BM Pacific Ltd v Mu'a [2002] WSSC 33 (20 September 2002)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN

BM PACIFIC LTD
a duly incorporated company having its registered office at Avondale, Auckland, New Zealand.
Plaintiff

AND

NATANIELU MU’A and SIAUMAU MU’A
both Self Employed of Vaitele trading as Benjamin Moore Colour Works, Samoa.
First Defendant

AND

NATANIELU MU’A
of Vaitele, Self Employed.
Second Defendant

AND

N. & S. MUA PAINTS LIMITED
trading as Benjamin Moore Colour Works, Samoa.
Third Defendant

AND

SEEHOY & AMY ENTERPRISES LIMITED
a duly incorporated company having its registered office at Apia.
Third Party

Counsel: A Roma for plaintiff
S Leung Wai for defendants
J Brunt for third party

Hearing: 31 July 2002
Judgment: 20 September 2002

JUDGMENT OF SAPOLU CJ

This case has raised some difficult issues. In view of the conclusions I have reached, it is unnecessary to deal with all the issues that were raised by counsel for the defendants and for the third party. It is also unnecessary to deal with all of the evidence in view of the same conclusions. However, it will be necessary to refer to parts of the pleadings by the parties. And, hopefully, in order to understand the reasons for the conclusions that I have reached, I have decided to deal with this case under different Parts.

PART A

Pleadings by the plaintiff and the defendants

The plaintiff is a company which carries on business in Auckland, New Zealand, as a supplier and manufacturer of paints and other associated materials. From the pleadings in the plaintiff’s statement of claim, it appears that pursuant to an agreement that was made on 1 April 1999 the first defendants Natanielu Mu’a and Siaumau Mu’a opened an account with the plaintiff in New Zealand for the supply of paint to the first defendants in Samoa. Then on diverse dates between May and December 1999, the plaintiff supplied paints and other associated materials to the defendants. This seems to suggest that even though the first defendants opened an account with the plaintiff for the supply of paints and other materials to the first defendants, those paints and materials were supplied to all the defendants, not just the first defendants. The plaintiff further claims that the defendants owe NZ$118,415.96 to it for unpaid paint and other associated materials that were supplied. The plaintiff also claims NZ$15,181.27 for various assistance by way of chattels which it says it had given to the defendants for setting up their paint business in Samoa. In total the plaintiff claims NZ$133,597.23 from the defendants. By the use of the word “defendants” in the statement of claim, I take that to mean that the plaintiff is claiming against all the defendants and not just the first defendants even though it was the first defendants alone who opened an account with the plaintiff in New Zealand for the supply of paint to the first defendants in Samoa.

In response to the plaintiff’s claim, all the defendants filed a joint statement of defence in which various denials and admissions are made of the allegations in the plaintiff’s statement of claim. However, the actual amounts in terms of money claimed by the plaintiff are neither denied nor admitted by the defendants. The defendants in their statement of defence then say by way of a further defence that pursuant to the agreement dated 1 April 1999, the ownership of any goods “purchased” will remain with the plaintiff until paid for. I take this to mean that the ownership in any paint or other materials purchased by the defendants from the plaintiff continued to remain with the plaintiff until their prices were paid for by the defendants to the plaintiff. It must be pointed out here that even though the word “purchased” is used once in the defendants statement of defence, the word “supply” is used by the plaintiff in its statement of claim instead of the word “sell” or “sold”.

It also appears from this further defence raised by the defendants, that they were carrying out their paint business in Apia as lessees in commercial premises which belongs to the third party. The defendants further say that when they had to vacate the third party’s premises in February 2000, they left behind furniture and fixtures which belonged to the plaintiff and the third party has kept those chattels. These furniture and fixtures are valued by the defendants at about NZ$15,181.27. The defendants also say that they left behind in the third party’s premises paint stock valued at about $50,000 and the third party has kept those paints. The defendants then claim under their further defence that the total value of the furniture, fixtures and paint stock which belong to the plaintiff but now kept by the third party should be deducted from the total value of the claim by the plaintiff against the defendants.

The defendants then filed a third party notice application. But before I come to that application, I wish to make some brief comments about the claim and defences filed by the plaintiff and the defendants respectively because of their relevance to the conclusions I have reached.

It appears from the pleadings in the statement of claim and statement of defence that on one view the relationship which existed between the plaintiff and the defendants was one of seller and buyer with the plaintiff being the seller and the defendants being the buyers. The transaction that took place between them being a sale of goods transaction.

The other view which is open on the pleadings, particularly the pleadings in the statement of claim, is that the plaintiff supplied paints and other materials to the defendants to sell to the public. The relationship between the plaintiff and the defendants was therefore not that of a seller and buyer. Whichever of those two views represents the true nature of the relationship between the plaintiff and the defendants, it is clear that that relationship was a contractual one and any action by the plaintiff against the defendants on the basis of that relationship would have to be in contract. A term of the said relationship is that the property (ownership) in the paints and other materials was to remain with the plaintiff until paid for.

As for the plaintiff’s claim for the value of the chattels, namely, furniture and fixtures it had given to the defendants to assist the defendants with setting up their paint business, the defendants do not dispute that part of the plaintiff’s claim. The chattels given by the plaintiff to the defendants were not free. They were to be paid for. The allegations in the statement of claim in support of this part of the plaintiff’s claim suggest that this part of the claim by the plaintiffs is also founded in contract. It certainly cannot be in torts. The claims made by the plaintiff against the defendants are therefore contractual.

I turn now to the third party proceedings filed by the defendants.

Third party proceedings

In the third party notice application that was filed by the defendants to join the third party to these proceedings, two things were being sought: (a) contribution from the third party to the claim by the plaintiff against the defendants, and (b) a determination of the ownership of the furniture, fixtures and paint stock alleged to have been retained by the third party but the defendants say belong to the plaintiff.

How that situation came about is that the defendants say they were carrying on their paint business as lessees in commercial premises owned by the third party which is a company. I use the words “the defendants” in this part of my judgment for convenience because as it will appear later, the defendants dispute that they were not legally the correct lessee for the lessee named in the deed of lease with the third party is a different person. From the affidavit which was filed by one of the co-owners of the third party company, it appears that by letter dated 16 February 2000, the defendants wrote to the third party as landlord that it was terminating its lease. This was well before the full term of the lease was to expire. At the time, the defendants were in substantial arrears with their rent, about $16,313.43. It is then alleged by the defendants that the third party locked up the leased premises and kept the furniture, fixtures and paint stock which were still there. This is disputed by the third party whose evidence was to the effect that the defendants abandoned the furniture, fixtures and paint stock in the third party’s premises. As the furniture, fixtures and paint stock belong to the plaintiff, the defendants brought third party proceedings claiming inter alia, contribution from the third party for the value of those goods and chattels. The third party opposed the third party notice application. Both counsel for the defendants and the third party made rather limited, but quite understandable legal submissions on the law of contribution perhaps due to the fact that third party notice applications seeking contribution have largely gone unopposed and without argument in the past. The defendants' third party notice application was then granted. However, the third party in its statement of defence and counterclaim has pleaded as a defence that the defendants have no right of contribution against the third party.

In his submissions in third party proceedings, counsel for the defendants had relied, inter alia, on the judgment of this Court in Computer Services Ltd v HJ Wendt & Sons Ltd (1995) (C.P. 447/93; unreported judgment delivered on 28 March 1995). In that case the defendant, a landlord, distrained on chattels which were in the demised premises occupied by the tenant for arrears of rent. Amongst the chattels which were the subject of the distraint were chattels which belonged to the plaintiff, a third party. The plaintiff tried to obtain his chattels from the defendant who would not return them. The plaintiff then brought an action in detinue and conversion against the defendant. This Court held that the right of the defendant as landlord to distrain for arrears of rent applies only to chattels of the tenant, it does not extend to the chattels of the plaintiff who was not the tenant even though the plaintiff’s chattels were found on the demised premises. In the circumstances, the defendant was held liable to the plaintiff both in detinue and in conversion.

In the present case, the third party did not dispute the claim by the defendants that the furniture, fixtures and paint stock in question belong to the plaintiff. It opposed the granting of leave to the defendants to issue third party proceedings on other grounds which are not related to the conclusions I have reached.

The plaintiff in this case may have a cause of action against the third party in tort for conversion. But the plaintiff has not sued the third party. It has sued only the defendants. The plaintiff’s causes of action against the defendants appear to be both in contract. On the other hand, the defendants in their pleadings have not shown a cause of action in tort, contract, or otherwise against the third party. What is claimed in the third party notice application by the defendants is that some of the goods and chattels claimed by the plaintiff against the defendants are in the possession of the third party who was the defendants' landlord. Those goods and chattels are the properties of the plaintiff and their value should be deducted from the value of the claim by the plaintiff against the defendants. The third party in its statement of defence and counterclaim against the defendants denies the defendants right to contribution and seeks dismissal of the claim for contribution. That is the third party’s statement of defence and counterclaim that went to trial. So contribution was still a live issue at the trial and has continued to be so.

Trial

At the commencement of the trial that was held, the defendants admitted liability to the plaintiff’s claims and proceeded on its claim for contribution against the third party and on the counterclaim by the third party for unpaid rent. As a consequence of this turn of events, the real nature of the relationship between the plaintiff and the defendants remains ambiguous because no evidence was given as to the true nature of that relationship. That is, was the relationship between the plaintiff and the defendants one of sale of goods as the statement of defence seems to suggest, or was the plaintiff simply supplying goods to the defendants to sell to the public and to pay the plaintiff from the proceeds of any sales so that the defendants were really middle-men between the plaintiff and the real buyers as the statement of claim seems to suggest. Whatever was the real nature of that relationship, it is clear that the relationship was contractual and the action by the plaintiff against the defendants is in contract.

As to the relationship between the defendants and the third party, the pleadings and part of the evidence which came out at the trial showed that it was one of landlord and tenant with the third party as landlord and the defendants as tenant even though as it will appear later, the defendants dispute that they were tenants under the deed of lease with the third party. None of the parties, including the plaintiff, disputed during the trial that the goods and chattels for which the defendants were claiming contribution from the third party belong to the plaintiff. The evidence given for the third party is that the goods and chattels were left behind in the third party’s premises when the defendants left those premises in February 2000 whilst owing $16,313.43 in rental arrears plus unpaid electricity and water charges.

Both counsel for the defendants and the third party made extensive submissions on such important issues like estoppel, bailment, penalties, etc. However, the question of contribution remained to trouble me as that is the whole basis of the claim by the defendants against the third party and the third party has pleaded in its statement of defence and counterclaim that the defendants have no right to claim contribution from the third party. As a result, I called back all counsel to chambers and asked for submissions on a particular aspect of contribution. I received submissions only from counsel for the defendants.

I will now deal with the question of contribution in Part B of my judgment.

PART B

Contribution

The familiar situations where the right to claim contribution are commonly found to lie in English law and the essence of that right are to be found in The Law of Restitution (1993) by Goff and Jones 4th ed where it is stated at p.304:

“It has long been held that at law and in equity, sureties, joint-contractors, trustees, “directors, partners, insurers, mortgagors and co-owners can generally claim “contribution from their co-obligors if they satisfy more than their proper share of the “common debt. But contribution claims were and are not limited to those familiar “situations. Any obligor who owes with another a duty to a third party is liable with “that other to a common demand should be able to claim contribution.”

A little further on in the same page the learned authors state:

“There could be no contribution if there was no liability to a common demand”.

It will be seen that the circumstances of the present case do not come within any of the familiar relationships where the right to contribution has been held to lie. It was submitted for the defendants that in this case justice requires that the third party should be liable for contribution to the defendants. The Courts, as the relevant English and New Zealand case law shows, have not adopted a broad brush or generalised approach based on an open-ended concept of justice to the question of liability for contribution. The approach has been to ask whether there is liability to a common demand or whether there exists a common obligation to the plaintiff. It is also stated in 9 Halsbury’s Laws of England (4th ed), para 654:

“The essence of the right to a contribution lies in the liability to a common demand”.

Sometimes the right to claim contribution is said to depend on whether there is a common obligation. For instance, in Smith v Cock [1911] UKLawRpAC 2; [1911] AC 317, the Privy Council stated at p.326:

“Without attempting to give a comprehensive definition of the expression ‘equitable contribution’, it is clear that the present case does not fall within it. Before there can be any contribution there must be a common obligation upon those who are required to contribute.”

It has been said that the doctrine of contribution is founded not in contract but on general principles of justice: Deering v Earl of Winchelsea (1787) 29 ER 1184. But a broad brush or generalised approach based on justice has not been applied to determine whether a right to contribution exists. The requirement of liability to a common demand or the existence of a common obligation has been the determining factor. This appears to be the position at law and in equity in England. But note that the English position has been modified in some respects by the Civil Liability (Contribution) Act 1978 (UK). We do not have such a statute in Samoa. The requirement of liability to a common demand or the existence of a common obligation to the plaintiff also applies in New Zealand: see for example McGechan On Procedure HR 75.05 and Karori Properties Ltd v Jelicich [1969] NZLR 698. In Karori Properties Speight J when dealing with the right to claim contribution in a third party notice application said at p.703:

“But such equitable contribution only arises when both parties are liable on a common demand.”

I will approach the question in this case of whether the defendants have a right to claim contribution from the third party on that basis.

As already pointed out, the liability of the defendants in this case to the plaintiff is in contract alone. The liability of the third party, if any, to the plaintiff if the plaintiff had decided to sue the third party would only be in tort for conversion as the goods and chattels in the possession of the third party have been shown to belong to the plaintiff. In the case of McLaren Maycroft & Co v Fletcher Development Co Ltd [1972] NZCA 29; [1973] 2 NZLR 100 the plaintiffs had purchased a plot of land from a subdivision by the defendant. Part of the subdivision was swampy and the defendant engaged the third parties who were consultant engineers to supervise and carry out the excavation and filling of that area. Apparently the plot of land that was purchased by the plaintiffs from the defendant was part of the area that was swampy. The plaintiffs then built a house on their plot of land. Some months later the house subsided and developed cracks in its structure. The plaintiffs then sued the defendant in contract for breach of an implied warranty in the contract for the sale of the land to the plaintiffs. The defendant issued a third party notice to join the third parties, the consultant engineers, to the proceedings for alleged breach of the contract between the defendant and the third party. In the Court of Appeal it was held that the defendant and the third parties owed no common liability to the plaintiff so that the defendant could not claim contribution from the third parties. Counsel for the defendant then submitted that the third parties owed a duty of care to the plaintiffs and were directly liable to the plaintiffs in negligence. In refusing that submission Richmond J who delivered the principal judgment said at p.117:

“If they [the third parties] did, a very difficult question would arise whether at law or in equity Fletchers [the defendant] (being liable to the Hudsons [plaintiffs] for breach of contract) would have any right of indemnity or contribution from McLaren Maycroft [third parties] (being liable to the Hudsons for the same damage in tort).”

McLaren Maycroft has been the subject of much criticism but such criticisms have been focused on the question of concurrent liability of professional persons in contract and tort and not on the question of contribution as such. Richmond J in effect held in that case that the liability of a professional person, like the third parties who were consultant engineers, lies in contract alone. Recent developments have shown that professional persons may be concurrently liable in tort and contract: Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145,194; Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30, 74.

In Smaill v Buller Council [1994] 3 NZLR 294, the plaintiffs were the owners of land in a land subdivision whose use had been approved by the defendant council to be changed from “rural” to “resort”. It was subsequently discovered that the land could become unstable in the event of an earthquake or heavy rain which could threaten the lives of residents. The plaintiffs therefore sued the defendant in tort for negligence and breach of statutory duty which was alleged to have resulted in diminution in the value of their land. The defendant in turn sought to join the third third party to the proceedings and claim contribution from it on the ground that under statute the plaintiffs were entitled to claim insurance payments from the third third party. Holland J after discussing the relevant law decided to strike out the defendant’s claim for contribution against the third third party.

In the course of his judgment Holland J referred to the judgment of Richmond J in McLaren Maycroft & Co v Fletcher Development Co Ltd [1972] NZCA 29; [1973] 2 NZLR 100 by saying at p 298:

“The judgment of Richmond J at p117 referred to the fact that there was no argument presented as to whether the third party owed any direct duty of care to the plaintiffs. The judgment says:

‘If they did, and were in breach of that duty, a very difficult question would arise whether at law or in equity Fletchers (being liable to the [plaintiffs] for breach of contract) would have any right of indemnity or contribution from McLaren Maycroft (being liable to the plaintiffs) for the same damage in tort.’

What was decided was that as the liability of Fletchers to the plaintiffs was in contract only, Fletcher had no right of contribution against the third party in tort in respect of a duty which may have been owed to the defendant but was not shown to have been owed to the plaintiff.”

Holland J then followed McLaren Maycroft and dismissed the defendant’s claim for contribution against the third party.

The circumstances of the two New Zealand cases just referred to are quite different from the circumstances of the present case. But I think the contribution principle in issue is the same. For the defendants in the present case to be able to claim contribution against the third party both the defendants and the third party should be liable to the plaintiff on a common demand or owe a common obligation to the plaintiff. But it is clear that the defendants are liable to the plaintiff only in contract for breach of contract whereas if the third party is to be liable to the plaintiff, it will only be in tort for conversion. The question of concurrent liability in tort and contract in respect of professional persons which has been the cause of much controversy surrounding McLaren Maycroft does not arise in this case because none of the parties in the present case is a professional. It is therefore clear that the defendants and the third party cannot be liable to a common demand. In terms of common obligation any obligation owed by the defendants to the plaintiff will be in contract alone whilst any obligation owed by the third party to the plaintiff will only be in tort for conversion. Thus the defendants and the plaintiff have no common obligation towards the plaintiff. It follows that as the law presently stands the defendants do not have a right to claim contribution against the third party and their present claim should be dismissed.

Common question to be tried between the parties

In their third party notice the defendants allege that there is a question or issue which should properly be determined between the plaintiff, defendants and third party. This is the ownership and value of the stock, furniture and fixtures retained by the third party. This part of third party notice clearly relates to r 43(1)(c) of the Supreme Court (Civil Procedure) Rules 1980.

Rule 43(1)(a)-(d) of our Supreme Court (Civil Procedure) Rules 1980 corresponds with r75(1)(a)-(d) of the High Court Rules (NZ). The New Zealand case law on r 75(1) is therefore relevant to the interpretation and application of our r43(1). Rule 75(1)(a) of the High Court Rules (NZ) like r43(1)(a) of our Supreme Court (Civil Procedure) Rules 1980 refers to contribution. I have already dealt with the question of contribution. Rule 75(1)(b)-(d) (NZ) corresponds with our r43(1)(b)-(d). In Karori Properties Ltd v Jelicich [1969] NZLR 698 Speight J when dealing with r95(1)(b)-(d) of the old New Zealand code, which is now r75(1)(b)-(d) of the High Court Rules (NZ), said at p703 in respect of an application for a third party notice which relies on r95(1)(b)-(d):

“But it is a prerequisite that there should be a right of action between the defendants and the third party, for R95 (b) says ‘entitled to relief’, R95 (c) says ‘should properly be determined between’ and R95(d) says ‘the same as some question or issue arising between’.

The question then is, is there, independently of the plaintiff’s rights, a right of action by the defendants against the third party?”

It appears therefore that the approach taken in Karori Properties by Speight J is that R95(b)-(d) now r75(1)(b)-(d) of the High Court Rules (NZ), will not be applicable to an application for a third party notice unless the defendant has a right of action, in other words a cause of action, against the third party. In Anderson v Van der Maas (1987) (unreported judgment by Smellie J) a contrary view of the matter was taken, however, in the subsequent case of Dairy Containers v NZI Bank Ltd [1993] 1 NZLR 160, 165 Smellie J acknowledged that the approach expoused by most of his brother Judges is the much more orthodox approach stated in Karori Properties by Speight J. He also referred to Turner v First Fifteen Holdings Ltd (1991) 3 PRNZ 145 where Barker J followed the orthodox approach.

In the present case it does not appear from the third party notice application or the defendants pleadings whether the defendants have a cause of action against the third party. A statement of claim by the defendants which pleads a cause of action against the third party would have put the matter beyond argument. As it is, no cause of action has been shown. There is also no remedy being sought. Perhaps a declaration could have been sought that the relevant goods and chattels in the possession of the third party belong in law to the plaintiff given the judgment of this Court in Computer Services Ltd v HJ Wendt & Sons Ltd (1995) (C.P. 447/93; unreported judgment delivered on 28 March 1995). See Daly v Ranchhold [1968] NZLR 609, 612 where it was held that a prayer for a declaration, where that is appropriate, may be sufficient to sustain a third party notice application. Be that as it may, the third party is willing to hand over to the plaintiff the goods and chattels in its possession which is alleged by the defendants to belong to the plaintiff. This handing over of the goods and chattels, according to the third party, is to be done in the presence of a representative from each of the plaintiff, the defendants and the third party. The value of the goods and chattels in question is disputed by the third party as no where near $50,000. I am not inclined to accept the valuation given by the defendants. The conduct of the defendants in this whole matter, namely, owing a substantial amount on their contract with the plaintiff and owing substantial arrears under their “lease” with the third party does not inspire confidence in their reliability and credibility. The evidence given for the party was also that some of the paint left behind by the defendants when they vacated the demised premises in an unclean condition was bad and had to be thrown away, whilst some of the other paint was left at the front of the demised premises for the defendants to collect but they did not return to the demised premises. In any event I have decided for reasons already given, that the defendants have no right to contribution against the third party. The claim for contribution is therefore dismissed.

Concession of liability by the defendants

It appeared at the trial that the concession by the defendants to the plaintiff of the whole amount of the claim was based on the assumption that the third party was liable to the defendants for contribution. But I have dismissed the claim for contribution which in effect amounts to upholding the defence pleaded by the third party that the defendants have no right of contribution in this case. In this uncommon situation, I have decided not to enter judgment for the plaintiff on the basis of the defendants concession of liability but to allow the defendants until 12 noon Friday, 27 September 2002, when this matter will be rementioned, to advise the Court on the position they wish to take given the decision by the Court on their claim for contribution.

PART C

Counterclaim by third party

The third party counterclaims against the defendants for substantial arrears of rent, penalty interest, storage charges and so on. The counterclaim arises under the lease with the third party and the defendants are in effect being sued as tenants under that lease. A number of submissions were made on behalf of the defendants in response to the counterclaim by the third party. One of those submissions is that the tenant in the deed of lease that was concluded with the third party is not one of the defendants. The tenant named in the deed of lease is “Benjamin Moore Colour Works Samoa a division of Roleski Construction Services Ltd a duly registered company having its registered office at Siusega.” And this is different from any of the defendants in the pleadings. It was therefore submitted for the defendants that none of them was the tenant to the lease pursuant to which the third party’s counterclaim is directed. The counterclaim should therefore be dismissed.

The first and second named defendants are individual persons and not companies. The tenant named in the lease is a division of Roleski Construction Services Ltd a duly registered company. The third named defendant is N & S Mua Paints Ltd which is clearly a different company from the tenant. It is therefore correct that the name of the tenant described in the deed of lease is not the same as the name of any of the defendants. However, what the defendants are submitting now is in conflict with what they have said before as I will show shortly and it may have led the third party to proceed on the basis that the defendants were in fact the tenant.

In the statement of defence that was filed by the defendants in response to the plaintiff’s statement of claim, it is alleged in paragraph 9 that it was the defendants, meaning all the defendants, who were leasing the commercial premises owned by the third party, the landlord. This was followed by the defendants' third party notice application. In an affidavit filed by the second named defendant Natanielu Mua in support of that application, it is stated in paragraph 3 that the third named defendant in 1999 and early 2000 leased parts of the commercial premises owned by the third party. This clearly conveys the impression that it was the third named defendant N & S Mua Paints Ltd alone who was the tenant of the lease with the third party. In the statement of defence and counterclaim that was subsequently filed by the third party, it is stated in paragraph 3 that the third party admits part of paragraph 9 of the defendants “claim” that the defendants were the tenants of the third party’s commercial premises. An affidavit filed by a director of the third party company also proceeds on the basis that the defendants were the tenants of the third party’s commercial premises. When the case went to trial there was this uncertainty whether the tenant/tenants of the lease with the third party was the third named defendant alone or all of the defendants. At the trial the deed of lease was produced as one of the exhibits for the third party which means the third party as the landlord must have had that deed of lease in its possession. In the deed of lease someone else is named and described as the tenant. As a consequence, counsel for the defendants submitted at the close of the evidence that the true tenant as shown in the deed of lease is not the defendants or one of them but a different entity, and therefore the counterclaim by the third party based on the purported tenancy should be dismissed.

I accept that the counterclaim by the third party against the defendants is founded on a deed of lease. The third party is shown to be the landlord in the deed but a different entity who is not the defendants or one of them is shown as the tenant. It is unfortunate that this matter was not picked up before or during the trial. Perhaps there were so many issues that arose out of the third party’s counterclaim that the third party merely followed the allegation in paragraph 9 of the defendants' statement of defence that the defendants were the tenants and concentrated on the other issues. I would have been inclined to take a view unfavourable to the defendants' submission if those were the only materials before the Court on this issue together with the second named defendant’s affidavit in support of the defendants' third party notice application. But it is the third party which produced the deed of lease as an exhibit for itself. So the third party must have had the deed of lease in its possession. A glance at the deed of lease would have shown that the tenant therein is a different person and not the defendants or one of them.

Accordingly, the submission for the defendants is upheld and the third party’s counterclaim is dismissed. It is therefore unnecessary to deal with the other issues that were raised and submitted upon by both counsel for the defendants and the third party. I only wish to add that the rule established by the old English cases of Pinnel [1572] EngR 290; (1602) 5 Co Rep 117a and Foakes v Beer [1884] UKHL 1; (1884) 9 App Cas 605 to which reference was made in this case has been made subject to a number of qualifications and exceptions in New Zealand, Australia and the United Kingdom that this Court is not likely to accept those two cases as representing the law in this country. In fact I have real doubts whether those two cases, if I had decided to accept them, would assist the defendants because of the rule they established that a promise by a creditor to accept from a debtor an amount less than the amount of the debt in full satisfaction of the debt is not binding on the creditor in the absence of consideration. And payment by the debtor of an amount less than the amount of the debt supplies no consideration for the creditor’s promise: see for instance Butterworths Commercial Law in New Zealand (2000) 4th ed pp36 – 37, Law of Contract in New Zealand (1997) by Burrows, Finn and Todd at pp 117 – 123; Cheshire and Fifoot’s Law of Contract (1992) 6th Australian ed at pp 143 – 149.

PART D

Judgment

(a) Judgment will not be entered for the plaintiff on the concession of liability by the defendants as the Court would like to hear further from counsel for the defendants on the position of the defendants of the dismissal of their claim for contribution when this matter is rementioned on 12 noon Friday, 27 September 2002.

(b) The defendants' claim for contribution against the third party is dismissed.

(c) The third party’s counterclaim against the defendants is also dismissed.

(d) Costs are awarded to the plaintiff against the defendants to be fixed by the registrar plus reasonable disbursements.

(e) I make no award for costs in favour of the defendants or the third party.

CHIEF JUSTICE

Solicitors:
Sapolu Lussick for plaintiff
Leung Wai Law Firm for defendant
Brunt Keli for third party