Raza Properties Ltd v Pioneer Supplies Ltd [2010] FJHC 478; Civil Action 11 of 2010 (28 October 2010)

IN THE HIGH COURT of FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO: 11 of 2010

IN THE MATTER
of an application under Section 169 of the Land Transfer Act Cap. 131
for an Order for Vacant Possession.

BETWEEN:

RAZA PROPERTIES LTD
a limited liability company having its registered office at
Lot 41, Nasekula Road, LABASA
PLAINTIFF

AND:

PIONEER SUPPLIES LIMITED
a limited liability company having its registered office at
161 Toorak Road, SUVA
DEFENDANT

BEFORE: MASTER ROBINSON

COUNSELS: S PRASAD ESQ for the PLAINTIFF
RAMS LAW for the DEFENDANT

DECISION

THE APPLICATION

This is an application by Summons dated 19 March 2010 for vacant possession under section 169 of the Land Transfer Act. Cap. 131.

The defendant is summoned to appear before the Master in Chambers at the High Court in Labasa on the 9 April 2010 to show cause why they should not give up vacant possession of the Plaintiff's property at Naseakula Road. The land is described in Crown Lease No: 3485 as Lot 2B, Section 18 Labasa Township situated in the Tikina of Labasa with an area of 32.7 roods.

The Summons did not specify which limb of s 169 the Plaintiff was relying on but he is clearly within paragraphs (a) and (c) and possibly (d). The Summons was supported by an affidavit sworn on 11 March 2010.

At the completion of the hearing Counsels then requested to provide written submissions. The Plaintiff was to provide submission within 14 days and the Defendant 14 days thereafter. Both parties then provided submission although later than had been requested although I am greatful that they assisted the Court at the end.

THE AFFIDAVIT IN SUPPORT

The affidavit in support was sworn by one Mohammed Sajid Raza of Vunimoli, Labasa, company director who states that the plaintiff is a limited liability company having its registered office at Naseakula Road, Labasa and that he is one of the directors of the said company and that he is duly authorised to depose of the affidavit on behalf of the company. That the company is the registered lessee of the said parcel of land. Attached to the affidavit is a copy of the lease which shows the Plaintiff to be the registered lessee and that the transfer was affected on the 28 of October 2009. That the defendant initially agreed to vacate the premises by 31 December 2009 but later reneged. On 12 January a notice to vacate was served on the defendant and upon receipt of the notice the defendant replied saying that they had a tenancy agreement and that we had been collecting rent from them since November 2009 and that they have a tenancy.

The affidavit was served to the Defendant on the 29 March 2010. Although this service was not in accordance with act in that it was not at least sixteen clear days before the hearing date, this point did not become an issue and in any event this was cured by the fact that the matter was not heard until some three months later. And I commend the parties for not raising this as an issue.

THE AFFIDAVIT IN OPPOSITION

In opposition to the summons to vacate the defendant filed an affidavit deposed by one Mahesh Chandra f/n Ram Nand of Koronivia Road, Nausori who swore under oath to the following facts:-

(1). that he is the Managing Director of the Defendant Company;

(2). that he admits that the plaintiff purchased the land and that he is the registered lessee of the land free from all encumbrances;

(3). that he denies that he was informed by the plaintiff to vacate the premises by the 31 December 2009;

(4). that they the defendant entered into a lease agreement with Viti Vanua Holdings, the plaintiff predecessor in title on or about 28 April 2004;

(5). that under the above lease agreement the defendant has been in control, possession and occupation of the whole ground floor of the property since the 28 April 2009 and that the Plaintiff was fully aware of this fact;

(6). that the plaintiff accepted the said rental agreement by its letter of 2 December 2009 and expressed a desire for the defendant to remain in the premises for a long term and wanted to increase the rental payments;

(7). that the plaintiff continued to collect rental from the defendant;

(8). that we advised the plaintiff that he could not increase the rental as this was determined by the lease agreement;

(9). that he admits to receiving the "Notice to Quit" but sad that the said notice was contrary to the lease agreement;

(10). that the defendant is in occupation of the property pursuant to a lease agreement and that the purchase of the property was subject to the lease agreement;

(11). that the plaintiff proceeded with the summons even though it was aware of the existence of the lease agreement;

(12). that the plaintiff is fully aware that that we have a legal contract to occupy the premises which entitles us exclusive right of possession of the premises;

AFFIDAVIT IN RESPONSE

The plaintiff in response to the affidavit in opposition states in brief that they were not aware of the lease agreement between the defendant and Viti Vanua Holdings as claimed but that the agreement so entered into is illegal and unenforceable. That the said agreement does not bind the plaintiff and that the plaintiff admits to the acceptance of the rental monies and was willing to enter into a lease agreement with the defendant if they agreed to the increase in rental. That the permission for the defendant to remain in the premises was contingent on the acceptance of the new rental agreement. That the agreement between the defendant and Viti Vanua Holdings contravenes the conditions of the lease in that no consent was obtained from the Director of Lands. That the said lease agreement was stamped by the Commissioner of Stamp Duties on the 25 January 2010 when Viti Vanua was no longer the owner of the property.

THE LEASE

It is not in dispute that the plaintiff is the registered lessee of the land in question. That the lease is a protected lease and contains a paragraph stating " And provided further and it is expressly declared that this lease is a Protected Lease under the provisions of the Crown Lands Ordinance (Cap. 138).

THE ISSUE for DETERMINATION

In my view there is only one legal point which determines this application and that is the application of section 13 of the Crown Lands Ordinance (Cap. 113) to which this lease is subject. The material part reads:-

"(1) Whenever in any lease under this Ordinance there has been inserted the following clause:-

'This lease is a protected lease under the provisions of the Crown Lands Ordinance' (hereinafter called a protected lease) it shall not be lawful for the lessee thereof to alienate or deal with land comprised in the lease or any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same without the written consent of the Director of Lands first had and obtained nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease.

Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void.

Section 13 of the Crown Lands Act (Cap. 132) which is now the applicable legislation provides almost in verbatim:-

(1) Whenever in any lease under this Act there has been inserted the following clause:-

"This lease is a protectase under the provisrovisions of the Crown Lands Act"

(hereinafter called a protecease ) it shall hall n lawful for the lessee thereof to alienate or deal with the land comprised in the lease of e of any part thereof, whether by sale, trr or ase or in any other manner whatsoever, nor to moro mortgage, charge or pledge the same, wit, without the written consent of the Director of Lands first had and obtained, nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease.

Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void.

THE DEFENDANT'S CASE

It is for the Defendant to show cause why she should not give up possession. The Defendant's only show of cause is that they were an existing tenant prior to the purchase of the property by the Plaintiff. That the Plaintiff was aware of his tenancy and that they had paid rent and that the receipt of the rent was indicative of and by implication an acceptance of the Defendants right as a tenant. Further that the purchase of the property by the Plaintiff was subject to an encumbrance, the encumbrance was the tenancy agreement entered into between the Defendant and the last owner of the premises, Viti Vanua Holdings. In support of the above proposition the defendant annexed to its affidavit in opposition a "Tenancy Agreement" executed on the 28 April 2004 between the Defendant and Viti Vanua Holdings. The top left hand side of the first page of this agreement shows that the agreement was stamped by the Commissioner of Stamp Duties on the 25 January 2010. The time of stamping appears to coincide with the period at which the parties were in dispute. There were no other endorsements on the tenancy agreement.

The Defendant in its submission acknowledges that the Lease is a protected lease and does not dispute the mandatory requirement of section 13 of the Crown Lands Act, it however is of the view that there is nothing before the Court to suggest that the Director of Lands consent was not obtained. The Defendant submits that the Plaintiff has not obtained the consent of the Director of Lands to institute proceedings against it. It then relies on the case of Mohhammad Rasul –v- Jeet Singh and Hazara Singh [1964] 10 FLR 16 as the authority for the proposition more particularly the comments of his Lordship Hammett ACJ where he said: There is nothing in the express wording of section 15(1) of the Crown Lands Ordinance which makes it necessary to obtain the consent of the Director of Lands before an action concerning a protected lease is initiated. The consent can be obtained at any time before the land is actually dealt with by the Court, which is not the case until an order has been made or judgement of court delivered.

The Defendant further relies on the unreported case of Shanti Lal –v- Bombay Trading Investment Limited; Lautoka CA No. 119/1981 and more particularly the remarks of Dyke JE that:-" One argument was that the Plaintiff did not have the consent of the Director of Lands to institute the proceedings, there is no merit in this ground since though the Plaintiff may not have obtained the necessary consent before instituting proceedings he certainly had it his application came to be considered"

On the above ground the Defendant is of the view that it is a mandatory for the Plaintiff to obtain the consent of the Director of Lands before it can institute proceedings against it and because of this failure the Plaintiff's application under s169 should be struck out with costs.
The second part of the Defendants submission refers to the operation of section 100(2) of the Property Law Act (cap.130). This provision states that: (2) "After giving the notice to quit acceptance of rent expressed to be without prejudice to the notice shall not operate as a waiver of the right to enforce the notice or create or revive a tenancy". The Defendant is of the view that the acceptance of the rent by the Plaintiff operates as a waiver of the right to enforce the notice and on this basis to the application by the plaintiff must fail.
Before I proceed any further with this ruling I feel it appropriate to address at this point some misconceptions which is evident from the Defendant's submission. In the first instance the Defendant's reliance on the decisions in Mohammad Rasul –v- Jeet Singh and Hazara Singh and Shanti Lal –v- Bombay Trading does not support its proposition that the Plaintiff ought to obtain the consent of the Director of Lands before it can institute proceedings against them. Lord Hammett states that "There is nothing in the express wording of section 15(1) of the Crown Lands Ordinance which makes it necessary to obtain the consent of the Director of Lands before an action concerning a protected lease is initiated." Secondly the Defendant has totally misread the operation of section 100(2) of the Property Law Act (Cap. 130). The section clearly states that the acceptance of rent expressed without prejudice shall not operate as a waiver of the right to enforce a notice or create or revive a tenancy.

CONSIDERATION OF THE APPLICATION

The Defendant acknowledges that the Lease has been transferred to the Plaintiff and that the Lease is a "protected lease". That the Defendant had occupied part of the premises by a "Tenancy Agreement" entered into between itself and Viti Vanua Holdings, the prior Lessee of the premises in April 2004. The Defendant also acknowledges that it must show cause why it should not vacate the premises and that the cause of their being there which would enable the court to allow them to remain is the tenancy agreement of April 2004. In the Court's view the fact that the Plaintiff may or may not have obtained the consent of the Director of Lands to seek an order from this Court to order them to vacate the premises is not the cause of their being granted the right to be there, it could never be in any reading of the provision of section 172 of the Land Transfer Act.

The Defendant has alleged that there is nothing before this Court sufficient for it to say that that no consent was granted when the tenancy agreement was entered into between itself and Viti Vanua Holdings. That is indeed true, this Court cannot come to that conclusion but the only conclusion that the Court can arrive at is that in the absence of the Defendant showing the Court any legal or equitable basis upon which it has cause to remain in possession, the Court could not arrive at any other conclusion. It is in fact incumbent upon the defendant to show the Court that it has cause by producing to the Court a Tenancy Agreement endorsed by the Director of Lands showing consent of the dealing between it and Viti Vanua Holdings. In the absence of the Director of Land's consent the Tenancy Agreement makes the agreement null and void.

Put simply the Defendant is now saying to the new owner of the premises, that notwithstanding that I do not have a valid agreement to remain you will have to get consent from the Director of Lands before you can make me vacate the premises. That is akin to saying, "I do not have permission to stay but you will have to obtain permission from the same authority from whom I ought to have obtained permission, to consent to you taking me to Court to give you vacant possession" In other words its cause to remain is an enforcement of an illegal possession against the legal right of the new lessee. I do not think that the drafters of section 13 of the Crown Lands Ordinance (Cap. 113) or section 13 of the Crown Lands Act (cap. 132) had this situation in mind.

I am in agreement with the views expressed by Justice Inoke in Singh -v-Reddy [2009] Lautoka HCA No: 258/08. In this case similar arguments were raised regarding the consent to issue proceedings. His Lordship Justice Inoke stated:-

" Counsel for the Defendant argued that the consent of the Director for the issue of these proceedings must be obtained before their issue, and that having not been done here, this Court has no jurisdiction to hear this application. He cited Regan v Verma [1965] 11 FLR 240 and Northern Hotels Ltd v Oliver [1980] 26 FLR 93 as supporting his submission.

In my opinion, Counsel's interpretation of s 13(1) in this regard is not correct. Consent need not be obtained prior to the issue of proceedings. My reading of the section is that prior consent only applies to when the lessee alienates or otherwise deals with the land under lease. When proceedings are being issued, the section only requires consent. My interpretation is not inconsistent with the two Court of Appeal decisions cited above by Counsel for the Defendant."

Under s.172 of the Land Transfer Act the defendant is summoned and he must show cause why he refuses to give possession and if he proves to the satisfaction of the Court a right to possession or can establish an arguable defence the application will be dismissed with costs in his favour. Here on the affidavit evidence before me no serious conflict is raised except to say that he is on the land because a third party has allowed him to occupy it. That is not a tangible evidence establishing a right to occupy vis a vis the plaintiffs' rights under the Crown Lease. It could not be said that the defendants cause or right to possession arose from the plaintiff's failure to obtain consent before issuing proceedings; (see also comments of Justice Pathik in Tradewinds Marine Ltd –v- Fa [1994] FJHC 80;) Here Justice Pathik said after having found that the plaintiffs are registered proprietors of the property and that the property being a protected Crown Lease that it may not be necessary to obtain the consent of the Director of Lands to institute legal proceedings and refers to the case of NAGIN s/o Gulabdas and RANAS LIMITED v YEE FONG GAU t/a YUE HING STORE (C.A. 93/87) at Labasa as supporting that position.

Had the defendant and the previous owner obtained the consent of the Director of Lands for the tenancy agreement the Lease would have an encumbrance which will bind the plaintiff.

The defendants total reliance on the tenancy agreement entered into between itself and Viti Vanua Holdings as the basis upon which its cause for remaining in possession of the property brought the matter squarely within the principle in the Privy Council decision of Chalmers v Pardoe [1963] 3 All E R 552.

The facts in that case were that Mr Pardoe was the holder of a lease of native land. That land was subject to the equivalent of s 12(1) of the Native Land Trust Act which is in the exact same terms as s 13 of the Crown Land Act, provides:

Except as may be otherwise provided by regulations made hereunder, it shall not be lawful for any lessee under this Act to alienate or deal with the land comprised in his lease or any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever without the consent of the Board as lessor or head lessor first had and obtained. The granting or withholding of consent shall be in the absolute discretion of the Board, and any sale, transfer, sublease or other unlawful alienation or dealing effected without such consent shall be null and void ... (emphasis added)

Mr Chalmers was not only the solicitor but also a friend of Mr Pardoe. Mr Chalmers, on retirement and because of their friendship, was allowed by Mr Pardoe to occupy part of Mr Pardoe's land and build his home. Mr Pardoe said in evidence that he told Mr Chalmers that he could build provided he got the necessary consent and permission of the NLTB. He was willing for Mr Chalmers to have a sublease or a direct lease following a surrender of that part of the land on which his house was built. They had a falling out and Mr Pardoe claimed that this "friendly arrangement" was a "dealing" in native land and because the prior consent and permission of the NLTB had not been obtained, it was null and void. Mr Chalmers on the other hand argued that he had an equity in the land and that equity should intervene to prevent Mr Pardoe from taking the buildings for nothing.

As to whether the "friendly arrangement' amounted to a "dealing" with native land within the meaning of s. 12 of the Ordinance, Sir Terence Donovan, in delivering the speech of the Privy Council in Chalmers v Pardoe (supra), explained it as follows:

Repeating this term, but without necessarily adopting it, the Court of Appeal held, as their lordships have already indicated, that the least effect which could be given to the "friendly arrangement" was that of a licence to occupy coupled with possession. Their lordships think the matter might have been put higher. "I gave him the land for nothing" said Mr Pardoe. Again, "He could get anything – a sublease or a surrender, which was perfectly correct..." And so on. In their lordships view an agreement for a lease or sublease in Mr Chalmers' favour could reasonably be inferred from Pardoe's evidence.

Even treating the matter simply as one where a licence to occupy coupled with possession was given, all for the purpose, as Mr Chalmers and Mr Pardoe well knew, of erecting a dwelling-house and necessary buildings, it seems to their lordships that, when this purpose was carried into effect, a "dealing" with the land took place. On this point their lordships are in accord with the Court of Appeal: and since the prior consent of the Board was not obtained, it follows that under the terms of s. 12 of the ordinance, cap 104, this dealing with the land was unlawful. It is true that in Harman Singh and Backshish Singh v Bawa Singh [1958] FLR 31 the Court of Appeal said that it would be an absurdity to say that a mere agreement to deal with land would contravene s. 12, for there must necessarily be some prior agreement in all such cases. Otherwise there would be nothing for which to seek the Board's consent. In the present case, however, there was not merely agreement, but, on one side, full performance: and the Board found itself with six more buildings on the land without having the opportunity of considering beforehand whether this was desirable. It would seem to their lordships that this is one of the things that s. 12 was designed to prevent. True it is that, confronted with the new buildings, the Board as lessor extracted additional rent from Mr Pardoe: but whatever effect this might have on the remedies the Board would otherwise have against Mr Pardoe under the lease, it cannot make lawful that which the ordinance declares to be unlawful.

In Gonzalez v Akhtar [2004] FJSC 2 (21 May 2004), the Supreme Court held that a contract for the sale and purchase of land entered into without the required prior approval of the Minister for Lands in breach of s 6(1) of the Land Sales Act was illegal and unenforceable. The Supreme Court approved the decision of Palmer J in Hunter v Apgar [1989] 35 FLR 180 to the same effect.

CONCLUSION

In view of the above I am satisfied that the tenancy agreement entered into between the defendant and Viti Vanua Holdings is null and void and of no effect in that no consent was obtained before its execution. That the said contract does not bind the plaintiff and that as a result the defendant has not shown sufficient cause to remain on the property. I further find that the fact that consent may or may not have been obtained by the plaintiff to issue proceedings was not sufficient cause for the defendant to remain on the premises. For reasons also explained above I also find that the acceptance of rent by the plaintiff did not amount to a waiver of their right to enforce the notice to quit. I therefore make the following orders.

ORDERS

The Orders are therefore as follows:

1. The application for vacant possession by the Plaintiff is allowed;

2. The Defendant is to vacate the premises by the 23 November 2010; and

3. The Defendant to pay the Plaintiff's costs of $500:00 to be paid within 14 days.

H A ROBINSON
MASTER

LABASA HIGH COURT
28 October 2010.