Fiso v Reid [2002] WSCA 2; Misc 70 2002 (2 December 2002)

IN THE COURT OF APPEAL OF SAMOA
HELD AT APIA

MISC 70/02

BETWEEN

ATIIFALE FISO
of Matautu-tai, Deceased
by his daughter Vaitoelau Hewson of Matautu-tai, Businesswoman.
Appellant

AND

PETER EUGENE REID JUNIOR
of Pago Pago, American Samoa, Businessman
for himself and as Attorney of the Estates of EARNEST REID;
RICHARD F. REID; CECIL W. REID; and BLANCHE H. REID.
Respondents

Coram: The Rt. Hon. Lord Cooke of Thorndon
The Rt. Hon. Sir Maurice Casey
The Rt. Hon. Sir Gordon Bisson

Hearing: 25 November 2002

Counsel: TRS Toailoa for appellant
PA Fepuleai for respondents

Reasons for Judgment: 2 December 2002

REASONS FOR JUDGMENT OF THE COURT DELIVERED BY
LORD COOKE OF THORNDON

This is an application for (inter alia) leave to extend the time for appealing from part of a judgment of Wilson J delivered in the Supreme Court on 30 June 2000. The application was filed in the Supreme Court on 8 February 2002. On 11 March 2002 the Chief Justice in that Court ordered that the application and incidental matters be referred to the Court of Appeal for determination. After hearing the arguments of counsel on 25 November 2002 this Court dismissed the application, indicating that the principle of the finality of litigation should prevail and that the Court would give fuller reasons later, which we now do.

The History

According at least to counsel for the applicant, this is the last stage to be expected in litigation concerning land and improvements on Beach Road, Apia. In the events that have happened the rival parties are families or estates of deceased persons. It will make for simplicity, however, to refer to the registered proprietor as Reid and the occupier as Fiso. On the land Fiso, who has occupied it for many years and is apparently still in occupation, has constructed certain buildings, including a night club and a store. Fiso has also improved the land, largely by filling which has converted some of it from swamp.

The earlier phases of the litigation are no longer of relevance. The phase with which this Court is now concerned began with a claim filed in the Supreme Court by Fiso against the owner for damages or compensation for unjust enrichment by the improvements on the land. The statement of claim, dated 13 August 1996, originally sought judgment for $1,528,000 later amended to $1,961,000, together with incidental relief. This was the claim dealt with by Wilson J in the judgment already mentioned.

In his judgment Wilson J found that the plaintiff and his family had occupied and looked after the land for many years with the consent of the original owners (evidently implied) and had carried out reclamation and improvements including clearing and filling, and constructing permanent homes and night club facilities. The claim was for value of fill ST$1,433,000 and buildings including bar facilities and amenities $528,000: total $1,961,000. A counterclaim seeking to treat the value of improvements as rent was not pursued. Thus Fiso has enjoyed and apparently continues to enjoy the land without paying any rent.

Evidence supporting the claim was given by the original plaintiff himself and several other witnesses, including an expert valuer, Malaki Tuiulupona. The Judge had the benefit of a view of the property. The only oral evidence called for the defendant was that of Peter Reid Jnr. The defendant adduced no expert valuation evidence. The Judge said that it was not contended on behalf of the defendant that a wrong approach had been adopted by the plaintiff’s valuer to his task regarding the cost of improvements. The latter valued the improvements on the basis of replacement cost less depreciation. That, however, was not the basis on which the Judge assessed compensation for the filling.

The Judge summarized the evidence of the plaintiff himself, whom he accepted as an honest witness, and his supporting witnesses. The evidence highlighted the cost of loads of fill. Wilson J went on to cite certain authorities. Having done so, he assessed the actual cost of the fill at $200,000, rejecting a submission by Mr Toailoa for the plaintiff that compensation should be based on current market value as opposed to the historical actual cost. If wrong in that view, he added that these would need to be a substantial discount (perhaps as much as 70% to 80%) on account of the fact that a great deal of the reclamation work was done free of commercial cost and that what was done was in the period 1940 to 1974 at a cost of much less than the inflationary sum of $65 per load.

In the result, adopting what he called ‘a broad axe approach’ he gave judgment for the $200,000 plus $528,000 for cost of improvements (‘as per the valuer’s evidence but limited to the plaintiff’s claim’): a total of $728,000. As from the date when the judgment was paid in full (which has yet to occur) the plaintiff and his family were required to vacate within three months. The Judge said that he considered that the total at which he had arrived satisfied the plaintiff’s equity.

Reid appealed from the judgment of Wilson J. The appeal was heard by a Court of Appeal consisting of Sir Ian Barker, Sir Ian McKay and Mr Justice Robertson. The judgment of the Court was delivered by Sir Ian McKay on 23 November 2001. A prominent feature of the argument presented for the appellant by Mr Enari was the submission that an essential ingredient of a claim of this kind for unjust enrichment is that the defendant should know at the time that the claimant was expending money on the land. The Court of Appeal rejected that submission, holding in the light of authorities which they cited that unfairness of allowing the owner to retain the benefit without compensation to the claimant, or ‘the absence of any juristic reason for the enrichment’, is the criterion. Their decision on this central point was thus favourable to Fiso.

But the Court of Appeal drew a distinction which was also important. Reid’s solicitor had sent to Fiso a letter dated 9 April 1992. It required Fiso to stop and desist forthwith from the concrete block construction on the property; and to vacate the land. The Court held that fresh expenditure after this express notice was not recoverable. As to the dates of some of the expenditure the evidence was unclear; but it was clear that work which created structures valued at $263,000 was done against the express wishes of Reid. Accordingly the Court disallowed that part of the claim, reducing the Judge’s award to $465,000. A corresponding adjustment was made in the award for the costs of the Court proceedings.

In all other respects the Court of Appeal left the Judge’s award standing. On the law, they expressed the opinion that it is a question of the amount which in the circumstances of the particular case will satisfy the requirements of equity. ‘In some cases the value of the benefit may be the appropriate guide. In other cases the cost incurred by the plaintiff may be a better measure’.

Early in their judgment the Court of Appeal recorded that there had been no cross appeal by Fiso. Later in their judgment they returned to this point in the following passage-

(ii) [A]warding a value of $200,000 for fill on the land;

The Judge reached his figure on what he described as a ‘broad axe’ approach. If he had awarded the valuer’s figure of ST$1,433,000, the appellant might have had difficulty in attacking it. The valuer assessed the value of the frontage land as bare swamp land at ST$280,000. He assessed the added value of the fill on the basis of a calculated volume, translated into a number of truckloads, at $65 per load. He acknowledged that this assessment of cost was not reflected to the full extent in the increase achieved in value. The same method was used in his report of 11 October 1995 in respect of the new land, giving a figure of ST$433,000. This evidence might seem to have justified an award of no more than ST$860,000. The Judge awarded only ST$200,000.

How the Judge arrived at this figure is unclear to us. He described it as a ‘broad axe’ approach. He rejected any work carried out which was not a ‘commercial cost’ to the respondent, and rejected any measuring of cost in the values of today rather than those of years ago. We are not called upon to decide whether he was correct in this approach, because there is no cross-appeal. It is quite clear to us, however, that the ST$200,000 awarded was a very modest amount in the circumstances. We are certainly not persuaded that it was excessive, or that the Judge erred in favour of the respondent in awarding it.

An incidental comment may be made that how the figure of ‘no more than ST$860,000’ was arrived at is not explained in the judgment, presumably because the suggestion was purely obiter.

We think it unlikely that in that passage the Court of Appeal intended to suggest that the litigation be further prolonged by a belated application on the part of Fiso for leave to appeal or cross appeal from Wilson J. The Court of Appeal probably intended to do no more than explain why Reid’s appeal against the ‘very modest’ award for fill must fail. Under Rule 18 of the Court of Appeal Rules the time for appeal is 30 days from when the appellant first had notice of the Supreme Court decision. By Rule 11, a cross appeal is required to be filed within ten days of service on the respondent of the notice of appeal. So the application in February 2002 was, as is conceded, long out of time. Mr Toailoa contends nevertheless that Fiso would have been content with the total award made by Wilson J but that, now that the Court of Appeal have both reduced the total award and made the observations contained in the quoted passage, it is just and in accordance with the merits of the dispute that the discretion to extend time should be exercised in Fiso’s favour.

The Principle of Finality

We have no doubt that in considering the exercise of the discretion to extend time the principle that there ought to be an end to litigation is a consideration to be taken into account. It is not the only consideration, but it is a major one in a case such as the present. An expression of the principle which has come to be cited very often in the last eighty years or so is contained in the judgment of Wigram V.-C. in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100, 115 –

... when a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward... The plea of res judicata applies, except in special cases ... to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.

Henderson v Henderson and many subsequent cases have been reviewed in the House of Lords in Johnson v Gore Wood & Co. [2001] 1 All ER 481. Delivering the leading speech, Lord Bingham of Cornhill concluded at pp. 498 to 499 –

It may very well be, as has been convincingly argued (Watt ‘The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter’ (2000) 19 CJQ 287), that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole.

Lord Bingham continued –

The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.

Similarly Lord Millett concluded at p.525 –

While the exact relationship between the principle expounded by Sir James Wigram and the defences of res judicata and cause of action and issue estoppel may be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented.

Johnson v Gore Wood appears to have inspired an article entitled ‘A Closer Look at Henderson v Henderson’ in (2002) 118 LQR 397 by K. R. Handley (Handley JA of the New South Wales Court of Appeal). The author analyses Henderson v Henderson itself as based on cause of action estoppel, argues that this point has been overlooked or misunderstood in some later cases of high authority, but applauds Johnson as returning Henderson to its proper place, as an example of a category of abuse of process. He accepts that a broad merits-based approach is now required, even though this means ‘a discretionary judgment and ... will tend to generate extensive argument and lengthy evidence.’

In the present case the argument was not lengthy, nor was any new evidence called for. Both the risk that the solicitor’s letter of April 1992 (expressly pleaded in the statement of defence) would be seen by the Court of Appeal as significant, and the argument that the award of only $200,000 for fill was based on a wrong principle, were or should have been obvious at all material times. On Fiso’s side those possibilities must be treated as having been impliedly accepted when a cross appeal was not brought. What generated the present very belated application were the obiter observations of the Court of Appeal in their judgment. Those observations were the only ‘special circumstances’ which Mr Toailoa could suggest to take the case out of the principle of finality. No doubt they were unexpected observations, but they cannot in our view override the plain fact that the opportunity of cross appealing was not taken.

There is another consideration of some importance. In the field of unjust enrichment a broad overall assessment may be the best that can be achieved, as both the Supreme Court and the Court of Appeal judgments recognize. It is often, and was in this case, necessary to stand back and look at the global award in the light of equity. An estimate on one head may be influenced by the amount of an estimate on another head; generosity in one part of the case may be tempered by conservatism in another part. Any advantages enjoyed by the claimant, such as the rent-free occupation here, have to be taken into account. In short, equitable compensation is not an exact science. The present application, though, seeks to single out the award for fill as the one subject for further contention. The applicant does not wish any other issue to be reopened. We do not consider that this would conduce to overall equity between these parties in these circumstances.

For these reasons the application had to be dismissed. But, however unwittingly, the observations of the Court of Appeal did stimulate the application. Accordingly, while the orders of the Court of Appeal will remain undisturbed, there will be no order for the costs of the present application in the Supreme Court or the Court of Appeal.

Solicitors:
Toailoa Law Firm for appellant
Fepuleai & Schuster Law Firm for respondent