Leong v Public Trustee [2018] SBHC 49; HCSI-CC 219 of 2014 (4 May 2018)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of Solomon Islands

MICHAEL LEONG AND TYSON LEONG ( As Administrators of the estate of Patrick Leong)
Claimant

PUBLIC TRUSTEE (As Administrator of the estate of Fenigolo Gagame)
Defendant

BETWEEN:	MICHAEL LEONG AND TYSON LEONG ( As Administrators of the estate of Patrick Leong)	-Claimant
AND:	PUBLIC TRUSTEE ( As Administrator of the estate of Fenigolo Gagame)	-Defendant

Claim for declaration relating to an oral agreement between the parties that such an agreement made in early 1995 is a valid and enforceable contract on which the claimant relies for specific performance and consequent court orders directing a subdivision of fixed term estate in parcel number 191-035-225 and transfer of part, then registered in the defendant’s name as owner.

This proceeding comes to court by way of amended Category A Claim brought on 24 May 2017 seeking a declaration that an oral agreement between the late Patrick Leong [Leong] and the late Fenigolo Gagame [Gagame] made early in 1995 is a valid and enforceable contract binding on the parties. Consequent upon such declaration, an order for specific performance of the oral agreement, and further to such specific performance, an order the defendant subdivide the property described as fixed term estate in parcel number 191-035-225 then in the name of the defendant as owner and to transfer part of the subdivided land on which a hostel had been erected, to the claimant.
By defence filed 28 of June 2017 the defendants (the administrators of the estate of the late Gagame) pleaded ownership of the estate in the registered land (with impliedly all the incidence and rights attendant in terms of the Land and Titles Act].^[1]
By Statement of Case, paragraph 5; the claimant says;
“ 5. The following are material terms of the oral agreement:

The case may clearly be seen to be a claim to an estate or interest in land for that, in consideration of monies advanced Gagame, he was to apply for a fixed term estate over the property, apply for the subdivision of such property and transfer that part upon which the hostel stood (built at Leong’s cost) to Leong.
By amended defence the defendant denies any written agreement for subdivision or sale of any portion of the land to Leong. (Paragraph 7 of defence).

“ S. 117 (1) No registered interest in land shall be capable of being created or disposed of except in accordance with this act and every attempt to create or dispose of such interest otherwise than in accordance with this act shall be ineffectual to create, extinguish, transfer, vary or affect any such interest.
(2) nothing in this section shall be construed as preventing an unregistered instrument from operating as a contract, but no action may be brought upon many contract for the disposition of any interest unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and is signed by the party to be charged or by some other person thereunto by him lawfully authorized:
Provided that such action ...”
Before considering those matters raised by the claimant in support it is necessary to look to the defence to the particular plea in relation to paragraph 5 of the Case (above) (CB 13).
Defence-para. 10 (IV)- the late Mr. Gagame admits paragraph 5 in the context of paragraphs 4 (a) to(f) hereof otherwise denies any oral agreement for the subdivision, sell (sic) and the eventual transfer of the portion of the estate as pleaded in paragraph 5 of the Claim.
(4) the late Mr. Leong is an individual business man who was responsible for constructing the hostel based on a verbal arrangement with the late Mr. Gagame in around 1994.
Particulars of the verbal lease agreement.
[a] at the material time late Gagame was employed (by) the late Leong to do repair and maintenance work.
[b] at the material time late Gagame was still in the process of negotiating the allocation of the said property to himself with the Commissioner of lands.
[c] in anticipation and on the basis of the assurance from the Commissioner of lands that the late Gagame would be allocated the title to the property, the late Leong commenced construction of his house currently located on the said property.
[d] at the material time the late Leong was looking for accommodation to house his female employees,
[e] the late Leong sought approval from the late Gagame for the construction of the hostel on the said property. The late Gagame agreed on the basis that the late Leong would rent the hostel at a monthly rental of $5000 and
[f] the late Leong pay the late Gagame an amount of $20,000 for the labour cost in constructing the hostel. The late Leong’s female employees moved in and occupied the hospital immediately after it was completed in early 1995 or thereabouts.
By introductory paragraph 4, it can be seen to be admitted by the defendant that the defendant constructed the hostel for Leong who was responsible “for constructing the hostel based on a verbal arrangement with Gagame in or around 1994”.
The [not agreed] Court Book contains statements of the claimant and the defendant before they both passed away. Both Counsel rely on the statements and no objection was raised by either Counsel to the courts use of statements as evidence in this proceeding. The court intends to place such weight on the material as it sees fit, in absence of any submissions to the contrary.

By Leong’s first statement he deposes to the terms of the oral agreement, by terms which correspond with his paragraph 5 of the Claim. (see above).
By paragraph 11 of his statement, he goes on to say;
“11. I deny the defendants allegation that the oral agreement was for me to meet the cost of construction of a hostel on the property and to then rent it from the defendant. No one in his right mind would have spent $20,000 and a lot more in mid 1990s to improve the property of another only to then pay more to rent the building. That kind of arrangement would have been completely one-sided was absolutely no advantage or benefit to me and my business as a prudent businessman, I would never have agreed to such an arrangement if it had been proposed. The defendant however never proposed such arrangement. Our agreement was that set out in paragraph 10 hereof.”[Paragraph 5 of the Claim]
By Gagame’s statement (commencing at 36 court book (not agreed)) he denies entering into a verbal contract with Leong.
He says; “9. I deny entering into a verbal contract with Leong as deposed to at paragraphs 89 and 10 in his sworn statement filed in the proceeding. I further say it is worth considering the discrepancy arose (sic) in his sworn statement in terms of the content of the defence filed on his behalf in HC- cc. Number 165 of 2005 being Exhibit “FG-2”.
10. I say that in or around 1994 I was still in the process of negotiating the allocation of the said property with the Commissioner of lands when Leong was looking for accommodation to house his female employees. I say Leong sought my approval for the construction of the hostel on the said property. I agree to the request on the basis that Leong would rent the hostel at a monthly rental of $5000. He never lived up to his promise up to this day.
11. I received from the claimant an amount of $25,000 out of the total labour costs of $40,000, incurred as a result of the construction of the hostel. Leong never got to pay to me the balance of $15,000. I did not bother following it up anyway as all these arrangements were done verbally. Nevertheless Leong’s female employees moved in and occupied the hostel immediately after it was completed in early 1995 or thereabouts.
12. At all material times I always maintain that the house belongs to Leong but the land will always remain in my name.
The proceedings in 2005 referred to above were instituted by this defendant (trading as F G Construction) as plaintiff in cc. 165 of 2005 by writ of summons against Patrick Leong defendant. By Statement of Claim the plaintiff, at paragraphs 4, 5 and 6 said;
“4. In mid-1990 the plaintiff and the defendant verbally agreed for the subdivision of the plaintiff’s land so that a building can be constructed to accommodate some of the defendants employees. The plaintiff’s land was subsequently subdivided and a building was constructed on P/N 191-035-225. The building was then used by the defendants employees as accommodation.
5. In mid-1997 the plaintiff and the defendant verbally agreed that the defendant should pay the plaintiff the amount of 25,000 for use of the plaintiff’s land (including P/N 191-035-225) for the years 1993 to 1997. It was also verbally agreed at that time that from 1998 onwards, the defendant was to pay a monthly rental of $5000.
6. Since 1998 to date, the plaintiff has failed, neglected or refuse to pay the plaintiff the monthly rental amounts of $5000. As at 31 March 2005 the defendant is indebted to the plaintiff for the amount of $435,000 as outstanding rentals. The defendant continues to use the plaintiff’s land to accommodate his employees and is therefore liable to the plaintiff the monthly rental of $5000 from 1 April 2005 until the date of vacation.”
By defence and counterclaim on 18 April 2005 the defendant, Leong addressed the statement of claim;
“4. Paragraph 4 (of the claim) is denied. In 1993 the plaintiff agreed to sell a fixed term estate in parcel number 191-035-225 to the defendant for $25,000. At that time there were no buildings on the land. The defendant pay the plaintiff $25,000 in cash for the land. At the time of payment the plaintiff agreed that he would have a transfer prepared and that he would obtain the Commissioner of lands consent to the transfer. The plaintiff failed to do so and has subsequently refused to transfer title to the defendant.
5. The defendant developed parcel number 191-035-225 at his expense by constructing thereon a hostel for some of his employees which he has continued to use until the date hereof.
6. Paragraph 5 is denied. The said sum of $25,000 was the agreed purchase price of the land. At no time has the defendant agreed to pay $5000 or any other sum as rent for the property and in any event a claim for rent arrears for the years 1993 to 1997 is statute barred as the six-year limitation period has expired.
7. as to paragraph 6 the defendant denies owing rent is alleged or at all. The defendant agrees that he continues to use the land as he has an equitable interest therein and is entitled to legal ownership thereof.”
By reply and defence to counterclaim the plaintiff joined issue with the defence and denied the defendant was entitled to specific performance by counterclaim; the counterclaim dated 18 April 2005 claimed that the plaintiff was in breach of contract to transfer the fixed term estate in that parcel to the defendant, Patrick Leong and claimed specific performance of the agreement and other ancillary orders.

On 1 April 2010 pursuant to Rule 9.72(d) of the Solomon Islands Courts (Civil Procedure) Rule 2007, the Registrar, having been satisfied that no step had been taken in the proceedings (since notice of intention to take further proceedings filed on 24 July 2007), in exercise of power, struck out the proceeding for want of prosecution. There was thus, no “action” on foot to recover land claimed by Patrick Leong in his counterclaim of 18 April 2005, “action” to be understood in terms of section 9(2) of the Limitation Act (Cap. 18).
“S. 9(2)- no action shall be brought, nor any arbitration shall be commenced by any other person to recover any land after the expiration of 12 years from the date on which the cause of action accrued to him or, if it accrued to some person through whom he claims to that person:...”
On the pleadings in CC 165 of 2005 the agreement claimed to have been breached was made in 1990 while it is agreed the land the subject of this argument became registered in the name of Gagame in 1998. It may have been argued in those earlier proceedings, that a cause of action for recovery of land by counterclaim accrued to Leong at the time of or sometime after the registration of the land in the name of Gagame. For in the absence of steps for subdivision to facilitate the transfer of that portion of the land parcel on which the hospital had been erected, to Leong, a cause of action may be said to have accrued to him. Leong must be deemed to have been cognizant of such, for his counterclaim in April 2005 reflects that fact.

There is no dispute over the fact that the estate of Patrick Leong is, by its servants or agents, in possession of that hostel and portion of the land parcel upon which it was erected in the mid 1990s. For it is this possession, the defendant in the current proceeding says, which gives cause to recover rent for the premises. Such cause is reliant on the supposed terms of the verbal lease arrangement in or about 1994 (CB 11, 12-Amended Statement of Defence). By statement of claim in the earlier proceedings CC 165 of 2005 the plaintiff, Gagame claims the verbal agreement over the hostel was made in 1997. (Statement of Case paragraph. 5).
When the court comes to consider the claim for declaration, in the amended claim in this proceeding, (the oral agreement between these persons, claimed to have been made in 1995) satisfies the proof needed for a valid and enforceable contract giving rise to the specific performance to subdivide and transfer the land upon which the hostel is built, the court is faced with a multiplicity of assertions as to, not only the terms of any arrangement but when and in what circumstances it was made. It would be reasonable to find the fact of possession of the hostel in Leong coupled with the acceptance of the fact that the building was erected at his expense, on land to be obtained by Gagame, support for the claim, yet on the pleadings in both these proceedings it may not be said the parties were ad idem.
What may be accepted however;
“If, whatever the man’s real intention may be, he so conducts himself that a reasonable man would believe that he was acceding to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”^[2]
for the court accepts Leong’s rationale for funding the hostel relied upon the future subdivision and transfer of that portion of land in the parcel subsequently granted Gagame in 1998 in consideration for the monies paid. When the small sum paid to the Commissioner of Lands for the actual Grant of land is viewed in the light of sizeable other monies said to have been paid by Leong to facilitate the grant to Gagame, a reasonable man may not be expected to believe Gagame’s assertion Leong’s building owed Gagame rental monies.
This court is required to make certain findings of fact and that “reasonable man” test supports this court’s finding that the hostel and portion of land (and any necessary access by usage through the land of the defendant) on which it stands both belongs to and may be used by the claimants. This finding is the legal right, in terms of section 33 of the Limitation Act, such as to be that right of “a person in actual occupation of the land,...”(S. 114[g] Land and Titles Act.)
“S. 33-except as otherwise provided in section 34 to 36, but subject to section 39, the expiry of the prescribed period in relation to an action, or the commencement of an arbitration, as the case may be, bars the legal remedy by that action or arbitration, but does not bar the legal right involved therein or abate the cause thereof.”
The defendant has properly show this proceeding is statute barred by provision of section 9 (2) of the Limitation Act.
Any cause of action (in this case reliant on implied fraud or mistake of Gagame) by section 32 (2)(c) may reasonably have been discovered after the defendant, Gagame, became registered in 1998 and the claimant has been shown to have failed to proceed by earlier proceeding or lodgement of a caveat over the registered land. The counterclaim in April 2005 presumed earlier knowledge in Leong of the claimed failure by Gagame to effect the transfer. Since these persons were conducting business together, a prudent businessman may have been expected to make enquiry from time to time of the lands registry to protect his own interests, and it would have become apparent after 1998 registration that parcel number 191-035-225 had been registered wholly favour of Gagame. The court does not accept the claimants reliance on the supposed assurances of Gagame to act by way of subdivision and transfer as reason to overlook a prudent man’s responsibility to see to his own interests, by enquiry from time to time at the lands registry. The court rather accepts the claimants presumed acceptance of the state of affairs, as implied knowledge from the time of registration in 1998 of that fact [that no subdivision or transfer had been effected] was with the claimant, Leong, as evidenced by his continual queries of Gagame.

It consequently stands to reason the claimant is statute barred by virtue of section 9 (2) of the Limitation Act from this action, for any cause of action to the knowledge of the claimant arose over 12 years ago. It should also be said any claim for rentals under these supposed oral arrangement would also fail by reason of the Act.

Having found the legal right as aforesaid, this court makes order directing the Registrar of Titles to make sufficient notation on the land register for parcel number 191-035-225 to reflect this court order to protect the overriding interest of the claimants in that land parcel and right of access pursuant to section 114 (g) of the Land and Titles Act.
The declaration is refused. The claim is dismissed.

High Court of Solomon Islands

Leong v Public Trustee [2018] SBHC 49; HCSI-CC 219 of 2014 (4 May 2018)