Fesolai v Boon [2016] WSSC 27 (14 March 2016)

IN THE SUPREME COURT OF SAMOA
Fesolai v Boon [2016] WSSC 27

Case name:	Fesolai v Boon
Citation:	[2016] WSSC 27
Decision date:	14 March 2016
Parties:	TAVITA FESOLAI, of Siusega and Auckland New Zealand, Banker. (Plaintiff) AND PATRICK BOON, of Siusega, Company Director. (First Defendant) AND ANZ BANK SAMOA LTD. (Second Defendant).
Hearing date(s):
File number(s):	CP 143/13
Jurisdiction:	Civil
Place of delivery:	Supreme Court, Mulinuu
Judge(s):	Justice Nelson
On appeal from:
Order:
Representation:	M V Peteru for plaintiff R V Papalii for defendant M G Latu for second defendant
Catchwords:
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Legislation cited:
Cases cited:
Summary of decision:

IN THE SUPREME COURT OF SAMOA

HELD AT MULINUU

CP 143/13

BETWEEN:

TAVITA FESOLAI, of Siusega and Auckland New Zealand, Banker.
Plaintiff

AND:

PATRICK BOON, of Siusega, Company Director.
First Defendant

AND:

ANZ BANK SAMOA LTD
Second Defendant

Counsel: M V Peteru for plaintiff
R V Papalii for first defendant
M G Latu for second defendant

Decision: 14 March 2016

DECISION OF NELSON J

Background

[1] The plaintiff is a non-resident citizen of Samoa and owns freehold land at Siusega described as Parcels 3535, 3536 and 3537 on Plan 4977 deposited in the Land Registry Office. Each parcel is a quarter acre in size. Parcel 3535 fronts onto the main road (Meyer Road East) and contains the entrance gate to the property. Two houses are located on either side of Parcel 3535, “House 1” on its southern side and “House 2” on its northern side. A third house sits on the southern side of the middle Parcel 3536 (“House 3”) and a fourth on the northern side of the rear Parcel 3537 (“House 4”). The whole of the property is surrounded by a chain link wire fence. No individual fences mark the boundaries between parcels. It is a compound style setting with vacant lawned areas down the middle.
[2] An inspection of the site revealed a large concrete slab had been built by the first defendant at some stage during his occupation of the property. The slab covers most of the area between House 1 and House 3 virtually house-to-house. The defendants containers, tools and some pieces of heavy equipment sit on the concrete slab and his business South Pacific Cladding Ltd appears to have operated from there. Until matters soured between the parties, the plaintiff took no steps to halt the defendants business operations or order removal of the slab.
[3] Parcels 3535 and 3536 complete with buildings were purchased by the plaintiff in 2006 for SAT$400,000 with financial assistance from the second defendant. The Banks mortgage was duly lodged on the title to Parcel 3535 but for some unknown reason, not on 3536 until 2014. The “oversight” only came to light when these proceedings were commenced in October 2013. The Bank was accordingly given leave to join the proceedings since a challenge is being mounted by the first defendant to the plaintiffs title over Parcel 3536.
[4] For convenience, the first defendant will be herein referred to as “the defendant” and the second defendant as “the Bank.” The defendant is asserting no knowledge of the mortgage over Parcel 3536. At the relevant time no mortgage was shown on the title. The outcome of the defendants challenge will determine whether the Bank requires taking more formal steps to protect its interest in Parcel 3536. The plaintiff and defendant have agreed to defer that issue pending disposition of the issues between them. If the challenge to title fails, the Banks position is assured. If however it succeeds issues such as bona-fide purchase without notice of an encumbrance will need to be addressed.
[5] The defendant began occupying the property in or about April 2011. The essence of the dispute between the parties is the defendant says this was pursuant to an oral agreement to purchase Parcels 3536 and 3537 and the structures thereon for the sum of SAT$200,000 per parcel. Furthermore, that the full purchase price has been paid and the plaintiff must now transfer unencumbered title to the defendant as agreed. On the other hand, the plaintiff argues that at the relevant time the defendant had no money and was awaiting receipt of funds from a Methodist Church contract he had won. The parties consequently agreed the defendant would in the meantime rent three of the houses for SAT$2,000 per house per month. This was later increased to renting all four houses for SAT$8,000 per month. According to the plaintiff the agreed purchase price was NZ$225,000 per parcel and house discounted from an asking price of NZ$250,000. Regrettably none of these arrangements were properly or at all documented by either party. Had they done so the matter could have been so easily resolved.

Plaintiffs claim

[6] The plaintiffs amended Statement of Claim (undated) alleges the lease to the defendant began “on or about April 2010.” I have taken that to be an error as the remainder of the Statement of Claim and the plaintiffs evidence refers to “April 2011” as being when the defendants tenancy began.
[7] Plaintiff alleges in his Amended Claim that as from that date the defendant agreed to lease the Siusega property for SAT$8,000 per month. I also take that to be an error as paragraph 6 of the Amended Statement of Claim and the plaintiffs own evidence was to the effect that three houses were leased from April to September 2011 (a period of 6 months) for the sum of $6,000 per month and all the four houses were rented for $8,000 per month from October 2011 to October 2013 (a period of 2 years and 1 month).
[8] The plaintiff said that initially the defendant wanted to buy one of his Siusega parcels. But because he had no money, they agreed he would rent first and conclude a purchase when his funds came through (“rent the properties until he gets proceeds of the money that was on the way for him” - transcript 31 July 2015 page 6). The defendant accordingly took possession of this parcel and two other houses for a monthly rental of $2,000 per house. This continued until October 2011 when the defendant requested removal of the tenant in the fourth house of the compound as he was concerned about the security of his equipment and tools. Which by then were on the land. The plaintiff agreed provided the defendant paid $2,000 per month rental for that house. Total rent payable from that time on became $8,000 per month.
[9] The plaintiffs evidence is their business relationship then expanded. The defendant requested he assume oversight of the defendants New Zealand funds from the Methodist Contract including attending to all purchases, payments and remittances as directed. He did this probably because the plaintiff was a Mobile Mortgage Manager, had worked for both ANZ and Westpac Bank and styled himself (see his affidavit as) a “Banker” by occupation.
[10] The plaintiff utilised his own personal account into which his salary was paid to administer the defendants money. This is readily apparent from copies of his bank statements produced as Exhibit “P-2” for the plaintiff. No distinction is therein drawn between expenses incurred by the plaintiff personally or for other matters and those associated with the defendants business. Consequently charges for monthly rent are not itemized as such.
[11] According to the plaintiff “The reasons why the account was put under my name is that Patrick wanted me to send some money here in Samoa and he wants me to be able to withdraw the funds easily and sending funds when it needs be.” (transcript 31 July 2015 page 8). He said he kept Spreadsheets recording the various payments but an examination of the Spreadsheet annexed to his supplementary affidavit Exhibit “P-3” reveals it to be a reconstructed record compiled by him specifically for the purposes of this proceeding. A record which he admitted in his evidence at page 10 he never provided to the defendant. The Spreadsheets that he did supply to the defendant showing previous rental payments and other expenses he said he kept no copies of. The defendant has denied receiving any Spreadsheet reports. I am also somewhat cautious about the accuracy of the Spreadsheet produced. When questioned on the details shown in the Sheet the plaintiff admitted to a number of discrepancies between it and the contents of his affidavit. Very unsatisfactory evidence relied upon by the plaintiff.
[12] Also raised with the plaintiff was the issue of the exchange rate at which rental payments were converted. The rent being levied in Samoan Tala and the payments being “credited” as it were to his account in New Zealand dollars. His explanation without offering any substantiation on the matter was “the rate is anywhere at the moment is 1.69 up to some time 1.79, 1.80 I thought these are average of 1.75 just to get a more accurate amount of the funds that I’ve held from the defendant.” (page 10 transcript). He also admitted he had not discussed the applied conversion rate with the defendant. It appears he applied the same rate to all rental payments despite existing and well known fluctuating exchange rates between the New Zealand Dollar and the Samoan Tala.
[13] According to the plaintiffs calculations, the defendant owes:
Period of tenancy: April 2011 – September 2011
3 houses @ $6,000 tala per month = 6 months x 6,000.00 = $36,000.00
Period of tenancy: October 2011 – October 2013
4 houses at $8,000.00 tala per month = 25 months x 8,000.00 = $200,000.00
Total rent owed by Defendant = $236,000.00

[14] Of this the defendant has paid as per the amended paragraph 12 of his affidavit “P-1” a total sum of SAT$165,250. Thus leaving on his figures an outstanding balance of $70,750. But his Amended Statement of Claim only seeks $68,600 in rental arrears and he is therefore limited to that amount.
[15] The plaintiff says he has been patient with the defendant and followed up on many occasions the matter of rental arrears and payment of the purchase price of the two parcels. To no avail except for a litany of broken promises. He was however surprised to find in October 2013 the defendant had vacated the houses prompting him to seek injunctive and other relief in respect of the defendant’s containers, equipment and tools left on the property. The Methodist monies having been by then exhausted and not available to satisfy any further outgoings. I note his Spreadsheet does acknowledge a balance in the defendants favour of NZ$3,475.11. An amount he therefore accepts as owing to the defendant.
[16] The plaintiff has abandoned his claim for chattels allegedly removed by the defendant. Leaving only his claim for rental arrears and associated costs and damages including general and aggravated damages. Even if he were successful in recovering rental arrears, there is no basis for an award of general or aggravated damages. These were not in any event pursued by his counsel either at trial or in final submissions.

Defendants Defence and Counter Claim

[17] The defendants answer to the plaintiffs claim is essentially that the arrangement in place from day one was an agreement to purchase Parcels 3536 and 3537 and the houses thereon for NZ$200,000 per parcel (amended by the defendant in his trial evidence to SAT$200,000 per parcel). He says more than this (he estimates at least NZ$480,000 to NZ$500,000) has been paid to the plaintiff as part of the contract monies administered by the plaintiff. Accordingly he seeks specific performance of the sale contract and an order the plaintiff transfer title over Parcels 3536 and 3537. Alternatively special damages by way of a full refund of the monies paid to him. His further and alternative cause of action is for unjust enrichment in the sum of $80,000 representing monies expended in making repairs and improvements to the houses on 3536 and 3537. A third cause of action relating to the unavailability of the defendants tools and equipment resulting in consequential and ongoing financial loss was not pursued by counsel during the hearing or in final submissions.
[18] The defendant paints a completely different picture of the matter. He says he was happily engaged in the cladding business in New Zealand doing the odd job in Samoa such as the ACC Building on Beach Road and Bluesky at Maluafou; that it was the plaintiff who drew his attention to the Methodist contract; that to overcome his concerns about working and living with relatives in Samoa he told him of his compound at Siusega; and that he could sell him one of his houses; of how he travelled to Samoa and his wife became enamoured of the Samoa venture and House 4; how he tendered successfully for the Methodist contract and therefore agreed to purchase Parcel 3537 once funds became available; how he moved to Samoa and because House 4 required repairs he began renovating; how the plaintiff agreed these costs could be deducted from the purchase price; how other monies borrowed by the plaintiff were also to be debited to the purchase price; how his Methodist contract was substantially increased by variation and he therefore offered to purchase the adjoining Parcel 3536; how he agreed the plaintiff uplift the Methodist progress payments and using his personal account, be responsible for buying and shipping materials for the contract to Samoa and remitting funds as needed; he had “no reason to distrust him and honestly thought he had become a good friend. He had some great ideas and I relied on his expertise.” (paragraph 20 defendants affidavit Exhibit “D-5”); how the plaintiff agreed to sell him Parcel 3536 and House 3 as by this stage he estimated he would have paid off Parcel 3537; how again he renovated House 3 on the same basis as House 4 in the belief he was buying it; how this venture has been costly for him; how when things deteriorated, the plaintiffs friends assaulted his wife causing their hurried departure from Siusega; leaving behind his containers, tools and equipment which the plaintiff subsequently injuncted.

Analysis

[19] It has been very difficult to determine where the truth lies in this matter. The plaintiffs evidence consists essentially of himself as does the defendants.
[20] Other evidence, such as it is, does not assist either party greatly. Mr Esra Stevens called by the plaintiff is not an independent witness, he is clearly aligned with the plaintiff. His evidence if anything serves to confirm the Samoa Commercial Bank records that despite their respective denials, both the plaintiff and the defendant were well aware of the Samoa Commercial Bank account and the fact it was being used for the defendants business operations. Plaintiff was a signatory on the account and the account documents show both the plaintiff and the defendant were either personally or through their agents privy or personally involved in financial transactions involving the account. To that extent, both parties tried to mislead the court.
[21] There are some key pieces of evidence however that militate against the plaintiffs claim for unpaid rent: firstly his failure to properly or in any form document the so called “rental payments.” As a banker experienced in financial management, he should have understood the importance of separation of such matters from the other expenses of the defendants business. Particularly since he was the defendants landlord. In the least he should have opened a separate account to receive “rental payments” and kept the defendants funds separate from his own personal monies. This could have easily been accommodated by one or more different accounts in his own name or under his control. This would have achieved the stated aims of the parties. His failure to do so reinforces the defendants argument that these monies were intended to be part payment of an agreed purchase price. That is why they were deposited and retained in the plaintiffs personal account.
[22] Secondly the evidence indicates the plaintiff at no stage took steps to prevent the defendant making improvements of a permanent nature to the property absent a tenancy agreement. Plaintiff accepted in cross examination the repairs and repainting to Houses 3 and 4. Some of this was evident when the court inspected the property. There was also the construction of a substantial concrete slab between Houses 1 and 3. Despite not having authorized the slab, there was never a request by the plaintiff for its removal. Again these are indicative of a long term sale/purchase relationship rather than a monthly tenancy as claimed by the plaintiff.
[23] Thirdly and finally are the actions of the plaintiff himself. In his Spreadsheet the plaintiff credits bulk sums for “rent”. But these sums bear no co-relation to payments of SAT$6,000 per month or SAT$8,000 per month. Again indicative that the payments were partial lump sum payments of an agreed purchase price in New Zealand dollars.
[24] Perhaps most damning of all is the telefax message from the defendant dated 10 October 2013 annexed to the plaintiffs supplementary affidavit Exhibit “P-4”. That sets out clearly the terms of the parties agreement from the defendants perspective. It furthermore refers to transaction fees of SAT$50,000 “to prepare and process the Transfer of Title” and a recent telephone conversation between the plaintiff and defendant. There is no suggestion the plaintiff did not receive this communication: it is annexed to his affidavit. What is clear is the plaintiff failed to reply or place on record his understanding of events, viz that this was no sale and purchase but a rental only arrangement until funds eventuated. This is fatal to the plaintiffs claim.

Decision

[25] A plaintiff must prove his claim on a balance of probabilities. That is, it is more probable than not that the factual assertions upon which his claim is based are true and correct. For the reasons outlined I am not satisfied the plaintiff has met this standard including in respect of rental for the other houses which the defendant denies using and occupying. His claim must fail and is dismissed.
[26] By the same token, a defendant must prove his counter claim to the same standard. The preponderance of evidence favours the defendants counter claim. I find that the arrangement between the parties was for the sale of Parcels 3536 and 3537, such sale to be funded from the Methodist contract monies. Which were with the defendants consent managed and operated by the plaintiff as the defendants agent.
[27] It seems to me what happened is the parties relied too much on trust and both lost track of what was actually happening in relation to the contract funds. Namely that they were being gradually eroded by payments authorised by the defendant leaving little core money to be applied to the purchase price of the properties. The lack of proper record keeping exacerbated an already too fluid situation.
[28] To this end I do not accept the defendants argument that the agreed purchase price was SAT$200,000 per parcel. That is not the figure given by the defendant in his pivotal communication of 10 October 2013 and it is not the figure contained in the defendants Statement of Defence and Counter Claim or his original court documents. This is a figure that surfaced for the first time at trial and I have little difficulty in rejecting it. I find the agreed purchase sum was NZ$200,000 per house and parcel as per the defendants 10 October 2013 telefax, an amount that was not questioned at the time by the plaintiff.
[29] The issue of where to proceed from here is not as clear. I am unable to determine, apart from the SAT$165,250 accepted by the plaintiff in paragraph 12 of his affidavit “P-1”, what else has been paid by the defendant towards the purchase price of the two properties. It is not for the court in these proceedings to exhaustively review each and every payment made by the plaintiff out of the funds entrusted to him in order to determine the validity of individual payments and whether further sums should be “credited” towards the purchase price. Doubtless there are many payments, if not all of them, that seem to have been satisfactorily accounted for by the plaintiff. I decline to find that the defendant has paid more than the SAT$165,250 the plaintiff accepts was paid to him. Furthermore, I also decline to issue an order for the plaintiff to transfer title to Parcels 3536 and 3537 until such time as the defendant pays the outstanding balance of the purchase monies, whatever that may be in accordance with an agreed to exchange rate.
[30] The matter vis-a-viz the second defendant also requires to be now addressed. Clearly the finding of the existence of an enforceable oral agreement for sale will impact on the Banks secured Parcel 3536. If the defendant elects to proceed with the purchase, the issue of whether he takes subject to the Banks mortgage needs to be determined. As does the matter of responsibility for the mortgage.
[31] Before entering final judgment on the Counter Claim, I will give counsels the opportunity to address on the way forward. This is a case that in my view cries out for some sensible form of settlement taking into account all the above matters to prevail, so that both the plaintiff and defendant can move on with their businesses and lives. There are various options the parties may and should consider.
[32] The proceedings are accordingly adjourned to 12:30 noon 30 March 2016 failing agreement, for entry of judgment on the Counter Claim.

JUSTICE NELSON