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Aggie Grey's Hotel Ltd v Grey Investment Group Ltd (In Receivership) [2024] WSSC 77 (29 August 2024)

IN THE SUPREME COURT OF SAMOA
Aggie Grey’s Hotel Limited & Ors v Grey Investment Group Limited (In Receivership) & Ors [2024] WSSC 77 (29 August 2024)


Case name:
Aggie Grey’s Hotel Limited & Ors v Grey Investment Group Limited (In Receivership) & Ors


Citation:


Decision date:
29 August 2024


Parties:
AGGIE GREY’S HOTEL LIMITED (First Plaintiff) & LEONARD CHENG, WANYENG HE & ZUZHENG LIU (Second Plaintiffs) v GREY INVESTMENT GROUP LIMITED (IN RECEIVERSHIP) (First Defendant & First Counterclaim Plaintiff); FREDERICK ALAN GREY (Second Defendant & Second Counterclaim Plaintiff); ALAN GREY LIMITED (Proposed Third Counterclaim Plaintiff); AGNES GENEVIVE LOTZE, MARYANNE MARINA GREY AND ADAM BRUKE, as trustees of the AGGIE GREY’S GRANDCHILDREN TRUST (Proposed Fourth Counterclaim Plaintiff).


Hearing date(s):
26 June 2024


File number(s):
CP81/21


Jurisdiction:
Supreme Court – CIVIL


Place of delivery:
Supreme Court of Samoa, Mulinuu


Judge(s):
Chief Justice Perese


On appeal from:


Order:
AGGT’s application to be added as a defendant party, the third defendant, to this proceeding is granted. AGL’s application for joinder is dismissed.

AGGT is to file and serve its Amended Statement of Defence and Counterclaim within 14 days of the date of this decision;

The Plaintiffs and First and Second Defendants are to file and serve responses to the Counterclaim, if any, within a further 14 days.

The parties are in the interim to prepare to attend to discovery of documents and inspection within a further 14 days of the Plaintiffs and First and Second Defendants responses to the Counterclaim.

The matter is to be called before me for a case conference within a further 14 days.

Costs are reserved.


Representation:
T. Lamb and M. Kersey for the First and Second Plaintiffs
K. Koria and M Crawford for the First Defendant
F. Ioane on behalf of P. Fepuleai for the Second Defendant
M. Lemisio, K. Francis & S. McNae for the Proposed Third and Fourth Plaintiffs


Catchwords:
Sale and purchase agreement – sale of property – joinder application.


Words and phrases:


Legislation cited:
Supreme Court (Civil Procedure) Rules 1980, r. 32;


Cases cited:
Drake v Attorney General [2021] WSCA 14;
MJ Crawford, ‘Submissions for Grey Investment Group Limited (In Receivership) Joinder and Caveat Removal Applications’ dated 19 June 2024;
Pegang Mining Co Ltd v Choon San (1969) 2 MLF 52.


Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU


BETWEEN:


AGGIE GREY’S HOTEL LIMITED


First Plaintiff


AND:


LEONARD CHENG, WANYENG HE, and ZUZHENG LIU


Second Plaintiffs


AND:


GREY INVESTMENT GROUP LIMITED (IN RECEIVERSHIP)


First Defendant and First Counterclaim Plaintiff


AND:


FREDERICK ALAN GREY


Second Defendant and Second Counterclaim Plaintiff


AND:


ALAN GREY LIMITED


Proposed Third Counterclaim Plaintiff


AND:


AGNES GENEVIVE LOTZE, MARYANNE MARINA GREY AND ADAM BRUKE as trustees of the AGGIE GREY’S GRANDCHILDREN TRUST


Proposed Fourth Counterclaim Plaintiff


Court: Honourable Chief Justice Perese


Counsel: T. Lamb and M. Kersey for the First and Second Plaintiffs
K. Koria and M Crawford for the First Defendant
F. Ioane on behalf of P. Fepuleai for the Second Defendant

M. Lemisio, K. Francis & S. McNae for the Proposed Third and Fourth Plaintiffs


Hearing: 26 June 2024
Judgment: 29 August 2024


RESERVED JUDGMENT OF PERESE C.J.

INTRODUCTION

  1. The issues in this case concern what property was conveyed in a Sale and Purchase Agreement (“ASP") that was concluded in August 2017. The parties to the ASP are Grey Investments Group Limited (“GIG”) and others (“Vendor”), Mr Leonard Cheng (or nominee) (“purchaser”), and Aggie Grey’s Hotel Limited (“AGHL”) (“company”).
  2. The purchaser pleads that it was his intention to purchase all the shares in AGHL, and by extension and as a matter of law, therefore own all the assets and property owned by AGHL. This included land that is presently, or had been registered on the Land Register at the time of the sale, as owned by AGHL. At stake is a property at Saleufi, of which AGHL is the registered owner. It also includes parcels of land which were transferred by GIG to itself after the ASP had been signed (“the GIG properties”).
  3. AGHL brought its claim to recover the Saleufi property on 6 October 2021. Then, by an amended statement of claim on 3 July 2023 (“ASOC”), AGHL joined the Second Plaintiffs and the Second Defendant, Frederick Grey. The remedies sought in the ASOC are to recover Saleufi and the GIG properties.
  4. The Second Plaintiff’s purchase of AGHL’s shares included the purchase of others shares. The former shareholders want to join the litigation to dispute AGHL’s ownership of Saleufi and the GIG properties. They say the properties were never intended to be conveyed to the purchaser under the ASP. They are family owned lands and the registered owners stand in the position of constuctuve trustees of their beneficial interests in the land. They seek to join these proceedings as Alan Grey Limited (“AGL”) and the Trustees of the Aggie Greys Grandchildren Trust (“AGGT”) (“the joinder parties”). Caveats were placed on the titles of GIG properties to protect their claimed beneficial interests in the land. AGL and AGGT claim AGHL and GIG hold the Saleufi and the GIG properties as constructive trustees. Declarations are sought to that effect.
  5. There are two issues that need to be decided in these interlocutory applications:
  6. The court has before it interlocutory applications. The evidence is yet to be tested. It is not possible at this point to express views on the meaning of the ASP. That is a matter for another day. What is however for consideration today is whether the court should exercise its discretion to join the joinder applicants and/or whether the caveats should continue to be sustained.

JOINDER

  1. The joinder parties rely on rule 32 of the Supreme Court (Civil Procedure) Rules 1980. They submit their presence in these proceedings is necessary for the Court to effectually and completely adjudicate upon and settle all the questions involved in these proceedings.

What are the substantive claims?

  1. The First and Second Plaintiffs ASOC seeks the making of orders that include:
  2. The joinder parties joint Statement of Counterclaim dated 7 June 2024 (“SOCC”), seeks to advance these claims. These are claims that are advanced by new counsel.
  3. The AGGT asks the Court to make three declarations: (1) that the former shareholders are parties to the ASP; (2) that to the extent clause 22 does not reflect the common intention that the plaintiffs were not to have interests in the properties, the ASP be rectified to so reflect; (3) that the properties owned by GIG are held by way of a constructive trust for the former shareholders pro-rata to their former shareholdings in AGHL; and that AGHL be ordered to convey the Saleufi land to GIG to be held on constructive trust by GIG for their benefit.

The Plaintiffs and First Defendant’s opposition to joinder

  1. The Plaintiffs’ advance a comprehensive range of grounds in support of their opposition to the joinder application. In relation to AGL’s application, the grounds include:
  2. In relation to the joinder application advanced by the AGGT, the Plaintiffs argue:
  3. GIG says the application for joinder does not meet the jurisdictional threshold set out in r. 32. It says joinder parties may only be added if their rights are directly affected and their presence is necessary. Further, AGL’s claim is new and distinct in that it seeks the return of the Casino land and damages; it is a claim that is fundamentally different to the issues pleaded in this proceeding. Moreover, AGL’s interests are not affected by any order that may be made in this proceeding, and it may issue its new proceeding afresh.
  4. In relation to the Trust, GIG argues the Trust’s claim is duplicative of GIG’s claim. It is submitted the Trust does not have standing to make the contract claims it advances. That is primarily because the Trust’s contract claim relies on the Accession Clause, which although signed by all the former shareholders was not signed by the current shareholders.

THE LAW

  1. Rule 32, in Part IV – Parties, of the Supreme Court (Civil Procedure) Rules 1980 is in the following terms:
  2. I have emphasised those parts of r.32 that I consider to be particularly pertinent. It is important to note that an order can be made at any stage of the proceedings, and that it can be made on the court’s own initiative to strike out or join a party. The basis for striking out a party arises because they have been improperly joined. The criteria for joining a party is that the party ought to have been joined in the first place or that parties presence may be, not is, necessary to enable the Court to effectually and completely adjudicate and settle all the questions involved in the action.
  3. GIG invites the court to adopt a directly affected and necessity test for r. 32. Mr Crawford argued:
  4. It appears Mr Crawford considers that the first limb or r.32 does not apply in this case, that there is no basis to find the former shareholders, asserting to be parties to the ASP, ought to have been joined. I will discuss the first limb shortly. But let me comment on the balance of Mr Crawford’s submission.
  5. Counsel suggests r.32 does not provide a jurisdictional gateway,[2] and that the court must therefore rely on its inherent jurisdiction (the common law) as recognised under r.206. In terms of common law authority, Mr Crawford refers to the Privy Council opinion in Pegang Mining Co Ltd v Choon San:[3]
  6. It seems to that this general principle applies to both limbs of r. 32. The first limb concerns the joinder applicant who ought to have been joined. The second limb is made out if the court is satisfied the joinder applicant’s presence...may be necessary to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the action.... Let me discuss the first ground.

Whether the joinder applicants ought to have been joined?

  1. This issue turns on what is at stake. The ASOC seeks to recover disputed lands as against GIG. The Plaintiffs and First Defendant submit this recovery proceeding does not involve either AGL or AGGT as they are not parties to the ASP.
  2. The joinder parties say they are parties to the ASP by virtue of the Accession Agreement, and they wish to enforce clause 22 of the ASP, set out below. Their argument is that clause 22 recognises that there were other properties which were to remain in the vendor’s (GIG) ownership,[4] and that the disputed properties are the other properties referred to in clause 22.
  3. The Plaintiffs and First Defendant ask me to reject the joinder parties’ contention that they can enforce clause 22. These parties submit the Accession Agreement had not been seen or signed by Mr Leonard Cheng, the first named second plaintiff, and therefore it does not form part of the ASP. Mr Cheng asserts on oath in an affidavit that he did not know about the existence of the Accession Agreement, and he first saw it when it was given to him by the AGHL’s lawyers (it is not known when this happened).[5]
  4. Mr Frederick Grey, the second defendant, says that the Accession Agreement satisfied clause 9.1 of the Final ASP (FG-1-076).[6] Clause 9.1 provides:
  5. The ASP settled, and this therefore suggests the condition precedent had been satisfied, in other words the other shareholders agreed to sell their shares.
  6. There are two evidential issues that are critical to the determination of the issues in this case. They cannot be adequately resolved on other papers. They are (1) whether the joinder parties are parties to the ASP by the Accession Agreement or upon any other basis; and (2) what property is referred to as being owned by the vendor (defined in the ASP as meaning GIG “and others”), in clause 22. These issues affect AGGT’s claims and the basis of AGHL’s assertion to own Saleufi without regard to the beneficial interests asserted on behalf of the AGGT. They also affect AGHL’s claim of a right to recover the GIG land.
  7. The orders, which the Plaintiffs seek would stand as conclusive determinations of ownership issues over the disputed property. Such orders would be made in the face of AGGT’s potential clause 22 claim. Moreover, it would undermine AGGT’s equitable claim, which the Plaintiffs have known about since about 21 February 2021. The AGGT’s then lawyer, Mr Patrick Fepuleai, wrote to AGHL’s lawyer claiming the ASP related only to the “Vaisigano properties”.[7] Mr Fepuleai’s advice requires to be tested, but if it is accepted, it would challenge the genuineness of the Second Plaintiff’s intention that they would own all the assets and property held in AGHL’s name, even those which were unrelated to the hotel and casino.
  8. In my respectful view, AGGT ought to have been joined to the proceeding when the First Plaintiff filed and served its ASOC, just before the close of the Limitation Act time limit of 6 years. However, if I am wrong in that view, I consider AGGT’s interests are directly related to the issues and relief being sought in this case, and their presence may be necessary to allow the court to effectually and completely adjudicate and settle all the questions involved in the action.
  9. I reject the Plaintiffs’ and First Defendant’s argument that AGGT may bring separate proceedings. That is because this is the proceeding in which the rights and interests relating to the lands at Saleufi and identified as GIG properties are intended to be determined. The Court needs to determine whether the Plaintiff’s had actual knowledge of the AGGT’s claimed equitable rights, indeed, whether they failed to make reasonable inquiries and were wilfully blind in that regard.
  10. AGL’s application for joinder rests on its claim to compensation for an unpaid purchase price, and a claim for the Saleufi land to be returned by AGHL to it. AGL is not a party to the Accession Agreement, and its claim against GIG and AGHL, with respect to the Casino land, do not arise out of the terms of the ASP. Accordingly, those claims must be pursued in separate proceedings. Perhaps the claim to Saleufi might be a clause 22 issue, but he is not a party to the ASP. However, as the evidence is discovered or unfolds, it might be thought prudent to join AGL at some point in the litigation, but not now. In any event, Mr Alan Grey is a party to the proceedings and what he may have to say about the actions he took, may be relevant in his defence of the Plaintiffs’ fiduciary claim against him.

Limitation defence

  1. The First Plaintiff’s concern with limitation issues does not go unnoticed, but there is no need to answer that question at this point. The joinder applicants claim has gone through a significant revision, and the issues may now concern section 19(1)(b) of the Limitation Act. That section provides that there is no limitation prescribed in the Limitation Act which applies to actions to recover trust property from a trustee. In this case the AGGT seeks to recover Saleufi and the GIG properties by way of a constructive trust.

Duplicative proceedings

  1. The First Defendant is concerned about what it says is the duplicative nature of the joinder parties involvement. A review of the pleadings suggests the First Defendant’s interests and those of the joinder parties are materially different. The First Defendant’s present pleading is that AGHL holds the Saleufi property on trust for it and related parties both prior to and following the sale of the First Plaintiff.[8] GIG pleads the disputed lands were not included as assets in the sale of the First Plaintiff pursuant to the ASP.[9] It would seem from these pleadings that the First Defendant is not now nor has it ever been able to argue that it holds Saleufi and the other properties as trustee for AGGT, which is the essence of the AGGT’s claim.
  2. AGGT’s new lawyers plead that GIG holds the GIG properties as trustees for the AGGT. Were the First Defendant to advance that position now would likely place the Receiver in a position of conflict. A Receiver’s primary responsibility is to realise the assets of the debtor to repay the debt secured by the debenture. However, assets of a company held only as trustee, impacts the assets on call and available to satisfy the secured debt.
  3. GIG’s claim of duplicative proceedings is not compelling and I reject it.

THE CAVEAT

  1. The Plaintiffs and the First Defendant challenge the extension of the ex parte orders that were made on 9 January 2024 to extend Caveat 66693 over lots 813 Plan 4679; 633 Plan 3632; Lot 627 Plan 3632; 207 Plan 1904 – and Caveat 66901 over lot 518 Plan 2672. They argue:
  2. There is a helpful discussion concerning the three ways by which a caveat may be removed, in the recent Court of Appeal in Drake v Attorney General,[10] included in the Plaintiffs Bundle of Authorities. The three ways are (1) by a court order under section 54 Land Titles Registration Act 2008 (“LTRA”); (2) by the Registrar’s notice to the caveator to remove the caveat under section 55 LTRA; and (3) the registration of an instrument under section 57 LTRA. The caveat issue in Drake concerned the removal of a caveat, despite a court order, pursuant to section 55.
  3. The Court of Appeal in Drake held section 55 of the LTRA, relied on by the respondent, did not apply, because the Registrar’s notice was not valid under section 55. I have reviewed the Registrar’s notice in this case in relation to Caveat 666901.[11] The Registrar’s notification is addressed to Fepuleai Law Firm, and what is notified is an application lodged by Wallwork Lamb Lawyers. However, Wallwork Lamb Lawyers is not the Caveatee of the land. Similarly, the Registrars notice in relation to Caveat 66693, advises that Komisi Koria of Clarke Ey Koria Lawyers lodged an application to remove Caveat 66693. Komisi Koria is not the caveatee of the land. The Court of Appeal’s decision in Drake makes plain that these types of notices are defective from when they were issued. They do not bring into play the operation of section 55 as a method by which a caveat may be removed. These notices demonstrate a lack of compliance by the Registrar of Lands with the requirements under section 55. I direct that a copy of both this and the Drake decisions be provided to the Registrar of Land.
  4. This senior court’s decision also acknowledges that in the circumstances where the section 55 notice is defective, the court may have an inherent jurisdiction to take steps in relation to an urgent application. The putative notices in this case were dated 22 December 2023, and the periods of time specified in section 55 count every day, including weekends and holidays, but excluding the last day if it falls on a weekend or a holiday. The court made an order extending the caveats on 9 January 2024, which was 17 days after the service of the defective notice. Respectfully, the court has inherent powers to extend the caveats upon the basis of urgency to prevent the removal of caveats that are the subject of defective section 55 notices.

DECISION

  1. AGGT’s application to be added as a defendant party, the third defendant, to this proceeding is granted. AGL’s application for joinder is dismissed.
  2. AGGT is to file and serve its Amended Statement of Defence and Counterclaim within 14 days of the date of this decision;
  3. The Plaintiffs and First and Second Defendants are to file and serve responses to the Counterclaim, if any, within a further 14 days.
  4. The parties are in the interim to prepare to attend to discovery of documents and inspection within a further 14 days of the Plaintiffs and First and Second Defendants responses to the Counterclaim.
  5. The matter is to be called before me for a case conference within a further 14 days.
  6. Costs are reserved

CHIEF JUSTICE


[1] MJ Crawford, ‘Submissions for Grey Investment Group Limited (In Receivership) Joinder and Caveat Removal Applications’ dated 19 June 2024, para [24].
[2] Ibid para [17].
[3] Pegang Mining Co Ltd v Choon San (1969) 2 MLF 52.
[4] Addendum to Agreement for Sale and Purchase of Shares (undated), in combined bundle of pleadings, pp. 3.129 & 3.141.
[5] Affidavit of Leonard Cheng dated 28 March 2024, para [7].
[6] Affidavit of Frederick Alan Grey dated 07 June 2024, para [26].

[7] Letter from Fepuleai Law to Wallwork Lamb Lawyers, re: Aggie Grey’s Hotel Ltd – Ownership of Lot 518 in Plan 2672, 16 February 2021.
[8] Amended Statement of Defence and Counterclaim dated 07 August 2023, para [33](b).
[9] Ibid., para [23].
[10] Drake v Attorney General [2021] WSCA 14.
[11] Letter from Manumaleuga Felisita Heather (Assistant Registrar of Land) to Fepuleai Law Firm, Re: Removal of Caveat 66901X Registered on Freehold Land Lot 518 in Plan 2672, 22 December 2023.

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