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Paulo v Va'atiuola [2012] WSSC 110 (27 April 2012)

Supreme Court of Samoa
Paulo v Va'atiuola [2012] WSSC 110

Case name: Paulo v Va'atiuola

Citation: [2012] WSSC 110

Decision date: 27 April 2012

Parties: IOANE PAULO of Satuimalufilufi, Samoa and New Zealand (Plaintiff) and LONGO T VA’ATIUOLA of Satuimalufilufi, Samoa and New Zealand (First Defendant) and PEPIGE POTA Mechanic of Faleasiu (Second Defendant) and ANAZ BANK (SAMOA) LIMITED of Matafele (Third Defendant)

Hearing date(s): 4 April 2012

File number(s): CP122/10

Jurisdiction: CIVIL

Place of delivery: MULINUU

Judge(s):

On appeal from:

Order:

Representation:
T S Toailoa for the plaintiff
S Wulf for the first defendant

Catchwords: contract, motor vehicle, bank, bona fide purchaser, remedy

Words and phrases:

Legislation cited:
Sale of Goods Act 1975, ss.2, 3, 17, 18, 19, 20, 21

Cases cited:
Page v Cowasjee Eduljee (1866) 1 LRPC 127
Martindale v. Smith (1841) 1 QB 389
R. V. Ward Limited v Bignall [1967] 1 QB 534
The Minister for Supply and Development v Servicemen’s Co-operative Joinery [1951] HCA 15; (1951) 82 CLR 621

Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN

IOANE PAULO Bus driver of Siusega
Plaintiff

AND

LONGO T VA'ATIUOLA of Satuimalufilufi, Samoa and New Zealand
First Defendant

AND

PEPIGE POTA Mechanic of Faleasiu
Second Defendant

AND

ANZ BANK (SAMOA) LIMITED of Matafele
Third Defendant

Counsel: T S Toailoa for the plaintiff
S Wulf for the first defendant

Hearing: 4 April 2012
Judgment: 27 April 2012

JUDGMENT OF SLICER J

1. This case involves a dispute as to the terms of a contract made between the Plaintiff and the First Defendant; the transfer of a motor vehicle to the Second Defendant and monies held by the Third Defendant as a result of an order by this Court.
2. The ANZ Bank had no interest in the outcome of the dispute therefore chose not to be represented. Given the absence of notice to the Second Defendant that this matter had been listed for hearing, the Plaintiff, on the day of the trial, discontinued his action against the Second Defendant due to absence of notice of trial. Given that the First Defendant had organised his return to New Zealand it would have been unfair to further adjourn the hearing.
3. The issue remaining concerns the terms and effect of an agreement made between Ioane Paulo (“Paulo”) and Longo Va’atiuola (“Va’atiuola”), and specifically the amount of the purchase price of a motor vehicle and whether the property, namely the vehicle, passed to the Plaintiff.

Factual Background

4. It is common ground that Paulo and Va’atiuola made an oral agreement for the sale of a Toyota Camry to the Plaintiff; the Plaintiff was to take immediate possession of the vehicle and that the Plaintiff would pay by installments to the First Defendant’s bank until full payment was made.
5. The vehicle was coloured brown and the Plaintiff, with the knowledge of the First Defendant, intended to use the vehicle as a taxi and pay the purchase price from the proceeds of its operation. In order to do that the Land Transport Authority (“LTA”) required the vehicle to be painted white, pass prescribed standards and be specially registered. The First Defendant purchased the paint and the Plaintiff completed the colour conversion. The LTA refused to issue the licence and registration until a small repair was made to the roof lining. This cost $300, and the Plaintiff later deducted that sum from the amount which he eventually paid to the First Defendant. The First Defendant attended to the registration, keeping it under his own name.
6. Paulo began to make payments in April 2009, into the account and continued those payments until January 2010, by which time the sum of $9,700 had been paid. He claimed that he was entitled to deduct the remaining $300 since he had paid for the roof repair.
7. He claimed in his pleadings and evidence at trial that the agreed purchase price was $10,000, a claim disputed by the First Defendant.
8. In July 2010, Va’atiuola returned to Samoa and on 17 August, approached Paulo for the loan of the vehicle; a request acceded to by the First Defendant. The First Defendant did not return the vehicle and, on the same day, sold it to the Second Defendant for the sum of $9,000, and immediately returned to New Zealand.

The Issues

9. Two issues are central to the resolution of this matter. The First Defendant claims that the agreed purchase price was $20,000 rather than $10,000. The second issue is that even if the First Defendant is correct, did the property in the vehicle pass to the Plaintiff upon the taking of possession.

The Evidence

10. The First Defendant stated at trial that he had purchased the vehicle in New Zealand for $6,000, paid the freight of $1,600 and import duty, and custom duty of $3,500, making a total outlay of $11,100 and it was unlikely that he would sell below cost. No documentation was tendered to substantiate this position.
11. In his original pleadings he claimed the purchase price to be $18,000 but amended it at trial to the sum of $20,000. At trial, he claimed that his original asking price was for $25,000, claiming that the purchase price had been only reduced to $20,000 at the request of a friend, the mother in law of the Plaintiff. His account as to the changes of price and value was unsatisfactory. On the First Defendant’s own account, the immediate sale to the Second Defendant for $9,000 plus the amount of $9,700 in the bank deposit would give him the sum of $18,700, the amount close to that originally pleaded. This may support his argument that the original purchase price was $18,000.
12. The evidence is primarily word against word. Neither party has sought the aid of equity.

Passing Property

13. It is convenient to first consider this question. It is impossible to have the vehicle returned, and the Court will assume that the original Second Defendant was a bona fide purchaser for value. If the property passed then the First Defendant had no right to retake possession and immediately sell it to another. If his claim is that the purchase price was $18,000 or $20,000 then he retains the right to sue for the outstanding balance. If his claim that the purchase price was $20,000 and the property did not pass until the full sum was paid and the Plaintiff is left with nothing because the money held in the bank would revert to the First Defendant.
14. It is first necessary to consider the Sale of Goods Act 1975 (“the Act”). The Act relevantly Section 2 provides:

“‘Contract of sale’ includes an agreement to sell as well as a sale.”

15. Section 3 provides:

“Sale and agreement to sell –

(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called ‘the price’.

(2) There may be a contract of sale between one part owner and another.

(3) A contract of sale may be absolute or conditional.

(4) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called ‘a sale’; but where the transfer of the property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, the contract is called ‘an agreement to sell’.

(5) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.”

16. The vehicle was ascertained property within the meaning of section 17. Section 18 governs the transfer and provides:

“Property passes when intended to pass –

(1) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.”

17. Section 19 provides Rules for ascertaining intention and relevantly states:

“Rules for ascertaining intention – Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Rule 1: Where there is an unconditional contract for the sale of specific goods, in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery or both, is postponed;

Rule 2: Where there is a contract for the sale of specific goods, and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done, and the buyer has notice thereof;

...

Rule 5: (1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.

(2) Where in pursuance of the contract, the seller delivers the goods to the buyer, or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he or she is deemed to have unconditionally appropriated the goods to the contract.”

18. Reservation of any claimed right of disposal is governed by the Act sections 20, 21, which relevantly provide:

“20. Reservation of right of disposal –

(1) Where there is a contract for the sale of specific goods, or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled.

(2) In such case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.

...

21. Risk prima facie passes with property - (1) Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer; but when the property therein is transferred to the buyer the goods are at the buyer's risk, whether delivery has been made or not...”

19. There was no direct evidence given at trial that the First Defendant had specifically reserved the right of disposal, as required by Section 19 Rule 5. The only evidence was that the vehicle had remained registered in the First Defendant’s name. There was no documentation tendered at trial relevant to this question. The Court finds that there had been an intention that the property passed on delivery. A secret or non statement of reservation is insufficient to displace the effect of Rules 1 and 5, or the operation of the Act section 20. The court pays regard to the provisions of Section 19 Rule 1.
20. Where, following the contract of sale, the buyer has both possession of, and the property in the goods, any retaking of the goods by the unpaid seller will (except in cases of fraud or misappropriation) be a conversion against the buyer (see generally: Sale of Goods, Benjamin 1974 Ed. para. 1147). In Page v Cowasjee Eduljee (1866) 1 LRPC 127, the Privy Council advised that even if the property remained in the possession of the vendor there was no right of resale by the vendor unless there had been a complete repudiation of the contract. Lord Chelmsford stated at 145:

“If, when the Defendant declined to pay the balance of the purchase money, and altogether repudiated the agreement, the Plaintiff had taken him at his word, and resumed possession without anything more being said, the case might have been different; but, instead of the Plaintiff agreeing to take the vessel back, and rescind the contract, he gave express notice to the Defendant that the vessel would be resold at his risk, ‘in terms of the conditions of sale.’ There is no case to be found in the Books where, after a sale and complete delivery of a chattel, and the price not paid, the vendor’s taking the property out of the purchaser’s possession has been held to amount to a rescission of the contract. Martindale v. Smith (1), and other cases, have determined that, where there is an agreement to purchase property, to be paid for at a future time, and the money is not paid at the day, the property remaining in the possession of the vendor, he has no right to sell it, and if he does the purchaser may maintain trover against him.”

21. In R. V. Ward Limited v Bignall, the English Court of Appeal held that:

“...if an unpaid seller resold, he put it out of his power to perform his contract and his action was inconsistent with a subsisting sale to the original buyer; the contract would, therefore, be rescinded, whether the resale was of the whole of the goods or of part only of them, and the property in them, assuming that it had passed to the buyer, would revert to the seller; accordingly, the plaintiff’s proper claim, whether or not the property in the cars had passed to the defendant, had been for damages for non-acceptance, giving credit for the value of the Zodiac...”

22. This is not a case, as in The Minister for Supply and Development v Servicemen’s Co-operative Joinery [1951] HCA 15; (1951) 82 CLR 621, where an express term ‘not cash before delivery’ was held to permit the seller to sue for the price before delivery. Here there was delivery, possession and the passing of the property in the vehicle.
23. It is the usual case that where there is a sale of specific goods, property in the goods normally passes to the buyer at the time the contract is made, and it so follows that they are also at the risk of the purchaser. Here, had the taxi been involved in an accident, the risk would have remained with the Plaintiff. The sale by the First Defendant precludes the remedy of possession. The risk had passed to the Plaintiff in accordance with the Act section 21.
24. A further remedy remains available to the First Defendant, if he maintains his claim that the purchase price was in fact $20,000, he can commence proceedings for payment of the balance of the money. He is bound neither by estoppel nor res judicata.
25. The Plaintiff is entitled to the money held in the bank paid by him in either full or part payment of the purchase price, subject to repayment of $300 tala to the First Defendant.

ORDERS OF THE COURT

(a) That there be judgment for the Plaintiff in the sum of $9,700;
(b) That the ANZ Bank (Samoa) Limited pay the money held in the account which is the subject of the Court Injunction; and
(c) That the First Defendant pays the costs of the Plaintiff, such costs to be taxed.

(JUSTICE SLICER)