Soltuna Ltd v Commissioner of Lands [2013] SBHC 158; HCSI-CC 162 of 2012 (4 December 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS.
(Faukona J).

Civil Case No. 162 of 2012.

BETWEEN:

SOLTUNA LIMITED
Claimant

AND:

COMMISSIONER OF LANDS
First Defendant

AND:

PREMIER OF WESTERN PROVINCE
Second Defendant

AND:

REGISTRAR OF TITLES
Third Defendant

AND:

ATTORNEY-GENERAL
Fourth Defendant

AND:

SOLOMON ISLANDS PORTS AUTHORITY
Fifth Defendant.

Date of Hearing: 21st November, 2013.
Date of Judgment: 4th December, 2013.

Mr G. Suri for the Claimant.
Mr J. Muria (Jr) for First to Fourth Defendants.
Mr M. Tagini for Fifth Defendant.

JUDGMENT.

Faukona J: This is a claim for judicial review. After some refinements an amended claim was filed on 18th July, 2012. The remedy sought by the Claimant are in tune of declaratory orders, quashing order and an order for rectification under section 229 (1) of the Lands and Titles Act.

2. The Claimant Company was incorporated on 23rd January, 2001 and was re-registered under the Companies Act on 30th July 2010. The Claimant took over all business and assets of Solomon Taiyo Limited by a Deed of Assets Transfer in 2001. The shareholders of the Claimant Company are; ICSI on behalf of Solomon Islands Government, NPF, TRI Ocean Overseas Holding ILC (NERVIS) and Western Province.

3. The Claimant's current business activity is production of cane tuna products, frozen tuna loins and fish meal. It operates its business at Noro town, New Georgia island, Western Province.

4. The First Defendant is the Commissioner of Lands, which is recognised as a legal entity, which administers the Lands and Titles Act - Section 3. It also holds powers by Section 4 (4) to hold and deal in interest in land for an on behalf of the Government, and for execution of documents relating to land.

5. The Second Defendant is the elected political figure who heads the Western Provincial Assembly.

6. The Third Defendant is another legal entity established by the Lands and Titles Act, Section 6 (1), to administer the land registries.

7. The Fourth Defendant is the Principal legal advisor for the Government.

8. The Fifth Defendant is a public authority, a body corporate and has power to acquire, and hold and dispose of lands. Its main function, among others, is to provide and operates ports facilities to serve public interest and to maintain, improved and regulate those ports.

Brief facts:

9. On a date not stated in 2001, the Claimant took over the business and assets of Solomon Taiyo Limited by a Deed of Assets Transfer. One of the assets is a cold storage building situated on land parcel No.098-011-33 in Noro town. The cold storage was built by Kitano Construction Co. in 1992 as one of the facilities under Japanese funded project known as "Noro Infrastructure Development Project Phase 2," hereinafter called the "project". This project was funded by Japan upon request by Solomon Islands Government. The objective of the project was to enhance Noro township development.

10. It was agreed that the Ministry of Natural Resources and or the Fifth Defendant be responsible for undertaking the operation and maintenance of the cold storage.

11. After completion of the project the Fifth Defendant took control and manages the storage on behalf of the SI Government.

12. On 1st July 1992 by virtue for an agreement, the Fifth Defendant leased the storage to Solomon Taiyo Ltd, for a period of five years. Thereafter the agreement had been renewed and extended. After taking over from Solomon Taiyo Ltd the Claimant had been using the cold storage facility.

13. A recent agreement between the Claimant and the Fifth Defendant was signed on 24th February, 2011. The Claimant had paid a monthly rental of $25,000.00 to the Fifth Defendant.

14. Relying on the agreement the Claimant had invested substantially by improving the storage facility and expended money on it. Besides that, the Claimant has business plan to increase production with two shifts per day. The production should hit a target of 150 metric tons valued at SBD twenty one million.

15. On 24th January, 2012, the First and Second Defendant executed a grant of Fixed Term Estate for registration by the Third Defendant. The grant showed no consideration was transacted. Subsequently the grant in the FTE in PN 098-011-33 was registered in the name of the Second Defendant on the same date.

16. To resolve the impasse the Claimant attempted to convince the Second Defendant to continue with its lease with the Fifth Defendant. To date no reply has been received. Again inquires with the Fifth Defendant to provide authority to lease the storage and encourage it to seek legal advice but there was no reply.

17. Further enquires were made with the Fourth Defendant and cabinet, whether provision of the Divestment of Government Assets or Service Act were complied with. To date there were no replies. On that fact, this suit was filed on the basis that registration of the FTE in the name of Second Defendant were made by mistake and that the transaction on transfer of title did not comply with the appropriate Act.

Agreed fact:

18. There is no dispute that FTE title in PN 098-011-33 was transferred and had been registered in the name of the Second Defendant.

The issue:

19. The major issue here is whether the transfer of the FTE Title in the land and the storage facility done in accordance with the provisions of the Divestment of Government Assets and Services Act. Mr Suri argues it was done contrary to the provision of the said Act. Mr Muria (Junior) argues the Act refer to is not the relevant Act that provides for such transaction but for privatization of Government Services and assets. Mr Tagini concedes with Mr Suri's argument.

The basis for transfer of FTE titled and Cold storage facility:

20. To set things on motion an initial letter by the Premier of Western Province date 21st October, 2009, informing the Minister for Finance that the Provincial Executive had resolved and therefore requested two assets (assume to be above) be transferred to the Western Fishing Company limited wholly owned by the Province.

21. Further supportive letter of this whole activity was written by the Prime Minister, Mr D. Philip on 4th October, 2011. The letter in fact gave ultimate direction to the Ministry of lands to facilitate the registration and grant instruments. Last paragraph of his letter is quite interesting advocating that the transfer is in line with his Government's policy of promoting and encouraging divestment of economic development and growth in the Provinces.

22. The Prime Minister's impartation of his own Government policy is rather absurd. The assets are already located in the Western Province. Perhaps what he meant is that with the transfer of assets the Province will directly benefit, thus alleviate its financial woes, if not accelerate it to a sustainable level.

23. The final determination was contain in the Minister of lands letter dated 1st October, 2011, directing that the Commissioner of Lands to facilitate registration of the two parcel of lands in the name of the Premier on behalf of Western Provincial Assembly. Again it's a misdirection. It could have been proper in the name of Western Fishing Company Limited as initially proposed.

24. By letter dated 4th November, 2011, the Commissioner of Lands requested the Registrar of Titles to register the two parcel numbers 098-011-0033 and 098-011-0034 in the name of the Premier of Western Province on behalf of the Western Provincial Assembly. Subsequently the grant was executed and titles of FTEs were transferred to the Premier on behalf of Western Province on 24th January, 2012.

Was the transfer done on legal basis:

25. Mr Suri argues supported by Mr Tagini that the process of transferring the title of the lands and the cooling facility at Noro by Commissioner of Lands, to the Western Provincial Assembly was improper and did not comply with the provisions of Divestment of Government Assets and Service Act.

26. Mr Muria (Junior) argues otherwise and submits that the Act paves a facilitation process to direct government assets and services for privatisation purposes to private entity or persons. The property in PN 098-011-33 was never sold to a private person but to a Province, which is an agent of the Crown, a concept expounded in the case of Premier of Isabel Province v Earthmovers[1]. In other words because the transfer was to a Province, a part of National Government organ and mechanism, it requires no Act to facilitate the transfer but can be done administratively with the Crown retaining the titles to the property.

Divestment of Government Assets and Services Act:

27. It is ideal to thoroughly examine the Act good and proper. Section 2(1) says where the Cabinet considers necessary or expedient that certain assets of a ministry or department of the Government be divested, then the procedure to apply follow in the sub-section. In subsection (3) it defines divested which means leasing, contracting, concession, sale or any other means of disposition.

28. Upon receipt of the reports the Minister then present it before cabinet, which will authorise the Minister of Finance to direct such assets by either, public auction, public tender, public offering or direct negotiations. It would appear that the procedure or method used in this case is public offering. This is confirmed by the evidence that the assets were transferred to the Premier of Western Provincial Assembly with nil consideration transacted.

29. Mr Suri submits that the word privatisation is not seen in any of the three sections of the Act. Hence prompted me to search to find out what is the definition of privatisation. I could not able to extract much but I find a meaning in the Longman's Dictionary which states privatize means to sell into private ownership.

30. The question is was the land and the cold storage property sold to a private entity. The original intention by the Premier was supposed to be, to be transferred to or sold to Western Fishing Company Limited. Consequently, it turned out differently. The properties were transfer to the Premier of western Province with no consideration. That transaction, in my view, cannot come under the principle of sell; rather it was a public offering in the nature of administrative arrangement.

31. There are arguments in conjunction with the status and functions of the Provincial Assembly. The arguments derive from the notion that Provincial Assembly is an agent of the Crown. Gather from the arguments is the rational whether the Provincial Assembly is a public entity, an agent of the Crown or a private entity. In any event, such submissions do not have any prospect of resolving the issue. What matters most is, under which legislative authority empowering or authorising or giving guidance and effect to the Commissioner of lands to divest the properties in the name of the Premier of the Western Province.

Mr Muria(J) submits that the Act refers to here provide no legal basis. However, he fails even to suggest an alternative proposition. Merely suggesting the Act provides legal basis for Government Privatisation activities is insufficient to say the least.

32. Mr Suri suggests two options. One is that the Act lay foundation upon which this claim was footed, and secondly under a devolution order provided for by Section 29 (1) of the Provincial Government Act. None of those acts were compiled with.

33. Amidst those arguments, I take cognizance of what the Prime Minister, Mr D. Philip said in his letter. At paragraph 5 he outlined that it was his Government's policy to promote and encourage divestment of economic development and growth in the Provinces and rural areas. The Prime Minister actually used the word divestment. I understand Mr Prime Minister is someone who may have some linguistic educational background. He chose his words correctly. It was not a mistake that he did not use the word privatisation but he used divestment. It is my strong belief that at that time the Prime Minister used the word he had the Divestment Act in his mind. He actually set the ball rolling. The Minister of lands responded instantly to the Prime Minister's letter. By 1st October 2011, he directed the Commissioner of lands to grant the two parcel numbers to the Premier of Western Province. Eventually it was done. I have no doubt by pivoting its claim on the Divestment of Government Assets and Services Act, as legal basis for pursing this suit is absolutely correct and without doubt.

34. The question is, has sections 2 and 3 of the Act complied with at the time when the transfer of the title in the properties including the cold storage was made to the Premier of Western Provincial Assembly? Expectedly my answer is no. Sections 2 and 3 of the Act had never been complied with by the relevant authorities. Hence the transfer of the land and the cold storage facility to the Premier of Western Province is null and void and of no effect.

35. Consequent to paragraph 34, the registration of the Fixed Term Estate in the name of the Second Defendant was obtained by error of law or mistake in law. Such action was done on no legal basis and an absolute ignorance of the shareholders of the Claimant Company such are: ICSI on behalf of SI Government, SINPF, TRI Oceanic Overseas Holding LLC and Western Province. The Claimant Company is the Company, which utilized the cold storage facility by an agreement signed on 24/2/2011 for $25,000-00 per month payable to the Fifth Defendant.

36. The action taken by the First and the Third Defendants had caught other stakeholders in amazement. In particular it does not honour the agreement that was concluded with the Fifth Defendant and also the fact that the Claimant at that time has an overriding interest as a person in actual occupation, - Section 114 (g) of Lands and Titles Act.

37. The unlawful act done was so overwhelming which require rectification of the land register pursuant to Section 229 of the Lands and Titles Act. Cancellation of such registration is most appropriate than amendment. The whole process under the Divestment of Government Assets and Services Act was flawed. I am satisfied that the registration was obtained by mistake. In the case of Hiva V Mindu[2] the Court of Appeal having considered other Australia authorities conclude in the last paragraph that S.132 of the Victorian Transfer of Lands Act the word "error" includes an error of law and extends to, "anything improperly done, or omitted to be done". Furthermore, in Caldwell V Rural Bank[3] the Full Court ordered rectification in the case of a transfer that was void as being ultra-vires the statutory authority of the transferor. This decision show that provisions comparable to S.229 (1) of the Act are not, as submitted by the appellant, to be read as being limited to errors or mistakes occasioned by someone other than the Commissioner of Lands or the Registry of Titles. Although the power to order rectification of the register is not one that should be widely construed there is no doubt that it is exercisable in the circumstances disclosed here.

38. I must therefore exercise the powers to order rectification of the register to reflect the veracity of mistake in law committed by the First and the Third Defendants.

The Fifth Defendant's cross-claim:

39. An amended cross-claim was filed by the Fifth Defendant on 13th August, 2012. It was done in a composite amalgamation as an amended defence. The facts stated in the statement of case are not disputed. That Fifth Defendant was a nominated executing agent, which holds the two lands PN 098-011-33 and 098-011-034 together with the cold storage facility, on behalf of the SI Government.

40. Over the years, the Fifth Defendant had been negotiating with the First Defendant for the registration of the two PNs to be registered in its name.

41. On 14th June 2011, the First Defendant offered FTE in both parcel numbers to the Fifth Defendant. The Fifth Defendant accepted the offer and hence paid all the relevant fees – Exh "RV2" attached to Romeo Vilaka's sworn statement filed on 28th June, 2013.

42. On 16th August, 2011, a grant instrument was signed by the Fifth Defendant and the First Defendant for both fixed term estates and was lodged for processing. Despite preceding legal activities, the First Defendant transferred the parcel numbers to the Second Defendant. The Fifth Defendant claim that it suffered damages and seek titles of both lands be rectified and transferred in its name.

43. In defending the Counter-Claim Counsel for First to Fourth Defendants entered denial with no further explanations. In submissions, the counsel submits that a cross-claim is not a judicial review or a part thereof but a claim for rectification under S.229 of the Land and Titles Act. He further states that the orders the Court can make in a judicial review claim are limited, and the cross-claim is not within that ambit. The cross-claim does not seek a mandatory order, prohibiting order or quashing order or for a declaration in relation to an act or subsidiary legislation. The Counsel makes reference to the White book to substantiate his argument. The White book though maintains parallel guidelines are now out of use. It has been superseded by the Courts Civil procedure rules 2007.

44. I noted the relief sought by the Fifth Defendant did not mention specific relief as outlined in R15.3.1. However, in my view, a relief that seek rectification under S.229 (1) of the Land Act is a quashing order in its legal interpretation. That the title be rectified, simply be cancelled from the register on the ground that it was registered by error or mistake in law. I am assisted by Mr Suri in response who succinctly clear the clouds that, though, none of the common law words was mentioned in the relief sought by the Fifth Defendant, it is sufficient that claim for rectification falls under quashing of the grant of the fixed term estate to the Second Defendant.

45. It appears that the reliefs sought by the Claimant, which is more confine to the common law, words entrenched in the Rules are parallel to the relief sought by the Fifth Defendant and they carry the same effect. Subsequently it is conceded that rectification sought be made in the name of the Fifth Defendant to satisfy the element of a valid contract which the First and Third Defendants had breached. There was indeed an offer; there was an acceptance by performance in which consideration was paid. Clearly without doubt, the parties had intended to create a legal relationship. Those elements had been fulfilled hence a conclusive contract had been accomplished, therefore the parties were bound by its terms.

46. By transferring the FTE title in the two parcel numbers and the cold storage facility to the Second Defendant was a clear breach of the contract which requires a cancellation order for rectification of the register, and have the titles of those lands be registered in the name of the Fifth Defendant.

The Orders:

1. This Court by order hereby declares that the grant of Fixed Term Estate in lands PN 098-011-33 and PN 098-011-34 by the First Defendant to the Second Defendant was made contrary to Sections 2 and 3 of the Divestment of Government Assets and Services Act 1999.

2. By grant of declaration in paragraph (1) this Court further declares that the registration of the said Fixed Term Estates in the name of the Second Defendant was obtained or made by mistake in law.

3. This Court hereby orders by quashing the grant of Fixed Term Estate in the lands PN 098-011-33 and PN 098-011-34 by the First Defendant to the Second Defendant.

4. Grant order rectification of the land register pursuant to Section 229 (1) of the Act, that registration of Fixed Term Estates in PN 098-011-33 and PN 098-011-34 in the name of the Second Defendant is cancelled and both parcel numbers is registered in the name of the Fifth Defendant.

5. Grant order declaring that the Claimant has an overriding interest vested upon it, as an entity in actual occupation by virtue of S.114 (g) of the Land and Titles Act.

6. Grant order for damages (to be assessed) suffered by the Fifth Defendant in connection to the two Fixed Term Estates.

7. Claimant's cost be paid by First to Fourth Defendant, and Fifth Defendant's cost also be paid by the First and the Third Defendants.

The Court.

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^[1] [Unreported, CACSI Civil Appeal No. 005 of 2005 (4 August 2005).
^[2] [2009] SBCA 22; CA 13/2008 (23 July 2009).
^[3] [1951] 53 SR (NSW)