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Kamu v Chan Chui [2010] WSSC 176 (10 December 2010)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

CP 61/09

BETWEEN:

ALO KAMU and MONALISA KAMU,
of Siusega, Business Operators.
Plaintiffs

AND

CHERYL SEKOLASITIKA CHAN CHUI
also know as
CHERUL SEKOLASITIKA AH WONG, of Moamoa
Defendant

Counsels: T S Toailoa for the plaintiffs
R Drake for the defendant

Decision: 10 December 2010

DECISION OF NELSON J.

The evidence:

[1] These are proceedings for the recovery of $24,308.30 said by the plaintiffs to be owing to them by the defendant. Much of the facts are not in dispute but where the evidence of the plaintiffs given on their behalf by the second named plaintiff Mrs Monalisa Kamu and the defendant conflict in material areas I prefer the evidence of the defendant as more credible.

[2] The parties to this saga were at one time all related. The defendant was married to Mrs Kamus brother one Alex Chan Chui. The Chan Chui family owned a valuable commercial property in downtown Apia upon which their family business of Chan Chui and Sons Limited had operated for many years. The property comprised principally of a two storey building and land.

[3] In or about October 2005 the plaintiffs, the defendant and her husband Alex Chan Chui and the parents of both Mrs Kamu and Alex Chan Chui, as co-owners in equal shares purchased the family property from Chan Chui and Sons Limited. The $1.7 million tala purchase price was funded by a $1.5 million tala loan from Westpac Bank with the balance funded by the parties. Operating from the building on the property at the time was a barber shop owned by a Mr Liu, rental of the upstairs premises to a Bible Society and downstairs, a business known as 'Indoors' owned by the plaintiffs and another called 'Head 2 Toes' owned by the parents of Mrs Kamu and Alex Chan Chui. Half of the plaintiffs space was offered to the defendant and her husband but as they were operating a similar business from different premises they declined the offer.

[4] Mrs Kamus evidence was the Westpac loan was the responsibility of all the purchasers and that her and her husband were allocated part of the loan repayment, the defendant and her husband the other part, with the elder Mr and Mrs Chan Chui (Liaga and Iva Chan Chui) contributing whatever they could to the loan. Her complaint is that the defendant and her husband refused to take full responsibility for their share of the loan repayment which the plaintiffs therefore had to make on their behalf. These payments are broken down in Exhibit "P-1" for the plaintiff attached to Mrs Kamus affidavit dated 26 May 2009 filed in this matter.

[5] According to her calculations the plaintiffs have paid $24,308.30 on behalf of the defendant and $24,308.30 on behalf of the defendants husband. Curiously but not surprisingly given that the defendants husband is her brother, the plaintiffs have sued only the defendant but not the defendant and her husband whom she alleges were the parties responsible for their "share" of the loan repayment. The defendant and her husband are now divorced but that does not in law absolve him from liability incurred before-hand if any. Mrs Kamus further testimony was that the defendant and her husband met their share of the loan payments up until July 2007 when the couple experienced problems and separated leading to their eventual divorce. She also said the Westpac loan was secured not only by a mortgage over the purchased property but also as against the plaintiffs personal assets.

[6] She initially denied the rental money from the various businesses on the premises were to be collected by her and applied to the loan repayment. But later in her testimony accepted that the rental monies received were applied towards the loan. She said the Bank had emailed her each month advising of the payment due as she was the only one who had email but she disavowed knowledge of some of the email correspondence produced in this case. Mrs Kamu also gave evidence concerning renovations carried out to the building on the property, the cost of which was shared between the plaintiffs and the defendant and her husband. But this is by and large irrelevant to the main issues of these proceedings.

[7] When the defendant and her brother separated, she said a decision was made to sell the property. At which point the plaintiffs agreed at her brothers request to take over their payments to the loan. All these arrangements were done orally and nothing was reduced to writing or to any form of agreement executed by the parties.

[8] Not surprisingly the defendants version is a little different. She said the arrangement from the outset was for the plaintiffs to collect the rentals from the various businesses operating on the property and apply them towards the loan. And then whatever balance remained was the responsibility of the plaintiffs and her and her husband to be shared among them the two couples. She said she trusted the plaintiffs to protect everyones interest including theirs and she paid their monthly contribution to the plaintiffs.

[9] To substantiate this the defendant produced as Exhibits "D2 – D6" various documents including email correspondence from the bank showing the repayments for various months and how this was apportioned after deduction of the rental income. The rental income payable was $6,000.00 per month for the plaintiffs Indoors business, $360.00 per month from the Bible Society which subsequently vacated the building, originally $600.00 per month but later $650.00 per month from the elder Chan Chuis for the Head 2 Toes business and $300.00 from Mr Liu for his barber shop. The balance was then divided equally between her and her husband and the plaintiffs. Their share of the loan repayment was funded from their other business and the defendant also produced as Exhibit "D-7" a statement of the loan account which I found far easier to follow than the plaintiffs reconciliation produced as Exhibit "P-2" for the plaintiffs.

[10] The defendant accepted she separated from Alex Chan Chui in or about July 2007 from which point on she was excluded from the Chan Chui family businesses and further that from then on there was no contribution by her and her husband to the loan as had been carried out previously. "D-7" bears this out and it shows that from this period on the loan became slowly delinquent and incurred numerous late penalty charges. The defendant further testified that she was approached by her ex-husband subsequently to sell her share in the property but she refused and that eventually the property was sold in or about September 2008 for $2.5 million which was split amongst all the co-owners equally after satisfying the bank indebtedness. "D-7" shows the sale was executed in or about December 2008 when a deposit from Mr Tuala the new buyers lawyers was received and the transaction completed as far as the bank was concerned in March 2009.

[11] There is some dispute in the evidence as to whether the plaintiffs continued to occupy the property and collect rents therefrom post the sale but by that stage the defendant was clearly persona non grata with the Chan Chuis and excluded from all business considerations of the family.

Discussion:

[12] Only Mrs Kamu and the defendant gave evidence in these proceedings. No other family members were called by either party. As I have stated earlier where the evidence conflicts I prefer the defendants account. I am satisfied the Chan Chui family property was purchased by the six co-owners in equal shares in October 2005 and the arrangement was that the plaintiffs would as the primary stakeholders not only in the business where their part rented represented the largest portion of the building but also because their assets was the banks secondary security for the loan, that the plaintiffs essentially ran the operation on behalf of the other co owners. And that to this end they collected rents from each of the businesses and were responsible for making the monthly loan repayment to the bank. The loan was serviced by first application of the rental monies including rental collected from the elder Chan Chuis for their Head 2 Toes business with the remaining balance to be apportioned equally between the plaintiffs and the defendant and her husband. This arrangement subsisted until the defendant and her husband separated at which point the family then took over the businesses of the defendant and her husband and thereby excluded the defendant from further involvement in their familys affairs. The cause of this state of affairs is not relevant to the present exercise, but these are the essential facts as the court has found them to be.

[13] The property continued to be occupied by the Chan Chuis and the loan serviced by them. But the terms of that occupation and any arrangement they may have had with the new owners for example as to payment of rent to the new owners pending settlement and/or taking of possession are not known as it was not addressed by the evidence. The best the defendant can do therefore is speculate that because of the continuing occupation of the property that therefore rent continued to accrue and to be paid as per previously. I pay little regard to "P-1" on this issue as that is a document obviously prepared for the purposes of this court proceeding. And the defendants "D-7" does not help as it does not show payment of the rentals separately to the loan account but only shows payment of spasmodic and varying lump sums, reducing in intensity as the account became more and more delinquent. Mrs Kamus evidence of a change to the arrangement and suspension of their rental payment does not in my view affect the defendants liability if any to contribute to what was actually paid on her / "their" behalf previously. A liability which it would seem from the below that she accepts. The argument in this case really is about quantum.

Decision:

[14] Accordingly I find as follows: The plaintiffs claim for $24,308.00 as against the defendant has not been proven on the balance of probabilities. She is liable only for one-sixth of the monies due to the bank less the monthly rentals. The defendant does not dispute the plaintiffs paid $145,849.80 in total towards the loan but from this amount should be deducted the rentals collected by the plaintiffs. This amount is calculated in the statement of defense as amended to be $97,300.00 in rental income leaving a shortfall of $48,549.80. One-sixth of that is $8,091.63 and the defendant accepts in her amended statement of defence that is the extent of her liability. That is a proper concession as the defendants liability is no greater or lesser than the other five co-owners and exists only in respect of the shortfall. The co-owners are entitled to the benefit of the rentals paid to the plaintiffs by the various businesses. Adoption of the plaintiffs method of calculation would mean that only the plaintiffs would benefit from the rentals paid and in effect would nett them a profit. The court is satisfied that this was not the arrangement and no prudent business people would into such an arrangement in the circumstances. It would be different if the $145-odd thousand paid to the bank was over and above the rentals that were collected but clearly that is not the case. Judgment will therefore be entered for the plaintiffs as against the defendant in the sum of $8,091.63 being the extent of her liability as determined by the court in this matter.

[15] As to costs the plaintiffs is entitled as the successful party to an award of costs but they should be minimal because they should have been advised that their claim for the total amount of $24,308.00 was simply not sustainable. But I do accept that the defendants concession as to the actual amount owing only occurred on trial day and could have been made earlier. Accordingly I fix costs payable as the defendants contribution in the sum of $850.00 plus GST and reasonable disbursements as approved by the Registrar.

[16] If not already done or not previously lapsed the departure prohibition order of the Deputy Registrar dated 09 April 2009 against the defendant referred to in the statement of claim is revoked.

[17] That leaves the defendants counter-claim. This was not the subject of much quality evidence. The factual allegations upon which the counter-claim rests were not in my view established to any great degree and I am not prepared to draw the necessary inferences that the counter-claim seeks or to extend the finding of facts on the primary issue beyond the period when the defendant became excluded from the Chan Chui family circle and dealings. Because it is quite possible that pending finalisation and settlement of the impending sale new arrangements and agreements were reached not only with the prospective purchaser but internally in relation to the payment of rents. I accept the status quo may possibly have continued but in large commercial transaction of this nature that is not necessarily so, and changes often do occur prior to final settlement of sale in the parties relationship. There is no documentary evidence to support either what the plaintiffs say or the defendants assertion of what happened post July 2007 except for "D-7" which shows dwindling payments as the date of final settlement approached. The facts for the counter-claim are therefore not in my assessment established on the balance of probabilities and it must be dismissed but with only minimal costs of $150.00 to the plaintiffs.

..............................

JUSTICE NELSON