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Rapchand Holding Ltd v Native Land Trust Board [2010] FJHC 208; HBC438.2003L (16 June 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION


Civil Action No: HBC 438 of 2003L


BETWEEN:


RAPCHAND HOLDING LIMITED
Plaintiff


AND:


NATIVE LAND TRUST BOARD
Defendant


FINAL JUDGMENT


Judgment of: Inoke J.


Counsel Appearing: Dr Sahu Khan for the Plaintiff
Mr N Tuifagalele for the Defendant


Solicitors: Sahu Khan & Sahu Khan for the Plaintiff
In-house lawyers for the Defendant


Date of Hearing: 11 February 2010
Date of Judgment: 16 June 2010


INTRODUCTION


[1] This is a dispute over the cancellation of a lease of native land by the Defendant (also referred to as the “NLTB”). The Plaintiff alleges that it was issued with a binding commercial lease for tourism purposes but the NLTB unlawfully terminated it and sold it to another company.

CASE HISTORY


[2] It is one of those cases with a sad history of delays through the courts, partly due to the parties and their lawyers and partly due to delays in the court system itself. The Writ of Summons with the Statement of Claim was filed on 10 December 2003 but the Defence was not filed until 9 September 2004 because judgment in default of defence was entered and the matter went on appeal to the Court of Appeal which remitted it back to this Court for rehearing. The Reply was filed on 15 October 2004. This not so unusual history included one interlocutory judgment entered for default of defence (10 May 2004), application to set it aside and the setting aside of the judgment, application to re-instate the default judgment for delay by the Defendant, order to re-instate the default judgment (25 February 2005), assessment of damages hearing and judgment in favour of the Plaintiff (13 May 2005), appeal to the Court of Appeal (ABU 41 of 2005) and the decision on appeal delivered on 10 November 2006 to the effect that the order of 25 February 2005 be set aside and the Defendant allowed to defend and the matter tried. A full account of the history of this matter is reported in the Court of Appeal decision: Native Land Trust Board v Rapchand Holdings Ltd [2006] FJCA 61; ABU0041J.2005 (10 November 2006).

[3] The documentation in this case is also riddled with typographical errors. The company seal bears the name RAPCHAN HOLDING LIMITED so I take it that the registered name of the Plaintiff is as per the company seal. The correspondence from its previous solicitors had the name RAPCHAN HOLDINGS LIMITED (emphasis added). The Plaintiff’s name in the original writ was RAPCHAN HOLDINGS LIMITED but later documents had its name as RAPCHAND HOLDINGS LIMITED. The only name consistent through out was the name of the Plaintiff in the lease documents – RAPCHAN HOLDING LIMITED – as in the company seal. I will therefore treat the Plaintiff’s name as stated in the company seal and in the lease documents, namely, RAPCHAN HOLDING LIMITED, and treat the Court documents as amended accordingly.

STATEMENT OF CLAIM


[4] The Original and Amended Statement of Claim plead a lot of facts and evidence rather haphazardly so I have rearranged them into a more comprehensible narrative. The Plaintiff was the holder of a lease of 0.75 acres of native land originally known as Legalega M/L 116 Ref No 4/10/4581 from the Defendant as landlord and trustee on behalf of the native landowners under Instrument of Tenancy No 5706. The land was swampy and not fit for any other use other than rice farming. On 9 November 1992 the Plaintiff applied to the Defendant to convert the land from agricultural use to commercial use and to issue it with a 99 year Tourism Lease. That was approved on 23 May 1994. The Plaintiff says that sometime in 1994, a lease agreement was duly executed (by the Plaintiff) and stamped but not registered with the Registrar of Titles because of an error by the Defendant (the “first lease”). Letters on 19 May 1996 and 3 June 1996 were written by the Plaintiff and its lawyers requesting the Defendant to send the lease documents. A further letter was sent on 29 January 1997 by the Plaintiff’s solicitors enquiring about the delay. A response was received from the Defendant on 12 February 1997 advising that the documents were being finalised. Four days later the Defendant advised that they were having printing problems in its Lautoka office so the documents had to be sent to Suva for printing. It was not until after 2 March 1998 that the Defendant sent the Plaintiff’s solicitors a draft copy of the lease documents. On 1 July 1998 the Defendant wrote to the Plaintiff’s solicitors advising that it had altered the lease agreement. Further letters were exchanged and under cover of its letter of 14 January 1999 the Defendant submitted the documents for execution by the Plaintiff. Finally, on 19 November 1999, the Defendant granted the Plaintiff’s Native Lease No 25050 for Tourism purposes (hereinafter referred to as “the lease”).

[5] The lease was for 3478 square metres of native land for 99 years backdated to commence on 1 July 1994. On 26 April 2000, the Defendant advised the Plaintiff’s solicitors that the lease had been stamped and registered. Because of the swampy nature of the land, the Plaintiff had to carry out earth filling works and allow the landfill to settle. On completion the Defendant sent its building plans for “Tourist Office” on 17 July 2003 for approval by the Defendant. However, on 11 September 2003 the Defendant terminated the lease pursuant to clause 3(b) of the lease for the Plaintiff’s failure to lodge detailed plans of the hotel for approval. The Plaintiff requested an extension of time on 19 September 2003. The Defendant wrote on 22 September 2003 to the Plaintiff’s solicitors granting an extension provided the “development got off the ground within (the) next 3 months”, i.e. to 22 December 2003. Instead, the Defendant changed its mind on 30 September 2003 and proceeded with its notice of 11 September 2003 and re-entered on 1 October 2003. The Plaintiff blames the Defendant for the delays in the preparation and issue of the lease.

[6] The Plaintiff claims that the termination and re-entry was unlawful which caused it to lose a business opportunity and waste expenditure on developing the land to that stage. The Plaintiff claims that the Defendant had breached its fiduciary duty to the Plaintiff by failing “to take reasonable care to ensure the Defendant followed the protocol” as the Plaintiff had invested a lot of money on the project which the Defendant knew at all material times.” The Plaintiff seeks the following orders:

THE DEFENCE


[7] The Defence likewise is long winded probably because of the Statement of Claim so I have condensed it too to a chronological narrative. The land was formerly leased by Ram Manorath since 1981 under an ALTA[1] lease. The lease was later transferred to Ramend Kumar Charan on 29 June 1985 who later surrendered it on 1 June 1994 with a view to converting the lease to a Hotel lease. The Defendant says that its letter of 23 May 1994 was an offer of a Tourism lease and not an approval for conversion from agricultural to commercial lease. It admits that a Tourism lease between the parties was executed on 6 September 1994. But it says that despite vigorous attempts by the Plaintiff to get a registered lease from the Defendants, three years and three months after the registered lease was granted the Plaintiff was still not able to erect structures for hotel purposes as was required under clause 3(b). It also says that it had reason to cancel the lease because the Plaintiff had lodged on 13 August 2002 with the Defendant an application for consent to assign the lease to Air Pacific Employees Credit Union and was intending to sell and assign the lease for $70,000. It denies being responsible for the delays because other agencies like Town and Country Planning, Lands Department, Surveyor General and private surveyors were also involved and they had their own inherent delays. The Defendant also denies that it owed the Plaintiff any fiduciary duty. The lease was sold to Sun Beach Fiji Limited after the Defendant re-entered.

THE REPLY


[8] In its Reply, the Plaintiff says that it decided to sell the land in 2002 because of the downturn in tourism business due to political instability in the country. However, the company later decided not to proceed with the sale and instructed its solicitors to withdraw the application for consent to transfer which they did on 16 August 2002.

THE AGREED FACTS FROM THE PTC MINUTES


[9] The agricultural lease was first issued to Ram Manorath. It was transferred to Ramend Kumar Charan on 29 June 1985. On 9 November 1992, Charan applied to the Defendant for a 99 year commercial lease by converting the agricultural purpose to tourism purpose. On 23 May 1994, the Defendant offered to Charan a Tourism Lease which he accepted. On 6 September 1994 a Tourism Lease was executed by Charan as Lessee (the first lease). The lease was assigned by Charan to the Plaintiff. On 19 November 1999 the Plaintiff and the Defendant executed a lease which became registered on 9 December 1999 as Native Lease No 25050. On 13 August 2002, the Plaintiff applied for consent to assign the lease to Air Pacific Employees Credit Union but later withdrew it on 16 August 2003. The plans for the Plaintiff’s building were approved on 1 August 2003 by the Defendant, Director of Town and Country Planning and the local authority. By letter dated 11 September 2003, the Defendant gave notice to terminate lease No 25050. The Plaintiff’s solicitors responded on 19 September 2003. The Defendant responded on 30 September 2003. By Notice dated 30 September 2003, the Defendant re-entered on 1 October 2003 and sold the lease to a third party, Sun Beach Fiji Limited.

[10] I note that the NLTB letter of offer of the first lease dated 23 May 1994 was addressed to the Plaintiff through its directors (ABD 2) rather than to Charan personally and the draft first lease document (ABD 23) was also between the Plaintiff and the NLTB and not with Charan personally.

THE HEARING


[11] The action was heard on 11 February 2010. At the commencement of the hearing, counsel for the Defendant asked me to decide a preliminary issue which he submitted would decide this case. He submitted that prayer (a) of the Amended Statement of Claim sought a declaration that re-entry was unlawful but the Registrar of Titles had already exercised his powers under s 57 of the Land Transfer Act [Cap 131] and cancelled the Plaintiff’s interest in the lease. And the Registrar having done that, that was the end of the matter, counsel submitted.

[12] Section 57 of the Act provides:

57. The Registrar, upon proof to his satisfaction of lawful re-entry and recovery of possession by a lessor either by process of law or in conformity with the provisions for re-entry contained or implied in the lease, shall cancel the original of such lease and enter a memorial to that effect in the register, and the estate of the lessee in such land shall thereupon determine but without releasing the lessee from his liability in respect of the breach of any covenant in such lease expressed or implied, and the Registrar shall cancel the duplicate of such lease if delivered up to him for that purpose:


Provided that-


(a) where the right of re-entry is based upon the non-payment of rent only, the Registrar shall, where any person other than the lessee has a registered interest in the lease, give notice to such other person at his address appearing in the register to pay the rent in arrear and, if the same is paid within one month from the date of the said notice, then the Registrar shall not cancel the original or duplicate of such lease; and


(b) unless the re-entry and recovery of possession have been by formal process of law, the Registrar shall require notice of application to register the same to be served on all persons interested under the lease, or, failing such notice, shall give at least one calendar month's notice of the application by publication in the Gazette and in one newspaper published and circulating in Fiji before making any entry in the register.


[13] I dismissed his application because I was of the view that this Court could decide for itself whether the Registrar had properly exercised his powers or not. Counsel elaborated on his oral submissions by his later written submissions which I will now consider to determine whether I was right in dismissing his oral application.

[14] In his written submissions he said the Defendant exercised its right of re-entry by formal process of law pursuant to s 57(b) and had complied with all the required steps. The Registrar exercised his powers under s 57, so, for all intents and purposes, re-entry and cancellation of the Plaintiff’s interest was completed on 1 October 2003, i.e. the date of actual re-entry.

[15] His argument, as best as I can follow, ran like this. The lease was registered by the Registrar pursuant to s 54(1) and (2) of the Land Transfer Act. The re-entry process was begun by a notice under s 105 of the Property Law Act [Cap 130]. That section gave the Plaintiff the right to seek relief against forfeiture. The Plaintiff failed to exercise its right to seek relief which relief the Court could have granted under s 168 of the Land Transfer Act. In the absence of any court order being served on the Registrar, the Registrar was satisfied and acted lawfully pursuant to s 57 to cancel the lease. Further, the fact of registration gave the Registrar the protections contained in Part V of the Land Transfer Act, in particular s 38. What the Registrar had done could not be undone. Counsel cited Patton & Storck Ltd v Central Rentals Ltd [1995] FJHC 18; Hbc0156j.94s (19 January 1995) in support of his argument.

[16] Having considered his written submissions I do not think that I was wrong in dismissing his oral application. Firstly, the re-entry in this case was not pursuant to a court order so it is not re-entry by “process of law” as submitted.

[17] Fatiaki J, as he then was, said, as obiter dicta, in Patton & Storck Ltd v Central Rentals Ltd [1995] FJHC 18; Hbc0156j.94s (19 January 1995), that the Registrar in that case was acting “judicially” when he exercised his powers under s 57. I think counsel’s argument is based on this statement which, with respect, I do not quite agree with. Re-entry in that case was pursuant to an alleged breach of a provision in the lease by the lessee subletting without the lessor’s prior consent. The relevant passage from the judgment is this:

Before dealing however with the various matters relied upon by the Acting Registrar of Titles, it is convenient at this stage to deal with the complaint of the plaintiff company that its lease was cancelled by the Acting Registrar of Titles "... without giving any opportunity to the lessee to make any submissions on the same."


In this latter regard it is common ground that the Acting Registrar of Titles in cancelling the plaintiff company's lease had not sought its views. That the exercise of the power vested in the Registrar of Titles under Section 57 of the Land Transfer Act (Cap. 131) can have far-reaching and quite drastic consequences cannot be doubted, nor, in my view, can the action of the Registrar of Titles be classed as a purely 'administrative act' as appears to have been suggested by learned counsel who appeared for the Registrar.


Section 57 of the Land Transfer Act (Cap. 131) provides:


"The Registrar, upon proof to his satisfaction of lawful re-entry and recovery of possession by a lessor either by process of law or in conformity with the provisions of re-entry contained or implied in the lease, shall cancel the original of such lease and enter a memorial to that effect in the register, and the estate of the lessee in such land shall thereupon determine ..."


On my reading of the 'Section' the Registrar in exercising his power to cancel a lease is acting 'judicially'. He must be satisfied that there has been an actual valid re-entry and a recovery of possession, either by process of law or by exercise of any power of re-entry contained or implied in the lease.


To put it another way and this time paraphrasing the words of Myers C.J. in Christoffel v. Mokau Collieries Ltd. (1934) N.Z.L.R. 170 at S171, the Registrar must be satisfied firstly, that the lessor is entitled to exercise the power of re-entry contained in the lease, and secondly, that the re-entry and recovery of possession of the premises was valid.


Further, by proviso (b) to the 'Section', unless the re-entry and recovery of possession have been obtained by judgment in an action for possession, the Registrar is required to be satisfied that notice of the application for registration of the re-entry has been served on all persons interested under the lease, or, failing that, the Registrar must himself give a month's notice of the application in the Gazette and in a local newspaper.


In the circumstances there would appear to be some merit in the plaintiff company's complaint. Learned counsel for the Registrar however, disputed the plaintiff company's right to be heard on an application under Section 57 and cited the Privy Council's decision in Laffer v. Gillen [1927] UKPCHCA 2; (1927) 40 C.L.R. 86 where it was held that a provision in a sale and purchase agreement which empowered the vendor to determine the agreement "(if) satisfied on such evidence as he deems sufficient" merely gave rise to an administrative function in which the vendor might form an opinion without giving the purchaser an opportunity of being heard or of meeting allegations to his prejudice.


Their lordships also dealt with a statutory provision in which the Registrar is directed to make an entry in the Register upon receipt of a notice and held that the provision (which is materially different from our Section 57) does not assume a lawful forfeiture or determination but merely gives effect to a forfeiture or determination which the Commissioner says has been lawfully made.


I confess that the decision of the Privy Council in Laffers case (ibid) has been of little assistance to me in resolving the plaintiff company's particular complaint. More relevant are the observations of Hyne C.J. in Ram Kali v. John Bayley and The Registrar of Titles 4 F.L.R. 139 when he rejected a somewhat similar complaint in the case where the Registrar had cancelled a lease in the exercise of his power under the predecessor to the present Section 57 of the Land Transfer Act. The learned Chief Justice who had the benefit of detailed evidence of the practice of the Titles Office, said at p.141:


"It is said, ..., on behalf of the plaintiff (lessee) that the plaintiff had a right to be heard. There is no such requirement in Section 51 or elsewhere in the Ordinance. The proviso only requires notice to be given to sub-lessees or sub-tenants when re-entry is based on non-payment of rent, to give them an opportunity of paying arrears if they wish."


With all due regard to the learned Chief Justice's observations I would respectfully differ with his view on a lessee's right to be heard on an application under Section 57. The provisions of Section 51 of the Land (Transfer and Registration) Ordinance (Cap. 136) (to be found in Vol. III of the 1955 Laws of Fiji reprint) which was under consideration in Ram Kali's case has been materially amended by the addition of an additional 'proviso (b)' in the Land Transfer Act 1971 which introduced a further more general notification requirement in respect of all applications under Section 57 of the Land Transfer Act (the successor to Section 51) which are unsupported by a court order.


Needless to say where re-entry and recovery of possession have been effected "by formal process of law", the Registrar need not concern himself with the lawfulness of the re-entry or the completeness of the recovery of possession which he would otherwise have had to consider in the absence of a court order and it is in this latter context that notice must "be served on all persons interested under the lease".


One is tempted to ask why the notification if the persons notified have no right to be heard or at least, a reasonable expectation that they would be given an opportunity to be heard? In my view 'natural justice' demands it and the statutory language although not expressly requiring it, quite clearly supports it.


Recently Scott J. had occasion in Ranjit Singh & Others v. Gordon Wilson Speakman and The Registrar of Titles C.A. No. 254 of 1992 to consider the meaning and effect of 'proviso (b)' to Section 57 and in an unreported judgment observed of the additional notification requirement:


"The purpose of this requirement to me is quite clear. It is to enable a lessee to seek relief from the Court against the cancellation, in other words to allow the lessee himself to have recourse to formal 'process of law' when faced with an application for cancellation which was not itself preceded by such a formal process."


I respectfully concur with those remarks which further emphasises the judicial nature of the Registrar's function in the exercise of his power under Section 57 and re-inforces the need to give a lessee sufficient notice of an application in order to enable him to show cause against the exercise by the Registrar of his powers under the Section and seek relief against forfeiture.


Be that as it may I do not propose to reach a final view on this inconclusive issue which was not seriously pressed by learned counsel for the plaintiff company. Instead I shall deal with the originating summons on its merits.


[18] With respect, I think the exercise of power by the Registrar of Titles under s 57 is not a judicial act but simply an administrative act which requires him to be satisfied, as the section says, that the re-entry was "in conformity with the provisions of re-entry contained or implied in the lease". That, in my view, is not an inquiry into the merits of the re-entry. All that the Registrar needs to be satisfied with is that the application shows that there was a lease, there was a provision for re-entry and the requirements for that provision had been met. A statutory declaration or other sworn testimony deposing to those matters would suffice. He is not, in my view, required to inquire whether the requirements were in fact met or whether in law they entitled the lessor to exercise his rights under the re-entry provision. As was said in Kali v Bayly [1954] 4 FLR 139, 141 by Hyne CJ: "All that he need do is to be satisfied that the declaration was right on the face of it".

[19] Further, I respectfully agree with the observations of Hyne CJ in Kali v Bayly as cited in Patton & Stork Limited that the lessee had no right to be heard before the Registrar. The need to give notice in cases where there is no court order for possession is to enable the lessee to either remedy the breach or to take appropriate court proceedings for relief, for example, under s 168 of the Land Transfer Act. Obviously, in the case of a court order for possession no notice is required because the order itself is notice and the lessee would have or should have vacated by then.

[20] Further, as I indicated to counsel for the Defendant at the hearing, surely the Registrar is not expected to search out the truthfulness or the merits of each such application, or for that matter, in every other application where he is given powers to do certain acts subject to him "being satisfied upon proof"[2]? As was pointed out by Hyne CJ in Ram Kali, the applicant need not provide evidence of lack of fraud or misrepresentation. The Registrar is busy enough without having to conduct hearings and inquiries as to merits of applications.

[21] When counsel first raised the preliminary point I understood him to be making an application to join the Registrar of Titles as a party. However, even if that was the case, this Court can decide whether the re-entry was proper or not without the Registrar’s presence. Further, as counsel for the Plaintiff pointed out, these proceedings have been ongoing since 2003 and joinder should not be allowed at this very late stage. The case has been to the Court of Appeal and back and no one had ever thought about joining the Registrar until now.

[22] Having now fully considered Defendant counsel’s written submissions on the point I am not convinced that I was wrong when I made my Ruling on the morning of the hearing which was, as noted on the file:

THE EVIDENCE


[23] The documentation in this action consisted of an agreed bundle of 26 documents tendered by consent, a set of Defendant’s bundle of documents and a supplementary Plaintiff’s bundle of documents. The agreed bundle was tendered in toto which the witnesses referred to without having to prove admissibility. The other documents were to be tendered as and when referred to by witnesses and were open to challenge.

[24] The company accountant gave evidence that the project was to build a hotel and office complex next to the Nadi International Airport. The accountant had prepared a report[3] dated 18 June 2004 and headed "Financial Projections and Valuation of Business Opportunity" based on his experience and from data based on other hotels that he had done similar projections on in Nadi. The construction costs were estimated by the Architect and Engineers. The costs of the project which were incurred up to the date of the report were $241,000. The figure was arrived at by the accountant from the paperwork and receipts provided to him by the company. He used a "discounted cash flow" basis. The report concluded that the lost business opportunity was $1,334,152. He explained that had the project proceeded the Plaintiff would have made this amount of money. The project did not proceed because the Defendant terminated the lease. That lost business opportunity is claimed in the Amended Statement of Claim, paragraph 34(ix).

[25] No opposing accountant or expert was called by the Defendant. The expertise of the Plaintiff’s accountant was established and not challenged so I am constrained to accept his figures as correct despite the valiant, though limited, cross examination by counsel for the Defendant.

[26] Ramen Charan, the principal of the Plaintiff gave evidence for the company. He left Fiji in 1988. He first leased the land to build a motel. He applied to the NLTB for a 99 year commercial lease. He wrote a letter to the NLTB to that effect on 9 November 1992. The letter read:

I would like to apply for a 99 years of commercial lease to build a motel. It has been already approved by the town planning and country board. The land plan and the approval letter has been lodged by Harris & Garrison (sic) Company, Lautoka.


I wish to start the development of my motel sometime at the beginning of next year.


....


Yours faithfully,

(Signed: Ramend Kumar Charan)


[27] He then received a letter from the NLTB dated 23 May 1994 which he said approved his application. He was taken through the various letters in the agreed bundle of documents which related to the facts as pleaded in the Amended Statement of Claim leading up to the signing of the lease, which were essentially his solicitors inquiring as to when the lease document would be available for execution and registration, so I will not repeat them here.

[28] He said the lease was eventually executed by his company, Rapchand Holding Limited, on 19 November 1999 and backdated to 1994. About three years later on 21 August 2002, the company solicitors wrote to the NLTB advising that soil and land development had taken place but the soil had to settle before construction began so they requested an extension of time for construction with plans to be submitted in due course. No extension was granted. On 17 July 2003, he wrote to the NLTB informing them that the land fill had settled and that he was intending to build so he was sending them the building plan and fee for approval and endorsement. The plans were approved by the NLTB on 21 July 2003.

[29] He then received a letter from the NLTB dated 11 September 2003 written pursuant to s 105 of the Property Law Act. The letter read:

Our records show that you have committed a fundamental breach of a term or condition of your lease namely that you have failed to comply with the requisite Clause 2(b) of the Lease. Clause 2(b) states that you were required to prepare and lodge with the Board on or before the first day of September 1994 detailed design plans, elevations and specifications of a Tourism Resort to be constructed on the subject land for tourism and resort purposes. To date no such building has ever been erected on the site.


In view of the breach of your lease conditions the Board has now terminated your lease and you are to quit and give vacant possession of the subject land to the Board as Landlord immediately.


[30] On 19 September 2003, the company’s solicitors responded to this letter. The letter said:

Please be advised that we have sent a letter to your office on August 21, 2002 asking for extension of time for construction of tourist development. Further, please be advised that our client has done the soil/land development for the land to settle. The land developers have assured our client that the said land is ready for construction.


Further, our client submitted you with the building plan with a requisite fee on the 17th day of July 2003. This was approved by Mr Mesake Mara, a Senior Estate Officer of Native Land Trust Board, Nadi on the 21st of July 2003. Attached is a copy of the approved plan.


To date we have been in liaison with Native Land Trust Board for development and it is a surprise that this action is taken since NLTB has always been informed.


In the circumstances we request for no further action be taken that we proceed with the developments.


[31] The NLTB responded on 22 September 2003 as follows:

The legal action taken is in line with the contractual obligation that we have with the client in regards to the development of his leasehold.


As you are fully aware this lease was issued in 1994 and it was now almost 10 years the land is still vacant and undeveloped. Being located on a very prime site, we are of the view that the development of the site would improve the general appearance of the area let alone the increase tourism activity within the airport area.


Above all we are also mindful of the benefit that goes out to the landowners which without a fully operational resort would be very small. It is through this that we decided to take legal action unless there is firm undertaking from your client that the development will get off the ground within the next 3 months.


If I do not receive any favourable response from you within that period I will have no other alternative but to instigate legal action for the cancellation of your clients lease.


[32] This letter was followed by a further letter on 30 September 2003 saying:

We refer to our earlier letter dated 22 September 2003 in relation to the above matter and in particular to the notice of re-entry dated 11 September 2003 from the Native Land Trust Board regarding the subject land. The Board’s position remains the same and there can be no reconsideration with regard to the status of the notice of re-entry.


An intended transfer of the subject land to Air Pacific Employees Credit Union based in Nadi Airport was executed and submitted for our consent on 13 August 2002 and received by the Board on 14 August 2002. This is a further fundamental breach of the conditions of the lease.


That being the case you are to quit and give vacant possession of the subject land to the Board immediately. You are not to enter or engage in any work whatsoever on the subject land.


In the circumstances you are hereby advised to disregard the content of the aforesaid letter giving any purported impression of negotiation on the issue. We regret that our position on the re-entry remains unaltered due to the seriousness of the various fundamental breaches of the lease conditions committed by your client.


[33] The Plaintiff was also given two notices of "execution of re-entry powers". One was dated 30 September 2003 which read:

PURSUANT to powers granted by clause 2 of the Tourism Lease Agreement dated 6 September 1994 and there being Notice having been issued on 11 September 2003 and with the Notice having now expired and no rectification of the said breach having been implemented, the Lessor is now left with no other option but to exercise its re-entry powers pursuant to the powers granted by the above-mentioned clause in the lease.


[34] The second notice was dated 1 October 2003 and was in similar terms except that re-entry was said to be pursuant to clause 3 of the lease.

[35] Mr Charan said that all monies owed to the NLTB have all been paid up and on time. He said he also paid $19,500 to the landowners’ chief to sign the consent form for the land to be converted to commercial lease. He also paid for land surveys and other expenses and had travelled to Fiji 20 times for this project. His company is claiming all these expenses in this action.

[36] However, because the land has already been sold to someone else the company is not seeking an injunction now. The company is only seeking damages.

[37] In cross examination, Mr Charan said that he personally surrendered the Instrument of Tenancy 5706. He never had any intention other than to build a hotel because it was to be a family business. In respect of the alleged transfer to Air Pacific Employees Credit Union, he said "they wanted to go 50/50 share with the Credit Union and not sale". The Credit Union wanted offices and his company wanted to build a hotel. He said that when he found out that the Credit Union wanted to sell, he immediately withdrew the consent application. His lawyer advised him against selling or sharing the land.

[38] Mr Lawrence Charles Meredith Browne of Queensland, Australia gave evidence on behalf of the Plaintiff. He said that he was going to go into a joint venture with Mr Charan. He had known him since the late 1980s. He arranged for finance from Australia. He advanced AUD$62,500 in 2003 to the company for this project. He was in a position to finance the project. He made 11 trips to Fiji, the first being in September 2003 and subsequently because of this case.

[39] In cross examination he said Charan showed him the plans in July 2003 and invited him to come to Fiji to look at the project. But when he arrived and read the letter of 11 September 2003 he decided not to invest. But he changed his mind when he saw the NLTB letter of 22 September 2003 giving them a 3 months extension. The money he paid to the company was after the project was terminated. He paid because he had promised Charan before the termination that he would pay. He joined as a director although he was not sure whether he was registered as such. He understood that he was going to be a shareholder as well. He relied on the company accountant to do the paperwork.

[40] The NLTB called one of its estate officers who was familiar with the file. She said the lease was terminated for non compliance with the "building clause". She said that after NLTB issued the lease and the Plaintiff did not comply within 2 years, NLTB proceeded with re-entry. They had followed the proper process in this case.

[41] In cross examination she agreed that the lessee was not given a chance to remedy the alleged breach. She also agreed that the 3 months extension granted on 22 September 2003 would have expired on 22 October 2003 which was after re-entry on 1 October 2003. She also agreed that the plans had been approved on 21 July 2003, so the breach in respect of clause 3(b) had also been remedied before re-entry on 1 October 2003.

[42] At the end of evidence, both counsel asked and were given 5 weeks in total to file written submissions which they have done and for which I am very grateful.

LIABILITY


[43] The Plaintiff’s claim is for a declaration that the notice of 11 September 2003 and re-entry on 1 October 2003 is unlawful, null and void [prayer (a)]. Consequent on that the Plaintiff claims special and damages [prayers (d) and (e)]. The claims for injunction are now abandoned [prayers (b) and (c)].

[44] The Plaintiff is not asking this Court to declare that the Registrar’s act of cancelling the lease under s 57 was unlawful, null and void. Even if that was the order sought, for the reasons given above that the Registrar was acting "administratively", I would have held that the NLTB letter of termination of 11 September 2003 and the notice of execution of re-entry of 1 October 2003 in respect of clause 3 were on their faces sufficient proof entitling the Registrar to exercise his powers under s 57 and cancel the lease. The cancellation of the lease in this case was, in my opinion, a valid exercise by the Registrar of Titles of his powers under s 57 of the Land Transfer Act.

[45] I must admit to having some difficulty ascertaining what the Plaintiff’s causes of action are. As best as I can establish from the Amended Statement of Claim, I think they are: (1) breach of fiduciary duty owed by the Defendant to the Plaintiff [paragraph 31] and, (2) illegal and unlawful re-entry and possession [paragraph 28].

[46] I do not think as a matter of law, the cause of action based on fiduciary duty can be sustained. No authority has been cited to show that the contracting parties owed each other any duty of care as fiduciaries or in any other capacity. Their duties were purely contractual as expressed in or implied into their contract.

[47] The only cause of action is therefore one based on unlawful re-entry and possession occasioning loss. The onus is on the Plaintiff to show that re-entry was unlawful.

[48] I note that Agreed Issue (1) in the PTC Minutes is "whether the Defendant was entitled to terminate lease Number 25050 as had been done by (it) and upon the grounds of termination as relied (upon) by them". Agreed Issue (4) is whether the notice of 11 September 2003 and re-entry on 1 October 2003 was unlawful, null and void. This, I think, is the issue that determines the outcome of this case.

WAS THE NOTICE OF 11 SEPTEMBER 2003 UNLAWFUL, NULL AND VOID?


[49] The lease was executed on 19 November 1999 and registered on 9 December 1999. It was to run for 99 years from 1 July 1994.

[50] The lessee’s covenant under Clause 3(b) was:

To prepare and lodge with the lessor for the lessor approval on or before the first day of September 1994 detailed design plans, elevations and specifications (hereinafter called "the plans") of a tourist resort to be constructed of substantial native materials on the land for tourism, hospitality, entering (sic), offices, shops and accommodation purposes and any other building ancillary to the Resort operations.


[51] So by the time the lease was executed and registered in 1999 the time set by clause 3(b) had already expired and the lessee’s obligations under the clause had not and could not have been complied with unless the plans were lodged some 5 years earlier, i.e. before 1994, which was not in fact done. The plans were only lodged on 17 July 2003 and approved four days later.

[52] Section 105 of the Property Law Act provides:

105. -(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition, express or implied, in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice –


(a) specifying the particular breach complained of; and


(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and


(c) in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.


[53] The notice of 11 September 2003 referred to clause 2(b) of the lease but it is obvious from the content of the notice and the subject matter, "Lease No: 4/10/4581", that the notice was referring to clause 2(b) of the first lease which was in exactly the same terms as clause 3(b) of the registered lease NL 25050. Also, I think it was quite clear to the Plaintiff and Mr Charan and their solicitors that the termination of the lease was principally on the basis of alleged non-compliance with the "building clause", clause 3(b). I do not think that they can now complain that they were mistaken as to the reason for the purported termination.

[54] Counsel for the Plaintiff submitted that the NLTB had waived any breach of clause 3(b) by executing the lease in November 1999. Thus, although counsel did not say so in so many words, the Plaintiff’s case was run on the premise that clause 3(b) was operative at the time the lease was executed despite the fact that the time for compliance had expired some 5 years earlier. Indeed, the Plaintiff’s case rested primarily on the submission that whatever the breach, by the time the Plaintiff became lessee, the building clause had already been breached by the previous lessee. The clause can only be breached once so the Plaintiff cannot be said to have breached it again.

[55] Dr Sahu Khan cited the unreported decision of this Court in Danam & Co Ltd v A. G. [2002] FJHC; HBC 209 of 2002L (17 October 2003) as supporting his submission. In that case, the building covenant required the lessee to erect an industrial building within 2 years from the commencement of the lease, that is, compliance by 31 December 2000. The original lessees had not complied with the covenant when they obtained the consent of the Director of Lands to transfer the lease. The land was subsequently transferred and on the second attempted transfer, an issue arose as to whether the breach was a continuing one. Byrne J, as he then was, adopted what was said by Ld Denning MR in In re King, Deceased. Robinson v Gray [1963] 1 Ch 459, 478, that:

Where the relevant obligation is to perform an act by a given date or within a reasonable period of time, it will fall to be classified as an obligation that can be broken only once. Thus if the particular act has not been performed by that date or within a reasonable time (as the case may be) there is a single breach of covenant. He asked himself the question: "Can the assignor in those circumstances afterwards sue the lessee for the breach that occurred, before the assignment, of the covenant to keep in repair? Clearly not: for that would mean that the lessee would be made liable twice over".


[56] Stephen v Junior Army & Navy Stores Ltd [1914] UKLawRpCh 103; [1914] 2 CH 516, 523 per Ld Cozens-Hardy MR; Jardine v AG for Newfoundland [1932] AC 275, 292 (PC) and Larking v Great Western (Nepean) Gravel Ltd [1940] HCA 37; [1940] 64 CLR 221, 236/7 Dixon J were also referred to in Danam & Co (supra) as supporting the proposition that a building covenant can only be breached once.

[57] The facts in Danam & Co (supra) however, are different from the present case for several reasons. The time for compliance had already expired when the lease was signed in 1999. The Plaintiff’s case is that it was Charan that committed the breach. However, it was he who wanted the lease assigned or issued to his company, the Plaintiff. I do not think that he should be allowed to take advantage of his breach by hiding behind his company.

[58] In any event, it is my view that it was the same lessee throughout. Although the PTC Minutes state as an agreed fact that the first lease, which was in Charan’s name, was later assigned to the Plaintiff and then subsequently became Native Lease 25050, the two lease documents in the Agreed Bundle of Documents (12 and 23) show that the Plaintiff company was the intended lessee and the lessee in fact.

[59] I come to the same conclusion in respect of the second case authority cited by Dr Sahu Khan: R Prasad Ltd v NLTB [2004] FJHC; HBC 1 of 2004L (17 June 2005). In that case the plaintiff acquired a native lease in 1999. The lease was for 75 years from 1941. The building covenant (clause 11) in the lease required the lessee to build a residential building with a minimum floor area of 400 square feet by 1943. An old wooden house with an area of 600 square feet had already been built on the land when the plaintiff acquired the lease. He obtained the approval and permission of the NLTB in 1997 and 1998 to build a commercial building on the site so in 1999 he demolished the old wooden building. However, because of the coup in May 2000, the project did not go ahead and the site remained vacant. A further building covenant (clause 12) required the plaintiff to build a new residential building within 2 years of the demolition of the old building, that is by 2001. In December 2003 the NLTB gave notice of breach of the building covenant (clause 11) and terminated the lease under s 105 of the Property Law Act. Connors J held that the breach, if there was a breach, occurred in 1943 and could not be breached again. In respect of an alleged breach of clause 12, His Lordship held that it had been waived by the NLTB accepting rent and agreeing to the plaintiff to mortgage the land to the bank:

If an obligation is to perform an act by a given time, once that time has elapsed and the act has not been performed, there is a breach of a single obligation and not of a continuing one. The fact that it still lies within the power of the lessee to perform the act cannot affect the nature of his obligations. In this field of law a reference to a continuing breach is a way of referring to breaches of a continuing obligation and does not refer to the ability to remedy a single breach: Fariman v Gates [1984] 271 EG 467 at 475 (CA).


[60] One can only speculate as to why the 1 September 1994 date for compliance under clause 2(b) of the first lease and clause 3(b) of the second lease was not changed. Both leases were signed by the Plaintiff some years after the compliance date had well passed. Charan and his company were legally represented throughout the lease negotiations. I think it was incumbent on them to make sure that they could meet the demands of those clauses. They had two opportunities to do it. The date was not changed so one can presume that the date was left unchanged deliberately. It was not the Plaintiff’s case that the clause was inoperative or that it allowed the Plaintiff a reasonable time within which to submit the plans after 1999.

[61] Further, I do not think that the plans that were submitted did in fact comply with the covenant. The covenant required the lessee to submit plans for a "tourist resort to be constructed of substantial native materials". The plans actually submitted were prepared by I. S. Chand & Associates, Architectural Consultants, for a two stage development. The first stage was for "Tourism Office". The plans showed the proposed building occupying the whole of the front part of the block of land and the rear portion was simply marked "Future Development for Hotel Used (sic)". The building was to be constructed of concrete and steel. One of the plans however, showed a second stage development sketch of 23 units and a swimming pool. The plan was not stamped "approved" like the others and gave no construction or other details and was more like a sketch.

BREACH BY FAILURE TO CONSTRUCT A HOTEL DEVELOPMENT


[62] One thing that must not be lost sight of and that was the promise by Charan and his company to build a motel on the site. Such was his promise in November 1992 that he would start the development in a few months. That was accepted and the lease was issued by the NLTB on that basis. I think it was a fundamental term, i.e., a condition of the lease, that the lessee would build a tourist type development on the site. Such a condition can be readily implied from clause 3(b) and the circumstances of this case.

[63] Section 12(2) of the Property Law Act [Cap 130] provides:

Stipulations in a contract, as to time or otherwise, that according to the rules of equity are not deemed to be or to have become of the essence of the contract, shall be construed and have effect at law in accordance with the rules of equity.


[64] The effect of the section has been said to be that[4]:

The rules at law are now the same as those in equity: the effect of [section (12)(2]) is that "contractual stipulations as to time...shall not be construed as essential, except where equity would before 1875 have so construed them – i.e. only when the strict observance of the stipulated time for performance was a matter of express agreement or of necessary implication": United Scientific Holdings Ltd v Burnley B. C. [1978] AC 904, 943-944; or in other words, [the section] "does not negative the existence of a breach of contract where one has occurred, but in certain circumstances it bars any assertion that the breach has amounted to a repudiation of the contract" which entitles the innocent party to treat the contract as terminated.


[65] This is a "commercial" contract. It is important to the NLTB that it knows exactly what is to be built and how long it would take. I think it goes without saying that time needed to be strictly complied with. There was no express provision to the contrary. This is a case where in my opinion time is of the essence by necessary implication.

[66] Now what is the time within which the Plaintiff must build the hotel and has he been given enough time to do it? The law implies a reasonable time. How is this to be ascertained? Some guidance can be obtained from the Assessment of Rent clauses in Schedule 2 of the lease signed in 1994 by the Plaintiff. Clause 1 provided for calculation of the annual land rent from 1 July 1999 based on gross receipts from the sale of accommodation, liquor, food, beverages and guest services. The rent was to double after the tenth year. Clause 2 required the lessee to inform the NLTB on or before 30 June 1998 and thereafter by the 31st of December in every year, the likely rent for the coming year. Interestingly, the exact same dates were repeated in the registered lease signed in 1999.

[67] Thus, the Plaintiff knew as far back as 1994 that it had to build and operate a tourist development by 1999.

[68] Some 3 years after that, on 21 August 2002, the Plaintiff’s solicitors wrote to the NLTB and asked for an "extension of time for construction of the tourist development" indicating that the land fill had settled and the site was ready to be built on. It took Charan another year to submit plans for the first time but they were not for a hotel but for an office block. So a year after the site was ready to be built on, the Plaintiff still had not built anything on it. Not surprisingly, no motel or resort was ever built when the NLTB terminated the lease in September 2003. I think the Plaintiff had not built within a reasonable time and was in breach of a fundamental term of the lease.

[69] I do not accept Charan’s evidence that it was his intention throughout to build a hotel on the site. His aborted attempt to sell the lease to the Credit Union and his submitted plans showing only details of an office building, in my opinion, showed that his intention to build a hotel, if he did have that intention at all, was only secondary. He only proposed the hotel development to secure the site for his primary purpose which was to construct an office block. I note also that in his application for the lease in 1992 he said that he had plans for a motel done by Harrison & Garrison (sic) which were already approved by the Town and Country Board and that he wanted to start construction at the beginning of the following year, 1993. It contradicts the reason later advanced by him that they were waiting for the land fill to settle. In any event, I do not think that it was a genuine excuse for delay in having plans done. He said in his application to the NLTB that he had approved plans for a motel in 1992. However, he did not submit any plans till 2003 and those plans were not for a motel but were for an office building. I note that none of the 1992 plans were discovered or used in the hearing and no explanation was given in that regard or as to why a representative of the company that did them was not called to give evidence.

[70] I am also not convinced that the Plaintiff was even in a position to build the "tourism office" that it was proposing. The evidence of funding from Australia to cover the total project cost estimated at close to $2.0m was not convincing.

[71] For these reasons, I find that the Plaintiff had breached clause 3(b) of the lease by not submitting the required plans on time and had also breached a fundamental term of the lease to construct a tourist resort on the land within a reasonable time. The NLTB letter of 11 September 2003 referred to both breaches and therefore in my opinion complied with the provisions of s 105(1)(a) of the Property Law Act. I also find that the breaches in this case were not capable of being remedied by the Plaintiff and even if they were, the Plaintiff did not and could not have remedied them. The NLTB letter therefore complies in all respects with the provisions of s 105 in my opinion.

WERE THE BREACHES WAIVED?


[72] I note that the Amended Statement of Claim did not plead estoppel although Agreed Issue 2 did raise it. Counsel for the Plaintiff, in his written submissions, submitted that the NLTB is estopped from relying on any breach of clause 3(b) because it had waived it by executing the lease in November 1999.

[73] I do not accept the submission advanced by counsel for the Plaintiff that the issues are as agreed in the Pre-Trial Conference (PTC) irrespective of what is raised in the pleadings. Firstly, the PTC is for the parties and their counsel to identify and narrow down the issues of fact and law if possible. This Court is not bound to accept them as the issues for the trial. If the parties and their counsel are mistaken, the Court is duty bound to correct them so that justice is done according to the respective cases as pleaded in the Statement of Claim, Defence and Reply. If at the PTC new issues are raised then the pleadings should be amended accordingly.

[74] None of the pleadings raise or plead estoppel. The Statement of Claim was amended to correct typographical errors and to particularise the special and general damages claimed by the Plaintiff. But the amendments do not include a plea of estoppel. However, out of deference to counsel for the Plaintiff and for the sake of completeness, I will deal with the issue.

[75] The facts of this case do not in my view raise waiver or estoppel. As I have said, the Plaintiff must be taken to have signed the lease knowing that the compliance date under clause 3(b) was 1 September 1994. I do not accept that the NLTB by signing the lease in 1999 is said to have waived the breach. I think the proper inference to be drawn is that the Plaintiff still had to provide the plans but within a reasonable time. In this case, I think 4 years after the lease was signed is not within a reasonable time.

[76] Similarly, by "approving" the plans submitted in 2003 I do not think that the NLTB can be said to have waived the breach. The plans that were submitted did not comply with the requirements of the lease for the Plaintiff to build a tourist development on the site.

[77] Furthermore, even if the NLTB was bound to give the Plaintiff a further 3 months, it would have been impossible for the Plaintiff to complete the project, let alone start construction, within that time.

[78] I therefore find that the breaches have not been waived so the notice of 11 September 2003 pursuant to s 105 of the Property Law Act was effective to terminate the lease and allow re-entry. Further, or in the alternative, the notice also terminated the lease for breach by the Plaintiff of a fundamental term of the lease that it was to build a tourist development on the land within a reasonable time.

[79] The Plaintiff’s claim therefore fails on liability.

QUANTUM


[80] Even if I am wrong in holding the Defendant not liable, I think the Plaintiff’s claims for special and general damages do not stand up to proof.

[81] The claim for special damages is for expenses incurred at a time when negotiations were continuing and there was no concluded lease. They were expenses which the Plaintiff undertook in preparation for and in fulfillment of his obligations that were to become legally binding only when the lease became registered. The company took the risk upon itself. Those expenses could not be claimed from the NLTB. For example, the payments for premiums and landowners were in return for the grant of the lease which the Plaintiff did get. Further expenses thereafter, for example, for survey costs and accounting fees, were to enable the Plaintiff to comply with its obligations under the lease. These expenses were not a direct or indirect result of the termination of the lease.

[82] As for the general damages claim, even if I am to accept the figures put forward by the consultant, I have grave doubts as to the Plaintiff’s ability to fund the project. It is so speculative a claim that I am not prepared to accept that the project would have gone ahead had the NLTB not terminated the lease.

COSTS


[83] There is nothing to displace the normal rule that costs follow the event. The documentation in this case was quite large. The issues were not as clearly defined largely I think due to the unsatisfactory nature of the pleadings in the Statement of Claim, and consequently, the trial and submissions were unnecessarily lengthy. I think costs at the high end of party-party costs is justified which I summarily set as $4,000.

ORDERS


[84] The Orders are therefore as follows:
  1. The Plaintiff’s claim is dismissed.
  2. The Plaintiff shall pay the Defendant’s costs of $4,000 within 28 days.

Sosefo Inoke
Judge

[1] Agricultural Landlord and Tenant Act [Cap 270]
[2] See for example, s 69 of the Land Transfer Act
[3] Agreed Bundle of Document #26.
[4] Chitty on Contracts, Vol 1, Sweet and Maxwell, 1994, 27th Edn., para21-011.

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