Lal v Wati - Ruling [2012] FJHC 1163; Civil Action190.2011 (15 June 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
Civil Action No. 190 of 2011

BETWEEN:

KESHVI ROMANISHI LAL as the duly appointed attorney by virtue of Power of Attorney No. 53271 of EDWIN CHARLES MORRIS GLADWIN of Lot 3 Queens Road, Korotogo, Sigatoka.
PLAINTIFF

AND:

VIDYA WATI
of Lot 3 Queens Road, Korotogo, Sigatoka.
DEFENDANT

Before : Master Anare Tuilevuka
Appearances : Mr. F. Vosarogo of Mamlakah Lawyers for the Plaintiff.
:Mr. R.P Chaudhary of Gordon & Chaudhary for the Defendant.

Date of Ruling : 15 June 2012 at 2.30 p.m.

RULING
INTRODUCTION

[1]. Edwin Charles Morris Gladwin ("Gladwin") is the registered proprietor of all that freehold land comprised in Certificate of Title No. 21499 on DP No. 5429 ("property"). The property is 965 square meters in size and is situated in Serua in Viti Levu. Erected on the property is a dwelling house known as Dunrovin Lodge ("lodge"). On 03 August 2006, Gladwin, who resides in Australia, and one Sherry Shiromani Narayan ("Narayan")who, I gather also resides in Australia and is Gladwin's partner - entered into an arrangement with one Vidya Wati ("Wati") – who resides in Fiji. Narayan and Wati are siblings. Their arrangement is documented - a copy of which document is exhibited in the affidavit of Wati sworn on 28 December 2011 and marked "VW2". The contents of the said document are set out in paragraphs 20 and 21 below.

[2]. On 11 October 2011, Wati prepared and lodged a caveat against the property.The caveat is an absolute caveat forbidding the registration of any dealing on the property. It was registered on 13 October 2011. Wati states her interest therein as a legal and/or an equitable one deriving from the above document[1].From the written submissions filed and oral arguments in Court, I gather that Wati's claimed estate or interest as lessee is purported to derive from the 03 August 2006 document.

[3]. Meanwhile, 11 October 2011, the date when Wati lodged her caveat, also happened to be the date when Gladwin entered into an agreement with another for the sale and purchase of the property. Gladwin has deliberately withheld this agreement as he wishes to conceal the identity of the purchaser for fear that Wati may corrupt him against settlement. No issue is raised about this.

[4]. It is stated however on behalf of Gladwin that the intended purchaser has secured finance and the parties had advanced in their arrangements. Settlement, however, is being hindered by Wati's caveat. What is before me at this time is Gladwin's application to remove the said caveat to enable him to settle with his purchaser.

MAGISTRATES COURT PROCEEDINGS – SIGATOKA

[5]. Several days before Wati lodged her caveat, she hadfiled a Writ of Summons and a Statement of Claim at the Sigatoka Magistrates Court on 03 October 2011. On the same day, Wati also obtainedvarious ex-parteinjunctive orders from the same Court. These Ordershad the effect of restraining Gladwin and Narayan from entering the property and from removing, tampering with or damaging any property of Wati - orfrom interfering with Wati's business – or from harassing, intimidating, coercing and threatening Wati – or from interfering with Wati's right to quiet enjoyment of the property[2].

[6]. Gladwin and Narayanfiled their statement of defence on 22 November 2011. But on 06 December 2011, Gordon &Chaudhary filed another Notice of Motion seeking security for costsas well as an order to restrain Gladwin from dealing with the property until the Sigatoka Magistrates Court determines the matter. The Motion also includes a prayer that the subject property be attached until further order of the Court or till the substantive action is determined.

[7]. The statement of claim pleads inter alia that Wati, after executing the agreement, has spent approximately $8,500 on improvements thereon the property and has obtained a hotel operating license over the lodge. Wati also pleads that she has been paying rent from November 2009. From receipts exhibited in her affidavit, I gather that she is being charged a rental at the rate of $300-00 (three hundred dollars per month).

ISSUES

[8]. If Gladwin were to obtain an Order to remove Wati's caveat, he would be bypassing the interim orders of the Magistrates Court and would thereafter be free to settlehis sale and purchase agreement. Can this court deal anyhow with the application for removal of caveat?If so, then doesthe document in question create in Wati an interest in the property of such a nature as to sustain her caveat?

CAN THIS COURT PROCEED WITH THE APPLICATION TO REMOVE THE CAVEAT?

[9]. The Magistrates Court has only issued interim orders and the substantive rights of the parties are yet hanging in the balance. Buckley LJ in Carl-Zeiss-Stiftung v Rayner [1969] 3 All E.R. 897 at 911 observed as follows at page 910 lines B -D:

Many interlocutory orders, such, for instance as an interim injunction limited to take effect only until judgement or further order, clearly involve no final decision of any issue between the parties either expressly or, since they depend only on a prima facie case being made out, by implication. Finality for this purpose means that the decision: (a) is one which does not ex facie, as in the case of an order for an account or enquiry, leave something to be judicially determined or ascertained before the decision can become effective or enforceable; and (b) is not subject to subsequent discharge, rescission, modification or any other form of revision by the court or tribunal making the decision

[10]. As such, there is nothing wrong in principle with this court dealing with the application to remove the caveat.Different if the Magistrate had already determined judicially with some finalitythe issues between the parties. Had that been the case - it would be an abuse of process to relitigate them in this court if guised in the form of the current application.

CAVEATBLE INTEREST

[11]. Mr. Chaudhary is adamant that the document in question evinces the incidents of a lease and that Wati's caveat is therefore sustainable[3]. Mr. Vosarogoargues that the document is an agreement to use the property as a lodge[4].

[12]. Both submissions are correct in law. The only issue is one of fact (and construction) as to whether the document in question actually evinces the incidents of a lease or any other form of an estate or a proprietary interest which can supportthe caveat.

LEASE OR MANAGEMENT AGREEMENT?

[13]. Whether or not the document evinces the incidents of a lease or something lesser, the test is whether or not it grants to the grantee (i.e. Wati) a right to exclusive possession of the premises.Exclusive possession is the lessee's right to exclude others including the lessor, subject to specific entry provisions in the document

[14]. In Lewis v Bell [1985] NSWLR 731, the Supreme Court of New South Wales applied the exclusive possession testto decide whether or not the document in question was a lease or a mere license to use the premises in a particular way (a personal non-caveatable interest)[5]. The court approached the issue - firstly –by an attempt to construe the terms of the document in context.

[15]. If the document uses words which are ordinarily understood to confer such a right, then a prima facie grant of exclusive possession will be inferred (as per Mahoney JA's views at 734 and 735 of Lewis v Bell)[6].

[16]. However, where the document is unclear as to what exactly is being granted such as where the grant is expressed not in terms of possession but as a right to occupy premises or a right to carry on business on premises or a right to use the premises either generally or in a specific way- the Australian approach is to determine by construction whether what is being granted is possession or exclusive possession. This is done by looking at both the nature of right granted and also the intention of parties[7].

[17]. At the end of the day, the process of construction is essentially a process of implication[8].

IMPORTANT

[18]. The nature of rights granted by a documentmust be consistent with the rights to exclusive possession. For example, if the right granted is of its nature, not transferable or is otherwise personal to the grantee it will, as such, not be a leasehold interest because a leasehold interest is – by its nature – transferable (see Richardson v Landecker [1950] NSWStRp 10; (1950) 50 SR (NSW) 250 at 255; 67 WN 149 at 151). On the other hand, if what has been granted can only be enjoyed by the grantee – the grant of exclusive possession will be inferred (see Radaich v Smith).

[19]. In England, what is often emphasised is the intention of the parties. There, exclusive possession is relevant but not decisive (see Halsbury's Laws of England, 4th ed, vol 27, pars 6-7 at 13-15, and the cases there referred to). The following words in Radaich v Smith perhaps encapsulate the Australian attitude:

...expressions of intention are irrelevant: the parties cannot escape the legal consequences of one relationship by professing that it is another.

THE DOCUMENT IN QUESTION

[20]. The document in this case between Gladwin, Narayan and Wati is worded inter alia as follows:

WHEREAS Edwin is the owner of the house and property known as Lot 3 Queens Road, Korotogo on the Certificate of Title No. D.P 5429 and whereas EDWIN agrees to lease the said house and property to VIDYA WATI for a period of not less than 10 years. To operate a business known as DUNROVIN LODGE.

(my emphasis)

[21]. The document then goes on to say as follows:

NOW THEREFORE THIS AGREEMENT AS FOLLOWS (sic)

VIDYA WATI agrees to share proceeds of income after expenses in three equal shares being EDWIN 33 1/3% 33 VIDYA1/3%. SHERRY 33 1/3%.

EDWIN and SHERRY agree that VIDYA will manage the business known as DUNROVIN LODGE.

[22]. The useof the words "agrees to lease ...for a period of not less than 10 years" might suggest that what is being granted is in fact a right to exclusive possession. However, the rest of the document appears to indicate that the right to occupy the premises given to Wati is merely incidental to the main purpose of operating Dunrovin Lodge as a business of providing accommodation to travellers.

[23]. That, coupled with the fact that Gladwindoes have an equal interest in the profits from the business – and the fact that she pays rent on the property at the meagre rate of $300 per month, and the fact that the business is a relatively small operation, and the fact that Gladwin is a resident of Australia while Wati is a local resident – all suggest strongly to me that the document is – but business arrangement which allows Wati a right to occupation to allow her to run, operate and manage the lodge for and on behalf of all interested parties – including Gladwin.

[24]. It appears to me that Gladwin wants out of that business arrangement. To extend the caveat is to extend the business arrangement that he wants out of. In my view, no Court could possibly justify tying him down to such business arrangement in the circumstances of this case against his will. There is nothing in the document to indicate that the right it confers on Wati is a right to exclusive possession.

[25]. In Austcorp Hotels Pty Ltd v 179 Elizabeth Street Pty Ltd [1994] ACL Rep [335 NSW 50] the New South Wales Supreme Court held that a company employed to manage a hotel for another did not have any right to exclusive possession against the owner, and could not maintain a lessee's caveat[9].I am of the view that the above applies also in this case. Hence – in my view, Wati does not have a caveatable interest.

LAW AS TO REMOVAL OF CAVEATS

[26]. The caveator bears the onusof showingthat his or her caveat should be extended until full trial. To succeed in doing this, he or she must establish three things: firstly, that there is a serious question to be tried. A factor to be considered in this first heading is what interest she has in the land. Secondly, that the balance of convenience favours maintenance of the caveat until trial and thirdly, that the overall justice of the case favours keeping the caveat until trial (see theFiji Court of Appeal's judgment in Bahadur Ali v Fiji Development Bank (Court of Appeal Civil Case No 57 of 2004; Decision of 18 March 2005).

[27]. I have considered all these and in my view, because:

• (i) the document in question cannot sustain Wati's caveat for the reasons stated above, and
  
• (ii) because to extend the caveat essentially will entail prolonging a business arrangement that Gladwin obviously wants out of.
  

the balance of convenience and the overall justice of the case favours the removal of the caveat. Wati of course may pursue her claim in the Magistrates Court for damages.

ORDERS

[28]. I grant Order in terms of the plaintiff's application and hereby direct the Registrar of Titles to forthwith remove the caveat in question. Costs to the plaintiff which I summarily assess at $850-00 (eight hundred and fifty dollars only).

Master Tuilevuka.

At Lautoka.
15 June 2012.

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^[1] The caveat in question describes Wati’s interest in the property as follows:

...a legal and or an equitable interest by way of a written agreement dated 3^rd of August 2006 being for a period of 10 years

^[2]Copy of Sealed Interim Injunction dated 04 October 2011 is exhibited in the affidavit of Vidya Wati filed on 12 January 2012 in opposition to the Originating Summons.
^[3] A lessee has an estate in the land and therefore a caveatable interest.
^[4]He cites various case law authorities to emphasise the law that only a caveat based on a claim to title, or a beneficial interest in the land or an estate or interest under the Land Transfer Act is sustainable. A caveat based on a contractual or a personal right is not sustainable (Holt v Anchorage Management Ltd [1987] NZCA 5; [1987] 1 NZLR 108 at 117; In Re Piles Caveats [1981] QDR 81).
^[5]see also Glenwood Lumber Co. Ltd v Phillips [1904] UKLawRpAC 26; [1904] AC 405 at 408; McPherson v Temiskaming Lumber Co Ltd [1912] UKLawRpAC 70; [1913] AC 145 at 152-153; Minister for State for the Army v Dalziel (19440 [1944] HCA 4; 68 CLR 261 at 299 et seq per Williams J cited in Lewis v Bell.
^[6]Mahoney JA said as follows:

But the use, in the operative part of the document, of words such as “lease” of “devise” will ordinarily be understood to involve the grant of such a right. Conversely, if what is granted is not in terms exclusive possession or if the words used in the grant are not words understood to convey the right of exclusive possession, then (subject to what I shall say) the transaction is prima facie not one of lease. Thus, if that which is granted is not of its nature the right to possession or exclusive possession but, e.g. the right to use the premises only for a defined and particular purpose, there will prima facie be no lease.
^[7]Mahoney J said as follows:

But there are cases in which it is not clear from the terms of the grant constructed in the light of the whole agreement and its context what it is that is being granted by them. In such cases, it is necessary to determine what is granted by looking at other aspects of the transaction. Thus a grant may not be in terms of “possession” but of something else. It may be the grant of a right to occupy premises: cf. O’Keefe v Malone [1903] UKLawRpAC 20; [1903] AC 365 at 377; Landale v Menzies [1909] HCA 48; (1909 9 CLR 89 at 91, 100, 101; the right to carry on a business on the premises: cf Radaich v Smith (at 210); or, as in the present case, the right “to use” the premises either generally or in a particular way. In such cases, the court must, by the process of construction, determine whether what is granted is mere occupation or use, or is possession in the relevant sense. And where what is granted is possession, it still, in principle, may remain to be decided whether what is granted is exclusive possession.............

In deciding, in such cases, whether what is granted is the right to exclusive possession, the court, in the process of construction, has in practice looked inter alia, to two things: the nature of the rights which, in terms, have been granted; and the intention of the parties.
^[8] Mahoney J said as follows at page 735 of the Judgement at paras B,C and D.

Where the argument for the existence of a lease is of this kind, it is, I think, important to have in mind that the argument depends upon the process of implication. Such an implication is, in my opinion, of the same nature as that involved in, for example, the implication of a term in the construction of transactions generally: at least, the principles upon which the implication is to me made are the same. These principles have been discussed in e.g. Liverpool City Council v Irwin [1976] UKHL 1; [1977] AC 239 at 255; and were referred to in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] 149 CLR 337: see eg (at 345 et seq) per Mason J; (at 400 et seq) per Brennan J. As was there indicated, there are several and distinct basis upon which terms may be implied. In a case such as the present, the basis of implication is normally that it is necessary in order to give business efficacy to the rights which otherwise have been granted. Such being its basis, the implication will not be made merely because it is reasonable or convenient to do so; it must be necessary that the implication be made. And it will not be made if the parties have directed their attention to the subject matter of the suggested implication and have otherwise provided or have stipulated in terms that no such implication is to be made.

^[9]See New South Wales Supreme Court decision inAustralian Convention and Exhibition Services Pty Ltd v Sydney City Council Matter Nos Ca 40429/97; Ca 40430/97 [1998] NSWSC 682 (17 December 1998) where
Austcorp Hotels Pty Ltd v 179 Elizabeth Street Pty Ltd is cited with authority.