Iririki Island Holdings v Ascension Limited [2007] VUCA 13; Civil Appeal Case 35 of 2007 (24 August 2007)

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

CIVIL APPEAL CASE No. 35 of 2007

BETWEEN:

IRIRIKI ISLAND HOLDINGS
Appellant

AND:

ASCENSION LIMITED
Respondent

Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Ronald Young
Hon. Justice Edwin Goldsbrough
Hon. Justice Oliver A. Saksak
Hon. Justice Hamlison Bulu

Counsels: Mr. Juris Ozols for the Appellant
Mr. Robert Sugden for the Respondent

Date of Hearing: Monday 20 August 2007
Date of Decision: Friday 24 August 2007

JUDGMENT

INTRODUCTION

1. This appeal is against orders made by the Supreme Court on 31 May 2007 and 31 July 2007. Both orders were made in a claim brought by Iririki Islands Holdings Limited (the Appellant) against Ascension Limited (the Respondent). Both parties are locally registered companies.

2. The orders sought and determined on 31 May 2007 were for interlocutory relief. Leave to appeal against such would normally be required and was indeed sought in the original notice of appeal. That original notice of appeal against only the order of 31 May 2007 preceded the final order made in the Supreme Court of 31 July 2007. To the extent that it may be necessary to revisit the question of granting leave to appeal against the interlocutory order, this court agrees to grant such leave.

3. The final order of 31 July 2007 was to strike out the claim as disclosing no reasonable cause of action. That order was made based on the earlier

findings when interlocutory relief was sought. In disposing of the question of interlocutory relief the Supreme Court found that there was no serious question to be tried. Hence the claim itself came to be struck out as disclosing no reasonable cause of action.

FACTS

4. The Appellant operates a resort hotel on Iririki Island. Being an island in Port Vila harbour, access is required from mainland Efate. Guests, staff and suppliers to the resort have used a ferry from a ferry terminal situated on land in these proceedings described as ‘the Mainland Title’. The Mainland Title means the Leasehold Title 11/OC22/009. There was a time in the past that both parcels of land were held by the same entity. For the purposes of this judgment the term ‘the Resort Title’ will be used for convenience to describe Iririki Resort.

5. Before 2001 both the Resort Title and the Mainland title were held by a company now known as Resorts Limited. In 2001 the Resort Title was sold to Andrew Spinks. The mainland title remained with Resorts Limited.

6. Then, recognizing the importance of the mainland title to the resort title, provision was made in the sale and purchase agreement between Iririki Islands Resort Limited (the predecessor to Resorts Limited) and Andrew Spinks. That provision appears in clause 4.4 of the agreement wherein can be found, inter alia:-

"4.4 Access

The Vendor is the registered proprietor of the Mainland Title which title is not included in the total assets sold to the purchaser pursuant to this contract. Nevertheless the Vendor acknowledges the critical importance to any operator of the Business of a right of carriage and access through the Mainland title for the purpose of access by guests of the Business to and from Iririki Islands and the delivery of supplies and other items used in the business. The Vendor undertakes and agrees that it is an important pre-condition to the Purchaser’s willingness to complete the purchase of the Business and the total Assets, that its continued rights of carriage and access over the Mainland Title are maintained, notwithstanding any subsequent sale or development of the Mainland Title, at a minimum, so as to ensure:

(a) continued adequate access for buses and motor vehicles to drop off and pick up guests at and from what is currently known as the Iririki Wharf.

(b) reasonable signage space available to the Purchaser as agreed;

(c) continued adequate access to permit delivery to the Iririki wharf of all supplies to the Business and including but not limited to all fuel and gas requirements of the business,

provided that all or any cost of utilities in provision of such access and space shall be met by the Purchaser on a pro rata basis in accordance with their general use. The Vendor covenants and undertakes to accommodate and in due course once any development plans for the Mainland Title are finalised which provide for a fixed and permanent right of carriage for the Purchaser and if deemed necessary by the parties to better secure the position for both taking into account the intent of this Clause, document by way of easement such minimum requirements of the Purchaser and in furtherance thereof the Vendor acknowledges that the Purchaser may lodge a caution to protect such a right of carriage over the Mainland Title to protect the benefit of the right of carriage over the Mainland Title and the rights granted to it under this Clause and the Vendor further undertakes to grant to the Purchaser a right of first refusal in respect of any proposed sale of the Mainland Title, such that the Purchaser shall be entitled to match any offer made for the purchase of the Mainland Title and to proceed to the acquisition of the Mainland Title on terms no less favourable than those offered to the Vendor by any such third party purchaser. The responsibility and cost for the upkeep of the access is entirely the Purchasers obligation save and except where the Vendor alters the agreed access route at which time the Vendor is responsible for ensuring prior to any development that the new access is both of a size for Direct Vehicle access and constructed to the same standard currently maintained at that time by the Purchasers."

7. Andrew Spinks is now deceased. There is nothing pleaded showing the transfer of any asset of his to the Appellant company. There is suggestion that the rights granted in Clause 4.4 to Andrew Spinks were somehow transferred to the benefit of the Appellant, perhaps in that he signed the above contract in a representative capacity.

8. The effect of Clause 4.4 as between Andrew Spinks and the then owner of the lease to the Mainland Title was that there was a contractual arrangement permitting the continued use by Spinks of Mainland Title access. This right was subsequently registered as a caution against the Mainland Title as provided for in the contract. That caution remained registered until some date towards the end of 2006. There was mention of converting the Clause 4.4 rights into an easement at a later stage when development plans for the Mainland Title were more advanced. This has never happened.

9. During the time that Resorts Limited retained their interest in the Mainland Title all was well, although it is important to note that during this period the usage by the parties appears to have exceeded that described in Clause

4.4 however none of the then parties seems to have sought to clarify the position and no objection was taken by the owner of the Mainland Title to the extent of such use.

10. In accordance with clause 4.4 of the contract Andrew Spinks was given the right of first refusal to purchase the Mainland Title in September 2004 when it was proposed that Resorts Limited to sell their interest. That offer was declined.

11. Having cleared the position as between themselves and the Appellant as regards the right of first refusal, Resorts Limited proceeded to dispose of their interest in the Mainland Title to the Respondent. At the time of contract negotiations the caution registered by Andrew Spinks remained in effect and reference to the rights of the Appellant does appear to have been included in the negotiations between the parties. In the contract of sale there appears a reference to the right of way of the Appellants over the Mainland Title. That appears in clause 11 of that contract for sale which led to the Respondent acquiring its interest in the Mainland Title.

12. Whilst there is no evidence that the counterpart to the contract was ever executed, certainly the requirement that the cautioner remove the caution did not happen as envisaged under the counterpart. The caution having been removed at the instigation of the Director of Lands, the lease in favour of the Respondent was registered in January 2006.

13. The claim made by the Appellant in these proceedings sought a declaration that:-

(i) the Claimant is entitled to exercise its right of access and carriageway and other rights granted under clause 4.4 of the Contract over the Mainland Wharf Title land against the defendant; and

(ii) that the Claimant’s exercise of its rights of access and carriageway and other rights granted under clause 4.4 of the Contract over the Mainland Wharf Title is valid and enforceable as against the Defendant; and

(iii) damages.

14. In the course of the proceedings a claim for interlocutory relief was brought and determined on a defended basis. Whilst it is not apparent from the papers where the assertion arose, it is clear that those proceedings were determined by the trial judge in the Supreme Court as having been brought pursuant to a right of occupation based on section 17 (g) of the Land Leases Act. This is apparent from the ruling made by the learned judge on 31 May 2007.

15. The Appellants originally claimed that the rights they exercised over the Mainland Title sprang from Clause 4.4 of the agreement of sale between Iririki Island Resorts Limited and Andrew Spinks. That clause is set out in (6). That Clause clearly, in the view of this court, sets out rights such as could result in an easement. It does not, in the view of this court, establish a right to occupy the Mainland Title or any part of it. Thus there is nothing in the statement of claim asserting that the Appellants had a right of occupation under section 17 (g) of the Land Leases Act. That being the case, the decision to strike out the claim as disclosing no reasonable cause of action with regard to any suggestion that the claim asserted a right of occupation under section 17 (g) of the Land Leases Act was quite proper. In that regard this court agrees with the determination made by the learned judge. To the extent that the claim relied upon a right of occupation rather than a right of easement it is the view of this court that the trial judge was correct in his analysis of the claim and therefore correct to determine that, through that route, the Appellant did not then demonstrate a serious issue to be tried.

16. What has not been decided, it seems to this court, is whether the Appellants are entitled, as between these parties, to exercise any rights arising from the provisions of Clause 4.4 and the subsequent contract between Resorts Ltd. and Ascension Ltd. Any such rights are in issue between the parties as evidenced by the denials contained in paragraph 13 of the respondent’s original defence.

17. There is no provision contained in Part 9 of the Civil Procedure Rules dealing with ending proceedings early to strike out a claim as disclosing no reasonable cause of action, although such a power was acknowledged to exist in Civil Appeal Case No. 24 of 2006. Therein it was said:-

"Although, as this Court pointed out in Kalses v Le Manganese de Vate Ltd [2005] VUCA 2, Civil Appeal Case 34 of 2003 (3 May 2005), there is no specific provision in the Civil Procedure Rules to strike out a proceeding on the grounds that there is no reasonable cause of action or that it is frivolous, vexatious or an abuse of process, it was not disputed that such a power exists. Jurisdiction can be found within the broad terms of ss.28 (1) (b) and 65 (1) of the Judicial Services and Courts Act No. 54 of 2000 and the Civil Procedure Rules themselves provide in Rules 1.2 and 1.7 a basis for exercising the jurisdiction. In practice the existence of such an inherent jurisdiction has been assumed by the Supreme Court: see e.g. the judgments of Treston J in Naflak Teufi v Kalsakau [2004] VUSC 94; Civil Case 102 of 2002 (6 May 2004) and Kalomtak Wiwi Family v Minister of Lands [2004] VUSC 47, Civil Case 14 of 2004 (2 September 2004). However it has always been recognised that the jurisdiction should be exercised sparingly and only in a clear case where the Court is satisfied it has the requisite material; the claimant’s case must be so clearly untenable that it cannot possibly succeed: Electricity Corp Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641."

18. The Court went on to express the approach to be adopted in determining such an application:-

"Disputed issues of fact should be decided at trial not on an application to strike out which is normally dealt with on the basis that the facts pleaded in the claim can be proven."

19. Such an approach is, in the view of this court, the correct approach to be taken. Thus in determining this appeal one must begin by considering that which appears in the originating claim and to take it that the facts pleaded in the claim can be proved. So, for example, whilst there is nothing disclosed in the pleadings as to how the rights granted to Andrew Spinks were transferred to the Appellant, the court assumes that this transfer can be proved as claimed.

20. We consider therefore that there remain triable issues that have not been determined and cannot be determined without trial. It is clear that, having been distracted by the terms of the application to strike out, which themselves may have been misguided, and in following the flow of the argument that took place during the hearing for interlocutory relief, the trial judge failed to revert to the original statement of claim to determine whether that claim had been disposed of. Had it been that nothing other than section 17 (g) occupation was in issue, then the order for strike out was appropriate. However the claim in part was based on the assertion that a right established under clause 4.4 subsisted and was capable of enforcement as against the present Respondent, then the claim in its entirety should not have been struck out.

21. Since, as between earlier owners of these two titles, it appears that more than the rights as described in Clause 4.4 had been exercised over the Mainland Title, it is easy to see why the present Appellant sought to demonstrate that the Clause 4.4 rights granted more than a right of easement. It is equally clear as to why such a claim is so strongly resisted. As pointed out from the sworn statement of Leiwia Dick, it appeared that the Appellants had been substantially occupying much of the Mainland Title. But nothing pleaded demonstrates that the occupation was a lawful occupation pursuant to a right. The Appellant claimed its occupation arose as a result of clause 4.4 and its actual occupation, whereas in fact the only rights which could be said to attach to the Appellant are those arising from clause 4.4

22. In the event, the appeal is allowed and the order striking out the claim is quashed. Turning to the claim for interim relief, an order restraining the respondent by themselves or by their agents or otherwise, from interfering in the claimant’s rights of access and carriageway and other rights previously used by the Appellant was refused. We consider that there may well be grounds upon which an order could be granted based on rights of access and carriageway. We do not consider that an order could be granted based on ‘other rights previously used’ by the Appellant. The judge at first instance went on to consider the question of the balance of convenience when he refused interim relief, and whilst it is clear that he considered the balance of convenience to be in favour of the appellants at that time, it must be the case that things have changed since then, if for no other reason than his refusal to grant interim relief. For that reason we remit to the trial judge the question of what order, if any, for interim relief should be made.

23. Costs of the appeal are awarded to the Appellant to be agreed or taxed.

DATED at Port Vila, this 24th day of August, 2007.

BY THE COURT

Hon. Vincent Lunabek CJ
Hon. Ronald Young J.
Hon. Edwin Goldsbrough J.
Hon. Oliver A. Saksak J.
Hon. Hamlison Bulu J.