Korean Enterprises Ltd v Shell Company (Pacific Islands) Ltd [2002] SBCA 1; CA-CAC 010 of 2001 (8 May 2002)

IN THE COURT OF APPEAL OF SOLOMON ISLANDS

Civil Appeal No. 10 of 2001

BETWEEN:

KOREAN ENTERPRISES LIMITED
First Appellant

AND:

THE PREMIER OF GUADALCANAL PROVINCE
(Representing the Guadalcanal Provincial Executive and Assembly)
Second Appellant

AND:

SHELL COMPANY (PACIFIC ISLANDS) LIMITED
Respondent

CORAM: LORD SLYNN P, McPHERSON & WILLIAMS JJA.

HEARING: December 13, 2001
JUDGMENT: Given by Registrar Court of Appeal, 8^th May 2002

JUDGEMENT

(LORD SLYNN OF HADLEY, P, McPHERSON JA, WILLIAMS JA.): Oil fuel is transported to Solomon Islands by the respondent Shell Company (Pacific) Limited in ocean-going tankers. On arrival, the tankers discharge the fuel into a 200 mm diameter steel pipe which runs ashore to a parcel of land in respect of which the first appellant Korean Enterprises Limited (KEL) now has a fixed term lease. The pipe line meets a non-return valve on the KEL land, and then performs a right angle turn to travel parallel to the waterfront on to another parcel of land belonging to the second appellant, which is the Guadalcanal Provincial Executive and Assembly (Province) represented as a party to these proceedings by the Premier. From there the pipe line passes under a road into land which was first acquired in 1951 by the respondent Shell, where the fuel is discharged into bulk storage tanks. For most or much of its length on the KEL land and the Province land, the pipe is underground. At the point of location of the non-return valve on the KEL land, there is an inspection hatch used by Shell employees for checking the valve. To have access to it, they go on to the KEL land.

The pipe line was laid down by Shell in 1962. At that time the other two parcels of land were vested in the High Commissioner for the Western Pacific. His was an office constituted under various imperial Acts and Orders in Council and continued under the Pacific Order in Council 1893, which first introduced English law into Solomon Islands (art 20). There is no doubt that the High Commissioner represented the Crown, meaning the Government of what was then the Solomon Islands Protectorate established under the Foreign Jurisdiction Act 1890 (imperial). On 1 January 1969, when the Land and Titles Act (Cap 133) came into force, title to these two parcels of land (which presumably was then still one allotment) was vested in or came under the control of the Commissioner of Lands, who, it is not disputed, also represents the Crown in right of the Government of Solomon Islands. The second appellant Province acquired its title to a perpetual estate in the land, which has since been subdivided, from the Commissioner of Lands on 8 July 1983. At that time it held both of the remaining two parcels ("the two parcels"); but on 14 July 1999 it transferred to KEL the fixed term lease in the parcel now owned by KEL.

Shell, Province, and KEL are each registered under the Land and Titles Act in respect of their interests in their various parcels of land. KEL plans to build a shopping and commercial centre on its land and on 19 July 1999 demanded that Shell remove the pipe line over or under that land. Shell claims to have an easement or a right of way in respect of the pipe line and also in respect of access to the inspection hatch or valve located on the KEL land for the purpose of its inspection, maintenance and repair. It also claims a corresponding easement or right of way in respect of the length of the pipe line that traverses the Province land. It claims to have acquired that right by virtue of its uninterrupted use of the pipe line for the period of 37 years which had elapsed before these proceedings were instituted. There is no dispute about the facts, on which the parties are agreed; and, in particular, it is accepted that at all material times both Province and KEL were aware of the existence of the pipe line on what are now their respective parcels of land.

The question whether Shell had any such right came before Palmer J in the High Court on 14 March 2001. Having made an earlier order on 25 April 2001, his Lordship gave reasons on 15 May 2001 in which he upheld Shell's claim to the right of way or easement it asserted, and on 27 June 2001 made appropriate declarations and orders which were passed and entered or perfected on 9 July 2001. It is against that judgment that this appeal is brought to the Court of Appeal. Between the original hearing and the appeal, the Attorney-General for Solomon Islands has exercised his right to intervene in support of the appeal, and was represented on the hearing before this Court by Mr Deve of counsel.

Earlier we said that the interests of the litigating parties in the various parcels of land were registered under the Land and Titles Act. That Act is evidently modelled to a large extent on the Australian Torrens legislation, which has been widely adopted in various parts of the Commonwealth, and which, in place of the old procedure of conveyancing by livery or deed, introduced a system of title by registration. See Frazer v Walker [1967] 1 AC 569 and Breskvar v Wall (1971) 126 CLR 376, 385. The dominant feature of the Torrens system is that, once registered, the interest of the owner of an interest in land is held "indefeasibly"; that is, subject only to such other interests as are registered in respect of it, but free from all other interests that are unregistered. In the case of the Land and Titles Act, these principles are given effect notably in the provisions of ss 109 and 110 of the Act. The Torrens legislation nevertheless recognises the existence and subsistence of various identified rights and interests even though they are not registered. Section 114 of the Act describes them as overriding interests and, in specifying what they are, that section specifies the following among others as overriding interests:

"(a) rights of way, rights of water, easements and profits subsisting at the time of first registration of that interest under this Act."

The expression "first registration of that interest under this Act is a reference to the registered interest of the owner over which the specified unregistered interest is to prevail. The only other overriding interest that, is or may be, relevant here is that specified in para (i) of s 114:

"(i) rights acquired or in the process of being acquired by virtue of any law relating to the limitation of actions by prescription."

The right, if any, of Shell to maintain and use the pipe line over the land of KEL and the Province and the right, if any, to have access across the land of KEL for purposes of inspection, etc., are rights that are or have the character respectively of an easement and of a right of way within s 114(a). Rights to pass water through a surface or subsurface pipe on the servient tenement, and to enter, inspect, maintain and repair it, are often the subject of express or implied grants, and Gale on Easements (16th ed: 1997) §6.77, at 285, expressly states that such rights may be acquired "by prescription in the usual way". The learned authors do not refer to authority distinctly dealing with pipes carrying oil, but there is no reason to doubt that an easement for that purpose may subsist at common law. In Attorney-General of Southern Nigeria v John Holt and Company (Liverpool) Limited [1915] AC 599, 617, their Lordships of the Privy Council quoted with approval a remark of Lord St Leonards in an earlier case that the category of "easements must alter and expand with the changes that take place in the circumstances of mankind".

We therefore entertain no doubt that a right of the kind asserted here by Shell in respect of the pipe line is capable of being recognised at common law as an easement. Although in this instance it has never been registered, s 114(a) of the Act would nevertheless allow effect to it as an overriding interest if it has already been acquired, or, under s 114(i), if it were still in the process of being acquired by virtue of any law relating to the limitation of actions or by prescription. The question here, however, is whether, in view of other provisions of the Land and Title Act, it was or is possible for Shell by process of prescription to have acquired such a right or easement over the other two parcels.

In answering that question in the affirmative, Palmer J relied on s 2 of the Prescription Act 1832; 2 & 3 Will 4, c 71. It fixed 20 years of uninterrupted enjoyment of a right as the period of acquisitive prescription in the case of an easement. It should, however, be borne in mind that by force of s 4 of the Prescription Act, it is not the total duration of uninterrupted usage that is critical but the period before litigation begins. See the observations of Lord Macnaghten in Coils v Home & Colonial Stores Limited [1904] AC 179, 189, adopted by the Court of Appeal in Hyman v Van den Bergh [1907] UKLawRpCh 157; [1908] 1 Ch 167; and Megarry & Wade: Law of Real Property (4th ed, 1975) at 851-852. Under that Act the 20 years period in this case therefore fails to be calculated back from the date in 1999 when the current litigation was instituted, which takes it to some time in 1979. From 1983 the Province had title to the parcel of land of which KEL is now lessee. In the past statutes of this kind have generally not been regarded as binding on the Crown if they operated to the prejudice of Crown; but s 2 of the Act of 1832 expressly mentions the King, and Palmer J held it was clear that under s 2 rights in the nature of an easement may be acquired against the Crown. His Lordship also held that the Act of 1832, or s 2 of it, was an Act of the Parliament of the United Kingdom "of general application" and in force on 1 January 1961. In consequence, the learned judge held that it had effect as part of the law of the Solomon Islands pursuant to s 1 of Schedule 3 to the Constitution.

We see no reason to doubt his Lordship's conclusion that s 2 of the Act of 1832 is an act "of general application". In Aseri Harry v Kalena Timber Company Limited in 1999 (Civil Appeal Case No 164 of 1994), this Court (Mason P, McPherson and Los JJA) held that the Law of Property Act 1925, or s 81(1) of it, was such an Act, and that it had effect in Solomon Islands. In Attorney-General for New South Wales v Love [1898] AC 879, the Crown Suits Act 1769, commonly known as the Nullum Tempus Act, which prescribed certain limitation periods for Crown suits was held to have been received in New South Wales. More specifically, in White v McLean [1890] SALawRp 27; (1890) 24 SALR 97, the Act of 1832 was held to form part of the law of South Australia. There are other Commonwealth decisions to similar effect.

It is, however, not in that area, but elsewhere, that the respondent's difficulties arise. Section 226(1) of the Land and Titles Act provides:

"(1) Easements and profits may be acquired by peaceable, overt and uninterrupted enjoyment thereof for a period of twelve years:

Provided that no easement or profit -

(i) may be acquired over or in an interest which is vested in the Commissioner or as local authority."

By s 2(1), the Commissioner means the Commissioner for Lands (to whom reference has already been made), in whom the whole of the land comprised in the two parcels was vested before its transfer to the Province in 1983. The Land and Titles Act was assented to on 1 January 1969, so that until the transfer to Province on 8 July 1983, proviso (i) to s 226(1) would have precluded any easement from being acquired by Shell against the Commissioner over or in respect of either of the two parcels now owned by the Province and KEL.

From 1983 until July 1999, when KEL made its demand that Shell stop using the pipe line, is a period of more than 12 years. Throughout that period Shell had, within the meaning of s 226(1) of the Act, had peaceable, overt and uninterrupted enjoyment of the pipe line. It has therefore done what was needed to acquire an easement under s 226(1) unless Province is a "local authority" under proviso (a) to s 226(1). As to that, Province was originally constituted as a local authority under the name Guadalcanal Local Council, and it was in that name that it acquired the two parcels in 1983. Its conversion into the Provincial Assembly by its present name was effected partly by art 13 of the Solomon Islands Independence Order and partly by force of the Provincial Government Act (Cap 118), with the process of transition taking place on 1 August 1984. The history of the matter is set out in the reasons of the learned primary judge, with which we respectfully agree. There is no reason for repeating it here. In particular, we agree with his Lordship's view that the Land and Titles Ordinance, as it originally was, was continued in operation by art 5 of Solomon Island Independence Order as an Act of the National Parliament, in precisely the same way as, it was held by this Court in Y Sato & Company Limited v Honiara Appointed Council (Civil Appeal Case No 16 of 1998), the Local Government Ordinance was continued as an Act of the National Parliament. It is therefore to the current, and not to the repealed, Interpretation Act (which came into force on 29 September 1978) that recourse must be had for the meaning of the expression local authority. It includes the second appellant Provincial Executive and Assembly of Guadalcanal, represented as a party in these proceedings by the Premier, which is therefore a "local authority" within the meaning of proviso (i) to s 226(1) of the Land and Titles Act.

The result is that, because of this proviso, it was not possible for Shell under s 226(1) of that Act to acquire an easement against Province in respect of the pipe line during the period it has been the owner of either or both of the two parcels, which as we have said more than once, was throughout the whole of the period from 1983 until 14 July 1999, when one of those parcels was transferred to KEL as lessee.

This leaves for consideration the point on which Palmer J determined the case in favour of Shell. It is that, whereas s 114(a) speaks of the subsistence (despite their non-registration) of "rights of way ... easements and profits", s 226(1) and the proviso to that subsection refer only to easements and profits. The singling out for special mention of rights of way in s 114(a) and their omission from s 226(1) must, it is said, mean that it was the intention to treat them differently in those two sections of the Act. Hence, the prohibition imposed by proviso (i) to s 226 must not have been intended to extend to rights of way even if it does extend to other forms of easements.

In our view, however, there are several reasons for rejecting this proposition. It is true that a right of way, or easement of way as it is correctly called, is simply a particular form of easement, and the specific mention of rights of way in s 114(1) may therefore not have been strictly necessary because the word "easement" would sufficiently have comprehended it. But s 114(1) was concerned to create a series of exceptions to the general principle of Torrens system indefeasibility, and the draftsman may well have thought it prudent to be quite specific about what those exceptions were. Another reason is that the word "easement" is defined in s 2(1) of the Act to mean, so far as material, "a right attached to a parcel of land ... to use other land in a particular manner......" When applied to s 226(1) and the proviso to it, it plainly includes an easement to maintain the subject pipe line in the present instance, and to pass oil or fuel through it. It is not at all clear that such a right could properly be described as a right of way; but, as an easement, it is within the prohibition or exception in proviso (i) to s 226(1). It is true that the definitions in s 2(1) are introduced by the formula "except where the context otherwise requires"; but it is scarcely possible to regard the reference to right of way in s 114(1) as a context that requires the word "easement" in s 226(1) to be read in any but its broad defined meaning. Finally, if as the respondent contends, the proviso to s 226(1) is to be read as not including rights of way, consistency requires the same interpretation to be extended to the whole of s 226(1); which would have the effect of altogether excluding easements in the form of rights of way from the scope of that provision. It would then not be possible by peaceable enjoyment for 12 years to acquire a right of way against anyone, let alone the Commissioner or a local authority. It hardly seems likely that that was the legislative intention.

Quite apart from these matters, there seems to us to be a compelling argument that the legislative intention in s 226 of the Act was to state in a complete fashion the leading principles governing the acquisition by prescription of easements and profits. The section forms part of Part XXIII of the Land and Titles Act, which is headed PRESCRIPTION. That Part in ss 224 and 225 deals with prescription generally in relation to land, and not only in relation to easements or even registered land. Section 227 incorporates a series of what are called transitional provisions designed to apply or adjust this new law to cases in which periods of prescription began at times before the Act commenced. It may perhaps be going too far to say that Part XXIII has exhaustively defined the law on the subject of prescription, but it has certainly gone a long way in that direction.

One thing that is clear from Part XXIII is that there is now really no room for the operation of the doctrine of lost modern grant. That "revolting fiction", as Lush J was moved to describe it in Angus v Dalton (1877) 3 QBD 85, 94, had, according to Griffith CJ in Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 282, 299, been much discredited in 19th century England. It would not be at all surprising if the Land and Titles Act was designed to give it its quietus in the Solomon Islands, and with it s 2 of the Real Property Limitations Act of 1832, which in 1966 the Law Reform Committee described as "one of the worst drafted Acts on the Statute Book" (Megarry & Wade: Law of Real Property, 4th ed., at 850).

In any event, Acts of the United Kingdom Parliament such as the Prescription Act 1832 have effect as part of the law of Solomon Islands only subject to the Constitution and to any Act of Parliament of the Solomon Islands. See Constitution Schedule 3, s 1. The Land and Titles Act was originally an ordinance passed during the days of the Protectorate, but is by force of cl 5 of the Solomon Island Independence Order 1978 now to be considered an Act of Parliament of Solomon Islands: see Y. Sato & Company Limited v Honiara Appointed Council, referred to above. The Prescription Act therefore has effect as law only "subject to" the Land and Titles Act and in particular Part XXIII of it. Its provisions do not expressly repeal the Prescription Act 1832, but it is well settled that valid subsequent local legislation may have that effect by implication. It does so when that local legislation is inconsistent with the prior Act of the United Kingdom Parliament such that the two provisions or sets of provisions cannot stand together: see, for example, Harris v Taylor (1889) 10 App Cas 289, 291; or where, from the form, nature and scope of the later local provisions, it is plain that they are intended to displace the pre-existing law on that subject: see R v de Bannoy (1968) 2 DLR (3d) 424.

That, in our opinion, is the case here. The provisions of s 226(1) of the Land and Titles Act now prescribe the circumstances under which an easement, including a right of way, may be acquired by prescription. For that purpose, they require a period of 12 years of uninterrupted user in the circumstances set out in the provisions of that Act. They do not require it to be calculated back from the commencement of the litigation. They also provide that no such easement or (as we interpret it) right of way may be acquired by prescription against the Commission of Lands or a local authority, which includes the second appellant in this case. That has been the law of Solomon Islands on this subject since 1 January 1969, when the Land and Titles Act, or Ordinance as it then was, came into force. Section 2 of the Prescription Act 1832, which provides for a period of 20 years calculated under s 4 back from when the litigation began, and which binds the Crown, is inconsistent with the provisions of s 226(1), and to that extent is repealed by implication by that subsequent local Act. Furthermore, the provisions of Part XXIII of that Act evince an intention that the law of Solomon Islands with respect to the acquisition by prescription of interests in land are to be regulated by the provisions of that Part, and not by the ancient doctrine of lost modern grant or by the provisions including s 2 of the Prescription Act 1832. Shell's pipe line and its acts of entry to inspect it constitute a continuing trespass on KEL's land. It is entitled to insist on removal of the pipe and to prevent entry on the land by Shell employees.

It follows that, in this particular but critical respect, we consider that the decision below was wrong, and must be reversed. It may be added that even if the right of access to the inspection valve and non-return valve had been capable of being regarded as a right of way that was outside the prohibition imposed by proviso (i) to s 226(1), our decision would be the same. The right claimed by Shell to enter on KEL's land and inspect the valve is plainly only ancillary to the right to maintain and use the pipe line for the purpose of transporting fuel through it, and that it exists for no other purpose. It cannot survive in isolation from the right claimed to exist over or in respect of the pipe line itself, as to which the proviso prohibited the prescriptive acquisition of an easement against the second appellant throughout the period from 8 July 1983, when the two parcels came into the ownership of the second appellant Province; or against the Commissioner of Lands before that date.

We reach this conclusion with some regret. We are conscious of the serious practical consequences that it may have for the welfare of Honiara and Guadalcanal as a whole, which are necessarily dependent on deliveries of fuel through the pipe line. But our function is to apply the law; and, even if we were at liberty not to do so, the consequences would soon be at least as far-reaching. Rights of way would become capable of being successfully asserted by acquisitive prescription in all parts of the country against the Commissioner of Lands of which that officer would not previously have been aware and which, in reliance on proviso (i) to s 226(1), he or she would have had no reason to take steps to curtail. It is no doubt partly for that reason that the Attorney-General intervened in this appeal in the public interest.

To avert some of the immediate consequences of this decision if it turned out to be unfavourable to the respondent, Shell and the first appellant KEL provided the Court with an agreed form of judgment or order for use if the appeal succeeded, as in law it must. The declaration in para 1 of this draft refers in terms to particular provisions of s 226(1) and the proviso to it. We do not consider it appropriate to make declarations in that form if it can be avoided. Instead, the judgment of this Court will be as follows:

Appeal allowed. Judgments of the High Court given on 24 April 2001 and on 27 June 2001 as perfected on 9 July 2001 set aside. Instead it is declared, ordered and adjudged.

1. That the Respondent has no easement and no right of way or of access to, over or in respect of the pipe on lands of the Appellants or either of them more particularly described in the Judgment given or perfected in the High Court on those days.

2. That, subject to paragraphs 3 and 4, the Respondent be restrained from using the pipe to move fuel across and from entering upon the First Appellant's land for any purpose connected with the use of the pipe.

3. That until such date as may be agreed by the parties or in default of agreement determined by the High Court (with liberty for that purpose to apply) the Respondent may continue to:

(a) use the pipe for the purpose of moving fuel, and

(b) enter on the land of the Appellants for the purpose of inspecting, maintaining and repairing the pipe.

4. That within a period of two months after the date in paragraph 3, the Respondent will render the pipe permanently unusable, safe and inert; or, alternatively, will at its expense remove the pipe from the land of the Second Appellant upon making good any and all damage caused by such removal.

5. That there be judgment for the First Appellant on its counterclaim, with damages to be assessed.

6. That the Respondent pay the costs of the First Appellant and of the Second Appellant of and incidental to this appeal and of and to the proceedings in the High Court.

7. That there be no order as to the costs of this appeal of the Attorney-General as intervener.

Lord Slynn of Hadley P.
McPherson JA.
Williams JA.