Finding among other things that he had no interest in the 1,000 acres of land at Providence which his company Sunset Lakes had bought from the Central Housing and Planning Authority (CH&PA) to develop private luxury housing, businessman Brian Tiwarie recently lost his challenge to title being passed to Precious Metal Mines Inc.
In a ruling handed down just over a week ago, High Court Judge Franklyn Holder referenced the legal principle of a company having a separate legal personality from its creditors or shareholders, and found therefore that the property vested in Sunset Lakes could not be said to be owned by Tiwarie (the Claimant).
On this point the Judge noted, “At no point in time was the Claimant ever the registered proprietor of the property,” at the center of the litigation.
Tiwarie had signed an agreement via his Sunset Lakes Inc. Company with the CH&PA to purchase and develop the 1,000 acres of land at a cost pegged at $475 million. He paid a quarter of the sum and had six months to pay off the balance.
In 2014, Tiwarie went into partnership with Chu Hongbo, Managing Director of Chinese logging company Baishanlin and it was agreed that Hongbo would pay him US$8 million and develop the site. As part of the agreement, Tiwarie would also get to keep some of the house lots in the gated community for his personal use.
However, Tiwarie took Chu to court for the balance of US$4 million on the agreed purchase price. He has maintained that the lands were never sold wholly to Hongbo as he remained a part of the partnership and since Chu defaulted, he should have either gotten his due amounts or the equivalent in lands.
Proceedings were also initiated by Citizens Bank Guyana Inc., to recover the more than $320 million from Baishanlin and its affiliate company Puruni Woods Products Inc. which it had loaned for the purchase of the 1,000 acres of land.
The land which was sold by the CH&PA to Tiwarie, had been repossessed by Citizens Bank after he defaulted on the mortgage. It was later sold by the bank to Tamesh Jagmohan of Precious Mining Inc. for over $1 billion. Tiwarie, prior to the repossession, had sold the land to Hongbo.
Citizens Bank Guyana Inc., which claimed it was owed for a loan on the property, appointed Nigel Hinds as its receiver in the second half of 2017 as it sought to recoup its money.
Seeking damages in excess of $300 million, Tiwarie in his action argued that the Registrar of Lands could not have lawfully transferred title of the property to Precious Metal Mines Inc., since a caveat on the property filed on 17 March, 2016, was still valid.
A caveat is a formal notice to a judicial officer requesting the officer to suspend a specific action until the party has received an opportunity to be heard on the matter.
Through his battery of attorneys, led by Senior Counsel Edward Luckhoo, Tiwarie argued that his caveat could only be removed with his consent or a Court acting pursuant to Section 125 of the Land Registry Act (LRA), in the absence of which the caveat remains on property.
He therefore argued that the Registrar of Lands acted ultra vires in failing to suspend the registration of the title until he was given requisite notice and an opportunity to commence legal proceedings and that the transfer was a null and to be set aside.
Attorneys for the defendants—Sunset Lakes (in Receivership), Citizens Bank, the Registrar of Lands, Hinds (as former Receiver/Manager of Sunset Lakes in Receivership), Harryram Parmesar (in his capacity as the Receiver/Manager) of Sunset Lakes and Precious Metal Mines—all argued that Tiwarie’s claim was misconceived, bad in law, frivolous and vexatious.
They specifically argued that in contravention to the Land Registry Act, the caveat claimed no interest in the registered land. They submitted that the caveat asserted a claim in personam against Hongbo for a liquidated sum arising out of breach of agreement and not a right in rem against the property.
Registrar exceeded her powers
Regarding the issue of whether the Registrar of Lands acted lawfully in not suspending the registration of the title, Justice Holder noted in his judgment that despite the Registrar’s perception of a caveat being defective for want of interest, nowhere in the Act does it empower her to disregard a caveat lodged, except in the limited circumstance provided in Section 125 (2).
He said that therefore, upon the lodgment of the caveat and entry of it on the memorial, the caveat acted as an estoppel against any dealing with the land until it was removed by proper procedure.
The Judge said that in the circumstances, he was not persuaded by her lawyers’ argument that she could have disregarded the caveat lodged by Tiwarie when transferring title to Precious Metal Mines on the basis that the Claimant’s caveat did not disclose an interest in the property.
“Such a decision clearly offends the intention of Parliament,” the Judge noted in his written judgment.
On that point, he said that the procedure to be followed is set out in Section 125 (6) of the Act, which requires the Registrar to give notice of the instrument to the Claimant and suspend the registration of the instrument of transfer for six weeks after the notice was given, during which time Tiwarie would have been entitled to commence legal proceedings and adduce evidence as to the purported interest he claimed to have had in the land.
“Nothing in the LRA empowers the Registrar of Lands to do as she did and disregard a caveat on the basis that it does not disclose an interest in land. Therefore, as it relates to the matter at bar, the Registrar’s actions clearly extended beyond the strictures placed on her by the LRA and operates to be unlawful and ultra vires the LRA,” Justice Holder asserted.
Though the Judge would himself go on to find that indeed Tiwarie did not have any interest in the property, he was keen in pointing out that the Registrar nonetheless exceeded her powers under the Act in arriving at the position she did and allowing the title to be transferred.
He noted that the Court had a duty to declare that error and the breach of the process which ought to have been used.
Citing case law authority, however, Justice Holder said it is quite trite that only a person who has an interest in land may lodge a caveat. On this point he said it was never in dispute that the property was owned by Sunset Lakes.
The Judge said that at no point in time was Tiwarie ever the registered proprietor of the property, while noting that a Company has a separate legal personality from its creditors or shareholders.
Therefore, the Court said that property vested in Subset Lakes could not be said to be owned by the Claimant; while noting that the interest to which he (Tiwarie) kept referring he had in Sunset Lakes was a lien on the shares of Hongbo which the Judge said he found to be without merit, since Hongbo divested himself of his entire shareholding before any purported lien could crystalize.
Referencing a plethora of case law authorities, Justice Holder emphasized that the equitable or legal interest in company property “cannot attach to a shareholder for the very simple reason that a company holds such property as a persona ficta unencumbered by any interest a shareholder might have in the company shares.
The Judge said that the caveat grounds the Claimant’s “purported interest” in the land on a purported breach of contract of Hongbo and the claims for liquidated unpaid sum owed. “Such a ground is clearly not a claim for right or interest in rem but a claim of a right in personam,” Justice Holder said
He then went on to assert that in the circumstances, the caveat lodged by Tiwarie against the property “clearly does not disclose an interest in land. Moreover, even if this court were to venture down the untenable tract which would have us arrive at the destination that the shares agreed to in the terms of settlement arrangement returned fifty percent of [Sunset’s] shareholdings to him (Tiwarie), this would be insufficient grounds for the Claimant to claim an interest in the land within the meaning of Section 125(1) LRA,” the Judge said.
He then went on to reiterate, “As I have already rationalized that the authorities make is clear that a shareholder would not have a legal or equitable interest,” to the Company’s property.
“I therefore find that the Claimant lodged a caveat which did not disclose an interest in registered land but asserted an in personam right to a liquidated unpaid sum owed by Hongbo Chu. In the circumstances, the inescapable conclusion of this court is that the caveat was deficient,” the Judge said.
Injudicious
The final issue which the Court considered was whether the certificate of title should be set aside. The Judge said that pursuant to Section 88 of the LRA, a mortgage or charge may be enforced in the same manner as provided by any Act, rule of court or practice in respect of any other mortgage.
He said that Section 234 of the Companies Act makes it clear that First Debenture ranks as a mortgage, noting that the purpose of the Act so stating was to speak on it having priority of interest.
It was against this background that he said the First debenture taken out by Sunset Lakes at the bank operated as a first charge ranking first in priority even over the caveat lodged by the Claimant against the property, as security for the debt owed to the Bank.
The Judge went on to note, however, that despite accepting that premise, it cannot be concluded, stricti juris that the act by the Registrar of Lands was lawful.
“It would have still been an ultra vires act for her to have given priority to the First Debenture over a caveator unless and until a Court of competent jurisdiction determined this issue of law,” Justice Holder said, before nevertheless finding that “it would be injudicious to undo all that has already been done to arrive at the same conclusion on the passing the title in favour” of Sunset Lakes.
He then further went on to note that with Tiwarie having not sufficiently pursued a claim for fraud, in the absence therefor or misdescription of the boundaries, the irregularities by the Registrar of Title would not be enough to extinguish or impeach Precious Metal Mines Inc’s absolute and indefeasible title to the land.
In all the circumstances, the Judge dismissed Tiwarie’s claim.
The Judge was keen to note, however, that his decision not to quash the decision of the Registrar to register the transfer of the property and not to set aside the Certificate of Title issued must be understood in the context of the peculiar facts of the case “and must not be read as the Court giving its approval of the actions of the (Registrar) in determining that the caveat lodged did not disclose that the Claimant had a valid interest in the land.”
“This was outside her jurisdiction. However, had the Registrar complied with Section 125(6) of the LRA I am of opinion that the very issue amongst others would have been raised in any proceedings before the Court by the parties seeking to have the instrument of transfer registered,” the Judge said.
The Bank was represented by Senior Counsel Neil Boston, while the Registrar of Lands was represented by Solicitor General Nigel Hawke.
Hinds was represented by attorney Manoj Narayan and Precious Metal Mines by attorney Glenn Hanoman.
