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Tongulmanu v Republic of Vanuatu [2015] VUSC 156; CC 132 of 2013 (17 September 2015)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No.132 of 2013

BETWEEN:

BILLY TONGULMANU, ATAVIMANU SIMO KALMALAS, JOHN KALOROA, JAMES KALOROA, JACK MANEARMANU, KALELE EMILE and GEORGES TAUANEARU
Claimants

AND:

THE REPUBLIC OF VANUATU
First Defendant

AND:

ALBERT SOLOMON TRADING AS "LELEPA ISLAND TOURS"
Second Defendant

Coram: Justice D. V. Fatiaki

Counsel: Mr. S. Hakwa for the Claimants
Mr. H. Tabi for the First Defendant
Mr. D. Yawha for the Second Defendant

Date of Delivery: 17 September 2015

Judgment

1. In this case the claimants seek a declaration that Lease Title No. 12/0512/006in the name of "Lelepa Island Tours"is invalid, void abinitio and a nullity. They also seek an order that the Director of Lands forthwith rectify the Lease Register by cancelling the registration of Lease Title No. 12/0512/006.
   
2. Lease Title No. 12/0512/006 covers approximately 22 hectares of land situated on part of Lelepa Island off the coast of South West Efate and is comprised within the boundary of customary land known as "LEOSA".
   
3. The claimants are members and authorized representatives of an extended group collectively referred to as "Family Leivele" who claim to be custom owners of "LEOSA" land including a smaller customary boundary within it called "FULTOKA" or "FILTOKA".
   
4. It is common ground that during colonial times a small parcel of LEOSA land was alienated under "Old Title No. 138". The old title land reverted to the indigenous custom owners at independence and remained dormant until 2004 when it became the subject-matter of a customary ownership dispute between three claimants including "Family Leivele" in Land Case No. 01 of 2004 lodged under the Customary Lands Tribunals Act. The dispute has progressed through one appeal stage and is pending determination before the Efate Island Court on a second appeal by Family Leivele.
   
5. It is also undisputed that pursuant to an agreement dated 5 July 2000 the second defendant has operated a tourism business on part of LEOSA land more especially, on and around Fultoka beach, under the business name: "Lelepa Island Tours" which was registered on 14 March 2013.
   
6. It is unclear however whether the specific part of the land which was utilized was old Title No. 138 or within "FULTOKA" land. This is significant for two reasons – (1) because the pending dispute before the Efate Island Court according to the claimants, only concerns ownership of the land comprised within "Old Title 138" and (2) because if "Old Title 138" is one and the same land as "FULTOKA", then, the existing dispute over the land comprised in "Old Title 138" does not involve most of the land comprised within the LEOSA land boundary. In the context of Lease Title No. 12/0512/006 this means that most of the land comprised within the lease is not "disputed land" and therefore would be beyond the general management and control powers of the Minister of Lands under section 8 of the Law Reform Act [CAP. 123]. Unfortunately no copy of any plan of "Old Title 138" or of "FULTOKA" land has been included in the papers.
   
7. There have been prior proceedings in the Supreme Court and in the Court of Appeal in regard to this same leased land. Sufficient to refer to the judgment of the Court of Appeal inTurquoise Limited v. Philip Kalsuak and Albert Solomon and others [2008] VUCA 22 where an identical Lease Title No. 12/0512/002 was cancelled on the ground that the appellant company's registration was obtained by mistake on the part of the Minister of Lands.
   
8. I say "identical Lease Title" advisedly because, except for the different suffix in the number of the Lease Title ("002") the survey plan of the land comprised within lease title "002" is exactly the same as that in the present lease title 12/0512/006 ("006") and both plans were prepared by the same registered surveyor namely, Jerry Moli.
   
9. In dismissing the appeal against the cancellation the Court of Appeal identified the Minister's "mistake" as failing to consult with the putative custom owner of the disputed land as he was required to do under Section 8 of the Law Reform Act. The Court also described the subject matter of the cancelled lease as "... the northern tip of Lelepa Island comprising some 20 hectares including the area known as Filtoka beach".
   
10. During the course of its judgment the Court of Appeal identified the nature of the consolidated claims in the Supreme Court proceedings as follows:
    

"The validity of the registration of the lease was challenged in two separate proceedings commenced in the Supreme Court. In each case the defendants were Turquoise, the Minister of Lands and the Director of Land Records. In the first case, Civil Case 163 of 2006, ...Albert Solomon, (Solomon) sought rectification and cancellation on the basis that he had a relevant interest as the holder of a Registered Negotiator Certificate issued to him by the previous Minister of Lands on 18 October 2005. That Negotiator Certificate named Naroe Kalsuak and Kalsau Naparo as custom owners. Since 1998 Solomon had been conducting the business of Lelepa Island Tours on the land. Solomon alleged that the registration of the lease had been made by fraud or mistake. First, he alleged that the Minister had been guilty of fraud or mistake in issuing another Registered Negotiator Certificate (the second Negotiator Certificate) to Turquoise on 23 November 2005 which named Chief Jack Tugulumau, Billy Tavman, G.K. Manalapa and John Kaloroa as the custom owners. Secondly, he alleged that the Minister had accepted a substantial cash bribe from Turquoise to grant the lease. Thirdly, he alleged that Turquoise had by fraud or mistake obtained the lease and its registration by disregarding decisions of the relevant Village and Area Land Tribunals which resulted in the Area Land Tribunal declaring Philip Kalsuak (Kalsuak) as the custom owner of the land, by obtaining the second Negotiator Certificate and by using a survey plan which had been prepared on Solomon's instructions.

In the second Supreme Court proceeding, Civil Case 29 of 2007, Kalsuak sought rectification and cancellation of the lease. Kalsuak pleaded that he was the custom owner of the land, having been declared as such by the North West Efate Area Customary Land Tribunal on 29 December 2005. He identified in his pleadings letters sent by the Acting Coordinator of Land Tribunals to the Minister of Lands on 6 February 2006 advising the Minister that Kalsuak was the declared custom owner, and letters from his solicitors to the Director of Lands and the Director General of the Ministry of Lands dated 11 January 2006 and 21 March 2006 respectively advising the Government that any dealing in the lands required the consent of Kalsuak. A further letter dated 14 March 2006 to the Attorney General from Kalsuak's solicitor was also identified. This letter requested the Attorney General to advise the Minister of Lands that no lease of the land should be granted without Kalsuak's prior consent. (At trial the Minister of Lands in his evidence conceded that he had seen this letter before granting the lease to Turquoise.)"
(my underlinings and highlights)

11. Significantly, the Second Defendant in the present claim was the second named respondent in the appeal and would have been well aware of the result of the appeal which upheld the cancellation of Lease Title No. 12/0512/002 which meant that the land comprised within the cancelled lease title was available to be leased again by the Minister of Lands.
    
12. Be that as it may the present matter before this Court arose following the vacating of a two-day trial fixture by consent of the parties and where consequential orders of the Court were made identifying several preliminary issues and agreed facts as follows:
    

Issue 1: What is the legal status and validity of the lease registered on 2 November 2012 in the name of "Lelepa Island Tours"?

Sub-issue (a):Does the registration of "Lelepa Island Tours" constitute a rectifiable "mistake" under Section 100 (1) of the Land Leases Act?

Sub-issue (b): Does the subsequent incorporation of "Lelepa Island Tours Limited" and the registration of the change of lessees name by the Director of Lands on 15 February 2015 affect the question of whether or not a rectifiable mistake occurred in November 2012?

Issue 2: Whether the non-payment of the purchase price of VT12 million as recorded in the lease constitute a rectifiable mistake?

The "agreed facts" are:

(a) The business name "Lelepa Island Tours" was registered by the Second Defendant (Albert Solomon) in 1998;

(b) A negotiator certificate was issued to "Lelepa Island Tours" on 31 July 2012;

(c) Lease Title No. 12/0512/006 was registered on 2 November 2012 in the name of "Lelepa Island Tours";

(d) The present claim seeking cancellation of the above lease was issued on 19 July 2013;

(e) "Lelepa Island Tours Limited" was registered by VFSC on 16 August 2013 on the application of Albert Solomon;

(f) The Director of Land Records registered a change of lessee name on the above lease from "Lelepa Island Tours" to "Lelepa Island Tours Limited" on 17 February 2015;

The Submissions

13. As to Issue (1) the claimant's simple, straight-forward submission is encapsulated in para. 2 of counsels written submissions which reads:
    

"The lessee ie other contracting party is described as Lelepa Island Tours which is a business name. Lelepa Island Tours is neither a natural person nor corporate entity and therefore has no legal capacity to enter into a valid contract for the lease".

14. Sub-issue (a)– the claimant submits that the lease survey plan included land that had not been previously alienated and was therefore beyond the power of the Minister of Lands in terms of Section 8 of the Law Reform Act [CAP. 123]. Furthermore even if the Minister could lease the whole of the land in Lease Title No. 12/0512/006 (which is denied) he "failed to consult properly with all the disputing claimants for custom ownership" of the said land (cf. the claims in Civil Case 29 of 2007 quoted at para. 11.
    
15. Sub-issue (b)– the claimant's submission is that the Director of Lands has no authority under the Land Leases Act to rectify the register by substituting "Lelepa Island Tours Limited" for "Lelepa Island Tours" as the company was incorporated and substituted after proceedings had been issued challenging the registration of the lease to "Lelepa Island Tours" and in the absence of any evidence that the company had a negotiator certificate and pre-existing valid and lawful contract for the lease of the land (see:s.6 Land Reform Act).
    
16. Concerning issue (2)– inthe face of the sworn admissions by the second defendant that he had never paid the VT12 million purchase price for the lease, Clause 1of the lease recording the payment as having been "received from the lessee" is a further error which led the Minister of Lands to grant the lease. This error was known to an officer in the Land Records Office and constituted an absence of consideration as well as a breach of the Minister's duty "to conduct transactions in respect of the land including the granting of the leases in the interests of and on behalf of the custom owners" [see: Section 8 (2) (b) and (c) of the Land Reform Act and the Torquoise judgment op.cit]
    
17. Finally, the claimant submits that Section 100 (2) of the Land Leases Act cannot assist the registered lessee as it is a mere unincorporated business-name incapable of taking possession of the lease and, by the admission of the registered proprietor of the business-nameie.the Second Defendant, no money and therefore "value" has been paid to obtain the lease[see in this latter regard Section 32D (2) as amended by Act No. 35 of 2006].
    
18. Albert Solomon's counsel whilst conceding that a "mistake" was made initially in registering the lease in a business-name: "Lelepa Island Tours", nevertheless submits that the error was "independently rectified" (whatever that may mean) by substituting the name of a registered corporate entity "Lelepa Island Tours Limited" in place of the business-name. Accordingly issue (1) is no longer "a current and live issue for this Court to deal with". I disagree with the submission which is based on the contemptuous behaviour of the second defendant in seeking to alter the goal posts "ex poste facto" and while the matter is subjudice.
    
19. As was said by Lord Diplock in Attorney General v. Times Newspapers (1974) AC (HL) 273 at p. 309B:
    

"The due administration of justice requires ...... thirdly, that once a dispute has been submitted to a court of law, (the parties) should be able to rely upon there being no usurpation by any person of the function of the court to decide it according to law. Conduct which is calculated to prejudice any of these requirements or to undermine the public confidence that they will be observed is contempt of court".

20. In the present case the actions of the defendants in altering the established facts and evidence that had been submitted to the court for determination before a decision had been made and which was plainly calculated to nullify a primary plank of the claimants' claim, is a blatant" usurpation" of this court's function in determining the claim as filed.
    
21. Alternatively, second defendant submits that the "mistake" concerning the business-name did not cause the registration of the lease, rather, "... it was the end product of the registration and not the root cause ..." (whatever that may mean).And counsel submits, the Director of Lands has power under Section 99 of the Land Leases Act to rectify the register by changing the name of the registered proprietor. On both counts I disagree.
    
22. As for issue (2) non-payment of the VT12 million premium under the lease, besides adopting the submissions of the First Defendant, the Second Defendant submits that the lease is a "private agreement between the First and Second Defendants" and the claimants not being "... privity(sic) to this contract ... does not have standing to complain". Whats more the Land Leases Act provides "a mechanism ... whereby the lessor in the lease can issue forfeiture notice to a lessee for defaulting in terms of their lease" and would be available to be invoked concerning the non-payment of the VT12 million.
    
23. If I may say so this submission conveniently overlooks the clear requirements of Section 32D (2) of the Land Leases Act (as amended by Act No. 5 of 2007) which reads:
    

"A new lease is not to be issued unless the lessee or the registered proprietor pays the lessor a premium based on the full rental value of the unimproved value of the land as determined by the Minister from time to time and the contract rent as agreed by the lessor and the lessee".

24. In the present case not only was this a "new lease" issued with a new title number but the registered proprietor of the lease by its sole registered user (Albert Solomon) deposed on 16 February 2015 that he has not paid any lease premium and that has "... had an arrangement with the Minister of Lands to settle lease premium by 3 instalments after the registration of the lease". This "arrangement" which is not denied was a "mistake" and breaches, in my view, the above provisions as well as Section 8 (2) (b) of the Law Reform Act.
    
25. On issue (1)state counsel supports the Minister's exercise of his powers under Section 8 to grant the lease by reference to the proviso to the definition of an "alienator" and construing Section 8(1) (b) as referring "... to land not occupied by an alienator (therefore not alienated land) but where ownership is disputed" which means custom ownership disputes between indigenous custom owners and their descendants. In short, "Part 5 of the Act which includes Section 8 by its heading is not limited to one or other kind and by its terms, applies both to alienated land and to customary or custom land".
    
26. Concerning the registration of the lease in the business-name of "Lelepa Island Tours" the state counsel submits:
    

"If the Court were persuaded that this constituted a mistake by the Minister due in some way to his improper exercise of power under Section 8 of the Law Reform Act, this would constitute a mistake in terms of Section 100 (1) of the Act which empowers the Court to order rectification.

The Court must be satisfied that such mistake caused the registration of the lease to occur".

27. As to sub-issue (b) concerning the change of the lessee's name to "Lelepa Island Tours Limited" the second defendant submits that fact "... does not affect the question of whether or not there was a mistake and further, that such mistake caused the registration of the lease to occur in November 2012". Whats more it can be inferred from the fact that the company was incorporated after these proceedings commenced and the subsequent change of lessee name "... that it was obviously known to the registered proprietor of the lease that the lessee at the time of registration of the lease was not a corporate body".
    
28. Finally in regard to issue (2)– state counsel submits that the non-payment of the VT12 million premium was known and admitted by the second defendant and if the Court finds that the failure on the part of the Minister to collect the premium before or at the time of executing the lease constituted a breach of his duty under Section 8 of the Law Reform Act then "... this would constitute a mistake in terms of sub-section 100(1) of the Act which empowers the Court to order rectification". I agree.
    
29. Notwithstanding the concession, state counsel submits by reference to the definition of a "lease" that failure to pay premium does not mean that there is no consideration for the lease as premium is only one factor in what constitutes consideration, and in any event, the definition includes a lease granted "without consideration".
    

Discussion

30. At the outset I mention that despite the registered proprietor of Lease Title No. 12/0512/006 being changed to "Lelepa Island Tours Limited", no application has been made by the Second Defendant to join the company in the proceedings as he should have done given that he is the majority shareholder and a director of the company. Furthermore given the competing submissions, it may be helpful for the Court to broadly indicate its construction of Section 8 of the Law Reform Act and Section 100 (1) of the Land Leases Act.
    
31. Section 8 of the Law Reform Act provides:
    

"8. Minister to have general management and control of certain land

(1) The Minister shall have general management and control over all land –

• (a) occupied by alienators where either there is no approved agreement in accordance with sections 6 or 7 or the ownership is disputed; or
  
• (b) not occupied by an alienator but where ownership is disputed;or
  
• (c) not occupied by an alienator, and which in the opinion of the Minister is inadequately maintained.
  

(2) Where the Minister manages and controls land in accordance with subsection (1) he shall have power to –

• (a) consent to a substitution of one alienator for another;
  
• (b) conduct transactions in respect of the land including the granting of leases in the interest of and on behalf of the custom owners;
  
• (c) take all necessary measures to conserve and protect the land on behalf of the custom owners."

(my underlining and emphasis)

32. The heading or title of the section suggests that it is concerned with or limited in its application, to "... certain land". Thus claimants' counsel submits the section only applies to "alienated land" and not to land that has not been previously alienated and which at Independence vested in the indigenous custom owners. It is only "alienated lands" that required the Minister's involvement. This submission is contradicted however by the actual wording of subsection (1) which grants the Minister power "over all land".
    
33. In this respect state counsel submits the subsection is clear in referring disjunctively to both "lands occupied by alienators" [para. (a)] as well as "lands not occupied by an alienator" [paras. (b) and (c)] and, where "ownership is disputed", the Minister has power to manage and control such unoccupied disputed land "in the interests of and on behalf of the custom owners".
    
34. I accept and agree with the submissions of State counsel which also receives some support from the "obiter dictum" of the Court of Appeal in Valele Family v. Touru [2002] VUCA 3 where the Court observed:
    

"The primary judge held that the land in question was not alienated land. He correctly recognized that as there was a dispute as to custom ownership s.8 of the Land Reform Regulation (which was in substantially similar terms to s.8 of the Land Reform Act) applied."

35. In the present case the disputed land is identified in the relevant negotiator certificate dated 31 July 2012 as: "Lease Title No. 12/0512/006" and the registered negotiator is: "Lelepa Island Tours". No custom owners are named in the certificate, instead, the relevant entry merely records: "Disputed".
    
36. It is common ground that the land in question is unoccupied and is part of the subject matter of an appeal pending before the Efate Island Court and of which customary "ownership is disputed". It falls squarely within para. (b) of Section 8 (1) of the Law Reform Act and is therefore available to be leased by the Minister if it is in the interests of custom owners. In this regard it is difficult to imagine how the lease for 75 years of a valuable piece of land with acknowledged tourism potential without receiving a single vatu of the VT12 million premium could be said to be: "... in the interests of the custom owners".
    
37. Be that as it may the registration of Lease Title No. 12/0512/006 in the business-name of "Lelepa Island Tours" was clearly a "mistake" on the second defendant's part and the officers in the Land Registry dealing with it. This much is clear from the second defendant's sworn statement dated 1 March 2015 wherein he deposes:
    

"1. I confirm at the time of obtaining the registration of my Lease, I applied for the lease under the trading name.

2. I then obtain the Negotiating Certificate under the trading name.

3. However, as soon as I was processing my lease for registration, I decided to also apply and change the status of my business into a company after receiving advice from several persons other than lawyers that a business name cannot own a lease.

4. However, the officers at the Lands Department did not tell me that so when I had the certificate under my trading name, I thought it was well and acceptable to do that."
(my highlighting)

And later at para. 11 he states:

"I confirm I did not change the subject lease because of this court case. I had taken the measure to change this mistake well ahead of the present court case and at the time which I did not know if a trading name can own a lease until I got the advice publicly to change that and it was on the basis alone, except that at the time this did not permit me to do it properly before the registration of my lease."

38. By his own sworn admission the second defendant substantially caused and contributed to the admitted "mistake" in firstly, applying for a negotiator certificate and the lease in the name of "Lelepa Island Tours" and thereafter, in failing to correct the "mistake" before the execution and registration of the lease in the name of "Lelepa Island Tours" by the Director of Land Records.
    
39. As was said by the Court of Appeal in Bouchaud v. Director of Lands [2003] VUCA 4:
    

"A business name is not a legal person for the purpose of issue and registration for the purposes of a lease"

And later, in dismissing a ground of appeal that the business-name had a registered and therefore indefeasible title, the Court said:

"The evidence before the Court is that the appellant obtained a lease ... The lease was issued in the name of Nasama Co. Ltd. It was issued to no more than a registered business name. It was not issued to a "person" as required under Section 1 of the Land Leases Act.The first ground is baseless and must fail".
(my emphasis)

40. "100. Rectification by the Court
    
    • (1) Subject to subsection (2) the court may order rectification of the register by directing that any registration be cancelled or amended ... where it is satisfied that any registration has been obtained, made or omitted by fraud or mistake.
      
    • (2) The register shall be not be rectified so as to affect the title of a proprietor who is in possession and acquired the interest for valuable consideration, unless such proprietor had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or cause such omission, fraud or mistake or substantially contributed to it by his act, neglect or default".
      
41. Plainly the registration of a lease in a land register may be cancelled where the Court is satisfied that it was obtained or made as a result of "fraud or mistake". The section does not identify by whom the "mistake" is to be made or how often or how many, only that the "mistake(s)" be causative of the impugned registration. A single mistake would suffice if it was operative and caused the registration.
    
42. In the present case I am satisfied that the second defendant's "mistake" in obtaining a registered negotiator certificate in a business-name was directly related and causative of the grant and registration of the lease in the same business-name "Lelepa Island Tours". The original "mistake" which was known to the second defendant, remained uncorrected, and was operative throughout the processing, grant and eventual registration of the lease in the business-name: "Lelepa Island Tours".
    
43. On this "mistake" alone, I consider that the grant of Lease Title No. 12/0512/006 and its registration must be cancelled and I so order in exercise of the Court's power under Section 100 (1) of the Land Leases Act.
    
44. Needless to say I reject the submission that the subsequent change in the name of the registered proprietor of the lease somehow validates retrospectively, the void and invalid lease granted to the business-name: "Lelepa Island Tours". To avoid any possible confusion, I also direct the Director of Lands to cancel the change of lessee name from "Lelepa Island Tours" to "Lelepa Island Tours Limited" registered on 17 February 2015 on the basis that section 99 (2) of the Land Leases Act only has application to a registered lease that is valid and subsisting or extant. It has no application to an invalid lease that never existed and was always a nullity.
    
45. The claimants having succeeded in the claim are awarded standard costs summarily assessed at VT250,000 to be paid by the second defendant only within 28 days.
    

DATED at Port Vila, this 17thday of September, 2015.

BY THE COURT

D. V. FATIAKI
Judge.