Food4Less (Tonga) Ltd v 'Ake [2014] TOLC 2; LA 10 of 2013 (31 March 2014)

IN THE LAND COURT OF TONGA

NUKU'ALOFA REGISTRY

LA 10 of 2013

BETWEEN:

FOOD4LESS (TONGA) LIMITED
Plaintiff

AND:

1. 'ALIPATE SERU FUKA 'AKE
2. MINISTER OF LANDS
3. KINGDOM OF TONGA
Defendants

Before the President and Mrs Assessor Kavaliku

Lord T. Tupou KC for the Plaintiff
Mrs P. Tupou for the First Defendant
'A. Kefu S.C (Solicitor General) for the Second & Third Defendants

JUDGMENT

[1] The First Defendant ('Ake) is the registered holder of a tax allotment at Haveluloto with an area of 8 acres, 0 Roods and 14.8 perches. 'Ake is a marine engineer who lives at Soa Village in Ra, Fiji. His father was the former registered owner of the land. His parents separated when he was quite young and since that time he has lived with his mother in Fiji where he was born. He has joint Tongan/Fijian citizenship but had not visited Tonga or seen his land until the present dispute arose. Upon his father's death he inherited the land. His interests in Fiji were looked after by his uncle Dr. Malakai 'Ake (Dr Malakai) in whose favour he executed a limited power of attorney in November 2009. [During the preparation of this judgment the sad news was received that Dr Malakai had passed away].

[2] The Plaintiff operates a chain of supermarkets in Tonga. Its Managing director is Mr Rudra Prasad (Prasad). The Plaintiff is associated with Food4less (Fiji) Limited of which Prasad is also the Managing director.

[3] It is not disputed that Prasad wished to acquire a piece of land in order to enable him to expand his operations in Tonga and manage them more efficiently. It came to his attention that 'Ake's land might be suitable. He made enquiries.

[4] Dr Malakai produced without objection and affidavit sworn by him on 12 June 2013. In paragraphs 10 to 18 of the affidavit he described how he had met Prasad in Nuku'alofa in late 2011. Prasad explained that he was interested in leasing part of the land. Although there was a measure of agreement about the amount of the premium and rent to be paid for three acres of the land, Prasad thought that the amounts requested were too high and said he wanted "to think about it". Shortly after, an employee of Prasad contacted Dr Malakai asking him for 'Ake's telephone number. He was given the number of someone who would know how to reach him.

[5] Prasad told the Court that in March 2011 he travelled to Soa village where he first met 'Ake. There was a general discussion about a 30 year lease over the tax allotment. 'Ake then referred Prasad to his cousin Elini and this is turn led to renewed discussions with Dr Malakai. These did not, however, succeed as the amount being asked by Dr Malakai was still too high.

[6] Towards the end of 2012 Prasad again approached 'Ake and this time he invited him to visit his office at Rodwell Road, Suva. It seems two meetings took place in Suva, on 1st and 6th February. On 1st February Prasad gave 'Ake $1000. A receipt for that amount P-12 was produced endorsed on a plan of the allotment. On the same day Prasad presented a Memorandum of Understanding (P35-38) which was signed by 'Ake on 6 February and witnessed but which, according to Prasad was not signed by him until after he had returned to Tonga.

[7] On 6 February 'Ake also signed Lands Department Form 9 (copy produced as P-27) which is the official Form which is to be completed when an application is made for the grant of a lease. As will be seen from the Form it was received by the Ministry of Lands on 20 February 2013. It is signed by Prasad as well as by 'Ake. It seeks approval for the lease, for a term of 20 years of 3 acres 1 Rood 2.87 perches of the allotment at an annual rental of TOP$500.00.

[8] On 8 March 2013 the Secretary for Lands advised the Plaintiff that on 1 March 2013 Cabinet had approved the application "effective – date of registration". The Plaintiff was advised in the penultimate paragraph of the letter that "the Ministry will execute all relevant survey requirements on this lease application before registration". A copy of the advice is Exhibit P-34. It is not in dispute that Section 126 of the Land Act provides that:

"No lease, sub-lease, transfer or permit until registered in the manner hereinafter prescribed shall be effectual to pass or affect any interest in land: [proviso not applicable]".

[9] PW2 Dharmendra Prasad told the Court that he is the General Manager of Moapa Enterprises, a company associated with the Plaintiff. Upon receipt of the 8 March letter from the Secretary of Lands he went to the Lands Office. After returning from the office a bulldozer was sent in and 'Ake's land was cleared. According to a certificate supplied by the Ministry of Agriculture, Food, Forestry and Fisheries (copy D-25) a substantial number of productive trees including coconuts, ivi, breadfruit and light lychees were uprooted totalling in value altogether TOP$172,237.05.

[10] Dr Malakai, who had grown up on the land, was very distressed to see what had been done to it. He got in touch with his nephew 'Ake and with his solicitor, Mrs Tupou. On 11 April 2013 Mrs Tupou wrote to the Minister of Lands seeking cancellation of Cabinet approval to the grant of the lease.

[11] On 23 May 2013 the Plaintiff commenced these proceedings. Principally, the Plaintiff sought (a) specific performance of the "agreement for lease made on 6 February 2013 between the Plaintiff and the First Defendant and the lease approved by Cabinet on 1 March 2013" and (b) an order restraining the Defendants from dealing in any way with the land approved for lease and from applying for the cancellation of Cabinet's approval.

[12] On 14 June 2013 no orders were made on the injunction application after undertakings by the Third Defendant not to process the grant of the lease further and by the Plaintiff not to enter the land, pending disposal of the action, were accepted. On 12 July 2013 I allowed an application by the then Second Defendant, Dr Malakai, to be dismissed from the suit.

[13] On 28 August 2013 a further amended Statement of Claim was filed by consent. A Defence ("Reply") was filed on 9 October by 'Ake. No Defence has been filed by the present Second and Third Defendants who, with the agreement of the other parties, undertook to abide by the result of the action.

[14] The trial took place on 28 and 29 January 2014. Following the conclusion of the trial both counsel filed helpful written submissions for which I am grateful.

[15] Much of the evidence at the trial was directed at the terms of the agreement which the Plaintiff asserted had been reached and which the First Defendant denied. As has already been noted the original Statement of Claim propounded an agreement (entitled Memorandum of Understanding) signed by 'Ake on 6 February 2013 (Exhibit P-35). Prasad however told the Court that the parties had in fact entered into a second agreement and that this agreement, a copy of which was produced as Exhibit A, was signed on 9 April 2013, after the land had been cleared. The second agreement is relied on in paragraph 5 of the further Amended Statement of Claim as well as an additional oral agreement between the Plaintiff and 'Ake said to have been reached in February 2013 in Suva. Prasad sought specific performance of the agreements while 'Ake who claimed that the first Memorandum did not represent a concluded agreement but merely outlined some areas of general agreement, that the second agreement was a forgery and that the oral terms of the agreement were not those alleged by the Plaintiff, counterclaimed for the value of the productive trees uprooted from his land.

[16] It was not however, the evidence directed at the parties' principal contentions which ended up being the primary concern of the Court; rather it was the undisputed fact that Prasad and 'Ake when completing and submitting Form 9 to the Minister of Lands for presentation to Cabinet for its approval did not state the truth.

[17] The first agreement (paragraph 5) states that the annual rental for the land was to be $500 and the figure is the same in the second agreement. But in paragraph 5 of the further Amended Statement of Claim the Plaintiff pleads that it was orally agreed that an additional sum of $2000.00 would in fact be paid. To questions from the Court Prasad gave the following answers:

"We did not record the oral terms in the written agreement because the First Defendant only wanted [a premium] of $75,000 to be shown to the Lands Department in Tonga. He wanted the balance paid in Fiji. He said he had no bank account in Tonga and wanted to be paid in Fiji. He was to be paid in Fiji dollars. At paragraph 5 [the agreement] says $500. I agree that the Lands Department was getting less than it was entitled to under Section 57(3) of the Land Act. When the $500 was disclosed in Form 9 it was false. I knew that when Form 9 was submitted. I knew when I received [Document P-34] that Cabinet had acted on the false information provided".

In answer to questions by Lord Tupou, Prasad stated:

"We mutually agreed to Form 9 being filled out in this way. We both agreed".

[18] When 'Ake gave evidence he told the Court:

"When I read the first MOU I understood from it that he would lease 3 acres at $75,000 for each acre for 20 years. Rudra said that in our MOU we will note down $75,000 for three acres but in our mutual agreement it would be $75,000 for each acre. He said more money would be taken away if everything we discussed was put on paper.

We agreed on $2500 rent but Lands would take tax and the rest would be given to me in Fiji.

He said he knows how the law works in Tonga. He said write $500 and the rest I take in Fiji".

Later, shown Form 9 (Document P-27) he stated:

"I see P-27. I recognise it. The only things that were filled in [when I last saw it] was 2 acres for 20 years at $500 per annum, Tongatapu, Fielakepa and the number on the side".

[19] After all the evidence had been heard and it was agreed that written submissions would be filed I raised my concerns. While the parties did not agree on the precise terms of the agreement reached, it was not in issue that they did agree in principle that the Plaintiff would lease of portion of the First Defendant's land. Such an agreement could not be legally effected without an application being made in the manner prescribed by Section 124 and Schedule IX of the Act. Both Prasad and 'Ake signed Form 9 which was the essential first step towards obtaining the lease. When the proposal was placed before Cabinet, the rent information as provided was known to be false. Unless detected, the result of this falsehood would have been that the Minister of Lands would only have collected 10% of $500 i.e. $50 under Section 57(3) each year whereas, if the true rental had been included the Minister would have been entitled annually to collect 10% of $2500 i.e. $250 per annum.

[20] It might be suggested that the amounts involved in this deception were relatively small. In my view however it is not the amounts which are of primary importance, it is rather the fact that the Plaintiff and the First Defendant knowingly provided false information to the Minister and to Cabinet knowing that the false information, if acted upon, would not only result in the lease being granted but in the Ministry being defrauded of the rental deductions properly due to it

[21] Both counsel in their written submissions argued that their clients should not suffer any detriment by reason of the falsehood perpetrated. Mrs Tupou suggested that 'Ake did not know that Form 9 had actually been submitted to the Ministry while Lord Tupou suggested that the only person to benefit from the deception was 'Ake since it was he who was receiving the rent. I cannot accept either of these arguments. 'Ake admitted signing the Form knowing that it was to be submittted in due course for approval. It was plainly to Prasad's advantage to have lease approved and, if it could be arranged for 'Ake to receive hidden benefits then he would clearly be more ready to enter into the agreement. In my opinion, the parties to the agreement acted unlawfully in concealing the true position from the Minister and from Cabinet. It my opinion it would be contrary to public policy and the long standing policy of the Courts to enforce this agreement in any way; ex turpi causa non oritur actio (see eg EuroDiam Ltd v Bathurst [1990] 1 QB1; Brown v Dunsmuir [1994] 3 NZLR 485. Accordingly the Plaintiff's action fails.

[22] There remains the counterclaim. As pointed out by Lord Tupou the Crop Compensation Act 2007 which was advanced as providing the statutory basis upon which the value of the uprooted trees was based, appears not to exist. Neither counsel was able to locate a copy and no such Act appears in the 2011 Revised List of Legislation prepared by the Attorney General or in the collection of 2007 Acts held by the Supreme Court. Without this alleged statutory basis, the values attributed to the trees appear to be arbitrary. Furthermore, there was no evidence that the trees which were uprooted were in fact used by 'Ake for income-generating purposes. It seems likely that this valuable piece of land will in due course be used for commercial purposes; the clearing of the land will in all likelihood have enhanced its value. As already pointed out, the Plaintiff and 'Ake had agreed in principle that the land would be cleared, even if the remaining terms of the agreement were unclear. In my opinion in all the circumstances of this case it would not be just to award the sum claimed by the First Defendant. The counterclaim also fails and is dismissed.

Result:

Both the claim and the counterclaim are dismissed. There will be no order
as to costs.

Dated: 31 March, 2014
PRESIDENT