Tekii v Minister of Agriculture [2006] CKHC 16; PLAINT 22 of 2006 (13 December 2006)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of the Cook Islands

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)

MARAEARA TEKII AND ON BEHALF OF THE AITUTAKI
PRODUCERS ASSOCIATION, a duly incorporated organization
under the Incorporated Societies Act 1994, and having its
registered office at Arutanga, Aitutaki
Plaintiff

THE MINISTER OF
AGRICULTURE OF THE COOK
ISLANDS, in his capacity as Minister responsible for the
Ministry of Agriculture of Rarotonga
First Defendant

THE ATTORNEY GENERAL OF
THE COOK ISLANDS, in his capacity as the legal representative
of the Government of the Cook Islands and the First Defendant, of Rarotonga
Second Defendant

Counsel: Mr T Vakalalabure for Plaintiff
Mr T Elikana for First, Second and Third Defendants

Dates of hearing: 6,7,11,12 and 13 December 2006
Date of judgment: 13 December 2006

[2] The Plaintiff claims that the Defendants converted agriculture equipment and implements purchased with a grant made to it of $63,565. It claims that it owns that equipment and implements and it seeks by reason of the alleged conversion orders delivering all the equipment and implements to it or payment of its value, being $63,565. It also claims general damages for conversion, costs and interests

[3] The Defendants do not take issue with the allegation that the items purchased with the grant money were in those of them that still exists are owned by the Producers Association. Its defence however, is that, it did not convert any of those items as it was given authority to have possession of them, to use them and to manage them by the Chairman of the Producers Association who had been the person who had successfully applied for the grant on behalf of the Producers Association.

[4] I have heard the evidence of 9 witnesses and a considerable number of documents were produced.

[5] From the evidence I find the following facts proved on the balance of probabilities.

[6] The Producers Association was formally incorporated in July 2000 and has Rules and a Constitution which were produced as exhibits. At the relevant times in 2001 and 2002, its Chairman was Mr Teiti Teiti and its Secretary was Mr Tekii.

[7] Mr Tekii had been seeking funding for the Producers Association for some while and from a number of sources and had not been successful before 2002.

[8] In April 2001, Mr Tekii made an application on behalf of the Producers Association for a grant of $33,000 from the Outer Islands Development Grant Fund. I will refer to that Fund as the Development Fund. That Fund is financed by equal contributions from the Government of New Zealand and the Government of the Cook Islands. It receives applications and makes grants in accordance with criteria laid down in guidelines which it has issued.

[9] The Development Fund is administered as Secretariat by the Aid Management Division of the Cook Islands Government. Members of the Board of the Development Fund include a representative from the New Zealand Government and the Cook Islands Government.

[10] On the 24th of August 2001, the Producers Association application for $33,000 was tabled with the Development Fund. A copy of the proposal was not kept but details of it are recorded in a business paper dated the 21st of January 2002 issued by the Development Fund. That document was produced as an annexure to Exhibit 7. That business paper referred to the Funds and the application tabled at the meeting on 24 August 2001 being for the purchase of a second-hand tractor for $17,000, freight for the tractor from Auckland to Aitutaki at $4,000, upgrading of store in Rarotonga and Aitutaki $5,000 and operating costs for the office in Aitutaki $7,000 making a total of $33,000.

[11] The business paper records that the Development Fund Committee was receptive to the proposal if:

[12] The business paper records that following that approval in principle subject to those conditions, the Aids Management Division consulted with the Ministry of Agriculture and prepared a memorandum of understanding between Mr Hewitt, an Island Council member and the Producers Association. What is said in the business paper is consistent with the evidence of Mr Tekii who said that he saw the Prime Minister and the Minister of Agriculture about the proposal and that he called in Mr Taripo the Manager of Aid Management Division, that being in October 2001.

[13] The Memorandum of Understanding referred to was given to Mr Tekii to take to Aitutaki for execution there by himself and Mr Hewitt. That was done and the memorandum which is dated the 29th of October 2001 was produced as Exhibit 5.

[14] It records that Aid Management Division would purchase agriculture equipment as set out in the Schedule under the Development Fund and that the Producers Association will take control of and be responsible for the machinery once purchased.

[15] It went on to record agreement that the Producers Association would develop a user-pays system whereby all revenues received for the use of the machinery would be used to meet all operating, maintenance and replacement costs including the remuneration of the machinery operators.

[16] It further recorded agreement that in the event that the Producers Association no longer operated according to its constitution, or fail to perform its task under the Memorandum of Understanding for whatever Mr William Hewitt on behalf of Arutanga village would take possession of the machinery and deal with it in such manner as it saw fit. It provided that in the unlikely event of dispute arising, such dispute was to be resolved expeditiously by arbitration. That Memorandum of Understanding was not the making of a grant of the $33,000 applied for but was made in anticipation that such a grant might be made. However, before the grant could be made it was necessary to get the support of the Aitutaki Island Council to the proposal.

[17] The Committee of the development grant considered the proposal further at a meeting on the 3rd of December 2001 recording that it was receptive to the proposal if supported by the Island Council and ownership of the tractor was clarified. It referred to the Memorandum of Understanding signed in October 2001 and the business paper relating to that meeting which was produced as Exhibit E, the Committee said:

(i) "in summary the Aid Management Division would purchase the machinery under the Development Fund

(ii) the Producers Association would take control and be responsible for the machinery once purchased

(iii) That in the event that the Producers Association no longer operated, Mr Hewitt on behalf of Arutanga village would take possession of the machinery."

[18] It then went on to state, and this is important, the machinery will be housed at the Ministry of Agriculture premises in Aitutaki. This arrangement was established with Mr Fred Charlie.

[19] The Committee said there were two options to decline the proposal or to accept and it accepted a second option of accepting the proposal. That however, did not constitute all that was necessary for the grant to be made because there was still outstanding the requirement of consent of the Island Council.

[20] It is clear that the then Minister of Agriculture, Dr Woonton, was becoming concerned about the absence of support for agriculture on Aitutaki and he accordingly called a meeting on Aitutaki on the 1st of January 2002. The minutes of that meeting were produced as Exhibit 12.

[21] It records that present at the meeting was the Minister, Dr Woonton, Mr Wigmore the under-secretary of Agriculture, Nga Mataio, the Secretary of Agriculture, Paora Teiti, under-secretary for Aitutaki agriculture and Teina Bishop, Member of Parliament, those were the officials who attended.

[22] The farmers who attended included Mr Maraeara Tekii, Teiti Paora who is otherwise known as Teiiti and as I said was the chairman of the Producers Association, Mr Tekii was the secretary, Fred Charlie and other farmers as noted.

[23] Dr Woonton addressed the meeting stating that little had been done to develop outer islands agriculture; that he had heard that the budget allocated for Aitutaki was $3.00 a day and he was ashamed of the Government who looked down on agriculture. He felt agriculture was the backbone of the country, that the Government recognize its importance and wanted to do something about it and revive it. He said, "I understand that request after request had been put forward to us by your association in regards to machinery need for the growers and I am proud to confirm that we have secured a tractor with full implements for the Aitutaki farmers. It will be coming on the Honorable Teina Bishop’s next charter boat. The tractor will be given from Agriculture to Agriculture and the farmers of Aitutaki and I do not want any interference from anybody or the Island Council. We, that is, the Department of Agriculture, will also be giving some small amount of money for maintenance and for revolving purpose but do not expect us to continue providing assistance, you will have to organize yourself here."

[24] Mr Wigmore spoke supporting what the Minister had said and the positive step that was being taken.

[26] Paora Teiti spoke supporting "I would like to support the idea of the nursery."

[27] Teina Bishop then welcomed the delegations and it was put to the meeting where did they start and it was recorded that the Minister of Agriculture said a committee had to be formed for the tractor and at the same time to manage the revolving fund that will be given and all revenues that is given by the Government will be put into the fund.

[28] So a committee was formed, the members of which were to be two Department of Agriculture officers, a Vainetini representative Tutai Anitonia, two representatives of the Producers Association Mr Tekii and Mr Teiti Teiti, a vegetable representative Tua Messine and an the Aitutaki Agriculture secretary the Honorable Paora Teiti.

[29] So it was on that positive note, with the Minister stating that the Government was going to give forthwith a tractor for Aitutaki and a small supporting fund for the tractor but the matter ................. the Manager of the Aid Management Division said in evidence that he realized that Mr Tekii’s proposal requesting the $33,000 would not succeed, first, because it primarily sought a tractor and a tractor had just been promised by the Government and second, because Island Council approval was not given to that proposal. Mr Taripo decided that the best way forward for the Aitutaki growers was for the Producers Association to lodge a further proposal. He pointed out that he and his division had prepared in liaison with Mr Tekii the first proposal and in a similar vein it helped prepare a second proposal.

[30] This was a proposal made by Mr Teiti Teiti as chairman of the Producers Association and it sought a grant of $63,565, not to buy a tractor but for implements to be used with the tractor and also materials to reconstruct the nursery on Aitutaki and also for consumables to enable plants to be grown in the nursery and be available for Aitutaki growers.

[31] He said that with those positive steps being taken and the Minister’s great concern to ensure benefit for Aitutaki growers. The Minister actually rang the Mayor who was head of the Island Council, explained the situation to him and that the Mayor then said that the Island Council would support the Producers Association second proposal.

[32] This support was obtained by Mr Teiti Teiti in tangible form and correspondence with the Island Council and there was produced as Exhibit F a letter dated the 15th of January 2002 from Mr Teiti Teiti as chairman of the Producers Association to Taraota Tom the Island Secretary stating "we the members of the Aitutaki Producers Association wish to apply for funds under the OIDGF to assist us in our activities in boosting agriculture production for both the expanding local market, brought about the island’s expanding tourist industry as well as to supply the growing rootcrops seafreight export market. Your endorsement of the proposal before it is submitted to the OIDGF committee in Rarotonga would be much appreciated."

[33] A letter was received in reply dated the 16th of January 2002. This was produced as Exhibit G. It was addressed to Teiti Teiti, chairman of the Aitutaki Producers Association and said "thank you for your project proposal under the OIDGF. I am pleased to inform you that I am in full support of the proposal and hope that the OIDGF committee will consider it favourably in order that your Association will be able to facilitate planting on the island for both local and export markets. I wish you well with your iniatives, Taraota Tom, Aitutaki Island Secretary. So the hoodle of getting the Island Council consent had been overcome.

[34] Mr Taripo said that the second proposal, the proposal in the name of the chairman of the Producers Association was to "rescue the first proposal " and upon that basis it was prepared and lodged.

[35] As stated in the Business paper of the Committee of the Development Fund dated 21st of January 2002, having referred to the first proposal requesting $33,000, the Committee referred to new developments and I quote "IMD has since received a new proposal from APA for $75,565. The new project requirements are:

(iii) small machineries to supplement those provided by the Ministry of Agriculture;

Agriculture equipment	$40,870
Nursery construction materials	6,295
Miscellaneous	12,400
Freight	4,000
Upgrading of stall Rarotonga & Aitutaki	5,000
Operating costs for office in Aitutaki	7,000
Total	$75,565

(ii) Accept the proposal for full funding from OIDGF of $75,565 AMD recommendation the Committee accepts Option 2.

[36] On the 13th of February 2002 a Memorandum of Understanding was signed by Mr Taripo and Mr Tekii on behalf of the Producers Association. That memorandum included the following agreed terms:

- The Aid Management Division will purchase agriculture machinery as set out in the schedule attached to this memorandum under the Outer Islands Development Grant Fund.

- The Aitutaki Producers Association (APA) will take control of and be responsible for the machinery once purchased

- The APA will ensure that the machinery will be used to the best advantage of all growers on Aitutaki in their endeavours to increase the production of agriculture produce for both the domestic and export markets

- The APA will develop a user-pay system whereby all revenues received from the use of the machinery will be used to meet all operating maintenance and replacement costs, including the remuneration of the machinery operators.

- In the event that APA no longer operates according to its constitution or fails to perform its tasks under this memorandum for whatever reason, Aid Management Division will take possession of the equipment and dispose of it as it sees fit.

- In the unlikely event of any dispute such dispute shall be resolved expeditiously by arbitration.

[37] It seems then that everything was in place for the Development Fund to action the proposals. If I can recall, the first one was Mr Tekii’s proposal, the second Mr Teiti Teiti’s proposal. It is clear from documents which I will refer to later, that what was decided was that the operating costs for the office in Rarotonga of $7,000 sought in both proposals was turned down.

[38] The upgrading of stall, Rarotonga and Aitutaki, request for $5,000 made in both proposals was granted. The balance of Mr Teiti’s proposal was turned down - the purchase of the tractor was not approved.

[39] However, taking the $7,000 for the operating costs of an office off the second proposal the Development Fund approved. The second proposal to the extent of a grant of $68,565.

[40] Mr Tekii was very anxious to ensure that the Producers Association received the funding which it sought. He came to Rarotonga, he had meetings with Mr Taripo that led to the Memorandum of Understanding which I have just referred to, he continued his visits to Aid Management each morning at 9 o’clock. He was keeping the pressure on. He understood that the proposal had been approved but he wanted a letter of confirmation and Ms Temarama Anguna the Senior Project Officer kept telling him it was not ready.

[41] However at his visit to the Aid Management office on the 22nd of February 2002.
Mr Tekii was given a letter. This was produced as Exhbit 7. It said:

Thank you for your application for funding assistance of $75,565 to purchase agriculture equipment to rehabilitate the agriculture industry on the island of Aitutaki.

We advise that the application was tabled at a meeting of the OIDGF held 29 January 2002.

I am pleased to advise that the OIDGF Committee approved a total contribution of $68,565 towards your project. He application met the OIDGF criteria for support to community projects that have the potential to generate increases in productivity, employment and revenue.

Agriculture equipment	$40,870
Nursery construction materials	$ 6,295
Miscellaneous	$12,400
Freight	$ 4,000
Upgrading of stall in Rarotonga and Aitutaki	$ 5,000
Total	$68,565

Unfortunately the Committee did not approve the operating costs for Aitutaki office of $7,000.

(a) A copy of the approved proposal outlining the equipment and materials to be purchased.

(b) A copy of the MOU signed by yourself and Mr Arthur Taripo, Manager, Aid Management Division. The MOU stipulates that in the event that APA no longer operates according to its Constitution or fails to perform its tasks under this Memorandum for whatever reason, Aid Management DIvision will take possession of the equipment and dispose of it as sees fit.

The OIDGF Committee notes that APA will develop a user-pays system whereby all revenues received for the use of the machinery, will be used to meet all operating, maintenance, and replacement costs including the remuneration of the machinery operators.

Accordingly, please submit invoices to our office to enable the disbursement of the grant.

Cc: Teiti Teiti, Chairman, Aitutaki Producers Association; Taraota Tom, Island Secretary, Aitutaki; Nga Mataio, Secretary, Ministry of Agriculture, Rarotonga."

[43] The first being that it really should have been addressed also directly to Mr Teiti and not just Mr Tekii.

[44] Also too the indication that given that it was Mr Tekii’s application that had been approved which was not the case.

[45] Also asking invoices to be submitted for disbursement because it is quite clear that on the 22nd of February the Aid Management Division handles the funds provided by the Development Fund actually applied a substantial amount of those funds in purchase of the equipment and materials in accordance with the second Teiti Teiti proposal.

[46] Having received that letter Mr Tekii was in his words "overwhelmingly surprised but happy and overjoyed." He said he had only asked for $33,000 and had been given $68,565. He said he was overjoyed but not comfortable. He said he had mixed feelings and confusion. He said that he was cautious and wanted to make sure that he was playing the game fair so he went to the Prime Minister’s Office, the office of Mr Terepai Maoate that day and the Prime Minister told him that he should be happy because he was given $68,000. He said that following the Prime Minister’s reply he was happy and comfortable.

[47] He said that a letter he had attached to a copy of the Development Funds business paper of the 21st of January and that caused him to be cautious. He said it was complicated because it talked about another proposal over the top of the $33,000 proposal.

[48] So what he did was, having seen the Prime Minister, the following day he wrote a letter on the 23rd of February. A copy of this was produced as Exhibit 8. It was addressed to Mr Taripo, the Manager of Project Aid Division. He pointed out how his three weeks visit and stay on Rarotonga had been an exhausting and frustrating experience. He advised of the provisions of the Rules and Constitution of the Producers Association and in particular, he asked that the total amount of the grant which was approved be deposited in the Producers Association bank account for which he gave the number.

[49] That was not done of course but what happened was, he was given an invoice and a cheque for $5,000 being the sum which had been granted for the stalls on Rarotonga and Aitutaki. He banked this. As stated, the bulk of the money was on the 22nd of December drawn down by Aid Management and dispersed to buy many of the items approved. And the evidence was that it is the policy to do that and not give the amount of a grant in money to an organization because of unfortunate experience that it is often not used for the authorized purpose.

[50] The next significant event referred to in evidence was described as a recalled annual general meeting of the Producers Association on the 11th of March 2002. A minute of this was produced as Exhibit 9. It records that the report of the chairman who was Mr Teiti Teiti was received and accepted. The report of the secretary Mr Tekii was received and accepted. It further recorded that a report from letter to OIDGP 2nd of February 2002 was accepted and endorsed. Now I take it that that was indeed the letter addressed to Mr Tekii dated that day, Exhibit 7.

[51] It was further stated that further the Secretary continued carry out actions as noted and related to the funds of APA. There was then an election and Mr Teiti Teiti was nominated and elected unanimously as chairman and Mr Tekii was nominated unanimously as Secretary.

[52] The evidence of Mr Teiti Teiti and Mr Taripo was that the arrangement was the items purchased from the grant of $68,565 were to be held by the Agriculture Department office and premises on Aitutaki and there be maintained by the Agriculture Department and made available for the use of all growers on Aitutaki.

[53] Clearly, the intention was that the materials for the reconstruction of the nursery would be used for that purpose and the consumable items, fertilizer and the like would be used in that nursery to produce plants and Mr Fred Charlie who was Senior Agriculture Officer on Aitutaki at the time said that this was done and photographs were produced showing how the nursery had been reconstructed and he talked of the great number of plants that were raised there and made available and the implements were purchased, taken to Aitutaki, housed by the Agriculture Department, maintained by them, made available for use by growers.

[54] However, this was contrary to the views of Mr Tekii and apparently other members of the Producers Association who considered that the Producers Association should have actual possession and management of the equipment.

[55] Mr Tekii unfortunately, apparently, was not consulted, nor were the members of the Producers Association about the preparation of the new proposal by Mr Teiti Teiti and understandably they were very confused and when the position started to become clear, there was dispute between Mr Tekii and Mr Teiti Teiti.

[56] It was in the context of that dispute that Mr Taripo wrote a letter to Mr Tekii and Mr Teiti Teiti on the 10th of May 2002, this was produced as Exhibit D. It said:

Re: Agriculture Assistance under the Outer Islands Development Grant Fund (OIDGF).

Thank you for your visits to my office in March and April in relation to the grant approved in February 2002 by the Outer Islands Development Grant Fund committee to assist efforts on Aitutaki to boost agriculture production.

To clear a lot of the confusion surrounding the disbursement of this grant, I am restating the circumstances which gave rise to the approval of the grant so that you and your members are brought into the picture more fully.

The total grant approved was $68,565. this covered two proposals made under the name of the Aitutaki Producers Association.

One proposal submitted by yourself Teiti, as the Chairman of APA, for assistance amounting to $63,565, was approved in whole. This amount has been disbursed through the channel of the Secretary of Agriculture Nga Mataio in collaboration with you as arranged with you. All disbursements from our office has been authorized by your agent the Secretary of Agriculture.

For your information, the push for this part of the grant was the Aitutaki growers meeting of 11 January 2002 attended by Minister of Agriculture and then Deputy Prime Minister Dr Robert Woonton, and MPs Robert Wigmore, Paora Teiti and Teina Bishop. As a result of this meeting, the proposal for purchase of agriculture equipment and construction of a nursery was developed, packaged, and approved by OIDGF and Government. The aim of the exercise, as captured in item 43 of the Memorandum of Understanding between Aid Management Division and the Aitutaki Producers Association, was that the purchases would enable and encourage increased production of all growers on Aitutaki.

A proposal submitted last year by yourself Maraeara as the Secretary of APA, for assistance was partially approved to enable your members to upgrade market stalls for the sale of your member’s produce. An amount of $5,000 was approved and paid out by us to the APA, the cheque being collected from our office by you.

(Please note Maraeara that your total request was for $33,000, the major portion being for a tractor and a smaller amount for operation costs of your Association.) However, the Committee declined those applications because a tractor for growers had just been delivered to Aitutaki and part of your application was to cover your Association’s operational costs, which is not permitted under the OIDGF guidelines).

The aforementioned summarizes the position of the Aid Management Division. We have distributed the funds through the above channels.

The Aitutaki Producers Association is in a unique position in that it has ownership of the equipment. But you should remember the assistance that is being channeled your way by Government and the Outer Islands Development Grant Fund Committee and do your best to justify their support. The onus is on the Association to look after the equipment and see that it is utilized for the purpose it was intended, i.e. to assist the production efforts of all growers in Aitutaki.

I do hope that as Executive members of the Aitutaki Producers Association, you can reconcile your differences and work together in the best interests of your members and all the people of Aitutaki. The hope of the Outer Islands Development Grant Fund Committee, which Committee member Piho Rua will relate when he meets with your and your members this weekend, is to encourage growth in the Rarotonga market. As I recall, the Committee believed that helping Aitutaki growers to make a go of growing commercially is a goal worth aiming for.

[57] Mr Tekii and some members of the Association were obviously not satisfied and Mr Tekii requested Pastor Tevai Matapo to act as arbitrator. Pastor Matapo gave evidence and produced the report which he made, that was Exhibit 13.

[58] He pointed out in that report how on the 21st of June 2002 Mr Tekii requested him to be the arbitrator over the dispute to the disbursement of the funding and he said and I quote from his report:

"It was obvious from the evidence available that there was no wrong doing on the part of any of the parties involved and furthermore the allegations of criminology could not be justified. At worse, there was gross misunderstanding due to the lack of clear and appropriate communication. It was resolved between AMD and myself that the best approach to resolve any issue was for myself to travel to Aitutaki and hold a public meeting for all concerned parties and to bring the matter to a satisfactory conclusion. AMD agreed to pay the costs for the trip. On Monday the 2nd of July at 8.00, he was accompanied by Tiki on a flight to Aitutaki and he goes on to say he met the Mayor and then there was a meeting of executive members of the APA and then there was a public meeting held later day for all growers in the Courthouse, forty growers were in attendance. He said that the meeting made the following resolutions:

(i) That it is clearly understood that the OIDGF grant had been disbursed almost according to the schedule listed in the proposal;

(ii) That APA is the rightful agency to control and be responsible for the machinery and equipment acquired under the grant;

(iii) That APA is willing to meet with the Island Council and Agriculture Department to resolve as to how the proposed project can be operated and advanced to the best advantage of all the growers in Aitutaki. This would include the storage and management of the equipment and machinery operating a user-pays system and managing a revolving fund;

(iv) That the members of APA and other growers are well aware of the importance of the project succeeding in terms of meeting growers’ needs and serving as a benchmark for further funding operation.

[59] Mr Matapo concluded, it was unfortunate that none of the Agriculture staff were present at the meeting but it was pointed out I would be speaking to Fred Charlie personally. I met Charlie at his home, 7.00pm, briefed him on the outcome. He indicated that he was willing to meet with and work closely with APA for the success of the project. So that in essence was Pastor Matapo’s report.

[60] The matter was referred to the Audit Department. In its report, produced as Exhibit 14, there was a report on the stocktake done by the Director of Audit Mr Paul Allsworth and Senior Auditor Mr Allan Parker at Aitutaki on the 4th of September 2002.

[61] The conducted their audit by speaking with the Mayor and then spoke to Mr Fred Charlie and Teiti Teiti and they noted in their report, "Audit went through the Audit Report with Fred Charlie and Teiti Teiti and reminded them that APA had legal ownership over the machinery and equipment. A copy of the opinion from Crown Law Office was also given to them. They advised Audit they were aware that APA are the legal owners of the machinery, however they had received instructions from the Minister of Agriculture, the Honorable Robert Woonton, to keep the machinery and not release this to APA. They advised that they would not release the machinery to APA until instructions were received from the Minister to do so.

[62] Further in their report, under 2.1, Legal ownership of the Machinery, it is clear from the information available to this office that the ownership of the machineries purchased under the OIDGF is vested in APA and where the organization is not operating the machineries, is to be transferred under the ownership of AMD.

[63] Later on, under 2.3, relating to a meeting in the Mayor’s office between Agriculture Department, APA members and the Mayor, the Director of Audit briefly clarified the audit findings and the issues from the Audit Report. He explained that the ownership of the machinery is vested in APA since it was this Association who applied to the OIDGF.

[64] However, he also made it clear that at present APA did not have a proper office and facilities, neither do they have a shed to shelter this machinery.

[65] He also further explained that the Agriculture Department had a proper office to administer the usage of machinery but more so they had the infrastructure to shelter and maintain these machinery. He suggested that there was a need for both parties to work together to determine some kind of arrangement that will benefit all the growers on the island rather than a group of growers.

[66] In the report of Mr Allsworth the Director of Audit to the Honorable Geoffrey Henry, Minister of the Public Expenditure Review Committee, and audit dated the 11th of September which is produced as part of Exhibit 14, Mr Allsworth made the statement under the heading, Major Audit Findings. Audit has confirmed that all machinery and equipment purchased under the OIGDF that were kept by Agriculture Department was in good working order and had been accounted for. Audit could not verify two fax machines, 100kg scale and the 10 chilly bins that were kept by Maraeara Tekii, as he was in Rarotonga during the time of the stocktake. However Mr Tekii has confirmed with Audit that these items were with him.

[67] The meeting held with the APA, Agriculture Department, the Mayor and Audit, was stepping stone in their success in the sense that both the APA and the Agriculture Department agreed to work together.

[68] Given the history of this case, the initiative taken by both parties to work together and to co-operate was a satisfying achievement.

[69] The meeting agreed that APA and the Agriculture Department would discuss and implement a Memorandum of Understanding that would best suit the interest of all growers in the agricultural sector of Aitutaki.

[70] Audit has found that the advancement of $5,000 by AMD to APA for the purpose of upgrading the markets in Rarotonga and Aitutaki was expended for that purpose, but instead, used to pay reimbursement claimed by APA members for airfares, transportation, fuel and communication costs. Audit highlights that this problem could have been avoided if AMD had disbursed funds upon the receipt of invoices or receipts. It is crucial that any further disbursement by AMD be based on the receipt of invoices and receipts.

[71] That is basically is an outline of the events. It has been necessary to quote at length from documents involved to put the matter in its correct perspective.

[72] The situation as it appeared in the hearing today was that all the grant made by the Development Fund had been correctly applied to purchase the equipment, the materials and the consumables for which that grant was made and that the Agriculture Department has implemented the intention that the nursery be reconstructed, the consumables used to produce plants and as maintained and managed the equipment for the benefit of growers of Aitutaki, had kept it in good working order and it has been available for use on application.

[73] The only misapplication of funds unfortunately comes from Mr Tekii who misapplied the $5,000 by not using it for markets but it would seem for travel and other expenses. However, I do not criticize Mr Tekii for this because obviously his heart and efforts has been in the furtherance of the Producers Association and the position as he saw it. It is unfortunate that he and Mr Teiti Teiti and the Management division have got at loggerheads, as basically I think they have all been working for the same goal.

[74] The action is brought as an action in conversion. Conversion is a civil tort. So far as I am aware, there are no cases in the Cook Islands jurisdiction involving conversion and the applicable law will be the Common Law as developed primarily in England, but more recently of course, in New Zealand, the Cook Islands law, whereas closely the New Zealand law in many respects and statute and in the application and adoption and principles of Common Law as stated by the New Zealand Courts. Just as the New Zealand Courts of course regard the Common Law as a growing body of law, and take into account positions of English Courts, Canadian and Australian Courts, so of course does the Cook Islands legal system take into account all sources of Common Law.

[75] In my view the Common Law provisions of conversion are those as stated by the New Zealand Court of Appeal in the case Cuff v Broadlands Finance Limited, 1987 2NZLR 343.

[76] In delivering the judgment of the Court of Appeal, Justice Summer said at page 346:

"The tort of conversion is constituted by the interference with the use and possession of the chattel of another willfully and without lawful justification. It requires a dealing with the chattel in a manner inconsistent with the Plaintiff’s right and with an intention in doing so to deny that right or to assert an inconsistent right.

See for example, Salmon v Houston on Torts, 18th edition, 1981, p282. It commonly arises when the Plaintiff’s chattel taken by the Defendant with the intention of exercising dominion over it with a permanently or only for a time. Conversion may also arise in other ways as where a Defendant who innocently obtains possession of a chattel is shown to have an intention to retain it against the Plaintiff who has the immediate right to possession. In such a case a demand by the Plaintiff in a failure to comply with the demand by the Defendant is the usual but not the only means of establishing the Defendant’s intent and the Plaintiff may sue indebting you for the return of the specific chattel or in conversion for damages.

[77] In the case of The Bank of Montreal v Ernestein Young Incorporated, reported 2002, Force Supreme Court reports, Canada, 312, the Supreme Court of Canada stated:

"An owner’s right of possession includes the right to authorize others to deal with his or her chattel in any manner specified. As a result dealing with another’s chattel in a manner authorized by the rightful owner is consistent with the owner’s right of possession and does not qualify as wrongful interference."

[78] The principle is aptly stated in R D Bowers Atreatis on the Law of Conversion 1917, 10

"It will be noted that the deprivation must be wrongful for without the element of wrong no tort can be committed and conversion cannot occur and to be wrongful it must be wholely in without the owner’s sanction or assent, either expressed or implied. So where the owner has given to another, or permitted him to have control of the property, no one can be held responsible in tort for its conversion, who merely makes use of the property or exercises such demand over it as is warranted by the authority thus given. Otherwise express, it has been said that a rightful interference with chattels of another cannot constitute a conversion.

[79] Going on, in the position of the Supreme Court of Canada, the principal is reiterated by A Grub v Editor, the law of Tort 2000, paragraph 11.170;

"No action by some conversion or trespass to chattels for consensual interference with goods, the nature of these torts involve wrongful interference with goods and an interference that is consented to cannot be wrongful. Consent may be express as in a contract or an agreement for bailment or lease, or may be implied from the circumstance."

[80] Now applying the law as stated in this case, it is clear that there were three categories of items for which the Development grant of sixty odd thousand was granted, one with chattels, the other was construction items – timber and the like, and the third was consumable items – items for use in the nursery.

[81] I find from the facts that the Department of Agriculture through its Ministry honestly and with justification believed that if it was authorized by the Development Fund to use the construction items to reconstruct the nursery and to use the consumable items to grow plants in that nursery and that it was authorized to have possession of and to maintain and manage the chattels, the items of equipment. It is in my view, was justified in having that belief from what it was told by Mr Teiti Teiti who was the then chairman of the Producers Association and had been the person primarily responsible for making the successful applications for those funds.

[82] It was also justified in regarding Mr Teiti Teiti as having the ostensible authority to give that permission on behalf of the Producers Association. As to the background too, it was justified in that view because the Producers Association did not itself, as has been said, I think in the Auditor’s Report, have the facilities and ability to house and maintain the equipment.

[83] So accordingly I find that up until the stage of the dispute arising whereupon the situation is not clear, the Agriculture Department have acted in the justified belief that it does have possession and control and use.

[84] However, the position has not been clarified by Court proceeding and in my view the Ministry of Agriculture should give up possession of those chattels which it now has to the Producers Association.

[85] To avoid however any further dispute as to who is entitled to have them and to whom they should be delivered, I direct that the Agriculture Department is to continue to have possession until such stage as there has been a general meeting of the Producers Association and that meeting resolves that the chattels, and this is the equipment, be handed to the Producers Association and names a person who is authorized to received those chattels on behalf of the Producers Association. When the Agriculture Department receives sufficient documentary verification that there has been such a meeting and such a resolution and that a person has been appointed to receive the chattels on behalf of the Producers Association, then the Agriculture Department is within two weeks of receiving that notice to deliver the chattels to that person. There has never been any question that the chattels belong to the Producers Association.

[86] This order relates only to the chattels which exists, it does not related to the construction items used to construct the nursery or to consumable items that have been consumed, but it is items such as has been as the Auditors found were in the possession of the Agriculture Department and as Mr Fred Charlie pointed out with photographs, the slasher and other such equipment, that is the rotary hoes, the blowers and things like that which are the subject of this order.

[87] I do not consider that this is a case for general damages. I really do consider that all involved have been working towards the common goal of the benefit of all the growers of Aitutaki. It is unfortunate that there has been misunderstanding and dispute and people such as Pastor Matapo really did their best to bring the matter to a realist conclusion.

[89] So far as costs are concerned, there has been merits on both sides and I order that costs should lie where they fall, that is, each party bear their own costs.

[90] If there is any further dispute as to the transfer of possession of the chattels, then leave for application to be made to the Court with notice to the other parties involved for further orders to resolve such dispute. I hope that the parties will get on with the matter in a constructive way for the benefit of the growers of Aitutaki.

High Court of the Cook Islands

Tekii v Minister of Agriculture [2006] CKHC 16; PLAINT 22 of 2006 (13 December 2006)