the considerations of industrial development in that area. Thus, the lease might not have been granted, or might have been made subject to the significant equitable rights of the residents.[50] (Further, in my opinion, a failure by the Board to give the equitable rights full consideration in such a situation would have given the residents very good grounds to take out a judicial review against the decision of the Board.)

Taking the argument of Miles J a step further, it could also be suggested that the equitable right could be used

1. The Amos Bai case (1992)

The opportunity to apply the argument just mentioned arose in the case of Amos Bai v Morobe Provincial Government and the State of Papua New Guinea.[51] In this case Amos Bai brought a representative action on behalf of himself and 20,000 other squatters living in 22 different locations or settlements around Lae city. Some of these residents had been living in their respective settlements for 20 years. In 1991 the then Morobe Premier had ordered the destruction of a number of settlements by bulldozer. This destroyed the homes of many people including women and children. Subsequently, an action was brought against the provincial government seeking declarations that the government actions were unlawful, and claiming rights of occupation and title to the land together with damages pursuant to s 58 of the Constitution.[52]

The presiding judge in this case was Doherty J, who previously as lawyer for the Morobe Provincial Government in 1981 had represented the residents in the png Ready Mixed case. In the Amos Bai decision, however, she did not avail herself of the opportunity of advancing and developing the principles established in the Ready Mixed case. One of the reasons for this was that the applicants were without any legal counsel to argue the case competently on their behalf. This was unfortunate as the opportunity for the advancement of important legal principles pertaining to human rights was lost.

The Premier had decided to take a strong stand against squatters and identified blocks of land belonging to the State which were being occupied without any permission from the State.[53] The people living in these areas were given eviction notices and informed that their homes would be bulldozed. Despite the submissions from the applicant, Doherty J felt that the actions of the provincial government were justified on the basis of s 113 of the Land Act. Since this section states that a person who occupies land without authority is guilty of an offence, Doherty J concluded that this entitled the State to evict the squatters.[54] Bredmeyer J had adopted similar reasoning in the case of Jivetuo v Independent State of Papua New Guinea.[55] There, people who had been living on police land for 12 years without permission were to be evicted, and Bredmeyer J said that the eviction was justified. Doherty J further noted that in the Land Act there is no provision for any minimum period of notice to be given to illegal occupants.[56] No point was raised as to whether the giving of notice by the State was subject to any limitation period.

Two points need to be considered here: whether there was in fact a limitation period in which notice should have been given, and whether the residents had in fact been occupying the land without any authority from the State and were therefore liable to be evicted.

On the first point, in Papua New Guinea the limitation period is normally determined by the Frauds and Limitation Act 1988. The basic principle is that unless a particular statute provides otherwise (as for example in the Wrongs (Miscellaneous Provisions) Act (Ch 297) in the event of death), the general limitation period is for six years. Yet some of the residents in this representative action had been living on the land for 20 years. Thus in accordance with the Frauds and Limitation Act the time period under which the government was entitled to bring a claim had expired. Further the equitable principle of laches should also apply in this situation, with the result that the court could be asked to refuse to give its assistance to stale demands where the right holder (in this case the provincial government) had slept on its rights and acquiesced for a long period of time.

As to the second issue, in accepting the State’s submission that the residents were occupying the land without authority, Doherty J has failed to uphold the principles that Miles J developed in the png Ready Mixed case. This is the principle of equitable estoppel, discussed at length above, which in a nutshell states that failure to raise any objection to a person occupying land for a significant period of time raises an equity in favour of the occupier. This equity is further strengthened if the person spends money on the land in question. Both points were in fact satisfied in the Amos Bai case. Following the precedent established in Inwards v Baker, it would have been quite in order, given that some residents had been there for 20 years, to satisfy the equity by ordering that they could remain living there for as long as they wished. Further in this case there was no issue with a conflicting registered lease. Unfortunately, the failure to consider these principles meant that the true rights of these residents were not properly acknowledged.

The fact that the residents had no legal counsel to present their argument certainly would have influenced the approach taken by the court. Further, the judge said nothing to undermine the principles established in the Ready Mixed case. This leaves the door fully open to reconsider the extent of these equitable rights in a future case.


2. Adverse Possession

In Papua New Guinea squatters occupy both State and customary land. The equitable right applies to both. However with customary land s 67 of the Land Dispute Settlement Act (Ch 45) gives people who have been living on land belonging to another clan for 12 years without any objection from the clan full customary title to the land. This principle has been applied in a number of cases, the first of which was the 1993 decision of Amet J in the Re Hides Gas Project Land Case.[57] In considering the relevance of this section in relation to customary land title, Amet J stated that it was no longer possible to rely upon genealogical history as the sole determining factor. It was necessary to take into account in the modern situation a number of other factors affecting title especially adverse possession which is what s 67 of the Act addresses. Injia J, in subsequently applying the decision of Amet J, summarised the effect of s 67 very well in the case of Tawindi Clan v Kaimari Clan when he stated:

The use of the land over a period of more than 12 years without opposition confers that right of title by operation of law. Upon the expiration of 12 years, the person is the absolute owner of the land which includes all improvements on the land which they have erected. The process of acquisition of title by operation of law extinguishes any existing supposed [proprietary] rights of any other party.[58]

While the approach of Amet J has received academic criticism it has nevertheless become the established law in Papua New Guinea and gives statutory effect to the equitable right.[59] Accordingly, where squatters are occupying customary land without objection from the customary landowners, the equitable right may be applicable during the period of 12 years, strengthening with the length of time, and then statute law takes over giving the squatters absolute title.

Where, in contrast, squatters have been occupying State land without authority for a lengthy period o time, common law prescriptive rights may come into force. This effectively means that a person occupying a piece of land for as long as people can remember, even without authority, may acquire an indefeasible title over the land. This doctrine is also referred to as “squatter’s title”.[60] However along with the prescriptive rights to squatter’s title comes the obligations of the payment of rates and other legal requirements.[61] The Prescription Act 1832 in England which gave statutory effect to the common law principles stated that a person can acquire such title after 30 years (subject to a claim by the rightful owner that they were in some way under a disability during that period of time). To obtain absolute indefeasible title it was necessary to have occupied the land for 60 years. The rules concerning prescriptive or squatter’s right are certainly a part of the underlying law in Papua New Guinea, and could therefore be relevant to people who have occupied State land without official authority for 30 years or more.

3. Harsh and Oppressive Acts under s 41 of the Constitution.

I have so far argued that the equitable right, supported by statute or other common law rights where applicable, may be applied to uphold a basic human right to shelter for the significant population of squatter residents in this country.[62] The argument may be further strengthened by reference to additional principles. The first of these arises from s 41 of the Constitution.

Section 41 gives the court the power to declare unlawful any act that is done under a valid law but in the particular case may be considered to be harsh and oppressive in its effects. This is a very interesting and significant section. It shows the lengths that the framers of the Constitution have gone to ensure that the actions of persons in authority should be open to scrutiny by the court. The courts have agreed that the section’s application is wide.[63] Kaputin J in the Re Mandatory Minimum Penalties case described it as a controlling mechanism or safety valve to ensure that every act or decision made by those in authority in a democratic society is done in accordance with democratic values and principles.[64]

This section has been applied on a number of instances, two of which concerned the evictions of squatters. In the case of Jivetuo v State of Papua New Guinea, some people who had been living on land belonging to the police force without official authority for 12 years were being evicted. As Bredmeyer J noted, this eviction was quite legal under s 113 of the Lands Act (referred to above in the discussion of the Amos Bai case[65]). It was however submitted by counsel for the occupants that the requirement to vacate the land within two weeks after having lived there for 12 years was harsh and oppressive. Bredmeyer J accepted this and extended the period to vacate to two months.[66] Doherty J made a similar order in the Amos Bai case itself.[67]

In my view, it is possible to take this approach a step further and argue that in certain circumstances the act of eviction itself may be harsh and oppressive. There may be a number of relevant factors operating here. First, the government through its inaction may have created in these peoples’ mind the understanding that it is acceptable for them to remain living there indefinitely. If so, it would be harsh and oppressive for the State suddenly to undermine this reasonably held expectation by evicting them. Secondly, if people have lived in a settlement for over 20 years, many of their children will have been born there and this will have become their official home. The parents may often have lost contact with their home area and their lengthy absence would have undermined any claims there to customary land. Many of them may be unemployed and without the financial means to return to their village even if they were welcome to do so. To be evicted without being provided with alternative accommodation means that they will be homeless. They are being denied their basic right to shelter. This is harsh and oppressive. A third point is that with nowhere else to go they will have to go to relatives and rely on assistance through traditional support obligations. In hard economic times, this would be placing additional pressure on the relatives’ already stretched resources, again a harsh and oppressive consequence. Finally, the eviction process will inevitably include many children who by virtue of birth happen to live in a squatter settlement and who took no part in the decision to live there in the first place. Children are particularly vulnerable and as such are supposed to be accorded special treatment. Eviction from one’s home is not a special type of caring treatment. It is a harsh and oppressive act upon children.


4. The State’s Fiduciary Obligation to People in Vulnerable Situations such as Squatters

Traditionally the expression “fiduciary obligation” was used to describe the obligation that the trustee of a trust always owed to the beneficiary to act in the beneficiary’s best interests. This is because the trustee is in a position of power, and could either advance or undermine the beneficiary’s interests. Equity therefore requires the trustee to act appropriately.

In the landmark decision of the High Court of Australia in Mabo v Queensland, Deane J and Toohey J extended this principle to describe the obligation that the State owed to the indigenous people of Australia.[68] This arose from the powerful position of the State on the one hand and the vulnerability of the indigenous people on the other. The State could either advance or undermine the interests of the Aboriginal people. Equity thus required the State always to act in a manner which advanced their situation and was in their best interests. The same argument may be used to express the legal relationship that should exist between the State and vulnerable groups such as squatters in Papua New Guinea. The vulnerability of the settlers can be seen in their living conditions, in their poverty and in the fact that they may often have lost any meaningful contact and identity with their home area. Equity requires the State to act in their best interests by being faithful to the expectation that it created through its acquiescence in not enforcing its right when the people first moved onto the State land. It can be argued that instead of evicting the squatters, the State should continue to act in their best interests by trying to improve the conditions in the squatter settlements and by creating employment opportunities through the development of small-scale projects in these settlements.


5. The State’s Obligations under the United Nations Convention on the Rights of the Child

Papua New Guinea has ratified the Convention on the Rights of the Child. While s 117 of the Constitution states that ratification does not give an international document the full status of domestic law unless it is enacted into domestic legislation, it still amounts to a very serious obligation undertaken by the State. Article 3 of the Child Convention requires that in all matters concerning children, whether the responsibility of the State or of private agencies, the best interests of the child are to be a primary consideration.

When speaking about Australia’s obligations regarding the ratification of the Convention on the Rights of the Child, Toohey J in the case of Minister of Immigration and Ethnic Affairs v Teoh stated that ratification amounted to a solemn undertaking to the world and the citizens of Australia that in all relevant actions concerning children the best interests of the child were to be so considered by the government.[69] Clearly this is a significant obligation. The High Court of Australia in this case went as far as stating that ratification created a legitimate expectation that in relevant matters the best interests of the child would be given a primary consideration.[70] While the Australian government subsequently announced its intention to enact legislation to state specifically that ratification should not give rise to such a doctrine of “legitimate expectation”, the importance of the obligations coming about through ratification was acknowledged. Similar sentiments were expressed by the Court of Appeal in New Zealand. This occurred in the case of Tavita v Minister of Immigration.[71] Sir Robin Cooke, then President of the Court, in response to a claim by counsel for the government that the obligations of the Child Convention could be ignored when making ministerial decisions, stated that this was an unattractive argument signifying that New Zealand’s commitment to international obligations was partly window dressing. Further it would expose New Zealand to legitimate international criticism. [72]

The obligations undertaken by the government of Papua New Guinea through ratification of the Convention must therefore be regarded as significant. A governmental decision to evict large numbers of families including children from settlements without providing alternative accommodation, hence undermining the security and stability of those families, is not in the best interests of the children. It would amount to a breach of the government’s international obligations under the Convention.[73]


E. Conclusion

In this paper I have referred to the plight and often precarious legal position of residents of squatter settlements in Papua New Guinea. In looking at arguments which may help to strengthen their legal position, I have concentrated on the principles of equitable or proprietary estoppel. I have also noted some related legal arguments dealing for example with the doctrine of adverse possession, protection from harsh and oppressive actions via s 41 of the Constitution, the fiduciary obligation of the State to act in the best interests of vulnerable sections of the community, and the impact of the UN Convention on the Rights of the Child.

Given the various reasons which may lead to people having to reside with their families in squatter settlements, and the actions or inaction of the government which may encourage them to think they are entitled to remain there, I have argued that the equitable principles and the related doctrines should at least in some circumstances be sufficient to establish an equity in favour of the settlers. This equity should be framed and given effect to so as to allow continued residence in the settlements. To evict is not only unjust but creates more long term problems than it solves. Rather, the government should be looking to improve the conditions, infrastructure and employment possibilities within these settlements.

Traditional legal principles and human rights standards are not two separate schools of law, but should operate together to maintain fairness and justice and to censure unconscionable conduct. In thus promoting the interests of squatter settlement residents, we are acknowledging the flexibility of equity to adapt to situations of difficulty and injustice. Equity should indeed stretch out its merciful hand to the vulnerable.




[*] Lecturer in Law, University of Papua New Guinea.

[1]2 Foakes v Beer (1884) 9 App Cas 605.

[3] From the judgment of Lord Blackburn.

[4] William Shakespeare, The Merchant of Venice.

[5] From the judgment of Lord Denning in D and C Builders [1966] 2 QB 617 (C of A).

[6] Hughes v Metropolitan Railway Co (1877) 2 App Cas 439.

[7] Central London Property Trust Limited v HighTrees House Ltd [1947] KB 130.

[8] Combe v Combe [1951] 1 All ER 767.

[9] Ajayi v Briscoe (1964) 3 All ER 556 (PC, on appeal from the Federal Supreme Court of Nigeria).

[10] Brikom Investments Ltd v Carr [1979] QB 467 Perhaps the best method of determining an undertaking/representation was relied upon is to refer to Lord Denning’s independent bystander test which he applied in among other cases Oscar Chess Ltd v Williams [1956] EWCA Civ 5; [1957] 1 All ER 325 (C of A). This test basically asks the question: would the independent bystander observing the interaction between the parties form the opinion that the promisor intended the promise to be relied upon (with the result that the promisee did so rely)?

[11] Hughes v Metropolitan Railway Co [1877] 2 App Cas 439 at 456.

[12] [1955] 2 All ER 657 (HL).

[13] [1955] 2 All ER 657 at 685-86.

[14] WJ Alan and Co Limited v El Nasr Export Co [1972] 2 All ER 127.

[15] [1951] 1 All ER 767. In this case (in which a wife sued her husband over an informal promise relating to maintenance, in a situation where her financial resources were greater than his), Lord Denning strongly emphasised that within contractual situations promissory estoppel could only be used as a defence and not to establish a cause of action.

[16] The flexibility of equity is discussed very well by Lord Scarman in the case of Crabb v Arun District Council [1975] 3 All ER 865.

[17] Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 76 ALR 513 (HC of A).

[18] [1988] HCA 7; (1988) 76 ALR 513 at 516.

[19] [1988] HCA 7; (1988) 76 ALR 513 at 525.

[20] [1988] HCA 7; (1988) 76 ALR 513 at 524.

[21] [1988] HCA 7; (1988) 76 ALR 513 at 525.

[22] Crabb v Arun District Council [1975] 3 All ER 865.

[23] [1975] 3 All ER 865 (taken from the summary of facts).

[24] Pascoe v Turner [1979] 1 WLR 431.

[25] [1975] 3 All ER 865 at 871.

[26] [1975] 3 All ER 865 at 871.

[27] [1975] 3 All ER 865 at 880.

[28] Ibid.

[29] There are three cases, Pascoe v Turner [1979] 1 WLR 431; Jones v Jones [1976] 1 WLR 438; and Inwards v Baker [1965] 1 All ER 446. In these cases the plaintiffs had had certain promises made to them, to the effect that although that did not have legal title to the houses that they were occupying, they could remain living in them. The promisors had then tried to go back on the undertakings. In each case, the court held that the undertaking which had been relied upon by the occupier raised an equity in the occupier’s favour.

[30] Inwards v Baker [1965] 1 All ER 446.

[31] [1965] 1 All ER 446 at 449.

[32] Ibid.

[33] png Ready Mixed Concrete Pty Limited v State of Papua New Guinea and Others [1981] PNGLR 396.

[34] [1981] PNGLR 396 at 401.

[35] Ibid.

[36] Indeed the national office in Port Moresby had instructed the provinical officials not to issue a notice: [1981] PNGLR 396 at 403.

[37] [1981] PNGLR 396 at 399.

[38] Ibid.

[39] [1981] PNGLR 396 ibid 402.

[40] Ibid.

[41] The quotation from Crabb is given at [1981] PNGLR 396 at 404.

[42] [1981] PNGLR 396 at 405.

[43] [1965] 1 All ER 446 at 447.

[44] “Equity by acquiescence”: see Halsburys Laws of England, 2nd ed, Vol 13.

[45] “Imputed notice” is a type of constructive notice, that is, knowledge that would have come to a person (eg a prospective purchaser) if proper enquiries had been made in the light of the relevant circumstances.

[46] [1981] PNGLR 396 at 407.

[47] Ibid.

[48] Ibid.

[49] The situation is similar under the 1996 legislation. The relevant sections of the new Lands Act 1996 are s 58 (requirement of notice of public meetings), and s 144 (illegal occupation and its effects).

[50] [1981] PNGLR 396 at 407.

[51] Amos Bai v Morobe Provincial Government and State of Papua New Guinea [1992] PNGLR 150.

[52] [1992] PNGLR 150 at 152.

[53] [1992] PNGLR 150 at 154-55.

[54] Ibid.

[55] Jivetuo v State of Papua New Guinea [1984] PNGLR 174.

[56] [1992] PNGLR 150 at 155.

[57] Re Hides Gas Project Land Case [1993] PNGLR 309.

[58] Tawindi Clan v Kaimari Clan (National Court at Mt Hagen, Injia J) (1998) N 1775, at 7.

[59] Re Hides Gas Project Land Case [1993] PNGLR 309. It may be noted that the court’s approach has been criticised by some authors – see eg L Kalinoe, “Determining Ownership of Customary Land in Papua New Guinea: Re Hides Gas Project Land Case”, (1293) 21 Melanesian Law Journal 1-12. Kalinoe takes issue with Amet J for not giving genealogy the primary status in determining customary title. However the decision reached by Amet J is at the moment the established law in Papua New Guinea.

[60] “Squatter’s title”: see P Osborn, A Concise Law Dictionary, 5th ed (London 1964), at p299.

[61] Ibid.

[62] In the Amos Bai case there were 20,000 people effected in just one city. This gives some indication of the number of people living in these settlements in countries such as Papua New Guinea.

[63] Premdas v State of Papua New Guinea [1979] PNGLR 329.

[64] SCR No 1 of 1984 [1984] PNGLR 314, at 351-52.

[65] [1992] PNGLR 150.

[66] [1984] PNGLR 174.

[67] [1992] PNGLR 150 at 157-58.

[68] Mabo v Queensland (1992) 175 CLR 1 (note in particular the judgments of Toohey J and Deane J).

[69] Minister of Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 128 ALR 353 at 362.

[70] Ibid.

[71] Tavita v Minister of Immigration [1994] 2 NZLR 257 at 266.

[72] Ibid

[73] I Brownlie, Principles of International Law, 4th ed (Oxford; Clarendon Press 1991), at p 35.


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