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Koloamatangi v Koloamatangi [2003] TOLawRp 23; [2003] Tonga LR 131 (28 May 2003)

IN THE LAND COURT OF TONGA
Land Court, Nuku'alofa

L 17/2001

Koloamatangi v Koloamatangi

Ford J, Mr George Blake (Assessor)
26 and 27 February 2003; 28 May 2003

Land law – registration by fraud – innocent party so grant not cancelled Land law – failure of Minister of Lands to give public notice – damages could be awarded

It was common ground that the allotment in question was on Crown land, comprised 1 rood 1.2 perches (1043 sq m), and was located in Ngele'ia, Kolofo'ou. The 30 year-old plaintiff, "Ueini", sought an order that would evict the second defendant and cancel his registration as holder of the allotment in question. The second defendant, "Faleata", contended that he acquired valid title to the land following its surrender by the first defendant in 1996. The first defendant, who took no steps in the proceedings, was the plaintiff's father, 'Ilai. 'Ilai's parents occupied the land for many years but it was never registered. In 1971 'Ilai married Vaisioa and they had two sons, the oldest of whom was the plaintiff. The couple separated soon after the birth of the second son. When he surrendered the allotment back in 1996 he falsely represented that he had no children. Faleata spent $60,000 in preparing the land and building the house that he and his family have lived in since the end of 1997. In 2000 Ueini found out from his mother that his father had a town allotment. He then found out that his father had surrendered the allotment in 1996 and that the Land Office had not published a notice of Cabinet's consent to the surrender contrary to s 54(2) of the Land Act; the Minister of Lands was the third defendent.

Held:

1. Registration was final unless it came about as a result of an error of law (ie contrary to the Act), or as result of fraud, mistake, breach of the principles of natural justice or of a promise made by the Minister. The undisputed fraud on the part of the first defendant satisfied the threshold test and the plaintiff established a basis for the court to set aside the grant if, in all the circumstances of the case, it was right and just to do so.

2. The Court was not prepared to recognise and apply a principle where fraud on the part of a previous title holder defeated a grant to a subsequent bona fide holder where the second defendant had enjoyed possession for a significant period of time and incurred very significant outlays.

3. Section 54(3) applied to both hereditary estates and Crown land. The third defendant was in breach of his statutory obligation under section 54 of the Land Act to give public notice of Cabinet's approval of the surrender.

4. The principal relief sought by the plaintiff was the cancellation of the grant in favour of the second defendant. The Court was not prepared to grant that relief. The plaintiff failed to establish any claim against the second defendant. The second defendant was an entirely innocent party to the first defendant's fraud.

5. Steps were taken by the third defendant to try and resolve the matter by the allocation to the plaintiff of another allotment in a different district. To give the plaintiff and the third defendant opportunity to continue with their negotiations, entry of judgment for the plaintiff against the third defendant was deferred but leave was reserved for either party to apply on notice for further directions or orders.

6. The second defendant was entitled to costs against the plaintiff to be agreed or taxed.

Cases considered:

Assets Co Ltd v Mere Rohi [1905] UKLawRpAC 11; [1905] AC 176

Vakameilalo v Vakameilalo & Minister of Lands [1989] Tonga LR 98 (PC)

Statutes considered:

Land Act (Cap 132)

Counsel for plaintiff: Mr Fakahua
Counsel for second defendant: Mr Niu
Counsel for third defendant: Mr Pouono

Judgment

It is not often that this court is able to conclude that all of the witnesses appearing in a case were basically truthful. That is, effectively, my conclusion in relation to the present proceedings although, in saying that, it has not made my task any easier.

The 30 year-old plaintiff, who was referred to during the hearing by his second name "Ueini", seeks an order evicting the second defendant and cancelling his registration as holder of the allotment in question. For his part, the second defendant, "Faleata" contends that he acquired valid title to the land following its surrender by the first defendant in 1996. The first defendant, who has taken no steps whatsoever in the proceedings, is the plaintiff's father. When he surrendered the allotment back in 1996 he falsely represented that he had no children.

It is common ground that the allotment in question is on Crown land. It comprises 1 rood 1.2 perches (1043 sq m) and is located in Ngele'ia, Kolofo'ou. It appears that the first defendant's parents occupied the land for many years but it was never registered. In 1971 the first defendant married Vaisioa and they had two sons, the oldest of whom is the plaintiff, Ueini. The couple separated soon after the birth of the second son. Thereafter, Ueini was raised by his mother's relatives who lived at Fasi while the younger son was raised by his mother's parents at Patangata. After a period, the mother travelled to Hawaii where she has lived ever since.

The first defendant married for a second time and there were three daughters from that marriage which also ended with a separation. The wife and the daughters moved to Lavengamalie while it seems that the first defendant continued living on in the allotment in question. It is not clear from the evidence exactly when the first defendant's parents passed away but counsel were in agreement that, at least by the early 1990s, the first defendant was the only family member still living on the allotment. He lived in the house that had been built by his parents. Another man and his wife lived with him.

Ueini visited the first defendant very rarely. He quite frankly acknowledged that his father was an alcoholic and his foster parents did not want him associating with him in any way for that reason. As I have indicated, the first defendant has taken no steps in the proceeding and he was not called as a witness by either party. The court was told by Ueini that his father is still an alcoholic and he is often seen "hanging around" the markets asking for money. Not having the advantage of having seen the first defendant, makes it very difficult for the court to express any considered views about his alcohol problem but there is reliable evidence to suggest that at times he can appear, to all intents and purposes, to be perfectly normal.

Although his application was not produced as an exhibit and the precise date is, therefore, unknown, it would seem that in or about late 1995 or early 1996 the first defendant filed an application with the third defendant for a grant of the allotment in question and, in response, a Deed of Grant was duly issued dated 29 April 1996. It was shortly after this point in time in the narrative that the second defendant, 37-year-old Faleata Leha, arrived on the scene.

Faleata works as an evangelist for the Free Wesleyan Church at Ngele'ia, Kolofo'ou. He studied for some six years in Fiji and upon his return to Tonga in 1994 he was keen to acquire an allotment in the Ngele'ia district upon which he could build a home for his wife and family. An evangelist friend in the USA, Mr Jeff Brooks, had agreed to help him out financially.

Towards the end of July 1996, Faleata heard from a local shopkeeper that the first defendant had an allotment available and after meeting with him, an agreement was reached whereby, in return for a "gift" of $7500, the first defendant would surrender the allotment in Faleata's favour. Faleata told the court that this agreement was reached on Friday 26 July and they agreed to meet again on the Monday morning at the Lands and Survey Office when the first defendant would surrender the land and, in return, Faleata would pay him a deposit of $300. On the Monday morning, Faleata picked up the first defendant in his van and they drove to the Lands Office. The first defendant told Faleata to wait outside, which he did.

The court then heard from Viliula Mafi, who is now deputy secretary of the Ministry of Lands, Survey and Natural Resources. Viliula told how he had been the person who had attended the first defendant in the Lands Office on that Monday morning back in July 1996 and, on his instructions, Viliula had prepared the surrender letter for his signature. The letter plays a crucial role in the case. As translated, it reads:

"Kolofo'ou

30th July 1996

Hon Minister

Ministry of Lands & Survey

Nuku'alofa

Dear Sir,

I write this letter with due respect to you.

The reason for this letter is that I truly consent to surrender my town allotment at Kolofo'ou which is known as MA'U HE MONU, with an area of 1r.1.2p (1043 sq m) which was registered on 29 April 1996.

The motive for the surrender is that I do agree to make this piece of land available for a man who is my relative called Faleata Leha of Kolofo'ou to make a town allotment application in respect of it. And I would like to make it clear that there are no children or son and heir to me.

Therefore, there is a belief and hope that you will kindly approve the request made herein.

Yours faithfully,

HALOTI KILIPI P. 'ITAI"

The letter is dated 30 July 1996 which was the Tuesday but I am satisfied that it was actually signed on the Monday. Nothing hinges on this point.

There are two significant falsehoods in the letter. First, Faleata was not a relative of the first defendant and secondly, and much more importantly, far from not having any issue, the first defendant had five children of which the plaintiff was the oldest son and heir.

Faleata's recollection of the letter was rather vague. He admitted that he noticed the reference to him being a "relative" but the statement did not concern him as he knew that the officer from the Ministry of Lands had prepared it and he thought that it was simply standard terminology for a letter of surrender. After they left the Lands Office, Faleata gave the first defendant the agreed $300 deposit.

Cabinet approved the surrender on 22 August 1996 and on 28 August 1996 Faleata paid the balance of $7200. The money paid had been advanced by Jeff Brooks. Mr Brooks had a one-page document drawn up which was headed "Transfer of Rights to Land". It is something that has no status whatsoever under the Land Act (CAP. 132) and no submissions were made as to its legality. It was described by Mr Niu as "a receipt" and that is probably a reasonable description because it was only meant to be signed by one party, namely the first defendant, and in doing so, he acknowledged receipt of the agreed figure of $7500. There is one particular sentence in the receipt, however, which Mr Fakahua places considerable reliance upon in his submissions. The sentence reads: "Upon payment of the agreed sum of $7500 neither I nor any of my heirs or family members will have any rights to this land." I will need to come back to this issue. The receipt was signed by the first defendant on 28 August 1996.

Faleata had limited knowledge of land transactions in the Kingdom but he was aware that after Cabinet's approval of the surrender of the allotment by the holder, he would then have to wait a further 12 months to see if anyone came forward claiming to be the legal successor. When the year was up, Faleata checked at the Lands Office and received confirmation from Mr Viliula Mafi that it was in order for him to move on to the land and begin work on his new home. Faleata lodged his application for a grant to the allotment on 9 September 1997 and he began construction work that same month.

The court then heard how, because of the low-lying nature of the land, it was necessary for Faleata to spend a considerable sum of money on fill before commencing building work. The dwellinghouse itself is constructed of concrete blocks with concrete foundations and a corrugated iron roof. In addition to the house, Faleata erected a watertank on the property and fenced off the allotment. He estimated the all up costs involved at $60,000 with substantial funding coming from Mr Brooks in America. Faleata was not challenged on this part of his evidence. He and his family have lived on the allotment in question since the end of 1997.

I return now to the case for the plaintiff. Although his evidence on the subject was vague, it appears that after he left school in 1993, Ueini visited his father's allotment only twice: first, towards the end of 1997 when he noticed the new house being erected and then again in early 2000. There was no evidence that he saw or spoke to anyone on either occasion. At one point, in cross-examination, Ueini indicated that he had known for many years that the allotment belonged to his father but, again, I found his evidence in this regard vague and to some extent contradictory. I can only conclude that he really did not focus on the situation regarding the allotment until early in the year 2000. He was certainly not aware that his father had taken title to the allotment in 1996 and then surrendered it in favour of Faleata.

In February 2000, Ueini was planning to make a trip to Hawaii to visit his mother. He telephoned his mother and told her that he had no property to use as security for his United States visa application and she then told him that his father, the first defendant, had a town allotment. That information came as a surprise to Ueini. His mother did not know the location of the allotment but Ueini made a visit to the Lands Office and he met up with Viliula Mafi. Viliula explained to him how he had prepared the letter of surrender back in 1996 on his father's instructions and how his father had told him that he had never married and had no children. Ueini told the court that he was "upset and unhappy" over what his father had done. He told Viliula that he would take the matter to court. Ueini also asked a person at the Lands Office, it is not clear if this was also Viliula, whether the Ministry of Lands had given public notice in the Tonga Chronicle newspaper of his father's surrender of the api. The person he spoke to knew nothing about any public notice. It transpires that, contrary to section 54 (2) of the Land Act, no public notice had been published of Cabinet's consent to the surrender.

Ueini said that sometime later, he met up with his father who confirmed that he had "sold the api" to the second defendant. He asked his father why he had stated in the surrender letter that he had no children. His father did not reply but Ueini said that he could tell from his facial expression that he was apologetic.

It is against that background that the plaintiff brings the present action seeking an eviction order and cancellation of the second defendant's Deed of Grant.

Any plaintiff seeking to upset a registered Deed of Grant faces a formidable task. Until it is established to the contrary, the court will presume that the register is correct. Registration is final unless it has come about as a result of an error of law (ie contrary to the Act), or as result of fraud, mistake, breach of the principles of natural justice or of a promise made by the Minister.

Not surprisingly, Mr Fakahua centres his submissions on the undisputed fraud on the part of the first defendant in stating in his surrender letter that he had no children. That statement was clearly false and and it would have misled the Minister who, on the strength of it no doubt, recommended the surrender to Cabinet. The plaintiff, therefore, satisfies the threshold test and he has established a basis for the court to set aside the grant if, in all the circumstances of the case, it is right and just to do so.

Counsel presented helpful submissions citing relevant reported decisions from the Tonga Law Reports. Mr Fakahua's principal submissions in support of the plaintiff's prayer for cancellation of the second defendant's registration are threefold and can probably be summed up as follows:

First, the first defendant's fraud or misrepresentation caused the Minister to act under mistake and contrary to the Land Act and this, in itself, warrants setting aside the grant. Secondly, although the fraud was perpetrated by the first defendant, the second defendant ought, in all the circumstances, to have made further or further adequate inquiries as to whether or not the first defendant had been married and had children. Thirdly, the third defendant breached his statutory duty in failing to give public notice of Cabinet's approval to the surrender of the api.

In response, Mr Niu submitted that, as there was no fraud on the part of the Minister or the second defendant, then the grant must stand and, even if the third defendant had failed to publish notice of the surrender, then, while that may give rise to a claim in damages, it was not a sufficient basis for setting aside the grant made to the innocent second defendant.

The plaintiff has been unable to refer the court to any authority where fraud on the part of a previous title holder has been held to defeat a grant to a subsequent bona fide holder and I am not prepared to recognise and apply any such principle in the present case where the second defendant has enjoyed possession for a significant period of time and has incurred very significant outlays.

Mr Fakahua's second submission appears to be sound as a proposition of law but whether or not it has application in any given case will depend entirely on the court's factual findings. Although, no authority was cited on the particular point, the principle counsel seeks to rely upon is probably that summed up by the Privy Council in Assets Co Ltd v Mere Rohi [1905] UKLawRpAC 11; [1905] AC 176,210. Dealing with an entirely different legal and factual scenario, their lordships made the following general observations in relation to an innocent victim of fraud:

"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 made further inquiries which he omitted to make, does not of itself prove fraud on his part. But if it be shown that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different and fraud may properly be ascribed to him."

If a plaintiff is able to establish a sufficient basis for suspicion of the other persons involvement in the matter then rigid inquiry is properly called for.

In the present case, Mr Fakahua submits that the second defendant ought to have made inquiries, "of other people at Ngele'ia" and "Ministry of Lands staff" to ascertain whether the first defendant had any children and he contends that Faleata ought to have noticed that the first defendant's statement in his surrender letter, that he had no children, "contradicted" the sentence in the receipt which I have referred to earlier in this judgment.

I reject both these submissions. Faleata said (in evidence which I accept) that on the Saturday after he reached his agreement with the first defendant back in July 1996, he spoke to the woman who, with her husband, lived in the first defendant's house on the allotment in question and he actually asked her whether the first defendant had any children. She told him that he did not. Mr Fakahua objected, in his written submissions, to that evidence as being hearsay but he took no exception to it at the time it was given and it now forms part of the record. I find that Faleata's approach to the lady in question was a reasonable inquiry for the second defendant to have made and he was entitled to rely upon her answer coupled, as it was of course, with the first defendant's own assurances.

At no time did Faleata or the officer in the Ministry of Lands have any cause to suspect that the first defendant might have had an alcohol problem. In this regard, Mr Fakahua referred to the first defendant's signature on the surrender letter and suggests that because it appears to have been printed rather than written, that fact should have put Faleata on notice in some way that the first defendant had problems. Again, I reject that submission. Not infrequently, the court encounters cases where elderly people in the Kingdom are unable to either read or write. The plaintiff's printed signature in the present case is perfectly legible.

Mr Fakahua also relies upon the statement in the one-page document which I have referred to earlier as a receipt. The document was prepared by Faleata's benefactor, Mr Brooks. It is written in the English language and there is no evidence before the court that the first defendant would even have known what it meant. Mr Faleata was never asked to clarify his understanding of the situation in this regard. I reject counsel's submission that the wording of the receipt should have aroused Faleata's suspicions.

I turn now to the failure by the third defendant to give public notice of Cabinet's approval of the first defendant's surrender. The requirement was inserted as an amendment to section 54 of the Land Act in 1991. It followed on from the decision in Vakameilalo v Vakameilalo & Minister of Lands [1989] Tonga LR 98 where the Privy Council recommended a requirement for public notice so that the fact of a surrender would be brought to the notice of an heir.

Mr Pouono for the third defendant submitted that public notice is only required to be given when the allotment surrendered is from an hereditary estate and there is no statutory requirement for notice to be given when the allotment is on Crown land. Mr Niu made a similar more detailed submission and he advanced the additional proposition that, even if notice had been given, it had not been proved that the plaintiff would have seen it because he admitted in cross-examination that he did not read, "every issue of every weekly newspaper." This latter point can be disposed of immediately. It is simply not an answer to a failure to give public notice in accordance with a statutory requirement to suggest that an heir may not have read it. The whole idea of a public notice requirement is that anyone at all might read the notice and draw it to the heir's attention.

The other part of the submission is more complex. It centres on the wording of section 54(3) of the Act which requires the public notice to state that if the legal successor to the surrendered land does not lodge a claim within 12 months from the date of publication of the notice, then the allotment "will revert to to the estate holder." The contention is that if public notice was required to be given when the allotment was on Crown land then the legislature would have said something like, "will revert to the estate holder or the Crown as the case may be."

On the face of it, there is some substance in that submission but I am satisfied that the confusion results from a drafting error in subsection 3 and in the form of notice specified in the schedule to the amending Act. When it comes to the object of the 1991 amendment, as explained by the Privy Council in the Vakameilalo decision, there is no logical reason for drawing any distinction between Crown land on the one hand and land held under an hereditary estate on the other. It is also clear from the wording of section 54(2) that it was the legislature's intention to require public notice to be given in all surrender cases.

In passing, I note that in an earlier decision I drew attention to another drafting error in section 54(3) of the Land Act. The word "less" in the English version should read "more". My finding, therefore, is that the third defendant was in breach of his statutory obligation under section 54 of the Land Act to give public notice of Cabinet's approval of the surrender.

Conceivably, argument may have arisen as to whether, and to what extent, relief may be sought by a legal successor to an allotment against the Minister in respect of the latter's failure to comply with the public notice requirement in section 54. That situation does not arise in the present case, however, because Mr Pouono, on behalf of the Crown, accepts (I think quite properly) that if I find that notice should have been given, which I do, then the third defendant has a civil liability to the plaintiff for breach of statutory duty.

The principal relief sought by the plaintiff in his pleadings is the cancellation of the grant in favour of the second defendant. I am not prepared to grant that relief. The plaintiff has failed to establish any claim against the second defendant. On the contrary, my finding is that the second defendant was an entirely innocent party to the first defendant's fraud.

Whilst conceivably, there may be circumstances where a failure by the Minister to give public notice pursuant to section 54 of the Land Act may result in the cancellation of a grant, I have not been persuaded that such draconian relief is appropriate or just in the circumstances of the present case.

The court is aware, because it was freely discussed at Chamber's hearings and in submissions, that steps have been taken by the third defendant to try and resolve the matter by the allocation to the plaintiff of another allotment in a different district. I suspect that the outcome of those negotiations may have been different had the plaintiff understood that this Court was not going to disturb the second defendant's title to the allotment in question. The court is anxious now to give the plaintiff and the third defendant a further opportunity to continue with their negotiations in the light of the findings recorded in this judgment. For this reason, entry of judgment for the plaintiff against the third defendant will be deferred at this point in time but leave is reserved for either party to apply on notice for further directions or orders.

The second defendant is entitled to costs against the plaintiff to be agreed or taxed.