Housing Corporation of Samoa v Kelemete [2000] WSSC 29 (11 August 2000)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

HOUSING CORPORATION of Samoa
established under the Housing Corporation Act 1989.
Plaintiff

AND:

FAAUUGA KELEMETE
of Tuloto, Taufusi, Accountant.
First Defendant

AND:

LUFI KELEMETE
of Tuloto, Taufusi, Domestic duties.
Second Defendant

AND:

SOLOMONA ALEFA
of Vaivase-uta, employee of Tokelau Affairs.
Third Defendant

Counsel: T Potoi-Vaai for plaintiff
First defendant in person
Second and third defendant make no appearance

Hearing: 1 August 2000
Judgment: 11 August 2000

JUDGMENT OF SAPOLU CJ

On 23 October 1990 the first defendant entered into a loan agreement for $20,000 with the plaintiff the Housing Corporation for the purpose of building his residential home at Tuloto, Taufusi. Under the terms of the loan agreement, the loan was to be repayable over five years with instalments of $500 per month. The agreed rate of interest was 12% pa reducible to 10% pa on due compliance with the terms and conditions of the loan. The first defendant was also to insure, upon advancement of the loan, his residential home against loss or damage by fire, and continue to keep his home insured as long as there was any money owing on the loan. This fire insurance was to be taken out in the name of the plaintiff. As part of the security required in the loan agreement, the second and third defendants provided a joint and several guarantees. The loan agreement was executed by the plaintiff by affixing its common seal and by the first defendant signing his name. As the plaintiff decided to proceed only against the first defendant as the borrower and principal debtor and not against the second and third defendants as guarantors, I will say no more about the second and third defendants.

After the loan agreement was executed, the loan was disbursed to the first defendant in two instalments. The first instalment of $10,000 was paid out to the first defendant on 18 December 1990. Then after an inspection by the plaintiff of the work on the first defendant’s home, the second instalment of $9,800 was paid out on 9 January 1991. A sum of $200 was taken off by the plaintiff from the second half of the loan to pay for the fire insurance and legal fees. This amount of $200 is confirmed from the records for this loan kept by the plaintiff.

After full disbursement of the loan, the first defendant made some repayments. According to the records produced by the plaintiff’s recoveries officer who gave evidence in this case, the last loan repayment made by the first defendant was at the end of August 1994 for $100. This is quality evidence compared to the first defendant’s evidence that he made no loan repayment in 1994. I have decided to accept the evidence given by the plaintiff’s recoveries officer. After that last repayment at the end of August 1994, the first defendant made no further repayment. As a result, a letter of demand dated 17 March 1997 was served by the plaintiff upon the defendant. However, there were no further repayments following that letter of demand. The total amount outstanding on the loan as at 14 January 1999 was $43,464.41 inclusive of accrued interest and less total repayments of $4,280. Then a second letter of demand dated 26 May 1999 was again served by the plaintiff upon the first defendant. Still no further repayments were made. So on 1 November 1999 the plaintiff filed proceedings claiming the total amount outstanding on the loan as at 14 January 1999 of $43,464.41 plus interest at the rate of 14% per annum from that date to the date of judgment. It must be said here that the correct rate of interest that should have been claimed is 12% per annum rather than 14% per annum because the loan agreement provides that the rate of interest was to be 12% reducible to 10% per annum on due compliance with the terms and conditions of the loan.

In his oral testimony the first defendant objected to having to make any further loan repayments. He said that as he understood matters, the insurance cover that was taken out on his home was to include loss and damage caused by a cyclone even though he did not read the loan agreement. His home was completed in December one week before cyclone Val struck Samoa and completely destroyed his home. This must have been December 1991 because cyclone Val struck Samoa on the 5^th or 6^th of December 1991. I find this part of the first defendant’s oral testimony to be inconsistent with the written statement he filed as his statement of defence and confirmed by him during his oral testimony in which he said that his home was completed in December before cyclone Val struck Samoa the following January.

I pause here to make certain observations concerning the first defendants written statement and oral testimony. My first observation is this. Given that the second and last instalment of $9,800 of the first defendant’s loan was disbursed to him on 9 January 1991, I am unable to accept that it took him another eleven months until December the same year to complete building his home. Not only that, the first instalment of $10,000 of his loan was disbursed to him on 18 December 1990 when he started building his home. In effect what he was saying in his evidence was that he started building his home in December 1990 and did not complete it until December 1991. I have never heard of a home worth $20,000 that has taken almost a whole year to build even though the owner had been given the money to build and complete it. In my view, the first defendant must have completed his home well before December 1991 if it is true that the money which was required to build and complete it was $20,000. My second observation is that cyclone Val struck Samoa about the 5^th or 6^th of December 1991 and not January 1992 as the first defendant’s written statement seems to be saying. My third observation is that if, as the first defendant said in his oral testimony, his home was completed in December one week before cyclone Val, then his home must have been completed before December 1991 because cyclone Val struck Samoa in the first week of December 1991. I find the first defendant’s evidence in relation to when his home was completed very unsatisfactory.

As to the insurance cover, I also find the first defendant’s oral testimony that he understood the insurance cover to extend to cyclone loss and damage to be unsatisfactory and difficult to accept. In his written statement he said that when his second loan instalment was disbursed to him, an officer of the plaintiff corporation told him $300 would be retained by the plaintiff to pay the premium for the insurance cover and only $9,700 was paid to him. So he felt happy. The documentary evidence that was given by the plaintiff’s recoveries officer showed that only $200 and not $300 was retained by the plaintiff to pay for the fire insurance premium and legal fees. The first defendant continued to say in his written statement that after his home was destroyed by cyclone Val, he went to see the plaintiff’s manager who told him that no insurance had been paid by the plaintiff. He was shocked. He then said that if the plaintiff had not prevented him from taking out an insurance cover on his house, he, himself, would have taken out an insurance cover on his house. So he objected to the loan because he had been penalised by the negligence of the plaintiff.

The documentary evidence attached to the affidavit by the plaintiff’s recoveries officer and was produced to the Court, clearly showed that on 18 February 1991 the plaintiff paid $160 to National Pacific Insurance as the annual premium for the insurance cover on the first defendant’s home. I therefore cannot accept what the first defendant said in his written statement that the plaintiff’s manager told him that no insurance had been paid by the plaintiff on his home and that he was shocked. Furthermore, it would be wrong for the first defendant to say that if the plaintiff had not prevented him from taking out insurance cover he would have done so himself. It is also wrong for the first defendant to say that because of the plaintiff’s negligence he is now penalised. An insurance cover was actually paid by the plaintiff. But it was only for loss and damage caused by fire in accordance with the terms and conditions of the loan agreement.

I also find it difficult to accept that when the first defendant signed the loan agreement, he was not aware that the insurance cover provided in the agreement extended only to loss and damage caused by fire. He continued to make loan repayments up to the end of August 1994 even though his home was destroyed by cyclone Val December 1991. He must have known well before August 1994 when he made his last loan repayment, that the damage caused by cyclone Val to his home in 1991 was not covered by the insurance provided in the loan agreement, but he still continued to make loan repayments. Overall, the first defendant’s evidence does not inspire or generate confidence and I do not accept it.

I therefore give judgment for the plaintiff in the amount claimed of $43,464.41 together with interest at 12% per annum on the unpaid amount of the principal sum of the loan from 14 January 1999 to the date of judgment. Costs are also awarded to the plaintiff to be fixed by the Registrar plus any disbursements.

CHIEF JUSTICE

Solicitors:
Attorney General’s Office for plaintiff