National Housing Corporation v Blandiniere Estate (Urban) Ltd [2005] VUSC 126; CC 025 2003 (4 November 2005)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 25 of 2003

BETWEEN:

NATIONAL HOUSING COOPERATION
Claimant

AND:

BLANDINIERE ESTATE (URBAN) LTD

Coram: Justice P.I. Treston

Mr. Yawha for Claimant
Mr. Kabini for Defendant

Dates of Hearing: 17 & 18 October 2005
Date of Decision: 4 November 2005

RESERVED JUDGMENT

CLAIM

In a Supreme Court claim filed on 27 February 2003 the claimant, The National Housing Corporation, claimed for a total of VT8,700,00 against the defendant company, Blandiniere Estate (Urban) Ltd. The claimant had originally sued Mr. Dinh Van Than and Mrs. Valerie Dinh but they were struck from the claim in a decision of Justice Carruthers on 25 July 2003.

The claimant elected at the hearing to sue only for the sum of VT7,000,000 on the basis of a business agreement between it and the defendant of 20 February 2001 on the basis that payment of the VT7,000,000 made by the then General Manager was unauthorized and the entire contract was illegal.

The defendant pleaded that there was no cause of action against it and no contract between it and the claimant. It counterclaimed for unspecified damages.

FACTS

From the claimant's perspective, it seems that one Tai Cheung Liao had closed-door meetings with the former General Manager of the claimant Mr. Paul Willie (now deceased). Their conferences seemingly resulted in an agreement dated 20 February 2001 (see exhibit B to sworn statement of Davina Tosusu dated 9 September 2003) which indicated that Mr. Liao of Blandiniere Estates would sell blocks of land at Tagabe to the claimant for low cost housing at a market price for each house and land of VT3,600,000 each.

On 19 March 2001, the General Manager instructed Mrs. Tosusu, an accounts officer, to file a letter of request at the claimant's bank, Banque D'Hawaii (Vanuatu) Ltd, to transfer VT7,000,000 to Blandiniere Estates. Mrs. Tosusu was unhappy about this because there had been no Board meeting but nevertheless issued a cheque on the instruction of her General Manager. The claimant's evidence was that the cheque was banked into the Blandiniere Estates account on the same date (see exhibit G).

The claimant's case was that the deal never went through and that it lost the VT7,000,000. The claimant's case was further that Mr. Liao was the agent for the defendant and that was confirmed first by the agreement of 20 February and second by an interview that the police had carried out with Mr. Dinh Van Than, the major shareholder of the defendant, during the criminal investigation into the matter when Mr. Dinh said in a statement that he authorized Mr. Liao to manage only the Blandiniere Estates. (see exhibit C to sworn statement of Namen Kali Jean Yves dated 12 March 2004).

From the defendant's point of view, the facts were that in about November 2000, Mr. Liao contacted Mr. Douglas Reid Patterson, the agent of Mr. Dinh, inquiring whether his company had any large development blocks of land available for low cost housing development. Mr. Patterson contacted his client Mr. Dinh and the upshot was that an agreement was prepared by his office dated 20 March 2001 (see exhibit DVT1 to sworn statement of Mr. Dinh dated 30 December 2003) whereunder Mr. Liao would purchase the shares in Blandiniere Estates Ltd for the total price of VT125,000,000 over a period and would pay a deposit of VT7,000,000 on the signing of the agreement. The defendant through its shareholder and agent said that the deposit was paid by the Banque D'Hawaii (Vanuatu) Ltd cheque of VT7,000,000 but after that Mr. Liao made no further payment under the agreement and then disappeared and that consequently his deposit was forfeit.

The defendant's witnesses denied that Mr. Liao was at any stage the agent for the defendant company and that he only became authorized to manage the defendant once he had paid his deposit for the shares of the defendant company.

In short, the defendant's claim was that the VT7,000,000 paid to it by Mr. Liao was the deposit under the agreement for the sale of the defendant company to him, an arrangement which continued until the deposit was forfeit on his subsequent non-compliance.

EVIDENCE

Evidence for the claimant was given by two sworn statements of Davina Tosusu, the first dated 9 September 2003 and the second dated 4 March 2004 and a further sworn statement from Mr. Naman Kali Jean Yves, senior inspector of Vanuatu Police Force who carried out a criminal investigation of the case. No prosecution eventuated because Mr. Liao left the country and Mr. Willie died.

For the defence, evidence was given by Mr. Than in two sworn statements, the first dated 13 December 2003 and the second dated 6 August 2004 and by Mr. Patterson in a sworn statement of 7 March 2005.

All four witnesses were cross-examined.

LAW

I am grateful for the authorities provided by counsel for the defendant in his written submissions setting out the principle that in general the Courts have held that a contract binds only those persons who are party to the bargain or privy to it. Clearly the parties to a contract can enjoy the benefits of that contract or suffer the burden of it and the general principle is set out in detail in the decisions of Dunlop Pneumatic Tyre Co. Ltd v Selfridge & Co Ltd [1915] UKHL 1; [1915] AC 847 (HL), Qalovaki v WR Carpenter (South Pacific) Ltd, (1979), unreported, 5 October, Supreme Court, Fiji Islands, Civil Case No. 478 of 1978 and Scrutiny Ltd v Midland Silicon Ltd [1963] AC 446 (HL).

As in all civil cases the burden of proof is on the claimant who must establish its claim on the balance of probabilities.

FINDINGS

I have had the opportunity of seeing and hearing the witnesses and of analyzing the evidence. While to some eyes the circumstances may appear to be, in the words of the witness Inspection Yves, "fishy", I must confess that I prefer the evidence of the defence witnesses. I find that Mr. Liao was never the agent of the defendant in February 2001 when the agreement (exhibit B) was signed by him and the then General Manager of the claimant. To the contrary, I am satisfied that, when he signed the agreement, he was doing it on his own behalf in anticipation of his purchase of the shares of the defendant which came to fruition in the contract of 20 March 2001 (exhibit DT 1).

I accept the evidence of Mr. Patterson and Mr. Dinh that the elusive Mr. Liao was always acting on his own behalf and never as the agent of the defendant and was only entitled to manage the company, as Mr. Dinh, said after his payment of the deposit of VT7,000,000.

While the whole transaction reeks of a scam, I am not satisfied on the balance of probabilities, that the defendant was part of that scam but was the innocent pawn in a deeper game being played by Mr. Liao and Mr. Willie.

As I have said, there was no privity of contract between the claimant and the defendant and Mr. Liao somewhat dubiously obtained the cheque for VT7,000,000 from the claimant which he immediately used to pay his deposit for the purchase of the defendant and its assets. When Mr. Liao's contract with the defendant was not completed, I find that the defendant was entitled to forfeit Mr. Liao's deposit and retain the VT7,000,000.

This decision does not deprive the claimant of its remedies. Although Mr. Liao has disappeared, the claimant still has an action against him and if it is satisfied that the payment of the VT7,000,000 was unauthorized and illegal, it had an action against Mr. Willie and still has an action against Mr. Willie's estate.

Claimant's counsel submitted that the Court has inherent jurisdiction to order that the VT7,000,000 be paid back to the claimant by the defendant but, in accordance with my analysis of the claim, that would not be in accordance with the legal contractual principles that I have outlined. I am of the view that the claimant's action against the defendant company was misconceived.

DECISION

For the above reasons I give judgment for the defendant against the claimant together with costs in favour of the defendant against the claimant on a standard basis as agreed or as determined by the Court in due course. The defendant's counterclaim is struck out.

Dated AT PORT VILA, this 4^th day of November 2005

BY THE COURT

P. I. TRESTON
Judge