Court Decision in Full: Blue Pacific Hotel Ltd vs SNPF

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The Supreme Court side of the Mulinuu Courthouse.

CA12/20

IN THE COURT OF APPEAL OF SAMOA

HELD AT MULINUU

BETWEEN: THERESA McCARTHY for Herself and in Respect of BLUE PACIFIC HOTEL LIMITED of Auckland New Zealand

Appellant

AND: SAMOA NATIONAL PROVIDENT FUND, established pursuant to the National Provident Fund Act 1972

Respondent

Coram: Honourable Chief Justice Perese

Honourable Justice Blanchard

Honorable Justice Harrison

Counsel: O Woodroffe (via video-link) for the Appellant

S Leung-Wai for the Respondent

Hearing: 11 April 2022

Judgment: 12 May 2022

JUDGMENT OF THE COURT

Introduction

[1] This appeal from the judgment of Clarke in the Supreme Court (*1) is the culmination of a long running dispute about the transfer by the Government of Samoa to the Samoa National Provident Fund (the SNPF) of land which its original owner, the appellant, Theresa McCarthy had earlier implicitly undertaken to create as public roads, by procuring approval of a scheme plan and deposit of a plan of subdivision showing the land as roads and agreeing to dedicate them for this purpose. Thereafter the Government proceeded on the basis that the roads had been vested in it.

*1 McCarthy v Samoa National Provident Fund [2020] WSSC 41 (24 July 2020).

[2] After Obtaining Sub-divisional approval, Mrs McCarthy constructed a 20 room two-storey-hotel, known as the new hotel, on the land which she had undertaken to set aside as public roads but had never formed or dedicated. The land was immediately adjacent to a parcel of her land on which she had earlier constructed a 10 room hotel, known as the old hotel. Together the two buildings were called the Blue Pacific Hotel.

[3] Mrs McCarthy mortgaged the old hotel property (but not the site of the new hotel) to the SPF as security for a substantial loan. In time she defaulted on her loan obligations and the SNPF purchased the old hotel property in exercise of its power of sale. Some years later the government transferred the new hotel property to the SNPF in the transaction which is under attack on this appeal

[4] These events generated a considerable amount of ancillary litigation. It is unnecessary for us to venture into its detail. Our concern is with the proceedings which Mrs McCarthy issued against the SNPF in the Supreme Court. She claimed very substantial damages on the grounds of negligence and unjust enrichment. Mrs McCarthy appeals against Clarke J’s dismissal of her claim.

Facts

[5] Mr Leung-Wai, who appeared as counsel for the SNPF, filed a most useful chronology of the relevant facts which we have adopted and expanded with references to the Supreme Court judgment as follows:

(1) In 1994 and 1995 Mrs McCarthy submitted for registration and the Director of Lands successively approved scheme plans of subdivision for her land at Fugalei which specifically showed her creation of Parcels 387 and 385 to be formed and dedicated as public roads, to be known as Toamalama and Tavaetoto Streets respectively. The approvals enabled her to construct a hotel on part of the land and sell other parts for residential purposes. Section 5(3) of the Survey Ordinance 1961 then in force required that all scheme plans show proposed roads, and section 13(1) provided that: “…every proposed road and every piece of land shown on the scheme plan as road which is not an existing road shall be dedicated by instrument in writing which shall be registered by the owner in the office of the Registrar of Land” (our emphasis) 

(2) In the late 1990s Mrs McCarthy built the old hotel on that part of her land contained within what is known as Parcel 426 and by 2000 she had constructed most of the new hotel on the adjacent site, being her proposed new roads which she had undertaken to dedicate as Toamalama and Tavaetoto Streets, known as Parcels 387 and 385 respectively, and encroaching slightly onto Parcel 426. The new hotel ran longitudinally and blocked access along Toamalama Street, almost for its full width, and across its intersection with lavaetoto Street;

(3) In 2001 the SNPF agreed to lend the sum of $1.139m to Mrs McCarthy to refinance her existing indebtedness and fund the completion of construction of the new hotel. Its loan was secured by a memorandum of mortgage over Parcel 426 plus four other adjacent parcels of her land. Their details are irrelevant to this appeal.

(4) In 2002 and thereafter Mrs McCarthy fell into default on her loan repayment obligations to the SNPF. In early 2005 the Supreme Court made an order approving the SNPF’s application to sell the secured property. By this time the SNPF and neighbouring landowners. the Moghbelpour family who had bought from Mrs McCarthy some of the rear parcels of land which she originally subdivided in 1995, were apparently aware that the new hotel was built predominantly on Parcel 387. The land which Mrs McCarthy had herself proposed as the public road to be formed on Toamalama Street was thus unavailable for access to the land which the Moghbelpour family had bought from her in good faith.

(5) It was necessary to create a new road for public access. Clarke found that the parties attempted to effect this obiective by submitting for registration in October 2007 a new plan of subdivision of the surrounding land with both the SNPF and the Moghbelpour family agreeing to give up parts of their land to accommodate a new road in exchange for Parcels 387 and 385. We infer that the SNPF participated in the process in anticipation of acquiring ownership of the secured property. Presumably it was in control of the land by then (*2)

(*2) At paras [26] & [52].

(6) With the assistance of political intervention Mrs McCarthy delayed the sale process for some years but in January 2008 the SNPF was able to exercise Its power of sale and purchased the secured property (Parcel 426 and the tour other parcels). Some time later, in November 2010 but with effect from 2009, the SNPF entered into an agreement with Mrs McCarthy to lease the property it now owned, Parcel 426 and the adjoining parcels. Although a copy of the lease was not produced at trial, it appears as though the parties assumed that the lease extended to the new hotel land. In any event Mrs McCarthy fell into arrears within eight months and the SNPF issued proceedings to recover outstanding rental. Judgment was entered by consent against Mrs McCarthy in May 2013 for the amount of unpaid rent. (*3)

(7) The Land Titles Registration Act 2008 came into force on 1 March 2009, introducing the Torrens system of land registration to Samoa;

(8) The Survev Act 2010 came into force on 1 December 2010 to replace the Survey Ordinance 1961, and required the approval of the Registrar of Lands to a new plan of subdivision, further subdividing Toamalama Street into four lots and designating it as a road to be closed (*4). In 2013 the Registrar approved the creation of Lot 14, being the eastern end of Tavaetoto Street, closed both Toamalama and Tavaetoto Streets, and created a new road from the lands surrendered by the SNPF and the Moghbelpours. On 1 April 2014 the Registrar issued a Computer Folio Certificate for Plan 10542 Lots 17, 18, 19 and 20, the new titles for Toamalama Street described as “government land”, recording the Government as the registered proprietor (*5).

(9) In May 2014 the Registrar approved Plan 11264 which amalgamated Lots 14 and 17 with the other land into Lot 5. By this means the land in Parcels 387 and 385 Toamalama Street and the eastern end of Tavaetoto Street – was amalgamated into one certitcate of title. Contemporaneously the Government transferred the land to the SNPF but without preparing and registering a formal instrument of transfer. Clarke J found that the transfer, which was effected by lodging Plan 11264, may have contravened the provisions of sections 20(1) and 36 of the Land Titles Registration Act 2008 (*6). The current Computer Folio Certificate for that land, referenced as 5/11264, records the SNPF as the registered proprietor (*7).

*3 At paras [40) – [43]

*4 At paras [26) & [52].

*5 At para [11].

*6At paras [12](b) & [51].

*7 Annexure to affidavit of Filisita Heather sworn on 20 January 2020.

[6] To complete the narrative we record that in 2011 Mrs McCarthy fell into arrears on her rental obligations and the SNPF terminated the lease. Despite judgment being entered by consent against her, the SNPF was forced to initiate proceedings to entorce her eviction. In March 2014 Mrs McCarthy filed her own proceedings in the Supreme Court against the SNPF, the Samoan Government and the Moghbelpours to enforce she alleged was her fundamental right to ownership of Parcel 387 Lot 17. Her claim was struck out by Nelson on 18 December 2014.

In a trenchantly worded criticism of her case, Nelson J noted Mrs McCarthy’s primary argument that Toamalama Street was her property and had never been lawfully dedicated as a public road in circumstances where she was herself responsible for that state of affairs. It is unsurprising that Mrs McCarthy did not appeal. We shall return to this point.

Supreme Court

[7] Clarke J made three particular findings of fact. First, he found that no instrument of dedication was prepared and registered when the Government originally acquired and created Toamalama Street and Tavaetoto Street as public roads.(*8) Second. as noted. he was satisfied that no instrument of transfer of Parcel 387 Lots 14 & 17 from the Government to SNPF was prepared or registered.(*9) Third, contrary to Mrs McCarthy’s statement of claim and the argument repeated by her counsel, Mrs Woodroffe, on appeal, he found that the SPF did not acquire those lots as part of the mortgagee sale process but directly from the Government by a process which he was satisfied was of questionable legality.(*10) The Judge identified what he regarded as more appropriate legal remedies for Mrs McCarthy against the Government than the ones she had elected to pursue against the SNPF.(*11) For reasons which will become apparent, echoing Nelson J’s criticisms, we disagree with Clarke J that Mrs McCarthy might have any possible rights of recourse against the Government.

[8] The Judge dismissed both causes of action in negligence and unjust enrichment. He grouped Mrs McCarthy’s claims into three broad categories, as flowing from (1) SNPF’s acquisition of the security property through the mortgagee sale process; (2) SPF’s allegedly unlawful acquisition of Parcel 387 Lots 14 & 17, again allegedly through the mortgagee sale process; and (3) lease and associated costs Which she paid to SPF pursuant to consent orders but now sought to recover.(*12)

[9] Clarke I found that all of Mrs McCarthv’s monetary claims in neghigence were barred by section 6(1) of the Limitation Act 1975;(*13) they were nearly six years out of time. He was satisfied also that (1) there were no mistakes sutticient to invoke Dostponement of the accrual date and therefore extend time pursuant to section 26(c) of the Limitation Act; and that (2) even if the ground of mistake was available to postpone the accrual date, Mrs McCarthy had failed to establish that she could not with due diligence have discovered her alleged mistake about the location of the new hotel on Parcel 387 Lot 17. and that that claim for recover of land was also statute barred.(*14) He found that Mrs McCarthy’s claims would have failed on the facts in any event.(*15)

*8 At paras [12](a) & [48]-[51].

*9 At para [12](b).

*10 At paras [13] & [78].

*11 At para [14].

*12 At para [7].

*13 At paras [7] & [85].

*14 At para [111].

*15 At paras (93)-(112)].

[10] Clarke dismissed Mrs McCarthv’s alternative claim for unjust enrichment. He was satisfied that the claim could not possibly succeed because SPF took legal title to Parcel 387 from the Government which had acted on the basis that the land was a public road which it owned and exchanged for value for some of the SPFs land.(*16) Mrs McCarthy had failed to prove the threshold restitutionary elements of this equitable cause of action that the SNPF had enjoyed a benefit with a corresponding deprivation on Mrs McCarthy’s part.

Analysis

(a) Negligence

[11] Mrs Woodroffe based Mrs McCarthy’s challenge to the Supreme Court judgment on a proposition that this appeal raises an issue of general public importance for the law of Samoa. Her argument was constructed around allegedly critical mistakes or contusion arising from the misunderstanding or misuse of the meanings of English words. She relies on the facts that both the new and old hotel were known as the Blue Pacific Hotel and that a valuation report prepared for the SNPF for the purposes of sale of the secured property in late 2007 described the new hotel as “…an improvement to Lot 426″ when in fact it was built on Parcel 387 and only slightly encroached onto Parcel 426. She submits that in reliance on this alleged mistake the SNPF wrongfully included land in Parcel 387 within the secured property which it then transferred to itself when exercising its power of sale as mortgagee, setting in train the events which led to this claim. An ancillary proposition, the relevance of which escapes us, was that even though Toamalama and Tavaetoto Street were shown on various plans as “streets”, they were in fact unformed roads.

[12] Mrs Woodroffe submits that the Judge erred in finding that the land was not acquired through the mortgagee sale process but was separately transferred by the Government to the SPF some years later. (*17) She relies on the facts that (a) Mrs McCarthy was given time to vacate the new hotel but was never advised that it was not part of the secured property; (b) the SNPF later agreed to lease the old and new hotel buildings to Mrs McCarthy; and (c) Mrs McCarthy was later given notice to quit the new hotel. All these facts, she says, prove that throughout the relevant period the SNPF was treating the disputed land, Parcel 387, as acquired through the mortgagee sale process. She also relies on the Judge’s finding that Parcel 387 was never lawfully dedicated as a public road. As a result, Mrs Woodroffe submits, Mrs McCarthy was wrongfully deprived of ownership of Parcel 387 and is now entitled to its recovery.

*16 At paras [122]-[124].

*17 At paras (113] & [121]-[124].

[13] This submission is tundamentaly flawed, both in law and fact for a number of reasons. First although Clarke J did not address this ground of defence, at trial Mr. Leung-Wai relied on Section 13(2) of the Lands Titles Registration Act 2008 which materially provides:

13(2) Where a computer folio certificate is issued in respect of a folio of the Register it shall be received by all courts or persons having by law or consent of parties authority to hear, receive and examine evidence as evidence of the particulars recorded in that folio, and it is conclusively presumed that:

(a) the certitcate contains all the intormation that was recorded in that folio at the time specified in the certificate;

(b) the land to which the certificate relates was at that time under the provisions of this Act; and

(c) a person recorded in the certificate as the registered proprietor of an estate or interest in the land to which the certificate relates was, at that time, the registered proprietor of that estate or interest.

[14] This provision, which expresses the principle of indefeasibility of title, is an absolute answer to Mrs McCarthy’s claim to recover Parcel 387. In Boyd v Mayor of Wellington(*18) the majority of the New Zealand Court of Appeal held that under the New Zealand statutory equivalent of section 13(2) a local authoritv which had acquired land from the original owner under a void proclamation nevertheless obtained an indefeasible title to that land. In Frazer v Walker(*19) the Privy Council approved the principle of immediate indefeasibility applied in Boyd and expresslv extended it to cases of deferred indefeasibility of title, to protect from attack a registered proprietor of land whose interest arose as a bona fide purchaser for value from a person who had knowingly acquired title under a defective instrument of transfer. This latter principle is enshrined in the provisions of the Land Titles Registration Act 2008. Section 32 confirms the paramountey of the title of a registered proprietor other than in excepted cases which do not apply here ; section 35(2) immunises a bona fide purchaser for valuable consideration of land of which it is the registered proprietor against a claim fOr recover) of that land “…merely because the vendor of the land may have been registered as proprietor through fraud or error, or by means of a void or voidable instrument…”; and section 76 protects the registered proprietor against proceedings for the recovery of land other than in excepted cases which again do not apply here. As the Privy Council explained in Frazer v Walker, the concept of indefeasibility of title, whether immediate or deferred, is a convenient description of the immunity which a registered proprietor of land enjoys from an adverse attack by a third party claiming an interest in the same land: registration is the cornerstone of an owner’s statutory protection.

*18 Boyd v Mayor of Wellingion (1924] NZLR 1174.

*19 Frazer v Walker (1967) 1 AC 569.

[15] The indefeasibility principles established by these authorities operate here to extinguish Mrs McCarthy’s claim at two stages of the disposition process of Parcel 387. At the first or immediate stage the decisions establish the indefeasibility of the Government’s title acquired to the land in Toamalama and Tavaetoto Streets despite the absence of an instrument of dedication. As we shall explain, we question whether an instrument of dedication was legally required to pass title to the Government. At the second or deferred stage, Mr Leung-Wai is correct that the Computer Folio Certificate issued for Parcel 387 raises a conclusive presumption that the SNPFs title to that land is indefeasible by virtue of its registration as the proprietor of a fee simple estate as owner. The SNPF acquired its interest as a bona fide purchaser for value by virtue of the exchange of land with the Government in May 2014. That transfer did not dispossess Mrs McCarthy of any interest in the land. She had undertaken to dispose of it to the Government for public Durposes in 1994 and 1995. She had no right of recovery from the SNPF. And the title was by that time under the Survey Act 2010 already vested in the Government.

[16]Second, Frazer v Walker affirms that the principle of indefeasibility of title arising on registration of an ownership interest in land does not extinguish any rights in personam which disaffected party may wish to pursue against the registered proprietor. Mrs McCarthy would therefore be entitled to claim damages from the SNPF if she could have established a viable cause of action. But her claim based on the pleaded existence of a duty of common law duty of care was misconceived. The duty imposed on a mortgagee to a mortgagor to exercise reasonable skill and care when enforcing its powers of sale is of an equitable nature and in any event, as we are about to affirm, the SNPF never exercised its power of sale over Parcel 387.(*20) Mrs McCarthy’s counsel did not seek to advance a principled argument to establish the elements of that cause of action. Her argument simply relied on what are said to be a misdescription of the hotel in a valuation report and a supposed series of misunderstandings about the physical delineation between the old and the new hotels.

[17] There could not be a more slender or disingenuous factual thread on which Mrs McCarthy might attempt to build an argument the acceptance of which would require us to turn a blind eye to the existence of an incontrovertible body of evidence. The misdescription of the new hotel in a valuation report as an improvement to the secured property and an alleged mistake about what hotel premises the SNPF leased back to Mrs McCarthy have no relevance whatsoever to the undeniably correct legal description of the secured property in the memorandum of mortgage, the SNPF’s acquisition of that property in exercise of its power of sale in 2008, and the SNPF’s later acquisition of the land contained in Parcel 387 in an exchange of values with the Crown in 2014. The SNPF never purported to exercise its Dowers of sale over Parcel 387. which was never included within the secured property. Clarke J’s findings are unassailable. All of Mrs McCarthy’s damages claims in negligence proceed on the unarguable factual premise that SPF unlawfully acquired Lot 387 as part of the mortgagee sale process and must fail accordingly.

*20 Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 (PC)

[18] Third, Mrs Woodroffe’s written submissions did not mount a principled challenge to Clarke J’s findings that Mrs McCarthy’s claims in negligence were statute barred. She simply denied that the Limitation Act applied. In our judgment Clarke J’s conclusion and the grounds for it are correct. Mrs Mccarthv’S appeal against the dismissal of her negligence cause of action must fail.

(b) Unjust Enrichment

[19] Mrs Woodroffe did not develop an argument to challenge Clarke J’s dismissal of Mrs McCarthv’s alternative cause of action for unjust enrichment, and it is unnecessarv for us to address it further except to add one observation within this restitutionary context in expansion of our disagreement with the Judge that Mrs McCarthy might have a residual right of action against the Government for a declaration or statutory damages for what are said to be its failures, first, to formally dedicate Toamalama and Tavaetoto Streets as public roads before acquiring the land In Parcel 387; and, second, to effect a formal instrument of transfer of that land SNPF.

[20] Mrs McCarthy could not possibly have been entitled to restitutionary relief against the SNPF or for discretionary relief against the Government of the type suggested by Clarke J. Mrs McCarthy is the author of her own misfortune. She is responsible for the all the problems for which she now seeks recompense. In 1994 and 1995 she obtained approval to subdivide her property at Fugalei and enable her to construct the Blue Pacific Hotel and sell residential sections on the basis of her undertaking to set aside clearly detined areas of land to be formed as public roads and provide public access through her property. Instead she built the new hotel on that land, blocked public access and remained in indefinite default of her implicit statutory obligation to submit an instrument of dedication of the roads which she had promised to set aside.

[21] The legal effect of the steps taken by the Government, the SPF and the Moghbelpours to mitigate the damage caused by Mrs McCarthy’s misconduct is not to be weighed in nice scales. It is correct that no instrument of dedication of the lands comprised in Toamalama and Tavaetoto Streets was prepared and lodged with the Registrar, as Clarke J found. But a declaration to that effect would be of no consequence. Although we do not need to decide the point. we doupt that the absence of that instrument had any adverse legal effect. Section 44, the savings and transitional provision of the Survey Act 2010 which came into force on 1 December 2010, provides that all scheme plans of subdivision approved or deposited under the Survey Ordinance shall be deemed to have been approved under the provisions of the Survey Act; and section 31 has the effect that on the submission of subdivision plans for approval all areas designated as roads shall vest in the Government. Mrs McCarthy’s scheme and subdivision plans had been retrospectively approved and deposited in terms of the Survey Ordinance (dedication was not a prerequisite). So on 1 December 2010 the Government acquired title to Parcel 387 if it had not already done so, perfecting Mrs McCarthy’s statutory promise to divest herself of that land and vest ownership with the Government, and a formal dedication was unnecessary.

[22] Mrs McCarthv had no interest in the valdtv or otherwise of the Government’s subsequent transfer of the land to the SPF effected without a registerable memorandum where Its purpose was to implement a transaction based on an agreed exchange of values between those parties: any defect could be cured by the parties lodging a memorandum of transfer in registrable form or, Mr. Leung-Wai submits, by an order of the Supreme Court under section 20 of the Land Titles Registration Act. In any event an indefeasible title has been issued to the SPF. And Mrs McCarthy has no arguable basis for applying either for a correction of the Land Register or for an order for compensation – she could not possibly satisfy any of the qualifying grounds provided in Section 77(1) of the Act.

[23] It is most regrettable that Mrs McCarthy’s counsel did not recognize that her case was devoid of any merit from the outset before advancing this appeal, which we add for the sake of completeness did not raise any questions of general importance for the law of Samoa about the misconstruction or misuse of the meanings of English words.

Result

[24] Mrs McCarthy’s appeal against the judgment of Clarke J is dismissed.

[25] Mrs McCarthy is ordered to pay SPF costs in this Court in the sum of S5000 together with usual disbursements. Were it not for Mrs McCarthy’s impecuniosity, as Mrs Woodroffe has explained it to us, we would have awarded indemnity costs in recognition of the hopeless nature of her appeal.

[Signed]

Honourable Chief Justice Perese

Honorable Justice Blanchard

Honorable Justice Harrison