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Tevi v Paea [2021] TOLC 7; LA 26 of 2019 (30 April 2021)

IN THE LAND COURT OF TONGA
NUKU'ALOFA REGISTRY


LA 26 of 2019


BETWEEN:


MILISE TEVI Plaintiff


-and-


MA’ATA TAUKAPA LATAI PAEA
Trading as “Ladies and Gentlemen Club” of Ma’ufanga Defendant


Plaintiff’s application to strike out the Defence


RULING


BEFORE: LORD CHIEF JUSTICE WHITTEN QC
Appearances: Mr William Edwards for the Plaintiff
Mr D. Corbett for the Defendant
Date of hearing: 1 April 2021
Date of ruling: 30 April 2021


The proceeding

  1. In this proceeding, the Plaintiff seeks an order against the Defendant for possession of a town allotment in Nuku'alofa (Deed of Grant Book 109, folio 43) and payment of mesne profits for use of the allotment since 1 May 2019 without paying rent.
  2. The relevant and uncontroversial chronology of events is as follows:
  3. The Plaintiff claims the allotment as widow of its former registered holder, Sioeli Vaihola Tevi. The Plaintiff alleges that the Defendant occupies the allotment from which she conducts a business known as the ‘Ladies and Gentlemen Club’. The Defendant’s occupation is said to be unlawful because, in summary:
  4. The Defendant filed a Statement of Defence on 13 January 2020, amended it on 10 March 2020, provided further and better particulars on 31 July 2020 and amended her defence again on 15 January 2021. I will turn to the substantive provisions of the current Second Amended Statement of Defence (“the defence”) further below.

The application

  1. On 17 February 2021, the Plaintiff filed an application to strike out the defence. In summary, the Plaintiff contends that:
“The Defendant, by her pleadings, has no acceptable nor credible basis for her defence to occupy or to continue to occupy the Plaintiff’s land, where her rights to have occupied the land in these proceedings, extinguished on 9 June 2015, the date of the expiry of the lease.”

  1. Directions were made for material to be filed and for the hearing of the application. Those directions included for any material in opposition to the application to be filed by 5 March 2021 and any material in reply by the Plaintiff to be filed by 19 March 2021. On 19 March 2021, Mr Edwards filed submissions in support of the application.
  2. Mr Corbett did not file a notice of opposition. At the hearing, he said that his instructions were simply to rely on the pleaded defence. After Mr Edwards concluded his oral submissions, Mr Corbett was offered another opportunity to make any submissions in opposition to Mr Edwards’ submissions or to otherwise support the defence. He declined to do so.

Principles on applications to strike out a pleading

  1. Order 8 rule 8 of the Supreme Court Rules provides:

0.8 Rule 8. Striking out pleading

(1) The Court may at any time order that any pleading or part thereof be struck out if —

(a) it disclno reasonable causecause of action or defence, as the case may be;

(b) it is scandalousvolous or v or vexatious;

(c) it is unclear, y otherwisjuprejudice or delay the fair trial of the actionction; or

(d) it is otherwise an abuseroc process of the Cou/p>

(2) No evidence shall be hen an application under paragraph (1)(a).


  2. Mr Edwards relied on the following passage from the 1999 UK Supreme Court Rules (“White Book”):
“A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered (per Lord Pearson in Drummond-Jackson v British Medical Association [1970] 1 ALL ER 1094 (CA). So long as the statement of claim or the particulars (Davey v Bentinck [1892] UKLawRpKQB 216; [1893] 1 QB 185) disclose some cause of action, or raise some question fit to be decided by the Judge to a jury, the mere fact that the case is weak, and not likely to succeed, is no ground for striking it out (Moore v Lawson (1915) 31 TLR 418, CA; Wenlock v Moloney [1965] 2 All ER 871, CA).”

  1. In Tonga, the guiding principles for strike out applications have recently been summarized, relevantly, as follows:[1]

The pleaded issues addressed by the Plaintiff

  1. Mr Edwards’ submissions focussed on two main propositions revealed by the defence, namely, that the Defendant has no legal right to remain in occupation of the subject premises because:

A. The expired lease and tenancy agreement

  1. Central to the Plaintiff's case is that the tenancy agreement was subject to the remaining term of the lease. Upon expiry of the lease on 9 June 2015, the Plaintiff says that the Defendant’s tenancy agreement with AJ Corporation came to an end. Alternatively, upon the expiration of the tenancy agreement on 12 April 2019, the Defendant had no legal right to continue to occupy the premises.
  2. In her defence,[3] the Defendant pleads, relevantly and in summary, that:
  3. At paragraph 6 of her defence, the Defendant denies that her tenancy agreement was subject to the term of the lease. The basis for the denial was not stated. It was a question also put squarely to Mr Corbett at the hearing of the application and, as noted above, he made no submissions in response.
  4. The only apparent explanation pleaded for the Defendant continuing to remain (at least until the alleged transfer of the business) in occupation of the allotment, despite the lease having expired and (as alleged in paragraph 7 of the Amended Statement of Claim) the land reverting back to the widow, is that the Defendant and her husband say they have spent $302,623.60 on renovations of the building, which they have not yet recouped and that were never informed by AJ Corporation or the previous allotment holder that the lease to AJ Corporation would expire on 9 June 2015.
  5. To that, Mr Edwards submitted that:[4]
"A tenancy agreement does not confer any interest in land. The Defendant as tenant knew or ought to have known that AJ Corporation had a limited interest in the land, which was the remainder of the lease number 4257 and could not give any more than the interest it has in the land.”

  1. He referred to the decision in Yuzhen Yang v ‘Olioni Moana & anor (CV 39 of 2014) in which was held that:
"In English law, a tenancy creates an interest in land which the Court of Appeal has now definitively reaffirmed (AC 22 of 2015), but in Tonga, agreements for the exclusive use and occupation of premises erected on town or tax allotments, which are not leases conforming with the requirements of the Land Act, are merely contractual licences and confer no interest in the land".
  1. To similar effect, more recently, in Cocker Enterprises Ltd v McCarthy (trading as Le-Ata Fashion Boutique & Gift Shop) [2021] TOSC 1, it was observed that:
69 In 'Unuaki 'O Tonga Royal University of Technology v Kingdom of Tonga [2013] TOLC 5, President oott observed that tenancies are not among the various ints in land recognised by the Act. ... ourt opined that:
‘The only only interests in land which can legally eated are those permitted bted by the Act. All other purported interests are outside the purview of the legislation. ...’

...


75 It is important, however, to distinguish between a mere contractual relationship (which creates rights in personad a lease (which hich may have contractual characteristics but which essentially creates an estate or interest in land and hence rights in rem): the significancthif this distinction is the doctrine of privity of coof contract provides that, as a general rule, a mere contract cannot confer rights or impose obligations osons who are not parties to it.[5] A contractual to occupy lapy land that does not create any estate or interest in the property to which it relates is likely to constitute a licence....”
  1. The Defendant’s pleaded position on this issue is misconceived. The only legal basis upon which the Defendant ever had a right to occupy the premises was derived by contract from the legal rights conferred on AJ Corporation by the Land Act through the lease (or sublease) it acquired from the bank. The duration and validity of any contractual rights conferred by the tenancy agreement depended entirely on the existence and duration of the underlying lease. To put it succinctly, had AJ Corporation not been a lessee of the land, the Defendant could never have been granted a lawful right by AJ Corporation to occupy the premises. As the expiration of the lease on 9 June 2015 ended the rights of AJ Corporation to the land, so too did its ability to grant to the Defendant any contractual right to occupy the premises also expire, and the allotment reverted to the registered holder or his successor.
  2. Further, and in any event, there can be no debate about the fact that even if the tenancy agreement survived the expiration of the lease (which it could not), the tenancy agreement itself expired on 12 April 2019. Notwithstanding, the Defendant has not pleaded that she is not and has not continued in occupation of the premises despite alleging a transfer of the business to her relative and, by her defence, appears to assert an entitlement to remain in possession to the exclusion of the Plaintiff.
  3. Accordingly, I find, as a matter of law, that this defence has no prospects of success.

B. The alleged failure to inform

  1. The other aspect of the pleaded defence upon which Mr Edwards focused was the Defendant’s allegation that the Plaintiff and her predecessors failed to notify the Defendant that her right to occupy the premises would expire when the lease to AJ Corporation expired on 9 June 2015.[6]
  2. To that, Mr Edwards submitted:[7]
"There is no requirement for the town allotment holder to give notice to the Defendant that her right to occupy will expire on 9 June 2015. The town allotment holder was not a party to the Tenancy Agreement and had no duties under the said agreement”.

  1. The submission is correct. Again, the Defendant's pleading does not set out any legal or factual basis for any alleged duty to notify. Neither the Plaintiff nor any of her predecessors were parties to the lease or the tenancy agreement, nor could they be. It was for the Defendant to ascertain the nature and extent of AJ Corporation’s interest in the land before committing to the tenancy agreement and any subsequent investments of capital in the subject building. The Defendant does not seem to dispute that she knew that AJ Corporation was the lessee of the premises. Her real complaint appears to be that she did not know when that lease would expire. That it is something which she ought to have enquired about as a matter of due diligence.
  2. Further, it is not clear from those parts of the defence how, if at all, this complaint can form the basis for a successful defence to the Plaintiff's claim for possession of the allotment. In other words, the plea goes nowhere. It has not been developed as the basis for any defence of estoppel, misrepresentation by silence, or otherwise.
  3. Accordingly, I am not satisfied that this issue, if it be intended as a basis for a viable defence, has any real prospects of success.

The other pleaded ‘defences’

  1. During the course of the hearing, and for the sake of completeness, I heard from Mr Edwards in relation to the other issues raised in the defence. As already noted, Mr Corbett elected not to make any submissions on those or any other issues raised. As will be seen, most of those issues were not defences to the claim at all.
  2. I will address each in turn.

C. That the Defendant no longer has any legal interest in the Ladies and Gentlemen Club business, which was transferred to Fe’aomoengalu Hakaumotu, her husband's cousin, sometime between May and September 2017 [paragraphs 2, 10(a) to (c), 12(vii)]

  1. As alluded to above, it is unclear how this issue is intended to be deployed as a defence to the Plaintiff's claim. It may well be an answer to the claim against the Defendant personally in relation to the occupation of the premises although, curiously, and as previously noted, the defence does not expressly state that she is no longer in occupation of the premises. Further, the pleaded circumstances surrounding the alleged transfer of the business to the Defendant’s husband's cousin are also unclear and there appears to be a continuing relationship between all three in relation to the operation of the business.
  2. If the Defendant is in fact no longer involved in the business, it would have been a simple matter for her to have admitted that part of the claim because any orders requiring her to vacate the premises would have no practical or deleterious effect on her.
  3. Similarly, if the Defendant in truth no longer has any interest or involvement in the business, then any court order requiring her to vacate the allotment and granting possession to the Plaintiff may not produce the Plaintiff’s desired result if another person, the alleged new owner of the business, is the person actually in occupation. This matter was raised with Mr Edwards on previous occasions. Notwithstanding, no application to join Fe’aomoengalu Hakaumotu has been filed. Fe’aomoengalu therefore cannot be the subject of any order for possession as against the Defendant.
  4. Be that as it may, this issue is not a competent or reasonable defence to the claim generally, and certainly not in respect of the claims for mesne profits for any period during which the Defendant was still the owner of the business and occupying the premises.

D. That in CV 21 of 2017, on 13 July 2018, Paulsen LCJ stayed that action pending the appointment of an administrator of the former holder’s estate. The Defendant ‘still awaits acknowledge [sic] of whether administrator will be appointed or not so it [sic] can purse [sic] costs issue against the estate’. [paragraph 12(ii)]

  1. In CV 21 of 2017, Mele Tevi sued the Defendant for vacant possession of the allotment. A review of the file in that proceeding reveals that the claims and defences raised were substantially similar to those raised in the present proceedings.
  2. On 9 March 2018, the Defendant (who was then also represented by Mr Corbett) filed an application for dismissal of that action on the basis that the Plaintiff had passed away on 15 February 2018. In the application, it was contended that:
"legally where a Plaintiff to a case passes away the beneficiaries inherit the lawsuit and continue a case as executor or administrator.... The (Defendant) has not been informed whether any application for probate or letters of administration has been applied for and it has been three weeks since the (Plaintiff) passed away.... Before a beneficiary can inherit the lawsuit, he must be appointed by the Supreme Court as executor or administrator.... There is a further difficulty that any beneficiary entitled to the land as air must file a claim with the Ministry of Land and there is a one year waiting period before claims to the land can be considered ...”.

  1. On 19 March 2018, Paulsen LCJ recorded that the application was premature. He noted that steps had been taken to apply for letters of administration and that Mrs Tupou (counsel then acting for the then Plaintiff) was seeking instructions as to whether the administrator (upon appointment) would wish to continue the action. The hearing, then scheduled for 5 and 6 April 2018, was vacated and the matter was listed for mention on 6 July 2018. On 13 July 2018, Paulsen LCJ recorded that:
"By consent this action is stayed pending the appointment of an administrator of the estate of the Plaintiff. The parties are at liberty to apply to lift the stay on seven days' notice."
  1. The court management system records the proceeding as having been finalised.
  2. The current defence does not articulate how the existence of the previous proceeding might, for example, operate as a bar or defence to the current proceeding. Further, it is unnecessary to dwell upon how the previous proceeding came to be so finalised in the face of the last order staying it by consent, or why the present fresh proceeding was issued in respect of essentially the same relief, because by paragraph 1 of the Amended Statement of Claim herein, the current Plaintiff in this action claims as the widow of Sioeli Vaihola Tevi, who was the former registered town allotment holder. The widow registered her interest in the land on 10 October 2020 by letter to the Minister of Lands. Those allegations are admitted by the Defendant herein.
  3. Accordingly, this ‘issue’ does not give rise to any viable defence to the current claim.

E. That she and her husband have spent $302,623.60 on renovations to the building which they have not yet recovered [paragraphs 7, 10(c), 12(v)].

  1. Once again, the defence does not articulate any legal basis for how this issue might be an answer to the Plaintiff's claims. Any decision by the Defendant and her husband to invest any sums in renovations to the building were entirely matters for them, no doubt motivated by the desire to improve the setting in which they wished to operate the business. They also made those decisions in the context of a five year tenancy agreement, which has since expired. Like any tenant, and absent any actionable representations by the landlord which are relied upon by the tenant (here) to her detriment,[8] any amounts spent on the rented premises are merely operating expenses (although some may represent depreciable assets for taxation purposes) and any detachable assets brought into or applied to the rented premises remain the property of the tenant and may be removed and taken away by the tenant at the expiration of the tenancy (subject to making good any damage caused by such removal). Similarly, if the tenant decides to leave those assets or improvements behind, that is a matter for the tenant. Should she do so when required to return the premises to the landlord, then without some reservation of rights or other arrangement in place, those items may well be regarded as having been abandoned by the tenant and therefore become the property of the landlord.
  2. Further, the fact that the Defendant has not recovered the amount spent on the building is a reflection of the success or otherwise of the business and not any basis for some asserted right to be able to continue to occupy the premises to the detriment of the allotment holder and without her consent. If that were so, then every term of every tenancy agreement fixing the period of the tenancy would be rendered meaningless.
  3. Accordingly, this issue is irrelevant to any possible defence to the Plaintiff's claim.

F. The Plaintiff acquiesced and therefore consented to the Defendant’s activities and expenditure on improving the building [paragraphs 9(vi), 10(c), 13].

  1. On this issue, Mr Edwards submitted that acquiescence would suggest that there was a duty on the landholder to inform the Defendant prior to expiry of the underlying lease that her interest was going to expire. He contended that “acquiescence means nothing given the fact that the tenancy agreement had already expired”.
  2. It must, of course, be observed at the outset, that the pleading once again fails to articulate any legal or complete factual basis for any form of relief. There is no claim for an estoppel against the Plaintiff. Apart from an assertion of acquiescence, none of the other requisite elements of the equitable ‘shield’ have been pleaded.
  3. The Tonga Courts have long recognised a defence of estoppel to an action for recovery of land.[9] Estoppel is also statutorily recognised in Tonga in s.103 of the Evidence Act. However, as Paulsen LCJ explained in Kalaisi v Maile [2016] TOLC 8, to establish an equity, the party seeking protection must establish:
    • (a) an expectation or belief by A that is encouraged by B as to the property of B, such as that the property is or will be the property of A or that he has some other interest in it;
    • (b) knowledge by B of A’s expectation or belief;
    • (c) some activity by A in reliance upon his expectation or belief such as the expenditure of money upon the property;
    • (d) the interest or expectation is one that B could lawfully satisfy; and
    • (e) encouragement by B of the activities of A or at least knowledge of those activities with a failure to assert his title to the property when they are adverse to it so that it would be unconscionable, inequitable or unjust for him to rely upon his legal rights to defeat the expectation encouraged by his conduct or lack of it.
  4. More specifically, the principles of estoppel by acquiescence, which descend from yn v Llewelyn (160;(1862) 4 F & J 517J 517 and Ramsdeyson (186;[1866] UKLawRpHL 7; (1866) LR 1 HL 129e exre explained by the Court of Appeal in Maile v Kalaisi [2017] TOCA 3 as follows:
[42] The doctrine gives the Court a wide dise discretion to grant relief when an ownerowner of land (a) induces, encourages or allowsclaimo believe that heat he or she has or will enjoy some right ight or benefit over the land, (b) the claimant acts to his or her detriment to the knowledge of the owner and (c) the owner then seeks to take unconscionable advantage of the situation by denying the claimant the expected right or benefit.”

  1. The term ‘acquiescence’ is not a term of art. It was used in Courts of Equity as a term to characterise a defence which may be set up by a person against whom another makes a claim for equitable relief. It is a well-known doctrine of equity that when a person claiming equitable relief has lain by for a long time, and so conducted himself that it would be inequitable to permit him to complain of the Defendant's actions, the court will refuse to grant the relief. The term also bears another meaning. It may be fairly applied to a man who, seeing an act about to be done to his prejudice, stands by and does not object to it. He may be very properly said to be acquiescing in that act being done. But the difference in point of law in the legal consequences of the two kinds of acquiescence is quite clear. A man who stands by and sees an act about to be done which will be injurious to himself, and makes no objection, cannot complain of that act as a wrong at all. He never has any right of action, because he stands by and allows the act to be done. Acquiescence in the other sense is a defence to an action for specific relief, on the ground that the Plaintiff cannot be reinstated in his original position without doing injustice to the Defendant, but it is not an answer to a cause of action already accrued.": Cashman v 7 North Golden Gate Gold Mining Co (1897) 7 QLJ 152 at 153-4. Acquiescence in the strict sense implies either that the party acquiescing has abandoned his right, or that he is estopped by his conduct from asserting it. Acquiescence in this sense is no more than an instance of estoppel by words or conduct.: Glasson v Fuller [1922] SAStRp 8; [1922] SASR 148 at 161-3. [10]
  2. There is also authority for the proposition that a Defendant wishing to make good the defence of laches or acquiescence must rely on the behaviour of the Plaintiff, not of his predecessors in title: Nwakobi v Nzekwu [1964] 1 WLR 1019 at 1024.
  3. Even if the relevant passages in the defence are intended to allege estoppel by acquiescence, and putting the case as high for the Defendant as her pleading can, the plea is fatally defective. Firstly, during the relevant period when the Defendant alleges she spent considerable sums refurbishing the building, there was no legal relationship between her and the Plaintiff or her predecessors in title. The Defendant’s only relevant legal relationship was as a tenant under her agreement with AJ Corporation as her landlord. Secondly, there is no allegation pleaded that the Plaintiff or any of her predecessors in title had any knowledge of any amounts being spent by the Defendant on the building. Thirdly, and as observed by the Court of Appeal in Maile v Kalaisi, ibid,[11] there is no allegation pleaded that the Defendant was induced, encouraged or allowed by the Plaintiff to believe that if she spent money on the building, she had or would enjoy a right or benefit over the land and/or building or to occupy it. Fourthly, there is no allegation of unconscionability, nor on the facts that have been pleaded, could there be. Fifthly, the allegation of acquiescence is unsustainable against the Plaintiff personally as her right to the allotment only crystallised upon her claim as widow in October 2020. The defence does not plead that the expenditure on the building has been incurred since then.
  4. For those reasons, I consider that as presently pleaded, any purported defence of estoppel by acquiescence has no prospects of success.

G. Clause 9.1 of the tenancy agreement with AJ Corporation conferred on the Defendant an option to renew [paragraphs 9(xii), 10(d)(6), 13(c)].

  1. The option to renew is irrelevant to a defence to the Plaintiff's claim. It was a right which existed only as between the Defendant and AJ Corporation. In any event, and for the reasons discussed above, upon the expiry of the lease held by AJ Corporation, the Defendant's right to renew that tenancy agreement evaporated.

H. Shortly after Cyclone Gita in February 2018, the Defendant's husband provided the Plaintiff’s late husband (former holder of the allotment) with $5000 cash and $2500 worth of food as assistance for the funeral expenses of his mother. In accepting the money and food, the former Plaintiff told the Defendant's husband that he would speak to him about the property and offer a new contract for the business to use the allotment, but he did not do so [paragraph 12 (iii), 14].

  1. Again, as pleaded, this issue goes nowhere. On the assumption that it may have been intended as a basis for an alternative plea of promissory estoppel, the defence fails to plead any allegations which could satisfy the requirements for establishing such an equity as referred to in paragraph 44 above.

Result

  1. For those reasons, I am satisfied that the Second Amended Statement of Defence discloses no reasonable defence.
  2. The application is therefore allowed.
  3. As Mr Corbett did not seek leave to amend or replead in the event of the application being allowed, in part or in whole, judgment will be entered for the Plaintiff on her claim for possession of the subject allotment with damages to be assessed on the mesne profits claim. A separate Order will be issued with this ruling. I will hear the parties further on directions for that assessment.
  4. Costs should follow the event. Subject to any application for a different order for costs, formal orders in respect of costs of the proceeding, which will include this application, will be made upon determination of the damages assessment.



NUKU’ALOFA
M. H. Whitten QC
30 April 2021
LORD CHIEF JUSTICE

[1] Edwards v Public Service Association [2020] TOSC 45 and cases cited therein.

[2] As referred to by Ward J in Cauchi v Air Fiji & Air Pacific Ltd [2005] TOSC 7 citing Nugent v Goss Aviation [2000] 2 WLR 22>

[3] Paragraphs 2, 10 and 12(vii).

[4] [4.2]

[5] Scruttoruttons Ltd v Midland Silicones Ltd [1961] UKHL 4; [1962] 1 All ER 1, HL; and [160;[1967] 2 R 1197, HL. SHL. See also Porkson Stevedoring Pty Pty Ltd v Salmond & Spr (Ausa) Pty Ltd, The New York Star [1980] 3ER 257, PC; Woodar Inar tmvestmvestment Development Ltd v Wimpey Construction d [198All ER l ER 571, HL.

[6] Paragraphs 7, 9(iii) to (v), (viii) xi), and (d)(5) and 1and 13(b).

[7] [4.3]

[8] Which could give rise to an action for acquisition by estoppel as explained in authorities such as Dillwyn v Llewellyn [1862] EWHC Ch J67; (1861-73) All ER 384, Ramsden v Dyson [1866] UKLawRpHL 7; (1866) LR 1 HL 129 and Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 420.

[9] Kaukauloka v Luna'eva & Sons Co Ltd [2020] TOLC 11 referring to Nginingini v Nginingini [2018] TOLC 4 per Paulsen LCJ at [30] and cases cited therein.

[10] Referred to in "Equity, Doctrines & Remedies" by Meagher Gummow & Lehane, 4th edition, LexisNexis Butterworths at 36-095.

[11] [43]

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