Midlink Marketing Aust Pty Ltd v Development Bank of Samoa [2005] WSSC 45 (17 January 2005)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

MIDLINK MARKETING AUST. PTY. LIMITED
a duly incorporated company having its registered office at Glen Iris, Victoria, Australia
Plaintiff

AND:

DEVELOPMENT BANK OF SAMOA
a statutory corporation having its registered office at Savalalo, Apia, Samoa and carrying on business as Bankers.
Defendant

Counsel: Mr RT Faaiuaso for the plaintiff
Ms K Atoa for the defendant

Hearing: 9 July 2003, 12 November 2003
Date of Decision: 17 January 2005

DECISION OF JUSTICE VAAI

The plaintiff an Australian Company supplied young chickens and chicken feed to Tauati Enterprises a family company of Mr and Mrs Tauati and children which operated a poultry farm on leasehold land near Apia. Tauati Enterprises borrowed substantial amounts of monies from the defendant secured by a mortgage over its farm. Towards the end of the year 2001 Tauati Enterprises experienced financial difficulties and by January 2002 it was seriously in default of its loan repayments prompting the defendant to commence foreclosure proceedings. At the same time Tauati Enterprises owed the plaintiff about AUD$82,000 for the chickens and feed.

It was not until April 2002 that the plaintiff was made aware of Tauati Enterprises demise and of the defendant’s exercise of its power of sale when Tauati Enterprises invited the plaintiff to bid for the farm in partnership with one William Tauati son of Mr Tauati. The plaintiff was not interested although it did attempt to dissuade the defendant from exercising its power of sale; unknown to the plaintiff at the time that the defendant’s foreclosure action was almost completed. In June 2002 the defendant sold the farm to Mr Chan Tung an established poultry farmer. The plaintiff claims that when the defendant sold the farm in June 2002 there were 3,000 chickens valued at $AUD$7,800 and 525 bags of chicken feed (equivalent to one full container) valued at AUD$38,342.77 and since Tauati Enterprises has not paid for the chicken and chicken feed the property in them remains with the plaintiff and the defendant should pay the plaintiff for the value of the chickens and feed.

Since there is conflicting evidence as to the quantity of the chickens and bags of chicken feed on the farm when the farm was sold, I must first resolve that conflict. Cam Johnstone the managing director of the plaintiff came to Samoa and visited the farm on the 6th June 2002 before the sale and while the Tauatis were still operating the farm and on that day there were four thousand (4,000) chickens of which one thousand (1,000) were old ones and three thousand (3,000) were supplied within the previous six (6) months as well as a full container of feeds. William Tauati also testified that there were (3,500) chickens and a full container of feeds or 525 bags; but the third witness for the plaintiff gave a different version. Mr Chan Tung did a site visit to the farm in December 2001 as the prospective buyer; there were 3,500 chickens and William Tauati was slaughtering chickens. In June 2002 when Mr Chan Tung took over there were 2,400 chickens of which 1,200 were productive as well as one weeks supply of feed left which is equivalent to 56 bags based on 8 bags per day for 2,400 chickens or one bag per 300 chickens per day. The small quantity of feed left prompted Mr Chan Tung to place an order for two full containers of feed for his newly acquired farm and his other poultry farm. In resolving the conflicting evidence I am gratefully guided by the documentary evidence provided by the plaintiff which needless to say undermines the sincerity of the testimony of Mr Johnstone and Mr Tauati and leads credibility to the testimony of Mr Chan Tung. The plaintiff produced as exhibit “P4” a copy of a faxed letter to the defendant from the plaintiff and a copy of the accounts showing the dates when the chicken and feeds were supplied. By scrutinizing the plaintiff’s invoice it shows that the plaintiff was supplying chicken feed almost monthly until February 2002 and chickens every three months until September 2001. If there were 3,000 to 3,500 chickens in June 2002 which consumed about 10 to 12 bags of feed per day or 300 to 360 bags per month then for the four months from February 2002 (when the last supply of feed was delivered) to June when the Tauatis moved out and Mr Chang Tung took over the farm the 3,000 to 3,500 chickens would have consumed about 1,200 to 1,400 bags or almost two and a half (2½) containers of chicken feed.

Assuming that there was a full container of feed in June 2002 as Mr Johnstone and Mr Tauati testified, and assuming also that the price of one container is $38,342.77 as claimed by the plaintiff this would mean that before Mr Chang Tung took over the farm in June there were at least 3 full containers of feed valued at about $115,000 on the farm in February 2002 after the last shipment. But this cannot be true because according to the plaintiff’s invoice the total amount of feeds supplied by the plaintiff to Tauati Enterprises between March 2001 and February 2002 amounts only to AUD$53,167.24. Consequently the evidence of both Mr Johnstone and Mr Tauati should be ignored and preference be given to the testimony of Mr Chang Tung that there was one weeks feed (56 bags) left at the farm. For the same reasons the evidence of Mr Chan Tung as to the quantity of chickens on the farm in June 2002 is to be preferred.

The next and most important issue to determine is whether in June 2002 when the defendant exercised its power as mortgagee the property in the chicken and the chicken feed has passed to Tauati Enterprises. Mr Cam Johnstone told the court that Tauati Enterprises had 30 days to pay after receipt of the goods while William Tauati was of the belief that payment for the chickens was not due until the chicken lay eggs (which is twenty weeks after delivery). In any event the plaintiff insists that as the goods have not been paid for the property in them has not passed to Tauati Enterprises. To determine this issue the court must consider the provision of the Sale of Goods Act 1975. Essentially the material section is section 18(1) which provides:

“Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred;”

and 18(2) says:

“For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case;”

In section 19 specific rules are to apply unless a different intention appears for ascertaining the intention of the parties as to the time at which the property in the goods is to pass. For the purpose of this judgment it is sufficient to refer to rule 1 only;

“Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery or both is postponed.”

Other than stating that the property in the chicken and feed has not passed to Tauati Enterprises because the purchase price has not been paid the plaintiff has failed to show a different intention that property did not pass. Where a different intention appears see In re Anchor Line (Henderson Brothers) Ltd (1937) Ch 1. On the contrary, pursuant to subsection 2 of section 18, I am of the view that considering the conduct of the parties and the circumstances surrounding the supply of chicken and chicken feed the property in the goods had vested in Tauati Enterprises.

In the first place when the chickens got too old to be productively laying eggs Tauati Enterprises was at liberty to slaughter and sell them and Tauati Enterprises has been so doing it since the year 2000 when the plaintiff commenced to supply the chickens to Tauati Enterprises. The plaintiff knew that Tauati Enterprises will be slaughtering and selling the old stock to be replaced by young ones supplied by the plaintiff and there has never been any contrary intention shown that the property in the chickens or chicken feeds will not pass until their price has been paid. See: Jarvis v Williams (1955) 1 All ER 108.

Secondly as I have earlier stated, when the plaintiff discovered through Tauati Enterprises that the defendant was taking steps to recover its debt it tried unsuccessfully to dissuade the defendant from proceeding and suggested by letter dated the 5th April 2002 (produced as plaintiff’s exhibit P2) the appointment of a receiver rather than an auction. The last paragraph of the letter states:

“We would appreciate your comments on our opinion as otherwise we will have to sue Tauati, which will then leave both the Bank and ourselves poorer for the result.

Yours faithfully,

C.C.B. Johnstone

Managing Director”

The last paragraph in my view is a revealing admission by the plaintiff that property in the goods has in fact passed to Tauati Enterprises and the subsequent assertions that property has not passed cannot be maintained. As a consequence the plaintiff’s claim must fail and is dismissed.

As to costs it is normally the case that the unsuccessful party should bear the costs. At the conclusion of the hearing counsels agreed to file legal submissions. Counsel for the defendant filed written submissions dated 28th November 2003 which was placed before me sometimes in 2004 after counsel for the plaintiff wrote inquiring about the court’s ruling. The court is entitled to legal submission not a summary of the evidence as submitted by counsel for the defendant. The defendant is not entitled to costs.

JUSTICE VAAI