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Court removes caveat in 1980s land dispute

The Supreme Court has ruled to remove a caveat on a parcel of land at Sinamoga, in connection to a land purchase that dates back to 1988. 

On the land was a motel, which was bought by a Catechist’s wife, who is also the plaintiff, Rebecca Schmidt, of Fasito’o-uta. 

The caveator and defendants is a business couple from Queensland Australia, David and Shirley Covacich. 

In the 1980s, the couple had sent more than $300,000 to a lawyer in Samoa, intended for the purchase of land from, Mrs. Schmidt.  

That lawyer was Tupa’i Se Apa, who was the barrister and solicitor and a partner in the law firm of Apa and Enari. 

Tupa’i is the third party who acted as the solicitor in the business deal for the purchase of land.   

In his ruling dated 14th June 2019, former Chief Justice, His Honour Patu Tiva’asue Falefatu Sapolu, ordered that the caveat lodged by Tupa’i on behalf of Mr. and Mrs. Covacich be removed. 

“In doing so I have every sympathy for the defendants, who as one of the innocent parties would have to lose out in this unfortunate transaction,” said Justice Patu. 

“In the circumstances, the defendants' claim for the equitable remedy of specific performance also cannot succeed.”   

The first issue in the civil case is if Tupa’i had acted as the solicitor for both the plaintiff as vendor, and the defendants as purchasers in the transaction.

After considering the evidence of the three parties involved, Justice Patu accepted that the third party was the agent for both parties; Mrs. Schmidt and the Australian couple to the transaction.  

He noted that from his own research he has not been able to find a case that is directly relevant to the one before the Court. 

“I am therefore of the opinion that the matter should be decided on principle,” said Justice Patu.  

“It is a situation of which of two innocent parties, the vendor or the purchasers, should lose out. As solicitor acting for both the plaintiff and the defendants, the third party was agent of both parties.   

“When the defendants as purchasers remitted the purchase funds to the third party, it is clear from the evidence that they were doing so on the basis that the third party was their solicitor, acting for them in their best interests.   

“Thus receipt by the third party of the purchase funds was receipt as solicitor and agent for the defendants.”

Justice Patu said the lawyer was obligated to pay the funds to Mrs. Schmidt, as vendor pursuant to the instructions of Mr. and Mrs. Covacich as purchasers, and to have the plaintiff sign the deed of conveyance.  

However, after the full purchase funds were remitted to the lawyer, the full payments were not made to Mrs. Schmidt for the land. 

Mr. Covacich had followed up with Tupa'i and his law firm on the signing of the deed of conveyance. He ended up losing communication with Tupa’i. 

“Even though the third party was also the solicitor and therefore agent of the plaintiff, she (Mrs. Schmidt) said that she did not receive the purchase funds,” said Patu.  

“Both the plaintiff and the defendants left the third party and engaged separate solicitors when they realised what was happening.  

“In or about May 1989, the plaintiff contacted Mr. Covacich and requested him to remit any further payments to her account with the Pacific Commercial Bank, and not to remit any more funds to the third party’s law firm trust account, as she was very concerned about the funds already sent to the third party.  

“However, Mr. Covacich continued to remit the remaining payments to the third party.   

“In these circumstances, I am of the opinion, that payment of the funds by the defendants to the third party was payment to him as solicitor and agent for the defendants — notwithstanding that the third party was also solicitor and agent for the plaintiff.”

The second issue in the case is did Mr. and Mrs. Covacich pay the full purchase price for Mrs. Schmidt’s property to Tupa’i. 

Based on the evidence, Justice Patu said he is satisfied that the Australian couple did pay the full purchase price for the property to Tupa’i. 

About the full purchase price of the property, the Court ruled that Tupa’i did not pay the full purchase price of the property to Mrs. Schmidt. 

Furthermore, Justice Patu added that Mrs. Schmidt did not receive the full payment price for her property which the Australian couple paid to Tupa’i. 

Therefore, the sale and purchase agreement was not fulfilled so that there was no caveatable interest to sustain the caveat lodged to protect the interest of Mr and Mrs. Covacich in the property. 

After careful consideration of the evidence, Justice Patu decided to accept the evidence of the plaintiff and that of Mr Covacich for the defendants.

“I am satisfied on the evidence of Mr Covacich, as supported by documentary evidence from the ANZ Bank (Samoa) Ltd, that the defendants remitted one payment on 22 December 1988 and four payments on 5 April, 10 July, 31 October, and 10 November 1989 to the trust account of the third party’s law firm – through the then Bank of Western Samoa,” he said.

 According to the evidence of Tupa’i, he was only aware from the financial statements his law firm was able to compile from past records of only two of those payments, namely the payments received on 22 December 1988 and 16 July 1989.

“Even if that was so, I am still satisfied from the evidence that the third party’s law firm did receive all five payments remitted by the defendants through the bank, for the full purchase of $300,000 for the plaintiff’s property.  

“In fact, the defendants actually remitted more than the amount of the purchase price.

“I am also satisfied from the evidence of the plaintiff that the monies remitted by the defendants were never paid to the plaintiff or only a small fraction of it was paid to the plaintiff, through the payments made to the plaintiff when she needed money.

“ There was also the insurance money from the plaintiff’s late husband.

“The third party said that all the money from the defendants were paid to the plaintiff, meaning the money for the two payments on 22 December 1988 and 16 July 1989.  

“But there was no evidence from the third party that the other three payments from the defendants were released to the plaintiff.”

Mrs. Schmidt denied that she was ever paid any money from the remittances made by the defendants.   She, however, received only two direct payments from the defendants which was $200 for the deposit on her property and $3,000 she requested directly from Mr Covacich.

She believed that the monies paid to her by the third party or his law firm were from her late husband’s insurance money, and not from the money for the purchase of her property.   

She had also explained that she decided in 1986 or 1987 to sell her property because her motel business was ruined by the youths of Sinamoga and not because of any debts.  

The third party, on the other hand, said that the insurance money was exhausted, and that was why the plaintiff wanted to sell her Sinamoga property.  

He also said that the monies which were paid out to the plaintiff from 1987 to 1993 were from his law firms trust account, in anticipation of the money to be remitted from the defendants for the purchase of the plaintiff’s property.  

“With respect, the evidence of the third party, for several reasons, does not inspire confidence,” said Justice Patu.  

“Firstly, the third party’s law firm started receiving payments from the defendants on 22 December 1988 until 10 November 1989.  

“The total payments was $313,773.22 which was quite a substantial amount of money.  

“So how could the third party’s law firm be paying monies to the plaintiff from its own trust account from 1989 to 1993 when it was in 1988 and 1989 in possession of a lot of money that belonged to the plaintiff.  

“How could it be said that the monies paid to the plaintiff from 1989 to 1993 were from the trust account of third party’s law firm in anticipation of the payments from the defendants when those payments were made by the defendants in 1988 and 1989.”

 Secondly, Justice Patu asked if the monies paid to the plaintiff were from the payments made by the defendants, then how was that allowed to happen when the plaintiff refused to sign the deed of conveyance to the defendants in December 1988.

Mrs. Schmidt had persistently refused to sign until she terminated her solicitor-client relationship with the third party in 1998, after she had met with Mr Gilmour, another solicitor in Apia at the time.  

Furthermore, the third party said he had prepared a caveat in 1989, which was lodged on behalf of the defendants in 1992 against the title to the plaintiff’s property, because she refused to sign the deed.  

In spite of that, the third party said he had paid all of the defendants money to the plaintiff up to 1993.

Justice Patu added this seems quite odd. 

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