Kalses v Le Manganese de Vate Ltd [2004] VUCA 8; Civil Appeal Case 34 of 2003 (11 June 2004)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE No. 34 of 2003

BETWEEN:

KALOMUT KALSES and OTHERS
First Appellants

AND:

FREDDY KALSES and OTHERS
Second Appellants

AND:

LE MANGANESE DE VATE LIMITED
First Respondent

AND:

FORARI DEVELOPMENT COMPANY LTD
Second Respondent

Coram: Chief Justice Lunabek
Justice Bruce Robertson
Justice John von Doussa
Justice Daniel Fatiaki

Counsels: Mr. George Boar for the appellants
Mr. John Malcolm for the respondents

Date of hearing: 31st May 2004
Date of judgment: 11th June 2004

JUDGMENT

This is an appeal against the judgment of Treston J dated 24 October 2004 striking out the appellants’ Claim filed in the Supreme Court as defective, vexatious and frivolous.

On 9 September 2003, the appellants claimed against the respondents for the following relief:

1. General damages to be assessed.
   
2. (a) Forfeiture of leasehold Title No. 12/0741/002 and 12/0741/003;
   

(b) Alternatively, rectification of lease registers for Titles 12/0741/002 and 12/0741/003 by cancellation.

3. Costs.
   

In their statement of claim the first appellants alleged that they are resident custom land owners and registered lessors in respect of leasehold Title 12/0741/002 and 12/0741/003 situated in Forari, North East Efate. The second appellants are ni-Vanuatu from Eton Village and claimed to be authorized to act on behalf of the first appellants. Le Manganese de Vate Limited is the registered lessee of leasehold Title 12/0741/002 and Forari Development Company Ltd of leasehold Title 12/0741/003.

The appellants alleged that in November 1982, the first appellants had executed a commercial lease with Le Manganese de Vate Limited 12/0741/002 through its representative Mr. R. Sombardier and that it was a condition of the lease that the land was to be used for specified purposes. They further contended that prior to execution, Mr. Sombardier had made verbal promises that they would revive the Forari mining and thereby provide employment for the people of Eton in particular and Efate people in general.

They alleged that Mr. Sombardier had lived on the property until 1987 when he departed and did not return and that contrary to the promises and or conditions of the lease, Le Manganese de Vate Limited failed to undertake any commercial or industrial development upon the land.

The appellants further alleged that Mr. Gerry Miles in 1989 had approached them and promised to re-open the manganese mine and thus provide employment, create a mini-township and a retirement village for millionaires, together with a vehicle assembly plant. As a result they alleged a variation of lease was entered into on 17 February 1989.

On 7 April 1989, a further lease was entered into in respect of adjacent land which is the land in lease 12/0741/003. Again it was a condition that the land would be used for the processing of mineral or substrate or other industrial or commercial activity and related support activity. The second lease was in the name of Forari Development Company Limited. It was alleged that Mr. Miles lived on the property until 1994 but again there was a failure or neglect to undertake any of the development promised.

In 1995 the appellants alleged that Mr. Jeff Fox approached them and that after they helped in repairing buildings on leasehold 12/0741/002 which included the removal of iron sheets and timber, there was a promise that there would be construction of pre-fabricated houses. There was also a request for a further lease but this was refused.

The appellants claimed that because of the history of their dealings, the first and second respondents had failed or neglected to use the leasehold lands for the purposes required and that the appellants had suffered damages by being deprived of the development of their land and reaping associated benefits for the past 21 years. This led to the issue of a notice of forfeiture which had been ignored. They therefore sought forfeiture of the leases or in the alternative, cancellation of them.

The first and second respondents filed a defence on 22 September 2003 denying the status of the appellants to bring their claims, and the name of the second respondent as pleaded. They also denied that there were any promissory or mandatory conditions. They contended that they had lawful leasehold interests. They accepted that the shareholders in Le Manganese de Vate Limited had changed from time to time but denied the right or entitlement of Mr. Jeff Fox to act on their behalf.

In other words, they put the appellants to proof on every part of their claim. Everything was in dispute or contention. They specifically noted that general damages were not properly pleaded, that forfeiture was not available and nor was rectification.

On 22 September 2003, the first and second respondents also applied for orders that:

1. The claim to be struck out as being frivolous and vexatious.

2. Ordering the lessors execute a Consent to transfer (on terms or conditions), or
3. Alternatively a declaration that Consent on behalf of the lessors is not required.
   

On 24 October 2003, Treston J struck out the appellants’ claim against the first and second respondents and awarded costs against them. Those Orders are the subject of the present appeal.

The Civil Procedure Rules (CPR) make no specific provision for an application by a defendant to strike out a claim. The CPR make provision in Part 9 for “Ending a Proceeding Early”, but those rules are directed only to situations where a claimant seeks to obtain an early judgment. They do not make provision for the reverse situation where a defendant wants to bring the proceedings to an early end.

The order sought by the defendants was that ‘the claim’ be struck out, not merely that the statement of claim be struck out. Where there are deficiencies in the pleading of a claim it is usual to seek to have only the pleading struck out, and leave is usually given to re-plead, at least once. To strike out a claim is a more serious step as it brings the whole proceedings to an end.

Application may be made under the rules for interlocutory orders: see Part 7. An interlocutory order is “an order that does not finally determine the rights, duties and obligations of the parties to a proceeding”: see Rule 7.1(1). A question arose in the course of argument on this appeal whether the CPR permit an application to strike out the whole claim, as opposed to merely a pleading. In some cases to strike out a claim might finally determine rights. That would not be an interlocutory order. However in this case counsel agreed that if the proceedings are struck out it is open to the claimants to bring fresh proceedings, so that point of interpretation of the CPR need nor be determined in this case.

The application to strike out the claim was treated as an interlocutory application, and directions were given for the filing of affidavits. Both sides filed affidavits. These give a more complete picture of the facts asserted by the parties which underlie their dispute.

Treston J struck out the claim as he considered there were major deficiencies in the pleadings and also other fundamental obstacles to the success of the appellants’ claim. He identified that there was no pleading specifically alleging damages caused by the respondents’ alleged wrongful conduct. This omission is a pleading defect, but one of the kind where an opportunity to amend the pleadings would usually be given as a matter of course (or the omission remedied by the giving of particulars).

More significantly Treston J considered that the claims were statute barred and on this ground there was no point in giving leave to amend the pleadings. His Lordship seems to have taken this view as he treated the pleadings as alleging breaches of the leases, or misrepresentations which occurred at the time when the leases were entered into in 1982 and 1989.

We consider that interpretation of the pleadings is too narrow. The pleadings include allegations that each lease required the appellants to use the land for specific purposes, and that in breach of the relevant conditions of the leases the land had not been so used. In these respects the pleadings alleged ongoing breaches. At least the failures to use the land in accordance with mandatory provision of the leases in the proceeding 6 years before the commencement of the proceedings would not be statute barred. In our opinion, the affidavits and attached correspondence indicate that there is a real issue between the parties which justifies a trial as to the meaning of the clauses of the leases which the appellants rely on. Do the clauses impose mandatory requirements to use the land in particular ways, or are the clauses merely permissive?

Whilst there are limits on the use which can be made of secondary evidence in interpreting written contracts (including leases), it may be permissible for the appellants to rely on the surrounding circumstances in which the leases were entered into to assist in interpreting the relevant clauses. That is also an issue that would need to be explored after hearing evidence.

In our view these issues plainly raised serious questions that should have gone to a full trial.

In any event, it is wrong for a Court to strike out a claim summarily on a limitation point where the defendant has not pleaded the point and the claimant has not had a reasonable opportunity to consider his position and to answer the pleading. In this case, the respondents have not pleaded the Limitation Act. Had they done so, it is likely that the claimants would have been better prepared to explain why parts of their claim, at the least, are not out of time.

Treston J also considered that the claims for forfeiture of the leases and rectification of the register of titles could not be sustained.

His Lordship considered that the claim for forfeiture rested on conduct alleged by the appellants which happened very many years before, and that by the lapse of time the conduct was taken to have been waived.

His Lordship considered that the claim for rectification could not succeed as neither fraud nor mistake, the two grounds in s.100 of the Land Leases Act for rectification, had not been pleaded. Moreover there was no evidence of fraud or mistake put forward by the appellants, and whatever the conduct might have been that the appellant would want to rely on, it happened well outside the limitation period.

With respect to His Lordship, we consider he has misunderstood the intent of the appellants’ pleadings and supporting affidavits. In their affidavit evidence the appellants deposed to giving a letter of forfeiture of the leases on 3 June 2003. Paragraph 20 of the statement of claim reads:

“Further the claimants say, despite notice being given to the defendants to forfeit the leases, the defendants have failed, refused and neglected to do so.”

To say the least the pleadings are sparse, and inelegant in relation to the claims for forfeiture and conceptually wrong in relation to the claim for rectification, but we think it is tolerably clear that what the pleader and the appellants were trying to say is that they terminated the leases on 3 June 2003 and they wanted that termination recognized and recorded on the Register of Titles.

On this interpretation of the appellants proposed case no question of fraud or mistake within the meaning of s.100 of the Land Leases Act arises. Indeed that Section seems to have nothing to do with their claim. What the appellants seem to want is a declaration that the leases have been validly forfeited, and an order requiring the forfeiture to be registered on the titles. The term “rectification” may not be the correct legal definition, but with a little help, and appropriate amendment, a presentable claim could be pleaded to raise real issues for trial on the basic facts put forward by the appellants.

In our opinion the appellants’ claim should not have been struck out. Rather they should have been given leave and time to amend the Statement of Claim.

In passing we note that the appellants purported in the letter of 3 June 2003 to terminate or forfeit the leases with immediate effect by relying on ss.43 and 45 of the Land Leases Act. Those Sections are “subject... to any provision to the contrary in the lease...”. As we pointed out to the appellants’ counsel during arguments, there appear to be clauses to the contrary effect in the leases between the parties. That is a matter to be considered if and when amendments to the pleadings are being drafted. If the appellants conclude that their notice of forfeiture was not validly given there would be little point in proceeding with that aspect of the case, and they may need to start afresh.

In our opinion substantial parts of the statement of claim adequately identify issues for trial. It is deficient however in pleading damages, and about the basis for the claims concerning the termination or forfeiture of the lease. The appeal should be allowed and leave should be given to the appellants to allow them to amend.

Finally, it is necessary to deal with the order made by His Lordship under Paragraph 2 of the respondents application filed on 18 August 2003 requiring the appellants to consent to the transfer of the leases.

We are concerned that such an order should be made where it is not claimed in an appropriate procedural vehicle, for example by counterclaim, and properly pleaded. Mr Malcolm accepted this must be the position in the course of the hearing before us.

However there is no need for us to explore that issue further. The order was made as a corollary to the earlier order which effectively ruled against the appellants on all their attempts to put an end to the respondents’ leasehold interests. As we consider the appeal must be allowed, the appellants’ attempts are still in foot, and the issue of consent, once properly raised and pleaded, should await the trial and determination of the other issues in the proceedings.

In summary we are satisfied that this appeal must be allowed and the matter returned to the Supreme Court so that any amendment to the pleadings can be made and all issues upon which determination is required are clearly marked out in advance. The matter can then be set down for hearing and determination.

Although the appellants have succeeded, they are to a great extent the authors of their own misfortune. By allowing the appeal, the Orders for costs in the Supreme Court will necessarily be vacated. We decline to make Orders in favour of either party in respect of the proceedings before us. The most fundamental and elementary steps must be taken to ensure that parties are properly identified and that all issues are clearly and precisely delineated before a further hearing begins.

The Court makes the following ORDERS:

1. The appeal is allowed.
2. All orders made on 24 October 2003 are set aside.
3. There is no order as to costs.
4. Leave is given to each of the parties to re-plead their case. A further Conference needs to be convened before the Supreme Court as a matter of urgency.
   

Dated at Port-Vila this 11^th Day of June 2004

BY THE COURT

VINCENT LUNABEK CJ
J. BRUCE ROBERTSON J
J. von DOUSSA J
DANIEL FATIAKI J