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High Court of Solomon Islands |
HIGH COURT OF SOLOMON ISLANDS
Civil Case No. 290 of 2008
DALGRO SOLOMON ISLANDS LIMITED AND SENENE TUGALE
V
KK REAL ESTATE PROPRIETOR LIMITED
1st Defendant
WOELLY FUJIAMA
2nd Defendant
Date of Hearing: 22 October 2000
Date of Ruling: 14 November 2008
B. Etomea for the Claimants
J. Sullivan and R. Kingmele for the 2nd Defendant
RULING ON APPLICATION TO STRIKE OUT, AND RULING ON APPLICATION FOR LEAVE TO AMEND STATEMENT OF CLAIM
Faukona, J.
This is an application by the Second Defendant to strike out the Statement of Claim as it discloses no cause of action, and an application by the Claimants for leave to amend the Statement of Claim. I will first deal with the application to strike out, and then the application for leave in later course.
Brief Background Facts
On 12th July 1994, the First Defendant and Keith Douglas agreed that the First Claimant would undertake certain road and cite works on the lands to which the First Defendant had title.
After completion of the work, the First Defendant would cede four land parcels including Lot No. 765 (the land) to Douglas as part payment for the work.
Subsequently, on the 14th September 1994, Douglas offered Lot No. 765 as a gift to the Second Claimant in appreciation of his service rendered by him prior to his retirement from the employment of the First Claimant.
In 1999, the First Defendant transferred three parcels of land to Douglas but not Lot. 765.
In 2003, the First Defendant transferred Lot. No. 765 to the Second Defendant for a consideration of ten thousand dollars.
The Issues
Relief Sought
The prayer for relief is that the registered fixed term title to the land be retrieved from the Second Defendant. The consequential relief is that such title be transferred to Keith Douglas and that thereafter that the title be transferred to the Second Claimant.
Does the Claim Discloses Reasonable Cause of Action
At the commencement of his submissions Mr. Sullivan identify certain problems which become apparent from the prayer for relief.
That the substantive Claimant is the Second Claimant who wants the land and the substantive defendant is the Second Defendant as she is the registered owner in dispute. No relief is sought from the First Claimant and no relief is claimed against the First Defendant. And there seems to be no basis for either be joined as parties.
The immediate relief is that the claim seeks a transfer of the "title" first to Douglas before being transferred to the Second Claimant, but Douglas is not a party to this case.
That there is no such cause of action as retrieval of title. It seems that the Second Claimant wants either to obtain –
For ease of reference it is considered appropriate to quote the written agreement which provide the foundation upon which the Claimants based their case.
"WORKS CONTRACT BETWEEN KK REAL ESTATE OF P. O. BOX 150, HONIARA, AND KEITH DOUGLAS OF P. O. BOX..............., HONIARA
4. We, the undersigned agree to abide with the terms of this contract until such time its purpose is fully served.
5. The work of Lot Nos: 762, 763, 764 and 765 has been completed and paid for in full.
Signed this 12th day of July 1994".
Firstly let me point out pertinent issues that arise out of the written contract.
However, Douglas is not a party to these proceedings. The First Claimant is a company incorporated a separate body which can sue or be sued in its own name. There is no denial that Douglas is the Managing Director of the First Claimant, but that does not qualify the First Claimant to come to Court or sue on the basis of the contract.
3. The terms of the contract appear to be ambiguous. On one part it purports to vest obligation on parties for future performance whilst at the same time it expresses the work has been done and fully paid. In any contract the terms must be certain. If there is any uncertainty in the terms, the court will declare the contract void for reason of uncertainty – see Scammell –v- Ouston[3]. The same ambiguity is pleaded in the Statement of Claim paragraphs 4 and 5. I find there is no exception to the principle that can possibly cure the situation. The entire contract is rather confusing.
4. Although that agreement has a common seal purported to be of the First Defendant, there is no pleading that KK Real Estate is the trading name of the First Defendant.
It would appear that the Second Claimant relies on the right of Douglas under the agreement with the First Defendant to assert that Douglas had the right to give the land to him. Surely Douglas is in a much better position than Second Claimant, than the Defendants. Since Douglas is not a party in these proceedings he cannot definitely enforce such rights, then the same falls flat on the Second Defendant as well. Assuming that the agreement is a valid and enforceable, and the First Defendant was the registered owner of the fixed-term estate and could therefore agree to transfer the land to Douglas (which at that time not) then arguably Douglas had an interest in the land as equitable owner.
The truth is that in 1994 when the agreement was signed the First Defendant was not the owner of the land. It was not created by the Commissioner of Lands until January 1999. The deed of grant available implicated so. Therefore the First Defendant had no right at all to the land before that date. He had nothing to transfer to Douglas.
Those fixed-term estates which the First Defendant claims were non existence at all that very time.
From the contract it is apparent that the agreement is to transfer the land to Douglas if and when the First Defendant got it. It is one to assign future property. The same apply to the Second Claimant but has never been pleaded. Suffice to say that the First Claimant should not be a party to these proceedings at all; it was not a party to the agreement. Douglas did, but perhaps for some undisclosed reasons he is not a party to this proceeding. Without any doubt the First Claimant has no cause of action.
In respect to the Second Claimant, he was supposed to be a recipient of the purported gift. Expectedly, after acquiring the land, Douglas would transfer to him. It never did occur.
So what is a gift? A gift is a transfer of any property from one person to another gratuitously. It is an act whereby something is voluntarily transferred from the true possessor to another person with the full intention on the part of the receiver to retain the thing entirely as his own without restoring it to the giver[4].
Where a gift rest merely on promise [written or verbal] ... it is incomplete and imperfect and the court will not compel the intending donor to complete and perfect[5].
An incomplete gift can be revoked at any time. No question of conscience enters into the matter for there is no consideration, and there is nothing dishonest on the part of the intending donor who chooses to change his mind at any time before the gift is completed[6].
In order that a voluntary assignment be valid, it must be in all respect complete and perfect. Consequently equity will not assist in completing an imperfect gift by holding that the intending donor is a trustee for the intended donee.
In examining the true status of the Second Claimant, I refer to the case off Norman –v- Federal Commissioner of Taxation[7], Windeyer J stated;
"As to attempted assignments of things not yet in existence: As it is impossible for anyone to own something that does not exist, it is impossible for anyone to make a present gift of such a thing to another person, however sure he may be that it will come into existence and will then be his to give. He can, of course, promise that when the thing is his he will make it over to the intended donee. But in the meantime he may change his mind and when the time comes refuses to carry out his promises, even though it were by deed. A court of law could not compel him to perform it. A court of equity would not. Courts of equity never had the objections to all agreements about future interests that, until the seventeenth century, were deeply rooted in common law. Equity did not share the view that such agreements were void on the ground of maintenance. But things not yet in existence could only be the subject of agreement, nor of present disposition. And, in relation to promises and agreements, equity has been faithfully to its maxim that it does not come to the aid of volunteers. For equity a deed does not make good a want of consideration".
In the case of, Brunker v. Perpetual Trustee Co. (Ltd),[8] Dixon J said;
Being a volunteer, on intended donee cannot obtain equitable remedies against the donor compelling him to give legal effect to his intention to give. The deceased manifested no intention to constitute himself a trustee of the land for the appellant, and the memorandum of transfer is not, and cannot produce the affect of a declaration of trust. The appellant is, therefore, the owner of neither a legal nor an equitable estate in the land".
In Corrin v. Patton[9] Tohey J stated on page 557, paragraph 2.
"...What is of importance is that, this and the related maxim that equity will not perfect an imperfect gift are primarily associated with the rule that a voluntary covenant is not enforceable in equity".
It is possible to make a gift, that is, to transfer land or property, provided that the transfer is effected in whatever manner is necessary for a transfer of that particular property (in this case land). However such transfer must complete and perfect. Neither Common law nor equity will recognise any purported voluntary disposition of property not presently held, but which will be or may be acquired by the assignor in the future. However, equity will recognise an assignment of such future property provided it is made for value.
In this case it would be seen as clear that the Second Claimant’s status is well defined. He is in fact a volunteer. A person to whom the land will subsequently transfer without valuable consideration or a person who expects to receive a voluntary transfer of the land.
On 14th September 1994, the date of the letter of gift, Douglas was not in actual possession of land, the same with the First Defendant. Therefore, it would be quite impossible for Douglas to make a gift to the Second Claimant; however certain he may be that it will come into existence. Even at the time when the three lots were transferred to Douglas, the land in question was not. If anything should remain undone by Douglas to give effect to his intention, then the gift is incomplete or imperfect, and therefore must fail. Equity will not intervene to perfect an imperfect gift.
The question has Douglas done all that is necessary to be done on his part to complete the gift. In Anning v Anning,[10]Griffith CJ said;
I take the law of this court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the person for whom he intends to provide and the provision will then be effectual, if he transfers the property to a trustee for the purposes of the settlement, or declares himself hold it in trust for the purposes".
In Corin v. Patton,[11] Windeyer J said;
"...that a donor has to do everything necessary to be done by him to complete a legal transfer in a case where the donor could in fact have procured a legal transfer, for example by seeing to registration personally. And, we have already noted, Isaacs J’s view confirms to the notion, underpinned by the two equitable maxims, that equity will not assist a volunteer to perfect a title which is incomplete.
And again on Page 558 paragraph 3;
"The rationale for refusing to complete an incomplete gift is that a donor should not be compelled to make a gift, the decision to give being a personal one for the donor to make. However that rationale cannot justify continued refusal to recognise any interest in the donee after the point when the donor has done all that is necessary to be done on his part to complete the gift, especially when the instrument has been delivered to the donee. Just as a manifestation plus sufficient acts of delivery are enough to complete a gift of chattels at common law, so should the doing of all necessary acts by the donor be sufficient to complete a gift in equity. The need for compliance with subsequent procedures such as registration, procedures which the donee is able to satisfy, should not permit the donor to resile from the gift".
And again on Page 559 paragraph 2;
"...Accordingly, we concluded it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of the legal title, then equity will recognise the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. Necessary used in this sense means necessary to affect the transfer.
In order to render a voluntary settlement valid and effectual, Douglas ought to have done everything, which according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding on him.
Plainly, equity will recognise the gift if Douglas has done everything necessary for him to have done, even to ensure the transfer of the title to the Second Claimant. However Douglas had failed to have taken steps to compel the Commissioner of Lands to transfer the title. He had taken no action whatsoever beyond the letter he wrote on the 14th September 1994. No transfer was executed by Douglas of the First Defendant in his favour. The gift was never perfected. What required of Douglas is that he could have done all necessary acts in 1999 sufficiently to complete a gift. Meantime it is an incomplete and imperfect gift, and equity will not intervene to perfect an imperfect gift.
The next question to ask is, it a requirement in the case of gift that consideration for value is necessary so that the court will come to the aid of the donee.
In Norman v Federal Commissioner of Taxation[12];
If we turn from attempted gifts of future property to purported disposition of it for value, the picture changes completely. The common law objection remains. But in equity a would-be present assignment of something to be acquired in the future is, when made for value, construed as an agreement to assign the thing when it is acquired. A court of equity will ensure that the would-be assignor performs this agreement, his conscience being bound by the consideration. The purported assignee thus gets an equitable interest in the property immediately the legal ownership of it is acquired by the assignor, assuming it to have been sufficient described to then identifiable. The prospective interest of the assignee is in the meantime protected by equity.
In Anning v. Anning[13] Griffiths CJ said;
"...So in the case of gift of land held under the Act regulating the transfer of land by registration, I think that a gift would be complete on execution of the instrument of transfer and delivery of it to the donee. If however, in the absence of which the donee cannot establish his title to the property as against the third person, the gift is perfect and in the absence of consideration the court will not aid the donee. But, if all that remains to be done by the donee himself, so that he does not need the assistance of the court, the gift is, I think, complete.
In Brunker v. Perpetual Trustee[14] Dixon J states;
"A transfer for value may before registration confer upon the transferee an equitable estate or interest. But it does so, not because it is a transfer, but because the transferee has given value for the land, and because, notwithstanding that the instrument is a memorandum of transfer, it may, as a writing, suffice to satisfy the requirements of the statute of Frauds and so place the transferee in the position of a purchaser who is entitled to specific performance of his contract and has paid him purchase money".
In those paragraphs quoted above consideration for value has a great impact on the donee or assignee, in which his interest is protected by equity and the gift be completed. Without consideration the court will not assist the donee. In this case the Second Claimant’s position would have changed had the gift of future acquisition of the land is to dispose off for value. It would have interpreted as an agreement to assign the land when it is acquired. However the Second Claimant has given no consideration. He has no rights in equity to come to court and seeks to perfect the gift. In fact it is not his duty he cannot possibly assert any right in equity against the Second Defendant. Therefore must have no cause of action. As plain as it is the First Claimant was not a party to the agreement and therefore has no cause of action. And though it may acquire some rights through Douglas he cannot enforce as well.
Are the Claimants Statute barred in bringing this proceedings
Arguments in relation to this particular issue is that Mr. Etomea for the Claimants said no, even if the case should accrue since 1999 it is not yet twelve years as provided for under Section 9(2) of the Limitation Act. On the other hand Mr. Sullivan for the Second Defendant says yes, that Douglas and the Second Claimant are time barred under Sections 5 of the Act, six years has lapsed from the date the lands were transferred to Douglas. Or alternatively Section 9[2] counting from the date the contract was signed.
Upon reading of those provisions S. 5 provides for general limitation. S. 9(2) provides specifically for limitation period for recovery of land. S. 34 provides for extinguishment of title to chattel. In my view S. [5) is more appropriate to this case, that is, six years limitation. The question to ask now is when would the cause of action begin to accrue? This is an action founded on a simple contract which must be commenced within 6 years. The contract expressly stated that having completed the work the lands have to be transferred. The land being the issue here was not transferred on the 5th March 1999. In contract the cause of action normally accrues not when the damage is suffered, but when the breach of the contract takes place.
As such Douglas must have therefore statute barred by 5th March 2005, six years after which his cause of action accrued. The fact is that Douglas had not commenced any proceedings against the First Defendant nor he is a party to this case. He may have the right to enforce the agreement against the First Defendant in 2003 when the land was transferred to the Second Defendant. However he has done nothing until time barred on 5th March 2005. He cannot enforce the agreement against the Second Defendant who is not a party to the agreement and is now the registered owner.
For the Second Claimant who asserts his right through Douglas cannot enforce the agreement against both Defendants. He is not a party to the agreement. If Douglas cannot enforce the agreement then the Second Claimant who is a mere volunteer cannot enforce it as well.
Assuming that the gift is valid in law then time runs against the Second Claimant as from 14th September 1994, which twelve years will lapse on 14th September 2006. He is also time barred. This case was field on 2nd September 2008, fourteen years after the cause of action accrued.
Recovery of Possession of Land
And then the claim for retrieval of title. If retrieval of the title can be interpreted as an action for recovery of possession of land then the problem for Douglas and the Second Claimant is that none of them ever had the possession of the land actual or constructive, so there is nothing to recover. This cause of action can only accrue if the Second Claimant at some stage in the past had either actual or constructive possession of the land. Assuming that the Second Claimant was in possession of the land as at 14th September, 1994, his right as I have stated above has been statute barred and extinguished since 14th 2006 under Sections 9 and 34 of the Limitation Act.
Rectification of the Register
The claim pleads that the land was fraudulently transferred to the Second Defendant (see paragraphs 4 and 11). There is no doubt that the Second Defendant is the registered owner who had acquired her interest for valuable consideration. Mr. Etomea submitted that the Second Defendant registered the land by fraud, that she had prior knowledge of an earlier sale to Douglas. Mr Sullivan denies any prior knowledge by the Second Defendant of any fraud, and had no knowledge of the purported gift.
Allegation of fraud is a serious matter, and subsequent result, if proof, is serious as well. There must be statements to specifically state the allegation of fraud. The Courts do not allow this sort of allegation to be treated lightly without supporting evidence. The court must be satisfied before it can exercise its powers and make an order to rectify the land register.
The word fraud meant actual fraud, that is, dishonesty of some sort. It is designed purposely to transfer to cheat Douglas or the Second Claimant’s existing rights. It is done by Second Defendant to establish by deliberate and dishonest trick to have the land registered in her name. The operative part of it is; has the Second Defendant as the registered proprietor acquired the transfer of title in the circumstances where the Second Claimant or Douglas has been defrauded out of his registered interest. Fraud must be found to exist in the circumstances in which the Second Defendant acquired the land. Section 229[2] of Lands and Titles Act is a protective clause and therefore is protective of the title of a particular type of the owner. In the case of Billy –v- Daokalia[15], the Court of Appeal stated that the title is protected if [1] the owner is in possession [2] acquired the interest for valuable consideration. The key however which can unlock the protective clause is [1]] that the owner had knowledge of the omission fraud or mistake, [2] cause such omission, fraud or mistake or substantially contributed to it by his act, neglect or default. On page 24 paragraph 5 the Court of Appeal said:
‘The claims of fraud or mistake therefore must be necessarily being linked to the time when registration was obtained, made or omitted. The knowledge refers to in subsection [2] accordingly, must also be confined to that 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 on subsection [2] of the Land and Titles Act.’
On the date when the Second Defendant acquired the title for value the land was not registered in the name of either Douglas or the Second Claimant, nor was it held in trust on either of their behalf by the First Defendant. The title undoubtedly was held by the First Defendant as a registered proprietor, and transferred to the Second Defendant for value. She denied neither being aware of the gift nor being aware of any notice of the previous transaction. Even if she had prior notice it is not fraud. There is nothing pleaded in regards to omission or undue influence, see Manehamosa v Kelly[16]. So where in the process can fraud be identified. There seems to be nothing. No particulars are given or pleaded.
This leads on to the application by Mr. Etomea for leave to amend the Statement of Claim by omitting the allegation of fraud and include a paragraph to plead notice of earlier sale to Douglas. Mr. Sulliavan argued that any amendment would not change or cure the Claimants’ case, nor would it assist them either.
Notice of prior transaction or trust is not fraud in itself. There is no representation to Douglas whose rights are statute barred. No fraud is committed against him. The same apply to the Second Defendant who is a volunteer and has no right in equity. If the prior agreement was disclosed there was no misrepresentation to the Second Defendant, therefore no fraud.
The Second Defendant who by taking transfer from the First Defendant is not affected by notice direct or constructive. Douglas could have pursued specific performance of the agreement in 2003 when time was still on his side. He did nothing. Now he is statutory barred. The same as Second Claimant. They cannot come to court now and plead notice of prior transaction. In fact there was no prior transaction. The title acquired by the Second Defendant is now well secured and was not acquired by fraud. Any amendment propose to be done cannot change or cure the Claimant’s case.
Having said that I find there is no cause of action disclose by the Claimant’s case. Even if any amendment be done, will not change their cause of action either. I therefore make the following orders.
Orders
THE COURT
[1] [1962] AC. 44
[2] [1967] 2 All ER 1
[3] [1941] AC 251
[4] Halsbury Laws, Vol. 18, Paragraph. 692.
[5] Ibid, Paragraph 755.
[6] Ibid
[7] [1963] HCA 21; [1962] 109 CLR 9, Page 24, Paragraph 1 and 2.
[8] [1937] 57 CCR 55 Page 599 paragraph. 3.
[9] [1990] 169 CLR 540.
[10] [1907] HCA 13; 4 CLR 1049 Page 1056, paragraph 3.
[11] [1990] 169 CLR Page 556, paragraph 4.
[12] Ibid, Page 24 paragraph 3
[13] Ibid, Page 1057 paragraph 2.
[14] Ibid, Page 599, paragraph 2.
[15] [1995] SBCA 5
[16] [2000] SBHC 16.
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