IN THE SUPREME COURT OF SAMOA
HELD AT APIA

IN THE MATTER of the Land Registration
Act 1992/1993

AND

IN THE MATTER of Caveat No. 765 against Dealings in respect of
Parcels 3693 and 3694 of which
Joseph Anthony Moli Pereira is registered
as Proprietor.

BETWEEN

the ANZ BANK (SAMOA) LTD.
formerly the BANK OF WESTERN SAMOA,
a duly incorporated company carrying on business in Samoa
APPLICANT

AND

POTOAE LOISE FATUPAITO
of Motootua C/- National Provident Fund
RESPONDENT

AND

FEPULEA’I & SCHUSTER
Formerly know as FEPULEA’I LAW FIRM OFFICE,
Solicitors.
THIRD PARTY

AND

THE ATTORNEY GENERAL
for and on behalf of the
REGISTRAR OF LANDS
of the Lands, Survey and Environment Department.
SECOND THIRD PARTY

Counsel: Ms R. Drake for the Applicant
Mr RSP Toailoa for the Respondent
Mr H. Schuster for the Third Party
Ms M. Betham for the Second Third Party

Date of Hearing: 19 November 2001
Date of Decision: 4 December 2001

DECISION OF JUSTICE VAAI

On the 29th March 2000 the Respondent for and on behalf of the Samoa National Provident Fund (the Respondent) lodged a caveat on parcel of land (parcels 3693 and 3694) at Vaitele claiming an interest as registered first mortgage. The two parcels of land are registered under the name of Joseph Pereira. The applicant bank formerly known as the Bank of Western Samoa seeks an order for the removal of the caveat pursuant to section 24 Land Registration Act 1992/1993.

BACKGROUND

In January 1991 Mr Pereira requested the applicant for a loan and offered to the applicant his two parcels of land at Vaitele as security for the advance. Mr Pereira’s request was granted and Mr Fepuleai (the third party) was instructed in writing to prepare deed of first mortgage over the two parcels of land. Mr Pereira executed the deed and copy of mortgage and both documents were forwarded to the Land Registrar for Registration. On the 23rd March 1991 the deed of mortgage was registered under No. 5934 and the original deed of mortgage was sent by the third party to the applicant for safekeeping. At that point of time it was unknown to both the applicant and the third party that whereas the registered original deed of mortgage included both parcels 3693 and 3694 the registered copy included parcel 3693 only. Unknown also at that point of time the Land Register recorded a mortgage on parcel 3693 only whereas parcel 3694 remained unencumbered.

In June 1993 Mr Pereira requested the Respondent for a substantial loan to construct a residential building on the same land he mortgaged to the applicant in 1991 and he also offered the same parcels as security. In response to Mr Pereira’s request the Respondent by letter of offer dated 9th June 1993 required several terms and conditions to be met by Mr Pereira; some of these terms and conditions were:-

(a)	the purpose of the loan was to construct a residential building (condition 2).
(b)	Security for the loan is a first mortgage over land at Vaitele – parcels 3693 and 3694 plus all improvements to be erected thereon (condition 6).
(c)	Mr Pereira’s debt with the applicant bank to be fully settled before disbursement of funds (condition 12).

Mr Pereira by letter dated the 15th June 1993 agreed to the terms and conditions and as a consequence written instructions were forwarded to the third party as Mr Pereira’s Solicitor to attend to security documentation. By letter dated the 21st June 1993 the third party advised the Respondent that parcel 3693 was mortgaged to the applicant while parcel 3694 was free. That letter is reproduced here and it reads:-

"The Manager								21 June 1993
National Provident Fund
Apia

Dear Sir,

Joseph Anthony Moli Pereira

	I refer to your letter of instructions of 16 June 1993.

	A search conducted with the Land Registry for the abovenamed’s land at Vaitele confirms that he is the registered owner of two ¼ acre pieces (parcels 3693 and 3694). Parcel 3693 is currently mortgaged to the Bank of Western Samoa. Parcel 3694 is currently unencumbered and Mr Pereira instructs me that this is the land that he proposes to construct his residential home. I await your further instructions on this.

Yours faithfully,

Patrick Fepuleai"

The Respondent subsequently agreed to take first mortgage on parcel 3694 and second mortgage on parcel 3693 as security and both mortgages were registered on the 6th July 1993. In October 1993 when the applicant knew for the first time that Mr Pereira had built on and mortgaged his land to the Respondent, the applicant searched the Register and discovered for the first time that its deed of mortgage is registered against parcel 3693 only and an officer of the Land Registry was confronted. After citing the original deed of mortgage the Registrar of Lands (Second third party) amended the Register to show that the applicant was the first mortgagee of parcels 3693 and 3694.

This amendment was done without the knowledge of the Respondent.

The Respondent maintains it holds a first mortgage on parcel 3694 and it alleges that the alteration of the Land Register by the Second third party resulting in the applicant holding first mortgage over parcel 3694 is defective and void. But instead of challenging the legality or otherwise of the actions of the Second third party, the Respondent lodged a caveat against parcel 3693 and 3694 resulting in the present application by the applicant to remove the caveat. Both third parties informed the court on the date of hearing that they join as third parties by consent and accordingly I make no ruling or comment on the basis and nature of the third party notices issued by the Respondent; although I will touch on their contents when determining the legal issues.

PROCEDURE:

The procedure which the court follows in dealing with applications for the removal of Caveat is the summary procedure and this was the procedure adopted in these proceedings: See Air New Zealand v Rosalina Higginson 1993 Misc. 15376/92 unreported decision of Sapolu CJ.

It was also said in Air New Zealand v Rosalina Higginson (supra) following Imo v Pereira 1978 (unreported) that the onus is on the caveator to show cause only the caveat should not be removed. In Imo v Pereira and in Air New Zealand v Rosalina Higginson this court refused to follow the decision the New Zealand Supreme Court in Re Paycher’s Caveat (1954) NZLR 285 which held that the onus rests on the applicant to show cause why the caveat should not remain on the register. But the New Zealand Court of Appeal in Sims v Lowe (1989) 1 NZLR 656 overrule Re Peycher’s Caveat (supra) so that the position in New Zealand is now the same as Samoa namely that the onus is on the caveator in proceedings for removal of caveat. Although both decisions in Imo v Pereira and Air New Zealand v Higginson relied on the wording of clause 11(b) of the Samoa Land Registration Amendment Order 1921 there is nothing in Section 24 of the Land Registration Act 1992/1993, under which the present application is brought, to alter what was decided in those two cases.

LEGAL ISSUES:

Submissions by counsels for the Applicant and the Respondent concentrated on parcel 3694 so that although the Respondents caveat was lodged against both parcels 3693 and 3694 it is really parcel 3694 upon which both the applicant and the Respondent are contesting as each party is claiming that it holds a first mortgage over parcel 3694. Counsels for the third and second third party made no submissions.

But according to the Land Register as it now stands and before the caveat was lodged by the Respondent the Applicant is the first mortgagee of parcel 3694; so that the real purpose of lodging the caveat is to declare the amendment or alteration of the Land Register by the Registrar of Lands as defective and void and the Respondent should therefore appear on the Register as the first mortgagee of parcel 3694. In essence then the Respondent’s complaint is really against the Second third party; the Registrar of Lands. It is asking for a declaration as well as well as a writ of mandamus against the Second third party to compel the Second third party to cancel the unlawful amendment or alteration the Second third party did to the Land Register. In fact in the Proposed Second Third Party Notice issued by the Respondent, the Respondent claims against the Second Third party namely:

(a)	to remedy defects or correct entries in register.
(b)	Declaration that Respondent holds a first mortgage over Parcel 3694, and
(c)	General damages of $40,000 and costs herein.

It seems inappropriate in my view for the Respondent to register the caveat against title as it did in an attempt to achieve the intended declaration and order that it seeks. The Land Register was amended or altered in 1993 and it was not until March 2000 that the Respondent registered its caveat supposedly to protect its interest as first mortgagee. On the other hand however it is accepted that both the Applicant and the Respondent have attempted to realise and enforce their securities against Mr Pereira and the real stumbling block now is the dispute between the two parties over the status of the mortgages over parcel 3694. Two legal issues have been posed for determination and both the applicant and the Respondent have accordingly targeted those issues in their submissions namely:

(a)	which of the applicant or the respondent has first mortgage over parcel 3694; and secondly:
(b)	 Were the amendments or alterations made by the Land Registrar in 1993 defective and void.

It is not in dispute that Mr Pereira in 1991 executed a mortgage in favour of the Applicant over parcels 3693 and 3694. Both the original and the copy of the executed mortgage were presented to the Second third party as the Registrar for registration and the Registrar returned the registered original and kept the copy. Counsels agree that it is the Deeds Title System and not a Torrens Title System which exists in Samoa. It is a system of registration of title; it is not a system of title by registration: See: Toailoa Vaosa and Toleafoa Solomona Toailoa v Attorney General (unreported decision of Wilson J. 4/8/2000) and at page 28 Wilson J has this to say regarding Section 16 Land Registration Act 1992/93:

"Section 16 of the Land Registration Act is a far cry from the Legislative enactments which establish indefeasibility in other jurisdictions. It merely operates to help ensure that instruments are registered and to that extent, it modifies the deed system. Without creating legal title to land, the section simply means that legal title to land cannot be affected by any instrument until and unless such instrument is registered. In other words, dealings with land so as affect title are conditional upon registration."

It is also not in dispute that under the deeds system, a mortgage is a conveyance of land vesting legal ownership in the creditor with equitable ownership remaining in the debtor; so that in 1991 when Mr Pereira executed the mortgage of parcel 3693 and 3694 he conveyed legal title of both parcels to the Applicant. But the Respondent argues that following what Wilson J said in Toailoa Vaosa & Toleafoa Solomona Toailoa v Attorney General (supra) the Applicant’s mortgage was registered against parcel 3693 only so that legal title to parcel 3694 was not affected until the Respondent registered its mortgage against it and accordingly legal title passed to the Respondent upon registration of its mortgage in 1993. Respondent therefore relies in the wording of Sections 16 & 17 Land Registration Act 1992/1993 which read:

"Section 16 – Effect of Registration:

No instrument of title shall in any manner affect the legal title to land until and unless such instrument is registered in the Land Register in accordance with this Act.

Section 17 – Mode of Registration:

The registration of an instrument shall be affected by the entry of a memorial thereof signed by the Registrar in the land Register on application for registration being made in accordance with this Act."

It must be remembered however that Section 16 does not create indefeasibility; it modifies the deed system but does not replace it. In other words registration does not give additional effectiveness or validity to a deed; so that when the Respondent registered its deed of mortgage over parcel 3694 in 1993 the equitable interest which they acquired through the mortgage remains an equitable interest and does not replace the legal interest mortgaged to the applicant in 1991. When Mr Pereira mortgaged parcel 3694 to the Respondent in 1993 the only interest he had in parcel 3694 was an equity of redemption. He could not give a better title than he had. The obvious conclusion therefore is that the legal mortgage of the applicant over parcel 3694 ranks in priority to that of the Respondent and having reached that conclusion it logically follows that on the undisputed facts the Registrar is obliged to correct the Land Register pursuant to Section 30 Land Registration Act since he had before him in 1993 sufficient evidence to correct the error.

In conclusion the Respondent cannot justify the continued existence of the caveat because he cannot show that he has a reasonably arguable case for the interests he claims to hold as first mortgagee. As stated by Somers J in Sims v Lowe (supra) at page 660:

"The caveator seeks to clog or better the proprietary interest of another. As a matter of principle it seems right that he must justify the continued existence of his caveat. He will do that if he can show he has a reasonably arguable case for the interest he claims."

Finally counsel for the applicant submits that the Respondent had constructive notice of the mortgage in 1991 to the applicant pursuant to Section 58(1)(b) Property Law Act 1952 which provides:

"(a)	A purchaser of land shall not be prejudicially affected by notice of any instrument, fact, or thing unless:

(c)	it has in the transaction as to which a question of notice arise come to the knowledge of his counsel as such, or of his solicitor or other agent as such if such inquiries and inspection had been made as ought reasonably to have been made by the Solicitor or other agent."

Counsel says that the knowledge or notice acquired by the third party as solicitor for the Respondent is constructive notice to the Respondent of a prior first mortgage to the applicant. But there is dispute or uncertainty as to whom the third party was counsel for and because this is summary procedure for the removal of caveat it is unsuitable to determine disputed questions of facts and accordingly I make no ruling on that submission.

The order of the Court is as follows:

(i)	The Caveat registered by the Respondent against the title of parcels 3693 and 3694 is to be removed forthwith.
(ii)	The Respondent, the third party and the Second third party are to pay costs of $400 each to the applicant.

JUSTICE VAAI