Tonga Industries Traders Ltd v Shell Company Pacific Island Ltd [2005] TOLC 3; [2005] TOSC 5; LA 002 2005 (15 June 2005)

IN THE LAND COURT OF TONGA
NUKU’ALOFA REGISTRY

NO. LA 02/2005

BETWEEN:

TONGA INDUSTRIES TRADERS LIMITED
Plaintiff

AND:

SHELL COMPANY PACIFIC ISLAND LIMITED
Defendant

BEFORE THE HON CHIEF JUSTICE WEBSTER AND ASSESSOR GEORGE BLAKE

Counsel: Plaintiff: Mr Niu
Defendant: Mr Tu’utafaiva

Date of Hearing: 27 May 2005.
Date of Judgment: 15 June 2005.

RESERVED RULING ON APPLICATION BY DEFENDANT FOR LEAVE TO FILE A STATEMENT OF DEFENCE OUT OF TIME:

HEARD AT NUKU’ALOFA ON 27 MAY 2005

3 intended grounds of defence have been raised by the Defendant. The first 2 are in the draft Statement of Defence presented by the Defendant, the third was raised by Counsel for the Defendant in the oral hearing of his application to file a Statement of Defence out of time.

1. Lack of registration of extension letter under the Contract Act

This is a not a valid point, as it has been held by the Privy Council in Appeal 1/1981 OG Sanft Ltd v Tonga Tourist & Development Co Ltd [1981-88] Tonga LR 17 (PC) and Appeal 5/1984 in Teta Ltd v Ullrich Exports Ltd [1981-88] Tonga LR 127 (PC) that the Contract Act (Cap 26) has no applicability to a company registered in Tonga, such as the Plaintiff.

2. Lack of jurisdiction

Unfortunately this is another ground which has no substance. Section 149(1), which lays down the jurisdiction of the Land Court, of the Land Act (Cap 132) was amended by Act 3 of 1997 by the addition of a further paragraph:

“149. (1) The Court shall have jurisdiction -

(a) ...

(e) to hear and determine any question or amount of damages, loss, compensation, mesne profit, rent or claim in respect of any allotment, lease or sub-lease, permit or interests of any kind in any land.”

The question thus arises of the proper characterisation of the claims made by the respondent in the Land Court, to be ascertained on an analysis of the nature of the claims made in the Statement of Claim: Piukala v Fonohema [2002] TOCA 3 (CA) (23 July 2002). In Mangisi v Koloamatangi [1999] TOCA 9 (CA) (23 July 1999), to which Counsel for the Defendant referred, the Court said:

“The contract was not and did not involve a lease. It conferred a permission or licence to operate a business in the building constructed by the appellant at her own expense. ...

It is essential to keep in mind that the contract conferred no interest of any kind in land. It conferred on the appellant a licence to use the building. In Tonga, a building may be severed from the land on which it stands, so as not to constitute a fixture: Kolo v Bank of Tonga (CA unreported, 7 August 1998).”

The present case, in which the Plaintiff seeks payments due under a Tenancy Agreement between the parties, the subjects of the Tenancy Agreement are described in it as buildings on the land (which is at Fatafehi Road, Nuku’alofa) together with the use of land adjoining the buildings.

This is therefore clearly a case where the Court is asked to hear and determine a question or amount of rent or a claim in respect of an interest of some kind in land. It falls to be distinguished from Mangisi v Koloamatangi, where only a building was concerned. Thus the Land Court clearly has jurisdiction.

3. Illegality in terms of section 13 of the Land Act

This was an issue which was not included in the draft Statement of Defence, but was raised orally by the Defendant’s Counsel at this hearing. The Plaintiff’s counsel objected to it being raised without notice in this fashion and the Court supports that objection, particularly as no authority was cited to support the submission. Litigation cannot be conducted on the wing, as it were, without fair notice to the other party and there was ample time since the claim was served on 3 February 2005 for the Defendant’s Counsel to have raised this issue in advance.

In any event the terms of section 13 are:

“13. Any landholder who enters or attempts to enter into any agreement for profit or benefit relating to the use or occupation of his holding or a part thereof other than in the manner prescribed by this Act or as approved in writing by the Minister shall be liable on conviction to a fine not exceeding $200 or to imprisonment for any period not exceeding 12 months or both."

It has been made clear by the Court of Appeal that section 13 is a criminal provision, and it should not be extended by any loose construction: Cowley v Tourist Services Ha'apai Ltd [2001] TOCA 5 (CA) (27 July 2001). In that case the Court of Appeal was also very clear that, given the history of treating buildings in law as not, in general, being fixtures, it would be inconsistent to treat section 13 as applicable to the short term tenancy agreements in that case. In Kolo v Bank of Tonga the Court of Appeal commented:

"Because of the Constitution of Tonga, and because of Tonga's traditions, the intricate law of fixtures and of accretions to land which applies elsewhere is not wholly appropriate to Tonga. Although all the implications have not yet been worked out, and their working out should be left to the process of development of the law of Tonga case by case, we think that the broad proposition stated by Ward CJ should be accepted. That means that it was open to Mr Kolo to pledge his house to the bank as an item separate from the land on which it stood."

We believe the same approach is applicable in the present case, which involves buildings as well as land, even although the Tenancy Agreement was for a longer period. Therefore the Tenancy Agreement in this case, although not registered, avoids any offence to section 13.

In addition, section 13 is concerned only with a landholder who has a "holding". Although "holding" is not defined in section 2, it is only paragraph (b) of the definition of "landholder" in section 2 that refers to a person having a "holding" and that reference is to any Tongan subject holding an hereditary estate (tofia), a tax allotment (api tukuhau) or a town allotment (api kolo). The Plaintiff as landlord in this case is described in the Tenancy Agreement as the lessee of the land and so does not come within that category of person and section 13, therefore, has no application.

The Defendant’s Counsel confirmed at the hearing that, apart from these 3 technical grounds of defence, the Defendant has no substantive defence to this action – it is still in occupation of the property and it is not disputed that the rent has not been paid since July 2004. We have to say that we are somewhat surprised that the time of the Court has been taken up dealing with points of little merit, which appear to have been raised simply to delay the conclusion of this case – especially as the Defendant is part of a worldwide group which we understand prides itself on its ethical approach.

The Court has therefore decided that the Defendant’s application for leave to file a Statement of Defence out of time should be refused as it has no good defence to the action.

Costs of this hearing, as agreed or taxed, are awarded to the Plaintiff.

However we are unable to accede to the Plaintiff’s submission that the Court should proceed straight to summary judgment in terms of Order 14, particularly as no formal application has been made to do so. It also has to be borne in mind that in the Land Court applications for judgment in default under Order 13 are not normally granted without a formal hearing.

The same applies to the proposed amendment of the Statement of Claim, which should be done formally in the normal manner.

The Court will therefore arrange a hearing on directions to fix a time for such a formal hearing and consider any other applications.

George Blake
Assessor

RM Webster
Chief Justice

Dated: 15 June 2005