IN THE COURT OF APPEAL
OF THE REPUBLIC OF VANUATU
(Civil Appellate Jurisdiction)

Civil Appeal Case No. 01 of 2003.

BETWEEN:

FREDERICK NUTLEY
Appellant

AND:

WU KIM KAM
First Respondent

AND:

GASPARD MOLIPALAUD
Second Respondent

Coram: Hon. Justice Bruce Robertson
Hon. Justice John W. von Doussa
Hon. Justice Daniel V. Fatiaki
Hon. Justice Patrick I. Treston

Counsel: Mr. Nutley, the appellant in person
Mr. Silas Hakwa for the first respondent
Mr. Hilary Toa for the second respondent

Hearing Date: 6th November 2003
Judgment Date: 7th November 2003

JUDGMENT

This is an appeal from a reserved judgment delivered in the Supreme Court, Luganville on 19th December 2002.

The appeal raises a simple question for determination namely which of two innocent parties dealing with Mr. Molipalaud is entitled to be registered on a block of leasehold title No. 03/0192/022 situated in the township of Luganville, Santo.

The relevant chronology of events in the case is not in serious dispute and may be briefly summarized as follows:

(1)	Between 14th July and 14th December 1999 the second respondent borrowed from the first respondent on 4 separate occasions the total sum of VT733,686 for the purpose of buying a leasehold property title No. 03/0192/022 from the Government of Vanuatu.

(2)	On 14th October 1999 the second respondent became the registered owner of 03/0192/022.

(3)	On 17th December 1999 the second respondent entered into a written agreement to sell the land to the appellant for VT1,2 million. A deposit of VT60,000 was paid.

(4)	On 21st December 1999 a further VT60,000 was paid by the appellant to the second respondent.

(5)	On 14th February 2000 the Minister of Lands consented to the transfer of land from the second respondent to the appellant.

(6)	On 2nd March 2000 the appellant issued 4 cheques to the Lands Department to pay for all registration fees relating to the lodgment of the appellant's documents for registration in the Lands Department.

(7)	On 4th May 2000 the appellant and second respondent executed a transfer of the land in favour of the appellant.

(8)	By letter dated 7th July 2000 the appellant transfer documents were sent to the Vanuatu Financial Services Commission for stamp duty purposes. By letter dated 11th October 2000 a late payment penalty of VT15,000 was imposed on the transfer from the second respondent to the appellant.

(9)	On 9th November 2000 the first respondent enquired about the title and 21st November 2000 Lands Department responded disclosing dealings between the appellant and the second respondent and advising the first respondent to lodge a Caution.

(10)	On 10th January 2001 stamp duty on the transfer was paid on the transfer from the second respondent to the appellant.

(11)	On 10th January 2001 the first respondent lodged a caution on the title claiming an interest in the property on the basis of the moneys lent to the second respondent and an oral agreement to transfer the title to the first respondent if he failed to repay the loan.

(12)	On 2nd February 2001 the monies not having been repaid the first respondent issued proceedings against the second respondent seeking to recover the monies lent or alternatively the transfer to the first respondent of the title in the leasehold.

(13)	On 12th April 2001 the second respondent filed a defence and counterclaim to the first respondent's claim denying the first respondent's claim.

(14)	On 18th May 2001 counsel for the appellant wrote to the first respondent's solicitors claiming an equitable interest in the property and offering VT250,000 to the first respondent to withdraw her caution and/or the appellant would be joined as a party.

(15)	On 17th August 2001 by Order of the Court the appellant filed a Statement of Claim as an interested third party to the first respondent's action.

(16)	On 24th August 2001 the first respondent filed a Statement of Defence denying the appellant's claim that the appellant had no reasonable cause of action or standing against the first respondent's claim and seeking the dismissal of the appellant's claim.

(17)	On 10th October 2001 the trial of the action commenced and continued on 20th May 2002 and finally concluded on 5th December 2002. At no stage did the second respondent participate in the trial. The appellant appeared in person and the first respondent was represented by counsel.

(18)	On 19th December 2002 the Court issued its judgment.

In this judgment in order to maintain consistency and avoid confusion we have adopted the capacities of the parties in this appeal to refer to them throughout. i.e. Frederick Nutley is referred to as "the appellant", Wu Kim Kam as the "first respondent" and Gaspard Molipalaud as the "second respondent".

For the purposes of this appeal we also highlight the following aspects of the parties pleadings in the case. In the first respondent's Statement of Claim paragraph (l) pleads the terms of the unwritten agreement between her and the second respondent as follows:

"At the time of the fourth advance (the second respondent) agreed and undertook that should he fail to repay the 4 advances in full (whether or not formal demand is made therefor) he would transfer all his rights and title in leasehold title No. 03/0192/022 to the (first respondent)." 

Such an agreement is not an agreement or contract to sell the land but rather one to transfer the second respondent's interest in the land in consideration of the first respondent forbearing to sue for the recovery of the monies lent to the second respondent.

For his part, the second respondent in his brief Statement of Defence whilst admitting formal parts, denied the entire substance of the first respondent's claims including paragraph (1) set out above.

For convenience we adopt the learned trial judge's summary of the parties respective claims:

"The first claim is between the (first respondent) and the (second respondent). It is a claim for money borrowed and owing to the (first respondent) in the total sum of VT733,686 being monies borrowed over 4 occasions"

"The second claim is by the appellant against the first respondent contained in the statement of claim dated 17th August 2001. The appellant claims that he is the bona fide purchaser for valuable consideration of title No. 03/0192/022. Further he claims that the caution by the first respondent is wrongful and that as a result that wrongful caution he suffers damages. He seeks orders setting aside the caution and that title 03/0192/022 be registered forthwith in the name of the appellant. He claims further for costs."

His Lordship on the pleadings distilled the following issues in respect of the first respondent's claim against the second respondent: 

"(1)	Whether or not the first respondent made cash advances to the second respondent?

(2)	Whether or not the second respondent had agreed with the first respondent to transfer his interests in leasehold Title No. 03/0192/022 to the first respondent in the event of failure to repay all advances in full? 

(3)	Whether or not the second respondent breached that agreement? 

(4)	Whether or not the first respondent suffered damages as a result of breach of the agreement?" 

In respect of these various issues on the first respondent's claim and second respondent's counterclaims his Lordship found (adopting the above numbering):

"(1)	That the total amount advanced to the second respondent by the first respondent is VT685,106;

(2)	That it is highly probable that there was an agreement between the second respondent and the first respondent that in the event of failure by the second respondent to repay the debts, the second respondent would transfer his interests in the title to the first respondent;

(3)	His Lordship found 'that no transfer was made by the second respondent to the first respondent of the leasehold property' as agreed;

(4)	His Lordship found 'there was no evidence by the second respondent rebutting the first respondent's evidence that the monies lent to the second respondent were from the bank facilitated through the first respondent's overdraft facility with the Bank of Hawaii at an interest rate of 3 per cent per annum'. 

(5)	On the second respondent's counterclaim his Lordship said: 'the second respondent failed to establish those agreements to rent the second respondent's premises and pay the second respondent and his wife for services over the second respondent's goods at the rate of VT16,000 per month.' Accordingly his Lordship found: 'that the second respondent's counterclaims must fail in their entirety' and the second respondent's counterclaims were dismissed.

In similar vein on the appellant's claims against the first respondent the issues were:

"(a)	Whether or not the appellant was the purchaser of title 03/0192/022?

(b)	Whether or not the appellant was a bona fide purchaser?

(c)	Whether or not the appellant paid the second respondent the sum of VT1,200,000?

(d)	Whether or not the second respondent transferred all his rights interests and title upon receiving the sum of VT1,200,000 from the appellant?

(e)	Whether or not stamp duties and registration fees have been paid?

(f)	Whether or not the delays in registration of the leasehold title is the direct result of the first respondent's caution?

(g)	Whether or not the caution is wrong? and

(h)	Whether or not the caution is causing losses and damages to the appellant?"

As for the appellant's claim against the first respondent his Lordship after considering the evidence led before him found as follows:

As to issues (a), (b), (c) and (d):

That the only payment made by the appellant to the second respondent for the land was VT60,000.

After referring to the various steps or procedures undertaken in obtaining or purchasing the property and the appellant's payments as evidenced by cheque butts, his Lordship said: 

'I reiterate that I find no evidence that VT1,200,000 was paid by the appellant and was received by the first respondent. Further I find no evidence of the actual Deed of Transfer from either the second respondent or the appellant. Further I find no evidence that the title in issue has now been registered in the name of the appellant'.

As to issue (e):

His Lordship found 'there was insufficient evidence of payment stamp duties and registration fees'; and finally

And as to issues (f), (g) and (h):

His Lordship further found relative to the first respondent's caution that 'unless and until it can be proven to be manifestly wrong, no liability can be attached to it'.

As for the first respondent's counterclaim his Lordship found that there was no contractual relationship whatsoever between the first respondent and the appellant and 'no statutory duty or obligation' existed between the first respondent and the appellant whose claims his Lordship agreed 'are without foundation, frivolous and vexatious'.

Most importantly his Lordship found 'on the evidence that the second respondent had no valid title in law to transfer or sell to the appellant as the second respondent was only registered as proprietor of the title on 24th February 2000'.

Finally his Lordship was: 'satisfied that the second respondent's action and or omissions were fraudulent as against the appellant depriving him of VT60,000 ……. (and) …. as against the first respondent denying her rights under a perfectly binding agreement to be transferred the rights, interest and title over the leasehold property'.

This finding of fraud his Lordship considered 'is enough for the Court to exercise its powers to order rectification of the register of leases under Section 100 of the Land Leases Act. But the first respondent does not seek rectification of the register'.

His Lordship dismissed the appellant's claim in its entirety but ordered no costs against the appellant as 'it was inevitable that the appellant could be made a party to these proceedings'.

Judgment was thereafter entered in favour of the first respondent's claim against the second respondent albeit for a reduced sum together with interest at the rate of 12% and costs, however, his Lordship noted that as the second respondent had failed to repay the sum 'that failure activates the second respondent's agreement with the first respondent to transfer his (the second respondent's) rights, interest and title on leasehold title No. 03/0192/022 to the first respondent' and specific performance was therefore granted by his Lordship in the following terms: 'the defendant (second respondent) shall within 30 days from the date of this judgment sell and transfer all his (second respondent's) rights, interests and title in leasehold title No. 03/0192/022 for a consideration of VT685,106 to the plaintiff (first respondent)'. No interest was awarded but costs were awarded against the second respondent in favour of the first respondent and the appellant. 

The appellant appeals against the order for specific performance on the ground that the trial judge erred in finding: 'that an oral agreement between the first respondent and the second respondent in or about July 1999 …….. was good, binding and enforceable at law …'.

The proceedings in this matter boil down to the fact that the first respondent wanted the property registered in her name whereas the appellant wanted it registered in his. The problem in legal terms can be expressed quite simply. The appellant has a duly signed transfer of the leasehold title No. 03/0192/022 in his name dated 24th February 2000 and for which stamp fees in the sum of VT75,000 have been paid as evidenced by an endorsement on the face of the transfer. The first respondent, on the other hand, has an unwritten oral agreement with the registered proprietor of the land which the trial judge found was entered into in December 1999 and "… is good in law and remains valid and it preceded the appellant's written sale and purchase agreement of 17th December 1999."

We are in no doubt that of the two competing claims the appellant's is the better and stronger and must prevail over the first respondent's unwritten oral agreement which is rendered unenforceable in terms of Section 40 of the Law of Property Act 1925 (UK) which we are satisfied has application as part of the laws of Vanuatu. The section reads:-

"No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorized."

At the commencement of the hearing of the appeal in the absence of any express pleading or reference to the requirements of the 'Statute of Frauds', the Court sought the assistance of Mr. Hakwa and granted him a short adjournment to allow him to consider the matter. When the Court resumed, counsel advised that having considered the matter he was no longer able to sustain the trial judge's order for specific performance.

The finding of the trial judge that the only payment made by the appellant to the second respondent for the land was VT60,000 is inconsistent with the evidence to which this Court has taken during the hearing of the appeal. Significantly, the second respondent acknowledges in the transfer which he signed and delivered to the appellant that the full consideration of VT1,200,000 had been paid. In any event, once it has proved that the transfer was signed and delivered by the second respondent to the appellant, full payment or otherwise of the agreed consideration was not a relevant issue on the pleadings.

The appeal is therefore allowed. There shall be an order directed to the Director of Land Records to remove the first respondent's caution from Leasehold title No. 03/0192/022 forthwith. Thereafter the registration of the appellant's transfer of leasehold title No. 03/0192/022 may proceed unimpaired.

As the appeal has been decided on a legal issue raised by the Court costs are reserved and can be considered as part of the outstanding issues by the Supreme Court.

The appellant claims to have suffered damages as a result of the lodgement of the first respondent's caution which we have determined has no legal basis to support it in law. The additional claim was added to the appellant's Statement of Claim and is grounded in Section 97 (5) of the Land Leases Act [CAP. 163].

This aspect of the appellant's claim is referred by consent to the Supreme Court in Vila for determination and assessment by a judge other than the trial judge. The claim, if upheld, is to be assessed for the period between the lodgment of the caution by the first respondent i.e. 28th December 2000 to the date of this judgment although regard will need to be had to the "reasonable cause" provisions of Section 97 (1) of the Land Leases Act.

For completeness we note that there is a money-judgment in favour of the first respondent against the second respondent entered by the trial judge. Nothing we have said in this appeal affects that judgment including the interest and costs awarded in favour of the first respondent.

The formal Orders of the Court are:

(1)	Appeal allowed;

(2)	A declaration that the first respondent's caution on leasehold title No. 03/0192/022 has no legal basis and is invalid and the Court directs that the caution be removed forthwith;

(3)	Order by consent that the appellant's claim for consequential loss be referred to the Supreme Court at Vila for determination and assessment.

(4)	Costs of the appeal are reserved for the determination of the Supreme Court in Vila failing agreement between the parties.

Dated at Port Vila, this 7th day of November 2003.

Hon. B. Robertson J.
Hon. J. von Doussa J.
Hon. D. Fatiaki J.
Hon. P. I. Treston J.