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Court of Appeal of Vanuatu |
IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)
CIVIL APPEAL CASE No. 21 of 2004
BETWEEN:
Mrs. GLADYS WILLIAM
First Appellant
AND:
Mr. DON WILLIAM, KENWAY WILLIAM,
KELSIN WILLAM AND TONY WILLIAM
Second Appellants
AND:
Mr. EZRA WILLIAM
First Respondent
AND:
AHC (VANUATU) LIMITED
Second Respondent
Coram: Chief Justice Vincent Lunabek
Justice Bruce Robertson
Justice John von Doussa
Justice Daniel Fatiaki
Justice Patrick Treston
Justice Hamlison Bulu
Counsel: Mr. Saling Stephens for the appellants
Mr. John Malcolm for the Respondents
Date of hearing: 27th October 2004
Date of judgment: 4th November 2004
JUDGMENT OF THE COURT
This is an appeal against a judgment of the Supreme Court sitting in Santo which dismissed the claims of Gladys William and two of her sons Don and Kenway against Ezra William and ACH (Vanuatu) Ltd.
At trial the appellants sought declarations that the subdivision of a lease then registered in the name of Ezra William as lessee into two titles, and the subsequent registration of transfers of those titles to AHC (Vanuatu) Ltd were ‘done through fraud, omission and/or mistake and should be declared null and void and of no legal effect’. In the alternative, orders were claimed requiring the respondents to jointly and severally compensate the appellants for improvements made by them on the two titles.
By cross claim, AHC (Vanuatu) Ltd “as bona fide purchaser for valuable consideration invoking the provisions of Section 100(2) of the Land Leases Act” claimed a declaration of validity of each registration as transferee of the Leasehold interests, an order evicting the appellants from the land and damages for trespass.
At earlier stages in the proceedings there had been other parties joined as defendants against whom the appellants made various claims, and against whom by counterclaim the defendants also sought remedies. By the time of trial the proceedings had been dismissed against these other parties. There is no need to further refer to them.
By the time of trial only the first two members of the second appellant group, Don and Kenway William, were seeking the remedies claimed in the proceedings. The other members of the second appellant group (also children of Gladys and Ezra) had apparently reached an agreement with the respondents.
Some facts were common ground. The first respondent Ezra William was the original proprietor of the Leasehold Titles No.04/2621/001 and 04/2621/002. These titles were transferred into his sole name in 1968 by Edward Allegre in consideration of the payment of 150 French Francs.
Lease 04/2621/001, although not formally registered until much later, was for a period of 50 years commencing on 30th July 1980. The lease was executed by the Minister for lands as lessor acting in exercise of, and in accordance with the powers conferred by ss.8 & 9 of the Land Reform Act [CAP. 123] for and on behalf of the indigenous disputing custom owners of the land.
In or about July 2001 Ezra William subdivided title No.04/2621/001 and created titles No.04/2621/008 and 04/2621/009. On 9 September 2002 both the subdivided titles were transferred to AHC (Vanuatu) Ltd by Ezra William in consideration of the payment of VT15,500,000.
At the time of the registration of the transfers of the two subdivided titles into the name of AHC (Vanuatu) Ltd, Gladys and some the children were residing on the land. Gladys was the wife of Ezra. The second appellants were their sons, being some of the ten children of Gladys and Ezra.
Beyond these facts, there was dispute between the appellants and the first respondent.
Mrs. Gladys William gave evidence that she was legally married to Ezra William in or about 1951. She and Ezra worked for Mr. Allegre, a white planter, who later transferred the land to them. She said she contributed to the consideration for the property partly in money and partly by her work as the wife of Ezra including the rearing of their children. She said that 10 years before the trial Ezra left her, moved off the land and took up residence in Luganville with another woman. Gladys William then took proceedings in the Magistrate’s Court for maintenance, and an order was made against Ezra. Under the order Ezra only paid VT40,000 and then told her to remain on the land. She has continued to do so ever since, and intended to go on doing so but for the attempts by AHC (Vanuatu) Ltd to evict her.
Mrs. William and Don William, one of the second appellants, gave evidence that in 1982 Ezra William granted individual plots of land to five of the sons, and those sons thereafter planted cash crops and grew food for their own children. Mrs. William said she had witnessed the boys working in their individual plots.
Mrs. William and Don William said that they were not aware of Ezra’s proposed sale of the land to AHC (Vanuatu) Ltd, and only learnt of the sale when steps were taken to evict them.
Ezra William in his evidence was disposed generally to dispute the evidence of his wife and his son Don, although he conceded that he had allowed his sons to work parts of the land. His overall attitude to their allegations was that whatever might have happened in the past, whilst he was still surviving, he was “boss” and could do as he wished with the land registered in his name. He also asserted that it was his right to transfer the land, notwithstanding that his wife continues to live on it.
At trial, a claim pleaded for compensation in the sum of VT110,000,000 was abandoned. It was a figure that had been suggested by a lay adviser to the appellants, but was clearly without any legal basis. To establish an entitlement to compensation, if the court found it appropriate to address the alternative claim, the appellants led evidence from an Agricultural Field Officer as to the value attributable to planted trees and crops on the land.
The primary Judge identified four substantive issues in the case that required decisions. He dealt with them as follows:
The primary Judge noted that the appellants admitted that there had been no fraud or mistake against either of them, nor was there any other evidence led which suggested that there had been fraud or mistake on the part of either Ezra or AHC (Vanuatu) Ltd which caused the registration of the transfer to occur. The claim for relief under s.100 was therefore dismissed.
The primary Judge held that the appellants’ evidence only established that they were still in occupation of the land, but did not establish that there was any liability in either tort, contract, or by statute. Accordingly, that aspect of the claim was also dismissed.
In reaching that conclusion the primary Judge noted that both the appellants and the respondents referred in their submissions to s.17(g) of the Land Leases Act. The primary Judge considered that he was unable to find any liability against AHC (Vanuatu) Ltd under that provision because of ss. 72 and 93 of the Land Leases Act. To enable that reasoning process to be considered, it is necessary to set out the provisions of ss.17, 72 and 93(1) of the Land Leases Act.
“17. Unless the contrary is expressed in the register, the proprietor of a registered lease shall hold such lease subject to such of the following overriding liabilities, rights and interests as may, for the time being, subsist and affect the same, without their being noted on the register-
(a) rights of way, right of water, easements and profits subsisting at the time of first registration of that lease under this Act;
(b) natural rights of light, air, water and support;
(c) rights to sites of trigonometrical stations and navigational aids conferred by any law;
(d) rights of compulsory acquisition, resumption, entry, search and user conferred by any law;
(e) the interests of a tenant in possession under a sublease for a term not more than 3 years or under a periodic tenancy;
(f) any charge for unpaid rates or other moneys, which, without the condition of registration under this Act, are expressly declared by any law to give rise to a charge on land;
(g) the rights of a person in actual occupation of land save where enquiry is made of such person and the rights are not disclosed; and
(h) rights and powers relating to electrics supply lines, telegraph and telephone lines or poles, pipelines, aqueducts, canals, weirs, dams roads and ancillary works conferred by any law:
Provided that the Director may direct registration of any of the liabilities rights and interests hereinbefore defined in such manner as he may think fit.”
“72.(1) Without prejudice to section 93 a licence shall not be capable of registration.
(2) A licence relating to the use or enjoyment of the land comprised in a registered lease is ineffective against a bona fide purchaser for valuable consideration unless the licence has protected his interest by lodging a caution under section 93.”
“93. (1) Any person who-
(a) claims any interest in land under an unregistered instrument or otherwise;
(b) claims a benefit under a trust affecting a registered interest;
(c) claims a licence affecting a registered interest; or
(d) has presented a bankruptcy or winding up petition against the proprietor of a registered interest;
may lodge with the Director a caution in the prescribed form forbidding the registration of any person as transferee or, or any instrument affecting, that interest, either absolutely or conditionally.”
The primary Judge said the appellants did not plead ss.72 and 93 of the Act, and they did not produce any evidence that they had lodged a caution under s.93. His Lordship said that s.72(2) is very clear, thereby indicating that he considered that the appellants were in occupation of the land as licensees, and AHC (Vanuatu) Ltd, as a bona fide purchaser for value was not subject to those rights. His Lordship did not consider whether AHC (Vanuatu) Ltd had actual or constructive notice of the fact that there were people, including the appellants and their families, in actual occupation of the land, or what the effect of such notice might be.
3. Whether Ezra William is liable to pay compensation to Gladys or any of the sons.
The primary Judge decided this question adversely to the appellants. His Lordship noted that counsel for the appellants relied both on s.17(g) and s.74 of the Land Leases Act. Section 74 is a provision that applies where a registered interest is vested in proprietors in common. His Lordship noted that neither Gladys William nor any of the second appellants were on the register as a joint proprietor. The sole registered proprietor was Ezra William. Accordingly s.74 had no application. In that respect we consider His Lordship was plainly correct. However, His Lordship’s further observation that the Court was not being asked, and was not entitled to determine, whether or not Gladys William was a proprietor in common, is more problematic. Evidence was led from Gladys William that she contributed to the consideration for the acquisition of the land from Mr. Allegre. We think that it was implicit in the evidence of Gladys that she was alleging a proprietary interest as an equitable tenant in common with Ezra William, based on the circumstances leading to the acquisition of the property. (This is separate from an additional claim which we understand Gladys William to have been making for an equitable interest in the land based on Ezra William failing to pay maintenance because of the promise by him to allow her to continue living on the land.)
The primary Judge did not discuss the appellants’ reliance on s.17(g) in the claim against Ezra William. His Lordship had already determined that the section could have no application as the appellants’ asserted entitlements, in the absence of a registered caution, failed under ss.72 and 93.
In any event the primary Judge held that the evidence of the Agricultural Field Officer that Don William was leaving improvements to the value of VT3,721,300 on the land was uncertain and could not be used as the basis of assessment. His Lordship did not specifically refer to the evidence of the same witness in regarding the value of improvements made by Kenway William, nor did His Lordship address the quantum of any possible claim by Gladys William arising from her eviction from the house she occupied on the land. His Lordship gave no reasons which would justify dismissing as unhelpful the apparently probative evidence of the Agriculture Field Officer.
4. Cross Claim.
The primary Judge held that as AHC (Vanuatu) Ltd was lawfully registered as the proprietor of the subdivided titles, he was entitled to an order evicting the claimants. Further, His Lordship held that Don and Kenway William had caused damage to fences erected by AHC (Vanuatu) Ltd and awarded it VT200,000 for that damage, and a further VT750,000 for trespass as they had continued to occupy the land after AHC (Vanuatu) Ltd became the lessee.
As the primary Judge considered that there was no legal basis arising under any of the statutory provisions relied upon by the appellants to justify their claims, he did not make findings of facts on the disputed aspects of the appellants’ evidence.
Before this Court, counsel for the appellants did not pursue the claims based on s.100 of the Land Leases Act, but argued that the primary Judge misapplied the other statutory provisions to which reference was made in the course of the trial.
We have already expressed our view that the primary Judge was correct in holding that s.74 of the Land Leases Act could have no application to the circumstances of this case. We also agree with the primary Judge that in so far as Gladys William might now wish to assert that she has an equitable interest as tenant in common with Ezra William arising from the circumstances in which the land was acquired from Mr. Allegre, that was not an issue raised expressly or by implication in the pleadings, and would more appropriately be the subject of a claim for division of matrimonial property. No application was made by Ezra William during the trial to amend her pleadings.
Next, counsel for the appellants argued that AHC (Vanuatu) Ltd was not a bona fide purchaser for value as the primary Judge should have held that it had constructive notice of the appellants’ interests. First, he argued that AHC (Vanuatu) Ltd had constructive notice of the presence on the land of the appellants because he should have inspected the land, and inspection would have established their presence. Counsel referred the Court to the “Law of Real Property”, 5th Edition, by Sir Robert Magarry and H.W.R. Wade, at 149. That text speaks of the usual and expected practice in the United Kingdom for a purchaser to inspect land and make inquiry as to anything which appears inconsistent with the title offered by the vendor.
Circumstances outside of the United Kingdom will be different, and we do not consider that this statement of principle can be automatically applied in this Republic. However there is authority in other countries which lends weight to the view that the particular circumstances of a transaction may require the purchaser to make some inquiry, and in those situations, the purchaser will be fixed with knowledge of what would have been ascertained had the inquiry been made.
As we think this appeal must be allowed on other grounds, it is not necessary in this case to explore the circumstances in which constructive notice will attach to a purchaser in Vanuatu who chooses not to carry out an inspection. That is a question best considered when it directly arises in a case, and there is better evidence about the circumstances surrounding the transaction.
Secondly, as an additional aspect of the argument based on notice, counsel relied on s.8 of the Land Reform Act [CAP. 123] which he contended placed an obligation on the Minister to make inquiry of a range of people including those in occupation of the land, before consenting to a transfer of lease, and no such inquiries were made by the Minister in this case. This argument is, in our view, without substance.
Section 8 empowers the Minister to have general management and control over land the subject of disputed custom ownership. It does not in terms require the Minister to make extensive enquiries of the kind suggested by counsel, and in any event the power of the Minister is a power to conduct transactions in respect of the land including the granting of leases.
In this case the exercise of that power occurred when the Minister granted lease No.04/2621/001 to Ezra William. We do not consider that the Minister exercised any power under s.8 of the Land Reform Act in connection with the transfer of the leasehold interest from Ezra William to the AHC (Vanuatu) Ltd.
In so far as the subdivision and transfers required ministerial approval, the Minister was acting under the Land Leases Act, and that Act imposed no obligation of the kind suggested by the appellant on the Minister. Moreover, even if the argument were correct, it would lead to a conclusion that the Minister had constructive notice of the presence of the appellants on the land, but would not fix the AHC (Vanuatu) Ltd with constructive notice of their presence.
The remaining submissions of counsel for the appellant concerned ss.17(g), 72 and 93(1) of the Land Leases Act.
It is necessary first to consider the relationship of s.17(g) with ss.72 and 93. Section 17(g) protects “the rights of a person in actual occupation of land” in circumstances otherwise falling within the terms of s.17. In some situations, a person might be in actual occupation of land pursuant to a license, but this is not necessarily so. A person might also be in actual occupation of land pursuant to other rights of different kinds.
These sections operate independently of each other according to their terms. Sections 93 provides the holder of an interest in, or in respect of, land as described in s.93(1) that is not registered, with a means of protecting that interest by giving public notice of its existence by lodging a caution. However, that procedure is permissive, not mandatory. The failure to lodge a caution does not of itself defeat the interest.
In the present case, if the only interest in respect of the land claimed by the appellants were interests as licensees, and if the appellants were not “in actual occupation” of the land, their failure to lodge a caution would mean that their interest would be defeated by a bona fide purchaser for value. The outcome of this case would then depend on whether AHC (Vanuatu) Ltd had actual or constructive notice of the appellants’ interests. That would be the affected operation of ss. 72(2) and 93.
As section 17 operates independently of ss.72 and 73, it is necessary to consider the meaning and application of that section. Section 17 is one of the provisions in Part IV of the Land Leases Act. That part contains the central provisions of the Act which establish and give effect to the notion of indefeasibility of registered titles. Section 14 deals with the effect of registration. It provides that “Subject to the provisions of this Act, the registration of a person as a proprietor of a lease shall vest in that person the leasehold interest...”. Section 15 provides that the rights of a proprietor of a registered interest shall be rights not liable to be defeated
“except as provided by this Act, and shall be held... subject... to such of the liabilities, rights and interests as are declared by this Act not to require registration and are subsisting...”
These sections lead into the provisions of s.17 and give emphasis to the exceptions and limitations to indefeasibility that are provided for in the Act. Section 17 then provides for
“overriding liabilities, rights and interests as may, for the time being, subsist and affect the same, without their being noted on the register...”.
A number of important matters arise from the language of s.17.
First, the liabilities, rights and interests identified in each of the paragraphs (a) to (h) are “overriding”. They override liabilities, rights and interests otherwise enjoyed by the proprietor of a registered leased.
Secondly, the liabilities, rights and interests subsist and continue to subsist “without their being noted on the register”.
Thirdly, the overriding operation applies to liabilities, rights and interests “as may, for the time being, subsist...”.
It is clear from the nature of the liabilities, rights and interests described in paragraphs (c), (d), (f) and (h) that they may subsist indefinitely into the future. Paragraph (e) has within its terms a limit on the duration for which liabilities, rights and interests subsist as overriding once in the absence of a notation on the register. As paragraph (e) is the only paragraph which expresses a limitation on duration, and as other paragraphs may extend indefinitely, we consider paragraph 17(g) should also be construed as being capable of operating indefinitely.
In a particular case, how the provision operates to give overriding effect to the rights it protects will depend on the nature of the rights. For example, and pertinent to this case, if the person “in actual occupation of land” is there pursuant to an equitable proprietary interest, the protection will subsist as long as the equitable interest continues. In such a case, the nature and duration of the equity will have to be determined. Where the interest is one acquired through or under a previous proprietor of a registered lease, the interest may continue for as long as the term of the lease.
Fourthly, paragraph 17(g) applies to the rights of a person “in actual occupation of land”. Whatever the exact limits of this expression, it plainly requires more than being merely in possession of land. At law, a person can be in possession of land although rarely, and sometimes never, setting foot upon it. That can be the situation of a lessee or a sublessee who enters into possession within the meaning of the law under a lease or sublease, and, in this respect, the limitation of s.17(g) to a person “in actual occupation” may be contrasted with the protection given under s.17(e) to a tenant in possession under a sublease for a term of not more than 3 years or under a periodic tenancy.
We consider the expression “actual occupation of land” requires that the person be physically occupying the land, although this does not necessary require that the person be constantly on the land. However, it would require a regular presence and use of the land. For example, a person residing in a house would be in actual occupation of the house and the surrounding curtilage even though that person may be absent to attend a place of employment for part of each day. If a person uses a plot of land as a garden that person is likely to be in actual occupation of the plot although not physically there for every hour of every day, or even every day of the week. The fact of ongoing cultivation and maintenance of the garden would provide the evidence of “actual occupation”.
Depending on the circumstances, the area actually occupied may extend to include areas used periodically as part of crop rotation. In the case of a plantation worked by a person, the person could be in actual occupation of a substantial plantation area, if that area comprises the farming unit conducted by that person. Questions of fact and degree are likely to arise and will need to be determined having regard to all the circumstances of the case, including the nature of the right being asserted and the evidence led in support of it.
Fifthly, s.17(g) operates in respect of “rights”, that is rights recognized by the law of Vanuatu. A person in actual occupation who is a trespasser will have no “rights” which are protected by the provision. A right may arise under custom law, or it might be a right that derives from and through the proprietor of a registered lease or the predecessor in title of that lease. The nature of the rights asserted in this case by the appellants are rights which they say derive from the Ezra William when he was the registered proprietor of the lease.
Sixthly, if the person in actual occupation claiming under s.17(g) establishes rights which support the occupation, the rights will be ‘overriding’ rights unless the proprietor of the registered lease establishes that enquiry was made of that person for an explanation of his or her occupancy, and the rights were not disclosed. The onus of proof as to the making of due enquiry is on the proprietor of the registered lease. To discharge that onus the proprietor would have to establish that a sufficient enquiry was made before the proprietor became the registered proprietor of the lease.
Seventhly, the evident intent of s.17(g) is to protect on the one hand a person who is in actual occupation of land pursuant to rights recognized by law, and on the other hand to provide a mechanism for those acquiring leases to protect themselves by making appropriate enquiry and inspection before acquisition. If a person in actual occupation is found on the land, the would-be purchaser, by making enquiry, can have the rights of that person identified so that the consideration for their acquisition can be adjusted, or the proposed acquisition can be abandoned. Alternatively, if the person found in actual occupation does not disclose a right that justifies his or her actual occupation, the would-be purchaser will obtain good title against that person, and will be entitled after registration to recover possession.
Returning to the circumstances of the present case, Gladys William on the evidence would appear to be a person in actual occupation of the land. On her evidence she asserted that her actual occupation was pursuant to a right acquired from Ezra William. The primary judge found that Gladys William’s right was merely a licence that was defeated by reason of the operation by s.72(2), in the absence of a caution lodged on the register.
It follows from what we have said that even if Gladys William held only a licence from Ezra William to be present on the land, that licence could attract the protection of s.17(g). The benefit of that provision would attach upon a finding that Gladys William was in actual occupation of the land, and that she had a right recognized by law to be there.
To determine the nature and extent of the right asserted by her requires an examination of the evidence and findings of facts which did not occur at trial. For example, it is necessary to consider whether the right asserted by Gladys William was merely a right to occupy, granted by Ezra William to continue only during such time Ezra William did not pay maintenance. In other words, was the provision of the house, and presumably a right to use surrounding land to grow food and maintain household animals, to be treated as having a value which month by month offset the periodic maintenance payable under the Court Order.
Alternatively, it may be that the agreement between Gladys William and Ezra William was intended from the outset to be one of long term duration under which Gladys William acquired an ongoing right, or equity, to occupy the house and surrounding land in exchange for her permanently foregoing the benefit of the maintenance Order. In this event presumably the agreement would have been subject to an implied condition that it would apply for the life of Gladys William and in any event it could not operate beyond the term of the lease. If this was the nature of the agreement it was a form of a matrimonial property settlement. If the agreement is an ongoing one, it would not be within the power of Ezra William to unilaterally change his mind, take back what he had given, and revert to the former situation where he pays maintenance.
As these issues were not dealt with at trial, the appeal by Gladys William must be allowed.
In the case of second appellants Don and Kenway William, they would appear to have been in actual occupation of substantial parts of the land, and as we understand their evidence they were asserting an equitable right to the exclusive use and occupation of the plots of land which had been “given” to them by their father. The situation of a son acquiring an equitable interest to use and enjoy farming land registered in a legal ownership of his father is not uncommon in many jurisdictions. Although the father is the registered owner of the land, if, as part of making provisions for the next generation, he promises a son that if he undertakes the management and improvement of the land, the land will in due course be his, equity will hold the father to the promise if the son, in reliance on the promise, expends time and money on the land.
Equity imposes a trust on the father to fulfil the promise which has been relied upon by the son. Although the father may remain the legal owner, he cannot deny the equitable interest which the son acquires by acting to his detriment in reliance on the promise. If the father later has a change of mind and asserts that because he remains the legal owner, he is the “boss” and can deny his son’s right, equity will restrain the father from doing so even if this means the father has permanently lost his beneficial rights to enjoy the land.
On the evidence of Don and Kenway William that is exactly the situation they were asserting. If that assertion is proved at trial, they have rights acquired from the predecessor on title of the registered leases, and their actual occupation on the land pursuant to those rights constitutes an overriding interest which continues to subsist notwithstanding the registration of AHC (Vanuatu) Ltd as proprietor. That would be the situation unless AHC (Vanuatu) Ltd is able to prove that before registration of the transfers it made due enquiry of the appellants as to their rights to occupancy, and those rights were not disclosed.
The nature of the rights asserted by Don and Kenway William to support their claim under s.17(g) were not determined at trial, and their appeal must also be allowed. As the judgment in favour of AHC (Vanuatu) Ltd on the cross claim for trespass and other damage was based on the premise that they had no rights to be on the land that part of the judgment must also be set aside. The outcome of the counter claim must await determination of the appellants’ claims under s.17(g).
The claims of Gladys William and Don and Kenway William based on their actual occupation on the land, and their asserted rights to occupy must be remitted for consideration and determination by the trial Judge pursuant to s.17(g) of the Land Leases Act. As we understand this case to be the first time that the operation of s.17(g) has been considered in the Supreme Court, or this Court, the parties should be given leave to adduce additional evidence touching on issues relevant to their s.17(g) claims.
The appellants are entitled to their costs of this appeal. The costs of the trial which has so far occurred in the Court below, and the costs of the further hearing are to be in the discretion of the trial Judge having regard to the ultimate outcome of the proceedings.
The formal Orders of the Court are:
DATED at PORT-VILA this 4th day of November 2004
BY THE COURT
Vincent LUNABEK CJ
Bruce ROBERTSON J
John von DOUSSA J
Daniel FATIAKI J
Patrick TRESTON J
Hamlison BULU J
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