Samoan Outrigger Hotel Ltd v Samoa Realty & Investment Ltd [2001] WSSC 22 (3 August 2001)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN

THE SAMOAN OUTRIGGER HOTEL LTD
a duly incorporated company having its registered office at Vaiala.
Plaintiff

AND

SAMOA REALTY AND INVESTMENTS LTD
a duly incorporated company having its registered office at Apia.
Defendant

Counsel: R Drake for plaintiff
S Hazelman for defendant

Hearing: 31 July 2001
Judgment: 3 August 2001

JUDGMENT OF SAPOLU CJ

In these proceedings the Court has to deal with a motion by the defendant company to discharge an interim injunction that was granted ex parte in favour of the plaintiff company to restrain the defendant, its servants and agents from evicting the plaintiff from the defendant’s premises at Vaiala leased by the defendant to the plaintiff.

Briefly, the defendant had leased to the plaintiff its premises at Vaiala for a period commencing on 17 October 1994 and ending on 1 December 1997. At the expiry of the term of the lease, the plaintiff had not applied for a renewal pursuant to the provisions of the deed of lease the parties had entered into. The plaintiff only applied for renewal of the lease by letter dated 8 December 1997 which was seven days after the expiry date. That application was declined by the defendant by letter dated 10 December. In the same letter the defendant indicated that it will continue to lease the demised premises to the plaintiff on a monthly tenancy until the parties agree otherwise. On 30 March 2001 the defendant gave notice to the plaintiff to vacate the demised premises by 31 May. That was the same day the plaintiff filed a motion for an ex parte interim injunction to restrain the defendant, its servants and agents from evicting the plaintiff. Accompanying the motion was an affidavit by the directors of the plaintiff company and a statement of claim seeking, inter alia, relief against forfeiture.

The grounds of the plaintiff’s ex parte motion were that the defendant had misrepresented to the plaintiff that it would be granted a new lease. Secondly, the defendant had encouraged the plaintiff to believe that a new lease would be granted to it and the plaintiff had acted on the basis of that misrepresentation and encouragement to its detriment. And thirdly, the defendant was acting unconscionably towards the plaintiff since it had encouraged the plaintiff to obtain funding and expend money on capital improvement to the demised premises. Without making any conclusive findings of fact, I think viewed in the light of the affidavit filed by the plaintiff in support of its motion for an ex parte interim injunction, the plaintiff is in effect saying that in the circumstances the conduct of the defendant had created an equity in favour of the plaintiff and the most appropriate way to protect that equity is to grant an interim injunction to hold the status quo pending the determination of its claim for relief against forfeiture.

The principal ground of the defendant’s motion to discharge the ex parte interim injunction granted to the plaintiff is the alleged failure of the plaintiff to disclose full details of the defence that was open to the defendant. It was submitted that this failure on the part of the plaintiff could furnish sufficient ground for discharging the interim injunction. In support of her submission in relation to this aspect of the case, counsel for the defendant relied on two New Zealand authorities. The first being United People’s Organisation (World Wide) Inc. v Rakino Farms Ltd (No 1) [1964] NZLR 737 where TA Gresson J stated at p 738:

“It is well settled that it is the duty of a solicitor certifying to an ex parte application to make the fullest disclosure to the Court of all matters relevant to such an application, whether or not such solicitor considered any such matter unimportant. He has a duty to disclose to the Court the defence to the action if he knows it, and the facts on which it is based, so that the Court can judge for itself whether they are material or not. Failure to do so may in itself furnish ground for dissolving the injunction, W v Public Trustee [1935] NZLR s.22; [1935] GLR 163; Escott v Thomas [1934] NZLR s.175; [1934] GLR 544; Simpson v Murphy [1947] GLR 411.

“If on a motion to dissolve an ex parte interim injunction it appears that the plaintiff had misstated his case, either by misrepresentation or by the suppression of material facts, so that an injunction has been obtained which might have been refused if all the facts had been stated, that in itself is sufficient ground for dissolving the injunction. There was no want of good faith on the part of the solicitors for the plaintiff, as is admitted by counsel for the defendant, but in my view there was a failure to make full disclosure of all the relevant facts including the terms of cl 19 of the agreement. Had these facts been placed before the Court there is room for the suspicion, which might later prove either well-founded or unwarranted, that the application for the interim injunction was filed merely to gain time while the plaintiff endeavoured to extricate itself from the consequences of its failure to meet the June instalment and to pay interest at the appropriate rate. This might have involved refusing the interim injunction altogether, or granting it on “terms”.

The interim injunction which had been granted ex parte in that case was therefore discharged. The second New Zealand authority cited by counsel for the defendant is Matich v United Building Society [1987] NZHC 1899; [1987] 2 NZLR 513 where Henry J at p.514 stated:

“There is a heavy onus on a party applying ex parte to observe the utmost good faith and to make full disclosure of material facts “(Haddow v New Zealand Insurance Co Ltd [1958] NZLR 704; United Peoples’ Organisation (World Wide) Inc v Rakino Farms Ltd (No 1) [1964] NZLR 737). The combination of the further “facts I have enumerated are such that a different view of the ex parte application may have been taken and the injunction either refused or granted on terms. The injunction is therefore discharged”.

Now the details of the defence the defendant claims the plaintiff had failed to disclose in its motion for an ex parte interim injunction may be set out as follows:-

(a) that under the terms of the lease the defendant was entitled to re-enter and take possession of the demised premises;

(b) that the plaintiff is in breach of the rent covenant in that it failed to provide the defendant with records of its gross monthly income for the purpose of calculating the percentage rent; and

(c) that the lease had expired and no renewal had been granted; the basis accepted by the plaintiff for its continuing use of the demised premises was a monthly tenancy which had been duly terminated.

Counsel for the plaintiff in her submissions pointed out that there is no power of re-entry given to the defendant as landlord under the lease. Thus the plaintiff could not over to that as a matter of fact in its ex parte motion for an interim injunction or the supporting affidavit of its directors. However, there is a power of re-entry implied in favour of a landlord in every lease by s.107(b) of the Property Law Act 1952 (NZ) which applies in Samoa. The response by counsel for the defendant is that counsel for the plaintiff should still have pointed that out in its motion as a matter of defence for the defendant. I should point out that as a matter of law, I was always aware of a landlord’s power of re-entry. But the plaintiff in its statement of claim is resisting re-entry by the defendant as landlord by claiming for relief against forfeiture. I also wish to point out that a landlord’s power of re-entry now appears in s.107 (c) of the Property Law Act 1952: see vol 5 of the Samoa Statutes Reprint 1978-1996. Whether the latter provision now represents the law in Samoa was not the subject of submissions by counsel and I leave the point open.

I have perused the statement of claim and the affidavit filed for the plaintiff in support of its ex parte motion, and even though the point is not made with conspicuous clarity, it does appear that the original lease between the plaintiff and the defendant expired on 1 December 1997 and the plaintiff’s late application for renewal of the lease was declined. It also appears that since renewal of the lease was declined the plaintiff has had the use of the demised premises on the basis of a monthly basis while continuing to request and negotiate with the defendant for a new lease. By terminating the monthly tenancy in March 2001 it is clear the defendant intended to re-enter the demised premises as a result of which the plaintiff is claiming for relief against forfeiture in its statement of claim. While the plaintiff does not refer in its ex parte motion with conspicuous clarity to the defendant’s implied power of re-entry under the Property Law Act 1952, it is clear from the supporting affidavit filed by plaintiff’s directors in support of the motion that the defendant was exercising that power and for that reason the plaintiff was seeking relief against forfeiture in its statement of claim. In other words the plaintiff is saying in its statement of claim that the defendant’s refusal to renew the lease and the exercise of its power of re-entry are not justified.

As for the second allegation by the defendant that the plaintiff failed to disclose that it has been in breach of the rent covenant of the lease by failing to provide the defendant with records of its gross monthly income for the purpose of calculating the monthly percentage rent, counsel for the plaintiff referred to documentary material to show that this issue relates to income derived by the plaintiff from its tours and it has already been settled by agreement between the parties. There was therefore no breach of the rent covenant of the lease and the plaintiff could not disclose in its ex parte motion a breach of the rent covenant which had not occurred. The plaintiff’s counsel also referred to a recent letter from the defendant to the plaintiff which states, inter alia, that the plaintiff had been paying rent for the last six years under the lease.

As for the third allegation by the defendant that the plaintiff failed to disclose that the lease had expired and renewal was refused by the defendant and that the plaintiff was having the use of the demised premises on a monthly tenancy basis which was duly terminated, this matter, though not mentioned in the plaintiff’s ex parte motion, is covered in the plaintiff’s supporting affidavit. The plaintiff is also challenging on equitable grounds in its motion, supporting affidavit and statement of claim the legality of the termination of the lease by the defendant seeking relief against forfeiture. The principal ground relied upon by the plaintiff is equitable estoppel.

In saying all this, I am in no way making any conclusive findings of fact one way or the other. The account of events given by the defendant in its motion to discharge and supporting affidavit is quite different from and conflicts in several respects with that given by the plaintiff. Given these discrepancies in the affidavit evidence for both parties, and the matters of equity raised, I think this case should proceed to a substantive hearing where questions of credibility will be determined and the discrepancies in the affidavit evidence resolved. The plaintiff’s claim and the defendant’s defence and counterclaim will also be given full consideration at the substantial hearing. In the meantime the interim injunction will remain.

This matter is adjourned for hearing to 16 August 2001 when both parties will call oral evidence.

Costs are reserved as costs in the cause.

CHIEF JUSTICE

Solicitors
Drake & Co. Law Firm for the plaintiff
Stevenson & Mitchell Law Firm for the defendant