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Tenene v Schueler [2001] VUSC 125; Civil Case 031 of 1999 (9 April 2001)

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

Civil Case No. 31 of 1999

BETWEEN:

CHIEF WAYA TENENE
Plaintiff

AND:

RICHARD SCHUELER
First Defendant

AND:

THE DIRECTOR OF LAND RECORDS
Second Defendant

AND:

THE MINISTER OF LANDS
Third Defendant

Mr. Hilary Toa for the Plaintiff
Mr. John Malcolm for the First Defendant

JUDGMENT

Action

Contract

Nature

The plaintiff in 1994 entered into agreement with the defendant for the defendant to lease part of this rural land. That was 5 hectares of land. The nature of the lease agreement was a commercial lease. The lessor and lessee sign the lease agreement on the 22^nd December 1994 and stamped on the 6^th January 1995. In addition to the registered lease between the lessee and the lessor there were three other agreement signed between the lessee and lessor and ... as agreement No. 1, No. 2 and No. 3.

Additional Agreement 1

1. The lessor (plaintiff) gave right to the defendant to assign, subdivide, sublease land or any part there off without written consent of the lessor (plaintiff).
   
2. The given right by the lessor to the lessee was for setting up and building mooring and jetties in adjacent water to the leased land and to use the water for starting and landing base for water operated aircraft.
   

Agreement 2

That the lessee pays to the lessor or into his bank account for the first 40 years the amount of VT1,658,000 as yearly lease rent for the first 40 years payable by 10^th June 1995.

Agreement 3

The lessor (plaintiff) agrees with lessee (defendant) that the defendant pay the survey fee, the lessor (plaintiff) owes to the Lands Department the amount of VT142,000.

The amount of VT142,000 that was to be paid by the lessee (defendant) will be deducted from the first payment of VT1,658,000. However, if the lease was not to be executed for other reasons, the lessor (plaintiff) will repay the VT142,000 back to lessee.

Statement of claim

The plaintiff stated that for the defendant to obtain a commercial lease, which he did for 75 years. And obtaining the lease then for the defendant to build a tourist resort on the lease land. The defendant was in breach of such agreement between them in that he did not build a tourist resort.

Further, that the defendant was in breach of the agreement in:-

1. not paying annual rent of VT145,000;
2. in not paying for surveyor fee;

100. fail to pay the required premium for 5 hectares;

4. in that he tried to sell the lease land to Caillard Kaddour without seeking the plaintiff’s consent.
   

Defence and Set off

The defendant admitted paragraph 1 and 2 that the plaintiff is a ni-Vanuatu and the defendant is a German. Also that the lease was for 75 years. That lease agreement was signed by the lessee and lessor. And for the defendant to pay rent for the first 40 years and that the defendant will pay all the rates, taxes and outgoing on the lease in the life of the lease. Further the defendant permitted the plaintiff to enter and inspect the land. And that the first defendant will not dispute the lease land for usage for other purposes or part of it without the written consent of the plaintiff. And as long as such consent cannot be unreasonably withheld.

Issues

1. Is whether there was oral agreement between the plaintiff and defendant for the defendant to build a tourist resort and bungalows;
   
2. Is whether the defendant breached the lease agreement to pay VT45,000 per annum to the plaintiff;
   
3. Is whether the defendant, pursuant to the agreement fail to give ... to the plaintiff;
   
4. Is whether the defendant fail to pay the required premium for the 5 hectares;
   
5. Is whether the defendant was in breach of the lease agreement by selling the lease land to Caillard Kaddour without obtaining written consent of the plaintiff.
   

Evidence

Issue No. 1: Is whether an oral agreement between the plaintiff and the defendant for the defendant to build a tourist resort and bungalows on the leased land.

The lease title 12/0913/022 was granted to the defendant as the Registered Proprietor. The purpose of the lease was for commercial nature.

In this case the defendant did not give any evidence to call upon ... to say that such agreement did not take place between the plaintiff and the defendant. The basis of this argument being that the lease agreement did not specify. If this is ... done then only the evidence of the plaintiff be accepted is sufficient on the balance of probability to prove that there was an agreement prior to obtaining the lease for the defendant to build a tourist resort and bungalows on the lease land.

Prior to any lease agreement the defendant went and saw the plaintiff in his house to ask him for a piece of land. The plaintiff inquired why the defendant wanted land. The defendant told him that he will make bungalows for tourist, he will connect electricity cable, water pipe, make bitumen road and will make a big restaurant. And by this improvement people will work there, he will pay for their garden food for the tourist to eat.

From this evidence, and in absent of any evidence from the defendant, or any of his witnesses, I find that this was the true position of the defendant in way to see the plaintiff and that was for the plaintiff to build a tourist resort with bungalows ... water, electricity; which employment opportunity for plaintiff people; and for paying for plaintiff’s people food from their garden.

The copy of the application for lease for commercial lease by the defendant sated in Type of Development refer to Home/Site and Engineering/Installation business and later bungalows/Motel and respective ...

On the basis of the content of this application by the defendant it is evident that the defendant did agree verbally with the plaintiff for the defendant to build bungalows for tourist and a big restaurant.

Malcolm advance that the building of bungalows for tourist was not part of the lease contract signed by the defendant and in this case instead of Tenene Waya Daniel signed.

The lease agreement only referred to a commercial lease but does not refer to any building of the bungalows for tourists. This in my view were not matter to be put into the lease agreement.

Can it mean that by operation of the lease agreement, verbal agreement between the plaintiff and the defendant be shown out. It is not disputed the lease agreement which did not content the building of bungalows and that was a sign instrument between the parties and they are subject to the four ... commercial lease agreement.

However, the lease agreement operate to govern the right of the parties in the purpose of the land lease form; which is not in the agreement itself apart from the general. Under ... rural com...

Section 38 of the Land Leases Act CAP 163 authorise the purpose of the lease which must be specify which states:

“Every lease shall specify –

(a) the purpose and use for which the land is lease; and

(b) the development conditions, if there is any.”

In such lease there was a purpose of the lease and that was for commercial purpose however, development condition were not included and if it was then it would be for building bungalows for tourists upon their verbal agreement.

There is no doubt that the defendant entered into a verbal agreement for the plaintiff to let his land to be leased to the defendant for the defendant to build bungalows for tourists and a resort. Otherwise, if this was not the case the plaintiff would not have let the defendant to leas his land. And that was the sole purposes of leasing the land. The leasing of the land can be a contract over building of bungalows for tourists and big resort, but does establishing the right of the parties in facilitating their verbal agreement and this building of the bungalows for tourist was the ... of such agreement which mean such agreement between the party must materialised. And because no evidence from the defendant that this agreement was not made, then the evidence of the plaintiff ... is admissible evidence.

I nothing wrong with the agreement, and find that they did understand each other in that for the defendant he included his intention.

Daniel Tenene also referred to the defendant seeing him to take land. He informed him that it was his land his father gave it to him. He then took him to the piece of land. The purpose of getting the land was to make business on it and that was for building bungalows for tourists. And he informed the defendant that the land was already surveyed and it costs VT142,000 and not paid as yet. Also George Kimbey, a lands officer within the Lands Department gave evidence that the plaintiff and defendant came and saw him for assistance over the lease agreement. The lease agreement he referred to was a standard lease agreement form. The lease as referred to as Rural Commercial Lease and the lease granted to the defendant was upon the proposal made by the defendant for engineering and building of bungalows, but that lease allows the defendant to build a resident unit.

So the three witnesses came to one point and that was over the said lease granted for building of bungalows for tourism. An agreement in the application for lease that was for bungalow/motel. I see no mistake to this as the plaintiff also in his evidence referred to the defendant seeing him to land to build bungalows for tourists and a resort. If this was the agreement between the parties then let it tale place in accordance with their agreement with the right to perform it under the lease. If no development take place to that agreement then it is a breach of which the plaintiff can enforce against the defendant.

It be remembered that it was the defendant to make the bungalows for tourists and non-one else. And that where he asked him. That is if he occupy or transfer the land to other ... will not other person build bungalows for tourists or other development. The agreement was his and he as to fulfil that.

Agreement No. 1 was an additional agreement to the case itself which is been as waving of right of parties under the lease and mainly paragraph 2 (g) where it refer to consent of lessor to be obtained first before lessee assigning or sublease or ..., mortgage etc. Agreement No. 1 completely remove the plaintiff right of dealing with the land in anyway for 75 years and he longer ... right had any as previously agreed as to assignment, sublease, sublet, mortgage etc. This was the ... additional agreement against the plaintiff which alter paragraph 2 (4) to become useless.

However, that additional agreement was signed on 22^nd December 1994 by Waya Tenene and his signature was deleted and Daniel Tenene signed, the defendant signed and George Kimbey as witness signed.

Hilary advance that there were no meeting of the ... as Daniel was in a rest and sign the lease document.

The question I ask is: Why divert from the lease standard condition and requirement? If this was the case, then at least the defendant being the drafter of Agreement No. 1 should explain at all the meaning and ... of assignment, subdivide, sublease, under last ... to the plaintiff in dealing with local people which English is their second or third language which reflect the complete understudy of the plaintiff before signing away of document. That is by signing Agreement No. 1 took away all right of the plaintiff away from him under the lease and this is quite very very important for him to know. However, Mr. Kimbey George did what he did best to explain to them the agreement, even he made some amendment to the agreement and they went away and later come back for signing. With this evidence, the plaintiff has a clause already to look at the agreement, seek assistance as to the content of the agreement and on return he signed the agreement No. 1, 2 and 3.

Even though Daniel Tenene was at a rush to go to Santo George Kimbey still explain the agreement. To me that is more then enough for me to conclude the good common law principle of offer and acceptance without doubt meaning that the parties have intended to agree that way. Signing of the lease ... and the Amended Agreement No. 1, 2 and 3 was the first result of their ... to be in that manner. I do not find him rushing away to Santo to have any reflect on the signing of the lease document including the amendment as opportunity was given to the parties. However, the situation would have been different if the plaintiff was not given the opportunities over the document and coming to sign the next time.

However, the whole term of contract did not alter the actual purpose of agreement between the plaintiff and the defendant for the defendant and no body else to build bungalows for tourists and a big restaurant and this agreement was a verbal agreement and remain to be done and remain to be the ... of the agreement.

If this is so then did agreement No. 1 alter the verbal contract between the plaintiff and defendant.

Firstly, by agreement No. 1 (b) that is “to set up and build moorings in adjacent under the lease land use the water as a start and landing base for water operated aircraft”.

This was an additional agreement to the purpose of the contract to build bungalows for tourist and big restaurant and never change the purpose of the contract and I find that those were additional.

Secondly by agreement No. 1 (a) that is if by that collateral agreement done away with the purpose agreement for the defendant to build bungalows for tourists and a big restaurant.

With this collateral agreement the defendant was the person to build the bungalows for tourists and big restaurant and no body else which mean that he only has to build that. Now is e.g. if the land is assigned or sold to other person, then will that other person will achieve the outcome of the agreement between the plaintiff and defendant. In my view it will not, and by that the purpose agreement to build bungalows for tourist and big restaurant will be thrown away resulting to the aim of the agreement of no value any more and does defeat the purpose of the whole heart full willing of the plaintiff in giving away his customary land for that purpose.

Question – Is whether the defendant can assign or sublet or mortgage without comply to build bungalows for tourist. I find that he can not and he can only do that if he has build a bungalow for tourist. With reference to case Robson and Sharpe v. Drummond will illustrate the ... process in that case:-

“Sharpe hired a carriage to Drummond at a yearly rent for five years, undertaking to paint it every year and to keep it in repair. Robson was the partner of Sharpe, but the contract was made with Sharpe alone. After three years Sharpe retired from business, and Drummond was informed that Robson was henceforth answerable for the painting and repair of the carriage, and would receive the payments. He refused to deal with Robson, and returned the carriage.”

It was held that he (Drummond) was entitled to do so. The reason given was that:-

“Now the defendant may have been induced to enter into this contract by reason of the personal confidence which he reposed in Sharpe, and therefore have agreed to pay money in advance. The latter, therefore, having said it was impossible for him to perform the contract, the defendant had a right to object to its being performed by any other person, and to say that he contracted with Sharpe alone, and not with any other person.”

The principle is simple and that is in assignment process a promisor can not assign his liabilities under a contract on ..., a promisee can not be ..., by the promisor or by a third party, to accept only but the promisor as the person liable to him on the promise. In this way the plaintiff, the defendant and the third person to build the bungalows for tourists all must agree for the third person to build the bungalows for tourists.

There are certain exception to the will where situation, as in this case if the defendant can not build the bungalows then he can have other contract to do the work for him and he will remain liable under the contract to pay him.

With remain for the defendant to build bungalows for tourist and big restaurant. But that is a matter for him. The plaintiff was making agreement with the defendant, which the defendant promised him that he will build bungalows for tourists and big restaurant.

In the defendant’s case he is stuck with the promise he made to the plaintiff and cannot get out of it. There is no reason for him to assign, subdivide, sublease, under let mortgage. All these can only take place after he has build the bungalows for tourists and a big restaurant. Not to fulfil his promise then by lease agreement No. 5 the provision of the Lease Act CAP 164 apply.

Issue No. 2: Is whether the defendant breach the agreement by not paying VT45,000 per annum.

The commercial lease agreement paragraph 1 allows for yearly rent and agreement No. 2 allows for VT45,000 per annum of which the parties by agreement No. 2 totalling VT1,658,000. This amount was paid to Daniel Tenene account with Westpac Vila on the 5^th May 1996 and the receipt annexure “A” confirm that this amount was paid in and received that amount. However, the agreement No. 2 stated that VT142,000 will be deducted from the VT1,658,000 represent the amount after VT142,000 was deducted from payment of land survey of which the amount should be VT1,800,000. And this came about due to agreement No. 2. This agreement was to vary paragraph 6 of the lease agreement itself. However, Section 39 of the Land Lease Act does not allow the parties to waive the requirement of the law and by Section 39 of the said Act the lease is to be reviewed every 5 years and declared that their agreement was not in accordance with Section 39. This means that the agreement for payment for 40 years does not alter the five years period of review.
With this the plaintiff can still apply for review of the rent and the amount of VT1,800,000 paid can be varied subject to the review.

Issue No. 3: Failure to give access to the plaintiff.

Section 41 (5) of the Land Lease Act allows lessee to enter premises. Tenene in his evidence he said defendant put up a fence. And defendant told one boy to come and tell Tenene that he, the defendant did not like to see him again and from there on Tenene did not go there. The question I ask myself is, who is that boy. As that boy was not called to give evidence. The evidence above is excluded by the rule of hearsay and their inadmissibility.

Even on Daniel’s evidence (P. 12) he refer to Titoman Kalwas as the defendant told him to tell him that the plaintiff must not go to the land. Again Kalwas was not called to give evidence and therefore such evidence be inadmissible to prove that the defendant said those words to Kalwas to tell Daniel.

I therefore, find no evidence that the defendant prevented the plaintiff to enter premise and dismiss.

Issue No. 4: Whether the defendant paid the required premium.

This was raised in the evidence of Daniel that the amount or premium was not included is the pleading which Hilary for the plaintiff agreed to apart from the land rent payment. Therefore in view of the issue, the issue no longer live and dismiss.

Issue No. 5: Is whether the defendant was in breach of the lease agreement by selling the lease land to Caillard Kaddour without obtaining the consent of the plaintiff.

The property was advertised for sale. The advertisement for sale was pursuant to agreement No. 1 on assignment by transferring the property upon that lease for two different price:-

1. AUD$630,000;
2. AUD$850,000.
   

Even though the defendant by that assignment, he cannot assign it by transfer of the leased property until he has built bungalows for tourist and a big resort. Simply because by agreement No. 1 the plaintiff never sign off his right for the defendant not building the bungalows for tourists. For the defendant to sell the leased property without building bungalows for tourists and a restaurant the defendant will be in breach of their verbal agreement. However, as Malcolm submitted that no time limitation given to such bungalows which I agree. I accept that the defendant in building the bungalows at any time within the period of 75 years and he is at liberty to do that.

I find that the advertisement was the beginning of a breach and will only conclude as final breach on acceptance and payment which ... The lease agreement ... and the provision of the Land Leases Act can come into operation against the defendant. The defendant is stuck with his verbal agreement and cannot get of it.

6. Rectification

The plaintiff apply for rectification of the lease.

Rectification under Section 100 of the Leases Act states:-

“Subject to subsection (2) the Court may order rectification of the register by directing that any registration be cancelled or amended where it is so empowered by this Act on whether it is satisfied that any registration has been obtained, made or omitted by fraud or mistake.”

Fraud under Section 100 is something more then mere disregard of the right of other person but it is more then a right but goes further to the nature of personal dishonesty.

Therefore, for the purpose of Section 100 of the Land Leases Act was the defendant dishonest in obtaining the lease agreement. Basically there is no evidence of dishonesty at all. At least the lease was not signed together with agreement No. 1, 2 and 3 and even Vt1,658,000 he already paid to Daniel in 1996 which Tenene received it. What remains for the defendant to do pursuant to their collateral agreement is to build bungalows for tourists and restaurant which he has a lot of time to build. And if he sells the land without building the land then the lease agreement be subject to the provision of the Land Leases Act. In other way, the defendant cannot sell land unless he first build bungalows for tourists and restaurant, this is beside building his own private residence.

I find no dishonest act by the defendant in obtaining the lease apart from the sale of land which is not completed. Therefore, I find no evidence of dishonesty and cannot order rectification.

7. Paying survey costs

Agreement No. 2 is quite clear in that VT142,000 will be deducted from the total amount of rent for the first 40 years. This agreement represent the amount of VT1,658,000 as land rent after deduction of VT142,000. As Daniel refer to the rent for the first 40 years was VT1,800,000. I see nothing wrong with such deduction and was proper in accordance with agreement No. 2.

8. Set off and/or Counterclaim

Counterclaim are normally made by a defendant, as a right to do so, who alleges that he has a claim, or is entitle to any relief or remedy against a plaintiff, instead of bringing a separate action. In the matter both the plaintiff in the action and the defendant as plaintiff in the counterclaim claims separately. If this is so then they each have to prove their respective case, and if possible two separate judgment can be given or be two separate reason for decision in the same judgment.

In this action, the defendant as plaintiff in the set off counterclaim fail to give evidence. The question I ask is: Whether evidence in cross-examination will be the evidence of the plaintiff in the counterclaim? Under Order 38 of the Civil Procedure Rules and also in principle of natural justice he who alleges and bear the burden of proving what he alleges must give evidence first. In this case the plaintiff in the action has given evidence. As for the plaintiff in the counterclaim fail to give evidence. If this is so then the plaintiff in the counterclaim has fail to prove what he alleges in the counterclaim. And therefore his statement of claim in the counterclaim is struck out.

I therefore make the following findings:-

1. There is a valid agreement between the plaintiff and the defendant for the defendant to build bungalows for tourists and a restaurant;
   
2. The defendant is estop from selling the property until he has build a bungalow for tourists and a restaurant;
   
3. Claims for cancellation of lease title No. 12/0912/022 is dismissed;
   
4. Claim for rectification is dismissed;
   
5. Claim for damages by the plaintiff is dismissed as it has no basis upon this contract pursuant to the above order;
   
6. Defendant’s counterclaim is dismissed;
   
7. Costs to the plaintiff to be taxed if not agreed. Taxation adjourned to ... for failure for any taxation on the above date, the tax motion will be struck out for any taxation and file close.
   

Dated at Port Vila, this 9^th day of April, 2001.

R. MARUM MBE
JUDGE.