Gray v Drake [2020] WSSC 45 (14 August 2020)

IN THE SUPREME COURT OF SAMOA
Gray v Drake [2020] WSSC 45

Case name:	Gray v Drake
Citation:	[2020] WSSC 45
Decision date:	14 August 2020
Parties:	CLARA AITELEA GRAY, as Administrator of the Estate of the late KIRITA MARIA-KOLOTITA PUNE and ELSA VAELUAGA as Administratrix of the Estate of Leilua Alosio Vaeluaga, late of Alamagoto, Deceased (Plaintiffs) v RUBY DRAKE, Barrister and Solicitor of Apia, Samoa (First Defendant); THE ATTORNEY GENERAL on behalf of THE MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT (Second Defendant); SAMOA BREWERIES LIMITED, a registered company having its address for service at Vaitele Industrial Zone, Vaitele-Tai, Faleata Sisifo, Samoa (Third Defendant); SAMOA STATIONERY AND BOOKS LIMITED, a registered company having its address for service at SSAB Megastore, Togafuafua Road, Apia, Vaimauga Sisifo, Samoa (Fourth Defendant)
Hearing date(s):
File number(s):	CP172/02, CP114/14
Jurisdiction:	CIVIL
Place of delivery:	Supreme Court of Samoa, Mulinuu
Judge(s):	Justice Nelson
On appeal from:
Order:	The actions insofar as they relate to the third and fourth defendants are struck out. The third and fourth defendants are entitled to costs. If these cannot be agreed upon the issue may be referred back to the court to determine.
Representation:	O Woodroffe for plaintiff K Drake-Kruse for first defendant S Ponifasio for second defendant C Vaai for third defendant F Ey for fourth defendant
Catchwords:	Strike out motion – caveat – Tuloto land – bona fide purchaser – damages – mortgage
Words and phrases:	Nemo dat quod non habet
Legislation cited:
Cases cited:	Alii and Faipule of Satapuala v Attorney General [2008] WSSC 88; Alii and Faipule of Siumu v Attorney General and others, unreported decision 30 August 2007; Carter v Ioane [2010] WSSC 14; Gray v Drake [2020] WSSC 37; Three Rivers District Council and others v Bank of England (No.3 [2001] UKHL 16; [2001] 2 All ER 513; Fesolai v Boon [2016] WSSC 36; Paina v Public Trustee [2001] WSSC 29; Pune v Drake [2016] WSSC 8; Pune v Vaeluaga [2016] WSCA 4; Stowers v Stowers [2010] WSSC 36.
Summary of decision:

CP172/02, CP114/14

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

IN THE MATTER: of the Land Titles Registration Act 2008 Section 55

BETWEEN:

CLARA AITELEA GRAY,as Administrator of the Estate of the late KIRITA MARIA-KOLOTITA PUNE and ELSA VAELUAGA as Administratrix of the Estate of Leilua Alosio Vaeluaga, late of Alamagoto, Deceased.
Plaintiffs

AND:

RUBY DRAKE, Barrister and Solicitor of Apia, Samoa.
First Defendant

AND:

THE ATTORNEY GENERAL on behalf of THE MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT.
Second Defendant

AND:

SAMOA BREWERIES LIMITED, a registered company having its address for service at Vaitele Industrial Zone, Vaitele-Tai, Faleata Sisifo, Samoa.
Third Defendant

AND:

SAMOA STATIONERY AND BOOKS LIMITED, a registered company having its address for service at SSAB Megastore, Togafuafua Road, Apia, Vaimauga Sisifo, Samoa.
Fourth Defendant

Counsel:
O Woodroffe for plaintiff
K Drake-Kruse for first defendant
S Ponifasio for second defendant
C Vaai for third defendant
F Ey for fourth defendant

Decision: 14 August 2020

DECISION OF THE COURT
(Motion to Strike Out Amended Statement of Claim)

Because the original second defendant Ming Leung Wai in his capacity as Attorney General has been struck out as a party the above intitulements are to be followed for the future conduct of these proceedings.

In this judgment I adopt the acronyms used in the judgment dated 20 July 2020 in respect of Caveat 837X reported as Gray v Drake [2020] WSSC 37. That judgment also contains some background pertinent to this matter.

Action against third defendant

1. In their Amended Statement of Claim dated 16 September 2019 the plaintiffs plead as their sole cause of action against the third defendant Breweries that because the third defendant was put on notice by the first defendant of the plaintiffs caveat and interest in the Tuloto land it was “Not a bona fide purchaser for value without notice” and that “The protection of a bona fide purchaser for value without notice does not apply to the third defendant.” As a result the plaintiffs have suffered general damages of $5m Samoan Tala and exemplary damages of $5m SamoanTala.
2. The obvious defect in such a pleading is the undisputed fact that the Breweries was the mortgagee of the Tuloto land not the purchaser. There is also no basis pleaded for the extraordinarily large sums claimed. They seem plucked out of thin air.
3. The plaintiffs also plead that despite the above-referred notice and the death of Molio’o in 2004 without the appointment of an Administrator, the third defendant continued to give credit “to persons who were not a party” to the mortgage or to the credit arrangement thereunder. How this gives rise to a cause of action and against whom and for what is not apparent from the Amended Statement of Claim or counsels submissions.
4. The final allegation against the third defendant is a lack of bona-fides “when it initiated the sale of the Tuloto land” and “when it initiated the removal of Caveat 837X.” This seems to be an allegation of fraud or deceitful misconduct on the part of the third defendant but if so, it is very inadequately particularised. The well-established law is that such allegations must be succinctly pleaded and specifically proved: per Lord Millet in the leading case of Three Rivers District Council and others v Bank of England (No.3 [2001] UKHL 16; [2001] 2 All ER 513 where at page 578 Lord Millet said:
   • “It is well established that fraud or dishonesty .................. must be distinctly alleged and as distinctly proved; that it must be sufficient particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence; see Kerr on the Law of Fraud and Mistake (7^th edn.1952) p.644, Davy v Garrett [1878] UKLawRpCh 8; (1878) 7 Ch D 473 at 489, Bullivant v A-G for Victoria [1901] UKLawRpAC 15; [1901] AC 196, [1900-3] All ER Rep 812, Armitage v Nurse [1997] EWCA Civ 1279; [1997] 2 All ER 705 at 715, [1998] Ch 241 at 256. This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest.............”

His Lordship went on to explain:

“It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means ‘dishonesty’ or ‘fraudulently’, it may not be enough to say ‘wilfully’ or ‘recklessly’. Such language is equivocal.
The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonestly from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.” (emphasis is mine)

5. These principles have been followed and applied in cases such as Alii and Faipule of Siumu v Attorney General and others unreported decision 30 August 2007 on the First Motion to Strike Out and Alii and Faipule of Satapuala v Attorney General [2008] WSSC 88.

Action against fourth defendant

6. As against the fourth defendant SSAB the plaintiffs allege that it is “Not a bona-fide purchaser for value without notice” because it was given notice in 2002 of the plaintiffs Caveat 837X, as a reasonable purchaser would have been able to readily ascertain by simply conducting a title search. Despite said notice the fourth defendant “took active steps to defeat” the plaintiffs caveated interests. Further that the fourth defendant did not act “bona fide when it purchased the Tuloto land”. As such it has caused the plaintiffs $5m Tala damages general and exemplary and orders are sought invalidating the sale and returning the land to the Estate of their father Vaeluaga Leilua the original owner. Other ancillary relief is also sought.
7. In relation to the latter cause of action again particulars of the lack of bona fides or fraudulent or dishonest conduct have not been sufficiently pleaded. Neither has the link between such conduct and the alleged damage. The blanket unspecific allegation of a lack of bona fides is in my assessment far too vague and does not meet the Three Rivers criterion. The plaintiffs cannot rely on the actions of the now struck out second defendant Attorney General Ming Leung Wai as amounting to fraud or some form of lack of bona-fides without pleading specifically how such would arise and how that gives rise to a cause of action against the fourth defendant.
8. As to the first cause of action there is no doubt the equitable defence of a bona-fide purchaser for value without notice may be available to the fourth defendant. Many cases in this jurisdiction have recognized and applied the defence: Fesolai v Boon [2016] WSSC 36, Stowers v Stowers [2010] WSSC 36 and Carter v Ioane [2010] WSSC 14 to name a few. The defence is also available to a bona fide mortgage without notice: Paina v Public Trustee [2001] WSSC 29 and Stowers v Stowers [2010] WSSC 36 where the court said:
   • “The equitable defence of bona fide purchaser for value without notice creates an exception to the common law maxim nemo dat quod non habe60 It affords protection to a defendant who receives real property from a non-owner against a claim by the plaintiff who is the true owner. But the basis of the defence is that the dent muve acted bona fida fide as purchaser for value without noti notice.
   • In Paina v Public Trustee [2001] WSSC 29 Vaai J held that the term "purchaser" includes a mortgagee. This must have been because of the definition of erm "purchaser" in s.2 of t of the Property Law Act 1952, which includes a mortgagee. It follows, according to Vaai J, that there is a defence of bona fide mortgagee for value without notili>
   • I accept that under our law of real property there is an equitable defence of bona fide mortgagee for value without notice. This affords protection to a defendant who lends money and receives land as mortgage security from a non-owner borrower against a claim by the true owner of the land who holds a mere equity. But the defendant must be a bona fide mortgagee of the legal estate in the mortgaged property for value without notice. If he is not, then he is not entitled to rely on this defence. This is the position under the deeds system. It also appears to be substantially the position under the Torrens system of registration of title. In Land Law in New Zealand (2003) vol 1 by Hinde, McMorland and Sim, the learned authors state at para 9.019:
   • "If registration has been obtained through the fraud of the registered proprietor or the fraud of the registered proprietor’s agent, the title is voidable at the suit of the person defrauded. For example, if a forger forges the signature of the registered proprietor of a parcel of land on a transfer of that land to the forger and then registers the transfer, the registered title is not indefeasible and the victim of the forgery (that is, the former registered proprietor) may recover possession of the land from the forger by virtue of s 63 (1) (c) of the Land Transfer Act 1952. But if the fraudulent person transfers or mortgages to a bona fide purchaser or mortgage for valuable consideration, the registered title of that bona fide purchaser or mortgagee is indefeasible".
9. In the present matter the central issue is one of whether or not adequate “notice” has been given. The plaintiffs say there was notice to the world of their interest when they lodged Caveat 837X and that this operates to defeat the defence.
10. The difficulty is that the plaintiffs are raising this before any such defence has been raised and seem to be asserting this fact as a basis for actionable relief. They seek to use it as a sword as opposed to a shield which is the raison d'être of the doctrine. As a matter of law such a ground has not been recognised in any previous authorities including those cited above.

Relevant Law

11. The principles governing strike out motions are firmly established. They were recently restated by the Court of Appeal in this very matter in Pune v Drake [2016] WSSC 8:
    • “The party seeking an order must show that the claim against it is certain to fail. The jurisdiction to strike out is to be used sparingly and only in a plain and obvious case. Where a cause of action is relevantly in a developing area of the law this may weigh further against making a strike out order. It may be appropriate in some cases for the court to extend to a plaintiff the opportunity to amend or replead their case if an unpleaded cause of action appears to be available.”

Decision

12. The action against the third defendant mortgagee as pleaded cannot succeed. They were not a bona fide purchaser for value, there has been no foundation laid for the damages and relief sought and the allegations of fraud/impropriety have been inadequately addressed.
13. In relation to the fourth defendant similar concerns prevail. Furthermore the equitable doctrine of bona fide purchaser for value without notice cannot be used as a basis for actionable relief. Again there is no prospect the action as pleaded can be in any manner sustained. This cannot be altered by allowing the plaintiffs to replead their case. The problem is not only one of underlying inference but a reliance on inapplicable facts.
14. In oral submissions plaintiffs counsel placed much emphasis on what the Court of Appeal said in Pune v Vaeluaga [2016] WSCA 4. Out of deference to senior counsel I have re-examined what we said in that case in particular the statement that “Properly framed pleadings would need to identify why Samoa Breweries is to lose the title that it already has if that allegation is to be pursued”. Regretfully the current pleadings do not rise to this level hence they must be struck out.

Orders

(i) The actions insofar as they relate to the third and fourth defendants are struck out.
(ii) The third and fourth defendants are entitled to costs. If these cannot be agreed upon the issue may be referred back to the court to determine.

The way forward

(i) As far as I am aware this resolves all the current outstanding matters in these proceedings. Counsels will no doubt revert if there remain other unresolved interlocutory issues.
(ii) I note the plaintiffs filed earlier this month a Motion to amend their Statement of Claim. In view of what is contained herein this will obviously have to be revisited by the plaintiffs and fresh proceedings if any will require to be properly filed and served in the normal fashion.
(iii) Once the plaintiffs meet the costs awarded to the third and fourth defendants herein their action can proceed further.
(iv) In the interests of expediting speedy resolution of a too long outstanding matter I would be happy to continue to case manage the proceedings through to trial.

JUSTICE NELSON