Colmar v Rose Vanuatu Limited [2007] VUCA 18; Civil Appeal Case 02 of 2007 (24 August 2007)

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

Civil Appeal Case No. 02 of 2007

BETWEEN:

PETER W. COLMAR
First Appellant

AND:

VALELE TRUST
Second Appellant

AND:

ROSE VANUATU LIMITED
First Respondent

AND:

DINH VAN THAN
Second Respondent

AND:

THE MINISTER OF LANDS
Third Respondent

Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Ronald Young
Hon. Justice Hamlison Bulu
Hon. Justice Christopher Tuohy

Counsels: Mr. Nigel Morrison for the Appellants
Mr. Felix Laumae for the First and Second Respondents
Mr. Tom Joe Botleng for the Third Respondent

Date of Hearing: 17 August 2007
Date of Decision: 24 August 2007

JUDGMENT

Introduction

1. This appeal concerns a complex series of transactions involving a leasehold title on Aese Island, East Santo. The Appellants challenge:-

(a) the Judge’s refusal to “rectify” the Land Records register by cancelling the transfer of the lease of the land to Rose Vanuatu Limited;

(b) the Judge’s refusal to grant specific performance of an agreement between the First Appellant and Mr. Than;

(c) the removal of the Second Appellant as a party to the case.

2. The Appellant’s case in the Supreme Court was essentially twofold.

(a) That the Land Register be rectified to reflect the fact that the Appellant had registered a caution against the leasehold title well before any registration of the transfer of the lease to Mr. Than or his company.

(b) In any event the Appellant purchased the lease from Mr. Than in June 2004.

3. Mr. Than in his defence says that he purchased the lease of the land in about 2002 from the Stuart family but did not register the transfer of the lease until May 2005. Mr. Than and his company Rose Vanuatu Limited denied Mr. Colmar or the Valele Trust had any right which entitled them to register a caution. And Mr. Than claimed he was forced to sign the agreement of June 2004 without knowing its content and therefore specific performance should not be ordered.

Background facts.

4. In about 2002 by agreement a lease of land at Aese Island in land title 04/2624/001 (the land) was sold by the Stuart family to Mr. Than for VT6 million.

5. Mr. Colmar, who represented the Valele Trust (the Second Appellant), in June 2004 presented to Mr. Than an agreement for the sale of Mr. Than’s interest in the land. The agreement was signed by Mr. Than. The agreement said that Mr. Than sold the lease and the improvements to Valele Trust for the price of 200 heifers aged between 16 and 20 months. On 19 April 2005 the Trust delivered 187 heifers to Mr. Than. They said it was impractical to send the other 13 heifers and sent instead a cheque to Mr. Than for VT234,000, the total value of 13 heifers at VT18,000 each. The cheque was presented and cashed.

6. No formal transfer of the lease from Mr. Than to the Trust occurred. In May 2005 Mr. Than registered the transfer of the lease he had purchased from the Stuart family back in 2002.

7. One further strand of facts needs to be mentioned. Mr. Colmar, on behalf of Titus Karu (Valele), from whom Mr. Colmar held a Power of Attorney, claimed he had lodged a caution with the Land Records Office in April 2003 with respect to the same land. Titus Karu claimed the caution was lodged because he was one of the customary owners of the land. He said he had not agreed to the transfer of the lease by the Stuarts to Mr. Than. Such caution has, for an unknown reason, never registered against the leasehold title.
Judgment appealed from.

8. The Judge in the Supreme Court faced a claim by Mr. Colmar and the Valele Trust that:-

(a) There should never have been any transfer of the leasehold interest to Mr. Than in March 2005 because Titus Karu’s caution should have been registered against the leasehold title which would in turn have prevented registration of any transfer of the leasehold interest to Mr. Than.

(b) Mr. Than should not have registered, in March 2005, his interest in the lease acquired in May 2002 when in June 2004 he had sold his interest in the lease to the Valele Trust. The Claimant said that this transfer was fraudulent because Mr. Than knew he had already sold his interest in the land in 2004.

9. The Claimant sought, in the Supreme Court, an order to rectify the record of leasehold interest by directing the Director of Lands to register the Valele Trust as the lessee with respect to the land.

10. The essence of the Defendant’s case was that Mr. Than had not understood he was selling his leasehold interest in the land in June 2004 and had never intended to do so.

11. The Judge decided, as to the caution:-

(a) The Claimants had failed to produce a copy of the register of the Land Records Office showing registration of their caution when they had the onus to do so;

(b) The Claimants had failed to take steps to ensure registration of their caution.

12. The Judge said the caution was ineffective and could not be used as a basis to challenge registration of Mr. Than’s lease. Thus the Judge concluded Mr. Than had title to the leasehold interest given it was not obtained by either fraud or mistake (see section 100 of the Land Leases Act).

13. The Judge concluded the contract of June 2004 was unenforceable by Mr. Colmar or the Valele Trust.

14. The Judge rejected the assertion by the Claimant that Mr. Than’s pleadings had not raised, as a defence to the Appellants action to enforce the contract of June 2004, the claim Mr. Than had not understood he was selling his leasehold interest. Thus the Judge concluded that Rose Vanuatu Limited remained the lessee of the land. However, he said the equivalent of 200 heifers should be paid by Rose Vanuatu Limited and Mr. Than to the Valele Trust. He entered judgment for that amount in the Appellant’s favour.

Discussion

15. We consider first the caution said to be presented for registration at the Land Records Office by Titus Karu in April 2003. Mr. Morrison, after discussion with the Court, accepted there was little practical point in pursuing this ground of appeal because his main challenge was to the Judge’s conclusions regarding the contract of June 2004. However we make some brief comments relating to the Supreme Court judgment.

16. In our view Mr. Colmar established that he had presented a caution for registration. The receipt produced by him in evidence was from the Land Records Office, it acknowledged receipt of a filing fee for a caution with respect to the same land.

17. We disagree with the Judge’s view that it was somehow Mr. Colmar’s responsibility to ensure actual registration of this caution. Sections 2 and 4 of the Land Leases Act make it clear that the responsibility for keeping the register falls on the Director. The responsibility of those seeking a caution be registered by the Director under that Act is to:-

(a) Have a claim to a cautionable interest;

(b) Complete the caution in accordance with the Land Leases Act;

(c) Present the caution for registration.

18. Once this is done the responsibility for ensuring registration is the Director’s. Nothing further need be said regarding this ground of appeal given the Appellant’s abandonment.

Contract of June 2004

19. The Judge concluded that there was no contract between Mr. Colmar and Mr. Than because:-

(a) There was no meeting of minds between the parties;

(b) Neither party had the chance for legal advice before signing;

(c) The agreement was too uncertain to be enforced;

(d) The agreement did not bear the common seal of Rose Vanuatu Limited;

(e) There was doubt that the witness to the contract was actually present at the time of signing.

We will deal with (a) last.

20. As to (b), this was a contract between two commercially knowledgeable persons. It was their decision whether they wanted their lawyers to approve the contract before they were to be bound by it. They chose not to do so. That choice, not to have legal advice before signature, therefore cannot affect whether the parties are bound by the contract. The Judge, in our view, therefore was wrong to take into account the fact that neither party had legal advice before signing the agreement.

21. As to (c) we see no uncertainty in the terms of the contract. The relevant document is the handwritten contract signed by Colmar and Than. Although the Judge said there were “uncertainties or ambiguities” none were in fact identified by the Judge in his judgment. We consider the Judge was wrong to conclude that the contract was too uncertain to enforce. In our view, the contract had all of the details required of such a contract. It identified exactly what was being sold by whom to whom. It identified the purchase price and it identified how and when it was to be paid.

22. As to (d) and the failure to affix the common seal of the company. Two points arise from this issue. Section 46 (1) of the Companies Act [CAP. 191] provides as follows:-

“Contracts on behalf of a company may be made as follows –

(a) a contract which if made between private persons would be by law required to be in writing and under seal shall be made on behalf of the company in writing under the common seal of the company.”

23. The Respondent argued that the effect of this provision is that the contract for the sale of the leasehold interest between Rose and Colmar had to be in writing and under the common seal of the company.

24. We disagree. Section 46 (1) (a) only requires the seal of the company to be affixed to a contract where, if the contract had been one between private persons, it would have been required by law to be in writing and under seal. There is no requirement in law that an agreement for the transfer of a leasehold interest in land between two private persons be “under seal”. Indeed neither counsel nor this Court could identify any contract between private persons which was required to be under seal. It may be the words “under seal” as they refer to a contract between private persons were included in error in section 46. However we are not prepared to conclude they have no meaning. The result is that this contract was not required by section 46 to be under the common seal of the company. Even if we considered the seal was required in such a contract the question arises as to what effect a failure to affix the common seal has on enforceability of the contract. We leave this issue for future consideration. However it should not be assumed that a failure to affix the seal necessarily means the contract is unenforceable.

25. The second related issue is whether Mr. Than had the authority to sell Rose’s interest in the lease to the Valele Trust.

26. The Respondent submitted that Mr. Than had no authority to bind Rose and therefore the contract was not enforceable against Rose. The Respondent said Rose had not agreed to sell its interest in the lease.

27. We are satisfied that the evidence clearly establishes that Mr. Than had authority from Rose to act for it and that it was his and Rose’s intention to sell Rose’s interest in the lease. Mr. Than is the majority shareholder in Rose and is a director of the company.

28. There was, we think, some uncertainty whether the purchase of the leasehold interest from the Stuarts was by Mr. Than or Rose. However in March 2005 a transfer of the lease from the Stuarts to Rose was registered. The statement of defence filed by Than and Rose however said the transfer of the lease from the Stuarts was to Than. Other correspondence produced in evidence claimed Rose had purchased the lease. Mr. Than said in his sworn statement the transfer of the lease was from the Stuarts to Rose. However, Mr. Than’s sworn statement reveals he personally paid outstanding rental to the custom owner on behalf of the previous lessee. This is inconsistent with Mr. Than’s claim he had not purchased the lease from the Stuarts. We note all correspondence from Rose is signed by Mr. Than.

29. Finally we consider the agreement itself identifies that there is some uncertainty whether the leasehold interest is held by Rose or Than. The agreement of June 2004 refers to the sale of the lease including the sale of any shares in any company which owns the lease.

30. If, as Mr. Than now claims, he was not acting as a director and shareholder of Rose when he signed the agreement but simply acting for himself then he appears to have sold an asset (the lease) which he did not own for which he has accepted payment of cash and goods worth VT3,600,000. This cannot be correct.

31. We consider this evidence collectively establishes Mr. Than signed the agreement on behalf of Rose. Although the agreement mentions a sale of shares we think it clear that when Mr. Than signed the agreement on behalf of Rose, that he was entitled in law to bind the company, and Rose was selling its interest in the lease of the land.

32. As to (e) there is no requirement in law that such a contract be witnessed. Mr. Than agreed he had signed the contract.

33. We now return to (a) and the plea of non est factum. Mr. Than said in evidence that he had not read the agreement of June 2004 because he was rushing to board a flight to Port Vila. Mr. Than said when he signed the contract “I thought it was for refund of outstanding land rents I paid the custom owners on behalf of Stuart Family, the lessor, and expenses I incurred for works done on the island”.

34. Mr. Than made the point in his sworn statement that he had purchased the lease for VT6 million and if he was to sell the lease he would have wanted more than VT6 million.

35. The Judge in his summary of evidence recorded that Mr. Than accepted that he had signed the agreement. Mr. Than said in evidence he understood that Mr. Colmar was “paying compensation for the trouble Valele had caused on Aese Island”. We note that this was a different reason than his explanation for the payment in his sworn statement.

36. As to the finding there was no meeting of minds, the Judge accepted the evidence of Mr. Than that he thought he was being paid for improvements undertaken on Aese Island. This evidence, the Judge said, was confirmed by the evidence of Willie Kolo who said Mr. Than had sent an account to the custom owners of Aese for construction work undertaken for them. That account was for VT4,635,460 and dated 19 May 2003. We note that the account is marked “pro forma account”. The Judge accepted that Mr. Than would not have sold the lease for less than the VT6 million he had previously paid for it.

37. The Judge accepted therefore that Mr. Than had not read the agreement and he genuinely believed he was signing an agreement for the payment to him of the cost of work previously undertaken. The Judge concluded therefore there was no contract between the parties for the sale of the leasehold of the land.

38. The first issue under this ground of appeal is the claim by the Appellant that the defence of non est factum was never raised in the pleadings and should therefore not have been considered by the Judge.

39. We disagree. While the Respondent’s pleadings do not expressly raise non est factum, paragraph 9 of the defence alleged Mr. Colmar had “forced” Mr. Than to sign the agreement “without (Mr. Than’s) knowing the content of the agreement”. This was sufficient pleading to put the Claimants on notice that these assertions of fact raised such a positive defence.

40. The Appellants submit, even accepting the Judge’s factual findings, that they could not give rise to a successful plea of non est factum. Counsel agreed that to establish a claim of non est factum three elements must be present and proven:-

(a) the signor must be under a disability; and

(b) there must be a sufficiently significant difference between the document as signed and what the signor believed it provided; and

(c) the signor should not have been careless when he signed the document.

41. The Judge in this case did not analyse the facts with this background of relevant legal principle. He was wrong not to do so. We also make the point that the Court, in such situation, must begin with the proposition that those who put their signature to an agreement are generally bound by it: Sanders v. Anglia Building Society [1971] AC 1004 and Petelin v. Cullen [1975] CLR 355.

42. As to the facts here there was no claim that Mr. Than was under any disability. Mr. Than has not claimed he lacks any understanding of written English. Indeed his sworn statement to the Court is in English and is completed with clarity and with some sophistication. By itself this absence of any “disability” means non est factum could not possibly have succeeded.

43. As to the other two factors, clearly there is a difference between what the document said and what Mr. Than says he believed it said. The Appellants challenged the Judge’s findings as to what Mr. Than actually believed the document said. We agree there are obvious inconsistencies in Mr. Than’s evidence not considered by the Judge. However, the Judge had the advantage of seeing and hearing Mr. Than and in those circumstances we consider the findings were open to him to make with regard to Mr. Than’s understanding of what the agreement said.

44. As to the third element of non est factum we consider Mr. Than was clearly careless in signing an agreement he had not read. Mr. Than is an experienced businessman. He would well understand that putting a signature to a document would bind him to that document. As to the suggestion he was “forced” or “rushed” to sign the document we cannot accept that claim. Given Mr. Than’s experience and sophistication in business he could easily have refused to sign the document. He gave no evidence to support the claim in his pleading that he was “forced” to sign it. We reject that claim.

45. We are in no doubt it was careless if, as Mr. Than claims, he signed this document without reading it. He had the opportunity to read the agreement and he was able to read it.

46. Given those conclusions we are satisfied the Judge was wrong to conclude the claim of non est factum succeeded. On the facts it could not possibly succeed.

Orders

47. We therefore allow the appeal, for the reasons given. The Appellant sought an order for specific performance. In this case there is no reason not to order performance. This was a commercial contract between two knowledgeable businessmen. One party has paid the purchase price but has not received the benefit of the purchase, here a transfer of the leasehold interest.

48. We are therefore satisfied that there should be an order for specific performance of the contract of June 2004. The proceedings should now be sent back to the Supreme Court to give effect to our conclusions. Rose has agreed to transfer to Valele Trust all the interest in the land it owns either legal or equitable. It will be for the parties and the Judge in the Supreme Court to resolve what form the final orders should take based on our conclusions.

Costs

49. We set aside the order for costs in the Supreme Court. We order costs in favour of the Appellants either as agreed between the parties or as taxed.

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

BY THE COURT

Hon. Vincent Lunabek CJ
Hon. Ronald Young J.
Hon. Hamlison Bulu J.
Hon. Christopher Tuohy J.