Strickland Brothers Ltd v FMC Construction Ltd [2011] WSSC 134 (18 November 2011)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

STRICKLAND BROTHERS LIMITED
a duly incorporated company having its registered office at Lepea.
Plaintiff

AND:

FMC CONSTRUCTION LIMITED
a duly incorporated company carrying on business at Vailima.

Defendant

Counsel: Kirstin Drake for plaintiff

Karanita Enari for defendant

Hearing: 4 September 2008

Decision: 18 November 2011

DECISION OF THE COURT

The Plaintiff's Claim

1. The plaintiff a registered private company owned by two brothers George and Joe Strickland (George & Joe), carries on business at Lepea as hardware merchants. It supplied to the defendant, a private registered company, building materials, on credit during the year 2004. As a result of an overdue outstanding balance owed by the defendant, the plaintiff's employees met with the defendant's manager (Mr Posala) to discuss the outstanding balance and to attempt to reach an agreement as to repayment.
   
2. The two employees of the plaintiff were armed with a written agreement setting out the monthly repayment schedule and interest on a monthly basis when they met with Mr Posala. They testified that Mr Posala agreed with the monthly repayment of $1,000 and monthly interest of 1.5% as set out in the written agreement but Mr Posala nonetheless refused to sign the agreement.
   
3. The defendant initially complied with the monthly repayment schedule but subsequently defaulted resulting in the action filed by the plaintiff for the balance of the price of the building materials as well as interest on a monthly basis on the outstanding balance.
   

The Defendant's defence

4. The defendant does not deny the outstanding balance owing on the purchase price of the building materials; he also concedes meeting with the plaintiff employees; he also concedes the two employees came with a written agreement which he refused to sign and he also concedes he verbally agreed to pay $1,000 a month towards the debt. But he refused to pay the interest rate inserted in the agreement and it was for that reason that he did not sign the written agreement.
   

The Defendant's Counter-claim

5. Pursuant to a Deed of Lease the defendant occupied land at Vailele which extended from the main road to the seashore and was originally used by one of Mr Posala's company for boat craft operation.
   
6. Two buildings were constructed on the land. The second building was constructed in 2004 by the defendant to house its night watchman. The main building housed the defendant's other operations like furniture construction and bottled purified water. It also had a completed and an uncompleted racket ball court. When the defendant's business operations faltered and finally ceased in 2006 or 2007 its business furniture, equipments and other assets like desk, chairs, water bottles and dispensers, sinks and doors were stored and locked inside the main building. The night watchman was retained to keep a watch on the main building.
   
7. The night watchman was originally a salesman for the defendant's bottled water operations since the year 2002. He was retained as a night watchman until 2007. He told the court that on the day he discovered the door of the main building opened, the gate to the defendant's land which was locked was opened and machines including a ten-wheeler truck were at the rear of the defendant's land. He inquired and was told that Joe was their boss. The Joe he identified in court was in fact Korea Strickland, a brother of Joe and George, and an employee of both the plaintiff and of Mana Industries.
   
8. The night watchman identified Korea Strickland as one of the persons he saw at the main building with the ten wheeler truck and items have been removed from the building. On the following day some of the items were returned. When the night watchman left at the beginning of 2008, the next door neighbor residing on the eastern side of the defendant's land kept a watch on the defendant's buildings.
   
9. The machines and the trucks went through the defendant's gates to dredge and cart away sand from the sea at the rear of the defendant's land. No prior permission was obtained from the defendant for the machines to go through its gate and land.
   
10. As a consequence of Mr. Posala prohibiting access through the defendant's land, the sand mining and dredging was halted for about four weeks. George approached and negotiated with Mr. Posala which resulted in the resumption of the sand mining business resuming Rental of $600 per week for use of the defendant's land as access was agreed upon.
    

The Plaintiff's Defence to the Counterclaim

11. The plaintiff denied that its workers broke down the defendant's gate and also denied occupying the defendant's land for the purpose of taking sand from the sea and foreshore. It also denied removing any material or equipment from the defendant's main building.
    
12. Witnesses for the plaintiff, in particular Korea Strickland, testified that the gate to the defendant's land was twisted and was not properly closed; the land was overgrown and abandoned; the two buildings were vacant, and the materials inside were in fact rubbish.
    
13. The main thrust of the plaintiff's defence to the counter-claim revolves around the legal entity of the sand mining operations which the plaintiff claimed was done by a company called Mana Industries, a duly incorporated private company and that Mr Posala was aware of the existence and operations of Mana Industries. Such knowledge could be inferred from the fact that the rental payments agreed to between Mr Posala and George were made not only by the Plaintiff's cheques but also by Mana Industries cheques.
    
14. Whereas the plaintiff is a hardware retailer carrying on business at Lepea and Vaitele, Mana Industries carried on business as sand minig at the sea shore at Vaitele behind and on part of the defendant's land. Although Mana Industries originally had a space at the Plaintiff's Lepea premises to sell and receipt payments of its products when it commenced trading, the office had moved to its Vaitele operations prior to the hearing of this action.
    
15. The shareholders of Mana Industries are George and Joe.
    

Discussion of the Plaintiff's Claim

16. As the defendant admits the quantum owing to the plaintiff on the balance of the purchase price of the building materials, the only issue for consideration is whether it was agreed between the parties that a monthly interest of 1.5% would be charged.
    
17. Refusal by the defendant to pay interest was the reason Mr Posala did not sign the Agreement prepared by the plaintiff before the meeting and presented to Mr Posala at the meeting by the two employees.
    
18. I have very serious doubt about the sincerity of the testimonies of the two witnesses for the plaintiff. As a consequence the claim for interest cannot be sustained and is dismissed.
    

Discussion of the counterclaim

19. When Mr. Posala discovered the unlawful entry of the sand mining operations as well as the removal of several materials and equipments from the main building he immediately denied access resulting in the complete stagnation of the sand mining operation. Joe could not dialogue with Mr. Posala. It was George, the older brother of Joe, and a friend of Mr Posala who struck a deal with Mr. Posala, resulting in the resumption of the sand mining operations upon payment of rent.
    
20. George was known to Mr. Posala as a shareholder of the plaintiff. Payments of rents were either by cash or by cheques drawn by either the plaintiff or Mana Industries and were issued out of the plaintiff's premises at Lepea or collected from there. Payment by Mana Industries cannot, as counsel for the plaintiff submitted, trigger suspicion or knowledge by Mr. Posala that the sand mining was by another entity other than the plaintiff; neither does it impose a burden on Mr. Posala to inquire. After all Mr. Posala has dealt only with the plaintiff and with George and Joe the shareholders of the Plaintiff. Payment for the rent has never been issued at the office of Mana Industries at Vaitele, if indeed Mana Industries did have an office at Vaitele.
    
21. George and Joe are the shareholders of both the plaintiff and Mana Industries; Korea Strickland, their brother, was a mutual employee of both companies; Ime Strickland, the wife of Joe is the secretary of both the plaintiff and Mana Industries and the sale of the sand was done at the Lepea premises until prior to the hearing of this action. All these factors point to the fact the management of the operations of both legal entities are by the same personnel and by some mutual employees of the two legal entities.
    
22. I accept the evidence given for the defendant that Korea Strickland and others were seen at or near the vicinity of the main house. It is confirmed by the testimony of Korea Strickland himself that he saw the two houses were abandoned and only rubbish were inside. He and other workers were supposed to be at the seashore mining sand. Access which initially was unlawful and subsequently agreed by Mr. Posala was for the plaintiff go to the seashore to mine sand but not to enter the main house whether abandoned or not.
    
23. It is true the two buildings were abandoned because Mr. Posala's businesses ceased operations and a night watchman was hired to keep a watch. Korea Strickland and others occasionally saw people coming onto the land during the day time but they were there to collect firewood. Their testimonies to the effect that they saw people removing materials from the main building is in my view a feeble attempt to shift the blame away from them.
    
24. The contention by counsel for the plaintiff that the defendant should have pleaded misrepresentation on the basis that the plaintiff misrepresented to the defendant that it was indeed the plaintiff operating the mining business is in my respectful view misconceived, simply on the basis that the defendant had no idea about the existence of Mana Industries or that George operated another business called Mana Industries. If all rental payments were given out at the foreshore at Vaitele where the sand was mined and by cheque of Mana Industries then perhaps the contention has some logic and validity.
    
25. The ten wheeler truck together with Korea Strickland had no business to be at the main building. Materials had gone missing and some returned. Materials were unlawful taken by Korea Strickland and some of the plaintiff's employees. The buildings were virtually abandoned during the daytime.
    
26. The valuations imposed on the missing items were by Mr. Posala himself which in my view faces unsurmountable difficulties. In the first place there was no inventory of the materials kept and locked in the main building. Secondly and most importantly, the valuation should have been conducted by some personnel with credence in valuations and who can show to the court the criteria and method of valuation. None was exhibited.
    
27. Although I am satisfied some of the materials stored in the main building were removed by the plaintiff's employees, their value cannot be ascertained. The defendant is accordingly non-suited as to the value of the stolen goods.
    

Result

(1) Judgment for the plaintiff in the sum of $5,439. The claim for interest is refused.

(2) On the counterclaim the defendant is non suited on the quantum of the value of the goods taken and converted by the officers and employees of the plaintiff.

(3) Each party will bear its own cost.

JUSTICE VAAI