Havea v Lauhingoa [2013] TOLC 3; LA14 of 2012 (12 June 2013)

IN THE LAND COURT OF TONGA
NUKU'ALOFA REGISTRY

LA 14 of 2012

BETWEEN:

'ALIFELETI HAVEA
Plaintiff

AND:

1. DUKE SIONE LAUHINGOA
2. ADVANCE STEEL TONGA LTD
3. ANGINA FINAU
4. MINISTRY OF LAND
Defendants

'O. Pouono for the Plaintiff
First Defendant in person
No appearance by the Second Defendant
Mrs 'A. Taumoepeau SC for the Third Defendant (Applicant)
'A. Kefu (Solicitor General) for the Fourth Defendant.

DECISION

1. The Plaintiff is the registered holder of a tax allotment at Hofoa which is Crown Land. On 3 March 1996 the land was leased to the Second Defendant for a term of 20 years at an annual rent of $2000.

2. A warehouse was built on the land by the Second Defendant. According to the Statement of Claim, rent has not been paid since 2000 and therefore there are now arrears of rent amounting to about $26,000.
3. According to an affidavit of the Plaintiff filed on 14 September 2012 he approached the Ministry of Lands in 2010 or 2011 with a view to forfeiture of the lease but, as conceded by Mr Pouono, he has not formally taken possession of the land as provided for in the standard Form of Lease (Schedule IX-Form 3 – the Land Act).

4. It appears that in December 1999 the lease was mortgaged to the Bank of Tonga. The amount secured was increased to $91,000 in March 2010. The mortgage was discharged on 4 April 2013.

5. On 12 September 2012 the Plaintiff filed an application for an order restraining the First and Third Defendants from entering the land. In his supporting affidavit, the Plaintiff deposed that servants or agents of the Third Defendant had partially demolished and removed the warehouse which the Third Defendant claimed to have bought from the First Defendant. The Plaintiff relying on the standard proviso incorporated in the lease and referred to in paragraph 3 above claimed a statutory lien over the warehouse until the arrears of rent had been paid.

6. On 18 September 2012 an order was granted ex parte in favour of the Plaintiff, as sought. On 28 September the order was extended until further order, by consent.

7. This is an application by the Third Defendant to discharge the order granted on 18 September 2012.

8. On 18 September 2012 a statement of defence was filed by the Third Defendant. The Third Defendant claimed that he bought the warehouse "from the Second Defendant through the First Defendant and the [Westpac] Bank of Tonga".

9. On 28 May 2013 the Third Defendant filed an affidavit in support of his application. He deposed that he entered into an agreement with the First Defendant and the Westpac Bank of Tonga "to purchase the First Defendant's warehouse" for $18,000. Annexures A & B to the affidavit are receipts by the First Defendant "for the sale of my steel frame building" which it is not disputed refers to the warehouse. Annexure D is a statement by the Westpac Bank of Tonga that the "Advance Steel Loan Account" "has been cleared on 6 March 2012 between Angina Finau and Duke Lauhingoa". As has already been seen, the mortgage was discharged on the following 4 April.

10. In support of her application Mrs Taumoepeau filed helpful written submissions. She suggested:

First, that the Third Defendant was not a party to the lease and was therefore not liable to the Plaintiff for unpaid rent;

Secondly, that the Third Defendant was a bona fide purchaser for value, and

Thirdly, that the Third Defendant was a purchaser under a mortgagee sale.

11. There is no difficulty about the first proposition. As to the second and third however, Mr Pouono submits that the lender was, as confirmed by the Third Defendant in his supporting affidavit and as appears further confirmed by Annexures A and B already referred to, not the bank, nor the Second Defendant (as claimed by the Third Defendant in paragraph 3(iii) of his Defence), but the First Defendant who has filed no defence to the Plaintiff's claim that he was the Second Defendant's Manager.

12. Under the Tenth Schedule to the Companies Act (14 of 1995), all companies were to apply for re-registration before the expiry of the transition period specified in Section 1 of the Schedule. Section 5 (1) requires the Registrar of Companies to remove those companies from the register which have not complied with Section 1. According to paragraph 6 of the Plaintiff's supporting affidavit a search of the companies register does not reveal the existence of the Second Defendant. It seems, on the information before the court, that the Second Defendant has been deregistered and, accordingly, dissolved (see Companies Act – Section 327 (i) (b) (iv)).

13. When a company is deregistered, Section 333 of the Companies Act provides that the undistributed assets of the Company (including leasehold property – S333(2)) vest in the Crown. In order for such properly to become available for distribution to creditors Sections 336 to 340 of the Companies Act have to be considered.

14. If the lease and the warehouse vested in Crown then they were not available for sale at all, whether by the Company, the Bank, the First Defendant or anyone else.

15. There is a further complication resulting from the fact that the lease, at the time it vested under Section 333 was, on the information before the Court, subject to a mortgage which, however, has now been discharged.

16. In my opinion the sale of the warehouse was not a mortgagee sale at all since the vendor was not the mortgagee Bank. Mrs Taumoepeau suggested that the sale of the warehouse and repayment of the Bank's loan was with the agreement of the Bank but in my view that does not mean that the sale was by the mortgagee, although it may have been to the mortgagee's advantage.

17. The order granted by this Court on 18 September 2012 was made in order to preserve the status quo pending a full determination of the quite complicated issues between the parties following trial. The further issues raised by this application reinforce my view that the Order of 18 September 2012 should remain in place. The application is dismissed.

DATED: 12 July 2013.
PRESIDENT
N. Tu'uholoaki
12/7/2013.