The Judicial Committee of the Privy Council Decisions

Privy Council Appeal No. 17 of 1996

 

British American Cattle Company Appellants

v.

(1) Caribe Farm Industries Limited (in receivership) and

(2) The Belize Bank Limited  Respondents

 

FROM

 

THE COURT OF APPEAL OF BELIZE

 

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 22nd June 1998

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Present at the hearing:-

Lord Browne-Wilkinson

Lord Jauncey of Tullichettle

Lord Mustill

Lord Slynn of Hadley

Lord Nolan

  ·[Delivered by Lord Browne-Wilkinson]

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This is an appeal against a decision of the Court of Appeal of Belize dated 17th October 1995.  It raises the issue whether the appellant, British American Cattle Company (“BACC”),  is entitled to a declaration that a certificate of title to certain land issued in the name of the first respondent, Caribe Farm Industries Limited (“Caribe”), is rendered ineffective by section 5 of the Aliens Landholding Ordinance 1973 (“ALO”).

 

1. The case turns on the Torrens system of land title established in Belize by the Law of Property Ordinance 1954 (“LPO”) and the General Registry Ordinance 1954 (“GRO”).  It is necessary to set out in outline the system of registered title thereby established.  The land law of Belize distinguishes between registered title and unregistered land.  In the case of registered title, title can only be created by registration of a certificate of title to the land under the GRO: LPO section 40(1)(a).  Once title has been registered, a duplicate certificate of title is given to the title holder.  Whenever the title holder wishes to transfer or deal with this land he must produce the duplicate certificate and execute a memorandum of transfer in a prescribed form: GRO sections13, 15 and 26.  If the Registrar is satisfied with the correctness of the memorandum, he prepares a new certificate of title and issues such new certificate to the new proprietor, the old certificate being then cancelled.

 

2. Since registered land can only be transferred on the register in the way that has been described, the question arises what is to happen when the prescribed formalities are not observed and the land is conveyed as though it were not registered.  That position is expressly covered by section 25(2) of the GRO which provides that such old style conveyance does not vest in the intended transferee the legal title to the land but operates “to create in the intended transferee an equitable title only to the land, estate or interest”.  Section 25(3) of the GRO provides that a person in whom the equitable title to registered land has become thereby vested may, after demand in writing made upon the holder of the legal title to such land, by action claim the transfer to himself of the legal title to the land in which he has the equitable title.

 

3. Finally, it should be noted that the Acts provide a separate regime for dealing with and registering charges over registered land: see LPO section 64 and GRO sections 45-49.

 

4. On 11th February 1963 Jonas Brotman was registered as proprietor of 24,000 acres of land at Revenge Lagoon, Orange Walk, Belize.  Accordingly, at all material times the land in question has been registered and the legal title has had to be dealt with in accordance with the statutory requirements affecting registered land.  Notwithstanding this, on 27th December 1973 Mr. Brotman “conveyed” part of the 24,000 acres to a Mr. Zent and on 24th October 1986 Mr. Zent “conveyed” such part of the land to the appellant BACC.  Neither of these “conveyances” complied with the statutory requirements for the transfer of registered land and took effect under section 25(2) of the GRO as transferring to BACC only the equitable title to the land.

 

5. Mr. Brotman died on 21st December 1980 but the land remained registered in his name until, on 4th March 1987, a Mr. Avilez, as personal representative of Mr. Brotman, was registered under the GRO as the registered proprietor of the whole of the 24,000 acres.  On 5th March 1987 Mr. Avilez transferred the registered title to the whole of the 24,000 acres to Caribe.  Caribe remains the registered proprietor of the whole 24,000 acres.  However, there is a letter of 5th March 1987 written by Mr. Avilez to Caribe (with copies sent to the Atlantic Bank and the Registrar General) which records that it was the intention of Mr. Avilez and Caribe to transfer 2,000 acres only to Caribe in order that Caribe might have title to such 2,000 acres to stand as security for a loan from Atlantic Bank.  The letter explains that the whole 24,000 acres had been transferred in order to avoid the delay inherent in sub-division of the land.  The letter expressly states that it should be noted that only 2,000 acres of the land were to be charged by way of legal mortgage and that it should be understood and agreed that upon settlement of a suitable sub-division Caribe would re-transfer the land to Mr. Avilez save and except the 2,000 acres originally intended to be sold.  That letter was, apparently, signed by the General Manager of Caribe.

 

6. There was formerly a dispute as to whether Caribe was an “alien” for the purposes of the ALO. It is now agreed that at all material times Caribe has been an alien.  In consequence under sections 4 and 5 of that Ordinance no legal or equitable estate in the registered land could vest in Caribe, as an alien, unless Caribe had obtained from the Minister a licence to acquire the land.  Caribe applied for, and on 26th February 1987 obtained, a licence from the Minister to acquire 2,000 acres of the land.  However, Caribe never obtained any licence to acquire the whole of the 24,000 acres transferred to it.  It is now agreed that in consequence there was no valid licence for the transfer of the 24,000 acres by Mr. Avilez to Caribe, as an alien, on 5th March 1987.

 

7. On 20th March 1987 Caribe charged the whole of the 24,000 acres to Atlantic Bank Limited by a mortgage noted on the Transfer Certificate of Title of Caribe.  Further by a Deed of Mortgage dated 20th May 1987 Caribe charged the whole 24,000 acres in favour of the Belize Bank, which charge was also noted on the Transfer Certificate of Title of Caribe.  The Atlantic Bank Limited is the second defendant in these proceedings, but has taken no part in the appeal.  The Belize Bank Limited is the third defendant.  The same counsel has throughout represented both Caribe and the Belize Bank.

 

8. On 8th July 1994 BACC requested a transfer from Caribe of the part of the land BACC had purchased.  No response having been obtained these proceedings were started by originating summons on 31st October 1994, the relief claimed being a declaration that the Transfer Certificate of Title dated March 5th 1987 in the name of Caribe is void and of no effect by reason of the provisions of the ALO.

 

9. In the course of the opening of the appeal before their Lordships by Mr. Lewison Q.C., for BACC, it became clear that it was impossible for the Board to resolve all the issues between BACC on the one hand and the two banks, as mortgagees on the other.  As between BACC and Caribe the only question is whether the purported transfer of title to Caribe without the necessary licence under the ALO precludes Caribe from asserting its registered title as against BACC.  As will appear their Lordships are of the view that Caribe cannot so assert its title.  However, the two banks, as mortgagees, are not in the same position as Caribe.  They may be in a position to assert that they have an impregnable title to their charges as against BACC, even though their mortgagor, Caribe, had no title to grant the mortgages to them.  Under the Torrens system a registered proprietor may obtain absolute title to land or an interest in land by registration even though there was no title in the person who granted him those rights.  So, in the present case, questions may well arise as to the state of knowledge of the Atlantic Bank and the Belize Bank when they were granted their respective mortgages and generally questions as to whether the title to the charges is paramount and overbears the equitable title of BACC under the unregistered “conveyances”.  Since none of these matters were investigated at the trial and indeed it had not even been appreciated that the interest of the Belize Bank was not the same as that of Caribe, it is impossible for these matters to be resolved on this appeal. Their Lordships will confine themselves to the only question actually raised in the proceedings, namely whether the title of Caribe is invalidated by the ALO.

 

10. The ALO, section 4, provides that, subject to certain exceptions not relevant in the present case, “no legal or equitable estate in land shall vest in an alien after the commencement of this Ordinance”.  Section 5 then provides as follows:-

“5.Any deed conveyance, certificate of title, fiat, vesting assent or other assurance of land whatsoever purporting to convey, transfer, vest or evidence title to a legal or equitable estate in land to or in an alien contrary to the provisions of this Ordinance shall for that purpose be void and of no effect.”

 

11. Therefore, on the face of it the Transfer Certificate of Title dated 5th March 1987 whereby Mr. Avilez purported to transfer the registered land to Caribe is absolutely ineffective.

 

12. However, the case made by Caribe and upheld by the Court of Appeal is that section 41 of the LPO precludes the ALO from operating since the LPO confers “absolute and indefeasible” title on the holder of the certificate of title which “trumps” the invalidity under the ALO.  Section 41 of the LPO so far as relevant, provides as follows:-

 

“(2)The certificate of title to the legal estate, interest or right in or over any land shall confer upon the registered proprietor -

 

(a)           the right against all the world to peaceable possession of the land for the estate, interest or right conferred by the certificates;

 

(b)          subject to the provisions of any statute and to any legal estates and interests, charges and incumbrances noted on the certificate of title, the absolute right to the use and enjoyment of the land against all the world for the estate, interest or right conferred by the certificate; and

 

(c)           subject to the provisions of any statute and to any legal estates and interests, charges and incumbrances noted on the certificate of title, the absolute right of disposition of the land against all the world by will or dealing inter vivos.

 

(3)A registered title to land under Part II of the General Registry Ordinance, subject to all estates, interests, charges and incumbrances noted on the certificate of title to the land, shall be an absolute and indefeasible title.

(4)In this section ‘absolute and indefeasible’ implies that a certificate of title issued by the Registrar under Part II of the General Registry Ordinance and the estates, interests, charges and incumbrances noted thereon by the Registrar cannot be challenged in any court of law on the ground that some person, other than the person named therein as the registered proprietor, is the true legal owner of the land therein set forth, or that the estates, interests, charges and incumbrances in the notings thereon are not estates, interests, charges and incumbrances on the said land, except where it is proved to the court that -

 

(a)           fraud was committed in respect of the issue of the certificate of title, or the noting of such estates, interests, charges or incumbrances; or

 

(b)          …”

 

13. Although the details of the Torrens system vary from jurisdiction to jurisdiction, it is the common aim of all systems to ensure that someone dealing with the registered proprietor of title to the land in good faith and for value will obtain an absolute and indefeasible title, whether or not the title of the registered proprietor from whom he acquires was liable to be defeated by title paramount or some other cause.  The principle is well stated in relation to the State of Victoria by the Board in Gibbs v. Messer [1891] AC 248 at page 254:-

 

“The main object of the Act, and the legislative scheme for the attainment of that object, appear to them to be equally plain.  The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the  history of their author’s title, and to satisfy themselves of its validity.  That end is accomplished by providing that every one who purchases, in bona fide and for value, from a registered proprietor, and enters his deed of transfer or mortgage on the register, shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author’s title.”

 

14. That principle has been repeatedly affirmed in the various jurisdictions most recently in relation to the law of New Zealand by the Board in Frazer v. Walker [1967] AC 569.

 

15. To achieve this objective, it is critical to keep to a minimum the number of matters which may defeat the title of the registered proprietor.  However, it is well established that there are certain exceptions.  One of these is where a later statute is inconsistent with the provisions of the Act conferring absolute and indefeasible title on the registered proprietor.  Thus, in Miller v. Minister of Mines [1963] A.C. 484 the appellant held a certificate of title to land in New Zealand which contained no reference to any rights of the Crown over the land.  The Crown enjoyed certain mining rights the registration of which was regulated by the Mining Act 1926.  It was held that the Crown’s mining rights prevailed over the absolute and indefeasible title which was assured to the registered proprietor of the land under the New Zealand Land Transfer Act.  The Board held that there was no need for any express provision overriding the provisions of the Land Transfer Act: it was sufficient if the only proper implication from the terms of the later statute was that it was inconsistent with absolute and indefeasible title under the Land Transfer Act.

 

16. A similar approach has been adopted by the majority of the High Court of Australia in Travinto Nominees Pty. Limited v. Vlattas (1973) 129 C.L.R. 1 in which Gibbs J. said (at page 35):-

 

“Although the Real Property Act is of the greatest importance in relation to land titles, it is not a fundamental or organic law to which other statutes are subordinate.  The question is simply whether the provisions of the later enactment … override it.”

 

17. Unfortunately, neither of those cases were brought to the attention of the Court of Appeal.

 

18. When that principle is applied to the present case in their Lordships’ view there can be no doubt as to the proper answer.  The provisions of the LPO and GRO attach critical importance to the certificate of title and the fact that the certificates are duplicates of the one registered.  Section 15 of the LPO provides:-

 

“Except in respect of crown land, title to a legal estate or a legal interest in land shall be evidenced either by a certificate of title issued or by a deed recorded under the General Registry Ordinance.”

 

19. Therefore, in order for Caribe to prove title to the registered land in issue, it will have to produce a certificate of title showing its ownership.  But the ALO not only prevents a legal estate in the land from vesting in Caribe (section 4) but expressly provides that a “certificate of title” purporting to “evidence” the title to land being vested in an alien shall “for that purpose be void and of no effect”.  Therefore this case is much stronger than the authorities just cited.  The ALO contains express provision showing that it is intended to override the particular provisions of the LPO and the GRO.  There is no way of reconciling the later Act (the ALO) with the earlier Acts (the LPO and GRO) other than by holding that the later Act pro tanto overrides the earlier Acts.

 

20. Their Lordships will therefore humbly advise Her Majesty that the appeal should be allowed and declare that the purported Transfer Certificate of Title dated March 5th 1987 registered in Land Titles Register Volume 18, Folio No. 7 in the name of Caribe is void and of no effect for the purpose of transferring title to a legal estate in land to Caribe as an alien contrary to the provisions of the Aliens Landholding Act.  However, it must be made clear that such order is without prejudice, first, to the right if any of Caribe to be registered in respect of 2,000 acres of land included in the Certificate of Title in respect of which Caribe holds a licence under the Aliens Landholding Ordinance and second, to the right, if any, of Atlantic Bank Limited or the Belize Bank Limited to claim that their respective charges over the land subject to the said Certificate of Title are unaffected by the invalidity of the title of Caribe.

 

21. The respondent must pay the appellant’s costs in the courts below and before their Lordships’ Board.

 

© CROWN COPYRIGHT as at the date of judgment.