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Luiramo v Tatai [2010] SBHC 85; HCSI-CC 426 of 2007 (9 December 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Chetwynd J)

Civil Claim No. 426 of 2007

BETWEEN

FREDDIE LUIRAMO and
JOYCE LUIRAMO
Claimants

And

BEN TATAI
Defendant

Mr M Tagini for the Claimant
Mr D Hou for the Defendant

Date of Hearing: 6th December 2010
Date of Judgment: 9th December 2010

Judgment

1. The Claimants are the undisputed registered owners of Parcel Number 191-016-36 (the property). The transfer to them was by Frank Konare (Konare). There is a slight discrepancy between the copy of the Register of the Fixed Term Estate [1] and the Transfer [2]. The Transfer is dated 29th August 2005 and is noted as being registered on 24th October 2005. The register says the transfer was on 10th October 2005. Fortunately, nothing may turn on this discrepancy in dates as regards the main plank of the defence, the Defendants occupancy of the property, as the parties agree the Defendant was undoubtedly in actual occupation on those dates. The date of the transfer may however have some bearing on any interest the Defendant may have in the property. The agreed facts [3] say the Defendant was in actual occupation at the time of the transfer. There is evidence to show he had been in occupation since 2000. There is also evidence suggesting he has now left the property but no date is given. There are also admissions that the Claimants were aware of the Defendant's occupation of the property prior to it being transferred to them.

2. The Defendant's evidence is that he entered into some kind of arrangement with Konare in 2000. As a result $42,000 was paid over by the Defendant to Konare. In other proceedings [4] in this court the Defendant says he thought he had bought a share in the property and that he did or would jointly own it with Konare. The Statement of Claim recites the handing over of the money to Konare which was used to clear "an outstanding loan". In those later proceedings the Defendant obtained judgment against Konare for $42,000 plus interest and costs [5].

3. There is no real evidence about the nature of loan which was "cleared" by the money handed over. All that is said is that it was a loan with the National Bank of Solomon Islands (NBSI). There is no evidence it was a loan secured against the property. The copy of the FTE register for Konare [6] does show a registered charge in favour of NBSI. It was created in 1999. It was discharged on 2nd September 2005 [7]. There is no evidence the money paid over in 2000 was used to pay all or any part of that charge.

4. The main issue before the court is whether the Defendant has an overriding interest in the property by reason of his occupancy. If the answer to that question is yes then it will be necessary to ascertain the nature of his interest or interests.

5. The relevant legislation is the Lands and Titles Act [Cap] 133 (the LTA). Section 114 of the LTA is perfectly clear. The owner of a registered interest in land (there is no dispute the Claimants are owners of a registered interest) shall hold such interest subject to the overriding interests set out in the subsections (a) to (i). The owners hold their interest subject to the overriding interests in the land even if the latter are not noted on the register. That is why they are called overriding interests. They override any interest the owners have in the land. Subsection (g) states;

"the rights of a person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed".

are overriding interests. It is accepted that the Defendant was in actual occupation of the land at the time of the transfer to the Claimants. The Claimants knew of the occupancy but did not make any enquiries of the Defendant. In accordance with s.114 they purchased the land subject to any rights that he had at that time.

6. There was no obligation on the Defendant to tell the Claimants that he had rights in the property. The onus was on them to make enquiries. If they chose not to do so they have no one to blame but themselves. If they had done so and the Defendant had misled them as to his rights then the property would not be subject to any interest based on those rights. If they had done so and the Defendant told them what rights he had then they could have made an informed decision whether or not to complete the transaction. There is no information about what legal representation or assistance the Claimants had. From my experience in the UK, a lawyer acting on behalf of clients purchasing a property would invariably make those enquiries on behalf of a purchaser. The enquiries would initially be addressed to the seller and followed up if the seller revealed the possibility of a person in occupation. If the seller misleads the purchaser, for example does not disclose that there is a person in occupation, then the purchaser would have a remedy against the seller. I have no information about what happens in Solomon Islands but if it is not accepted practice to make enquiries then this case is a fine example of what might happen as a result.

7. There is no doubt in my mind the Claimants take their interest in the property subject to any rights the Defendant had at the time of the transfer. He has overriding interests in the property. Having answered that question in the affirmative it is necessary to consider what those overriding interest are.

8. The rights which are capable of being overriding interests must subsist at the relevant time. There are a number of English cases which set out in great detail what rights are capable of constituting an overriding interest. There may be a different approach in Australia but the provisions in the English legislation, Land Registration Act of 1925 were identical to those in the LTA. The Australian legislation is markedly different. I say were identical because there was new legislation in the UK introduced in 2002. The provisions in the 2002 legislation as to the overriding interests of persons in actual occupation are different in an effort to mitigate the hardship sometimes caused by the operation of the "old" section 70(1) (g) of the Land Registration Act 1925. Be that as it may, the long line of cases including National Provincial Bank Ltd v. Ainsworth [8], Westminster Bank Ltd v. Lee [9], Abbey National Building Society v. Cann [10] and Lloyds Bank PLC v. Rosset [11] all deal in detail with the nature of rights capable of constituting overriding interests.

9. The case law refers to rights which are in reference to the land and are capable of enduring through different ownership of the land. They are something more than purely personal rights as between the person occupying the land and the owner at that time. An example of purely a personal right was that of the deserted wife in the National Provincial Bank and Ainsworth case. The right of the wife was purely personal between her and her husband. It was not capable of being an overriding interest although it could be enforced as against the husband.

10. In this case the Defendants right to occupy the property is more than a purely personal right as between himself and Konare. It does not arise solely out of the relationship between the Defendant and Konare. It is capable of enduring through different ownerships. It arises from his beneficial interest in the property which arose from the payment of $42,000 to Konare. The Defendant's right to occupy the property by reason of his beneficial interest is an overriding interest. That being so, the Claimants have no right to evict the Defendant. The Defendant cannot be a trespasser. Their claim must inevitably fail.

11. It is clear from the long line of decided cases, and in particular London and Cheshire Insurance Co Ltd v. Laplagrene Property Co Ltd, once created an overriding interest which arises under s114(g) of the LTA does not disappear if the occupier ceases to occupy. The overriding interest crystallised at the time of the transfer and registration and remains intact until discharged or overreached. The Defendant's beneficial interest in the property still subsists even though he may no longer be in occupation. His right to occupy the property by reason of his beneficial interest still subsists even though he may no longer be in actual occupation.

12. In his counterclaim the Defendant seeks an order that the Claimants pay him $46,775.00 which was the sum he was awarded in Civil case 576 of 2005. I do not believe that an order in those terms is possible. However, if the money was paid in respect of the property then it is capable, as explained above, of creating a beneficial interest in the property. Whilst I accept, in the words of the Claimants' Defence to the Counterclaim, "money claims do not evince an interest in land", that proposition must be qualified by the addition of the word mere before money claims. If the Defendant simply gave Konare money or if Konare merely owed money to the Defendant, the money given or owed might well not be an equitable charge over the property or give rise to a beneficial interest in it. However, the Defendant's accepted version of events is that the money was given in order to pay off a loan and was part of an agreement between the Defendant and Konare for the purchase of the property. That takes the matter from being a mere money claim to a claim for monies paid and attributable to the property. Whilst the Defendant may not be able to enforce the "contract" between him and Konare because there is no evidence it was reduced to writing, it has given rise to a beneficial interest to the tune of $42,000 over the property. The Claimants, if they wish to sell the property, must discharge the beneficial interest from any proceeds of sale before they are able to give clear title. In order to protect any future purchaser it is right that the Defendants overriding interests should be noted in the Register.

13. In all the circumstances and for the reasons stated above, the claim is dismissed. The Defendant has overriding interests in the property and they should be noted on the register. Costs should, as usual, follow the event. The Claimants shall pay the Defendant's costs, such costs to be taxed on a standard basis if not agreed.

Chetwynd J

^[1] Pages 47 and 48 of the Court Book
^[2] Pages 51 to 54 inclusive ibid
^[3] Pages 43 to 44 inclusive ibid
^[4] Civil Case No. 576 of 2005
^[5] See exhibit BT4 at page 40 of the Court Book
^[6] See exhibit BT3 at pages 45 and 46 ibid
^[7] See page 55 ibid
^[8] [1965] 2 All E.R. 472
^[9] [1955] 3 W.L.R. 543
^[10] [1990] UKHL 3
^[11] [1988] EWCA Civ 11; [1988] 3 All ER 915