Schmidt v Covacich [2019] WSSC 23 (14 June 2019)

SUPREME COURT OF SAMOA
Schmidt v Covacich [2019] WSSC 23

Case name:	Schmidt v Covacich
Citation:	[2019] WSSC 23
Decision date:	14 June 2019
Parties:	IN THE MATTER OF an application by REBECCA SCHMIDT Fasitoouta, Catechist’s wife. Plaintiff A N D: IN THE MATTER OF: Caveat No. 1053X lodged by DAVID COVACICH and SHIRLEY ANN COVACICH both of 139 Cane Street, Redland Bay, Brisbane Queensland, Australia, Businesspersons. Defendants/Caveators A N D TUPA’I SE APA of Vaivaseuta, Barrister and Solicitor. Third Party
Hearing date(s):
File number(s):
Jurisdiction:	CIVIL
Place of delivery:	Supreme Court of Samoa, Mulinuu
Judge(s):	Patu FM Sapolu Former Chief Justice and Temporary Supreme Court Justice
On appeal from:
Order:	I order that the caveat lodged by the third party on behalf of the defendants to be removed. In so doing, I have every sympathy for the defendants who, as one of the innocent parties, would have to lose out in this unfortunate transaction. - In the circumstances, the defendants claim for the equitable remedy of specific performance also cannot succeed.
Representation:	P A Fepuleai for plaintiff R Drake for defendants T K Enari for third party
Catchwords:	agent – caveat –deposit –purchaser – sale of land transaction – sale and purchase agreement –– solicitor -specific performance – stakeholder – vendor –
Words and phrases:
Legislation cited:
Cases cited:	Bellis v Challinor [2015] EWCA 59Ellis v Goulton [1893] 1 QBD 350 Burt v Cousins & Co Ltd [1971] 2QB 426P & P Property Ltd v Owen White & Catlin LLP [2016] EWHC 2276 P & P Property Ltd v Owen White & Catlin LLP [2016] EWHC 2276
Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

IN THE MATTER OF:

application by REBECCA SCHIDT Fasitoouta, Catechist’s wife.
Plaintiff

A N D:

IN THE MATTER OF:

Caveat No. 1053^X lodged by DAVID COVACICH and SHIRLEY ANN COVACICH both of 139 Cane Street, Redland Bay, Brisbane Queensland, Australia, Businesspersons.
Defendants/Caveators

A N D

TUPA’I SE APA of Vaivaseuta, Barrister and Solicitor.
Third Party

Counsel:
P A Fepuleai for plaintiff
R Drake for defendants
T K Enari for third party

Judgment: 14 June 2019

JUDGMENT OF SAPOLU J
TEMPORARY JUSTICE OF THE SUPREME COURT
AND FORMER CHIEF JUSTICE

Introduction

1. This case is about a sale and purchase of land transaction. On the land was a motel. The vendor was the plaintiff and the purchasers were the defendants and caveators in these proceedings. The third party was the solicitor involved in the transaction.
2. The plaintiff claimed that the third party acted as solicitor for both herself as vendor and the defendants as purchasers. The third party also said that he acted as solicitor for both the vendor and the purchasers. Implicit in the written submissions of counsel for the defendants is that the third party acted as solicitor only for the vendor so that payment by the defendants of the purchase price of the property to the third party was in law payment to the vendor. However, in his evidence Mr Covacich, the first-named defendant, said that the third party was comfortable to act for both the plaintiff and the defendants in this matter There was also some conflict between the evidence of the defendants and the evidence of the third party as to whether the defendants had paid the full purchase price of the property to the third party. The defendants said they had done so. On the other hand, the third party in his evidence and statement of defence refused to admit that the defendants had paid to him the full purchase price of the property. Furthermore, the plaintiff claimed that she was never paid the full purchase price of her land but only a small part of it. The third party, on the other hand, said that the plaintiff had been paid the full purchase price of her property but she refused to sign the deed of conveyance to the defendants.
3. As a result of the plaintiff’s refusal to sign the deed of conveyance, a caveat was subsequently lodged by the third party against the title to the land. These proceedings are concerned with a motion by the plaintiff for removal of that caveat. The defendants counterclaimed for specific performance of the deed of conveyance from the plaintiff to them.

The issues

4. The issues in this case may be stated as follows:
   • (a) Did the third party act as solicitor for both the plaintiff as vendor and the defendants as purchasers in the transaction so that he was agent for both parties or did the third party act as solicitor only for the plaintiff so that he was agent only for the plaintiff and therefore the purchase monies paid to and received by him from the defendants should be deemed to be monies paid to and received by the plaintiff as principal?
   • (b) Did the defendants pay the full purchase of the plaintiff’s property to the third party or not?
   • (c) Did the third party pay the full purchase price of the property to the plaintiff or not?
   • (d) Did the defendants have a caveatable interest to sustain the caveat lodged by the third party on their behalf against the title to the plaintiff’s property?

The evidence

(a) Evidence for the plaintiff

5. The plaintiff in her evidence said that when her husband died in 1984 she engaged the third party, who was a partner in the law firm of Apa and Enari, to handle the estate of her husband which consisted of the insurance money for her husband. The plaintiff was definite in her evidence that the insurance money was over a million talā. The insurance money was paid from the United States so it must have been transferred from the United States to Samoa in American dollars which was higher in value than the Samoan talā. The money was then deposited in an estate trust account of the third party’s law firm.
6. With the insurance money, the plaintiff purchased a motel at Sinamoga for $210,000, a property at Alafua for $15,000 for her to live in, and two new vehicles, a Pajero and a Dyna. She did some renovations to the motel but could not remember how much was spent on those renovations. She also could not remember the cost of the two vehicles.
7. In 1986 or 1987, the plaintiff decided to sell her Sinamoga property and it was advertised for sale by the third party. The asking price was $300,000. The plaintiff said that at that time, she knew that there was still money with the third party from her husband’s insurance. Under cross-examination by counsel for the defendants, the plaintiff denied that she decided to sell her Sinamoga property because she had debts to pay. She said that the reason why she wanted to sell her Sinamoga property was because her motel was ruined by the youths of Sinamoga.
8. The plaintiff also said that her Sinamoga property was on the market for sale for quite a while before a buyer was found. The third party said it was about a year. The plaintiff further said that the third party represented both herself and the defendant in this transaction. She and the defendants attended at the office of the third party on 16 September 1988 and signed the agreement for the sale and purchase of her Sinamoga property. A deposit of $200 was paid by the defendants to the plaintiff on that same day. The signatures were witnessed by the third party. It was agreed that the purchasers who reside in Australia would send the money for the purchase price to the third party and then the third party would pass the money onto the plaintiff.
9. As the defendants were not citizens of Samoa the consent of the Head of State was required for the transaction. The plaintiff said she was never advised whether such a consent was obtained.
10. On or about 22 December 1988, the plaintiff was visited at her place by the third party at around 5pm. She was told by the third party that he has received $60,000 from the purchasers in Australia. The plaintiff said that the third party then asked her to sign the deed of conveyance he brought with him. She told the third party that she would not sign the deed until the full purchase price has been paid but to put the $60,000 into her trust account.
11. Subsequently, the plaintiff started to follow up the balance of the purchase price of her property by coming to the office of the third party every month, sometimes twice or three times a month. She then started to visit the third party’s office almost daily to enquire about the balance of the purchase price. The plaintiff said that on some of those occasions the third party would ask her to sign the deed of conveyance but she refused until the full purchase price was paid to her. Sometimes when the third party was not available, she would meet with the ladies at his office. When the third party was appointed to a position in government in 1993, the plaintiff continued to visit him at his new office about the balance of the purchase price for her property. However, there was no satisfactory explanation given to her. When the third party returned to his private law firm in 1995, the plaintiff continued to follow up with him the balance of the purchase price of her property but without any success.
12. Then the plaintiff received a letter dated 15 December 1998 from Mr Gilmour a different solicitor who had been engaged by the defendants. That letter enquired of the plaintiff as to why she had not executed the deed of conveyance of her Sinamoga property to the defendants when the defendants had paid the full purchase price to the third party. The plaintiff, accompanied by her son, then went and saw Mr Gilmour. She advised Mr Gilmour that she had not been paid any money for her property. She also asked Mr Gilmour if he could provide confirmation that the purchase price of her property had been paid by the defendants to the third party. Mr Gilmour handed a document to the plaintiff. That document showed that the defendants had paid more than the full purchase price of $300,000 in the following instalments by way of bank transfers to the third party’s law firm: (a) 22 December 1988, $60,000; (b) 5 April 1989, $91,949.02; (c) 16 July 1989, $44,995; (d) 31 October 1989, $869.65; and (e) 10 November 1989, $115,959.55. The total amount of these payments came to $313,773.22. The document also showed that the defendants had made the following direct payments to the plaintiff: (a) 16 September 1988, $200 by way of deposit; and (b) 7 July 1989, $3,000 to the plaintiff’s bank account with the Pacific Commercial Bank. It appears from the defendants affidavit that this amount of $3,000 was sent to the plaintiff’s bank account with the Pacific Commercial Bank on 9 May 1989 and not 7 July 1989. When these direct payments are added to the above-mentioned payments made by the defendants, the total amount of all the payments made by the defendants came to $316,973.22. The plaintiff in her evidence admitted receiving these two direct payments to her. She said that was the only money she received for her property but she never received any of the other monies paid by the defendants to the third party. She was shocked when she read the document handed to her by Mr Gilmour and she asked the solicitor if she could use his phone to call the defendants in Australia. When she talked to Mr Covacich, the first named defendant, he was angry with her for not signing the deed but he and his wife had paid the full purchase price of her property. She told Mr Covacich that she was shocked when she was shown the document which confirmed the payments the defendants had made to the third party as she had never received any of that money from the third party.
13. After the plaintiff had been to see Mr Gilmour, she came with her son and went straight to see the third party at his office. She explained to the third party the document shown to her by Mr Gilmour and her phone conversation with Mr Covacich. The third party’s response was that he had received only one payment from the defendant. There was no mention by the third party that he had disbursed any money to her for the sale of her property. So the plaintiff told the third party that she would find another solicitor to sell her property and walked out of the third party’s office.
14. The plaintiff strongly denied that the monies shown in the financial statements and summaries prepared by the office of the third party and which were included in the affidavits produced in evidence for the third party were monies from the payments made by the defendants for the purchase price of her property. She said that the third party was also handling the money from her late husband’s insurance which was over a million talā; the monies which were shown in the third party’s financial statements and summaries to have been paid to her, were monies from her late husband’s insurance. The plaintiff also denied the loans of $44,985 and $25,000 shown in the financial statements prepared by the third party’s law firm. She said she made no such loans. The alleged loan of $44,985 is shown in the financial statement of 22 November 1989 even though on 10 November 1989 the purchasers made the final payment of $115,959.55 to the third party for the purchase of her property. So the plaintiff would seem to have had a lot of money with the office of the third party at that time.
15. The plaintiff’s son Bill Voorwiden a computer technician was called as a witness for his mother. He said that he was present when the plaintiff met with Mr Gilmour. This was on the day after the plaintiff had received the letter dated 15 December 1998 from Mr Gilmour. The plaintiff was asked by Mr Gilmour as to why she had not signed the deed of conveyance when the defendants had paid the full purchase price for her property. The plaintiff responded by asking for confirmation that the money had been paid. Mr Gilmour then gave a document to the plaintiff which showed that the full purchase price had been remitted by the defendants to the trust account of the third party’s law firm. The plaintiff then asked Mr Gilmour if she could use his phone to call Mr Covacich. After the plaintiff talked to Mr Covacich on the phone, she told Mr Gilmour that she could not sign the deed of conveyance. He then left with his mother and went straight to see the third party at his office. They took with them the document that Mr Gilmour gave to the plaintiff. When they met with the third party at his office, the plaintiff sought from the third party an explanation of the document given to her by Mr Gilmour. Mr Voorwiden testified that the third party replied that he did not know anything; he did not know any money for her property; he had received no money. The plaintiff then showed the third party the document given to her by Mr Gilmour. The third party looked at the document and then said that if the money had come in he did not know where it was; he did not know about the girls in the office as there had been another girl there before.
16. Under cross-examination by counsel for the defendants, Mr Voorwiden said that he knows that his mother used to go to the third party’s office and obtained money but he knows of nothing else. He also said that his mother did not want to sell her property because her motel business had any debts to pay.

(b) Evidence for the defendants

17. Only the first named defendant Mr Covacich gave evidence in these proceedings. His wife, the second named defendant, did not give evidence. Mr Covacich in his joint affidavit with his wife, which he confirmed on oath, said that he, his wife, and the plaintiff had met with the third party to discuss the terms and conditions of the sale and purchase agreement for the plaintiff’s Sinamoga property. The third party indicated to them that he was comfortable representing both parties to the transaction. During the discussions with the third party, Mr and Mrs Covacich made it clear that as they might not be able to be in Samoa at the time of settlement, they required the transfer of title upon the vendor receiving the purchase funds. The sale and purchase agreement was then signed on 16 September 1988 and the Covacichs paid a deposit of $200.
18. Clause 12 of the agreement made it subject to the consent of the Head of State as Mr and Covacich were not Samoan citizens. The processing of the consent of the Head of State took much longer than originally thought. Then by facsimile letter dated 14 December 1988, Mr and Mrs Covacich were advised by the third party that the consent of the Head of State had been granted that same day.
19. The Covacichs then started remitting funds through the then Bank of Western Samoa into the trust account of the third party’s law firm for the purchase price of the plaintiff’s property. Those remittances were: (a) $60,000 on 22 December 1988, (b) $91,949.02 on 15 April 1989, (c) $44,995 on 16 July 1989, (d) $869.95 on 31 October 1989, and (e) $115,959.55 on 10 December 1989. The total funds remitted was $313,773.22. Documentary evidence from the ANZ Bank (Samoa) Ltd which has taken over the Bank of Western Samoa confirmed that the Bank had received the above remittances. Add on the two direct payments of $200.00 and $3,000.00 made by the defendants to the plaintiff, the total amount that the defendants had paid was $316,973.22. This was more than the purchase price of the plaintiff’s property which was $300,000.
20. The defendants also said that on 9 May 1989 he remitted $3,000 to the Pacific Commercial Bank at the request of the plaintiff. The plaintiff’s request was by a fax message. It showed that the plaintiff was having serious problems with the third party’s accounting of the two payments already made by the defendants to the third party. She therefore requested Mr Covacich that any further payments be sent to her account with the Pacific Commercial Bank and not to the trust account of the third party’s law firm. However, the defendants continued to remit funds to the third party.
21. The defendants further said in their affidavit that after they sent the last payment on 10 November 1989, they requested the third party to make sure that they received the signed deed of conveyance. When they called back a week later, the third party advised that the plaintiff had refused to sign although she had been given the purchase funds. Subsequently, the defendants lost communication with the third party and they sought assistance from Mr Gilmour. Upon the defendants instructions, Mr Gilmour wrote to the third party for clarification as to why the purchase funds were released to the plaintiff before she had signed the deed of conveyance. It appears that the defendants were under the impression that the third party had already released the funds to the plaintiff. The third party’s reply, as shown from Mr Gilmour’s letter of 18 January 1999 to Mr Covacich, was that he was at fault for releasing the funds to the plaintiff. This was denied by the third party in his evidence. All these matters as set out in the defendants affidavit were confirmed by Mr Covacich in his oral testimony.
22. Mr Covacich in his oral testimony then said that in or about May 1989 he received an urgent call from the plaintiff. She was terribly distressed and was complaining that she was not getting all the money for her property. He then sent her $3,000 which was one of the two direct payments made to the plaintiff. Mr Covacich further said that in June 1989 he received another message from the plaintiff saying that she would hand over the keys as soon as the transaction was complete.
23. Under cross-examination by counsel for the plaintiff, Mr Covacich said that the third party had indicated to him and the plaintiff that he was comfortable acting for both parties to the transaction. Mr Covacich also said that when he talked to the third party on the phone after the last payment, the third party said that he had given all the money to the plaintiff but she refused to sign the deed of conveyance. I must say that it is rather strange for a vendor to refuse to sign a deed of conveyance for no reason when he/she had been paid the full purchase price for his/her property. It is also unusual for a solicitor to give the full purchase price to a vendor before the vendor has signed the deed of conveyance.

(c) Evidence for the third party

24. The evidence of the third party consisted of affidavits and oral testimony. The third party filed three separate affidavits. The first affidavit was sworn on 26 November 2001 and the other two affidavits were both sworn on 22 May 2002. One of these two affidavits replaced the affidavit sworn on 26 November 2001. So the 2001 affidavit is no longer relevant. The two affidavits sworn in 2002 consisted of a list of documents for the third party and statements regarding monies alleged by the third party to have been paid out by his law firm to the plaintiff and moneys alleged to have been received on behalf of the plaintiff. The affidavits were not well explained at the hearing. In his oral testimony, the third party said that the records from which the financial statements in the affidavits were compiled were incomplete due to the lapse of time before this matter was brought to Court.
25. Of the two 2002 affidavits, I will start with the first affidavit to which I will refer as “affidavit A”. This affidavit purports to set out the moneys alleged to have been paid out by the third party’s law firm to the plaintiff during the years 1987 to 1993 and the monies received by the third party’s law firm on behalf of the plaintiff during the same period. The payments for 1987 showed that a total amount of $300 was paid out to the plaintiff in that year; the payments for 1988 showed that a total amount of $6,935 was paid out to the plaintiff in that year; the payments for 1989 showed that a total amount of $249,580.16 was paid out to the plaintiff in that year; the payments for 1990 showed that a total amount of $35,730.73 was paid out to the plaintiff in that year; the payments for 1991 showed that a total amount of $24,218.50 was paid out to the plaintiff in that year; the payments for 1992 showed that a total amount of $29,754.91 was paid out to the plaintiff in that year; and the payments for 1993 showed that a total amount of $1,813 was paid out to the plaintiff in that year. So for the seven-year period from 1987 to 1993 a total amount of $348,332.30 was paid out to the plaintiff. The third party’s affidavit A also showed that on an unspecified date in 1988 the third party’s law firm received $60,000 on behalf of the plaintiff and on another unspecified date in 1989 the third party received $44,995 on behalf of the plaintiff. Those two amounts were remittances from the defendants. So the total amount received by the third party on behalf of the plaintiff for 1988 and 1989 was $106,186.89. This means that the total payments of $348,332.30 that the third party claimed to have made to the plaintiff during the years 1987 to 1993 exceeded the total amount of $106,186.89 claimed to have been received by the third party on behalf of the plaintiff in 1987 and 1988 by $242,145.31.
26. Important questions arise from the third party’s affidavit A. The first is that it does not show three of the payments the defendants claimed to have remitted through the then Bank of Western Samoa in 1989 to the trust account of the third party’s law firm. It raises the question of whether the third party’s law firm actually received those three payments. If it did, then where are the monies for those three payments because they are not shown in the third party’s affidavit A. Secondly, if most of the monies shown in affidavit A to have been paid by the third party to the plaintiff did not come from the defendants, then where did that money come from. The third party in his oral testimony said that those monies came from his law firm’s trust account and not from the plaintiff’s husband insurance money which had been exhausted. Does that mean that those monies came from the trust funds of other clients of the third party’s law firm? There was no mention by the plaintiff in her evidence that she received or was advised by the third party that he had received on her behalf the sum of $44,995 in 1989. Affidavit A also shows that the payments made by the third party’s law firm to the plaintiff during the years 1987 to 1993 exceeded the monies received on behalf of the plaintiff by $242,145.31. If that was so, then quite a substantial amount was paid out from the trust account of the third party’s law firm to the plaintiff. The plaintiff was definite in her evidence that the monies that were paid out to her were from her late husband’s insurance money which was over a million tala. This was paid from the United States. The third party said that the insurance money was between $800,000 and $900,000. If the amounts of $210,000 spent by the plaintiff on the purchase of her Sinamoga property, $15,000 spent on the purchase of her Alafua property, the monies spent on the purchase of two new vehicles, and the money spent on renovations to the Sinamoga property are added together, it is unlikely that the total would come to near $900,000 or a million tala. Thirdly, it would also appear that the third party was paying out monies to the plaintiff from 1989 to 1993 despite the plaintiff’s persistent refusal starting from December 1988 to sign the deed of conveyance to the defendants and despite the caveat the third party had lodged on behalf of the defendants in 1992. With respect, this appears odd. Fourthly, there was no acceptable explanation from the third party as to why he was disbursing the purchase funds, as he claimed, to the plaintiff by instalments as and when requested by the plaintiff even though the plaintiff was all along asking for the money to be paid to her all at once. After all, it was the plaintiff’s money and not the third party’s money.
27. The second affidavit of the third party’s 2002 affidavits to which I will refer as “affidavit B” is a list of the third party’s documents and it includes a breakdown of the monies received by the third party’s law firm on behalf of the plaintiff in 1998 and 1989. It shows that on an unspecified date in 1988 the sum of $60,000 was received by telegraphic transfer through the then Bank of Western Samoa from Mr Covacich and on another unspecified date in 1989 the sum of $44,995 was received by another telegraphic transfer from Mr Covacich through the same bank. There is no other reference in affidavit B to any further payment received from the defendants. So there is no mention in the third party’s affidavit A or affidavit B of three of the five payments that the defendants claimed to have remitted to the third party.
28. I will turn now to the third party’s oral testimony. In his evidence in chief, the third party said that on 22 December 1989 he went to the plaintiff’s place and informed her that a payment of $60,000 has been received from Mr Covacich for the purchase price of her property. He then asked the plaintiff to sign the deed of conveyance he had brought with him. The plaintiff refused to sign until the full purchase had been paid. The third party denied that the plaintiff asked him to put that money in her trust account. The third party also said that when ‘all the monies’ were paid by the purchasers he rang up the plaintiff to come to his office to sign the deed of conveyance but she again refused. He kept harping after her to sign the deed but she still refused. The third party then prepared a caveat in 1989 to be lodged against the title to the plaintiff’s property. Counsel for the plaintiff pointed out that that caveat was not lodged until 1992 and was registered on 12 January 1993.
29. During his examination in chief, the third party was also taken through the financial statements included in his affidavits. It is not necessary to go through that part of the third party’s evidence in chief as the financial statements can speak for themselves and nothing of significance was added to them by the examination in chief.
30. Under cross-examination by counsel for the plaintiff, the third party said that he acted as the solicitor for both the plaintiff and the defendants in the present transaction. The third party further said that the plaintiff loved spending money. When her late husband’s insurance money was exhausted, her Sinamoga property was put up for sale. The insurance money was about $800,000 or $900,000 but he could not say whether it was over a million tala. The property was on the market for about a year before the defendants arrived and wanted to buy it. According to the plaintiff, her husband died in 1984. His insurance was over a million tala and that the monies the third party paid to her were from that insurance money. She decided in 1986 or 1987 to sell her Sinamoga property because her motel was ruined by the youths of Sinamoga. In other words, according to the plaintiff she did not want to sell her property because of the reason given by the third party. If the third party’s evidence that the insurance money was exhausted is correct, then by 1986 or 1987 the insurance money was exhausted. The third party said that the advances made to the plaintiff were in anticipation of the payments from the defendants and the advances were paid from his law firm’s trust account. It was not clear whether that meant the monies of other clients held in the trust account of the third party’s law firm. The third party also said that when the plaintiff kept coming to him, he told her that all the purchase money received by his law firm had been paid to her but she had spent all the money.
31. With respect, I find it difficult to accept that the third party, an experienced solicitor, paid out the monies received in 1988 and 1989 from the defendants to the plaintiff before the plaintiff signed the deed of conveyance and was persistently refusing to sign the deed until the full purchase price was paid to her. It was also clear from the plaintiff’s evidence that she wanted the full purchase price to be paid all at once. After all, the money belonged to her. However, the third party, according to his own evidence, paid out the money by instalments to the plaintiff as and when the plaintiff needed money. As I have already stated, the money belonged to the plaintiff and it should have been paid out to her according to her instructions. It also appears from the evidence of the plaintiff that she was not aware of the payment of $44,995 from the defendants in July 1989.
32. The witness Pativaine Petaia who used to be employed at the third party’s law firm to look after it books and accounts was called as a witness for the third party. She testified that the plaintiff used to come to the third party’s law firm once a month and sometimes more than once a day asking for money. Most of the time she was given money but sometimes she would tell the plaintiff there was no money. The plaintiff would also not ask for her credit balance. Some of this money was to pay for the nightwatchmen at her motel. Under cross-examination by counsel for the plaintiff, this witness said that this was before the deed of conveyance was signed. In fact, the deed of conveyance was never signed. She also said that she was not aware of any agreement for the sale of the plaintiff’s Sinamoga property.
33. An accountant who was requested to look into the books and accounts of the third party’s law firm was also called as a witness for third party. His evidence did not provide any additional assistance to the case for the third party. This witness appeared to have been conscious of that himself.

Discussion

34. After careful consideration of the evidence, I have decided to accept the evidence of the plaintiff and that of Mr Covacich for the defendants where they are at variance with the evidence of the third party on the material aspects of this case. I find the evidence for the plaintiff and for the defendants to be of better quality and inspire confidence.
35. I am satisfied on the evidence of Mr Covacich, as supported by documentary evidence from the ANZ Bank (Samoa) Ltd, that the defendants remitted one payment on 22 December 1988 and four payments on 5 April, 10 July, 31 October, and 10 November 1989 to the trust account of the third party’s law firm through the then Bank of Western Samoa. According to the evidence of the third party, he was only aware from the financial statements his law firm was able to compile from past records of only two of those payments, namely, the payments received on 22 December 1988 and 16 July 1989. Even if that was so, I am still satisfied from the evidence that the third party’s law firm did receive all five payments remitted by the defendants through the bank for the full purchase of $300,000 for the plaintiff’s property. In fact, the defendants actually remitted more than the amount of the purchase price.
36. I am also satisfied from the evidence of the plaintiff that the monies remitted by the defendants were never paid to the plaintiff or only a small fraction of it was paid to the plaintiff through the payments made to the plaintiff when she needed money. There was also the insurance money from the plaintiff’s late husband. The third party said that all the money from the defendants were paid to the plaintiff, meaning the money for the two payments on 22 December 1988 and 16 July 1989. But there was no evidence from the third party that the other three payments from the defendants were released to the plaintiff.
37. The plaintiff denied that she was ever paid any money from the remittances made by the defendants. She, however, received only two direct payments from the defendants which was $200 for the deposit on her property and $3,000 she requested directly from Mr Covacich. She believed that the monies paid to her by the third party or his law firm were from her late husband’s insurance money and not from the money for the purchase of her property. She had also explained that she decided in 1986 or 1987 to sell her property because her motel business was ruined by the youths of Sinamoga and not because of any debts. I have also set out how part of the insurance money was used by the plaintiff to purchase two properties at Sinamoga and Alafua as well as two new vehicles and to do some renovations to her Sinamoga property.
38. The third party, on the other hand, said that the insurance money was exhausted and that was why the plaintiff wanted to sell her Sinamoga property. He also said that the monies which were paid out to the plaintiff from 1987 to 1993 were from his law firms trust account in anticipation of the money to be remitted from the defendants for the purchase of the plaintiff’s property. With respect, the evidence of the third party, for several reasons, does not inspire confidence. Firstly, the third party’s law firm started receiving payments from the defendants on 22 December 1988 until 10 November 1989. The total payments was $313,773.22 which was quite a substantial amount of money. So how could the third party’s law firm be paying monies to the plaintiff from its own trust account from 1989 to 1993 when it was in 1988 and 1989 in possession of a lot of money that belonged to the plaintiff. How could it be said that the monies paid to the plaintiff from 1989 to 1993 were from the trust account of third party’s law firm in anticipation of the payments from the defendants when those payments were made by the defendants in 1988 and 1989. Secondly, if the monies paid to the plaintiff were from the payments made by the defendants, then how was that allowed to happen when the plaintiff refused to sign the deed of conveyance to the defendants in December 1988 and then persistently refused to sign until she terminated her solicitor-client relationship with the third party in 1998 after she had met with Mr Gilmour another solicitor in Apia at the time. Furthermore, the third party said he had prepared a caveat in 1989 which was lodged on behalf of the defendants in 1992 against the title to the plaintiff’s property because she refused to sign the deed. In spite of that, the third party said he had paid all of the defendants money to the plaintiff up to 1993. I have already said that this seems quite odd.

The issues

(a) First issue: Did the third party act as solicitor for both the plaintiff as vendor and the defendants as purchasers in this transaction so that he was agent for both parties or did the third party act as solicitor only for the plaintiff so that he was agent only for the plaintiff and therefore the purchase monies paid to and received by him from the defendants should be deemed to be monies paid to and received by the plaintiff as principal?

39. The evidence of all three parties the plaintiff, the defendants, and the third party was that the third party acted as solicitor for both the plaintiff as vendor and the defendants as purchasers in this transaction. So the third party was agent for both parties to the transaction.
40. Counsel for the defendants in her written submissions attempted to argue that the third party acted as solicitor only for the plaintiff so that he was an agent only for the plaintiff. That being so, payment by the defendants of the purchase price to the third party was payment to the plaintiff as principal. Counsel relied on the English case of Ellis v Goulton [1893] 1 QBD 350. That case can be distinguished from this case. What happened in that was that the purchaser paid a deposit to the solicitor for the vendor for the purchase of the vendor’s freehold property. Through the fault of the vendor the sale went off and the purchaser brought an action against the vendor’s solicitor for the return of the deposit. It was held that payment of the deposit to the vendor’s solicitor was equivalent to payment to the vendor as principal as the solicitor was agent for the vendor. Therefore, the action against the solicitor could not be maintained. At pp. 352-353, Bowen LJ made this observation:
    • “When a deposit is paid by a purchaser under a contract for the sale of land, the person who makes the payment may enter into an agreement with the vendor that the money shall be held by the recipient as agent for both vendor and purchaser. If this is done, the person who receives it becomes a stakeholder, liable, in certain events, to return the money to the person who paid it. In the absence of such agreement, the money is paid to a person who has not the character of stakeholder; and it follows that when the money reaches his hands, it is the same thing so far as the person who pays it is concerned as if it had reached the hands of the principal...The solicitor of the vendor is, unless the contrary has been agreed on, the agent of the vendor to receive a deposit on his behalf”.
41. On the basis of the above passage from the judgment of Bowen LJ, counsel for the defendants submitted that receipt by the third party of the purchase money as solicitor and agent of the plaintiff was receipt by the plaintiff as vendor. This is notwithstanding the fact that the third party acted as solicitor for both the plaintiff and the defendants and there was no agreement that the third party was to act as agent only for the plaintiff for the purpose of receiving the defendants payments.
42. I accept that in law payment of money to the solicitor of a party in a sale of land transaction upon request of that party is payment to that party unless there is an agreement to the contrary. The reason being that the solicitor is the agent and the party for whom he acts is the principal. However, the passage cited by counsel for the defendants from the judgment of Bowen LJ in Ellis v Goulton [1893] 1 QBD 350, 352 – 353, was in the context of a deposit paid by the purchaser to the solicitor for the vendor in a sale of land transaction. The reference to “stakeholder” further shows that the passage was made in the context of a deposit. The term “stakeholder” is defined in New Zealand Law Dictionary (1972) 2nd ed by G W Hinde as follows:
    • “Stakeholder. One with whom a stake is deposited pending the decision of a wager, etc.
    • “The term is also used in relation to a sum of money paid as a deposit on a contract for the purchase of property. Such sum is often paid to some person as a stakeholder as between the two parties, not as agent for the vendor”.
43. I have also looked at Sale of Land (2000) by DW McMorland and Ellis v Goulton is referred to only in chapter 7 of that text which relates to deposits in sale of land transactions. I therefore do not consider that Ellis v Goulton is relevant to this case. Anyhow, the deposit of $200 that was paid by the defendants was paid direct to the plaintiff on 16 September 1988 when the parties signed the sale and purchase agreement before the third party.
44. The principle in Ellis v Goulton [1893] 1 QBD 350 has been reiterated in recent English cases, for example, Bellis v Challinor [2015] EWCA 59 where Briggs LJ in delivering the judgment of the Court of Appeal said:
    • “Of course, money paid into a solicitor’s client’s account is held on trust, but where a party to a transaction pays money at the other party’s request to that other party’s solicitor, then the default position is, and has been for over a century, that payment to the solicitor is equivalent to payment to the solicitor’s client so that the money is held on trust for the client: see Ellis v Goulton [1893] 1 QBD 350. By ‘the default position’, I mean the position in the absence of any agreement or arrangement to the contrary”
45. In the case of P & P Property Ltd v Owen White & Catlin LLP [2016] EWHC 2276, the Court said:
    • “This is consistent with the default position that, in the absence of any agreement or arrangement to the contrary, where a party to a transaction pays money at the other party’s request to that other party’s solicitor, the payment to the solicitor is equivalent to payment to the solicitor’s client so that the money is held on trust for the client: Ellis v Goulton [1893] 1 QBD 350 and Burt v Cousins & Co Ltd [1971] 2QB 426.”
46. It would appear from the above two English cases that the principle in Ellis v Goulton would not apply to this case because the plaintiff did not request the defendants to make their payments to the third party. It was the defendants themselves who decided that it would be convenient for them to remit their funds to the third party as solicitor acting for them. The third party would then get the plaintiff to sign the deed of conveyance and paid over the money. If anything, the plaintiff had sent a faxed message to the defendants in or about May 1989 to make any further payments to her account with the Pacific Commercial Bank and not to make any further payments to the third party’s trust account as she was very concerned about the funds already remitted to the third party. In these circumstances, payment by the defendants to the third party would not be equivalent to payment to the plaintiff.
47. From my own research, I have not been able to find a case that is directly relevant to this case. I am therefore of the opinion that the matter should be decided on principle. It is a situation of which of two innocent parties, the vendor or the purchasers, should lose out. As solicitor acting for both the plaintiff and the defendants, the third party was agent of both parties. When the defendants as purchasers remitted the purchase funds to the third party, it is clear from the evidence that they were doing so on the basis that the third party was their solicitor acting for them in their best interests. Thus receipt by the third party of the purchase funds was receipt as solicitor and agent for the defendants. He was under the obligation to pay the funds to the plaintiff as vendor pursuant to the instructions of the defendants as purchasers and to have the plaintiff sign the deed of conveyance. After the full purchase funds were remitted to the third party, Mr Covacich followed up with the third party and his law firm the signing of the deed of conveyance until he lost communication with the third party. Even though the third party was also the solicitor and therefore agent of the plaintiff, she said that she did not receive the purchase funds. Both the plaintiff and the defendants left the third party and engaged separate solicitors when they realised what was happening. In or about May 1989, the plaintiff contacted Mr Covacich and requested him to remit any further payments to her account with the Pacific Commercial Bank and not to remit any more funds to the third party’s law firm trust account as she was very concerned about the funds already sent to the third party. However, Mr Covacich continued to remit the remaining payments to the third party. In these circumstances, I am of the opinion, that payment of the funds by the defendants to the third party was payment to him as solicitor and agent for the defendants notwithstanding that the third party was also solicitor and agent for the plaintiff.

(b) Second issue: Did the defendants pay the full purchase price for the plaintiff’s property to the third party?

48. Based on the evidence, I am satisfied that the defendants did pay the full purchase price for the plaintiff’s property to the third party.

(c) Third issue: Did the third party pay the full purchase price of the property to the plaintiff?

49. Based on the evidence, I am satisfied that the third party did not pay the full purchase price of the property to the plaintiff.

(d) Fourth issue: Did the defendants have a caveatable interest to sustain the caveat lodged on their behalf against the title to the plaintiff’s property?

50. As the plaintiff did not receive the full purchase price for her property which the defendants had paid to the third party, the sale and purchase agreement was not fulfilled so that there was no caveatable interest to sustain the caveat lodged by the third party on behalf of the defendants to protect their interest in the property.

Conclusions

51. From the foregoing, I order that the caveat lodged by the third party on behalf of the defendants to be removed. In so doing, I have every sympathy for the defendants who, as one of the innocent parties, would have to lose out in this unfortunate transaction.
52. In the circumstances, the defendants claim for the equitable remedy of specific performance also cannot succeed.

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TEMPORARY JUSTICE OF THE SUPREME COURT
AND FORMER CHIEF JUSTICE