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Tradewinds Marine Ltd v Fa [1994] FJHC 80; Hbc0389j.93s (15 July 1994)

IN THE HIGH COURT OF FIJI
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0389J.93S

Between:

TRADEWINDS MARINE LIMITED and
OCEANIC DEVELOPERS (FIJI) LIMITED
Plaintiffs

- and -

TEVITA FA
Defendant

Mr. W. Morgan for the Plaintiffs
Mr. Tevita Fa, the Defendant in person

JUDGMENT

The Plaintiffs have issued a Summons under section 169 of the Land Transfer Act (hereinafter referred to as the "Act") as the last registered proprietors of Crown Lease Book A Folio 86 situate at No. 41 Gladstone Road, Suva (hereinafter referred to as "the property") against the Defendant requiring him to show cause why he should not give up immediate vacant possession of part of the property occupied by the defendant to the Plaintiffs.

I have before me an Affidavit in support of the summons. The defendant has filed an affidavit in reply opposing the application. Further affidavits have been filed by the parties.

Both counsel submitted their arguments in Chambers before me and they have also filed comprehensive written submissions in the matter.

BACKGROUND TO THE CASE

The property is a protected Crown Lease comprising an area of 2 roods 34.5 perches. There is a two storey wooden building erected thereon which is currently used as office premises. There are four offices two of which are upstairs and are occupied by the defendant, a solicitor. The defendant took occupation of one of the top-floor offices in January 1985 and by 1988 he had also acquired the second office upstairs.

The property was transferred to the Plaintiffs on 13 May 1992. At that time the defendant occupied and still occupies part of the said building purportedly as a sub-tenant of the previous registered proprietors. There was an agreement executed on 13 March 1989 in respect of such purported sub-lease (hereafter referred to as the "Lease"). It is to be noted that no consent of the Director of Lands to this purported sub-lease was ever obtained. The agreement provided that the sub-lease was for a period of three years from the date of execution of the Lease with an option to renew for a further three years on terms to be negotiated.

There is no evidence that this Lease was renewed.

There are no dealings registered against the Crown Lease in favour of the defendant to protect his purported interest either as lessee or as option to purchase holder in respect of the property.

The defendant was served with Notice to quit on 21 January 1993 and 1 March 1993.

The consent of the Director of Lands to commence proceedings against the defendant was given on 21 June 1993 prior to the Plaintiffs filing this section 169 Summons.

THE PLAINTIFFS' CASE AND SUBMISSIONS

The Plaintiffs as the registered proprietors say that the defendant has no legal right to occupy the property. They state that they have served valid and lawful notices to quit on the defendant which he acknowledges, but despite that he has refused to vacate and deliver up possession of the property to the Plaintiffs. They further say that they have not authorized the defendant to continue in occupation of it.

They submit that under s.172 of the Act the defendant is required to show cause why he refuses to give up possession of the property.

Although the defendant alleges that he has a valid tenancy agreement with the previous owners, no consent of the Director of Lands was obtained to the purported sub-lease prior to the commencement of the same as required by section 13(1) of the Crown Lands Act. Hence the Plaintiffs say that the sub-lease is null and void ab initio.

In any event the Plaintiffs say that the purported lease has since expired and had expired at the time the property was transferred to the Plaintiffs and that there is no evidence of any renewal of it.

Although he received the notices the defendant says that one BORTLES had verbally assured him that his interests as tenant would be looked after; Bortles denies having given such assurances. They say that even if such assurances were given (which is denied) they contend that the alleged assurances are too vague so as to constitute a binding lease agreement or a right to occupation and also prior consent of the Director of Lands has not been obtained to the purported tenancy arrangement.

In these circumstances they say that the defendant has failed to establish that he has any right to occupation as a tenant.

THE DEFENDANT'S CASE AND SUBMISSIONS

The defendant says that he is a lawful tenant of the property.

He says that he had a valid option to purchase the property from the former registered proprietors but they failed to give him proper notice of its sale to enable him to exercise the option.

The defendant says that on the assurances given by the said Bortles that he could continue as a tenant, the notices to quit given him were in "contradiction" of these assurances.

The defendant says that under section 172 of the Act he has "a right to the possession of the land" in question by virtue of the lease he had with his previous landlord and "certain undertaking and promises made to him by the Plaintiffs' representative LARRY LYNEL BORTLES" (hereinafter referred to as "BORTLES"). He says in his submission, inter alia, that:

"These matters are now the subject of litigation in Civil Action No. 596 of 1993 where the defendant in this section 169 proceedings is the plaintiff and the defendants are the plaintiffs in s169 proceedings together with five others who are trustees of the Alliance Party from whom the plaintiffs bought the property. Amongst other matters, the plaintiff in Civil Action No. 596 of 1993 is claiming fraud against the defendants."

THE DETERMINATION OF THE ISSUES

Because the defendant has raised the issues of fraud against the Plaintiffs and the previous registered proprietors he says that it is a triable issue and should not be dealt with under s.169. He further alleges that the previous owners in concert with the plaintiffs did not give him the opportunity of exercising his option to purchase the property under the Lease. I shall deal with these matters under the appropriate heads in my judgment suffice it to say at this stage that despite the allegations and the fact that these matters are the subject matters of a civil action which is pending do not preclude the Court, in the exercise of its discretion, to deal with these issues if they are capable of being dealt with in so far as the Plaintiffs are concerned in this action under s.169. (KISSUN LAL ANTHONY and PRITAM SINGH CIV. APP. 23/87 FCA, SHIU NARAYAN and SHELL FIJI LIMITED CIV. APP. 52/87 FCA). I propose to deal with the issues in the following order: (a) validity of the Lease (b) exercise of option to purchase and (c) effect of allegation of fraud.

The relevant sections of the Act under which this action is brought are as follows in so far as they are material to the issue before the Court:-

"169. The following persons may summon any person in possession of land to appear before a judge in chambers to show cause why the person summoned should not give up possession to the applicant:-

(a) the last registered proprietor of the land;

(b)....

(c) a lessor against a lessee or tenant where a legal notice to quit has been given or the term of the lease has expired."

"172. If the person summoned appears he may show cause why he refuses to give possession of such land and, if he proves to the satisfaction of the judge a right to the possession of the land, the judge shall dismiss the summons with costs against the proprietor, mortgagee or lessor or he may make any order and impose any terms he may think fit:"

Under s.172 of the Act the onus is on the defendant to "show cause why he refuses to give possession" and why an order for possession should not be made against him.

(a) VALIDITY OF THE LEASE

For his right to the possession of the property the defendant is relying on (a) lease agreement dated 13 March 1989 (b) undertaking and promises allegedly made by BORTLES and (c) fraud on the part of the Plaintiffs (who are the second defendants in Civil Action No. 596/93) and the previous owners of the property.

As far as (a) above is concerned, I hold the agreement of 13 March 1989 to be null and void as under s.13(1) of the Crown Lands Act Cap 132 it is necessary that the consent of the Director of Lands should be first had and obtained to sub-lease the property. It is a "dealing" with Crown Land which took place for which consent is required under the said section which reads as follows:-

"13. - (1) Whenever in any lease under this Act there has been inserted the following clause:-

"This lease is a protected lease under the provisions of the Crown Lands Act"

(hereinafter called a protected lease) it shall not be lawful for the lessee thereof to alienate or deal with the land comprised in the lease of any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same, without the written consent of the Director of Lands first had and obtained, nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease.

Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void."

After the previous owners sold the property to the Plaintiffs the Defendant continued to be in occupation of the property. I hold that he could not be regarded as the lessee under the Lease for the reason that no consent to lease was obtained. Although he continued to pay rent to the plaintiffs he could not be regarded as the lawful tenant of the property for the same reason, namely, the absence of consent. Even if one were to regard it a licence to occupy, it was still a "dealing" which required the consent of the Director of Lands. In a similar situation their Lordships in the Privy Council case of CHALMERS v PARDOE (1963) 3 AER 552 said that "the transaction amounted to an agreement for a lease or sub-lease but even regarding it as a licence to occupy coupled with possession, their Lordships considered that a "dealing" with the land took place." (GOULD V P in JAI KISSUN SINGH v SUMINTRA 16 FLR p.165).

Although under clause 2 of the Lease it is provided that the "landlord will be responsible for and will obtain the necessary consent from the Director of the Lands for this Lease arrangement including the sub-leasing of the premises by the Tenant during the term of the lease period", no steps were taken by the landlord (the previous owners) to obtain consent. I am of the view that to protect his interests the defendant who is learned in the law could himself have taken steps to obtain consent. I consider that there was nothing to prevent him from doing so. Such a view has been expressed by MARSACK J. A. in D. B. WAITE (OVERSEAS) LTD v SIDNEY LESLIE WALLATH 18 FLR 141 FCA at 147 as follows:-

"The primary responsibility for applying for the Board's consent undoubtedly lies on the vendor. But, as I see it, there is no definite rule that in no circumstances is the Board entitled to grant its consent to a dealing in land except upon the application of the vendor. In Court Brothers Limited v. Sunbeam Transport Limited (1969) 15 F.L.R. 206 and in Fong Lee v. Mitlal (1966) 12 F.L.R. 4 the consent of the Board to the sale was granted upon the application of the purchaser, and the legality of the contract was confirmed by this Court."

The defendant relies on the lease for his "right to the possession of the land" and "certain undertaking and promises made to him by BORTLES who is the plaintiffs' representative". I have considered the allegations against BORTLES very carefully and find them to be very weak grounds for the defendant to rely upon.

There was so much going on around him in regard to the property of which he was well aware but he did not wake up to take appropriate legal steps whatsoever to protect his alleged interests and to raise the allegations of fraud at the appropriate time after the sale in 1992 instead of four months after the present summons.

The situation therefore is and I do so find that: the Plaintiffs are the registered proprietors of the property. The property is a Crown protected lease and the consent of the Director of Lands to institute legal proceedings against the defendant for vacant possession has been obtained but this may not have been necessary (NAGIN s/o Gulabdas and RANAS LIMITED v YEE FONG GAU t/a YUE HING STORE (C.A. 93/87 at Labasa); the defendant was given a proper notice to vacate and deliver up vacant possession of the property; no consent of the Director of Lands was obtained by either the previous owners or the present proprietors to the letting out of the property.

In view of what I have to say later in my judgment on 'option to purchase' clause and allegations of fraud, I am not satisfied that the defendant has "shown cause" to enable me not to make an order for vacant possession. He is relying on the Lease but I find that because of the absence of consent the Lease is an illegal transaction and is therefore null and void. In RAM KALI f/n Sita Ram and SATEN f/n H. Maharaj (Action No. 93/77) KERMODE J said:

"It is not necessary to determine whether there was an alleged sale as the defendant contends or a tenancy as the plaintiff alleges. Either transaction was illegal without the consent of the Director of Lands.

While the plaintiff did disclose the illegal tenancy her claim for possession is based on the independent and untainted grounds of her registered ownership and she does not have to have recourse to the illegal tenancy to establish her case." (underlining mine).

The above is the situation in this case as in the above-quoted passages, with which I am in agreement, and therefore the Plaintiffs are not affected by the illegal nature of the Lease and subsequent occupation by the defendant after the expiry of the period of Lease and after the Plaintiff became the registered proprietors of the property.

In the Privy Council case of AMAR SINGH v KULUBYA (1964) A.C. 142 the principle there applied was that a plaintiff can recover what he has transferred under an illegal contract if he can frame his action upon some independent and lawful ground.

The KULUBYA case is similar to the case before me in some respects. It "concerned an illegal lease of 'MAILO' land by an African to a non-African which was prohibited by a Uganda Statute except with the written consent of the Governor. No consent was obtained to the lease. After the defendant had been in possession for several years the plaintiff gave notice to quit and ultimately sued him for recovery of the land. He succeeded." (quoting from RAM KALI (supra)

For the reasons given hereabove I find that the Plaintiffs are entitled to the order sought for immediate vacant possession.

(b) EXERCISE OF OPTION TO PURCHASE

As I have already stated the only issue before me is whether the defendant has any right to possession. I have already found that he has none; but since he has alleged that he was precluded from exercising his alleged option to purchase by the previous owners in concert with the Plaintiffs I shall consider it. I am of the view that it is something which does not affect the main issue before me. He can still raise the matter but this does not in any way affect the title of the Plaintiffs and it is not a disputed fact which precludes me from dealing with it under s.169 procedure.

Mr. Morgan submits that since the Lease is null and void, clause 9 which reads as follows should also suffer the same fate:

"where for any reason whatsoever the landlord decides to sell the premises together with all the adjoining land forming part of this property, he shall give the tenant the opportunity to purchase the property."

I do not have to specifically decide the validity of the option clause for the purposes of the issue before me suffice it to say that there is no cogent evidence that the Plaintiffs were instrumental in preventing the defendant from exercising his alleged option. However, it appears that Clause 9 is not severable from the rest of the provisions of the Lease because the Lease was not registered under the Act. Had the Director of Land's consent been obtained clause 9 would have formed an integral part of the lease itself. In any case it seems that clause 9 is not within the mischief aimed at by S13(1) of the Crown Lands Act. It was so held as follows in COURT BROS (FURNISHERS) LTD v SUNBEAM TRANSPORT LTD (15 FLR p.206 FCA), but there, there was a separate option agreement:

"The option in question did not amount to a dealing in land within the meaning of section 13(1) of Crown Lands Ordinance. Per Marsack J.A.: No transaction or registration can be a dealing in land unless it creates an immediate interest. Per Gould V.P: An option to purchase creates an executory interest in land, but it is an exceptional type of interest, inchoate in nature and not within the mischief aimed at by section 13(1)."

Although it is in order to have an option clause in the Lease, clause 9, as submitted by Mr. Morgan, is too vague and does not constitute an enforceable option to purchase in law. A view with which I agree. BYRNE J had in MAHEND PRATAP SINGH v. JACQUELINE EHNY N'YUERT (C.A. No. 44/93) said that:

"It is there clear from these authorities that there must be tangible evidence, generally in writing, of the terms of any option to purchase including the monetary value thereof, or, if this is not stated how it is to be ascertained and the duration of the option stating the period for which it is to be open and the manner in which it is to be exercised."

Mere knowledge on the part of BORTLES or the Plaintiffs of the existence of clause 9 would be insufficient to constitute fraud in them or sufficient to enable the defendant to attack the principle of indefeasibility of title for it was said by DENNISTON, EDWARDS, COOPER, & CHAPMAN JJ. IN FELS AND ANOTHER v KNOWLES AND ANOTHER (906 26 NZLR 604) that:

"The cardinal principle of the Land Transfer Acts is that the register is everything, and that, except in cases of actual fraud on the part of the person dealing with the registered proprietor, such person, upon registration of the title under which he takes from the registered proprietor, has an indefeasible title against all the world. Everything which can be registered gives, in the absence of fraud, an indefeasible title to the estate or interest registered, or, in the cases in which registration of a right is authorized - as in the case of easements or incorporeal rights - to the right registered" (underlining mine)

The defendant's complaint is mainly with the previous owners who as he says in one of his affidavits (sworn 26 August 1993) "I never had the opportunity to exercise that option as my previous landlord never gave me notice of its intention to sell". The defendant did not even challenge the sale and the reason he gives for not doing so is (as he says in his said affidavit "because of a verbal assurance given to me by the said Larry Lynel Bortles that my interests as a tenant would be looked after and that it was not necessary for me to challenge that validity of the sale to his companies" He said that he learnt of the sale after the sale had taken place but that is not so on the evidence before me. In any case the lease was for a period of three years (clause I) with an option to renew for a further term. There was no renewal. The option ought to have been exercised (if it was exercisable) only during the currency of the Lease as held by HARVEY J in SHEARER v WILDING [1915] NSWStRp 34; (15 NSW SR 283).

The defendant did not exercise the option to purchase within the period of the Lease nor even after one BRAIN for the previous owners had discussion with the defendant on 30 January 1991 followed by letter of even date stating, inter alia, confirming (1) that "you are unable to match the offer made for the Crown Lease by Mr. L. Bortles and Mr. T. Philips. (2) That you would like to continue on with your present office space under the new ownership."

The defendant should have either taken his grievances up with the previous owners or instituted legal proceedings long before; it is of no avail complaining to the Plaintiffs or alleging fraud against them about the alleged failure by the previous owners to give the defendant an opportunity to exercise the option.

In the said civil action which the defendant has instituted, he emphasizes the point that he was precluded by the previous owners from exercising the option and alternatively they acted in concert with the Plaintiffs to sell the property thus constituting a fraud. As I said before he is not claiming a right to possession of the property in that action but is merely seeking a declaration that the transfer of the property to the Plaintiffs be set aside. Here in the Summons before me as I said earlier I am concerned with determining only the defendant's right to possession of the property.

In conclusion therefore on this aspect of the matter I hold that in the absence of consent under s.13, the Lease along with clause 9, (as it (clause 9) forms an integral part of the Lease) is null and void bearing in mind though, that had the option been contained in an agreement on its own no consent would have been necessary (COURT BROS (FURNISHERS) LTD) (supra). Further the option is too vague with no terms and conditions as to when it is to be exercised including whether it would be exercised during the life of the Lease etc and hence the option could turn out to be unenforceable in law.

Be that as it may on the evidence before me I find that the allegation of being prevented from exercising the option by the previous owners does not in any way affect the Plaintiffs' title to the property and that the allegation that the Plaintiffs were in any way involved in preventing the exercise of option has not been established against them. Therefore s.169 procedure is available to the Plaintiffs and is appropriate.

(c) EFFECT OF ALLEGATION OF FRAUD

The defendant's allegation of fraud against the Plaintiffs and the former registered proprietors is as put by Mr. Morgan in his written submission and it is as follows:-

"The Defendant has disclosed in his Affidavit filed on the 8th November 1993 that he has instituted proceedings against the former registered proprietors of the property and the Plaintiffs alleging that the former registered proprietors failed to give him the opportunity to exercise his option to purchase contained in the purported sub-lease agreement and further that the former registered proprietors committed a fraud against the Defendant in doing so or alternatively that the former registered proprietors in concert with the Plaintiffs in this action committed a fraud against the Defendant by failing to allow the Defendant the opportunity to purchase the property.... In the light of these proceedings, the Defendant asks that the Court not entertain the Plaintiffs' Summons and should dismiss the same." (underlining mine).

The defendant relies very heavily on his allegation of "fraud" on the part of the Plaintiffs. These allegations are contained in the Affidavit of the Defendant. Because he has raised the element of "fraud" in the circumstances that he has outlined, the defendant is firmly of the view that s.169 is not applicable and the matter should not be dealt with summarily on affidavit evidence alone. I have given careful consideration to his arguments but I find that he has not shown grounds constituting fraud in the Plaintiffs. The material placed before me does enable me to deal with this aspect of the matter and to decide whether there is sufficient evidence to compel me to dismiss this 169 application for vacant possession. In considering s.169 Summons one has to bear in mind whether there is clear evidence which indicates that there are issues which could not properly be resolved on affidavit alone (KISSUN LAL ANTHONY and PRITAM SINGH (supra). The fact that there are other proceedings before the Court is not in itself a ground to resist the s.169 Summons for one has to look at each case on its own facts. It is a matter entirely in the discretion of the Court. In SHYAM LAL v ERIC MARTIN SCHULTZ 18 FLR p. 152 GOULD V. P. said:

"that I am in sympathy with the proposition that complicated question of fact (particularly where there are allegations of Fraud) cannot adequately be investigated and dealt with on a summary proceedings in Chambers. The present case, however, involved initially no contested relevant fact and the Learned Judge in my opinion rightly entertained and dealt with it."

In GAJADHAR s/o Bharat and JAI PAL s/o Sital v NATIVE LAND TRUST BOARD(Civ. App. 49/81 FCA) the Court said that:

"Fraud cases largely turn upon the knowledge that the challenged party has of the existence and nature of the adverse claims."

Here I am dealing with the question of fraud defeating indefeasibility. The Land Transfer Act (Cap. 131) deals with this in sections 39 and 40 which (in so far as they are relevant) read as follows:-

"39.-(1) Notwithstanding the existence in any 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 ...

(underlining mine).

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 in any previous proprietor of such estate or interest is or was registered, or to see to 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." (underlining mine).

It is pertinent to note that under s.40 notice of a trust or unregistered interest in existence does not of itself constitute fraud upon the party obtaining registration. In the case before me the Plaintiffs deny that they had any knowledge of any unregistered interest of the defendant or of any trust except that they knew that he was in occupation of the property as a tenant of the previous registered proprietors. The fact that the Plaintiffs have an "indefeasible title" to the property means that the title cannot be set aside because of some defect in the history of the title.

The Plaintiffs in this case bought the property only with the knowledge of the tenancy. The period of the alleged lease at the time of the transfer had expired and the Plaintiffs were not aware of any renewal thereof. In any case the agreement was null and void without the consent of the Director of Lands.

In item 36 of the defendant's Amended Statement of Claim (annexed to his affidavit sworn 21.2.94) is set out in full his allegation of fraud on the part of the Plaintiffs. It is as follows:-

"Alternatively, the plaintiff charges and the fact is that the matters referred to in paragraphs 17 to 34 (inclusive) herein constitute a fraud by the first-named defendants acting in concert with the second-named defendants on the plaintiff calculated to deprive him and did in fact deprive him of the opportunity to purchase the property in question.

PARTICULARS OF FRAUD ON PART OF SECOND-NAMED DEFENDANTS

(i) Proceeding with the purchase in question with full knowledge of the Plaintiff's first-option to purchase.

(ii) Proceeding with the purchase in question with full knowledge of the Plaintiff's intention to exercise his rights under the Tenancy Agreement.

(iii) Other particulars as herein pleaded in the Statement of Claim." (underlining mine)

After considering the contents of the defendant's affidavits I find that there is no basis to impute fraud in the Plaintiffs; there is nothing in the affidavits to establish any semblance of fraud in them. There is lack of evidence to make the Plaintiffs even a party to the alleged fraud. These findings that I have made have been arrived at upon consideration of a number of authorities on the subject. Since they are relevant to the facts before me and also provide answers to the issue before me I refer to them hereunder.

"Fraud" in the context of the Torrens System was referred to in ASSETS CO. LTD v MERE ROIHI [1905] UKLawRpAC 11; (1905 A.C. 176 at 210, PRIVY COUNCIL)

"... by fraud in these Acts is meant actual fraud, i.e., dishonesty of some sort, not what is called constructive or equitable fraud ..... the fraud which must be proved in order to invalidate the title of a registered purchaser for value, whether he buys from a prior registered owner or from a person claiming under a title certified under the Native Land Acts, must be brought home to the person whose registered title is impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents. The mere fact that he might have found out fraud if he had been more vigilant, and had made further inquiries which he omitted to make, does not of itself prove fraud on his part."

In BUTLER v FAIRCLOUGH [1917] HCA 9; (1917) 23 CLR 78 at 97, ISAACS J said what was contemplated by "fraud" was "actual fraud, moral turpitude" and GRIFFITH CJ (ibid at 90) said that it imported "personal dishonesty or moral turpitude". In WICKS v BENNETT [1921] HCA 57; (1921) 30 CLR 80 at 91, KNOX C J and RICH J said that "fraud" as that term was used in s43 (equivalent to s.40 of the Act) meant "something more than mere disregard of rights which the person sought to be affected had notice".

Furthermore, on what constitutes and establishes fraud I quote from INTRODUCTION TO LAND LAW by PETER BUTT at p.298 as they have a direct bearing on the facts and circumstances of this case. It is stated there as follows:-

"In Stuart v. Kingston [1923] HCA 17; 1923) 32 C.L.R. 309, Starke J. said:

"Fraud will no longer be imputed to a proprietor registered under the Act unless some consciously dishonest act can be brought home to him. The imputation of fraud based upon the refinements of the doctrine of notice has gone."

And the Privy Council, in a later case expressed the view:

"If the designed object of a transfer be to cheat a man of a known existing right, that is fraudulent, and so also fraud may be established by a deliberate and dishonest trick causing an interest not to be registered and thus fraudulently keeping the register clear ... The act must be dishonest, and dishonesty must not be assumed solely by reason of knowledge of an unregistered interest" (Waimiha Sawmilling Co. Ltd. v. Waione Timber Co. Ltd. [1926] A.C. 101, at 106-107).

In line with these dicta, it has been held that it is not fraud to purchase with notice of an unregistered lease, become registered as proprietor and then evict the lessee relying on the indefeasible title conferred by registration (Oretel v. Hordern [1902] NSWStRp 21; (1901) 2 S.R. (N.S.W.) (Eq.) 37; Wicks v. Bennett (1021) [1921] HCA 57; 30 C.L.R. 80, at 91, 94-95; R. M. Hosking Properties Pty. Ltd. v. Barnes [1971] S.A.S.R. 100, at 103; Achatz v. De Reuver [1971] S.A.S.R. 240, at 250); it is always open to the holder of an unregistered interest to protect his interest by caveat, and "a purchaser may shut his eyes to the fact of there being an unregistered interest, and need not take any consideration of the persons who claim under the unregistered interest" (Munro v. Stuart [1924] NSWStRp 54; (1924) 41 S.R. (N.S.W.) 203, at 206. In the words of Kitto J., "merely to take a transfer with notice or even actual knowledge that its registration will defeat an existing unregistered interest is not fraud" (Mills v. Stokman [1967] HCA 15; (1967) 116 C.L.R. 61, at 78). Nor is it fraud to register promptly with the purpose of defeating a claim over the land which may be established by pending litigation: that is not cheating a person of a known existing right (Waimiha Sawmilling Co. Ltd. v. Waione Timber Co. Ltd. [1926] A.C. 101). On the other side of the line, a registered title is defeasible for fraud where the purchaser takes not merely with notice of the unregistered interest but having given an assurance that the interest will be preserved (Loke Yew v. Port Swettenham Rubber Co. Ltd. [1913] UKLawRpAC 11; [1913] A.C. 491, at 501-502)."

Finally, I find that on the facts and on the basis of the above authorities, the Plaintiffs are not guilty of fraud by the previous owners allegedly acting in "concert" with the Plaintiffs.

Having thus found, the s.169 procedure on the facts of this case is appropriate and the Court is therefore enabled to deal with it and make the order sought for vacant possession.

In the outcome, for the reasons given hereabove I find that the defendant has not shown cause to the satisfaction of the Court a right to the possession of the property or that there are any triable issues as far as the Plaintiffs are concerned, and therefore I order the defendant to deliver immediate vacant possession of the property to the Plaintiffs with costs against the defendant which are to be taxed if not agreed.

D. Pathik
Judge

Suva
15 July 1994

HBC0389J.93S