PacLII Home | Databases | WorldLII | Search | Feedback

Supreme Court of Samoa
You are here:  PacLII >> Databases >> Supreme Court of Samoa >> 2025 >> [2025] WSSC 8

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

Kingsun Development v A'i [2025] WSSC 8 (4 April 2025)

IN THE SUPREME COURT OF SAMOA
Kingsun Development v A’i & Anor [2025] WSSC 8 (4 April 2025)


Case name:
Kingsun Development v A’i & Anor


Citation:


Decision date:
4 April 2025


Parties:
KINGSUN DEVELOPMENT (Plaintiff) v FUATINO A’I (First Defendant) & PETRONELLA FEPULEAI (Second Defendant)


Hearing date(s):
20 February 2025


File number(s):
CP29/22


Jurisdiction:
Supreme Court – CIVIL


Place of delivery:
Supreme Court of Samoa, Mulinuu


Judge(s):
Chief Justice Perese


On appeal from:


Order:


Representation:
A. Su’a for the Plaintiff
J. Fuimaono-Sapolu for the First and Second Defendants


Catchwords:
Guarantors – arrears – contract of guarantee.


Words and phrases:


Legislation cited:


Cases cited:
Andrews and Millett Law of Guarantees (4th ed, Sweet & Maxwell, London);
Antaios Compania Naviera S.A. v Salen Rederierna A.B. [1985] AC 191, 201 D;
Attorney General for England and Wales v R [2002] 2 NZLR;
Eastwood v Kenyon (1840) 11 Ad & E 482, QB;
Investors Compensation Scheme Ltd v West Bromwich Building Society [1988] 1 All ER 94;
Martin v Short [2012] NZHC 2664;
Samoa Commercial Bank Limited v Palm Island Traders [2009] WSSC 4.


Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU


BETWEEN:


KINGSUN DEVELOPMENT


Plaintiff


A N D:


FUATINO A’I


First Defendant


A N D:


PETRONELLA FEPULEAI


Second Defendant


Counsel: A. Su’a for the Plaintiff
J. Fuimaono-Sapolu for the First and Second Defendants

Hearing: 20 February 2025


Judgment: 4 April 2025


RESERVED JUDGMENT OF PERESE CJ

  1. The Plaintiff, Kingsun Development Industries (”Kingsun”), issued these proceedings to enforce guarantees allegedly given by the defendants Fuatino A’i (“Ms A’i”) and Petronella Fepuleai (“Ms Fepuleai”). The guarantees relate to substantial rental arrears owed by Temukisa Apulu (“Ms Apulu”), who is not a party in this proceeding.

The issues

  1. This case involves the interpretation of the two documents that allegedly record guarantees given by Ms A’i and Ms Fepuleai for rental arrears. One is signed by both Ms A’i and Ms Fepuleai, and the other is signed only by Ms Fepuleai. Two questions that require determination are:

Background

  1. Anufesaina Mary Grace Chan Mow (“Ms Chan Mow”) an Account Manager of Kingsun Development Ltd, helpfully sets out the background as follows:[1]
  2. Ms Apulu appears to have rented the premises for about two years, and she fell into serious arrears to the tune of $55,527.16 by late 2014. This is when Kingsun, understandably, re-entered the lease. A copy of the lease between Kingsun and Ms Apulu was not placed before the court.

The Agreements

  1. The relevant documents are an Acknowledgement of Payment for Rental Arrears Agreement (“APRA”), and a Guarantee Agreement (“GA”). The APRA bears the date of 8 July 2016; the GA is undated, but I can infer from the text of the document that it likely to have been formed at around the same time as the APRA.
  2. Strangely, the Statement of Claim, the APRA, and the GA refer to different amounts of indebtedness. The APRA refers to the “outstanding balance” of ST65,474.46 payable in monthly instalments of ST200; the indebtedness in the GA is expressed as ST57,736.02 with monthly instalments of ST250.00. The Statement of Claim seeks recovery of yet another sum - ST96,906.86. For the purposes of this proceeding, I am satisfied the various iterations of the sum due represents the unpaid debt Ms Apulu owed.
  3. Ms Chan Mow placed before the Court the APRA and the GA. The APRA provides:
  4. The parts of the text that have been italicised are handwritten.
  5. The GA provides:
  6. The italics indicate that the document was signed.

How did these documents come about?

  1. Ms Chan Mow said she discussed the terms of the APRA with Ms A’i, who then signed. Afterwards Ms A’i went to find someone else whom Ms Chan Mow said would act “as an additional guarantor with a reliable source of income.”[2] When Ms A’i’s returned for a second visit she was accompanied by Ms Fepuleai, who before attending this meeting sought legal advice from Ms Aeau Tima Leavai. Ms Fepuleai took to the meeting the GA, which had apparently already been signed by Ms Leavai who did not attend the meeting. Ms Chan Mow acknowledged in her oral evidence the GA was countersigned by the Financial Controller of Chan Mow Company Limited (“Chan Mow Ltd”).
  2. It is not clear how and why Chan Mow Company Limited (“Chan Mow Ltd”) is even named in the GA, let alone as the creditor. Chan Mow Limited was not a party to the lease agreement giving rise to the debt. It may be that there are intercompany arrangements between Kingsun and Chan Mow Ltd, but the court is not aware of when and how the debt might have been assigned to Chan Mow Ltd.
  3. The position is that Ms Apulu does not owe a debt on account or rental arrears to Chan Mow Limited. It follows there is no debt capable of being the subject of a guarantee to Chan Mow Ltd. In my view this is the end of the matter in so far as the GA is concerned.
  4. Both defendants it is claimed owe obligations under the APRA. I will consider this shortly.

Guarantee – the law

  1. A contract of guarantee is a contract to perform the promise of, or to discharge the liability or obligation of a third person. The learned authors of the Laws of New Zealand refer as follows:[3]
  2. The learned authors further say:[4]
  3. His Honour Sapolu CJ. discussed the principles relating to the interpretation of contractual documents in Samoa Commercial Bank Limited v Palm Island Traders.[5] His Honour referred to decisions of the English House of Lords that discussed a shift from the strict construction of commercial instruments to purposive construction or a commercially sensible interpretation. This means, as observed by Lord Diplock in Antaios Compania Naviera S.A. v Salen Rederierna A.B,[6] the law favours a sensible commercially sensible interpretation because it is more likely to give effect to the intention of the parties. His Lordship observed, “[w]ords are therefore to be interpreted in the way in which a reasonable commercial person would construe them”, avoiding a concern that if a detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that “flouts business common sense” that this “must be made” to yield to business common sense’. Sapolu CJ in Samoa Commercial Bank Limited v Palm Island Traders[7] also referred to His Lordship Lord Hoffman’s summary of the principles of interpretation in Investors Compensation Scheme Ltd v West Bromwich Building Society:[8]
    1. The document is to be given the meaning it conveys to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time of contract;
    2. The background includes Lord Wilberforce’s well known “matrix of fact” but it may also include, subject to exception, anything which would have affected the way in which the language of the document would have been understood by a reasonable man (my emphasis);
    1. One of the exceptions is that the law excludes from admissible background evidence of previous negotiations and declarations of subjective intent. They are only admissible for rectification. The distinction is drawn for reasons of practical policy and, in this respect only legal interpretation differs from the way we would interpret utterances in ordinary life;
    1. The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean;
    2. The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common-sense proposition that we do not easily accept that people have made linguistic mistakes. However, if, nevertheless a conclusion can be properly drawn that something has gone wrong, the law does not require judges to attribute to the parties an intention which they did not have.
  4. Turning to apply these principles to the APRA and GA.

Analysis of the APRA

  1. Ms Chan Mow’s said she was approached by the defendants seeking a special agreement for the release of Ms Apulu from prison so she could care for her new-born outside of the prison. Ms Chan Mow says Kingsun’s Board ultimately came to the view that Ms Apulu could be released from her committal, upon the following conditions:[9]

Does the APRA record personal guarantees?

  1. Both Ms A’i and Ms Fepuleai signed the APRA, which contained the terms that acknowledge and agree to accept personal responsibility for the payment of rental arrears. Though there is no commercial benefit to Ms A’i or Ms Fepuleai, the lack of a benefit for a guarantor is not unusual, and therefore does not tell against the existence of a guarantee. Her Honour Justice Katz observed in Martin v Short:[10] that consideration, in the context of a guarantee, does not usually lie in any direct benefit or advantage to the guarantor.
  2. Turning to the words of the APRA. A guarantee is normally expressed as a guarantor’s promise to pay the debtors debt - if the debtor does not. Here, there is no such expression. But that may be remedied by necessarily implying that important qualification. Furthermore, a guarantee being a personal obligation owed by the guarantor to the creditor. However, the APRA states the defendants’ sign the APRA “[f]or and on behalf of” Ms Apulu. An agency would clearly defeat the purpose of a personal obligation owed by the guarantor. That is because the personal obligation to pay has been entered into on behalf of Ms Apulu, and therefore Ms Apulu is ultimately liable to pay, not Ms A’i or Ms Fepuleai.
  3. Perhaps, to give effect to the parties’ intention to enter a guarantee, I can interpret the phrase ‘for and on behalf of’ as assuming no greater meaning than an indication from the defendants they are giving their guarantees in relation to Ms Apulu’s indebtedness for Unit 22 at 22 Lotemau Centre formerly Lainothy Salon. That, if Ms Apulu’s fails to pay her debt, then their guarantees could be called on. Respectfully, this is would be a common-sense commercial interpretation of the agreement.
  4. It should also be acknowledged that the interpretation is broadly consistent with the second obligation in the GA, which obliges the guarantor to “make sure [Ms Apulu] continues to make the payments state in clause 1”. And, the fourth GA obligation, which provides that “[i]n the event of default, the Guarantors should make every effort to maintain the required monthly payment of $250.00 until full settlement of the outstanding balance”.
  5. I am satisfied and find the APRA is a contract of guarantee, for the reasons discussed above.

Is the guarantee supported by consideration?

  1. His Honour Sapolu CJ held in Samoa Commercial Bank;[11]
  2. The present case involves past consideration. The rent arrears were incurred between 2012 and 2014. What is meant by the term “consideration” is summarised by the learned authors in Andrew and Millet as follows:[12]

Notably, examples of the word consideration refer to “advantage” as financial advantage: namely, the forbearance to sue, compromise of an outstanding debt, supply of further goods on credit upon the promise of the guarantor, or employment of someone because of a fidelity guarantee are financial advantages. Where these financial advantages are conferred on the debtor at the request of the guarantor, there can be little doubt that there is fresh consideration for taking on of past debt.

  1. The types of financial advantage discussed above do not apply to the facts of this case, and it remains for us to consider whether there are any other types of financial advantage arising in this case that may give rise to a finding of sufficient consideration?

What are the general principles of consideration?

  1. I respectfully refer to His Honour Justice Tipping’s discussion in Attorney General for England and Wales v R [2002] 2 NZLR:
  2. The learned authors Burrows, Finn and Todd in Law of Contract in New Zealand, (7th ed) at 113 observe as follows:
  3. Applying the price-based approach requires a consideration of the price each party pays for what the contract requires of the other?

What is the price Kingsun pays?

  1. Kingsun agrees for Ms Apulu to be released from prison so she could tend to her newborn. But, it is difficult to see how this agreement could be regarded as a price that Kingsun pays for the obtaining of the Defendants guarantees. Ms Apulu’s committal to prison is a punishment for debtors, and serves no other purpose. There is no discernible benefit to Kingsun, arising from Ms Apulu’s imprisonment, that it gives up, if Ms Apulu is released.
  2. On the contrary, Kingsun’s agreement facilitates a significant improvement of its position as creditor. This happens when Ms Apulu begins making monthly payments again, after her release. The evidence shows that Ms Apulu has made further payments since her release. And, Kingsun’s position is vastly improved when it secures two new sureties (Ms A’i and Ms Fepuleai), guaranteeing the debt, which as these proceedings show are being relied on to recover an ever-increasing debt.
  3. I am not satisfied that Kingsun paid any price in its giving of its agreement for Ms Apulu to be released from prison.

What is the price the Defendants pay?

  1. As set out in the APRA, Ms A’i and Ms Fepuleai gave their personal guarantees to pay Ms Apulu’s debts. These guarantees were a significant benefit for Kingsun, they could reasonably be described as a windfall. That is because, Ms A’i and Ms Fepuleai gave their agreement to a financial burden that has no finite term. The lack of a term may be for good reason, the debt is never able to be paid without a significant increase in the level of monthly instalments.
  2. The accounting is as follows: (1) Ms A’i and Ms Fepuleai are required to make monthly payments of ST200. If they did, they would pay an annual amount of ST2,400; (2) however, at the end of every month until full settlement, the debt is subject to compound interest at a rate of 0.67, (which I take to mean 0.67 of 1%, rather than 67%). This would mean that for a debt of ST65,474.46, the compound interest charge would be around ST4,386.79; (3) the difference between the amount the Defendants are required to pay, and the sum of the compound interest charged over the same period, is almost ST2,000
  3. The debt cannot be paid unless Ms A’i and Ms Fepuleai doubled their monthly payments. If they are unable to meet that level of servicing, they will have signed up to a debt for life. If they were, for arguments sake, able to double the monthly instalments, it would take them about 27 years to pay off the debt.
  4. There is a further reason as to why I do not accept there is sufficient consideration for the guarantee. That is because, Ms Apulu would have been released from prison in due course anyway. The maximum period of a committal is 6 months: s. 6 Judgement Summons Act 1965 (“the JSA”). One of Ms Apulu’s options, given she was clearly not in a position to pay the debt from prison, was to apply for voluntary adjudication, bankruptcy. The court, in the circumstances brought about by the newborn would grant urgency. This would mean Ms Apulu might have been released at a point much earlier than the maximum period of 6 months: s. 18 JSA. It was also possible for Ms Apulu to have sought a review of the committal warrant in the view of her circumstances, and obtained interim relief whilst that was going on. In the light of Ms Apulu’s imminent release, Kingsun’s agreement was not determinative in any material way.
  5. However, standing back and looking at what happened, Kingsun’s agreement to release Ms Apulu for her newborn’s wellbeing is an act of decency and humanity. It is the same type of moral obligation that led to the Plaintiff in the leading authority on past consideration being no consideration, Eastwood v Kenyon,[13] to voluntarily pay the costs of raising the testator’s daughter until she was of age. The Court considered Mr Eastwood’s act a moral obligation, which, not unexpectedly is unenforceable in contract law for want of consideration. The leading judgment of the Chief Justice, Lord Denham, on the question of consideration held:[14]
  6. Kingsun’s agreement was also a moral obligation, founded on doing the right thing by a vulnerable member of society.

Analysis of the GA

  1. I have earlier expressed the view that the GA cannot be a guarantee because there is no evidence that Chan Mow Ltd has been assigned a debt, which is being pursued by Kingsun.
  2. I also note, for completeness, that although expressed to be a “Deed” – the document does not satisfy the formal requirements of a Deed. None of the signatures have been witnessed, it was supposedly signed by Ms Leavai before the meeting, and Ms Leavai did not attend the meeting with the Chan Mow Agent. Moreover, Ms Leavai is not being pursued and one can only assume that Ms Leavai has been released from her obligations. What is therefore expressed as a Deed of Guarantee, which if valid needs no new consideration, is rather a simple contract of guarantee. As with the APRA, a contract of guarantee needs to be supported by new or fresh consideration. In that regard, and assuming that Chan Mow Ltd is the correct creditor, the GA is set aside because there is no new consideration expressed anywhere in the text. Further, for the reasons noted earlier, the agreement to allow Ms Apulu to be released does not come at a cost to either Kingsun or Chan Mow Ltd. Therefore, they do not give fresh consideration for Ms A’i and Ms Fepuleai’s promises.

Decision

  1. At the beginning I identified two questions:

In answer to (a)

  1. Ms A’i and Ms Fepuleai gave guarantees under the APRA. However, Ms Fepulea’i did not give Kingsun under the GA. Kingsun did not prove Ms Apulu was indebted to Chan Mow Ltd. Without a primary debt upon which a guarantee could be given by Ms Fepuleai, the GA agreement is void and set aside.

In answer to (b)

  1. The guarantee under the APRA is not supported by consideration because the Plaintiff did not pay a price for its agreement to Ms Apulu’s release from prison. In so far as the GA is concerned, as a simple agreement to give a guarantee for a past debt, the GA does not disclose new consideration for Ms Leavai and Ms Fepuleai’s promises, and it is therefore set aside for want of fresh or new consideration.
  2. Costs should follow the event and counsel are asked to discuss. If no agreement can be reached, the parties are to file memoranda within 3 weeks of today’s date. I confirm that the matter involved hearing time equivalent to half a day. I also record that it was unnecessary for me to hear evidence from the defendants.

CHIEF JUSTICE


[1] Anufesaina Mary Grace Chan Mow: Affidavit dated 19 February 2025 (Exhibit P1).
[2] Above n1 at Para 6.b.
[3] A Forbes, S Lennon, Justice Gault The Laws of New Zealand, Guarantee and Indemnities - The nature of guarantees (on line ed ) Lexis Nexis, at para 1
[4] Above at para 77
[5] Samoa Commercial Bank Limited v Palm Island Traders [2009] WSSC 4.
[6] Antaios Compania Naviera S.A. v Salen Rederierna A.B. [1985] AC 191, 201 D.
[7] Above n4 at Para 45.
[8] Investors Compensation Scheme Ltd v West Bromwich Building Society [1988] 1 All ER 94.
[9] Above n1 at Para 6.
[10] Martin v Short [2012] NZHC 2664 at para 11.
[11] Above n4 at Para 38.
[12] Andrews and Millett Law of Guarantees (4th ed, Sweet & Maxwell, London) at 22.
[13] Eastwood v Kenyon (1840) 11 Ad & E 482, QB
[14] Above at 487

PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/ws/cases/WSSC/2025/8.html