Zuvva Company Ltd v Tafolo [2007] TOLawRp 8; [2007] Tonga LR 63 (16 May 2007)

[2007] Tonga LR 63

IN THE SUPREME COURT OF TONGA

Zuvva Company Ltd

v

Tafolo anor

Land Court, Nuku'alofa
Laurenson J
L 04/07

11 and 14 May 2007; 16 May 2007

Land law – procedure – application to strike out defence – refused

The plaintiff was a registered lessee of a commercial property on which there were facilities for a fuel distribution business. In January 2004 the plaintiff and the defendant entered into an arrangement involving the transfer of the lease and business to the defendant. The plaintiff became concerned over the defendant's alleged failure to perform his obligations under the agreement and attempted to cancel a consent it had given to transfer the lease to the defendant. The defendant remained in possession of the premises and business. In March 2007 the plaintiff filed proceedings to recover possession of both the premises and the business and the defendant filed a counterclaim alleging inter alia that the plaintiff was estopped from claiming possession. The plaintiff then filed an application to strike out the paragraphs in the statement of defence which set out the basis for the estoppel defence in reliance upon section 126 of the Land Act which provides that no person can claim any title as the lessee of a commercial lot unless registered as lessee, or, unless it could be shown that the plaintiff was estopped from reclaiming possession. The issue was whether the statement of defence disclosed a sufficient basis to justify a claim for estoppel.

Held:

1. There was obviously a complicated factual background to the matter which deserved a full examination at the substantive hearing.

2. There had been a significant delay on the part of the plaintiff i.e. over three years.

3. The application to strike out the defence was refused but further orders were made to protect the plaintiff's position pending the substantive hearing.

Statute considered:

Land Act (Cap 132)

Counsel for the plaintiff: Mr Niu
Counsel for the defendant: Mr Tu'utafaiva

Ruling

Introduction

[1] The plaintiff is the registered lessee under lease No. 4086 of a commercial property at Touliki in Nuku'alofa on which there are facilities for a fuel distribution business.

[2] On or about 16 January 2004 the plaintiff and the defendant were parties to what can best be described as a vague and uncertain arrangement which, for a start, involved the transfer of the lease and business to the defendant. Shortly afterwards the plaintiff became concerned at what it perceived to be a failure by the defendant to perform his obligations under this arrangement. The plaintiff undertook a number of steps to protect its position including the cancellation of a request to transfer the lease to the defendant. Despite this, the defendant entered into possession of the premises and business and has continued to do so until the present time.

[3] On 28 March 2007 the plaintiff filed proceedings to recover possession of both the premises and the business claiming as well, substantial damages. An ex parte application for interim relief, including an application for possession, was determined by Ford CJ on 30 March 2007. A number of orders were made including orders to preserve the position pending the hearing of the substantive claim which has been set down for hearing on 23 October 2007.

[4] On 13 April 2007 the defendant filed a statement of defence and counterclaim alleging inter alia that the plaintiff was estopped from reclaiming possession. The plaintiff then filed the present application seeking to strike out paragraphs 17-20 of the statement of defence which set out the basis for the estoppel defence and also seeking an order for possession.

[5] Stated simply, under section 126 of the Land Act no person can claim any title as lessee of a commercial lot unless registered as lessee, or, unless it can be shown that the plaintiff is estopped from reclaiming possession.

[6] The plaintiff has submitted that the pleadings in paragraphs 17-20 do not provide a sufficient basis to ground a claim for estoppel. The defendant argues that there is evidence to justify the claim basically on the ground that the defendant has performed its obligations under the original arrangement.

Conclusions

[7] Having heard counsel I am not prepared to strike out the pleadings or make the order for possession. My reasons are:

(a) There is quite clearly, a complicated factual background to this matter which deserves a full examination at the substantive hearing.

(b) It appears from the papers that the plaintiff owes a considerable amount of money to the Tonga Development Bank. I am unable to see from the papers what exactly is the position regarding this indebtedness. Given the lapse of time, it is not unreasonable to assume that the bank has secured its position in some way which might involve repayments by the defendant on behalf of the plaintiff. If this is so, then to order the defendant to vacate the premises and hence effectively close the business could create an even more difficult situation to be resolved later.

(c) Although there may be a good reason for it, there has, on the face of it, been a significant delay on the part of the plaintiff i.e. over three years. This being the case, I do not consider that a further delay until October 2007, when the matter will be heard, is unreasonable.

(d) Further orders can be made now to protect the plaintiff's position on an interim basis.

[8] For the above reasons, I do not consider it is appropriate to consider making an order to evict the defendant at this point. The question remains as to whether or not it is appropriate to nevertheless strike out the estoppel pleadings. In my view it is pointless to do so, given my decision that it is not appropriate to make an eviction order. In this regard I also note that if the defence was struck out, the defendant could still file an amended statement of defence resurrecting the defence on an amended factual basis or one which might emerge during the course of the main hearing.

[9] Having indicated to counsel the likely outcome of the application, Mr Niu then invited me to consider further orders to protect the plaintiff's position. Following a discussion with counsel and then with the consent of the defendant's counsel, I directed that the following further interim orders be made by way of variation of order No 3 of the orders made by Ford CJ on 30 March 2007:

(a) All records to date are to be filed with the court by 4:30 p.m. on Monday 21 May 2007 and further records compiled thereafter are to be filed at monthly intervals until the hearing of the substantive action.

(b) The plaintiff is to have leave to apply for further orders following receipt of the records referred to in (a) above.

(c) Mrs Naufahu is to have the right to inspect the Touliki premises with such advisers as she elects to take, during the hours of 9 a.m. and 4 p.m. on any day providing 48 hours prior notice is given to the defendant.

(d) The third petrol pump removed from the Touliki premises is to be returned and reinstalled there forthwith.

(e) The defendant is to provide to the plaintiff within 24 hours from the date of the making of this order full details of all insurances in relation to the Touliki premises and business including copies of all relevant cover notes and/or policies and receipts for current premiums.

[10] Costs are reserved.