Mone v Paane [2009] TOCA 26; AC 13 of 2009 (9 September 2009)

IN THE COURT OF APPEAL OF TONGA
LAND JURISDICTION
NUKU'ALOFA REGISTRY

AC 13 of 2009

BETWEEN:

MALAKAI 'ALIFELETI MONE and
THE FREE WESLEYAN CHURCH OF TONGA
Appellants

AND:

HALA PAANE (first respondent)
Hon. FAKAFANUA (second respondent) and
MINISTER OF LANDS (third respondent)
Respondents

Coram:	Ford CJ
	Burchett J
	Salmon J

Counsel:	Mr Tu'utafaiva for the Appellants
	Mr Niu for the First Respondent
	Lord Tupou for the Second Respondent
	Ms Mafi for the Third Respondent

Date of hearing:	2 July 2009
Date of Judgment	9 September 2009

JUDGMENT OF THE COURT

[1] At Halaleva, in Tongatapu, there is a church of the Free Wesleyan Church of Tonga. A need was recognised in 2001 by the Church authorities to provide a residence for the Minister, so an approach was made to the local estate holder, the Hon. Fakafanua, to lease an appropriate allotment. Section 17 of The Land Act authorises the grant of land in a town upon lease to a religious body where the body has at least thirty adherents of the age of sixteen years or more in the town. No question has been raised as to the eligibility of the Free Wesleyan Church in Halaleva to hold land upon lease for the required purpose. The proposed lease was agreed to by the estate holder, and application was duly made to the Minister of Lands.
[2] It should be noted that the form of application for a lease is prescribed by s.124 and Schedule IX of The Land Act. That form provides for the estate holder (as "grantor") to sign the following: "I hereby agree to the lease of the property as described above and declare that there is no impediment to prejudice this lease". Once a lease issued upon this application, the presumption of the regularity of official acts would, in the absence of evidence to the contrary, support the conclusion that the application was authorised under s.17 and was appropriately signed by the Hon. Fakafanua: Maamakalafi v Finau [2004] Tonga LR 218 at 223.
[3] The Church's application led to a series of events, and ultimately (but only some years later) to the litigation in the Land Court and the judgment of Shuster J. which is the subject of this appeal. In the Land Court, one Hala Paane (here, the first respondent) sued the President of the Free Wesleyan Church of Tonga, Dr Malakai Mone, and the Church (the appellants), Hon. Fakafanua (the grandson of the estate holder at the relevant time, who had succeeded to the title and estate, the second respondent) and the Minister of Lands (the third respondent).
[4] Before coming to the issues in the appeal, we must resume the account of what occurred. Soon after the Church's application to the Minister was lodged in early January 2001, Hala Paane became aware of it. He contacted both the President of the Church and the office of the Minister, claiming that he had been given the land by the estate holder many years earlier (perhaps about 1972) as a reward for unpaid work he had done on the estate holder's behalf, particularly work transporting rock in a truck he owned. Over the years since, he had grown crops on the land, although there is much confusion in the evidence as to when it was used by him personally and when by others, whether strangers or his sons-in-law.
[5] Mr. Paane's claim led swiftly to a letter from the estate holder to the Minister dated 24 January 2001 which asserts that the land given to Mr Paane was a different allotment, on which he "presently resides". The estate holder requested the Minister to proceed to registration of the lease to the Church. However, the Church was less precipitate. After all, Mr Paane and the estate holder might be presumed to have some recollection of the events (subject to the limitations, after some thirty years, of human memory). The President of the Church, on the other hand, could only inquire. He, therefore, wrote on 26 January 2001 to the Minister, conveying his understanding from Mr Paane that the "estate holder had already given this piece of land to him" and Mr Paane "will have it registered as soon as possible". On that basis, he had "agreed to stop the written application" for a lease.
[6] But Mr Paane did not proceed to register his claimed interest "as soon as possible", or at all. Indeed, it must have become clear that it was quite impracticable for him to do so. In the first place, the estate holder's response to his claim was to deny it on the basis of the provision of the different lot on which Mr Paane's substantial brick house was built. In the second place, both lots were town allotments, so that section 48 of The Land Act would, if he registered a grant of the disputed lot, raise a bar to his thereafter obtaining a grant of the lot not in dispute (but not registered) on which he lived with his wife and one daughter. If he died after registering a grant of the disputed lot (he is eighty-four years of age), his wife's widow's inheritance would at the least be in great jeopardy. Although section 48 was raised by Mr Tu'utafaiva, who appeared for the appellants both below and on the appeal, the Land Court engaged in no detailed exploration of these problems. But the transcript of the cross-examination of Mr Paane, and also of Mrs Paane, shows they were conscious they confronted a difficulty. When it was put to him that his claim involved his having "two allotments", he replied:
"I had not applied for the land from Fakafanua [the alleged gift], I was going to have it registered under my son-in-law."

Of course, the land was not given, on any version, to the son-in-law. When Mr Tu'utafaiva pointed out that the land was allegedly given to Mr Paane himself, he retreated to the proposition that the land was given to him to "do as I pleased until death". But that could not enable him to register it as a grant to his son-in-law, since such a registration would confer a title not limited "until death" of Hala Paane, and he acknowledged repeatedly in his evidence that the estate holder Fakafanua "did not consent to have it registered". Later, he again asserted "I was going to get it registered under my son [-in-] law". Similarly, Mrs Paane said: [W]e had always intended it for our daughters and their families".

[7] As was pointed out by Lord Tupou, who appeared on the appeal for the second respondent, the present Fakafanua, the alleged gift might have been capable of operation as a permit under sections 124 and 125 of The Land Act. But that would have required writing and registration under section 126. By section 125, such a permit "shall not be capable of being transferred and shall cease to be valid on and after the date of the death of either the grantee of that permit or of the landholder of the day of issue of that permit". The definition section, section 2, brings the relevant estate holder, Hon. Fakafanua, within the expression "the landholder" as defined, and he died in 2004. It should be added that section 126 provides (subject to a presently irrelevant proviso): "No lease, sub-lease, transfer or permit [emphasis added] until registered ... shall be effectual to pass or affect any interest in land". So on this footing any permit would not have been capable of being transferred to the son-in-law; it would have ceased to be valid in 2004; and it could not have passed or affected an interest in land without registration. The place of these sections in the constitutional framework of land rights in Tonga was explained in Cowley v Tourist Services Ha'apai Ltd [2001] Tonga LR 183 at 187-188.
[8] Mr Paane, although he took no step to register his claimed interest, did call at the office of the Minister of Lands on 28 March 2001 to assert his complaint about the Church's lease application, which he also put in writing on 29 March 2001. The Minister's Office replied, on 3 April 2001, that "action will be taken about your letter and we will contact you when that is done or if anything else is required." It is apparent that, by then, Mr Paane must have appreciated the Church had been informed of the estate holder's attitude, and would probably be renewing the pursuit of its application to the Minister. In fact, the first appellant, the President of the Church, wrote on 7 May 2001 a further letter to the Minister, referring to the earlier letter "to cancel the application for the allotment at Halaleva", and advising that "according to the information at hand, from the Minister and Steward of the Free Wesleyan Church at Halaleva, it is confirmed by the estate holder that the allotment is available". The letter offers an apology for "adding further work", but requests: "can you allow the application for the town allotment at Halaleva to proceed to allow for the construction of the residence for the Minister of the Free Wesleyan Church Minister [sic] at Halaleva?"
[9] On 30 August 2001, the Minister of Lands, Hon. Fielakepa, wrote to Hala Paane referring to his "visit on Tuesday, 28 March, 2001 (at 3:50pm)" when he "complained about the lease application" (ie by the Church), and adding:
"I also received on 29 March your letter about the same thing in which you stated that this lot was allotted to you by the Estate Holder in 1972 and your name was written in the map although you have not registered it up to today."

The Minister's letter goes on to refer to subsequent events, including the dispute between Hon. Fakafanua and Hala Paane as to whether the allotment provided by the estate holder was that on which the house was built, previously granted to one Vikilani but acquired by Hala Paane with the agreement of Hon. Fakafanua as estate holder. It concludes (omitting formal parts):

"Because there is no further lawful ground for me to hold up this lease application, I hereby inform you that this lease application will be submitted to His Majesty's Cabinet which has the authority to decide this matter finally.
You are of course at liberty to claim your right in this matter in the Land Court. I trust I have clarified this matter."
[10] There the correspondence between Hala Paane and the Minister ended. In due course, Cabinet approved the application and a lease to the Free Wesleyan Church of Tonga was registered on 15 November 2001, no further contention having been raised with the Minister by or on behalf of Hala Paane. The Church proceeded promptly with the erection of a residence for its Minister at Halaleva. No claim was made in the Land Court by Hala Paane at that time, or until much later, after the death of the Hon. Fakafanua who was alleged to have made the gift. The Statement of Claim in this case was filed on 9 December 2005, following a solicitor's letter of 30 May 2005 demanding compensation in the sum of $180,000 based on an allegation of fraud.
[11] There is an important principle of the common law that enjoins a court to be meticulous in its examination of the evidence where a claim is put forward that, in his lifetime, someone since deceased incurred an obligation. The rule was stated by Isaacs J in Plunket v Bull [1915] HCA 14; (1915) 19 CLR 544 at 548-549:
"[U]ndoubtedly it is established that in cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue."
See also Nolan v Nolan [2003] VSC 121; (2003) 10 VR 626 at 650-651; Nagle v Lavender [2002] NSWSC 611; Day v Couch [2000] NSWSC 230; Hunt v Barlow [2000] NSWSC 324; and Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 789. Hala Paane's failure to pursue his claim at the proper time, before the Church obtained legal title and expended money and labour building on the land, during the Hon. Fakafanua's lifetime, may be susceptible of explanation, but it does raise the very questions that form the foundation of the common law principle.
[12] The one explanation of Hala Paane's long delay which appears in his pleading is not available to him. For he alleged he was persuaded to refrain from pursuing his objection to the Church's application for a lease by a fraudulent representation made by the first appellant. That cannot avail him on this appeal because Shuster J. expressly found against him on the issue of fraud, and there has been no cross-appeal. In any case, there was ample ground for the rejection of the allegation, which was made in reliance on the evidence of Hala Paane's wife Tu'ifua. As pleaded, it was that "[i]n early September 2001", the first appellant "told her to go and discuss the matter with [her husband] and his children and come back with the figure of the amount of money that [he] wanted for the allotment and the Church would pay it to him in order that the Church would proceed to register its lease of the allotment"; the lease was registered on 15 November 2001; and "[i]n or about the following year, 2002, [Hala Paane] sent his wife Tu'ifuaPaane with a letter to [the first appellant] stating a sum of $180,000, which he and his family had discussed and agreed to be paid by the Church to him in exchange for the allotment. The [first appellant] refused to accept the letter and he told Tu'ifuaPaane that the Church already had legal title to the lease and that the Church would not pay any money to [Hala Paane]." The improbability of the President of the Church making an open-ended promise of payment of whatever the family asked for is obvious. It is much more probable that the President, as he said in evidence, urged Tu'ifua to "talk this out with the church in good faith because they were once members", and as to any amount of money they would want, it would be "an agreement [between] them and the church". The President was "not familiar with legal matters concerning land" and he said he told Tu'ifua to speak to a lawyer and to the church at Halaleva. Despite the way the allegation was put in the pleading, Tu'ifua's evidence was: "He told me to go to Hala and the children to see how much they would agree to so he can inform the church so we could be compensated" (not "so we could receive whatever we asked"). Mrs Paane did not suggest she approached the church at Halaleva about her husband's claim, or that he did. The claim she much later put to the President was for $180,000, which Hala Paane himself was quite unable to justify in evidence as a claim bearing any relation to the value of the allotment – he said it took account of the unquantified work he had done for the Hon. Fakafanua, which, of course, had nothing to do with either the value of the land or the Church.
[13] Although the foundation of Hala Paane's claim in the Land Court was the alleged gift of the land in dispute by the estate holder, and the estate holder's successor (first his son, and on his death his grandson) was joined as a party to the proceedings together with the Minister of Lands, no specific relief was sought against the estate holder. The specific relief prayed was:

1. "an order cancelling the lease granted by [the Minister of Lands] of the allotment to [the Free Wesleyan Church of Tonga] and directing [the Church] to vacate the allotment";
2. "alternatively ... damages in the sum of $180,000 or such reasonable sum as the Court shall order as compensation to be paid by [the President of the Church and the Church] to [Hala Paane] in respect of the loss of the allotment";

100. "costs of the proceedings to be paid by the [President of the Church and the Church]".

There was a general prayer for "any other order or relief as may be just", but it is not suggested any submission was made seeking further relief. Of course, if the lease had been cancelled the estate holder would have been consequentially affected by the loss of rent. The pleaded basis for the relief sought was that Hala Paane was in lawful occupation of the land at the time the lease was granted by the Minister of Lands to the Church; that the land was therefore not "available" for grant; alternatively, the Minister of Lands made the grant by mistake, wrongly understanding Hala Paane's objection to have been resolved; alternatively, the grant was procured by fraud; and alternatively, the Church was liable for damages of $180,000 or such sum as was fair on the basis of the President's "undertaking" that the Church would compensate Hala Paane for the land.

[14] As has been mentioned, the trial judge expressly rejected the claim of fraud. He also held the grant was not affected by misrepresentation and "there was no mistake in this case on the part of [the Minister of Lands]", who "granted the lease to [the Church] based upon information it had [that] indicated the land was available". On the material in the appeal papers, this Court can see no reason to doubt these conclusions. Unless the granting of the lease involved an error of principle, its registration unaffected by fraud, misrepresentation or mistake confers upon the Church a title which has been described as "paramount and conclusive": Lautaha v Minister of Lands [1995] Tonga LR 153 at 160-161, per Hampton CJ.
[15] As to the claimed unavailability of the land by reason of a right in respect of it said to have been granted by the estate holder, but not in writing and never registered, counsel below referred Shuster J. to section 6 of The Land Act, which provides:
"Every verbal or documentary disposition by a holder of any estate (tofia) or allotment (api) which purports to effect a voluntary conveyance, an out-and-out sale, or a devise by will of such estate or allotment is null and void."

Reference was also made to the longstanding decision of Ragnar Hyne J. in Paula Tu'iono v Paula Tulua (1937) 2 Tongan LR 36 at 37, where he said:

"A noble cannot confer legal titles to land, and cannot grant either town or tax allotments valid as such in law."

This statement of the law was cited with approval by Webster J. (as he then was) in Vai v 'Uliafu [1989] Tonga LR 56 at 61. See also Kaufusi v Kaufusi [1998] Tonga LR 173 at 175. On the facts alleged in the present appeal, the consequence is that the claimed gift of the disputed land could not have operated as a valid disposition of an interest in it. It was not a grant of the town allotment in question, which could only be made by the Minister of lands pursuant to section 19 and sections 43 and following of The Land Act. Nor could it have operated under sections 124 and 125 as a lease, transfer or permit, not only because it was not cast in any of those forms, but also for the reasons stated earlier in relation to those sections, and particularly because of the requirement under section 126 of registration before it could be "effectual to pass or affect any interest in land".

[16] Could the lease to the Church nevertheless be vulnerable to attack on the ground that the lot was not "available" within the meaning of section 50 of The Land Act? Although the hierarchy of potentially available allotment set out in section 50 was held in Maamakalafi v Finau at 223 to have directory effect only, not going to the validity of a grant, in Tafa v Viau (Burchett, Salmon and Moore JJ, 16 August 2006), this Court held (in para 11) that"[t]he scheme [of The Land Act with respect to grants], as a whole, seems to us to make availability [ie of the land actually granted, whatever its place in the hierarchy] an essential requirement before a grant can be made". The Court drew support for this view from the form of application which provides for the estate holder to certify, as was done in the present case, that there was "no impediment" to the grant. Land might be unavailable for grant to an applicant because of an equity entitling someone else to object. In Tafa v Viau, a registered deed of grant was obtained despite the fact that the land had been promised to a person (other than the grantee), who had built a substantial house on it and occupied it with his family for many years, encouraged to do so by the promises of the landholder to have his title to the land registered. In that case, the grant of the land to the grantee was procured surreptitiously without notice to the lawful occupant and without advising the Minister of Lands that a house had been lawfully built on the land and was in occupation. The trial judge followed Vai v 'Uliafu in holding that this land, with the house built on it, was not "available" for grant to a third party, and this Court dismissed an appeal from his order cancelling the registration of the deed of grant. This Court held (in para 14) that "reasonable steps were not taken by or on behalf of the Minister to acquaint him with the relevant information, so that a most material factor, the occupation of the land by the respondents together with the erection of a house on it, was not taken into account". It should be emphasised that, in the cited Vai v 'Uliafu at 63-64, Webster J., after his earlier approval (to which we have already referred) of the principle stated in Paula Tu'iono v Paula Tulua, was careful to note:
"Mr Niu for the First Defendant submitted strongly that by 1985 the land occupied by the First Defendant was not then 'land available for allotment'. Mr Niu did so on the basis that a verbal grant had been made, but the Court finds as a fact that the land was not available, not for this reason (as explained above about verbal grants) but because a house had been built on the land. In addition the estate holder or his representative on his behalf had put the First Defendant onto the land and had allowed him to build a house there. So as well the estate holder was estopped in relation to the First Defendant from agreeing to the land being granted to any other person."

Tafa v Viau was just such another case.

[17] Plainly, from time to time, a borderline case will arise involving some permission to make some use of land, which it is later proposed be granted to a third party. In such a case, the central questions will generally be whether the Minister of Lands has been shown to have failed to accord natural justice to the permittee by giving him an opportunity to present his case, or whether the Minister has been shown to have failed to take a relevant matter into account. Both these questions are referred to in Tafa v Viau, where Hakeai v Minister of Lands [1996] Tonga LR 142 is cited in respect of the principle of natural justice. See also Cocker v Palavi [1997] Tonga LR 203, and note Order 6 rule 4, Land Court Rules.
[18] In the present case, there was no claim, and no finding that the Minister of Lands had failed to accord natural justice to the first respondent. Such a claim, in the face of the Minister's careful letter of 30 August 2001 would have been hopeless. Nor, having received the first respondent's representations, could it be suggested the Minister had failed to take account of a material consideration. The argument that was put, that the land was not in fact available, really seeks to deprive the Minister of his administrative function of deciding a question in a case where it cannot be said that only an answer favourable to the first respondent was open in law.
[19] His Honour was referred by counsel to section 6 of The Land Act and to Paula Tu'iono v Paula Tulua, but he did not consider their effect upon the alleged gift. Without discussing either the legal difficulties or the considerable obscurities in the evidence, he dealt with the case as follows:
"I now turn to the most important point in this case, that is the issue of fairness and justice. If the court accepts the Plaintiffs evidence; either in whole or in part, and if the Court accepts the Plaintiff served the late Fakafanua in the manner in which both he and his wife testified, and, the court accepts the Plaintiff was granted a lifelong lease by the late Fakafanua in that estate, then an injustice will have occurred if the Plaintiff was improperly displaced from his land. This would be an injustice which must be corrected by this Court as being only just-fair-and equitable."

After some observations about the attitudes of the parties to settlement and the "grossly exaggerated, unrealistic and wide of the mark" claim of the first respondent for $180,000, a figure he characterised as "just picked or plucked ... out of the air", he continued:

"In my view the Plaintiff will have had and will always have a legitimate expectation; the land offered by the late Fakafanua as a gift to him for services rendered would have been his to deal with; for the rest of his natural life. On the evidence before me I find as a fact the parcel of land in this case was gifted to the Plaintiff for life.

It was only the intervention of the First and Second Defendants by their application for a lease for the construction of the Minister's residence that the Plaintiff was deprived of the use of his land; and which as I have said, and have no doubt was, gifted by the late Fakafanua for the whole of the Plaintiffs life.

With all the expectations which exist in today's society, if a man's word is to be his bond; then if the land was gifted for a lifetime in the manner described by the Plaintiff, then there must be a legitimate expectation on his behalf the land would never be taken sold or leased to another party – effectively pulled out from under his feet – as sadly happened here."

[20] This is to place the whole burden of the decision (1) upon the purported gift (not, it will be noted, on any encouraged expenditure on the land as in the cases which have been cited), and (2) upon the first respondent's "legitimate expectation". We have already explained why the first basis of this judgment cannot stand – in the light of section 6 of The Land Act and established principle. The second basis does not appear to have been raised by any party; it refers to a doctrine attributed to Lord Denning MR and now firmly established in the context of the law relating to natural justice, where a "legitimate expectation" may found a right to be heard before an adverse decision is made. It simply has no place as the foundation of a proprietary right for the purposes of the application of The Land Act. In this case, as we have noted, a denial of natural justice was not in issue.
[21] We turn to the orders made. Plainly, given the ample notice the first respondent received, his failure to take any action until some years after the Church had erected a house for its Minister on the land raised an insuperable obstacle to an order cancelling the Church's lease. But although there was no prayer for relief against the estate holder, a matter to which his counsel had drawn attention as the judge noted without comment, an order was made that he "is to gift to – and register in the name of the Plaintiff – an equivalent parcel of land to that lost ... to be situated within a reasonable walking distance of the Plaintiffs current home / residence". The estate holder is not an appellant; his attitude has always been one of willingness to assist by making suitable land available, if he can. Nevertheless, we should point out that the Court cannot order a man to do what is illegal under The Land Act; the terms of the order cannot override section 6; and since "an equivalent parcel" would be a town allotment, a performance of this order might, for reasons we have already stated, will leave the first respondent with a Pyrrhic victory, having regard to section 48. The final orders were that the appellants "are to pay the sum of $20,000 to the Plaintiff as compensation for the loss of the use of his original parcel of land within 30 days" and that the appellants "only are to pay 90% of the costs of these proceedings". The figure of $20,000 is not supported by reasoning. An allowance of $20,000 for the period up to the hearing, during a number of years of which he was entirely silent about the matter and took no step to dispute the lease, is without justification in the evidence. More importantly, if the reasoning for the decision were valid – which we have held it is not – it might justify an order, had such an order been sought, requiring the estate holder to compensate the first respondent, but how does it justify an order against the appellants? The "service", the "gift", the "word [that should have been observed as a] bond" were all the estate holder's responsibility, not the Church's, and certainly not the President's (he was merely the principal administrator in the Church). The Church made a lawful request to the estate holder of the estate in the area of the church at Halaleva, and he allotted the land, subject to application to the Minister of Lands and Cabinet. For the same reasons, the costs order was misconceived; even in a case where a grant was set aside because a competing application had not been considered, this Court held it was wrong to order the applicant to pay the costs, explaining:
"The appellant was entitled to apply for the lease. It was not his mistake that led to it being granted. It was the Minister's." – Cocker v Palavi at 206.
[22] For the foregoing reasons, we make the following orders:

1. Appeal allowed;
2. Each of the orders made against the Appellants for the payment of compensation and costs be set aside, and in lieu thereof, the claims against the Appellants be dismissed with costs;
3. The First Respondent pay the costs of the Appellants of the appeal and the costs of the Second and Third Respondents of the appeal as of submitting parties.

Ford CJ
Burchett J
Salmon J