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Naidu v Attorney General of Fiji [2019] FJCA 38; ABU0094.2017 (8 March 2019)

IN THE COURT OF APPEAL, FIJI
ON APPEAL FROM THE HIGH COURT

Civil Appeal No. ABU 0094 of 2017
(High Court Civil Action No. HBC136 of 2015)

BETWEEN:

LAWRENCE FRANCES NAIDU
Appellant

AND:

1. ATTORNEY GENERAL OF FIJI
1^st Respondent

2. FIJI PUBLIC TRUSTEE CORPORATION LIMITED

2^ndRespondent

Coram : Lecamwasam, JA
Guneratne, JA
Jameel, JA

Counsel: Mr. N.R. Padarath for the Appellant
Mr. J. Mainavolau for the 1^st Respondent
2^nd Respondent – Absent &Unrepresented.

Date of Hearing: 20 February 2019

Date of Judgment: 8 March 2019

JUDGMENT

Lecamwasam, JA

[1] I agree with the reasons and conclusions arrived at, by Jameel, JA.

Guneratne, JA

[2] I agree with the reasons, conclusions and proposed orders in the Judgment of Jameel, JA.

Jameel, JA

Introduction

[3] This is an appeal from the judgment of the High Court, dated 14 June 2017, striking out the Originating Summons of the Appellant, in respect of relief sought by the Appellant under different heads, which will be elaborated below.

[4] The essence of the matter for determination by this Court is whether the agreement executed between the Appellant and the deceased, one Sunil Prasad, constitutes an enforceable option to purchase; whether the land in issue was ever “allocated” to the Appellant, and the interpretation of section 90 of the Land Transfer Act, (Cap 131).

[5] For the reasons that will follow, the Appellant’s claim cannot succeed.

Factual background

[6] The Appellant entered into an agreement dated 26 July 2005 with one Sunil Prasad, (“the deceased”, who is sometimes also referred to as “Sunil Prasad”) for the purchase of State land which the Appellant hoped, the deceased would transfer to him in terms of the agreement. The agreement was to be in operation for a period of two years. It would thus cease to be effective from 26 July 2007. In accordance with the terms of the agreement, the Appellant had paid the deceased $32,000.00, despite the subject matter of the agreement being State land not having been identified, and the deceased not having any right or title to the land. The peculiar circumstance is that the agreement itself contemplated land that was “to be obtained” in the future. The subject matter of the agreement was land which had not been identified with certainty, in terms of extent and location.

[7] After the agreement had been executed, the Appellant and the deceased decided that the Appellant was to play a dominant role in the process of obtaining the lease from the Director of Lands to the deceased, for onward transmission to the Appellant. This agreement is reflected in letter dated 11 November 2005, which was signed by the parties.

The orders sought in the Originating Summons

[8] The Originating Summons was supported by the Affidavit dated 3^rd August 2015 of the Appellant. For the purposes of this appeal, it is sufficient to refer to only some of the orders that were sought. They were as follows:

(a) a declaration that the Estate of the said Sunil now vests in the State in accordance with section 8 of the Succession, Probate and Administration Act;

(b) An order requiring the Director of Lands discloses the following to the Plaintiff and/ this Honourable court,

(i) a copy of any approval notices, offers or applications made in relation to land described and shown as Lot 2 on Volivoli (Pt of) in the Tikina of Rakiraki, province of Ra and the island of Vitilevu (Survey Plan SO 5915[referred to as “Land”]

(ii) details of any application, notification or other information given to the Second Defendant in relation to the disappearance of Sunil Prasad.

(iii) details of any application, notification or other information given to the Second Defendant in relation to the nomination or appointment of a representative of Sunil Prasad.

(iv) Details of any application made by anyone for a lease or licence over the land.

(v) A declaration that the Plaintiff is entitled to exercise his option to purchase Lot 2 on Volivoli (Pt of) in the Tikina of Rakiraki, province of Ra and the island of Vitilevu (Survey Plan SO 5915) pursuant to agreement dated 26^th July 2005 between the Plaintiff and Sunil Prasad.

(vi) The Second Defendant and/or The Registrar of this honourable court execute relevant documents for an application for consent for the sale and purchase of Lot 2 on Volivoli (Pt of) in the Tikina of Rakiraki, province of Ra and the island of Vitilevu (Survey Plan SO 5915) from Sunil Prasad to the Plaintiff”.

[9] An Affidavit dated 20 October 2015, in opposition was filed by the Divisional Manager of the Department of Lands on behalf of the 1^st Respondent. He denied knowledge of the agreement between the Appellant and the deceased Sunil Prasad, and that the land in issue had ever been allocated to the Appellant. He objected to the grant of the injunction sought against the Director of Lands, and stated that the Director of Lands had not consented to the agreement, the land was occupied by persons other than the Appellant (at the hearing, learned Counsel for the 1^st Respondent stated that there were squatters on the land), and moved for the striking out of the Originating Summons of the Appellant.

The Judgment of the High Court

[10] In his judgment, the Learned High Court Judge has set out in detail the contents of the affidavit supporting the Originating Summons, as well as the affidavit in opposition which had been sworn by the Divisional Lands Manager of the Department of Lands, Lautoka. During the course of the proceedings in the court below, the Appellant had abandoned his claim against the Commissioner of Police and the parties had requested time to confirm whether Lot 1 of the subject land had been approved by the Director or Lands. The First Defendant had subsequently informed Court that “Lot 1” had never been approved for leasing out to the Appellant. The findings of the learned Judge can be summarised as follows : Lot 2 on Volivoli (Pt of) in the Tikina of Rakiraki, province of Ra and the island of Viti Levu (Survey Plan SO 5915) had not been leased to anyone, it continued to remain State land, and was being occupied by squatters, the Appellant does not reside on this land, the endorsement of the Survey Plan which reflected the survey that had been carried out was not necessarily an indication or conclusive proof that the Appellant was entitled to the lease. The Learned Judge’s reasoning was as follows: the land referred to in the agreement had not been identified, had never been allocated to the Appellant, and the deceased did not have any right or title to the land at the time he executed the agreement with the Appellant, the parties were still liaising with the Lands Department when the deceased was reported missing, and later confirmed dead, the agreement being one relating to land, had been executed without the consent of the Director of Lands, and since there was no privity of contract between the Appellant and the Director of Lands, therefore the latter was not bound by it. The learned Judge therefore held that the agreement was null and void ab initio.

[11] In conclusion, the learned Judge found that the Appellant could not rely on the principles of equity to enforce the agreement, because it was illegal in the circumstances, and that the Director of Lands cannot be compelled to consent to enforcing an illegal contract, that the action was vexatious, and he therefore struck out and dismissed the Appellant’s Originating Summons, without costs.

Grounds of Appeal

[12] The Appellant has set out three grounds of appeal, which are reproduced below:

1. The learned Trial Judge erred in fact and in law in holding that the option agreement between the Appellant and one Sunil Prasad (“The Deceased”) was a dealing in land” and fell within the ambit of Section 13 of the State Lands Act and therefore void when: -
   

1.1.1 The agreement was merely an option to purchase as opposed to an Agreement to purchase land; and

1.1.2 Once the option was exercised, then the option agreement would become a sale and purchase agreement and it was at that time that the consent of the Director of Lands would have to be obtained.

2. The learned Trial Judge erred in fact and in law in holding that the land in question was never allocated to the deceased Sunil Prasad when:
   

2.1 The land was identified by the parties and subsequently there was a letter dated 11^th November 2005 which was signed and this confirmed that the application number was A/333/2002;

2.2 The Director of Lands wrote a letter dated 8^th June 2006 clearly saying that the Survey Plan is to be produced “for registration so that individual leases could be issued to the deceased; and

2.3 The subdivision plan showing the reference number was subsequently approved.

3. The learned trial Judge erred in law in his interpretation of the Section 90 of the Land Transfer Act which dealt with vesting orders by people in occupation of land and had nothing to do with t he issues in the matter before him.
   
4. Such further grounds of appeal as may be added upon receipt of the record.

Discussion of the grounds of appeal

Ground one

1. Did the agreement between the Appellant and the deceased constitute a “dealing in land” within the ambit of Section 13 of the State Land Ordinance.
   

(a) The “Option Agreement”

[13] The Agreement was executed on 26 July 2005. According to the Agreement the deceased is named the “Vendor” and the Appellant is the “Purchaser”. The material portions of the Agreement are:

“Whereas the Vendor is in the process of obtaining lease (sic) from director of Lands of Fiji or a piece of land situate at Ellington, Rakiraki and WHERESAS the vendor and the purchaser had a discussion about the sale of the subject land by the vendor to the purchaser AND WHEREAS the purchaser in consideration of the sum of $42, 000.00 (FORTY TWO THOUSAND DOLLARS) to be paid by the purchaser to the vendor.IT IS HEREBY AGREED as follows:-

1. That the vendor hereby grants to the purchaser the option after the period of two years from the date hereof/or hereby undertakes that he shall not for a period of two years from the date hereof (without first offering the same to the purchaser by giving him one month’s notice of his desire to do so in wishing) sell, agreed to sell or after to do so to any person other than the purchaser at a price of $42,000.00 (FORTY TWO THOUSANDDOLLARS) the subject land.
2. That if the purchaser bring the said period of two years gives notice in writing to the vendor exercising the said option and pays to the vendor a deposit (or the sum of $42,000.00(FORTY TWO THOUSAND DOLLARS) which makes with the said sum of $42,000.00 (FORTY TWO THOUSAND DOLLARS) a deposit of (ten) percent of the said purchase money then this agreement and the said notice shall constitute a contract for the sale and purchase of the said property”. (Emphasis).
   

[14] The Appellant claims that paragraph 2 of the said Agreement entitles him to exercise the option of purchasing the land. He states that if the Court were to grant the declaration sought, then it is only a matter of the Director of Lands having to decide whether or not he would grant consent. The Appellant submits that the option agreement does not amount to “dealing” in land (within the ambit of section 13 of the State Land Act), until the option is exercised, and relies on Court Bros (Furnishers) Ltd v Sunbeam Transport Ltd 15 FLR 206; Babacomp Ltd v Rightside Properties Ltd [1974] 1 All ER 142. The Appellant contends that this Court in Court Brothers (supra) held that an option agreement is, “...option to purchase an executory interest in land, but it is an exceptional type of interest, inchoate in nature and not within the mischief aimed at by Section 13(1).” On this basis he claims that since the agreement between the deceased and him is not a dealing in land, and the consent of the Director of Lands was not a mandatory requirement prior to the execution of the agreement.

[15] The facts in Court Brothers (supra) can be distinguished from the facts of this appeal, for the reason that in that case, the option agreement was in respect of a protected lease, and the question before that court was whether, in the circumstances of that case, the option agreement amounted to a “dealing” in land, within the ambit of the provisions of section 13 of the Crown Lands Ordinance.

[16] In this appeal, the position of the 1^st Respondent is that there was no lease executed in favour of the deceased, the Director Lands had not granted consent to the deceased to deal in the land, there was no privity of contract between the Director Lands and the Appellant, and therefore in terms of section 13 of the State Lands Act, the agreement between the Appellant and the deceased, was null and void. This argument is without merit and will be dealt with more fully under Ground two of this appeal.

[17] The First Respondent denied that the “Land” referred to in the Agreement refers to Lot 2 SO5915. He says the land is not identified and the agreement only refers to “a piece of land” situated at Ellington, Rakiraki, even if it is regarded as an option agreement, this does not negate the fact that it is still an agreement with terms which suggests a future execution date. That is correct, it does not refer to a future date.

(b) Conditional contract and an Option Agreement distinguished

[18] In a conditional contract the buyer agrees to buy the property subject to certain conditions being fulfilled. Once the conditions have been fulfilled, he would, in terms of the agreement, be obliged to buy that property. Such conditions could encompass for example, a situation on which the property is occupied at the time the contract was executed, or where planning permission is awaited.

[19] In an Option Agreement on the other hand, the buyer has the ‘option’ to buy the property subject to certain conditions being fulfilled, either by the proposed seller or someone else. The advantage of an option agreement is that when one of the future conditions specified in the option agreement is fulfilled, the purchaser has the right, within the time frame specified in the agreement, to serve notice upon the seller, requiring the seller to permit the buyer to first exercise his ‘option’ of purchasing the property. It does not compel the buyer to purchase the land, but gives him the flexibility of an option and if agreed upon, the first right to offer to buy.

[20] Having said that, it is now necessary to determine the consequences of the agreement between the Appellant and the deceased in this appeal. Despite the unfortunate predicament the Appellant finds himself in, the fact is that the agreement (whether it is termed an option agreement or not), is not a valid contract because the subject matter of the contract was unascertained and indeterminate. There can be no valid contract in respect of indeterminate subject matter. A contract can be conditional upon the happening of an event, however no contract can come into effect in the absence of determined and certain subject matter. In the case of a written agreement, the parties will be bound by contents of the executed document.

[21] It might seem odd that in this case the Appellant agreed to execute an agreement which gave him really nothing; he knew not what or where the land would be, he knew not the extent, or even when it would eventually be obtained by the deceased, so as to enable the deceased to give him the option of purchasing the land. The agreement states that “Forty-Two Thousand Dollars is to be paid, and therefore, the agreement itself does not acknowledge the payment of money to the Appellant. Although the Appellant appears to have parted with $32,000.00, that was after the said agreement had been executed.

[22] It is always a matter of consideration of the individual circumstances of each case, that needs to be viewed in its own context before determining whether the conduct of the parties as reflected in the documents executed, can in law, be regarded as binding.

[23] In Court Brothers (supra) Marsack J.A. said:

“Mr. McFarlane contends that a "dealing in land" must be such as to create an immediate interest in the land, and not merely a contingent interest, that is to say an interest which may arise in the future if some particular action is taken by one of the parties. This argument is, I think, well founded. In Stroud's Jul Dictionary, 3ry, 3rd Ed. this statement appears under the heading Option: —

"An option is defined to be a right acquired by contract to accept or reject a present offer w a limited, or it may be a be a reasonable, time in the future (Paterson v Houghton, 19 Marc. R.."

It is of the essence of an option, in my view, that any interest in the land, other than a contingent or an executory interest, which it mnfer on the holder of the option can arise only when that hhat holder has given notice of acceptance of the option; that is necessarily at some future time. If that is so, the holder of the option does not acquire any immediate interest in the land at the time of the granting of the option. If there can be no "dealing in land" until such an interest is acquired by the other party from the vendor, then no dealing in land can arise until the further act of acceptance is performed by the holder of the option.

This appears to me consistent with the judgment of the Court in Griffith v Pelton&(CA) [195 [1958] Ch. 205 at p.225: —

"An option in gross for the purchase of land is a conditional contract for such purchase by the granteehe option from the grantor, which the grantee is entitled tled to convert into a concluded contract of purchase, and to have carried to completion by the grantor, upon giving the prescribed notice and otherwise complying with the conditions upon which the option is made exercisable in any particular case."

[24] In Court Brothers (supra) in defining an option agreement Gould V.P. said:

“On the contrary, I think the option to purchase is an exceptional type of interest, incohate in nature, which has no positive effect on the land. It is negative, in that it binds the owner to nothing except that he may not without breach of contract deal with his land contrary to its tenor during its currency. It confers no possessory or other rights upon its holder until it is exercised, at which stage it becomes a fully-fledged agreement touching the land and consequently a dealing with it. At that stage the land 'becomes irrevocably the subject matter of a transaction directly affecting it and until that stage arrives, I do not consider that the land is "dealt with" within the scope and intention of the Ordinance”.

[25] Accordingly, as the land in issue was not identified at all, was unknown, had not been leased to the deceased, the agreement between the Appellant and the deceased did not amount to a dealing in land within the ambit of section 13 of the State Lands Act.

[26] During the course of the hearing, learned Counsel for the Appellant drew the attention of court to paragraph [38] of the judgement, and contended that the learned judge had found that the land had been allocated to the Appellant, but had concluded that the land was not allocated to the deceased, meaning that, there was a contradiction between the findings and the conclusion reached by the learned Judge. However, as clarified by learned Counsel for the 1^st Respondent, the learned judge had, in his judgment, merely recounted the written submissions of the Appellant, and there was no “finding” that the land had been allocated to the deceased, which was then followed by an incorrect conclusion. On an examination of the record, the 1^st Respondent’s contention is correct, and nothing turns on the submission made to court by the learned Counsel for the Appellant.

[27] In my view, there is no doubt that the agreement relied on by the Appellant contemplated suspending any type of liability or obligations, until the conclusion of the formality of the deceased obtaining a formal lease in his name. It was therefore not an immediately binding agreement, and gave no legal protection to the Appellant that he could enforce In view of the fact that deceased was not a lessee, in whose lease the words, “This lease is a protected lease under the provisions of the State Lands Act”, was contained in the agreement executed between the Appellant and the deceased, is not a “dealing in land” within the ambit of section 13 of the State Lands Act. It is not the intention of the court to be the destroyer of bargains, and in my quest to find an answer to the unfortunate predicament in which the Appellant finds himself, I have given anxious consideration to the oral and written submissions of the Appellant, however I have to conclude that the option agreement relied on by the Appellant is a nullity in law, and in fact could have been disregarded by either party. For the reasons set out above, ground one of the appeal is dismissed.

Ground two- Was the land ever allocated to the deceased?

[28] The short answer to this question is; no. The Appellant contends that by virtue of the Agreement the deceased vendor gave the Appellant an option to purchase a lease which, he concedes the deceased was yet “in the process of obtaining from the Director of Lands”. Thus, the land which is the subject matter of the agreement had not been identified at the time the agreement was executed. On 11^th November 2005, the deceased countersigned a letter by which he confirmed that he had made an application to the Director of Lands for a lease, under Application No. A/33/2002, and that he had authorised the Appellant “to seek details and information regarding this application, from the Lands Department, and other government departments as the need arises to progress his application.”

[29] By a letter dated 8^th June 2006 (RHC 35), the Director of Lands wrote to the deceased and Brij Lal (apparently, the brother of the deceased), stating that approval had been given to survey the land occupied by them (RHC 35). The material part of this letter states as follows:

“Please be advised that the Department has given approval for you to seek the services of a private surveyor to carry out the survey of your current occupational area at Ellington, Rakiraki, and produce a Survey Plan for registration so that individual leases could be issued to you both.”

The Appellant’s Claim of an Equitable Interest in the Land

[30] The Survey Plan was subsequently endorsed and was approved by the Director of Lands on 29^th April 2009 (RHC 39). In these circumstances, the Appellant claims that he had an equitable right to the lease because the Director of Lands had, in the letter dated 8^th June 2006, undertaken to issue the lease to him upon meeting certain conditions including the surveying of the land. The Appellant contends that he could not exercise his option because the deceased died before the currency of the Agreement; the agreement does not state that time is of the essence, the deceased had accepted payments and had the deceased been alive, he would have allowed the Appellant to take all of these actions without opposition and it would have amounted to a waiver of any time clause. In these circumstances, the Appellant moves that he be allowed to continue with the agreement which is now vested in the Public Trustee, so that when he opts to exercise the option in the agreement which he says, still stands, it will then be a matter for the Director of Lands to determine whether or not consent ought to be granted.

[31] An examination of the letter dated 8^th June 2006 indicates that that initial steps in respect of the process of allocating land to the deceased had begun. It does not reveal whether there had been previous correspondence between the deceased and the Director of Lands. It refers to the land he was apparently occupying at the time. On a plain reading of the letter, it cannot be denied that the deceased was being given an indication that when the survey was completed, the land that he was in occupation of, would be transferred to him. Or put differently, the said letter does not unequivocally indicate that the said land would not be allocated to the deceased. It cannot be denied that it probably gave the deceased more than just a glimmer of hope. But I am not prepared to put anything further on that letter.

[32] In respect of ground two of the appeal, the position of the 1^st Respondent is that the permission given to conduct the survey is not an automatic ground for an entitlement to the lease, and that a party who deals with State land illegally cannot rely on the principles of equity to assist him. As a matter of general principle, this appears correct.

[33] In arguing ground one of the appeal, the learned Counsel for the 1^st Respondent drew the attention of the Court to section 13 of the State Lands Act which provides as follows:

13.-(1) Whenever in any lease under this Act there has been inserted the following clause: -

"This lease is a protected lease under the provisions of the State Lands Act"(hereinafter called a protected lease) it shall not be t be lawful for the lessee thereof to alienate or deal with the lanprised in the lease of any any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same, without the written consent of the Director of Lands first had and obtained, nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease”. (Emphasis added).

[34] The submission of the learned Counsel for the 1^st Respondent was that even if the court does not accept that thewords “sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same, without the written consent of the Director of Lands”, is wide enough to subsume even an “option agreement”. This argument is unacceptable because it is diametrically at variance with the position taken by him, that there was no lease given to the deceased.

[35] Section 13 of the State Lands Ordinance is engaged only when a lease is already in existence, and that lease contains the clause “This lease is a protected lease under the State Lands Act”. Since it is a fact that there was no lease executed between the deceased and the Director of Lands, it is not open to the 1^st Respondent to argue that the Agreement between the Appellant and the deceased was in breach of section 13 of the State Lands Act. Accordingly, the agreement executed between the Appellant and the deceased was void for uncertainty of the subject matter. It was not void for contravention of section 13 of the State Lands Act.

[36] In all the circumstances of this case, the subsequent identification of the land cannot, be linked to the agreement entered into between the appellant and the deceased, to the extent that enables this court to conclude that the land in issue had been “allocated” to the deceased. That, indeed cannot be the case, for according to the Appellant, by 14 October 2006, (RHC 21, paragraph 11 of the Appellant’s affidavit), Sunil Prasad was reported missing, by his brother Brij Lal, and the Director of Lands cannot be deemed to have been coordinating or dealing with him after that point in time. Therefore, the learned Judge was not in error when he held that the land in question was never allocated to the deceased, and the Appellant cannot hope to benefit out of the agreement he entered into with the deceased. The sympathy that the Appellant’s predicament may naturally evoke, cannot be a basis on which the law relating to contracts can be extended. Ground two of the appeal is therefore dismissed.

Ground three of the appeal - Section 90 of the Land Transfer Act.

[37] This ground alleges that the learned Judge’s interpretation of section 90 of the Land Transfer Act is erroneous, because the Appellant did not seek a vesting order under section 78 of the Land Transfer Act. The 1^st Respondent did not address the third ground of appeal. Nothing turns on this, and I do not find any merit in this ground. Ground three of the appeal is therefore dismissed.
Section 8 of the Succession, Probate and Administration Act (Cap.60 )

[38] The death of the deceased Sunil Prasad was made known to the Director of Lands who states so in the affidavit in opposition filed on his behalf, (RHC 65), and the Death Certificate of the said Sunil Prasad has been annexed to this affidavit. However, he was unable to offer further information in that regard.

[39] By letter dated 13 November 2014 Solicitors on behalf of the Appellant, wrote to the 2^nd Respondent intimating to him that the said Sunil Prasad had been declared dead, and that in terms of the provisions of section 8 of the Succession, Probate and Administration Act (Cap. 60), his estate vests in the 2^nd Respondent and inquired whether he had been made aware of the death. The 2^nd Respondent replied by letter dated 18 December 2014, that he had conducted a search of Wills in the Registry of the Public Trustee Corporation Limited, and that there was no record of a Will, nor had they received any information of his death. The 2^nd Respondent did not appear in the court below or in this court, despite having been noticed. Basically, all efforts to trace Sunil Prasad, or his successors drew a blank.

[40] The agreement dated 27 July 2005 between the Appellant and the deceased was not illegal, but was void for uncertainty. It does not give the Appellant any right in law to claim that the Director lands be compelled to issue the Appellant a lease.

[41] However, in view of all the peculiar circumstances of this case, and the consistent interest shown by the Appellant evidenced by the steps taken to survey the land, and see finality to the execution of the lease, (no doubt in favour of the person who is now deceased), there does not appear to be any legal impediment to the Director of Lands, giving genuine consideration to the application of the Appellant, and granting him a lease in accordance with law.

The Orders of the Court are:

1. The Appeal is dismissed, and the judgment of the High Court dated 14 June 2017 is affirmed.
   
2. The parties will bear their costs.
   

Hon. Justice S. Lecamwasam

JUSTICE OF APPEAL

Hon. Justice J. Almeida Guneratne

JUSTICE OF APPEAL

Hon. Justice Farzana Jameel

JUSTICE OF APPEAL