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Knab v Fohe [2007] TOLawRp 17; [2007] Tonga LR 105 (13 July 2007)

[2007] Tonga LR 105

IN THE SUPREME COURT OF TONGA

Knab

v

Fohe

Land Court, Nuku'alofa
Andrew J and Assessor Mr George Blake
L 16/2005

5 and 6 June 2007; 13 July 2007

Land law – interpretation of Memorandum of Tenancy agreement – claim unsuccessful and counterclaim for eviction upheld

The defendant held a four acre tax allotment at the village of Puke. On 14 November 1994 he entered into a Memorandum of Tenancy Agreement with Heiner and Astrid Dunker of Germany and Richard Mueller also of Germany under which there would be no rent payable but the tenants would build and construct houses on the land which upon the death of the last surviving tenant would be inherited by the landlord, the defendant. Richard Mueller died on 24 July 2005 and he left a will providing that the plaintiff would take over the rent of his house. The plaintiff sought orders that he had a right to occupy the house at Puke on the defendant's tax allotment until the last tenant died "as per the Memorandum of Tenancy Agreement. Following Mr Mueller's death, Heiner and Astrid Dunker had written to the defendant surrendering that part of their interest in the lease that had been held by Mr Mueller. Issues arose over the legality of the Memorandum of Tenancy Agreement; whether it amounted to a lease and whether the dwelling house the plaintiff claimed he had an equitable right to formed part of the land or was detachable from the land. The defendant had counterclaimed for an eviction order and for outstanding rent at $600 per month from August 2005.

Held:

1. The plaintiff was in breach of section 14 of the Land Act (a penal provision) which made it unlawful for any alien to hold or to reside upon or to occupy land without first having obtained from the Minister of Lands a permit to do so.

2. The Memorandum of Tenancy Agreement established all the terms of a 30 lease and could be construed as a lease under the Land Act.

3. The lease was granted jointly to the three tenants over the whole of the land and each tenant was seized with the whole of the land jointly. On the death of one, the remaining two would still be seized of the whole of the land. On the death of all the tenants the land would revert to the landowner or his successors, heirs or assigns. The lease would only be extinguished by the death of the last survivor.

4. Mr and Mrs Dunker were entitled to surrender part of their interest in the lease pursuant to section 54(1) of the Land Act.

5. Whilst the general proposition in the Kingdom was that buildings were regarded as detachable from the land and not fixtures, the circumstances of this case were unique as it was the intention of the parties under the agreement that the buildings were to become permanent fixtures and hence they could not be moved and formed part of the land.

6. It was held that the plaintiff could not succeed in his claim nor did he have any equitable right to continue to occupy the residence.

7. In respect of the defendant's counterclaim, the court ordered that the plaintiff was to vacate the premises within 18 days and judgment was entered for the defendant in the sum of $15,180 in respect of arrears of rent together with costs as agreed or taxed.

Cases considered:

Bank of Tonga v Vaka'uta (unreported decision of 7th February 1994)

Cowley v Tourist Services Ha'apai and Fund Manangement Ltd [2001] Tonga LR 183

Fasi v Fifita [1996] Tonga LR 68

Fu v Giant Turtle Investments Ltd [2004] TOSC 20

Fua No 6/99

Kolo v Bank Of Tonga [1997] Tonga LR 181

Ma'umalanga v Tupou [1994] Tonga LR 30

Olive Mangisi v 'Ungatea 'Ilolahia Koloamatangi (Unreported Judgment of the 60 23rd July 1990 Appeal No.11/98)

Taumoepeau v Taumoepeau [2000] Tonga LR 236

Tu'ipulotu v Ma'afu [1984] Tonga LR 125

Statute considered:

Land Act (Cap 132)

Regulations considered:

Land (Occupation by Aliens) Regulations 1929

Counsel for the plaintiff: Mr Corbett
Counsel for the defendant: Mr Tu'utafaiva

Judgment

[1] The defendant owns a tax allotment measuring 4 acres at the village of PUKE as described on BLOCK 80/89 (LOT 22) ("the land"). Briefly stated, he entered into a Memorandum of Tenancy Agreement on the 14th November 1994 with Heiner Dunker and Astrid Dunker of Germany and then of NUKU'ALOFA and also Richard Mueller also of Germany and then of NUKU'ALOFA. The essence of the agreement was that there would be no annual rent but the tenants would use and live on the land and would build and construct houses. The tenancy and lease were for the term of the life time of the tenants until the death of the last surviving whereupon all buildings, facilities and constructions and other immoveable goods would be inherited by the landlord (ie. the defendant) or his successors heirs and assigns. The tenants constructed dwelling houses on the allotment and resided there. On the 24th July 2005 the tenant, Richard Mueller, died. Prior to that, on the 6th June 2005, he made his last will and testament stating in paragraph 4 therein, that the Plaintiff would rent his house and properties on the land and that a rent agreement would come into force when he, Mr Mueller, died. Upon his death the Plaintiff moved into the house and has resided there ever since. The relevant clause of Mr Mueller's will (Clause 4) stated as follows:

"My house including all inventory and my household belongings as well as all buildings located on my leased land will be rent out to the tenant Mr Peter Knab. The monthly rent is Top 500. The rent is due on the first day of each month in advance for the current month and is to be paid back into the following bank account ... the tenant Mr Peter Knab has to pay all expenses of the house for utilities and maintenance including insurance and all repairs. No deductions of the rent will be allowed. This rental agreement comes into force after my death and it will end, when the land lease expires."

[2] The Plaintiff seeks orders that he has a right to occupy the house at PUKE, on the defendant's tax allotment until the last tenant dies "as per the said memorandum of tenancy agreement". Effectively he claims continued possession of the premises, that is, the land and the buildings and for a lease to be registered in his name. He says he has an equitable right to occupy the residential house of the deceased Richard Mueller in accordance with the Memorandum of Understanding (The MOT) and in accordance with the last wishes of Richard Mueller.

[3] The Plaintiff's claim is in difficulty from the outset because he appears in breach of S 14 of the Land Act (a penal provision) which provides that it is unlawful for any alien to hold or to reside upon or to occupy any land without first having obtained from the Minister of Lands, a permit to do so. The Plaintiff is an alien and no permit exists, or as far as I can see, has ever been applied for. He is liable on conviction to a fine or imprisonment for any period not exceeding 12 months. That should really be the end of this claim but that aside I propose to deal with the legal issues which have been raised.

[4] Further the Plaintiff must comply with the requirements of Sections 14 and 15. The former, as stated, makes it a criminal offence for an alien to hold or reside upon or to occupy any land without first having obtained a permit to do so from the Minister of Lands. The Land (Occupation by Aliens) Regulations 1929 repeats this requirement and stipulates that the duration of the permit be for a period of one year, a half-year or a quarter of a year. The terms of the permit are found in Form 2 of Schedule IX of the Act. The Plaintiff has no such permit. Section 15 makes it a criminal offence for a landholder to allow an alien to reside upon or occupy any part of his holding unless the alien "has been granted a lease or permit in accordance with the Act." The Landowner could say that he granted a lease. These requirements are repeated in S 93 of the Act. See Ma'umalanga v Tupou [1994] Tonga LR 30. But as noted in that decision, S 14 is criminal only and nowhere does it say that the absence of a permit renders the lease void at initio or entitles the Land Court to revoke it. The Minister may elect to review the lease and to have it revoked but that is a matter for him.

[5]

MEMORANDUM OF TENANCY AGREEMENT

Clause 6 of the agreement

provides:

"6. LEASE PROVISIONS.

The Landlord will register the land for lease purposes in accordance with the laws of Tonga. Once a Deed of lease is prepared the Tenants have the right to register the land by way of a sub-lease".

[6] The Plaintiff says that no such lease was ever prepared and the tenants believed they had a lease. Certain equitable rights, it is said, rest in the Plaintiff as a result. I think that all parties had referred to 'a lease' which was really a description of the MOT. The defendant says that no lease as envisaged by Clause 6 of the MOT was ever prepared as the three tenants did not wish to have one as they were concerned that it might raise the prospect of rent and he therefore did not prepare one. I accept the evidence of Mr Fohe on this point. His is the only evidence and the Plaintiff's assertion that there were discussions of a lease is only as to a description of the MOT.

[7] Mr Fohe's evidence is made more plausible by the simple fact that if a lease had been prepared as required by Form No 3 in schedule IX of the Land Act (Cap 132) (the prescribed form of lease) there would have been a requirement for rent to be paid by the lessees. This would have contravened Clause 1.4 of the MOT and clearly the tenants wished to avoid the spectre of rent.

[8] An instrument is usually construed as a lease if it contains words of present demise. Even where the instrument is called an agreement and contains a stipulation for the subsequent granting of a formal lease it may be construed as a lease if the essential terms are fixed, especially if possession is to be taken under it. Where a demise is made by an oral agreement or by an informal instrument, the resulting lease is often described as a 'tenancy agreement'. See Halsbury's Laws Of England Ed Vol 27(1), Paragraphs 50 and 52. In this case the MOT established the terms of a lease and can be construed as a lease.

[9]

• The three tenants (Heiner Dunker and Astrid Dunker and Richard Mueller) were granted a lease jointly over the whole of the land: Clause 1.2 of the MOT.

• The tenancy and lease were for the lifetime of each tenant until the death of the last surviving tenant: Clause 2.

• The tenants were entitled to live on the land and build and construct houses and all necessary facilities: Clause 3.

• By Clause 5:

"The Tenants and Landlord hereby agree that when the last tenant passes away, all buildings facilities and constructions and other immoveable goods shall be inherited by the Landlord or his successors heirs and assigns and none of the Tenants heirs or assigns shall have a right to interfere or claim any of the said premises."

[10] There was clearly therefore an agreement that upon the death of the last tenant the land would be inherited or it would revert to the landlord or his successors or assigns. There is no provision or intention for the assigns of any tenant to have a claim on the land.

[11] I am satisfied that the lease was granted jointly to the three tenants over the whole of the land. In respect of Tongan Land, the Land Act is a complete code. Here each tenant was seized with the whole of the land jointly (Clause 1.2 of the MOT). On the death of one, the remaining two would still he seized of the whole of the land. On the death of two the last survivor would be seized of the whole and on his (or her) death the whole would revert to the landowner or his successors, heirs or assigns. The totality of the holding of the three tenants is not affected by the death of one as the whole of the land remains with the survivors for they have always been seized of the whole. All that happens is that the property is freed from the control of one. That was what was to happen here. The lease would only be extinguished by the death of the last survivor.

[12] That was how the two surviving tenants believed it to be, for following the death of Mr Mueller they wrote as follows:

"We, Heiner and Astrid Dunker, herewith state, that we hand over our rights and liabilities for Richard Mueller's dwelling, which occur from our lease contract between Dunker, Mueller & Fohe to our landlord Sione Fohe. This part of the property owned by the deceased Richard Mueller is 53m inland parallel to the west main border of the complete premises and marked by the existing fence.

Our rights of this particular part and all buildings on it are from now on given to Sione Fohe. HAMBURG, 21st of AUGUST 2005."

[13] Mr and Mrs Dunker had thus surrended part of their interest in the lease. They were entitled to do that. A surrender is a voluntary act of the parties whereby, with the landlord's consent the tenant surrenders his lease to the landlord so that the lease merges with the reversion. It is defined as being the yielding up of the term to the person who has the immediate estate on reversion in order that the term may merge in the reversion. I can see no impediment or reason why they could not surrender part of their interest on the lease in this way. That is in accord with s 54(1) of the Land Act which provides for surrender.

[14] The Plaintiff further argues that he has an equitable right to remain in the dwelling house of the deceased Richard Mueller. In deciding that issue I think is it necessary (as submitted) to decide whether the buildings erected and especially the dwelling home are permanent fixtures on the defendant's tax allotment and have therefore become part of the land or whether they were not fixtures and therefore treated as detachable from the land if as personal property detachable from the land.

"In Tonga buildings are not in general regarded as fixtures and they are treated as detachable from the land ... that is to say as personal property detachable from the land." See Cowley v Tourist Services Ha'apai and Fund Manangement Ltd [2001] Tonga LR 183 at 186. In Tu'ipulotu v Ma'afu [1984] Tonga LR 125 it was held that the buildings attached to the land and the case of Fua No 6/99 was cited where Martin CJ said:

"The buildings on the land were clearly paid for by the Company. I find as a fact that they are fixtures — they cannot be moved and therefore form part of the land."

[15] The facts in that case were somewhat unique as mentioned by the Court of Appeal in Kolo v Bank of Tonga [1997] Tonga LR 181 at 183:

"Clause 90 of the Constitution reserves to the Land Court, and on appeal to the Privy Council, "cases concerning titles to land". Thus the appellant's argument raises a constitutional question of great importance. The Constitution directs attention to "titles to land" rather than to the incidents of the possession of land. In commercial practice, that is how the constitutional limitation has been understood. Buildings as Ward CJ pointed out in the judgment to which reference has already been made, have been regarded as items of personal property rather than as forming part of the realty. Because of the Constitution of Tonga, and because of Tonga's traditions, the intricate law of fixtures and of accretions is not wholly appropriate to Tonga. Although all the implications have not yet been worked out, and their working out should be left to the process of development of the law of Tonga case by case, we think that the broad proposition stated by Ward CJ should be accepted. That means that it was open to Mr Kolo to pledge his house to the bank as an item separate from the land on which it stood."

[16] The broad proposition of Ward CJ was in the above case at first instance where 250 he said that properties such as houses and fixtures which cannot be subject to distress in England because they accrete to the land are considered severable from the land under our law. That decision followed Dalgety J in Bank of Tonga v Vaka'uta (unreported decision of 7th February 1994).

The citation above from Kolo's case was repeated by the Court of Appeal in Olive Mangisi v 'Ungatea 'Ilolahia Koloamatangi (Unreported Judgment of the 23rd July 1990 Appeal No.11/98).

[17] Thus the 'general' or 'broad' proposition that buildings are not regarded as fixtures and are detachable from the land may depend, as stated, on a case by case basis. Generally in considering whether something is a fixture the court must consider the purpose for which it was placed there (Fu v Giant Turtle Investments Ltd [2004] TOSC 20). I think that the issue of whether the residence here was part of the land, or whether it is detachable from the land, turns of the interpretation of the MOT and the intention of the parties thereto.

[18] In my opinion the circumstances of this case are unique. The recitals in the agreement refer to the tenants' desire of taking the land and constructing on it a dwelling home known as 'the premises'. The essence of the agreement on the landowners part was (Expressed Simply) that you, the tenants, may have a life-time interest in 'the land', rent free providing that you build and construct homes and all necessary facilities and on the death of the last surviving tenant their properties and the land shall revert or be inherited by me or my successors, heirs or assigns.

[19] By Clause 3, the tenants are to use the leased land and live on it. The tenants are required to build homes with their own money with the intention of the homes becoming the property of the landowner or his successors. There is no agreement or any intention that the buildings can be severed in any way. They shall pass with the land to the landowner. That agreement binding the buildings and the land is immutable. I am satisfied that it was the intention of the parties that the buildings were to become permanent fixtures. They are fixtures which could not be moved and they formed part of the land. I think that the unique form of this agreement and the intention of the parties amounts to a rare exception to the general rule that properties such as houses are considered severable from the land.

[20] This is a case of a lease being granted to aliens (the word use by the Land Act) where residences constructed by aliens shall revert to the landowner. It is not the normal case involving the rental of homes from a landowner involving the detachment of the buildings from the realty and it does not involve the intricacies of Tongan land law in respect of such questions as succession etc. Rather, as stated, it is a grant to aliens of land on condition that buildings shall be constructed where they and the land will ultimately revert to the landowner. In those exceptional circumstances and in considering the intention of the parties I am satisfied that the buildings are fixtures and form part of the land. The Plaintiff could not succeed in a claim to the land.

[21] Further, Mr Muller was required to obtain a permit to occupy or reside on the Land (S 14) and that permit would, by S 125 of the Act, have ceased to be valid upon his death — that is a further reason why he could not have created a sub-lease to the Plaintiff.

[22] In relation to the claim that the Plaintiff has some equitable right to continue to occupy the residence this could hardly succeed given the various illegalities involved. The Plaintiff does not come with clean hands and further the necessary precondition for the equity of possession is a legal relationship: Taumoepeau v Taumoepeau [2000] Tonga LR 236 and 241. There is no legal relationship between the Plaintiff and the defendant. Equitable principles can only apply to leasehold interests after they have been validly created. See Fasi v Fifita [1996] Tonga LR 68, that is not the case here. Further again, it is the intention of the Land Act that there can be no devise of land by way of a will: (S 6 of the Land Act) so that the purported lease or sub-lease to the plaintiff was invalid.

[23] For all of these reasons the Plaintiff fails in his claim and it is dismissed with costs to the defendant as agreed or taxed.

COUNTERCLAIM

[24] The defendant has counterclaimed seeking orders that the Plaintiff pays rent to the defendant at $600.00 per month commencing on the 25th August until he vacates the property. He claims interest at the rate of 10% per annum for the unpaid rent until paid and an order that the Plaintiff vacates the buildings. By S 149(e) of the Act the Land Court may determine any question relating to rent in respect of any allotment, lease, sub-lease or interest of any kind in land.

For the reasons already given I am satisfied that the Plaintiff is illegally occupying the defendants' tax allotment and the premises therein and I am satisfied that he has so been in occupation since late August 2005. The plaintiff resisted all attempts to have him vacate the premises. There were in the past some discussions about his paying rent to the defendant in the sum of $600 for week but nothing came of this. I am satisfied that they had agreed on a figure of $600 per week although, as said, nothing came of it.

[25] I am satisfied that the Plaintiff was liable to pay rent as he occupied the defendant's residence. On my findings Mr & Mrs Dunker had surrendered the premises to the defendant on the 21st of August 2005 so that it is reasonable that rent due to the defendant should have commenced shortly thereafter say the 1st September 2005.

[26] I propose to make an order that the Plaintiff is to vacate the premises by the 1st August 2007, to allow him some time in which to move and seek alternative accommodation.

[27] The orders I make are as follows:

1. The Plaintiff is to vacate the premises of the defendant at BLOCK 80/89 (LOT 22 PUKE) by the 1st August 2007.

2. The Plaintiff is to pay arrears of rent to the defendant as follows:

3. There shall be judgment for the defendant in the sum of PA$15,180 together with costs of the counterclaim to the defendant as agreed or taxed.