IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 198 of 2003

BETWEEN:

ISLAND PROPERTY
Claimant

AND:

SAM MAHIT
First Defendant

AND:

MINISTER OF LANDS
Second Defendant

Coram:	Justice H. Bulu 

Counsels:	Mr. Sam Rosewarne for the Claimant 
Mr. Jack Kilu for the First Defendant 

Date of Hearing:	19 October 2007
Date of Decision:	30 October 2007 

RESERVED JUDGMENT

Introduction 

1.	In early 1997 the First Defendant (Mr. Mahit) approached Douglas Patterson, a director of the Claimant, for assistance in developing an old property registered 1718. He had been granted a Negotiator Certificate to negotiate for a lease. However, Mr. Mahit did not have adequate capacity and finances to develop the land as he intended. 

2.	Mr. Mahit repeatedly called on Mr. Patterson at his office often accompanied by Mr. Godson Ijeh who he introduced as a friend and legal adviser. Mr. Ijeh was born in Africa and his bislama at that stage was not very fluent. The interactions would normally be in bislama except when Mr. Ijeh was present and he was addressed in English. 

3.	In or about March 1997, Mr. Patterson, on behalf of the Claimant, agreed to help Mr. Mahit. A draft agreement was given to Mr. Mahit and Ijeh to consider. 

4.	On 13 March, 2003 Mr. Mahit authorized Mr. Patterson to “be responsible for applying for a new lease for me on this land and to make any other applications necessary to obtain this lease for me. You may write any necessary letters and collect any documents from the Ministry of Lands or Department of Lands on my behalf.” 

5.	At the time of providing a draft copy of the Agreement to Mr. Mahit both parties understood that they had reached an agreement. That agreement had at its essence the following:- 

•	The written agreement reflects what they has discussed. 

•	Island Property will pay the costs of the Negotiator’s Certificate and obtaining a lease over old title 1718. 

•	Costs incurred were to be reimbursed through proceeds of sale of the sub-division. 

6.	At all time following the exchange of the draft Agreement both the Claimant and Mr. Mahit proceeded on the basis that the Agreement, although unexecuted, was already on foot. 

7.	In late April 1997, Mr. Mahit began to seek advances from the Claimant. Each time an advance was made Mahit signed a receipt for the advance which were to be repaid pursuant to the terms of the Agreement. 

8.	The Agreement was executed by both the Claimant and Mr. Mahit on 30 September 1997. 

9.	In 2000 after Island Property began to do the survey work on the subdivision numerous ni-Vanuatu went to the offices of the company to complain that they had given money to Mr. Mahit as “deposits” for land plots, some of them as long ago as 1998, long before the subdivision had been fully approved. 36 people in total had paid moneys to Mr. Mahit as “deposits” totaling VT4,837,000. This was done in violation of the Agreement. 

10.	On 12 February 2001, the Claimant lodged the surrender of lease title No. 11/OH32/047 and 22 new residential leases with the Ministry of Lands for approval and execution. The Claimant also paid all the fees associated with the lodgment in the amount of VT383,821 including VT131,196 as payment of the first years ground rent on 22 leases in question. 

11.	On 12 April, 2001, the 22 new residential leases were approved and signed by the Minister. 

12.	On 30 June 2001 Mr. Mahit wrote to Island Property asking it not to sell plots 4 and 7 of the subdivision. This is reflected in “DRP41” to the sworn statement of Douglas Patterson dated 28 October 2004. 

13.	On 20 August, 2001, Mahit wrote to the Claimant demanding “details of sales transactions” and further demanded that 7 plots, namely plots number 1, 3, 4, 6, 9, 12 and 18 be withheld from being sold until he had received details of the sales transactions. It appears, that the reason for the demands was that persons who had made deposits with Mahit for plots of land before and after the subdivision was approved have been demanding their money back, but there was nothing to return to those persons. 

14.	The relationship continued to deteriorate from April 2001 onward. On 1 March 2002 the Claimant received a letter from Mahit entitled “Revocation of Power of Attorney” revoking the Power of Attorney granted to the Claimant. 

15.	Mahit continued to demand advances from Mr. Patterson and took several steps to obtain consent from the Minister to sell several plots in the subdivision contrary to the Agreement they had signed. 

16.	On 22 April 2002 a new Agreement was signed between Island Property and Mahit titled “Agrimen blong developem mo salem 22 plot graon long Freshwota” (the Second Agreement), a new Power of Attorney in favour of the Claimant, a Public announcement to the media, a letter to the Director of Lands confirming that he had cancelled revocation of the original power of Attorney, signed a new power of Attorney that he had restored full authority to exclusively sell the plots and that he had signed any transfer of lease fir the new titles.

17.	At the end of 2002 early 2003 Mr. Mahit attempted to remove the cautions placed on each plot.

18.	On 20 February 2003 Island Property received a letter from Jack I Kilu and Associates on behalf of Mr. Mahit asking the Claimant to “refrain from further dealing with the subdivisions” and enclosing a copy of Mahits’ second notice of revocation of Power of Attorney dated 16 December 2002.

19.	Mr. Mahit soon after the signing of the second Agreement decided unilaterally to terminate the second Agreement because:–

(a)	The Power of Attorney was never registered. 

(b)	Certain important clauses in terms of the financial details of the arrangements which was supposed to be included in the agreement were not included in the agreement.

(c)	He was not permitted to obtain independent legal advice from a lawyer resulting in the agreement omitting important clauses in respect of the financial details of the agreement, and it was something he never really understood nor agreed to.

20.	The purported termination of the Agreement it appears occurred in or about 16 December 2002 but the Claimant only became aware of it on or about 5 June 2003 on being advised by Mr. Kilu in his letter of the same date. It appears that Mahit also revoked the second Power of Attorney on 16 December 2002.

The Claim

21.	As a consequence of the actions of Mahit, the Claimant commenced proceedings in the Supreme Court on 4 December 2003 seeking specific performance under the Agreement, interim injunctions restraining Mr. Mahit, his associates, agents (workers) or otherwise howsoever from interfering with the Claimant’s right to sell the 22 leasehold titles pursuant to the “Agreement Blong Developem mo Salem 22 plot Graon Long Freswota”.

Claimant’s Case

22.	Mr. Rosewarne, on behalf of the Claimant, submitted that it was Mr. Mahit who approached and sought the assistance of the Claimant in early 1997 in relation to the development of the land in Freshwota area. This resulted in the “Joint Development Agreement” with the Claimant being executed on 30 December 2007.

23.	On the basis of such Agreement the Claimant took various steps to develop the land in Freswota area. Mahit had given full authority for that to happen in the Power of Attorney made on 17 September 2002 (first Power of Attorney). The Claimant paid for all the costs associated with the development of the land, and also forwarded Mahit significant sums of money. This is reflected in “DRP 63” to the sworn statement of Douglas Reid Patterson dated 28 October 2004 and filed on the same date (the Patterson statement). Mahit acknowledged liability for these expenses.

24.	Mr. Rosewarne continued that as time went on it became clear that Mahit was in breach of his obligations. He attempted to sell land within Freswota subdivisions by taking deposits from numerous Ni-Vanuatu (paragraph 49 and Annexure “DRP 31” to the Patterson sworn statement). Mahit also attempted to revoke the first Power of Attorney. See Annexure “DRP 44” to the Patterson sworn statement.

25.	Mr. Rosewarne continued that as a last resort and in the hope of avoiding the need for litigation, the Claimant agreed to enter into the “Agreement to develop and sell 22 plots at Freswota” with Mahit on 22 April 2002. Under this new Agreement, Mahit agreed to –

(a)	Cancel the Revocation of the Power Attorney dated 27 February 2002.

(b)	Sign a new Power of Attorney in favour of the Developer to again sell the 22 plots.

(c)	Sign 3 original transfer of lease documents on the 22 titles that are yet to be sold by the Developer. These titles are:-

11/0H32/047				11/0H32/058
11/0H32/048				11/0H32/059
11/0H32/049				11/0H32/060
11/0H32/050				11/0H32/061
11/0H32/051				11/0H32/062
11/0H32/052				11/0H32/063
11/0H32/053				11/0H32/064
11/0H32/055				11/0H32/065
11/0H32/056				11/0H31/092
11/0H32/057				11/0H31/091
11/0H31/090

(d)	Sign a mortgage in favour of the Claimant equaling the amount of VT6,236,928 that the lessee must pay to the Claimant as of the date of the Agreement.

(e)	Sign a guarantee as a promise not to accept any money from any purchaser as a deposit or payment for any of the titles above. 

(f)	Letter to be forwarded to the Lands Department to state that the Claimant is the only one responsible to sell the above plots and the Developer alone can apply for any consent to transfer.

(g)	Sign a public notice that Radio Vanuatu can announce to clarify the situation in the project.

26.	Mahit performed all that he agreed to do as referred to above. However, he failed to comply with the terms of the Agreement.

Undue Influence

27.	Mr. Rosewarne, under this head submitted that paragraphs 13 and 14 of the Defence and Counter Claim dated 16 December 2003 and paragraphs 6, 7 and 8 of the Mahit statement suggest that the Second Agreement should be set aside by reason of “undue influence”.

28.	Mr. Rosewarne further submitted that in the circumstances of this case –

(a)	There was no confidential or special relationship between Mahit and Island Property that could possibly give rise to presumption of undue influence. 

(b)	The party alleging undue influence has the onus of proving it. That undue influence was actually exerted and that this excluded free consent to the Agreement. Mahit has failed to discharge this evidentiary onus in the circumstances of this case.

(c)	The terms of both the first and the second Agreement were clearly beneficial to Mahit, and as a result it is not possible for him to establish that any disadvantage has been taken of him so as to impose a “manifest and unfair disadvantage”. Rather the circumstances are quite the opposite.

Termination of Second Agreement

29.	Mr. Rosewarne, on behalf of the Claimant, submitted that as a matter of law, Mr. Mahit cannot unilaterally revoke or terminate the Agreement. This is because:–

(a)	There is no specific provision in the Agreement telling the parties to the Agreement how or under what circumstances a party may chose to terminate the Agreement.

(b)	Mr. Mahit failed to show any reasonable grounds under which he could terminate the Agreement.

(c)	This is a contract. The law confers a right to terminate only for serious breaches. There are 3 types of breaches that will justify termination:–

i.	Repudiation. This is a breach consisting of a manifestation of unwillingness or inability to perform the contract in substance or at all.

ii.	Breach of an essential term. This is a breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract. 

iii.	Breach causing substantial loss of benefit. This is a breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract.

30.	Mr. Rosewarne continued that Mr. Mahit has failed to establish the breach of any essential term of the Agreement by Island Property. This is because there was never any such breach, and at all times the Claimant complied with its obligations under both the First and the Second Agreement.

No Powers of Attorney-Can the claimant still proceed to dispose of the plots of land in the Freswota subdivision?

31.	Mr. Rosewarne, under this head, submitted on behalf of the Claimant that:– 

(a)	The Claimant is seeking the Courts Assistance in ordering Mahit to enforce the terms of the Second Agreement. That Agreement expressly requires Mr. Mahit to sign a Power of Attorney allowing the Claimant to sell the remaining 22 plots in the Freswota subdivision. This is clearly within the Courts powers.

(b)	Section 82 of the Land Lease Act provides for Powers of Attorney. Subsection (6) makes a Power of Attorney irrevocable where it was given for valuable consideration.

32.	Mr. Rosewarne further submitted that it is beyond doubt that the first Power of Attorney and the second Power of Attorney, having been given for valuable consideration, were irrevocable within the terms of section 82(6) of the Land Lease Act. Accordingly, it was not legally open for Mahit to attempt to revoke them and any attempts to do so were not valid.

First Defendant’s Case

33.	Mr. Jack Kilu, on behalf of the first Defendant (Mahit), submitted that the Claimant and Mahit commenced their business relations in early 1997. However, the claim as pleaded has nothing to do with the first Agreement of 1997. Island Property is estopped from making complaints in relation to the First Agreement.

34.	After the First Agreement had been terminated along with the first Power of Attorney on 27th February 2002, the Claimant on or about April 2002 re-negotiated a second new agreement with the First Defendant.

35.	This second agreement entitled ”Agrimen Blong Developem mo Salem 22 Plot Graon Long Freshwota” is dated 22nd April 2002 and is the only agreement which is the subject of this Court action. The agreement is deposed to in Annexure “DRP 53” of Patterson’s sworn statement.

36.	The agreement basically is to allow the Claimant to sub-divide old lease title 1718 belonging to Mahit and located at Freshwota Area into 22 new plots or leases then bring in water, electricity supply and assist Mahit in the sale of the said 22 new subdivisions.

Power of Attorney

37.	Mr. Kilu, under this head, submitted that in order to permit the Claimant to conduct the sale of the 22 plots on behalf of Mahit, the Land Lease Act required that the Claimant be given a Power of Attorney by Mahit to conduct the sale of the plots.

38.	A second new Power of Attorney was then issued dated 12th April 2002, but which power of attorney was never registered.

39.	Sometimes later, having signed the Second Agreement and having signed the second unregistered Power of Attorney, Mr. Kilu continued that Mahit realized that certain important clauses in terms of the financial details of the arrangement which supposed to be included in the Second Agreement were not included.

40.	Mr. Kilu continued that Mahit then decided to terminate the Second Agreement on the grounds that he was not permitted to obtain independent legal advice from a lawyer resulting in the Second Agreement being without very important clauses in respect of the financial details, and that it was something he never really understood nor agreed to.

41.	 Mr. Kilu continued that Mahit also proceeded to revoke the unregistered Power of Attorney on the grounds of undue influence claiming that as he was of very limited educational background, he was induced in signing the Second Agreement by Mr. Patterson who is a long time real estate businessman and who knew a lot about the business, but refused to let Mahit obtain prior independent legal advice.

42.	Mr. Kilu further submitted that Powers of Attorney are required to be registered pursuant to Section 22 of the Land Leases Act and the Director of Lands is to maintain a register of such Powers of Attorney under section 82 of the same Act. Section 22 (1) says that every attempt to transfer, vary or affect any right or interest in a registered lease which is not in accordance with the Land Leases Act shall be ineffectual to transfer, vary or affect any right or interest in the lease. Mr. Kilu continued that this means that any attempt by the Claimant to sell or transfer the 22 plots which are registered to Mr. Mahit, the Claimant can only do so pursuant to a registered power of Attorney. An unregistered power of Attorney has no legal effect of conveying any authority to the Claimant to sell Mahit’s 22 plots.

43.	The purpose of the Power of Attorney in this case was to enable the Claimant to do all those things set out in the Power of Attorney itself. That is: -

“The Power of Attorney serves to cancel the revocation of Power of Attorney dated 27th February 2002 and restores full Powers of Sale to Island Property Consultants Ltd for the land lease titles mentioned in this Power of Attorney and reinstates all previous rights granted by me, Sam Mahit to Island Property Consultants in our Agreement dated 30th September 1997”.

44.	However, the Land Leases Act clearly provides that such an instrument is ineffectual if it is not registered pursuant to the Act, continued Mr. Kilu.

45.	Since the Power of Attorney was never registered, it meant that legally and in accordance with the Act, the Claimant never had any power or legal authority to deal with Mahits 22 plots of land from the date of the revocation of the first Power of Attorney which was dated 22 February 2002. This, Mr. Kilu continued, effectively means that as from 22 February 2002, the Claimant did not have any legal right or authority to deal with Mahit’s 22 plots.

46.	Mr. Kilu further submitted that this in itself brings the whole case to an end, so that there is no need to be further concerned with the issue of the termination of Agreement for undue influence because the Agreement itself was all along ineffectual without a registered Power of Attorney.

Undue Influence

47.	Mr. Kilu, under this head submitted that the Second Agreement was entered into by Mr. Mahit due to undue influence being exerted upon him by Mr. Patterson, on behalf of the Claimant, as he was promised to be paid vt.500,000 upon signing of the Second Agreement.

48.	Mr. Kilu continued that Mahit had very limited formal education. He only finished in primary school. Due to his poor educational background he had specifically requested to obtain advise from an independent lawyer. This was turned down by Nr. Patterson, on behalf of the Claimant, that the matter did not need any advises from any lawyers.

49.	Mr. Kilu continued that Mr. Mahit was not happy with the 50/50 arrangement put in place by Mr. Patterson. Another reason why he wanted independent legal advice.

50.	Mr. Kilu finally submitted that all the above show the use of undue influence by Mr. Patterson in getting Mahit to sign the Second Agreement.

Issues

51.	The issues that arise for determination by the Court are:- 

(a)	Was undue influence exerted by Mr. Patterson on Mr. Mahit to sign the Second Agreement.

(b)	Can the Agreement be unilaterally terminated.

(c)	Can the Power of Attorney be revoked.

(d)	Is the Agreement still subsisting

Law

Land Leases Act [CAP. 163] 

52.	The relevant provisions of the Land Leases Act are set out fully below:

“1.	Interpretation 

In this Act unless the context otherwise requires:- 

“dealing” includes disposition and transmission;

“disposition” means any act inter vivos by a proprietor whereby his rights in or over his registered lease, sublease or mortgage are affected, but does not include an agreement to transfer, sublease or mortgage; 

“instrument” includes any deed, judgment, decree, order or other document requiring or capable of registration under this Act;”.

Part 6 – Dispositions – General 

22. Instruments ineffectual until registered 

(1)	No registered lease or mortgage shall be capable of being created or disposed of except in accordance with this Act. Every attempt to create or dispose of a registered lease or mortgage or to create, extinguish, transfer, vary or affect, any right or interest in a registered lease or mortgage otherwise than in accordance with this Act shall be ineffectual to create, or dispose of a registered lease or mortgage or to create, extinguish, transfer, vary or affect any right or interest in the lease or mortgage. 

(2)	Subject to the provisions of subsection (3) every instrument creating or disposing of a registered lease or mortgage shall be registered. 

(3)	It shall not be necessary to register – 

(a)	any lease for a period not exceeding 3 years unless it is required to be registered under section 35; 

(b)	any transfer, mortgage, or other instrument disposing of any lease being a lease for a period not exceeding 3 years which is not registered or required to be registered under section 35; 

(c)	any will; 

(d)	any appointment of a personal representative; 

(e)	any appointment of a trustee in bankruptcy or any receiving order in bankruptcy; or 

(f)	any order of a court unless the registration thereof or of the effect thereof is specifically required by this Act. 

(4)	If requested so to do, the Director shall register such instrument as is mentioned in subsection (3) (d) or (e) and may register any other instrument mentioned in subsection (3) save a will which shall not be capable of registration. 

(5)	Nothing in this section shall be construed so as to prevent any unregistered instrument from operating as a contract. 

(6)	The death of any person by or on behalf of whom any instrument of dealing has been executed shall not affect the validity thereof and any such instrument may be presented for registration as if the death had not occurred. 

23. Protection of persons dealing in registered interests in land 

(1)	No person dealing or proposing to deal for valuable consideration with a proprietor of a registered interest shall be required or in any way concerned – 

(a) to inquire or ascertain the circumstances in or the consideration for which such proprietor or any previous proprietor was registered; or 

(b)	to see to the application of any consideration or any part thereof; or 

(c)	to search any register kept under any previous law. 

(2) Where the proprietor of such an interest is a trustee, he shall in dealing therewith, be deemed to be the absolute proprietor thereof and no disposition by such trustee to a bona fide purchaser for valuable consideration shall be defeasible by reason of the fact that such disposition amounted to a breach of trust. 

25. Additional fee for delayed registration 

Where an instrument is presented for registration more than 3 months after the date of the instrument, then as well as the registration fee an additional fee equal to the registration fee shall be payable. 

26. Power to compel registration 

(1) If he is satisfied that any person has failed to register any instrument which is required to be registered under this Act, the Director may by notice in writing order such person to present such instrument for registration and thereupon the registration fee, including any additional fee payable under section 25 shall become due and shall be payable whether the instrument is presented for registration or not. 

(2) Any person who without just cause fails to comply with an order of the Director under subsection (1) within 1 months of the service of the notice, shall be liable on conviction to a fine not exceeding VT500,000. 

82. Powers of attorney 

(1) The Director shall, subject to the provisions of this section, maintain an index of powers of attorney in such form and manner as he may deem fit. 

(2) Upon the application of the donor or the donee of a power of attorney which contains any power to dispose of any registered interest in land, such power shall be entered in an index of powers of attorney and the original, or with the consent of the Director, a copy thereof certified by the Director, shall be filed. 

(3) Every such power shall be in the prescribed form and shall be executed and verified in accordance with section 77 and 78 except where the Director in any particular case otherwise permits. 

(4) The donor of a power of attorney recorded under this section may at any time give notice to the Director in the prescribed form or in such other form as the Director may approve, that the power has been revoked. 

(5) Any interested person may give notice in writing to the Director that a power of attorney which has been registered under this section has been revoked by the death, bankruptcy or disability of the donor, accompanied by such evidence as the Director requires. 

(6) Subsections (4) and (5) shall not apply to any power of attorney given for valuable consideration during any time during which it is by virtue of the terms thereof, irrevocable. 

(7) If owing to the length of time since the execution of a power of attorney or for any other reason the Director considers it desirable, he may require evidence that the power has not been revoked and may refuse to register any disposition by the donee of the power of attorney until satisfactory evidence is produced. 

83. Effect of registered powers of attorney 

(1) A power of attorney which has been recorded under section 82 and of which no notice of revocation has been received under that section shall be deemed to be subsisting as regards the Director and any person acquiring any interest in land affected by the exercise of the power, for valuable consideration and without notice of revocation and in good faith, or any person deriving title under such a person. 

(2) Any person making any payment or doing any act in good faith in pursuance of a power of attorney recorded under section 82, shall not be liable in respect of the payment or act by reason only that before the payment or act the donor of the power had died or become subject to a disability or become bankrupt, or had revoked the power, if the fact of death, disability, bankruptcy or revocation was not at the time of the payment or act known to the person making or doing the payment or act.” 

Discussions 

53.	At the date of writing up this judgment all the Court records had been burnt in the fire in June 2007. The Court’s notes on evidence given orally by both Mr. Patterson, on behalf of the Claimant, and Mahit have all gone. The process of writing up this judgment has been extra difficult to complete under the circumstances. 

Was undue influence exerted by Mr. Patterson on the First Defendant to sign the Agreement? 

54.	It is my view that to reach a finding on this issue the Court needs to go back in time to the First Agreement to see the conduct of the parties leading up to the Second Agreement. 

55.	The First Agreement was signed on 30 September 2007. Under that Agreement Mahit agreed:- 

(a)	and authorized the Claimant to attend to all necessary applications surveying, preparations of lease documents, stamping and registration of new titles on his behalf. The fees involved will be advanced by the Claimant; 

(b)	and accepted an amount of VT717,205 as consideration of the Agreement; 

(c)	that any monies advanced by the Claimant will be repaid plus interests; 

(d)	to sign a power of attorney in favour of the Claimant authorizing the Claimant to sell urban titles 11/OD31/049 and 11/OD31/050 and to sign all necessary documents to effect such sales; 
(e)	for the Claimant to lodge a caution on both titles referred to in (d) above; 

(f)	to receive 50% (fifty per cent) of the sale price of any plot of land created by subdividing the title, after all development costs are deducted. 

56.	Prior to the First Agreement being executed, and around March 1997 both the Claimant and the Defendant proceeded on the basis that eventhough the Agreement, although unexecuted at that time, was already on foot. 

57.	On 13 March 1997 Mahit wrote to Mr. Patterson (“DRP3” to Patterson’s statement) authorizing him to act on his behalf to apply for a new lease and to make any other applications necessary. This is a letter that is written in very good English. 

58.	On 29 April 1997 the Claimant paid the Second Defendant an advance of VT50,000, the first of many such payments. 

59.	On 29 September 1997 Mahit wrote to Mr. Patterson requesting VT1,500,000 to clear some outstanding expenses. 

60.	Between May and September 1997 inclusive the Claimant advanced Mahit different payments totaling VT667,205. Some of these payments were made direct to the people or companies Mahit had debts with, for example AGC Finance, Jill’s Café and Vanuatu Government. These are annexed and marked collectively as “DRP9” to the Patterson statement. 

61.	At paragraph 22 of his sworn statement Mr. Patterson swore that the Second Defendant insisted at one time that he had to pay certain debts, “sapos mi no pem mi stap long trabol”. On 1 October 1997, the Claimant advanced Mahit a further VT100,000. See “DRP10” to Patterson’s sworn statement. In his sworn statement nor his oral evidence did Mahit at any time deny this or any other advances made to him or the reasons he requested such advances. Clearly many such advances do not relate to the purpose of their agreement. 

62.	Annexure “DRP11” to the Patterson statement shows a total of VT81,750 advanced to Mahit during October 1997. 

63.	Annexure “DRP12” to the Patterson statement shows a total of VT116,835 advanced to Mahit during November 1997. 

64.	Annexure “DRP13” to the Patterson statement shows a total of VT285,597 advanced to Mahit during December 1997. 

65.	Annexure “DRP14” to the Patterson statement shows a total of VT306,000 advanced to Mahit during January 1998. 

66.	Annexure “DRP16” to the Patterson statement shows a total of VT423,474 advanced to Mahit during February 1998. VT60,000 was paid direct to Mr. Jack I. Kilu to settle a private debt Mahit had with Mr. Kilu. 

67.	Annexure “DRP20” to the Patterson statement shows that VT35,000 was advanced to Mahit during April 1998. 

68.	Annexure “DRP23” to the Patterson statement shows that VT22,600 was advanced to Mahit during May and June 1998. 

69.	Annexure “DRP24” to the Patterson statement shows that VT43,980 was paid to Ana Spooner to settle a debt Mahit owed her pursuant to Civil Case No. 174 of 1999 on 4 November 1999. 

70.	Annexure “DRP35” to the Patterson statement shows a total of VT170,245 advanced to Mahit between 17 November 1999 and September 2000. 

71.	Annexure “DRP36” to the Patterson statement shows a total of VT459,717 advanced to Mahit between 14 September 2000 and end of March 2001. 

72.	In the totality of his evidence in this matter, Mahit at no time denied these advances. In fact he admitted such liability. 

73.	During 2000, especially after the Claimant began to do survey work on the subdivision, numerous Ni-Vanuatu started to approach the Claimant to complain that they had given money to Mahit as “deposits” for land plots, some of them long ago as 1998, long before the subdivision had even been fully approved. These Ni-Vanuatu brought receipts totaling VT4,837,000. A complete list of the 36 people who gave the Claimant receipts together with material evidencing payments to Mahit are collectively annexed and marked “DRP31” to the Patterson statement. 

74.	All these payments as “deposits” to Mahit are in violation of the terms of the Agreement they had entered into on 30 September 1997. It is even worse. Mr. Mahit had gone about it without the knowledge of the Claimant. The “deposits” began about April 1997 and stopped on or about February 2001. This was made in breach of the Agreement. 

75.	As time went by clearly Mr. Mahit became annoyed that the Claimant would not keep paying him large amounts of money anytime he wanted it. On 20 August 2001, he wrote, in perfect English, to the Claimant demanding:- 

(a)	“details of any transactions and/or sales relating to my subdivision at Freswota area which is handled by your firm. This should include all costs incurred, development costs, any deposit made, how many sold, what your commission is including total advance made by me personally.” 

(b)	“in the meantime, please withhold plots number 1, 3, 4, 6, 9, 12 and 18 from being sold until I have received the required report from you.” 

76.	At paragraph 65 of the Patterson statement, Mr. Patterson deposed that on 20 August 2001 Mahit came to see him at this office, and he told him that it was impossible to “withhold” 7 plots from sale as not only this demand was a breach by him of the Agreement, but selling the new titles was the only way the Claimant could recover their expenses. Mahit told Mr. Patterson to the effect:- 

“Fulap man we oli pem deposit long mi oli kam long haos blong mi mo oli treatenem mi. Mi mas kat mani blong pem back olgeta, sapos no oli save spoilem mi. 

Sapos yu no pem mi bae mi save putum ol man insaed long ol plot ia.” 

77.	Although Mahit continued to be aggressive and hostile towards him, the Claimant continued to advance money to him in the amount of VT791,068 during the period April 2001 and January 2002. See “DRP43” to the Patterson statement. 

78.	By that time their relationship had completely broken down. On 1 March 2002, Mahit wrote to the Claimant advising him that he was revoking the Power of Attorney granted to the Claimant. One of the reasons given for the revocation in his letter is:- 

“4. Yu sakem out mi 3 taem out long ofis blong yu and yu refuse blong luk mi.” 

79.	Around mid April 2002, Mahit went to the offices of the Claimant and told Patterson that if he gave VT150,000 to him he would uphold their Agreement and sign any paper needed. Mr. Patterson in his oral evidence before the Court maintained this position. 

80.	On 22 April 2002, a new Agreement (Second Agreement) was entered into. Mahit signed the following documents on 22 April 2002:- 

(a)	A new agreement with the Claimant entitled “Agrimen Blong Developem mo Salem 22 Plot Graon long Freswota” (“the Second Agreement”); 

(b)	A new Power of Attorney in the Claimant’s favour cancelling the Revocation of Power of Attorney dated 27 February 2002; 

(c)	A Public Announcement to go to the media, which appeared in the Trading Post newspaper; 

(d)	A letter to the Director of Lands confirming that he had cancelled to revocation of the Claimant’s original Power of Attorney, signed a new power of attorney in the Claimant’s favour, that he had restored the Claimant’s full authority to exclusively sell the plots and that he has signed every Transfer of Lease for the new titles; and 

(e)	A Receipt from the Claimant dated 22 April 2002, for VT150,000 as payment of the “Final advance”. 

81.	These documents are annexed and marked collectively as “DRP53” to the Patterson statement. 

82.	During cross-examination, Mr. Patterson gave evidence that he did not advise Mahit not to see a lawyer. That it was not for him to tell Mahit to see a lawyer of his choice or not. 

83.	I had observed both Mr. Patterson and Mr. Mahit while giving oral evidence in this proceedings. My observations were that Mr. Patterson was frank and honest in his answers. On the other hand, I though Mahit was not frank and at times evasive in his answers. 

84.	I find Mr. Patterson to be a credible witness and I believe his story. 

85.	I find that I could not say the same thing for Mahit. Mr. Mahit gave evidence that he signed the Second Agreement on the promise that he was to be paid VT500,000. Because the Claimant did not pay him, and as a consequence he terminated the Second Agreement. Having observed Mr. Mahit I find that I could not believe his version of the events that happened then. I prefer that of Mr. Patterson. The real reason, it seems, is because the Claimant took a stronger stand in not giving him large advances whenever he wanted it, and his efforts in selling the plots without the Claimant’s knowledge were catching up on him. 

86.	A person with limited formal education does not necessary mean the person is not wise to the ways of this world. From 1997 leading up to the termination of the Second Agreement, evidence portrays a very shrewd man who played others off to get what he wanted for his various schemes. On the evidence before this Court, I do not find that undue influence was exerted on Mahit because of his limited formal education background or at all. 

87.	The basis of the equitable doctrine of undue influence is explained by Ashburner as follows:- 

“In a court of equity if A obtains any benefit B which, in the opinion of the court, prevents B from exercising independent judgment in the matter in question, B can set aside the context or recover the gift. Moreover in certain cases the relation between A and B may be such that A has peculiar opportunity of exercising influence over B. If under such circumstances A enters into a contact with B, or receives a gift from B, a court of equity imposes upon A the burden if he wishes to maintain the contract or gift, of proving he expected no influence for the purpose of obtaining it.” 

88.	The quote above makes it clear that there are two classes of undue influence. These are:- 

(a)	Cases where there is no special relationship but actual undue influence can be established; 

(b)	Cases where the nature of relationship between the parties is such as to raise a presumption of undue influence. 

89.	It is clear from the circumstances and the evidence that has been adduced before this Court that there was no confidential or special relationship between Mahit and the Claimant that could possibly give rise to the presumption of undue influence. Accordingly I do not see how the claim as made by Mahit can stand in relation to category (a) in paragraph 91 above. 

90.	As explained by Dickson J. in Johnson & Barclays, in looking at cases within category (a):- 

“The source of power to practice such a domination may be found in no antecedent and relation but in a particular situation or in the deliberate contrivance of the party. In this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind alienator that it cannot be considered his true act.” 

91.	That is, when no special relationship exists between the parties, the party alleging undue influence must prove that undue influence was actually exerted and that this excluded the consents to the agreement. I have gone through the evidence as adduced before this Court and I am of the view that there is no doubt that Mahit has failed to discharge this evidentiary onus in the circumstances of this case. He gave evidence that he signed the Agreement because the Claimant had promised to pay him VT500,000. Mr. Patterson had testified that he only paid him VT150,000 and not to induce him to sign the Second Agreement. As I have stated earlier, I prefer the version of what happened then as told by Mr. Patterson. 

92.	It is my view that any suggestion that Island Property was under an obligation to require Mahit to obtain independent legal advise before entering the second agreement is misconceived. This is not the case where the Claimant is required to show that the other party in fact acted voluntarily as there is no presumed relationship of undue influence. Further, both the extended history of dealings between Mahit of the matter and the continued involvement of Mr. Godson Ijeh mandate Mahit’s election not to seek further independent, legal advise cannot form any basis to avoid this obligations under both the First Agreement and the Second Agreement. 

93.	Further, it is widely accepted that the adequacy of the consideration in entering into a contract clearly is a material question when looking at the issue of undue influence. The terms of both the First Agreement and the Second Agreement were clearly beneficial to Mahit and as a result it is not possible for him to establish that any advantage has been taken of him so as to impose a “manifest and fair disadvantage”. Rather, the circumstances surrounding the dealings between the Claimant and Mahit, in my view, are quite the opposite. This is a case of a contract that was entered into for value, in which the consideration was fair and reasonable, and in circumstances where Mahit was not placed under any disadvantage as a result of the bargain. 

Can the Agreement be unilaterally terminated?

94.	During the proceedings before the Court in this matter Mr. Kilu, on behalf of Mahit, failed to address the Court on this very issue. He focused mainly on the issue of the revocation of the Power of Attorney and the fact that such Power of Attorney was not registered and secondly on the issue of undue influence. 

95.	The Second Agreement contains no provision giving either party the right to terminate the Agreement unilaterally. Given that situation, one has to look to common law for guidance. In that context, and as a matter of law whether Mahit can terminate the Agreement in the manner that he purported to do, it is necessary to determine whether any of the following three circumstances arose giving rise to such a decision by Mahit:- 

(a)	Was there a breach by the Claimant consisting of a manifestation of unwillingness or inability to perform the contract in substance or at all. 

(b)	Was there a breach of an essential term of the Agreement that has the effect of depriving Mahit of the substantial benefit of the Agreement. 

(c)	Was there a breach of the Agreement causing substantial loss of benefit to Mahit. 

96.	At the time of the purported termination of the Second Agreement:- 

(a)	The new Agricultural lease title number 11/OH32/047 had been registered at the Land Records Office. 

(b)	The title 11/OH32/047 was surrendered and consent obtained for the subdivision to go ahead. 

(c)	The Municipal Council of Port Vila had approved planning permission for the subdivision. 

(d)	In 2000 the Claimant commenced to do survey work and clear the land on the subdivision. 

(e)	On 16 May 2000, the Port Vila Municipal Council approved the residential subdivision. 

(f)	On 12 February 2001, the Claimant lodged the surrender of lease title No. 11/OH32/04 and 22 new residential leases with the Minister of Lands for approval and execution. The Clamant paid all fees associated with the lodgment in the amount of VT383,821, including VT131,196 as payment of the first years ground rent on the 22 leases in question. 

(g)	The 22 new residential leases were approved and signed by the Minister on 12 April 2001. 

(h)	Connection of electricity and water, and telephone. 

(i)	VT6,283,928 had been advanced to Mahit and which he must repay with interest under the Agreement. 

(j)	Subdivision was basically completed and started to sell some plots. 

97.	On the evidence, the Claimant had performed its obligations under the Agreement. There was no breach of an essential term of the Agreement, or a breach in substance or a breach causing substantial loss. 

98.	It is my view that the Second Agreement could not have been terminated unilaterally by Mahit in the circumstances and therefore the purported termination of the Second Agreement is of no effect. 

Can the power of attorney be revoked?

99.	The Land Leases Act contains provisions which are pertinent to this issue. Section 22 is concerned with instrument that have to be or registerable under the Act. A Power of attorney is no exception and for it to be effective it has to be registered. This is clearly reflected in section 22 (2) of the Act. 

100.	The provision concerning the powers of attorney are specifically found in section 82 of the Act. Subsection (1) makes provision for the Director to maintain an index of powers of attorney in such form and manner he or she considers fit. Subsection (2) goes on to make provision for those who wish to provide powers of attorney which contains any power to dispose of any registered interest in land that such power shall be entered in the index of powers of attorney. Subsection (4) provides that the donor of a power of attorney may at any time give notice to the Director that the power has been revoked. Subsection (5) provides that any interested person may give notice in writing to the Director that the power of attorney which has been registered has been revoked by the death, bankruptcy or disability of the donor accompanied by such evidence as the Director may require. Subsection (6) provides that subsections (4) and (5) will not apply to any power of attorney given for valuable consideration during any time during which it is by virtue of the terms thereof irrevocable. 

101.	The Second Power of Attorney given pursuant to the Second Agreement is one that was given for valuable consideration. That, in my view, falls within subsection (6) of section 82. Mr. Mahit could not have revoked the power of attorney that he has made to the Claimant to enable him to deal with the subdivision in Freshwota. 

102.	Mr. Mahit, it appears was very eager to terminate or to purport to revoke the power of attorney. Sections 25 and 26 of the Act provides for instruments which are registerable under the Act if they are not registered within the required time the provision imposes a duty on the Director to compel the registration of such instrument. Section 26 (1) specifically states that if the Director is satisfied that any person has failed to register any instrument which is required to be registered under this Act, the Director may by notice in writing order such person to present such instrument for registration. Further subsection (2) goes on to make it an offence that if any person who without just cause fails to comply with an order of the Director under subsection (1) within 1 month of the service of notice on the person be liable on conviction to a fine not exceeding VT500,000. Taking these provisions into account, it is my view that the purported termination of the power of attorney by Mr. Mahit was premature. The provision of the Act clearly allows for such instruments to be registered eventhough somewhat later. 

103.	Before the registration of a power of attorney section 53 (5) provides that nothing in that section shall be construed so as to prevent any unregistered instrument from operating as a contract. At the point in time when Mr. Mahit purported to terminate or to revoke the power of attorney it is clear from subsection (5) that it was operating as a contract and therefore is binding on Mr. Mahit. Given that the unregistered Power of Attorney was made for valuable consideration, it is my view that it was not open for Mahit to revoke it. 

Is the agreement subsisting?

104.	 For reasons given in this decision I am of the view that the agreement still subsists. There is no specific provision in the Second Agreement telling the parties how or under what circumstances a party may choose to terminate the agreement. Mr. Mahit failed to show any reasonable grounds under which he could terminate the agreement. If he was not happy about the Claimant’s performance under the agreement, the proper way to address such an issue is to serve notice on the Claimant and tell the Claimant what it is that he is not happy about and ask the Claimant to fix that within a reasonable time. That did not happen in this case. 

105.	This is a contract and as such the law confers the right to terminate only for serious breaches. There are three types of breaches that will justify termination:- 

(a)	Repudiation. This is a breach consisting of a manifestation of unwillingness or inability to perform the contract in substance or at all. 

(b)	Breach of an essential term. This is a breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract. 

(c)	Breach causing substantial loss or benefits. This is a breach consisting a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract. 

106.	On the evidence before the Court it is my view that Mr. Mahit has failed to establish the breach of an essential term or the agreement between the Claimant and himself. 

107.	In conclusion it is my view from various reasons that I have given that the agreement still subsists. Therefore the Court orders and declares that:- 

(a)	Judgment for the Claimant in the amount VT6,876,734 as calculated in “Schedule 1” hereto, together with interest continuing to accrue on that amount from 19 October 2007 until the Judgment debt and interest thereon is paid in full, at the daily rate of VT942; 

(b)	The Claimant be empowered to sell and transfer the leasehold property contained and described in Title Numbers 11/OH32/047, 11/OH/048, 11/OH32/049, 11/OH32/050, 11/OH32/051, 11/OH32/052, 11/OH32/053, 11/OH32/055, 11/OH32/058, 11/OH32/059, 11/OH32/061, 11/OH32/065, 11/OH32/090, 11/OH32/091, 11/OH32/092, by such means and in such manner as it shall deem fit; 

(c)	Pending such sale and transfer the Claimant, or any agent or agents duly authorized by it in writing, be empowered to enter on the said leasehold properties and act in all respects in the place and on behalf of the proprietor of the lease, and to apply in reduction of the monies due and owing to the Claimant all or any rent received in respect of the said properties; 

(d)	The purchase monies arising from the sale and transfer of the said leasehold properties and the monies received (if any) by the Claimant pending such sale and transfer shall be applied:- 

(e)	Firstly, in payment of the expenses occasioned by the sale and transfer or going into and remaining in possession (as the case may be), including the costs of this application; 

(f)	Secondly, in payment of any registered mortgages or encumbrances (if any) in order of their priority; 

(g)	Thirdly, in payment of the monies then due and owing to the Claimant under Order 1 hereof; 

(h)	Fourthly, the surplus (if any) to be paid to:- 

(i)	as to 50% thereof to the Claimant pursuant to the Joint Development Agreement between the Claimant and the First Defendant, dated 30 September 1997; and 

(ii) as to the balance, into Court to be held for twelve months or until further Order, on account of any claims by persons who may have been mislead by the First Defendant into paying monies to him, for the acquisition of leases which the First Defendant was not legally in a position to convey. 

(i)	The First and Second Defendants do all things necessary, including executing and registering all necessary documents so far as to perfect the Claimants power of sale under Order 2 hereof, within seven (7) days of the date of these Orders; 

(j)	The Consent of Transfer signed by the Second Defendant and dated 25 September 2003 in respect of leasehold title 11/OH32/050, is invalid and of no legal force or effect; 

(k)	The Notice of Revocation of the Power of Attorney between the Claimant and the First Defendant delivered 22 April 2002, which revocation Notice is dated 16 December 2002, is invalid and of no legal force or effect and furthermore and without limitation to order 5 above, the First and Second Defendants are to execute all necessary documents and approvals necessary to effect registration of the said Power of Attorney, against each and all of the leases the subject of Order 2 above, within seven (7) days of the date of these orders and the Second Defendant shall effect the registration of the same, against all the leases herein before described, within twenty one (21) days of the date of these orders; 

(l)	The First Defendant by himself, his servants, agents (workers) or otherwise howsoever be and is hereby restrained from interfering in any way with the Claimant’s exercise of the power of sale conferred on the Claimant under Order 2 hereof; 

(m)	Without limiting the generality or Order 8 above, the First Defendant by himself, his servants, agents (workers) or otherwise howsoever be and is hereby restrained from soliciting or accepting any monies from any party howsoever, in respect of the properties the subject of Order 2 hereof and except as provided for in these Orders; 

(n)	The First and Second Defendants be and are hereby restrained from revoking and/or registering any purported revocation of the Power of Attorney from the First Defendant to the Claimant dated 22 April 2002; 

(o)	The First Defendant’s Counter-Claim be and is hereby dismissed; and 

(p)	The First Defendant to pay the Claimant’s costs of and incidental to these proceedings, at the standard rate, as taxed and/or as agreed. 

DATED at Port Vila, this 30th day of October, 2007.

BY ORDER OF THE COURT

H. BULU
Judge.