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Hua Huang v Kaufusi [2024] TOCA 16; AC 4 of 2024 (20 November 2024)

IN THE COURT OF APPEAL OF TONGA

CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

[AC 4 /2024]
[CV56/2022]

BETWEEN

HUA HUANG
First Appellant

AND
NAITINGIKEILI KAUFUSI
First Respondent

AND

MINISTER OF LANDS

Second Respondent

Hearing: 14 November 2024
Court: Randerson J, Harrison J and Heath J
Counsel: Fatai Vaihu for the Appellant
: Tevita ‘Aho for the First Respondent
: Linda Folaumoetu’i SC Attorney-General for the Second Respondent
Judgment: 20 November 2024

Introduction

[1] This appeal from a judgment of Cooper J raises a discrete point about the jurisdiction of the Supreme Court to hear a claim for damages against the Minister of Lands and Natural Resources consequential upon his wrongful cancellation of a lease.

[2] The appeal has taken an unusual course in that neither of the named respondents have participated. Both have given notice that they take neutral positions and would not file any submissions.

Background

[3] The background facts can be briefly stated. The first respondent, Naitingikeili Kaufusi, is the registered leaseholder of a tax allotment at Kolofo’ou. The land is commercially valuable. He had for many years leased a portion of the allotment to Sione and Lupe Veatupu.

[4] In September 2017 Mr Kaufusi applied to the Minister of Lands and Natural Resources, the second respondent, for approval to cancel the lease on the ground that the lessees were in breach of certain covenants. The Minister is responsible for granting and cancelling leases^[1]. After making inquiries the Minister granted the application and cancelled the Veatupus’ lease. On 18 October 2017 he advised Mr Kaufusi of his decision.

[5] In November 2017 Mr Kaufusi entered into an agreement to lease the same area of land to the appellant, Hua Huang. In accordance with its terms Mr Huang paid TOP $120,000 upon confirmation of cabinet approval of the lease which was given in February 2018. The lease was registered in Mr Huang’s name on 9 February 2018.

[6 ]The Veatupus challenged the Minister’s decisions. They issued proceedings in the Land Court for this purpose. After a trial Nui J sitting with an assessor gave judgment for the Veatapus declaring both decisions invalid and ordering cancellation of Mr Huang’s lease. In November 2020 this Court dismissed an appeal.^[2]

[7] Mr Huang wants to recover the funds which he has paid Mr Kaufusi under the cancelled lease agreement. In 2022 he issued proceedings in the Supreme Court against, first, Mr Kaufusi for breach of contract and, second, the Minister for breaches of statutory and common law duties of care in failing to make all necessary and reasonable inquiries before cancelling the Veatupu lease.

[8 ]On 22 November 2022 Whitten LCJ entered judgment by consent for Mr Huang against Mr Kaufusi for TOP$120,000 plus legal costs of TOP$30,000 (Mr Huang has since withdrawn his claim for legal costs). Execution of the judgment was stayed, however, pending final determination of the claims by Mr Huang and Mr Kaufusi against the Minister. It was noted that Mr Kaufusi did not have funds to meet the judgment.

[9] Mr Kaufusi has cross claimed for indemnity against the Minister. In early 2023, Mr Kaufusi applied to strike out the Minister’s amended statement of defence to his cross claim which retracted earlier admissions and replaced them with denials of the existence of a duty of care. The Minister’s amendment was allegedly time barred. The substantive essence of his pleading retraction was to deny Mr Huang’s claim that the Minister’s unlawful cancellation of the Veatupus’ lease was res judicata.

[10] Whitten LCJ heard the consequential applications by Mr Kaufusi for summary judgment against the Minister and by the Minister to file his amended pleading out of time. The parties apparently reached a compromise during the hearing. The Lord Chief Justice’s judgment delivered on 2 March 2023 recited that the Minister had withdrawn his denial of res judicata and accepted the existence of a common law but not a statutory duty of care. In the result he dismissed the Minister’s application on the basis that Mr Kaufusi withdrew his application to strike out. He ordered the Minister to pay costs.

Supreme Court

[11] It appears that the proceedings first came before Cooper J for trial in late 2023. He adjourned the hearing for further submissions on points which he raised. On 14 February 2024 the Judge delivered a brief judgment dismissing the claims and setting aside as a nullity the consent orders earlier made by Whitten LCJ “... in respect of the plaintiff and first defendant...” We infer that Cooper J was referring to the judgment entered by consent on 22 November 2022.

[12] Cooper J decided that the Supreme Court had no jurisdiction. He relied on the exclusion found in clause 90 of the Constitution which vested jurisdiction in the Supreme Court “...in all cases in law and equity arising under the Constitution and the Law of the Kingdom (except cases concerning titles to land which shall be determined by a Land Court) ...” As this case “stemmed” from a case concerning title to land, it fell within the clause 90 exclusion.

Decision

[12] Mr Huang challenges the Supreme Court decision on the ground that this case did not concern title to land within the cl 90 exclusion. It appears that the Judge delivered his brief judgment without the benefit of submissions from counsel.

[13] The Land Court was established by cl 86A of the Constitution and is constituted by the Lord President and other Supreme Court Judges assisted by assessors. The Land Court is to consist of and be presided over by the Judge assisted by an assessor^[3]. The Judge will formulate all judgments and orders with the assessor having no participation^[4]. The assessor’s duties are “... to assist the Judge with explanation and advice in regard to Tongan usages and custom and other matters of a similar nature” ^[5]

[14] The Land Act provides that the Land Court “...shall have jurisdiction...” in five distinct circumstances^[6]. The two circumstances of relevance to this appeal are:

(1) “ to hear and determine all disputes, claims and questions of title affecting any land or interest in land in the Kingdom and in particular all disputes, claims and questions of title affecting any tofi’a, tax or town allotment or any interest therein “^[7]

(2) “ to hear and determine any question or amount of damages , loss, compensation mesne profit, rent or claim in respect of any allotment , lease, sub-lease, permits or interests of any kind in the land”^[8]

[15] Clause 90 expressly stipulates that the Land Court shall have exclusive jurisdiction in the first of these two circumstances - disputes and questions of title affecting any interest in land. The words “affecting” and “concerning” are synonymous in this context. The Land Court determined that dispute affecting or concerning the validity of the leases between Mr Huang and the Veatupus in 2020, and its decision was upheld by this Court.

[16] However, by contrast neither the Constitution nor the Land Act reserves exclusive jurisdiction to the Land Court in the second circumstance of determining questions of damages of the type arising here. Its jurisdiction is concurrent but not sole. The distinction is consistent with the structure of the Land Court and its provisions. An assessor would be able in some circumstances to explain or advise on matters of custom or usage of land which would assist the Judge in formulating his or her judgment on a question of title. The assessor would not be in a position, however, to offer any material assistance on the question of law of whether the Minister of Lands owed a duty of care to a third party and, if so, on the factual questions of whether he or she breached the duty and caused loss. In terms of clause 90 of the Constitution, those are questions of law arising under the law of the Kingdom which are unaffected by the title exception.

[17] In this case the issues now for determination following the Court of Appeal’s decision on cancellation of the leases are, first, the question of law of whether the Minister owed the other parties a statutory duty of care; second, if so, whether he breached that duty; third, if so, whether his breach caused loss; and, fourth, if so, the amount of that loss. Two points should be made at this stage.

[18] First, it is unclear why the parties wish to argue the question of the existence of a statutory duty of care. The Minister has conceded the existence of a common law duty of care and there are no material differences in the nature of the duties or their financial consequences. Second, the question of causation on Mr Kaufusi’s cross claim for indemnity may be particularly problematic given that the Minister’s decision to cancel was made in consequence of advice provided to him by Mr Kaufusi. Counsel would be well advised to consider this issue carefully as the case proceeds further.

[19 ]We are satisfied that Cooper J erred in making orders dismissing both the claims and cross claims by Mr Huang and Mr Kaufusi against the Minister and setting aside the judgment entered by default for Mr Huang against Mr Kaufusi.

Result

[20] The appeal is allowed and the judgment and orders made by Cooper J on 14 February 2024 are set aside and the proceedings are remitted to the Supreme Court for determination.

[21] In the circumstances there will be no order for costs.

__________________
Justice Randerson

___________________
Justice Harrison

___________________
Justice Heath

^[1] Sections 19 (1) and (3) of the Land Act.
^[2] Kaufisi v Veatupu [2020] TOCA 7
^[3] Section 146 (1)
^[4] Section 146 (2)
^[5] Section 146 (3)
^[6] Section 149 ( 1)
^[7] Section 149 (1) (b)
^[8] Section 149 (1) (e)