Fagalei Investments Ltd v Schmidt [2010] WSSC 78 (6 July 2010)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

MISC 554/09

BETWEEN:

FAGALEI INVESTMENTS LIMITED
a duly incorporated company having its registered office
C/- Kruse Enari & Barlow.
PLAINTIFF

AND:

IPUNIUESE SCHMIDT
as Administrator of the estate of
POLATAIVAO FOSSIE SCHMIDT
FIRST DEFENDANT

AND:

IPUNIUESE SCHMIDT, ASALEMO SCHMIDT and LAAULI LEAUTEA SCHMIDT
for and on behalf of the heirs of
POLATAIVAO FOSSIE SCHMIDT
SECOND DEFENDANTS

Presiding Judge: Justice Slicer

Counsel: P Fepuleai for Plaintiff
S Toailoa for Defendants

Hearing: 12 February, 15 March and 19 April, 10 June 2010
Judgment: 6 July 2010

JUDGMENT OF SLICER J

1. Fagalei Investment Limited, a company incorporated in Samoa which is the registered and legal owner of land comprising 100 acres and registered as Volume 4 Folio 72 of the Land Register. Ipuniuese Schmidt is the Administrator of the estate of Polataivao Fossie Schmidt and the Second Defendants, beneficiaries of the estate. Myron Bruns ("Bruns") is the Managing Director of Fagalei.
   
2. The matter came before the Court as an application to remove Caveats No. 31726 and 996X. Given that a Removal Application ought to be determined on the affidavits and the restricted test of arguable case, the parties agreed that that application be subsumed into the substance of the matters pleaded in the Statement of Claim dated 10 February 2010 and Counterclaim of 11 February.
   

HISTORY OF PROCEEDINGS

3. Fagalei purchased the land in June 1971 for the consideration of T$35,000.00. On 17 May 1982, it entered into a Caretaker Agreement with Polataivao Fossie Schmidt ("Polataivao") and members of his family granting them a licence to employ and occupy the land. The agreement remained in force until 26 March 2009 when it was terminated. On 16 September 2004, Polataivao had lodged a Caveat No.996X over the land claiming an interest by adverse possession. On 23 February 2009, the Second Defendants lodged a second Caveat No. 31726 over the land on the same ground. On 22 May 2009, Fagalei sought by way of Motion the Removal of Caveat 996X and on 23 October, repeated its application for removal of Caveat 31726. On 10 February 2010, by Ordinary Summons it sought Orders:
   

1) Restraining the Defendants from occupying the land.

2) Removing the Defendants from the land.

3) Removing fencing and other property.

4) For the removal of the Caveats.

4. These proceedings concern the Notices of Motion and the Ordinary Summons. The Defendants plead that the action is barred by statute and in turn by Counterclaim seek:
   

A declaration vesting the land in the Estate as owner by adverse possession.

5. Fagalei meets this pleading by denying adverse possession and/or a claim that any unlawful possession occurred after a meeting between Bruns and Polataivao in June 1999, a period less than 12 years required to establish limitation or adverse possession.
   

HISTORY OF DEALINGS

6. The previous Managing Director of Fagalei was Joseph Coker who befriended Polataivao. Polataivao had been a Minister of State for Samoa between 1970 and 2001. In 1971, he was the Minister for Lands and Survey. Doubtless Coker believed that there would be advantage in forming a friendly relationship with the Minister although there is no suggestion of impropriety by either. The evidence given on behalf of the Defendants is that there were a number of proposals for the development of the land with consequent enhancement which led to a legitimate expectation that eventually there would be mutual benefit in the relationship. That relationship eventually led to the agreement evidenced in the document dated 17 May 1982. On that day, Fagalei and Polataivao entered into a Caretaker Agreement which provided a licence for use and employment and in lieu of rent the undertaking of specified tasks of care, maintenance and cultivation of the land. It permitted the erection of a fale or fales for the use of Polataivao and his family subject to a term which provided that the licencee was:
   

"(e) Not to permit any other person or persons other than the members of the family of the Licensee to settle, trespass or in any way occupy or utilize the said property."

7. The Agreement contained a proviso and clause, central to these proceedings which state:
   

"...provided that nothing therein contained shall be deemed to create a lease of tenancy."

......

"THIS agreement shall be valid and subsisting between the parties hereto until such time in the future as the Owner by notice in writing to the Licensee shall advise the Licensee that the Owner intends to erect a fale or other complex upon the property such notice to be of sufficient and reasonable length of time to enable the Licensee to make the necessary arrangement to vacate the property and the disposal of any produce collected and put aside..."

8. The Defendants take a different approach to the agreement. They maintain that the relationship between Coker and Polataivao commenced in the early 1970's when Polataivao was Minister of Lands & Survey and involved in the formulation and enactment of the Alienation of Freehold Land Act 1972 which required the consent of the Head of State to any alienation of freehold land to a non-citizen. This enactment probably gave rise to Fagalei's incorporation in Samoa. The Defendants claim that because of the legislation the Cokers, as non-citizens, appointed Polataivao to look after the land on their behalf and the agreement merely formulated the terms of the relationship.
   
9. The Court rejects the evidence of La'auli Leautea Schmidt that Coker or Fagalei had an informal agreement before 1981 which Polataivao had terminated in 1981 because of non-compliance by the former, some 12 months before the licence agreement was signed. The claim is made in a letter dated 3 March 2009 from the Defendants' solicitors which stated;
   

"Our instructions show that the late Polataivao Fossie Schmidt was granted licence by Fagalei Investments Limited in or about 1974 to occupy and take care of the land. However, in or about 1981, Mr. Schmidt considered the licence to have come to an end and from then onwards had expelled any attempt by representatives of Fagalei Investments Ltd to set foot on the land. On a number of occasions Mr. Schmidt had clearly spelt out in no uncertain terms to company representatives that he was in sole occupation of the land and prohibiting any access or attempted access by any company representative onto the land. Since that time, the Schmidts have had uninterrupted and exclusive physical control over the land which they continue up until now."

10. La'auli maintained on the hearing that such was the case. He said that his father had become dissatisfied with his dealings with Coker and terminated the oral agreement of occupancy one year previous to the date of the written licence document. When asked to explain the apparent contradiction he claimed that the document was but a formalisation of varying prior agreements which, had already been unilaterally terminated. He is not accepted as a credible witness. The letter itself was contradicted by a second, also from the Defendants' solicitors dated 3 March 2009 responding to one written by the Plaintiff's solicitors contradicting that of 12 March 2009. The second letter stated;
    

"I have sought clarifications from my client as to when exactly they were in adverse possession and our instructions are that it was around 1988 or 1989 when Mr. Bruns and his wife visited Samoa and at the time, the Hon. Polataivao was then Minister of Health. On that occasion, Mr. Bruns and his wife were informed in no uncertain terms that the licence agreement was at an end and that Polataivao was in sole occupation and possession of Fagalei for himself. They were also told that they were not permitted to set foot on the property and they never did or even attempted to.

"Since that time, Polataivao and his family continued in occupation and treated the land as their own to the exclusion of all others. For many years up till now, the Schmidts have placed a permanent care-taker to look after the land on their behalf."

11. In 2007, the parties entered into negotiations for the sale of the land. On 13 March 2009, solicitors for the Defendants wrote explaining their version of the negotiations stating;
    

"The offers that were made in or about 2007 to the late Mr. Barlow were on the basis of overseas investors who wanted to go into partnership with the Schmidts. It does not, in any way, relinquish the Schmidts' right to the land by way of adverse possession, which is by operation of law and which had already subsisted prior to those offers being made."

12. The explanation is of little evidentiary value. If the Defendants were confident of their title why would they make offers of sale simply because there were overseas investors? The letter also contradicts the evidence of La'auli given at trial that he was negotiating on his own behalf and was simply exploring the market.
    
13. Those contradictions show that the Defendants provide differing versions of the history of the dealings with the land.
    
14. On the Defendants' case, it is difficult to see why if the agreement had been put to an end in 1988, the company acquiescenced or that Bruns was not told. It is also difficult to see why the company, at least did not seek compensation for the money it had paid but 10 years previous.
    
15. The Defendants claim that at a meeting in 1988/9 between Polataivao and Bruns, attended by others, the licence was ended and thereafter the family occupied the land, giving rise to a title by adverse possession. They originally claimed that Mary Bruns, the wife of the Managing Director, was present at that meeting. She avers that she had never visited Samoa until 1999 when, as her passport confirms, she arrived on 7 June of that year. Bruns had come to Samoa in 1988, accompanied by a realtor Ross, and was engaged in attempting to negotiate the sale of the land to the Sheraton Hotel chain. On his evidence there were no discussions in 1988 or any intimations by Polataivao that the licence would be terminated in the following decade.
    
16. The Defendants' pleadings assert that Polataivao terminated the agreement or licence in 1988 and, since that date he or his estate has remained in possession in September 2006. In the Defence to the Counterclaim, the Plaintiff claims that its representative has been on the land on various occasions and has used the land in a manner consistent with its claim of ownership.
    

MEETING 1988

17. The Defendants in their letter of 12 March claim that at a meeting in around 1988-9, Polataivao informed Bruns and his wife that the licence agreement was at an end. The Defendant La'auli claims to fix the time from his memory of his father's reaction to a letter from the Prime Minister concerning the government's support for the sale of the land to the Sheraton Hotel group. He has no direct knowledge of the meeting but claims that such should be inferred by his father's reaction and the subsequent erection of signs and broadcast notices published by public radio. Polataivao Asalemo claimed in an affidavit that he had taken his father to the Hotel Aggie Grey to meet Bruns in 1988 but neither claim to have been present at a meeting nor that he met Mrs. Bruns as asserted in the letter. He puts the date of Coker's final visit and stroke whilst in transit at 1987 rather than the following year. He states in his affidavit that he recalled his father telling Bruns that the agreement was terminated because of breach of negotiating its sale and that he would occupy the land.
    
18. Mrs. Bruns gave evidence that she had never visited Samoa until 1999, a matter not challenged and corroborated by her passport. Bruns said he had come to Samoa in 1988 with Bob Ross an American realtor, to seek the government's support for the sale of the land to the Sheraton group but had no meeting with Polataivao.
    
19. The Court received into evidence the affidavit of Polataivao Asalemo Schmidt ("Asalemo") the eldest son of Polataivao. Asalemo an intended witness became ill during the hearing and died before he could give his testimony. Evidence provided in an affidavit by a witness who has since died is admissible on the trial (Elias v Griffith 1877 47 LJ Ch 806; see generally Cross on Evidence 6th Ed. 17480; Halsbury 3rd Ed. Vol 15 466 at para 841). But less weight may be given to it since it has not been tested in cross-examination (Abadom v Abdaom [1857] EngR 706; (1857) 24 Beav 243).
    
20. His affidavit was admitted in evidence and has been carefully examined. He deposed that:
    
    1. He had been responsible for the supervision of the operations carried out on the land during the licence period.
       
    2. In 1987, he was told by his father that Coker had been in Samoa seeking government support for the Sheraton development, but had suffered a stroke during the course of the negotiations and that further consultations were in abeyance until his recovery.
       
    3. In 1988, his father received a letter from the then Prime Minister informing him that Fagalei had resumed negotiations and that his father, angered by the approach, had told the Prime Minister that he had terminated the 'licence' and that the land now belonged to his family.
       
    4. On the following day;
       

"I drove my father to Aggie Grey's Hotel in town about lunchtime where he met Mr. Bruns and I do recall my father telling Mr. Bruns that he had terminated the licence agreement that he had signed with Coker as they have breached it by negotiating a sale of the land and that he has taken over possession of Fagalei land for himself and his family and that nobody is permitted to set foot on the land without his permission. I know for a fact that the two gentlemen that came on that trip returned to the States without setting foot on the land as my father would not permit them."

5. In the mid or late 1990's;
   

"...Mr. Bruns returned to Samoa and this time accompanied by his wife. I was summoned by my father to come over to his office and when I got there this couple was there and I was introduced to them. I recall my father telling them the same thing that he had also said to the same man years before, that he has taken over possession of the land for himself and would not permit any person claiming under Fagalei Investments Limited to set foot on the land. My father also told that couple that I am the Manager of the land. I also spoke and confirmed to them what my father had said and also reiterated that no one can set foot on the land. I also know for a fact that the couple returned to the States without setting foot on the land as my father would not permit them although they had indicated to my father a wish to view the land."

6. "No trespass" signs and radio announcements forbidding entry had been erected or published forbidding entry in and subsequent to 1988.
   
21. The affidavit was sworn on 12 February 2010, after that of Mary Bruns who had denied being in Samoa in 1988.
    
22. The components of the affidavit will be considered in detail.
    
    1. This portion is non-controversial
       
    2. The timing supports the conclusion that Coker came to Samoa to conduct negotiations in 1987. It is likely that he suffered a stroke before the negotiations commenced but irrespective, they concerned the Sheraton proposal.
       
    3. Bruns became the Managing Director of Fagalei in 1988 and did come to Samoa with the realtor Ross in 1988. He claimed not to have met with Polataivao on that visit. It may be that Polataivao was angered by being left out of the negotiations or informed of progress because of an understanding with Coker. But he took no action to notify Fagalei of any termination of licence. No copy of the letter said to have been written by the Prime Minister was produced at trial or any corroboration of the claim that there had been a meeting between Bruns and Polataivao. There is no evidence that Polataivao did anything to bring the Sheraton negotiations to an end, or to enter them himself as a true owner of the land. The deponent has confused or moved that meeting to the one held in 1999.
       
    4. The memory of the deponent has either transposed the 1999 event to 1988 or adjusted the date to enhance his cause. The initial claim was that Mary Bruns had been present at the meeting. She was, in fact present at the 1999 meeting.
       
    5. There was a meeting between Polataivao, Bruns and Mary Bruns in 1999. The Court accepts that it was Asalemo who was present as the 'bodyguard' of his father. Claims of ownership were made, but were made on a political or personal basis rather than the operation or otherwise of the licence. It is improbable that if Bruns had been told unequivocally in 1988 that the land belonged to the family and had acquiesced, that he would have returned or taken no steps to protect the company's title or interests. It is improbable that Polataivao would find it necessary to repeat in detail what he had said 10 years earlier if the original statements had been made and the licence terminated. It is improbable that Bruns would not have raised the issue of redress, compensation or payment of the original purchase price if the version given in the affidavit is accurate. The videotape made by Polataivao shortly before his death is consistent with his view of the meeting in 1999, some five years earlier.
       
    6. There is no evidence, corroborating the statement that trespass signs or radio notices had been erected or published in and since 1988. No records, invoices or copies of the notices and their dates were produced at trial. The Court accepts that Bruns had access to the property and inspected it whilst in Samoa. The Notice of Termination of Licence was provided after it became obvious that the land was occupied adverse to the original agreement.
       
23. The Court is satisfied, for reasons later stated that there was no such meeting or notice given in 1988. Given that there were ongoing negotiations in relation to the Sheraton proposal, it is unlikely that Polataivao would sabotage those prospects until he was certain he would be disadvantaged. Coker's illness might have caused Polataivao's exclusion from the discussions giving rise to the grievance or anger but the outcome remained unknown. The Court accepts the Defendant's general account that at some stage their father was angered but not that he purported to bring the licence to an end.
    
24. There is a more fundamental objection to the Defendants' claim for remedy on their counterclaim. There was nothing to terminate except the continued right of occupancy by Polataivao. The agreement was that of occupancy subject to conditions. The land was held by freehold title. There was no claim, spoken or unspoken that the land was either customary or held by the Defendants through title. There was nothing from which they could withdraw except continued occupancy, and the return of profits resulting from their use of the land. The family had obtained significant benefits from the licence to use the land and retain its profits. According to Asalemo in his affidavit some 30 persons were employed in the commercial operation over a lengthy period during the time for harvesting and delivering of copra. There were other crops of taro and bananas and the raising of pigs. A reasonable inference is that the family received a considerable financial benefit from the arrangement. The licence itself contained no provision enabling revocation by Polataivao but any factual revocation or termination, in law, would simply disentitle them from any ongoing financial benefit.
    
25. The Court is satisfied that there was no meeting in 1988, no unilateral termination and no continued occupancy other than by licence at least until 1999.
    
26. During the period 1988-1999, the company continued to exercise management and control over its land.
    

MEETING 1999

27. The Court accepts that there was a meeting between Polataivao, his son Asalemo and Bruns and his wife in 1999. At that meeting Asalemo, a member of the Minister's staff told Bruns that the land was Samoan and the company no longer the owners. Bruns initially did not take the statement seriously but it was real. The Defendants' family did purport to assume 'de facto' control. The Court accepts that there were notices erected or published adverse to the Applicant's title and that the Plaintiff took no legal proceedings to enforce its right. The Court received into evidence Polataivao's statement recorded on videotape some little time before his death. In that statement which he records as being made on 16 July (2004) in the 3rd or 4th year of his illness in New Zealand. He had been taken to New Zealand in 2001. Polataivao referred to steps he had taken to prohibit entry onto the claimed land. Polataivao referred to people who came to see the land, 'three couples who claimed that they were from Fagalei Investment' and a letter from the Prime Minister. Polataivao claimed to be the authority over the land. It is likely that it was the playing of the taped interview which led to the filing of Caveat 996X.
    
28. The statement is more consistent with a claim to title as inherent to the family or customary in nature, rather than that by legal adverse possession. Its making is more consistent with a decision taken or communicated in 1999 rather than 1988 as claimed in the evidence of the Second Defendant.
    
29. The Court accepts that there has been an occupation, lawful or otherwise, either concurrent or adverse to the Plaintiff since 1999. But the events pleaded by the Defendants in their Counterclaim, paragraph 10 occurred after the statement made in 1999.
    
30. The Limitation Act 1975 section 11 (2) (b) provides:
    

"In any other case, after the expiration of 12 years from the date on which the right of action accrued to the person entitled to the preceding estate or interest, or 6 years from the date on which the right of action accrued to the person entitled to the succeeding estate or interest, whichever period last expires".

31. The legal and equitable principles which govern these proceedings have been stated in this jurisdiction in cases such as Nelson Mackenzie Ltd v Sale Lamosi [1995] WSSC (5 July CP 125/93); Wallace Jennings v Ioane Onesemo [2000] WSSC 9 August; Douglas Crane Kreubuhl v Salu Liugalua & Ors (unreported decision delivered on 24 January 2003). Adverse possession must be actual, open and manifest, exclusive and continuous (McDonnell v Giblin [1904] NZGazLawRp 25; (1904) 23 NZLR 660). Consent or Licence by the owner does not create a limitation defence or an equitable right to seek a declaration.
    
32. Here the evidence does not provide a defence to the claims of injunction, eviction and removal of caveats.
    

SUBSEQUENT DEALINGS

33. The Defendants lodged Caveat 996X on 16 September 2004. In July 2007, negotiations were conducted between the solicitors for the parties on the sale of the land by Fagalei to the Schmidts. On 24 July, the Defendants' solicitor advised that Asalemo, acting on behalf of the Schmidts, had proposed a contract for the sale of the land. On 24 July, the Plaintiff's solicitors asking (inter alia) 'who comprises the proposed Purchaser'. The reply of the same day was that 'Panvar was only acting for the Schmidts. So the names to go down as purchasers would be the Schmidts'.
    
34. The Court does not accept the evidence of La'auli that he was acting only on his own behalf or that he was simply exploring the market. The negotiations or offer confirm the Court's conclusion that the Defendants were not confident of any right acquired through limitation. It appears that the negotiations failed since on 3 March the Defendants' solicitors again wrote complaining of a further process of selling off the land and entering into an agreement with a different company for the use of the land required for the making of a film. The letter claimed adverse possession 'as from 1981' and threatened an action in trespass. Caveat No. 31726 was recorded on 23 February 2009.
    
35. Formal written Notice of Termination of Licence agreement was given to the estate pursuant to Clause 4, repeated through solicitors on 3 April 2009.
    

PROCEEDINGS

36. On 11 February 2010, the Company commenced proceedings in tort seeking orders, of eviction and removal and declaration of title.
    
37. The Defendants pleaded the termination of the licence and claimed exclusive and continuous possession for over 12 years, as a bar to the action and in turn sought a declaration of title through adverse possession and a vesting order.
    
38. The applications for removal of the caveats incidental in the substantive proceedings were heard concurrently.
    
39. There is little, if any controversy between the parties as to the legal principles involved. This case turns on the facts. It is not necessary to decide whether the negotiations and exchanges of memoranda in 2007 estopped the Defendants from pleading limitation or brought to an end any adverse possession since the finding is that there was no intimation of any claim of adverse possession before 1999 (see: Wallace Jennings v Ioane Onesemo [2001] WSCA 1). But the 2007 exchanges supports the conclusions that the Defendants did not themselves believe that they had established a basis for title at the time. That in turn makes the account for a 1988 meeting and licence termination more improbable.
    

CONCLUSION

40. The Defendants' have been in possession of the land by licence which was terminated by the Plaintiff by notice on 3 April 2009. Even had Asalemo given notice of the claim of possession on behalf of his father in 1999, it did not create an interest in the land. The Defendants have not established their plea of limitation nor adverse possession as alleged in their counterclaim.
    
41. The Plaintiff succeeds in its action and its applications to remove the caveats.
    

ORDERS

1. The Defendants, their servants or agents are injuncted from remaining on or re-entering onto the Plaintiff's land.
   
2. The Defendants' claim for possessory title based on adverse possession is dismissed, and the counterclaim is dismissed.
   
3. The Defendants are to remove fencing and other property not owned by the Plaintiff from the land.
   
4. The Defendants, their servants or agents are evicted from the Plaintiff's land.
   
5. The application to set aside Caveat 996X registered on 19 October 2004 is allowed.
   
6. The application to set aside Caveat 31726 registered on 23 February 2009 is allowed.
   
7. The Defendants pay the Plaintiff's costs of and incidental to the action, applications and counterclaim.
   

The parties are given leave to make submissions as to any incidental or consequential orders required by this decision.

JUSTICE SLICER