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

Civil Appeal Case No. 26 of 2010

BETWEEN:

MICHEL WORWOR
Appellant

AND:

THEOPHILE PIO
First Respondent

AND:

DIRECTOR OF LAND RECORDS
Second Respondent

AND:

MINISTER OF LANDS AND NATURAL RESOURCES
Third Respondent

Coram: Hon. Chief Justice V. Lunabek
 Hon. Justice O. A. Saksak
 Hon. Justice J. Mansfield
 Hon. Justice D. V. Fatiaki
 Hon. Justice R. Spear
 Hon. Justice R. Asher
 
Counsel: Mr. W. Kapalu for Appellant
 Mr. J. Tari for the First Respondent
 Mr. F. Gilu for Second and Third Respondents

Date of Hearing: 30 March 2011
Date of Judgment: 8 April 2011

JUDGMENT

1.	This is an appeal against a decision of the Supreme Court (Clapham J) dated 12 April 2010 in which the trial judge ordered the cancellation of a lease registered to the appellant (Worwor) and directed that a competing lease of the first respondent (Pio), be registered.

2.	The case concerned the competing interests of Pio and Worwor over the same leasehold title number: 12/0912/509 which was registered in Worwor's name on 30 August 2005.

3.	In summary the historical background to the action is that, along with many others, Pio and Worwor were permitted to occupy plots of land that had been alienated by the Catholic Church at Montmartre and located beside the Second Lagoon Area in Port Vila, Efate. After independence, the land reverted to the custom owners but, as ownership was disputed, the general management and control of the land was vested in the Minister of Lands in terms of Section 8 of the Land Reform Act (Cap 123).

4.	In exercise of the Minister's power under the Land Reform Act (Cap 123), the occupancies of Pio and Worwor were formally regularized by the grant of leases under the Land Leases Act (Cap 163). The leaseholds were separated by a plot of land, (No. 332) which had been given by the Catholic Church to Charles Ciriaque (Ciriaque) and which, because of the smallness of its total area (430 m2), could not be constituted as a residential lease. In the result Ciriaque agreed to surrender his interest in plot No. 332 to his neighbour and "family" member Worwor. We note at this juncture that there is not the slightest suggestion that Pio had similarly entered into negotiations with Ciriaque to acquire his plot of land. 

5.	In order to accommodate Ciriaque's plot of land in Worwor's leasehold title, a new survey plan and leasehold title No. 12/0912/509 was created. Worwor surrendered his lease title No. 12/0912/334 and was granted a Negotiator's Certificate on 21 December 2004 to conduct negotiations to acquire leasehold title No. 12/0912/509 which comprised the land under his surrendered lease and Ciriaque's plot No. 332. 

6.	On 6 June 2005 the then Minister of Lands approved a grant to Pio of a lease over lease title No. 12/0912/509. 

7.	On 25 August 2005, a similar approval was granted by a different Minister to Worwor over the same lease title and five (5) days later on 30 August 2005, Worwor's lease was registered. Pio's competing lease remains unregistered.

8.	A month later on 22 September 2005 Pio lodged a caution over Worwor's leasehold title No. 12/0912/509.

9.	The claim (as amended) sought the cancellation of the registration of Worwor's lease over lease title No. 12/0912/509 and the registration of Pio's lease over the same title. The action was plainly one seeking the exercise of the Court's power under section 100 of the Land Leases Act (Cap 163). 

10.	For ease of reference, the chronology of relevant events documents and instruments (with our comments interspersed) may be summarized as follows:

•	19 August 1998 - Lease title No. 12/0912/318 registered to Pio;

•	8 February 2001 - Lease title No. 12/0912/334 registered to Worwor;

•	11 June 2002 - Erakor Land Committee letter in support of Pio's lease to include Ciriaque's plot No. 332;

•	4 November 2002 - Minister of Lands consents to the surrender of Worwor's lease title 12/0912/334 in order "to extend the property";

•	28 January 2003 - Worwor's Surrender of Lease title No. 12/0912/334 was registered;

11.	With the registration of Worwor's surrender, his rights and interest in lease title No. 12/0912/334 were finally extinguished.

•	17 April 2003 - Ciriaque's letter in support of his plot No. 332 being included in Worwor's lease;

12.	Cyriaque's letter, contrary to the sworn statements of Alfred Carlot and Timteo Kalmet (which the trial judge considered "of the greatest importance"), does not purport to represent that Cyriaque was claiming to be a custom owner of Plot 332. Rather, the letter makes it clear that he was given the plot of land by the Catholic church and that it was in that capacity and no other that he was surrendering Plot 332 in favour of Worwor.

•	12 November 2004 - Mortgage registered over Pio's lease title No. 12/0912/318 in favour of National Bank of Vanuatu;

13.	With the registration of the mortgage, Pio's right as registered proprietor to freely deal with or dispose of his lease title No. 12/0912/318 and his ability to register any instrument effecting the same, was severely curtailed.

•	6 June 2005 - Unregistered lease granted to Pio over lease title 12/0912/509;

•	23 June 2005 - Surrender of Pio's lease title No. 12/0912/318 lodged for registration;

•	12 December 2004 - A Negotiator's Certificate issued to Worwor authorizing him to negotiate with the custom owners for a residential lease over title No. 12/0912/509;

•	25 August 2005 - Unregistered lease granted to Worwor over lease title No. 12/0912/509;

•	30 August 2005 - Lease title No. 12/0912/509 registered in favour of Worwor;

14.	In terms of Section 14 of the Land Leases Act (Cap 163) the registration of Worwor as the proprietor of lease title No. 12/0912/509 vested Worwor with the leasehold interest described in the lease.

•	22 September 2005 - Pio registers a caution over Worwor's lease title No. 12/0912/509.

15.	From the foregoing chronology it is clear that until 30 August 2005 Pio had an equitable interest in lease title No. 12/0912/509 which existed before Worwor's similar interest came into being. All things being equal, Pio would have had a legitimate claim to priority for the registration, of his interest. However, upon his registration Worwor became the registered proprietor of lease title No. 12/0912/509 and in accordance with Section 15 of the Land Leases Act (Cap 163) his acquired rights were "…. not liable to be defeated except as provided in the Act." 

16.	In Ratua Development Ltd v. Ndui [2007] VUCA 23 this Court reaffirmed the paramountcy of the register and the indefeasibility of registered interests: 

"The (Land Leases) Act creates in Vanuatu a Torrens' system of land registration…" (and later). "The essential feature of any Torrens System is the indefeasibility of the title of the registered proprietor. Indefeasibility is enshrined by the provisions of Part 4 of the Act relating to the effect of registration…" (and finally after setting out sections 15, 18 and 23) "… the effect of all these provisions is that the register is everything. The title of the registered proprietor … is protected against any adverse claims or interests not entered in the register except as provided in the Act."

17.	In this latter regard Section 100 of the Land Lease Act (Cap 163) expressly provides:-

"(1) Subject to subsection (2) the Court may order rectification of the register by directing that any registration be cancelled or amended where it is so empowered by this Act or where it is satisfied that any registration has been obtained, made or omitted by fraud or mistake.

(2) The register shall not be rectified so as to affect the title of a proprietor who is in possession and acquired the interest for valuable consideration, unless such proprietor had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or caused such omission, fraud or mistake or substantially contributed to it by his act, neglect or default."

18.	In Naflak Teufi Ltd v. Kalsakau [2005] VUCA 15 this Court said that the object of Section 100 is to ensure that the land register and the processes leading up to the registration of any instrument or interest is free of any mistakes, fraud or possible fraudulent activities. In other words, its purpose is to secure the integrity of the register and the internal processes culminating in registration.

19.	In his amended claim in the Supreme Court, Pio asserted that Worwor's lease title 12/0912/509. "…. was obtained by fraud as the Defendants (including Worwor) knew well that the claimant (Pio) has only (sic) executed a lease on this title but went ahead and executed another lease on the same title." The trial judge, however, made no findings of fraud against the defendants (including Worwor). As there has been no cross-appeal seeking to re-litigate the issue of fraud in this appeal, that issue need not further concern us. 

20.	Alternatively, Pio claimed that Worwor's lease "… was prepared endorsed and registered ….by reason of mistake". The mistakes are particularized as follows:

"(i) The Second Defendant through Lands Survey mistakenly believed that Title 12/0912/509 was the only plan issued to the First Defendant not realizing there had already been survey plan for title 12/0912/509 issued to the Claimant and that the lease has already been executed by the Claimant as a lessee and the Minister of Lands as a lessor. The survey plan for the First Defendant was done by a private surveyor. 

(ii) The Second Defendant mistakenly believed that there was only one title 12/0912/509 which had been executed by the Third Defendant not realizing that lease 12/0912/509 had already been prepared by the Second Defendant and had already been executed by the Claimant. 

(iii) The Second Defendant through the Department of Land Records mistakenly believed that the First Defendant was the only person to execute a lease not realizing that the Claimant had executed a lease on title 12/0912/509 and that the lease at the material time when the Second Defendant registered title 12/0912/509. 

(iv) That the Third Defendant executed the lease not realizing that the lease has already been executed by former Minister of Lands Mr. Paul B. Telukluk as he was not fully informed by the Second Defendant.

21.	The trial judge accepted that both mistake and procedural error had occurred in the registration of lease title No. 12/0912/509 and, more particularly, "through mistake and procedural error Worwor is the registered lessee". The mistakes and procedural errors relied upon by the trial judge are set out in the judgment as follows:

"(a) The misdescription of the number."

22.	What the particular number is and in what document(s) it is contained are not explained or clarified in the judgment but the conclusion is irresistible that Pio and Worwor both sought leases of different parcels of land albeit that both parcels of land included Cyriaque's plot No. 332. The mistake that occurred was in the assignment of the same title number 12/0912/509 to both the survey plans and unregistered leases granted to Pio and Worwor. This mistake does not implicate Worwor in any wrong doing and it is not irremediable as Pio's original lease title No. 12/0912/318 has not been effectively surrendered nor has his new lease been registered. We are therefore satisfied that this mistake was not causative of the registration of Worwor's lease.

"(b) The execution of two leases by the Minister of Lands over the same portions of land."

23.	The evidence clearly shows however that the competing leases were agreed and consented to by different Ministers of Land and comprised different parcels of land. In the absence of any evidence from the Minister who dealt with Worwor's lease, no assumption can be made as to the existence of a mistake on the Minister's part in granting him the lease. Indeed, the existence of the two unregistered leases over the same title (not parcel of land) is, in our view, equally consistent with a non-culpable lack of knowledge of the existence of Pio's prior lease on the part of the particular Minister who dealt with Worwor.

"(c) The prior right of the claimant to registration. His lease at least creating a contract and I find creating an equitable interest".

24.	Whilst we accept that Pio obtained an unregistered lease over title No. 12/0912/509 and lodged a surrender of his original lease title No. 12/0912/318 before Worwor obtained his unregistered lease over lease title No. 12/0912/509, the undeniable fact remains that neither of Pio's instruments could be registered without the written consent of the National Bank of Vanuatu which was not provided. 

25.	This Court recently recognized the over-riding impediment created by a registered mortgage on a leasehold title when it affirmed the trial judge's findings in Kontos v. Dinh [2010] VUCA 36 that the existence of two duly executed but unregistered Deeds of Surrender of leasehold titles "… were ineffectual, as they could not be enforced having regard to section 49 (2) of the Land Leases Act [CAP. 163]". 

26.	Worwor had also effectively surrendered his original lease title No. 12/0912/334 long before Pio's instruments were created and with a view to incorporating Cyriaque's plot 332 into his surrendered lease.

27.	In so far as this mistake might be referable to Section 27 of the Land Leases Act (Cap 163), we are of the view that the Section does not assist Pio's prior instruments which were and remain unregistered.

"(d) His lease is in registrable form and if registered would have given good title. Nothing was wrong with the documentation, the delay occurred from a failure to deal adequately with his bank".

28.	Given the above observations, Pio's unregistered lease title No. 12/0912/509 is not capable of being registered without the prior written consent of the National Bank of Vanuatu. Indeed there is uncontroverted evidence that registration of Pio's surrender was withheld at lodgment "awaiting discharge of mortgage." This is also consistent with the restriction entered on the Lease Register of Pio's original lease title No. 12/0912/318 which prohibits the registration of any disposition "without the written consent of the proprietor of the mortgage" registered on the title.

"(e) In addition there is evidence that Cyriaque was not an occupier thus affecting whether or not Worwor had "a properly acquired lease". It is on this basis that I uphold the Claimant's claim and will make orders."

29.	Why this should be so is not explained in the judgment but, in any event, we disagree. The evidence is clear that Cyriaque's plot No. 332 was amalgamated with Worwor's old lease title only after Cyriaque had agreed to surrender the plot to Worwor and after Worwor had obtained a Negotiator's Certificate and had surrendered his old lease title No. 12/0912/334. 

30.	In discussing the evidence in the case the trial judge said:

"On the assumption that Pio, the Claimant, has been correct in his dealings with the custom owners of the land, there should be little challenge to his position".

And later:

"If the present lessee, that is Worwor, continues to be the registered lessee of the land with the terms of the lease as set out, the effect of this (sic) that despite the consent of the Erakor people. (and) the Minister of Lands, granting a lease to the claimant, it means that in his life time he will never occupy the land".

31.	Whilst we can sympathize with the sentiments expressed, we do not accept either the assumption or the validity and significance of the consent of the Erakor people. The fact remains that in the absence of a declaration of customary ownership by an Island Court or Customary Land Tribunal recognizing the Chiefs and people of Erakor as the legitimate custom owners of the land over which lease title No. 12/0912/509 is registered, the land remains "disputed land" under the Land Reform Act within the exclusive control and management of the Minister of Lands. 

32.	Even if the consent of the Erakor Land Committee could be considered an agreement to lease Cyriaque's plot No. 332 to Pio, in the absence of a registered Negotiator's Certificate held by Pio to acquire Plot 332, the Minister "… may refuse to approve the agreement". Furthermore, given the protective provisions of section 23 of the Land Reform Act [CAP. 123], it is at least doubtful whether the agreement between the Erakor Land Committee and Pio could extinguish Cyriaque's right and beneficial interest over plot No. 332 without his prior knowledge, involvement, or agreement. 

33.	Accordingly, the purported consent of the Erakor Land Committee had no legal basis or validity and could not have affected or influenced the registration of Pio's lease as the Director of Lands correctly pointed out.

34.	Likewise the trial judge's preoccupation with Cyriaque's non-occupation of his plot No. 332 ignores the clear terms of the letter surrendering his interest in the plot in favour of Worwor. That interest was, at the very least, a right to exclusive possession of plot No. 332 as a licensee of a recognized alienator. 

35.	In his written submissions appellant's counsel helpfully condense the five grounds of appeal into a single issue in this appeal namely: 

 "Whether the appellant acquired title 12/0912/509 by mistake and procedural error as held by the learned Supreme Court Judge?"

36.	Counsel also refers to Section 8 of the Land Reform Act (Cap 123) and various provisions of the Land Leases Act (Cap 163) with a view to demonstrating the various errors that occurred in the judgment.

37.	After careful consideration of the evidence and counsel's submissions, we are satisfied that the trial judge erred in concluding that, "through mistake and procedural error Worwor is the registered lessee" particularly in the face of his unqualified acceptance of the evidence of the Director of Lands.

38.	Although the matter was not canvassed or addressed before the trial judge, we are satisfied from our consideration of the evidence that the registration of Worwor's lease title No. 12/0912/509 was not the product of any fraud or mistake, but, was the result of a seemingly conscientious decision taken by the Director of Lands with a full awareness of the sequence of events and competing documents and instruments. This included the inability of Pio to surrender his original lease title No. 12/0912/318 owing to the existence of an undischarged registered mortgage over the lease. 

39.	Accordingly, we allow the appeal and quash the decision and orders of the trial judge dated 12 April 2010. The caution lodged by Pio on title No. 12/0912/509 is ordered to be removed forthwith. This has the effect of upholding the registration of Worwor's lease title No. 12/0912/509 which remains valid and effective. 

40.	We recognize, however, that there remains a mistake in the assignment of the number '12/0912/509' to Pio's survey plan and unregistered lease title and, further, that Cyriaque's Plot No. 332 has been improperly included in the survey plan of Pio's unregistered lease. Neither error was contributed to or procured by Worwor and neither mistake caused the registration of his lease to occur. As was said by this Court in Jone Roqara & Others v. Noel Takau and Others [2005] VUCA 5: 

"For a party seeking rectification under s. 100 of the Land Leases Act, it is not sufficient to prove that a mistake occurred in the course of a transaction which ultimately concluded in registration of the interest which is sought to have removed from the register …. The section imposes a causal requirement. The mistake must lead to the impugned registration being made. The onus is on the party seeking rectification not only to establish a mistake but also to satisfy the Court that it caused the registration to occur." 

41.	We have considered whether or not we should make orders with a view to correcting the identified errors. However, in the absence of any counterclaim by Worwor before the trial judge we decline to do so. We are of course not unmindful that provisions exist in the Land Leases Act [CAP. 163] for the correction of such errors by the Director of Lands in the exercise of his powers under Sections 11 and 99. 

42.	The appellant having succeeded in the appeal is awarded the costs of the appeal. 

43.	For completeness, we record that counsel who appeared for the second and third respondents agreed to abide by the result of the appeal. They are awarded their costs in the lower court to be taxed if not agreed. 

Dated at Port Vila, this 8th day of April, 2011

BY THE COURT

Hon. Chief Justice V. LUNABEK

Hon. Justice Oliver A. SAKSAK

Hon. Justice John MANSFIELD

Hon. Justice D. V. FATIAKI

Hon. Justice R. SPEAR

Hon. Justice R. ASHER