Carter v Ioane [2010] WSSC 14 (12 April 2010)

Misc 240/09

IN THE SUPREME COURT OF SAMOA
HELD AT MULINU’U

IN THE MATTER of the Samoa Land Registration Act 1992/1993.

AND:

IN THE MATTER
of Caveat 829x lodged by SEFO IOANE and SAO IOANE
against parcel 5559 being part of Parcel 4932, Flur!X, Upolu Plan 6562, Volume 41 Folio 190.

BETWEEN:

BARBARA CARTER
Investment Officer and

HARRY AMOS CARTER
Counselor both of Lalovaea.
Applicants

AND:

SEFO IOANE and SAO IOANE
of Vaiusu
Respondents

Counsel: R Papali’i for applicants
R Drake for respondents

Judgment: 12 April 2010

JUDGMENT OF SAPOLU CJ

Introduction

1. These proceedings are concerned with an application by the applicants Barbara Carter and her husband Harry Carter to remove caveat 829x lodged by the respondents Sefo Ioane and his wife Sao Ioane over land situated at Vaiusu-uta and described as parcel 5559.

2. The sole ground of the application is essentially that the respondents have no caveatable interest in the said land as it has been purchased by the applicants as bona fide purchasers for valuable consideration without notice of the respondents alleged equitable interest in it. This narrows down the case for the applicants to the question of whether the applicants are bona fide purchasers for valuable consideration without notice. This is essentially a question of fact.

3. However, the submissions by counsel for the applicants raises another issue. This is whether it is the Land Registration Act 1992/1993 or the Land Titles Registration Act 2008 which repealed the 1992/1993 Act that applies to this matter. The significance of this point is that under the Land Registration Act 1992/1993 the system for the registration of land in Samoa was still the deeds system of land registration. That was changed by the Land Titles Registration Act 2008 which introduced the torrens system of land registration to Samoa.

4. There is, however, a further issue which has troubled me. This is the position of the National Provident Fund as mortgagee in relation to the applicants as mortgagors of the said land. This was touched upon briefly in the evidence and written submissions for the applicants. It was not touched upon in the evidence or the submissions for the respondents. Nor has the National Provident Fund been cited as a party to these proceedings. However, the said land has been made the subject of a first mortgage security by the applicants to the National Provident Fund as mortgagee and the decision of the Court in this matter, if it goes in favour of the respondents, may impact upon the interest of the National Provident Fund as mortgagee.

5. Thus on 11 March 2010, I delivered my conclusions that there are issues which require further consideration and submissions by counsel but the caveat by the respondents will continue in the meantime. Since delivering those conclusions, I have done further research on the issues that troubled me and I am now in a position to deliver my final judgment on those issues. No further submissions are therefore required from counsel.

Background

6. As it appears from the evidence for the respondents, the actual land in dispute forms part of parcel 5559 which used to form part of a five acre block of land at Vaiusu-uta. The respondent Sefo Ioane (Sefo) and his family have lived on part of that five acre block of land since 1969. Later the owner of the said block of land conveyed it to his nephew. When the nephew died, his widow Imeleta Schwenke (Imeleta) acquired the said block of land.

7. Subsequently, the said block of land was subdivided by Imeleta and the part of the land where the respondent Sefo and his family live became parcel 5559 with an area of half an acre. In March 1999, the respondents Sefo and his wife Sao Ioane (Sao) entered into an oral agreement with the said Imeleta to sell to them a quarter acre from parcel 5559. This quarter acre includes the land where the house of the respondents is located.

8. The terms of that oral agreement were: (a) the said Imeleta would sell to the respondents Sefo and Sao a quarter acre where their house is located on parcel 5559, (b) the purchase price is $28,000, (c) the deposit would be $5,000 and the balance of the purchase price to be paid by monthly instalments of $150, and (d) Imeleta would effect a survey of the said quarter acre from parcel 5559 once the deposit was paid.

9. The respondents claim that in September 1999 they had paid the deposit for their quarter acre, however, no survey was done to take their quarter acre out of parcel 5559. Nonetheless, they continued to make monthly payments of $150 towards the balance of the purchase price of their quarter acre to Imeleta as required under their oral agreement for sale and purchase of land. By April 2006, the respondents had paid $16,390.00 (inclusive of the deposit) to Imeleta. At that time, their quarter acre had still not been surveyed despite their many requests to Imeleta and the many promises by her that parcel 5559 will be surveyed. The respondents then sought the assistance of their solicitor who advised them not to make any more payments to Imeleta but to the solicitor’s trust account. By April 2009, the respondents have made total payments in the amount of $22,400 towards the purchase price of $28,000 for the land but their quarter acre had still not been surveyed from parcel 5559.

10. It would now be appropriate to turn to the evidence for the applicants. According to the evidence of the applicant Barbara, who is an investment officer with the National Provident Fund (the NPF), the said Imeleta obtained a loan from the NPF in or about 2000 and used parcel 5559 as a first mortgage security for her loan. Before the NPF had taken out a first mortgage over parcel 5559, it conducted a search of the land register and found no encumbrance on the said parcel of land.

11. It further appears from the evidence of the applicant Barbara that Imeleta soon defaulted on her loan with the NPF. Barbara was very much aware of the situation with regard to Imeleta’s loan because she was the NPFs investment officer who was managing the loan. At this point of the evidence in chief by Barbara, counsel for the respondents raised objection to questions by counsel for the applicants to Barbara’s evidence regarding discussions between her and Imeleta and what Imeleta said in those discussions about selling parcel 5559 to Barbara. The reason for the objection was that Imeleta was not going to be called as a witness and therefore what she might have said in those discussions would be hearsay.

12. From the affidavit evidence by Barbara, it appears that while the loan by Imeleta from the NPF was in default, Imeleta approached Barbara sometime in August 2001 if she would like to purchase parcel 5559. That is clear from Barbara’s joint affidavit with her husband and her evidence given under cross-examination. I do not accept that it was in the year 2000 that Imeleta approached Barbara if she would like to buy parcel 5559 even though that appears from her affidavit of 4 March 2009. Subsequently, Barbara and her husband Harry Carter (Harry), the other applicant in these proceedings, agreed to purchase parcel 5559. Barbara then applied for a loan from the NPF to purchase parcel 5559.

13. On 28 September 2001 Barbara was approved her loan from the NPF to purchase parcel 5559. At no time did Imeleta tell any of the applicants that she had entered into an oral agreement in 1999 with the respondents to sell to them a quarter acre out of parcel 5559 and that the respondents had already paid the deposit and were making monthly instalment payments towards the balance of the purchase price.

14. Barbara and Harry then purchased parcel 5559 from Imeleta with the proceeds of Barbara’s loan from NPF. It is not clear whether Barbara alone or both Barbara and Harry took over Imeleta’s loan with the NPF. Whatever the case may be, a deed of conveyance was prepared and executed by Imeleta on 4 October 2001 for the transfer of parcel 5559 from her to the applicants. That deed was registered on 6 November 2001. Parcel 5559 was also used by the applicants as first mortgage security for the loan from the NPF. Whether the deed of mortgage was executed at the same time as the deed of conveyance is not clear from the evidence and no copy of that deed was produced. Presumably, a prudent lender will ensure that all the security documentation are in order before a loan is disbursed to a borrower. That is most likely to have been so in this case given that the deed of conveyance and the deed of mortgage were prepared by the NPFs own in-house solicitor. The deed of mortgage was registered after the registration of the deed of conveyance on 6 November 2001 but it is not entirely clear when that was done. I infer from the evidence that the deed of mortgage was registered shortly after the deed of conveyance was registered.

15. The next part of the evidence relates to the dispute between the parties as to whether the applicants had notice of the respondents equitable interest under the sale and purchase agreement between the respondents and Imeleta before they purchased parcel 5559, which includes the disputed land, from Imeleta. I have given careful consideration to this part of the evidence and have decided to accept certain parts of the evidence for the respondents and certain parts of the evidence for the applicants. I will refer principally to those parts of the evidence I have decided to accept.

16. The respondent Sao in her oral testimony and affidavit evidence said that in October 2001 three men came onto the land. That was in the first week of October 2001 before White Sunday. At that time, Sao was at home with her friend and neighbour Marieta Opetaia (Marieta). The three men then took a survey of the land and Sao went over and enquired as to what they were doing. One of the men said that he is the husband of Barbara and they were surveying their land. As it appears from the other parts of the evidence, that man was the applicant Harry. Sao said she then went inside her house and came out with three receipts which she showed to Harry. Sao then told Harry that she and her husband have bought the land and were paying for it and Harry replied not to worry as it would be at least ten years before they would do anything to the land.

17. The said Marieta was called as a witness by the respondents. She said that about September 2001 when she and Sao were chatting on the land, three men came. Having regard to the evidence of the respondent Sao and the applicant Harry, I accept that it was in the first week of October 2001 that the three men came onto the land and not September 2001 as the witness Marieta testified.

18. Marieta then said that she recalls the occasion because it was not long after her brother had died in June 2001 and she and Sao were talking about her brother. Marieta also said that one of the men who identified himself as the husband of Barbara came to where she and Sao were talking and said that they had come to survey his land. This must be the applicant Harry. Marieta then told Harry that Sao’s house is on the land pointing her hand to Sao. Sao also told Harry that her house is on the land and that she has bought the land and was paying for it. The three of them then walked towards Sao’s house and Sao went inside and came out with three or four receipts which she showed Harry who then replied not to worry as it would be another ten years before they would need the land.

19. The evidence given by the applicant Harry was that on 4 October 2001 after he and his wife Barbara had signed some documents before the NPFs in-house solicitor in relation to their loan for the purchase of parcel 5559 from Imeleta, he went with his son and three survey workers to the land. He recalls having met with the respondent Sao but he does not recall whether the witness Marieta was there. At times Harry denied what Sao said that she showed him three receipts and told him that she has bought the land and was paying for it. At other times during cross-examination he was uncertain and unclear whether Sao had shown him receipts and told him that she has bought the land and was paying for it.

20. After careful consideration of this part of the evidence, I am of the clear view that the evidence of the respondent Sao as supported by the evidence of the witness Marieta is to be preferred and accepted. I therefore find as a fact that on 4 October 2001 the respondent Harry had notice from the respondent Sao that the respondents have purchased the disputed land contained in parcel 5559 and were paying for it.

21. I turn now to the relevant parts of the evidence for the applicants that I have decided to accept. It is clear from the evidence given by the applicant Barbara that prior to 4 October 2001 she had already had some knowledge of parcel 5559. This was because as an investment officer for the NPF, she was the NPF employee who handled and managed the loan by Imeleta from the NPF.

22. Barbara testified that Imeleta took out a loan from the NPF in or about 2000 and used parcel 5559 as a first mortgage security for her loan. For the purpose of that mortgage security, the NPF had carried out a search of the land register and found no encumbrance on parcel 5559. Imeleta, however, defaulted on her loan and Barbara made many follow ups on her for payment of her arrears. Imeleta did not pay her arrears. Then in August 2001, Imeleta approached Barbara if she would like to purchase parcel 5559. Here, there is an inconsistency between what is said by Barbara in her affidavit of 15 April 2009 and what is said in her supplementary joint affidavit with her husband of 17 September 2009 and during cross-examination. In her affidavit of 15 April 2009, Barbara says that Imeleta approached her in or about 2000 if she would like to purchase parcel 5559. In her supplementary affidavit with her husband of 17 September 2009, Barbara says that negotiations between herself, her husband and Imeleta did not take place until August 2001. Under persistent cross-examination by counsel for the respondents on this point, Barbara maintained throughout that it was in 2001 that Imeleta approached her. She also confirmed under cross-examination that that was in August 2001. After careful consideration of Barbara’s evidence, particularly her evidence given under cross-examination, I am satisfied that it was in August 2001 and not 2000 that Imeleta approached Barbara if she would like to purchase parcel 5559.

23. Later in September 2001, Barbara and her husband Harry agreed to purchase parcel 5559. Barbara then applied to the NPF for a loan to purchase the land. Her loan application was approved on 28 September 2001. Part of the loan was used to purchase the land and pay off Imeleta’s loan with the NPF and the remainder was given to Imeleta as part of the price of the land. A deed of conveyance dated 4 October 2001 was executed by Imeleta before the NPFs in-house solicitor transferring the land to the applicants Barbara and Harry.

24. According to the evidence of Barbara and Harry, on the same day, 4 October 2001, they signed documents before the NPFs in-house solicitor. These were the only documents they signed. They signed no other document. I infer from the evidence that the documents signed by the applicants was the deed of mortgage and copies thereof because parcel 5559 was also used by the applicants as mortgage security for the loan from the NPF. Both the deed of conveyance and the deed of mortgage were then lodged with the registrar of lands. According to the evidence, the deed of conveyance was registered on 6 November 2001 and the deed of mortgage was registered afterwards. At the times of both registrations, there was no valid caveat lodged by the respondents with the registrar of lands.

25. It also appears from the evidence given by the applicants that at all times Imeleta never told them that she had already sold part of parcel 5559 to the respondents. It suggests that Imeleta had not only misled the respondents but she had also misled the applicants. The applicants and the respondents are in effect now arguing before the Court as to who gets the part of parcel 5559 which Imeleta had first sold to the respondents but subsequently re-sold to the applicants.

26. Counsel for the respondents sought to establish through her cross-examination of the applicant Barbara that she was already aware in September 2001 that Imeleta had sold part of parcel 5559 to the respondents. With respect, the cross-examination of Barbara was well short of establishing such knowledge on her part. It is to be remembered that Barbara is the NPF investment officer who handled and managed Imeleta’s loan. She had already known that there was no encumbrance on parcel 5559 when the NPFs deed of mortgage was registered as security for Imeleta’s loan. What she would really be interested in at the time of negotiations for sale and purchase with Imeleta and the time of the actual purchase was to acquire a clear title to the land. And she knew that the land was unencumbered. On the other hand, Imeleta who wanted to sell parcel 5559 would like to see the sale go through.

27. It is true that Barbara and Imeleta visited the land in September 2001 but Barbara testified that she did not know from the way Imeleta pointed the land out to her that the house of the respondents was on the land she was going to purchase. Given what is now known about Imeleta from the evidence, I am of the view that she was misleading Barbara as she did not want Barbara to know or suspect that she had already sold part of parcel 5559 to the respondents in case Barbara and her husband might change their minds and withdraw from the proposed sale. This would be consistent with the omission by Imeleta to tell Barbara and her husband that she had already sold part of parcel 5559 to the respondents. The fraudulent party in this matter was Imeleta as it is clear from the evidence and not Barbara as the cross-examination at times seems to suggest.

28. I have also decided to accept the evidence of the applicant Harry that on 4 October 2001 after he and his wife had signed some documents for the loan before the NPFs in-house solicitor, he went with surveyors to identify the boundaries of the land. I have already determined that the documents that were signed by Harry and his wife must have been the deed of mortgage and copies thereof. It was when Harry and the surveyors arrived on the land that Harry was shown the receipts by the respondent Sao who also told Harry that she and her husband have bought the land and were paying for it. That was the first time Harry was made aware that the respondents have bought the land.

29. However, counsel for the respondents during cross-examination tried to show that in September 2001 when Harry, Barbara and Imeleta visited the land, Harry became aware that the house of the respondents was located on the land. Not only is there no evidence of such knowledge on the part of Harry but he also denied such knowledge.

30. In his evidence in chief, Harry said that when he went with his wife and Imeleta to see the land September 2001, Imeleta simply said that is the land and pointed to where the land is. Imeleta did not point out any pegs or the boundaries of the land. So he was not clear and unhappy. That was why he sought the assistance of surveyors to check the boundaries. I therefore do not accept the suggestion in the submissions by counsel for the respondents that Harry was unhappy with the respondents’ house being on the land. There is no evidence that that was the reason why Harry was unhappy. According to Harry’s evidence, he was not clear and unhappy because Imeleta did not point out any pegs or the boundaries of the land. And that part of Harry’s evidence was not destabilised under cross-examination.

31 The applicant Harry must also have learnt from his wife that the land was unencumbered. So he could not have been concerned whether there was a clear title to the land when he visited the land with his wife and Imeleta. He was simply unhappy that Imeleta did not point out any pegs or the boundaries of the land. Perhaps Imeleta did not want the applicants to know the true boundaries of the land as that would have revealed that the house of the respondents is located on part of the land thereby jeopardising the proposed sale.

32. I, therefore, conclude as a matter of fact that when parcel 5559, which includes the disputed land, was conveyed by Imeleta to the applicants on 4 October 2001, and the deed of mortgage was signed by the applicants on the same day, the applicants had no knowledge that part of parcel 5559 had already been sold by Imeleta to the respondents in 1999 pursuant to an oral sale and purchase agreement. It was only later on 4 October 2001 when the applicant Harry was told by the respondent Sao that she and her husband have bought the land from Imeleta and were paying for it that Harry became aware that the respondents have an interest in the land.

33. The final evidential matter relates to caveat 829x lodged by the respondents. It appears from the evidence and the submissions for the respondents, that after the respondents had sought assistance from their solicitor in 2001, a caveat was lodged on their behalf in August 2001 to protect their equitable interest in the land under the sale and purchase agreement with Imeleta. However, that caveat was rejected because Imeleta had subdivided the land and there had been a change in parcel and plan numbers. A fresh caveat re-lodged with the registrar of lands in December 2001. By that time, the deed of conveyance from Imeleta to the applicants and the deed of mortgage from the applicants to the NPF had already been registered in November 2001.

The relevant law

(a) Caveatable interest

34. The applicants claim that the respondents as caveators have no caveatable interest in parcel 5559 to support their caveat. The caveat must therefore be removed. The basis for the applicants claim is that they are bona fide purchasers of the land for valuable consideration without notice of the respondents equitable interest in the land.

35. In Land Law in New Zealand (2003) vol 1 by Hinde, McMorland and Sim, the learned authors state at para 10.009(g):

"There is strong authority for the proposition that an oral agreement for the sale and purchase of land, which is unenforceable (but not illegal or void) by reason of s.2 of the Contracts Enforcement Act 1956, may be sufficient to support a caveat if the circumstances are such that the purchaser may be entitled to specific performance of the contract by virtue of the equitable doctrine of part performance, and may thus be regarded as the equitable owner of the land".

36. Both counsel did not adequately address the issue whether the respondents have a caveatable interest in the land in terms of the principles act out in Land Law in New Zealand (2003) vol 1 by Hinde, McMorland and Sim at para 10.009(g). Counsel for the respondents seems to have largely assumed that the oral sale and purchase agreement between the respondents and Imeleta conferred upon the respondents an equitable interest in the land. On the other hand, counsel for the applicants seems to have proceeded on the basis that if the respondents have a caveatable interest in the land, such interest has been defeated by the equitable doctrine of bona fide purchaser for value without notice which applies to the applicants. In these circumstances and given the background already set out, I will proceed on the basis that the respondents have a caveatable interest in the land pursuant to the oral agreement for sale and purchase of land between them and Imeleta.

(b) The equitable doctrine of bona fide purchaser for value without notice

37. The equitable doctrine of bona fide purchaser for value without notice is usually raised in relation to interest in land where one person holds an equitable interest in land but another person subsequently acquires the legal estate in the same land in good faith for valuable consideration without notice of the prior equitable interest. In such a situation, the law has consistently maintained that the interest of the person who has acquired the legal estate in good faith for valuable consideration without notice prevails over that of the person with the prior equitable interest.

38. In the often cited English case of Pilcher v Rawlins [1872] UKLawRpCh 13; (1872) LR 7 Ch App 259, James LJ stated at pp 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 view 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. In such a case a purchaser is entitled to hold that which, without breach of duty, he has had conveyed to him".

39. The above passage has already been adopted and applied by this Court in Taiene Paina v Public Trustee [2001] WSSC9 and Meredith v Manoo [2002] WSSC 51.

40. Also in Pilcher v Rawlins [1872] UKLawRpCh 13; (1872) LR 7 Ch App 259, Mellish LJ stated at p.273:

"The general rule seems to be laid down in the clearest terms by all the great authorities in equity, and has been acted on for a great number of years, namely, that this Court will not take an estate from a purchaser who has bought for valuable consideration without notice".

41. In Snell’s Equity (1990) 29th ed, the learned authors, with reference to Pilcher v Rawlins (1872) LR7 Ch App 259, stated at p.47:

"Nothing can be clearer than that a purchaser for valuable consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law. In such a case equity follows the law; the purchaser’s conscience is in no way affected by the equitable right. Where there is equal equity the law prevails. The onus of proving the purchase of a legal estate without notice rests on the purchaser".

42. In Land Law in New Zealand (2003) by Hinde, McMorland and Sim, the learned authors state at para 9.005(e) in vol 1:

"Under the general law the holder of an equitable interest may suffer the postponement or loss of that equitable interest if the holder of an equitable interest which was created later in time becomes the bona fide purchaser for value of the legal estate in the land without notice of the prior equitable interest".

43. Furthermore, in Land Law in New Zealand (2003) vol 1 the learned authors state at para 4.023:

"The plea of purchase of the legal estate for value without notice is ‘an absolute, unqualified, unanswerable defence’ against the claims of the owner of a prior equitable interest. Equity cannot touch such a purchaser because his or her conscience is not affected by knowledge of the equitable interest".

(c) The position of a bona fide purchaser for value without notice who acquires notice after giving valuable consideration but before registration of the deed or instrument of title.

44. As it appears from the evidence in this case, after the deed of conveyance and the deed of mortgage were executed on 4 October 2001, the applicant Harry went with surveyors to the land where he was shown receipts by the respondent Sao who told him that she and her husband have bought the land and were paying for it. One would assume that at that time the applicants had already paid for the land otherwise the deed of conveyance would not have been executed. At that time the deed of conveyance had not been registered as it was only registered on 6 November 2001. It is also not clear, given the submissions by counsel for the applicants, whether it is the Land Registration Act 1992/1993 or its successor the Land Titles Registration Act 2008 which introduced the torrens system of land registration to Samoa that applies to this case. In such uncertain circumstances, I have decided to refer to the law with regard to a bona fide purchaser for value without notice who had no notice of a prior equitable interest at the time he provided valuable consideration but later acquired notice of such an equitable interest before registration of his deed or instrument of title.

45. The position under the general law can be seen from the following authorities. In Pilcher v Rawlins (1872) LR7 Ch App 259, Lord Hatherley LC stated at p.265:

"In itself it is immaterial whether the purchaser knows or not that another has an equitable interest prior to his own, provided he did not know that fact on paying his purchase money".

46. In Taylor v Russell [1892] UKLawRpAC 13; [1892] AC 244, Lord Herschell stated at p.253:

"It is not disputed that the doctrine of equity is well settled, ‘that a man who has bona fide paid money without notice of any other title, though at the time of the payment he as purchaser gets nothing but an equitable title, may afterwards get in a legal title if he can and may hold it, though during the interval between the payment and the getting in of the legal title he may have had notice of some prior dealing inconsistent with the good faith of the dealing with himself. I am using the language of Lord Selborne when delivering the opinion of the Judicial Committee in the case of Blackwood v London Chartered Bank of Australia [1874] UKLawRpPC 2; (1874) LR 5 PC 92 at p.111".

47. In Equity and Trusts in Australia and New Zealand (2000) 2nd ed by Dal Pont and Chalmers, the learned authors state at p.49 in relation to the doctrine of a bona fide purchaser for value without notice:

"The purchaser must take the land without notice of any prior equitable interest. Notice will only operate to postpone a legal interest if it is communicated prior to the time consideration is furnished. If, however, a purchaser acquires notice after furnishing consideration, yet before obtaining legal title, her or his title will be taken unencumbered by any prior equitable interests provided the conveyance of the legal estate is not in breach of trust. Notice to the purchaser may be actual, constructive or imputed".

(d) Is it the Land Registration Act 1992/1993 or the Land Titles Registration Act 2008 which applies to this case

48. The submissions by counsel for the applicants that it is the Land Titles Registration Act 2008 which introduced the torrens system of land registration to Samoa and not the Land Registration Act 1992/1993 that is applicable to this case has caused me some initial difficulties which I need not explain as it will only prolong this judgment unnecessarily. After further consideration of the matter, I am now satisfied that it is the Land Registration Act 1992/1993 that applies to this case even though that Act has been repealed by the Land Titles Registration Act 2008.

49. When the transaction between the applicants and Imeleta took place in 2001, it was the Land Registration Act 1992/1993 that was in force and that Act applied to that transaction. Likewise, when the oral sale and purchase agreement between the respondents and Imeleta was made in 1999, it was the 1992/1993 Act that was in force and applicable to that transaction.

50. It is clear from the savings provisions of s.94(2) of the Land Titles Registration Act 2008 that all entries, registers, notices, instruments, information, search copies, proceedings and generally all acts of authority which were made or originated under the Land Registration Act 1992/1993 have been preserved under the 2008 Act. It is, therefore, still the 1992/1993Act that applies to these proceedings. I also very much doubt that it will make any difference to the outcome of these proceedings if it were the 2008 Act that applies.

Discussion

51. The essential facts as I have found are as follows. In 1999, Imeleta and the respondents made an oral sale and purchase agreement whereby Imeleta agreed to sell and the respondents agreed to buy a quarter acre within parcel 5559 which is half an acre in area. The terms of that agreement required the respondents to pay a deposit of $5,000 and then Imeleta will have the quarter acre surveyed to take it out of parcel 5559. The balance of the purchase price of $28,000 was to be paid by monthly instalments of $150. In September 1999 the deposit was paid. However, Imeleta failed to have the quarter acre surveyed. The respondents paid and continued to pay to Imeleta the monthly instalments for the land. At the same time, the respondents were making numerous requests to Imeleta to have their quarter acre surveyed. In spite of the many promises from Imeleta that that will be done, no survey has ever been done.

52. Then in 2000, Imeleta took out a loan from the NPF and used parcel 5559 as a first mortgage security for her loan. In the meantime she was still receiving monthly instalments payments from the respondents for the quarter acre. Imeleta soon defaulted on her loan. The applicant Barbara who is the NPF investment officer who was handling and managing Imeleta’s lona made many follow ups on Imeleta to pay up her arrears. Imeleta failed to do so.

53. Then sometime in August 2001, Imeleta approached Barbara if she would like to purchase parcel 5559. Barbara was aware that the land was unencumbered because she had been managing Imeleta’s loan. Subsequently, Barbara and her husband Harry, who is the other applicant agreed to purchase the land. Barbara then applied to the NPF for a loan to purchase the land. Her loan application was approved by the NPF on 28 September 2001. On 4 October 2001, Imeleta signed the appropriate deed of conveyance before the NPFs in-house solicitor. I conclude that the price of the land was paid by or on behalf of the applicants to Imeleta at that time. At the same time, or very soon thereafter, on the same day, the applicants signed a deed of first mortgage before the NPFs in-house solicitor over parcel 5559 as security for the loan. At no time up to the signing of those documents did Imeleta tell any of the applicants that she had already sold a quarter acre contained in parcel 5559 to the respondents.

54. After the applicant Harry had signed the deed of mortage on 4 October 2001, he went with surveyors later the same day to locate the boundaries of the land. It was then that the respondent Sao told Harry that she and her husband have bought the land and were paying for it. That was the first time that the applicants were made aware that part of the land they had purchased from Imeleta had previously been sold by Imeleta to the respondents.

55. On 6 November 2001, the deed of conveyance from Imeleta to the applicants was registered. It appears from the evidence that the deed of mortgage from the applicants to the NPF was registered soon afterwards. At the times of those registrations, there was no caveat on the land. The caveat that the respondents had lodged in August 2001 was rejected by the registrar of lands because of incorrect parcel and plan numbers. A fresh caveat was only re-lodged with the registrar in December 2001. At that time the deed of conveyance from Imeleta to the applicants had already been registered.

56. On the basis of that evidence, I find that the applicants were bona fide purchasers for value without notice of the respondents prior equitable interest in the land under their oral sale and purchase agreement with Imeleta. That is because at the time the purchase price of the land was paid and the deed of conveyance was executed, Imeleta had never told the applicants that she had already sold part of the land to the respondents. There was also no caveat on the land at that time.

57. Even though the applicants later became aware after paying over the purchase money but before registration of their deed of conveyance, of the respondents equitable interest in the land, their title to the land "will be taken unencumbered by any prior equitable interests": Equity and Trusts in Australia and New Zealand (2000) 2nd ed by Dal Pont and Chalmers at p.49. As bona fide purchasers for value without notice, the applicants have "an absolute, unqualified, unanswerable defence" Pilcher v Rawlins (1872) LR7 Ch App 259 per James LJ at pp.268-269 against the claim of the respondents as owners of a prior equitable interest: Land Law in New Zealand (2003) by Hinde, McMorland and Sim vol 1 at para 4.023.

58. It follows that the applicants plea of bona fide purchaser for value without notice succeeds and prevails over the respondents caveatable interest founded on their equitable interest in the land. The respondents caveat should therefore be removed.

59. Accordingly, it is ordered that the caveat 829x lodged by the respondents be removed forthwith.

60. Counsel to file memorandum as to costs in 10 days.

CHIEF JUSTICE

Solicitor:

Papalii Law for applicants
Drake & Co for respondents