Din v Kumar [2008] FJHC 187; Civil Action 62.2006 (25 August 2008)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO.: 62 OF 2006

BETWEEN:

SITAL DIN
f/n Jagdeo of Naqara, Taveuni
Plaintiff

AND:

JAGDISH KUMAR
f/n Jagdeo
First Defendant

REGISTRAR OF TITLES
Second Defendant

Mr. A. Sen for Plaintiff
Mr. R.P. Singh for First Defendant
No Appearance for Second Defendant

Date of Hearing: Tuesday, 22nd April 2008
Date of Judgment: 25th August 2008

JUDGMENT

BACKGROUND:

[1] The plaintiff and the defendant are brothers. Their contest is over a piece of residential freehold land at Naqara, Taveuni. The area of the land is 1 rood and 24 perches. The title to the land is in the name of the first defendant. The plaintiff is claiming that the defendant is holding one undivided half share of the land in trust for him.

[2] Some of the facts are not in dispute. Even though the defendant is the registered proprietor, the plaintiff has erected his dwelling house and other structures on the land. Prior to 1983 the plaintiff and the defendant leased this land from Carpenters Fiji Limited. In May 1993 Carpenters Fiji Limited sold the land to the two brothers for $12,000.00. A couple of months later the plaintiff transferred his one half undivided share to the defendant. The consideration shown on the transfer is $1,000.00 – document 5 in the agreed bundle. The two brothers continued to live on the land until September 2006 when the defendant entered into a sale and purchase agreement with Taveuni Central Indian School to sell the land to it for $200,000.00. On 26th May 2006 the plaintiff had lodged a caveat against the title claiming an equitable interest in the land.

ISSUES:

[3] Counsels in these pre-trial minutes have listed fourteen issues to be decided. Some of them are repetitious and others merge into one another. The issues as I see them are:

(a) Is the defendant holding one half undivided share in trust for the plaintiff?

(b) Had the plaintiff carried out developments on the property relying on some form of assurance by the defendant?

(c) Do the provisions of Indemnity, Guarantee and Bailment Act apply?

[4] Issue 1 - Is the defendant holding one undivided half share in trust?

The parties came onto this land round about the period 1981 to 1983. No one could tell me the exact date, month or year except for Bharti Kumari whose evidence I have grave reservations about as I will explain later. It is not disputed that this land was first leased from Archie Sidal. The lease itself has not been produced. The plaintiff says he bought the lease for a price of $35,000 to $40,000.00. Again there is no documentary evidence to support this claim. Of interest is an endorsement on the title which shows a lease of this land to one Lalta Prasad for a period of 75 years at a rental of $90.00 per annum. This would suggest that the price of $35,000.00 or over is highly unlikely.

[5] Further the plaintiff was born on 27th January 1956. He lived with his parents so by early eighties, he would be about 25 or 26 years of age. His father died when he was fourteen years of age. According to evidence tendered on behalf of the plaintiff it was the plaintiff who looked after the family and paid for the expenses of the entire family including the mother, the defendant and sisters. I find it amazing that the plaintiff with all these commitments would be able to accumulate and pay such a large sum to Archie Sidal even over a period of few years.

[6] I shall now deal with the evidence of Bharti Kumari. She was born in 1969. She would be about 12 years old or just over at the time when the land was leased. She is hardly likely to be consulted or being part of discussions. She gave her evidence in a dogmatic fashion volunteering information and rambling on to questions asked. She also began to agitatedly comment from the gallery of the court when the defendant was testifying. I found her a partisan witness and an extremely partisan witness at that.

The purchase of freehold:

[7] In 1993 the two brothers bought this land. The title bears this out. The price was $12,000.00 which would also suggest that a leasehold could hardly cost more than this sum. The transfer from Carpenters to the two brothers is dated 26th May 1993. The transfer from the plaintiff to the defendant is dated 17th July 1993. The title to the land CT 28088 was issued on 16th September 1993.

[8] The transfer from the plaintiff to the defendant is document 5 in the agreed bundle. It was prepared by a firm of solicitors and executed before Mr. Sen. The consideration shown on the transfer is $1,000.00 agreed to be paid to the transferor. It does not say that it is pursuant to some family deed whereby the defendant is to hold the land in trust for the plaintiff. That would be the usual conveyancing practice.

[9] According to the defendant he did not pay the sum of $1,000.00 consideration shown to the plaintiff. He stated that the transfer document was made for convenience. He did not elaborate on what he meant by convenience nor was he questioned further about it. The plaintiff also said that the defendant paid him no money for the transfer of the undivided share. So what we have here is a land purchased in the name of two brothers but one brother transfers his half share to the other for $1,000.00 and which sum is never paid.

[10] This state of affairs gives rise to the question as to why the transfer was not done directly into the name of the defendant instead of first having been done into both brothers’ name and then another transfer done from one brother to another of half interest. This must have added to costs.

[11] The plaintiff stated that he transferred the land to the defendant because the two brothers were on good terms which I have no reason to disbelieve. Further the defendant had told him that the plaintiff had in the past suffered expenses on behalf of the family so the defendant volunteered that he be given an opportunity to match his brother’s past generosity. Secondly, he stated that the defendant wanted a loan from the bank and the Bank would not grant a loan if the land was held in the name of two persons.

[12] The first reason that the defendant wanted to match the plaintiff’s past generosity as the reason for transfer does not appear logical. All it entails is payment of money. The payment of money that is, the purchase price could be done by the defendant alone even though the title remained in the name of both. It would have saved the parties unnecessary costs of a transfer.

[13] An assertion that the bank would not give a loan if the land was registered in two persons’ name sounds truly odd. Loans are often made to persons with joint names on title; husband and wife combination is obvious. This is what the bank told them according to the plaintiff. In fact it would be to the advantage of the Bank to have two persons as mortgagors particularly in this case where the defendant was a small time garage owner and an alcoholic and the plaintiff asserted he had a better financial standing. Having the plaintiff also as a joint mortgagor would be an additional guarantee that the mortgage instalments would be met which would be the Bank’s prime interest.

[14] I am not convinced by the reasons advanced by the plaintiff as to why he transferred his half share to the defendant. He had not paid any money to Carpenters. That was done from loan from the Westpac Banking Corporation whose mortgage is registered on the title on 16th September 1993, the same day as the title was issued. In the absence of an express declaration of trust on the transfer, I have to construe the transfer according to its language, that is the plaintiff transferred "all the right title and interest" to the defendant.

[15] But that is not the end of the matter. A trust or some form of estoppel could arise subsequent to the transfer and one has to examine conduct of the parties after the transfer regarding developments etc. on the land.

[16] Issue 2 - Did the plaintiff carry out developments relying on some assurance by the defendant?

It is not disputed that the plaintiff has structures on the defendant’s land. The valuation report refers to these structures. It is also abundantly clear that the value of plaintiff’s structures exceeds the value of defendant’s house. The plaintiff told me that he spent $300,000.00 on the property. This is a figure which I do not accept as the valuer put the total value of all improvements on the property at $105,000.00.

[17] It is the plaintiff who is alleging that the defendant holds the land in trust for himself and the plaintiff in equal shares. It is therefore for the plaintiff to prove to the court on balance of probability the existence of such trust. The reason for this is obvious. Historically, English law, from which our own jurisprudence in this area is derived, distinguishes between the legal interest in land and the beneficial interest. The defendant holds the registered title in his name so he has the legal interest in the land. The trust under which land is held determines the extent of a party’s beneficial interest. One can do no better than to quote Lord Diplock from Gissing v. Gissing – [1970] UKHL 3; 1971 AC 886 at 904:

"Any claim to a beneficial interest in land by a person, whether spouse or stranger, in whom the legal estate in the land is not vested must be based upon the proposition that the person in whom the legal estate is vested holds it as trustee upon trust to give effect to the beneficial interest of the claimant as cestiu que trust ......"

[18] Very convincing evidence is required to establish a trust. In Nagaiya v. Subaiya 15 FLR 212 Justice Marsack at page 216 stated that where "it is sought to establish that the registered proprietor is in fact holding as trustee then, in my view, there must be cogent and compelling evidence of the existence of such a trust. This evidence should prove how the trust came into existence and who are the persons on behalf of whom the property is held by the trustee". In Stack v. Dowden - [2007] UKHL 17; 2007 2 ALL ER 929 the House of Lords held that in considering the beneficial interest one has to consider all the relevant circumstances to discern the common intention of the parties with respect to the property in light of whole course of conduct in relation to it.

[19] The relationship here was between two brothers not between two strangers. These two brothers would be more trusting of each other than strangers or men of commerce and therefore less likely to express their intentions in writing.

[20] If the transfer of half interest from the plaintiff to the defendant was on the basis that the plaintiff had no further interest in the land, then on what basis was he continuing to live on the land and continuing to erect houses for residence. The defendant submits that the plaintiff occupied the land as a licensee which could be revoked by the defendant by notice, while the plaintiff says that the occupation was by virtue of a trust. The defendant relies heavily on the New Zealand case McBean v. Howey (1958) NZLR 25. There the defendant had allowed and encouraged the plaintiff to a portion of driveway over his land so that the plaintiff could access his garage. The court there concluded that the arrangement between the two was not a promise of an easement but a promise of a licence unsupported by consideration and which could be revoked. The court then considered that mere acquiescence and encouragement ipso facto do not give rise to an equity unless asserting one’s own legal rights would be considered fraudulent. The court then considered the factors which would constitute fraud. The factors are outlined in the defendants’ submissions as –

(a) the plaintiff must have made a mistake

(b) plaintiff expended money on the faith of mistaken belief

(c) possessor of legal right must know of the existence of his own legal right which is inconsistent with the right claimed by the plaintiff

(d) the defendant must know of the plaintiff’s mistaken belief of his rights

(e) the defendant must have encouraged the plaintiff to incur expenditure of money or abstain from asserting his legal right.

[21] Authorities in Fiji also support the views as expressed in McBean v. Howey. In Badal & Others v. Bhim Sen ABU 49 of 1977 the Court of Appeal upheld the trial judge when he held that equitable estoppel applied where the plaintiff had built on the land and expended money in the mistaken belief that he was entitled to do so without any intervention by the owner to assert his rights. Justice Stuart in the High Court had based his reasoning on basis of principles regarding proprietary estoppel as discussed by Snell in Principles of Equity: Justice Stuart distilled four conditions which must be satisfied for proprietary estoppel to apply. First there must be expenditure. Second there must be belief, actively or passively encouraged by the owner, that defendant either had or would have a sufficient interest in the land to justify the expenditure. Thirdly the owner must have known that the defendant was incurring the expenditure in his mistaken belief but has nevertheless stood by or participated in the expenditure without enlightening the defendant. Fourthly, there must be no bar to the equity. In Jim’s Enterprises Limited v. Marika Vosawale Mara & Others – HBC 106 of 2004 Justice Jitoko concluded that "proprietory estoppel, unlike promissory estoppel, is permanent in its effect. It is capable of conferring a right of action". He had earlier cited with approval the passage from Snell’s Equity 13th edition at paragraphs 39-12 as follows:

"Proprietory estoppel as one of the qualifications to the general rule that a person who spends money or improving the property of another had no claim to reimbursement or to any proprietary interest in the property."

[22] One of the structures constructed by the plaintiff according to the valuer’s report was a "single storey modern concrete home" 46 feet by 54 feet. A concrete structure is usually constructed for permanent habitation. It cannot be removed. The defendant told the court that the plaintiff told him that he would leave the land and buildings if the defendant sold the land. If as the defendant asserts that the plaintiff had assured him that he would leave if property was sold, then this conduct of the plaintiff in constructing permanent structures appears to certainly contradict the defendant’s assertion. Such conduct unequivocally shows that the plaintiff intended to permanently stay on the land in question. I do not consider that the plaintiff would be foolish enough to invest substantial amount of money if he was aware of the risk of having to lose his investment and his stay there was temporary as licensee. This substantial investment can only be as a result of some understanding between the brothers that they could stay there as long as they wanted.

[23] The defendant in his evidence stated that he objected to the defendant building unauthorized structures on the land. He said that he complained to the Rural Local Authority but it took no action. He also complained to the District Officer. He also told the court that his brother assaulted him when he protested. He said he complained to police but police took no action. Beyond his assertions there is no other supporting evidence about his complaints. There is nothing in writing about his complaints. I find this portion of defendant’s evidence difficult to accept.

[24] Equally, I do not believe that at any stage the defendant told the plaintiff to pay him $10,000.00 which he incurred in payments to the Westpac before he would transfer half interest back to the plaintiff. The plaintiff stated in his examination in chief that when loan was repaid he asked the defendant to transfer land to the plaintiff. The plaintiff said he offered to give defendant $10,000.00 not that the defendant asked for it. Further, I do not believe the plaintiff that he gave $2,400.00 to the defendant. I got the distinct impression from the plaintiff that he gave $2,400.00 in one instalment while the mother’s evidence suggests payment of $2,400.00 was in three instalments. I do not accept that the defendant took $2,400.00 and then backtracked on some promise to transfer half share to the plaintiff. The plaintiff could easily have brought evidence of withdrawals from Bank. I am of the firm belief that this piece of evidence was made up by the plaintiff and his witnesses to fortify their case.

[25] The plaintiff stated that he paid this sum of money that is $2,400.00 five or six years ago and the brother refused to re-transfer. If that was what actually happened, then five or six years ago, the plaintiff should have realized that his brother is not a man of his word, and I would have expected him to act and lodge the caveat then instead of waiting till April 2006. My view is that this version of request for $10,000.00 by the defendant is made up to fortify the plaintiff’s claim. I shall ignore this piece of evidence.

[26] I find there was no written or oral representation by the defendant to the plaintiff telling him that he could build on the land and he would be given a share in it. However, there are situations where a person’s conduct may lead towards that conclusion. I have to consider the total circumstances of the relationship here. During the life time of their father, these parties lived together as a joint Indian family. After the father’s death, that system continued until the defendant got married when the plaintiff moved to a shack on the property. This entire family had moved first to Naqara as a unit, then onto the present land on lease from Archie Sidal and they later purchased the land from Carpenters and both continued to reside on it.

[27] The plaintiff over the years, right under the nose of the defendant, built structures on the land. The valuer’s report says the plaintiff’s structures occupy two thirds of the land and he built a modern concrete house, a workshop and flat and an open shed on it. These I find were erected unimpeded by the defendant.

[28] The plaintiff has certainly invested a substantial sum of money on these structures. Even the defendant put their value at $50,000.00 while the valuer’s value was much higher. This absolute silence on part of the defendant in face of ongoing constructions of permanent structures really requires no oral or written representations. This type of situation would be a cause for screams of protest. The plaintiff has severely reorganized his life and his family’s life around this location. He cannot remove permanent structures. He stands to lose a lot of investment while the defendant would gain their value. Even in the sale and purchase agreement the defendant has sold all the improvements on the property to Taveuni Central Indian School. The defendant therefore takes benefit of the proceeds of sale even of structures belonging to the plaintiff. This is an unconscionable denial of the plaintiff’s beneficial interest in the property and not consistent with the reasonable expectations of the plaintiff.

[29] G.E. Dal Pont and D.R.C. Chalmers in the text Equity and Trusts in Australia and New Zealand 2nd edition at page 292 summarise the position as follows:

"Yet the typical situation giving rise to a proprietary estoppel is, in modern Australian and New Zealand courts, more commonly argued on the grounds of constructive trusts. The main reason for this is that the court imposes a constructive trust recognizing contributions to property which are not reflected in the legal title to the property by reference to whether, in Australia, there has been an unconscionable denial of a beneficial interest in the property, and in New Zealand whether to deny an interest in the property in issue is inconsistent with the reasonable expectations of the claimant. Hence, establishing an entitlement to constructive trust relief is not dependent upon proof of any representation, reliance or detriment, though such evidence may be relevant to the issue of whether conduct is unconscionable or contrary to reasonable expectations. In that the cause of action is based on conduct or expectations, there is no little need for estoppel itself to provide a cause of action. Yet it is not uncommon for estoppel to be pleaded as an alternative cause of action in cases which may come within both doctrines."

[30] Issue 3 - Breach of Indemnity, Guarantee & Bailment Acts. Is it a bar to equity?

Mr. Singh submitted that even if the court found that there was a trust, nevertheless it could not be enforced because it did not comply with the provisions of the Indemnity, Guarantee and Bailment Act Cap 232 which specifies that no action shall be brought upon any contract or sale of land unless the agreement or some memorandum is in writing. Section 59 so far as material to the proceedings provides:

"No action shall be brought

(d) upon any contract or sale of lands, tenements or hereditaments or any interest in or concerning them unless the agreement upon which such action is to be brought or some memorandum or note thereof is in writing ....."

The plaintiff is claiming a beneficial interest. I am of the view that the word "interest" is confined to disposition of a legal interest in land not to claim for equitable interest. Hence I conclude that Section 59 does not apply and it does not affect the equity in favour of the plaintiff.

[31] Accordingly I declare that the defendant holds Certificate of Title Number 28088 in trust for the plaintiff and himself in equal shares and in the event of sale both are entitled to share the proceeds of sale equally.

[Jiten Singh]
JUDGE

At Labasa
25th August 2008