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Singh v Chabildas [1978] FJCA 4; Civil Appeal No 42 of 1978 (30 November 1978)

IN THE FIJI COURT OF APPEAL
Civil Jurisdiction

Civil Appeal Case No. 42 of 1978

RAGHUPAL SINGH
s/o Nakshu Singh
Appellant

- and -

1. CHABILDAS s/o Gulabdas
2. DEVIDAS s/o Gulabdas
Respondents

Mr. G.P. Shankar for the Appellant
Mr. M.S. Sahu Khan for the Respondents

Date of Hearing: 6^th November 1978
Date of Judgment: 30^th November 1978

Henry J.A.

JUDGMENT OF THE COURT

This is an appeal against an order for possession of certain business premises in the town of Ba occupied by appellant. The order was made pursuant to an originating summons taken out under the summary provisions of Section 169 of the Land Transfer Act 1971. The premises are a portion of a block which comprises 3 shops on the ground floor and 2 residential flats on the first floor. Appellant occupies one of the shops. The whole of the land is contained in Certificate of Title No. 9800. In 1969 the registered proprietor was one Dayabhai Kewalbhai Patel who will be called "the lessor". On December 20, 1969, the lessor executed an agreement to lease granting to appellant a lease of the said premises for a term of 7 years commencing on January 1, 1970 at a monthly rent of $100 payable in advance. The said agreement contained the following provision, namely:-

"The Lessor shall give to the Lessees option of renewal of this lease for a term of 10 years upon the terms and conditions agreed between the parties hereto."

The lessor left Fiji and went to Canada. Appellant claimed that he orally exercised the above option. Although the case was heard on affidavit, no evidence was given by the lessor. The learned judge held that the option had not been exercised, but for reasons which will later appear, this finding has been abandoned in this Court and the appeal falls to be determined solely on a question of title. The agreement to lease expired on December 31, 1976. Appellant continued in possession. He had, however, paid an increase rent of $160 per month since the end of July 1976 and continued to pay that rent after the end of the term of the said agreement to lease.

In 1977 respondents purchased the property. On April 12, 1977, they became the registered proprietors of the fee simple by virtues of an entry on the said Certificate of Title No. 9800 of a Memorandum of Transfer pursuant to the provisions of the Land Transfer Act 1971. The said agreement to lease was not then in registrable form. No caveat was lodged to protect any claim which appellant might consider he had under it. The renewal depended solely on an alleged oral exercise of the option. However, it is sufficient to say that no entry appeared on the register in respect of any right claimed by appellant. Respondents at all times treated appellant as a monthly tenant as, indeed, so it appears, did the lessor for a short time before the end of the agreed term. Nothing now turns on this except to say that, if appellant did not have a renewed term, it is not disputed that a proper notice to quit was given to him as a monthly tenant.

In the Court below counsel for respondents argued both the question of the exercise of the option and the question of the effect of the registration of the Memorandum of Transfer. The latter question was argued on the basis of a concession that the option had been "inferentially exercised". In this court counsel for the respondents relied solely on a contention that, upon registration of the said Memorandum of Transfer, respondents acquired a title free from any renewed term of 10 years set up by the appellant. Upon this contention alone, the present appeal must either succeed or fail. There were no pleadings because, as earlier stated, resort was had the summary proceedings under Section 169 of the Land Transfer Act 1971. The concession made by counsel for the respondents is based on a clear acceptance by counsel for appellant that it is common ground that fraud is not alleged against respondents. In short, the respondents obtained the character of "registered proprietors" under the Land Transfer Act 1971 without any fraud on their part.

The contention of counsel for appellant is short. It is that, on the exercise of the option, appellant being in possession of the premises, acquired an equitable interest in the land which prevailed over the title later acquired by respondents upon registration of their Memorandum of Transfer. Counsel claimed that, by reason of knowledge of appellant’s occupancy of the premises, respondents were affected with notice of such equitable interest, and, if respondents failed to inquire into the nature of that interest, they were deemed to have constructive notice of the terms of the tenancy, namely, a prior renewed agreement to lease for a term of 10 years. It should again be made clear no question of fraud is involved.

Counsel for appellant relied principally on the authority of Hunt v. Luck [1902] UKLawRpCh 16; [1902] 1 Ch. 428; (1900-03) All England Reports (Reprint) 295 and Francis on the Torrens Title in Australasia Vol. 1 at p.611. It is sufficient to cite a passage at the beginning of the judgment of Vaughan Williams L.J. in Hunt v. Luck at p. 432; 297 where he said:-

"I am of the opinion that the judgment of Farewell, J., must be affirmed. He apparently dealt with the case without reference to the provisions of the Conveyancing Acts, but he made a statement of the law as established by decisions, including decisions prior to the Conveyancing Acts, and if this question is to be determined with reference to the old law, then I still think that the conclusion of Farewell, J. was right. In his judgment Farewell, J. after quoting the older authorities, says:

"The rule established by these two cases [Barnhart v. Greenshields (1); Bailey v. Richardson (2)] may be stated thus: (i) A tenant’s occupation is notice of all that tenant’s rights, but not of his lessor's title or rights; (ii) actual knowledge that the rents are paid by the tenants to some person whose receipt is inconsistent with the title of the vendor is notice of that person’s rights."

The passage cited from Francis deals with indefeasibility of title under Section 72 of the Victorian Transfer of Land Act 1928 which contained an exception to paramountcy of title. An exception was expressed as relating to instances where the possession was not adverse to "the interest of any tenant of the land". No such words or exceptions appear in the Fiji Statute so the passage and the cases cited in the textbook may be put aside. Hunt v. Luck (supra) of course, has no relevancy to the question of indefeasibility. It does not help appellant since counsel for respondents conceded, as a basis of his reply to appellant’s claim, all that appellant might gain as an interest in the land if his contentions were correct.

We proceed now to deal with the question whether, in the absence of fraud (and assuming appellant had valid agreement to lease for a term of 10 years) the title, acquired by respondents upon registration of the said Memorandum of Transfer, was paramount so that respondents are not bound by a renewed term of the said agreement to lease. The relevant sections of the Land Transfer Act 1971 are Sections 39 and 40. They read:-

"39. (1) Notwithstanding the existence in other person of any estate or interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, the registered proprietor of any land subject to the provisions of this Act, or of any estate or interest therein, shall, except in case of fraud, hold the same subject to such encumbrances as may be notified on the folium of the register, constituted by the instrument of title thereto, but absolutely free from all other encumbrances whatsoever except-

(a) the estate or interest of a proprietor claiming the same land, estate or interest under a prior instrument of title registered under the provisions of this Act; and

(b) so far as regards any portion of land that may by wrong description or parcels or of boundaries be erroneously included in the instrument of title of the registered proprietor not being a purchase or mortgage for value or deriving title from a purchase or mortgage for value; and

(c) any reservations, exceptions, conditions and powers contained in the original grant.

(2) Subject to the provisions of Part XIII of this Act, no estate or interest in any land subject to he provisions of this Act shall be acquired by possession or user adversely to or in derogation of the title of any person registered as the proprietor of any estate or interest in such land under the provisions of this Act.

40. Except in the case of fraud, no person contracting or dealing with or taking or proposing to take a transfer from the proprietor of any estate or interest in land subject to the provisions of this Act shall be required or in any manner concerned to inquire or ascertain the circumstances in or the consideration for which such proprietor or any previous proprietor of such estate or interest is or was registered, or to see the application of the purchase money or any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding, and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud."

Sections 39 and 40 are in terms similar to Sections 62 and 63 of the N.Z. Land Transfer Act 1952. They are, in general terms, similar to provisions made in statutes in other countries which have adopted the Torrens System of land title. The Judicial Committee of the Privy Council in Frazer v. Walker [1967] A.C. 569, 580 made this authoritative statement of the law as so enacted:-

"As will appear from the following paragraphs, the inhibiting effect of certain sections (e.g. sections 62 and 63) and the probative effect of others (e.g. section 75) in no way depend on any fact other than actual registration and not its antecedents which vests and divests title.

II. Those sections which provide protection to the registered proprietor against claims and proceedings. These are sections 62 and 63. Without attempting any comprehensive or exhaustive description of what these sections achieve, it may be said that while section 62 secures that a registered proprietor, and consequently anyone who deals with him, shall hold his estate or interest absolutely free from encumbrances, with three specified exceptions, section 63 protects him against any action for possession or recovery of land, with five specified exceptions. Subsection (2) of section 63 is particularly strong provision in his favour; it provides that the register is, in every court of law or equity, to be an absolute bar to any such action against the registered proprietor, any rule of law or equity to the contrary notwithstanding. It is to be noticed that each of these sections excepts the case of fraud, section 62 employing the words "except in the case of fraud," and section 63 using the words "as against the person registered as proprietor of that land through fraud." The uncertain ambit of these expression has been limited by judicial decision to actual fraud by the registered proprietor or his agent: Assets Co. Ltd. v. Mere Roihi [1905] UKLawRpAC 11; (1905) A.C. 176, 210 P.C.

It is these sections which, together with those next referred to, confer upon the registered proprietor what has come to be called "indefeasibility of title". The expression, not used in the Acts itself, is a convenient description of the immunity from attack by adverse claim to the land or interest in respect of which he is registered, which a registered proprietor enjoys. This conception is central in the system of registration. It does not involve that the registered proprietor is protected against any claim whatsoever; as will be seen later, there are provisions by which the entry on which he relies may be cancelled or corrected, or he may be exposed to claims in personam.

These are matters not to be overlooked when a total description of his rights is required. But as registered proprietor, and while he remains such, no adverse claim (except as specifically admitted) may be brought against him."

In the light of this authoritative pronouncement of the law, it is clear that, in the absence of fraud, appellant cannot assert the interest claimed as against respondents who took a registered title which was free from any such interest. Appellant does not come within any of the exceptions in Section 39 (1). Under section 40 respondents are not affected by notice, direct or constructive, of any unregistered interest, any rule of law or equity to the contrary notwithstanding. Any equitable interest which appellant seeks to set up under Hunt v. Luck (supra) is clearly contrary to the expressed terms of Sections 39 and 40. Counsel for appellant did not refer to the law, as now set out in the decision of Frazer v. Walker, either in his submissions or in reply to the submissions of counsel for respondents. Counsel relied on such cases as Barry v. Heider [1914] HCA 79; [1914] 19 CLR 197 and Premier Group Ltd. v. Lidgard [1970] N.Z.L.R. 280, 283. These cases do not deal with indefeasibility and can take the matter no further than the concession made by counsel for respondents, namely, that the appeal should proceed on the basis that the interest claimed did in fact exist prior to the time when the Memorandum of Transfer of the fee simple to respondents was registered. In the admitted absence of fraud respondents took an indefeasible title to the exclusion of any claim by appellant that he had an equitable interest for a term of years created by predecessor in title and binding upon respondents who had notice of no more than the occupancy of appellant as tenant and who were not a party to any fraud.

We therefore dismiss the appeal with costs to respondents and confirm the order made in the Supreme Court. Appeal dismissed with cost and order made in the Supreme Court affirmed.

Court of Appeal of Fiji.