Samoa National Provident Fund v Stanley [2003] WSSC 48 (16 May 2003)

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 813 against dealings in respect of Parcel 573 being part of Parcel 216/77 L R 29/84 of which NINO VITO is registered as proprietor.

BETWEEN:

SAMOA NATIONAL PROVIDENT FUND
established pursuant to the National Provident Fund 1972.
First applicant

AND:

WESTPAC BANK SAMOA LIMITED
formerly known as PACIFIC COMMERCIAL BANK LTD
a duly incorporated company carrying on business in Samoa.
Second Applicant

AND:

DEVELOPMENT BANK OF SAMOA
a statutory corporation established pursuant to the Development Bank of Samoa Act 1974.
Third Applicant

AND:

WILSON H STANLEY, ARTHUR AGHAMAISEN STANLEY
all of the United States of American and
WINSTON STANLEY of Vaitele, c/- Asiata Saleimoa Vaai, Solicitor.
Respondents

Counsels: Ms Drake for Applicants
Mr Meredith for Respondent

Hearing: 24 March 2003
Decision: 16 May 2003

DECISION OF VAAI J

By deed of conveyance dated 19th April 1991 Mr Stanley, a Minister of Religion, conveyed to his sister Nino Vito his undivided ½ share in a piece of land at Togafuafua near Apia at a consideration of $18,000 to the intent that the purchaser Nino Vito shall become the sole owner of the land. On the same date the vendor and purchaser together with their spouses executed a separate document worded in the Samoan language. That document is reproduced in full:

“O LE FEAGAIGA ua faia i le aso 19th o April 1991.

I LE VA O: HINI STANLEY o Saleimoa, Faife’au, ma ALOFISA lona faletua.

I le tasi itu (ua ta’ua mulimuli ane nei o le Itu Muamua) MA: FUIMAONO LAFAELE VITO o Togafu’afu’a, Fai pisinisi ma NINO lona Faletua i le isi itu (ua ta’ua mulimuli ane nei o le Itu Lua) ua avea ai lenei Feagaiga e molimauina tu’utu’uga nei:

1. Ua tu’uina atu e Hini Stanely lona afa (½) sea o le fanua umia sa’oloto i Togafu’afu’a e resitaraina i le igoa o Nino Vito ina ia mafai ai ona maua se nogatupe a le Itu Lua mai i le N.P.F. mo le la pisinisi. O le Deed of Conveyance o lo’o ta’ua ai le totogi e $18,000.00 ae peitai e leai se tupe na tu’uina atu ia Hini ma e fa’amaonia i lenei feagaiga.
   
2. Ua malilie itu e lua o lenei feagaiga, o le a umia e Nino Vito le fanua atoa i Togafu’afua i luga o se tulaga fa’atuatuaina mo fanau a le Itu Muamua ma fanau a le Itu Lua ina ia umia e i latou uma ini sea tutusa i le taimi e maliu ai Nino Vito.
   
3. Ia faia e Nino Vito sana mavaega e fa’ataunu’uina ai le malieliega e pei ona ta’ua i le parakarafa 2 o lenei Feagaiga.
   
4. O fale uma o le a fausia, i luga o le fanua fa’apea ma nisi mea tumau (permanent fixtures), o le a avea uma lava ma vaega o le fanua ma o le vaega o lo’o taua i le parakarafa 2.
   
5. O le a fa’aauau pea i luga o le fanua le pisinisi o lo’o faia nei e le Itu Lua.
   

SAINIA e HINI STANLEY ma ALOFISA )

) ..............................

STANLEY o le Itu Muamua i luma )

)

o:

SAINIA e FUIMAONO LAFAELE VITO )

) ..............................

O le Itu Lua i luma o: )”

I am indebted to counsel for the applicants for the English translation of the document and except for some minor variations I adopt counsel's translation as contained in her written submissions. I also note that counsel for the respondents did not oppose the translation. The English translation is:

THE AGREEMENT is made on the 19th day of April 1991.

BETWEEN HINI STANLEY of Saleimoa, Minister of Religion and his wife ALOFISA of the one part (hereinafter called the first part);

AND

FUIMAONO LAFAELE VITO of Togafu’afu’a, Businessman and his wife NINO of the other part (hereinafter called the second part) this Agreement witnesseth these stipulations:

1. Hini Stanely gives his ½ share of the freehold land at Togafuafua to register in the name of Nino Vito to enable the second part to obtain a loan from the N.P.F. for their business. The consideration of $18,000 in the Deed of Conveyance has not been handed over to Hini Stanely as confirmed by this Agreement.
   
2. It is agreed to by both parties of this agreement that Nino shall hold the whole land at Togafuafua for the children of the first and the second part in equal shares after the death of Nino.
   
3. Nino Vito is to make a will to put into effect what is agreed to in paragraph two of this Agreement.
   
4. All buildings to be constructed on the land including permanent fixtures shall become part of the land and those referred to in paragraph two.
   
5. The business presently conducted shall continue to be conducted by the second party on the land.
   

This document the Respondents argue is a deed of trust while the Applicants say is nothing more than an Agreement between the vendor and the purchaser; but on the other hand the caveat refers to the document as an agreement which contained a trust. I will for convenience refer to the document as the Agreement. The deed of conveyance, the agreement and deed of mortgage to the first applicant were all prepared by the same solicitor. And whereas both the deeds of conveyance and mortgage were both registered on the 26th April 1991 the agreement was not, so that it was never brought to the notice of the applicants when they advanced substantial amounts of monies to Mr & Mrs Vito on the security of the mortgages. Mortgage repayments to the three applicants fell into arrears resulting in formal demands and default notices being served by the applicants on Mr & Mrs Vito as a step towards enforcing their rights under the mortgages.

The four Respondents are the children of Mr Stanley. Through their Solicitor (the same solicitor who prepared the deed of conveyance, deed of first mortgage and the Agreement) lodged and registered on the 26th May 2001 a caveat claiming interest as beneficiaries of a trust contained in the Agreement.

Both counsels have addressed the approach to be adopted by the court when considering whether the caveat should remain on the register. One approach is whether the caveator who bears the onus to show cause why the caveat should be maintained has to establish that there is a serious question to be tried and that the balance of convenience considerations are in his favour as decided by the NZ Court of Appeal in Castle Hill Run Ltd. v N.Z.I. Finance (1985)2 NZLR 104 which followed the approach adopted by the Privy Council in Eng Mee Yang v Lethumanan (1980) AC 331. The second approach is whether the caveator merely has to establish a reasonably arguable case to justify the continued existence of the caveat as decided by a differently constituted NZ Court of Appeal in Holt v Anchorage Management Ltd. (1987)1 NZLR 108. In an unreported decision of this Court in Air New Zealand Ltd. v Rosalina Maeli Higginson Misc.15376/92 cited by counsel for the applicants; Sapolu CJ left open the approach to be adopted.

Counsel for the Respondents has referred to a number of NZ and English authorities to support his submissions that the approach is similar to that in determining interim injunctions, namely that there is a serious question to be tried and that the balance of convenience favours the caveators.

Similarly counsel for the applicants after addressing the facts and making references to the English and NZ authorities concluded her submissions by stating that there is obviously no serious question to be tried and the court should exercise its discretion in favour of the applicants without the need to consider where the balance of convenience lies.

The approach the courts should adopt was considered by Sapolu CJ in The Public Trustee v Lio Miti & Others Unreported Misc. 19223 10th July 1995 where he referred to the NZ Court of Appeal decision in Sims v Lowe (1989)1 NZLR 656 which dealt with section 143 Land Transfer Act 1952 (NZ) which is similar, albeit not identical, to clause 11 of the Samoa Land Registration Amendment Order 1921 as now replaced by section 24 Land Registration Act 1992/1993. His honour formed the view that the preferable approach is for the caveator to establish a reasonably arguable case as alluded to by Somers J at page 660:

“It was said in Re Peycher’s Caveat (91934) NZLR 285, 288 that the onus of establishing a right to removal of a caveat ........... rests on the applicant for removal. With respect we do not think this can be right. The caveator seeks to clog or fetter 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.”

Adopting the same approach I now turn to consider the affidavits filed and the submissions of counsel bearing in mind what was said by Somers J in Sims v Lowe (supra) at page 659-660:

“It is clear that this summary procedure for the removal of a caveat against dealings is unwholly unsuitable for the determination of disputed questions of fact. From this it follows, and has been consistently held, that an order for the removal of such a caveat will not be made under s.143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such ground as then existed no longer does so ........... The patent clarity referred to will not exist where the caveator has a reasonably arguable case in support of the interest claimed.”

There are no disputed facts here. In fact what is in issue here is the Agreement which the Respondents argue constitutes a trust in favour of the Respondents and that the interests of Respondents expressed in the trust are superior to the interests of the applicants as mortgagees. Mr Stanley filed an affidavit contesting the removal of the caveat. He deposed that he and his wife had both intended to live on the land upon retirement from pastoral work and their desire was conveyed to Mr and Mrs Vito when they granted permission to Mr and Mrs Vito in the 1970’s to reside and operate a business on the land.

In 1991 after many requests and assurances from Mr Vito, Mr Stanley finally agreed to covey his ½ share to Mrs Vito to enable Mr and Mrs Vito to use the land as security for a loan but subject however to both parties entering into the Agreement. Mr Stanley says that the Agreement was to guarantee the vesting of the land in his children despite the interests of the mortgagees so that any mortgage registered on the land would be subject to the terms of the trust expressed in the Agreement. With the belief that the interests in the trust are superior to those of the mortgagees Mr Stanley executed the Agreement and the deed of conveyance. He is near retirement and still has the intention and plan of retiring to the land.

Counsel for Respondent in his written submissions says that the applicants admits to the existence of the Deed of Trust. I do not agree. Mrs Drake in her written submissions categorically states that the Agreement is not an actual deed of trust conferring on the Respondents an immediate interest in the freehold but is an agreement recording what the parties had agreed to do.

In any event whether the Respondent has established a reasonably arguable case to maintain the caveat on the register depends on the meaning and effect of the Agreement. Counsel for the Respondents submits that the agreement constitutes a trust in favour of the Respondents thus giving rise to an arguable case which should be properly determined by court action to be brought in the form of a Statement of Claim to determine the priority of interests as between the applicants as mortgagees and the Respondents as beneficiaries under the trust as well as other issues like ignorance, mistake, and undue influence.

No explanation has been offered as to why the Respondents have not pursued their intended court action since they lodged the caveat in 2001. It appears to the court (although not relevant to the determination of the issues) that the caveators themselves were not aware of the Agreement and of the Caveat lodged and probably are not aware of these proceedings as well. Mr Stanley the father of the Respondents conveyed the land to Mrs Vito to enable Mr and Mrs Vito to obtain a loan and the deed of conveyance states that the Vendor:

“DOTH HEREBY CONVEY unto the purchaser his undivided one-half (½) share to the intent that the purchaser shall become the sole owner of the said land TO HOLD the same unto the Purchaser her executors administrators and assigns forever.”

This same deed of conveyance which counsel for the Respondents say was executed subsequent to the execution of the Agreement makes no reference whatsoever to any trust. Similarly the Deed of Mortgage executed some five (5) days later makes no reference to any trust.

If Mr Stanley is correct that he executed the Agreement with the understanding that the interests in the trusts are superior to that of the mortgagees interest so that any mortgage would be subject to the terms of the trust, then Mr Stanley has either not had the benefit of competent legal advice or if that advice was given it was misunderstood by Mr Stanley.

Secondly if Mr Stanley is quite serious about his belief then he is telling the court that he agreed to convey his ½ share to enable Mr and Mrs Vito to obtain a loan but such a security will be utterly useless to the mortgagees because Mrs Vito was to hold the land in trust for the Respondent so that even if Mr and Mrs Vito default in their repayments of the loan the mortgagees cannot exercise their rights against the land. Reverend Stanley’s belief and expectations borders the absurdity.

In any event the Respondents as caveators must pursuant to section 21 Land Registration Act 1992/1993, be persons entitled to or beneficially interested by virtue of any unregistered agreement or other instrument or transmission or of any trust express or implied, or otherwise howsoever. To have a caveatable interest they must have an existing legal or equitable interest as Callan J after referring to a number of English authorities said in Guardian Trust & Executer Co. of New Zealand v Hall (1938) NZLR 1020 at page 1026:

“These cases are clear and high authority for the proposition that the legatee of a share in residue has no interest in any of the property of the testator. Until the residue has been ascertained, and that his right is to have the estate properly, administered and applied for his benefit when the administration is complete.”

In the present case Mr Stanley’s half-share (½) was conveyed for the purpose of obtaining a loan and upon Mrs Vito’s death the land was to pass on to the Respondents pursuant to a will to be made by Mrs Vito. Now Mrs Vito is still alive and presumably has not made a will. It follows therefore that the Respondents have no existing interests in the land so that they do not come within section 21 Land Registration Act as persons with a presently existing or equitable interest in the land.

However, even if the Agreement does create a trust in favour of the Respondent, the equitable interest thereby created will be subject to the legal interests of the three applicants as mortgagees. It is not disputed that the three applicants were bona fide mortgagees without any notice of the Agreement so that their legal interests prevail over those of the Respondents.

I have accordingly come to the conclusion that the caveators have not established a reasonably arguable case. The application for the removal of caveat 813X therefore succeeds and the order is made for its removal. Costs are awarded to the applicants which I fix at $250.00 for each applicant.

JUSTICE VAAI