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Smith v Smith [2011] FJHC 480; HBC322.2010 (29 August 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 322 of 2010

BETWEEN:

VIKA SMITH aka VIKATORIA SMITH formerly of Lot 72 Kauvula Road, Delainavesi and now residing at 67 Lawrence Street, Fresh Water, NSW, Sydney, Australia, Domestic Duties.
PLAINTIFF

AND:

GABRIEL SMITH & SALA SMITH of Lot 72 Kauvula Road, Delainavesi, Suva.
DEFENDANTS

BEFORE: MASTER DEEPTHI AMARATUNGA

COUNSELS: Mr. Hiuare W for the Plaintiff
Ms. Leweniqila S for the Defendant

Date of Hearing: 16th June, 2011
Date of Ruling: 29th August, 2011

RULING

1. INTRODUCTION
   

1. This is an application in terms of Section 169 of the Land Transfer Act, for the eviction of Defendants from the premises they reside. The Defendants admit that the property in which they reside is a native lease and the Plaintiff is the lessee of the said Native Lease. Defendants state that said lease hold property was possessed by them and claims an equitable right to stay. The Defendants also state that the Plaintiff has signed a 'transfer' of the lease to them in 2001, but could not register the said transfer as the lease rentals were not fully settled. Defendants have paid the lease rentals, but the overdue amount has not been fully settled. Defendants state that their legitimate expectation was to obtain the transfer from the Plaintiff once the full overdue rentals are settled. The Defendants live in the property with his wife after the marriage in 1995 and before the marriage he lived there with his parents from 1984. The Defendant is the grandson of the Plaintiff. Plaintiff admits the payment of lease rentals for more than 10 years by the Defendant, in her name, but state that he is a licensee and could be evicted after notice to quit.
   

2. FACTS
   

2. On 21st January, 2010, the Plaintiff through its solicitors filed and issued Originating Summons seeking eviction against the Defendants.
   
3. The Plaintiff is the registered proprietor of the Naïve Lease No. 16763 Lot 72 Delainavesi Subdivision for 99 years and the Defendants in their affidavit in opposition has admitted that right of the Plaintiff.
   
4. The Plaintiff has allowed the Defendants to reside on the said property and the Plaintiff is residing abroad at the moment.
   
5. The Defendant state that the Plaintiff has agreed to transfer the said native Lease to them and has also signed the said 'transfer' in 2001, but was unable to register the transfer as there were overdue lease rentals to the lessor.
   
6. The Plaintiff admits the signing of the said 'transfer' but alleges that it was illegal since no consent of the lessor in terms of the Section 12 of the Native Land Trust Act was obtained prior to signing.
   
7. In the said 'transfer' there were three transferees and one intended recipient was the Defendant and other two were his parents.
   
8. The mother of the Defendant who was one of the recipients has died and she has not signed the said 'transfer' accepting it.
   

100. ANALYSIS
     

Preliminary Issue

9. After the hearing of this application, both parties were granted time to file written submissions on the points that were raised in the hearing, and the Defendants have not filed any submissions but has raised a new issue regarding the jurisdiction in terms of Order 59 of the High Court Rules of 1988. The Defendants submits that I do not have jurisdiction to hear contested application filed in terms of the Seciton 169 of the Land Transfer Act. Order 59 also grants the jurisdiction to deal with any matter that the Chief Justice assigns and I have been granted an extended jurisdiction to hear contested applications in terms of said provision in the High Court and the preliminary issue of jurisdiction, though not argued in the hearing is overruled.
   

Proprietary Estoppels

10. The Plaintiff states that the fact that she is the registered proprietor and the fact that the Defendants were residing there by way of licence to occupy and that right ceased when the Defendants received notice to vacate on the 28th August, 2010. Hence, the Defendants have been trespassers and for that reason this Court must grant an Order for them to vacate the property forthwith.
    
11. The Defendant in his affidavit in opposition state that the said property was transferred to him and to his parents by the Plaintiff in 2001, though it was not registered, as the lease rentals were overdue at that moment and the lease could not be transferred while the rentals were overdue. The lease rentals are still overdue and this supports the contention of the Defendant in not registering the transfer of the lease in 2001. In any event the said 'transfer' has not been signed by all the parties to it, though the Plaintiff has signed it and the Plaintiff has admitted signing of the said 'transfer' in 2001,
    
12. The Defendant allege equitable interest on the property, but he was unable to produce any expenditure other than some lease rentals paid to the lessor which the Plaintiff admits and states that though some rentals were paid by the Defendants the said transfer could not be completed and registered in the name of the Defendant and asserts her rights as the last registered proprietor since she holds the title as the lessee.
    
13. The said transfer was signed in 2001 by the Plaintiff as the transferor and the transferees were John Smith, Catherine Smith and Gabriel Smith but only one transferee has signed the said document. The remaining transferees who have not signed and accepted the alleged transfer were the parents of the Defendant. The mother of the Defendant has died and the father has not supported the Defendant's position and has not filed any affidavit.
    
14. The said 'transfer' was signed by the Plaintiff without the consent of the lessor, which makes the said transfer illegal ab initio and no right could derive from such an illegal transfer.
    
15. Section 12 of the Native Land Trust Act, is explicit on this matter and the law regarding any agreement entered in contravention of the said provision is a settled law.
    
16. In Chandra Prakash Dulare & Chandra Kanta Prakash –v- Sakeo Tuiwainikali [1994] HB00013J.94S Judgment 12 July 1994 Pathik J. held;
    

"On evidence defendant entered into occupation without agreement and without consent of the NLTB, did pay rent as a monthly tenant and the plaintiffs have been accepting it but for the last twelve months he is in arrears. "One might ask could he be regarded as a "tenant" in the absence of the necessary consent?" The answer would, in my view, be in the negative. Therefore, were there any tenancy agreement the same would be null and void in accordance with S12 of Native Land Trust Act. Hence the defendant's occupancy could hardly be more than a licence to occupy.... The situation therefore is that whatever licence to occupy he may have had would have been terminated by the notice to vacate."

(emphasis is added)

17. The Defendant is required to fulfill the requirements contained in the Section 172 of the Land Transfer Act, once the burden on the Plaintiff is met.
    

Section 172 states as follows:

If the person summoned appears he may show cause why he refuses to give possession of such land and, if he proves to the satisfaction of the judge a right to the possession of the land, the judge shall dismiss the summons with costs against the proprietor, mortgagee or lessor or he may make any order and impose any terms he may think fit.

Provided that the dismissal of the summons shall not prejudice the right of the plaintiff to take any other proceeding against the person summoned to which he may be otherwise entitled.

Provided also that in the case of a lessor against a lessee, if the lessee, before the hearing, pay or tender all rent due and all costs incurred by the lessor, the judge shall dismiss the summons."

18. The burden is shifted to the Defendant to satisfy the court that he has a right to possession of the land in dispute. In Morris Hedstrom Limited –v- Liaquat Ali CA No: 153/87, the Supreme Court of Fiji described the scope of the said provision.

19. In the case of Morris Hedstrom Limited –v- Liaquat Ali CA No: 153/87, the Supreme Court said that:-

"Under Section 172 the person summonsed may show cause why he refused to give possession of the land if he proves to the satisfaction of the Judge a right to possession or can establish an arguable defence the application will be dismissed with costs in his favour. The Defendant must show on affidavit evidence some right to possession which would preclude the granting of an order for possession under Section 169 procedure. That is not to say that final or incontrovertible proof of a right to remain in possession must be adduced. What is required is that some tangible evidence establishing a right or supporting an arguable case for such a right must be adduced." (emphasis is mine)

20. In opposition to this application the Defendant states that he has an equitable interest in the said property. In Denny v Jessen [1977] 1 NZLR 635 at 639 Justice White summarized the proprietary estoppel as follows:

"In Snell's Principles of Equity (27th ed) 565 it is stated that proprietary estoppel is "... capable of operating positively so far as to confer a right of action". It is "one of the qualifications" to the general rule that a person who spends money on improving the property of another has no claim to reimbursement or to any proprietary interest in the property. In Plaimmer v Wellington City Corporation (1884) 9 App Cas 699; NZPCC 250 it was stated by the Privy Council that "...the equity arising from expenditure on land need not fail merely on the ground that the interest to be secured has not been expressly indicated."(ibid, 713, 29). After referring to the cases, including Ramsden v Dyson [1866] UKLawRpHL 7; (1866) LR 1 HL 129, the opinion of the Privy Council continued, "In fact the court must look at the circumstances in each case to decide in what way the equity can be satisfied" (9 App Cas 699, 714; NZPCC 250, 260). In Chalmers v Pardoe [1963] 1WLR 677; [1963] 3 All ER 552 (PC) a person expending money was held entitled to a charge on the same principle. The principle was again applied by the Court of Appeal in Inwards v Baker [1965] EWCA Civ 4; [1965] 2 QB 29; [1965] 1 All ER 446. There a son had built on land owned by his father who died leaving his estate to others. Lord Denning MR, with whom Danckwerts and Salmon L JJ agreed, said that all that was necessary;

"... is that the licensee should, at the request or with the encouragement of the landlord, have spent the money in expectation of being allowed to stay there. If so, the court will not allow that expectation to be defeated where it would be inequitable so to do."(ibid, 37,449).

The general rule, however, is that "liabilities are not to be forced upon people behind their backs" and four conditions must be satisfied before proprietary estoppel applies.

There must be an expenditure, a mistaken belief, conscious silence on the part of the owner of the land and no bar to the equity ..."Conscious silence" implies knowledge on the part of the defendant that the plaintiff was incurring the expenditure and in the mistaken belief that here was a contract to purchase and that here defendant "stood by" without enlightening the plaintiff. In short the plaintiff must establish fraud or unconscionable behavior. The rule based on the cases cited, is stated in Snell (op cit) 566 as follows:

"Knowledge of the mistake makes it dishonest for him to remain willfully passive in order afterwards to profit by the mistake he might have prevented. The knowledge must accordingly be proved by "strong and congent evidence"

This passage was adopted by Megarry J in Re Vandervell's Trusts (No 2)[1974] Ch 269,301[1974] 1 All ER 47, 74".

21. The above, was quoted in the case of HBC 40 of 2009 in the High Court Fiji at Labasa in the case of Wilfred Thomas Peter V Hira Lal and Farisiko by Justice Anjala Wati and stated

'I must analyse whether the four conditions have been met for the defense of proprietary estoppel to apply. The four conditions are:

i. An expenditure;

ii. A mistaken belief

iii. Conscious silence on the part of the owner of the land; and

iv. No bar to the equity.

Expenditure
22. The Defendant has alleged expenditure on the property without proof of any receipts or other documents, neither has he indicated any addition or improvement to the premises, his only expenditure that is admitted by the Plaintiff is the lease rentals, which he has paid, but he was unable to clear the overdue rentals and his payments were done while living on the said property without any payment to the Plaintiff. The said payments were done in the false premise that the illegal 'transfer' could be executed and registered once the overdue rentals are fully settled.

23. The Defendant state that the property was renovated in 1998, by his parents and also by him, but he could not obtain an affidavit from his father to support this contention, who was one of the 'transfarees' of the property according to the said 'transfer' which was not registered.

Mistaken Belief
24. So, on the available evidence the only expenditure is the lease rentals and even the payment of the rent, it is not certain how much rent has been paid, but the Plaintiff admit that rentals were paid by the Defendant in her name which can be considered as an expenditure on the property in the light of the false premise that property would be transfered to his parents and to him once the overdue rents have been settled.

Conscious silence on the part of the owner of the land
25. The Defendant has paid the rentals for more than 10 years and this was done in the mistaken belief that he would obtain the lease once the overdue rent is paid. It is clear that though no right could derive from the said transfer that was signed by the Plaintiff without the consent of the lessor, the fact of signing that document is admitted by the Plaintiff and it is clear that legal contract is not a requirement to establish equitable right, specially proprietary estoppels. It is also clear that the Plaintiff, who is abroad, do not allege any improvement for the property for over 10 years and she has not paid the lease rentals for the time period though the Defendant paid in her name, since the lease could not be transferred legally during the said time period.

26. It is also noteworthy that the Plaintiff has remained silent for over 10 years after the signing of the illegal transfer and the Defendant remained in the property with his parents from 1984 and after the marriage in 1995 he has lived there with his wife (who is the second named Defendant) as his residence while paying the lease rentals in the name of the Plaintiff expecting to execute the transfer of the lease to himself once the overdue payments are fully settled as it is a requirement in all Native Lease Lands. So the Defendant who got married in 1995 continued to stay in the property and in 2001 the plaintiff has signed the purported transfer to the Defendant and he continued to live in the property as his own while continuing to pay the lease rentals expecting the transfer to be executed in future. He has considered the property as a one where he has an interest.

27. The Defendant could not settle the overdue rent fully and the payments were done on the mistaken belief and he still continues to pay the rent. The Plaintiff has remained silent for more than 10 years after the signing of said 'transfer' and any residential property needs some maintenance within the long period of stay of the Defendant and the Plaintiff who is living abroad has not alleged such expenditure during the long period of the Defendant's stay. It can be safely deduced that no such expenditure was incurred by the Plaintiff from the available evidence as no such statement was made by the Plaintiff in her affidavit in reply. So, it is clear that there was 'conscious silence on the part of the owner of the land', for more than 10 years.

No bar to the equity
28. It is to be noted that the Plaintiff and the Defendant are grandmother and grandchild, respectively and the facts and circumstance of the case has to be considered in the light of the said relationship and the Defendant's genuine belief that the property will be transferred to him once the overdue rent is paid, though in law the said 'transfer' is illegal and no rights could derive on it. In the circumstances the equity will not bar the proprietary estoppel that is held in favour of the Defendant. The Plaintiff who is in abroad has not done any improvements to the property for a considerable time, though she was the person who has the registrable rights over the said property, as the last registered proprietor. It is clear though the said illegal transfer cannot derive any enforceable right; it is not a requirement in establishing proprietary estoppel to have a legal contract between parties. The Defendant has satisfied on the material before me proprietary estoppel over the property and this can establish only through a proper trial.

4. CONCLUSIOIN
   

29. Considering the facts of this case, though the said 'transfer' was illegal in terms of the Section 12 of the Native Land Trust Act, the Defendant has established equitable estoppel from the available evidence in this application. The Defendant has established more than an arguable case and also has established a right to remain on the said property in terms of the Section 172 of the Land Transfer Act. Considering the circumstances of the case I will not award any cost to the Defendant. The application is dismissed without cost.

The Court orders as follows:

1. The Summons of the Plaintiff to evict the Defendants from the premises described in the originating summons is dismissed;
   
2. No cost is awarded.
   

Dated at Suva this 29th day of August, 2011.

Mr. D Amaratunga
Acting Master of the High Court
Suva