Christina Motel Company Ltd v Sala [2005] WSSC 31 (21 November 2005)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

CHRISTINA MOTEL COMPANY LIMITED
a duly incorporated company operating an hotel at Malifa.
Plaintiff

AND:

MS SITA SALA and MS MARY GREY
both c/- Teuila Motel, Malifa.
Defendants

Counsel: Mr TK Enari for the plaintiff
Mr T Malifa for the defendants

Hearing: 18 November 2005
Decision: 21 November 2005

DECISION OF VAAI J

On the 18th November 2005 after hearing of the evidence I gave judgment for the defendants. These are my reasons.

The plaintiff a registered company is the owner of a hotel at Malifa near Apia known as the Hotel Teuila which is currently managed by the first named defendant Sita G. Reupena who is also a director and the company secretary. It has a share capital of $300,000 divided amongst Mrs Christina Grey, aged 86 years and three of her children as follows:-

Christina Grey - 50%

Michael Grey - 40%

Sita Reupena - 5%

Mary Grey - 5%

All of the shareholders are directors together with one Jerome Grey a son of Christina Grey who resides overseas. To construct the hotel, a loan of about $885,000 was obtained from the Samoa National Provident Fund in September 1993. Due to her age, Christina Grey did not play an active role in the management of the hotel which was left to her shareholding children who took turns. Bitterness and rivalry developed amongst the children and at the same time the loan repayments fell into arrears, in fact by 2004 the loan balance has exceeded $2,000,000.00 which prompted the National Provident Fund to commence foreclosure proceedings on its mortgage. But the Ministry of Education Sports and Culture came to the rescue when it leased almost all of the hotel for office space at a monthly rental of $32,000 exclusive of GST commencing 1st day of March 2004. When the Ministry of Education Sports and Culture commenced its lease an insignificant part of the hotel was leased to another company and another small area was occupied by the manageress Sita Reupena the first named defendant. Also at that time Christina Grey was living with one of her daughters Seiuli Titi Grey to whom she had given a power of attorney to act for her on the board of directors of the plaintiff. Pursuant to the power of attorney Seiuli Titi Grey and her brother Michael Grey initiated these proceedings in early 2005 in the name of the Company to evict the defendants from the hotel.

They allege inter alia:

(i) The shareholders Michael Grey and Seiuli Titi Grey have agreed to lease the hotel to the Education department.

(ii) The Education department would like to have control of the whole of the premises of the hotel.

(iii) The defendants refuse to yield up the whole of the premises of the hotel.

(iv) The defendants are occupying the hotel without paying rent.

The plaintiffs say the space that was leased to another Company is now occupied by the defendant Sita Reupena who should now vacate the said space as well as the hotel and pay past rents of $20,000. Neither plaintiffs have visited the hotel recently; I therefore accept the evidence of the defendant Sita Reupena that the space in question is now utilized as the Company office. In respect of the space occupied by the defendant Sita Reupena the two plaintiffs in their evidence confirmed that the defendant Sita Reupena has been occupying the same space since 1998 and when the Ministry of Education Sports and Culture commenced its lease the defendant Sita Reupena continued to occupy the same space as it was not part and parcel of the area leased to the Ministry of Education Sports and Culture.

Undoubtedly the hostility amongst family members motivated the initiation of the present proceedings, but undoubtedly for the financial benefit to the Company. The plaintiff Michael Grey who owns 40% of the shareholding is justified in his concerns that an average of $20,000 from the $32,000 monthly rent is paid to the National Provident Fund while the $12,000 has not been properly accounted for considering the virtual non-existent of overheads. Should he wish to pursue his concerns there are undoubtedly other avenues he can take to meet his concerns. It is this continuing rivalry and hostility between the two parties which has undoubtedly led both to ignore the proper procedures and the requirements of the Article of Association of the company. In the first place, the annual general meetings which are required to be held each year never eventuated and as a result the accounts, balance sheets and directors reports were never tabled. Secondly the meetings instigated by one side were not attended by the other and notices of these meetings never complied with the articles. A memorandum of minutes of a directors meeting held on the 5th March 2005 was produced by the defendant Sita Reupena as exhibit. The plaintiff Michael Grey did not attend, not because he did not want to but because he was never informed about the meeting. Minutes of the meeting noted those present as:

Christina T. Grey

Veronica Wulf

Mary Grey

Clara Crichton

Sita G. Reupena

Absent: Michael Grey

Agenda: Christina Toeaso Grey 50% shares

Revocation of her power of Attorney

Additional Directors

Management.

Attendance by Veronica Wulf and Clara Crichton of the meeting is repugnant to the articles of Association as neither of them was a director when the meeting was summoned. Notice in writing and purpose of the meeting should have been given to both Michael Grey and Jerome Grey the two existing directors, as required by the Articles of the company. Undoubtedly the meeting was summoned to get at the two plaintiffs and to defeat their present claim.

Similarly when Michael Grey and Seiuli Titi Grey decided to commence these proceedings they ignored to follow procedures. Christina Grey appointed the plaintiff Seiuli Titi Grey to be her attorney to represent her on the board of directors of the hotel and to carry out other acts in connection with the said duties. Neither the attorney for Christina Grey nor the plaintiff Michael Grey complied with the articles of Association when they decided to take steps to evict the defendants. When they decided to instruct their solicitor to demand the defendants to vacate the hotel premises they were simply adding fuel to the already volatile scenario. The defendant Sita has been on the premises as manageress since 1998 presumably with the sanction of the board; in fact there is no evidence to the contrary. Neither is there evidence that the Ministry of Education, Sports and Culture wants the space in dispute, nor is there evidence of the second named defendant Mary Grey in occupation of the hotel.

Personal differences and blatant stubbornness have prevailed over common sense. Neither party can claim victory in these proceedings. But the plaintiffs who brought this claim under the name of the Company cannot succeed. Judgment is given for the defendants. The two plaintiffs Michael Grey and Seiuli Titi Grey are to pay costs of $400.00.

JUSTICE VAAI