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Kaitapu v Tu'iha'angana [2025] TOCA 3; AC 2 of 2024 (16 May 2025)

IN THE COURT OF APPEAL OF TONGA
LAND JURISDICTION
NUKU’ALOFA REGISTRY

AC 2 of 2024
[LA 15 of 2021]

BETWEEN
‘ALOISIO KAITAPU and MELAIA KAITAPU
Appellants

AND
MELE TU’IHA’ANGANA, BAKO STORE LTD
and RENG XING YU (aka SIAKI)
Respondents

AND
MINISTER OF LANDS and
GOVERNMENT OF TONGA
Third Parties

Hearing:
5 May 2025

Court:
Randerson, Harrison and Morrison JJ

Counsel:
Fanga Afu for the First Appellant
No appearance by or for the Second Appellant
William Edwards for the Respondents
Sione Sisifa SC Solicitor-General, for the Third Parties

Judgment:
16 May 2025

JUDGMENT OF THE COURT

Background

[1] This appeal concerns a dispute over a commercial lease numbered 8981 granted to the first appellant ‘Aloisio over land in Pangai, Ha’apai. The lease comprised an area of 1619m² with a term of 30 years. ‘Aloisio and his wife, the second appellant Melaia, built and ran a small café on the land. They were separated at the time of trial and have since divorced.
[2] Soon after the grant of the lease, Melaia began to take goods on credit and to borrow money from the second respondent Bako Store, a company of which the first respondent Mele was the owner and director. The company employed the third respondent Siaki with whom Melaia had become acquainted.
[3] In 2019, there were discussions about the possibility of the lease being transferred to Mele given the debts that had by then accrued. On 17 May 2019, ‘Aloisio signed a letter agreeing to transfer the lease to Mele. The letter was filed with the Ministry of Lands by Mele on the same day. Although ‘Aloisio endeavoured to recant at various stages, he wrote again to the Minister on 5 June 2019 confirming his original wish for the lease to be transferred to Mele.
[4] Relying on these letters from ‘Aloisio, the Minister recommended Cabinet approve the transfer of the lease to Mele but before this occurred, it came to light that there was a bank mortgage on the lease. It is not in dispute that ‘Aloisio, Melaia and Mele went to the bank and that Mele paid the balance due on the mortgage amounting to $8,843.10. Thereafter, Cabinet approved the transfer. Correspondence between ‘Aloisio and the Minister continued from December 2019 until June 2020 which it is unnecessary to detail here. Suffice to say that this led to Cabinet rescinding its decision to transfer the lease and terminating the lease. Cabinet then approved a new lease to Mele numbered 9837 over the same land for 60 years.
[5] By their Amended Statement of Claim in the Court below, the respondents sought an order directing ‘Aloisio to sign the indenture of the lease transfer to Mele in respect of the original lease 8981 or alternatively, judgment in the sum of $78,257.10 (being the amount of debt owed to the respondents) together with interest and costs. The claim as then pleaded alleged the appellants had been guilty of false pretences by offering the transfer of the lease to Mele in exchange for the debt then accrued and for further advances made thereafter in reliance on ‘Aloisio’s promise to transfer the lease.
[6] In their defence, the appellants denied the claims made by the respondents and counterclaimed for declarations that the termination of the original lease 9891 was unlawful and invalid. They also alleged that the grant of the new lease to Mele was unlawful. They sought an order reinstating the original lease to ‘Aloisio or alternatively damages relating to the cost incurred in developing the land. A critical part of the defence was ‘Aloisio’s contention that he understood the transfer of the lease to Mele was intended to be by way of security for the debts rather than an unconditional transfer.
[7] The third parties abide the decision of this Court.

The findings in the Court below

[8] By the time of trial, the respondents’ claim against Melaia was by way of formal proof after her failure to file a defence.
[9] Acting Justice Langi heard evidence from the parties which she outlined in detail in her judgment under appeal. Counsel for the respondents had accepted they could not have both a money claim against the appellants and an order amounting to specific performance of the agreement to transfer the lease to Mele. The respondents withdrew the claim against Melaia and asked only that the Court confirm the legality of the new lease granted to Mele. Alternatively, in the event that the new lease was declared unlawful, they sought an order directing ‘Aloisio to sign the indenture of the lease transfer to Mele in respect of the original lease.
[10] The Judge found that the termination of the original lease by Cabinet was unlawful since it had not been shown that ‘Aloisio had breached any of the terms of the lease and the Minister had not afforded natural justice to ‘Aloisio by allowing him an opportunity to be heard before recommending to Cabinet the termination of the original lease. The Judge also considered that the Minister had acted ultra vires by effectively acting as a debt collector when requiring ‘Aloisio to repay the amounts owed to the respondents under the threat that the original lease would be cancelled if he did not. These findings are no longer challenged by any party.
[11] In their closing submissions, the respondents had submitted that ‘Aloisio was estopped by his conduct from cancelling the transfer of the original lease to Mele. The Judge subsequently noted that estoppel had not been specifically pleaded by the respondents and sought advice as to whether they wished to seek leave to amend their pleadings. The appellant opposed any amendment but after hearing the parties, the Judge granted the respondents leave to amend their pleadings. A Second Amended Statement of Claim was filed relying solely on estoppel by conduct.
[12] On the facts, the Judge found decisively in favour of the respondents. She found that:

Although I find that the termination of ‘Aloisio’s lease was unlawful and that he is the lawful holder of Lease 8981, I find on the facts that he had unequivocally agreed to transfer the Lease to Mele Tu’iha’angana in satisfaction of his and his wife’s debts. In my view, there is no doubt that this matter falls to be determined by an application of the law of estoppel.^[1]

[13] The Judge made a firm credibility finding preferring the evidence of Mele and Siaki where it was inconsistent with the evidence of the appellants. She found ‘Aloisio not to be a convincing witness and that Melaia’s evidence was contradictory and not credible.^[2] The Judge below did not accept ‘Aloisio’s claim that he was an innocent party and had no knowledge of the dealings between his wife, Siaki and Mele. She noted he had extensive experience as a banker for 37 years and would have understood the difference between an unconditional transfer of the lease and transfer by way of security.^[3] Acting Justice Langi also rejected ‘Aloisio’s evidence that the facts were misrepresented to him by his wife. The Judge found that ‘Aloisio knew exactly what he was doing when he signed the letter of 17 May 2019; both ‘Aloisio and Melaia were in financial difficulty and they saw the agreement to transfer the lease as the most effective way of overcoming these difficulties.^[4]
[14] The Judge observed that ‘Aloisio had written the second letter of 5 June 2019 again requesting the Minister to transfer the lease to Mele. She then concluded:

170. I have no doubt that ‘Aloisio knew exactly what he was doing when he signed the transfer letter. Both Defendants have now come to court and have tried to distance themselves from each other so that Melaia would take the fall for all that has happened. On the evidence before me, I am convinced that this was a calculated scheme by ‘Aloisio and Melaia to obtain money from the Plaintiffs’ to pay off debts discussed earlier.
171. In my view, an equity has been established on the facts described above. I therefore find that the Plaintiffs’ had clearly relied on the representation of ‘Aloisio to transfer the lease to Mele in exchange for debts owed and monetary loans made by Melaia. The expectations of the Plaintiffs’ to have the lease transferred to Mele Tu’iha’angana will be defeated if the ‘Aloisio is not ordered to honour his part of the agreement.
172. I do not believe that an order for the return of the monies given by the Plaintiffs’ to the Defendants’ is an appropriate remedy and I therefore make an order for specific performance and that ‘Aloisio’s lease is transferred to Mele Tu’iha’angana for the remaining years left on Lease 8981.
     • [15] The Judge then made a series of related and consequential orders. ‘Aloisio was ordered to vacate the property within one month from the date the judgment was received and to remove all buildings and other belongings located on the land. The appellants were ordered to pay 75% of the respondents’ costs on a party and party basis, recognising that their counterclaim had been successful in part. The appellants and the Minister were ordered to bear their own costs in respect of the counterclaim.

The grounds of appeal

[16] The notice of appeal relies on 3 grounds:
(a) The amendment of the pleadings to raise the issue of estoppel by conduct ought not to have been allowed and had not been established in any event;
(b) An order effectively for specific performance of the transfer of the lease should not have been made;
(c) ‘Aloisio should not bear the costs jointly with Melaia.

• [17] It is not in dispute that the principles to be applied to applications to amend pleadings during or after trial are set out in Piukala v Saulala.^[5] The central question is whether the amendment is necessary in the interests of justice to enable a proper determination of the issues. Whether the opposing party will be prejudiced by the amendment will usually be an important consideration, particularly when the amendment is sought at a late stage of the trial or after the evidence has concluded.
• [18] Having reviewed the evidence, we are not persuaded that the evidence at trial would have been materially different if the estoppel cause of action had been pleaded at the outset. Much of the evidence was in the form of correspondence and documents that could not be disputed. The essence of the appellants’ defence was that the transfer of the lease was intended to be by way of security only. That contention was not supported by the plain terms of ‘Aloisio’s letters of 17 May 2019 and 5 June 2019 and his protestations to the contrary were firmly rejected by the trial judge. The respondents had adduced evidence of their reliance on the transfer to support the making of further advances including repaying the mortgage of the lease that had not been disclosed.
• [19] On appeal, Miss Afu did not identify how the evidence might have been different had the issue of estoppel been raised before evidence was heard. As Mr Edwards pointed out, there was little material change to the claim based on false pretences. The particulars relied upon by the respondents in support of the estoppel cause of action were already largely pleaded in the Amended Statement of Claim filed prior to trial.
• [20] We note too that trial counsel for the appellants (not Miss Afu) made submissions in opposition to the application to amend the Statement of Claim. Prejudice was not raised. Rather counsel focussed on the availability of the cause of action based on estoppel and his contention that ‘Aloisio had valid reasons for cancelling the transaction. We are satisfied the amendment was properly granted.
• [21] On appeal, Miss Afu did not submit that the cause of action based on estoppel was an available remedy. We agree it was available. We were referred to the decision of this Court in Maile v Kalasi,^[6] where the circumstances in which estoppel by acquiescence (or proprietary estoppel as it is sometimes called) may be relied upon to effect or create property rights were discussed. In broad terms, the Court has a wide discretion to grant relief when an owner of land:

(a) Induces, encourages or allows the claimant to believe that he or she had or will enjoy some right or benefit over the land;
(b) The claimant acts to his or her detriment to the knowledge of the owner;
(c) The owner then seeks to take unconscionable advantage of the situation by denying the claimant the expected right or benefit.^[7]

• [22] The relevant principles were also discussed by the Court of Appeal of New Zealand in considerable detail in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd & Ors.^[8]
• [23] Counsel submitted it had not been proved that ‘Aloisio induced, encouraged or allowed Mele to believe that the lease would be transferred to her. This submission must be rejected given the plain terms of the letters ‘Aloisio sent to Mele. For the reasons already given, the Judge’s findings are clear on this point and no basis has been shown to disturb them.
• [24] We are satisfied that all the elements necessary to establish estoppel were satisfied in this case including unequivocal written representations by ‘Aloisio that the lease would be transferred to Mele; reliance on those representations by acceptance of the agreement to transfer in satisfaction of the accrued debt and by the payment of further money thereafter; and the conclusion of the Judge that it would be unconscionable for ‘Aloisio now to deny Mele the benefit of the representation he made. We see no basis to disturb these findings.
• [25] Addressing the second ground of appeal, counsel submitted that the trial evidence was clear that all moneys were given to Melaia and that ‘Aloisio did not receive any such money. It was argued that it would unfair or unjust to require ‘Aloisio to bear the sole burden of the order for transfer of the lease to Mele in such circumstances. Yet again, the Judge’s firm findings demonstrate this argument has no merit. Having reviewed the evidence we are satisfied there was a clear basis for the Judge to conclude that payments of money and the advancing of credit to Melaia were for the joint benefit of both herself and ‘Aloisio. Effectively, the Judge found that a payment to Melaia was a payment to both.
• [26] It is also beyond argument that although the legal obligation to repay the mortgage of the lease fell upon ‘Aloisio, Melaia’s attendance at the bank when Mele paid the amount owing shows she was fully aware that the discharge of the mortgage was necessary to implement the transfer of the lease. ‘Aloisio’s failure to disclose the existence of the mortgage when he agreed to transfer the lease to Mele supports the Judge’s conclusion that ‘Aloisio and Melaia took part in a calculated scheme to obtain money from the respondents to pay off debts for which they both considered themselves to be responsible. The payment of the balance due on the mortgage is a clear example of that. We note too that in his letter of 17 May 2019 ‘Aloisio said that “we” have agreed to the transfer of the lease, adding that he hoped Mele would apply the land to good use.
• [27] With regard to the second ground of appeal, Miss Afu submitted first that relief effectively amounting to an order for specific performance should not have been granted, particularly because the debt was mainly incurred by Melaia. We have already rejected that argument given the Judge’s findings of joint benefit to ‘Aloisio and Mele.
• [28] Thirdly, it was submitted there was a disproportion between the value of the debt of approximately $78,000 and the value of the lease which was said to be based on a valuation of $133,000 in 2018. In response, Mr Edwards submitted this issue was not raised at trial and pointed out that the valuation was 5 years out of date by the time of trial in the court below. By then he submitted that the value would have likely fallen. We also note that the valuation referred to the extreme difficulty in valuing a lease of this type. Doubtless Mr Edwards would have challenged the valuation if ‘Alosio had raised this as a contested issue at trial.

[29] The Court enjoys a wide discretion when the necessary elements of estoppel are established. Relief short of granting the plaintiffs’ expectations in full is clearly available depending on the facts. In the present case however, we are not prepared to interfere with the orders made by the Judge. ‘Aloisio and Melaia embarked on a joint scheme designed to deceive Mele and the other respondents which indicates a high degree of unconscionability, tantamount to fraud. As well, the total amount of advances made, credit given and the funds for the discharge of the undisclosed mortgage together was substantial. ‘Aloisio agreed unconditionally to transfer the lease to Mele and we see no reason why he should be allowed to resile from the bargain he made.

[29] For similar reasons, we are unable to accept ‘Aloisio’s argument on the third ground of appeal relating to the costs orders made in the Court below.

Result

1. The appeal is dismissed.

2. The first appellant is to pay costs to the respondents in this Court, to be fixed by the Registrar if not agreed.
   

Randerson J

Harrison J

Morrison J

^[1] Judgment at paragraph 154.
^[2] Judgment at paragraphs 160 and 166.
^[3] Judgment at paragraph 161.
^[4] Judgment at paragraphs 164–168.
^[5] Piukala v Saulala [2022] TOSC 50.
^[6] Maile v Kalasi [2017] TOCA 3; AC 17 of 2016 (16 March 2017).
^[7] At [41] and [42].
^[8] Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd & Ors [2014] 3 NZLR 567; [2014] NZCA 407; leave to appeal to the Supreme Court was refused in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd & Ors [2014] NZSC 173.