Beldon v Commissioner of Lands [2017] SBHC 75; HCSI-CC 242 of 2015 (20 June 2017)

IN THE HIGH COURT OF SOLOMON ISLANDS

(FAUKONA PJ)

CIVIL CASE NO. 242 OF 2015

BETWEEN: MARTHA OLIVIA BELDON First Claimant

AND: LIU MELIAN Second Claimant

AND: COMMISSIONER OF LANDS First Defendant

AND: REGISTRAR OF TITLES Second Defendant

AND: KEVIN CHENG Third Defendant

Date of Hearing: 9^th May 2017
Date of Judgment: 20^th June 2017

Mrs L. Ramo for the First and Second Claimants
Mr D. Damilea for the First and Second Defendants
Mr A. Radcliffe for the Third Defendant

JUDGMENT ON CLAIM FOR RECTIFICATION OF TITLES

Faukona, PJ: An amended claim was filed on 22^nd July 2015. There are three major reliefs sought. The first one is a declaration that registration of PN. 191-037-48 and 191-037-47 in the name of the third Defendant is null and void and of no effect. The second is a consequential order for rectification of the two fixed term estates, and thirdly that both fixed term estates be in the names of the second Claimant.

	Background facts:
2.	On 27th November 2008, the first Claimant was registered as the owner of two fixed term estates, situate at Kukum, Honiara. The first Claimant acquired registration as a result of transfer from the previous owner, Constance Nuaniani.
3.	On 26th May 2014, the first Defendant grant consent for transfer subject to the discharge of a registered charge placed over the properties by ANZ Bank.
4.	On 5th June 2014, the first Claimant sold the two lands to the second Claimant.
5.	After 2nd July 2014 following the payment of stamp duty, a transfer instrument was executed between the first Claimant and the second Claimant and was lodged for registration.
6.	On 11th July 2014, the Commissioner of Lands made an offer for the two fixed term estates to the third Defendant following forfeiture processes.
7.	On 10th December 2014, both lands were registered in the names of the third Defendant.
	Conditions attached to granting of fixed term estate:
8.	Upon conclusion of contract for sale, the Commissioner of Lands then granted the fixed term estate to the Grantee in a standard form S.134 of Land and Titles Act (LTA). Paragraph 4 of the grant instrument requires the Grantee to construct a building thereupon for commercial purposes, which design must be approved by the Honiara Town and Country Planning Board.
9.	Paragraph 6 of the grant instrument requires that the Grantee must within certain month from the date the Grantor signs the instrument erected on the land to the satisfaction of the Grantor a building costing a minimum of certain amount of money.
10.	Apart from the two above paragraphs, a further guidance is expressed by S.136(1) of the Land and Titles Act that the Commissioner has the right to forfeit an estate if the owner fails to pay any rent incidental to the estate upon its becoming due.
11.	On the whole, a Grantee who is granted the fixed term estate has to comply with paragraphs 4 and 6 of the grant instrument together with payment of any rentals incident to the estate. Should the Grantee fails to perform as required, the Commissioner by law has the right to forfeit the estate, see S.136 of Land and Titles Act.
12.	In sequence, the commercial building design structure must first be approved by Town and Country Planning board before it was constructed. That must be done within a certain period of time for instance, 18 months depending on the period the Commissioner may prescribe.
13.	In this case there was no period of limitation stated in the original grant instrument in which Mrs Constance Nuaniani must construct the approved commercial structure.
14.	When the estates were transferred to the first Claimant, there was no grant instrument executed, perceivably not necessary, because the transfer instruments may perhaps intended to transfer all the obligations and liabilities upon the transferee including the ones at the back of the page. However, it ought to be noted that the transfer instruments did not contain same conditions as the grant instruments. Therefore at the time of transfer to the first claimant, the period to construct did not apply. The same covenant did not apply to the second transfer when the first Claimant transferred the fixed term estates to the second Claimant.
15.	It therefore left with the only issue whether the first Claimant had paid the rentals incidental to the estate as at the date of transfer to the second Claimant. This appears to be the only consideration which will form the basis upon which the Commissioner will exercise its powers to forfeit the estates.
16.	There can be no doubt the first title holder of the fixed term estates Ms Nuaniani had failed to develop the lands for two years and four months up until 27th November 2008, the date the fixed term estates were registered in the name of the first Claimant.
17.	From that date of registration until the lands were transferred to the second Claimant on 1st July 2014, was about 5 years and 8 months. By then, still there was no development done by the first Claimant.
18.	The problem encountered by the Commissioner is the omission to completely fill the clause in paragraph 6 of the grant instrument. From that error/mistake the transfer instruments did not provide a cure to the condition. In fact a new regime of covenant were attached to it. Therefore, the Commissioner can only apply for forfeiture process in regards to none payment of rentals incidental to the estates as provided for in S. 136 (1) of the Land and Titles Act, and for no other reasons.
19.	Amazingly, on 30th June 2015 there was an instrument of variation which validated the terms in both fixed term estates to include the clause of the Grant Instruments so as to read 24 months. That variation was intended to be back dated to 27th November 2008. Ironically that was a variation done in haste and for no purpose but merely to serve an agenda which no one can able to verify. In fact the variation was an evidence of self-realisation of the error made originally, nine (9) years ago. In deed it was more than late and has no effect as far as this case is concerned.
20.	In noted the notice before forfeiture dated 21st October 2013, which stated that the first Claimant failed to erect a building for commercial purpose, in accordance to Public Health Ordinance 1970 or any by-law made under the provision. There was no reference, or indication that the first Claimant had failed to erect such building within the period as stated. Perhaps it was not mentioned because there was no grant instrument executed which expectedly contain paragraph 6 of the covenant. The transfer instruments that were signed did not contain the same or equal provisions as stated in the grant instruments. Therefore it is out of context to rely on none compliance for not developing the fixed term estates, because no period was stated within which the construction of such building be done.
	The validity of the notice before forfeiture:
21.	Section136 (1) of the (LTA) provides a mandatory exercise of the Commissioner’s right to forfeit an estate if the owner fails to pay any rent incidental to the estate. Apart from that section, a title can also be forfeited by the Commissioner on the grounds of being failed to develop the land in accordance with the terms of the grant.
22.	In this case the notice before forfeiture was issued on 21st October 2013. Its content was basically on performance and obligation under the purported grant. Unfortunately there was no grant instrument exhibited, hence would mean none at all. That was a mistake of understanding the provisions of the Land and Titles Act.
23.	There was no time frame expressly stated for the construction of the required building. Inevitably, this is of significant, because when the transfer instruments were executed, the transferee was expected to be aware of his legal obligations under the transferred covenants. In this case the first Claimant, on the date of transfer was bound by the covenant, but an important covenant was not included, the limitation period to construct a required building. Originally, this was the mistake omitted by the Commissioner of Lands when the original grant was executed. I agree the terms and conditions were binding on the first Claimant by means of the legal transfer, but not to the full, the covenant in the original grant was incomplete. The same can be said when the first Claimant transferred the fixed term estates to the second Claimant. In fact the grant instruments covering both fixed term estates has no specific building covenant and time frame.
24.	Amazingly, the Commissioner may have been unaware of, or was another mistake, for not including as one of his reasons to issue notice before forfeiture, the non-payment of rentals which at that time of the issuant of notice stood at $14,059.80. Definitely the notice was inadequate and one which the recipient cannot rely and act upon.
	Service of notice on the first Claimant:
25.	Section 252 of the Land and Titles Act states that notices may be delivered to the person personally or sent by registered mail. The argument advanced by the third Defendant is that there is no evidence from the fist Claimant that she was not served personally, which is a non-issue in this case.
26.	It is a non-issue because the Commissioner had elected to serve the notices by registered post. That was very plain and clearly stated on the notices before forfeiture. It is irrelevant for the first Claimant to adduce evidence that she was not served personally. Therefore, the third Defendant cannot rely on the presumption that everything that was required to be done was done.
27.	Legitimately the onus is on the Commissioner to proof in evidence as to service. Having elected to serve by registered post, a receipt to that effect is sufficient evidence to proof notice was served. The Commissioner had produced no receipt.
28.	Further still, there is evidence from the Manager of Office Exchange, Solomon Post, who states that he had conducted a thorough search of their record but found no tracking number to confirm any registered mail sent by the Commissioner to the first Claimant, C/- P O Box 1553, Honiara, a post office box owned by A & A legal services.
29.	Mr C. Ashly the legal entrepreneur of A & A Legal Services, admitted P. O Box 1553 was his postal address. But denied in his sworn statement receiving any registered post or ordinary mail addressed to the first Claimant. I must therefore conclude on the balance that the notice before forfeiture was never served on the first Claimant. There was no evidence to proof service was effected upon the first Claimant.
30.	In the case of Maukera V Attorney-General[1], Palmer Chief Justice stated;
		“Section 138 provides that no right of forfeiture may be exercised by the Commissioner until a notice of forfeiture had been served on the owner of the estate. Proof of service of notice of forfeiture is therefore crucial to any valid exercise of forfeiture. No proof of service, no valid exercise of the right of forfeiture”.
31.	From the authority of the above paragraph, it therefore must be applied equally in this case. The common denominator is lack of evidence to proof service was made upon the first Claimant. Any exercise of right by the Commissioner from this point on ward, such as re-entry process, application by the third Defendant, approval of it, offer made on 11th July 2014, payment of the required fees, grant and even registration, are all invalid. No proof of service had been done, therefore invalidated any exercise of the Commissioner’s rights there-after in regards to the above activities.
32.	The basic reason is that, at that time the Commissioner exercised his rights the two estates were not legally possessed by him, they were still owned by the first Claimant. Therefore the Commissioner was actually exercising his rights in a vacuum. He was yet to re-possess those fixed term estates, so that he would have rights to dispose them after the forfeiture processes.
33.	It makes no different, if the rental arrears were paid after the purported forfeiture of the title. The first Claimant can rely on as a waiver because the notice did not concern about rentals. None service of the notice before forfeiture has also discredited or nullified any payment of rent by the third Defendant. In fact payment of all rental arrears by the first Claimant has added more strength to his case, although it was transacted after the purported forfeiture of the titles. The Commissioner had agreed and received the monies. It was a positive act shown as an intention to treat the estates as subsisting.
34.	Assuming that the notices before forfeiture were served on 21st October 2013; and the notice of re-entry was issued on 28th May 2014. Amazingly the offer was made to the third Defendant on 11th July 2014, one month and eleven days after. That action by the Commissioner was contrary to the requirements in S.139 (2) (c) of the Lands and Titles Act. This is not a case where the Commissioner is proceeding by action but an action prompted by notice of re-entry in which S. 139 requires the owner must be given privilege to apply to the High Court for relief. By subsection (2) (c) requires the owner must file application within six months.
35.	In this case it appears no such time was given to the first Claimant to seek relief. The offer was made less than two months from the date of re-entry. Again the Commissioner had caused such omission. Conceivably the Commissioner was administering the forfeiture process in haste or under some sort of pressure. In any event, the Commissioner had failed to comply with the relevant provisions of the Act, and thus made him abhorrent in performing his duties, so it is another failure.
	Is the registration of the title valid?:
36.	Amidst the presence of omission, errors or mistakes, was the registration of the titles in the name of the third Defendant spotless and free from any impurity? The answer must be definitely in the negative. There was error committed when the Commissioner referred to a grant made to the first Claimant upon issuing of the notice before forfeiture when there was no grant instrument executed by the Commissioner and the first Claimant at all. The Commissioner was expected to possess full knowledge of all the transactions, yet he failed.
37.	Grant instruments executed should be evidence proving that a sale agreement has been conclusive. There was no copy of such grant instrument on file that should clearly indicate nothing was done. A prudent Registrar should detect the absence of a grant instrument, when making a cross check with the terms of the notices before forfeiture were issued in particular where there is nothing to substantiate. The Registrar by that reality should refuse to register the two fixed term estate in the third Defendant’s name.
38.	Again the Registrar of Titles had failed or neglecting to exercise due diligence to detect that the forfeiture process was not valid. In particular, there was no proof of service of notices before forfeiture. This significant point would pave the way for the Commissioner to exercise his right of forfeiture. The Registrar could have rejected the registration on that ground as well.
39.	It does not end there, the Registrar of Titles could have noticed that six months allowed by S. 139 (2) (c) of the Land and Titles Act, for the first Claimant to file application to the High Court for relief, was not granted. In fact that part of the process was absolutely bypassed. From notice of re-entry to when the offer was made to the third Defendant was only one month and thirteen days. A prudent Registrar exercising due care and diligence would have rejected to registrar the titles of the lands in the name of the third Defendant, yet she did.
	Was the third Defendant a bona fide purchaser?:
40.	From the Defendants’ submissions they seem to uphold the principle “as a bona fide purchaser for value.” However, there appears to be a manifestation reflected by the documents per se, but a book cannot be judged by its cover. There is so much, so that arriving at a grandeur conclusion, the processes provided by the Land and Titles Act has to be complied with.
41.	Section 229 (2) of LTA provides protection from rectification of the title of an owner who is in possession and had acquired the interest for valuable consideration, unless such owner had knowledge of the omission or mistake or him substantially contributed to it by his act. The relevant issue is whether the third Defendant had knowledge of the omission or mistake done by the Commissioner of Lands.
42.	In this case the facts are different and may be unusual. Common practice is, when required fees are paid as required by the offer, an interest had been acquired on that date for valuable consideration. However, quite unfortunate, the third Defendant had never physically in possession of the two estates. I noted the third Defendant could not able to develop the lands because he was prevented by the Claimants. That may be so, a valid excuse, but he could have instituted a civil suit for eviction orders which he never did, hence breached one of his protective shields.
43.	Evidence had revealed that the third Defendant was well aware of the status of the two estates through his inquiries with the Commissioner’s Office in 2013. Further inquiries with the Director of Physical Plaining (Ag) resulted in a report compiled by that Officer recommending to the Commissioner forfeiture of the subject lands. By yielding to it the commissioner therefore issued notice before forfeiture on 21st October 2013. At that stage it would be unknown to the third Defendant whether the notices before forfeiture was served or not. If that was the major mistake which upon this case was grounded on, then it would not be possible that third Defendant would have aware of it. There may be pressure which resulted in haste administration and exercise of rights, but having knowledge of whether the service was effected or not, is quite remote.
44.	It can’t be the case, by approving the third Defendant’s application, he had knowledge that the titles were still in the name of the first Claimant. That may be true, but the approval was subject to completion of the forfeiture processes. Simply mean, after the forfeiture processes were done a letter of offer be issued, which was done untimely in this case.
45.	The significant of all is that where there is no proof of service of notice before forfeiture, there is no valid exercise of rights of forfeiture. Simply mean, all other exercise of rights by the Commissioner thereafter, were all not valid including the offer, acceptance by payment of the required fees, grant of the estates and registration. Therefore the third Defendant cannot rely on S. 229 (2) to protect himself. All along was a mistake by the Commissioner on point of law, therefore, there cannot be a valid registration of the estates in the name of the third Defendant. I am satisfied on the evidence that the registration was done by mistake, if not, was prompted by absolute misunderstanding of the relevant provisions of the Land and Titles Act. As a result the register ought to be rectified.
	Counter-claim:
46.	From the mistakes and omissions committed by the commissioner of Lands and the Registrar of Titles, the caveats registered over both estates by the second Claimant and one Mr Talo on behalf of the first Claimant, will continue remain in place. The caveators have caveatable interest on both estates.
47.	With all the reasons I have alluded to in respect of all the issues, I hereby make the following orders.
	ORDERS:
	1.		That registration made by the second Defendant of the two fixed term estates in PN. 191-037-48 and 191-037-47 in the name of the third Defendant is null and void and has no effect.
	2.		Order that registration of the two fixed term estates in PN. 191-037-48 and PN. 191-037-47 is hereby rectified accordingly.
	3.		Order that the fixed term estates in PN. 191-037-48 and PN. 191-037-47 is registered in the name of the second Claimant.
	4.		Refuse to grant order for removal of the caveats as required by the counter-claim.
	5.		Refuse to grant order restraining the Claimants from interfering with the third Defendant.
	6.		Order cost be payable to the Claimants by the first and second Defendants.
7.		No cost awarded against the third Defendant.
			The Court.

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^[1] HC – CC 14 of 2003 (19 November 2003).