inception report...technical assistance consultant’s report project number: ta 8481 sam promoting...

Technical Assistance Consultant’s Report

Project Number: TA 8481 SAM

Promoting Economic Use of Customary Land, Phase III

May/June 2014

INCEPTION REPORT

Prepared by the Project Team – Hinauri Petana (Team Leader/Coordinator), Graham Powell (International Legal Specialist), and Mareva Betham-Annandale (National Legal Specialist).

For the Ministry of Finance, the Ministry of Natural Resources, Environment and Meteorology and the Customary Land Advisory Commission This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents.

ABBREVIATIONS AND NOTES

ABBREVIATIONS ACL Act Alienation of Customary Land Act 1965 (Samoa) ACEO Assistant Chief Executive Officer ADB Asian Development Bank AGO Attorney General’s Office CBS Central Bank of Samoa CEO Chief Executive Officer CLAC Customary Land Advisory Commission CLLS Customary Land Leasing Section (MNRE) DBS Development Bank of Samoa LWG Legal Working Group (established by the TA) MOF Ministry of Finance MNRE Ministry of Natural Resources & Environment MJCA Ministry of Justice and Courts Administration SHC Samoa Housing Corporation SLAC Samoa Life Assurance Corporation SLRC Samoa Law Reform Commission SNPF Samoa National Provident Fund TA Technical Assistance

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on June 30.

(i) In this report, "$" refers to US dollars, unless otherwise stated.

TA 8481 SAM – Inception Report

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TABLE OF CONTENTS

Page 1. Executive Summary……………………………………………………………………..4-5 2. Project Context A. Overview…………………………………………………………………………………6 B. Period of Implementation……………………………………………………………6 C. Project Coordination…………………………………………………………………6 D. A recent Historical Background to this TA………………………………………6 E. The TA Objectives……………………………………………………………………..7 F. A Preliminary Assessment of the Legal Issues……………………………….7-13 G. Implementing the Reforms………………………………………………………13-17 H. proposed Program of Action……………………………………………………17-20 I. Managing Project Risks……………………………………………………………..20 J. Expected Impacts of this TA………………………………………………………..20 K. Expected Outcomes of this TA…………………………………………………20-21 L. Proposed Project Timelines……………………………………………………….22 3. Appendices Appendix 1. Terms of Reference for the Legal Working Group……………..23-24 Appendix 2. List of People Consulted………………………………………………25 Appendix 3. Preliminary Review of Relevant Laws……………………………26-29


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EXECUTIVE SUMMARY

Since 2005 the Asian Development Bank (ADB) has provided technical assistance (TA) to the government of Samoa to consider issues and options in the context of making economic use of customary land. 1

The Phase I Report (March 2006) endorsed the option of permitting leases of customary land to be mortgaged and made various recommendations to implement such arrangements. Phase II Report (December 2013) resulted in the establishment of the Customary Land Advisory Commission (CLAC) to oversee future reforms in this context. 2

The CLAC is now operational and have already had successful public consultations through the media and directly with the communities in both Savaii and Upolu, building on earlier consultations under the first phase. These consultations have established a platform for the ongoing work the CLAC is tasked with, in developing a leasing framework for customary land. Core Objectives Phase III is tasked with the following core objectives: (a) To establish a functional Legal Working Group (LWG) which will liaise with the

Bankers’ Association and other key stakeholders; and (b) To establish a leasing framework (including registration processes for security

interests over customary land leases; protection of security interests; publicising security interests affecting leases of the customary land; and processes for repossessing or reselling leases in the event of a default under the mortgage).

Core Outputs If the above objectives are met, it is intended that the TA, with the on-going assistance of the LWG, will present the following outputs

(i) a clearly defined leasing framework will be developed for approval, covering aspects relevant to the registration processes for security interests over customary land leases; protection of security interests; publicizing security interests affecting leases of the customary land; and processes for repossessing, reselling or re-assignment of the leasehold interest in the event of a default under the mortgage;

(ii) the leasing framework will be articulated in approved government policy; (iii) necessary legislative reforms will be drafted and enacted to give a sound legal

foundation to the reformed leasing framework; (iv) all documentation used for leases and mortgages will be standardized and

harmonized with the policy and legislative reforms; (v) all processes and procedures used for taking out leases on customary land will

be standardized and harmonized with the policy and legislative reforms; Core Outcomes By pursuing the objectives and achieving the outputs the TA and the LWG will support the following outcomes:

1 ADB 2005. Technical Assistance to the Independent State of Samoa for Promoting Economic Use of Customary

Land, Manila. (TA 4712-SAM, approved in December) 2 ADB 2009, Technical Assistance to the Independent State of Samoa for Promoting Economic Use of Customary

Land Phase II (TA 7387-SAM, approved in November).


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A. The rights of customary landowners will be secured by law, and in a manner which is consistent with article 102 of the Constitution, in relation to all aspects of the process for leasing customary land, and for mortgaging such leasehold interests;

B. The interests of developers and lenders who lease customary land and secure the leasehold interest by way of mortgage will be protected and enhanced by promoting transparency and fairness in such processes;

C. Banking institutions and other lenders will be given a full range of options in the event of a default under a mortgage over leasehold interests in customary land, and such options will result in a real value being ascribed by lenders to such securities.

D. Approved government policies will provide a clear statement of the rights of customary landowners when their lands are leased and/or secured. These policies will also underpin reformed legal and administrative processes in this context. New legislative provisions, either by way of the drafting of new laws, or amendments to current laws, will provide the foundation for all issues relevant to these rights and processes.

E. A range of “standard” forms will be available for use in relation to the leasing of customary land, and the securing of such leases by way of mortgage, and such forms will reflect the relevant legal requirements and processes arising from the reforms.

The Team engaged for purposes of achieving the above core objectives will work collaboratively with the CLAC, the Ministry of Finance as Executing Agency, the Ministry of Natural Resources and Environment, as the Implementing Agency, and other agencies of the government such as the Attorney General’s Office and the Samoa Law Reform Commission. The TA will effectively start May 2014 and end December 2016.


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PROJECT CONTEXT

A. Overview

1. ADB has extended support since 2005 with the approval of the first technical assistance to help promote the economic use of customary land in Samoa. This was a landmark decision that the government embarked on, assisted further by the ADB under a second phase in 2010. This third phase will focus on the development and establishment of a leasing framework for customary land, bringing to fruition all of the work that has been done previously under the first and second phases, to facilitate the leasing of customary land, and where necessary, secure the mortgaging of the lease interest on customary land for development purposes.

B. Period of Implementation A. The project began in mid May 2014. The final completion date has been set

as 31st December 2016. B. Mobilization of the TA team members during the Inception Phase has been as

follows in Table 1 below: Member Designation Mobilization

Hinauri Petana Team Leader/Coordinator 6th March 2014

Graham Bruce Powell International Legal Specialist 11th May 2014

Mareva Betham-Annandale

National Legal Adviser 13th May 2014

Table 1: TA Mobilisation – Inception Phase

C. Project Coordination 2. The project will be managed through the Customary Land Advisory Commission (CLAC) in association with the Ministry of Natural Resources & Environment (MNRE) as the Implementing Agency and the Ministry of Finance (MOF) as the Executing Agency. The Team Leader and Project Coordinator will coordinate all activities of the project team, including meetings and activities of the Legal Working Group (LWG) to be established, and consult with the CLAC, MNRE and MOF as well as all principal stakeholders on all matters pertaining to the Technical Assistance. All issues papers will be circulated for comment following endorsement by the CLAC and the LWG to the government, and where necessary and appropriate, approval by the Cabinet, especially where matters of policy, due process and any legislative drafting is required.

D. A Recent Historical Background to this TA 3. Following the completion of Phase II, the main milestones that were achieved to support the implementation of this third phase are essentially :

The establishment of the CLAC which is mandated to operate for 7 years and has the following legislated functions –

To recommend to Cabinet suggested measures for the facilitation, encouragement and promotion of the economic use of customary land in Samoa;

In accordance with references made to it by Cabinet, to conduct public consultations on areas of law affecting customary land considered to be in need of reform, and report its recommendations for reform to Cabinet;

To consult with and advise the public and any specific sectors of the community about its work;

To review all laws affecting customary land in Samoa and make recommendations to Cabinet for changes to such laws where such


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are necessary for the facilitation, encouragement and promotion of the economic use of customary land;

To carry out any other function given to it under this Act or any other Act.

Establishment of a Secretariat, to assist the CLAC;

Establishment of a One-stop Shop which is currently operational under the MNRE as the Customary Land Leasing Section (CLLS);

Effective Community Advocacy. 4. The establishment of a well functioning secretariat will greatly assist the project team with implementation of the technical assistance. At present, the only technical staff with experience in the government service is the head of the secretariat, whose designation is that of Principal Officer. There is only other senior officer seconded from the MNRE, however, as the TA progresses, there will be a need for the CLAC to be adequately staffed with two additional officers given the amount of work that the TA is likely to generate in the development of a leasing framework, and given the nature of the issues to be addresses, capacity building to ensure sustainability when the TA comes to a close. E. The TA Objectives 5. The objectives of the TA are to : (a) To establish a functional Legal Working Group (LWG) which will liaise with

the Bankers’ Association and other key stakeholders; and (b) To establish a leasing framework (including registration processes for security interests over customary land leases; protection of security interests; publicizing security interests affecting leases of the customary land; and processes for repossessing or reselling leases in the event of a default under the mortgage).

F. A Preliminary Assessment of the Legal Issues The application of Article 102 of the Constitution 6. The Terms of Reference for the International Legal Specialist alert the TA to a fundamental constitutional issue, and to differing opinions concerning the affect of this issue on the project objectives and outputs. The following is stated in the Terms of Reference:

“Section 15 of the CLAC Act allows the mortgage of customary land leases. However, despite their willingness to move into this area, commercial banks are yet to take advantage of this because of different legal interpretations of Section 102 of the Constitution of Samoa; Section 4 of the Alienation of Customary Land Act, 1965; and Section 15 of the CLAC Act, 2013. This is despite an independent legal opinion (sought by the Office of the Attorney General) that the mortgage of customary land leases is possible. To discuss and resolve these differences, the TA is expected to provide the following outputs: 1. Output 1: A functional legal working group established… 2. Output 2: Leasing framework established.”

7. It is fundamentally important that the constitutional issue be understood, and that the differing opinions about its effect are fully considered. The TA has been given access to the independent legal opinion obtained by the Attorney General, and endorses its finding that the constitutional issue does not prevent the granting, registration and enforcement of mortgage securities over leasehold interests in customary land. The following briefly explains


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the nature of the issue, and the reasons why the TA endorses the findings of the independent legal opinion. 8. The relevant provision of the Constitution of the Independent State of Samoa is Article 102 which reads as follows:

No alienation of customary land - It shall not be lawful or competent for any person to make

any alienation or disposition of customary land or of any interest in customary land, whether

by way of sale, mortgage or otherwise howsoever, nor shall customary land or any interest

therein be capable of being taken in execution or be assets for the payment of the debts of any

person on his decease or insolvency:

PROVIDED THAT an Act of Parliament may authorize: (a) The granting of a lease or

licence of any customary land or of any interest therein; (b) The taking of any customary land

or any interest therein for public purposes.”

9. A superficial consideration of Article 102 might suggest that the prohibition on the alienation or disposition of customary land or interests in customary land prevents the granting, registration and enforcement of mortgages over leasehold interests in such lands. Such leasehold interests are clearly permissible under the first exception stated in Article 102. However it is necessary to consider the entire provision in a balanced and reasoned manner, and to assess its effect in the light of basic principles of property law, and laws relating to securities over land and interests in land. This was done in the independent legal opinion obtained by the Attorney General, which made the following observations and conclusions:

- In our view, the proper construction of proviso (a) to Article 102 of the Constitution does permit an Act of Parliament to authorize both:

the granting of leases and licences of customary land in Samoa; and

the granting of mortgages over (or other interests in) leasehold interests in customary land.

- The ACL Act (Alienation of Customary Land Act) empowers the Minister

responsible for lands (Minister) to grant leases and licences of customary land. The ACL Act also sets out a reasonably detailed process for dealing with applications for leases and licences.

- The ACL Act also empowers the Minister to grant an interest in a lease or

licence of customary land, such as a mortgage of the lease or licence. However the ACL Act is largely silent on the process to be followed when considering an application for mortgage of a lease or licence.

10. The independent opinion makes the following useful observations about the consideration of the issue of mortgaging customary land leases at the time that the Constitution of the Independent State of Samoa was developed and drafted:

- There is also extrinsic evidence from the time when the Constitution was drafted to suggest that, from a policy perspective, Article 102 is not intended to prohibit the mortgaging of a lease of customary land, albeit that an Act of Parliament would be required to authorise the granting of mortgages. For example:

The Constitutional Advisor Professor J.W Davidson, during the proceedings of the Working Committee for Self-Government in 1959, explained that the mortgaging of leases of customary land is an option to secure loans; and


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Parliamentary debates regarding the Alienation of Customary Land Bill 1965...considered that leasehold interests of customary land could be used to secure loans.”

11. The TA endorses the reasoning applied in the independent opinion when reaching the conclusions noted above, and also supports the following recommendations made in the independent advice:

- In the longer term, we can see value in an amendment to the ACL Act that clarifies the process to be followed when considering applications for mortgages of leases or licences. The opportunity could also be used to improve the process for lease and licence applications also.

- In the interests of removing doubt and providing the sort of certainty much

preferred by commercial organisations such as trading banks, we believe there would be a great deal of merit in Parliament amending the Act (or passing a new and separate piece of legislation) to expressly provide for an application process for mortgages of leases, and to update the process for granting leases.”

12. In this context, it is important to understand the historical and technical concepts of mortgage interests over land, and interests in land. Prior to the creation of land registers in English common law countries, and the enactment of laws to permit the registration of legal mortgages over land and interests in land, mortgages were created by the vesting of ownership of the secured land in the lender (mortgagee). The borrower (mortgagor) retained a legal right to require the re-conveyance of his or her interest in the land upon payment of the sum borrowed in accordance with the terms of the mortgage. Such “general law” mortgages constituted an alienation or disposition of the land to the mortgagee for the term of the mortgage. This was fundamentally changed when mortgages were created by registration against the title to the land. Laws which establish such processes contain a provision which clarifies that the registration of the mortgage has effect only as a security and does not operate as a transfer of the mortgaged land3. The mortgage creates an interest

in the land, but does not amount to an alienation or disposition of the land, as was the case with “general law” mortgages. A provision of this type appears in section 44 of the Land Titles Registration Act 2008 of Samoa which reads as follows:

Lands under this Act: how mortgaged or encumbered-(1) Whenever any land or estate or

interest in land under the provisions of this Act is intended to be charged with, or made

security for, the payment of a debt, the proprietor shall execute and cause to be registered a

mortgage in the approved form.

(2) A mortgage under this Act has effect as a security but does not operate as a transfer of the

land mortgaged.”

13. Section 44 of the Land Titles Registration Act 2008 is in conflict with many provisions of the Property Law Act 1952 of Samoa. Section 76 in particular reads as follows:

Form of mortgage - (1) Mortgages of land may be made in the form in the Third Schedule,

or by an ordinary conveyance by way of mortgage.

(2) Every mortgage in the said form shall be deemed to be a conveyance of land by way of

mortgage, and may be registered accordingly.”

3 See section 57 of the Real Property Act of New South Wales and section 74 of the Transfer of Land

Act of Victoria.


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14. The registration of a mortgage under section 76 of the Property Law Act 1952 is in fact a registration of a conveyance and clearly amounts to an alienation and disposition of the secured land, albeit only until the re-conveyance upon repayment of the secured debt, and therefore temporary in nature. 15. The above matters have important implications in the context of the constitutional issue. Article 102 specifically prohibits an alienation or disposition of customary land or any interest over customary land by way of mortgage. This prohibition would apply to a general law mortgage, and to a mortgage created under the Property Law Act 1952. It does not however affect the validity of a mortgage registered under the Land Titles Registration Act 2008 as the registration does not alienate or dispose of any interest in the customary land. The act of registration only creates a security over the leasehold interest in the land. The proposed review of the Property Law Act 1952 16. The TA is aware of a proposed review of the Property Law Act 1952. This can be done effectively by formal reference to the Samoa Law Reform Commission, which has a proud record of undertaking useful legislative reviews and preparing worthy legislative reforms in recent years. The matters raised above confirm the need to review the provisions of the Property Law Act 1952, and especially the mortgage provisions of Part VII. The review should remove the anomaly identified above, and provide a full and effective range of options for mortgagees to enforce mortgages when they are in default. 17. The TA would welcome an opportunity to work with the Samoa Law Reform Commission in a comprehensive review of the Property Law Act 1952. The core focus of our inputs to such a review would be centered on new provisions dealing with mortgages over leasehold interests of customary land. Policy development to underpin the law reforms 18. For nearly 20 years Samoa has justly earned an enviable reputation for achieving and implementing reforms to its laws. These initiatives have been successfully implemented in relation to all aspects of governance, and in all sectors of the Samoan government. As noted above it is timely that a focus now be directed to the complex and out-dated provisions of the Property Law Act 1952. 19. Past reforms have been properly and effectively undertaken by the Samoan government with varying degrees of policy development. In the context of this TA however, there is a clear need for the legislative reforms to be soundly based on approved government policy. The reasons for this include: (i) the complexity of the legal issues arising in the contexts of property and securities law; (ii) the need to achieve a high degree of harmonization between relevant laws (and most notably the Land Titles Registration Act 2008 and the Property Law Act 1952); (iii) the institutional arrangements under which the Customary Land Advisory Commission has an advisory and facilitation role to play; (iv) the degree of politicization of the issues and the potential for controversy arising from misunderstandings and misrepresentations of the constitutional issues surrounding the special status of customary land; and (v) the need to ensure that the reforms respect the fundamental rights of customary land owners, while also protecting the interests of lenders and financial institutions. 20. The development and approval of policy to underpin the legal and administrative aspects of these reforms will therefore have the following benefits: (i) the Customary Land Advisory Commission will effectively perform its statutory roles to advise government and to generally oversee these important reforms; (ii) the rights of customary landowners will be specifically articulated and will become the fundamental foundation for all reform initiatives;


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(iii) the potential for controversy will be minimized by the clear statement of the underlying policy principles aimed at protecting the interests of customary landowners; (iv) the level of understanding amongst potential lenders in relation to the effect and benefits of the reforms will be raised; and (v) the procedural aspects for both leasing customary land and for securing such leases by way of mortgage will be considered, enhanced and implemented in a holistic manner. 21. It is suggested that the process for policy development be implemented by each of the following steps: (i) CLAC should prepare and endorse and statement of fundamental policy precepts underlying the reforms; (ii) a Statement of Rights of Customary Landowners should be prepared and endorsed by both CLAC and Cabinet to give clear prominence to this critical aspect of the reforms; and (iii) administrative and legal arrangements to facilitate the processes for leasing customary land, and for using such leases as security by way of mortgage, should be developed through the Legal Working Group, and then clearly articulated to and endorsed by all major stakeholders in government and the financial sector. The fundamental project policy precepts 22. Under the Customary Land Advisory Commission Act 2013, CLAC is mandated to “review all laws affecting customary land in Samoa and make recommendations to Cabinet for changes to such laws where such are necessary for the facilitation, encouragement and promotion of the economic use of customary land”. There are clear functions and powers for CLAC to conduct and sponsor studies, and to consult with government and the public. The work of the TA in support of CLAC is clearly consistent with the functions and powers of CLAC under its enabling law. 23. Given the tendency for any reform in the context of customary land ownership to spark some controversy, and taking account of the sensitivities with which such issues must be handled, it would benefit CLAC and the TA if a brief statement of the underlying principles for the reforms are developed, endorsed and applied by CLAC and the TA. These should be clearly articulated at all stages of the reforms. As a minimum these precepts should do all of the following: (i) unequivocally confirm that there can be and will be no alienation of ownership of customary land, as specifically required by the Constitution; (ii) additionally, the rights of customary lands owners must be recognized and enforced by the reforms so that they enjoy all of the rights usually vested in lessors (including the right to approve or disallow the use of the lease as security, and the power to approve or disallow the assignment of the lease, whether as a result of a default by the mortgagor or otherwise); and (iii) the interests of lenders as mortgagees for customary land leases must be respected and protected, taking account of the underlying rights of the customary landowners as beneficial owners. A statement of rights of customary landowners 24. In addition to the brief statement of fundamental precepts upon which the project is to proceed, and upon which the work of CLAC is to be undertaken, the policy development should initially be focused on determining the full scope of rights which must be vested in the customary landowners as beneficial owners of the land which is to be leased and secured by way of mortgage. The processes for leasing customary land under ACL Act result in the Minister acting as lessor in the capacity as agent and trustee for customary landowners who consent to the proposed leasing arrangement. In this way it is the government which makes the lease and acts at all subsequent stages as lessor. There is then some clear potential for the customary owners to be deprived of the rights normally enjoyed by lessors, and to be overlooked during subsequent stages of the leasing arrangement. This must be avoided in these reforms and a statement of the rights of customary land owners should be developed, endorsed and applied as a matter of fundamental policy under-scoring the resultant legislative reforms.


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25. Full consideration will be given to the rights normally enjoyed by lessors, and these will be replicated to the fullest possible extent as rights of the customary landowners as beneficial owners of the demised land. As a minimum the rights that should be recognized and confirmed for the customary owners must include all of the following: (i) the right to approve or disallow the use of the land as security under a registered mortgage; (ii) the right to permit or disallow the assignment of the lease (subject to such consent not being unreasonably withheld); and (iii) the right to enjoy the full reversionary interest in all fixtures to the land upon termination of the lease. 26. The above matters are consistent with the findings and recommendations made in the final report of ADB TA No. 3549 SAM – Capacity Building of Financial and Business Advisory Intermediaries Project. These findings and recommendations included the following:

the lease is a creature of the State and the law. The government has a valid interest in how this legal tool is used, and a valid interest in a legal framework that best promotes economic activity (and minimizes disputes). The existing legislation is an example of the government requiring a proper process before a lease can be established – including preventing titleholders from entering into lease directly.

For these reasons, there is a potential role for the government to ensure that appropriate levels of mandate and governance are achieved in the leasing process

Whether this is a role for government, and if so what the minimum standards of mandate and governance should be, should be subject to further consultation and discussion

Once these discussions have been progressed, there is potential to formalize these requirements as part of the Minister’s role in the lease application process. This could be by way of published criteria, for instance, informing potential applicants of the minimum standards of mandate and governance required…

Requiring minimum standards of mandate and governance has the potential to improve decision-making and the performance of the customary land system over time, but still leave the aiga potopoto and the titleholders free to negotiate their own arrangements.” (pages 37 and 38)

27. It is suggested that the core focus of the “mandate and governance” issues should be on recognizing and protecting the rights of customary landowners under the lease and mortgaging processes, by recognizing that the customary owners are entitled to enjoy the usual rights of lessors. This should be a minimum statement of their rights. This is what all Samoans stakeholders would justly expect, and it must contribute to the ultimate integrity of the leasing and mortgaging processes by promoting harmony among the customary owners for the term of the lease. Administrative and legal processes for customary land leases and mortgages over them 28. The final stage of the policy development should focus on all relevant administrative and legal processes for the granting of leases of customary land, and using the leases as security for loans taken by the lessee by way of mortgage over the leasehold interest. Clear direction is provided by the Terms of Reference for the establishment of a leasing framework


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which include the following:

“registration processes for security interests over customary land leases; perfection of security interests; publicizing security interests affecting leases of customary land; and processes for repossessing or reselling leases in the event of a default under the mortgage”.

29. The development of such processes, and their incorporation into the laws of Samoa, will then become a fundamental aspect of the TA’s workplan over the entire project period. G. Implementing the Reforms The general nature of the legal reforms 30. As noted above, the Terms of Reference call for the establishment of a leasing framework, including arrangements relevant to “registration processes for security interests over customary land leases; perfection of security interests; publicising security interests affecting leases of customary land; and processes for repossessing or reselling leases in the event of a default under the mortgage”. 31. At this time it is not possible or appropriate to specify exactly how the new leasing framework will be incorporated into the laws of Samoa. This could be done by way of amendment to one or more existing laws, or by the enactment of a new law with specific application to some or all aspects of the leasing framework. Or the reforms could be achieved through a combination of a new Act and amendments to current laws. 32. The current laws which have application in this context include all of the following: (i) the Constitution of the Independent State of Samoa; (ii) the Alienation of Customary Land Act 1965; (iii) the Land Titles Registration Act 2008; (iv) the Property Law Act 1952; (vi) the Land and Titles Act 1981; and (v) the Customary Land Advisory Commission Act 2013. 33. Whatever reform options are adopted it seems clear that the mortgage provisions in Part VII of the Property Law Act 1952 require comprehensive change to reflect the current legislated registration processes for mortgages under the Land Titles Registration Act 2008, rather than the “old” law mortgage arrangements referred to in Part VII of the Property Law Act 1952. This may require the removal of mortgage provisions to another law, or the re-statement of reformed arrangements in a new law which replaces the Property Law Act 1952 in its entirety. 34. No major decision in relation to the fundamental direction of the legislative reforms should be made until: (i) all relevant laws are comprehensively reviewed; (ii) a comprehensive policy basis is developed for the leasing framework; and (iii) the proposed nature and structure of the reforms are considered and endorsed by the Legal Working Group. 35. It appears that only one major loan has been secured by way of mortgage over a lease of customary land. Interestingly the CEO of the government entity which assented to the grant made the observation that even in that case the value ascribed to the security over the lease was ST$0. The developers were required to provide additional securities up to the full assessed value of the loan. This highlights the need to ensure that the leasing framework, and the reformed laws which will underpin it, must aim to ensure that the fullest possible value will be given by the lending institutions to such securities. Much will depend upon the options that are given to the lenders in the event of a default under such an arrangement. The CEO expressed the view that the institution would be willing to step in and take over management of the lease in the event of a default.


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The Legal Working Group 36. The Terms of Reference call for the establishment of a Legal Working Group (LWG) to be tasked with working “closely with the Banking Association of Samoa to discuss further actions required to enable commercial banks to take advantage of [the] legal framework and accept customary land leases as collateral…”. 37. Given that the focus of the TA in its early implementation phases will be on policy development for endorsement and adoption by CLAC and the government as a prelude to the legislative reforms, it is proposed that the LWG will initially be comprised of the legal officers of relevant government ministries and agencies. Where such bodies do not have a legal officer, they could be represented by officers who perform legal related tasks. These additional officers could include ministry and agency staff who have duties related to the registration of land titles or the preparation of security documentation. 38. The TA shall prepare issues papers for the LWG and ensure that each member of the LWG (and therefore each relevant Ministry and agency) are included in the “loop” as the core issues to be addressed by the TA are considered and developed. The TA will ensure that the members of the LWG are fully informed of all aspects of the work of the TA without being unnecessarily burdened by any specific tasks or duties. The LWG will ensure a free flow of information about the TA’s work and provide an opportunity for members of the LWG (and the ministries and agencies which they represent) to participate in and contribute to the legal, policy and administrative reforms at all stages of their development. 39. At an appropriate time the LWG shall engage with the Banking Association of Samoa and all other lending institutions (including the SNPF, SHC and SLAC) to ensure that the proposed policies aimed at facilitating the leasing of customary land and the securing of such leases by way of mortgages, are fully understood by and generally acceptable to the financial sector. However, it is important that constructive action be taken to develop the relevant policies and to scope the necessary legislative reforms as matters of government policy, and the LWG will play a critical role in achieving this in the early implementation phases. 40. At consultations held with key government stakeholders during the inception phase, there has been unanimous and genuine support for the early formation of the LWG. The Attorney General has fully endorsed the concept and has nominated two members of his professional staff, one from the civil section of the office, and the other being the Assistant Attorney General (Legislative). Other officers who have been approved to be members of the LWG are listed in the following table. The Executive Director of the Samoa Law Reform Commission has approved the appointment of an officer in an “observer” capacity. This step properly respects the nature and roles of the SLRC and will permit the involvement of the SLRC, and the free flow of information between the SLRC and the TA, without committing the SLRC to any particular position in relation to the broader reform agenda. In due course the SLRC will discharge its statutory role by submitting a report of its own making in relation to the review of the Property Law Act 1952.

Member of the LWG Ministry/Agency represented

Loretta Teuuli – ACEO (Legislative) Sosefina Fa’amausili – (Civil)

Office of the Attorney General Office of the Attorney General

A senior officer to be advised (Observer) SLRC

Gafatasi Patu – ACEO, Legal Central Bank

Sala Josephine Stowers – ACEO (Legal) MNRE

Salote Peteru – ACEO (Legal) MoF

To be advised MJCA

Talasa Saaga – Manager, Legal Division Development Bank of Samoa


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Leslie Petaia – Legal Manager NPF

Alosio Leota – Manager for Legal Services

Samoa Housing Corporation

Iasoni Stiiti – Principal Officer, Loans and Investments

SLAC

41. With the concurrence of the Attorney General it has been decided that the LWG will be chaired by the Team Leader/Coordinator of the TA. The LWG will be resourced and supported through CLAC. In due course a decision may be made to appoint an independent lawyer to act as chair but it is important that the LWG be established at an early opportunity, and that the TA make use of the LWG in the initial implementation phase. To this end the TA will initially provide the necessary leadership of the LWG. 42. It is proposed that the LWG operate under the terms of reference stated in Appendix 1. Modifications to arrangements for the International Legal Specialist 43. Under current contractual arrangements the International Legal Specialist has a total of 176 days of inputs, comprised of 171 in-country days and 5 home-office days. These inputs extend over a period of 34 months from 28/02/2014 to 31/12/2016. The 5 home office days are scheduled to be used only in the final month (December 2106). To perform the in-country inputs allowance is made for only 2 return trips for the International Legal Specialist, at a total of US$6,000. 44. The limitation of two airfares requires that the inputs of the International Legal Specialist must be compartmentalized into only two periods of prolonged inputs, presumably one at the beginning of the TA, and one toward the end. It is clearly preferable for the in-country inputs to be spread more evenly over the duration of the TA, and so additional airfares should be provided for. 45. As a considerable amount of the work of the International Legal Specialist will focus on legal research and review, the identification and assessment of legal options, the scoping of the reforms and the drafting of legislation, it is quite feasible for some of this work to be done as home office inputs. This work can be facilitated and advanced by the Team Leader and National Legal Specialist who are both based permanently in Apia and are well able to convene and conduct meetings of the LWG, and present aspects of the reforms to broader stakeholders. This has the additional advantage of not exposing the International Legal Specialist to accusation of “foreign” domination of the reform agenda. 46. On the basis of the above it is recommended that the following variations be made to the contract of the International Legal Specialist, with no resultant increase to the overall costings for these services:

Current contractual provision Proposed Variations

In country days: 171 (from 28/02/2014 to 30/11/2016)

In country days: 141 (from 28/02/2014 to 30/11/2016)

Home office days 5 (from 01/12/2014 to 31/12/2016)

Home office days 30 (from 28/02/2014 to 30/11/2016) and 5 (from 01/12/2014 to 31/12/2016)

Per diems – 197 @ US$209 per day Total – US$41,173

Per diems – 167 @ US$209 per day Total – US$34,903 (A saving of US$6,270)

2 rtn airfares (total of US$6,000) 4 rtn airfares – (total of US$12,000)


June 2014

(An increase of $6,000)4

Modifications to arrangements for the National Legal Adviser 47. Under current contractual arrangements the National Legal Adviser has a total of 88 days of inputs on an intermittent basis. It is expected that these inputs will extend over a period of 34 months from 28/02/2014 to 31/12/2016. 48. The National Legal Adviser is expected to work with the International Legal Specialist to:

Develop a framework for the use of land leases as collateral for lending under her TOR.

49. However, with the proposal to reduce the number of in country days and increasing instead the number of home office days, to generate savings for four instead of two trips for the International Legal Specialist, it will be essential that the work on the ground with all the review, research and consultations are sustained by assistance from the National Legal Adviser given the limited legal and technical capacity in the CLAC. This will also greatly assist the Team Leader, enabling her to meet her tasks timely. As the Legal Adviser is locally based, she will play a more active role in supporting and where appropriate in the absence of the International Legal Specialist, assist the Team Leader in facilitating and guiding the discussions on legal and technical issues in the LWG; the LWG and the Bankers’ association; and also assist in presenting to the public the key aspects of the reforms. Looking at the TOR of the International Legal Specialist, and the division of tasks under the proposed Work Plan, both the Team Leader and the Legal Adviser will be actively seeking the information needed for the review of existing policies and procedures which support the existing leasing framework provided under the MNRE. At present, there is limited capacity at CLAC (with regards to personnel and resources) which means the Project Team will actively source the information from the LWG or directly through visits to the respective ministries and agencies concerned. 50. In addition to the review of all existing legislation that govern the potential creation of security interests in land leases in Samoa, there is also a need to review the existing policies, procedures and any Ministry/Agency specific forms to inform the reform agenda. As well, there is a need to work collaboratively with the SLRC on its review of the Property Law Act 1952 as this Act currently provides for mortgaging processes in Samoa and the TA intends to contribute specifically to the reform of the mortgaging aspect of the amendment to the Act or to a new legislation, whatever the review outcome will be. Furthermore, there will be a need for the National Legal Adviser to assist the International Legal Adviser with drafting instructions and drafting of any necessary legislation reform. Overall, the National Legal Adviser’s working days need to be aligned to that of the International Legal Specialist so that both Legal Advisers are working hand in hand to ensure the TA is completed successfully within the given timeframe. 51. In this regard, it is proposed that the TOR for the National Legal Adviser is amended to closely align that of the International Legal Specialist as follows :

Review all existing legislation governing the potential creation of security interests inland leases in Samoa;

Suggest any changes necessary to establish an effective system of using land leases

4 There are likely to be cost savings arising from utilising lower airfares which could be used to fund an additional 2

round trips.


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as collateral;

Support discussions between the Legal Working Group and the Bankers Association of Samoa on options for how customary land can be used as collateral by commercial banks.

Support the work of CLAC and the legal working group in advising the Cabinet on the proposed way forward.

Assist the Team Leader & Project Manager in managing consultations and management of meetings with all of the stakeholders where legal and technical issues may come up

Assist with any other task. 52. On the basis of the above proposal, it is recommended that the following variations be made to the contract of the National Legal Adviser to increase the number of days of her inputs to align with those of the International Legal Specialist, and the associated costs involved.

Current contractual provision Proposed Variations

In country days: 88 days intermittently over 34 months (from 28/02/2014 to 30/12/2016) at USD$205. per day = USD $18,040.00

Additional in country days: 88 days intermittently over 34 months (from 28/02/2014 to 30/11/2016) at USD$205. per day = USD$18,040.00. Increased working days to align with the work of the International Legal Specialists.

H. Proposed Program of Action 53. Work Plan Activities and tasks of each team member 54. The Terms of Reference for the Team Leader/Coordinator specify the following activities and tasks:

1. Monitor, update and report on implementation of the technical assistance. 2. Reporting to focus on the achievement of the outputs and outcomes

measured in terms of indicators and targets set out in the action plans. 3. Support and work actively with the CLAC to manage the reform process and

the working groups sponsored by CLAC, including leading consultations and discussions with civil society and non-government organisations.

4. Contribute to the delivery of non-technical outputs. 5. Cooperate with the Executing Agency counterpart in promoting awareness of

the relevant issues and reforms to the broader public. 6. Support capacity development among staff of the agencies involved in

customary land administration as appropriate. 7. Ensure short term consultants also contribute to strengthening the technical

capacity of the relevant government agencies. 8. Ensure inputs of consultants are well coordinated and appropriately timed. 9. Ensure terms of reference for all consultants are clear and appropriate, and

that they are briefed of their responsibilities, progress and outstanding issues of the reforms and progress of the TA.


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10. Compile reports from the short term consultants, quarterly progress reports, and draft project inception, draft and final reports.

11. Prepare knowledge products (policy briefs, detailed project description on the process and implementation of customary land reform in Samoa for use outside of and in Samoa.

55. The Terms of Reference for the International Legal Specialist specify the following activities and tasks:

1. Review all existing legislation governing the potential creation of security interests in land leases in Samoa.

2. Suggest any changes necessary to establish an effective system of using land leases as collateral.

3. Support discussions between the legal working group and the Bankers Association of Samoa on options for how customary land can be used as collateral by commercial banks.

4. Support the work of CLAC and the legal working group in advising the Cabinet on the proposed way forward.

5. If required, prepare drafting instructions for any new laws (and amendments to existing laws if required) in accordance with the requirements of the Legislative Drafting Handbook.

6. Undertake or oversee the drafting of any necessary changes to legislation. 56. The Terms of Reference for the National Legal Adviser specify the following activities and tasks in the ADB TA Report:

1. Work with the International Legal Specialist to develop a framework for the use of land leases as collateral for lending.

That as proposed above, her TOR be expanded to align with the International Legal Specialist as follows in the development of a framework for the use of land leases as collateral for lending :

1. Develop a framework for the use of land leases as collateral for lending; 2. Review all existing legislation governing the potential creation of security

interests in land leases in Samoa; 3. Suggest any changes necessary to establish an effective system of using

land leases as collateral; 4. Support discussions between the Legal Working Group and the Bankers

Association of Samoa on options for how customary land can be used as collateral by commercial banks.

5. Support the work of the CLAC and the LWG in advising Cabinet on the proposed way forward;

6. Assist the Team Leader & Project Manager in managing consultations and management of meetings with all of the stakeholders where legal and technical issues may come up;

7. Assist with any other task. Overview of TA activities and tasks 57. The activities and tasks of the members of the TA define the core activities to be all of the following: (i) a review of relevant laws; (ii) a review of policies, reports and proposed reforms; (iii) support for the CLAC; (iv) establishment of the LWG; (v) identification of issues and recommendations for legal reforms; (vi) collaboration with SLRC on review of Property Law Act; (vii) consultations with the LWG and the Bankers Association of Samoa; (viii) broader community and stakeholder consultations; (ix) development and finalisation of


June 2014

government endorsed policies; (x) scoping legislative reforms and preparation of Drafting Instructions and other necessary documentation; and (xi) drafting of legislative reforms. 58. The table below specifies aspects of the TA’s activities and tasks in greater detail, allocates responsibility among team members, and indicates the timing and duration for the work to be undertaken:

Activities and tasks Responsibility Timing and duration

(i) Review of relevant laws

GP, MBA May – July 2014

(ii) Review of policies, procedures reports, legal opinions and proposed reforms

HP, GP and MBA

May – August 2014

(iii) Support for the CLAC:

Statement of project policy precepts

Preparation of Issues Papers for confirmation

Preparation of consultation materials

Preparation of CLAC and TA reports to Cabinet

HP, GP and MBA

Entire TA duration

(iv) Establishment of the LWG:

Identification of members

Preparation of ToR for LWG

Endorsement of ToR

Initial meeting(s)

HP, GP and MBA

May – June 2014

(v) Identification of issues and recommendations for legal reforms

HP, GP and MBA

June – October 2014

(vi) Collaboration with SLRC on review of Property Law Act 1952

GP and MBA July 2014 – May 2015

(vii) Consultations with the LWG and the Bankers Association of Samoa

HP, GP and MBA

Commencing October 2014 – December 2016

(viii) Broader community and stakeholder consultations

HP and MBA Commencing October 2014 – December 2016

(ix) Development and finalisation of government endorsed policies:

Rights of customary landowners

Protection of interests of lenders and developers

Other aspects of the leasing framework

HP, GP and MBA

May – July 2015

(x) Scoping legislative reforms and preparation of Drafting Instructions and other necessary documentation

GP and MBA Commencing July 2015


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(xi) Drafting of legislative reforms GP and MBA September 2015 – May 2016

HP – Team leader/Coordinator; GP – International Legal Specialist, MBA – National Legal Specialist

I. Managing Project Risks 59. Risk Management is a vital part of technical assistance programs. With any reform comes a degree of associated risk for the implementing Ministries and Agencies and all stakeholders. Clear and open communications is the first step in managing risk. It is important that all stakeholders in the reform have a clear understanding of the proposed work program, expected results and impacts from the beginning. Planning ahead, advising those involved early of expectations and measuring progress on an agreed timetable is the basic approach to managing and minimizing risk. 60. Regular team meetings, meetings with key government officials, and maintaining an open free exchange of views between government and the TA will identify the action and policy to be followed. This will be facilitated through the CLAC and the LWG. And at an appropriate time representatives from the financial sector and the broader community shall be brought into the reform process through the CLAC, the LWG and by direct engagement with the TA. Continued reference to this Inception Report, after acceptance by government and the ADB, will promote on-going risk management throughout the life of the TA. J. Expected Impacts of this TA 61. This TA is expected to have the following impacts –

A. The rights of customary landowners will be secured by law, and in a manner which is consistent with article 102 of the Constitution, in relation to all aspects of the processing for leasing customary land, and for mortgaging such leasehold interests;

B. The interests of developers and lenders who lease customary land and secure the leasehold interest by way of mortgage will be protected and enhanced by promoting transparency and fairness in such processes;

C. Banking institutions and other lenders will be given a full range of options in the event of a default under a mortgage over leasehold interests in customary land, and such options will result in a real value being ascribed by lenders to such securities.

D. Approved government policies will provide a clear statement of the rights of customary landowners when their lands are leased and/or secured. These policies will also underpin reformed legal and administrative processes in this context. New legislative provisions, either by way of the drafting of new laws, or amendments to current laws, will provide the foundation for all issues relevant to these rights and processes.

E. A range of “standard” forms will be available for use in relation to the leasing of customary land, and the securing of such leases by way of mortgage, and such forms will reflect the relevant legal requirements and processes arising from the reforms.

K. Expected Outputs of this TA 62. It is intended that the TA, with the on-going assistance of the LWG, will present the following outputs

(i) a clearly defined leasing framework will be developed for approval, covering


June 2014

aspects relevant to the registration processes for security interests over customary land leases; protection of security interests; publicizing security interests affecting leases of the customary land; and processes for repossessing, reselling or re-assignment of the leasehold interest in the event of a default under the mortgage;

(ii) the leasing framework will be articulated in approved government policy; (iii) necessary legislative reforms will be drafted and enacted to give a sound legal

foundation to the reformed leasing framework; (iv) all documentation used for leases and mortgages will be standardized and

harmonized with the policy and legislative reforms; (v) all processes and procedures used for taking out leases on customary land will

be standardized and harmonized with the policy and legislative reforms.


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L. Proposed Project Timelines

Activities and tasks 2014 2015 2016 M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

(i) Review of relevant laws

(ii) Review of policies, reports, legal opinions and proposed reforms

(iii) Support for CLAC

(iv) Establishment of LWG

(v) Identify issues and recommend legal reforms

(vi) Collaboration with SLRC to review Property Law Act

(vii) Consultations with the LWG and Bankers Assocn

(viii) Stakeholder & community consultations

(ix) Develop and finalise govt endorsed policies

(x) Scope legislative reforms

(xi) Legislative drafting


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APPENDIX 1

TERMS OF REFERENCE FOR THE LEGAL WORKING GROUP (LWG) Background Since 2005 the Asian Development Bank (ADB) has provided technical assistance (TA) to the government to consider issues and options in the context of making economic use of customary land. The Phase I Report (March 2006) endorsed the option of permitting leases of customary land to be mortgaged and made various recommendations to implement such arrangements. Phase II of the ADB support resulted in the establishment of the Customary Land Advisory Commission (CLAC) to oversee future reforms in this context. And now Phase III focuses on the legal issues and necessary legal reforms to finally bring the years of deliberation and consultation to fruition. The ADB TA in Phase III is tasked with the following core objectives: (a) To establish a functional Legal Working Group (LWG) which will liaise with the

Bankers’ Association and other key stakeholders; and (b) To establish a leasing framework (including registration processes for security

interests over customary land leases; protection of security interests; publicising security interests affecting leases of the customary land; and processes for repossessing or reselling leases in the event of a default under the mortgage).

The Legal Working Group The LWG will initially be comprised of the legal officers of relevant government ministries and agencies (including the AGO, SLRC, MNRE, MOF, MJCA, NPF, SHC, DBS, and SLAC). Where such bodies do not have a legal officer, they can be represented by nominated officers who perform legal related tasks. These additional officers could include ministry and agency staff who have duties related to the registration of land titles or the preparation of security documentation. Support for the Legal Working Group The LWG will be chaired by the Team Leader/Coordinator of the ADB TA. The LWG will be resourced and supported through the recently established Customary Land Advisory Commission. In due course a decision may be made to appoint an independent lawyer to act as chair The ADB TA shall prepare issues papers for the LWG and ensure that each member of the LWG (and therefore each relevant Ministry and agency) are included in the “loop” as the core issues to be addressed by the TA are developed and considered. The ADB TA will ensure that the members of the LWG are fully informed of all aspects of the work of the ADB TA without being unnecessarily burdened by any specific tasks or duties. The LWG will ensure a free flow of information about the ADB TA’s work and provide an opportunity for members of the LWG (and the ministries and agencies which they represent) to participate in and contribute to the legal and administrative reforms at all stages of their development. Terms of Reference 1. The members of the LWG shall represent their respective Ministry or Agency and

present any views or concerns on behalf of their employer. This does not prevent any member from making an input or contribution to the LWG based upon their personal opinion or concern.


June 2014

2. Members of the LWG are invited to consider any aspect of the current processes for approving and issuing leases over customary land in Samoa, and to provide any opinion or other input aimed at enhancing the effectiveness of such processes.

3. Members of the LWG are invited to consider all issues relevant to the granting of

mortgages over leasehold interests in customary land, and to provide any opinion or other input aimed at enhancing the effectiveness of relevant processes, and to protect the rights of lenders who may place reliance on such securities.

4. Members of the LWG are free to share any document prepared for the LWG, and any

information provided to the LWG, with their respective Ministry or Agency. Where information is provided to the LWG on a confidential basis then all members of the LWG are expected to respect such confidentiality. There may be occasions when the Chairperson requests that certain information only be communicated to the respective Ministries and Agencies until such time as the LWG authorizes its broader circulation.

5. The contributions of the members of the LWG shall be used to develop approved

government policy related to the leasing of customary land and the processes for securing loans by way of mortgage over such leases. The approved policies shall then become the foundation for appropriate legislative reforms. The draft legislation shall be submitted to members of the LWG for review and inputs.

6. At appropriate times the members of the LWG shall liaise with the Banking

Association of Samoa and other key stakeholders in the financial sector to present and explain the proposed policies and legislative reforms.

7. At all stages of the reform process members of the LWG are to be mindful of the

constitutional protections relevant to the inalienable status of customary land (subject to the stated exceptions in Article 102). Protecting and enhancing the rights of customary landowners in the context of leasing customary land and the mortgaging of such interests is a critical role of the LWG.


June 2014

APPENDIX 2

LIST OF PERSONS CONSULTED

Aumua Ming Leung Wai Attorney General

Leota Theresa Potoi Executive Director - SLRC

Tupa’imatuna Lavea Iulai Lavea CEO – MOF

Sulu Amataga Penaia Sala Josephine Stowers Filisita Heather

CEO - MNRE ACEO (Legal Division) – MNRE ACEO (Land Management Div.) – MNRE

Lei’ataua Alden Godinet Iasoni Sitiiti Elisapeta Fuimaono

CEO – SLAC Principal, Loans & Investments – SLAC Principal Administration – SLAC

Faummuina Esther Lameko CEO - SNPF

Susana Laulu Alesana Esera Martha Papali’i

General Manager – DBS Manager, Corporate Services Legal Officer

Matau’tia Rula Levi Fulumoa Su’a Fa’aifoaso Alosio Leota Leitufia Mati Luamanuvae

General Manager – SHC Deputy General Manager Manager, Legal Division Manager, Loans

Maiava Atalina Enari Governor – Central Bank

Lemalu Lavea Tupuola Sione Malifa Ala’ifea La’itiiti Belford-Su’a Seamalepua Leulua’iali’i ‘Ailuai Tuloa Fetufou Aiono

Chairman – CLAC Commissioner – CLAC Commissioner – CLAC Secretary – CLAC


June 2014

APPENDIX 3

PRELIMINARY REVIEW OF RELEVANT LAWS

Legislation Section Relevant Provision Clarification The

Constitution of

Samoa 1961

Article

101

Article

102

Classifies land into 3 categories:

1) freehold

2) customary

3) public

“It shall not be lawful or competent for any

person to make any alienation or disposition of

customary land or of any interest in customary

land, whether by way of sale, mortgage or

otherwise howsoever , nor shall customary land

or any interest therein be capable of being taken

in execution or be assets for the payment of the

debts of any person on his decease or insolvency:

PROVIDED THAT an Act of Parliament may

authorize:

(a) The granting of a lease or licence of any

customary land or of any interest

therein;

(b) The taking of any customary land or any

interest therein for public purposes.”

General rule is that

there is no alienation

of customary land.

Proviso is: except by

Act of Parliament,

which is:

– Alienation of

Customary Land Act

1965

Property Law

Act 1952 (NZ)

Part VII

Section

76

Provides the legal mechanism for mortgaging

of land in Samoa in particular freehold land

as well as leasehold interests.

An example of the problematic provisions of

this Act in relation to the modern laws is

section 76 which is in conflict with section

44 of the Land Titles Registration Act 2008

hence creating problems with alienation of

property rights of customary land owners

where mortgages are taken over the leasehold

interests of customary land.

“76. Form of mortgage - (1) Mortgages

of land may be made in the form in the

Third Schedule, or by an ordinary

conveyance by way of mortgage.

(2) Every mortgage in the said form shall

be deemed to be a conveyance of land by

way of mortgage, and may be registered

accordingly.”

Archaic legislation

that needs to be

reviewed and

amended or repealed

and replaced with a

new Act to ensure it is

aligned to existing

modern laws relating

to mortgages and

other securities over

freehold land and

leasehold interests

including those

leasehold interests

over customary land.


June 2014

Alienation of

Customary

Land Act 1965

Section 4

Provides for leasing and licensing of

customary land for certain purposes.

Empowers the Minister to grant a lease or

license over customary land.

Section 4 has been consequentially amended

by section 15 of the Customary Land

Advisory Commission Act 2013 to clarify that

an interest in the lease or licence of

customary land that the Minister can grant,

includes a mortgage of the interest of the

lessee or licensee.

Provides that grant of

lease over customary

land is permitted and

that leasehold

interests over

customary land is

mortgagable.

Land and Titles

Act 1981

section 8

Provides for the administration and

procedures of the Land & Titles Court (LTC)

that deals with disputes relating to pule

(ownership) over customary land, boundaries

and matai titles.

Customary land is held in accordance with

Samoan customs and usages.

Defines land that is deemed customary land:

- Samoan freehold

- land ordered by LTC or by Land

Commission (created under the Land

Titles Investigation Act 1965)

Provides LTC with

mandate to determine

ownership of

customary land and

empowers Registrar

of LTC to transmit to

Registrar of Lands

(also CEO of MNRE)

decisions of LTC that

confirm the ownership

and boundaries of

customary land. This

information is needed

to populate the Land

Register sitting within

MNRE.

Land Titles

Registration Act

2008

section

9(2)

section

9(4)

Sets out the mechanisms and procedures for

the registration of instruments affecting titles

to lands. Applies to freehold, public and

customary land leases.

The Registrar of Lands is given the discretion

to record ownership as to customary land

where the LTC has so determined. “(2) The Registrar may also include in

the Register customary land in respect of

which judgment has been made by the

Land and Titles Court under the

provisions of the Land and Titles Act

1981.”

(4) No provision of this Act may be

construed or applied to: (a) permit or

imply the alienation of customary land in

a manner prohibited by Article 102 of

the Constitution; or (b) permit or deem

ownership in any customary land to vest

in a person otherwise than as determined

under any law dealing with the

determination of title to customary land.

(5) Nothing in this Act shall permit the

exercise of any power or affect any

interest in customary land that could

Clarifies that

registration into the

Land Titles Register

does not alienate

property rights to

customary land as it

only records LTC

decisions confirming

ownership rights over

customary land.


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section

44

section

46

have been applied by law prior to the

commencement of this Act.”

Section 44 provides:

“44. Lands under this Act: how

mortgaged or encumbered-(1) Whenever

any land or estate or interest in land

under the provisions of this Act is

intended to be charged with, or made

security for, the payment of a debt, the

proprietor shall execute and cause to be

registered a mortgage in the approved

form.

(2) A mortgage under this Act has effect

as a security but does not operate as a

transfer of the land mortgaged.”

Applies Part VII Property Law Act 1952 to

mortgages registered under this Act.

Section 44 of this Act is

in conflict with many

provisions of the

Property Law Act 1952,

section 76.

Problematic as it gives

priority to application

of Property Law Act

1952 over this Act

which means that any

transfer of title

effected under the

PLA would take

priority over

registration of title

under this Act which

does not intend to

alienate property

rights of customary

land owners whose

land is mortgaged by

developers/mortgagee.

Customary

Land Advisory

Commission

Act 2013

section

15

Set up the Customary Land Advisory

Commission (CLAC) and the Customary

Land Leasing Section within MNRE.

Consequentially amends section 4 of the

Alienation of Customary Land Act 1965 as:

(c) “(2) For the avoidance of doubt, an

interest in the lease or licence of

customary land that the Minister can

grant by subsection (1) includes a

mortgage of the interest of the lessee or

licensee.”

Clarifies that the

leasehold interests

over customary land

can be mortgaged.

This Act has a sunset

clause (7 years) and

this may create a

problem for the

consequential

amendment which

amends a principal

Act, although having

said that section

14(3)(b) ensures the

survival of the

consequential

amendment after 7

years. Nevertheless, it

is best to provide for

this clarification

amendment in the

principal Act at some


June 2014

point in the future.

inception report...technical assistance consultant’s report project number: ta 8481 sam promoting...

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