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Korean Enterprises Ltd v Commissioner of Lands [1998] SBHC 92; HCSI-CC 170 of 1997 (8 June 1998)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 170 of 1997

KOREAN ENTERPRISES LIMITED

-v-

COMMISSIONER OF LANDS & OTRS

HIGH COURT OF SOLOMON ISLANDS
(PALMER J.)
Civil Case No. 170 of 1997

Hearing: 13th May, 1998
Judgment: 8th June, 1998

A. Radclyffe for the Plaintiff
B. Titiulu for the First Defendant
H. Pelu representing the Second Defendant
Sol-Law for the Third Defendant

PALMER J.: This is an application by Originating Summons filed on 22nd July, 1997 for the following declarations:

“1. That no valid notice before forfeiture has been served on the Plaintiff pursuant to section 128 of the Land & Titles Act;

2. That the vesting order dated 20th June 1997 is null and void;

3. That the removal of the Plaintiff from the fixed-term estate register as owner of the fixed-term estate of Parcel No. 191-023-114 was invalid;

4. That the registration by the Second Defendant of any other person as owner of the fixed term estate in Parcel No. 191-023-114 is invalid;

5. That the Plaintiff is still the registered owner of the fixed-term estate in Parcel No. 191-023-114.”

Although not mentioned, the application sought would not be complete without making mention of sections 129 and 209 of the Land and Titles Act which provide for relief against forfeiture including rectification of the Land Register.

THE FACTS:

1. THE PLAINTIFF’S VERSION.

The Plaintiff was first registered as owner of the fixed-term estate in Parcel No. 191-023-114 on or about 7 February, 1995. One of the conditions of the Grant Instrument dated 11th April, 1994 (certified copy attached to the letter of Mr. Pelu, Deputy Registrar of Titles) was that the Plaintiff erect on the land within a period of 24 months from 11th April, 1994, a building costing a minimum of $400,000.00 for commercial purposes in accordance with the provisions of the Public Health Act 1970 or any by-laws made under the provisions of the Local Government Act (clause 6).

The Plaintiff did not comply with that requirement (see affidavit of Kim Durk Kee, Director of the Plaintiff, filed on 22nd July, 1997 at paragraphs 4-6) for various reasons. Ultimately, approval was granted by letter dated 28th May, 1997 (see exhibit “C” annexed to the affidavit of Kim Durk Kee).

On 10th June, 1997, the Plaintiff was granted a three months extension for the period May to July 1997 to comply with clause 6 of the Grant Instrument (see exhibit “D” annexed to the affidavit of Mr. Kim). Variation fees of $150.00 for the extension were duly paid on 11th June 1997.

2. THE FIRST DEFENDANT’S VERSION.

Meanwhile, unbeknown (it is alleged) to the Plaintiff, the First Defendant had purportedly instituted forfeiture proceedings under section 128 of the Land & Titles Act in February of 1997 (see copy of Notice Before Forfeiture dated 24th February, 1997 proven in evidence by the former Commissioner of Lands, Mr. Eliam Tanirono; also see exhibit “E” annexed to the same affidavit of Mr. Kim). Subsequently, a vesting order dated 20th June, 1997 was purportedly issued by the First Defendant under section 129(3) of the Land and Titles Act (see exhibit “G” annexed to the affidavit of Mr. Kim). Forfeiture proceedings were allegedly completed when re-entry and possession was effected on 25 June, 1997 (see exhibit “H”).

3. THE THIRD DEFENDANTS VERSION.

The version of events described by the Third Defendant paints a very different and confused state of affairs existing in the Offices of the Commissioner of Lands. In the affidavit of Cannay Lee filed 23rd March, 1998, he states at paragraph (3), that by letter dated 25th January, 1997, (exhibit “CL2”) he was promised an offer of the fixed-term estate in parcel no. 191-023-114, on completion of the forfeiture proceedings. He states at paragraph (2) that the Notice of Forfeiture shown to him was dated 30th May, 1996. That Notice of Forfeiture however had never been served on the Plaintiff (not in dispute), and therefore never processed. Nestor Maelanga confirmed in evidence that that Notice had never been dispatched as it contained errors. The only Notice Before Forfeiture brought to the attention of Mr. Tanirono was the one dated 24th February, 1997 (exhibit “E”). It makes one wonder why that Notice dated 30th May 1996, was ever shown to the Third Defendant. Even more surprising, was why it should be referred to in the Vesting Order dated 20 June, 1997 (exhibit “G” in the affidavit of Mr. Kim filed 22 April, 1997) and in the Notice of Re-Entry issued 25th June, 1997 (exhibit “H”). That Notice of 30 May, 1996 should never have been left in the files, and if so, a simple notice of cancellation or words of similar effect should have been engrossed over it. Someone obviously had not done his job and checked the documents properly.

At paragraph (3) of his affidavit, Mr. Lee stated that on 3rd February, 1997 he paid premium, rent, survey and registration fees totalling $17,198.00 in respect of the said fixed-term estate. Forfeiture proceedings however had not even been commenced. Someone was either too eager to have the estate forfeited and given to the Third Defendant or simply not doing their work.
At paragraph (6), Mr. Lee further deposed that a grant of the Fixed-Term Estate in Parcel No. 191-023-114 dated 6 March, 1 997 was made by the First Defendant (see exhibit “CL4” annexed to the same affidavit) to him. Again, this was made when forfeiture proceedings had just been commenced (some two weeks). A clear example of “dereliction of duty”. On 18th June, 1997, the application for registration was lodged at the Registrar of Titles Office again when forfeiture proceedings had not yet been completed. Registration was effected on 26th June, 1997, one day after the Notice of Re-entry was executed.

REGISTRATION OF THE THIRD DEFENDANT BY THE SECOND DEFENDANT.

The registration of the Third Defendant as owner of the Fixed- Term Estate in Parcel No. 1 91-023-114 was clearly irregular and therefore should never have been registered at all. According to the affidavit evidence of Mr. Haelo Pelu, Deputy Registrar of Titles, the application for registration was lodged on 18th June, 1997. On filing, the application was given No. 506/97. One of the prescribed forms required to be filed was the covering sheet RT FORM IC (see exhibit “HP2” annexed to the affidavit of Haelo Pelu filed 26th March, 1998). At Part 3 of the said Form, all the instruments and other documents filed with the application were required to be listed. Only three documents however were listed; the Grant Instrument and its copy, and the certificate of payment. The other documents referred to in the affidavit of Mr. Pelu at paragraph 7, (the General Treasury Receipt No. 8586588, a copy of the Notice of Re-Entry, a copy of the Vesting Order and a copy of the Notice Before Forfeiture) were not listed. Mr. Pelu could not confirm whether those documents were included in the application or not, though he did say that it seemed to him that they may have been lodged with the application.

One thing however is clear, the said documents were not mentioned in Part 3 of RT FORM IC. More likely than not, they were not included at the time the application was lodged. In particular, the following documents: (1) the Notice of Re-entry and (2) the Vesting Order, according to the sequence of dates and timing of events could not possibly have been lodged with the said application on 18th June, 1997. Bearing this physical impossibility in mind, the only logical explanation for having them in the said Application is they could only have been placed there sometime after. This should have put the Second Defendant on notice that something was not right and have the application rejected. But even if their inclusion was not irregular, it should have come to the notice of the Second Defendant that something was drastically wrong. As well as paying premium, rent, survey and registration fees well before forfeiture proceedings had commenced, the First Defendant had purported to grant the fixed-term estate in Parcel 1 91-023-114 to the Third Defendant when title of the Plaintiff had not ceased to subsist and before it was cancelled. That was a glaring fundamental defect which should have resulted in an outright rejection of the application for registration. The opening of a new fixed-term estate register in favour of the Third Defendant accordingly should never have been done and therefore invalid. The Fixed-Term Estate in favour of the Plaintiff had to be determined (cancelled) first before the First Defendant could ever validly make a fresh grant to the Third Defendant.

The First Defendant thus legally, could only have been able to grant a new fixed-term estate over the said parcel after 25th June, 1997 (date of re-entry) and not before (see sections 126(2)(a), 127 and 131(1), and subsection 131 (6) of the Land and Titles Act). The purported grant therefore dated 6th March, 1997 in favour of the Third Defendant was invalid from the beginning and unregistrable. I do accept however that the grant could be re-executed, provided the forfeiture proceedings had been duly and properly completed.

THE ISSUE:

This brings me to the crucial issue raised in the originating summons, whether a valid notice before forfeiture had been served on the Plaintiff. The Third Defendant and First Defendant obviously take the view that this had been done, whilst the Plaintiff denies this.

THE LAW:

The relevant law on forfeiture proceedings is covered in sections 126-129 of the Land and Titles Act.

Section 1 28 of the Land and Titles Act requires that notice before forfeiture must be served on the owner of the estate and any other interested person before the Commissioner could exercise the right of forfeiture.

“The Commissioner shall not be entitled to exercise the right of forfeiture until he has served on the owner of the estate and on every other person shown by the land register to be interested a notice -

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the owner to remedy the breach within such reasonable period as is specified in the notice; and

(c) in any case other than non-payment of rent, requiring the owner to make compensation in money for the breach, and the owner has failed to remedy the breach within a reasonable time thereafter, if it is capable of remedy, and to make reasonable compensation in money.”

[Emphasis added]

THE NOTICE BEFORE FORFEITURE:

The breach complained of in that Notice (exhibit “E”), [requirement (a)], was the requirement that the Plaintiff erect within 24 months a building costing not less than $400,000.00 (Clause 6 of the Grant Instrument dated 11th April, 1994).

The period specified in the notice, [requirement (b)], was three (3) months (from 24th February, 1997), to remedy the breach by having a building of the said value developed and erected within that period. The three months would have lapsed on 24th May, 1997.

THE EVIDENCE:

Oral evidence had been adduced from most of the persons who had dealings with this Notice from the Office of the Commissioner of Lands. The then Commissioner of Lands, Mr. Eliam Tanirono stated how the Notice had been brought to his attention by one of the Senior Lands Officers, Mrs. Nestor Maelanga, when he had only been in Office for some two to three months. He was not familiar with forfeiture proceedings and so relied on the knowledge and experience of Nestor Maelanga to explain things to him. He recalled signing the document without sighting the file, but took no further action concerning its dispatch from the Office. He relied on the knowledge and experience of Nestor Maelanga who had earlier explained to him that this was to be by registered mail (see section 229 of the Land and Titles Act which deals with service of notices; one of these was to be by way of registered mail).

In his evidence before this Court, Mr. Tanirono also referred to a separate book which he believed was kept for recording outgoing registered mail. This should contain details of mail sent by registered post and is kept in the custody of the Registry Clerk.

Nestor Maelanga confirms taking the said Notice for signing by Mr. Tanirono before taking it to the Registry Office for dispatch. Under cross-examination she recalls writing out the address on the envelope and leaving it with the Registry Clerk to post. She did not know if it was sent by registered mail, ordinary mail or not at all. She did not check after.

Nestor also confirmed in evidence that there used to be a book kept for recording outgoing registered mail in the care of the Registry Clerk. She did not know however if any entry or receipt was entered in the said book to confirm whether the said Notice had been sent by registered mail or not. The most she could say was that in all probability it was sent by registered mail, but could not confirm or deny it

One of the Registry Clerks, John Maelafia was also called to give evidence. Part of his job description was to address letters and mail them. This includes posting of registered letters. He states mailing of letters was also done by the Office Orderly. When he posts letters by registered mail, he usually gets a receipt for this and either places it in the relevant file or give it to the person who wrote the letter. He denied the existence of any book for recording outgoing registered mails.

THE SUBMISSION OF THE FIRST AND THIRD DEFENDANTS:

The submission of the First and Third Defendants on the evidence regarding service of Notice Before Forfeiture is that in all probability, service was effected on the Plaintiff by registered post. They argue that from the evidence adduced, it would have been sent by registered mail, as standard office practice. Nestor Maelanga had confirmed this in evidence, having delivered the mail to the Registry Clerk with instructions to have it posted. The only uncertainty lies in the fact that it could not be confirmed whether it was actually posted or not, but in all probability it would have been done in any event by the Registry Clerk or Office Orderly.

Mr. Titiulu further argues that there is support for the suggestion that in all probability the Notice was sent because in the affidavit of Mr. Eliam Tanirono filed on 13th May, 1998, at paragraph (3) it was deposed that the Manageress of Korean Enterprises Limited had protested the Notice to him some two to three weeks later. The Plaintiff however denies all this (see affidavit of Mr. Kim Durk Kee filed on 22nd July, 1997, at paragraphs 9-10).

THE ONUS OF PROOF:

The onus of proof, on the balance of probabilities, lies with the First Defendant to discharge. Subsection 229(6) (a) of the Land and Titles Act makes this abundantly clear.

“Notwithstanding anything in subsections (1) to (5)-

(a) it shall be the duty of any person seeking to serve the notice to do everything reasonably practicable to ensure that the contents of the notice come to the knowledge of the person affected thereby; ...”

Has this duty been duly discharged by the First Defendant? Respectfully, I do not agree with nor accept as sufficient, the submission of the First and Third Defendants, that if the standard procedures practiced in the Office of the Commissioner of Lands were taken into account, that it was more probable than not that the Notice was sent. That is nothing more than mere assumption. It is assumed that the Notice had been posted by registered mail and therefore assumed that it would have been received in the ordinary course of post. That with respect, is not enough. The issue is whether the said Notice was posted by registered letter; not whether in all probability it was posted by registered letter. If we are to start from the premise (which was actually what was being suggested by the First and Third Defendants), that in all probability the Notice was posted by registered letter, then unfortunately we cannot deem it [as required by subsection 229(3)] served; the reason being, apart from non-compliance with the law, the probability that it may be served is even less. We can thus only deem it served, at the time when it ought in due course of post to have been delivered at the address to which it was sent, if, and only if, the Notice had been posted by registered letter (this in my respectful view must be affirmatively proved, nothing less). Anything short, cannot be deemed to be effective service and no amount of probabilities or suggestions of probabilities will suffice. Because the Plaintiff has flatly denied service, the onus lies with the First Defendant to show to this Court conclusively, that the Notice had been posted by registered letter.

On proof of this particular point, none of the witnesses from the Office of the Commissioner of Lands could show anything for it or even at the least say that they had the Notice posted by registered letter. No separate registry book for instance has been produced in court which showed that the said Notice had been taken to the Post Office for mailing by the Registry Clerk or the Office Orderly. Even the most obvious thing, a receipt from the Post Office to prove that the said Notice had been duly posted could not be found in the file. None of the witnesses from the Office of the Commissioner of Lands could recall ever posting the said Notice or receiving any receipts from the Post Office. The First Defendant has not even bothered to check if the Post Office has or keeps any book for recording registered mail and whether any entry was made for the said period (24th February to say first week of May 1997). It is common knowledge that the Post Office keeps a register of registered mail so that customers could keep track with what has happened to their mail.

The evidence adduced in support of proof of service by registered letter has simply been not enough and I am not satisfied it has been established that the said Notice was posted by registered letter.

THE EFFECT OF AN INVALID NOTICE:

The effect of this is as follows. The Commissioner cannot exercise the right of forfeiture in respect of the fixed-term estate in Parcel No. 191-023-114. In other words, he had no right whatsoever in law to forfeit the said fixed-term estate of the Plaintiff. Any purported exercise of that right of forfeiture accordingly was null and void. It follows that the removal of the Plaintiff as registered owner and the registration of the Third Defendant as new owner also null and void.

It should be made clear that the Third Defendant acquired no legal interest whatsoever over the said property. The fixed-term estate of the Plaintiff in Parcel No. 191-023-114 had never ceased to subsist and so there was no fixed-term estate to be granted to the Third Defendant. The Grant Instrument therefore purported to be executed on 6th March, 1997 in favour of the Third Defendant was void ab initio. Further it should never have been registered by the Second Defendant.

SUBSECTION 209(2) OF THE LAND AND TITLES ACT:

But even if it could be argued that he was a bona fide purchaser for value under subsection 209(2), I am not satisfied he did not have knowledge of the omission or mistake committed by the First Defendant. How could he ever successfully claim that he had no knowledge of what was going on when it is a fact that the fixed-term estate register in the said parcel had no alterations or entries to suggest otherwise. Right up to 25th June, 1997, title to the said property remained with the Plaintiff. It had never ceased to subsist. If the Third Defendant had taken the time to do a search at the Lands Registry in the Office of the Registrar of Titles, he would not have failed to notice that something was drastically wrong with the Grant Instrument dated 6th March, 1997 (exhibit “CL4”) , and the manner in which his application had been processed. When he paid the fees in February and executed the Grant Instrument in March 1997, title to the fixed-term estate remained with the Plaintiff. It had never been forfeited or cancelled. But whether he did know or not is immaterial, he is deemed to have knowledge of that fact. And even if it might be argued that it was not necessary for him to enquire further, he cannot say in the least, that he did not know that the Plaintiff had a fixed-term estate interest in the said property. See letter dated 21st November, 1996 (exhibit “CL1”) at paragraph (3), which referred to the lot which had been allocated to the Plaintiff. The Third Defendant knew what he was talking about; that the Plaintiff had an interest in the said Parcel. See also letter dated 25th January, 1997 (exhibit “CL2”) where the Commissioner of lands also informed him about the forfeiture proceedings yet to be completed against the Plaintiff. Indirectly, he was being informed about the adverse interests of the Plaintiff which were yet to be finally addressed; that is, the Plaintiff held a fixed-term estate interest in the said Parcel and before he could ever successfully acquire the said fixed-term estate interest, the interest of the Plaintiff would first have to be forfeited. This would have put a reasonable, prudent and intelligent businessman like the Third Defendant on notice, and to be extremely cautious about what he was entering himself into with the First Defendant. He should have then engaged legal Counsel at that stage and saved himself all the unnecessary hassles and expense which he eventually ended up with.

See also paragraph (5) of his affidavit, which reads:

“I was assured by the Commissioner of Lands Office that upon forfeiture of the property I would be free to purchase same.”

From the evidence, I am satisfied the Third Defendant knew that the Plaintiff had a fixed-term estate interest in Parcel No. 191-023-114. He also knew that forfeiture proceedings had been instituted against the Plaintiff but not yet completed. He also knew that he could only be given a grant on forfeiture of the said fixed-term estate. In other words, he knew that before a grant could be made in his favour, the fixed-term estate of the Plaintiff had to be forfeited first (that is cancelled). It follows, that he must know, or cannot have failed to realise, that the success of his application would be dependent upon the validity of those forfeiture proceedings. If the forfeiture proceedings fail, then any claims or application he has made for the said fixed-term estate will also fail. It was in his interest therefore to check and ensure that the forfeiture proceedings had been properly and validly done. This he failed to do and simply turned a blind eye to blatant omissions and mistakes committed not only by the First Defendant, but also by the Second Defendant.

It is an embarrassment to the Office of the Commissioner of Lands, that they who should know better (what to do or the right things to do), do not even seem to know what was going on amongst themselves. Evidence has been adduced in this Court where documents were being signed right, left and centre without the Commissioner or other responsible officers being aware of their effects on the said land. One can’t be blamed for thinking that the handling of this land had been anything but chaotic. Even when clear instructions had been given, these seemed to have fallen on deaf ears. It is high time some measure of control must be exercised with a firm hand or appropriate disciplinary action taken against Officers proven to have failed to perform their duties or responsibilities as laid down in their job descriptions or office procedure. The unfortunate thing about this all is that it is costing affected parties including the Government, money in the thousands. In this case, the Third Defendant has already indicated that he will be seeking compensation and that it would not be an insignificant sum.

Subsection 209(2) of the Land and Titles Act, therefore does not in any way protect the interest of the Third Defendant even if it could be argued that it is relevant, on the ground that the evidence before me does not support his claim that he was not aware that the Notice Before Forfeiture was defective or that something was amiss.

THE VARIATION DATED 10TH JUNE, 1997

There is also another matter which had been raised and which needs to be commented on. This relates to the variation granted to the Plaintiff for a period of three months from May to July 1997 (see exhibit “D” annexed to the affidavit of Mr. Kim filed on 22nd July, 1997). Even assuming for one moment that the Notice Before Forfeiture had been validly served, the variation granted in that letter dated 10th June, 1997, would have superseded the Notice Before Forfeiture dated 24th February, 1997. It has been suggested that the said variation was invalid in that it had been done without the authority of the Commissioner of Lands. Again I find this breakdown of communication and checks and control on lower Officers and amongst Officers appalling. It should be standard office procedure that all correspondences bearing the name of the Commissioner of Lands (this includes correspondences being signed for the Commissioner) must be vetted through him first without exception. It would ensure, if not minimise, the unnecessary and confused array of dealings and correspondences that have plagued this case from the beginning. The variation granted to the Plaintiff had never been formally cancelled or retracted. Accordingly the Commissioner would have been bound by the variation. The Commissioner of Lands and the Officers in that Office must come to terms with the fact that there are legal consequences for actions taken by them, and therefore they must be responsible honest and diligent in the discharge of their duties. When in doubt, legal advice must be sought from the Office of the Attorney-General.

With regards to the vesting order issued on 20th June, 1 997, it has been correctly described by Mr. Radclyffe and conceded by Mr. Patrick as inappropriate and therefore null and void. I need say no more on that.

The ORDERS of the Court should read as follows:

1. DECLARE that no valid notice before forfeiture had been served on the Plaintiff pursuant to section 128 of the land and Titles Act.

2. DECLARE that the vesting, order dated 20th June, 1997 is null and void.

3. DECLARE that the removal of the Plaintiff from the fixed-term estate register as owner of the fixed-term estate of Parcel No. 191-023-114 was invalid.

4. DECLARE that the registration by the Second Defendant of any other person as owner of the fixed-term estate in Parcel No. 191-023-114 was invalid.

5. DECLARE that the Plaintiff is still the registered owner of the fixed-term estate in Parcel No. 191-023-114.

6. FOR the avoidance of doubt, DIRECT that the Fixed-Term Estate Register in Parcel No. 191-023-114 be rectified (under section 209(1) of the land and Titles Act) by cancelling the title of Cannay Lee and re-instating the title of Korean Enterprises Limited.

6. COSTS of both the Plaintiff and the Third Defendant to be borne by the First Defendant.

THE COURT.