Samoa Coconut Products Ltd v Samoa Coconut Oil Products Ltd [2000] WSSC 32 (18 September 2000)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN

SAMOA COCONUT PRODUCTS LIMITED
a duly incorporated company located at Vaitele.
First Plaintiff

AND

ATTORNEY GENERAL
Second Defendant

AND

SAMOA COCONUT OIL PRODUCTS LIMITED
a duly incorporated company.
First Defendant

AND

TUAOPEPE FELIX WENDT,
Director of Samoa Coconut Oil Products Limited.
Second Defendant

AND

MARTIN A. SCOTT,
Director of Samoa Coconut Oil Products Limited.
Third Defendant

Counsel: G. Latu for first and second plaintiffs
T. K. Enari for third defendant

Hearing: 14 September 2000
Judgment: 18 September 2000

JUDGMENT OF SAPOLU CJ

The present proceedings are concerned with a motion on behalf of the liquidator for Samoa Coconut Products Ltd (SCOPL) and the Attorney-General to lift an interim injunction granted on 27 July 2000 which in effect prevented the Attorney-General and those on whose behalf she acts from selling or otherwise dealing with certain machinery, namely, two Anderson units used for coconut milling, which the third defendant claims to belong to him. The Attorney-General apparently wants the interim injunction lifted so that the two Anderson units could be sold to the successful bidder for the acquisition of the coconut mill at Vaitele so that the coconut mill could be brought into operation again.

In proceedings which resulted in the interim injunction of 27 July 2000, it was not raised or argued whether it was appropriate to issue an interim injunction against the Attorney-General. However, in the present proceedings it was submitted on behalf of the third defendant that the Attorney-General does not have standing to bring these proceedings to lift that injunction. The short answer to that submission is that since the Attorney-General is affected by the interim injunction, she should have standing to apply for its discharge. Counsel for the Attorney-General also informed the Court that he was asked by the liquidator of SCOPL to appear on his behalf.

The central issue in these proceedings is whether the two Anderson units belong to SCOPL which is now in liquidation or to the third defendant who was, and perhaps still is, a shareholder and director of SCOPL. It is clear that if the two Anderson units belong to SCOPL then the interim injunction should be lifted so that the liquidator can sell those machinery. But if the two Anderson units belong to the third defendant then the interim injunction should remain. Likewise, if there is doubt as to the ownership of the two Anderson units, then in principle the status quo should be preserved until the substantive hearing when oral evidence may be called and questions of credibility and reliability may be properly determined. In the present proceedings the evidence on both sides were given in affidavit form so that it would not be appropriate to make findings on credibility where the opposing affidavits conflict in a material way.

On behalf of the Attorney-General, reliance was placed on the 1997 and 1998 financial statements of the now in liquidation SCOPL and other documentary material to show that the two Anderson units belong to SCOPL. In chronological order, the first piece of documentary material submitted on behalf of the Attorney-General is a letter dated 17 January 1997 from Tuaopepe Felix Wendt, the managing director of SCOPL, to the then Minister for Trade, Commerce and Industry. From what counsel for the Attorney-General told the Court, the mill unit mentioned in that letter refers to the two Anderson units. They were manufactured in the United States and were then transferred to Palau where they had been used for 13 years. According to that letter, the Anderson units were to be relocated to Samoa from Palau via Los Angeles. The purpose of Mr Wendt’s letter of 17 January 1997 was to seek approval from the Minister for Trade, Commerce and Industry for the mill unit to be brought into Samoa under SCOPL’s incentives approval order which granted to SCOPL duty and excise tax incentives. Paragraph 2 which is the material part of that letter says:

“The mill is being transferred to Samoa by its owners, Messrs Guy Luttrell and Martin Scott, who are the principal partners of our company. This represents the further capital investment by Samoa Coconut Oil Production Ltd into the processing of copra into oil....”

This part of the letter dated 17 January 1997 is a clear indication from Mr Wendt that the mill unit (the Anderson units) were owned by Guy Luttrell and Martin Scott, the third defendant, at that point in time.

The audited financial statements for SCOPL for the year ending 31 December 1997 under the heading “Authorised and Paid Up Capital” then show that $2,065,000 of the share capital of SCOPL paid during 1997 was from the acquisition by SCOPL of the Anderson will machinery from its shareholders. At this point in time both Guy Luttrell and Martin Scott must still have been shareholders of SCOPL although Guy Luttrell appears from the material adduced on behalf of the third defendant to have left the company sometime during 1997. Then under the heading “Due From Related Parties” is shown that $2,076,503 was advanced from shareholders by means of the Anderson mill machinery. Again under the heading “Fixed Assets” is shown Anderson mill machinery. I must say any person looking at SCOPL’s financial statements for the year 1997 would have the clear impression that the Anderson units had become the properties of SCOPL in 1997.

In the unaudited financial statements of SCOPL for the year ending 31 December 1998 under the heading “Fixed Assets”, the Anderson mill machinery again reappears twice and under the heading “Cost of Production” appears the items mill machinery repairs and maintenance” and “mill machinery depreciation”. Again the clear impression any person looking at the unaudited financial statements of SCOPL for the year 1998 would have is that the Anderson mill units belonged to SCOPL in 1998.

Then in a letter dated 10 April 2000 from Mr Wendt to Mr Jim Dunlop of Oilseed Products/OCCL which was the company that was going to enter into a joint venture operation with SCOPL, Mr Wendt refers to the joint inspection by the two companies of the assets of SCOPL that were to be handed over by SCOPL as part of its contribution to the proposed joint venture. Amongst the assets to be handed over by SCOPL were two Anderson expellors. That letter from Mr Wendt was copied to several addresses including the third defendant. Furthermore, in winding-up proceedings brought by Oilseed Products (NZ) Ltd against SCOPL earlier this year, Mr Wendt filed a sworn affidavit where it says, inter alia, in paragraph 15 that SCOPL’s assets which represented its share input to the joint venture with Oilseed Products (NZ) Ltd included two Anderson expellor units. Again the clear impression conveyed in these two documents is that the two Anderson units belonged to SCOPL.

Counsel for the Attorney-General also referred to section 327 of the Companies Act 1955 (NZ) which applies in Samoa. Section 327 provides:

“Where a company is being wound up, all books and papers of the company and of the liquidator shall, as between the contributories of the company, be prima facie evidence of the truth of all matters purporting to be therein recorded”.

Obviously section 327 lays down a prima facie rule which should prevail in the absence of sufficient evidence to the contrary.

Now for the third defendant who resides permanently in the United States, his counsel produced an affidavit by the third defendant together with supporting documentary material to show that the two Anderson units under dispute belong to the third defendant. Apart from assertions of ownership of the two Anderson units in the third defendant’s affidavit, is a letter dated 12 March 1998 from the third defendant to the late Mr Kamu who, until his untimely death in July 1999, was the chairman of SCOPL’s board of directors. That letter is relatively brief and I would set it out in full:

190 North Canon drive

Sude 401

Beverly Hills, CA 90210

March 12, 1998

Leva Kamu, Esq.

PO Box 2949

Apia, Western Samoa

Fax # [phone]

re: Anderson Equipment

Dear Leva:

I expect my legal situation with Guy Luttrell to be settled within the next 10 days or so. At that time, it is expected that Guy Luttrell will deed the Anderson equipment, which is his personal property, to me. As you know, Guy allowed SCOPL to use this equipment at the mill during this interim period.

As soon as I receive the final documents, I will prepare a letter which assigns the Anderson equipment to the mill for the duration of the case. However, as we discussed at a meeting at Bob Barlow’s office, I will expect to receive some lieu or proof le legal security from SCOPL that protects me, the personal owner, as to the fair market value of the equipment. I will anticipate receiving some indication in writing that this has been done prior to my assignment being considered, by anyone, as legally binding.

Very truly yours,

Martin Scott

MS:dg

cc:Dr Felix Wendt

Fax # [phone]

Then a further letter dated 31 March 1998 concerning the same Anderson units was sent by the third defendant to Mr Kamu. Again I will here set out that letter in full. It reads:

190 North Canon Drive

Suite 401

Beverly Hills, CA 90210

March 31, 1998

Leva Kamu, Esq.

P.O. Box 2949

Apia, Western Samoa

Fax # 20550

re: Equipment Referred To In Bill Of Sale Between Guy Luttrell & Martin Scott, Dated March 30, 1998

Dear Leva:

As you know, prior to March 30, 1998, all of the “Anderson Milling Equipment” had been personally owned by Guy Luttrell and myself. As of March 30, 1998, please be advised that I am now the sole owner of said equipment. This is evidenced by Bill of Sale, a copy of which is attached.

As the sole owner of this equipment, I agree to assign this personal asset to SCOPL for the benefit of the company and its operations. This assignment is given only for the term of the active lease of the mill at Vaitele, Western Samoa. SCOPL is not authorized to encumber, sell, or dispose of this equipment, in any manner whatsoever, but may utilize its value in order to balance and finalize its accounting.

I assume that, as both an attorney and a fellow shareholder in SCOPL you will protect my interests in this equipment.

Very truly yours,

Martin Scott

MS:dg

cc: Dr Felix Wendt

Fax # [phone]

A copy of the bill of sale mentioned in the third defendant’s letter is also annexed to the third defendant’s affidavit. On its face, the bill of sale confirms the sale by Mr Guy Luttrell of his interest in the Anderson units to the third defendant for valuable consideration. In paragraph 4 of his affidavit, the third defendant also says that although he agreed to put parts of his Anderson equipment into the coconut mill to get it functioning, he had never relinquished his ownership of the equipment. He also says in paragraph 12 of his affidavit that he did not sign SCOPL’s accounts for 1997 and 1998 and he did not intend by those accounts to mean that SCOPL owned his Anderson equipment.

Taking an overall view of all the materials that was placed before the Court concerning the ownership of the two Anderson units, I feel that I cannot safely conclude with the necessary degree of confidence that the two Anderson units belong to SCOPL or to the third defendant. The matter has to go further to a substantive hearing where questions of credibility could properly be determined. I cannot determine such questions solely on the basis of affidavits. Even though there is an element of real urgency as far as the Attorney-General is concerned, the material placed before the Court by both parties does not sufficiently satisfy the Court with the necessary degree of confidence that ownership of the two Anderson units belong to SCOPL now in liquidation so as to justify lifting the interim injunction granted on 27 July 2000.

The motion to lift the interim injunction is therefore denied until further order of the Court. Counsel may see me in chambers for setting a date for the substantive hearing of this matter.

CHIEF JUSTICE

Solicitors:
Attorney Generals Office for first and second plaintiffs
Kruse, Enari & Barlow for third defendant