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Toliliu v Toliliu [2008] SBHC 25; HCSI-CC 248 of 2004 (9 June 2008)

HIGH COURT OF SOLOMON ISLANDS

Civil Case Number 248 of 2004

BETWEEN:

George Toliliu,
Henry Toliliu,
Pamela Bainivalu and;
Roselyn Reid
(Plaintiffs)

AND

Sula Toliliu
(First Defendants)

AND

Willie Toliliu and
Fred Toliliu
(Second Defendants)

Date of Hearing: 29th August 2007, 24th September 2007, 20th March 2008
Date of Judgement: 9th June 2008

Bridge Lawyers for the Plaintiffs
D. Hou for the Defendants.

Palmer CJ.

The plaintiffs in this case are the registered joint owners of the fixed-term estate in parcel number 191-029-92 ("the Property") situated at West Kola’a Ridge in Honiara. The first and second defendants ("the defendants") however reside in the Property and have refused to vacate the house after being told to do so by the plaintiffs. They allege fraud in the registration of the Property.

The first defendant is the widow of Peter Toliliu (deceased) ("Peter") and the second defendants are her children. Peter passed away on 14th December 2003. Prior to that, he was a registered joint owner of the Property together with the plaintiffs.

The defendants say that the transfer of the Property from Peter to the plaintiffs and himself in or about 1995 had been obtained by fraud; that Peter never signed the transfer form. They say it was done by someone else. They say they did not become aware of the transfer until after Peter’s death and only when they were told to vacate the Property.

The plaintiffs on the other hand maintain that the transfer effected in 1995 was a valid one.

A number of issues arise from the defence of the defendants. The first issue is whether the transfer made to Peter and the plaintiffs in 1995 fraudulent or not. If the answer is in the affirmative then consequential orders are sought.

The defendants however raise an alternative argument, by operation of a resulting trust and in the further alternative a constructive trust based on the contributions of the first defendant and that of Peter Toliliu (deceased) towards the purchase of the Property.

They also say that by virtue of sections 200(2)(b), 216 and 195(3) of the Land and Titles Act ("LTA"), the defendants acquire a beneficial interest over the property as well. Accordingly, they cannot be regarded as trespassers and have equitable rights to the Property in the same way as the plaintiffs. They say the register accordingly should be rectified to reflect accurately their beneficial interests in the Property.

Was the transfer of the Property from Peter to himself and the plaintiffs dated 18th February 1995 fraudulent?

The allegation of fraud stemmed from allegations of forgery against the plaintiffs that the signatures of Peter on the transfer form dated 18th February 1995 and the statutory declaration executed by him on the same date were forged.

The defendants rely on comparisons of signatures which they allege were genuine as compared to those which they say were forged. The genuine signatures included signatures obtained from his Seamen’s Certificate of Identity, Passport Nos. 3281 and 011684, signatures on charge instrument dated 30th August 1974, signatures on a variation instrument dated 30th September 1974, signature on a letter addressed to his employer Markwarth Shipping Company dated 27th March 1975, and signatures on a grant instrument dated 16th November 1972. They however say that an agreement dated 15th February 1975 which contained his signature should not be treated as genuine by the Court as it looked a little bit different.

All the signatures regarded as genuine were those made in 1972, 1974 and 1975. No new copies of his signatures in recent years however were provided by the defendants as genuine. I do not know why that is so. It is an accepted fact however that a person’s signature does exhibit variations which I would describe as minor depending on the time the signature was made. Sometimes when a person is nervous, tired, hungry, feeling sick or in a hurry etc. then their signatures may look a little bit different.

There is however an important distinction to be noted in this case, for the plaintiffs case is that Peter himself voluntarily signed those documents effecting the transfer to him and the plaintiffs. The defendants thus have the hurdle of proving that the execution of the documents by Peter were forgeries.

They produced four witnesses; George Toliliu, Pamela Toliliu, Henry Toliliu and Yvonne Toliliu to support their case.

The defendants therefore from the outset have the added difficulty of disproving what those direct witnesses on that issue have to say.

The real issue therefore is not so much genuiness of signatures as proof of execution of those documents. The maxim "omnia praesumuntur rite et solemniter esse acta donec probetur in contrarium" ( All things are presumed to have been rightly and duly performed until it is proved to the contrary) applies in this case.

There are four witnesses who have given basically undisputed and un-contradicted evidence about the fact that Peter was present and voluntarily signed the transfer instrument and statutory declaration. Their evidence has never been seriously challenged or discredited in anyway. They gave consistent, clear and specific evidence as to the location of the venue (at the Public Solicitor’s Office) where they signed, before Mrs. Samuels, that it was on a Saturday, and they recalled picking him up from the wharf to attend at the office to sign the document. Henry Toliliu goes so far to say he remembers picking Peter up at the wharf from the ship he was working in.

The evidence in respect of the validity of those documents is simply overwhelming. It is for the defendants to demonstrate to the requisite civil standard for fraud cases, on the balance of probabilities that fraud had been committed by the plaintiffs in the process of registration. That the process of registration was fraudulent; that they were dishonest about it[1].

In fraud cases the standard of proof had been stated quite clearly as increasing in probability the more serious the allegation but need not reach the criminal standard[2].

The submission that the court should make the comparisons on what they allege were apparent differences on the signatures must fail in the face of the uncontroverted evidence that had been adduced. The evidence on the genuiness of signatures is too vague. Apart from signatures that were made in 1972, 1974 and 1975, no other signature of recent origin was produced. Further, a signature purported to be made by Peter in 1975 was simply rejected by the defendants as not genuine simply because it appeared a little different but no with no satisfactory reason or explanation provided. Learned Counsel for the defendants could offer no explanation as to why they say it was not genuine other than that it looked different.

Further, apart from alleging that the signatures were not genuine, the defendants have not adduced evidence to say why they say they were not genuine. If they were forged, who was the culprit? I am not satisfied the issue of comparison is adequate and must be dismissed as vague and ambiguous.

The circumstantial evidence adduced in support of their arguments also must fail in the face of the clear and undisputed evidence regarding proof of execution of those documents. All the matters referred to in paragraphs 45 (a) – (m) in the written submission of the defendants have not displaced the accuracy and veracity of the evidence of the plaintiffs that the transfer instruments and statutory declaration were executed by no one else than Peter himself.

The plaintiffs therefore have acquired valid title through the process of registration which has not been displaced by fraud. This would be consistent with the evidence adduced in court that the Property had been intended to be the family home for all of them by their father and that Peter had been registered as a joint owner as he was the eldest brother at that time.

Claim of equitable right of the first defendant and the second defendants.

Mr Hou however has raised an intriguing argument before this court regarding the rights in equity of the defendants which he says the court ought to impute upon them in the particular circumstances of this case where the first defendant had been the main support for Peter throughout their years of marriage together and especially throughout the period when the loan was being paid off from 1974 right through to 1985.

William Toliliu passed away in 1977 and thereafter Peter was solely responsible for the repayment of the loan to 1985. Mr Hou argues that in those circumstances, an intention to create a tenancy in common ought to have been presumed[3]. The effect of this he says is to be found in the law of equity which creates a resulting trust in the circumstances. He referred to the case of Bull v. Bull[4] in which the court held in favour of the mother that because she had made a substantial contribution to the house although she had not been registered as an owner in common and that her contribution towards the house was not intended as a gift to the son, a resulting trust was created in her favour.

The son and mother had purchased a home for them to dwell in; the son providing the greater part of the purchase price. After getting married, things did not work out between the mother and daughter in law and so the son decided to ask the mother to leave the house. She refused and so went to court to resolve the dispute. Lord Denning found in favour of an equitable right as a tenant in common and therefore the mother could not be evicted by the son although he held legal title over the property. Lord Denning held she had equal right to the possession, use and enjoyment of the land and could not be turned out[5].

Mr. Hou submits that the same approach should be taken by the court in relation to the property held in the joint names of William Toliliu (deceased) and Peter; that the court ought to find a resulting trust exists in those circumstances and impute a tenancy in common between them.

Learned Counsel also cited authorities in Australia including the case of Martin v. Martin[6] in which the High Court of Australia recognised the principle that if the husband or wife did not intend at the time of purchase that his wife or child should take by way of advancement, the rule of law is that a resulting trust is created[7]. In Calverley v. Green[8] Gibbs CJ held that where a property is jointly purchased by two persons, unless there is a presumption that the other intended to give the other a beneficial interest of his share, there is a presumption that they held the property in trust for themselves as owners in common in the proportions in which they contributed the purchase money.

Lord Denning reiterated this principle in Rimmer v. Rimmer[9] that where the parties by their joint efforts save money (or as in this case took out a loan together) to acquire a house which is intended as a continuing provision for them both, the proper presumption is that the beneficial interest belongs to them jointly. Lord Denning’s decision was upheld by the House of Lords in Pettit v. Pettit[10]. See also the cases of Baumgartner v. Baumgartner[11] and Fibrance v. Fibrance (No.2)[12].

Mr. Hou submits that when William Toliliu (deceased) and Peter obtained a loan from the British Solomon Islands Housing Authority for the purpose of building the Property up to the death of William Toliliu (deceased) on 24 November 1977 and up to 29 July 1985 when the loan was fully paid, both had contributed in unequal shares into the purchase of the property. Mr. Hou submits that the property was held by them in trust for themselves as tenants in common in accordance to the proportion of their contributions towards the purchase price of the Property. He submits this should be in the proportion of one third to William Toliliu (deceased) and two thirds to Peter.

Having carefully considered his line of argument on behalf of the defendants, I am satisfied it applies in this case. I would venture to add that while it may have been the intention that they would hold the Property in equal undivided shares, what happened after the death of William Toliliu in 1977 changed the proportions of their contributions. It appears some money from the pension of William Toliliu (deceased) may have been paid towards the loan but that it was not cleared off until 29th July 1985 and the person solely responsible for paying it off and thereby ensuring that the Property was not forfeited was Peter. Had he not done what he did, the Property may have been lost. There is no evidence to suggest that anyone else offered to take up or assist with the loan repayments thereafter. The Property thereby exists today by virtue of the crucial contribution Peter played in maintaining and ensuring the loan was fully paid off.

I am satisfied accordingly that the proportions submitted by Mr. Hou as they apply to the shares of William Toliliu (deceased) and Peter correctly reflect their unequal contributions to the property. I am satisfied the doctrine of a resulting trust applies to this case and up till the time transfer was effected on or about 18th February 1995, Peter held the shares at two thirds in trust on behalf of himself, and that of the other one third on behalf of the personal representatives and children of William Toliliu (deceased).

When the transfer was therefore effected on 18th February 1995, I find that a resulting trust must be presumed in favour of a tenancy in common of equal undivided shares in which two thirds were held on his behalf and his personal representatives and children and the other one third on behalf of the plaintiffs and their personal representatives and children. In the absence of any presumption or evidence to suggest that he intended his two thirds share to be gifted to the plaintiffs, (which had been emphatically denied by the defendants) the law of equity necessarily imputes a resulting trust on his two thirds share.

The evidence adduced before me has not raised any doubt in my mind as to why this presumption should be divested in favour of the plaintiffs. While in law, up till his death, Peter and the plaintiffs were the legal joint owners of the Property, I find in favour of the defendants, a clear presumption in equity of a resulting trust held by Peter and the plaintiffs, which had not been divested to the plaintiffs, that accordingly he held a tenancy in common over the Property in the proportion of two thirds as per his unequal contribution towards the purchase of the Property. On his death, the plaintiffs held the Property on a resulting trust for his personal representative and children; in this instance, the first defendant and the second defendants.

This is entirely consistent with and supported by the statutory declaration of 18th February 1995 made by Peter and the plaintiffs that the legal interests were held in favour of the beneficiaries expressly stipulated in the statutory declaration.

The alternative argument raised by Mr. Hou that a constructive trust can also be found by the court is also directly on point.

In a constructive trust, the court imposes a trust by law based on good conscience and justice[13]. It is a process founded in the principles of equity and is to be applied in cases where a party cannot conscientiously keep the property for himself alone but ought to allow another to have a share in it. It is a remedy by which the court can enable an aggrieved party to obtain restitution. An example would be where one person contributes to the purchase price of the house. The owner holds it on a constructive trust for him, proportionate to his contribution even though there is no agreement between them, no declaration of a trust or no evidence of any intention to create a trust. A case in point would be where a wife had contributed money to the purchase of the property from the outset. It would be inequitable for the husband as legal owner to take the property for himself and exclude the wife from it. In that case, the law imputes a trust for his or her benefit[14].

It is not necessary however to find separately for the wife in this case as I am more than satisfied the resulting trust held by Peter adequately covers her interest and that of her children. Only where the resulting trust argument fails would it be necessary to include her interest under a constructive trust.

Conclusion.

The defendants accordingly hold beneficial interests over the Property of two thirds of the Property and therefore have as good rights, in fact better rights to reside in the Property as the plaintiffs and cannot be removed without their consent. In the same way the plaintiffs have equal rights over the Property in so far as their one third share is concerned for and on behalf of themselves, their personal representatives and their children. Until the house is sold or some agreement is reached between them as to what should be done, the Property remains the possession of all of them.

This raises the question whether the register should be rectified to reflect accurately the findings of this court of a resulting trust. In my view this must be answered in the affirmative. To refuse to do so would be fraudulent as it would be to defeat the beneficial interest which this court had found exists in favour of the defendants.

So while the principle of survivorship applies in this case so that the title currently vests on the plaintiffs as legal owners of the Property they do so on the resulting trust. The register accordingly should be rectified to give effect to the beneficial interests of the defendants on the resulting trust. The statutory declaration of 18th February 1995 is entirely consistent with this conclusion and must be given effect.

All the parties to this case in my respectful view should now come together and resolve their differences and disagreements in a responsible, peaceful and amicable manner. The Property is now too small for all of them and they should all consider what is the most practical way of resolving it with the assistance of their lawyers.

Orders of the court.

1. Claim of the plaintiffs:

(i) Refuse claim for possession of the Property;
(ii) Refuse claim for mesne profits over the Property;

2. Counter-Claim of the defendants:

(i) Dismiss claim for fraud as against the plaintiffs;
(ii) Grant declaration that the defendants are entitled to a beneficial interest in the Property in shares proportional to the contributions rendered to the purchase of the Property in the fixed-term estate in parcel number 191-029-92 by the deceased Peter Toliliu;
(iii) Grant declaration that the defendants are entitled to two thirds of the beneficial interest over the fixed-term estate in parcel number 191-029-92 as owners in common in equal undivided shares as opposed to the one third beneficial interest held by the plaintiffs as owners in common in equal undivided shares;
(iv) Consequentially direct that the fixed-term register in parcel number 191-029-92 be rectified so as to accurately reflect the beneficial interests of the defendants as per the findings of this court of a resulting trust in their favour as owners in common in equal undivided shares of two thirds of the fixed-term estate in parcel number 191-029-92 as opposed to the ownership in common in equal undivided shares of one third owned by the plaintiffs.

3. Each party to bear their own costs.

The Court.

[1] Trading Company (Solomons) Ltd v PKR Pacific Sales Ltd [1981] SBHC 13; [1980-1981] SILR 172 (31 July 1981), Daly CJ.

^[2] see Reef Pacific Trading Ltd v Price Waterhouse [1999] SBHC 72; HC-CC 164 of 1994 (26 July 1999), in which Kabui J. endorsed the comments of Lord Denning in Hornal v Neuberger Products Ltd. [1956] 3 A.E.R 971 at page 973; and also the comments of the High Court in Rejfek v McElroy [1965] HCA 46; (1965) 112 CLR 517 at page 521.
^[3] See Re Vandervell’s Trusts (No. 2) [1974] Ch. 268, 289.
^[4] [1955] 1 Q.B. 234; and Bernard v. Josephs [1892] Ch. 391
^[5] ibid 238.
^[6] (1959) 110 CLR 297
^[7] ibid 304
^[8] (1984) 56 ALR 483
^[9] [1952] 2 All ER 863
^[10] [1969] UKHL 5; [1969] 2 WLR 966, 980 per Lord Morris; 987 per Lord Hodson; 991 per Lord Upjohn.
^[11] (1987) 164 CLR, 137
^[12] [1957] 1WLR 384
^[13] Hussey v. Palmer [1972] 3 All ER 744
^[14] see also Muschinski v. Doods [1985] HCA 78; (1985) 160 CLR 583, at 614, 616; Calverley v. Green [1984] HCA 81; (1984) 56 ALR 483, per Mason and Brennan JJ at 497; Rathwell v. Rathwell [1987] 2 SCR 436, 451, 447, 456, 460.