Laurie v Toa [2016] VUSC 37; Civil Case 38 of 2013 (23 March 2016)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)
Civil Case No.38 of 2013

BETWEEN:

KEITHA ROBYNE ANNESLEY LAURIE
represented by DANIEL JOHN
Claimant

AND:

NGWELE WILLIE TOA
Defendant

Coram: Justice D. V. Fatiaki
Counsels: Mr. J. Kilu for the Claimant
Mr. B. Livo for the Defendant

Date of Ruling : 23 March 2016.

RULING

1. On 25 February 2015 after unsuccessful attempts by the claimant to obtain default judgment and summary judgment and with the agreement of counsels the Court ordered written submissions on the following preliminary issues:
   

"(a) Whether or not there was a loan agreement or a joint venture agreement between the parties? And

(b) Whether or not there were 2 separate agreements an initial loan agreement later followed by a joint venture?"

2. The issues arise out of two (2) documents executed by the parties as follows:
   

"LOAN AGREEMENT

AGREEMENT DATE: 21 December 2008

LENDER:

Keitha Robyne Annesley Laurie

PO Box 893, Port Vila. Mobile [phone]

BORROWER

Willie Toa Ngwele

PO Box 893, Port Vila, Vanuatu.

LOAN AMOUNT:

Four million vatu (VT4,000,000) such monies initially to be deposited to the account of Peter Andre Ngwele at Westpac Bank Port Vila whilst waiting the opening of a bank current account styled Willie Toa Ngwele trading as Emten Lagoon Resort, in order to expedite the initial development of the land.

RATE OF INTEREST & LOAN PERIOD:

Ten percent (10%) VT400,000 – Estimated loan period – one year, payable no later than 1 December 2009.

SOLE PURPOSE OF LOAN:

Provision of working capital for the sole purpose of development of land Title No. – with frontage to No. 2 Lagoon.

Moneys only to be used for capital costs of developing the land in order to obtain strata title of seven blocks:

Clearing of land

Survey costs

Valuation costs

Body Corporate incorporation costs

Body Corporate costs

Marketing costs in Australia

Once the current account is opened the balance left in the account of Pan Construction is to be deposited into a current (cheque) account in the name of Willie Toa Ngwele trading as Emten Lagoon Resort or such other name approved by the Vanuatu Financial Services, with a major trading Bank in Port Vila. This cheque account is to be operated by joint signatories of Willie Toa Ngwele and Keitha Laurie.

It is further agreed that Keitha Laurie will be actively engaged in assistance in obtaining finance, project management and all accounting for the project for a consulting fee of one hundred thousand vatu (VT100,000) per calendar month to be paid monthly from Emten Lagoon Resort current account.

It is further agreed that Keitha Laurie will act in the capacity of consultant in finding suitable sales agents, marketing consultants and will provide input to the design and interior decoration of the buildings to be constructed by PAN Construction. An additional fee (hourly rate fee to be determined) will be payable to Keitha Laurie for these additional services.

Willie Toa Ngwele hereby confirms that Keitha Laurie will be offered a strata titled block at the market selling price (set by Real Estate firm, Real Estate of Distinction, the sole marketing and sales agent for the project) such price being agreeable to Willie Toa Ngwele, less 20% discount.

No further monies will be released until project design has been reviewed and a full and proper costing of both development and construction costs are obtained.

It is hereby agreed that Keitha Laurie will require as security for the loan a first mortgage over the land, any legal costs to be paid by the borrower Willie Toa Ngwele.

SIGNED: Willie Toa Ngwele (signed)

Keitha R A Laurie (signed)

Witnessed: (signed)

DATED: 21 December 2008, Port Vila, Vanuatu."

3. The second document is:
   

"ADDENDUM TO LOAN AGREEMENT DATED 21 DECEMBER 2008

LENDER:

Keitha Robyne Annesley Laurie

PO Box 3100, Port Vila, Vanuatu. Tel [phone]

C/- JW Schubert & Co. Tel [phone]

(PO Box 752 Springwood. Qld. Australia 4127)

BORROWER

Willie Toa Ngwele

PO Box 893, Port Vila, Vanuatu.

Mobile [phone]

LOAN AMOUNT:

Four million vatu (VT4,000,000) such monies initially deposited to deposited to the account of Peter Andre Ngwele at Westpac Port Vila whilst waiting for the opening of a bank account styled Willie Toa Ngwele trading as Emten Lagoon Resort in order to expedite the initial development of the land property title 12/0912/365 held in the name of Willie Toa Ngwele.

RATE OF INTEREST & LOAN PERIOD:

Ten percent per annum (10%). Estimated period of loan – one year, payable no later than 1 December 2009.

SOLE PURPOSE OF LOAN:

Provision of working capital for the sole purpose of development of land title 12/0912/365.

CONSULTANCY FEES – KEITHA LAURIE:

Willie Toa Ngwele hereby confirms that he will honor the original contract as to the VT100,000 per calendar month consulting fees to cover all professional services rendered by Keitha Laurie.

Keitha Laurie agrees to forgo consultancy fees of VT30,000 for the month of February such amount being due and payable by Peter Andre Ngwele but guaranteed by Willie Toa Ngwele. Forgone consultancy fees to date 6 months March to August 09 @ VT100,000 being a total of VT600,000.

SALE OF LAND TITLE 12/0912/365

Willie Toa Ngwele agrees that should he be unable to find finance to enable him to construct a motel type property on the land he guarantees to pay Keitha Laurie all moneys due as per this agreement.

Should a first mortgage be obtained against the said land and buildings constructed Willie Ngwele guarantess to register Keitha Laurie's interest to the lenders and to pay all moneys due by the contract date which is no later than 1 December 2009.

Should no contract of sale of the said land eventuate before 30 November 09 Willie Ngwele covenants to provide a first mortgage over the said title to Keitha Laurie.

Attached is a full statement of account between the parties showing interest to 31st August 2009, this statement shall form part of this agreement.

SIGNED: Willie Toa Ngwele Keitha R. A. Laurie

Port Vila, Vanuatu Port Vila, Vanuatu

Dated: 5/8/09 Dated: 28/7/09

Witnessed:

Port Vila, Vanuatu Dated: 5/8/09"

For completeness, there was a brief second ADDENDUM also signed by the parties which records:

"Should the loan extend to the 31/12/09 the full amount payable to Keitha Laurie would be four million, seven hundred & forty six thousand, six hundred and ninety one vatu (VT4,476,691)".

4. The following is common ground between the parties:
   
   • (1) Lease Title No. 12/0912/365 situated at Erakor with a wide frontage onto Emten Lagoon is registered in the defendant's name as lessee;
     
   • (2) Peter Andre Ngwele (PAN) is a builder trading as "PAN Construction" and the real brother of the defendant;
     
   • (3) A sum of VT4,000,000 was deposited by the claimant into the PAN Construction account maintained at Westpac on or about 02 December 2008;
     
   • (4) "Emten Lagoon Resort" was registered as a business name of the defendant alone on 13 January 2009;
     
   • (5) A sum of VT1,800,000 was deposited into the Westpac account of "Emten Lagoon Resort" on or about 25 February 2009;
     
   • (6) Despite the contractual requirement, no mortgage over Lease No. 12/0912/365 has been executed by the defendant in favour of the claimant;
     
   • (7) By letter dated 14 July 2009 the claimant requested Westpac to cancel her authority to co-sign cheques on the Emten Lagoon Resort account;
     
   • (8) The claimant left Vanuatu for Australia permanently on 13 August 2009.
     
5. In his written submissions, claimant's counsel highlighted various terms and descriptions in both documents and extracts a clear intention between the parties to enter into a loan agreement simpliciter and counsel submits: "... there is nothing at all, of any relevant strength to suggest that the intentions of the parties were to create a joint venture agreement". The "sale of land" clause in the ADDENDUM also makes clear that it is the defendant's responsibility "... to find finance to enable him to construct a motel type property on the land ...".
   
6. As for the clause requiring the Emten Lagoon Resort business cheque account "to be operated by joint signatories of Willie Toa Ngwele and Keitha Laurie", claimant's counsel writes:
   

"... (that fact) ... was merely (the claimant's) normal practice of ensuring her clients spend the money genuinely on the intended project. In fact the cheque account was never opened and so (the claimant) never actually counter-signed any cheques for the project ..."

7. Defence counsel for his part, lays emphasis on the distinct duties and functions that the parties agreed to perform under the agreement and counsel submits:
   

"The contract was more than a loan. It was a mutual, reciprocal and inter dependent investment agreement requiring cooperation between the parties to invest their shared resources in a (joint) business venture ................. the agreement implies that the claimant is providing working capital in the form of money and the defendant gave his land lease at Namba 2 lagoon to develop it using the working capital."

8. As for the joint-signatory clause, defence counsel forcefully submits:
   

"A money lender cannot lend money and then be involved in its accounting spending of it or sign to withdraw money from the borrower's bank account. That is impossible."

9. Alternatively, defence counsel submits that in the absence of the claimant possessing a valid business licence and work permit, the contract is "illegal, null and void and unenforceable". Furthermore if the agreement is capable of being separated into a loan and a joint-venture agreement, then, in the absence of a banking licence under the Financial Institutions Act [CAP. 254], "the claimant is prohibited by law to carry out money lending or banking business".

10. After considering the two (2) documents and counsel's competing submissions and the pleadings in the case, I accept and uphold the submissions of the claimant's counsel.
    
11. I am satisfied that the basic underlying contract between the parties was a loan agreement. The aspirational and ancillary clauses that point otherwise although mutually agreed terms, did not alter the underlying loan agreement which was fully performed by the claimant. I am equally satisfied that the defendant has failed to repay the loan and agreed interest by the due date and I find that the defendant is in breach of the agreement.
    
12. Needless to say the case of Goiset v. Blue Wave Limited [2001] VUSC 124 is readily distinguished on the facts from the present case including the fact that the claimant in that case admitted conducting a consultancy business without a business licence whereas in the present case, the claimant's consultancy (if performed) was a term of the loan agreement and, in my view, is severable from it. In any event the claimant had foregone any claim for consultancy fees in the August addendum long before issuing proceedings.
    
13. Equally I am satisfied that any defence based on the provisions of Section 7 of the Financial Institutions Act [CAP. 254] which is no-where raised or pleaded in the defence, is wholly misconceived as it has no application to the claimant who is not "a body corporate".
    
14. Accordingly judgment is entered against the defendant in the sum of VT4,000,000 together with interest of 10% per annum with effect from 1 December 2009 and payable within 60 days. Costs are also awarded to the claimant to be agreed or taxed by the Master.
    

DATED at Port Vila, this 23rd day of March, 2016.

BY THE COURT

D. V. FATIAKI
Judge.