Paina v Public Trustee [2001] WSSC 29 (9 November 2001)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

TAIENE PAINA of Eva, Matai
as the Administrator of the estate of Taiene Pouono Paina deceased
Plaintiff

AND:

THE PUBLIC TRUSTEE
as the Administrator of the estate of
Patu Tauvela Paniani Hunter deceased.
Defendant

Counsel: Mrs R. Drake for the Plaintiff
Mr G. Latu for the Defendant

Date of Hearing: 31 July 2000
Submissions Filed: Plaintiff: 19.09.2000
Defendant: 09.02.2001
Date of Decision: 9 November 2001

DECISION OF VAAI J.

The plaintiff is the administrator of the estate of his grandfather Taiene Pouono Paina, (who will be referred to in this judgment as Taiene) who was a pastor at the village of Fusi, and the defendant is the administrator of the estate of Patu Tauvela Hunter (who will be referred to as Hunter) who was a surveyor from the village of Vaiala. Both Taiene and Hunter became friends through the generosity and hospitality of Taiene who played hosts to Hunter and his party on a number of occasions when Hunter went out to do survey work. In 1940 Hunter and his survey team stayed with Taiene while doing survey work at Fusi and in response to Taiene’s request Hunter agreed to look for a piece of freehold land near Apia for his friend Taiene to purchase. A piece of land at Tanumaleko, Vailima comprising 3 acres and 10 perches was found and which Taiene agreed to buy at a price of 100 pounds sterling. The land was at the time part of the estate of Mr Trood which was administered by the Public Trustee. Payment of the final instalment was made in April 1945 and in response to a request by Taiene for the deeds of transfer, Hunter told Taiene that formalities for transfer will take sometimes, but his family should then move on to the land. Taiene’s children moved on to the land in 1946 and have lived there ever since. Taiene made several more requests to Hunter for the deeds but no such deed was ever produced to Taiene before Taiene passed away in 1964. Unknown to Taiene his trust in Hunter has been abused; his generosity has been reciprocated by outright greed and dishonesty; Hunter on the 3^rd September 1945 registered the land under his own name. Before his death in 1971 Hunter mortgaged the land to the Public Trustee in July 1969 as security for loans to himself. Three further advances were granted by the Public Trustee to Hunter in 1969, 1970 and 1971 using the same land a security.

The plaintiff was appointed administrator of the estate of Taiene in July 1994 and in 1995 he commenced action which has culminated in the proceedings now before the court. Essentially the plaintiff seeks two orders namely that the defendant as administrator of the estate of Hunter holds the land in question as trustee for the plaintiff as the administrator of the estate of Taiene; and secondly that the Public Trustee is to pay in full and discharge Hunter’s mortgage secured by the said land and to transfer title of the land to the plaintiff as the administrator of Taiene’s estate. During the course of the hearing counsel for the defendant properly conceded that the defendant holds the said land in trust for the plaintiff as the administrator of the estate of Taiene. In doing so, the defendant concedes that, since the commencement of these proceedings, and as a result of its investigations, the defendant agrees that all the purchase monies for the purchase of the land were provided by Taiene. Hunter, the legal owner is therefore presumed to hold the land in trust for Taiene the provider of the purchase money.

As a result of the concession by the defendant in respect of the first order sought by the plaintiff, I now turn to consider the second order sought namely that the defendant should discharge the mortgage and transfer the title of the land to the plaintiff as administrator of the estate of Taiene.

Although the defendant is sued as the administrator of the estate of Hunter, the plaintiff is actually challenging the legality of the mortgage, so that given the concession by the defendant that it holds the land on trust for the plaintiff, the plaintiff is now saying that since Hunter did not have a valid title to the land it therefore follows that the mortgages he subsequently granted to the defendant as security for the monies advanced were all void. In reality then the plaintiff is saying that the defendant as the mortgagee has no valid mortgage. There is therefore some substance in the contention by the defendant that the plaintiff appears to confuse the role of the defendant as the registered mortgagee on the one hand and the role of the defendant as the administrator on the other hand. But as I have clearly indicated above the single issue really is a determination whether the defendant has a valid mortgage.

For the plaintiff it is submitted that the status of the mortgage to the defendant depends upon the validity of the deed of conveyance of 1945 to Hunter. Since Hunter’s title to the land was defective as it was based on a fraudulent act, his subsequent act of mortgaging the said land to the defendant was tainted by the same fraud. Hunter’s title to the land therefore was not indefeasible; he had no legal or equitable right to the land and as such he could not give a valid security when he mortgaged the land. The mortgage to the defendant is therefore a void instrument based on a void title because Hunter could not confer a better title than he had and it is immaterial whether the defendant was unaware of the defect in Hunter’s title.

In pursuing this argument the plaintiff is relying on the common law rule that no man can confer a better title than he had, so that if the original deed of conveyance was invalid, the title was impeachable despite any subsequent conveyances, mortgages or other dealings which had been made. It must be borne in mind however that the plaintiff by seeking an order that the defendant holds the land in trust for the plaintiff, is in fact acknowledging that Hunter the legal owner holds the land in trust for Taiene.

It is not and has never been the contention of the defendant that Hunter’s title to the land was indefeasible; if they did they would never have conceded that they hold the land on trust for the plaintiff. It is also not disputed that the system of registration of deeds created by the Land Registration Act 1992-1993 is a system of registration of title; it is not a system of title by registration. See Toailoa Vaosa & Toleafoa Solomona Toailoa v Attorney General & Leataata Toailoa unreported decision of Wilson J delivered 2/8/2000. Title therefore depends upon the instrument itself, not upon registration, so that registration had no effect on the validity of an instrument. It follows therefore that a void deed remains ineffective even though it has been registered.

But the defendant says that the common law rule (namely that no man could confer a better than he had) upon which the plaintiff is resting its claim is subject to the qualification that a bona fide purchaser of a legal estate for value without notice can take free from any equitable interests which bound the vendor. It was never disputed throughout the trial that the defendant had any knowledge, actual, constructive or imputed of the dealings between Hunter and Taiene when the defendant obtained in 1969 a mortgage over the land as security for loan to Hunter. Submissions by the plaintiff do not contend that the defendant possessed any such knowledge and it is therefore accepted that the defendant in 1969 was a bona fide mortgagee for value without notice. In Pilcher v Rawlins (1872) 7 Ch appeals 259 it was said by Sir James J. at page 268-269:

“I propose simply to apply myself to the case of a purchaser for valuable consideration, without notice, obtaining, upon the occasion of his purchase, and by means of his purchase deed, some legal estate, some legal right, some legal advantage; and, according to my views of the established law of this Court, such a purchaser’s plea of a purchase for valuable consideration without notice is an absolute, unqualified, unanswerable defence, and an unanswerable plea to the jurisdiction of this court. Such a purchaser, when he has once put in that plea, may be interrogated and tested to any extent as to the valuable consideration which he has given in order to show the bona fides or mala fides of his purchase, and also the presence or the absence of notice; but when once he has gone through that ordeal, and has satisfied the terms of the plea of purchase for valuable consideration without notice then according to my judgment, this court has no jurisdiction whatever to do anything more than to let him depart in possession of that legal estate, that legal right, that legal advantage which he has obtained, whatever it may be.”

And in Taylor v Blakelock [1886] UKLawRpCh 102; (1886) 32 ChD 560 it was said by Bowen LJ at page 569-570.

“That really reduces it to the simple question of what is the meaning of the term a purchaser for value in such cases. A purchaser for value is a well known expression to the law. By the common law of this country the payment of an existing debt is a payment for valuable consideration. That was always the common law before the reign of queen Elizabeth as well as since. Commercial transactions are based upon that very idea. It is one of the elementary legal principles as it seems to me, which belong to every civilised society; and many of the commercial instruments which the law recognises have no other consideration whatever than a pre-existing debt.”

The obvious conclusion from the uncontested evidence and from the authorities is that the term purchaser includes a mortgagee and that the defendant as mortgagee in 1969 was a bona fide mortgagee for value without notice. Accordingly the plea advanced by the defendant must succeed.

I now turn to consider the remaining submission by the plaintiff namely that the defendant is precluded by the Limitation Act 1975 to enforce its mortgage. It should be stated at the outset that the pleadings by the plaintiff in the statement of claim gave no indication whatsoever that the plaintiff will claim the benefit of the Limitation Act 1975 and furthermore the evidence adduced by the plaintiff was confined to and related only to the validity of the mortgage. References therefore by counsel for the plaintiff in her submissions to the contents of the variations of Mortgages dated the 27^th November 1969; 15^th December 1970; and the 14^th May 1971 as evidence that the defendant is prevented by the Limitation Act 1975 from recovering monies secured by the mortgage and the variations of mortgages cannot be sustained simply because the documents were never tendered in evidence. In fact only the original mortgage was tendered and it was produced by the defendant for reasons unknown to the court. There is simply no evidence before the court to entertain an argument whether the defendant is precluded by the Limitation Act 1975 to enforce its mortgage. Accordingly the submission cannot be sustained.

Judgment is given for the defendant. On the question of costs it is normal for the unsuccessful party to pay costs. These proceedings have been delayed by two preliminary motions filed by the defendant. One motion was unsuccessful and the question of costs was reserved. An earlier concession by the defendant that it holds the land in question on trust for the plaintiff after it discovered the events of 1945 would have given the plaintiff or both parties an opportunity to take steps to expedite the dilemma confronting the plaintiff. In the circumstances I make no order as to costs.

JUSTICE VAAI