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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT
Civil Appeal No: ABU 005 of 2013
(Lautoka High Court Civil Action No: HBC 60 of 2006)
BETWEEN:
1. MAHENDRA SHARMA
2. RAJENDRA SHARMA
1st and 2nd Appellants (Original)
AND:
ITAUKEI LAND TRUST BOARD (Formally NLTB)
Respondent
Coram : Calanchini P
Basnayake JA
Amaratunga JA
Counsel : Mr. H. Ram for the Appellants
Mr. I.B. Lutumailagi for the Respondent
Date of Hearing : 11 September 2015
Date of Judgment : 2 October 2015
JUDGMENT
Calanchini P
[1] I have read the draft judgment of Basnayake JA and agree that the appeal should be allowed and the action remitted to the High Court for retrial.
Basnayake JA
[2] This is an appeal filed on 15 February 2013 inter alia to have the Ruling of the learned High Court Judge at Lautoka set aside. By this Ruling the learned Judge had dismissed the action of the plaintiffs with costs.
[3] The plaintiffs filed this action on 6 March 2006 to claim the following reliefs, namely:
[4] The plaintiffs claim to be the owners of two allotments of land by virtue of two ‘Notices Of Approval To Lease’ issued by the respondent (Notices are at pgs. 218-221 and 223-226 and marked as MS4A and MS4B). The plaintiffs’ case is set out in the statement of claim, the amended statement of claim, (-pgs 14-16 and 48-52 of the Record of the High Court (RHC)) evidence of the 1st plaintiff and the documents produced.
[5] By virtue of these two notices, namely, MS4A and MS4B dated 4 August 1983 and 21 August 1984 and plan Nos. NLTB 4/7/4073 (pg. 220) and 4/7/4072 (pg. 225) respectively, the two plaintiffs have been given two parcels of land on lease, for periods of 50 years, commencing from 1 January 1983, with extents of approximately 23 perches and 18 perches.
[6] In terms of section 6 of the said notices the lessees were required to engage registered land surveyors to carry out cadastral survey of the lands described in the notices. This survey was done in July 2005 and a plan made. The plan had been given a reference number SO 5364 (pg. 376) by the respondent. This plan depicts two allotments as lots 1 and 2 with extents of 1142 square meters (SM) and 1145 SM respectively.
[7] On 28 October 2005 the plaintiffs were offered in writing two leases by the respondent (MS15 & MS16 at pgs. 275 & 278). These leases are in respect of the two allotments depicted in plan No. SO 5364 (pg. 376) (lots 1 and 2 0.1142 HA and 0.1145HA). Prior to the letter of offer the respondent had had a discussion with the plaintiffs and in an internal memorandum (MS14 at pg. 273) dated 27 October 2005, had instructed the respondent’s North Western Manager to have the registered leases prepared. The title of this letter reads as follows: “RE: Conversion of Lease Titles-From Notice to Approval to Lease to Registered Lease”. In the offer letters the plaintiffs were invited to execute contracts upon settlement of $3,705.98. A payment schedule too was attached to the offer letter. The particulars of the two lands, namely, the extents and the lot numbers are as per plan No. SO5364.
[8] This document states that the plan No. SO 5364 has been approved (with a copy of the plan attached). In terms of this document the plaintiffs were required to surrender the two Notices that the plaintiffs were given previously. As per this document the effective date of the new lease is 1 January 2006 with a validity period of 75 years.
[9] The plaintiffs state that they surrendered the Notices and made a surrender fee as well. The original leases were issued in 1983 and were for a period of 50 years. These leases would have expired in the year 2033. The leases had a balance period of 28 (by 2005) years to expire. At the request of the defendant the plaintiffs had surrendered the remaining term of those two leases and paid $1800/-as surrender fee. The surrender was registered with the Registrar of Titles (MS 18 (pg. 284 RHC)).
[10] The learned counsel for the plaintiffs submitted that the survey plan No. SO 5364 was approved by the defendant. It is only thereafter at the request of the plaintiffs, that the defendant made the offer of the new leases by documents marked MS 15 and 16. The learned counsel submitted that it is in order to facilitate the issue of the new leases that the defendant required the plaintiffs to surrender the existing leases (MS4A & MS4B) with which the plaintiffs complied. The learned counsel submitted that after the internal memorandum (MS 14) and the contract offer (MS 15 & 16) the only requirement for the acceptance of the offers were for the plaintiffs to call over at the office of the defendant and to execute the leases and complete payment.
Documents MS 19 and MS 20
[11] The documents marked MS 19 and 20 are two indentures. After perfecting, these documents are sent to the Registrar of Title for registration. These documents contained the names of the parties and information with regard to the land and other covenants the parties were obliged to fulfil. The documents state that in consideration of the sum paid by the lessees to the lessor before the execution hereof, the lessor hereby demises unto the lessees, “All that Piece or Parcel of land etc”.
[12] The documents MS 19 and 20 are the lease documents that were partially executed. These two documents were executed after the completion of a valid contract, namely, an offer and acceptance. (Gibson v Manchester City Council [1979] UKHL 6; [1979] 1 WLR 294).
[13] It is the plaintiffs’ case that the new leases were given to the plaintiffs for execution in the office and by the staff of the defendant. After the execution by both plaintiffs, payments of $ 3705.98 were made. The plaintiffs’ case is that this has created a valid contract. After the execution the staff of the defendant had taken those leases (MS 19 & 20) to have the same duly executed and dated. The plaintiffs submitted that payments were made for stamps duty and for registration. The plaintiffs were advised that the leases would be returned after they were executed by the defendant and registered. The plaintiffs submitted that out of the two leases one (MS 20) of them was executed by both parties while MS19 was only executed by the 1st plaintiff.
Minutes of Pre-trial Conference
[14] At the pre-trial conference the defendant inter alia admitted to the written offers dated 28 October 2005 made to the two plaintiffs. These two letters contained the lot numbers as lot 1 and lot 2 and also the extents as 0.1142 HA and 0.1145 HA. The defendant admitted that the plaintiffs having accepted the offers, made the required payments as consideration for the issue of the leases. The defendant also admitted to the surrender of the old leases at the request of the defendant and the payment of the surrender fees. The defendant said that the Lautoka Rural Authority had issued a Certificate of Land Subdivision Completion in respect of the two lots.
The Ruling
[15] The learned Judge had observed that the two documents marked MS19 and MS20 (pgs. 286 and 294 respectively) are mere formats and these documents do not constitute contracts enforceable. The learned Judge held that the reliefs by way of declarations that the two plaintiffs are entitled to two pieces of land in extent 0.1142 HA (1142 square meters) and 0.1145 HA (1145 SM) are without any basis. The learned Judge had observed that the plaintiffs were given in the original leases (MS4A and MS4B) areas of 582 SM (23 perches) and 455 SM (18 perches). However, the plaintiffs through MS 19 and MS 20 claim an area of 1142 SM and 1145 SM.
[16] In paragraph 20 of the Ruling the learned Judge held as follows: (Pg 10 RHC) “The plaintiffs have not explained as to how such a disparity in area could have occurred. This Court in the circumstances reasonably infers that the 1st plaintiff or both plaintiffs have practiced trickery or subterfuge to claim more area than what they were offered by the defendant in the two notices of approval” (the two original leases).
[17] The learned Judge had observed that in the document marked MS 22 (pg. 307 of RHC) the Manager North Western Region of the respondent had advised the private surveyor who has prepared plan No SO 5364 (pg. 376) to amend the survey plan. The learned Judge stated that (para 22) the exact extent and the area of the native land to be leased out is a fundamental component in the process of forming a contract with the defendant. The area given as 1142 SM and 1145 SM in MS 19 and MS 20 are contrary to the extents given in the notices of approval marked MS4A and MS4B.
[18] In paragraph 23 the learned Judge held (pg. 11 RHC) that MS 19 and MS 20 are in dispute and questionable and do not constitute valid contracts to enable the plaintiffs to secure specific performance and/or seek damages for breach of contract.
Dispute
[19] Issue No 5 appears to be the dispute in this case. Hence I will reproduce the same.
“5. Whether the boundary surveyed as lots 1 and 2 as surveyed by the Surveyor forms part of any land, the subject of any existing leasehold title and if so whether under the Notice of Approval to Lease that area shall be deemed to be excluded from lot 1 and 2?
[20] Issue No 8 is a consequential issue. However this issue is based on the counter claim. The issue is as follows:
8. Whether the plaintiffs are only entitled to the Specific Performance of the Agreement to Lease exclusive of the area referred to in paragraph 5 of the issues to be tried above.
[21] It becomes clear now that there is no dispute with regard to the fact that the defendant made an offer to the plaintiffs to lease lots 1 and 2 of plan SO 5364 (supra). There is also no dispute that consideration has passed and the contract is complete.
[22] Issue No. 5 is concerning plan No. SO 5364. The defendant admits to having approved this plan. However the defendant complains that the approval was given on a misrepresentation by the plaintiffs. The plan SO 5364 does not show any other lands forming part of lots 1 and 2. As per condition No. 3 of the Notice of approval to lease (MS4A and B (Pgs 218 & 223), if these allotments form part of any other leasehold or freehold lands, the lease shall be deemed to exclude such area. The condition is as follows:-
3. “In the event of it being shown by survey that the land provisionally approved for lease forms part of any land the subject of an existing freehold or leasehold title, this notice of approval to lease shall be deemed to exclude such area”.
[23] The plaintiff got the land surveyed as required by condition No. section 6 of the Notice of approval to lease and the plan SO 5364 was made. Although approved, if it is found that any other land forms part of this land, condition 3 may come into play and effect exclusion. However this fact has to be proved by evidence at the trial and a finding has to be made on this issue at the end of the case and not before. A question would arise with regard to the validity of condition No3. This is a condition attached to the Notices to Approval (MS4A & B) which have already been surrendered and have no force. Another question is whether the defendant would be able to dispute Plan No. SO 5364?
Conclusion
[24] At first glance it appears that the dispute in this case is whether the parties have entered into valid contracts. There is an offer, acceptance and the passing of consideration; the fundamentals to the formation of a contract. It appears that there is a discrepancy relating to the survey done and the resulting plan No. SO 5364. The defendant claims that other leases fall within the allotments of plan No. SO 5364 (pg. 376) and require to be amended by exclusion. Thus issue No. 5 was raised which need to be answered. The validity of the contracts too may be on the balance, in the event of proof of fraud on the part of the plaintiffs. There is a question as to how the extent of the land got larger.
[25] I am of the view that the learned Judge has erred by focusing only on MS 19 and MS 20 and holding that they did not constitute a valid contract for the reason that they have not been executed. The defendant made an offer which the plaintiffs accepted. Consideration had passed. Thereafter one of the two lease documents (MS 20) was executed by both parties and required to be sent for registration. The other document (MS 19) was executed by the plaintiff in the office of the defendant. The plaintiffs may be still be at risk of failing if it is found that other conditions have not been fulfilled, namely condition No. 3 in the Notices of Approval. However if there are any violations of conditions, they must be proved and the issues decided at the end of the case and not at the beginning.
[26] Apart from the relief of specific performance the plaintiffs claim damages. There is also a counter claim which the court is bound to consider. I am of the view that the learned Judge has erred by not considering any of these issues. I am of the view that the learned Judge has erred by dismissing the plaintiffs’ case prematurely. Hence the Ruling dated 31 January 2013 should be set aside and the case sent back for retrial. However in view of the facts of this case I do not order costs.
Amaratunga JA
[27] I had an opportunity of reading the judgment of my brother judge Basnayake JA. I agree that the appeal should be allowed and the matter should be remitted back to court below for trial.
[28] This is an appeal from the Ruling of court below in terms of O.33 r.7 of High Court Rules 1988 (HCR) dismissing the action. At the hearing in the court below the learned judge had raised a preliminary issue in terms of O.33 r.3 of HCR. Both parties to this appeal, did not raise the issue whether the said ruling was interlocutory or final decision, but it is a preliminary issue in this appeal.
[29] I could not find local authority on this issue. The widely accepted local authority of Fiji Court of Appeal in Gounder v Minister of Health (unreported) (decided on 9th July, 2008) stated,
‘It seems to this Court that the "application approach" is the correct approach for the reasons stated in Suresh Charan v Shah and for the additional reason of legal certainty.’
Further at paragraph 37, and 38 held,
‘This is the position. Where proceedings are commenced in the High Court in the Court’s original jurisdiction and the matter proceeds to hearing and judgment and the judge proceeds to make final orders or declarations, the judgment and orders are not interlocutory.
Every other application to the High Court should be considered interlocutory and a litigant dissatisfied with the ruling or order or declaration of the Court needs leave to appeal to that ruling order or declaration.’
[30] In the court below there was no application by the parties and, the issue was raised by the court in terms of Order 33 rule 3 of the HCR. In such a position ‘the application approach’ is not suitable for the classification of the order, as final or interlocutory.
[31] At the same time if the findings in paragraph 37 and 38 in Gounder(supra) are to be applied, the ruling of the court below is interlocutory and not a final decision. But I do agree that the ruling of the court below should be treated as final order as it was a decision in the nature of split trial.
[32] Rule 7 of the Court of Appeal Rules allow application of practice and procedure in England, and the Supreme Court Practice (White Book) 1988 can be of assistance in this regard.
Supreme Court Practice 1988(White Book) p853 59/1/25 stated;
‘where however, the final trial or hearing is split into two or more parts the orders made in respect of each of the parts are final orders......Thus, where judgment is given on liability with damages to be assessed both judgment or liability and the judgment fixing the quantum of damages are treated as final orders. Likewise, where there has been a direction for trail of preliminary issue, the order made at the trial of that issue will be final order if the circumstances are such that it is equivalent to a split trial (i.e the issue is not antecedent procedural point which falls to be determined in advance of the final trial or hearing...) (emphasis added)
[33] So when a judge decides to deal a preliminary non procedural issue in terms of Order 33 rule 3 of the HCR at the hearing, which is ‘equivalent to split trial’, it is not an interlocutory order and this may be considered as an exception to what was stated in paragraph 37-38 in Gounder Vs Minister of Health (unreported) (decided on 9th July, 2008). As such the ruling of the court below was not an interlocutory order, as it was an issue raised by the judge at the hearing as a preliminary matter that is equivalent to a split trial. The learned judge in court below thought it would be an efficient disposal of the action.
[34] In the court below the judge had raised a preliminary issue of the validity of MS19 and MS20 as contracts for the Plaintiff to seek specific performance in terms of O.33 r.3 of the HCR. The Ruling dated 31st January, 2013 dismissed the action and in the said ruling stated that O.33 of the HCR ‘substantially vests court with the power to determine an issue of preliminary nature in the cause or matter’.
[35] I do agree that power is vested with the court below to determine issues of preliminary nature, but that has to be done cautiously. As much as there are advantages in such an endeavour for case management there are inherent disadvantages and these should be considered before the exercise of such power.The court should also consider the benefits of resorting to O.33 r.3 of HCR. The court should also consider the nature of reliefs sought in the pleadings before venturing to dismiss the action in terms of O.33 r.7 of HCR.
[36] In Three Rivers District Council and others v Bank of England (No 3) [2001] UKHL 16; [2001] 2 All ER 513 after quoting Lord Roskill’ s decision in Ashmore v Corp of Lloyd's [ 1992] 2 All ER 486;
the identical paragraph quoted in the ruling of court below, and at 566 and held,(Lord Hobhouse)
‘There is always an exercise of judgment to be undertaken by the judge whether the perceived short-cut will turn out to have been beneficial and, inevitably, in a proportion of cases expectations will be confounded. Caution is required. But it is simplistic to suppose that in complex litigation the exercise should never be attempted. The volume of documentation and the complexity of the issues raised on the pleadings should be the subject of critical scrutiny and should not without more deter the judge from considering whether it is really necessary to commit the parties and the court to a lengthy trial and all the preparatory steps which that will involve. Indeed it can be submitted with force that those are just the sorts of case which most strongly cry out for the exclusion of anything that is unnecessary for the achievement of a just outcome for the parties’ (emphasis added)
[37] In the court below the issues were raised relating to the manner of survey and more specifically in issue 5a in following manner;
‘Whether the surveyed boundary by the Registered Surveyors observed the Surveyors Act (Cap 260)’
[38] The manner of survey and its results were critical factors and if there was no survey in accordance with the instructions given the subject matter of MS 19 and MS 20 liable to be tainted with misrepresentation and or mistake.
[39] The 1st and 2nd Plaintiffs obtained Notices for Approval to Lease for 23 and 18 perches, respectively from the Defendant in 1983 for 50 years.
[40] Though the tenure of the said Notices for Approval to Lease had not expired, there was a dispute as to the boundary with the neighbours and this resulted that the Plaintiffs requesting for leases instead of Notices for Approval to Lease from the Defendant. In fact the person who investigated said boundary dispute had advised the Plaintiffs to do so.
[41] The idea behind this would have been to obtain more clearer ‘title’ to what they were initially granted. Notices for Approval to Lease were granted before the formal leases and they were often granted without proper survey plans.
[42] The Plaintiffs were required to survey the land, subjected to the said Notices for Approval to Lease, engaging a private surveyor. The surveyor was issued with specific instruction to prepare the survey plans in accordance with the survey instructions provided by the Defendant. So, the obligation to conduct the survey in accordance with the survey instructions was with the Plaintiffs.
[43] The survey instructions inter alia provided the extent of the two lots and also a sketch plan of the boundaries of the two lots under the said Notices for approval to leases. (MS9B)
[44] The two survey plans prepared by the private surveyor, surprisingly consisted of larger area than what was initially requested to be surveyed by the Defendant. There was no explanation for that.
[45] There was an allegation that the survey was not performed in accordance with the survey instructions that were provided, but this was detected much later in the day when the Defendant had endorsed the said survey SO 5364, and approved by Surveyor General’s office.
[46] The SO 5364 (Survey Plan) also included adjoining building and fence. These were all undisputed facts before the court below and contained in the appeal record.
[47] Strangely, any permanent structures or fence were not shown in the plans prepared by Ami Chand and approved by the relevant authorities including the Defendant. This SO 5364 was the subject matter of MS 19 and MS 20.
[48] In any event, there is evidence that the actual survey was not performed by Mr. Ami Chand but another surveyor assigned by him named Mr. Sela Macanawai and signed by Mr. Ami Chand. There is evidence that Mr. Sela Macanawai had admitted that he would have erred in his assumptions and consented to resurvey in terms of the instructions issued by NLTB. (See MS 23) But whether there was an error in the assumptions cannot be decided at this stage, without considering his evidence.
[49] In the affidavit of Mr. Sela Macanawai admits the following facts;
[50] Does this mean that the survey was not conducted in terms of the instruction? If so subject matter of the lease which was the most important thing in a lease may not be correctly depicted in MS 19 and MS 20.
[51] There was a letter written by Acting Director of Lands and Surveyor General that Both Ami Chand and Sela Macanawai would have to appear before the Surveyors Registration Board. The said letter stated that plan SO 5364 cannot be amended as the “error is critical” and required another survey plan. (MS 23). These were evidence that needed to be tested at trial.
[52] Both these Notices for Approval to Lease were surrendered to the Defendant in the anticipation of obtaining of leases contained in MS 19 and MS 20 based on the said plan SO 5364 which was “critically erroneous” , according to the said letter of Acting Director of Lands and Surveyor General.
[53] The clause 3 of the Notice for Approval to Lease may not be directly applicable to MS 19 and MS 20 as these Notices of Approval for Lease were surrendered to the Defendant in anticipation of MS 19 and MS 20 on 31st October, 2005. In any event said clause 3 was applicable only if the land under said notices, included freehold or lease hold titles of third parties.
[54] MS 19 contains an area of 1142 square meters and MS 20 contains an area of 1145 square meters and the survey instructions were to survey estimated areas of 582 square meters and 455 square meters, respectively. The disparity of the area is almost double! This needs to be clarified by the surveyor and or the Plaintiffs. It should also be noted Notices for Approval to Lease were for perches 23 and 18 and the extent stated in survey instructions are analogous with the said areas converted in to square meters.
[55] In a letter written by previous solicitors of the Plaintiffs, dated 10th January, 2008 a survey plan was attached and it depicts permanent structures and even a fence belonging to third parties. This is annexed EL4 to the Elia Lewena’s affidavit. (Vol. 2 of Record of the High Court).
[56] The Plaintiff had sought alternative relief of damages in lieu of specific performance of MS19 and MS 20. So there is an alternate claim for damages, and this was not considered in the court below when the action was dismissed upon the validity of MS 19 and MS 20. The alternate remedy of damages was sought by the Plaintiff due to the conduct of the Defendants. Even if the court rejects specific performance, the issue of damages as alternate remedy cannot be decided on the validity of MS 19 and MS 20 in terms of Order 33 of HCR. The alternate issue of damages was not considered in the ruling in the court below.
[57] In the statement of Defence, Defendant sought specific performance of leases on identical terms and conditions in terms of MS19 and MS20, with revised plan. Even if the statement of claim is struck off this counter claim should be considered without dismissing the entire action. So the dismissal of the action is not warranted. This counter claim was not considered in the ruling of the court below.
[58] It should be borne in mind that judge has sufficient power and authority to resort to O33 r.3 in an appropriate matter, but this needs to exercise with caution. In the majority judgment of Ashmore v Corp of Lloyd's [ 1992] 2 All ER 486 at 493 Lord Templeman said,
"The control of the proceedings rests with the judge and not with the plaintiffs, an expectation that the trial would proceed to a conclusion upon the evidence to be adduced is not a legitimate expectation. The only legitimate expectation of any plaintiff is to receive justice. Justice can only be achieved by assisting the judge and accepting his rulings."
[59] The exercise of that power by a judge cannot be considered as denial of justice or as a violation of right to a fair trial, as contended by the appellants.
[60] I would like to quote Lord Scarman's speech in Tilling and another v Whiteman [1979] UKHL 10; [1979] 1 All ER 737 at 744:
"The case presents two disturbing features. First, the decision in the county court was on a preliminary point of law. Had an extra half hour or so been used to hear the evidence, one of two consequences would have ensued. Either Mrs Tilling would have been believed when she said she required the house as a residence, or she would not. If the latter, that would have been the end of the case. If the former, your Lordships' decision allowing the appeal would now be final. As it is, the case has to go back to the county court to be tried. Preliminary points of law are too often treacherous short cuts. Their price can be, as here, delay, anxiety and expense."(emphasis added)
[61] Specific Performance is an equitable remedy and there are restrictions to it considering the drastic nature of granting such a relief . If the specific performance is granted on the MS 19 and MS 20 the subject matters of the said documents are based on erroneous plan. There is sufficient evidence before the court below that, though the SO 5364 obtained approvals and endorsements, including the Defendant it lacked certain essential features like depiction of all permanent structures and fence . So any approvals or endorsements granted to SO 5364 may be due to misrepresentation and or mistake.
[62] The specific performance is a discretionary remedy, hence the court can refuse it even if there is a valid contract in law. (See Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] 3 All ER 297.
[63] Lord Hoffman, in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd. (supra) Held,
"The principles on which English judges exercise the discretion to grant specific performance are reasonably well settled and depend on a number of considerations, mostly of a practical nature, which are of very general application."(emphasis added)
[64] In this case the documents MS 19 and MS 20 cannot be subject to specific performance considering the evidence before the court below due to admitted errors in SO 5364, by the surveyor who did the field survey . The Acting Surveyor General states SO 5364 contained 'critical errors' and it cannot be even 'amended'. In my judgment the conduct of the Plaintiffs and surveyor in the preparation of SO 5364 which is the subject matters of MS 19 and MS 20 is sufficient to refuse the discretion of the court in granting specific performance by the court. It would be practicable to do so. So I would remit the matter for to court below for Plaintiff's alternative claim for damages and also for counter claim of the Defendant.
The Orders of the Court are:
Hon. Mr. Justice W. Calanchini
PRESIDENT, COURT OF APPEAL
Hon. Mr. Justice E. Basnayake
JUSTICE OF APPEAL
Hon. Mr. Justice G. Amaratunga
JUSTICE OF APPEAL
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