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RSI Holdings v Attorney General [2013] WSCA 4 (28 June 2013)

COURT OF APPEAL OF SAMOA

RSI Holdings v Attorney General [2013] WSCA 04


Case name: RSI Holdings v Attorney General

Citation: [2013] WSCA 04

Decision date: 28 June 2013

Parties:
RSI HOLDINGS (Samoa) limited a duly incorporated company having its registered office at Samoa, development company.(Appellant) v THE ATTORNEY GENERAL. sued for and on behalf of the government of Samoa.(Respondent)

Hearing date(s): 26 June 2013

File number(s): C.A. 08/13

Jurisdiction: Civil

Place of delivery: Mulinuu

Judge(s):
Fisher j
Hammond J
Hansen J

On appeal from:

Order:

Representation:
I Hutchinson and T R Faaiuaso for appellant
M Lui and S Faamausili for respondent

Catchwords:

Words and phrases:

Legislation cited:
Property :Law Act 1952

Cases cited:

Summary of decision:


IN THE COURT OF APPEAL OF SAMOA

HELD AT MULINUU


C.A. 08/13


BETWEEN:


RSI HOLDINGS (Samoa) limited a duly incorporated company having its registered office at Samoa, development company.

Appellant


AND


THE ATTORNEY GENERAL. sued for and on behalf of the government of Samoa.

Respondent


Coram:

Honourable Justice Fisher

Honourable Justice Hammond

Honourable Justice Hansen

Counsel: I Hutchinson and T R Faaiuaso for appellant

M Lui and S Faamausili for respondent

Hearing: 26 June 2013

Judgment: 28 June 2013


JUDGMENT OF THE COURT

Introduction

  1. The plaintiff (RSI) commenced proceedings in the Supreme Court of Samoa seeking damages from the defendant in the sum of US$1.5 million; a sum for what was termed ‘loss of opportunity damages’ in the estimated sum of “several million” Tala; and an order for exemplary damages, in such sum as the Supreme Court deemed just.
  2. The proceeding went to trial on various dates in October 2012. The claims were dismissed by Slicer J in a judgment of 21 December 2012.
  3. The plaintiff now appeals to this Court.
  4. The disastrous cyclone which struck Samoa in late December 2012 gave rise to some confusion as to whether an appeal had been timeously lodged. By a judgment of 29 May 2013, Slicer J granted RSI an extension of time to appeal.

The facts

  1. The case concerns Taumeasina, an island off the coast of Apia.
  2. A Mr Gordon Taylor operated a company, the particulars of which no longer matter. By a convoluted route it became the appellant company. Nothing turns on this.
  3. In September 2000, Mr Taylor wrote to the Samoa Treasury suggesting the development of this island for tourism purposes. After meeting with a government taskforce he proposed an apartment and condominium model. Strata title legislation would be required for such a development.
  4. The business case for the development depended on the sale of condominiums and capital from that to fund other parts of the project.
  5. The total project cost was to be around NZ$27 million. It required, to be viable, a 99 year lease, with a rental limit to SAT$14,000, and immigration approval. The Government would also have to provide water, electricity and road works.
  6. The three central features of this proposed development were that:
  7. The parties continued to communicate over this possible development for several years. All three elements proved to be problematic.
  8. As to possible legislation, the Samoa Cabinet eventually decided that there would be no new laws to directly assist the appellant. Any legislation which was enacted would be of a general character and would apply to all ‘similar enterprises’ in Samoa. In short, the appellant would not get specific legislation directed to its proposed ends. Only laws of general application would be entertained. As it transpired, such legislation was not enacted until 2008, and even now it has not been proclaimed in force.
  9. At trial, the appellant argued that, although it accepted as a broad proposition that an individual corporation could not require Government to enact legislation, it ought to be compensated if it acted to its detriment on the basis of a promise to do so.
  10. As to that point, Justice Slicer noted that the Samoan Government did not enact that which the appellant had proposed. It did not clearly reject the appellant’s proposal. But the Judge held that the prospective legislation did not induce the appellant to proceed with the construction. It went ahead for business reasons. In the simplest terms, RSI proceeded at its own risk. In any event, as His Honour noted, the legislation which was eventually passed did not apply to the appellant.
  11. As to the physical development, RSI also struck difficulties. A causeway needed to be erected. In 2004, permission was granted for only a temporary causeway. Subsequently the Samoan authorities claimed that the appellant had breached the terms of the permit to construct the causeway.
  12. Then, in 2005, the Ministry of Natural Resources and Environment (MNRE) suggested to Mr Taylor that he had acted illegally in removing sand from foreshore and coastal waters contrary to the Lands, Survey and Environment Act 1989. A sum of $15,000 for 3,000 cubic metres of sand removed before the permit and $10,000 for 2,000 cubic metres of sand removed under the permit was demanded. Payment was apparently confirmed but by 2006 MNRE was advising of the further illegal removal of sand by RSI.
  13. These events triggered fresh negotiations. The Prime Minister of Samoa advised that on execution of a lease, the Government undertook to provide infrastructure, refund of monies, strata title legislation and body corporate legislation within 12 months of the execution of the lease.
  14. A draft lease was in fact prepared. The Government gave RSI until 30 September 2006 to resolve the outstanding issues between the parties. The appellant’s response was equivocal and there was in fact no concluded agreement at that time.
  15. Finally, on 29 September 2006, the parties executed a lease. It provided for a staged development, and contemplated, although it did not require, strata and body corporate legislation.
  16. It is important to note that this formal Deed overtook all the negotiations which had taken place. It is the considered agreement of the parties.
  17. But then, in 2007, the Land Board terminated the lease on the ground that the plaintiff had failed to commence construction on the project within a six month period, as was required by a specific provision in the lease (Clause 3.3). Time was of the essence under the lease (Clause 3.5 (b)).
  18. Subsequent to the termination, the appellant attempted to extend the termination of lease by involving an international hotel group, Wyndham Hotel Group, and assigning the “existing” lease to it. So third party interests became potentially involved. But further negotiations did not produce agreement.
  19. In 2008, the Unit Trusts Act was enacted but has not been proclaimed.

The appellant’s proceedings

  1. The appellant contends that the respondents have unlawfully abandoned undertakings given to it, particularly in relation to legislation. It cast about with a smorgasbord of causes of action in the Supreme Court in an endeavour to enforce this understanding.
  2. In relation to the lease itself, it advanced the arguments that the Samoa Government breached the lease in failing to promulgate strata title legislation; it suggested a breach of the lease by failure to act with due diligence in bringing about the passage of legislation; and (if necessary) relief against forfeiture was sought under s118 of the Property Law Act 1952.
  3. A related set of allegations were advanced in equity against the Government: equitable estoppel, founded on breach of fiduciary duty; and unjust enrichment.
  4. The appellant then resorted to alleged public law duties, including a suggestion of misfeasance in public office.
  5. The essential defence was that there were no obligations of the kind asserted established against the defendant and that if there were obligations arising out of the lease, it had been lawfully avoided by the defendant.

The trial judgment

  1. A shotgun approach such as that adopted by the appellant in this case poses particular difficulties both for a trial court, and on appeal. There are cases in which the novelty of a situation may need to give rise to a consideration of whether several possible causes of action may apply (if they apply at all). Cases of that kind are relatively rare. This is certainly not one of them.
  2. The essential problem for the appellant was to establish a legal obligation on the part of the defendants to promulgate legislation, which was always going to be a very long bow.
  3. The Judge struggled through the whole suite of allegations and suggested causes of action. He was not persuaded any of them had been made out.

The appeal grounds

  1. The Notice of Appeal as filed sought to relitigate all the causes of action raised in the Supreme Court, and claimed the Judge was in error (sometimes on the law and sometimes on the facts), in 55 enumerated respects.
  2. However before us Counsel for the appellant abandoned all but three claims. These are therefore now the only live issues. They are as follows:

A term requiring legislation?

  1. On the facts, it is indisputable that no strata title legislation is in force, nor was it at any relevant time.
  2. In the executed Deed of Lease there is no express obligation on the defendant to enact strata title legislation. Clause 33 (6) of the lease refers only to erecting deluxe apartment suites and villas within “three” (3) year from the enactment (if any) of strata title legislation” (Emphasis added). Before us, Mr Hutchinson accepted that there was no express clause such as is asserted.
  3. The consequence of this was that if strata title legislation was not enacted, the appellant would be obliged only to build 50 hotel rooms. That had always been the Government minimum requirement.
    1. The short point is that the lease – really a development lease – was not, as a whole, subject to the obligation asserted. Only part of it was, and that was contingent on the Government passing particular legislation. And it is elementary that the Executive could not bind the Parliament of Samoa to pass the legislation; hence the carefully worded “if any” in the lease. Under s43 of the Constitution of Samoa, it is Parliament which “may make laws...” for Samoa.
  4. As to the suggestion of an implied term, that is routinely the last refuge of the doomed in commercial litigation. And just so here. The term Mr Hutchinson sought to have implied is that the Minister “[would] present to the Legislative Assembly for enactment Strata Title and Body Corporate Legislation within 12 months from the date of the execution of the Lease.”
  5. This issue was expressly dealt with in the lease; the appellant cannot set up an implied term which would contradict what was expressly agreed.
  6. Further to that, the execution of the Lease had superseded all the informal prior negotiations. The agreement was in the lease, it also being in law a contract as well as an interest in land.

Breach of agreement to extend

  1. The background to this claim is that the respondent terminated the lease. It is accepted that was a lawful termination, although the appellant has only now (and very belatedly) come to accept that. But after the termination there were then negotiations for an “extension” of that termination (more accurately a deferral of it) essentially on a proposal that within a period of one year the lease of the Taumeasina land would be assigned from the appellant to the Wyndham Group “on similar Terms and Conditions.” (Emphasis added). This was an attempt to “rescue” the whole venture by assigning the lease into third party hands.
  2. However, these negotiations did not result in a concluded agreement or assignment. Although counsel for the Attorney General suggested in her submissions that there was “mutual agreement,” a traverse of the relevant correspondence shows this not to be the case. We refer in particular to the Ministers letter of 12 July to Mr Stevenson, and the response thereto, which clearly indicate the parties were not at idem and still needed to negotiate further.
  3. The appellant seeks to overcome this fundamental difficulty of non agreement by asserting that “the respondent was obliged to do all that was reasonably necessary to assist the appellant to attempt to effect the assignment of the lease to Wyndham”. It is said it should have given assurances the lease remained on foot (when clearly it was not) and by not responding to proposals put forward.
  4. The short answer to this claim is that no obligations of the character asserted ever come into existence. No agreement of this kind was ever settled or executed, and as already noted, the parties were still, in legal terms, negotiating.

Unjust enrichment

  1. The pleading here is that “by virtue of the purported termination of the Deed of Lease, the [defendant] seeks to obtain and retain for its own benefit the value of the substantial work and improvements to the land at Taumeasina...” It is then averred that the defendant “has or will be unjustly enriched at the expense of the appellant.”
  2. 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:-
  3. The trial Judge appears to have accepted the first two elements but found that the third was not satisfied because of an absence of “clean hands” on the part of Mr Taylor.
  4. As to the facts, undoubtedly the appellant expended monies on this development. It says as much as SAT$3,791,407. On the other side, the Government undoubtedly lost opportunity costs, such as prospective rental income, from the failed venture.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. This claim too fails.

Costs

  1. Slicer J considered that the Attorney-General should have its costs, on a solicitor and client basis. But he ordered them to be taxed, which is an exercise akin to galley-slave duty.
  2. Happily the parties have now agreed those costs, which have been confirmed by a sealed order of the Supreme Court. We therefore need say no more on that issue.
  3. In this Court the defendant will have costs of SAT$10,000.00 and its disbursements, if necessary as fixed by the Registrar.

Conclusion

58. The appeal is dismissed, with costs as fixed in [57].


------------------------------------------------
Honourable Justice Fisher


------------------------------------------------
Honourable Justice Hammond


------------------------------------------------
Honourable Justice Hansen


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