Ah Ping v Cheung Pun [2012] WSSC 82 (26 October 2012)

SUPREME COURT OF SAMOA

Ah Ping v Cheung Pun [2012] WSSC 82

Case name: Ah Ping v Cheung Pun

Citation: [2012] WSSC

Decision date: 26 October 2012

Parties:
Lila Ah Ping male of Vaitele, Apia, Samoa, Retiree
Sui Cheung Pun of Vaitele, Apia, Samoa, Businesswoman

Hearing date(s): 20 May 2010

File number(s):

Jurisdiction: Civil

Place of delivery: Mulinuu

Judge(s): Justice Vaai

On appeal from:

Order:

(1) The deed of conveyance by way of gift dated the 16^th August 2006 registered on the 29^th August 2006, executed by the plaintiff in favour of the defendant is set aside.
(2) The deed of conveyance is also declared void for fraud.
(3) The defendant is ordered to convey, transfer and register ownership of the land to the plaintiff within 14 days today. Total costs of the transfer shall be borne by the defendant.
(4) The transfer of ownership to the plaintiff shall be subject to the mortgage in favour of the Samoa Housing Corporation.
(5) The defendant is ordered to pay costs of $1,500.

Representation:
Semi Leung Wai for plaintiff
Raymond Schuster for defendant

Catchwords:

Words and phrases:

Legislation cited:

Cases cited:
Louth v. Diprose [1992] HCA 61; (1992) 175 CLR 621 at 626 – 627
Commercial Bank of Australia Ltd v. Amadia (1982 - [1983] HCA 14; 1983) 151 CLR 447 at 461
Blomley v Ryan (1952 - [1956] HCA 81; 1958) 99 CLR 362
Louth v Disprose (supra) at page 632
Brusemitz v Brown [1923] NZGazLawRp 219; (1923) NZLR 1106 at 1109

Summary of decision:

IN THE SUPREME COURT OF SAMOA

HELD AT MULINUU

BETWEEN:

LILA AH PING male of Vaitele, Apia, Samoa, Retiree

Plaintiff

AND

SUI CHEUNG PUN of Vaitele, Apia, Samoa, Businesswoman

Defendant

Counsel:

Semi Leung Wai for plaintiff

Raymond Schuster for defendant

Decision: 26 October 2012

DECISION OF THE COURT

Introduction

1. The plaintiff a 71 year old father seeks an order to set aside a deed of conveyance he executed in August 2006, whereby he conveyed by way of gift his ¼ acre land (the land) at Vaitele, to his daughter, the defendant.
2. Both the plaintiff and his 69 year old wife testified.
3. In his judgment I will refer to the plaintiff as the father, his wife as the mother and the daughter as the defendant.
4. The father and mother have 9 adult children, 4 of them live overseas. The defendant is the second eldest who also lived overseas but returned to Samoa in June 2006 and lived with the father and mother on the land. Another brother was also living on the land.
   

The land

5. The land was purchased under the plaintiff’s name from the then Western Samoa Trust Estates Corporation (WSTEC) where the father was then employed.
6. Both the father and mother testified that the purchase price of $8,000 was financed by the father’s salary and by the wife regularly going to the market to sell fish from the family fishing boat which their elder sons operated.
7. The defendant on the other hand told the court she herself paid the full purchase price of $8,000.

The plaintiff’s claim

8. The mother told the court that not long after the defendant’s return from overseas, she was asked by the defendant to approach the father to give to the defendant the deeds of the land to secure a loan to build a house for the father and mother. Soon after the deeds were given to the defendant, the father was told by the defendant to go to the lawyer’s office to sign the loan documents.
9. When the father, mother and the defendant entered the lawyer’s room the documents were already prepared. The father told the court that he was then told by the lawyer to sign the papers for the loan to build a house. He was questioned as to what was said before he signed the documents.

Question: What happened?

Answer: All that was said was I sign for the loan to build a house

Question: who said?

Answer: The lawyer but he never explained anything

Question: Did you ask the lawyer what documents you were executing?

Answer: I did not ask

Question: Did the lawyer ask you if you wanted to seek other lawyer’s advice?

Answer: No

Question: Is it your evidence that the lawyer did not explain what you were signing?

Answer: No

Question: If the lawyer had explained to you the document would you have signed?

Answer: If he did I would not have signed, but I signed when he said it was for the loan to build the house.

10. The father’s testimony was supported by the testimony of the mother.
11. Neither the father nor the mother knew of the amounts of the loans the defendant obtained using the land as security and in any event they did not get their house built.
12. Both the father and the mother knew for the first time that the defendant was the registered owner of the land when the mother attended the hearing of a court case between the defendant and her brother Pelusa in which the defendant as the registered owner was successful in evicting the brother from the land. Immediately following that court hearing the father and the mother instructed counsel resulting in the current proceedings.

The defendant’s Response

13. She said she paid for the land with the monies she earned from her job before she left for overseas. She did not say what her job was, neither was she questioned under cross examination.
14. She returned to Samoa in June 2006 with monies which her other siblings contributed to. Her goal was to build a better home for her parents. Discussions with her mother and father concerning the construction of a house on the land commenced in July about a month after her return from Australia. It was a daily topic of their discussions towards the end of July. She required a loan to finance the house and told them the deeds of the land were needed as security, and should be transferred to her name for her to obtain the loan.
15. They both agreed and told the defendant to consult a lawyer which she did. She then instructed Mr Ainuu to prepare a deed of conveyance from her father to her. She told the court that after consulting the lawyer she told her parents a lawyer has been engaged; she also relayed to them what she discussed with the lawyer in compliance with their earlier discussions before she saw the lawyer. She was asked in examination in chief at page 35 of the transcript:

Question: After your talk with the lawyer did you return home to the old man and old woman?

Answer: Yes, I did and relayed all my discussion with the lawyer to comply with the programme as scheduled in our discussions with my parents to see a lawyer and to let them know what to do.

16. About a week after consulting the lawyer the defendant accompanied her mother and father to the lawyer’s office. The three of them went into the room and the lawyer explained to the father the contents of the document. She told the court that before the papers were signed questions were asked by the lawyer and by the father. Papers were then signed when the father agreed to sign.
17. Consequent to the registration of the deeds she obtained a loan of $35,000 from Samoa Commercial Bank but her father was not happy and labeled her a liar as he believed the defendant obtained a $50,000 loan. She then claimed her father notified the other children overseas and told them about the defendant’s activities in Samoa. It was from then on, the defendant said, she changed her mind, and instead of building a house, she bought two taxis and furniture. She also moved and lived elsewhere.
18. As she had no income she purchased the two taxis to service the loans. Both taxis were registered under her name. She took out a second loan from the Samoa Housing Corporation for $40,000 at a lower interest rate to pay off the loan with Samoa Commercial Bank and for her personal use.
19. Mr Ainuu, the lawyer, told the court that he was instructed by the defendant to transfer her father’s land to her. He agreed to prepare the deed of conveyance which he did.
20. At their next meeting the defendant came with her father and mother and Mr Ainuu explained to the father that the deed of conveyance will transfer the title of the land to the defendant. Mr Ainuu recalled that the father asked a couple of questions which after clarification he then signed the deed.
21. On the issue of the loan Mr Ainuu was asked in examination in chief (at page 57) whether the issue of a loan was raised in the discussion. He replied:

“That was raised, that a loan was sought but I explained to them that that is not important, that is for you, what is important is for you to understand today this paper will transfer all your rights in the land to your daughter.”

22. Mr Ainuu was also asked under cross examination (at page 64 of the transcript) whether the defendant told him on the day he was consulted, that the purpose of the title transfer was to obtain a loan. Mr Ainuu replied:

“She probably did, she probably said something, but that was not important to me what was important to me was the consent of the person to sign the deed.”

Purchase of the Land

23. If the defendant did ask her father and mother to transfer the title of the land to her she did it for the purpose of obtaining a loan, not for the reason that she purchased the land with monies from her wages as she contended. She did not deny that her father was working at WSTEC at the time, neither did she deny that the family had a fishing boat manned by her brothers, and nor did she deny that her mother sold the catches from the fishing boat at the market.
24. Her assertion that she bought the land from her wages is selfish and untrue. She did not say where she was employed, but obviously not a well paid job as she admitted under cross examination she migrated to New Zealand for a better living. She is also described, and she called herself in these proceedings a business woman, a status she obviously inherited after she acquired the land, obtained the loan and bought two taxis. Before then she was unemployed and staying with her mother and father.

Unconscionable Conduct

25. Counsel for the plaintiff’s submitted that the defendant’s conduct which resulted in the plaintiff executing the deed of conveyance and transferred the fee simple of the land to the defendant was unconscionable.
26. It is common ground that the defendant told her parents that she wanted to build a house on the land for them. It is also common ground that the defendant required the loan to finance the construction. It is also common ground that the land was required as security for the loan, and it is also common ground that the plaintiff executed a deed of conveyance to convey the land to the defendant.
27. What is in contention is whether the plaintiff agreed to convey his interest. For the purpose of the plea of unconscionable conduct it is presumed that the plaintiff did knowingly sign the deed of conveyance.
28. Plaintiff counsel’s contention that the defendant was guilty of unconscionable conduct by taking unfair advantage of the plaintiff’s needs and disability for her own personal gain. She dishonestly manufactured an atmosphere of expectancy that a house will be built on the land for her elderly mother and father, a project which the defendant and other siblings had wanted to realize for their parents.
29. When the defendant returned from overseas and lived with her parents on the land, she brought with her monies given by her other siblings living overseas. They all wanted a better home for their elderly mother and father. She kept the monies in her personal account. By the end of July, according to the defendant’s testimony, the construction of a house was the daily topic, as a result of which it was agreed that the defendant will arrange for a loan using the land which will be transferred to her, as security. She was also told to see a lawyer to arrange the transfer of the land and the loan. She saw Mr Ainuu, and according to her testimony (paragraph 15 above) when she returned home after seeing the lawyer, she told her mother and father that she relayed to the lawyer what they had discussed.
30. So when the plaintiff took the trip to the office of the lawyer to sign the papers he was obviously fixed with the idea that he will at last live in a comfortable house. Naturally the plaintiff raised the issue of a loan with the lawyer before the papers were signed. He must have been comforted by the response before he put pen to paper.
31. It is difficult to comprehend that the lawyer considered the inquiry by the plaintiff as insignificant because the defendant herself also raised it with the lawyer when she instructed the lawyer to prepare the transfer documents. Whatever was said in response to the plaintiff’s inquiry about the loan, the response obviously satisfied the plaintiff that a loan will be obtained to build his house.
32. The jurisdiction to set aside gifts procured by unconscionable conduct was stated by Brennan J in a judgment of the High Court of Australia in Louth v. Diprose [1992] HCA 61; (1992) 175 CLR 621 at 626 – 627:

“The jurisdiction of equity to set aside gifts procured by unconscionable conduct ordinarily arises from the concatenation of three factors: a relationship between the parties which, to the knowledge of the donee, places the donor at a special disadvantage vis-à-vis the donee; the donee’s unconscientious exploitation of the donor’s disadvantage; and the consequent overbearing of the will of the donor whereby the donor is unable to make a worthwhile judgment as to what is in his or her best interest (18). A similar jurisdiction exists to set aside gifts procured by undue influence.”

33. Mason J in another Australia High Court decision in Commercial Bank of Australia Ltd v. Amadia (1982 - [1983] HCA 14; 1983) 151 CLR 447 at 461 distinguished unconscionable conduct from undue influence:

“In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantages position of which he is placed and of the other party unconscientiously taking advantage of that position.”

The similarity between the two jurisdictions gives to cases arising in the exercise of one jurisdiction an analogous character in considering cases involving the same points in the other jurisdiction.

34. In Blomley v Ryan (1952 - [1956] HCA 81; 1958) 99 CLR 362 Kitto J emphasised intervention by equity:

“whenever one party to a transaction is at a special disadvantage in dealing with the other party ... and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.”

Instances of disadvantage include poverty or need of any kind, sickness, age, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.

35. Once it is proved that a substantial property has been given by a donor to a done after the donee has exploited the donor’s known position of special disadvantage, an inference may be drawn that the gift is the product of the exploitation. But such an inference as Brennan J observed in Louth v Disprose (supra) at page 632 does not arise by operation of law, it arises from the facts of the case. He went on to say:

“The inference may be drawn unless the donee can rely on countervailing evidence to show that the donee’s exploitative conduct was not the cause of the gift. At the end of the day, however, it is for the party impeaching the gift to show that it is the product of the donee’s exploitative conduct. That is the final and necessary link in the chain of proof of unconscionable conduct leading to a decree setting aside the gift.”

36. Counsel for defendant contended that, whatever view is taken of her conduct, the reasonable conclusion to be drawn on the evidence is that the plaintiff willingly gifted the land to the defendant to obtain the loan to construct a house and at the time of the transfer the defendant genuinely purported to build a house. It was the result of the events after the deed of transfer was signed which stalled the intended construction.
37. If the defendant’s counsel contention is correct so that the gift was not the result of unconscionable conduct on the part of the defendant, the plaintiff cannot recover the gift. A statement to the same effect was made by Salmond J in Brusemitz v Brown [1923] NZGazLawRp 219; (1923) NZLR 1106 at 1109:

“The law in general leaves every man at liberty to make such bargains as he pleases, and to dispose of his own property as he chooses. However improvident, unreasonable, or unjust such bargains or dispositions may be, they are binding on every party to them unless he can prove affirmatively the existence of one of the recongised invalidating circumstances, such as fraud or undue influence.”

38. The circumstances leading up to and which surrounds the execution of the deed of conveyance by the plaintiff points to the obvious conclusion that the gift by way of conveyance was the product of the defendant’s unconscionable conduct. Upon her return from Australia with funds from her other siblings to care for their elderly parents and to upgrade their living accommodation she wasted no time in absorbing and gaining her parents confidence that she will build a new house; a project which became a topic of frequent discussions. She convinced the parents that a loan could only be obtained if the land was transferred to her.
39. Although the plaintiff was told by the lawyer that the plaintiff’s inquiry about a loan was insignificant and unimportant, the plaintiff was nonetheless led to believe that he will live in a better house as a result of the transfer of his land. Not only did the defendant tell the court that she relayed to the lawyer all that was discussed between her and her parents, but the lawyer himself also told the court that the defendant probably told him about the loan when he was instructed to prepare the transfer papers.
40. The consideration for the transfer of title was the construction of a house. No house has been built. The plaintiff was led to believe that a loan could only be obtained if the land was transferred to the defendant. When he queried the lawyer about the loan, the plaintiff was not enlightened on a third party mortgage. Instead he was told, if the lawyer’s testimony is accepted as the truth, that his concern was not important.
41. The simple truth is that the plaintiff would never have signed the transfer if he had access to independent legal advice.
42. The plea of unconscionable conduct succeeds.

Fraud

43. When it was agreed between the defendant and her parents that a loan would be sought to construct the house, the defendant had no income to service that loan. It was blatantly obvious from her testimony that she intended to rely on her siblings overseas for the loan repayment, but that scheme fell through when, as she told the court, the father telephoned the siblings overseas, after the defendant obtained the loan. Without the assistance from overseas the defendant then proceeded to buy two taxis to service the loan.
44. It was also blatantly obvious she did not want the overseas siblings and those siblings living in Samoa to know that she had arranged and did succeed in convincing the father to transfer the title of the land to her. The scheme therefore was for the other siblings to pay the loan to construct the house whilst the defendant held the title of the security.
45. When the plaintiff attended the lawyer’s office to sign the papers the deed was already prepared. At no time was the defendant, as the donee, asked by the lawyer to leave the room whilst he explained to the plaintiff what he was about to sign. Neither did the defendant feel obliged to leave. But the suggestion should have come from the lawyer as the defendant obviously was keen for the plaintiff to put his signature to the document. Indeed he should have insisted. He was after all instructed by the donee, he was acting in the interests of the defendant as donee. The appearance of the plaintiff and his wife as elderly parents should have put the lawyer on alert to ensure that the document about to be signed was comprehensively understood. The land to be gifted was obviously his lifetime saving and only asset.
46. If, as the lawyer conceded, that the issue of the loan was raised before the document was signed, that evidence should have put the lawyer on notice there and then and explore the inquiry which unfortunately and incredibly he considered to be unimportant. In fact that piece of testimony tends to support the suggestion that the lawyer’s response was an attempt to cover up the defendant’s fraudulent motive to convey the land to her. The imputation gained support by the testimony of the lawyer himself that the defendant probably referred to the loan when the defendant instructed the lawyer to prepare the deed of transfer.
47. Under examination in chief and cross examination the lawyer insisted that what was important to him was that the plaintiff as donor understood that the document would transfer the plaintiff’s rights in the land to the defendant and that the plaintiff consented to the transfer. If what the defendant told the court is true, namely that she said to her parents after consulting the lawyer, that she told the lawyer all that was discussed between them concerning the loan and the transfer of the land, then the lawyer was well aware that the purpose of the transfer of title to the defendant was to enable the defendant to obtain a loan.
48. Which leads to the obvious conclusion that the lawyer should never have told the plaintiff that his inquiry about the loan was not important. What was important was that the plaintiff should not have signed the papers without the benefit of proper and competent legal advice to which he was entitled.
49. The plaintiff would never have signed if he was given that legal advice.
50. The plea of fraud also succeeds.

Non Est Factum and Unjust Enrichment

51. Without discourtesy to counsels, the court considers that with the court’s ruling on the issues of unconscionable conduct and Fraud, it would not be necessary to consider these two issues.

The Mortgagee

52. Counsel for the Samoa Housing Corporation advised that Court that it will abide by the ruling of the court. On the other hand the plaintiff understandably in the circumstances did not seek any orders against the mortgagee which on the evidence had no notice of the defendant’s exploitative conduct.

Order

(1) The deed of conveyance by way of gift dated the 16^th August 2006 registered on the 29^th August 2006, executed by the plaintiff in favour of the defendant is set aside.
(2) The deed of conveyance is also declared void for fraud.
(3) The defendant is ordered to convey, transfer and register ownership of the land to the plaintiff within 14 days today. Total costs of the transfer shall be borne by the defendant.
(4) The transfer of ownership to the plaintiff shall be subject to the mortgage in favour of the Samoa Housing Corporation.
(5) The defendant is ordered to pay costs of $1,500.

JUSTICE VAAI