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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
APPELLATE JURISDICTION
CIVIL APPEAL NO: ABU0027 OF 2011
CIVIL APPEAL NO: ABU0018 OF 2011
(Independent Legal Services Commission,
Application No.0021 of 2010)
BETWEEN:
VIPUL MISHRA
MEHBOOB RAZA
Appellants
AND:
CHIEF REGISTRAR
Respondent
CORAM: CALANCHINI AP
BASNAYAKE JA
WATI JA
Counsel: Mr. S.K. Ram for the 1st Appellant
Ms. N. Khan for the 2nd Appellant
Mr. R. Chand for the Respondent
Date of Hearing: 19 February 2013
Date of Judgment: 13 March 2013
JUDGMENT
Calanchini AP
[1] I have had the opportunity of reading the judgment prepared by Basnayake JA. I agree that the appeal of the First Appellant should be dismissed and the Second Appellant's appeal should be allowed.
Basnayake JA
[2] The 1st appellant was charged before the Independent Legal Services Commission (ILSC) for professional misconduct contrary to
section 82 (1) (a) of the Legal Practitioners Decree 2009.
Section 82 (1) (a) is as follows:-
82 (1):- For the purposes of this Decree, 'professional misconduct' includes-
(a) Unsatisfactory professional conduct of a legal practitioner....if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence;
- (b) & (2) not reproduced.
[3] After trial the 1st appellant was convicted on counts 1 & 2. A summary of these two charges will be given later. The 2nd appellant was charged under section 81. Section 81 is as follows:-
81. For the purposes of this Decree, 'unsatisfactory professional conduct' includes conduct of a legal practitioner...occurring in connection with the practice of the law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent or professional legal practitioner....
[4] The 2nd appellant was convicted on this charge. One Dr. Muhammad Shamsud-Dean Sahu Khan too was charged under Sections 82 (1) (a) and (b) of the LPD and was found guilty. His appeal against the conviction and the sentence is fixed to be heard separately in due course. The liability of the said Khan is not discussed in this judgment.
[5] The 1st appellant was sentenced as follows;
[6] The second appellant was sentenced as follows:
Both the appellants appealed against the findings and the sentences.
The Facts
[7] Ambika Nand was the registered owner of crown lease No. 5375. The 1st appellant had been the solicitor for Ambika Nand. A mortgage was registered against the lease 5375 in 1983 (Pg 266-Vol 1 RILSC). At present the mortgagee is the Reserve Bank of Fiji (RBF). A caveat too had been registered by the Lands Department against lease No. 5375. The lease No. 5375 expired on 31 December 2003. At the time of its expiry, the mortgage and the caveat had not been discharged. A new lease was registered on 5 April 2006 with effect from 1 January 2004, in place of the old lease No. 5375. The number of the new lease is CL 16375. The new lease, when registered, did not carry forward any endorsements from CL 5375.
[8] On 11 April 2006, the solicitors for RBF, namely Cromptons, wrote (pg 199 of RILC) to the 1st appellant, solicitor for Ambika Nand, and informed him with regard to the mortgage (registration no. 201344) held against property CL 5375 in favour of RBF. Cromptons had inquired from the 1st appellant why steps had been taken to evict the caretaker engaged by the RBF to protect their interests as mortgagee. Cromptons had further inquired as to how the 1st appellant's client intended to redeem the mortgage. The 1st appellant replied to Cromptons on 6 June 2006 (pg 200); in that the 1st appellant had informed that he received instructions to proceed with the eviction as the mortgage debt with the RBF had been disputed by his client.
[9] At this time Ambika Nand was in the process of selling the land he held on lease No. 16375. The learned counsel for the 1st respondent raises a doubt in his written submissions as to whether the purpose of evicting the caretaker was to provide vacant possession to the prospective buyer. The learned counsel for the 1st appellant has countered this doubt with the submission that the writ of possession was obtained in the year 2001, by which time there was no indication of a sale. Although a writ of possession was obtained in the year 2001, the execution was done only in 2006 and confirms the doubt created by the respondent.
[10] On 28 July 2006 Ms. Sashi Pratab (purchaser) entered into an agreement to purchase crown lease No. 16375 from Ambika Nand (vendor) for a sum of $130,000.00 (Vol. 1 pg 205). The 1st appellant had been the solicitor of the vendor while the 2nd appellant had been the solicitor for the purchaser. This agreement was drawn in the office of the 1st appellant. In terms of the agreement the property had been described as one free of all encumbrances. Crown Lease 16375 was registered without mention of encumbrances. The encumbrances of the earlier lease had not been copied to the new lease; the new lease did not give any particulars of the old. On 21 August 2006 the 1st appellant sent a copy of the sales and purchase agreement to the 2nd appellant. By this letter the 2nd appellant was informed of the availability of the original Crown Lease No. 16375 with the 1st appellant. The letter specifically mentioned that this lease was free of any encumbrances (pg. 211 of RILC).
[11] Cromptons had already alerted the 1st appellant with regard to the mortgage. The 1st appellant filed action to get vacant possession of the mortgaged land. The mortgaged land was held by the vendor under CL 5375. In the meantime the 1st appellant was instructed to sell the land owned by Ambika Nand under lease No. 16375. This was the new lease issued in place of the old CL 5375. With this background the 1st appellant ought to have known the existence of the mortgage and the caveat registered against this land. By letter dated 27 October 2006, the 1st appellant in his reply to the Cromptons stated that, "our client does not admit owing the money. We do not have a copy of the mortgage but the mortgage would have been only for the balance period of the lease. Any mortgage over any speculative further period of lease may be void for uncertainty". (emphasis added) (pg. 211 RILSC).
[12] The 1st appellant had done a search in the Land Registry prior to the execution of the sales & purchase agreement. This was to make sure that the new lease was free of encumbrances. Knowing very well the encumbrances attached to this land, why did the 1st appellant make this search in the registry? The 1st appellant was well informed of the mortgage. He had been corresponding with Cromptons with regard to the mortgage. If at all it is the buyer that needs to do a search to get to know the land.
[13] The vendor had been issued with a new lease instead of a renewal. For some reason the new lease, when registered with the Registrar of Titles, did not bring forward the encumbrances from the old. The 1st appellant would have become aware of this fact on receipt of the duplicate. The reason for the search would have been to make sure that it did not have any encumbrances. The search revealed that this land was free of encumbrances. By making use of this information the 1st appellant helped the vendor to sell CL 16375 as a land free of any encumbrances. The encumbrances were carried forward to the new lease after the purchaser (complainant) purchased the land.
[14] At the time of entering in to the sale and purchase agreement on 28 July 2006 and at the time of sale on 24 October 2006, the purchaser or her solicitor, the 2nd appellant, were unaware of a previous lease. The 1st appellant knew about the previous lease and its encumbrances. However he chose not to disclose this information to the purchaser and to her solicitor. Without this information being disclosed, there is no way that the purchaser or her solicitor, the 2nd appellant, could have known or become aware of a un-discharged mortgage. The learned counsel for the respondent raised a point in his written submissions that in the event the information with regard to the encumbrances were disclosed, whether that would have hindered the purchaser from buying this land.
[15] Cromptons again on 23 October 2006 communicated with the 1st appellant; in that Cromptons specifically mentioned the sum owed by the vendor to the Bank being $58468.53 (as at 31 October 2006). A statement showing the breakdown of the amount had also been enclosed. Cromptons had also mentioned that a new lease NO. 16375 had been issued to the vendor without endorsing the mortgage. The 1st appellant replied on 27 October 2006. On 25.10.2006 the 2nd appellant lodged the transfer with the Registrar of Titles. Prior to this, namely, on 19 October 2006, Cromptons delivered a letter to the Director of Lands requesting that the mortgage on CL 5375 be entered in the new lease No. 16375 which was done. An undated endorsement states "B/F from CL 5375". In March 2007 the purchaser found that the transfer had not been registered. The documents were uplifted on 7 May 2006 as registration was rejected owing to the fact that the transfer did not show that it was subject to a mortgage.
[16] The 1st appellant was found guilty of two charges. The gist of the charges are as follows:-
The Judgment
[17] The learned Commissioner found that the 1st appellant on receipt of advice from Cromptons on 23 October 2006, made no inquiries as to the present position with respect to the mortgage but took the stance that as the mortgage was not on the current lease document the vendor had no duty or obligation to disclose it. This position was taken notwithstanding that the 1st appellant was aware that the vendor had mortgaged the subject land and that the vendor disputed the debt (Pg 31 para. 128). The learned commissioner also found fault with the 1st appellant for not withholding the settlement or not retaining the settlement monies whilst the matter was clarified and not informing the solicitor for the purchaser of the mortgagee's claim prior to the settlement, or at any time, being conduct that breaches the overriding duty of honesty that practitioners owe to the courts, their clients and to their fellow practitioners (129).) It is this conduct that would justify a finding that the practitioner is not a fit and proper person to engage in the legal practice (130). Counts 1 and 2 are therefore found proved (131).
Submission of the Learned Counsel for the 1st Appellant
[18] It is the submission of the learned counsel for the 1st appellant that the appellant had been acting on the instructions of his client (vendor). He was not acting for both parties. The purchaser had employed her own solicitors to protect her interests. The learned counsel also submitted that the vendor had disputed the mortgage debt. Under section 60 of the Land Transfer Act only the "..lessee or the registered proprietor of any encumbrance" can request the registrar of titles to state that the new lease is a renewal of a prior lease. Neither the 1st appellant, nor the lawyers for RBF could make this request without instructions from their respective clients. It was only if this step was carried out that the lease would become subject to the encumbrances.
[19] The learned counsel submitted that at this time all that the appellant had knowledge of was an alleged debt secured by a mortgage on some other lease. The 1st appellant could not possibly guess that such a mortgage would be endorsed on the lease after settlement. Considering the facts in the Chamberlain v The Law Society of Australia Capital Territory [1993] FCA 527; 118 ALR 54, 154 CLR 661 the learned counsel submitted that the 1st appellant had no knowledge of a mistake or problem. What the 1st appellant did was to follow the instructions of his client. The learned counsel submitted that the facts of this case are far less serious than that of Chamberlain's. Therefore even found guilty as charged, the sentences imposed had not been appropriate.
The appellant had no knowledge of the mortgage
[20] The learned counsel submitted in the "appellant's written submissions in reply" that, "the mortgage is uncertain (now an undisputed fact) and the appellant's client is saying he denies the mortgage".
[21] The learned counsel submitted that "there is no evidence that the appellant had knowingly assisted his client in providing incorrect information". He submitted that, "the respondent in his submissions (paragraph 2.25) argues that by facilitating the execution of the agreement for sale and purchase with the knowledge that the issue of the un-discharged mortgage debt was unresolved, the appellant had breached the duty of honesty. If the 1st appellant was unaware of the existence of a mortgage, the above accusation is bound to fail.
[22] Referring to clause 6 of the agreement signed on 28 July 2006 that "the property is sold free from all mortgages, charges and encumbrances", the learned counsel submitted that this does not mean that at the time of signing the agreement, the property was to have no mortgages, charges or encumbrances upon it. It simply means that at settlement the property will be transferred free of all mortgages, charges and encumbrances...The fact that people enter into agreements when land is subject to encumbrances is a reality that every conveyancing lawyer faces. Most of the times the land that is being sold is subject to some mortgage or charge. That is why it is agreed to be sold free of these mortgages and charges. Appropriate discharges of these encumbrances are registered at the time of settlement.
[23] Although that was the submission, the 1st appellant concedes that the encumbrances were carried forward from the old lease No 5375, which is in breach of clause No. 6 of the sales and purchase agreement entered on 28 July 2006.
[24] The learned counsel for the 1st appellant submitted that the vendors (appellant's client) had never accepted that the mortgage was lawful and that monies were owing under it. It is quite obvious that he denied it....There is no evidence that the appellant knew that a mortgage sum was owed by his client to the mortgagee" Referring to the reply sent by the appellant dated 27 October 2006 the learned counsel stated that, "the appellant further says that he does not have a copy of the mortgage. Once again this proves the appellant had no knowledge of the mortgage. As such under no circumstances can it be said that the appellant assisted his client in providing incorrect information knowingly".
[25] Does the learned counsel concede that if the appellant knew the existence of the mortgage that he facilitated his client to go through a sale smoothly and thereby help the vendor in wrongful gain as against the buyer?
[26] The learned counsel further submitted that in Chamberlain's case the solicitor acted on his own behalf while in this case the 1st appellant acted on behalf of his client on instructions received.
[27] The above submissions are untenable for the reason that they are not factually correct. I have already set out the facts in this case in detail. There is ample evidence that the 1st appellant was aware of the existence of the mortgage. The letters written by Cromptons and the replies sent in response alone are sufficient to determine the knowledge of the 1st appellant with regard to the encumbrances. The 1st appellant knew that CL 5375 and CL16375 were both in respect of the same land. Unfortunately due to a lapse in the Registrar of Titles office, the encumbrances of CL 5375 had not been carried forward to CL 16375 at the time of its registration. It is this lapse that the 1st appellant has taken advantage of. This advantage favoured the vendor and put the purchaser in utter misery. It is nothing but mischief committed on the purchaser by the 1st appellant. Thus this appears to create a worse situation than in Chamberlain vs. The Law Society of Australian Capital Territory (supra).
[28] The 1st appellant whilst knowing there are encumbrances attached to this land, declared in a memorandum of agreement entered on 28 July 2006 that the property is sold free from all mortgages, charges and encumbrances (pg 206 HCR). In a letter dated 21 August 2006 addressed to the 2nd appellant, the 1st appellant stated that the land (lease) is unencumbered (pg.211). On 6 April 2006 and again on 23 October 2006, Cromptons wrote to the 1st appellant with regard to the mortgage and the fact that this mortgage had not been carried forward to the new lease. By this time the purchaser had deposited money into the 1st appellant's Trust account.
[29] Although the learned counsel submitted that the 1st appellant was unaware of the existence of a mortgage, the evidence of the
1st appellant is to the contrary. The evidence given by the appellant at the inquiry before the learned Commissioner has been reproduced
for further confirmation of the fact that the appellant knew of the mortgage attached to this land.
(Proceedings of some pages between 955-970 of the Record of the ILC Vol4)
(pg. 955 of the ILC Record Vol. 4)
Mr Mishra: No I wanted the search perform because it was a crown lease I had questioned him and I had become aware that this lease was the same lease that we had in a Magistrate's court were executing an order for possession once I found out that it was the same lease I did have some conversation with him and did tell him look, I might have this lease 16375 in my hand I was aware of the Land Transfer Act provision and that's the reason why he wanted to get it done quickly and had come from New Zealand.
Commissioner: why wasn't the inquiry made to the mortgagee as to how much was owed on the mortgage when you both you and your client both knew that there was a debt that When he knew and you knew that there was a mortgage to the Reserve Bank and you both knew that there was a mortgage to the Reserve Bank you both knew that the debt was being disputed by him why was it necessary to inquire of the Titles office there was a mortgage to the Reserve Bank with respect to the Lots 10 and 13?
Mr Mishra: Commissioner on that day I did a phone search because I thought that it could be that the Reserve Bank of Fiji could have applied by request to the Registrar of Titles and asked for the mortgage to be brought down to the new lease. The fact that the new lease in my hand did not have a memorial on it did not mean that in the meantime Mr Knight had not made a request afterwards.(pg. 956)
Commissioner: That's all showing an attitude of been a bit sharp to avoid the known liability you knew because you had received the letter from Cromptons in April Mr Ambika Nand your client knew no doubt because you told him but he also knew independently you knew because proceedings to evict the care-taker who was on the premises to protect the interest of the mortgagee the Reserve Bank when these things were known to you and your client and client is sitting there with you I left with one conclusion as to why the enquiry was made to the Lands Titles office I don't see why else you would have anticipated that the mortgage would be there you would have rang up Mr Knight and said got your letter it says I owe money but the client disputes if there is an issue we are trying to sell it let's resolve the issue.
Mr Mishra: I do not look at it that way all and I more certainly did not have all that in my mind. When I got Cromptons letter of 11th April 2006 which is [Ex A33] I read it I did get in touch with my client he said I don't owe the money I dispute it and ..............................
Commissioner:My question relates to the existence of it and the known fact that the debt was disputed.
.............
Commissioner: But he told you there is a mortgage I owe money.
....................
Mr Mishra: Mr Nand didn't tell me he owed money he disputed if Cromptons alleged.
Commissioner:I will rephrase my question Mr Nand told you there was a disputed debt with the Reserve Bank of Fiji and you were aware that the debt was secured by a mortgage over Lots 10 and 13?
Mr Mishra: All I knew was CL5375......... (pg. 957)
I didn't realize it was the same land until that day in my office when I said is this the same one in respect to which you had asked us to execute an order for possession then he said yes. He had a brand new lease it was registered at the back there were no endorsements I went through it quickly I saw it was subject to alter I saw it was for 30 years which was consist with section 6(a) and before any sales and purchase agreement I do.......
Mr Mishra: Yes before I get to this stage and also Mr Raza had asked for some changes and I do remember talking to Mr Raza briefly and we agreed to put in vacant at possession.
About this letter which was faxed at 4.30pm I confirm that 6700255 is our Ba office fax and I don't recall when I saw it but when I did see it I noted it and I did read that Cromptons had said noted with grave concern that our client had acquired a new lease over the property being CL16375 but that the mortgage has not been endorsed on the new lease as it should have been.......
Commissioner: Are you saying that it was your decision not to communicate the content of that letter to Mr Raza?
(pg 958)
Mr Mishra: Yes and there was some reasons for it. One of them was that I didn't think it was very relevant to CL16375................................
Commissioner:How does that become relevant to what you did or didn't do in this matter you just told me you formed an opinion not to disclose the content of the letter you formed an opinion not to disclose disputed debt on your instructions to the Reserve Bank you formed the view if the Reserve Bank was serious about the debt there were certain things they could have done to get it on the title and by implication if they didn't bad luck to the Reserve Bank trouble with that plan is bad luck to the purchaser that's the consequence of your decision to say bad luck to the Reserve Bank if they don't fill out the right form and get it registered I know there is a mortgage but I am not going to disclose it because my client thinks he can get away with it and tough luck somebody suffered as a reason of that altitude didn't they?
Mr Mishra: But it is not my fault that's what I am saying to this commission.
Commissioner: Didn't you have an obligation to disclose what you knew as a lawyer.
Commissioner: You knew the existence of the debt you knew the existence of a mortgage to the Reserve Bank?
Mr Mishra: I did not know the existence of a debt......
Commissioner: Are you saying your client instructed you not to disclose to the purchaser or the purchaser's solicitor the existence of a mortgage over the land subject to the sale and purchase?
(pg. 959)
Mr Mishra: My client came this way he said I have got a clear title.....
I said if this is the same land.
It was the same land and after I got to know it was the same land........I wanted to see that the title was clear and that was as his solicitor I did not feel I had duty to Mr. Knight or the Reserve Bank of Fiji.
Mr Mishra: Or even the purchaser all I had to do was provide him with a clear title and Mr Ambika Nand had a clear title.
Mr Mishra: Cromptons letter I confirm I did see it at that time I don't know whether I saw it on the 23rd of October 2006 and 24th of October 2006.......
(pg 964)
Mr. Mishra: He (vendor) told me to proceed with the execution he does not accept that he owes any money to Mr. knight's client.
(pg. 965)
Mr. Mishra: He said I don't know I don't know that I owe anything......
..........
Lidise: Would it be correct to say Mr. Mishra that from your conversation with Mr. Nand he did not dispute the existence of the mortgage in principle it was more the amount owed that he disputed?
Mr. Mishra: Madam he did not dispute he had signed the mortgage I did not even ask him that to be honest I had known Mr. Knight for a long time he said not to see disputed the amount he said he didn't know anything at all he also said he had made certain payments and he had certain disputes.....
(pg. 968).....
Ms Lidise: ....why did you tell him about section 60?
Mr. Mishra: That was my job as his lawyer.
(Pg. 970)
Mr. Mishra:.....I will accept that he has ordered that the mortgage is validly transferred and registered on new lease.
..........
Mr. Mishra: From the old lease number 5375 on about 19th October 2006.....
[30] The learned counsel for the 1st appellant made submissions on the basis that the 1st appellant was not aware of the mortgage. However in the evidence the appellant has clearly admitted his knowledge of the mortgage. The conviction of the 1st appellant was based on this knowledge. The 1st appellant whilst knowing that there was a valid mortgage attached to this lease, represented that it was free of encumbrances and sold it to the complainant (purchaser). After the transfer documents were tendered for registration they were rejected as the mortgage was not shown in the transfer.
[31] Prior to the entering of the sales and purchase agreement, the 1st appellant was warned by the solicitor of the mortgagee, about the mortgage. The vendor in this case was living in New Zealand. It was the 1st appellant who was handling the sale. The 1st appellant knew that there was a previous lease subject to a mortgage. This lease expired on 31.12.2003. The vendor had applied for a renewal. Instead of a renewal the Director of Lands had issued a new lease (16375). This lease had no reference to the old lease (5375). When this was registered with the Registrar of Titles, it was done free of encumbrances.
[32] The 1st appellant did a search to make sure that the new lease did not have any encumbrances. The 1st appellant need not have done a search. He knew very well that the lease was subject to a mortgage. One cannot find a buyer for a good price in respect of a land subject to a mortgage. The vendor had a brand new lease valid for a period of 30 years. It was without any encumbrances. About this time Cromptons wrote to the 1st appellant about the mortgage. The 1st appellant never disclosed to Cromptons about the impending sale. Again Cromptons informed the 1st appellant about the new lease not having an endorsement of the mortgage. The 1st appellant prepared (1st appellant's clerk) the sales and purchase agreement. Clause No. 6 of this agreement stated that the lease is free of encumbrances. Again the 1st appellant wrote to the 2nd appellant who was the solicitor for the purchaser. In that the 1st appellant declared that the land was free of encumbrances. As far as the buyer was concerned it was a brand new lease. It was only the 1st appellant and his client that were aware of the encumbrances. Later the encumbrances were copied from the previous lease by the Registrar of Titles. This was admitted by the 1st appellant in his evidence. The transfer (conveyance) did not show the mortgage. Hence the Registrar of Title had refused to register the transfer. Due to this fact in May 2007 the transfer papers were uplifted. Thus ownership continued to be with the vendor even after the sale.
[33] The 1st appellant did not give the land free of encumbrances and breached clause No 6 of the sales agreement. Knowing very well that the land was subject to a mortgage, it was sold without it. The sale was completed and the money paid. The vendor profited and the buyer was saddled with a mortgage. If the 1st appellant informed the 2nd appellant, who was acting for the purchaser, of the existence of a previous lease and a mortgage this disaster could have been averted. The reason for the disaster is clearly the dishonest intention of the 1st appellant. I do not see any error committed by the learned Commissioner in finding the 1st appellant guilty of counts 1 and 2.
The Sentence
[34] Of the sentences, the 1st appellant was ordered to do all things necessary to facilitate the removal of the mortgage. The 1st appellant was also imposed a fine of $ 10,000.00. The 1st appellant complained that the learned Commissioner had erred in holding that the 1st appellant take action to discharge the mortgage when the complainant or the purchaser has her legal remedies open to her. The learned counsel for the 1st appellant submitted that the 1st appellant acted for a client whereas in Chamberlain's he did something for himself and was only reprimanded.
Powers of the Commissioner
[35] I think it is appropriate to consider some powers given to the Commissioner by the Legal Practitioners' Decree 2009.
[36] Considering the seriousness of this case I am of the view that the sentences passed on the 1st appellant were according to the law and reasonable. I am of the view that the facts in the Chamberlain's case are different to the facts of this case. Therefore, this appeal is dismissed with costs fixed at $ 4000.00.
The 2nd Appellant
[37] On 25 October 2006 the 2nd appellant lodged with the Registrar of Titles the duly executed transfer of CL 16375 and awaited the registration. In March 2007, the purchaser found that the transfer had not yet been registered. She had made this known to the 2nd appellant. At that time, the 2nd appellant had made an unsuccessful attempt to reach the 1st appellant and thereafter done nothing in this regard. On 31 July 2007, one Farouk Ali had registered a judgment against this lease. Had the 2nd appellant filed a caveat after lodging the transfer, the learned Commissioner found that the purchaser could have been protected. The learned Commissioner found that (paragraphs 136 and 137 of the judgment) "clearly the 2nd appellant failed to protect the interest of the purchaser and in so failing is guilty of unsatisfactory professional conduct. The work was not performed with the level of competence and diligence that the members of the public are entitled to expect".
[38] The learned counsel for the 2nd appellant submitted that no encumbrances were registered and/or no memorial of any encumbrances was noted on the title at the time of lodging the transfer. The learned Commissioner too in paragraph 111 of the judgment endorsed this fact by holding that "the memorials were not endorsed upon the registration of the new lease".
[39] The learned counsel for the respondent submitted that it was the laxity on the part of the 2nd appellant that had led to the state of affairs complained of. The learned counsel submitted that although the 2nd appellant could not have done anything to prevent the effect of the mortgage and the caveat on the transfer, he could have prevented the subsequent registration of the judgment by Farouk Ali on 31 July 2007. The learned counsel submitted that without a caveat and given the fact that the registration of the purchaser's transfer remained undetermined for a period of approximately 1 ½ years any person with any interest in the title could have registered their interest against the title. The learned counsel submitted that the registration of the judgment would have been subject to the purchaser's interest if a caveat had been filed, as the caveat would take priority over the interest represented by the judgment.
[40] At the time of lodging the transfer of registration the 2nd appellant was not aware of any encumbrances attached to the title. Even if a search was done, the 2nd appellant would not have discovered any encumbrances as the new lease did not have any reference to an old lease. The 2nd appellant was found fault with for not registering a caveat after lodging the transfer of registration. Had this been done the purchaser would have been protected of the subsequent judgment registered against the title. However, one must not forget that the Registrar of Titles had rejected the registration of the transfer of the purchaser by March 2007. The registration papers were withdrawn on 7 May 2007. The judgment of Farouk was registered much later on 31.7.2007.
[41] Having considered the submissions of learned counsel very carefully, I am of the view that a case has not been made against the 2nd appellant. Hence the conviction and the sentence of the 2nd appellant on count 4 is set aside. The appeal of the 2nd appellant is allowed.
Wati JA
[42] I agree with the reasoning and conclusion arrived at by Basnayake JA.
ORDERS OF COURT
Hon. Mr. Justice William Calanchini
Acting President
Hon Mr Justice Eric Basnayake
Justice of Appeal
Hon Madam Justice Anjala Wati
Justice of Appeal
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