Wight v Wight [2018] TOCA 17; AC 3 of 2018 (7 September 2018)

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

AC 3 of 2018
[LA 31 of 2017]

BETWEEN : DOUGLAS WIGHT

- Appellant

AND : 1. RAYMOND WIGHT
2. MINISTER OF LANDS

- Respondents

Coram : Handley J

Blanchard J

Hansen J

Counsel : Mr. S. Tu’utafaiva for the Appellant

Mr. H. Tatila for the First Respondent
Mr. S. Sisifa SC for the Second Respondent

Date of Hearing : 4 September 2018

Date of Judgment : 7 September 2018

JUDGMENT OF THE COURT

Introduction

[1] This case involves a dispute about how a registered lease of land known as “Ha’amea”, at Liahona in the estate of Lasike, is to devolve after the death of the last of the three Wight brothers, Charley, Fred and Harry. The lease is for a term of 50 years expiring on 24 November 2024. The area of the land is 99 acres.

The Facts

[2] The original lessee was a fourth brother, William Wight. About two years into the term of William’s lease, on 25 November 1976, he executed an indenture conveying the lease to himself, Charley, Fred and Harry for a consideration of TOP$1,000. Lord President Paulsen, who heard the case in the Land Court and from whose decision this appeal is brought, accepted evidence, which was not disputed, that by arrangement between them each of the brothers had a roughly equal area of Ha’amea for his separate use, although not demarcated by fences. William, Charley and Harry each grew crops on the land and exported fruit and vegetables. They also raised animals. Fred was not involved in the business at this stage as he was living in New Zealand.

[3] In 1970 William and his family moved away from Ha’amea and by indenture dated 12 May 1980 he conveyed his interest in the lease to Charley, Harry and Fred. The consideration was again stated to be TOP$1000 with no indication that the transferees had contributed unequally. However, the Lord President accepted uncontradicted evidence from Raymond Wight, a son of Harry and the respondent to the appeal, that in reality this was a sale of William’s interest in the lease to Harry alone. (That evidence was given by Raymond against his own interest as an heir of the last surviving joint tenant.)

[4] In due course Fred returned to Tonga and built a home and lived on the land with his wife and only child, Douglas, the appellant. (Fred’s house, which under Tongan law had the status of a chattel, is no longer there).

[5] Fred died in 1992. His widow moved with Douglas to the United States where she remarried. The evidence was that no application has ever been made for letters of administration of Fred’s estate.

[6] Charley died in the United States in 1993 or 1994. Again, no application for letters of administration of his estate has been made. He has children living in the United States.

[7] Harry survived Fred and Charley and continued to live on and farm Ha’amea. As well, Harry’s son, Raymond, has run cattle on the land since 1995 and paid the rent and other outgoings of Ha’amea.

[8] In 2012 Douglas was deported from the United States and, with Harry’s permission, lived for a time in a building on the land, known as “the Hut”.

[9] There were some disagreements between Harry and Douglas, who was raising a claim to Ha’amea that Harry did not accept. Douglas was obliged to move off the property. But he took the opportunity to move back into the Hut when in 2014 Harry went to the United States for medical treatment. In October 2015 Raymond allowed Douglas to move into Harry’s house.

[10] Harry died on 12 April 2016 in the United States.

[11] A dispute then arose between Douglas and Raymond when Douglas cut down some trees and slaughtered some of Raymond’s cattle on the land. Douglas also disconnected the water lines necessary for the maintenance of Raymond’s cattle.

[12] Raymond applied for letters of administration of Harry’s estate which were granted by the Supreme Court on 2 August 2017. The only asset of the estate is said to be Harry’s interest in the lease. Raymond regarded Douglas as a trespasser and sought from the Land Court an order for possession and damages.

[13] Before doing so, Raymond lodged the letters of administration with the Minister of Lands together with an indenture conveying the lease to himself. Both documents were registered. The Lord President found, however, that Raymond is registered only in his capacity as administrator of Harry’s estate. There is no appeal by Raymond against that finding.

The Land Court Judgment

(a). The nature of Harry’s interest

[14] The Lord President asked himself what exactly was Harry’s interest in the lease after he survived his brothers? Was he the surviving joint tenant entitled beneficially to the entire lease or was he merely the holder of an undivided one half share as a tenant in common?

[15] In the absence of any assistance from Tongan legislation, the Lord President looked to the common law for guidance. He said that a lease, while a form of land tenure, is regarded as a “chattel real” that will devolve upon the death of the lessee in the same way as personal estate, noting that it has been held in Tonga in Pangia v Kalaniuvalu (1937) 2 Tonga LR 32 at 34 that in the case of a single lessee his interest in a lease will form part of his personal estate upon his death. The Lord President said this was in accordance with current practice in Tonga and also with s.11 of the Probate Act. (That section vests the personal property of an intestate person in the Supreme Court until administration is granted.) Section 11, the Lord President said, does not restrict the definition of personal property of a deceased. He noted also that s.131 of the Land Act requires grants of both letters of administration and probate affecting leases to be registered under that Act.

(b). Joint tenancy and tenancy in common

[16] The Lord President then turned to the respective features of joint tenancies and tenancies in common. We agree with the summary he gave:

[37] A joint tenancy will be created when a lease is registered or transferred to two or more persons simultaneously without any words to show that they take distinct or separate shares (commonly referred to as ‘words of severance’). The essential attributes of a joint tenancy are the right of survivorship, pursuant to which on the death of one joint tenant his interest in the lease is extinguished and accrues to the surviving joint tenants, and the existence of the four unities (possession, interest, title and time). These four unities can be summarised as follows; (1) No joint tenant has an exclusive right to possession of any particular part of property that is held on a joint tenancy, (2) The interest of each joint tenant is the same in nature, extent and duration, (3) All joint tenants have derived their interest under the same instrument, and (4) The interest of each joint tenant vested at the same time.

[38]. In contrast, a tenancy in common exists whenever two or more persons hold undivided shares in the same lease yet, unlike a joint tenant, are entitled only to a distinct share of the lease. In the case of a tenancy in common no right of survivorship exists so that upon the death of a co-lessee his share passes to his personal representatives and devolves upon his beneficiaries under his will or in accordance with law in the case of an intestacy (Hinde McMorland and Sim ‘Land Law’ Vol 2 at 907-932 for a summary of the relevant law).

[17] The Lord President said, correctly, that for historical reasons the common law favours joint tenancies. In circumstances where a lease is owned jointly the common law will presume that the lessees are joint tenants. But equity is hostile to that and in certain circumstances will treat what would otherwise be regarded as a joint tenancy as a tenancy in common. This is because the right of survivorship unduly favours the person of longevity for no better reason than the accident that he happens to survive his co-owners (Meagher Gummow and Lehane’s Equity Doctrines and Remedies 4ed at 103). The lease and the conveyance to the three brothers gave no indication that they were to hold the land other than jointly. They must be regarded as such unless there were circumstances that dictated that they had a contrary intention. As Baroness Hale had said in Stack v Dowden [2007] UKHL 12, [2007] 2 AC 432 at [69], in a case of this kind context was everything.

[18] Counsel for Raymond had in fact conceded that the lease was held by the brothers as tenants in common. The Lord President considered that the concession was properly made for two reasons:

[44] First, Raymond said that William sold his interest in the lease to Harry alone and I have accepted his evidence. The acquisition by one joint tenant of a greater share will sever a joint tenancy as it destroys the unity of interest (Wright v Gibbons [1949] HCA 3; (1949) 78 CLR 313).

(As will be seen, we consider that while this proposition of law is correct it does not apply to the transaction between William and his brothers). The other reason was:

[45] Secondly, this was family land that had in effect been passed down from the brothers’ father to them all. Furthermore, Raymond’s evidence was that the three brothers had their own areas of the land which at various times they farmed to support their respective families and that in regards to the export of fruit and vegetables they co- operated together but were paid only for what they individually grew. In respect of this last matter it is of some relevance that equity considers the right of survivorship incompatible with a commercial venture (Hinde (supra) at page 946 referring to Buckley v Barber [1851] EngR 100; (1851) 6 Exch 164, 179-180 and Stack (supra) at [157]). I can only infer that it could not have been the brothers’ intention that upon their deaths the lease would pass to the lucky survivor of them and to the exclusion of their own immediate families. To the contrary, I consider it much more likely that they would regard themselves as each having an interest in the lease (and the land) which would pass to and benefit their widows and children upon their deaths. In short, it is highly unlikely that the brothers would have intended survivorship “with its tontine ‘winner takes all’ effect” (Stack (supra) at [57] per Baroness Hale).

[19] For those reasons, the Lord President said the brothers must be regarded as having held the lease as tenants in common, with Harry having a one-half interest and Charley and Fred each having a one quarter interest.

The nature of the tenancy – our view

[20] Although that conclusion is not directly challenged on this appeal, it does not in our view accurately state the position and the reasoning of the Lord President needs to be reviewed. We should say at once that we do agree with the second reason he gave. When in 1976 William transferred the lease to himself and his three brothers the four of them held it at law as a joint tenancy but in equity as tenants in common in equal shares because of the intention that they would separately use parts of the land for their own purposes. It was like the business premises referred to by the Privy Council in Malayan Credit Ltd v Jack Chia – MPH Ltd [1986] AC 549 at 560 in a passage cited by the Lord President:

It seems to their Lordships that where premises are held by two persons as joint tenants at law for their several business purposes, it is improbable that they would intend to hold as joint tenants in equity. Suppose that an accountant and an architect take a lease of premises containing four rooms, that the accountant uses two rooms and that the architect uses two rooms. It is scarcely to be supposed that they intend that if, for example, the accountant dies first without having gone through the formalities of a severance, the beneficial interest in the entire premises is to survive to the architect. Their Lordships do not accept that the cases in which joint tenants at law will be presumed to hold as tenants in common in equity are as rigidly circumscribed as the plaintiff asserts. Such cases are not necessarily limited to purchasers who contribute unequally, to co- mortgagees and to partners. There are other circumstances in which equity may infer that the beneficial interest is intended to be held by the grantees as tenants in common. In the opinion of their Lordships, one such case is where the grantees hold the premises for their several individual business purposes.

[21] However, equity does not displace the position at law. Indeed it cannot possibly do so in the case of a registered lease. The legal interest in the lease was, and remains, held on the joint tenancy; but equity requires that the legal owners (or survivor) must beneficially deal with the property as a tenancy in common which, depending upon the actual arrangements between them, may be in equal or unequal shares. Those shares are in the whole of the lease; they are undivided shares.

[22] In 1980 William conveyed the legal estate in the lease to his brothers who again took it at law (on the register maintained under the Land Act) as joint tenants. The existing joint tenancy between them was not severed. At law they simply acquired a further interest on the same basis. It was as if they had enlarged the existing joint tenancy between the three of them. “A transfer and release to all other joint tenants would maintain a joint tenancy among them, the transferor having relinquished his or her interest”: Elizabeth Toomey (ed) New Zealand Land Law 3ed 2017 at 6.4.10 (1).

[23] But that is only the position at law and on the face of the lease, as varied by the conveyance. In equity, as the Lord President has found, Harry acquired William’s interest. Henceforth, in equity, Harry had an undivided half share and Fred and Charley each had an undivided quarter share.

[24] When Fred and Charley had died Harry became by survivorship the sole owner at law and has been succeeded at law by Raymond as his administrator registered on the title to the lease. However in equity Raymond now holds the lease as to a one half share for the heirs of Harry, including himself, and assuming the lease is personal property as the Lord President held, the equitable one quarter shares of the estates of Charley and Fred are vested in the Court under s.11 of the Probate Act.

The judgment below – was Douglas a trespasser?

[25] The Lord President concluded, rightly in our view, that as administrator Raymond had a right to bring an action against a trespasser for possession of the land. But Douglas claimed not to be a trespasser, saying that as Fred’s heir he had an interest in the lease and thus the right, as one of the owners, to be in possession. The Lord President rejected that claim:

[50] Douglas claims that he has an interest in the lease as Fred’s heir. He does not have any such interest. Upon the death of both Fred and Charley their personal property, which included their interests in the lease, vested in the Supreme Court until such time as administration was granted (section 11 of the Probate Act). No administration has been granted. The proceeds of their estates are the property of the Crown and to be paid into the general revenue. This is subject to the Minister’s power to instruct the Supreme Court to grant Letters of Administration ‘to any person entitled to such grant or to any person illegitimately descended from the deceased’ (section 12 of the Probate Act). Douglas has made no such application.

[26] The Lord President said that Fred’s interest in the lease had not passed directly to Douglas without the need for letters of administration. That assertion by Douglas conflicted with s.11. It also proceeded on an incorrect assumption that all interests of land in Tonga are subject to strict rules of succession set out in the Land Act, which in the case of leases, the Lord President said, they are not.

[27] As administrator, the Lord President said, Raymond could maintain an action for possession of the whole of the land. Douglas had not established any right to be on the land. He was ordered to forthwith vacate Ha’amea. But only nominal damages of $100 were ordered to be paid by Douglas. (As Raymond has not appealed against the quantum of that award we will not need to consider whether more than a nominal sum should have been awarded).

The issue in the appeal

[28] That brings us to the real issue in the appeal: whether Douglas is actually a trespasser or whether, on the contrary, he already holds (in equity) an interest in the lease under which he has a right to possession.

Argument for appellant

[29] For the appellant, Mr. Tu’utafaiva repeated arguments rejected by the Lord President. He submitted that the finding that a lease in Tonga is a chattel real that devolves as personalty is in error. In Tonga, counsel said, a lease is simply an interest in land. It is included in the definition of “land” in the Interpretation Act. A lessee is also a “holder” of land under the Land Act. Furthermore, it was submitted that Douglas presently has an interest in the lease, which was expressly granted not only to the lessee but also to the lessee’s heirs and representatives. Douglas claims as an heir. His right to be on the land is thus derived directly from the lease. The Lord President had held that no letters of administration had been granted in respect of Fred’s quarter share but, Mr. Tu’utafaiva said, there are already letters of administration granted to Raymond in respect of the whole land. It was therefore not correct to insist on Douglas also obtaining such a grant in order to establish his right. It was further submitted that Raymond should not have obtained a grant for the whole lease. Accordingly, Douglas was not liable for any damages for trespass.

The legal nature of a lease of land

[30] This case does not turn upon the classification of the lease as either real or personal property. In fact, however, it is a hybrid and hence the common law description of “chattel real.” The following explanation appears in New Zealand Land Law 3ed 2017 at 8.1.01:

Leases exhibit both proprietary and contractual characteristics. The common law originally recognised the arrangements from which they sprang as merely contractual, but gradually acknowledged the lessee’s right to the land that was the subject of the contract, recognising, through the remedies available, that the lessee had rights in rem. This unusual “duality of character” was captured in the clumsy description “chattel real”, which is sometimes used to refer to leases, although it is now considered archaic. Similarly, leases are technically categorised as “personal property”, since in personam remedies were originally available for interference with a lessee’s interest, but that classification is almost inconsequential today and underplays their importance.

In a footnote the author says that the only consequence of classifying a lease one way or another would seem to be if a testator made a gift of “personal property” or “real property” in a will. But in Tonga see s.11 of the Probate Act discussed below.

The position of an heir

[31] No matter which way the lease of Ha’amea is classified, the heirs of Charley and Fred have no interest in it until and unless letters of administration are granted in the respective estates. The grant of administration in respect of Harry’s estate does not entitle Raymond to administer the estates of his uncles who in equity held separate but undivided interests in the lease. Nor does the classification affect the distribution of the uncles’ estates. Section 16 of the Probate Act distributes the residue of any estate of an intestate (“the rest of the property”) in accordance with Schedule 1 of the Act without distinguishing between real and personal property. It is true that under section s.11 only personal property is vested in the Court pending a grant of administration but that is no doubt because real estate, of its nature, is not at risk in an intestacy in the same way as personal property, for it is immoveable and subject to the constraints found in the Land Act and in the prescribed form of lease.

[32] Nor does the position of an heir of an intestate person prior to administration differ depending upon whether the assets consist of real or personal estate. In either case, the heir has no interest in the property until an administrator is appointed. The leading case is the decision of the Privy Council in Commissioner of Stamp Duties (Queensland) v Livingston [1964] UKPC 2; [1965] AC 694. It concerned Queensland succession duty on the estate of a Mrs. Coulson. She had previously been married to Mr. Livingston who owned both freehold and leasehold grazing properties in Queensland. He died in 1948 and by his will left the residue of his estate (including those properties) to his trustees upon trust as to one third of the residue for his widow absolutely. In 1950 the widow married Mr. Coulson but died shortly thereafter. The crucial point in the case was that at the date of her death Mr. Livingston’s estate was still in the course of administration. No clear residue had been ascertained. So her rights at her death were the rights of a person interested in a dead man’s unadministered estate. (As it happened, it was also the case that no letters of administration had been granted or resealed in Queensland.) Succession duty was payable in respect of real and personal property of a deceased in Queensland. The question was whether at her death Mrs. Coulson had any such property:

One way or the other then, if there is to be a taxable succession, it must be because she died owning a beneficial interest in real property in Queensland or had beneficial personal property interests locally situate in Queensland. (p.706)

[33] The Privy Council said that whatever properties came to the executor of an estate by virtue of office came to him in full ownership without distinction between legal and equitable ownership:

The whole property was his. He held it for the purpose of carrying out the function and duties of administration, not for his own benefit; and these duties would be enforced upon him by the Court of Chancery, if application had to be made for the purpose by a creditor or beneficiary interested in the estate. Certainly, therefore, he was in a fiduciary position with regard to the assets that came to him in the right of his office, and for certain purposes and in some aspects he was treated by the court as a trustee. “An executor” said Kay J. in In re Marsden [(1884) [1884] UKLawRpCh 136; 26 ChD 783 at 789, “is personally liable in equity for all breaches of the ordinary trusts which in Courts of Equity are considered to arise from his office.” He is a trustee “in this sense.” (p.707)

[34] After referring to the nature of those trusts, the judgment of the Privy Council delivered by Viscount Radcliffe continued:

What equity did not do was to recognise or create for residuary legatees a beneficial interest in the assets in the executor’s hands during the course of administration. Conceivably this could have been done, in the sense that the assets, whatever they might be from time to time, could have been treated as a present, though fluctuating, trust fund held for the benefit of all those interested in the estate according to the measure of their respective interests. But it never was done. It would have been a clumsy and unsatisfactory device from a practical point of view; and, indeed, it would have been in plain conflict with the basic conception of equity that to impose the fetters of a trust upon property, with the resulting creation of equitable interests in that property, there had to be specific subjects identifiable as the trust fund. An unadministered estate was incapable of satisfying this requirement. The assets as a whole were in the hands of the executor, his property; and until administration was complete no one was in a position to say what items of property would need to be realised for the purposes of that administration or of what the residue, when ascertained, would consist or what its value would be. Even in modern economies, when the ready marketability of many forms of property can almost be assumed, valuation and realization are very far from being interchangeable terms. (p.707-708)

[35] At the date of Mrs. Coulson’s death, therefore, there was no trust fund consisting of Mr. Livingston’s residuary estate in which she could be said to have any beneficial interest because no trust had as yet come into existence to affect the assets of his estate. His property in Queensland, real or personal, was vested in his executors in full right, and no beneficial property interest in any item of it belonged to Mrs. Coulson:

When the whole right of property is in a person, as it is in an executor, there is no need to distinguish between the legal and equitable interest in that property, any more than there is for the property of a full beneficial owner. What matters is that the court will control the executor in the use of his rights over assets that come to him in that capacity; but it will do it by the enforcement of remedies which do not involve the admission or recognition of equitable rights of property in those assets. Equity in fact calls into existence and protects equitable rights and interests in property only where their recognition has been found to be required in order to give effect to its doctrines. (p.712)

[36] The Privy Council had earlier referred to Lord Cairns’ dictum in Cooper v Cooper [1874] UKLawRpHL 3; (1874) LR 7 HL 53 at 66 that a Statute of Distributions was in substance nothing more than a will made by the legislature for an intestate. Section 16 and Schedule 1 of the Probate Act are a “Statute of Distributions”. The remarks of the Privy Council therefore apply as much to the position of an administrator of an intestate estate as they do to an executor under a will.

This case

[37] In the present case the position is clear cut. As far as is known, Charley and Fred had not made wills. No persons have been appointed to carry out the duties of an administrator of their intestate estates, including the identification of their respective heirs in terms of Schedule 1 and the identification of the assets of each estate. Until that is done, so that there are statutory trusts to be administered, none of the heirs has any beneficial interest in any of their assets, even if in fact their only asset in each case ultimately proves to be their one quarter undivided interests as tenants in common of the lease. As the Lord President held, Douglas therefore had no right to remain on the land when requested to leave by Raymond.

[38] Mr. Tu’utafaiva urged upon us the view that all this was quite unnecessary because the lease was in favour of the heirs as much as the lessees named in it, but that merely indicates the inheritable characteristic of the grant. When a lessee (at law or beneficially) dies, the only way in which the lease can be claimed and dealt with is by the obtaining of probate or letters of administration upon an order of the Supreme Court and the registration of that order under s.131 of the Land Act. That section plainly spells it out that registration is “compulsory”. The Minister cannot recognise any other form of claim to a lease where a lessee has died. (The position is of course different for town and tax allotments in respect of which the Act contains the rules to be applied by the Minister.)

[39] In the case of the estates of Charley and Fred, the claims of the heirs must come via letters of administration granted in respect of each estate. The fact that there has been a grant registered in respect of Harry’s estate does not prevent this or make it unnecessary because that grant relates only to Harry’s legal interest (effectively as a trustee or fiduciary) in the lease, in respect of which Raymond is now registered, and to Harry’s one half share as an equitable tenant in common. It does not encompass the one quarter shares held in equity by Charley and Fred, which are not assets of Harry’s estate.

[40] If administrators can be appointed in the estates of Charley and Fred (after due inquiry) and the heirs identified it will be possible to approach the Minister seeking to have the register corrected to reflect the position in equity, namely that one quarter interests in the lease are owned by the heirs of Charley and Fred in common with the heirs of Harry’s estate.

[41] As to whether the one quarter shares in the lease constitute real or personal property, and therefore whether they have vested in the Court under s.11, we would not differ from the view of the Lord President that they are personalty, and now vested in the Court. We consider that the reasoning of the Lord President fully supports this view. We would also be loath to disturb a settled understanding and practice existing since the Pangia decision more than 80 years ago. Mr. Tu’utafaiva referred us to the recent decision of Niu J in Pekipaki v Moimoi (LA 23 of 2017) at [32] but the Judge was not considering a situation such as the one in this case (an administrator had been appointed of Mrs. Pekipaki’s estate) and he was not saying that heirs could make their claim without obtaining a grant of administration.

[42] In summary, Raymond holds the legal title to the lease, but the beneficial ownership is presently in Raymond (as administrator of the estate of Harry) and the Court (under s.11, in respect of the interests of Charley and Fred) as tenants in common in equal undivided shares (ie 50% Raymond and 50% the Court). If before the grant of administration of the estates of Charley and Fred any action is necessary to protect the position of their heirs, application can be made to the Court accordingly: see the passage quoted from Livingston at [33] above.

Result and Orders

[43] For these reasons we confirm that Raymond is entitled to have Douglas removed from the land and excluded unless and until Douglas establishes his right as an heir of Fred under the Probate Act.

[44] We make the following orders:

(a) Douglas Wight must vacate Ha’amea within 28 days of the date of delivery of this judgment.

(b) The other orders of the Land Court are confirmed and the appeal is otherwise dismissed.

(c) costs to the First Respondent to be fixed by the Registrar of this Court if not agreed.

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Handley J

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Blanchard J

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Hansen J