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Attorney-General v Consolidated Realtors Ltd [1993] FJCA 18; Abu0009u.90s (3 August 1993)

IN THE FIJI COURT OF APPEAL

AT SUVA

CIVIL JURISDICTION

CIVIL APPEAL NO. 9 OF 1990
(High Court Civil Action No. 583 of 1988)

BETWEEN:

THE ATTORNEY GENERAL
APPELLANT

AND:

CONSOLIDATED REALTORS LTD
RESPONDENT

Mr. A. Cope for the Appellant
Mr. S. J. Stanton for the Respondent

Date of Hearing:18th June, 1992
Date of Delivery of Judgment: 3rd August, 1993

JUDGMENT

This is an appeal from a judgment of Byrne J delivered on 5th December 1989. For the purpose of this appeal the following facts are relevant.

The Respondent company (Plaintiff) was incorporated on 12th August 1986, probably for the purpose of developing a particular Crown lease (the land). There were three shares issued, two held by Mr. T. Naco and one by his wife M. Naco. By two transfers dated 28th November 1986, T. Naco transferred one of his shares to S. Matawalu, and M. Naco transferred her share to S. Momoivalu. These two transfers were registered on 22nd September 1987. There were then three shareholders.

What has been called an "allotment of shares" was apparently brought into being on 23rd October 1986. It showed the total number of shares as at that date as ten, held as follows: T. Naco 6, M. Naco 2 and A. Masirewa 2. This document was not produced to or deposited with the Companies Registry until some time in 1988, as will appear. So that up to some time after 12th February 1988 the company's shareholders were three, each holding one share as mentioned above.

In about September 1986 tenders were called by someone for the development of the land. The company, on 13th February 1987, became the successful tenderer. Approval of the Minister of Lands of an application by the company to develop that land was notified to it on that day (ex P 6). It seems that a development lease of the land had to be entered into and it appears that this was issued on 30th June 1987 (ex D 4).

It is convenient to note here that sometime after 12th February 1988 a photocopy of the allotment of shares dated 23rd October 1986 was lodged with the Registrar of Companies. The date of this lodgment is, for some reason, not known, but in the view that we take that is of no consequence. It showed the shareholders of the 10 shares mentioned above.

By letter dated 17th March 1988 the company was notified that the rent for the Crown development lease was owing and unless paid within one month the lease would be cancelled. The company was also notified that it was in breach of the terms of the lease by sub-letting without consent a certain area, and a please explain was required within one month. The company had by letter dated 30th March 1987 notified the Director of Lands of an option given by it on 16th March 1987 to purchase a portion of the land to an optionee, together with a lease (it was actually a license) subject to approval, but it seems that approval had never been obtained. This may be relevant as will appear.

On 12th April 1988 the company made application to the Director of Lands seeking consent to mortgage (it is not in dispute that such consent was required). It can be assumed that the company was arranging or wished to arrange finance to enable it to develop the land. The consent was not forthcoming, and Mr. Naco went to see the Minister. He says this was in June 1988, so that if he was correct, it most probably was after the events to which we shall refer. He says that the Minister told him that consent would only be given if he agreed to give a timber concession (right to remove timber) to a friend of the Minister. He says he refused.

The Permanent Secretary for Lands gave evidence that this meeting was in mid May 1988, and we think that is more probably when it occurred. In the view which we take it does not matter.

The Judge found that the Minister had made no suggestion such as that alleged or imposed it as a condition of approval to mortgage. We are, of course bound by that finding. Mr. Naco asserts that there was a subsequent meeting at which the Minister imposed the same condition, but the Judge found against the Plaintiff on this also.

At the meeting in May or June between Mr. Naco and the Minister one or both of the matters mentioned earlier were raised as a reason for delaying the grant of consent to mortgage, that is to say the arrears and rent or the grant of a sub-lease as it was called. It may be that the learned Judge found that approval had already been granted to this sub-lease, but if so that is not correct. Whatever else may have been discussed by Mr. Naco with the Minister it is clear that one or both of these topics was raised at the meeting as being a reason for delay in the granting of consent to mortgage.

Those matters had not been resolved by 30th May 1988 when the Director of Lands received a telegram advising of a dispute between shareholders of the Plaintiff company, which was folloed by a letter dated 2nd June, apparently received on 6th June, from Messrs Matawalu and Momoivalu. They claimed to be the owners of the company, that Mr. Naco was in effect acting dishonestly, and that if consent to mortgage was given they would consider immediate legal action. The letter enclosed copies of the transfers of one share to each of them. It can be assumed that they played no part in the so called allotment of shares recorded in the return of 23rd October 1986.

On 8th June 1988 the Director wrote to the solicitor for the company notifying him of the dispute and informing him of the Minister's decision to stay any further processing of the application for consent to mortgage until the dispute was resolved. One can hardly expect him to have done otherwise.

On 14th June 1988 it appears that the Minister received from the solicitor to whom the previous letter had been written a letter stating that a search of the records at the office of Registrar of Companies disclosed the shareholding as in the so called allotment of shares of 23rd October 1986 (see above). So the Acting Permanent Secretary for Lands on the next day, 15th June, wrote a memorandum to the Registrar of Companies seeking clarification of the shareholding position. A reply was received on 22nd June 1988. It stated that the Companies Office records showed only the 3 shareholders mentioned earlier, but that "sometime after 12th February, 1988 a photocopy of a Return of Allotments was lodged in this office". It was the one of 23rd October 1986. He went on to explain that the Companies Act would not permit registration of this return for reasons which he gave, that he had advised the company of this on 17th June 1988, and that an order would have to be obtained from the High Court before registration could take place. In fact on 17th June the Registrar had written to the company advising them of this, and returned to it the alleged allotment form.

It appears that on 4th July 1988 the solicitors for the company wrote to the Registrar inquiring why he was looking into the company structure.

The present proceedings were commenced on 30th August 1988.

For record purposes only it can be noted that proceedings by T. and M. Naco as Plaintiffs against Messrs Matawalu and Momoivalu were commenced sometime in 1988. By letter from the two last mentioned persons dated 20th December 1988 the Director of Land was informed that these proceedings had been settled, although an affidavit in those proceedings claiming fraud and dishonesty by the two Plaintiffs was sworn on 24th February 1989 by S. Momoivalu and filed on that day. By July 1989 an order extending the time for filing the allotment of shares of 23rd October 1986 had been obtained and the company filed the return of allotment of 23rd October 1986 on 20th July 1989.

The present proceedings were commenced, as we have said, on 30th August 1988. They were commenced by the "Plaintiff in Person" according to the Writ, although the Plaintiff is the company. The Statement of Claim is signed by the "Plaintiff in Person", T. Naco, although nowhere does it allege that he was authorised to bring the proceedings on behalf of the company, or how that authorisation, if any, was given. No one seems to have paid the slightest attention to that. Further, it appears that the Statement of Claim must have been drawn by Mr. Naco, because it is a confused mass of allegations from which it is very difficult to ascertain what causes of action the company alleges that it had. No application to strike out the Statement of Claim was made, and we confess that we can only assume that the Judge proceeded on the basis of fraud and negligence. The fraud (or dishonesty) alleged was the requirement of the Minister that the twelve concession be given to the Minister's friend; the negligence alleged seems to have been a breach of duty to consider the application for consent to mortgage on its merits.

The matter came on for hearing on 14th November 1989. The decision from which this appeal is brought was given on 5th December 1989. The Judge awarded a sum of $126,000 to the Plaintiff company. The company did not succeed in establishing fraud. Unfortunately it is very difficult to ascertain on what basis it did succeed. Whatever might have been the basis, it was, of course incumbent upon the company to establish that a cause of action had arisen by 30th August 1988. We proceed to examine what we think may have been reasons why the Judge concluded that such was the case.

In the first place, the Judge said that the only reasons for the Minister witholding his consent were, firstly, the desirability of obtaining the opinion of the Crown Law Office on the sub-tenancy of the land granted by the company without consent and secondly, the dispute as to the shareholding (record p 60). As to the latter, and in spite of the fact that the correct issues of law were never considered by His Lordship, he held that the company had no redress so far as the latter was concerned (record p 61). As to the former His Lordship proceeded on the basis that the consent of the Department of Lands had been given to the sub-tenancy. This, unfortunately, was not correct, and we think that His Lordship mistook the consent which was referred to in the letter of 30th March 1987 as being consent to the sub-lease when it was actually the consent to development. The Director was quite correct in asserting in his letter of 17th March 1988 that consent to sub-lease had not been obtained. In that letter he gave the company one month in which to explain its absence. So far as the evidence goes it was never explained. In the light of this it seems difficult to suggest that the seeking of advice about this aspect from the Solicitor-General and the Attorney-General might have been "very cautious" as His Lordship said (record p 60); but there is no way upon the facts as they existed that it could have amounted to a breach of any duty owed to the company to take reasonable care. There was never any finding that it was.

The learned Judge refers to delay on the part of the Registrar of Companies to deal with the so called "allotment of shares" between whenever it was lodged after 12th February 1988 and 17th June 1988. It is hard to see how this had any bearing on the issues, whatever they were; there was certainly no assertion made by the Plaintiff in his or its Statement of Claim that any delay by the Registrar was in breach of any duty of care. The facts are simply (i) that the application for consent was made on 12th April 1988, so that any lack of action on the part of the Registrar up to that time had no effect whatsoever (ii) from 12th April 1988 to 30th May or 6th June the Minister had no inkling of any dispute as to the shareholding, so that any delay by the Minister up to that time had nothing to do with the inaction by the Registrar (iii) thenceforth the Minister or Director was under threat of action by the two persons who according to the records rightly asserted that they were the majority shareholders in the company; he would have been crazy to proceed further without seeking advice and (iv) there was no power in the Registrar to register the document. Before anything else of significance occurred the Plaintiff commenced its action.

There is no claim at all that the Plaintiff is entitled to damages because of any lack of action on the part of the Registrar. We note that the Judge at record p 61 says: "Had the Registrar written to the Plaintiff earlier than mid June 1988 it is quite possible that the Plaintiff may have made its application to the Court earlier and in so doing reduced it loss". There is not a skerrick of evidence upon which this could be based, and anyway it assumes that the two disgruntled shareholders would not have made their claim of fraud on the part of Mr. Naco, and that, if they had, the Minister would have ignored their threat to take action if he granted consent. Nothing more need be said.

The other matter mentioned by His Lordship was some failure on the part of the Permanent Secretary in September 1989. This has nothing to do with whether any delays gave the Plaintiff a cause of action that had arisen by 30th August 1988 when it commenced its action.

In fact the company never established on the facts that it had any cause of action at all. This makes it unnecessary to discuss what we might describe as the somewhat unconventional way in which His Lordship proceeded to assess damages.

It may be thought that some delay in the performance of his duty by an official of itself gives rise to a cause of action for damages. This of course is not the case. It is unnecessary to discuss any matter of breach of statutory duty. That matter was neither pleaded nor mentioned. On the facts here it does not appear that there was any.

We might add for what it is worth that it is inconceivable that the Minister would consider granting consent when there was a Court case on foot alleging fraud on his part and an extant claim for damages.

The appeal will be dismissed with costs.

Mr. Justice Michael M Helsham
President, Fiji Court of Appeal

Sir Moti Tikaram
Resident Judge of Appeal

Mr. Justice Arnold Amet
Judge of Appeal

APPENDIX

We might add that none of the matters we have dealt with appear to have been raised or debated before his Lordship by counsel appearing in the trial. It is much more difficult for a Judge at first instance, faced with problems of witnesses, taking notes, admissibility of evidence, credibility and so on to have regard to such matters when we gets no assistance from counsel whatsoever.

Abu0009u.90s