Court rules in complex business deal
The Supreme Court has dismissed several claims and counterclaims in relation to a “complex” business deal fallout between three business people.
The parties involved are Alan Belcher based in Vaivase-tai (plaintiff), Albert Brown (owner of A.L.C.C. Brown Enterprises and the first and second defendant), and Lusia Brown (third defendant and wife of Mr. Brown, trading as Lusia’s Lagoon Chalets in Salelologa, Savai’i).
It was around 2009 that Mr. Belcher and Mr. Brown got into an agreement to go into partnership to setup a road maintenance company called C.P.H. and later a car rental business in Savai’i called AB Rentals.
However in between 2009 to 2011, a disagreement between the parties resulted in the surrendering of heavy machinery such as an excavator, a heavy duty truck, two dynas and two Toyota Estima vans to the custody of the Registrar.
Mr. Belcher filed several civil claims of detinue (wrongful detention of goods) against Mr. and Mrs. Brown, ordering the return of his equipment, machinery, rental vehicles and miscellaneous items of property alleged to be in the custody and control of the first defendant.
Other claims from Mr. Belcher include consequential loss of $219,400 and damages of $50,000 as well as an account of all the income alleged to have been earned by Mr. Brown from the plaintiff’s equipment, machinery and rentals.
Mr. and Mrs. Brown, on the other hand, filed counterclaims against Mr. Belcher for renting at his property in Vailima and yard with the total cost of $99,000 as well as rent for Vaitele and Salelologa yard amounting to $76,000.
In addition, the defendants also asked for Mr. Belcher to pay cost of $599,000 for preparing, shipping, Customs Duties and wharf charges for machines that were brought in from New Zealand.
Former Chief Justice His Honour Patu Tiava’asue Falefatu Sapolu, in his decision, allowed a few claims and counterclaims.
He said there are issues that he has left for settlement discussions between the parties and their respective counsel.
“I have also set out legal principles that apply to the claims and counterclaims between the plaintiff on one hand, and the first and second defendants on the other hand.
“The position taken by counsel for the first and second defendants, before the commencement of these proceedings to have this case settled out of Court, has much to commend itself.”
He reserved the question of costs.
The claim of detinue from Mr. Belcher against Mr. and Mrs. Brown was dismissed.
In his judgment, Justice Patu said what should have been done is for the parties to sit down and discuss what should be fair compensation for all the work done by Mr. Brown, on the Mr. Belcher’s chattels and compensation for the storage of the chattels.
“Any monies that may be owed by the first and second defendants to the plaintiff in relation to the second shipment should also be taken into account.
“When that issue is settled, the chattels should then be returned to the plaintiff.
“This seems to have been what the first defendant had wanted from the plaintiff but the plaintiff’s response had always been ‘refer to my lawyer’.
“I strongly urge the parties to reach agreement as soon as possible on a fair compensation to the defendants applying the principle I have set out in this judgment and then the chattels to be returned to the plaintiff.”
The Court also ordered Mr. Belcher to pay a sum of NZ$1,000 (T$2,629), for reimbursement to Mr. Brown’s counterclaim of his money being used to purchase machinery and equipment in Auckland.
Mr. Belcher’s claim for exemplary damages was also dismissed.
According to Justice Patu, the Court has decided to accept the evidence from Mr. Belcher that Mr. Brown had borrowed the miscellaneous items over time and had not returned them to him.
This has been left for parties to discuss settlement.
In considering the evidence of the case, Justice Patu said the matter is a complex case.
He said the evidence is conflicting, confusing and vague in many respects.
“As a result, it has been extremely difficult to identify the correct factual matrix to which the relevant law can be applied,” he said.
“Some of these factual complexities may not be apparent from this judgment as I do not want to further prolong the delivery of this judgment by dwelling on them.
“Even the applicable law is not straightforward.”
In addition, he disagreed with counsel for the plaintiff that the facts of the case are fairly straight forward, and the factual issues are not overly complex.
Given the difficulties with the evidence, particularly the many conflicts between the accounts given by the Mr. Belcher and Mr. Brown, this case is anything but straightforward, said the former Chief Justice.
“I wish this case had been resolved when it was referred to mediation. It would have brought this dispute to an early resolution.
“The plaintiff has been eager for an early judicial resolution of this case. So are the defendants.
“This is understandable. I regret it has taken this long to produce my judgment.
“Perhaps if the parties themselves had understood the evidential and legal difficulties associated with this case, they would have reached an early negotiated settlement of their dispute and each party to go his own way.
“Litigation is not the only way for settlement of disputes.
“It is normally an expensive and time consuming way of dispute resolution.
“Numerous commercial disputes in other jurisdictions are now resolved through mediation. Mediation is quicker and much less expensive and time consuming than litigation.”
The background of the case shows that Mr. Belcher, a New Zealand national, came to Samoa in May 2009 for vacation and to check if there is a business opportunity for him in Samoa.
Mr. Brown is a business man and owns the A.L.C.C. Brown Enterprises.
It is a company that carries out, inter alia, road construction and maintenance works in Upolu using heavy machinery and equipment.
The third defendant is the wife of Mr. Brown and she operates a resort at Salelologa called Lusia’s Lagoon Resort.
According to the ruling, the different accounts given by Mr. Belcher and Mr. Brown regarding this matter are conflicting from the outset.
Mr. Belcher testified that he first met Mr. Brown in New Zealand in July 2009 and had approached him for them to go into business together in the form of a company called C.P.H.
Mr. Brown, on the other hand, testified that he first met Mr. Belcher in May 2009 at Vailima.
This company, as Mr. Brown said, was formerly owned by his brother who died five years ago. The arrangements that were made between the businessmen at their first meeting in July 2009, was that Mr. Brown promised Mr. Belcher a 50 per cent shareholding and a directorship in C.P.H.
C.P.H. had been granted a permit to carry out routine road maintenance work at Savai’i and the other 50 per cent shareholding would be held by Mr. Brown’s daughter.
In return, Mr. Belcher agreed that he would put into C.P.H. his machines and equipment to be purchased in New Zealand, and brought to Samoa on the “first shipment” which arrived in September 2009 according to Mr. Brown’s evidence.
Apart from the machinery and equipment, the first shipment included two Toyota Estima vans purchased by Mr. Belcher.
He paid for the freight and duty costs of the first shipment.
Mr. Brown said he also put in machines and equipment into C.P.H. as part of his daughter’s share in the company.
It is not clear from Mr. Brown’s evidence what those machines and equipment were. But it appears from Mr. Belcher’s evidence under cross-examination that they included one ex120 excavator, a tipping trailer, and a six-wheeler tipping truck.
The Court heard that Mr. Brown also said it was agreed that he was to repair and service the first shipment machines when they arrived in Samoa as they secondhand.
And he repairs those machines when they arrived in Samoa and he did those repairs.
One other matter that Mr. Belcher said arose from his first meeting with the first defendant in July 2009 was the question of his accommodation in Samoa.
He told the Court that at that meeting Mr. Brown agreed to provide free accommodation for him at his compound at Vailima as part of the CP.H. deal.
Mr. Brown also agreed that when the plaintiff or people on behalf of C.P.H. go to Savai'i, they would stay free of charge at the resort of the third defendant, who is the wife of Mr. Brown. However, when C.P.H. begins to make some money, then C.P.H. would pay for those accommodation costs.
Mr. Brown, in his evidence, denied that he agreed to provide free accommodation for the plaintiff in one of his units at Vailima.
Counsel for the plaintiff, in her submissions said all the machinery and equipment brought on the first shipment are now in the plaintiff’s possession, except for a David Brown tractor and a Mower grader which are in the custody of the registrar.
So, counsel for the plaintiff further said the basis of the plaintiff’s claim in the tort of detinue is his ownership of the first shipment machinery, equipment, rentals, and miscellaneous items, which are still in the custody and control of the first and second defendants and in respect of which he is seeking an order for their return to him.
The machines were not being used for C.P.H. contracts. Thus, the claim by the first and second defendants against the plaintiff for fuel and wages of the second defendant’s workers is unsustainable.
In February 2010, Mr. Belcher and Mr. Brown travelled to New Zealand to attend a liquidation sale in Auckland of various machinery and vehicles.
Here again, the evidence of the businessmen are quite conflicting, said Justice Patu.
“The plaintiff said that at the request of the first defendant he purchased several items of heavy machinery,” he stated in his ruling.
“The plaintiff maintained these machines belonged to him and were never transferred to C.P.H. or anyone else.
“The plaintiff also purchased two Nissan vehicles. These machines and vehicles were brought to Samoa on what has been described by the parties as the “second shipment”.
What is clear from this part of the evidence is that the funds that were used to purchase the machines, equipment, and vehicles for the second shipment were the plaintiff’s personal funds except for the NZ$1,000 put in by the first defendant.
“No document was ever executed for the transfer of those machines and vehicles to C.P.H.
“So those machines and equipment remained the personal properties of the plaintiff and not of C.P.H.
“Even though the first defendant said that it was his understanding that those machines and vehicles were intended for C.P.H, the machines and vehicles were purchased with the plaintiff’s own funds, not C.P.H funds.”
Also, Justice Patu said their ownership was never transferred to C.P.H.
Mr. Brown has however claimed for the NZ$1,000 he contributed to the purchase price of the machines and equipment in New Zealand and the repairs he carried out when the machines and equipment arrived in Samoa.