LAND TENURE EXAM NOTES

A. Equity of Redemption
A mortgage of Land as per section 2 of the Land Registration Act is a charge on land that is
created only for securing a debt. It does not operate as a conveyance but rather as a security
for the repayment of debt or proprietary interest conferred upon a creditor by its debtor. By
taking the property as security, the creditor can procure the discharge of the debtor's
obligation to the creditor. In the transaction, the debtor is known as the mortgagor and the
creditor is known as the mortgagee. The mortgage debt is the principal sum and the interest
thereof secured by the mortgage. Upon payment of the mortgage debt, the mortgagor redeems
or "buys back" the security at the time stipulated in the mortgage (contract). However, there
are instances where the mortgagor fails to pay the debt on the agreed date, but equity aids the
mortgagor by giving it the right to redeem after the expiration of the legal date of redemption.
This right is protected by Common Law which prohibits any contractual provision which
prevents the borrower from exercising this right (known as a clog on the equity of redemption).
This is a protection that is summed up in the phrase "once a mortgagor, always a mortgagor."
There are a number of protections which bar clogs on the equity of redemption.
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The right to redeem however is not unlimited. In the instance where the mortgagor continues
to default on payment, the mortgagee is entitled to certain remedies, one of which is the right
to foreclose on the mortgage as provided for under section 74(3) of the Land Registration Act
(year). The process of foreclosure effectively extinguishes the mortgagor's equitable right to
redeem and confers onto the mortgagee the right to sell the property or take possession of the
property in order to settle its debts.

There are a number o f protection which clogs on the equity of redemption.

1. A term in a mortgage agreement which purports to give the mortgagee and option to
purchase the mortgaged property is void. – Mortgage must not be irredeemable,” once
a mortgage, always a mortgage”.
2. Postponement of the right of redemption alone is not a clog on the equity of
redemption, except where the right to redeem is in reality non existent.
(Any postponement of the right of redemption that makes the redemption illusory.)
3. Any obligation limited to out live of the life of the mortgage is bad.
4. Any attempt by the creditor to revise upwards the default interest and charges is that it
is made difficult for the mortgagor to redeem.

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A term in a mortgage agreement which purports to give the mortgagee and option to
purchase the mortgaged property is void. – Mortgagee must not be irredeemable,” once a
mortgage, always a mortgage”.
Option to purchase is regarded as inconsistent and repugnant to the mortgagor’s equity of
redemption.
Case: Samuel v Jarah Timber and Wood Paving Corporation LTD [ 1904] AC 323
The court invalidated a term in the mortgage between the plaintiff and the defendant which
gave the defendant an option to purchase a share of the mortgage anytime with a certain
period stipulated in the contract. The plaintiff sought a declaratory order from the court that
the option was invalid and they were entitled to redeem all their shares. The court found in
Favor of the plaintiff, holding that any bargaining that has the effect of preventing the
mortgagors from getting back their property upon payoff of what is due on their property is
invalid and inconsistent with the transaction being a mortgage.

Postponement of the right of redemption alone is not a clog on the equity of redemption,
except where the right to redeem is in reality non existent.
( any postponement of the right of redemption that makes the redemption illusory. )
Fairclough v Swan Brewery Company Ltd [1912] AC 562
In this case, the lease was for a term of twenty years. The date of the redemption of the
mortgage on the lease was up to six weeks before the end of the lease. The provision gave the
plaintiff an advantage to be a monopolist supplier of beer on the premises for the duration of
the mortgage. The mortgagor attempted to redeem early after only three years to release
himself from that monopoly. The question arose as to whether the clause postponing
redemption was a “clog” on the equity of redemption. The court held that the clause
postponing redemption in the circumstances of the case was a clog as it rendered the right of
redemption illusory.
[ illusory meaning the right of redemption was made meaningless or impractical. ]
In the context of the mortgage redemption case, "illusory" means the right of redemption was
made meaningless or impractical.
The clause allowing redemption only up to six weeks before the lease ended made the
mortgagor's ability to redeem the mortgage effectively useless. Even if they had the money to
redeem it early, they wouldn't have much control over the property for the remaining lease
term. This essentially took away the core benefit of redeeming a mortgage (getting the
property back) and rendered the right itself illusory.

Knightbridge Estates Trust Ltd v Bryne and Ors [ 1939] CH 441

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This case involves freehold property. The company mortgaged their property with a term of
repayment of 40 years. The mortgagor wished to redeem earlier, and the court held the
postponement of redemption for 40 years was valid, as it was a commercial agreement
between businessmen for a fee simple estate.
The rule in this case is that the circumstances must be taken into account. A term of
repayment for 40 years may not be valid for a domestic mortgage, but in the commercial world
the circumstances are different.
Presiding judge made reference to the Knightbridge Estates Trust Ltd v Bryne and Ors case,
stating that the clause therein was rendered a clog as it made the right of redemption illusory.
In this case however, the right to redeem, though postponed for 40 years, was real. There was
no basis for judicial intervention in the mortgage.

Collateral Advantages.
See Land Law text book. 7.51, page 188: Noakes & Co Ltd v Rice [1902] AC 24 : Biggs v
Haddinott [1895-99]
- Court only interfered with bargains which were unconscionable or oppressive in a
mortgage.

B. Conversion of Customary Land to Freehold Title

Introduction
Customary land with secure title is critical for investments and economic development.
Secure titles provide customary land owners with a means to obtain loans and mortgages.
This security is achieved through a process called tenure conversion, which converts the
status of customary or unalienated land into fee simple or freehold title. Once converted,
customary tenure ceases to apply.
The primary legislation governing this conversion is the Land Tenure Conversion Act 1963. This
Act facilitates the creation of freehold titles, which are provided for under the Land
(Ownership of Freeholds) Act 1976. The ability to hold freehold land is aligned with Section
56(1)(b) of the National Constitution of PNG, which restricts freehold land ownership to
citizens.
The Land Commission Act 2022 further facilitates the tenure conversion process established
by the 1963 Act. It consolidates the Land Titles Commission (LTC) and the National Lands
Commission into a single Land Commission (Parliament of Papua New Guinea). The LTC,
previously established by the Land Titles Commission Act (1962), dealt with customary land,
while the National Lands Commission managed state land.

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In the context of customary land, the PNG Land Commission acts as a quasi-judicial tribunal
similar to the former LTC. Its jurisdiction is limited to tenure conversion applications and
disputes concerning whether a particular piece of land is customary land or not. This paper
will explain the detailed processes involved in converting customary land to freehold title
under the Land Tenure Conversion Act 1963.

The Process of Tenure Conversion

Application and dealing with application: s.7& s.8 of LTC Act 1963
The process of Tenure Conversion is initiated when an application for registration of customary
land by a citizen either in his or its name of any customary land or of an interest in customary
land is made under section 7 of the Land Tenure Conversion Act 1963. Following this the
Commission deals with the application as per section 8 by adjudicating the land rights by
determining whose has ownership rights and interest in the land according to custom. This
process is accompanied by survey plans of the proposed lands where a demarcation
committee demarcates the boundaries of and the extent of the individual's landed interest.
Additionally subject to section 13 of the Act, The Commission shall take such action as will
ensure with reasonable certainty that the boundaries of land on a conversion plan are
permanently identifiable on the ground.
A notice of the application is then published to ensure that all stakeholders receive a
reasonable notice of 30 days within which they are allowed to object to the application on the
grounds of conflicting claims to the land under consideration. / On the grounds that he has
claim to the customary land.
Conversion Order: s.9
Pursuant to section 9 of the Land Tenure Conversion Act 1963, after the expiration of the 30-
day period a Conversion Order is made by the Commission provided that all individuals with
right and interest in the land agree to the conversion and those who are not made joint owners
or have their rights or interest protected on the Register as 'encumbrances, must be
adequately compensated for loss or reduction of their rights.
According to section 10 of the Act, the procedure to follow when issuing a conversion order
requires the Commission to deal with applications or objections by considering or either
adjourning multiple applications together and determining persons interested in the land
subject to the application.
Registration
Once all the requirements are met, conversion order to issue COT is forwarded to the
Registrar of Titles at DLPP established under the Land, under Section 15 of the Act (Land
Tenure Conversion Act, 1963). The Registrar of Titles then issues a Certificate of Title which
serves as the freehold title over the land of interest.

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Conclusion
In conclusion