Y Sato & Company Ltd v Tiare [1999] SBHC 84; HC-CC 133 of 1997 (31 August 1999)

HIGH COURT OF SOLOMON ISLANDS
Civil Case No. 133 of 1997

Y SATO AND COMPANY LIMITED

V

JESSE TIARE, CATHERINE TIARE,
ANTHONY TIARE AND REGISTRAR OF TITLES

High Court of Solomon Islands
Before: Frank Kabui, J
Civil Case. No. 133 of 1997

Hearing: 16th August 1999
Judgment: 31st August 1999

Andrew Radclyffe for the Plaintiff
Leslie Kwaiga for the Defendant

JUDGMENT

(Frank Kabui J): By Originating Summons filed on 4th June 1997, the Plaintiff sought rectification of the fixed fixed - term estate register in respect of Parcel No. 191 – 035 - 134 under section 209 (now section 229) of the Land and Titles Act (Cap. 133) on the ground of mistake. Section 229 is in these terms: -

(1) Subject to subsection (2), the High Court may order rectification of the land register by directing that any registration be cancelled or amended where it is so empowered by this Act, or where it is satisfied that any registration has been obtained, made or omitted by fraud or mistake.

(2) The land register shall not be rectified so as to affect the title of an owner who is in possession and acquired the interest for valuable consideration, unless such owner had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or caused such omission, fraud or mistake or substantially contributed to it by his act, neglect or default.

Background

The late Charles Tiare was a former public officer in the Public Service of the Government of Solomon Islands. On 28^th March 1977, he applied to the then Committee for the sale of Government Houses to purchase Government Quarter No. 830 at Tanuli Ridge in Honiara. Quarter No. 830 is a Class VI house under the Government's classification system of its houses at that time. He and his family occupied that house at that time. He was then an Administrative Officer by appointment in the Public Service. His application to purchase Quarter No. 830 was accepted on 29^th March 1977. He accepted the terms of the purchase on 6^th May 1977. He signed the sale Agreement on 1^st March 1978. The Agreement between the then Solomon Islands Housing Authority and the Government over the administration of the sale of Quarter No. 830 was signed on 11^th September 1978. The arrangement was that the Commissioner of Lands was to make a grant of a fixed - term estate for 50 years to the then Solomon Islands Housing Authority which would then transfer its title to Charles Tiare and then would hold a charge over the property as security for the repayment of its loan to Charles Tiare. The repayment of the loan was by way of monthly deduction from the Charles Tiare's salary. After having been terminated from Government employment he became an employee of Szetu Enterprises Limited towards the end of 1983. By reason of an Agreement signed by Charles Tiare and Mr. Lenga on 2^nd June 1983, Charles Tiare sold the house (the property) to Mr. Lenga for $24,000. However, only $16, 222.58 were paid to Charles Tiare by Mr. Lenga.

Title to the property never passed to Mr. Lenga. In that same year, Charles Tiare died (the deceased). In 1989, Jessie Tiare, the wife of the deceased on the advice of an employee of the Solomon Islands Home Finance Corporation called at the office of the Registrar General where she was advised to see the Public Solicitor in Honiara. This, she did but her case never really progressed until 1993 when the Honiara Local Court ruled that the property be transferred to Jessie Tiare, Catherine Tiare and Anthony Tiare as joint owners of the property. Title to the property was duly registered in their names as joint owners on 28^th December 1993 (See Exhibit 'A' to Yukio Sato's affidavit of 4th June 1999).

However, Mr. Lenga had sold the property to the Plaintiff for $24,000 in 1991, 8 years after the death of the deceased. As part of the purchase price, the Plaintiff paid directly to the Solomon Islands Home Finance Corporation the sum of $7,551.90 being the outstanding arrears for the loan in the name of the deceased. The charge over the property was accordingly discharged on 24^th January 1994.

The Plaintiff's Case

The case for the Plaintiff is simple and straight forward. The Plaintiff now says it was a mistake that the Defendants had become joint owners of the property because it had bought the property in 1991 for $24,000. It should therefore be the owner and the fixed-term estate register in respect of Parcel No. 191 - 035 - 134 should be rectified in its favour to reflect this fact. The Plaintiff relies on section 229 of the Land and Titles Act above to press its case in this Court.

The First Defendants' Case

The case for the First Defendants is set out in Jessie Tiare's affidavit filed on 19^th February 1999. There, she said that she always believed that the property belonged to her late husband, the deceased before and after his death. She said, they (the family) had to move out of the property so that Mr. Lenga would rent it to repay the loan for the property. She said she was not aware of the alleged sale of the property to Mr. Lenga nor the sale to Plaintiff. She said she only know about Mr. Lenga's purchase in 1989 when she was told by an employee of the Solomon Islands Home Finance Corporation that there were problems with the property. She said the sale of the property to Plaintiff should not be recognised as her late husband would have never sold the property to anyone.

The Law

The case that discusses the application of section 229 of the Land and Titles Act above in terms of the word "mistake" as used in section 229 is the case of Walter Billy v Paul Daokalia v and Others (Civil Appeal No. 1/95 (unreported)). Whilst it is not necessary to repeat the facts of that case here, it is important to note what the Court of Appeal said in the context of "mistake" as a ground for allowing rectification under section 229 of the Land & Titles Act. At page 3, the Court said,-

"Under subsection 209(1) the Plaintiffs claim for rectification is based on the ground of mistake. Subsection 209(2) however imposes a restriction to rectification, in the case where an owner is in possession, and had acquired the interest for valuable consideration, unless that owner had knowledge of the mistake in consequence of which the rectification is sought. There are two essential grounds therefore set out in the above subsections which the Plaintiff must necessarily establish to the satisfaction of the Court. These are, (1) the fact of a mistake and, (ii) the fact of knowledge of that mistake by the owner."

Then at pages 29 - 30, the Court again said,

"First, the true intent and purport of subsection 209(2) must be understood. Subsection 209(2) is a protective clause. It is consistent with the doctrine of indefeasibility as expressly contained in section 100 of the Land and Titles Act (Cap. 93), and therefore is protective of the title of a particular type of owner. That title is protected if,

(i) the owner is in possession, and

(ii) acquired the interest for valuable consideration. The key however which can unlock that protective clause is threefold:"

(i) that the owner had knowledge of the omission, fraud or mistake;

(ii) caused such omission, fraud or mistake; or substantially contributed to it by his act, neglect or default;"

The Court then discussed the time period required for "the knowledge of the mistake" to be effective so as to open up the register for rectification. In this regard, the Court again at page 30, continued,

"A crucial question which must be clarified relates to the time period when such owner had knowledge of the mistake. Is it inclusive of knowledge after registration, that is, when possession had been obtained and the interest acquired for valuable consideration, or, must it necessarily be restricted to the time period prior to and at the time possession was obtained and interest acquired for valuable consideration? To give it the former meaning in our view would make the protective arm of that subsection meaningless. Secondly, it must be read in conjunction with subsection (1). That subsection, (1), states inter alia, that the registration may be cancelled or amended where the court is satisfied that any registration has been obtained, made or omitted by fraud or mistake. The claims of fraud or mistake therefore must necessarily be linked to the time when registration was obtained, made or omitted. The knowledge referred to in subsection (2) accordingly, must also be confined to that time period when registration was obtained or made. If the registered owner had obtained possession and acquired the interest for valuable consideration without knowledge of the omission, fraud or mistake, then he is entitled to rely on the protection of subsection 209(2) of the Land and Titles Act."

So that in a nutshell, the land register cannot be rectified so as to affect the owner in possession of the property having acquired it for valuable consideration unless it can be shown by evidence that the owner was aware of the mistake or caused it or substantially contributed to it by his or her act, neglect or default. This position is well within the spirit of the doctrine of indefensibility of title as pointed out by the Court of Appeal above.

The Applicable Law of Succession

The fact however is that the First Defendants acquired title to the property under the law of succession as applicable in Solomon Islands. Exhibit"JTX1" attached to Jessie Tiare's affidavit filed on 28th January 1999 does confirm that as a matter of fact, letters of administration were granted to the Official Administrator of Unrepresented Estates, (OAUE) on 24th November 1989. This was well before Mr. Lenga sold the property to the Plaintiff. The law that applied at that time would have been the British Solomon Islands and Gilbert and Ellice Islands, (Probate and Administration) Order, 1914 ("the Order"). It was obviously the case that the OAUE had applied and was granted letters of administration under section 14 of the Order. That section is hereby reproduced in its entirety,

"The official administrator shall, as soon as possible after his right to do so accrued under the provisions of this Order, take possession of any unrepresented estate of a deceased person in the Protectorate and apply forthwith to the Court for an order for letters of administration thereof, or of administration thereof with the will annexed (as the case may be) to issue to him, and the Court, if satisfied that there is no person in the Protectorate other than the official administrator entitled to and able and willing to take the said grant, shall make a grant to the official administrator accordingly."

Prior to the granting of the letters of administration, the personal property of the deceased would have vested in the judge of the High Court under section 7 of the Order. Again, section 7 is hereby reproduced in its entirety,-

"From the death of a person subject to the jurisdiction of the Court, having at the time of his death his fixed place of abode in the jurisdiction of the Court, intestate, until administration granted, his personal property in the jurisdiction of the Court shall be vested in the Judge of the Court".

There was however no provision in the Order that covered the vesting of real property on the death of a person without a will. This is obviously a deficiency which must be supplemented by the Administration of Estates Act, 1925 as amended of the Parliament of the United Kingdom prior to 1^st January 1961 under section 76 of the Constitution as read with Schedule 3 thereto (See my judgment in In the Matter of the Estate of Victor Eoaeo (Civil Case No. 29/97) at 7. As was said by Awich J in that same case in 1997, (Civil Case No. 130/96 and Civil Case No. 29/97) the Order was "basic in nature" and therefore deficient in many matters. This being the case, the Administration of Estates Act, 1925 as amended of the Parliament of the United Kingdom was in my view an Act of general application under Schedule 3 to the Constitution and therefore would have applied to Solomon Islands in 1989. In terms of section 9 of the Administration of Estates Act, 1925 above, both the real and personal estate of a person who died intestate would vest in the Probate Judge etc. until administration was granted in respect thereof. Section 9 is hereby reproduced in its entirety,

"Where a person dies intestate, his real and personal estate, until administration is granted in respect thereof, shall vest in the Probate Judge in the same manner and to the same extent as formerly in the case of personal estate it vested in the ordinary."

This being the case, on the death of deceased in 1983, his estate both real and personal would have vested automatically in the judge of the High Court of Solomon Islands being then the Chief Justice. On the grant of letters of administration on 24^th November 1989, the authority over the deceased's estate both real and personal shifted to the OAUE as from that date. The equivalent of section 7 of the Order and section 9 of the Administration of Estates Act 1925 above is section 60 of the Wills, Probate and Administration Act (Cap. 33) of Solomon Islands which came into effect only on 3^rd May 1991.

However, in my view, section 188 of the Land & Titles Act (Cap. 93) prior to the Revised Edition of the Laws of Solomon Islands 1996 was the applicable law in this case. In terms of section 188 above (now section 209 of Cap. 133 of the Revised Edition 1996), the interest in the property upon the death of the deceased would have vested directly in the OUAE in 1983. The relevant parts of section 188 above are hereby reproduced:-

(1) If a sole owner or owner in common of a registered interest dies, the interest of the deceased shall vest in the official administrator until some other personal representative is appointed, whereupon the interest of the deceased shall vest in such personal representative.

(2) ..........................................

(3) The official administrator or other personal representative, or the Commissioner, on application to the Registrar in the prescribed form accompanied by proof of his authority to act, shall be entitled to require the Registrar.

(a) to register him by transmission as owner in the place of the deceased and in the case of the official administrator or other personal representative, with the addition after his name of the words "as executor of the estate of .......... deceased" or "as administrator of the estate of ............ deceased" as the case may be; or

(b) to register some other specified person as owner, owner in common, or joint owner of the deceased's interest.

(4) If no personal representative, other than the official administrator is appointed within a period of six months from the death of the owner, the official administrator may apply to the High Court for the appointment of some other personal representative.

(5) For the purposes of subsection (3) authority to act shall consist of a grant of probate of a will, a grant of letters of administration or an order of the High Court.

The fixed - term estate by operation of law vested in the OAUE in 1983 upon the death of the deceased as I have said above. In this case, it remained so in the OAUE until 24^th November 1989 when letters of administration were granted to the OAUE (See Exhibit "JTX1" to Jessie Tiare's affidavit of 28^th January 1999). It must have obviously been the case that the then OAUE had applied to the Registrar of Titles to register the fixed - term estate on being satisfied that the First Defendants were entitled to the property after the ruling by the Honiara Local Court on 19^th March 1993. (See Exhibit "JTX1" above). The fact that registration was effected on 28^th December 1993 in favour of the First Defendants following the ruling of the Honiara Local Court was the conclusion of the administration of the deceased's estate. It was a valid transfer of title to the First Defendants under section 188 of the Land & Titles Act referred to above.

Can this be undone by the application of section 229 of the Land & Titles Act?

Mr. Radclyffe, Counsel for the Plaintiff, argued that in this case, section 229(2) of the Land & Titles Act would not apply for two reasons. Firstly, he said, the First Defendants were not in possession of the property. Secondly, the First Defendants did not acquire the property for valuable consideration. Mr. Radclyffe argued that this being the case, there was sufficient documentary evidence in terms of section 117 of the Land & Titles Act (Cap. 133) that the transactions between the deceased and Mr. Lenga and subsequently between Mr. Lenga and the Plaintiff were enforceable contracts. In addition on, Mr. Radclyffe argued that the fact that the Plaintiff had paid $24,000 for the property and had occupied it since were both acts of part performance. In other words the Plaintiff had a good case in equity for specific performance had it not been for the mistaken ruling by the Honiara Local Court on 19^th March 1993 confirming the entitlement of the First Defendants to the property This, Mr. Radclyffe argued, was the mistake because the Honiara Local Court was not aware of the fact that the property has been purchased by the Plaintiff and was no longer part of the deceased's estate at time. I must say however that I do not dispute the application of section 229 of the Lands & Titles Act as discussed by the Solomon Islands Court of Appeal in the case of Walter Billy v Paul Daokalia & Others cited above and the arguments advanced by Mr. Radclyffe.

I do not however think "mistake" under section 229 of the Land & Titles Act can undo the title held by the First Defendants. As 1 have stated above, the reason being that by operation of law, the fixed - term estate being a registered interest had passed by vesting in the OAUE upon the death of the deceased in 1983 followed by the grant of letters of administration in 1989. The ruling by the Honiara Local Court was not a "mistake" of any sort but a necessary step towards the conclusion of the administration of the deceased's estate under the law. Obviously, the Plaintiff bought the property after it had already passed into the authority of the OAUE. Furthermore, the letter dated 1st March 1992 written by the Loans Manager of the Solomon Islands Home Finance Corporation, addressed to the Ombudsman (Exhibit "JTX1" attached to Jessie Tiare's affidavit filed on 28th January 1999) made it quite clear that events went back as far as 1989 over the question of title to the property. In fact, the Plaintiff knew the interest the OAUE had in the property and the fact that the First Defendants had wanted to repossess the property as early as 1989 (See Exhibit "JTX1" above).

The Plaintiff had obviously taken a great risk upon itself to buy a property it knew was under dispute. It had made no attempt to contact the OAUE both before and after it bought the property to ascertain the status of the property. It chose to come to Court 6 years after the purchase of the property.

Who was at fault?

I think it was the case that the deceased had sold the property to Mr. Lenga without the knowledge of his wife, Jessie Tiare However, the intention of the deceased was that the title to the property would only pass upon Mr. Lenga paying off the mortgage arrears of $7,551.90 to the then Solomon Islands Housing Authority (See Exhibits "C" and "E" attached to Yukio Sato's affidavit filed on 4th June 1997). Obviously, that condition was never fulfilled by Mr. Lenga until he sold the property to the Plaintiff in 1991. No title would of course have passed to Mr. Lenga for obvious reason. Mr. Lenga obviously did to the Plaintiff exactly what the deceased did to him in that it was part of the agreement that the Plaintiff pay off the mortgage arrears of $7,551.90 and would get the title which at that time Mr. Lenga never had for 8 years. It is clear from Jessie Tiare's affidavit that she knew nothing about these sales until after the events. The earliest she knew about the difficulties over the property was in 1989 when advised so by an employee of the Solomon Islands Home Finance Corporation. From there on, she took active steps to recover possession of the property. In fact, it would appear that officials in the Solomon Islands Home Finance Corporation knew of the Plaintiff's interest in the property as early as 1989 and onwards (See Exhibit "JTX" referred to above). The caveat lodged by the OAUE on 3rd July 1991 was a step necessary to protect the property (See Exhibit "JTX1" above). It is interesting to observe why this was done. The OAUE must have obviously been aware of an impending sale of the property to the Plaintiff. The sale nevertheless took place on length 15^th July 1991 after the caveat over the property had been registered. Clearly, the First Defendant had never been aware of the sales of the property to Mr. Lenga and subsequently to the Plaintiff. Nor did they cause or substantially contribute to it by their acts, neglect or default within the meaning of section 229(2) of the Land & Titles Act. Much less did they have anything to do with organizing the sitting of the Honiara Local Court on 19th March 1991. Even if section 229 of the Land & Titles Act were to apply on the ground of "mistake", the title now in the joint names of the First Defendants would still be valid under subsection 2 of section 229 of the Lands & Titles Act (Cap. 133) for the reasons stated above. The lack of "possession" and "valuable consideration" as pointed out by Mr. Radclyffe in his submission is not in my view a fatal consideration against the First Defendants. As I have said, the title in this case was acquired under the law of succession and not by sale contract. This point was raised at page 30 of Solomon Islands Court of Appeal judgment in the Walter Billy's case cited above but the Court did not go so far as expressing any conclusive view on the point but was prepared to extend the principle of "possession" and "valuable consideration" under section 229 above to cover any title acquired on first registration. Again at page 30, the Court said,

"The primary judge did not consider as an issue, the question whether Walter Billy was an owner in possession and had acquired the interest for valuable consideration. We quite agree and only wish to point out that although Walter Billy's interest was not acquired for valuable consideration, it was acquired on first registration and as read with the provisions of section 100, he would also be entitled to rely on such protection, provided that the element of knowledge of the mistake cannot be proved to the satisfaction of the court."

I would say the same would apply to titles acquired under section 188 (now 209) of the Land Titles Act as was the case here. My view is that the Plaintiff was the party at fault. As I have said, Exhibit "JTX1" referred to above I would seem to indicate that the plaintiff had considered Mr. Lenga's deal as early as 1989 and only acted in 1991. Then it took 6 years for the Plaintiff to come to Court. There would have been no way in the world the Plaintiff would succeed against the operation of section 190 of the Land & Titles Act (Cap. 93) prior to the Revised Edition of the Laws of Solomon Islands 1996. The relevant parts of that section is hereby reproduced,

"(1) Where the provisions of section 188 take effect with respect to an interest to which the deceased was entitled for his own use and benefit, and the interest vests in the official administrator or other personal representative, it shall do so upon the trusts declared by this section, but subject always to the right of the official administrator or other personal representative to dispose of such interest in some other manner in due course of administration.

(2) If the deceased validly disposed of the interest by a valid will, the interest shall be held upon trust to give effect to the terms of the disposition.

(3) Where the interest is not disposed of by a valid will, it shall subject to section 188 (2), be held -

(a) in the case of an interest of which a Solomon Islander was owner, upon trust to dispose of the interest in accordance with current customary usage;

(b) in the case of an interest of which a person not a Solomon Islander was owner, upon trust to dispose of the interest in accordance with the law relating to the administration of estates of persons who are not Solomon Islanders.

(4) For the purpose of determining the disposition of an interest in accordance with current customary usage under the preceding subsection, the official administrator or other personal representative shall apply to the local court having jurisdiction, to determine and certify to him the disposition of the interest in accordance with current customary usage; and the local court shall prepare and submit to the official administrator or other personal representative a certificate showing: -

(a) the name of every heir,

(b) the share of every heir and the nature thereof, in particular whether the heir takes as joint owner, owner in common, on trust or otherwise;

(c) which (if any) of the heirs is under the apparent age of twenty - one years; and

(d) the date of the determination of the disposition.

(5) ...

(6) ...

(7) ...

(8) ...

(9) ..."

This was obviously the legal basis for the ruling by the Honiara Local Court on 19th March 1993. This cannot possibly be a "mistake" in terms of section 229 of the Lands & Titles Act (Cap. 133) as alleged by the Plaintiff. The Plaintiff had failed to appeal to the Magistrate Court under subsection (6) of this section if it was aggrieved by the ruling of the Honiara Local Court on 19th March 1993. Even if it did, its chances of success would, in my view, have been very slim indeed. Whilst I am mindful of the fact that the mortgage arrears of $7,551.90 had been paid off by the Plaintiff, the fact of the matter was that it was a fulfilment of a condition by Mr. Lenga due to be fulfilled 8 years ago under the Agreement signed by Mr. Lenga and the deceased in 1983. The payment of the mortgage arrears of $7,551.90 had obviously removed the encumbrance upon the title to the property. Unfortunately, the charge was discharged on 21st January 1993 (sic) well after the title to the property had passed to the First Defendants on 28^th December 1993. Again, the plaintiff was disadvantaged. The Plaintiff obviously suffered loss as a therefore loss result of its own doing. It cannot blame the First Defendant for its loss. I therefore that the First Defendants have no case to answer on the Originating Summons filed by the Plaintiff. The Plaintiff's application is therefore refused with costs.

F. O. Kabui
Judge