Dive and Fly Samoa Ltd v Schmidt [2005] WSSC 40 (22 December 2005)

IN THE SUPREME COURT OF SAMOA

HELD AT APIA

BETWEEN

DIVE AND FLY SAMOA LIMITED

PLAINTIFF

AND

TIAPILI FILISI SCHMIDT AND PENINA SCHMIDT.

DEFENDANTS

Counsel:

S Hazelman for plaintiff

TRS Toailoa for defendants

Hearing: 06 December 2005

Judgment: 22 December 2005

JUDGEMENT OF SAPOLU CJ

Proceedings

These proceedings are concerned, first, with a first amended motion by the defendants to set aside an interim injunction issued by Vaai J on 25 October 2005 against the defendants until further order of the Court. The interim injunction restrained the defendants by themselves, their family members, servants, agents or otherwise: (a) from entering or attempting to enter the three fales/cottages built, owned and used by the plaintiff for its scuba diving business operation and residential purposes; (b) from entering the said fales/cottages and using the same for their own personal and /or business purposes; and (c) from using any of the plaintiff’s personal effects contained in the fales/cottages. This interim injunction was issued on the basis of an ex parte motion for an interim injunction together with a supporting affidavit filed for the plaintiff as well as a statement of claim seeking, inter alia, damages in the tort of trespass.

The defendants’ motion to set aside the interim injunction is based on only one ground, namely, that the plaintiff would be adequately compensated by an award of damages and the plaintiff’s ex parte motion for an interim injunction should therefore have not been granted. However, at the hearing of these proceedings counsel for the defendants raised issues not covered in the stated ground of the motion to set aside. These are: ( a) the plaintiff being a licensee on the land in question it cannot maintain an action in trespass; (b) the plaintiff was not in possession of the land at the time it filed its ex parte motion for an interim injunction alleging trespass as it had already left the land and therefore no longer had any possessory rights; (c) even if the plaintiff is to be regarded as a lessee and not as a licensee, it was not in exclusive possession of the land; and (d) the fales in question are fixtures and therefore form part of the land. I must say that all these issues relate to the question of whether there is a serious question to be tried which is the first requirement the Court must be satisfied of in determining whether or not to issue an interim injunction. As issues (a), (b) and (c) were not referred to in the motion to set aside the interim injunction but only arose from the submissions of counsel for the defendants at the hearing of this matter, the Court did not have benefit of submissions from counsel for the plaintiff on those issues. Counsel for the plaintiff, however, was able to anticipate issue (d) in her submissions.

There seems to be some inconsistency in the case law as to whether the adequacy of damages with which to compensate the plaintiff, which is the stated ground of the defendant’s motion to set aside, is a separate requirement or whether it is one of the factors to be considered in determining whether the balance of convenience favours the grant or refusal of an interim injunction. I am of the view that the question of the adequacy or otherwise of damages is one of the factors, and is a very important factor, to be considered together with any other relevant factors in determining the question of where the balance of convenience lies. This will be more consistent with the equitable and discretionary nature of an injunction. Thus in determining whether the interim injunction in this case should have been granted or not the two issues to be considered are: (a) is there a serious question to be tried, and (b) whether the balance of convenience favours retention or discharge of the interim injunction.

Background

The plaintiff is a locally incorporated company carrying on a scuba diving business with apparently two directors one of whom is the majority shareholder. It is alleged in the plaintiff’s statement of claim that in September 2001 the plaintiff and the defendants entered into a written agreement in which the defendants agreed that: (a) the plaintiff would operate its business as a scuba diving school from the defendants family land at the village of Manase in Savaii; (b) the plaintiff would be allowed to build a diving fale on the said land from which it would operate its business free of rent; and (c) the defendants would build two fales in which the directors of the plaintiff company would live free of rent. It turned out, as alleged by the plaintiff, that the defendants did not build any fale for the directors to live in so that in May 2003 the plaintiff built the two fales to accommodate its directors.

In consideration for what the defendants agreed to, it is alleged in the statement of claim that the plaintiff agreed to assist the defendants' beach fale business on the same land at Manase by advertising the defendants business on the plaintiff’s website, brochure and flyers. The plaintiff also paid for the stickers that were plastered on the defendants' buses which promoted both of their businesses. As further consideration, it is alleged that the plaintiff agreed to assist the defendants' beach fale business by booking its customers into the defendants' fales. This agreement was to take effect from January 2002.

According to the plaintiff, in February 2002, it built the diving fale in which it kept all its diving equipment and which provided the reception for its customers. In May 2003 the plaintiff built the two fales, which were supposed to be built by the defendants under the agreement, to accommodate its directors as the defendants had not built those fales. It is claimed that the plaintiff spent $80,683 on all three buildings. It appears from the defendants' statement of defence and counterclaim that from about January 2002 to April 2003, the plaintiff’s directors/shareholders stayed in the defendants' beach fale resort free of charge. The defendants also deny that there was any agreement as alleged by the plaintiff.

At the beginning of their business relationship, the parties worked well together with the majority of the guests staying at the defendants' beach fales being referred there by the plaintiff. However, as alleged by the plaintiff, the relationship between the parties began to sour as from July 2004 due to alleged ill-treatment by the second named defendant of the plaintiff’s directors. According to the affidavit that had been filed by Dirk Klein, one of the plaintiff’s directors, in support of the plaintiff’s motion for an ex parte interim injunction, the plaintiff’s directors assumed that the reason behind the change of attitude on the part of the second named defendant had something to do with money. Thus they made a proposal to the defendants. One of the terms of that proposal was the payment of a monthly rent of $320 commencing from January 2005. That appears to have been accepted by the defendants. This may be the reason for the submission by counsel for the defendants that even if the plaintiff is to be regarded as a lessee and not a licensee, the plaintiff was not in exclusive possession of the land and therefore cannot maintain an action in trespass. In any event, as further submitted by counsel for the defendants, the plaintiff was not at the material time in possession of the fales alleged to have been built by the plaintiff as its directors/shareholders had vacated the land by the time the ex parte motion for the interim injunction was filed.

In spite of the payment of rent as mentioned, the relationship between the parties continued to worsen. The plaintiff says that in April 2005 it decided to vacate the land as there was no other alternative but to leave. In the affidavit of Dirk Klein, it is alleged that the plaintiff’s directors assumed from the continuing attitude of the second named defendant towards them that the defendants were just trying to find a way to kick them out.

It is further alleged for the plaintiff that since leaving the property at Manase, the defendants have asked for the keys to the plaintiff’s fales so that they could move into them to use for their own family purposes otherwise the fales would be broken in or burnt down. The plaintiff refused to give the defendants the keys. Instead it was made known to the defendants that the plaintiff intended to remove its fales and personal effects in them from the land. It is also alleged by the plaintiff that the defendants have banned the plaintiff’s directors and other employees from entering the land to remove the fales and other personal effects. As it has happened, the defendants have broken into the plaintiff’s fales and are using them for their own personal and/or business purposes.

One of the issues that is not clear is whether the land in question is freehold or customary land. This is a relevant consideration to the issue raised for the defendants that the plaintiff’s fales are fixtures and form part of the land. As the land is situated at the village of Manase in Savaii, I am inclined to think that it is customary land. More than 80% of the land in Samoa is customary land. Most of the customary lands are situated in the villages. The land in this case is situated at the village of Manase in Savaii. The first named defendant is named Tiapili which is a matai title in the village of Manase and customary lands are held pursuant to matai titles.

It is also not explicit from the material placed by the plaintiff before the Court whether the plaintiff continued to pay monthly rent to the defendants up to the time its directors left the land. Whether an occupier of land is a lessee or licensee can have important implications in relation to the tort of trespass. There is another related issue which I do not have to deal with in this judgment and, that is, if the relationship between the defendants and the plaintiff was one of lessor and lessee at the time the plaintiff’s directors left the land, and the land is customary land, did such a lease comply with the statutory requirements for the creation of leases of customary land. If there was non-compliance, does such non-compliance have an effect on the purported lease. If so, what is that effect. I have only referred to these issues for consideration by counsel but I do not have to express any view on them in this judgment.

Finally in this connection, amongst the remedies sought by the plaintiff in its statement of claim is a claim for damages in the sum of $40,000 for trespass and an order to allow the plaintiff, its workers, and agents to enter the land to dismantle and remove the said fales.

Is there a serious question to be tried

Whether or not an interim injunction should be granted, the first issue to be determined is whether there is a serious question to be tried. If there is no serious question to be tried then an interim injunction that has been granted should not have been granted. It should therefore be discharged.

Essentially, what has been said for the defendants is that on the basis of the material that was submitted by the plaintiff in support of its ex parte motion for an interim injunction, there is no actionable trespass in law. In other words, there is no reasonable cause of action in trespass which means there is no serious question to be tried. The interim injunction obtained by the plaintiff against the defendants should therefore be set aside. I must say at once that the defendants' motion to set aside the interim injunction does touch on some complex issues regarding the law of trespass to land in relation to licensees and in particular contractual licensees. From my own research, I have not been able to find any authority which is directly on the issue in this case. In this situation, the proper cause to take is to conclude that there is a serious question to be tried which requires further submissions and mature consideration at the substantive hearing. I will now explain the reasons for my conclusion that there is a serious question to be tried.

Traditionally, there are three categories of licences. These are bare licences, contractual licences, and licences coupled with an interest. These categories of licences are explained in Land Law in New Zealand (2004) by Hinde, McMorland and Sim in vol 2, paras 18.004, 18.005 and 18.006 at pp 782-785 which is the second edition of the original 1978-1979 text by the same authors. From the facts alleged by the plaintiff it is clear that the basis on which the plaintiff occupied the land in question was that of a licence which implies that the relationship between the defendants and the plaintiff was that of licensor and licensee. But on the same facts the licence cannot be a bare licence or a licence coupled with an interest. It is clear from what the plaintiff says that the licence that was granted by the defendants to the plaintiff to occupy the land and to set up and operate its scuba diving business was granted in return for certain types of assistance to be given by the plaintiff to the defendants' beach fale resort. The plaintiff therefore occupied the land on the basis of a contractual licence as a contractual licensee. Even though it is also alleged by the plaintiff that at a later stage of its business relationship with the defendants it made a proposal, accepted by the defendants, to pay a monthly rent of $320 commencing from January 2005, there is no evidence to show whether that proposal was implemented up to April 2005 when the plaintiff’s directors left the land. It is therefore difficult to say whether what started off as a licence later became some kind of tenancy because of the paucity of evidence on this point. It was also not contended by counsel for the plaintiff that some kind of tenancy had come into existence between the plaintiff and the defendants at the time the plaintiff’s directors left the land. I will therefore continue to proceed on the basis that at all material times the plaintiff was occupying the land on the basis of a contractual licence.

The agreement that was made between the plaintiff and the defendants is silent on the question of whether the plaintiff can remove the fales that it built on the land at the end of the licence. Perhaps it is because of this silence that it was submitted for the defendants that the fales are fixtures and form part of the land so that they cannot be removed by the plaintiff. In effect what the defendants appear to be saying is that as the fales are fixtures and form part of the land their ownership has vested in the defendants so that the defendants cannot be committing trespass if they occupy the fales or ban the plaintiff and its employees from entering the land to remove them. It is therefore necessary to consider whether the said fales are fixtures and form part of the land.

The first difficulty in determining whether the fales are fixtures is that the status of the land, whether it is freehold or customary land, is not clear. As mentioned earlier, I am inclined to think that the land is customary land as it is situated at the village of Manase in Savaii. It is also pleaded in the plaintiff’s statement of claim that the land in question is “the defendants' family land.” The name Tiapili of the first named defendant is also a matai title of the village of Manase and customary lands are hold under matai titles. If it is correct, as I am entitled to assume at this stage in the absence of any evidence to the contrary, that the land in question is customary land, then it is not appropriate to apply the law of fixtures which was born out of very different circumstances to customary land in Samoa. From my judicial experience as president of the Land and Titles Court where I dealt with a number of disputes concerning the removal of houses or other structures built on customary land no one has ever raised that such houses or structures whether rightfully or wrongfully built on customary land form part of the land and cannot be removed by the owner. The attitude amongst litigants to customary land disputes has always been that houses and other structures which have been wrongfully built on customary land should be dismantled and removed and the Land and Titles Court on a number of occasions over the years has made orders to that effect without any inhibition that such houses may be fixtures and therefore cannot be removed as they form part of the customary lands on which they had been built. What I am saying here is closely in line with the view which has been taken by the Courts in the Kingdom of Tonga that the law of fixtures does not apply in that country to make a house built on land a fixture so as to form part of the land. In the case of Mangisi v Koloamatangi [1999] TOCA 9, the Court of Appeal of Tonga comprising of Burchett, Tompkins and Beaumont JJ said:

“The contract was not and did not involve a lease. It conferred a permission or licence to operate a business in the building constructed by the appellant at her own expense...

It is essential to keep in mind that the contract conferred no interest of any kind in land. It conferred on the appellant a licence to use the building. In Tonga, a building may be severed from the land on which it stands, so as not to constitute a fixture; Kolo v Bank of Tonga (Court of Appeal, Burchett, Tompkins and Beaumont JJ, unreported, 7 August 1998). In that case, the Court of Appeal referred to an earlier decision of Ward CJ in Bank of Tonga v Kolo (unreported, 21 April 1995) in which the Chief Justice stated that buildings in Tonga have been regarded as items of personal property rather than as forming part of the realty. The Court of Appeal commented:

“Because of the Constitution of Tonga, and because of Tonga’s traditions, the intricate law of fixtures and of accretions to land which applies elsewhere is not wholly appropriate to Tonga. Although all the implications have not yet been worked out, and their working out should be left to the process of development of the law of Tonga case by case, we think that the broad proposition stated by Ward CJ should be accepted. That means that it was open to Mr Kolo to pledge his house to the Bank as an item separate from the land on which it stood.”"

The approach adopted by the Court of Appeal of Tonga in Mangisi v Koloamatangi [1999] TOCA 9 has subsequently been applied by the Supreme Court of Tonga in the case of Tonga Industries Traders Ltd v Shell Company Pacific Ltd [2005] TOSC 5. In my respectful view, what is stated by the Court of Appeal of Tonga in Mangisi v Koloamatangi concerning the inapplicability of the law of fixtures to buildings constructed on land in Tonga is also applicable to houses and buildings constructed on Samoan customary land. This being the case, I hold that the fales built by the plaintiff at its own expense on the land at Manase in Savaii are not fixtures if the land on which they stand is customary land. These fales belong to the plaintiff as items of personal property and therefore can be removed. It follows that since the law of fixtures does not apply to a house or building erected on customary land, such a house or building can be pledged or used by the owner to secure a loan because it does not in law form part of the customary land on which it stands. If the owner defaults on the loan the lender may enter the land and dismantle, remove, and sell the house or building to pay off the outstanding balance of the loan.

If, as I have said, the land on which the fales in the present case have been erected is customary land, then the fales remain the personal properties of the plaintiff. As items of personal properties, they are chattels. As chattels they are goods: see the definition of “goods” in s.2 of the Sale of Good Act 1975 and the discussion in Law of Personal Property (1998) 6^th ed by Garrow and Fenton at paras 1.001 and 1.002. Being goods, any unjustified interference with their possession by the plaintiff or with the plaintiff’s rights to their immediate possession would constitute trespass to goods which is one of the categories of trespass.

If, on the other hand, the land in question is freehold land, then both counsel in this case appear to have proceeded on the basis that the law of fixtures apply. In classifying objects which are brought onto land, Lord Lloyd in Elitestone Ltd v Morris [1997] UKHL 15; [1997] 2 All ER 513 said at p. 517:

“An object which is brought onto land may be classified under one of three broad heads. It may be (a) a chattel; (b) a fixture; or (c) part and parcel of the land itself. Objects in categories (b) and (c) are treated as being part of the land.”

Buildings are to be considered under category (b) or (c) whether they are part of the land on which they stand. In making that consideration, the two criteria to be taken into account are: (a) the degree of annexation of the building to the land, and (b) the purpose of annexation: see Land Law in New Zealand (2004) 2^nd ed by Hinde, McMorland and Sim vol 1 at para 6.036, p. 158; and Law of Personal Property (1998) 6^th ed by Garrow and Fenton at paras 3.003 and 3.004. Elaborate discussions of those two criteria will be found in the two texts just referred to.

In these proceedings, the plaintiff pleads in its statement of claim that it built three fales on the land. One of these fales is the diving fale in which all the plaintiff’s diving equipment were left and which provided the reception for the plaintiff’s customers. The other two fales accommodated the plaintiff’s directors. In the defendants statement of defence and counterclaim it is admitted that three fales were built. It is then alleged that the fales form part of the land and in law vest in the defendants upon termination of the plaintiff’s licence. On those pleaded facts which are the only relevant facts it is not clear what is the degree of annexation of each fale to the land or what was the purpose of annexation which are the two criteria to be considered whether a house has become part of the land. I am also not able to determine those two criteria on the basis of the submissions put to the Court. Consequently, if the land in question is freehold land, I am not able at this stage of proceedings to determine whether or not the said fales have become part of the land. As it will appear from the two textbooks referred to in this part of my judgement, even though buildings often form part of the land on which they are erected, that is not always the case. So there is here a serious question to be tried, namely, whether or not the said fales have become part of the land if the land is freehold land. However, there appears to be another relevant issue which arose from the submissions by counsel for the plaintiff.

It was raised for the plaintiff that if the defendants are to keep the fales built by the plaintiff at its own expense on the basis that the fales are deemed to have become part of the land, then applying the doctrine of unjust enrichment the defendants would have gained a benefit, at the expense of the plaintiff, when it would be unjust for the defendants to retain that benefit. Counsel for the plaintiff mentioned that in some of the recent Samoan cases where unjust enrichment was pleaded as a cause of action, the owner of land was ordered to pay compensation to a party who had been in occupation of land for improvements that party had made to the land because it was considered unjust for the owner to keep the benefit of the improvements without paying compensation for it. The remedies for unjust enrichment are not restricted to compensation, the Court may instead order the return of the enrichment in appropriate circumstances. At first blush there would seem to be an apparent conflict between the law of fixtures and the doctrine of unjust enrichment where an owner of land is required under the doctrine of unjust enrichment to pay compensation for improvements to land made by another person even though such improvements have become part of the land and vested in the owner under the law of fixtures.

The law of fixtures is of course much older than the doctrine of unjust enrichment which was only given judicial recognition in recent times. Whatever should be the legal relationship between the two with regard to improvements to land such as buildings and houses, is a complex issue which is not appropriate for determination in these interlocutory proceedings. It would be more appropriate to leave that issue for further submissions and consideration at the substantive hearing if it is still necessary for the plaintiff to pursue it. If the land in question is freehold land and the plaintiff intends to rely on unjust enrichment, then unjust enrichment should be pleaded as a cause of action.

I turn now to the law of trespass as it is relevant to these proceedings. Trespass to land is interference, without justification, with possession or rights to the immediate possession of land. The concept of “possession” in the context of the tort of trespass to land cannot be explained in a few words and its exact parameters have not been exhaustively defined: see, for example, Winfield and Jolowicz on Tort (1994) 14^th ed by W V H Rogers at pp 384-385; The Law of Torts in New Zealand (1997) 2^nd ed by Todd et al at para 8.4.3 at pp 469-473 which are the latest editions of those two texts available to the Court.

In The Law of Torts in New Zealand (supra) in para 8.4 at pp 466-467, it is there stated:

“In the case of land which has been built on, possession may be evidenced by occupation of the building. If the building is vacant, possession may be indicated by possession of the key or other method of obtaining entry.”

Then in para 8.4.3 at pp 469-470 of the same text, it is there stated with regard to licensees:

“The traditional view was that a licensee could not sue in trespass because he or she did not have exclusive possession of the land. But that view, if it was ever right, certainly cannot be sustained today. It remains the case that a bare licensee cannot sue in trespass, because he or she has no intention to possess the land and does not exercise control over it to the exclusion of other persons. But other licensees have such possession of the land or part of it that it would be absurd to deny their interest in preserving such possession – and the Courts have so held. For example, if a building owner leaves a contractor in sole and undisputed control of a building site, that contractor may sue, even though it is only a licensee. So too in England, deserted wives whose legal status has been no more than licensee in the matrimonial home have been held to have sufficient ‘exclusive possession’ as to bring proceedings against trespassers. The holder of an exclusive right of burial in perpetuity to a burial plot probably has a sufficient right of exclusive possession to prevent trespass, even though only a licensee.

While there is authority that a ‘lodger in a house, although he has the exclusive use of rooms in the house’ cannot bring an action in trespass, it is submitted that each case must turn on its facts, and that a lodger with power under his or her licence to bar access to the rooms could maintain an action in trespass with respect to unauthorised entries into those rooms.

Indeed, it would be extraordinary if a lodger (say, a student in a university hostel) could not seek redress to prevent repeated entries by another lodger. The licensor would probably have no interest in bringing an action, and in any event it is the lodger, not the licensor, who has suffered the real harm.”

The Law of Torts in New Zealand (supra) then goes on at p. 470 to refer to Moore v MacMillan [1977] 2 NZLR 81, which was cited for the defendants in the present proceedings in support of the proposition that a licensee does not have possession of the land and so cannot sue in trespass, as a case on unusual facts. It is pointed out that the plaintiff in Moore v MacMillan was no more than a bare licensee. I have also noticed that even though Moore v MacMillan is cited in Butterworths Land Law in New Zealand (1997) in para 7.001 at p. 668, it is not cited in Land Law in New Zealand (2004) 2^nd ed by Hinde McMorland and Sim which is the current edition of that work where the following passage appears in para 18.001 at p. 779:

“A licensee with a right of occupation of, and sufficient rights of control over, land has a right to bring proceedings in trespass, but a licensee with lesser rights over land does not.”

It is therefore not every case that a licensee cannot sue in trespass. It depends on the circumstances of each case.

It has not been possible to find any decided case with a factual situation which is similar to that in this case. In this case, the plaintiff built on land at its own expense a fale for its scuba diving business with the express agreement of the defendants and two fales to accommodate its directors with the apparent acquiescence of the defendants. On the same land is the defendants' beach fale resort. Due to the deterioration in the relationship between the parties, the plaintiff says it had no alternative but to leave. The plaintiff’s directors locked the three fales and took the keys with them. When asked for the keys to the fales by the defendants, the plaintiff’s directors refused to hand over the keys. The defendants, according the plaintiff, broke into and occupy the fales. The plaintiff and its employees now want to remove the fales but it is alleged that they have been banned by the defendants. In those circumstances, it has not been possible to make a definitive determination, on the basis of the material and submissions presented to the Court, whether there is trespass on the part of the defendants or not. In other words there is a serious question that ought to be tried.

It has already been pointed out that if the land on which the disputed fales stand is customary land, then the fales are not fixtures, and therefore do not form part of the land. They are still items of personal property which belong to the plaintiff and can be removed by the plaintiff. If on the other hand, the land is freehold land, then there is doubt whether the fales are fixtures because their degree of annexation to the land and their purpose of annexation are not clear in terms of the law of fixtures. If, however, it turns out that the fales are not fixtures, but items of personal property which belong to the plaintiff, then the plaintiff is entitled to remove them. In breaking into the fales, occupying them, and banning the plaintiff and its employees from removing the fales, it is highly arguable that the defendants are committing trespass which will not be trespass to land but trespass to chattels or goods.

In Salmond and Heuston on The Law of Torts (1992) 12^th ed, it is stated at p. 81:

“A bare licence may be revoked at will by the licensor. Before the decision to revoke will determine the licence, it must be communicated to the licensee. This may be either by express notice or merely by doing any act inconsistent with the continuance of the licence.

Once such communication has taken place, the licensee is entitled to a period reasonable in the circumstances to enable him or her to leave the premises or to remove his or her property from the licensor’s land. Until that period of grace (or ‘packing-up period’) has elapsed, the licensee does not become a trespasser.”

At p. 478 of the same text, it is there stated:

“When a contractual licence is found to be revocable, the licensee will have at least the period of grace which is allowed to a bare licensee to remove himself or herself and his or her possessions from the premises. Alternatively, the Courts may imply into the contract a requirement that the licensor give a reasonable period of notice to the licensee. Only once the period of grace or notice has expired will the licensee become a trespasser.”

In Land Law in New Zealand (2004) 2^nd ed by Hinde, McMorland and Sim, the learned authors state in vol 2 para 18.015 at pp 796-797:

“A bare licence, being only a privilege unprotected by any right that it should not be revoked, is lawfully revocable at will by the licensor. Before the decision to revoke will determine the licence, it must be communicated to the licensee. This may be either by express notice, or merely by doing any act inconsistent with the continuance of the licence...

Although a bare licence is lawfully terminable at will, the licensee is entitled to a period reasonable in the circumstances to enable him or her to leave the premises or to remove any property from the licensor’s land or otherwise to cease doing that which became unlawful on the termination of the licence. Until that period of grace has elapsed, the licensor may not in any way treat the licensee as a trespasser, so that any physical ejectment will give the licensee a right of action for trespass even though no more than reasonable force is used. The period of grace... depends entirely on the facts of each case based on the purpose of the period which is simply to give the licensee time peaceably to vacate the premises.”

In para 18.017 at p. 790 of the same text, the learned authors go on to state:

“When a contractual licence is found to be revokable, the licensee will have at least the period of grace which is allowed to a bare license to vacate the licensor’s premises. Being concerned with a contract, it is also possible for the Courts to imply into the contract a requirement that the licensor give a reasonable period of notice to the licensee. The ordinary rules for the implication of terms into a contract apply. What is a reasonable period depends on the facts of each case, but the Courts have considered as relevant the business commitments of the licensee at the time of the notice, the amount of financial investment made by the licensee which would presumably be lost, and in unusual circumstances have allowed the licensee a reasonable period to make suitable alternative arrangements. The period should allow both parties to adjust to the change.”

I have referred to the above texts for two reasons. First, it is to show that at the termination of a revocable licence, whether it is a bare or contractual licence, the licensee is entitled to a notice of termination giving him a reasonable period of time to vacate the premises of the licensor. What is a reasonable period of notice will depend on the circumstances of each case.

Second, it is to show that at the termination of a licence, a bare or contractual license is entitled to remove his personal properties or possessions from the premises of the licensor. If, therefore, the fales in this case are personal properties of the plaintiff, then it is at least arguable that the defendants in occupying the plaintiff’s fales without the consent of the plaintiff and by banning the plaintiff and its employees from removing the fales are liable in trespass. Either the plaintiff is in possession of the fales because it still has the keys to the fales or if the house are personal properties then the plaintiff has rights to their immediate possession. The same applies to the personal effects in the fales. There is therefore a serious question to be tried.

For all the foregoing reasons, I conclude that there are more than one serious question to be tried in this case. I turn now to the question of whether the balance of convenience favours the retention or discharge of the interim injunction that was granted by Vaai J.

Balance of convenience

The expression “balance of convenience” is explained in Equity and Trusts in Australia and New Zealand (2000) 2^nd ed by Dal Pont and Chalmers at pp 817-818 as follows:

“Once the plaintiff has persuaded the Court that there is a serious question to be tried, the Court must consider whether the balance of convenience is in favour of the grant or refusal of the injunction sought. This is the classic exercise of the equitable discretion. ‘It is the balance of convenience component of the test which ensures flexibility in the application of equitable principles in diverse factual situations.’ Though expressed as a balance ‘of convenience,’ the balance that the Court seeks is more fundamental and weightier than mere convenience – it is the ‘balance of the risk of doing an injustice’ that better describes the process. In assessing where this balance lies, the Court must weigh the respective risks that injustice may result from its deciding one way rather than the other at a stage when the evidence is incomplete. In effect, the question is to see whether the nature and degree of harm and inconvenience likely to be sustained by the defendant and the plaintiff respectively from the grant or refusal of an injunction are sufficiently disproportionate to bring down by themselves the balance on one side or the other. Where the balance of convenience clearly does not favour either party, the Court may, for reasons of prudence decide to preserve the status quo.”

Similarly, in Civil Remedies in New Zealand (2003), it is stated in para 5.3 at p. 268:

“An assessment by the Court of the balance of convenience between the parties is now the dominant consideration that determines the grant of an interlocutory injunction. The phrase ‘balance of convenience’ is simply convenient shorthand. What is at issue is something more fundamental than mere convenience, and it may be more appropriately described as the balance of the risk of doing an injustice.”

Both these explanations of the deeper meaning of the expression ‘balance of convenience’ rely on what was said in Cayne v Global National Resources plc [1984] 1 All ER 225 per May L J at p. 237.

The word ‘balance’ in the expression ‘balance of convenience’ clearly implies that what is involved is a weighing up and balancing exercise of all the relevant factors in order to avoid or minimise the risk of an injustice being done to any of the parties. This is consistent with the flexible nature of the equitable jurisdiction involved. On this basis the question of the adequacy of damages as a remedy should apply not only to the party who is seeking the injunction but also to the party against whom the injunction is sought. Equity in this context acts both ways and does not discriminate between the parties. I respectfully agree with what is said in Civil Remedies in New Zealand (2003) at pp. 269-270:

“While New Zealand Courts have rejected the rigid approach to the adequacy of damages suggested by Lord Diplock in American Cyanamid, in practice it is a factor that will often determine the grant of an interlocutory injunction. If damages would be an adequate remedy to the plaintiff, an injunction will usually be refused. If damages would be an adequate remedy to the defendant, the injunction will usually be granted. Indeed, it is usually sufficient that damages are likely to be a substantially better remedy for one party than the other... [When] considering whether damages would be an adequate remedy on an application for an interlocutory injunction, the concern is almost entirely focused on the potential for financial injury to either party if the injunction is wrongly granted or refused...On an interlocutory injunction, the concern is simply to maintain some just interim position.”

In Total Marine Services Pty Ltd v Walker & Anor [2002] WASC 8, Roberts-Smith J in the Supreme Court of Western Australia says at para 72:

“The principle [of balance of convenience] is also aptly referred to as the balance of the risk of doing an injustice: per May L J in Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237. What is to be weighed is the damage the respondents will suffer if the injunction is granted against that which the applicant may suffer if the injunction is refused.”

In Australia, in the context of interlocutory injunctions, there is a noticeable shift in emphasis from whether damages is an adequate remedy for the applicant to whether damages is a just remedy in all the circumstances. In Equity and Trusts in Australia and New Zealand (supra) at p. 820, it is there stated:

“Recently Australian Courts have extended the availability of the injunction by framing the relevant query in the following terms: ‘Is it just, in all the circumstances, that a plaintiff should be confined to her or his remedy in damages?’... Mr Justice Gummow, writing extra-judicially, surmised that ‘the result of these developments is that little is now heard in Australia Courts of any rule as to the need for irreparable injury.’”

In Total Marine Services Pty Ltd. V Walter & Anor (supra) at para 61, Roberts-Smith J says:

“I accept the applicant’s submission that the test here is not simply whether damages will provide it with an adequate remedy but rather whether it would be just in all the

circumstances to confine it to that remedy: Evans Marshall and Co. Ltd v Bertola SA [1973] 1 WLR 349, State Transport Authority v Apex Quarries Ltd. [1998] VR 187.”

It must also be pointed out that adequacy of damages as a remedy is not an independent and separate requirement in determining whether to grant or refuse an interlocutory interim injunction but is one of the factors, and is a very important factor, to be considered with any other relevant factors in determining where the balance of convenience lies. There are a number of cases which show that that is the true position. However, there are also a number of cases which show that adequacy of damages as a remedy is a separate requirement to be considered after the Court decides that there is a serious question to be tried but before considering whether the balance of convenience favours the grant or refusal of an injunction. In my opinion, the better view is to treat adequacy of damages as one factor to be considered together with any other relevant factors in assessing where the balance of convenience lies rather than to treat it as an independent and separate requirement as it is done in some of the cases.

Another relevant factor in the assessment of whether the balance of convenience favours the grant or refusal of an interlocutory injunction is the respective strengths and weaknesses of the plaintiff’s case and the defendant’s case. There is an apparent degree of inconsistency in the authorities as to the degree of prominence to be accorded to this factor in the assessment of the balance of convenience. At this stage of development perhaps what one can say with confidence is that the matter should depend on the facts of each case bearing in mind that when the Court embarks on an assessment of where the balance of convenience lies what is really involved is to weigh in the balance the risk of doing an injustice. Be that as it may, there is consistency amongst the relevant authorities that the respective strengths and weaknesses of the parties' cases is a relevant factor to be considered in determining whether the balance of convenience favours the grant or refusal of an interlocutory injunction. In considering the question of adequacy of damages with regard to both the plaintiff and the defendants, it is clear that if the injunction is discharged, the damage the plaintiff will suffer is that the defendants will be able to occupy the three fales which were built by the plaintiff at its own expense until this matter is determined at a substantive hearing. As alleged by the plaintiff, the defendants have been occupying those fales for some time now in spite of the injunction that was issued. Thus, to discharge the injunction would mean that the defendants would be able to continue their occupation of the fales for their own purposes. Furthermore, to discharge the injunction would mean that the plaintiff would effectively continue to be deprived of the use of its fales and its personal effects in those fales for a period of time in spite of its right as licensee, whether it is a bare or contractual licensee, to have its personal properties removed from the defendants premises. This is assuming that the fales are not fixtures, a point I will again return to later when I come to consider the strength of the defendant’s case. There must also be concern on the part of the plaintiff for the security of its personal effects which have been left behind in the fales.

On the other hand, if the injunction remains, it is rather difficult to see what damages the defendants will suffer. After all they did not build the fales and spent no money on their construction. The personal effects in the fales also belong to the plaintiff. I am also mindful of the fact that the plaintiff has given an undertaking as to damages.

Turning to the respective strengths and weaknesses of the parties’ cases, I am sufficiently confident at this stage to say that the case for the plaintiff is much stronger than that for the defendants with regard to the fales and the personal effects in them. The fales were built by the plaintiff at its own expense. There is no dispute, or serious dispute, that the personal effects in the fales belong to the plaintiff.

A technical defence has been raised on behalf of the defendants. It was submitted that the fales are fixtures and therefore form part of the land so that they have been vested in the defendants. However, the status of the land, whether it is customary land or freehold land, is not clear. For reasons already stated, I am very much inclined to think that it is customary land. There is nothing at this stage which points the other way to show that the land is probably freehold land. I have expressed the clear view that it is not appropriate to apply the law of fixtures which was born out of very different circumstances to Samoan customary land. Consequently, such houses and buildings are not fixtures and do not form part of the land on which they stand. They remain the personal properties of the persons who built them with their own money. They are personal chattels.

As the plaintiff is a licensee it is entitled to remove its personal properties from the land. Any unjustified interference with the plaintiff’s possession or rights to immediate possession of its personal properties would be trespass. Under the present classification of the law of trespass into trespass to land, trespass to goods, and trespass to the person, it would be appropriate to consider the alleged trespass in this case under the category of trespass to goods.

There is also material before the Court that the plaintiff’s directors locked all three fales and took the keys with them when they left the premises in April 2005. The defendants subsequently asked for the keys but the plaintiff’s directors refused to hand them over. There is authority that possession of the keys or other lawful means of obtaining entry into a house is evidence of possession of that house. In any event, if the land is customary land as it seems to be then the fales remain the personal properties of the plaintiff. As such, even if the plaintiff does not have possession of its fales and personal effects, it has rights of immediate possession to its own chattels. The tort of conversion has not been pleaded by the plaintiff so that it is not necessary to comment on its applicability or otherwise to this case. Suffice to say that physical possession is not an essential ingredient of the tort of conversion.

In the circumstances, it is a possibility that the land may be freehold land. But even if it turns out that the land is freehold land, there is no evidence to show what is the degree of annexation of these fales to the land and what is the purpose of annexation which are the two criteria to be considered in determining whether a house or building erected on land has become a fixture or form part and parcel of the land.

Another factor which is relevant to the assessment of where the balance of convenience lies is the conduct of the parties although I would not give as much weight to this factor as I would give to the other factors already discussed. It must have been clear to the defendants that the fales in question were built by the plaintiff at its own expense with their agreement and /or acquiescence. There is no denial of any real substance of those matters by the defendants. There are bare denials even though it is admitted that the fales were built. On this issue, I prefer the allegations by the plaintiff, even at this stage, as they are of better quality and inspire confidence. With respect to the defendants, their alleged conduct in occupying these fales and prohibiting the plaintiff and its employees from removing them and the plaintiff’s personal effects in them, suggests deliberate infringement of the plaintiff’s rights to the fales and its personal effects. It is true the defendants have raised the law of fixtures as a defence but that is a technical defence which they could not have been aware of until they engaged counsel. This case does not appear at this stage to be a borderline case of trespass where there are powerful competing claims with regard to ownership of the fales and especially the personal effects in them. On the material before the Court, it would appear that prima facie the fales belong to the plaintiff.

There is also a counterclaim by the defendants for rent for the time between January 2002 and April 2003 which is alleged to be the time the plaintiff’s directors/shareholders stayed at the defendants beach fale resort and for the time the plaintiff conducted its business operation on the defendants land. The plaintiff denies the counterclaim saying that its directors/shareholders stayed in the defendants’ beach fale resort free of charge and operated its business on the defendants’ land free of charge pursuant to the agreement that the parties had entered into. Whatever is the truth in this regard, it is difficult at this stage to see what connection this matter has got to the question of trespass in relation to the fales built by the plaintiff and its personal effects in those fales.

After considering the requirements of whether there is a serious question to be tried and of whether the balance of convenience favours a discharge or continuation of the interim injunction, I have come to the conclusion that the injunction should remain. I have also stood back and consider the overall justice of the case on the basis of the material before the Court and that has not altered the conclusion I have reached. Accordingly, the motion to set aside the interim injunction that was granted by Vaai J is dismissed.

Security for costs

The defendants have also sought security for costs against the plaintiff. Rule 30 of the Supreme Court (Civil Procedure Rules) 1980 which provides for security for costs states:

“(1) In any civil proceedings and at any stage thereof the Supreme Court may require a plaintiff or applicant resident out of the jurisdiction of the Supreme Court to deposit any sum of money as security for costs and may stay the proceeding pending the making of that deposit.

“(2) When any sum has been so deposited as security for cost, it shall be disposed of in such manner as the Court directs.”

The plaintiff is a company which is registered and incorporated in Samoa. Its registered office was at Manase in Savaii where it had carried out its scuba diving business operation until April 2005 when its directors/shareholders left. The plaintiff’s majority shareholder is Dick Klein who claims to hold 99% of the plaintiff’s shares. Mr Klein, his wife and family are still living in Samoa. He has a work permit which has been extended to October 2008.

There is no evidence to suggest that the control and management of the plaintiff company is anywhere but Samoa. Given the nature of the plaintiff’s business and the fact that Mr Klein who owns 99% of the plaintiff’s shareholding resides with his wife and family in Samoa, it is not possible to see that the centre of control and management of the plaintiff company can be anywhere but Samoa. The clear and reasonable inference to be drawn is that the centre of control and management of the plaintiff company is in Samoa. In the circumstances, I conclude that the plaintiff’s place of residence is Samoa.

The plaintiff, as already mentioned, was incorporated in Samoa. So its place of domicile is also Samoa.

In Cheshire and North’s Private International Law (1992) 12^th ed, it is stated at p. 174 in relation to corporations:

“Thus the tests of domicile and of residence are different. A company is resident where its control and management abide; it is domiciled where it is incorporated. But the domicile of a corporation has this peculiarity, that cannot be changed.”

In Dicey & Morris The Conflict of Laws (1993) 12^th ed, it is stated in vol 2, p. 1103:

“Rule 154 – (1) The domicile of a corporation is in the country under whose law it is incorporated.”

(2) A corporation is resident in the country where its central management and control is exercised. If the exercise of central management and control is divided between two or more countries then the corporation is resident in each of these countries.”

Applying the legal tests for the domicil and residence of a company as set out, there is no doubt that the plaintiff company’s place of domicil and of residence are both Samoa.

Rule 30 of the Supreme Court (Civil Produce Rules) 1980 provides a threshold requirement which must be satisfied before the Court may exercise any discretion whether to order a plaintiff to furnish security for costs. This threshold requirement is that the plaintiff must be resident out of the Court’s jurisdiction. So rule 30 applies only to a plaintiff who is “resident out of the jurisdiction.” It will not apply to a plaintiff who is resident within the jurisdiction. This threshold requirement is the pre-condition which must first exist before the Court may exercise any discretion whether to order a plaintiff to deposit a sum of money as security for costs. Without that pre-condition the exercise of the discretion does not arise.

I have decided that the plaintiff company is resident in Samoa because its centre of control and management is in Samoa. It follows that an order for security for costs cannot be made under rule 30 against the plaintiff company.

The concern expressed on behalf of the defendants that the director/majority shareholder of the plaintiff being a German national may leave the jurisdiction and therefore any judgement in favour of the defendants cannot be satisfied does not fall within the threshold requirement of rule 30. However, the same concern can be levelled at others. It is a known fact that there are Samoan citizens who are now living overseas but have debts in Samoa. Such debts include judgement debts. Evidence of this is provided by applications for writs of arrest made to the Court when some Samoan citizens living abroad return to Samoa for some reason on a temporary basis.

All in all then, the application for security for costs is also dismissed.

Costs reserved on both the motion to set aside the interim injunction and the application for security for costs by defendants.

CHIEF JUSTICE