Richardson Anthony Arthur v Attorney General of the Turks & Caicos Islands
| Jurisdiction | UK Non-devolved |
| Judge | Sir Terence Etherton |
| Judgment Date | 16 August 2012 |
| Neutral Citation | [2012] UKPC 30 |
| Date | 16 August 2012 |
| Docket Number | Appeal No 0074 of 2011 |
| Court | Privy Council |
[2012] UKPC 30
Lord Hope
Lord Wilson
Lord Sumption
Lord Carnwath
Sir Terence Etherton
Appeal No 0074 of 2011
Privy Council
Appellant
Ariel R Misick QC
Akierra M D Missick
(Instructed by Sharpe Pritchard)
Respondent
David Phillips QC
Patrick Patterson
(Instructed by Edwards Wildman Palmer UK LLP)
Heard on 28 June 2012
This is an appeal by the defendant, Richardson Anthony Arthur, from the decision of the Court of Appeal of the Turks and Caicos Islands dismissing his appeal from Martin J, who refused to strike out those parts of the writ and statement of claim which advance a cause of action for "knowing receipt".
The central issue on the appeal is whether the Torrens system of land registration, as enacted in the Turks and Caicos Islands' Registered Land Ordinance ("the RLO"), precludes a claim that the registered proprietor of land is a constructive trustee of the land by virtue of his knowledge that the transfer was in breach of trust or fiduciary duty.
The claim is brought on behalf of the Crown by the respondent, the Attorney General of the Turks and Caicos Islands. It relates to land at Long Beach, Providenciales, Turks and Caicos Islands ("the Property"), which was formerly Crown land. The Crown's claim, as conveniently summarised by Ground JA in the Court of Appeal, is that the Property was sold by the Crown on favourable terms to the appellant, who then immediately sold it on to the developer of a neighbouring luxury commercial property development for a very substantial profit, the appellant having been given inside information and the opportunity to purchase the Property by Mr McAllister Hanchell, the then Minister for Natural Resources ("the Minister"), for corrupt reasons.
The factual and legal basis for the claim is set out in the statement of claim and further and better particulars of the statement of claim. The following is a sufficient, but much simplified, summary.
Following approval by the Minister, the Property was leased in April 2007 to the appellant for the purpose of enabling him to build a dwelling house. The lease, known as a residential Conditional Purchase Lease ("the Lease"), imposed on the appellant an obligation to build a house and contained a covenant by him to use the Property for residential purposes only. It granted him the right to acquire the freehold of the Property, in the event that he had complied with the covenants and obligations in the Lease, for a heavily discounted sum of $50,000.
On 27 July 2007, before the appellant had begun the construction of a house, the Minister approved the purchase by the appellant of the freehold of the Property for only $12,500. On 24 September 2007 the appellant contracted to sell the Property to 172 Limited, a development company, for $1,350,000. On 30 January 2008 the appellant acquired the freehold of the Property and paid the Crown $50,000. It is common ground, although not expressly pleaded, that he was registered as proprietor of the Property on 4 February 2008. On 20 March 2008 the appellant transferred the Property to 172 Limited for $1,350,000. It forms part of a proposed luxury property development comprising a number of villas and condominiums proposed for Long Bay Breach on Providentiales.
It is alleged that the transfer of the Property from the Crown to the appellant was at a price which was significantly below its true market value, even allowing for the discount to which the appellant was entitled as a "Belonger", that is a person having a connection with the Turks and Caicos Islands by birth or family. It is alleged that the transfer was fraudulent and/or corrupt and/or in breach of trust; and, in particular, that the Minister was in breach of his fiduciary duties, including duties of loyalty, fidelity and good faith, in approving the appellant's application for the Lease and the sale of the freehold of the Property to the appellant. It is further alleged that the appellant, in entering into the Lease and in acquiring the freehold, knew of the breaches of duty by the Minister, and that it is unconscionable of the appellant to retain the Property and/or the money received by him from the sale of the Property to 172 Limited. It is further alleged that, in the circumstances, the appellant held the Property and the proceeds of sale on constructive trust for the respondent on the basis of knowing receipt.
It is also alleged that the appellant is liable for the tort of deceit because he made fraudulent representations in applying for the Lease and to purchase the freehold of the Property at a time when he expected and intended that he would sell the Property for an immediate and substantial gain, and not for the purpose of constructing a single residential dwelling for his own use.
The respondent claims the following relief in the writ and the statement of claim: a declaration that the appellant holds the Property on trust for the respondent; an order setting aside the transfer to the appellant; further or alternatively, a declaration that the appellant holds the purchase price of $1,350,000 on trust for the respondent; further or alternatively, damages.
172 Limited was registered as proprietor of the Property. The respondent no longer pursues a claim that the Property itself (as distinct from the proceeds of sale received by the appellant) is held on trust for the Crown.
The appellant has served a substantial Defence, further and better particulars of the Defence and an amended Defence, in which he denies all allegations of wrongdoing by him and he denies that the respondent is entitled to any of the relief claimed. In paragraph 68 of the amended Defence the appellant asserts that he was at all times a bona fide purchaser of the Property for value without fraud or notice of any wrongdoing, and that, on the transfer of the Property to him, he acquired the absolute title free of any interest held by the respondent. In paragraphs 68A and 2.4 of the amended Defence it is asserted that, whether or not the appellant was a bona fide purchaser for value of the Property, by virtue of his registration as proprietor of the Property on 4 February 2008 he took the Property free of any interest whatsoever previously vested in or held by the respondent.
On 25 January 2011 the appellant issued a summons to strike out those parts of the endorsement of the writ and the statement of claim relating to the allegation of knowing receipt, in other words everything other than those parts supporting the common law claim for damages for deceit. The basis of the summons was, as asserted in paragraphs 68A and 2.4 of the amended Defence, that, on registration of the appellant as proprietor of the Property on 4 February 2008, he took the Property free of any interest whatsoever previously vested in or held by the respondent. That is said by the appellant to be the effect of the RLO.
Registration of title was introduced into Australia by Sir Robert Torrens in 1858. The system, which came to be known as the Torrens system and was first embodied in the South Australian Real Property Act 1858, spread to the other colonies in Australia and New Zealand and later to many other countries in the Commonwealth and elsewhere. The objective of the system was to achieve complete certainty of title. It was described by Barwick CJ in Breskevar v Wall (1971) 126 CLR 376, 385 as "not so much a system of registration of title but a system of title by registration". The objective of complete certainty of title has never been achieved, as is observed in the following passage in Ruoff & Roper on Registered Conveyancing at 3.004 :
"The declared intention of the Torrens systems to have absolute and indefeasible or unimpeachable titles has never been completely attainable because there have had to be exceptions to the general rule.
There are necessarily differences in the way that the system has been applied in different jurisdictions but it is generally true to say that, in certain circumstances, fraud, mistake and misdescription of property are typically exceptions to the principle of indefeasibility. There can be other situations where a Torrens title can be upset. For example, a subsequent statute has been held to override the registration of title enactment so as to make a particular transaction void and ineffective. Jurisdictions based on the Torrens system do not have a uniform approach to adverse possession. In some cases it is completely excluded. In others, there may be either a variation of the rules that apply to unregulated land which are modified to meet the requirements of the registration of title system, or there may even be a retention of those rules."
The fact that the Torrens system has been implemented in different countries with varying degrees of flexibility was emphasised by the Board in Santiago Castillo Ltd v Quinto [2009] UKPC 15, (2009) 74 WIR 217, when considering the provisions in the Belize Registered Land Act 1974 for rectification of the register. In holding that those provisions enabled the court to rectify the register on the facts, Lord Philips of Worth Matravers, delivering the judgment of the Board, said at paragraph [39]:
"We accept that this significantly diminishes the element of indefeasibility of registered title that is a feature of the Torrens system, but this is the manner in which the legislation of Belize has decided to balance the desirability of a simple system of land transfer with the interests of justice. The remedy of rectification lies within the discretion of the court and is subject to the protection given...
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