IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. HBC 163 of 2008L

BETWEEN:

ANTHONY FREDERICK STEPHENS
of 3 Ragg Street, Martintar, Nadi, Consultant
Plaintiff

AND:

FANNY ESTHER FISHER
of 58 Mc Elrath Crescent, Martintar, Nadi, Domestic Duties
1st Defendant

AND:

THE REGISTRAR OF TITLES
of Suvavou House, Suva
2nd Defendant

FINAL JUDGMENT

Of: Inoke J.

Counsel Appearing: Mr. Qoro for the Plaintiff
Ms Draunidalo on instructions of Koyas & Co. for the 1st Defendant
Mr. R Green for the 2nd Defendant

Solicitors: Messrs Qoro Legal for the Plaintiff
Koyas for the 1st Defendant
Office of the Attorney General for the 2nd Defendant

Date of Hearing: 23 September 2009
Date of Judgment: 22 October 2009

INTRODUCTION

[1] The Plaintiff ("Stephens") and the First Defendant ("Fisher") were once married. This application concerns a property that was bought during their relationship and registered in Fisher’s name. Stephens says that the property was bought from his income alone and claims that he has an interest in the property by way of constructive trust and brought this application in 2008 for registration of a caveat on the title to protect his interest. Fisher says exactly the opposite.

THE APPLICATION

[2] The application was brought by way of Originating Summons filed on 2 September 2008 for the following orders:

1. A declaration that the Plaintiff is entitled and beneficially interested in the land known as Lot 1 DP 5144 registered in Certificate of Title No. 20360.

2. An order that the time for removal of Caveat No. 707626 be extended beyond 21 days as stipulated in Notice of Removal of Caveat dated 12th August 2008 or until further order of this Honourable Court.

[3] The application is made pursuant to s 106(a) of the Land Transfer Act and the Court’s inherent jurisdiction and is supported by Stephens’ affidavit filed on 2 September 2008.

[4] On 4 September 2008 Stephens filed an Ex-parte Motion for interim relief in the form of these orders:

a) That the Caveat Number 699742 registered over Certificate of Title Number 20360 being Lot 1 on Deposited Plan Number 5144 be extended until the final determination of this action or further order of the Court.

b) That there be no further dealing of Certificate of Title Number 20360 being Lot 1 on Deposited Plan Number 5144 until the determination of this action or further order of the Court.

[5] The ex-parte application was supported by an affidavit by Mr Kitione Vuataki ("Vuataki"), the solicitor who acted for both parties in the acquisition of the property, CT 20360, which consisted of 6 flats.

CASE HISTORY

[6] On 5 September 2008, the parties agreed before Datt J that caveat 699742 be extended to 12 September 2008 and the matter be called for directions before Phillips J on 12 September 2008. On 12 September 2008, directions for filing of affidavits were given and the application set down for hearing on 31 October 2008. The caveat was also extended to that day. On 31 October 2008, Mr Qoro, Counsel for Stephens, abandoned the claim in paragraph 1 of the Originating Summons. Fisher still had not filed her affidavit so she was given a further 7 days and the hearing adjourned to 3 December 2008. The caveat was also extended to that day. Further time was given by Phillips J on 3 December 2008 for Fisher to file her affidavit by 9 January 2009 and the hearing adjourned to 23 January 2009. The cumulative effects of the legal vacation, the January floods in the West and the events of April 2009 caused the matter to be adjourned 6 more times to 23 September 2009. Fisher still had not filed her affidavit so on that day I gave her a final 7 days to do that. Her affidavit was eventually filed on 30 September 2009. Submissions were filed by Mr Qoro for Stephens and Ms Draunidalo for Fisher. No submissions were filed for the Registrar of Titles. The parties agreed that I deliver my judgment based on their submissions and the affidavits.

STEPHENS AFFIDAVIT

[7] Stephens says in his affidavit that he and Fisher were living in a de facto relationship between 1990 and 1993 in Suva. In 1992, they moved to the property in Nadi. Stephens was working as a consultant for a business man by the name of Mamoru Takahashi (Takahashi) who was the principal behind a Fiji registered company called Takahashi Corporation Ltd ("Takahashi Corporation"). Arrangements were made by Stephens and his solicitor, Vuataki, for Takahashi to purchase the property. Takahashi could not come up with the purchase price so Vuataki obtained a loan from the Fiji Development Bank to buy the property. The Certificate of Title shows Vuataki as registered proprietor and Fiji Development Bank as first mortgagee on 1 May 1996. Stephens says that Vuataki’s contribution was the deposit, which was one third of the total purchase price, and that Vuataki held the property in trust for Fisher. A Deed of Trust dated 28 October 1996 between Vuataki and Fisher recites that Vuataki purchased the property as nominee and trustee for Fisher, the "owner" of the property, and undertook "not to transfer deal or dispose of the said property save as the owner may from time to time direct." I will refer to the full text of the Deed later on in this Judgment as the text tells a completely different story to that in Stephens’ affidavit. Stephens says that he appointed Fisher to look after the income deriving from the property. He also deposited his income from other sources into Fisher’s bank account. Sometime in 2000 Stephens said he instructed Vuataki to transfer the property to Fisher for no consideration. The instruction was in the form of a letter dated 2 February 2000 from Takahashi Corporation to Vuataki signed by Takahashi. Stephens also said "arrangements were also made with Colonial Bank" and money was paid by him into Fisher’s bank account "to boost her chance of getting the loan". He said Fisher was not working at the time and had not worked for more than 17 years. The Certificate of Title shows Fisher became registered proprietor and the Colonial National Bank as first mortgagee on 20 March 2000. After the property was transferred to Fisher, Stephens says he directed her to sign a blank transfer form. He annexed a copy of what is commonly known as an Application for the Director of Land’s consent to a transfer as proof of what he has said. The document is in blank except for what appears to be Fisher’s signature as "Transferor" and Stephens’ signature as "Witness".

[8] The parties were married on 29 September 2000. They are now divorced. Stephens admits in his affidavit that since there was a receiving order made against him, all money that he received from his consultancy work was paid into Fisher’s account. He had requested Fisher to transfer the property back to him to no avail. She has obtained an injunction from the Nadi Magistrates Court to evict Stephens from the property. On 5 February 2008, Stephens registered Caveat number 699742 on the title to protect his interest.

VUATAKI’S AFFIDAVIT

[9] Vuataki says in his affidavit that he picked up the Notice of Removal of Caveat from the Lautoka Post Office on 26 August 2008 on Stephens instructions. The Notice was dated 12 August 2008. He says that he had known Stephens since 1986 and knew of the parties’ personal relationship. He had Takahashi and Takahashi Corporation as his clients and confirms what Stephens has said in his affidavit as to the circumstances of the purchase of the property. Takahashi had paid a $60,000 deposit. In August 1995, Takahashi faxed Stephens saying that he did not have the extra money to complete the purchase and was fearful of losing his deposit. In an attempt to salvage the deposit, Vuataki entered into a sale and purchase agreement with the owner of the property on 22 December 1995 whereby Takahashi’s deposit was to be used as the deposit in his agreement. The property was registered in Vuataki’s name and mortgaged to the Fiji Development Bank ("FDB") on 1 May 1996. He says at all times he held the property for Takahashi and Takahashi Corporation for debts owed to Stephens as well as in trust for Fisher as Stephens was in receivership at the time. He confirms entering into the Deed of Trust of 28 October 1996 and had signed an irrevocable authority on 30 September 1996 in favour of Fisher for her to collect the rent from the 6 flats on the property and pay the FDB. Vuataki also confirmed that income received by or on Stephens behalf were paid to Fisher’s bank account to facilitate Fisher getting a bank loan as she was only receiving rental income from the flats. He agreed to transfer the property to Fisher in trust for Stephens. He annexed the letter from Takahashi Corporation dated 2 February 2000 to him as the authority to transfer to Fisher.

[10] Vuataki also says that he specifically asked Stephens what was his protection in the event of breach of trust by Fisher. Stephens answer was that he relied on a "constructive trust". He annexed to his affidavit as evidence of such a trust, a copy of Fisher’s will of 26 January 2000, a blank Application for consent to transfer, a blank Transfer and a general Power of Attorney by Fisher nominating Stephens as her attorney. The Transfer and the Power of Attorney were signed by Fisher but not witnessed. Vuataki believes that the property is held in trust by way of constructive trust for Stephens and that his caveat should be extended.

[11] The Deed of Trust between Vuataki as trustee and Fisher as owner or beneficiary is in the following terms:

I, KITIONE VUATAKI, BARRISTER & SOLICITOR, OF VUATAKI PRASAD & ASSOCIATES of 14 TUKANA ST LAUTOKA, FIJI

HEREBY ACKNOWLEDGE AND DECLARE that I purchased all that land comprised in the certificate of Title No. 20360 on Lot 1 on DP No. 5144 situated at 1 Summerville Place, Martintar, Nadi in the District of Ba containing an area of 27 and two tenths perches, together with all improvements thereon namely with residential accommodation (hereinafter collectively referred to as the said land and improvements).

All the said Land and improvements is in my name as nominee and trustee for Fanny Esther Fisher of Martintar Nadi (herein after called owner)

I undertake and agree not to transfer deal or dispose of the said property save as the owner may from time to time direct and further to give full effect to the trust hereby declared.

I EXPRESSLY DECLARE that this authority is IRREVOCABLE by me.

I further UNDERTAKE AND AGREE to provide the owner with all statements and demands made upon me by the FDB during the duration and terms of the mortgage as per their letter dated 21/2/92. I declare that the $60,000 deposit paid to the FDB known as Applicants Equity was provided by the owner and that the balance owing of $121,000 is the owners responsibility which will be paid each month by installments of $1250.00 until the final payment due May 2011.

I further UNDERTAKE and AGREE that all monies and profits which may be payable to me in respect of the sale of the said land improvements will be paid to the owner upon payoff of the mortgage to the FDB.

I acknowledge that I have no claim whatsoever against the owner, associates, company, for compensation loss of office or otherwise howsoever.

I declare that I shall only act upon instructions from the owner or agent in such a manner as will promote and further the objects of the owners wishes at all times.

Dated this 28th of October 1996.

SIGNED: K. VUATAKI  WITNESSED BY: F. FISHER 

FISHER’S AFFIDAVIT

[12] Fisher filed an affidavit with one annexure which consisted of the Statement of Account of her Colonial National Bank account from January 2000 to April 2008. She concedes that Stephens and others have paid money into her ANZ Bank account in the late 1990s to 2005 as Stephens was an undischarged bankrupt but all that money was used by him and his associates for their own personal and business purposes. None of that money was used for the property. She gave as an example, Stephens elderly father who came to visit them from overseas and he used her account to deposit the money that he needed to spend in Fiji and after his visit she was paid out of her account from that money the expenses for her looking after him.

[13] Her explanation of the circumstances of the purchase of the property is vastly different from that of Stephens and Vuataki. She says that when Takahashi was unable to complete the purchase, Stephens arranged for Vuataki as trustee to complete it with a loan from the FDB. According to her, the trust arrangement fell through sometime in 2000 because Stephens and Vuataki could not clear the arrears owed to FDB. The FDB knew that she was the one managing the flats and in their discussions the bank offered to sell the property to her with clear title for the amount of the loan and arrears then owing. Fisher then approached the Colonial National Bank. The bank did not require a deposit but only financial information for the ensuing 3 years to show that the loan could be repaid and a valuation of the property. The bank granted her loan sometime in 2000. She annexed a copy of the Statement of Account with the bank which she says showed that all repayments for the loan came from rental income from the property and not from Stephens’ income.

[14] Fisher says that she was certain that she did not sign any Power of Attorney or Transfer as alleged by Stephens and Vuataki. She also complains that Vuataki as their previous lawyer should remain independent and should not have filed an affidavit in support of Stephens application.

CONSIDERATION OF THE APPLICATION AND AFFIDAVITS

[15] In going through the affidavits it soon became apparent that both parties had entered into arrangements to overcome Stephens receivership. I am also surprised that neither Mr Qoro nor Ms Draunidalo alluded to this possibility in their submissions. Their submissions dealt with the law relating to s 110 of the Land Transfer Act and whether a constructive trust existed giving Stephens a caveatable interest. Mr Qoro convincing himself that such a trust did exist and Ms Draunidalo believing that Fisher was telling the truth and that Vuataki should not be allowed to swear an affidavit and that I should ignore it.

[16] I do not think that it is necessary for me to express an opinion on their submissions because I think this application should instead be decided on the law relating to transactions entered into with the main purpose of avoiding the processes of the law.

[17] I think what actually happened was this. Takahashi paid the $60,000 deposit. He could not come up with the balance of $120,000. Stephens and Vuataki in an attempt to save the deposit came up with a plan to get a loan from the FDB. Stephens, being an undischarged bankrupt, would not be touched by FDB or any bank or lending institution in Fiji, so either Vuataki or Fisher had to be the applicant. Fisher was unemployed so she was not a contender. Vuataki was the only potential applicant but he felt uneasy because of his relationship with Stephens and Fisher as his clients on the one hand and being the solicitor for Takahashi and Takahashi Corporation on the other. I believe he entered into the Trust Deed of 28 October 1996 to rid himself of his uneasiness, and rightly so. But what he had not realised was that he had inadvertently allowed himself to be caught up in Stephens and Fisher’s conspiracy to avoid Stephens receivership problems. Stephens could not have any property in his name. He had to use Fisher’s name and Fisher knowingly obliged. I think as between them, the property was to be owned by them jointly. The breakdown in their personal relationship after the property was transferred into Fisher’s name in 2000 and subsequent divorce proceedings have led to the positions now taken by the parties and this application.

[18] This is a situation where the parties have entered into an otherwise legitimate arrangement for an illegitimate purpose. The legitimate arrangement is the obtaining of the loans and subsequent transfer of the property to Fisher. The illegitimate purpose is for the property to be held in Fisher’s name to avoid the Official Receiver or Stephens’ creditors getting their hands on it.

[19] A similar situation as to what arose in this case was considered by the Court of Appeal in Latchman v Prasad [1960] 7 FLR 90. In that case, the parties entered into an agreement in respect of several buses. The purpose of the agreement as found by the trial Judge was for an illegal purpose, namely, to allow an undischarged bankrupt secretly to operate the buses for his own benefit without the knowledge of the official receiver or his creditors. He found that both parties were in pari delicto in this respect and dismissed both the claim and the counter claim. One of the grounds of appeal was that the illegality was not raised in the pleadings or at the trial by the parties. The President of the Court of Appeal, Adams JA, at p 95, agreed with Knox-Mawer and Trainor JJA, and gave the main reason for dismissal of the appeal as follows:

"In the present case, I consider that the illegal intention was present when the contract was entered into, and was forthwith put into operation in the performance of the contract, and remained in operation at all relevant times.

As to the duty of the court to take notice of such illegality though the parties have not chosen to plead or argue it, the practice in that respect is well established, and in my opinion was applicable here. The illegality was quite clearly revealed on the evidence before the court, and there was no reason to suppose that the relevant facts were not fully before the court. In such circumstances, the court will not allow its processes to be used, and the classical passage cited from North Western Salt Co Ltd. v. Electrolytic Alkali Co Ltd [1914] AC 461, 469 has no application where the evidence unequivocally establishes the illegality. A court which has such evidence before it has, as the law now stands, no option but to refuse its assistance."

[20] This is exactly what happened in this case. Stephens and Fisher by their own admissions in their affidavits knowingly entered into their arrangements for the illegal purpose that I have referred to above.

[21] This Court will assist neither of them. The loss lies where it falls.

THE ORDERS

[22] The Orders are therefore as follows:

1. The Plaintiffs Originating Summons filed on 2 September 2008 is dismissed.

2. Caveat number 699742 registered on CT 20360 is to be removed forthwith.

3. There is no order as to costs.

POST SCRIPT:

OBSERVATIONS ON THE AFFIDAVITS

[23] On Friday just passed, I delivered a judgment in which I said that some rather brazen statements were made in an affidavit. In this Judgment my observation is that Stephens affidavit contains half truths and misleading statements. Lawyers must impress upon their clients that affidavits are not submissions or interpretations of evidence aimed at misleading the Court. They are statements of facts given on oath as if they were made orally in an open Court trial. These statements are not subject to cross examination unless leave is obtained so lawyers should be extra vigilant to ensure that their clients do not deliberately tell lies. Be bold and courageous enough to disclose the facts as they are and face them head on if they are adverse to your case. The Courts need not constantly remind lawyers that they have an overriding duty to place the facts before it and not mislead. Much of the Courts’ time is wasted in sifting through improperly drafted affidavits to get to the truth. It is not possible to tell whether an affidavit is drawn and settled by a clerk, the deponent himself or the lawyer involved. There is no accountability in the process. Therefore through this Judgment I am recommending to the Chief Justice that a Practice Direction be issued that from now on all affidavits must state the name of the drafter and settler of the affidavit.

Sosefo Inoke
Judge