Solomon Islands National Provident Fund Board v Waiwori [2009] SBHC 59; HCSI-CC 218 of 2005 (18 November 2009)

HIGH COURT OF SOLOMON ISLANDS

Civil Case Number 218 of 2005

Solomon Islands National Provident Fund Board
The Applicant/Claimant

V

Clement Waiwori
First Respondent/First Defendant

And

Rachman Syah
Second Respondent/Second Defendant

And

Catherine Syah
Third Defendant

And

Commissioner of Lands
Fourth Defendant

And

Registrar of Titles
Fifth Defendant

Date of Hearing: 29 September 2009
Date of Judgement: 18 November 2009

I. Kako for the Applicant / Claimant
B. Etomea for the 1st Respondent / First Defendant
P. Tegavota for the 2nd and 3rd Defendants
L. Folaumoetui for the 4th and 5th Defendants

Palmer CJ:

There are two applications in this matter. The first one was filed by the first Respondent/first defendant ("Waiwori") on 17 August 2009 to have the orders of 12 February 2009 set aside and stayed. The second application is that by the Claimant ("NPF") to have that application dismissed as disclosing no reasonable cause of action and or frivolous and vexatious.

The background facts.

This case seems to have had a long history going beyond 13 July 2005 when a specially endorsed writ was filed seeking orders inter alia for payment of the sum of $177, 779.41 to NPF for moneys owed arising from a loan and accrued interest.

It is important to understand the history of this land. That however can only be obtained by perusing in some detail the file documents. The Development Bank of Solomon Islands ("DBSI") had seized the fixed-term estate in parcel 191-028-25 ("the Property") and put out on tender in 1993. There are two dwelling houses on the Property and which had been put out for sale by tender. Waiwori was one of the successful bidders for one of the dwelling houses while Rachman Syah and Catherine Syah ("the Syahs") were successful bidders of the other dwelling house.

All of them sought loans from NPF to effect the purchases. The loan given to the Syahs was for $60,000.00 and dated 6 September 1993. The loan given to Waiwori was dated 28 July 1993 for the sum of $67,000.00.

It was also agreed by them that the property would be subdivided to register their interests separately. NPF was aware of this when it disbursed its loan as can be seen in the letter of the General Manager of NPF dated 9 August 1993 and actually insisted that the property be subdivided. It was only logical that the property was sub-divided as the two dwelling houses had been purchased by two separate families. The issue of subdivision and consent therefore was a non-issue from the beginning.

In the meantime their interests were separately registered as owners in common in undivided shares as follows:

(i) Clement Waiwori: 50% share;

(ii) Rachman Syah: 25% share;

(iii) Catherine Syah: 25% share.

In order to protect its moneys NPF took out a charge over the Property in the sum of $154,000.00. That charge was registered on 9 September 1994 and covered the two loans taken out by Waiwori and the Syahs.

On or about 4 November 1993, an application for subdivision was lodged with the Registrar of Titles. Fees for the subdivision were paid on 23 November 1993. That resulted in the subdivision of the fixed-term estate in parcel 191-028-25 into five new parcels of land as follows:

(i) 191-028-61;

(ii) 191-028-62;

(iii) 191-028-63;

(iv) 191-028-64;

(v) 191-028-65.

Parcels 191-028-64 and 191-028-65 have been registered in the names of the Syahs. My understanding is that they have paid off their loans with NPF and so any charge registered against their property should be discharged immediately, if not done to date. Those two parcels of land are no longer in issue in this case and the Syahs should have been excluded in these proceedings.

Parcel number 191-028-62 is an access road and so not relevant in these proceedings.

There seems to have been some confusion caused in the way and manner this application has been filed because despite the subdivisions having been lawfully effected, NPF continues to insist that the subdivision was invalid. However that can only be maintained by taking appropriate action to have the register rectified. It cannot be done by correspondence and insisting that because they did not object, that the subdivision was invalid. No such application for rectification has been made. The confusion seems to have been compounded by NPF insisting on the subsistence of parcel 191-028-25. I think NPF takes this view because of its registered charge over the fixed-term estate and thinking that through the subdivisions it would lose control of its security.

While section 169 of the Land and Titles Act provides that no subdivision shall be effected without the written consent of the chargee, in this case NPF, section 168(1)(d) of the Land and Titles Act also provides that consent inter alia for subdivision shall not be unreasonably withheld. So even if NPF had withheld consent from the outset (which is not the case here) I do not think such refusal could be sustained in view of the circumstances of this case. NPF had expressly made it clear that a condition for the disbursement of the loans was for the Property to be subdivided. It cannot therefore approbate and then reprobate.

What seems to have added to the confusion is that no grant of fixed-term estates were made in favour of Waiwori in respect of the remaining parcels of land; parcels 191-028-61 and 191-028-63. Accordingly no subsequent charge could be registered in favour of NPF.

The decision to subdivide.

The decision to subdivide parcel 191-028-25 in this case cannot be faulted. It was the right thing to do in the circumstances. It was a condition for the payment of the loans and it was only logical for it to be done. What has confused the parties and even the court as well is that when NPF filed its case, by insisting that parcel 191-028-25 still subsisted and framing its questions for relief accordingly, it misled everyone into thinking that the property put out for sale was the fixed-term estate in parcel 191-028-25. That however was incorrect for the fixed-term estate in parcel 191-028-25 had been extinguished. In lieu thereof, five new parcels were created, 191-028-61, 191-028-62, 191-028-63, 191-028-64, and 191-028-65. The two parcels of land that are of direct interest to NPF in this particular case are parcels 191-028-61 and 191-028-63, being the parcels of land which reflected Waiwori’s interest. I do not think it can ever be denied by anyone that those two parcels reflected the 50% share of Waiwori as owner in common over parcel 191-028-025.

Confusion compounded

What has compounded the confusion in this case is that when the subdivision was effected, no grants of a fixed-term estate over those two parcels of land were completed in favour of Waiwori. NPF therefore appears to have been left in the lurch regarding its security over the outstanding loan held against Waiwori. Waiwori in turn seems to think that he cannot be evicted from the land that he currently occupies because of the absence of any registered interest that can be enforced against him. The prospective purchasers, Mr and Mrs. Darton Deva, of the property, have been confused and misled into thinking that their successful tender was for the fixed-term estate in parcel 191-028-25, which if correct would have included the residence of the Syahs as well. That is not the case however; the tender was supposedly intended for the residence of Waiwori only. It could not have included the Syahs property because they had paid off their loans and are entitled to have any charges against their property removed. The problem with any tenders over parcels 191-028-61 and 191-028-63 is that because no grant of any fixed-term estates had been effected in favour of Waiwori, there was no charge which could be enforced over those properties.

The Way Out

The Commissioner of Lands should now effect grant of fixed-term estates in parcel numbers 191-028-61 and 191-028-63 to Waiwori. NPF should then offer those two properties for sale to Mr. and Mrs. Deva for the sum tendered. If accepted then the sale can be effected and registered in their names. If Mr. and Mrs. Deva should decline the offer, then NPF has the choice of either offering the property to the second bidder or to re-advertise the property, correctly described.

As to any concerns regarding the rights of NPF to enforce their charges over those fixed-term estates, section 140(5) of the Land and Titles Act protects their interest, in particular of relevance is the proviso to that subsection, which provides as follows:

"Provided that unless the chargee in giving his consent to the subdivision under section 168(1)(d) agrees to the apportionment of the moneys payable under or to severance of the obligations contained in the charge (which consent when given shall be irrevocable), nothing in this subsection shall be deemed to impair the right of the chargee to recover from any of the estates resulting from the subdivision the whole of the moneys payable under the charge or to enforce the charge against any of the estates so resulting."

NPFs interest would be protected in this instance and would follow through the subdivision to the resulting estates. But even if somehow it may be argued that the above provision does not apply, NPF still retains an equitable interest over the subdivided properties by virtue of its registered charge under the original parcel and would have been entitled in any event to register an effective caveat over those properties to prevent any further dealing until its charge had been effectively registered over those two new parcels to protect its interest.

The application by Waiwori therefore for the orders of this court of 12 February 2009 to be stayed must be dismissed. In view of the way and manner in which this case has been proceeded with, each party is to bear their own costs save for the costs of the Syahs, which is to be borne by NPF.

Orders of the Court:

1. Dismiss application for stay.

2. Vary paragraph 2 of the orders of the court dated 31st October 2005 by substituting the following order:

(a) Direct the Commissioner of Lands to grant fixed-term estates to Waiwori in the following parcel numbers: 191-028-61 and 191-028-63;

(b) Grant leave to NPF to sell the property in those two parcel numbers by tender.

3. Vary paragraphs 1 and 2 of the orders of the court dated 13 February 2009 by substituting the following orders:

(a) Grant leave to NPF to sell the property in the fixed-term estates in parcel numbers 191-028-61 and 191-028-63 to Mr. and Mrs. Deva for the sum of $225,000.00;

(b) In the event the offer is rejected, NPF has leave to either offer the same property to the second winning bidder, Fred Buka for $130,000.00, or to re-advertise the properties for fresh tenders.

4. Costs of Rachman Syah and Catherine Syah to be borne by NPF.

5. The remaining parties to this case to bear their own costs in this matter.

THE COURT.