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Kingdom of Tonga v 'Uhi [2024] TOCA 12; AC 29 of 2022 (28 May 2024)

IN THE COURT OF APPEAL OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY


AC 29 of 2022
[CV 57of 2019]


BETWEEN
KINGDOM OF TONGA

- Appellant

AND
1. SIOSIFA MOSA‘ATI ’UHI
2. FINEHIKA MALUPO
- Respondents


___________________________________________________________________________


JUDGMENT OF THE COURT
___________________________________________________________________________


Court: Randerson J
Harrison J
Heath J


Counsel: Mr S Sisifa, Solicitor-General, for Appellant
Mrs F L Vaihu for First Respondent
Mr W Edwards for Second Respondent


Hearing: 24 May 2024
Judgment: 28 May 2024


The appeals

[1] The Kingdom of Tonga (the Kingdom) appeals against a judgment given in the Supreme Court on 23 November 2022. Niu J found the Kingdom and Mrs Finehika Malupo (as administrator of the estate of the late Mr Sekitofa Malupo) jointly and severally liable to pay a sum of TOP$3,213,182.80 (in respect of overburden removed from a tax allotment) and TOP$109,154.55 (for royalty payments) to the allotment owner Mr Siosifa Uhi.
[2] The Kingdom also appeals against an order requiring it to pay interest, at the rate of 10% per annum, on each of those sums from 31 October 2019, until payment. Mr Uhi cross-appeals against the Judge’s decision not to award general damages in his favour.

Background to the claims

[3] Mr Uhi’s claim arose out of an agreement dated 29 June 2012 whereby he and the Kingdom agreed that the latter would lease Mr Uhi’s tax allotment for a period of 20 years from 2013, for the purpose of quarrying. The lease was approved by Cabinet on 16 March 2012 and registered on 10 May 2013.
[4] The Kingdom entered into a separate agreement, dated 6 November 2013, with Mr Sekitofa Malupo for the operation of the quarry on the land, Mr Malupo was a second defendant in the Supreme Court proceeding. Sadly, he died shortly before the hearing in that Court. Niu J entered judgment against his estate on the same basis as that ordered against the Kingdom.
[5] Mr Uhi’s claim was for:
[6] At the appeal hearing, we explored with Mrs Vaihu, counsel for Mr Uhi, the cause of action on which she had relied in making the claims in respect of the overburden and stockpile of rocks. Although the Amended Statement of Claim makes reference to trespass, negligence and breach of a consent order made by the Court of Appeal on 16 March 2017, Mrs Vaihu confirmed that the claim was based in conversion. That position is consistent with a 2019 decision of this Court,[1] to which we refer later. Given Mrs Vaihu’s indication, we do not need to dwell on other claims apparently raised in the Amended Statement of Claim.
[7] The Kingdom submits that Niu J erred in entering judgment against it. Counsel for the Kingdom contends that the claim for overburden had already been resolved in separate proceedings brought in the Land Court.[2] The Land Court’s judgment had been upheld by the Court of Appeal.[3] The Kingdom opposed entry of judgment in the Supreme Court on a plea of res judicata. However, the Kingdom also adduced evidence on questions of damages, in case the Supreme Court did not accept that res judicata applied.

The Kingdom’s position on appeal

[8] Shortly before the appeal hearing, the Solicitor-General, for the Kingdom, filed a memorandum in which he advised the Court that:

The Land Court proceedings

[9] In late 2017 and early 2018, former Lord President Paulsen heard a claim by Mr Uhi in the Land Court against the Kingdom which also involved the question whether damages should be awarded in his favour in respect of overburden taken from his land. Mr Malupo was not a party to this litigation. In his judgment, the Lord President accepted that overburden had been unlawfully removed by Mr Malupo for which the Kingdom was required to pay Mr Uhi a sum of TOP$99,716.[4] In assessing damages, Paulsen LP did not accept expert evidence adduced by either Mr Uhi or the Kingdom. Instead, basing his decision on Mr Uhi’s acceptance in evidence that the price of TOP$2.00 per tonne for rock would apply also to overburden, the Lord President assessed damages based on that rate.
[10] Mr Uhi appealed against the Land Court’s decision. On 17 April 2019, the Court of Appeal gave judgment. It criticised the basis on which Mr Uhi’s claim had been advanced. The Court noted that the lease was to run for 20 years from 10 May 2013, meaning that it did not expire until 2033. The claim in the Land Court had been brought in trespass. The Court of Appeal observed that although the quarry agreement did not refer to the overburden or its removal such removal must have been contemplated to enable the Kingdom to have access to the rock and extract it from the ground. However, the Court added that a “royalty was not payable on the sale of the overburden and the Kingdom was not entitled to dispose of it, or to authorise [Mr Malupo] to do so”. As a result, there was no trespass but the cause of action ought to have been one of conversion injurious to Mr Uhi’s reversionary interest in the land.[5] That interest would have crystallised in either 2033 at the end of the lease or on Mr Uhi’s earlier death.[6]
[11] On that basis, the Court considered that the claim should have been based on the “present value in 2018 of the overburden in 2033”, an amount that had not been proved. Nevertheless, the Court was content to adopt the rate applied by the Lord President and upheld the award of TOP$99,716.[7]
[12] Mr Uhi commenced his proceeding in the Supreme Court a matter of months after the Court of Appeal had given its decision on his appeal from the Land Court.

Analysis

[13] As a result of discussions between members of the Court and counsel, it has proved possible to narrow the scope of the issues on which a decision is required on appeal. It is now accepted that:
[14] In the Supreme Court, counsel for the Kingdom argued that Mr Uhi’s claim was barred on application of the principle of res judicata. Niu J rejected that submission. The Judge relied on s 102(d) of the Evidence Act which, on his interpretation, rendered the doctrine inapplicable. Section 102(d) applies when a previous Court has not given a decision on the merits of a disputes. Niu J held that the Lord President, in the Land Court, had refused to admit hearsay evidence as to value which should have been allowed because of the more flexible rules of evidence that apply in that Court. From that proposition the Judge reasoned that the Lord President had failed to determine the dispute on the merits. That view is plainly wrong. The Lord President was entitled to rule the hearsay evidence inadmissible, as a matter of discretion. Not only did he proceed to give a judgment on the merits but his decision was also upheld (both as to liability and quantum) in the Court of Appeal.
[15] The term “res judicata” was discussed by the Supreme Court of the United Kingdom in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd, an authority cited by Mr Edwards, for the Malupo estate, in argument before us.[8] Delivering the principal judgment, Lord Sumption considered the various species of res judicata. He did so in the context of his initial comment that res judicata “is a portmanteau term which is used to describe a number of different legal principles with different juridical origins”.[9] Applying Conquer v Boot,[10] Lord Sumption identified the principle relevant to the present case as one “where the claimant succeeded in the first action and does not challenge the outcome [leading to the position that] he may not bring a second action on the same cause of action, for example to recover further damages”.[11] Applying that principle to the facts of this case, we hold that Mr Uhi was entitled to bring a claim in conversion in respect of wrongfully removed overburden for a discrete and limited period after the date on which he obtained judgment in the Land Court. The Land Court’s judgment responded to the conversion of the overburden up to 30 April 2018. From that date, until quarrying ceased in October 2019, the conversion continued. So, the fact that a claim had been resolved and upheld by the Court of Appeal in respect of the first period did not prevent Mr Uhi from suing in respect of the later period and adducing additional evidence as to quantity or price. Both of those aspects were live issues in the Supreme Court.
[16] We find that the Kingdom and Mr Malupo were privy to the conversion of the overburden. Although Mr Malupo was not a party to the Land Court proceedings, he was a joint tortfeasor by reason of the fact that he was responsible for removing the overburden for the land at the behest of the Kingdom. In entering judgment against the Kingdom and Mr Malupo, on the overburden claim, Niu J found that TOP$3,213,182.80 was payable, even though that amount was in excess of the original claim and an uplifted amendment during trial. For reasons we develop, we have no doubt that the Judge’s calculations, both as to quantity and price, were overstated. His Honour calculated the quantity on the basis of what had been removed from the quarry from inception in early 2013 until October 2019, rather than the more limited period from 30 April 2018 until October 2019. While the price was fixed on the basis of expert evidence that had not been put before Lord President Paulsen in the Land Court, it did not address the basis on which this Court had held that damages should be calculated net present value.[12]
[17] In the absence of any evidence on net present value, the amount payable must be substantially discounted from the value of the overburden as calculated by the Judge, TOP$32.35 per tonne. The Judge made no adjustment to take account “any cost incurred in having the overburden dug, moved and piled ready for sale, as well as the cost of loading and transportation if not separately charged to the customer”.[13] Nor did the Judge take any profit component in respect of the overburden, into account. Market value in a case such as this should exclude a profit element since it was common ground that Mr Uhi did not himself intend to quarry the land, and had no capacity to do so.
[18] In the absence of evidence of net present value and the undesirable possibility that we may need to remit the Judge’s award for rehearing, the Court asked counsel whether they preferred this Court to resolve all matters on a pragmatic basis to bring the litigation to an end. Counsel were happy to proceed on that basis. What follows is our attempt to fix quantity and value on the basis of the existing evidence.
[19] As to quantity, Lord President Paulsen assessed the amount payable as at 30 April 2018 on the basis of 49,858 tonnes of overburden. As it happens, that quantity is broadly equivalent to the quantity of rock removed from the quarry in the period between 2014 (when operations commenced) and 2017 (three months prior to delivery of the Land Court’s decision). The relevant figures are set out in Niu J’s judgment[14].
[20] For the period between 2014 and 2017 inclusive, a total of 47,845 tonnes of rock was removed. The royalty for rock was TOP$2.00 per tonne. We proceed on the basis that the approximate correlation between the quantities of rock and overburden removed reflect the fact that overburden must be removed before the rock can be extracted. Taking the same approach, for the years of 2018 and 2019, rock totalling 17,000 tonnes was removed.[15] We fix, for present purposes, the quantity of overburden removed in that period as 17,000 tonnes.
[21] Assessing the value is more difficult. Despite the fact that Niu J had additional valuation evidence before him, we have found his analysis of value difficult to follow. The “net” figure at which he arrived (TOP$32.35) was not based on net present value, did not take account of the costs of removing the overburden or exclude a margin for profit.[16] There is no satisfactory evidence of those elements on which we can safely act. We have found Niu J’s judgment on this aspect of the case confusing and difficult to follow.
[22] Doing the best we can on the limited evidence before us, we consider (as a matter of consistency) that we should apply the value of TOP$2.00 that the Lord President adopted in the Land Court, and which this Court upheld on appeal. Use of that figure is the most principled basis on which we can proceed. It also reflects an appropriate degree of proportionality in respect the qualities removed: the amount of overburden in issue on this appeal is about one-third of that in the period to which the Land Court decision relates. Applying a figure of TOP$2.00 results in an award of TOP$34,000, which we round to TOP$35,000 to make an allowance for interest since the time the Supreme Court proceeding was brought, 29 October 2019.
[23] We do not consider that Mr Uhi suffered any greater frustration or anxiety than any other litigants in his position. Nor do we consider that the Kingdom’s or Mr Malupo’s as a contumelious, justifying exemplary damages. In those circumstances, no award will be made on Mr Uhi’s cross appeal for general, aggravating and exemplary damages.
[24] We record that the Kingdom has already paid interest on the royalty claim. With the principal on that claim included, Mr Uhi has, to date, received approximately TOP$145,000 for those royalties, as well as the sum of TOP$99,716, under the Land Court’s judgment, for removal of overburden. In those circumstances, we do not consider interest should be awarded on the much reduced overburden claim.
[25] The disputes among the current parties, have been ongoing for many years, having first been commenced in the Land Court in 2016. Most of the complexity that has arisen can be attributed to the ways in which the Land Court and Supreme Court proceedings were pursued, both as to pleading and evidence. In those circumstances, we do not propose to award costs in favour of the Kingdom. Nor is Mr Malupo’s to estate entitled costs in respect of these claims, given his position as a joint tortfeasor.

Result

[26] For the reasons given:

__________________________
Randerson J


__________________________
Harrison J


__________________________
Heath J

[1] Uhi v Kingdom of Tonga Court of Appeal, AC 8 of 2018, 17 April 2019.
[2] Uhi v Kingdom of Tonga Land Court, LA 24 of 2016, 30 April 2018.
[3] Uhi v Kingdom of Tonga Court of Appeal, AC 8 of 2018, 17 April 2019.
[4] Uhi v Kingdom of Tonga Land Court LA 24 of 2016, 30 April 2018 at para [71].
[5] Uhi v Kingdom of Tonga Court of Appeal, AC 8 of 2018, 17 April 2019, at paras [12] and [17].
[6] Section 4 of the Land Act provides that a person’s interest in a tax allotment terminates on his or her death.
[7] Uhi v Kingdom of Tonga Court of Appeal, AC 8 of 2018, 17 April 2019 at paras [21] and [22].
[8] Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46.
[9] Ibid, at para 17.
[10] Conquer v Boot [1928] 2 KB 336.
[11] Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, at para 17.
[12] See paras [10] and [11] above
[13] Uhi v Kingdom of Tonga Supreme Court, CV 57 of 2019, 23 November 2022, at paras 86 and 87
[14] Ibid, at para [15]
[15] Ibid, at para 15.
[16] See para [17] above

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