Fruean v Fruean [2016] WSCA 7 (1 March 2016)

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Case name:	Fruean v Fruean

Citation:	[2016] WSCA 7

Decision date:	1^st March 2016

Parties:	MARGARET FRUEAN (appellant) and JULIUS and LENITALA FRUEAN (First Respondents) and PAPALII LIMA CHARLIE and PATRICIA FRUEAN (Second Respondents)

Hearing date(s):	16 February 2016

File number(s):	CA15/15

Jurisdiction:	Civil

Place of delivery:	Court of Appeal of Samoa, Mulinuu

Judge(s):	Honourable Justice Fisher Honourable Justice Panckhurst Honourable Justice Nelson

On appeal from:	Supreme Court

Order:	The following orders are substituted for those made in the Supreme Court: (a) The interim injunction of 24 March 2014 is discharged. (b) A declaration is made that the appellant currently holds the legal title to the property as trustee for the rightful successors to the estate of her deceased mother. (c) The appellant shall within 10 days execute and register at her own expense a transfer of legal title to the land to Julius and Charlie to be held by them as trustees for the rightful successors to the estate of their deceased mother. (d) Leave is granted to all parties to apply to the Supreme Court for further order concerning the terms on which Julius and Charlie hold the property on trust pending final distribution. (e) The appellant must pay reasonable costs to the respondents for the proceedings in the Supreme Court to be fixed by the Supreme Court in the absence of agreement. - In this Court the appellant must pay the respondents costs of $5000 plus disbursements.

Representation:	M Betham-Annandale for the appellant R Drake for the 1^st and 2^nd respondents

Catchwords:	Interim injunction – dispute on land – sole ownership

Words and phrases:

Legislation cited:

Cases cited:	Martin v Ryan Avondale Printers & Stationers Ltd v Haggie

Summary of decision:

Court:
Honourable Justice Fisher
Honourable Justice Panckhurst
Honourable Justice Nelson

Counsel:
M Betham-Annandale for the appellant
R Drake for the 1^st and 2^nd respondents

[1] In a Supreme Court decision of 27 November 2015 Vaai J dismissed the appellant’s claim to sole ownership of her deceased mother’s house property at Vaivase-uta. From that decision the appellant has appealed.

[2] The late Palepa Fruean (“the mother”) had five children, Margaret (the appellant) Julius (first-named 1^st respondent), Joshua, Emma and Charlie (first-named 2^nd respondent). It will be convenient to refer to Julius and Charlie as “the respondents”. Joshua was and is mentally handicapped.

[3] In 1991 the mother, and allegedly the appellant, purchased a vacant quarter acre property at Vaivase-uta for $16,000.

[4] The mother spoke little English. Her daughter, the appellant, was a fluent English speaker employed by the Treasury Department. The appellant handled communications with the family’s solicitor, Mr Toailoa. Mr Toailoa arranged for legal title to the property to be conveyed into the names of the mother and the appellant as joint tenants.

[5] The deed of conveyance to the mother and appellant was executed by the Public Trustee as vendor on 31 October 1991 and registered on 18 November 1991. In the deed the Public Trustee acknowledged receipted of the purchase price of $16,000.

[6] By letter of 10 March 1992 the Housing Corporation instructed the family solicitor to prepare a mortgage over the property, asking the solicitor to return the signed copy of the letter “when documentation is completed and in order to release”.

[7] Shortly after the purchase, members of the family began stock-piling materials with which to build a house on the land. Various members of the family contributed to the house in various ways. The appellant paid for the roofing iron. Julius financed the bulk of the construction by paying for materials, drawings, and other services such as water and electricity. By 1994 construction of the house had reached a point at which the mother, Joshua and Julius could move in. At some point Charlie also moved onto the property.

[8] The mother worked at Aggie Grey’s Hotel. The Grey family provided carpenters to build a bed-sitter and Samoan fale on the property and paid for more materials. They did so as an acknowledgement of the mother’s long and faithful service for over 30 years and in particular her caregiving service to Aggie Grey, the founder of the Hotel.

[9] From time to time the four children other than Joshua worked on improvements to, and maintenance of, the property.

[10] The mother died in December 2013. By that stage Julius and Charlie were living on the property and caring for Joshua there. In March 2014 they erected a chain-linked fence around the land. They also used money from renting out one of the houses on the property to assist with expenses and care-giving for Joshua.

[11] The appellant sought to assert her interest as sole owner acquired by virtue of the joint interest and survivorship. The respondents resisted this. In 2014 the appellant obtained an ex parte interim injunction requiring Julius and Charlie to leave the property. We mention in passing that the documents then before the Court showed no possible justification for the extreme step of granting the injunction ex parte. Injunctions should never be granted ex parte unless notice to the other party would cause irrevocable harm.^1[1] This application ought to have been dealt with on notice.

[12] Following the interim injunction Julius and Charles left and subsequently took it in turns to care for Joshua in their respective homes elsewhere.

[13] The Supreme Court proceedings continued beyond the interim injunction. In her statement of claim the appellant pleaded that she and her mother had bought the property as joint tenants; that to pay the purchase price of $16,000 they used a loan of $11,000 from the Samoa Housing Corporation (“SHC”) plus mutual savings totalling $5000 that the SHC loan was serviced equally by the appellant and her mother, and that as a result of her mother’s death she became the sole owner by survivorship.

[14] In their statement of defence and counterclaim Julius and Charlie pleaded that the land had been purchased by the mother through a loan of $16,000 from her employer, Aggie Grey Hotel, on favourable terms and that the loan had been serviced by direct deductions from their mother’s salary. They argued that through dishonesty and fraudulent conduct the appellant had taken advantage of the mother’s limited knowledge and trust by arranging for transfer of the title into her own name and that of the mother as joint tenants. They sought an order that the appellant hold the land under a constructive trust for all five children or in the alternative damages for unjust enrichment.

[15] At the Supreme Court trial that followed, the appellant gave evidence that when the Public Trustee advertised the land for sale, she submitted a successful bid for $16,000. For the purchase price she and her mother arranged a loan of $11,000 with SHC to which they added $5,000 from their own savings. She said that instalments of $260 per month were then paid to SHC through direct deductions from their bank accounts and that the other children were at all times aware of the joint tenancy. In support she produced documentary evidence showing that direct deductions of $260 per month in total were made in favour of SHC by way of equal contributions from the bank accounts of her mother and herself from and after October 1991.

[16] In their evidence Julius and Charlie denied all knowledge of any joint tenancy before their mother died. They gave evidence of the extensive maintenance and improvements that they had carried out to the property. They said they would not have contributed in that way had they realised that the appellant was relying upon a joint tenancy. They called evidence from Mr Alan Grey, of Aggie Grey’s Hotel. He recalled lending the mother $16,000 to buy the property.

[17] In his judgment the Judge saw the central issues as “firstly whether the plaintiff contributed to half the purchase price of the land, and secondly if she did, did the defendants and their sister Emma knew at the time they contributed to the costs of improvements that the plaintiff was the joint owner.”

[18] The Judge acknowledged the appellant’s point that direct deductions had been made from the joint bank accounts of herself and her mother in favour of the Housing Corporation from the time of the purchase in October 1991. However he considered that the bank account deductions on which the appellant relied were inconsistent with the Housing repayment terms, which required monthly instalments of $260. He concluded that those deductions were probably for a different loan altogether.

[19] In this Court Mrs Betham-Annandale sought to introduce fresh evidence obtained from an officer at SHC since the trial.

[20] The affidavit from the SHC officer exhibited an SHC ledger card for the loan in question. The ledger card establishes a number of pertinent points – first that the loan was made in the name of the mother alone, secondly that it was a loan for $11,000, thirdly that regular monthly instalments of $260 were made over a period of about a year, fourthly that over that year the loan was progressively reduced to $8,901.68, and finally that the balance of $8,901.68 was repaid in full by a single payment on 20 October 1992.

[21] In addition to production of the ledger card the SHC officer’s affidavit proposed an ambitious set of propositions concerning SHC and conveyancing practices in 1991.

[22] Mrs Drake opposed the introduction of the proposed evidence from the SHC officer. She rejected the notions that the new evidence would have been unavailable at the original trial, that it was likely to have a major effect on the outcome and that she had been given adequate notice of the intention to apply to introduce fresh evidence.

[23] We upheld Mrs Drake’s opposition in all respects except one. In our view the ledger card itself is incontrovertible and relevant. We therefore admitted the ledger card as evidence on the appeal while rejecting the rest of the SHC officer’s affidavit.

[24] The appellant’s grounds for appeal can be grouped under the following headings:

[26] We accept the appellant’s contention that she contributed to the purchase price of the vacant land.

[27] The Judge noted that SHD did not send its letter of instructions to the purchaser’s solicitors until March 1992. From this he assumed that it must have concerned an unrelated loan. But the relevant SHC ledger makes it clear that SHC advanced the $11,000 in question to the mother in October 1991. Since that was the date of purchase, it is inescapable that the majority of the funds required for the initial purchase came from SHC as the appellant had said.

[28] That also makes it entirely possible that the balance of $5000 required to settle the initial purchase came from the savings of the appellant ($2000) and her mother ($3000) as the appellant had claimed.

[29] It is also clear from the bank statements produced to the Supreme Court that over the year following the SHC loan the appellant and her mother made equal contributions to the monthly instalments of interest and principal due under that loan. The appellant’s contributions under that heading appear to have amounted to about $1625. It seems safe to infer that a prior commitment along those lines from the appellant would have been important to the mother in deciding whether to make the purchase.

[30] In broad terms the appellant’s contribution to the purchase of the vacant land, whether in immediate cash or a commitment to help with instalments over the first year, amounted to about $4,625.

[31] The balance of $8,901.68 owing under the SHC loan was repaid in full by a single payment on 20 October 1992. A cheque for $5000 from Aggie Grey’s Hotel payable to the mother’s lawyer was dated 19 October 1992. On 20 October 1992 the mother’s lawyer acknowledged receipt of $8901.68 from her in the form of the Aggie Grey cheque for $5000 and the balance in cash. The appellant does not suggest that she contributed at that time. It is reasonable to conclude that the mortgage was paid off by a combination of assistance from Aggie Grey’s and accumulated savings of the mother.

[32] In broad terms the appellant’s contribution to the purchase of the vacant land was therefore immediate cash, and a commitment to help with instalments over the first year, amounting to about $4,625 in total. To that one could add her subsequent contribution of about $1,200 for roofing iron. The total of her contributions to the property throughout her mother’s life was therefore in the order of $6,000. The figure is very approximate but sufficient for the broad judgments to which we will come later in this judgment.

[33] The Judge concluded that the mother was unaware that the solicitor had arranged for the title to be put into a joint tenancy with the appellant.

[34] On appeal Mrs Betham-Annandale challenged that finding. She submitted that the solicitor acting on the purchase was a senior one and that it would be safe to assume that he would have explained the nature of the joint tenancy to the mother.

[35] We can find no basis for differing from the trial judge on this issue. His conclusion is supported by a number of considerations:

[36] We are satisfied that on this critical issue the Judge’s conclusion that the mother was unaware of any joint tenancy was well-founded. The mother thought that she alone was, and would remain, the sole owner of the property. Further, the appellant must have known that that was the mother’s understanding.

[37] Mrs Betham-Annandale challenged the Judge’s conclusion that the respondents did not know of the joint tenancy. She pointed out that when Charlie had used the property as collateral for a number of personal loans he had knowingly obtained her written consent as well as that of the mother and that the letter of consent referred to both as the owners.

[38] We see no reasons to depart from the Judge’s conclusion on this aspect bearing in mind the following:

[39] We also see no reason to question the Judge’s view that the appellant must have known very well that her brothers would not have made the contributions they did if they had thought that they were effectively improving their sister’s property.

[41] The probable sequence is that when the vacant land was originally purchased in 1991 the mother and the appellant intended that the purchase would be solely for the benefit of the mother. The appellant says that it was not until she discussed legal matters with their solicitor that he told her that since she was contributing to the purchase, title should be taken in their joint names. We have rejected that explanation. However the timing suggests that the appellant did not discuss the question of joint tenancy with their solicitor until after the mother had already agreed to purchase the property. By then the mother already had the sole beneficial interest in the property, albeit not the legal title.

[42] What followed after the mother had already acquired the sole beneficial interest was merely a matter of organising the legal title. The appellant could not derogate from the mother’s existing beneficial interest without the mother’s agreement. The mother never gave that agreement. Consequently the arrangements then made to take legal title in joint names cast the appellant in the role of mere trustee. The relevant principle is uncontroversial. It has been expressed as follows:

A constructive trust arises by operation of law where it would be a fraud for the legal owner to assert his beneficial interest.^2[2]

[43] The entire beneficial interest therefore remained that of the mother. At all material times since then the appellant has held her legal interest in the property as constructive trustee for the mother, and more recently, for the deceased mother’s estate.

[44] The effect of the legal joint tenancy was that by right of survivorship the appellant now has sole legal title to the property. However the sole legal title is that of a trustee only. The beneficial interest passed from the mother to the successors to her estate.

[45] That makes it unnecessary for us to consider the alternative counterclaim of the respondents based on unjust enrichment. It is sufficient to say that that claim would have been a strong one had it been necessary to analyse it further.

[47] While such orders would be entirely sensible from a family viewpoint it would be difficult to find the jurisdiction for them. Strictly speaking the mother’s beneficial interest in the property passed on her death to the rightful successors to her estate.

[48] We have not been told the identity of the successors to the mother’s estate. They may well be the five children in equal shares consequent upon an intestacy. However we heard no submissions to that effect and it would be wrong for us to make that assumption.

[49] In substance the appeal fails. However in a technical sense it succeeds to the extent that the remedies will be modified to reflect succession via the mother’s estate. Given the background it is also appropriate that the trusteeship pass immediately to Julius and Charlie pending final distribution of the estate.

[51] In this Court the appellant must pay the respondents costs of $5000 plus disbursements.

Court of Appeal of Samoa

Fruean v Fruean [2016] WSCA 7 (1 March 2016)