Vosailagi V Mara [1992] FJHC 62; Hbc0569d.91S (4 December 1992)

Vosailagi v Mara [1992] FJHC 62; Hbc0569d.91s (4 December 1992)

IN THE HIGH COURT OF FIJI At Suva Civil Jurisdiction

CIVIL ACTION NO. 569 OF 1991

Between:

BULOU ETA KACALAINI VOSAILAGI Plaintiff

- and -

1. ADI LADY LALABALAVU LITIA KALOAFUTOGA MARA 2. YANUCA ISLAND LIMITED 3. NAKURUVAKARUA COMPANY LIMITED 4. THE REGISTRAR OF TITLES Defendants

Mr. A.R. Matebalavu for the Plaintiff Mr. Q.B. Bale for the 1st and 3rd Defendants Mr. C.B. Young for the 2nd Defendant

INTERIM JUDGMENT

This case concerns the Island of Yanuca (hereafter referred to as 'the island') situated off the coast of the chiefly village of Cuvu in the province of Nadroga and on which is erected an international resort hotel commonly referred to as 'the Fijian' generating by all accounts a large sum of money from a lucrative tourist market. The case however does not directly concern the hotel or its profitability and at an early stage the hotel was given leave to withdraw from the proceedings upon its undertaking through its counsel to furnish any information that the Court may require and to abide by any decision the Court may make on the plaintiff's application.

More particularly this case raises the concerns of the beneficiaries of a trust established by the then Colonial Administration in 1930 (hereafter referred to as 'the Yanuca Trust') in respect of Yanuca Island and which was subsequently conveyed by a formal deed on the 30th of October 1969 to the present sole trustee, Adi Lady Lalabalavu Litia Kaloafutoga Mara (hereafter referred to as 'the trustee').

At the outset I would observe that the plaintiff has chosen as she is entitled, to come to this Court by way of originating summons dated the 28th of November 1991 seeking the removal and replacement of 'the trustee' and an order for accounts during her stewardship.

Of such a procedure Buckley J. said in Re Sir Lindsay Parkinson & Co. Trusts Deed v. Smith and Anor. (1965) 1 ALL E.R. 609 at p.610: "... it was, I think, open to the plaintiffs to institute these proceedings either by originating summons or by writ; ... but I desire to say that in my view, clearly, proceedings by beneficiaries against trustees of a contentious nature, charging the trustees with breach of trust or with default in the proper performance of their duties, whether the matters with which the trustees are charged are matters of commission or omission, ought normally to be commenced by writ and not by originating summons; for in such proceedings it is most desirable that the trustees should know before trial precisely what is alleged against them."

However no objection has been taken to the 'form' of the action and nothing more need be said about it.

In support of the summons the plaintiff has filed an affidavit numbering 29 pages long and containing 83 paragraphs with numerous annexures. In the affidavit she alleges no less than 8 instances of breach of trust and mismanagement by 'the trustee' in the performance of her duties under 'the Yanuca trust'.

'The trustee' for her part having acknowledged service of the papers through her solicitors on the 4th of December 1991, filed a 1 page affidavit on the 12th of May 1992 (i.e. 6 months later) the relevant parts of which reads:

"3. That I deny that (the) Plaintiff is a proper Plaintiff beneficiary as alleged in this action.

4. That I am informed and verily believe that (the) question of (the) lawful heirs and successors to the ownership of C.T.33/3336 has yet to be lawfully resolved. 5. That the Native Land Commission which has jurisdiction over the said C.T.33/3336 is presently reviewing the whole question of the ownership and proper successors and assigns in respect of the said land which I hold as trustee. The said Native Land Commission has yet to meet and decide on this question. 6. That I deny that I have any duties as trustee to give accounts or any explanations to any persons who are not proper beneficiaries. 7. That the Plaintiff is not entitled to the relief it (sic) seeks as the Plaintiff is not a proper determined beneficiary to the trust of which I am Trustee. 8. That I am prepared to give full details of accounts as soon as the proper beneficiaries and the ownership of the land subject matter of this action is determined by (the) Native Lands Commission as (the) Native land Commission is the only authority in Fiji which could determine customary rights and legal ownership of the land subject matter of this action. 9. That unless and until the said issue is determined the Plaintiff herein has no locus standi to bring this action."

Then in a subsequent supplementary affidavit 'the trustee' elaborated on the above matters in the following relevant extracts:

"3.... the subject land being C.T.No.33/3336 described as Yanuca Island was sold to the Ka Levu in 1909, one Ratu Luke Nakulanikoro, as an individual and not to him in trust for his tokatoka or any other division or subdivision of his people." 4.... the subject property and the true beneficiaries thereof can only be confined to the proper heirs and successors of the chiefly position of Ka Levu. In this context the Native Lands Commission confirmed in its decision dated 19th July 1990 that the true and proper heir and successor to the said chiefly position is Ratu Sakiusa Makutu. 7.... in the circumstances the identity of the true beneficiary or beneficiaries of the said trust is not certain. I claim that it was the Ka Levu Ratu Luke Nakulanikoro alone; the Plaintiff's claim that it was the Tokatoka Nakuruvakarua ..."

Further in referring to the 3rd defendant company 'the trustee' deposed:

"9.... My inclusion with my late uncle Ratu Tevita Makutu (No.2) the Ka Levu at that time, as the only shareholders of the trust and investment company Nakuruvakarua Company Limited was understood to reflect the true beneficiaries (in that case Ratu Tevita Makutu No.2 alone) of this trust I was appointed to hold only for him and his true heirs and successors."

It may be inferred from the above that 'the trustee' is challenging the 'capacity' of the plaintiff to bring these proceedings on her own behalf or on behalf of an as yet unascertained group or class of beneficiaries. There is also a clear suggestion that 'the Yanuca trust' was established solely for the benefit of the then holder of the chiefly title of "Ka Levu" and his true heirs and successors and that in any event the Native Land Commission is the proper forum to decide this case.

I note with concern however that although mention has been made of the third defendant company, nothing has been put before the Court in either of 'the trustee's' affidavits seriously denying or disputing the various allegations of breach of trust and mismanagement made against her.

It is necessary to consider chronologically the historical background to the 'Yanuca trust' and the terms of the trust itself in order to answer the matters raised by 'the trustee' in her affidavit.

In doing so however I do not propose to canvass again matters that have already been the subject of earlier decisions of this Court which are undoubtedly familiar to 'the trustee' and which answers many of the matters raised in her affidavits. I refer in particular to:

(a) the decision of Rooney J. in Civil Action No. 293 of 1986 Ratu Epi Volavola v. Adi Lady Lalabalavu Litia Kaloafutoga Mara (hereafter referred to as 'Ratu Epi Volavola's case'), (b) a ruling of Sheehan J. in 'Ratu Epi Volavola's case';

and more recently

(c) the judgment of the Chief Justice in Judicial Review No. 19 of 1988 Bulou Eta Kacalaini Vosailagi v. N.L.C. and Anor. delivered on the 22nd of June 1989 (hereafter referred to as 'the KALEVU case').

The earliest pre-Cession written record concerning Yanuca Island dates back to a handwritten 'Sale and Purchase Agreement' dated the 4th of May 1865 in which the then "Ka Levu" one "Ratu Kini Chief of Nadroga" sold the island "... for the sum of one hundred dollars in trade ..." to Francis Henry Davis a trader of Nasoata, Lower Rewa".

The island was later to become the subject matter of an unsuccessful petition in 1884 by the then Roko Tui Nadroga and a Crown Grant Folio No: 992 was registered in favour of Francis Henry Davis over the entire 109 acres that comprised 'the island'.

On the 5th of October 1888 the island was mortgaged to William Scott solicitor of Suva as security for a loan and a year later on the 24th of September 1889 a Certificate of Title No: 13 Folio 1186 was issued in the names of William Scott and Nicholas Hedstrom as executors of the estate of Francis Henry Davis.

Subsequently on the 11th of April 1891 a new Certificate of Title No: 15 Folio 1367 was issued solely in the name of William Scott who held the title until it was transferred to his executors William Alexander Scott and Henry Milne Scott in 1908. They in turn were issued with a new Certificate of Title No. 32 Folio 3319.

Prior to his death however, as appears from relevant extracts of the Nadroga Provincial Council records, William Scott had agreed to sell 'the island' for the sum of 200 which was to be raised by way of a levy on the people and chiefs of the province of Nadroga.

Nothing is known about how? or from whom? the money was raised nor has the Court been furnished with any evidence which might help to fill this lacuna.

Suffice it to say that the purchase price was fully paid up and on the 23rd of January 1909 'the island' was eventually transferred by the executors of William Scott to the "Native Commissioner of the Colony of Fiji for the time being" as evidenced by a third Certificate of Title No: 33 Folio 3336 issued on the 23rd of April 1909. The ownership of the island was to remain in that 'suspended state' for the next 21 years.

The next relevant document dealing with 'the island' is dated the 5th of July 1930 and records a transfer of the island to "the Secretary For Native Affairs for the time being 'as Trustee' ...". On the same day a "Declaration of Trust" was executed by the Secretary of Native Affairs creating a trust over the island for 28 named persons and setting out the manner of determining future beneficiaries and ultimately of the trust in the event of a failure of beneficiaries.

It is convenient at this stage to set out in full the terms of the Declaration of Trust which reads as follows:

"DECLARATION OF TRUST

TO ALL TO WHOM THESE PRESENTS SHALL COME: The Secretary for Native Affairs of Fiji sends Greetings:- WHEREAS the Native Commissioner for the time being is registered as proprietor of the piece of land containing one hundred and nine acres be the same more or less and situated in the Province of Nadroga on the southern coast of the Island of Viti Levu and known as the Island of Yanuca above high water mark uas more particularly delineated on a plan endorsed on Certificate of Title Vol.33 Folio 3336 dated at Suva the 23rd day of April, 1909: AND WHEREAS the officer named as Native Commissioner in the said Certificate of Title is now known as the Secretary for Native Affairs: AND WHEREAS the said lands are held by the Proprietor on behalf of and for the benefit of certain native Fijians: "NOW THESE PRESENTS WITNESS that the said Secretary for Native Affairs hereby declares that he stands seized of the said land in trust for the persons named in the Schedule hereto and their lawful heirs and successors according to Native Custom as though the said persons constituted one mataqali and the provisions of Sections 5 and 6 of the Native Lands Ordinance 1905 apply to the said land. IN WITNESS WHEREOF the Secretary for Native Affairs has hereunto signed his name and affixed his seal. Sealed Signed and Delivered this 5th day of July, 1930. (Sgd.) Armstrong Secretary for Native Affairs In the presence of (Sgd.) G.P. Armstrong Witness. A Commissioner"

The 'Schedule' then enumerates under the heading: 'LIST OF THE NAMES OF THE FAMILY OF THE "KALEVU" OF CUVU, NADROGA' the names of 28 individuals as follows:

"1. Ratu Timoci Vosailagi 2. Ratu Mosese Volavola 3. Ratu Orisi Lala 4.Ratu Osika Noca Louvatu Vosailagi (c) 1 5. Ratu Veni Cawaitakali 6. Ratu Ilaitia Vobowale 7. Ratu Isea Nawasa 8. Kini Kurisaru (c) 6 9. Peceli Nakavulevu 10. Peceli Nakavulevu (ii) (c) 6 11. Alivereti Uqeuqe 12. Isei Nawasa (ii) 13. Asenaca Vosailagi 14. Ateca Tuwaci 15. Unaisi Navue (c) 2 16. Amele Caginitoba 17. Ema Kelea 18. Luse Taumi 19. Fifita Naulu 20. Kinisimere Tavailagi 21. Vaulina Sereibua (i) (c) 6 22. Toakasa Rabo (c) 7 23. Salanieta Tanumi 24. Amele Caginitoba 25. Mereoni Buloulevu (c) 9 26. Toakasa Rabo 27. Loata Naivua 28. Joana Tuwaci"

On the 10th of November 1965 the then Secretary for Fijian Affairs "as Trustee" leased approximately half of the island to Fiji Resorts Limited (later renamed Yanuca Island Limited the 2nd defendant herein) for a yearly rental of 500.

Then at a meeting of the members of the Tokatoka Nakuruvakarua held on or about the 18th of January 1969 it was agreed amongst other things to extend the lease of Fiji Resorts Limited to include the remaining portion of the island and more particularly: "3. That the Trustee be changed, and that Adi Lady Lala Mara be the Trustee."

On the 30th of October 1969 the then Minister for Fijian Affairs and Local Government Ratu Penaia Kanatabatu Ganilau gave effect to the written request of the members of the tokatoka by executing a Deed of Trust in which he discharged the Colonial Government's trusteeship over the island and appointed:

"... ADI LADY LALABALAVU LITIA KALOAFUTOGA MARA to be Trustee in his stead of the said land to hold the same upon the trusts mentioned in the said Declaration of Trust dated the 5th of July, 1930 and the said ADI LADY LALABALAVU LITIA KALOAFUTOGA MARA DOTH HEREBY ACCEPT appointment as trustee as aforesaid AND DECLARE that she will hold the said land upon the trusts hereinbefore mentioned."

In accepting the trusteeship Adi Lady Mara bound herself in the words of the Lord Chancellor in Moyle v. Moyle (1831) Vol. 34 R.R. 186 at p.189:

"to discharge its duties so long as (her) character of trustee subsists; for by consenting to assume the office, (she) prevents other persons from being appointed or accepting, who might have more time and leisure to devote to it. It is no excuse, therefore, that the parties are volunteers; for they are greatly to blame in consenting to act, if they really have no time for the due performance of their duty ..."

In similar vein Lord Esher M.R. in Soar v. Ashwell (1893) 2 Q.B. 390 said of "express trusts" at p.394:

"... where a person has assumed, either with or without consent, to act as a trustee of money or property, i.e., to act in a fiduciary relation with regard to it, and has in consequence been in possession of or has exercised command or control over such money or property, a Court of Equity will impose upon him all the liabilities of an express trustee, and will class him and will call him an express trustee of an express trust. The principal liability of such a trustee is that he must discharge himself by accounting to his cestui que trusts for all such money or property without regard to lapse of time."

On the same day and pursuant to above-mentioned 'Deed of Trust' the island was transferred to ADI LADY LALABALAVU LITIA KALOAFUTOGA MARA 'as Trustee'.

The expanded lease of the island to Fiji Resorts Limited was not formalised however until the 14th of January 1970 when a lease over the whole island for 99 years from the 1st of September 1969 was executed by the newly appointed trustee.

It may be noted that this latter lease was for a yearly rental of $20,000 and contained a 'profit- sharing' clause in the following terms:

"1. In addition to the rental hereinbefore provided and in consideration of the lessor's waiving any claim to periodical reassessment of rental the lessee will pay to the lessor an annual sum equivalent to 1% (one percent) of the amount by which the lessee's gross income from the business on the subject land for each year ending on the thirty-first August shall exceed the sum of $1,800,000 (ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS). Such additional payment shall be calculated by the lessee's auditors and shall be paid within sixty days after the audited accounts of the lessee have been adopted by the lessee."

On the 21st of August 1970 a private company limited by shares was incorporated under the name and title: NAKURUVAKARUA COMPANY LIMITED (the third defendant company) with a share capital of 50,000 shares of $1 each of which 2 shares were paid up and issued, one in the personal name of 'the trustee' and the other in the name of the late Ratu Tevita Nabekasiga Makutu (No.1).

It is not entirely clear why or on whose advice the company was set up but in any event it was a convenient vehicle through which to channel the trust income generated by the lease of 'the island' to Fiji Resorts Limited and through which other trust assets could be and were acquired.

From the foregoing it is possible to draw the following conclusions:

(1) The land comprising Yanuca Island is not "native Land" as defined by the Native Lands Act (Cap. 133) as it is land which was "the subject of a Crown Grant" and although the cumulative effect of the 'Declaration of Trust and transfers in respect of 'the island' may be said to have resulted in the return of the beneficial interest in the island to its original native owner(s), the island has never been placed under the control of the Native Lands Trust Board nor has it been administered by it as 'native land'. Very simply Yanuca Island is 'freehold';

(2) The transfer of the island to the Secretary for Native Affairs "as Trustee" coupled with the written 'Declaration of Trust' by him was sufficient to create and did create an 'express trust' over Yanuca Island in which the Secretary for Native Affairs was constituted the trustee of the island for various named beneficiaries and their lawful heirs and successors; (3) The subsequent transfer of the island to Adi Lady Lala Mara coupled with her clear and unconditional acceptance of the Deed of Trust on the 30th of October 1969 constituted her the sole trustee of the express trust previously established over the island and bound her to accept its terms and conditions including the beneficiaries for whose benefit the trust was first declared; (4) Although the original property settled in 'the Yanuca trust' was an uninhabited island its potential for development as an attractive island resort has been tapped with the result that the trust assets have grown over the past 22 years to include a valuable lease of the island, a private limited liability company with substantial assets and holdings valued in excess of one and a half million dollars, and an undistributed accumulated fund in excess of three quarter of a million dollars.

In this latter regard Sheehan J. in Ratu Epi Volavola's case (op cit) in refusing an injunction to freeze the assets of the Yanuca trust observed at p.4:

"The assets of this trust, the Court is advised is in the nature of a million dollars or more. Such substantial assets require, in my view, nothing less than constant attention as regards investment and management, I cannot see that having the trust funds simply frozen as they stand without there being any provision for interim management is in the interest of all beneficiaries. In any case ... the appointed trustee (is) accountable to the beneficiaries ..."

So much then for the historical background to the 'Yanuca trust'. I turn next to deal with the issues raised in the competing affidavits of the plaintiff and 'the trustee'.

I shall deal firstly with the question of the 'locus standi' of the plaintiff to bring these proceedings. I would observe however that this preliminary matter ought properly to have been raised in a separate more appropriate action than as a ground for opposing the granting of the relief sought in the substantive action.

Be that as it may the plaintiff in her affidavit states that she is a member of the Tokatoka Nakuruvakarua and by virtue of that membership is a beneficiary in terms of the 'Yanuca trust' created over 'the island'. Additionally she seeks the leave of the Court to be appointed the representative of the other members of the Tokatoka Nakuruvakarua who she deposes are also beneficiaries under the 'Yanuca trust' and whose signed 'Authority to Represent' forms an annexure to the plaintiff's affidavit.

Suffice it to say that from the earlier decision in 'the KALEVU Case' there can be no dispute that the plaintiff is the daughter of an original beneficiary of the 'Yanuca trust' and former holder of the chiefly title of 'KALEVU' namely, Ratu Timoci Vosailagi which is a fact that bears significantly upon her 'standing' to bring these present proceedings.

The fact of her membership of the Tokatoka Nakuruvakarua is, as observed by Rooney J. in Ratu Epi Volavola's case (op cit) at p.7:

"... incidental to (her) right to be regarded as a beneficiary under the Trust Deed."

The reason for that observation being as Rooney J. correctly points out with respect at p.6 (ibid) is that:

"As Yanuca Island had once been the subject of a Crown Grant and could no longer be treated as native land, it was made the subject of a trust in favour of the people considered the rightful owners. I have no information as to how this situation first arose and when, but, the solution adopted was a practical one."

True there is reference in the 'Declaration of Trust' to "native custom" but that was merely the adopted formula or method by which the beneficiaries of the trust could with reasonable certainty be ascertained. It had nothing whatsoever to do with the 'legal status' of the 'the island' the subject matter of the 'Yanuca trust' which had been determined much earlier with the issuance of a Crown Grant.

As was pointed out by Rooney J. (op.cit) the relevance of the reference to 'native custom' in the 'Declaration of Trust' was that "... the persons entitled to the benefits of the Trust Deed were not the heirs under English law as applied in Fiji, but the heirs under Fijian custom."

In my view there is also an inherent danger, apt to confuse in the present context, of identifying the beneficiaries of the 'Yanuca trust' by reference solely to their membership of the Tokatoka Nakuruvakarua.

It might well be as the Chief Justice observed at p.8 of 'the KALEVU case' (op cit) that the: "Members of the Ka Levu dynasty belong to the chiefly Tokatoka (lineage unit) Nakuruvakarua within Mataqali (sub-clan) Leweinadroga in the Yavusa (the widest patrilineal kinship unit) Louvatu."

It may well be that membership of the Tokatoka Nakuruvakarua raises an evidential presumption that the particular member is, to adopt the wordings of the 'Declaration of Trust', "a lawful heir and successor according to Native Custom ..." of the family of the "Ka Levu" of Cuvu, Nadroga, but to accept those propositions uncritically, would be, in my view, to place undue weight on the heading of the 'Schedule' to the 'Declaration of Trust' at the risk of ignoring the original 28 individuals named in it who undoubtedly comprise the extended family members of the then "KALEVU" and who might be considered the foundation or primary beneficiaries of 'the Yanuca trust' and to whom and from whom anyone claiming to be a 'beneficiary' must ultimately trace his or her ancestry albeit through 'native custom'.

Accordingly I would hold that the plaintiff as a child of a named beneficiary of 'the Yanuca Trust' and a former 'Ka Levu' (albeit of a recent lineage) is a 'lawful heir and successor according to Native custom' within the class of beneficiaries contemplated by 'the Yanuca trust' so as to entitle her to bring these present proceedings on her own behalf.

The question of the plaintiff's representative capacity of the other tokatoka members however is a more difficult one to determine and one likely to involve an examination of native land holding records (viz the Vola-ni-Kawa) and more importantly matters of 'native custom' relating to succession to property which are more suitably within the auspices of the Native Lands Commission.

Furthermore it is unknown whether the signatories to the 'Authority to Represent' annexed to the plaintiff's affidavit comprise the majority of the surviving adult members of the Tokatoka Nakuruvakarua but in any event I do not consider that factor necessarily conclusive of the plaintiff's right to institute a representative action on behalf of the other members of the tokatoka which she purportedly seeks.

It was established as long ago as 1956 in the decision of Hammett J. in Meli Kaliavu and Others v. N.L.T.B. 5 F.L.R 17 that individual members of a 'mataqali' or other Fijian landowning unit have no right to institute proceedings in this Court.

That decision was more recently reaffirmed in Civil Action No. 421 of 1986 Timoci Bavadra v. N.L.T.B. (unreported) in which Rooney J. in refusing leave to the plaintiff to institute a representative action on behalf of his tokatoka said at p.4:

"Even if the plaintiff could show that he had the support of the majority of the adult members of the land holding unit this would not necessarily give him or the people he represents the right to sue. That depends on the nature of the Fijian land holding unit."

and later in referring to "a tokatoka or mataqali" the learned judge said at p.7 (ibid):

"It is, as far as the applied law is concerned, an alien institution, which is neither a corporation nor an unincorporated association."

Notwithstanding those observations, in this instance it is beyond serious dispute and I so find that these present proceedings concerns '... property subject to a trust' and the 'beneficiaries' thereof.

In these circumstances Order 15 rule 15 of the High Court Rules gives the Court power to appoint the plaintiff a representative of other beneficiaries (NOT I might add other members of her tokatoka) if it is expedient to do so and if one or more of the following conditions are met, namely -

"(a) that the person, the class or some members of the class, cannot be ascertained or cannot readily be ascertained;

(b) that the person, class or some member of the class, though ascertained, cannot be found;

(c) that, though the person or the class and the members thereof can be ascertained and found, it appears to the Court expedient (regard being had to all the circumstances including the amount at stake and the degree of difficulty of the point to be determined) to exercise the power for the purpose of saving expense."

In this latter regard mindful that the persons which the plaintiff seeks to represent all rely on one and the same 'Declaration of Trust' as evidencing their 'common interest' and mindful of their written 'Authority' to the plaintiff to represent them in these proceedings and the 'common purpose' therein to wit, the substitution of the present sole trustee of 'the Yanuca trust', I am satisfied having regard to all the circumstances including the amount at stake and the degree of difficulty of the point to be determined that it would be expedient and cost-effective to exercise the power of the Court under Order 15 r.15 by appointing the plaintiff to represent in these proceedings the 67 named signatories of the "Authority to Represent" which forms an annexure to the plaintiff's founding affidavit.

So much then for the plaintiff's standing to bring these proceedings I turn next to this Court's power to determine the various issues raised by the parties in these proceedings.

In Ratu Epi Volavola's case (op cit) Rooney J. observed at p.7:

"... a beneficiary enjoys rights against a trustee as provided for under the Trustee Act (Cap.65) and under the system of equity developed in the former Court of Chancery in England and which is now administered in this Court."

As to the former, the Trustee Act (Cap. 65) provides by Section 89 that:

"An order under the provisions of this Act for the appointment of a new trustee, or concerning any property subject to a trust, may be made on the application of a person beneficially interested in the property ..."

and Section 73 empowers the Court:

"... whenever it is expedient to appoint a new trustee(s) ... and it is inexpedient, difficult or impracticable so to do without the assistance of the Court, (to) make an order for the appointment of a new trustee(s) either in substitution for or in addition to any existing trustee(s) ..."

In this latter regard the plaintiff asserts and it is not seriously denied that the beneficiaries (which she presumably represents) have exercised all reasonable options available to them to achieve an amicable replacement of the present trustee without any success.

Of the Court's equitable jurisdiction Scott J. said in Chellaram v. Chellaram (1985) 1 Ch.D 409 at p.428:

"The jurisdiction of the court to administer trusts to which the jurisdiction to remove trustees and appoint new ones is ancillary, is an in personam jurisdiction. In the exercise of it, the court will inquire what personal obligations are binding upon the trustees and will enforce those obligations... The trustees can be ordered to pay, to sell, to buy, to invest, whatever may be necessary to give effect to the rights of the beneficiaries, which are binding on them. If the court is satisfied that in order to give effect to or to protect the rights of the beneficiaries, trustees ought to be replaced by others, I can see no reason in principle why the court should not make in personam orders against the trustees requiring them to resign and to vest the trust assets in the new trustees."

More relevant however in the present context is the decision of the Privy Council in Letterstedt v. Broers (1884) 9 App. Cas. 371 in which the Court laid down the 'guiding principles' to be applied in the removal of trustees in the following passages of its judgment delivered by Lord Blackburn at pp. 386 and 387:

"It seems to their Lordships that the jurisdiction which a Court of Equity has no difficulty in exercising ... is merely ancillary to its principle duty, to see that the trusts are properly executed. This duty is constantly being performed by the substitution of new trustees in the place of original trustees for a variety of reasons in non-contentious cases. And therefore, though it should appear that the charges of misconduct were either not made out, or were grossly exaggerated, so that the trustee was justified in resisting them, ... yet if satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate. As soon as all questions of character are as far settled as the nature of the case admits, if it appears clear that the continuance of the trustee would be detrimental to the execution of the trust, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, ... the trustee is always, advised by his counsel to resign, and does so. In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries."

and later at p.389 their lordships said:

"It is quite true that friction or hostility between trustees and the immediate possessor of the trust estate is not of itself a reason for the removal of the trustees. But where the hostility is grounded on the mode in which the trust has been administered, ... it is certainly not to be disregarded."

Bearing those principles in mind I turn to consider the specific allegations of breach of trust and mismanagement deposed by the plaintiff in her affidavit. They are in summary:

(1) an allegation of 'breach of trust' in the incorporation and management of the Nakuruvakarua Company Limited;

(2) an allegation of 'breach of trust' in having caused and permitted a conflict to arise between her own interests and her duties as trustee in the expenditure of trust funds;

(3) an allegation of 'breach of trust' in her neglect and failure to account fully to the beneficiaries for income derived from the utilisation of trust funds; (4) an allegation of 'breach of trust' in the acquisition of assets that did not accurately reflect the interests of the beneficiaries;

(5) an allegation of a failure to exercise due diligence and care in the management and investment of trust funds in particular in the manner authorised and provided for by the Trustee Act (Cap. 65);

(6) an allegation of a failure to exercise a sufficient degree of diligence in the execution and management of the office of trustee;

(7) an allegation that the trustee failed in her duty to act impartially and to act in the interests of all the beneficiaries; and

(8) an allegation that the trustee failed in her duty to provide information and accounts to the beneficiaries concerning the trust fund.

Grounds 5 and 6 however unlike the other grounds are bare allegations and in that form I do not propose to deal with them.

It is convenient at this point to set out briefly the relevant principles that guide the Court in considering the plaintiff's allegations, in particular, the recognised 'duties of a trustee' having regard to the completely discretionary nature of the 'express trusts' which 'the trustee' was charged with performing in terms of the Declaration of Trust and Deed of Trust and mindful of the assertions made in 'the trustees' affidavits in reply.

To begin with it is the primary duty of any trustee who accepts a trust to acquaint himself with the terms of the trust and to ascertain (if necessary with the assistance of the Court) the beneficiaries for whose benefit the trust was established. Accordingly a trustee having accepted a trust is not permitted thereafter to impeach the validity of the trust or the title of the beneficiaries of the trust.

In this case 'the trustee' has clearly deposed in terms that impliedly denies the validity of 'the Yanuca trust' instrument and the title of and/or the class of beneficiaries thereunder.

In not dissimilar circumstances Sim J. said in McGregor v. McGregor (No.2) (1919) N.Z.L.R. 286 at p.287:

"... mere obstinacy may amount to misconduct on the part of a trustee.

In the present case (the trustee) was guilty of much more than mere obstinacy. He denied altogether the existence of the trust, and claimed as his own the whole of the trust estate. It is impossible for a trustee to be guilty of more serious misconduct than that in relation to the trust, and the fact that the trustee may have honestly believed that his claim was justified does not make his action, in my opinion, any the less misconduct on his part."

In similar vein Romilly M.R. said more than half a century earlier in Newsome v. Flowers (1861) 132 R.R. 363 at p.369:

"It is a common principle of law that ... where persons are made trustees for the owner of property: if they acknowledge the trust for a considerable time, they cannot say that any other persons are their cestui que trust, or "we will turn you out of the property."

Needless to say before a trustee can properly claim that a claimant is not a beneficiary of the trust which he is charged to administer he must satisfy the Court that he has taken all reasonable steps available to him to verify the claim and ascertain the identity of the proper beneficiaries.

In this regard it is noteworthy that 'the trustee' has sought neither the assistance of the Native Lands Commission which she asserts is the proper forum to determine the issue nor of the Court in terms of the Trustee Act (Cap. 65).

In so far as a trustee is empowered and required to manage trust funds Equity requires him to:

"... take such care in conducting the business of the trust as a reasonably cautious man would use, having regard not only to the interests of those who are entitled to the income, but to the interests of those who will take in future. That is to say ... trustees are bound to preserve the money for those entitled to the corpus in remainder, and they are bound to invest it in such a way as will produce a reasonable income for those enjoying the income for the present. In my opinion a trustee is not bound to have special knowledge. Where there is any special knowledge required, he may, and ought to consult those who could advise him from their special knowledge ..." (per Cotton L.J. in Whiteley v. Learoyd (1886) 33 Ch.D. 347 at p.350.)

Of the general rule of equity that no one in a fiduciary position (such as a trustee) is allowed to enter into engagements in which he has or can have a personal interest conflicting with the interests of the beneficiaries whom he is bound to protect and to whom he must account for any personal benefits, Rigby L.J. in Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch.D. 392 said at p.442:

"It is an equitable rule which has always been guarded and enforced with the utmost jealousy, that no fiduciary agent shall, under pain of consequences thoroughly well known ..., intentionally place himself in a position in which his interest may conflict with his duty. The rule is not a mere arbitrary or technical rule of equity, but is based upon high grounds of morality, and the Courts of Equity have always held any departure from it to be a serious wrongdoing. The equitable rule referred to does not in any way depend upon fraud or any presumption of advantage actually taken; indeed, it applies equally, even though it be shewn that no advantage has been taken."

Then it has been said that a trustee has a duty to give each of his 'cestui que trust', on demand, information with respect to the mode in which the trust fund has been dealt with and where it is. More particularly, Kekewich J. speaking of the same duty said in Re Watson (1904) 49 Sol. Jo. 54:

"The duty of a trustee is three-fold: there is the duty to keep accounts, the duty to deliver accounts, and the duty to vouch accounts... The duty to keep accounts is an essential duty, he must keep such accounts so as to be able to deliver a proper account within a reasonable time showing what he has received and paid ..."

In this particular case the plaintiff complains that Nakuruvakarua Company Limited was incorporated by the trustee without the knowledge of the beneficiaries of the Yanuca Trust and rental monies under the lease of the island were diverted into the company and utilised for purposes otherwise than for the benefit of the beneficiaries.

Specifically, the plaintiff complains that the existing shareholding in the company does not clearly or adequately reflect the interests of the beneficiaries in the company or the trusteeship of the named shareholders and further that trust funds were expended and advanced on various unauthorised projects and for various unidentified purposes and, where identified, no details or accounts have been furnished or supplied.

In this regard after having carefully considered the various sworn complaints of the plaintiff (which remain undisputed and untested in cross-examination) in the light of the public records relating to Nakuruvakarua Company Limited and the accounts of the company which declares inter alia:

"The company has been regarded by the shareholders, as an extension of the Trust Deed in respect of the Island of Yanuca."

and mindful that during the present trustee's stewardship the trust estate has been greatly enhanced, and further that it is generally accepted as commonplace that substantially all business and commercial undertakings, regardless of size or importance, are today carried on through the corporate vehicle, I cannot accept that any breach of trust occurred in the incorporation of the Nakuruvakarua Company Limited.

I accept however that there is reason for concern in the nature of the present recorded shareholding of the company which at best is ambiguous and at worst a potential source for a conflict of interest and accordingly an appropriate order(s) will be made to regularise the matter upon hearing counsel further on the matter.

As for the management of the company by 'the trustee' and more particularly in regard to the various items of expenditure in the solitary set of accounts submitted by 'the trustee' covering one third of the 20 odd years of her trusteeship and of which specific complaint has been made, this Court is firmly of the view that such expenditure and the undeniable failure of the trustee in discharging her positive duty to render accounts to the beneficiaries of 'the Yanuca trust' concerning the same cannot be so easily and euphemistically excused:

"... as payments ... for causes which were intended to enhance the good name and standing of the Tokatoka Nakuruvakarua." or as being:

"... matter of record available for perusal at the office of Trust accountants."

Be that as it may, in her most recent affidavit filed on the 30th of November 'the trustee' has deposed to her decision "... to stand down voluntarily from my position as sole trustee of the Nakuruvakarua trust in the hope that this would be the best means of promoting unity amongst the members of the Tokatoka Nakuruvakarua".

In the light of this most recent development the appropriateness or genuineness of which I have no reason to doubt, it is no longer encumbent on the Court to deal in any detail with the plaintiff's various complaints.

Learned counsel for the plaintiff objects to the lateness of this most recent affidavit and questions the regularity of the Court accepting or acting on it. I am firmly of the view however that in exercising its jurisdiction in the matter this Court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not necessarily in determining the rights of adversarial parties.

That is not always easy, particularly where, as in this case, the application has been conducted as if it were hostile litigation but that must not be permitted to obscure the real question at issue which is what directions ought to be given in the interests of all the beneficiaries.

Furthermore the lateness with which a Court would accept a trustee's offer to withdraw is well illustrated in Harris v. Harris (No.1) (1861) 131 R.R. 475 when Romilly M.R. said at p.476:

"Generally speaking, when these cases occur, the trustee who never derives any benefit, but incurs a considerable amount to risk from the office, upon the slightest intimation from the Court, which is always unwilling to make any hostile determination against him, says, "If you wish me to retire, I do not wish to remain; all I have done in this matter, which was purely gratuitous, has been for your benefit. I do not wish to give my services any longer, if you do not wish to have them." I should have wished that this trustee had adopted that course, and, if he wishes it, I will now allow it to be stated in the decree that he requested to be no longer continued as trustee, but if not he must be removed."

In my view the existing trustee has expressed a desire (albeit somewhat belatedly) to be discharged from her onerous office and in such circumstances the Court has power pursuant to Section 73(2)(a) of the Trustee Act (Cap.65) to make an order appointing a new trustee.

In exercising the Court's power however I ought not to ignore what has been variously described by counsel for 'the trustee' as the "realities" of the obviously hostile atmosphere that presently exists between 'the trustee' and some of the beneficiaries of 'the Yanuca trust'.

It is a matter of some regret and of grave concern to the Court that relations between the parties was permitted to degenerate to the extent that it has. Moreso where it involves close relatives from within the same chiefly tokatoka who are persons of high chiefly status in their own traditional right.

It is also unfortunate that the parties for reasons best known to themselves or, as has been suggested, as a result of the influence of "outsiders" appear to have forgotten the salutary observations of the learned Chief Justice when he said at p.22 of 'the KALEVU case':

"Fijian custom and tradition has its own in-built method of resolving even the hardest of disputes. It is called "veisorosorovi" and is invoked in order to restore peace and harmony to village life and in a larger context to the life of the vanua. It of course requires a huge helping of magnanimity wisdom and understanding. It is only when Fijian custom and tradition is ignored or gives way to expediency that disputatious situations will arise in Fijian society."

That a state of hostility presently exists between the parties and within the membership of the tokatoka Nakuruvakarua, there can be no doubt.

In the circumstances this Court has the opportunity and in my humble view ought in the exercise of its discretionary powers in this case, to attempt to foster if at all possible a reconciliation between the parties and within the membership of the Tokatoka Nakuruvakarua who comprise the beneficiaries of 'the Yanuca trust'.

Accordingly I do not propose at this stage to exercise the Court's power to appoint a trustee or trustees and risk perpetuating or aggravating the existing hostilities, instead I shall by way of an indulgence to the parties give all the beneficiaries of 'the Yanuca trust' the opportunity of meeting together and deciding by themselves and for themselves in the traditional and customary manner, the names of the new person or persons that they collectively consider would best serve all their interests in the execution of the 'Yanuca trust'.

The order of the court is that this matter shall stand adjourned for 2 weeks until 23.12.92 and the plaintiff and 'the trustee' are hereby DIRECTED to meet and convene with the assistance of their respective counsels (if necessary) a private meeting of all adult members of the Tokatoka Nakuruvakarua to discuss and agree on the name or names of the new trustee or trustees of 'the Yanuca trust' AND FURTHER such name or names (if any) which is or are agreed is to be submitted in a joint affidavit to the Court together with the necessary consent(s) of such nominee or nominees for the consideration of the Court.

Failing this the Court will proceed to final judgment.

(D.V. Fatiaki) JUDGE

At Suva, 4th December, 1992.

HBC0569D.91S