Kelsall v Jamias [2022] WSSC 36 (22 July 2022)

IN THE SUPREME COURT OF SAMOA
Kelsall & Ors v Jamias & Anor [2022] WSSC 36 (22 July 2022)

Case name:	Frost & Ors v Jamias & Anor
Citation:	[2022] WSSC 36
Decision date:	22 July 2022
Parties:	ANGELA SOPHRONIA FROST KELSALL of Utah, USA and WENDALL FREDERICK FROST, of Utah, USA and WILMA EVELYNE FROST TUIMAUGA, of Utah, USA v MAPU SAEI JAMIAS, of Pago Pago, American Samoa and ILIGANOA SOOALO, of Pago Pago, American Samoa.
Hearing date(s):	25th 26th May 2022; 03rd June 2022
File number(s):
Jurisdiction:	CIVIL
Place of delivery:	Supreme Court of Samoa, Mulinuu
Judge(s):	Justice Tafaoimalo Leilani Tuala-Warren
On appeal from:
Order:	- For the foregoing reasons, the Plaintiff’s claim is successful and the Defendants counterclaim is denied. - The Plaintiffs to file and serve Memorandum of Costs within 14 days. The Plaintiff to file their response within a further 14 days.
Representation:	S Wulf for the Plaintiffs A Su’a for the Respondents
Catchwords:	Unjust enrichment – lease agreement – reclamation of the land – behind on rent payments – duplex built pre-lease.
Words and phrases:
Legislation cited:
Cases cited:	Tokuma v Samoa Land Corporation [2018] WSSC 81; RSI Holdings v Attorney General [2013] WSCA 04.
Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN

ANGELA SOPHRONIA FROST of Utah, USA and WENDALL FREDERICK FROST, of Utah, USA and WILMA EVELYNE FROST TUIMAUGA, of Utah, USA.

Plaintiffs

A N D

MAPU SAEI JAMIAS, of Pago Pago, American Samoa and ILIGANOA SOOIALO, of Pago Pago, American Samoa.

Respondents

Counsel: S Wulf for Applicants

A Su’a for Respondents

Hearing Dates: 25 - 26 May, 3 June 2022

Decision Date: 22 July 2022

RESERVED DECISION OF TUALA-WARREN J

INTRODUCTION

1. The Plaintiffs are registered owners and lessors of land at Fugalei on which Maliu Mai Bar and Restaurant (“Maliu Mai”) is situated. They have been the owners of the land described as Parcels 601 and 602 since 16 October 2002. The Defendants are lessees of the land and built Maliu Mai.
2. The Plaintiff and the Defendant signed a lease agreement dated 23 September 2004. That lease was terminated by the Plaintiffs on 12 June 2020 due to default by the defendants in their lease payments.
3. The Plaintiffs seek to remove the Defendants from the land. The Defendants counterclaim that they should be paid the cost of the building (SAT$943,000.00) which they built on the land and reclamation to the land (SAT$115,000.00). The Defendants claim in total is SAT$1,058,000.00.

THE PLAINTIFF’S CLAIM

4. The Plaintiffs seek an eviction order against the Defendants and any of their family members, agents, servants or anyone under their authority to vacate the land. This is on the basis that the lease was terminated by way of notice on 12 June 2020 for non-payment of rent. The defendants were given one month to vacate the land. The Defendants continue to occupy the land two years later.
5. The Defendants concede that they defaulted or rather their adopted daughter defaulted on the payment of rent and that they received notice of termination.

THE DEFENDANTS COUNTERCLAIM

6. The Defendants plead unjust enrichment and more particularly, as per their Statement of Defence and Counterclaim (paras 3-6);
   • 3. THAT the developments made by the Defendants on the property had not only caused improvements thereon, they also constitute reclamation work that has improved the value and condition of the property from being swampy land and[to] hard land at Fugalei.
   • 4. THAT the lease agreement does not stipulate any waiver on a right to compensation on the part of the Defendants improvements on the property and building placed thereon by the Defendants.
   • 5. NOW the Plaintiffs are claiming possession of the property, the Defendants are also now claiming compensation for the reclamation work they have done on it with buildings placed thereon that has improved the condition of the property and making it attractive for business investments since 2004 to date.
   • 6. THAT without an agreed cost of compensation between the parties, the Defendants will continue to put forward in Court their counter claim for compensation for reclamation work that upgraded the property as follows;
     • 6.1 The compensation claim on reclamation work is ST$115,000.00;
     • 6.2 The cost of buildings thereon for business investment operations is ST943,000.00.

THE PLAINTIFFS DEFENCE TO COUNTERCLAIM

7. The Plaintiffs say that the land was not swampy but dry land and that the Defendants wanted to lease the land after they viewed the land and concluded that it was good to build on. Their evidence though which I accept is that they did not know the state of the land as they were not here in 2003.
8. They further say that the Defendants are to remove their buildings. They want the return of the land.

THE LAW

The Lease Agreement

9. The Lease Agreement which governs the lease of the land is dated 23 September 2004. It was signed by the Defendants and the father of the Plaintiffs, Frederick Fatu Frost (“Mr Frost”) as their attorney, witnessed by Solicitor Patrick Fepuleai. The Defendants signatures were witnessed by Notary Public Annette L Lockington.
10. The lease payment was USD$200 per month (clause 2).
11. Arrears of 60 days give the lessors the right to re-enter the property and take possession of the land (clause 9).
12. Clause 8 of the agreement specifies;
    • 8. THAT if the lessees have paid the rend hereby reserved and observed and performed the covenants and conditions hereof then the Lessees shall at the expiration of the said term or sooner termination thereafter have the right of removal from the land all improvements by the Lessees during the said term PROVIDED that the Lessees shall first offer to the Lessors the right to purchase the improvements at a price to be agreed upon by the parties.

Unjust Enrichment

13. Clarke J in Tokuma v Samoa Land Corporation [2018] WSSC 81 succinctly set out the law regarding unjust enrichment as follows;
    • 64. The three elements that the Plaintiffs must satisfy for a claim based on unjust enrichment to succeed are: (i) a benefit enjoyed by the recipient, the Defendant; (ii) a corresponding deprivation on the part of the claimant, the Plaintiffs; and (iii) the absence of any juristic reason for the recipient to retain the benefit (Stanley v Vito [2010] WSCA 2 (7 May 2010)).
    • 65. In Stanley v Vito at paragraph 24, the Court of Appeal explained the third element of an absence of any juristic reason for the recipient to retain the benefit in the following terms:
    • “The real question on which liability turns is whether the respondents have demonstrated the third unjust enrichment element (absence of any juristic reason for retaining the benefit). The question is whether the respondents (being the counter-claimants for unjust enrichment in that case) had excluded any legal basis upon which the Stanleys could retain the benefit of improvements to their property without paying for them.”
14. The Court of Appeal in RSI Holdings v Attorney General [2013] WSCA 04, stated in relation to unjust enrichment;
    • 46. There is no issue that claims sounding in unjust enrichment have been accepted as part of the law of Samoa. And that the elements of such a claim are –
      • That the defendant has been enriched by the receipt of a benefit;
      • That the enrichment has been at the plaintiff’s expense; and
      • That it would be unjust to allow the defendant to retain the benefit.
15. However the Court of Appeal stated the following where a lease agreement governed the relationship between the parties;
    • 49. Several points need to be made here. First, we reiterate the point already made that although the parties had extensive pre-lease negotiations, where things came together was in the Deed of Lease. That was the opportunity for the parties to resolve any concerns, and mutual obligations.
    • 50. Second, and relatedly there is routinely express provision in a lease for “improvements”. Here there was no such provision. Under Clause 15 the lessee was to yield up the land at the end of term in a good state of repair. And Clause 27 allowed for the removal of buildings at the end of term. But no more was provided for. So on this venture, the risk lay with the developer, the appellant. Even if there had been provision for improvements, the lease was, as is now accepted by the appellant, lost by reason of the (lawful) termination of it.
    • 51. It is not therefore necessary to address where the overall equities lay. The lawful avoidance of the lease reverted the land the subject of it, to the Government, in its then state. This was the agreement of the parties.
    • 52. Third, a claim for unjust enrichment as a backdoor attempt to secure what an improvement clause would normally do, is quite untenable. A claim of that kind cannot be grounded on the unlawful (here, non-observation of the lease in several respects) activities of an erstwhile plaintiff. Otherwise, for instance, contractors who found the going too tough on their development projects could simply down tools, and claim “unjust enrichment” for what they had already done.
    • 53. Fourth, the appellant is the author of its own misfortune. It cannot rely on its own breach of the lease conditions to found a claim of the kind asserted.

ISSUES

16. I determine that the issues in this case are;
    • (a) Does the building fall under ‘improvements’ covered under clause 8 of the lease agreement;
    • (b) Does the reclamation of the land fall under ‘improvements’ in clause 8 of the lease agreement; and
    • (c) Can unjust enrichment be used to compensate the building and reclamation if not covered under the lease agreement.

EVIDENCE

17. Angela Frost Kelsall gave evidence on behalf of the Plaintiffs. She confirmed that the Plaintiffs terminated the lease due to default on the part of the Defendants in paying the lease. She confirms that the Plaintiffs had given their father Frederick Frost a power of attorney to sign the lease as lessor on their behalf. She says also that the Plaintiffs have no knowledge of the buildings and reclamation as they were not in Samoa during 2003-2004. She says that the Plaintiffs are happy for the Defendants to take their building when they vacate the land, which they should have done one month after the lease was terminated on 12 June 2020 (by way of letter from Wulf Law Firm to the defendants, attachment E of Exhibit P3).
18. Both Defendants gave evidence and provided affidavits to the Court. They both speak of a relationship between themselves and the father of the Plaintiffs Mr Frost, as they were related through Iliganoa Sooialo(“Iliganoa”), who is the wife of Mapu Saei Jamias (“Mapu”).
19. Mapu says that Mr Frost contacted he and his wife in 2003 to see if they were interested in developing his family land at Fugalei for their business. He says Mr Frost said if they were interested they would need to fill and reclaim the land first and any costs incurred on that would have to be taken out of the lease. Mapu says reclamation of the land was done in late 2003, for which he paid for personally. He knew through his solicitor that the land was transferred from Mr Frost to his children, the Plaintiffs in 2002.
20. Iliganoa says that it was at the request of Mr Frost that she and Mapu reclaimed the land at Fugalei. They asked Mr Frost for a lease agreement and she says Mr Frost agreed and said “whatever the cost of that reclamation works would be, that it be taken out of the lease”. She says they used Apia Concrete Products for the loads of fill.
21. She says the land was marshy and swampy in late 2003 when they reclaimed the land. Mr Frost she says looked after the land as they travelled to and from American Samoa to sort their business arrangements. They built a two bedroom duplex in early 2004 for him to live in, at his request. Mapu says that a few years later, the Maliu Mai Restaurant building was built next to the duplex.
22. In late 2004, the lease agreement was signed. Mapu says that later that year they met Wilma and Angela when they visited Samoa. Mapu says that while Mr Frost was alive, he used to give him 2 years rent in advance. They had no problem with this. He says he has always recommended to the Plaintiffs that he pay the rent via his USA bank account to their USA bank account since they reside in the USA. He says he was informed by the Plaintiffs that they were behind on the rent payments which was a shock as they relied on their daughter Filoi who ran Maliu Mai to pay the rent.
23. Filoi Talie who is the adopted daughter of Mapu and Iliganoa gave evidence that she has been looking after Maliu Mai since 2013. She admits that she fell behind in rent payments but did not tell her parents. When the reclamation was done in 2003 she was in Pago. She was the one who showed the surveyor around the land and showed him the swampy boundary of the land.
24. Mr Galuvao Viliamu Sepulona is a surveyor and he produced a report (exhibit “D4”) which he says shows the volume of the land. He says Filoi showed him land which had not been reclaimed which he then used as a benchmark to calculate the original level of parcels 601 and 602. It is accepted that these are the parcels in issue. The benchmark however is on parcel 603 which is the neighbouring land. The bench mark is the low level of the swamp. He determined the low level of the swamp to be 1 metre. Any land above that represents the land fill. He determined that the mean of height levels around the property is 1.42 metres. So he subtracted the benchmark of 1 metre leaving 0.42 metres and multiplied that by the land mass of parcels 601 and 602, which he says is 2062 square metres. The volume of the land is 866 cubic metres. He says that he is uncertain as to how many truckloads of fill would be needed for 866 square metres as there are too many variables. But he does know that each truckload is 3 square metres. He also gave the volume for an area which is outside parcels 601 and 602, which has no relevance in this case.
25. Mr Toleafoa Elon Betham is a licenced valuer and he gave evidence in relation to the value of the building and the cost of reclaiming 2062 square metres which is the total land mass of parcels 601 and 602. The building value of $943,000 was attained he said from current market values as he had no information as to the actual cost of the building. In his report “D5” he used a per square metre value of $69.17 which adds a betterment value of 10% to the value estimate in 2004.

DISCUSSION

The discussion will follow the issues I identified.

Issue 1. Does the building fall under ‘improvements’ covered under clause 8 of the lease agreement

26. The evidence given by Angela Frost is not disputed in terms of the termination of the lease.
27. It is also not in dispute that the duplex was built pre lease, in early 2004 and not during the term of the lease which commenced on 23 September 2004. According to Mapu’s evidence, the Maliu Mai Restaurant Building was built a few years later next to the duplex, a diagram of the building can be found in exhibit “D5”.
28. Clause 8 of the agreement specifies;
    • 8. THAT if the lessees have paid the rent hereby reserved and observed and performed the covenants and conditions hereof then the Lessees shall at the expiration of the said term or sooner termination thereafter have the right of removal from the land all improvements by the Lessees during the said term PROVIDED that the Lessees shall first offer to the Lessors the right to purchase the improvements at a price to be agreed upon by the parties.
29. The Maliu Mai Restaurant therefore falls under “improvements by the Lessees during the term of the said lease” in clause 8 of the lease agreement. The lease having now been terminated means that Mapu and Iliganoa have the right to remove that part of the building, if after offering it to the Lessors, they are not interested in purchasing it.
30. The Plaintiffs do not want to purchase the Restaurant part of Maliu Mai.
31. The duplex, which is not captured under clause 8 will be covered under my discussion pertaining to unjust enrichment.

Issue 2. Does the reclamation of the land fall under improvements in clause 8 of the lease agreement

32. I accept that the reclamation of parcels 601 and 602 are improvements to the land. I accept Mr Betham’s evidence and also Mapu and Iliganoa’s that the land in question was swampy in 2003-2004 and needed to be reclaimed. There is no contradictory evidence as the Plaintiffs had no knowledge of the land in 2003. There is therefore no dispute that Mapu and Iliganoa carried out the reclamation.
33. However, the reclamation is not caught under improvements during the lease as the reclamation occurred outside of the term of the lease, in late 2003, whereas the lease commenced on 23 September 2004.

Issue 3. Can unjust enrichment be used to compensate the building and reclamation if not covered under the lease agreement?

34. This issue pertains directly to the duplex and the reclamation which may be improvements but are not improvements caught under the lease agreement. Both were done pre lease.
35. Before I address the claim for unjust enrichment, a few difficulties arose in this case in relation to valuing this work. There is no documentary evidence from the defendants to support the value of the duplex or the value of the reclamation at the time these were carried out. They gave evidence about the value but their evidence was at best guesswork given the amount of time which has passed. There were no receipts for the fill for reclamation nor were there any receipts for the building of the duplex. Iliganoa gave evidence that about USD$50,000.00 was spent on the duplex and USD$500,000.00 on the building.
36. The case authority most relevant to the case before me now is the Court of Appeal judgment in RSI Holdings v Attorney General [2013] WSCA 04.
37. Similar to that case, the Defendants undoubtedly spent money on the improvements. That amount though is uncertain, and it has not been proved on a balance of probabilities with any certainty what that amount is.
38. Secondly, the Defendants submit “that the lease agreement does not stipulate any waiver on a right to compensation on the part of the defendants improvements on the property and building placed thereon by the defendants” (see para 4 of the Statement of Defence and Counterclaim). Both Defendants say that Mr Frost agreed that whatever the cost of the reclamation works would have to be taken out of the lease. The Deed of Lease governs that relationship between the parties. There is no mention of the duplex and reclamation of the land in that agreement, given that they were done pre lease. Both parties had the opportunity in the agreement to include these matters. It is not for this Court to infer or read in any terms which are not in the lease agreement. The only matter which is covered are improvements by the Lessee during the said term, being the term of the lease. This means that improvements outside the term of the lease are not provided for, so the risk is on the Lessee. As the Court of Appeal stated in RSI, this was the agreement of the parties and a claim for unjust enrichment as a backdoor attempt to secure what an improvement clause (in this case, an improvement clause which covers improvements made pre lease), would normally do, is quite untenable. Upon termination of the lease, the property reverts to the Lessor. In this case, the Lessor has no interest in purchasing the improvements, both the duplex and the restaurant, and have said that they have no issue with the defendants removing those buildings.
39. Thirdly, as in RSI, the Defendants breached the terms of the lease by defaulting in their lease payments which is not disputed. They cannot then rely on unjust enrichment to counter what the Plaintiffs were legally permitted under the lease agreement to do, and that is to terminate the agreement, given their non-observation of the lease agreement. For the last 2 years the defendants have lived on the property without making any payments.
40. For the sake of completeness, I find on a balance of probabilities that the Plaintiffs have been enriched by the receipt of a benefit, that the enrichment has been at the defendant’s expense but it would not be unjust to allow the Plaintiffs to retain the benefit. I am referring specifically to the duplex built pre lease. The defendants had built the duplex before they signed the lease. I can only infer that they knew it was not covered by the lease as the only improvements covered by the lease are those done during the term of the lease. The defendants are fortunate that the Plaintiffs are allowing them to remove the whole building, including the duplex for which they had not provided for under the lease agreement. The Plaintiffs end up with no benefit when the defendants remove their building.
41. The reclamation will remain as it is not an improvement captured under the lease, nor is it unjust for the Plaintiffs to retain that benefit for the same reason as it is not unjust for them to retain the benefit of the duplex (which the Plaintiffs choose not to keep). The defendants had ample opportunity to include the reclamation in the lease agreement which they signed with the person who allegedly said to them that the reclamation would be factored into the lease. However, they did not specifically include the reclamation they did pre lease in the lease agreement, which allows me to infer that they were content with the lease agreement.
42. There is a clause in the lease agreement (10(e)) that if the lessees exercise their right of renewal the rent will increase to USD$275.00 per month which is an increase on the initial amount of USD$200.00 per month for the first 20 years. This seems to be in line with what Mr Frost said to the defendants, that the cost of the reclamation would be taken out of the lease. Therefore, it is safe for me to infer that the reclamation has been factored into the lease payments as a reduced monthly rent was to be in force for the first 20 years, and in fact they had the reduced lease payment of USD$200.00 per month from 2004 to termination of the lease in 2020.
43. A further and most significant point which should be made is that the Defendants are still in occupation of the land despite the lease agreement being terminated in 2020. It is not disputed that the lease has been terminated by the Plaintiffs. The defendants, and their daughter or any other party claiming under them, have no legal basis to be on the land and they are ordered to vacate the property forthwith and remove their building.

RESULT

44. For the foregoing reasons, the Plaintiff’s claim is successful and the Defendants counterclaim is denied.
45. The Plaintiffs to file and serve Memorandum of Costs within 14 days. The Plaintiff to file their response within a further 14 days.

JUSTICE TUALA-WARREN