Tonga Asset Managers Associates Ltd v Paea [2022] TOLC 1; LA 4 of 2021 (30 March 2022)

IN THE LAND COURT OF TONGA
NUKU'ALOFA REGISTRY

LA 4 of 2021

IN THE MATTER OF THE LAND ACT

BETWEEN:

TONGA ASSET MANAGERS ASSOCIATES LTD Plaintiff

-and-

[1] TOMIFA PAEA
[2] MINISTER OF LANDS Defendants

JUDGMENT

BEFORE: ACTING LAND COURT PRESIDENT JUSTICE AFEAKI
Assessor: Mr S. Tu’ifua

Counsel: Mr S. Tu’utafaiva for the Plaintiff

Mrs P. Tupou KC for the First Defendant

Mr S. Sisifa Solicitor-General for the Second Defendant assisted by Ms B. ‘Uta’atu
Dates of hearing: 23, 24, 25 November 2021
Date of judgment: 30 March 2022

Table of Contents

1. INTRODUCTION, TALATEU
   1. The Parties
   2. The Claim

2. PARTIES’ PLEADINGS
   1. Plaintiff’s Statement of Claim allegations
   2. Plaintiff’s relief sought
   100. Minister’s alleged failure to cancel Cabinet Decisions
   4. First Defendant’s Statement of Defence
   5. First Defendant’s Notice of Claim against the Second Defendant
   6. Minister’s Statement of Defence
   7. Minister’s Amended Statement of Defence
   8. Minister’s response to First Defendant’s Notice of Claim
      
3. CHRONOLOGY, SUMMARY OF FACTS
   
   1. Chronology
   2. Summary of facts and preliminary analysis

4. LEGAL SUBMISSIONS
   1. Plaintiff’s submissions
   2. First Defendant’s submissions
   100. Second Defendant’s submissions
        
5. ANALYSIS
   1. Equity
   2. The Land Act
      
6. SUMMARY OF FINDINGS
   1. Rights and Interests, summary of findings
   2. Rentals
   100. Lease No. 6226A
   4. Mr Paea’s subleases
      
7. RESULT
   1. Orders
   2. Costs
      

I. INTRODUCTION

[1] The Court respectfully recognises the recent tumultuous times commenced by the Hunga eruption and peaukula in January, followed by the full lockdown with the February arrival of covid in the Kingdom with ongoing state of emergency imposing disruptions to all levels of goods and services, communications, including legal and judicial services. In such times, the Court is grateful for learned counsels’ helpful legal submissions and prays for blessings on counsel, the parties and all the people of our beloved Tonga.
[2] This nature of this claim is complicated by the passage of a quarter century time, or at least a generation. It has multiple parties and reflects the numerous: government compositions; ministers and officials and to underscore this, during those 25 years we have witnessed the reigns of three Kings and many significant developments and changes also.
[3] Part of the complexity of this matter includes that the pleadings include claims, defences and notices of claims between defendants and responses to those, which increased context has meant that some issues and evidence are relevant in more than one aspect of the case, claims, responses of counter-claims to be analysed. In so doing, repetition has been avoided where possible, but the length of this decision was necessary to do justice to the issues and of course, to the parties.

Talateu

[4] Fakatulou atu ke u fakahoko e fakatapu ki he Hau Fatu Fonua o Tonga, a Tupou VI mo e Ta’ahine Kuini, mo e Ha’a Moheofo hono kotoa. Ke ata’ ke u fakatapu ki he La’a Kuo ‘Unga Fonua, a Taufa’ahau Tupou I mo ‘Ene langimama’o ma’ae kitautolu kotoa ‘a e fanga makapuna ‘o e kakai o e ‘otu Tonga. Na’e ‘iai e talanoa mei he ha’ele a Tupou I ki he ‘otu motu lalahi ki muli’, pea ne mamata leva he fāngota mālie ‘a e fu’u lulutai ‘i he feitu’una, o ne toe me’a Ia ki he fanga manupuna īki na’e kai ‘a e toetoenga kai, o ne pehē ki he ‘Ene kau folau: “ ‘Oku kai e manu vaivai he fāngota ‘o e lulutai.’”
[5] ‘Oku kei totonu e tō folofola ‘o e Tama Tu’i ko Tupou. ‘Oku tau toutou ‘inasi kātoa i he ‘Ene langimama’o fekau’aki mo e ngaahi koloa fakaenatula na’ane foaki mai o malu’i i hotau Konisitūtone, hangē ko e kelekele a hotau fonua.
[6] Ka ‘i he ngaahi tōnounou ‘a etau ngaue’, ‘oku pau pē ke tau ma’u ha ‘ako’anga mei ai, ke tau lava leva ke fokotu’u ha taumu’a lelei ke tau faka’aonga’aki ‘a e koloa ‘i he founga ‘oku taau, fakalukufua ki he kakai, fonua, pule’anga, Tu’i mo e Konisitutone’. Faka’apa’apa atu.

A. The parties

[7] The plaintiff, Tonga Assets Management Associates Limited is a company incorporated under the Companies Act.
[8] The first defendant, Mr Tomifa Paea is a businessman of Neiafu, Vava’u.
[9] The second defendant is the Honourable Minister of Lands of His Majesty’s Government.

B. The claims, basics

[10] The plaintiff seeks an order against the first defendant, Mr Paea that he be evicted from the subject lands on the basis that inter alia he has no legal right to possess and use lots 2, 3 and 4 of the plaintiff’s leasehold land No. 6226A at the Small Industry Centre in Vava’u (plaintiff’s Statement of Claim “SOC” dated 5 March 2021).
[11] The plaintiff also claims that the first defendant should pay damages by way of unpaid rent to the plaintiff in the sum of $19,570.52 as of November 2020 for his possession and use of lots 2, 3 and 4 and alleged that this was “without regular payment” of the rent since about 1996. On the final day of hearing, the plaintiff sought leave to amend the alleged unpaid rent claimed by reducing it from $19,570.52 by $12,961.88 to $6,608.64.
[12] The plaintiff claims that the second defendant, the Minister of Lands should cancel the Cabinet Decisions numbers 2256, 2257, and 2258 of 19 December 2002 which approved the first defendant’s applications to sublease Lots 2, 3 and 4 from the Minister of Labour Commerce and Industries (“MLCI”).
[13] The first defendant also gave notice of its claim against the second defendant Minister of Lands, claiming that he should cancel Lease No. 6226A in favour of the plaintiff and complete, sign and register the first defendant’s subleases.
[14] Alternatively, the first defendant claims damages for loss of use of lands and compensation for the value of the first defendant’s buildings on the land.

II. THE PARTIES’ PLEADINGS

A. Plaintiff’s Statement of Claim (TAMA Limited)

The pleaded issues addressed by the Plaintiff include:

[15] The plaintiff (“TAMA”) say that they are a company incorporated under the Companies Act having their registered office at Ma’ufanga and that they are a Public Enterprise.
[16] TAMA says that under Lease No. 6226A, they are the lessee of the subject land at the Small Industries Centre in Neiafu, Vava’u.
[17] The Statement of Claim alleged that the first defendant Mr Paea:

1. has no rights to possess and use Lots 2, 3 and 4 of the plaintiff’s leased land under Lease No. 6226A and the court should order his eviction;
2. should pay damages by way of rent arrears for his possession and use of Lots 2, 3 and 4 because he has used them without regular payment since about 1996; and

100. that his subleases not having been registered as required under the Act give him no rights.

[18] TAMA alleges that the second defendant, the Minister of Lands:

1. should take action to cancel the three Cabinet Decision no. 2256, 2257 and 2258 of 19 December 2002 approving Mr Paea’s applications to sublease Lots 2, 3 and 4.
   

B. Plaintiff’s relief sought

By way of relief, the plaintiff, TAMA claims:

[19] That the Court order Mr. Paea to vacate TAMA's leased land;
[20] that the Court order the Mr Paea to pay damages for unpaid rent in the amount of $19,570.52. It is relevant that during trial the plaintiff asked to amend its claim to reduce the “damage by way of unpaid rent” by deducting $12,961.88, resulting in a reduced claim of $6,608.64;
[21] that the Court order: the Minister of Lands to take action to cancel Cabinet’s approvals of Mr. Paea's application to sublease Lots 2, 3 and 4; and payment of its legal costs.

C. The Minister of Lands alleged failure to cancel Cabinet’s approvals

[22] The other aspect of the pleaded claim was the Plaintiff’s allegation that the Second Defendant failed to action the request by the plaintiff to cancel the Cabinet’s approval of the First Defendant’s applications to sublease the lots.

D. First Defendant’s Defence (Mr Paea)

[23] In his defence, Mr Paea says that he is in lawful possession of the area leased to the plaintiff under Lease No. 6226 and that he came into possession of it in around 2000.
[24] He says he was not consulted by the Minister of Lands prior to his granting and registering the transfer of Lease to the plaintiff, TAMA and that failure has breached the principles of natural justice in respect of his interests in the land. Mr Paea says he has invested a substantial amount of money, over a million pa’anga worth of improvements on the land and time, effort, without any objection from the Government or TAMA and that this gives him a pre-existing equitable interest in the land.
[25] Mr Paea says that TAMA took over the lease land under Lease No. 6226A with full knowledge of Mr Paea's investment on the land and therefore they had notice of his pre-existing interests.
[26] He says TAMA cannot now complain because they had prior notice and knowledge of Mr Paea's investments and interests in the land. He says the plaintiff’s claim should be dismissed.
[27] Mr Paea argues that his equitable interests in the land arise via his investments on the land made in reliance on the agreement held with the previous sublessor, MLCI which was the responsible ministry.
[28] Mr Paea says that the Minister of Lands not consulting him prior to granting and registering the lease transfer to TAMA has had an adverse effect on his enjoyment of his subleased land.
[29] Mr Paea alleged that the plaintiff is not entitled to rent from 1996 because it did not have any interest in the land until many years later, if at all and requires proof of the plaintiff’s claim as to how rent arises in the circumstances of his claim.
[30] Mr. Paea says that the second defendant, the Minister of Lands, is bound by the Cabinet decisions of 2002 and that any potential action towards ‘cancelling’ those Cabinet decisions must include consultation with him.
[31] Mr. Paea acknowledges that TAMA Limited is a registered limited liability company, but says further that TAMA Limited is not listed as a Public Enterprise within the schedule of the Public Enterprises Act and therefore does not know whether or not he is legally obliged to deal with them as a Public Enterprise, within the meaning of that statute.
[32] Mr Paea alleged that in 2019 he stopped paying rent to TAMA in an attempt to cause the Minister of Lands to take action to register his subleases. He said that he has been paying rent to MLCI since around 1995 - 1996, all the years up until 2019 and that therefore he has valid interests in the land. He required the plaintiff to prove its rent allegations.
[33] Mr Paea alleged that the transfer of the land from MLCI to TAMA may well have occurred but that does not deprive him of his equitable interest in the land because of his long-term investments and his payment of the rent, which was accepted without complaint for the entire term.
[34] Mr Paea asked for the plaintiff’s claim to be dismissed and that by amendment to the statement of defence made during trial, to the effect that damages sought be ordered in the value of $938,100 (as per the evidence of valuer, Mr Viliula Mafi at CB page 138 D), plus legal costs.

E. First Defendant’s Claim against the Second Defendant, 6 April 2022

[35] On 6 April 2021, Mr. Paea gave notice of a claim to the second defendant, the Minister of Lands. In this claim he sought:

• 35.1 cancellation of the Lease No. 6226A to the plaintiff, TAMA;
• 35.2 that the Minister sign the deed of subleases for Lots 2, 3 and 4 in the name of Mr Paea and register them, or alternatively;
• 35.3 that he pays damages for the loss of 15 years of use of Lots 2 and 3, and two years of use of Lot 4 at $36.77 per month; and
• 35.4 Compensation for the value of the buildings owned by Mr. Paea erected on the land to be valued and assessed by the Court.
  

[36] Mr Paea says he was permitted by the Government’s MLCI in about 1995 to construct a twin steel pack house on the land for the packing of squash for export and that Mr. Paea took possession of the land around that time.
[37] Following the success of that project, in 2002, MLCI and Mr Paea’s company, Vava'u Construction Limited (“VCL”) entered into an agreement to sublease the land.
[38] Mr Paea was later advised by Government officials to apply for the sublease from MLCI in his own personal name, so he did this and those subleases were approved by Cabinet in 2002.
[39] Mr Paea then says that he relied on the agreement, Cabinet approval, and he continued to invest and develop on the land by building on it and using it for business.
[40] MLCI and the second defendant never complained about his development of the land and yet the plaintiff now wants his land.
[41] During 2015 the Ministry of Lands officials drew up deeds of subleases to be signed by the Minister of Lands, MLCI and Mr Paea and granted to him.
[42] Mr Paea gave evidence that despite his several attempts to have the Minister of Lands sign the subleases, they were never signed.
[43] Mr Paea complained that the Minister of Lands granted a transfer of Lease No. 6226 to TAMA without consulting him or giving him the right to be heard, especially because he alleged it was going to adversely affect his interests.
[44] Mr Paea says that the Minister of Lands not giving him an opportunity to be heard will cause him to lose the use of part of the land for 15 years and another part of the land for another two years. In addition to that loss would be losses of his investments of over one million pa'anga on improvements to the land.

F. Second Defendant’s Statement of Defence to TAMA of 16 April 2021

[45] On 19 August 2021, the Minister of Lands filed and served a statement of defence in reply to the plaintiff’s claims against him.
[46] In response to allegation (1c) he noted that he does not have the power to cancel a decision made by His Majesty's Cabinet as sought by the plaintiff.
[47] He admitted that on 17 August 1998, Lease No. 6226 was registered to the Ministry of Labour, Commerce and Industries (MLCI).
[48] He confirmed that on 7 October 2011, Cabinet approved in Cabinet Decision 872, the policy direction to transfer ownership and management of the Tongatapu and Vava’u small industries centre lands from MLCI to TAMA. (However, the Court notes that that Cabinet Decision does not name TAMA and only refers to “Small Industries Centre”.)
[49] Seven years later, on 14 December 2018, Cabinet Decision 1171 approved the transfer of the Lease to TAMA.
[50] Two years later, on 21 April 2020, the transfer of Lease No. 6226A to TAMA was registered in the Ministry of Lands Register.
[51] At paragraph (2.d) of the statement of defence responding to paragraph 2 of the claim, the Minister pleaded that:

• 51.1 “The delay was due to the former Minister of Labour, Commerce and Industries, Honourable Tu’i Uata not signing the indentures of transfer. As the lessor the Ministry of Labour, Commerce and Industries is required to sign the indenture of transfer in order to give effect to the transfer. This was only signed by the newly re-named Ministry of Trade and Economic Development, Honourable Samiu Vaipulu on 20 April 2021.”

[52] The Minister admitted that on 19 December 2002, Cabinet Decisions 2256, 2257, 2258 approved the subleases of Lots 2, 3 and 4 to Tomifa Paea and in respect of the alleged rental arrears said further at paragraph 3 that:

• 52.1 “further says that he only became aware of Tomifa paying rent and being in arrears to TAMA when TAMA wrote to him on 27 October 2020.”

[53] At paragraph 6, he denied the plaintiff’s allegations concerning what the plaintiff calls the MLCI’s DEED OF SUBLEASE of the Lots dated 1 January 2002 to VCL, the Minister said further:

• 53.1 “That he denies the allegations brought under paragraph 6, and further says that the ‘Deed of Sublease’ document being referred to is not an official Form of sub-lease prescribed under the Land Act and is therefore not recognised as an official document by the Ministry of Lands and Natural Resources...”

[54] The Minister admitted the paragraph 8 allegation that on 28 January 2003, the first defendant and MLCI applied to the second defendant to sublease Lots 2, 3 and 4.
[55] Responding to the paragraph 9 allegation, the Minister admitted and provided the specific details of His Majesty’s three Cabinet Decisions No. 2256, 2257 and 2258 dated 19 December 2002 approving the sub-leases between MLCI and Mr Paea.
[56] The Minister admitted the plaintiff company’s paragraph 10 allegation that in 2011 it had become a “Public Enterprise” and that the government agreed to transfer to it Lease No. 6226.
[57] The Minister admitted the plaintiff’s paragraph 11 allegation, that in December 2018 Cabinet had approved the transfer of Lease No. 6226 from MLCI to it.
[58] The Minister admitted the plaintiff’s paragraph 12 allegation, that in April 2020 he had registered the transfer of the Lease by the indenture from MLCI to TAMA and it then became Lease No. 6226A.
[59] The Minister admitted in reply to paragraph 13 that the subleases of Lots 2, 3 and 4 have not been registered in the Ministry of Lands Register, but that Mr Paea has been in occupation of the Lots since about 2001.
[60] In response to TAMA’s paragraph 14 allegation, that Mr Paea had been “irregularly paying rent” for his possession of the Lots, that the last payment received was on 14 January 2019 and alleging that there was an outstanding balance of $19,570.52 at 23 November 2020, the Minister responded that he has no knowledge of that and because there was no allegation against him, he was not required to plead.
[61] In admitting TAMA’s paragraph 15 allegations, that in October 2020 they had asked the Minister to cancel the three Cabinet Decisions on the grounds that:

• 61.1 Mr Paea is in arrears with his payment of rent;
• 61.2 VCL has been struck off from the Companies Register; and
• 61.3 The subleases have not been registered.

[62] The Minister admitted to paragraph 15, although in so doing said further that the TAMA letter was in relation to Cabinet Decisions No. 2256, 2257 and 2258 dated 19 December 2002. (The Court finds that already having denied knowledge of Mr Paea’s alleged rental arrears in paragraph 14, and any knowledge about VCL in paragraph 6 in respect of the purported “Deeds of Sublease”, the Minister was restricting his paragraph 15 admission to the 2002 Cabinet Decisions and was not admitting rental arrears, nor actual knowledge of VCL’s status.)
[63] In response to the TAMA’s paragraph 16 allegation, that Mr Paea “has no right to possess and use Lots 2, 3 and 4 of the plaintiff’s leased land”, the Minister only admitted that the Lots were not registered, but did not make any further comments in respect to Mr Paea’s rights.
[64] In response to the TAMA’s paragraph 17 allegations of their sending eviction notices to Mr Paea in October and November 2020, the Minister indicated that he did not know and was not required to plead.
[65] In response to the TAMA’s paragraph 18 allegations, that Mr Paea has not vacated the land, the Minister only admitted that he became aware of Mr Paea’s occupation and use of the Lots by TAMA’s 27 October 2020 letter to Mr Paea and other than that, he had no knowledge then of the status of Mr Paea’s occupation and use.
[66] Responding to TAMA’s paragraph 19 allegations repeating its paragraph 14 allegation, which had also been denied, that Mr Paea had rental arrears of $19,570.52 as of November 2020, the Minister admitted TAMA’s allegations, that Mr Paea owed:

• 66.1 “only to the extent of Tomifa’s rental arrears in the amount of approximately $17,000 to TAMA when TAMA wrote to the Minister on 27 October 2020, but otherwise he has no knowledge of current outstanding arrears owed to TAMA.”

[67] The Minister admitted TAMA’s paragraph 20 allegation that he had not actioned their requests “to cancel the Cabinets approval of applications to sublease” the Lots.
[68] In response to the TAMA’s paragraph 21 allegations, that because he had not taken action to cancel the “said Cabinet approvals”, TAMA is unable to deal with the Lots of its leased land, the Minister said he has no knowledge of it and did not need to plead.
[69] The Minister therefore asked the Court to dismiss the claims against him, to order costs in his favour and to make “Any order this Honourable Court deems just”.

G. Second Defendant’s Amended Statement of Defence 20 November 2021

[70] In his Amended Statement of Defence, filed just before hearing, learned counsel, in a more detailed response to the plaintiff’s claim that he should cancel the three Cabinet Decisions, the Minister denied the claim and pleaded at paragraph (1.c):

• 70.1 “i. That the Minister under the law does not have the powers to cancel, or take action to cancel decisions made by His Majesty’s Cabinet because the Minister had already taken steps to implement the Cabinet Decisions to grant and register the sub-leases by his issuance of savingrams to survey, and issue deeds of sub-leases to the First Defendant;
• 70.2 ii. That a termination and cancellation of a sub-lease would only have to be carried out in accordance with the covenants specified in a deed of sub-lease. As such, the Minister would have to complete the process of issuance of a[sic] deeds of sub-leases to the First Defendant, and accordingly the deeds would clearly state the grounds for which the sub-leases could be terminated or cancelled; or
• 70.3 iii. In the alternative, under the law, the Minister cannot cancel or take action to cancel a sub-lease because the authority to terminate, or cancel a sub-lease rests with the Land Court.”
  

H. Second Defendant’s Response to First Defendant’s 6 April 2022 Notice of Claim, dated 22 November 2021

[71] On 22 November 2021 the Minister filed his response to the first defendant’s 6 April 2021 notice of claim against him. In his paragraph (d.i) responding to the claim that he should cancel Lease No. 6226A to TAMA, he stated:

• 71.1 “That lease no. 6226A is in effect a covenant between the estate holder and the Plaintiff only, and does not, in any shape or form affect the rights of the First Defendant given under the sub-leases;
• 71.2 ii. That lease no 6226A cannot be terminated or cancelled unless done so in accordance with a breach of the covenant of the parties specified under the deed of lease, or by the Land Court;
• 71.3 That the fact the First Defendant has paid the Plaintiff some of the rents under the sub-leases due to the Plaintiff as holder of lease no. 6226A, the First Defendant is deemed to have accepted without reservation/or without any dispute that the Plaintiff is the holder of lease no. 6226A, and that he is still obligated to be bound by the sub-leases with the Plaintiff, and that he should continue to pay the rent specified under those sub-leases;
• 71.4 That despite lease no. 6226A, the First Defendant’s rights under the sub-leases are still valid and in effect, and therefore cannot claim any damages against the Second Defendant because the Second Defendant has not done anything contrary to the sub-leases;
• 71.5 That despite lease no. 6226A, the First Defendant’s rights under the sub-leases are still valid and in effect, and therefore cannot claim any compensation against the Second Defendant because the Second Defendant has not done anything contrary to the sub-leases; and
• 71.6 That the Second Defendant is not obligated under the law to follow up with the First Defendant to sign the deeds of sub-leases.”
  

III. CHRONOLOGY, SUMMARY OF FACTS

A. Chronology

1995 – 1996	- First Defendant commences hina (squash) exports using land.
1998 – 2001	- His Late Majesty King Taufa’ahau Tupou IV leases 3.083 hectares of land to the Ministry of Labour, Commerce and Industry (“MLCI”) for use as ‘Small Industry Centre.’ - First Defendant commences improving land, constructing packing house facility and offices.
2001 – 2002	- MLCI and First Defendant enter into agreement to sublease. - First Defendant builds 540 hurricane relief houses for Vava’u, Niuafo’ou, Niuatoputapu at premises after Cyclone Waka. - Cabinet Decision approves the sublease of 3 lots of land to Mr Paea.
2003	- Minister of Lands instructs officials to survey Lots 2, 3, 4 for sublease to Mr Paea and to prepare deeds of sublease. - Public Enterprises Act comes into force on 31 March 2003.
2011	- Cabinet approves transfer of head lease from MLCI to ‘Small Industries Centre’.
2015	- Ministry of Lands complete survey lots 2,3, 4 and issues deeds of sublease to Mr Paea for he and MLCI to sign, who seeks meeting with MLCI to sign.
2016	- Mr Paea learns that the subleases had not yet been registered at Ministry of Lands.
2017	- Mr Paea pays lump sum of rent to TAMA believing their assertion that they were his landlord. - Mr Paea requests Minister of Lands and MLCI to sign and register the subleases. - Mr Felise Langi approaches Mr Paea indicating business interest in the land and buildings. - Ministry of Customs and Revenue (MCR) seeks cabinet approval to transfer Mr Paea’s subleases to Felise Langi’s company, SF Oceania Co Ltd. - Ministry of Lands advise MCR, Felise Langi, MLCI and TAMA that Mr Paea’s lands cannot be transferred to SF Oceania because of his interests - TAMA opposes MCR’s proposed transfer of subleases to Felise Langi’s SF Oceania because Mr Paea has interests and “will sue” MCR and TAMA.
2018	- Ministry of Lands approves transfer of head lease 6226 from MLCI to TAMA.
2019	- Mr Paea pays a further lump sum of rent to TAMA as landlord. - Mr Paea advises TAMA that he has regularly paid rent to MCLI, challenges the accounting basis for TAMA’s demand for rent arrears, requests full accounting reconciliation of the amounts demanded and basis of same. - TAMA/Mr Huakau does not provide full accounting requested. - Mr Paea continues to seek MLCI, TAMA and MOL to sign his deeds of sublease and advises he will withhold rent until signed
2020	- On 21 April the transfer of head lease no. 6226 from MLCI to TAMA completed by registration of indenture at Ministry of Lands, who re-register the head lease as lease no. 6226A. - TAMA becomes sublessor of the head lease and under same becomes liable to pay rent to MLCI. - In October 2020: 27th - TAMA writes Minister of Lands stating Mr Paea is in material default in payment of the rent of $17,000, has vacated the land, is breaching sublease, notes the subleases are not formally registered and asks for urgent formal cancellation of the 2002 Cabinet Decisions, so that TAMA may enter long term arrangements with new tenants for the premises. 28th - TAMA writes Mr Paea instructing him to vacate the property because of his use of it for politically related activities. Mr Paea does not vacate the land. - In November 2020: 6th - TAMA writes Mr Paea eviction notice letter demanding he vacate the land and remove materials of political nature. 10th - Mr Paea replies to TAMA, asserts his rights to occupy his subleased lands pursuant to arrangements with Government and explains part of the office building is being used for charity foundation benefit purposes for education, scholarships and to help the poor, for which he had sought approval and which had been approved by letter from Palace Office, which he attached. 23rd – TAMA issues rental Statement to Mr Paea claiming rental arrears of $19,570.52 from 1 January 2016 to 23 November 2020.
2021	8th March - TAMA issues proceedings in the Land Court.

B. Summary of Facts and Preliminary Analysis

[72] In 1995 or 1996, Mr Paea, a squash grower at the time wanted to build a packing building, in which he and his other aligned group of Vava’u squash growers could pack squash for export to Japan. He says that the MLCI supported his initiative and permitted him to construct a pack house on the land in Vava’u. He says he grew, processed and exported squash with his group of farmer exporters from the pack house from 1996 to 2000.
[73] In 1998, His Late Majesty King Taufa’ahau Tupou IV leased 3.083 hectares of his Vava’u Royal Estate lands under deed of lease registered as number 6226 to the Ministry of Labour, Commerce and Industries (MLCI) for 99 years. The lands were to be dedicated to creating the Vava’u Small Industry Centre. The vision was that the centre was intended to become a 'hub’ for industry to stimulate the business economy and create jobs in Vava’u, like the Small Industry Centre had been created to do on the edge of Nuku’alofa in the 1980s. We remember with gratitude His Late Majesty’s vision.
[74] In January 2002, MLCI agreed to sublease ‘plot 3’ of its leased land, comprising 1562 square metres to Vava’u Construction Limited, a company registered by the first defendant, Mr Paea and his wife, Amy Paea.
[75] The first defendant and MLCI entered into a ‘deed of sublease’ of plot 3 on 1 January 2002 for 50 years in favour of the sub lessee, Mr. Paea. This deed drafted by MLCI was backdated to commence from 1 November 1996 until 2 January 2046. The Court notes here that the so-called deed is formatted much more in the nature of an agreement to lease, than a deed of sublease because as the Ministry of Lands advised it does not conform with the requirements for deeds of sublease provided for in the Land Act.
[76] In January 2002 MLCI also entered into another ‘deed of sublease’ of ‘plot 4’ of its leased land, comprising 3403 square metres to Vava'u Construction Limited. That document was dated 1 January 2002 and was for a term for 20 years until 2 January 2022.
[77] Although subsequent documents show that there was also an agreement between MLCI and Mr Paea to sublease ‘plot 2’ in January 2002, due to the elapse of two decades, that ‘deed’ has not been located by the parties. However, the documentary trail shows that formal arrangements continued for all three sublease ‘plots’.

Sublease Applications Made and Approved

[78] On 28 January 2002, the first defendant applied to the second defendant, the Minister of Lands to sublease from MLCI Lots 2, 3 and 4 of leased land No. 6226. The first defendant, Mr Paea completed three Ministry of Lands Form L9 applications for sublease and co-signed them with the MLCI as sub-lessor. Receipt of the application and payment of the survey fee was signed and stamped by the Deputy Minister of Lands on 26 February 2002.
[79] In December 2002, His Majesty's Cabinet approved the applications by Mr Paea to sublease Lots 2, 3 and 4. Cabinet Decisions numbers 2256, 2257, 2258 of 19 December 2002 confirmed and approved the three subleases.
[80] On 9 May 2003 the late Hon. Minister of Lands, ‘Eiki Fielakepa instructed the Secretary of Lands (and copied to the Hon. Governor of Vava’u) that due to His Majesty’s Cabinet Decisions dated 19 December 2002, the officials were to conduct a survey and produce a sketch map for subleases from lease 6226 and then prepare an agreement to lease for registration as follows:

• 80.1 Sub-Lessee Tomifa Paea, Sub-Lessor MLCI;
• 80.2 Lot 2, 1344 m2 for 40 years at rental of $806.40 per annum, commercial purposes, effective from date of registration;
• 80.3 Lot 3, 1562 m2 for 40 years at rental of $937.20 per annum, commercial purposes, effective from date of registration; and
• 80.4 Lot 4, 3403 m2 for 20 years at rental of $2,041.80 per annum, commercial purposes, effective from date of registration.

[81] That same day, 9 May 2003, the late Chief Land Valuer, Siope Lomu wrote to the Secretary of MLCI advising him that His Majesty’s Cabinet had approved the MLCI’s application to sub-lease Lots 2, 3 and 4 to Mr Paea and confirming the same lot, term, and rent details. He concluded that “The Ministry will execute all the relevant requirements for the said lease before registration.” This letter was copied to Mr Paea.

Public Enterprise Status Not Effected

[82] The plaintiff company TAMA claim that they became a Public Enterprise in October 2011 and at that time the Government agreed to transfer its interests in Lease No. 6226 to TAMA by Cabinet Decision No. 872 of 7 October 2011 (see CB p 104). Notably that decision records Small Industries Centre “SIC” as though it was an entity however it makes no mention of TAMA. TAMA did not provide any documentary evidence of its putative status as a registered limited liability company or as a public enterprise, but its CEO, Mr Hu’akau did state in evidence that it was both a company and a public enterprise.
[83] However, the Court notes that despite Cabinet’s 2011 decision to declare the Small Industries Centre or “SIC” a Public Enterprise under that Act and authorising the responsible Minister “to do all things to complete the formalisation of SIC as a public enterprise” (CB p 105), during the decade elapsed by the time of trial, Cabinet has not done so by amending Schedule 1 of that Act to list TAMA as a Public Enterprise. This is required by s 5 of the Public Enterprises Act and in its interpretation section the definition reads: “public enterprise” means an entity listed [in] the Schedule to this Act”. TAMA is not listed in the Schedule to that Act, nor is “Small Industries Centre”. The Court finds therefore that TAMA not in fact a public enterprise.

Surveys and Sublease Deeds Drafted in 2015

[84] In 2015 the Ministry took action to actually conduct the surveys. As the Ministry’s Senior Lands Registration Officer, Mr Moala attested: “The prolonged delay was due to the backlog of the survey assignments and was queued over a long period as there was only one surveyor servicing the Vava’u district.”
[85] Thus, some twelve (12) years after the then Minister so instructed the witness said: “Two of the Sub-Leases have been issued by the Mapping Section being Lots 4 and 6 (Survey Plan). However, the deeds have not been located in the Ministry’s files and may have been delivered either to the Plaintiff or the First Defendants to sign, but have not been returned to the Second Defendant for registration of the deeds.”
[86] These “Toe Lisi (Sub-Lease)” Deeds can be seen at CB 141-164, with the S.I.C. Vava’u Master Plan Scheme showing Lots 2, 3, 4. Notably the Deeds show the correct locations of boundary pillars, bearings, distances, measurements and sizes for Lots 2, 3, 4, but are misdescribed in the deeds as lots 4, 5, 6.
[87] Inaccuracies of this type are not surprising given the elapse of so many years between the instructions being made to officials and when they did the work. However this is of little comfort to Mr Paea in particular and to the public in general who deserve to know that their public servants and are diligently carrying out their duties to the citizenry. Such inordinate delays in processing are not acceptable.

Mr Paea’s Pursuit of Sublease Registration

[88] Mr Paea gave evidence that “I started to pursue the registration. I kept trying to get the Second Defendant to sign and register my sub-lease up to 2015 when the Ministry drew up three Deeds and told me to take it [sic] to the Minister of Labour [MLCI] for his signature but I was never granted an opportunity to meet with him.”
[89] On 20 April 2017, Mr Paea wrote to the second defendant, Minister of Lands, as he testified: “requesting the completion of registration of my Sub-Lease and informing him that my investment on the land exceeded 1 million pa’anga.”
[90] On that same day, Mr Paea wrote to the plaintiff, TAMA: “requesting that they endorse my sub-leases and put them on notice my investment on the land.” In his letter, he advised that:

“I will update any outstanding money owed to the appropriate authority once the Sub-Lease is sign [sic], to give me some comfort with the investment I have put into the property. Look forward to hearing from you soon.”

[91] He copied this letter to the relevant ministers: Hon. Minister of Lands, the Late ‘Eiki Ma’afu Tukui’aulahi; to then Hon. Minister of Labour, Commerce and Industries, Pohiva Tu’i’onetoa; and to the then Hon. Minister of Public Enterprises, Poasi Tei. The Court notes that at that time in 2017, TAMA had not yet become the sub-lessor of the land, which was still registered to the Minister of Labour, Commerce and Industries under Lease No. 6226. It is also noted that Mr Paea expressed to all those to whom he served the letter that he was not completely sure who to pay rentals to by using the words “the appropriate authority” because by that time TAMA had asserted that he had to pay rent to them as the landlord. This was a fair request as no one had actually clarified to him what was happening.
[92] The Court received no evidence of TAMA nor any of the three addressee Ministers replying to Mr Paea’s letter, which one might have reasonably expected at least an acknowledgment of given the importance of the issues he had raised and their obligations to him. Mr Paea said he received no replies from any of them.

Cabinet Approves Transfer of Head Lease to TAMA

[93] On 14 December 2018, seven years after initial 2011 approval, and over a year and a half after Mr Paea’s 2017 requests for the government to deal with completing his much earlier approved subleases, Cabinet approved the transfer of Lease No. 6226 from MLCI to the plaintiff, TAMA. This was effected by a Cabinet Decision No. 1171 on 14 December 2018. This is evidenced at CB p 112 and includes at para 2 of the Decision: "That the consent to transfer the lease shall include the buildings, infrastructure and improvements within the leased lands to Tonga Asset Managers and Associates (subject to any existing agreements with Sub-Lease holders or tenants).” Notably, Mr Paea’s subleases approved sixteen (16) years before, then surveyed and drafted in 2015, three years before 2018 - remained unsigned and unregistered by the two relevant Ministers of Government.

Indenture of Lease from MCLI to TAMA

[94] On 21 April 2020, pursuant to s 124 of the Act, the MLCI Minister executed Indenture of Lease No. 6226 to TAMA who counter-signed it. It was also executed by the Minister of Lands, who effected the transfer of it by registration under ss 126 & 128 and it became registered Lease No. 6226A. This formalised the agreement between MLCI and TAMA, by which TAMA became responsible for the land for the lease term, for all sub-leases and became responsible to pay consideration of $1,875 annual rent to MLCI. This is the date upon which TAMA achieved the legal status of sublessor of the head lease.
[95] A significant distinction between the Court’s treatment of TAMA, a hitherto unregistered sub-lessor asserting rights and Mr Paea as an unregistered sublessee, is that all through his occupation of the lands since at least the mid-1990s, Mr Paea actually paid rent to his landlord, MLCI being valuable consideration under their agreement to sublease, whereas there was no evidence from TAMA, a separate legal entity to MLCI, ever being a legally bound sub-lessor nor of it paying any rent in consideration of its purported rights or being required to, until lease rent for the first year became payable upon registration of indenture of transfer on 21 April 2020.
[96] When considered in contrast to Mr Paea’s treatment, with still no execution nor registration of his subleases approved from long before TAMA’s emergence he nevertheless repeatedly requested completion and continued to rely upon Government assurances of their protecting his interests. Therefore he invested, improved and paid rent in the confidence that in good faith, his actions would be reciprocated. Importantly, Mr Paea’s evidence, which the Court accepts, is that the Government via MLCI always accepted and never rejected his rent when he paid it. Despite non-registration of his subleases, the Court finds that equity arises in his favour to preserve his position.
[97] Mr. Paea's approved subleases of Lots 2, 3 and 4 have not yet been registered under section 126 of the Land Act (the “Act”). However according to the evidence he has paid rent for, improved, remained in occupation and use of those lots since he was given permission from MLCI to do so in the mid-1990s. In a more formalised sense, the evidence shows that MLCI authorisation backed by Cabinet encouraged him to occupy and use the land since 2001, but which agreement the Government had backdated to 1996.

Rentals

[98] Mr Paea gave evidence that he had paid rent to MLCI at its Vava’u office for all the years he had occupied and used the land, and that he only began to pay rent to TAMA when they demanded he pay them, on the basis that they represented that TAMA was the sublessor and therefore the landlord to be paid.
[99] However, as it transpired TAMA had not become even the sublessor and lease landlord until the indenture of transfer on 21 April 2020. It appears that TAMA had simply assumed that status upon cabinet approval, but without proper completion of any legal steps one might reasonably expect to have been required under MLCI’s agreements with Mr Paea, nor under the Land Act nor even collaterally under the Public Enterprises Act.
[100] Other than the 2018 cabinet approval, TAMA provided no evidence to the Court whatsoever of any arrangements made between MLCI and Mr Paea whereby he would be advised of a change to his status as sublessee to a different entity, TAMA and therefore be required to pay rent to them and by what type of formalised, notified basis this was supposed to occur. Nor was any evidence adduced in respect of MLCI’s responsibility to execute its subleases with Mr Paea. Instead evidence was shown that rather than execute its prior commitment to Mr Paea pursuant to the 2002 cabinet decision, it only executed a much later 2020 indenture in favour of TAMA which exacerbated the prejudice of lengthy delays to Mr Paea and in due course gave TAMA encouragement and putative legal status as sublessor to evict him.
[101] TAMA alleged that Mr Paea had “irregularly” paid rent since 1996 for his possession and use of Lots 2, 3 and 4 at a rate of $362.77 per month. When asked during trial, Mr Hu’akau for TAMA did not provide any records of rentals invoiced or demanded, nor reconciliation of the same, nor of any payments received from Mr Paea from prior to 24 August 2017. Mr Paea says that in good faith that day he made a lump sum payment of $5,000.00 to TAMA which is recorded in TAMA’s “Statement” of account dated 23 November 2020 (at CB p 128) and another of $4,353.24 on 14 January 2019 (CB p 127).
[102] Mr Paea gave evidence that in a meeting or meetings, he had asked Mr Hu’akau for a full accounting justifying his demand for arrears, but was never provided one. Mr Hu’akau was asked about this during cross-examination and conceded that he was asked for, but did not provide the accounting Mr Paea had requested. The Court considers it reasonable for a tenant being required to pay rentals by an apparently new landlord to ask for proper accounting to justify the same.
[103] TAMA’s claim alleged that an amount of $19,570.52 in rental arrears was payable as of 23 November 2020 and that in writing the plaintiff had demanded payment from the Mr Paea. From the evidence, that “Statement” is the nearest document which may be described as an ‘accounting’ that TAMA provided him (CB pp 125-128).
[104] When the Court gave him further time to produce evidence, Mr Hu’akau was not able to provide any company invoices, financial statements nor audited accounts for TAMA, nor any acceptable transparent accounting basis for his allegations of the debt, or the basis for it. His explanation to the Court was that their computers had ‘broken’ and that they had lost the data.
[105] When pressed for the factual basis of the TAMA “Statement” of account of 23 November 2020 including its starting balance of $12,961.88 for the period 1/1/2016 to 31/3/2017, Mr Hu’akau admitted that he could provide no evidential basis for it. He admitted that he had not provided the reconciliation sought by Mr Paea to him. MLCI was not a party to this case, nor did Mr Hu’akau adduce any accounting records or evidence from MCLI’s tenure as predecessor holder of the Lease. The Court can only conclude that he had assumed a position of Mr Paea's indebtedness without proof.
[106] At trial, Mr Hu’akau gave no further credible insight and therefore, the Court finds as a fact that there is no contractual nor evidential basis for TAMA’s demand on Mr Paea, for the period when TAMA asserted Mr Paea’s indebtedness from 2016 to 2020. Indeed, if TAMA’s indenture of the newly named Lease No. 6226A as registered on 21 April 2020 been successful, they may have been able to charge Mr Paea rent from that date onwards. However all aspects of their conduct and that of the relevant responsible officials has to be taken into account by the Court in determining what interests arose, if at all, how, when and why.
[107] By contrast the Court accepts Mr Paea’s evidence that in good faith he had personally paid MLCI their rentals over the years. Mr Paea had maintained his contractual obligations to MLCI who he believed on reasonable grounds were his landlord. Mr Paea and MLCI had long-standing privity of contract. There was no privity of contract between Mr Paea and TAMA, despite what TAMA believed it was entitled to do with respect to Mr Paea’s land and buildings. There was no evidence of a contract between TAMA and Mr Paea and as said, it appears the latter paid rent to the former on TAMA’s advice that they were a public enterprise and Cabinet approved them to take the lease. Mr Paea had no actual contractual duty to TAMA until 21 April 2020, when TAMA would become bound by the indenture of the transferred, new Lease 6226A liable to pay annual rent of $1,875 to MLCI. In return for that valuable consideration MLCI assigned the land to TAMA under the Act. The Court finds that this event crystalised the TAMA/Paea relationship.
[108] The Court notes that TAMA’s annual rent of $1,875 is less than half than the $4,353.24 Mr Paea pays for his subleases annually for a relatively very small portion of the whole 3 hectare block. Obviously a lessor and a sub-lessor are free to strike whatever rent they agree on, but the Court takes judicial notice of the context of the relationships, the way the parties treat each other, including rental rates, whether or not the parties paid rent and how each party has improved their lands which Mr Paea has done, or not as may the case for the other 2.4+ hectares of the mostly undeveloped centre.
[109] Mr Paea’s counsel has claimed in the alternative for a finding that he only became liable to pay monthly rental of $362.77 to TAMA as a sublessee on 21 April 2020. The evidence shows that he made two large payments to TAMA, amounting to $9,353.24 before he ceased making rental payments. It was at that latter stage in 2019 that Mr Paea made a fair yet despairing attempt to ask for completion and registration of his subleases, by withholding payment of rentals until his interests were protected.
[110] In the circumstances of having no interests registered after twenty years Mr Paea’s withholding rent was understandable, but TAMA mistakenly believed that they were entitled to demand large sums of arrears from him without an accounting justification and threaten him with eviction, significantly on the basis of their allegation of his arrears.
[111] Further, TAMA advised the Minister of Lands and other government entities that Mr Paea was in material breach of his duty to pay them rent, when in fact he was not. TAMA relied on this purported ‘moral high ground’ to assert the right to have his interests cancelled, have him vacated so that they could seek “other long term tenants” using what appears to be the only fully developed commercial premises to have been built on the Vava’u Small Industries Centre land. The evidence before the Court is that Mr Paea’s is the only land to have been developed for business there, with the one other premises being that office used there by TAMA as sublessor and landlord, with one person stationed there. This latter evidence was provided by the valuer expert witness, Mr Mafi.
[112] At trial TAMA sought and by consent was granted leave to amend downwards the alleged unpaid rent they claimed to $6,608.64. This was because they conceded that they had no evidence with which to claim the assumed “arrears” of $12,961.88 from 2016 or earlier.
[113] However, this reduction does not go far enough to remedy the lack of rights held by TAMA and which they sought to impose on Mr Paea. Despite the amount in the statement of claim as reduced, on the evidence Mr Paea has overpaid TAMA did not yet have that right.
[114] Mr Paea paid TAMA $9,353.24 on the basis of their assertion of the right to receive rentals from him, whereas at law they did not yet have that right.

TAMA Writes complaint and request the Minister of Lands

[115] By its letter to the Minister of Lands dated 27 October 2020, (CB pp 120-121) TAMA, via Mr Hu’akau requested that the second defendant cancel Cabinet decisions numbered 2256, 2257 and 2258 dated 19 December 2002 in favour of Mr Paea on the grounds that:

1. The first defendant was in arrears of rent to TAMA in the amount of “approximately $17,000”;
2. Mr Paea/Vava’u Construction Limited have vacated the premises and the latter company “no longer exists” as it had been struck off the Companies’ Register in 2016;
3. Those subleases have not been formally registered with the Ministry of Lands register; and
4. (Although it was not pleaded in the eventual statement of claim) That they wanted to enter into long term arrangements with new tenants for the subject premises and could not do so while the existing cabinet approvals for Mr Paea remain in place.

[116] TAMA’s letter to the Minister was not copied to Mr Paea, their tenant. Evidence was not presented as to whether it was copied to MLCI.

TAMA Writes Eviction Notice to Mr Paea

[117] The next day, 28 October 2020, TAMA wrote to Mr Paea a letter entitled “Eviction Notice – SIC Vava’u” in which they advised him of:

1. “... the Board’s grave concern about your using the Vava’u Small Industries Centre [sic] property for politically related activities;
2. Official information from the Ministry of Lands that the Palace Office have expressed great displeasure at these motivated activities on His Majesty’s estate;
3. Based on the above, you are now instructed to vacate the property and remove all materials of political nature from the property; and
4. Failure to comply with the above will give us no choice but to take legal action.” (CB p 122)

[118] TAMA’s 28 October letter to Mr Paea is very different to their letter to the Minister the day before because it only focusses on their saying they are evicting him because of the political matters. It made no mention of their 27 October letter to the Minister of Lands and the reasons provided to him. TAMA was instead requesting cancellation of the cabinet approvals of his subleases, no mention of their allegations of his “material default” of $17,000 rental arrears due and owing to TAMA, no mention of their wanting to find new tenants for his premises.
[119] It also highlights the apparent inconsistency of TAMA’s stance in stark contrast with their having earlier in 2017 opposed the Ministry of Revenue and Customs seeking to cancel Mr Paea’s subleases so they could sublease them to Mr Felise Langi’s company. At that time Mr Hu’akau said TAMA opposed because Mr Paea had interests in the lands and would sue the Ministry of Revenue and TAMA. Now in 2020 TAMA was on the one hand complaining of a different set of issues to the Minister of Lands, while on the other hand issuing Mr Paea a notice of eviction based on very different reasons. It appears that one big change was that by October 2020, TAMA relied on the fact that it had actually become the registered sublessor and was working to leverage its position to deny the rights it had earlier said Mr Paea had, evict him and use his improvements to engage in long-term tenancies and thereby make some income for its own purposes.
[120] Another implication is that TAMA was wrong about Mr Paea owing them $17,000 because they had not been able to charge him rentals for the earlier years when they were not yet the registered holder of the lease and from the evidence had not yet paid any rent to MLCI as it had not become sublessor. TAMA had not provided any accounting justification for its demand, nor any information from MLCI as far as the evidence before the Court is concerned and had therefore misrepresented the true position about this important issue of rent status to the Minister of Lands. TAMA’s advice to him on this point clearly ‘painted’ Mr Paea in a bad light. Even though TAMA actually believed they were entitled to be paid rent, they were wrong and should have organised their proper legal status correctly from the start, including advising the MLCI of his obligation to firstly honour the agreement with Mr Paea before transferring the Lease to TAMA, thereby undermining his position with them as the new sublessor, who would then find ways to evict him and use his interests for their own purposes.
[121] However, TAMA did not so advise the MLCI and from the evidence were clearly playing all sides against each other for their own self-interest. Once they became the sub-lessor, they inherited all MLCI’s rights and obligations, but chose not to execute the subleases with Mr Paea, preferring instead to use their newly legitimised position to refuse to sign any subleases with him and seeking instead to have his Cabinet approvals cancelled.
[122] TAMA had bided their time and used their assumed but mistaken ‘entitlement’ as a Public Enterprise to ‘leverage’ Ministers and their officials to secure their position further based on certain information and asserted position, while pressuring Mr Paea with other different information. As successor to the MLCI who entered the arrangement with Mr Paea in good faith, TAMA do not appear to be upholding their side of the sublease relationship by acting in good faith.
[123] A week later on 6 November 2020, TAMA wrote again to Mr. Paea, simply advising:

“We give you 14 days from the date of this letter to vacate the property and remove all materials of political nature from the property.” (CB p 123)

[124] Mr. Paea refused to vacate the land. On 10 November 2020, he wrote TAMA referring to the three Cabinet approvals made in December 2002 and advising:

• 124.1 That he owns all the buildings and improvements on the lands, having heavily invested over a million dollars on the properties and that he had written to TAMA and spoken to Mr Hu’akau many times about getting his lease endorsed by MLCI and that not completing his lease was detrimental to his family’s future;
• 124.2 In response to TAMA’s assertions about his using or allowing the property to be used for politically related activities and thereby serving him notice of eviction, Mr Paea advised that:
  • 124.2.1 “That part of my office is used for Charity Foundation which I support to help the poor people, develop sports activities, support education through scholarship and donations of school material and furniture to local primary schools.
  • 124.2.2 That I have spoken with Palace Office on our various projects[sic] and they were very happy to support our program, hence they wrote a letter to approve Mr. Ilaiuti Fanua’s new home to be built[sic] on the King Tupou 6 estate at Vete, Neiafu Vava’u.”
• 124.3 He also provided a misguided and/or misinformed comment on the Constitution and attached a letter from Palace Office confirming support for his charity, but which copy was not provided to the Court.

[125] On 23 November 2020, as discussed above, TAMA issued its statement of account to Mr Paea demanding payment of $19,570.52 in rental arrears.
[126] TAMA issued these proceedings on 8 March 2021.

IV. LEGAL SUBMISSIONS BY THE PARTIES

A. Plaintiff’s legal submissions

Registration of land, Section 126 of the Land Act

[127] The plaintiff’s submissions by learned counsel, Mr Tu’utafaiva focus firstly on the lack of registration of Mr Paea’s sub-leases. This perspective draws into focus the plaintiff’s principal allegation that Mr Paea is not legally entitled to possess the lands in question because his interests are not registered with the Ministry of Lands.
[128] Section 126 of the Act provides:

“All leases, etc., to be registered

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: Provided always that the requirements of Division III (B) or Part VIII as to the registration shall not apply to a sub-lease not exceeding a term of 3 years from the making thereof.”

[129] Mr Tu’utafaiva submitted that the first issue is whether the “alleged permission” given by the MLCI in 1995 to Mr Paea to build the pack house on the land created an “equitable interest" of the first defendant on the leased land. He submitted the answer was “NO”.
[130] Learned counsel sought to rely on Faleafa v Faleafa LA 18/2012 (unreported per Paulsen P) as an authority for his assertion that no interest in land can be created except in accordance with the provisions of the Act. The paragraphs [22] - [24] in that judgment are somewhat useful in terms of clarifying what equity can do in terms of providing a defence of estoppel to an evicti0n order sought by a registered owner. It is also clear that there are certain prohibitions under s 6 of the Act against verbal or other documentary conveyances. However in this case it was Mr Paea’s evidence that the Minister of MLCI permitted him to build the pack house on that land to use for the then burgeoning needs of the squash industry in the 1990s. In the absence of any pleading about this, or any other specific contesting evidence, the Court is satisfied that the MLCI was comfortable to receive rent from and informally permit Mr Paea to work on His Late Majesty’s land, presumably with His blessing before it (the Government) formally leased it from Him in 1998. The Court also notes the historical context that the then new squash farming for export to Japan in their winter off-season and that lucrative earning sector became a major focus of Tonga Government in the 1990s. Supporting private sector investment in infrastructure for farming and processing became an urgent priority for job-creation and economic development during that decade.
[131] TAMA then refocusses on the claim that the first defendant has “no legal right to possess and use the plaintiff’s leased lands” and relies on the requirement under section 126 of the Act, claiming that in the years following 1998 after MLCI became the holder under Lease No. 6226, Mr Paea still did not gain legal rights because his subleases were never registered.
[132] In respect of whether or not Mr Paea can in the circumstances assert that he is properly a holder of the land, despite not having his subleases registered, the Court of Appeal has determined that registration of leases under s 126 of the Act indicates completion of land holding, but that they are not the only factor to be considered in evidencing ownership of land.
[133] In a case which differed in its facts, but is nevertheless relevant, the Privy Council, followed later by the Court of Appeal in Lisiate v ‘Eli [2012] TOCA 13, at [27] where it upheld a decision on the effect of registration of land holding interests holding that:

“... In 1956 in the case of Mesiu Moala v Tu'i'afitu & Anor [1956] Vol II Tonga LR 104, Hunter J at page 106, referring to these sections said:

"It is interesting to note that in this division of the act which is headed "Registration of Allotments", it is not stated nor do I think it is implied, that the registration is the test of "ownership" and that unless a person is registered he cannot be regarded as the holder."

[28] That decision was appealed to the Privy Council. In his judgment Hammett CJ [1956] Vol II Tonga LR 153 upheld the decision of Hunter J and agreed with the statement of law set out above.

[29] The question was considered again by the Privy Council in 1985 in the case of Ongosia v Tu'inukuafe and Minister of Lands 1981-1988 Tonga LR 113. In the Judgment appealed against the decision in Folau was relied upon. The Privy Council noted (at p115) that what Harwood appeared to be saying in the Folau case was that a plaintiff claiming an allotment could only succeed if he could prove registration and the issue of the grant. The Council went on to note that there was ample authority to the contrary, including at least one decision of the Privy Council.”

[134] Following through that line of cases, Paulsen P in Manu v ‘Aholelei [2015] TOLC 5 at [34] properly following the appellate court held that:

“The Land Act does not make registration the test of ownership and the intention of the Act is that registration is a method of proof of ownership and nothing more. (Lisiate and anor v 'Eli and ors [AC 23 of 2011, 27 April 2012], supra, [2012] TOCA 13.

[135] In the fuller circumstances of this situation as described in this decision, TAMA’s allegation that Mr Paea has no legal right due to non-registration is bound to fail. Mr Paea has made a persuasive case for having sublease landholding interests, despite a lack of registration to date and not due to a lack of effort by him. The Ministers officials and learned counsel also agree that he has sublease interests, albeit unregistered as yet. Mr Paea also argues that he has equitable interests, which are the next aspects addressed.

Equity and Criteria

[136] Learned counsel for TAMA then moves to submissions on equity. Quoting the then President of the Land Court, His Honour Paulsen LCJ in his comprehensive judgment in Nginingini v Nginingini [2018] TOLC 4, at para [35], in turn quoting himself from his earlier decision in Siasi Tokaikolo 'Ia Kalaisi v Sione H. Maile & Ors (Unreported, Land Court of Tonga, LA 19/15, 9 Nov 16, Paulsen CJ) at [106], Mr Tu’utafaiva further explains that the First Defendant’s claim of an equitable interest needs to be established on the following basis:

“... relevant matters required in order to establish an equity;

1. An expectation or belief by A that is encouraged by person B as to the property of person B, such as that the property is or will be the property of person A or that he has some other interest in it;
2. Knowledge’ by B of A’s expectation or belief;

100. some activity by A in reliance upon his expectation or belief such as the expenditure of money upon the property;

4. the interest or expectation is one that B could lawfully satisfy; and
5. encouragement by B of activities of A or at least knowledge of those activities on the property 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.”

[137] On an analysis of those criteria (a) to (e) in terms of the evidence, Mr Paea is able to satisfy each of them to establish an equity in his favour. In that respect, the Nginingini decision’s criteria assists Mr Paea’s case, not TAMA’s.
[138] Relying on that same judgment, learned counsel for TAMA then submitted in a somewhat convoluted argument in respect of “third party” interests that the “alleged permission was given by the “previous Lessor” (Ministry of Labour, Commerce and Industries)” and that apparently from what the Court can discern from the submission, the equity if so raised applies to the position of MLCI as third party, but not to TAMA.
[139] This cannot be the case because Cabinet and MLCI clearly intended that in transferring its leasehold interests by indenture, that TAMA was to inherit not just the benefits of the lease but also its obligations as recorded in Cabinet Decision 1171 of 14 December 2018 (CB p112) which in approving the transfer of Lease 6226 at 2 reads:

“... shall include the transfer of ownership of the buildings, infrastructure and improvements within the two leased lands to Tonga Assets & Management Associates (subject to any existing agreements with Sub-Lease holders or tenants).” [emphasis added]

[140] In all fairness, TAMA cannot have the benefits of the lease from MLCI without also assuming the obligations.
[141] Following further consideration of the plaintiff’s and the other parties’ legal submissions below, the Court will make analysis and apply the rules of equity.

[142] Mr Tu’utafaiva further submits that:

1. the first defendant’s pack house was later improved by the Vava’u Construction Limited company which was later struck off by the companies register therefore it was no longer a legal entity;
2. Mr Paea then stopped paying rent in 2019 and no longer operates any business on the property in question;

100. that apparently Mr Paea was going to sell one of the pack houses to a third party; and

4. the original lessor [His Majesty] wants to cancel the lease because it is no longer being used for the purpose it was granted in the first place.

[143] For those reasons, Mr Tu’utafaiva submits that it would not be wrong to have Mr Paea evicted from the lands.

Vava’u Construction Limited (VCL)

[144] In respect of the argument in (a), Mr Paea’s evidence was that after he had signed the “Deed of Sublease” or agreement to sublease prepared by MLCI for that Minister and Vava’u Construction Limited (“VCL”), he was advised by Ministry of Lands officials to sign in his own name the legally correct application to sublease which they had prepared. The Ministry of Lands advised that this was because the MLCI-prepared ‘Deed of Sublease’ disconformed with the provisions of the Act. The Ministry’s witness, Mr Moala also corroborated this in his evidence. The evidence before the Court concerning VCL is that it was fully owned by Mr Paea and his wife and had been a part of their business operations including improving the subject property so it could be used for business. VCL having been removed many years later from the Companies Office register is not fatal to Mr Paea’s legal position in respect of the lands subleased to him by MLCI because the Government’s own processes and officials dictated the terms to Mr Paea as sublessee. He merely complied with their legal requirements.

Rentals and alleged non-usage

[145] In respect of learned counsel’s argument in (b), rather than focus as he has on Mr Paea not having paid rent since 2019, it can more properly be put in context that Mr Paea did in fact pay rent from the mid-1990s all the way up until 2019, when in his ‘last-ditch’ attempt to have his subleases registered he advised the various parties who could execute and register his leases that he would withhold rent until they completed the actions they had undertaken to do in 2002 – 2003.
[146] In terms of the second part of counsel’s submission in (b), the allegation that Mr Paea was no longer operating business on the premises, was not pleaded in the statement of claim, is collateral to Mr Paea’s continued possession, use of the improvements and the land supported by payment of rent in expectation of the other parties completing their undertakings. In evidence Mr Paea advised that he keeps various of his business machinery such as the concrete block machinery, plant equipment and other gear there, to be ready for opportunities, as is the nature of business. Indeed, taking the plaintiff’s argument further, even if it needed to be, if it had sought to pursue some sort of allegation of abandonment and forfeiture then they would needed to have so pleaded such allegations pursuant to the appropriate provisions of the Act if they were available to them, adduced evidence and given Mr Paea a proper opportunity to plead any defence he might have had and adduce evidence to contest it. However TAMA did not properly raise it much earlier by pleading any such allegation and therefore the Court does not need to waste more time making a finding on this aspect.

Possible Sale of Buildings

[147] Turning to TAMA’s argument in (c), that “apparently Mr Paea was going to sell one of the pack houses to a third party”, it is difficult to see the relevance of this because it was not pleaded in TAMA’s claim against him. Further, in light of the Government’s MLCI and TAMA (to the extent that they could have assisted) not having carried out their clear obligations to complete and register Mr Paea’s subleases, it would be very difficult for him to ‘sell’ a building on the property, especially since TAMA began actively undermining Mr Paea’s position, denying existence of his rights and in due course acting to evict him so they could use his assets for their own gain. In respect of the latter comment, the Court is also aware of TAMA’s evidence that they seek to use the premises to let out to other long-term tenants, although they did not go so far as to reveal to whom they might sub-lease or whether in fact any such person or company had expressed interest. Finally, if TAMA was referring to Mr Felise Langi’s interest in purchasing the buildings, although this was not clarified in their pleadings or submissions, it is ironic that TAMA’s own evidence from Mr Hu’akau was that in 2017 TAMA actively opposed the other branch of Government, the Ministry of Revenue and Customs taking Mr Paea’s premises and giving it to Mr Langi’s company SF Oceania Limited to use.
[148] The evidence of inconsistency and apparent lack of communication between various arms of government and their associated quasi-private servants in this case is not at all helpful to private individuals such as here, who are seeking certainty of their interests by which to raise finance, run businesses, enter contract commitments, import or export goods and services, employ people, generate and as a result pay taxes which in turn pay those same public servants’ salaries. TAMA’s board of directors and salaried staff such as Mr Hu’akau also derive income benefits from private business underpinned by Government held assets, in this case land.

Use of Premises Issue

[149] Finally Learned Counsel raises in (d) another issue which again TAMA did not plead in its statement of claim. The issue of the Palace Office Deputy Secretary writing a complaint to the Minister of Lands on 27 October 2020 (CB p 119) was not a claim alleged in pleadings but it has been a topic which TAMA seeks to use to collaterally attack Mr Paea’s allowing use of the land for non-commercial purposes, in this case a charity, “Lolo ‘a Halaevalu” which is said to be aligned to what appears to be a waning influence and of which Mr Paea testified that he is not a member nor a supporter of. Referring to Lease No 6226 granted in 1998, Mr Mara’s letter states:

“...for a 99 year period for the purposes of establishing small industries. However was [sic] never fulfilled and the centre has been used for other purposes. It now houses the Offices for the Global PATOA movement and parliamentary member for Vava’u 14.”

[150] It appears that in this the Deputy Secretary was not fully advised of the history of the use of the land, whereas had he been properly informed, he would have understood as the Court has from the evidence, that Mr Paea had been the one Vava’u businessman to have taken up the opportunity last century generously granted by His Late Majesty King Tupou IV; and as a consequence worked the land, built the pack houses and commercial buildings, ran imports/exports, wholesaling, created many jobs, created a construction-brick plant and machinery there, built hundreds of hurricane-relief houses and a large hotel from there, provided infrastructure to stimulate the economy and generated income for the most part of the last 25 years.
[151] Mr Paea’s evidence was that he and his family were only sincerely interested in supporting the ‘Lolo ‘a Halaevalu’ charity operations especially for the poor and for youth, to keep them away from drugs, in school and in healthy sports, implying that the acronym on the signage was unimportant. In light of that apparent lack of understanding it might well have been more advisable in light of Mr Paea’s naivety in allowing the offending signage on the premises in relation to the charity he gave evidence about, that this should have been brought to his attention, notified to him with an opportunity for him to remedy it.
[152] Notably when Mr Tu’utafaiva cross-examined Mr Paea under oath about the offending signage and after Mr Paea answered him that he was not a member nor a supporter of PATOA, Mr Tu’utafaiva asked him if he accepted that someone seeing the sign might have the impression that he was a supporter of it. Mr Paea answered that they might gain that mistaken impression. When questioned further that even though he was not a member of, nor supported that party, that by allowing the sign with those words on his building might reasonably result in one seeing the sign believing that he, Tomifa Paea is a supporter or member of it? To which Mr Paea reasonably conceded that yes it was possible. One import of this is that Mr Paea’s said on oath he was not in fact a member nor supporter of that party. Another is that his evidence is reasonable and he was credible in making this concession in the fuller light of the discussion. Another arising from that is that had this matter been raised with him in a more reasonable manner at the time, with an explanation such as Mr Tu’utafaiva put to him and a request that he remove it, rather than a summary eviction notice, that he might have reacted in a different manner. However, that is only as far as the Court is prepared to take the inferences from the evidence before it.
[153] On the other hand it is notable that TAMA took action that same day, 27 October 2020, to write to and selectively advise the Minister of Lands of various other different allegations including the mistaken and later conceded inflated claim of Mr Paea’s alleged “material default” of $17,000 rent arrears without accounting justification. TAMA then asked the Minister to cancel the cabinet sublease approvals (CB p 120).
[154] The evidence shows that TAMA did not ask nor give Mr Paea an option to explain, nor remedy the offence. The very next day, 28 October 2020, TAMA wrote and served an eviction notice on Mr Paea (CB p 122). As shown in the evidence, they did not offer him an opportunity to explain or a chance to remedy the offence caused by the usage and signage with the political acronym on the premises. That would have been reasonable conduct before issuing a formal written notice of eviction to a long-standing tenant. That letter made no mention of the alleged “material default” of rental $17,000 arrears which TAMA had purported in its letter to the Minister, presumably because they had at best a questionable foundation which Mr Paea had asked TAMA for accounting on and which Mr Hu’akau had not given to him. TAMA did not advise him that they believed he had ‘no legal right’ to be on the land as later pleaded to the Court. It is in this context that it also appears that His Majesty’s office were not fully advised of or misinformed of either the historical background or of the ways in which the situation could have been remedied if TAMA had exercised a modicum of good faith decorum in its letter.
[155] The Court can only draw logical inferences from the conduct of the parties to these proceedings and in this situation the evidence is of harsh eviction to Mr Paea contrasted to influential and misleading communications by TAMA to key ministerial decision-makers. TAMA wrote another, shorter eviction letter to Mr Paea on 6 November (CB p 123), to which he responded tersely on 10 November 2020 (CB p 124), only followed by TAMA’s 23 November 2020, 4 page “Statement” rent demand for which before the Court they conceded they had no valid accounting basis for the starting point of (CB pgs 125-128), as discussed elsewhere in this decision.

Court of Appeal’s guiding principles, reasonable opportunity to remedy breaches

[156] The Court of Appeal in Kaufusi v Veatupu [2020] TOCA 7 provided highly significant guiding obiter dicta about the principled basis upon which Cabinet must conduct themselves in decision-making about leases, applicable in the present case to a transfer of lease or a proposal from a party to cancel a much earlier approved sublease to a prior interested party’s rights. The principled guidance in situations like the present involving allegations of breaches of covenants, can be seen at [47] and [48]:

“[47] We make these final comments. The lease expressly gives to Cabinet a discretion to terminate for non-compliance with any of the lease covenants. A court will intervene to ensure that Cabinet follows a proper process in making its decision. Therefore the setting aside of the decision does not preclude Cabinet from looking at the matter afresh if, after proper inquiries have been made by the Minister through his officials, existing breaches of the lease are revealed.

[48] We leave open the question, not raised before us, of whether the existence or non-existence of a breach of covenant, is entirely a matter for assessment by Cabinet once proper inquiries have been made and a proper process followed by its advisers, or whether that matter additionally falls within the Land Court’s jurisdiction under s.149(1)(b) or (e) of the Land Act.

[157] Along these lines, the Court of Appeal’s obiter in Kaufusi v Veatupu [2020] TOCA 7 in discussing a situation in which possible pathways to the parties engaging in reaching reasonable remedies for alleged breaches of leases were at issue, commented most persuasively at [49] that:

“[49] Further, although the form of lease could be read as strictly limiting the exercise of Cabinet's discretion in respect of a breach of covenant to either terminating the lease or, despite the breach, declining to do so, that may be an unsatisfactorily stark choice. We according think it possible, without deciding the point, that Cabinet has an implicit power, and perhaps in at least some circumstances, an obligation, to give the defaulting lessee notice of the breach and a reasonable period within which to remedy the breach, rather than proceeding immediately with termination.”

[158] Considering that principled approach, which the Court adopts, a reasonable pathway to raise and discuss issues in good faith with Mr Paea would have been preferrable for TAMA to have taken in this situation, rather than the stark, confrontational eviction letter designed to escalate issues, which led to this litigation, further uncertainty, time and costs to all concerned.

[159] The Court finds much to commend in the Learned Judges’ guidance in Kaufusi, especially in circumstances where long-standing interests exist, investments have been made, communities benefitted, historical irregularities and delays in processing, accounting, communicating have occurred. Discrete enquiries with polite requests, possibly a face-to-face meeting to discuss diplomatically may have achieved a positive response, remedial removal of signage and even a ‘tukulolo’ or apology from the sublessee for unwitting offence caused to a respected estate holder.

[160] The Lopeti v Lopeti [2017] TOLC 11 case which learned counsel, Mr Tu’utafaiva also relies on in his submissions is distinguishable on the facts from the present case, yet is useful for some of its approaches and also because of the distinctions. Unlike that case, here Mr Paea did not spend money and develop on lot 2, 3 and 4 knowing that his subleases were not yet registered. He began developing and building his business premises encouraged by no less than the Government’s assurances that everything necessary had been done. He had already applied for the subleases which were approved and granted by Cabinet. He had been given applications to sign and all relevant documents were handled and processed as far as he was concerned. He was advised of the Minister’s instruction letters to his officials to prepare maps and deeds and copies of their letters which advised the subleases would be executed and registered. Unlike the aggrieved party in Mr Tu’utafaiva’s Lopeti case, Mr Paea had in fact paid rent for over twenty years and the Government accepted that valuable consideration. Indeed as Lord President Paulsen found in that case, and as quoted by him as TAMA’s counsel:

“[35] There is some limited force in Mr. Tu’utafaiva’s submission that injustice may arise in particular cases such as this. Such injustice might result because a prospective lessee has paid for the benefit of the lease or has spent money developing the land only to find that they do not have a valid lease at all. But the risk of injustice should not be overstated and is not a significant factor in this case. A prospective lessee can take steps to protect their own interests by not making any payment for a lease or developing the land until the lease has been registered. In this case there is no suggestion that Luse paid for the lease and whilst she has developed the land she did so in the full knowledge that her expenditure might be wasted should the lease be held to be invalid.”

[161] In contrast to that case, Mr Paea had invested in the land with government encouragement, did pay rent for it over many years and in 2019 advised TAMA and the three relevant Ministers (including by that time the Minister of Public Enterprises) that he was withholding rent until they completed deeds and formalities agreed to and registered his subleases precisely to protect his interests, but to no avail. The Court now finds that on the evidence Mr Paea does have sublease landholding interests at law, albeit not yet registered to formalise the same. But Mr Paea did not know that then.
[162] Mr Paea was clearly under the impression that the government was protecting and advancing his interests. He had proceeded with building and starting his business on the property because he genuinely understood on reasonable grounds that his subleases had been registered. For many years he believed that everything was approved and signed by him leaving MLCI and the Lands Ministry to handle everything else from there.

Value of Improvements

[163] TAMA complained in submissions that Mr Paea’s claims to have invested over a million pa’anga were inflated and that “he has not provided any record of the alleged spending.” However it is noted that Mr Paea’s explanation at hearing was that he had invested money building since 1995 or 1996, over a period of some decades of business and could not be expected to keep all receipts from all that time ago, when even the tax department do not require anyone to retain receipts for that long. Notably the evidence before the Court is that Mr Paea built substantial improvements on the land; a twin steel packing shed/warehouse and a two-story brick office building together encompassing 927 square metres, concrete pillar and wire fencing and large entry foyer, on the land.
[164] TAMA did not mention it in closings, but Mr Paea also commissioned a valuation by qualified and long-experienced valuer, Mr Viliula Mafi, which valuation was provided to the Court as primary evidence and concluded with a total of $938,100 valuation of the improvements, with the land valued separately at $504,700. For TAMA, Mr Tu’utafaiva took the opportunity to cross-examine and challenge it, albeit without any significant success or concessions, because Mr Mafi’s written report and his viva voce evidence under cross was credible and clear. TAMA did not call their own expert valuation evidence with which to contest Mr Mafi’s conclusions, although they had the right to and had ample time to do so.
[165] The relatively limited focus Mr Tu’utafaiva was able to bring in his cross-examination of the expert was the well-understood fact that there is a distinction between the value of improvements to the land and the value of the land itself and indeed the optimum valuation of such a commercial premises would arise from having both the underlying land and the buildings and improvements on it. This is obviously one of Mr Paea’s purposes in commissioning valuation evidence; providing a basis of distinct components of valuation to show what he claims is the value of his improvements, which the plaintiff appears to want to take from him and use for its benefit. Further, as Mr Mafi agreed conceptually to Mr Tu’utafaiva’s questions, obviously the whole property would be more valuable if it included the land. A land holding which TAMA now says to the Court that Mr Paea has no legal right to.
[166] The Court also notes that by the same token concerning requiring Mr Paea actual financial records of construction, ironically TAMA could not provide Mr Paea nor the Court any accounting records to justify their “material breach” rental arrears claim from a much more recent time frame of circa 2016 onwards, nor from it’s predecessor MLCI from earlier, simply citing that TAMA’s “computer was broken” as if that went any way towards providing them a legal basis to apparently overcharge a tenant and then malign them to government as being in arrears without proof of a starting point alleging a very specific sum: $12,961.88. A party asserting a moral high ground should come to court with clean hands or at least make an honest attempt at providing proper accounting.
[167] One aspect in the history of the parties’ activities and inactivity, is that for some time after July 2015 when the deeds of sublease were finally prepared by the Ministry of Lands and given to Mr Paea to action, he tried unsuccessfully to meet with the Minister of Labour (MLCI) to counter-sign them. Mr Paea’s evidence was that this worried him and he therefore continued for the next several years to seek signing of the deeds by both that Minister and also TAMA and the Minister of Lands. Why the MLCI did not sign is not clear but the impact of his omission is ongoing and in fact prejudicial. TAMA’s evidence via Mr Hu’akau on Mr Paea’s requests was to the effect that TAMA’s board made such decisions and did not so instruct him on this aspect of not signing the subleases, which evidence is unhelpful to TAMA’s cause and does not show the TAMA board in a positive light.
[168] In absence of any further evidence the Court can only infer that MLCI had decided not to sign in apparent breach of the 2002 Cabinet Decisions. TAMA was not in fact the sublessor so could not sign deeds but nothing in the evidence indicated that Mr Hu’akau advised Mr Paea of that; instead Mr Hu’akau encouraged Mr Paea to pay rent and he would put the request to the TAMA board who did nothing.

TAMA’s submissions against the Minister of Lands

[169] As against the Minister of Lands, TAMA’s claim pleaded that he should “cancel” Cabinet’s approvals of the subleases and that the Court should order him to do so.
[170] In closing his submissions for TAMA’s claim against the Minister of Lands, Mr Tu’utafaiva uses notably different terms, instead of demanding that the Minister should: “take action to cancel Cabinet approvals”, he submitted that the Minister should: “... submit to Cabinet to rescind its decisions to approve the applications by the First Defendant to sublease.” Also, that there are “good reasons to rescind the approvals.” No doubt this change of parlance arises from the evidence at hearing and notably Mr Moala’s evidence for the Minister of Lands.
[171] TAMA’s “good reasons to rescind” include in learned counsel’s words that “firstly”:

• 171.1 Mr Paea and VCL have occupied and used the land since 1996 but VCL has been removed as a registered company since 2016;
• 171.2 Mr Paea’s subleases have not been registered;
• 171.3 There is no business carried out on the land and Mr Paea no longer pays the rent.

[172] In terms of the first submission the Court notes that Mr Paea continues to occupy and use the land and that VCL is no longer a registered company, but despite that the government via its two operative ministries, actively encouraged him to deal with them in his personal capacity, prepared application to lease documents with him and not VCL, accepted rentals from him since the mid-1990s without complaint.
[173] For the second ‘first’ point, the Court notes that the Government’s two ministries are primarily responsible for the failure to complete and register Mr Paea’s subleases.
[174] In respect of the third ‘first’ point, Mr Paea’s evidence indicated that his occupation of the premises continues although the changes to the economic conditions which he has no control over have meant that his usage of it has changed, including for the charity. He said that he maintains the premises, keeps his machinery and equipment there and asserts his continued rights so he may be positioned to adapt to business opportunities arising as he described having done with it over the years, in effect as he described, reacting to the ebbs and flows of the economy. The Court accepts his evidence.
[175] Mr Paea’s non-payment of rent since 2019 in an attempt to secure registration of his subleases is noted in the context of two decades of non-completion by the ministries and as also notified to TAMA. The Court also notes that TAMA was only lawfully entitled to charge rent from at the earliest, 21 April 2020.
[176] Learned counsel for TAMA’s “good reasons to rescind the approvals” submissions continue that:

• 176.1 “Secondly, like Lopeti, the Cabinet approval is for a sublease by the Ministry of Labour, Commerce and Industry but the lessee is now the Plaintiff. Therefore, it is submitted that the subleases approved by Cabinet cannot be registered with the Plaintiff as the new lessee.”

[177] This submission manifests a circuitous and opportunistic attempt by TAMA to entrench its position, exempt MCLI and Government from honouring their collective obligations with TAMA as the new sublessor to Mr Paea on whom more prejudice is imposed, without notice to him, nor his consent, whilst proposing to have this Court enrich TAMA with his assets.
[178] The Minister of Lands was also compromised by the MLCI’s lack of action because as Mr Moala testified under cross-examination by Mr Tu’utafaiva, the Ministry of Lands were not in a position to force the parties (Mr Paea and MLCI) to meet or as the Court understood his evidence, to ‘make’ the MLCI sign the sublease deeds. The import of Mr Moala’s answers about this issue during cross-examination seemed to be that the Minister could suggest that the parties themselves who were disagreeing with one not signing, would have to resolve it between themselves. This is not useful.
[179] The Court observes in the absence of MLCI carrying out its duty to implement signing the deeds under the 2002 Cabinet Decisions, there should have been a referral back to Cabinet for MLCI’s failure to perform its duty to sign. In that way, Cabinet would at least confront the unfulfilled directions and either decide to confirm the decision to approve, or rescind it if it so chose, but at least bring the matter into the open for discussion, debate and decision. Cabinet could have then followed an accountable, transparent process to uphold its own collective honour, whilst also providing certainty for the parties outside the Government, like Mr Paea. It is not for the Court to dictate to Government precisely how it runs its affairs, but in these circumstances the Court can comment on the effects of what has happened and not happened in this case. The long periods of inaction leading to indecision have led to the inertia, confusion, miscommunication, misunderstandings. This has led to prejudice to the parties, uncertainty, stress at least for some, much time spent and costs of litigation.
[180] This convolution all appears to have been further exacerbated when TAMA came into the equation, albeit in an assumed role as the sublessor which had not yet occurred. TAMA then seeks to support its own position by arguing that the Minister of Lands cannot now implement the 2002 Cabinet-approved subleases because it, TAMA is the new “lessee”, or sublessor of the head lease and not MLCI. It is for this reason that the submission is circuitous; it is disingenuous and self-serving of TAMA to use that against Mr Paea at this stage.
[181] Thirdly, Mr Tu’utafaiva submits in respect of TAMA’s claims against the Minister that Mr Paea:

• 181.1 “... took the risk of allegedly investing a lot of money on the leased land, he waited for more than 10 years before pursuing registration of his sublease in about 2015 when the plaintiff had already taken over the control of the leased land in about 2011.”

[182] Dealing with the second submission first, the Court notes that Mr Paea did not simply wait 10 years; he had relied on assurances from no less than two ministers and the entire Cabinet backed by a series of official documents, applications and correspondence. In reliance on those government assurances and acceptance of rent, he had built, improved the land, used it for business purposes and stimulated the local economy over the years. He only heard about non-registration in 2015, which was when he first realised that he was at any risk in respect of his tenure. That is when he found out that none of the three lots were yet registered, was given Deeds by MOL to get MLCI to sign, hence his requests for singing and registration.
[183] In reference to TAMA’s submission that in effect Mr Paea took the risk until 2015 by which time TAMA had “already taken over the control of the land in about 2011”, the Court finds that TAMA had not in fact nor at law taken the land. The 2011 Cabinet Decision only names SIC, “Small Industries Centre” and not TAMA, if it even existed at that time. TAMA taking putative control happened when their relationship with the land as sublessor to MLCI was formalised on 21 April 2020. Given the complications of this case, the Court is reviewing that latter status in light of all the evidence, the rights of the parties, the Act and the law as interpreted.
[184] On the whole in considering TAMA’s pleaded allegations and submissions on: case law authorities; sublease registration; their own assumed status and denial of legal or equitable interests in favour of Mr Paea demonstrate on their part a lack of consistency and absence of good faith. TAMA were duplicitous in dealings with Ministers and Mr Paea and showed a lack of integrity in accounting procedures. Further, they demonstrate what may be described as a lack of acumen in understanding rights and interests of themselves as a company in the context, or for that matter of others’ rights and interests.
[185] Although it is a company said to be wholly owned by Government, the evidence before the Court shows that TAMA’s conduct falls below what the general public is entitled to expect of a private commercial vehicle carrying on the business of renting out land for the Government, presumably to stimulate and support private sector businesses. One would reasonably expect the highest standards of character and utmost good faith to be manifest in all dealings of such a company. Instead, the Court finds TAMA’s conduct to be condescending, arbitrary and self-serving.

B. First Defendant’s legal submissions

[186] Mrs Tupou KC, learned counsel for Mr Paea in summary submits that:

• 186.1 The Plaintiff is an incorporated company but was never a public enterprise within the meaning and provisions of the Public Enterprises Act;
• 186.2 Mr Paea is a businessman of Neiafu, Vava’u;
• 186.3 The Minister of Labour Commerce and Industries approved Mr Paea’s use of the lands for squash export business in 1995, for building hurricane relief houses in 2001-02, entered an agreement to sublease Lots 2, 3 and 4 to him and applied to the Minister of Lands for those, received cabinet approval of them in 2002, followed by that Minister’s 2003 directions to officials to survey and prepare deeds of sublease and notice of that to MLCI.
• 186.4 The Ministry of Lands issued deeds of subleases to Mr Paea on 31 July 2015 to get MLCI to sign and for him to counter-sign;
• 186.5 The MLCI and the Minister of Lands would not meet Mr Paea and did not sign the deeds of sublease;
• 186.6 On 21 April 2020 the Minister of Lands signed and registered the MLCI’s indenture of transfer of lease to TAMA as Lease No. 6226A;
• 186.7 The Minister of Lands did not inform Mr Paea of what was happening, nor enquire of him as an interested tenant on the land or give him an opportunity to be heard about his rights;
• 186.8 Natural justice requires the Minister of Lands to investigate when a party has a valid and lawful interest which is known about, or should be known about. The Minister of Lands clearly knew that Mr Paea had applied for the registration of the subleases of all three lots. His officials knew about it and had advised MLCI about it;
• 186.9 The plaintiff, TAMA was collecting rent from Mr Paea prior to serving him eviction notice and then issuing proceedings against him.
• 186.10 TAMA is bound by equity because they did know of Mr Paea’s equitable interests and it would be unjust for them to be allowed to evict Mr Paea;

[187] Learned counsel submits that in spite of the subleases not being registered, Mr Paea has been in government-encouraged occupation and use of the land under an informal agreement from 1996 to 2001 and under agreement to sublease since 2001.
[188] Mrs Tupou submitted that the issues for determination are as follows:

• 188.1 “Was the transfer of the lease to the Plaintiff legal?
• 188.2 If it is lawful, is it entitled to damages for rent?
• 188.3 If it is entitled to rent, from what period is rent payable by the First Defendant to the Plaintiff?
• 188.4 If it is unlawful, is it entitled to bring this action against the First and Second Defendant?
• 188.5 What damages is the First Defendant entitled to if any?”
  

Was the transfer of the lease to the Plaintiff legal?

Possession of the Land

[189] Mrs Tupou submits that at the time the Lease was transferred by indenture to TAMA on 21 April 2020, Mr Paea had been and remained in possession of it since 1996, with permission from MLCI.

Improvements on the Land

[190] Learned counsel also submits that Mr Paea had expended substantial money on building the two buildings on the land without any objections from the Ministry or anyone else. She then listed the documentary history of governmental actions relied upon by Mr Paea. She referred to Mr Mafi’s expert evidence that he valued the improvements on the land at $938,100.

TAMA not a public enterprise

[191] Mrs Tupou denies that TAMA is a public enterprise, submits that it was not named in the 2011 Cabinet Decision No. 872 tendered by TAMA as proof (at CB p 104). She also notes Mr Hu’akau’s evidence of MLCI’s transfer of lease by indenture to TAMA as registered by the Minister of Lands on 21 April 2020 (at CB p 116).

What information did the Ministry of Lands hold, which they should have enquired further of, inspected property or acted on?

[192] In her submissions numbered D5, Mrs Tupou asked the sub-issue question:

“Was there anything in the Second Defendant’s possession that should have alerted him to the First Defendant’s existing interests in Lots 2, 3 and 4 which ought to have triggered a need for proper enquiries and/or inspection of the property to be made?”

[193] To which she provided the following answers:

• 193.1 The Second Defendant’s witness, Mr Moala had acknowledged that the applications to sublease, Cabinet Decisions and the Minister’s directions to survey and draw up deeds in favour of Mr Paea were in the Ministry’s records;
• 193.2 Mr Moala’s evidence was that the three deeds for the three lots were issued in 2015 but that the Ministry did not know where they are and who had taken them;
• 193.3 He acknowledged Mr Paea’s occupation of the allotments;
• 193.4 He agreed that the Ministry was aware of the Second Defendant’s interest because there was a Cabinet Decision No. 89 of 3 February 2017 granting Felise Langi the same premises (Mr Paea’s lots). Mr Moala stated that the Second Defendant advised that the ... “First Defendant and the Plaintiff were to be consulted as the First Defendant had an interest in the allotments by way of Cabinet Approval and issued Sub-Lease Deeds.” (see CB 27)
• 193.5 That there was “... an abundance of information before the Second Defendant to have alerted a need for proper enquiries, an inspection and an opportunity for the [sic] First Defendant to be heard prior to the Decision to transfer the lease to the Plaintiff.”
  

If the Plaintiff’s Lease No. 6226A is lawful what rent is it entitled to?

[194] Learned counsel submitted:

• 194.1 “If the Plaintiff’s lease is lawful (which is denied), it is only entitled to rent starting from the date of registration of the Indenture which was on 21 April 2020 amounting to $6,535.40.”
  

Breach of Natural Justice

[195] Mrs Tupou argues that the Land Court’s ruling in Manu v ‘Aholelei is applicable,] in particular that passage at [67] where His Honour Paulsen P held:

“... Before granting the lease the Minister was obliged to inspect the land and to give consideration of the interests of Fine and to give her an opportunity to be heard in accordance with the principles of natural justice. The Minister failed to do so and the granting of the lease was accordingly unlawful.”

[196] Learned counsel refers to Mr Moala’s evidence for the Minister of Lands where she submits:

• 196.1 “... that the normal procedure in transferring of leases is that no inquiries or inspection would be conducted as it was a transfer of an existing lease, EXCEPT if there was a mortgage or other interests and he agreed under cross examination that the interests of the first defendant was documented in the ministry's records.” [capital letters as per counsel’s original]
• 196.2 “The principles of natural justice do not discriminate to any type of landholding in Tonga. So long as a valid and lawful interest is known or ought to have been known by the Second Defendant, he is required to make proper inquiries and afford persons with such interests [sic] prior to his making a decision that would adversely affect those interests.”
• 196.3 “In this case, the transfer of lease 6226A to the Plaintiff gave the Plaintiff the right to evict him which it has sought to do here.”

[197] Therefore for the first defendant, Mrs Tupou submits that as happened in the Manu v ‘Aholelei case, the transfer of the lease to the plaintiff in this case should be declared unlawful and ordered to be cancelled.

Equity

[198] Learned counsel refers to the two cases of Nginingini and Siasi Tokaikolo which learned counsel for the plaintiff also referred to and which the Court takes due regard of. Both Mrs Tupou and Mr Tu’utafaiva refer to the list of five relevant matters listed at [35] in Nginingini which are required to establish an equity in situations like this. Those five key aspects cover expectation, encouragement, knowledge of that expectation, action in reliance on that expectation, ability to lawfully satisfy that interest, with the result that it would be unconscionable, inequitable or unjust for one party to rely on their legal rights to defeat the expectation of the other party who has acted in reliance.
[199] Whereas Mr Tu’utafaiva for the Plaintiff dwelt on paras [39], [40] and [43] in relation to implications for third parties, which the Court has already dealt with above and which somewhat dislocated the logical application of the Nginingini principles to the relevant facts, Mrs Tupou followed directly from the list of five criteria at [35] to the subsequent paragraphs [36], [37], [38] before heading into paras [39] and [40] for their application within context. They are worth setting out in full as follows:

“[36] If the Court finds that an equity has been established it has considerable flexibility as to the remedy it may grant. In Inwards (supra) Lord Denning noted that it is for the Court to say in what way the equity will be satisfied. The effect of the equity, and thus the remedy required to satisfy it, may differ at different points in time. Most often the Courts in Tonga have granted claimants protection from eviction for a stated period of time. It might be that in some cases monetary compensation is an adequate remedy.

[37] This Court’s remedial powers whilst flexible are not unlimited. It cannot grant relief which is contrary to some provision in the Land Act. Furthermore, as it has been held that in Tonga an estoppel only imposes a personal restriction upon the person against whom the estoppel operates and does not create any interest in land any period of occupation that is granted to satisfy an equity should, in my view, not exceed the lifetime of the landholder (OG Sanft & Sons v Tonga Tourist and Development Co Ltd [1981-88] Tonga LR 26, Matavalea v Uata [1989] Tonga LR 101, 103 and Schaumkel v ‘Aholelei & anor [2013] Tonga (Unreported Court of Appeal, AC 14 of 2012, 17 April 2013).

[38] In this case it is not the landholder who seeks to assert his legal rights but ‘Alisi as lessee. It is therefore necessary to consider the position of third parties. If a claimant’s belief as to some interest or right over land was originally created by a landholder an equity might also arise against a third party including a successor in title or a person who has acquired an interest from the landholder (such as a mortgagee or lessee).

[39] A third party may be bound by an equity when (1) they have acquired their interest with knowledge of the circumstances giving rise to the claimant’s equity and (2) in the circumstances of the case it would be unconscionable for the third party to assert his/her legal rights. In such a case the equity that binds the third party is not derivative but operates directly against the third party.

[40] Consistent with well established principles of equity, knowledge in this context must include actual knowledge but also knowledge that would have been acquired but for the shutting of one’s eyes to the obvious or willfully and recklessly failing to make such enquiries as a reasonable and honest person would make (Re Montagu’s Settlement [1987] 1 Ch 264).”

[200] The first defendant “relies on this case and submits that he has established a right and equity and that the actions of the plaintiff and trying to evict him are unconscionable.”
[201] The first defendant also submits that the facts establish that both the plaintiff and the second defendant had full knowledge of the first defendant's equitable rights.
[202] Learned counsel submits that “the plaintiff is bound in equity because he had full knowledge of the first defendant’s existing rights and was collecting rent from him prior to issuing this action against him.”
[203] The Court finds that on the evidence before it, His Honour Paulsen P’s highly persuasive reasoning in Nginingini is readily applicable in the present case where the first defendant’s expectations and actions in reasonable reliance on the MLCI’s actions, also on the second defendant’s actions, knowledge, later omissions and failure to enquire or consult and also on the plaintiff’s and its predecessor or parent Ministry’s knowledge, actions and acquiescence, give rise to Mr Paea having established an equity which the other parties are estopped from denying and asserting legal rights against. Further discussions follow below in concluding this decision.

C. Second Defendant’s legal submissions

In response to the Plaintiff’s claim

[204] The Learned Solicitor-General, Mr Sisifa for the Minister of Lands as second defendant, submits in defence to the plaintiff’s claim that under the law, the second defendant cannot cancel a Cabinet Decision.
[205] He submits the main issue to determine in this case is whether or not the Minister of Lands can cancel a Cabinet Decision approving a sublease.

In response to the First Defendant’s notice of claim

[206] Before dealing with the plaintiff TAMA’s claims against his client Minister, Mr Sisifa first listed and addressed the first defendant Mr Paea’s notice of claims for relief from the second defendant, where he seeks:

• 206.1 cancellation of Lease No. 6226A in the name of the plaintiff; and
• 206.2 execution of the deeds of sub-leases in the name of the first defendant and registration of same it, or alternatively;
• 206.3 damages for the loss of fifteen years of use of Lots 2 and 3 and two years of use of Lot 4 at $36.77 [sic] per month [*$362.77 being the combined monthly rentals in evidence]
• 206.4 compensation for the value of buildings of the first defendant erected on the land to be valued and assessed by the Court.”

[207] Mr Sisifa then lists a number of key dates, events, agreements and approvals. He notes that MLCI became a registered lessee in 1998 and yet that earlier, in 1995 had given the first defendant permission to occupy the lands. He notes Cabinet’s 2002 approval of the application to sublease the lots and key sequence of events and facts established in the evidence.
[208] Mr Sisifa responds to Mr Paea’s claim that the Minister should cancel TAMA’s lease by submitting that:
[209] “ i. The lease no 6226A is in effect a covenant between the estate holder and the Plaintiff only, and does not, in any shape or form affect the rights of the First Defendant given under the sub-leases.”

[210] “ii. Additionally, lease no. 6226A cannot be terminated or cancelled unless done so in accordance with a breach of covenant of the parties specified under the deed of lease, or by the Land Court.”

[211] “iii. That there is no legal obligation for the Second Defendant to consult the First Defendant in respect of the transfer of lease no. 6226 to the Plaintiff which subsequently became lease no. 6226A because, lease no. 6226A is in effect a covenant between the estate holder and the Plaintiff only, and does not in any shape of [sic] form affect the rights of the First Defendant given under the sub-leases.”
[212] “iv. That despite lease no. 6226A, the First Defendant’s rights under the sub-leases are still valid and in effect, and that the Second Defendant have [sic] not done anything contrary to the rights of the First Defendant under the sub-leases.”
[213] In response to Mr Paea’s claim for damages for loss of use of the lots for the remainder of the terms and for compensation for the value of the buildings learned counsel submitted:
[214] “v. That the Second Defendant is not liable to pay damages for loss of years because the delay in registration of the First Defendant’s sub-leases is not the issue or reason why the Plaintiff wishes that his sub-leases [sic] be cancelled. The claim for cancellation of his sub-lease [sic] is due to the First Defendant himself breaching the sub-lease covenants, and the purpose for which the sub-lease was granted; and
[215] vi. That the Second Defendant is not liable to pay compensation for the value of the buildings because the delay in registration of the First Defendant’s sub-leases is not the issue or reason why the Plaintiff wishes that his sub-lease [sic] be cancelled. The claim for cancellation of his sub-lease [sic] is due to the First Defendant himself breaching the sub-lease covenants, and the purpose for which the sub-lease was granted.”
[216] Responding to the Court’s invitation to provide submissions on the issues the Second Defendant seeks determination of, Mr Sisifa identified:

• 216.1 “Whether the Second Defendant can cancel a registered lease?;
• 216.2 Whether the Second Defendant is obliged under the law to consult and give the First Defendant the right to be heard before transferring Lease No. 6226 from the Ministry to the Plaintiff?;
• 216.3 Whether the Second Defendant is liable to pay damages for loss of years of the First Defendant to [sic] Lots 2, 3 and 4?; and
• 216.4 Whether the Second Defendant is liable to pay for compensation for the value of the buildings on Lots 2, 3 and 4?”
  

Reply to the Plaintiff’s claim against the Second Defendant

Cancelling Cabinet Decisions approving subleases to Mr Paea

[217] Mr Sisifa responds to TAMA’s claim that the Minister should cancel the Cabinet Decisions approving Mr Paea’s sub-leases by submitting in response that:

• 217.1 The Minister does not have any power to cancel cabinet decisions because he had already taken steps to implement the 2002 Cabinet Decisions to grant and register the sub-leases by his issuances of savingrams to survey and issue draft deeds of sub-leases to Mr Paea;
• 217.2 “That termination or cancellation of a sub-lease would only have to be done in accordance with the covenant specified under the deeds of sub-leases;
• 217.3 In the alternative, under the law, the Minister cannot cancel or take action to cancel a sub-lease because the authority to cancel is with Cabinet or the Land Court;
• 217.4 Furthermore, a termination and cancellation of a sub-lease would only have to be carried out in accordance with the covenants specified in a deed of sub-lease. As such, the Minister would have to complete the process of issuance of the deeds of sub-leases to the First Defendants, and accordingly the deeds would clearly state the grounds for which the sub-leases could be terminated or cancelled.”

[218] Learned counsel argues that Mr Paea had both an existing agreement and a sub-lease for the three lots, submitting that although the sub-leases were not registered, that the registration process was “still ongoing”, citing the Ministerial Savingrams (CB pp 95, 97 & 99) to survey, sketch map and prepare deeds of lease for registration as “an indication of approving the sub-lease for registration.”
[219] In respect of the registration process being evidence of a grant already made by the Minister, learned counsel helpfully quoted Niu J’s judgment in Kuli v Maile LA 8 of 2019 (unreported) at [8] and also Whitten LCJ’s judgment in Finau v Finau and Ors LA 11 of 2019 (unreported) where His Honour as President of the Land Court opined at [92] in relation to when a grant has been made that there are two possibilities:

“a. the Ministry informed the person that the grant has been made by some other representation induces the person to believe that he or she has a lawful entitlement to the land and to use it as such; or

b. no such communication was made, in which case, the plaintiff, after commencing legal proceedings, uses the discovery process in the hope of finding documents, such as the Minister’s savingram here, to support a claim that the grant was made.”

[220] Mr Sisifa submitted that consistent with Mr Paea’s evidence of his having met with the Chief Executive Officer of the Ministry of Lands, Ms Bing and Land Officer, Mr Vea, who had explained to him that “he will get his sub-leases registered and there was no problem with it” meant that the decision had been made and within the Finau category ‘a’ of para [92] above he had a lawful entitlement to the land.
[221] The Court also observes that although the Court Book helpfully complied and filed as a common bundle includes the Minister’s savingrams and other official documents and correspondence in the lengthy history of this claim, it is not assured that all of those documents or the information contained in them were provided to Mr Paea much earlier on. In the context of his being kept ‘in the dark’ about his rights and the status of his registration for many years prior, it is commendable of those officials to have arranged to meet with him, hear his concerns and in effect advise him of his status at that later time. However they were not the only active participant in the process; the MLCI appears to have been doing nothing to complete its duty to implement Cabinet’s 2002 decision and the plaintiff was also pursuing its own interests.
[222] The learned Solicitor-General’s submission is that on that basis it is clear that once the Minister has made a decision to approve registration then the sub-lease has been lawfully granted and “a deed of sub-lease is only evidence that the grant of sub-lease was made.”
[223] With respect to the claim that the Minister should cancel or terminate the sub-leases, Mr Sisifa submits that in terms of s19(3) of the Act the Minister’s only power is that under it he:

“... shall grant leases (including sub-leases) and permits with the consent of Cabinet...”

[224] Therefore he submits that the Minister is not empowered to terminate subleases, nor has he any duty, obligation nor power to cancel the subject Cabinet Decisions of 19 December 2002.
[225] The Solicitor-General also helpfully provided reference to (and a copy of page 35) section 134 of the Cabinet Manual of His Majesty’s Cabinet, CAP 1.1.01, which provides that:

“Cabinet Decisions by the full Cabinet, and Cabinet committee decisions that have been confirmed, or authorised, by the full Cabinet, must be adhered to and implemented by all Ministers and public servants. Such Cabinet decisions may be amended, altered or rescinded at a subsequent Cabinet meeting.” [Court’s emphasis added]

[226] The learned Solicitor-General was then able to submit with good reason that Cabinet itself may rescind its own decisions at later Cabinet meetings, but the Minister of Lands himself could not and that there was no legal authority granting such a power to him. It is also noted that the starting point is that upon Cabinet making a decision that the same “must be adhered to and implemented by all Ministers and public servants”. In this regard the Court reiterates its earlier comments concerning the MLCI’s failure or refusal to implement the 2002 Cabinet Decision and the continuing impacts of that on the parties.
[227] Mr Sisifa then advanced the further logical step that if a Minister so wished, he could make a submission to Cabinet, recommending to cancel a decision and properly surmised that it would only be a submission and that Cabinet would have the right to approve or decline such a recommendation.

Cabinet Decision 89 of 2017 from Ministry of Revenue and Customs approving third party Mr Felise Langi’s SF Oceania Limited use of land

Impacting on Cabinet Decisions approving subleases to Mr Paea

[228] In a related but relevant illustrative matter in the complicated meanderings of competing interests in respect of the land and a lack of communication between arms of the government, the Court notes that relatively scant evidence was brought before it in relation to another Cabinet Decision; No. 89 of 3 February 2017 (CB pages 106-107), which approved the Ministry of Revenue and Customs’ recommendation to approve Mr Felise Langi’s company, SF Oceania Limited be allowed to:

“1. ... build a Bonded Facility at the Small Industry Premises at Neiafu, Vava’u at the area that has been allocated to Tomifa Paea and pay similar rental charges to the Government of Tonga.

2. To approve that the Government of Tonga shall continue to deal directly with Tomifa Paea on the unpaid rental charges of the premises and allow SF Oceania Limited to proceed with the establishments of the facility in this proposed areas [sic] which has been lying undeveloped for a number of years.

3. To approve that SF Oceania Limited be allowed to develop the proposed Bonded Facilities to be an International Export Packing Facility for all crops and marine products;

4. That SF Oceania Limited shall be encouraged to negotiate with shipping lines and shipping Agents to increase the number of voygage [sic] to Vava’u from our trading partners;

5. To approved [sic] that the SF Oceania Limited be allowed to act as a stevedoring Agent, and be allowed to provide equipment and machineries to facilitate the operation of the proposed Bonded Facilities and the loading and unloading of all imported and exported commodities at the Halaevalu Wharf;

6. To approve that all building Material, equipment and machineries imported for the development of the proposed Bonded Facilities be exempted from Duty & Consumption Tax.”

[229] Mr ‘Anisi Bloomfield, the then CEO of Ministry of Revenue and Customs followed through that Cabinet Decision with a savingram on 3 March 2017 to the CEO of the Ministry of Labour and Commerce (CB pages 108-109) and copied to the CEO for Public Enterprises and the Acting CEO of Lands and Surveys, advising inter alia that:

“.. the Government of Tonga must ensure that these six approved Recommendations are carry [sic] out effectively in a timely manner.

Within these six approved Recommendations, different line Ministries are responsible to implement these directions accordingly. This letter serves to seek your Ministry’s kind assistance in facilitating Recommendations 1, 2 and 3 below, as we understand that the said premises are still under the responsibility of your ministry.”

[230] The savingram reproduces the Cabinet’s first three approved Recommendations listed above, seeks “immediate” action and continues to explain the rationale for promoting SF Oceania Limited’s machinery, abilities and activities assisting the Government in devanning, loading and unloading of shipping containers during the second half of 2016, including that that company:

“... is ready to provide all these services at no cost to the government including all infrastructures and materials for the construction of these facilities.”

[231] From the evidence, a number of concerns arose from this at the time for the parties to this proceeding.
[232] First, Mr Moala for the Minister of Lands gave evidence that when they were advised of this decision, they advised the Government not to proceed because Mr Paea had interests in the land and he would have to be consulted and given an opportunity to be heard. Essentially, his interests could not be ignored because of all the actions as evidenced. The Court understands that the Minister’s CEO and officials responsibly assessed and advised the Government of the legal risks entailed in proceeding without Mr Paea’s proper and due involvement.
[233] Secondly, Mr Hu’akau testified that on behalf of TAMA, he opposed the Government giving the lands to Mr Langi’s SF Oceania Limited because Mr Paea had interests in the land and “he would sue them”. Interestingly what Mr Hu’akau later alleged to the Court for TAMA was that Mr Paea did not have lawful interests in the land. From his evidence, Mr Hu’akau was surprised that his company had been left out of the communication and taken out of contention for the valuable Vava’u lands, especially since TAMA had alleged that they could rely on the Government transferring its leases to it as approved seven years earlier by Cabinet Decision No. 872 of 7 October 2011. The Court has already made findings on that decision.
[234] Lastly but not least in terms of who in fact had legal interests, it is not clear who told Mr Paea of the Cabinet Decision No. 89/2017, although he did say that Mr Felise Langi had approached him at some stage before that time (of the decision in February 2017, possibly in late 2016) to ask if he was interested in selling his buildings to him and if so what price he would ask, to which Mr Paea had replied in the vicinity of a million pa’anga, although Mr Langi did not then offer to buy it off him.
[235] Mr Paea then told the Court that he was surprised to hear of that Cabinet approval and as a consequence on 20 April 2017 wrote to the Minister of Lands asking for completion of his sublease registrations (CB p 110). He copied that letter to MLCI, Minster of Public Enterprises, TAMA’s chairman, to Ms Bing of the Ministry of Lands and to Mr Hu’akau.
[236] Mr Paea pointed out in his evidence what he considered TAMA’s complete turn-about, from on the one hand opposing the Ministry of Revenue and Customs taking his land to in turn give it to Mr Langi’s company because he had interests in it, to then asserting TAMA’s rights to have it transferred to them, to collecting rent without accounting, to receiving the transfer of the lease in 2020 and that year evicting him because he had ‘no legal rights’, and in the equation taking the benefit of his assets.
[237] The Court notes with interest that Cabinet Decision No 89/2017 (“Decision 89/2017”) is an official government decision and certain aspects of it deserve attention such as:

“2. The Government of Tonga shall continue to deal directly with Tomifa Paea on the unpaid rental charges of the premises and allow SF Oceania Limited to proceed with the establishments of the facility in this proposed areas [sic] which has been lying undeveloped for a number of years.” [emphasis added]

[238] As at 2017 the Government was still dealing “directly” with Mr Paea, not “SIC” as mentioned in Cabinet Decision No 872/2011 and not TAMA. This aligns with Mr Paea’s evidence that he was dealing with the MLCI and that only later TAMA became involved and demanded he pay them. Further and relevantly, the Ministry of Revenue and Customs’ 3 March 2017 letter to MCLI also emphasised that “the premises are still the responsibility of your ministry”.
[239] Decision 89/2017 refers to Mr Paea’s “unpaid rental charges” whereas it was his evidence that he had continued to pay his rent to MLCI in Vava’u since the 1990s. The Court has noted the issue of rentals earlier and in the absence of actual evidence from any other than Mr Paea, accepts his evidence and find that the other assertions of his indebtedness are not proven. It was also shortly after he had surprised to have been issued the Ministry of Lands deeds of sublease for signing with MLCI and was chasing that. Significantly and noted earlier, whilst asking TAMA for an accounting as he is entitled to do as tenant, Mr Paea made two large payments: $5,000 in 2017 and another $4,353.24 in 2019, yet was accused of being in material default of his rent.

Government Failures in completion, co-ordination, communication

[240] In the context of alarming evidence of lack of communication between various ministries, departments and arms of government, wholly government-owned companies not being registered as public enterprises, important matters such as land tenure rights, work on important matters being directed but not being completed for years or sometimes decades, it is not surprising that land lot numbers are mixed up, accounting records, audited accounts and reconciliations are missing or simply ignored as being unnecessary.
[241] The problem is that records and transparent, accountable processes are necessary and even more important than usual when the combined power of the state is brought to bear on a private citizen conducting his own business.
[242] The onus is on the Government to ensure that the law which creates and empowers it is utilised in good faith, with best practices at the forefront of their minds as public servants; serving the individual and collective communities of the public.
[243] The next aspect is the Government favouring Mr Langi’s private interests over and above its pre-existing commitments to Mr Paea and ignoring or denying his history of having developed the land His Late Majesty had dedicated as a centre for small industrial development for jobs and economic advancement in the Vava’u community.
[244] In this vein, the Cabinet approving removal of Mr Paea’s rights because of inter alia, their official view that that particular land he has developed and paid for “which has been lying undeveloped for a number of years”, flies in the face of the evidence before the Court of intensive usage for at that time, 2017, over 20 years of economic stimulus in farming, packing, exporting, construction, wholesale goods, tourism development.
[245] Further to this point, the Cabinet approval that “SF Oceania Limited be allowed to build a Bonded Facility... at the Premises” appears to have been worded to be interpreted by one not familiar with the land to believe that the land has nothing on it, whereas the evidence is that Mr Paea had already built a 927 square metre commercial complex on it. That is a large development already in place, which may well have been readily converted to Mr Langi’s purposes. Yet the wording of the recommendation strongly indicates that Mr Langi would be allowed to “build” indicates he would do so ‘from scratch’. Therefore as the 3 March 2017 letter promotes (CB p 109) that his company “... is ready to provide all these services at no costs to the government including all infrastructures and materials for the construction of these facilities” appears at the very least misinformed and is more likely, given the surrounding circumstances, purposefully misleading.
[246] Another question arising from this is, who provided the officials with this information, or perhaps more accurately, mis-information? Self-interest or other forms of vested interest appear have been at play. But without specific evidence before it all the Court may do is draw inferences of ignorant or improper influence on decision-makers in highly influential positions, resulting in mistakes, which prejudice Mr Paea as land holder and favour others with nothing to lose and much to gain.
[247] Following through this line of enquiry, the Court also notes that Decision 89/2017 granted Mr Langi’s company very significant privileges:

“5. To approved [sic] that the SF Oceania Limited be allowed to act as a stevedoring Agent, and be allowed to provide equipment and machineries to facilitate the operation of the proposed Bonded Facilities and the loading and unloading of all imported and exported commodities at the Halaevalu Wharf;

6. To approve that all building Material, equipment and machineries imported for the development of the proposed Bonded Facilities be exempted from Duty & Consumption Tax.”

[248] The Court observes that these comprise a very significant and valuable set of rights as Agent, bonded store operator, stevedore, including duty-free and consumption tax-free status for Mr Langi’s company for all materials he might need to use to re-develop a purpose built complex. However, a substantial factor which is not recognised nor highlighted in the recommendation to Cabinet is that of Mr Paea’s large, developed commercial buildings, already there, conveniently located 1.5km from Neiafu.
[249] Without needing to make a finding on these irregular and worrying matters for the purposes of the present case, the Court is obliged to comment on the same as relevant background to credibility, records, processes and procedures, people who were actively involved insofar as they impact on the issues for determination.

Ministry of Lands; in between the parties

[250] Indeed it was Mr Moala the Chief Land Registration Officer’s evidence under cross-examination that due to his and the CEO of Ministry of Lands’ reservations about the Cabinet Decision 89/2017 approving transfer of Mr Paea’s premises to Mr Langi’s SF Oceania Limited, that Mr Moala read out his handwritten file note (on the file cover) of a meeting on 20 February 2018 between the Minister of Lands, the late Lord Ma’afu Tukui’aulahi, CEO Ms Rosamond Bing, Mr Felise Langi and Mr Moala to discuss that the Government could not transfer Mr Paea’s lands to Mr Langi’s company because Mr Paea had interests in them. Mr Moala said that the CEO wished to notify TAMA of this and later did so meet with them for that discussion. Mr Moala confirmed that the Minister had met and advised the CEO of Revenue and Customs about the same matters.
[251] The Court asked Mr Moala if the Ministry of Revenue and Customs had asked Ministry of Lands about the status of the Mr Paea’s premises before recommending its transfer to Mr Langi in 2017, to which he answered not to his knowledge.
[252] It appears that after those considerations were aired and made clear that Cabinet rescinded its Decision 89/2017 in favour of Mr Langi.
[253] More to the point is that in the above scenario it is clear that in considering all the people consulted, no one deigned to ask Mr Paea himself about the land, his operational history, investment, the buildings, his intentions or his rights. It appears that this whole exercise was done behind ‘closed doors’ by private individuals, officials and quasi-public entities competing for position to acquire his assets without reference to him.
[254] This latter point underscores the rationale for a right to be consulted and to have a chance to be heard where one’s land interests are concerned, which is developed in the authorities such as those raised by learned Crown and Mr Paea’s counsel.

Right to be consulted, right to be heard before cancellation

[255] Returning to the Crown’s submissions in respect of TAMA’s claim to cancel the subleases approval, Mr Sisifa referred to the Land Court judgment of Hampton LCJ in Sakalia v Vailea, Schaumkel & Minister of Lands [1995] TLR 33, acknowledged that different fact scenario, but emphasised the applicable principle in relation to executive decisions and the bases upon which they can be made in terms of the Act.
[256] In that case, the plaintiff whose interests in land were cancelled following the then Minister of Lands’ recommendation to Cabinet that they cancel an earlier decision. The plaintiff’s case was that he was not given an opportunity to make representations in relation to his position and the possible cancellation of his own registration. Importantly also, he was occupying the land. The Court held that the Cabinet’s decision was unlawful and overturned it, ordering restoring the registration of the land into the plaintiff’s name. The Court of Appeal upheld the Land Court’s decision upon appeal in Vailea v Sakalia, Schaumkel & Minister of Lands [1995] Tonga LR 33, at 138.
[257] Another relevant Court of Appeal authority confirming the principle that there is right to natural justice for a landholder or occupier of land, including the right to be consulted, to be heard and for decision-making officials to conduct due enquiries into the interests of land holders, can be found in Tafa v Viau [2006] Tonga LR 287, who at 293 confirmed:

“... that any person or body who had authority to decide anything which may affect another person or persons had a duty to take reasonable steps to ascertain the facts relevant to the matter and to accord natural justice before proceeding to make the decision.”

[258] The Solicitor-General’s argument is that although TAMA had requested the Minister take action to recommend that Cabinet cancel their approvals for Mr Paea, this would affect those same approved subleases, which the Minister had already granted to him.
[259] Therefore he argued that the Minister could not make such a cancellation request without giving Mr Paea an opportunity to be heard in relation to his position and interests.
[260] Mr Sisifa submits that this position is supported by Mr Moala’s evidence that the Ministry cannot action on TAMA’s request to ‘cancel’ Cabinet’s approvals without proper consultation with Mr Paea, because of his interest in the land.
[261] Learned counsel adds that:

“Furthermore, even if the Cabinet decided to cancel Cabinet Decisions 2256, 2257 and 2258, that does not give effect to the cancellation of the First Defendant’s sub-leases for Lots 2, 3 and 4.”

[262] The Court is grateful for the learned Solicitor-General’s submissions on this claim. Acknowledging both his and Mrs Tupou’s submissions the Court finds that given the circumstances of the Minister having in effect granted Mr Paea’s subleases thereby entitling him to be consulted and to have a proper opportunity to be heard on protection of his interests, the principles of which have been interpreted by the courts, the Minister does not have any power under the Act to cancel the 2002 Cabinet Decisions as sought by TAMA.

Reply to the Mr Paea’s notice of claim against the Second Defendant

Issue I: Whether the Minister can cancel a registered lease?

[263] The Solicitor-General submits in response to Mr Paea’s seeking cancellation of TAMA’s Lease registered as No. 6226A that it is in effect a covenant between the estate holder Himself and TAMA only and does not “in any shape of form affect the rights of the First Defendant under the sub-leases.”
[264] Mr Sisifa submits that Lease No. 6226A “cannot be terminated or cancelled unless done arising from a breach of the covenant of the parties specified under the deed of lease, or by the Land Court.”
[265] He reiterates as with his response to the plaintiff’s claim to cancel Cabinet’s approvals for Mr Paea, that s 19(3) of the Act gives the Minister power to grant leases and sub-leases with the consent of Cabinet, but by contrast the Minister alone does not have the power to cancel a lease. The Court agrees.
[266] The Court also agrees that under the Act it has the power to order cancellation of a lease, or in the present case a transfer of a lease if the evidence before it provides good reason(s) to do so.

Issue II: Whether the Minister owed Mr Paea natural justice when transferring Lease No. 6226A from MLCI to TAMA?

[267] The learned Solicitor-General submits that the Minister has no legal obligation to consult Mr Paea in respect of the transfer of Lease No. 6226 from MLCI to TAMA because:

“... lease no. 6226A is in effect a covenant between the estate holder and the Plaintiff only, and does not, in any way shape of form affect the rights of the First Defendant given under the sub-leases.”

[268] He relies on Mr Moala’s evidence that the transfer of the lease does not affect Mr Paea’s rights to his subleases, submitting that the import of that evidence is that:

“... the transfer of the lease does not, in any way shape of form affect the First Defendant’s rights ... and that his interest on the land will not be affected by the transfer.”

[269] He submits that in his evidence, Mr Moala’s had explained the differences between a fresh new lease and a transfer of a lease, whereby a

“... fresh new lease is a totally new lease is [sic] governed by its covenants, whereas a transfer of lease is a transfer or lease to a new lessee, however all details including any existing agreements or sub-leases remains the same without any implication on the rights of the sub-lessee.”

[270] Learned Crown counsel then quoted Cabinet Decision No 1171 of 14 December 2018 (CB p 112) transferring Lease 6226 from MLCI to TAMA and in which recommendation 2 reads:

“... (subject to any existing agreement with Sub-Lease holders or tenants),” [Counsel’s own emphasis used]

[271] Concluding his submissions on this issue, Mr Sisifa contends that although the transfer of lease was approved by Cabinet and registered accordingly, it did not affect Mr Paea’s rights and interests in Lots 2, 3 and 4 because they pre-existed that lease transfer to TAMA. Therefore he argues there is no obligation for the Minister to consult or afford an opportunity for Mr Paea to have been heard before transferring Lease No. 6226 to TAMA.

Analysis

[272] The Court disagrees with learned counsel that the Minister has no legal obligation to consult Mr Paea as the sublessee before consenting to the transfer of the head lease because in the circumstances of the long-standing, unaddressed procedural defects in this case, evidence showed that the lessee’s rights were in fact affected by not just the omissions, but also by the actions of all the other participants who held some power over the land and could influence the decision-making processes.
[273] Arguably at the very least, the transfer of a lease to another entity can affect others if there is a mortgage registered over the lease or other interests affecting the land, such as a sublease of some twenty years with buildings and developments on 927 square metres of the land.
[274] In Mr Paea’s case, his interests included his unregistered subleases, as yet unsigned by the original sublessor, MLCI despite Paea’s many attempts and requests that he do so pursuant to their agreement of 2001, Cabinet’s lawful approval in 2002 and the duty to implement that, the Minister of Lands’ instructions in 2003 and again in 2015 when finally the Ministry issued deeds for signature by the parties.
[275] In this line of reasoning, Mr Paea had a right to satisfaction of his landlord, the MLCI honouring his duty to sign the deeds, instead of taking rent only for over twenty years and actively encouraging Mr Paea to use and improve the land.
[276] MLCI is not a party to these proceedings and yet the evidence shows that as a key party in the relationship, that ministry did nothing to uphold its agreement with Mr Paea as directed by Cabinet and despite Mr Paea’s efforts to have them sign its sublease deeds, failed or refused to act. Instead MLCI appears to have purported to abrogate its responsibilities in favour of TAMA, who was not a party to the subleases and could not sign the deeds in the place of MLCI. It then ignored Mr Paea. Once it was registered as sublessor, in full knowledge of its predecessor’s failure to sign the subleases, TAMA sought to use that perceived lack of completion or registration to deny Mr Paea his rights.
[277] The learned Solicitor-General argues that because in the transfer of the Lease from MCLI to TAMA, nothing changed in Mr Paea’s subleases and his position from the earlier agreement was preserved by the Cabinet Decision’s proviso (CB p 112), that there was no need for the Ministry of Lands to investigate, consult or give him an opportunity to be heard.
[278] By contrast, learned King’s Counsel Mrs Tupou referred to Mr Moala’s evidence with a slightly different focus, namely submitting that he said:

“that the normal procedure in transferring of leases, no further enquiries or inspection would be conducted as it was a transfer of an existing lease, EXCEPT if there was a mortgage or other interests and he agreed under cross-examination that the interests of the First Defendant was documented in the Ministry’s records.” [counsel’s own emphasis]

[279] From this exception because of Mr Paea’s as yet unregistered interests which the Ministry of Lands had actual knowledge of, Mrs Tupou submitted that natural justice required they make proper enquiries and give him a chance to be heard.
[280] The Court finds logic in the latter submission because of the existence of the incomplete matter in the land being transferred; Mr Paea’s approved but unsigned and as yet unregistered subleases and his investments were known by the Ministry of Lands.
[281] To take this example further to a logical conclusion, if there was a duly agreed and approved but unsigned and as yet unregistered mortgage on the Ministry of Lands file which a sublessor wished to transfer the head lease of to another entity, it is hard for the Court to believe that the Ministry would not have a duty to investigate those interests, enquire with both the mortgagor and mortgagee as to why those arrangements had not been completed and give all parties an opportunity to be heard on their respective interests. There is no logical reason why the same reasoning should not apply here for this particular situation concerning clear evidence of interests and incomplete instruments on the Ministry’s own file.
[282] The Court notes that Mr Moala’s evidence led by learned Crown counsel is of assistance in considering the processes undertaken by Ministry of Lands officials in respect of the transfers of existing leases. Mr Sisifa’s question and Mr Moala’s evidence from the afternoon of day 2 (pages 7 – 9, after 2pm, 24 November 2021) of the hearing transcript follows The Court has made only a few additions in the translation into English for the sake of ensuring completeness of the content of the discussion and where this has occurred they have been placed in { } brackets. Punctuation has been inserted where missing. Emphasis where added is in bold:

“Mr Sisifa: Kou mahino ho’o fakamatala ho’o tali fehu’i ki he fekau’aki pea mo e lisi. Fefe taimi ‘oku ‘osi ai pe lisi ia ka ‘oku fiema’u ‘e he lessee ke transfer ‘a e fo’i lisi ki ha tokotaha kehe ‘i he funga ‘o ha tokotaha kehe ‘oke maheni mo e founga ngaue koia ‘oku fakahoko koia?

[Your evidence when answering the questions regarding the lease is understood. What about the time that a lease is already in place but the lessee wants to transfer the lease to a sublease are you familiar with that work procedure?]

Mr Moala: Koia. Kapau ‘oku ai ha lisi ia ‘oku lolotonga lesisita pe ‘oku felotoi ‘a e lessee ia pea mo ha kautaha pe ko ha taha ke liliu ki ai ‘a e lisi koia ‘oku pau kena faitohi ange ‘oku na fakamo’oni loua ai ke fai hono transfer ‘a e kautaha pe ko e tokotaha ‘oku fai kiai ‘a e felotoi ke transfer. Ko hono fakahu ange ‘a e tohi pea mau vakai’i leva ‘a e tu’unga ‘oku ai ‘a e lisi koia ‘oku lolotonga tu’u ai ‘a e lesisita ‘oku fai mai kole ki hono liliu pe transfer ki ha tokotaha kehe pea mau teuteu leva ‘a e pepa submission ‘okapau ‘oku ‘ata peia ke fai transfer mau teuteu pepa submission pea fai mo hono brief ‘a e Minisita Fonua fekau’aki mo e kole koeni pe ‘oku fe’unga pe ke hokoatu pe ‘oku ‘ia ki ke fe’unga ia ke hokoatu ka ko hono fakamo’oni ‘a e submission pea hokoatu aipe ki he kapineti ki hono tali mo ‘omai ‘a e tu’utu’u ni kapineti ke mau fakakakato ‘a e transfer ‘a ia te mau teuteu leva indenture ke fakamo’oni ai ‘a e ongo party ki hono fai ‘a e transfer koia fakatatau ki he tu’utu’u ni kapineti kuo tali mai pea toki fakakakato ai ke fakamo’oni ai ‘a e Minisita pea totongi pea fakakakato aki ngaue ki he lisi ke transfer.

[Yes. If there is a lease that is currently registered and the lessee consent to a company or a person to change the lease to so they both have to write us a letter with both their signatures on it for the transfer to the company or the person the consent is made to for transfer. When the letter is submitted we then check the status of the lease regarding the application and we then prepare the submission if it is eligible for transfer we prepare the submissions paper and brief the Minister of Lands about this application whether it is appropriate to continue or not. But when the submission is signed it is then handed to Cabinet for approval and a Cabinet decision is given to us for the completion of the transfer, so we then prepare the indenture for both parties to sign for the transfer according to the Cabinet decision and then completed for the Minister to sign, and for the payment and the completion of the work for the transfer of lease.]

Mr Sisifa: Ta talanoa pe ‘eni he transfers ‘I ho’o maheni pe eni mo homou founga ngaue ko e taimi ‘oku transfer ai ‘a e lisi ‘oku to e liliu ‘a e ngaahi term of condition pe ko e ngaahi aleapau ‘oku ‘asi he deed pe ‘ikai?

[We are talking about the transfers here according to how familiar you with your work procedure, when the lease is transferred do the terms of condition change or the agreements stated on the deed or not?]

Mr Moala: ‘Oku ‘ikai pe ke to e liliu ha me’a ia he deed ‘a e ngaahi tu’utu’u ni mo e ngaahi kovinanite. Pea mo e deed ‘o e lisi ‘oku ‘ikai ke to e liliu ha me’a ko e lessee ‘e liliu ‘o fakatatau ki he lisi.

[Nothing is changed in the deed, the directions and the covenants. And nothing in the deed of lease changes, the lessee changes according to the lease.]

Mr Sisifa: ‘A ia ko e transfer ia ko ‘ene kehekehe mo e lisi tatau pe he kapau ko ha fo’i lisi fo’ou te ke lava ‘o ki’i fakama’ala’ala ‘oke ‘osi talamai ‘a e natula kehe ‘o e transfer ‘oku ha leva ‘a e lisi fo’ou?

[So the transfer is {different or the same} because if it was a new lease can you clarify you have already stated the different nature of the transfer what about the new lease?]

Mr Moala: Lisi fo’ou nau ‘osi fakamatala ki ai anenai. Te mau toki fuofua lesisita ‘a e lisi ke hoko ko e lisi ko e lisi fo’ou ia. Ko e transfer ia ‘oku ‘uhinga peia ki ha lisi ‘oku lolotonga lesisita na’e ‘osi lesisita pe pea to e lesisita pe ke fai ha transfer ‘a ia ‘oku toki fai ai ‘a e transfer ia. Ko e lesisita ‘a e lisi fo’ou ia ‘i hono tali mai pe he kapineti pea teuteu leva ‘a e deed of lease nau fakamatala kiai ‘anenai ‘e maau uu me’a koia pea toki lesisita pea toki lisi leva ‘a e lisi fo’ou koia.

[The new lease I have already explained earlier. We will initially register the lease for it to become a lease that is a new lease. Transfer refers to a lease that is currently registered that was already registered and registered again for transfer that is when a transfer happens. The registration of a new lease is when it is approved by Cabinet the deed of lease is then prepared as I had stated earlier all those things and then registered and then that lease will become a lease.]

Mr Sisifa: Na’e ‘iai ho lave ‘anenai fekau’aki moe founga ngaue hono process ‘aki koe lisi. Na’a ke lave ai ‘o pehe koe lave koe application ke mou vakai’i konga ‘api pea ‘ave leva briefing ki he Minister ke manatu kiai?

[You had stated earlier regarding work procedure in processing the lease. You stated that the application you would check the piece of land and the briefing will be given to the Minister, do you remember that?]

Mr Moala: Koia Sea.

[Yes Your Honour]

Mr Sisifa: Koe process koe ‘oe lisi pekoe lisi fo’ou, fefe leva taimi ‘oku transfer ai? ‘Oku toe fiema’u ke vakai’i konga ‘api?

[The processing of a new lease, what about when it is transferred? Does the piece of land still need to be checked?]

Mr Moala: ‘Ikai Sea koe me’a pe ‘oku mau ngaue kiai koe vakai’i pe lisi koe ‘oku lolotonga lesisita pe ko ha mortgage pe ko ha fa’ahinga koe me’a ia ‘oku ma’u vakai’i ‘oku ‘ata pe na’e ‘iai ha sub-lease ia na’e ‘osi fai. Koe me’a koe ‘oku ‘ikai ke mau toe ‘a’ahi ‘oku ‘ikai pe ke mau toe o mautolu fai hono ‘a’ahi mau fai ‘aki pe ‘ae mahino ‘oku ‘iai ‘ae lisi tokotaha koia.

[No Your Honour the only thing we work on is checking the lease that is currently registered or mortgage {or something else} that is {there} what we check {is} whether it is available or whether there was a sub-lease already in place. What we do not check we do not go and check we just go with the understanding that that person already has a lease.]”

[283] The context and import of Mr Moala’s evidence in respect of processes in the transfer of leases is that first, other than the change of name from the transferor of the lease to the transferor, the existing obligations in respect of subleases remain the same. Secondly if there was a mortgage or anything else which existed affecting the land, then they would check that. The logical extension would be that if a person was affected, they would take steps to give effect to the rights they had.
[284] Referring again to the earlier scenario, if a cabinet-approved, agreed but unsigned and unregistered mortgage was on the Ministry of Lands file which a lessor wished to transfer to another entity, the Ministry would have an active duty to properly enquire into those interests, consult with the mortgagor and mortgagee as to why those arrangements had not been completed and give the parties an opportunity to be heard on their interests. The same rationale applies here.
[285] If the transfer of a head lease to another sublessor can affect the sublessee, then as a matter of natural justice, that sublessee should be given the benefit of knowing what is happening and a fair chance to represent his interests to the Minister. That did not occur here. MLCI, TAMA and the Minister all conferred with each other, but none of them asked nor told Mr Paea, despite his efforts to have the MLCI counter-sign his deeds of sublease and gain the protection he sought. All the parties had actual knowledge of his status and chose not to do anything about it.
[286] The evidence bears out Mr Paea’s concern at not being consulted nor heard.
[287] As recorded earlier but which is also appropriate to set out in this particular consideration, soon after registration of the transfer in April 2020, TAMA, as the newly registered sublessor served an eviction notice on Mr Paea in October 2020, then in March 2021 issued proceedings alleging that he had no legal right to possess and use Lots 2, 3 and 4 of the plaintiff’s leased land (Lease No. 6226A) ... and an order for his eviction” (SOC CB p 3), pleaded that he was in rental arrears of $19,570.52 in breach of his duty to pay rent (SOC CB p 9), although paradoxically TAMA demanded that he pay rent and accepted it, and alleged that because Mr Paea’s subleases had not been registered, he had no rights to the lands (SOC CB pp 9, 10).
[288] The Court finds that the Mr Paea’s sublease interests did in fact affect the land and given the circumstances of delays, his requests for action and non-registration, deserved further attention, proper enquiry, actual consultation and engagement by the Ministry of Lands with Mr Paea himself so he could represent his own interests to them before the Ministry of Lands accepted and recommended to Cabinet the transfer of the Lease to TAMA.

Second Defendant’s legal submissions

In response to the Mr Paea’s claims for damages and compensation

[289] Learned counsel listed these issues to be determined:

• 289.1 Whether the Second Defendant is liable to pay damages for loss of years of the First Defendant to [sic] Lots 2, 3 and 4?; and
• 289.2 Whether the Second Defendant is liable to pay for compensation for the value of the buildings on Lots 2, 3 and 4?”

[290] Mr Sisifa submitted that the Second Defendant is not liable to pay damages for loss of years of usage because the delay in registration of Mr Paea’s subleases is not the issue or reason why TAMA seeks that they be cancelled. He submits that TAMA’s claim for cancellation is due to the Mr Paea himself breaching the sublease covenants, the purpose for which the sub-lease was granted and that the Minister had no part in that.
[291] In respect of the second claim for compensation, the Solicitor-General says the Minister is not liable to pay compensation for the value of Mr Paea’s buildings because as with his reason for rejecting the damages claim, the delay in registration of Mr Paea’s sub-leases is not the reason why TAMA wishes that the subleases cancelled. He submits again that TAMA’s claim for cancellation is due to Mr Paea breaching the sublease covenants, the purpose for which the sub-lease was granted and that the Minister had no part in that.
[292] Mr Sisifa’s contention that the Minister of Lands has no responsibility for either damages or compensation sought by Mr Paea is based on his submission that he had not paid rent to TAMA as agreed.

Rentals Issue

[293] For reasons given, the Court has found that TAMA was not in fact or at law a party to the subleases between MCLI and Mr Paea until at earliest 21 April 2020 and prior to that any rentals were due to MLCI, to whom Mr Paea had paid rent earlier and then to TAMA upon their demand.
[294] TAMA conceded at hearing that they had no accounting basis from which to have demanded rent arrears from Mr Paea resulting in a $19,570.52 allegation in their statement of claim in 2021, which at trial they then asked to reduce by $12,691.88 down to $6,608.64. In hearing, Mr Paea accepted such a figure.
[295] The Court has found that in the extraordinary circumstances, Mr Paea had a reasonable cause to withhold some rentals while asking MLCI and TAMA to honour their agreement and the Minister of Lands to facilitate his subleases.
[296] Mr Paea has overpaid TAMA what they were due for the period they were due payment. The balance of the rent he had paid prior to 21 April 2020 was rightfully MLCI’s.
[297] For the foregoing reasons, the Court finds that TAMA’s claim of Mr Paea’s breach of covenant to pay rent to them fails. This means that the plaintiff’s rationale for the breach by Mr Paea on the rental allegation fails, as does denying he has a legal right to possess the land, as does TAMA’s claim for orders cancelling the subleases.

Use of premises issue

[298] Turning now to the learned Solicitor-General’s last submission, that TAMA’s reason for wanting to cancel Mr Paea’s subleases is his “using the land for political purposes” in breach of the covenants in the sublease. The Court has already found that this matter was not pleaded, nor was leave sought for its inclusion as a cause of action, thus it is a collateral attack and a more reasonable process should have been adopted as described earlier.

Responsibilities of Ministers

[299] The Minister of Land’s role in this situation is not straightforward, especially given the actions and omissions of others and the effusion of time. However the Court does not agree with Mr Sisifa’s rather simplistic submission that once the Ministry of Lands gave Mr Paea the draft Deeds of Subleases 12 years late in 2015, that it was only up to Mr Paea solely to get the MLCI to counter-sign them and returned to the Minister for him to sign and register them. The onus was not only on the sublessee himself, it was also on the Minister’s cabinet colleague, the Minister of Labour Commerce and Industries, to implement the will of Cabinet. He refused for another five years and his delegated successor, TAMA now says he will not and cannot sign the Deeds.
[300] The Minister of Lands is a member of Cabinet and also has collective responsibility to implement its decisions, but he did not do so and did not do all he could in his power to facilitate the MLCI signing the Deeds.
[301] In this vein, regardless of what difficulties there might have been politically or administratively, which the Court does not comment on here, in terms of fairness and natural justice it must look to the imbalance of power between the private individual sublessee and two Ministers of His Majesty’s Cabinet and their ‘legion’ of officials to assist. The evidence shows that it was impossible for Mr Paea to gain any traction with getting Ministers to implement the approvals, particularly after so many years and so many changes of ministers. Yet he paid his rent and they took it. When he did not, he was promptly threatened with eviction then sued.
[302] In those circumstances the Minister himself and the MLCI and both their sets of officials and quasi-public/private servants should have done the right thing and attended on having the Deeds honoured, signed and registered. Neither are blameless. Both are responsible.
[303] Having considered the evidential merits and issues arising, the Court must now look at what remedies are available at law and in equity, including damages and compensation as possible options, in order to resolve the issues and find a way to achieve justice.

V. ANALYSIS

A. EQUITY

Equitable interest and Estoppel

[304] TAMA have asserted their legal rights in the land as sublessor under Lease No. 6226A.
[305] Mr Paea asserts his legal rights to his subleases as well as his equitable right to protection of the equitable doctrine of estoppel.
[306] In Tafolo v Vete [1998] Tonga LR 164, the Court of Appeal provided a useful reference from the ever-helpful Halsbury’s Laws of England [4th Ed] Vol 27(1) at 33:

“Equity recognises and enforces rights (sometimes referred to as ‘equities of possession’ or ‘equitable licences’) so as to restrict the revocation of licences to occupy or use premises which at common law would be regarded as revocable. This restriction occurs where a person who is occupying or using land has acted in reliance upon the representation or the acquiescence of the person having a proprietary interest in respect of that land. Where a person has established an express or implied licence to occupy premises, the role of equity is supportive and supplementary, but, if the legal relationship between the parties is such that the true arrangement between them will be frustrated if they are left to their legal rights and duties at law, an equity will arise notwithstanding that there has been no agreement (so that there is no contractual licence), and notwithstanding that the representation made or the belief which has been acted upon is so imprecise as not to define the duration of the right to occupy or use the premises; in such circumstances it is for the court to determine what period of occupation or use is sufficient to satisfy the equity. Such rights arise by operation of the principles of equitable estoppel.

[307] In respect of equity, Tongan Courts recognise a defence of estoppel to an action for recovery of land. The authorities are: Tafolo v Vete; Ongolea v Finau [2003] Tonga LR 147; Pulu v Bloomfield [1974] Tonga LR 105; and Alofi v Fine [1998] Tonga LR 24. These decisions are examples referred to by His Honour Paulsen LCJ in his judgments in Nginingini and Siasi Tokaikolo (supra) referred to earlier and from which the Court gains guidance.
[308] The principles of estoppel by acquiescence, with which we are concerned in this case and which Paulsen LCJ had earlier commented on in his decisions, have a long ‘genealogy’ descending from 19^th century milestone judgments in Dillwyn v Llewelyn (1862) 4 De G F & J 517 and Ramsden v Dyson [1866] UKLawRpHL 7; (1866) LR 1 HL 129 (see also Meagher, Gummow & Lehanes, Equity Doctrines and Remedies 4th Ed at 17-075 page 560).
[309] In Inwards v Baker [1965] EWCA Civ 4; [1965] 1 All ER 446, 448-449, the masterful jurist, Lord Denning MR wrote of equity in clear terms:

“It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay. He has a licence coupled with an equity....

It is an equity well recognised in law. It arises from the expenditure of money by a person in actual occupation of land when he is led to believe that, as a result of that expenditure, he will be allowed to remain there. It is for the court to say in what way that equity can be satisfied.”

[310] That is the case here and the Court must decide in what way that equity can be best satisfied within the parameters of the Act, to fulfil the needs of justice.
[311] What creates the equity is the unconscionable conduct of the land holder. In Willmot v Barber [1880] UKLawRpCh 183; (1880) 15 Ch D 96, 105 Fry J said:

“It has been said that the acquiescence which will deprive a man of his legal rights must amount to fraud, and in my view that is an abbreviated statement of a very true proposition. A man is not to be deprived or his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights.

[312] [34] In Crabb v Arun District Council [1975] EWCA Civ 7; [1975] 3 All ER 865, 877 Scarman LJ put the matter this way:

“But it is clear that whether one uses the word ‘fraud’ or not, the plaintiff has to establish as a fact that the defendant, by setting up his right, is taking advantage of him in a way which is unconscionable, inequitable or unjust. It is to be observed from the passage that I have quoted from the judgment of Fry J, that the fraud or injustice alleged does not take place during the course of negotiation, but only when the defendant decides to refuse to allow the plaintiff to set up his claim against the defendant’s undoubted right. The fraud, if it be such, arises after the event, when the defendant seeks by relying on his right to defeat the expectation which he by his conduct encouraged the plaintiff to have. There need not be anything fraudulent or unjust in the conduct of the actual negotiations - the conduct of the transaction by the defendant.

The court therefore cannot find an equity established unless it is prepared to go as far as to say that it would be unconscionable and unjust to allow the defendants to set up their undoubted rights against the claim being made by the plaintiff. In order to reach a conclusion on that matter the court has to consider the history of the case under the five headings to which Fry J referred.”

[313] Those five headings are the clear pathway, together with other layers of parties’ actions or omissions to be considered.
[314] His Honour Paulsen LCJ gave some helpful analysis in Nginingini (supra) from [36] to [40] which have been considered earlier and were well raised by learned counsel for consideration. The subsequent paragraphs are worth setting out also because this Court will apply the relevant approaches:

[41] In E.R. Ives Investment Ltd v High [1966] EWCA Civ 1; [1967] 2. Q.B. 379 the defendant had made an agreement with the plaintiffs’ predecessors in title (W) that he would have a right of way over W’s land in return for which he would not require W to remove foundations of his building that encroached on the defendant’s land. The defendant exercised his right of way and developed his land to make best use of it. The plaintiffs acquired W’s land with knowledge of the right of way but asserted that the right of way did not bind them as it was not registered. They sought an injunction restraining the defendant from trespassing on their land and damages. The Court of Appeal dismissed their claim and held that an equity arising out of acquiescence bound not only the original landowner W but also the plaintiffs. Lord Denning said at 394-395:

“That gives rise to ‘an equity arising out of acquiescence’. It is available not only against the Wrights but also their successors in title. The court will not allow that expectation to be defeated when it would be inequitable so to do”

[42] One of the principal reasons that it would have been inequitable for the plaintiffs to have defeated the defendant’s equity was that they were benefitting from having their foundations on the defendant’s land but did not wish to bear the burden of the condition on which that benefit was granted. Dankwerts LJ said at 400:

“The plaintiffs bought the property subject to Mr. High’s equitable rights and the property was so conveyed to them. They had full knowledge of the situation, yet they continue to enjoy the benefits of the situation and wish to deny Mr. High the benefit of what he was induced to do in reliance upon the mutual arrangement. As long as the plaintiffs continue to enjoy the foundations, they must accept the terms of that enjoyment.”

[43] It has been recognised in Tonga that an equity may bind a third party. In Tafolo (supra) at 164 the Court of Appeal said:

“Of course, if such an equity were to be made out here, it would prima facie bind only the second respondent. But if it was shown that the first respondent, as the holder of the legal leasehold estate, also had notice of the appellant’s equity, he would also be bound.”

[315] The five headings to establish an equity listed and referred to earlier by the Court in Nginingini and Siasi Tokaikolo (supra) are: expectation, encouragement, knowledge of that expectation, action in reliance on that expectation, ability to lawfully satisfy that interest, with the result that it would be unconscionable, inequitable or unjust for one party to rely on their legal rights to defeat the expectation of the other party who has acted in reliance. The evidence shows that in this case all these elements are present.
[316] Here, Mr Paea’s expectations and actions in reasonable reliance on the MLCI’s and TAMA’s actions, knowledge, actions, omission, knowledge, encouragement and acquiescence, also on the second defendant Minister of Land’s actions, knowledge, encouragement, later omissions and failure to enquire or consult, give rise to Mr Paea having established an equity against which the other party, TAMA are estopped from denying and asserting their legal rights. In the circumstances of Mr Paea’s case the Court finds that they have been established.
[317] It would be unconscionable, inequitable or unjust for TAMA and MLCI to rely on their legal rights to defeat the reasonable expectations of Mr Paea who acted in reliance. The Court must now decide what remedy is required to satisfy Mr Paea’s equity.

Are damages and compensation an appropriate remedy?

[318] The Court notes the valuation evidence from Mr Mafi, for both the land and also for the improvements, but must ask the questions, are compensation for the Mr Paea’s improvements to the land an appropriate remedy available in the circumstances? At law, the improvements he has built belong to Mr Paea, but they require underlying certainty of land tenure also to realise their full value.
[319] Due to the other findings and orders which the Court will make in respect of cancelling the transfer of the head lease and ordering completion and registration of the subleases, noting also Mr Paea’s resilience and the value of his buildings, the Court is satisfied that his effective retention of the subleased lots for a further 20 years each on existing terms will satisfy the equity which has arisen in his favour.
[320] Therefore the Court finds that neither damages nor compensation are payable to Mr Paea from either of the other parties.

B. The Land Act

[321] S 149 of the Land Act provides this Court’s powers. In this case the relevant ones are in s 149(1) (b) and (e):

“149 Jurisdiction of Court defined (1) The Court shall have jurisdiction — ;

(b) to hear and determine all disputes, claims and questions of title affecting any land or any interest in land in the Kingdom and in particular all disputes, claims and questions of title affecting any tofia, tax or town allotment or any interest therein; and

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

[322] In considering the equity raised in favour of Mr Paea, the Court is mindful that in considering its options to achieve justice, it cannot provide remedies which do not exist or are contrary to the provisions of our Land Act.
[323] His Honour Paulsen P in Nginingini at [37] (supra) put it well:

“[37] This Court’s remedial powers whilst flexible are not unlimited. It cannot grant relief which is contrary to some provision in the Land Act. Furthermore, as it has been held that in Tonga an estoppel only imposes a personal restriction upon the person against whom the estoppel operates and does not create any interest in land any period of occupation that is granted to satisfy an equity should, in my view, not exceed the lifetime of the landholder (OG Sanft & Sons v Tonga Tourist and Development Co Ltd [1981-88] Tonga LR 26, Matavalea v Uata [1989] Tonga LR 101, 103 and Schaumkel v ‘Aholelei & anor [2013] Tonga (Unreported Court of Appeal, AC 14 of 2012, 17 April 2013).

[324] On the basis of those considerations and the issues traversed in the evidence and parties’ legal rights and duties, the Court will provide an available remedy which is appropriate in the circumstances.

VI. SUMMARY OF FINDINGS

A. Rights and Interests, Summary of Findings

[325] Mr Paea has established his interests in the subject lands, built considerable infrastructure, possessed and used them for business since the mid-1990s. He formalized those arrangements with the Government, who had formally become lessee of the block of His Majesty’s by Lease No. 6226 in 1998. He entered into the 2001 agreements to sub-lease with MLCI as his then company, VCL. Cabinet approved the subleases in December 2002, whereupon the Ministers and officials were to undertake their work to arrange, issue, have signed and register subleases. Upon the advice of MOL officials Mr Paea made applications in his own name together with MLCI to the Minister of Lands to sub-lease the lots. In May 2003 the Minister of Lands instructed officials to survey the lands and prepare maps and deeds of subleases for execution, which they eventually did.
[326] For reasons unknown the inordinate delays by the officials over very many years, meant that the approved final deeds of sublease were not generated, executed, completed, signed by the MLCI with Mr Paea and the Minister of Lands then registered to regularise Mr Paea’s position as sublessee.
[327] The Government via the MCLI’s active encouragement of Mr Paea over more than twenty years and acceptance of his rental payments has led him to justifiably rely on their good faith in providing him with security of tenure of the lands he possesses and the improvements he has made on them. Within natural justice and the parameters of the Land Act, Equity intervenes to hold the parties to their responsibilities.
[328] On the face of it, the Minister of Lands was entitled to approve and register the indenture transfer of the leasehold interest from MCLI known as Lease No 6226 to TAMA on 21 April 2020 to become the registered Lease No. 6226A. However, given Mr Paea’s continuing unregistered sublease interests and his significant improvements which he had advised the Minister of and which he should have been advised of by his officials, before he approved the transfer, he should have enquired of Mr Paea, MLCI and TAMA whether or not there were any matters which might impugn or prejudice Mr Paea’s rights. This is because there was at least the potential for Mr Paea’s rights to be prejudiced, should the new sublessor, TAMA seek to take advantage of Mr Paea’s non-registration by as they have in this case, seeking to cancel his rights on the basis of non-registration of his sublease interests.
[329] This is not necessarily to say that the Minister must on every single application for a transfer of a lease, consult with each and every sublessee or putative sublessee before approving a lease transfer. Rather in situations like this where he has a duty the Minister should have been properly advised in advance by his officials who were well aware of the lack of completion of the earlier legal processes in favour of the sublessee, Mr Paea. If such lack of completion of formal processes had the potential to cause problems for a sublessee then the Minister does have a duty to consult and regularise matters prior to granting a transfer of lease rights over those unregistered interests. Subleases which have irregularities such as this, including mortgages which grant legal rights over leased lands sought to be transferred, should be properly enquired into and consulted on before transfers are recommended. As events transpired here, prejudice to the sublessee was borne out by the new sub-lessor TAMA’s actions since registration of Lease No. 6226A. It is precisely to avoid messes like this that the due diligence by Ministers advised by relevant officials should be done in advance.
[330] The Second Defendant’s registration of the transfer of the Government’s Lease No. 6226 held by Ministry of Labour Commerce and Industry to the Plaintiff by indenture on 21 April 2020, registered as Lease No. 6226A is invalid and unlawful because the Minister of Lands should have made enquiries as to the status of Mr Paea’s sublease interests and sought his views before recommending the transfer to TAMA. See the decision in Tafa v Viau, and in Manu v ‘Aholelei as authority for the proposition that parties with interests in the land should be given an opportunity to be heard in relation to leases and in this case a transfer by indenture is a situation in which rights to be consulted arise.
[331] Cabinet according to its own rules also has a collective responsibility to implement decisions it has made. It has not done so in this case because two of its ministers and their official teams have failed to complete their duties in a timely and proper manner. Ministerial action is required so that all the people who rely on their decisions can get on with their lives and businesses with certainty of their tenure. Having said this the Court is aware that 25 years, a quarter century has passed since this started. Many ministers, government administrations, officials have changed and many have passed on and have been remembered during this case. The Court’s comments are obviously not focused on individuals but rather on each component individual comprising the various parts of Government at all levels, to take responsibility for the follow-through work necessary. The Court implores the Government’s leaders to get this processing right so that all parts of society can get on with the business of serving one another.
[332] TAMA’s allegations that Mr Paea has no legal right to possess and occupy Lots 2, 3 and 4 because his subleases have not been registered under s 126 of the Act are incorrect.
[333] Mr Paea has had the right to those lots since Cabinet approved them and the Minister of Lands put into place instructions and processes to formalise them, have deeds of sublease generated, signed and registered. The Court finds, in alignment with the ample authorities considered and with the learned Solicitor-General’s and Mrs Tupou KC’s submissions that in his circumstances, Mr Paea’s sublease interests already exist and that registration will evidence that in due course, given good process.
[334] The problem with that is that the Government did not follow through. Had MOL officials done their surveying job properly many years earlier and followed through with the deeds and processing of Mr Paea’s registration, all might have gone well. Had the MLCI followed through as sublessor and had they much earlier advised the Minister of Lands, then the present situation may never have arisen. Further, had Mr Paea been given an opportunity to be advised about the proposed transfer of the lease to TAMA he would therefore have been able to ask about his own subleases, which he reasonably believed to have been registered many years earlier.
[335] That this did not happen prejudices Mr Paea and needs to be remedied so he may be placed in the position which he should have been in from 2003, when arrangements were all made and recognising his interests arising since then.
[336] Further, equity intervenes in favour of Mr Paea and TAMA and MLCI are estopped from denying his right to his interests being recognised in a manner consistent with the Land Act, which will satisfy his equity, namely granting him his right to subleases for twenty years. It is unconscionable for TAMA to stand on its legal rights to deny Mr Paea his.
[337] To achieve this, Mr Paea’s subleases must be completed for a further sublease term of twenty years on the existing conditions and put in place by registration.
[338] However, to achieve that outcome, the Court recognises that Cabinet Decisions Nos. 2256,2257 and 2258 of 19 December 2002 approved the three subleases of Lots 2, 3 and 4 from MLCI to Mr Tomifa Paea.
[339] However, on 21 April 2020, MLCI and TAMA signed the indenture of transfer of Lease No. 6226 to TAMA. The MOL signed and registered the transfer and Lease No. 6226A became registered to TAMA.
[340] Therefore to put matters right, the Court must first arrange to remove TAMA as sublessor of Lease No. 6226A by cancelling that transfer of lease and reinstate MLCI as the sublessor of Lease No. 6226. Once the MLCI is back in place as sublessor, he will be able to carry out his duties to Mr Paea.
[341] Then the Court must arrange for the Minister of Lands via his officials, to reissue the draft Deeds of Sublease to correctly reflect Lots 2, 3 and 4, for a further twenty years on the same terms and conditions, arrange for prompt signing of them by Mr Paea and MLCI and do all things necessary to have the subleases registered forthwith.
[342] Although the Court makes no orders in respect of Mr Paea’s counterclaim for damages and compensation for the value of his improvements on the land, the expert Mr Mafi’s valuation presented and cross-examined before the Court appears reasonable in the adjusted amount of $938,100.
[343] The Court notes for completeness that some findings made earlier in the body of this decision have not been repeated in this summary.

B. Rentals

[344] For reasons traversed in this decision, the Court has found that TAMA was not in fact or at law a party to the subleases between MCLI and Mr Paea until 21 April 2020. Prior to that any rentals were due to MLCI to whom Mr Paea had paid rents earlier. He later paid to TAMA upon their representation that they were entitled to it; he had no reason to disbelieve.
[345] TAMA conceded at hearing, that they had no evidential accounting basis from which to have demanded $12,961.88 rent from Mr Paea in 2020 as a starting point. Therefore their $19,570.52 allegation of rental arrears in their claim was in error, meaning that the purported $17,000 arrears they complained to the Minister of Lands of in October 2020 was also not accurate; it was misleading. TAMA then reduced the claim to $6,608.64 at trial. This amounts to about 18 months rent, not an unreasonable sum to withhold given a 20-year tenancy, money and time invested in a 927 square metre complex and still no registered titles.
[346] The Court accepted that Mr Paea had paid to TAMA in good faith, lump sums of $5,000 in 2017 and $4,353.24 in 2019, on the basis that TAMA or its master, MCLI would sign the subleases. MCLI never did sign and once TAMA was registered as sublessor in 2020, they refused to sign, saying that MLCI cannot now sign and maintain through to the closing submissions of their case that they (TAMA) cannot and will not sign.
[347] The Court finds that in the extraordinary circumstances of his case, Mr Paea had a reasonable cause to withhold some rentals while asking MLCI and TAMA to honour their agreement and the Minister of Lands to facilitate it. MCLI have a duty to Cabinet to fulfil as well as the duty to Mr Paea to sign his deeds of sublease. TAMA succeeded to that duty from MLCI as transferee of the lease yet have chosen to pursue this action for, inter alia, non-payment of rent.
[348] Mr Hua’kau’s concession under questioning that he did not have proof for their ‘starting point’ of $12,961.88 rent owed was very significant because it was relied on as a key breach of the sublease terms in TAMA’s claim against Mr Paea. It was done in full knowledge that Mr Paea’s withholding rent was due to his asking for their help in completion of his subleases. It was done in full knowledge that TAMA’s board did not pursue completing the subleases with MLCI and that they did not tell Mr Paea that fact.
[349] The Court notes that TAMA’s concession at hearing of the lower amount of rent of $6,608.64 does not absolve them of responsibility. It does show that they did not prepare their evidence accurately, have wasted a lot of everyone else’s time and resources, yet still maintain that they are entitled to the orders they were seeking. They were wrong.
[350] As TAMA was only entitled to rentals as sublessor from its lease transfer from MLCI from 21 April 2020 to 23 November 2020, it was only entitled to claim at most, rent for 7 months x $362.77, being $2,539.39. However, now the Court is ordering the cancellation of that lease to TAMA, all the rents Mr Paea has paid are for the credit of MLCI, the original sublessor who will be reinstated to that role.
[351] Not having had the benefit of MLCI’s inclusion as a party, evidence or further reliable information about rentals from them or TAMA, the Court makes no further findings.
[352] For the foregoing reasons on the evidence, the Court finds that TAMA’s claim of Mr Paea’s breach of covenant to pay rent to them fails.

C. Lease No. 6226A

[353] To put matters right, the Court will first make orders to remove TAMA as sublessor of Lease No. 6226A by cancelling that transfer of lease and to reinstate MLCI on the Lands Register as the sublessor of Lease No. 6226. Once the MLCI is back in place as sublessor, he will be able to carry out his duties to Mr Paea as agreed with him and as Cabinet directed in 2002.

D. Mr Paea’s subleases

[354] The Court will make orders for the Minister of Lands via his officials, to reissue the draft Deeds of Sublease to correctly reflect Lots 2, 3 and 4, for a further twenty years on the same terms and conditions, arrange for prompt signing of them by Mr Paea, MLCI and then he must sign and do all things necessary to have the subleases registered forthwith.

VII. RESULT

A. Orders

[1] The Honourable Minister of Lands is ordered to cancel Lease No. 6226A registered in favour of TAMA on 21 April 2020.
[2] The Hon. Minister of Lands is ordered to reinstate and re-register Lease No. 6226 in favour of the Hon. Minister of Labour, Trade and Commerce or the lawful successor minister to him, which the Court understands is now the Hon. Minister of Trade and Economic Development.
[3] The Hon. Minister of Lands is ordered to direct his officials to reissue the draft deeds of sublease to correctly reflect Lots 2, 3 and 4, for a further twenty years from the date of commencement on the same terms and conditions and arrange for the prompt signing of deeds by Mr Paea and the Hon. Minister of Trade and Economic Development, who is ordered to sign the deeds of sublease.
[4] The Hon. Minister of Lands is then to sign, complete and arrange all things necessary to effect registration the deeds of sublease in the Land Register.

B. Costs

[5] The Court orders that 85% of the first defendant’s costs are ordered against the plaintiff, with a 15% portion of the first defendant’s costs ordered against the second defendant.
[6] Costs may be agreed between the first defendant and the other parties or failing agreement, taxed by the Registrar.

NUKU’ALOFA		Tu’inukutavake Barron Afeaki
30 March 2022		ACTING PRESIDENT OF THE LAND COURT