IN THE HIGH COURT OF TUVALU 2025

CIVIL CASE NO.1/23

	BETWEEN

SULANI TRADING LTD 				PLAINTIFF

AND

TUVALU GOV’T CHANCERY TASKFORCE	FIRST DEFENDANT
	LANDS DEPARTMENT				SECOND DEFENDANT
	
Before 		Hon Judge   Sir John Muria

Hearing		On written submissions

Ms L Kofe for Plaintiff
Ms L Letasi for Defendants

J U D G E M E N T

Muria J:  	“On behalf of the Lands Management Committee, I am pleased to inform you that the committee has approved your application to sublease the plot next to Taupili Nikotemo’s Fuel Station.

The only area that is available to you is 10 by 10 meters and the Department is now working in formalizing appropriate documents for signing.  We will advice of the signing in due course.

We wish you best of luck in your developments and future endeavours.”

2.	The above quote contains the contents of the Letter dated 11th August 2011 written by the second defendant to the plaintiff confirming and assuring the Government’s approval of the 

plaintiff’s application for a sublease of the Government’s leased land at Kavatoetoe area, near Taupili Nikotemo’s Fuel station.  The plot is measured 10 x 10 metres.
	
	Brief background
3.	Relying on that information, assuring it of the defendant’s approval of its application to sublease the piece of Government’s land at Kavatoetoe, the plaintiff, a registered company in Tuvalu, commenced its business operation on the said land shortly after 11th August 2011.  Unfortunately, 10 years later, the relationship built upon the assurance and understanding between the defendants and plaintiff came to an end at the instigation of the defendants and to the detriment of the plaintiff.  There was no alternative for the plaintiff but to close its business operation and vacate the land.  These proceedings are the consequences of that falling out.

4.	The plaintiffs’ branch operation at Kavatoetoe, was part of its business set up in Tuvalu.  The Kavatoetoe Branch operation consisted of a retail store trading.  

5.	On 3rd February 2023 the plaintiff took out a Writ of Summons claiming damages for beach of contract and negligence against the defendants.  In the course of the proceedings following the filing of the Writ of Summons, it became clear that its claim for breach of contract and a claim for negligence against the defendants might be an uphill battle.  The plaintiff’s case is now focused on its claim for 

“Fair and adequate compensation” for the loss it incurred for uprooting its branch business operations from the land at Kavatoetoe and relocating it elsewhere.  This claim is premised on the recognised legal principle of ‘legitimate expectation’ which the plaintiff says, was breached by the defendants.

6.	There has never been any lease or sublease agreement between the plaintiff and the Government over the piece of land although there is evidence that some discussions took place between the plaintiff and officers of the Lands Department on the question of lease arrangement between the parties.  This lead to the Letter from the defendants, the contents of which are set out at the beginning of this judgment.  Despite the fact that there has never been any lease agreement between the Government and the plaintiff for the use of the land where the plaintiff’s branch was located, the defendants had never interfered with the plaintiff’s business operation nor have they demanded rental payment from the plaintiff.  

7.	In no uncertain terms, the plaintiff was given permission to move onto the piece of the Government land and to operate its business at Kavatoetoe.  The plaintiff’s business at its Kavatoetoe Branch continued as normal until it moved out from the place in July 2023 under threat of eviction by the defendants.

8.	Prior to July 2023, the defendants threatened to resort to eviction proceedings against the plaintiff to evict them from the land in question.  However, eviction process did not materialise because the plaintiff opted to leave the land voluntarily.  As it transpired, the 
plaintiff voluntarily moved out of the land, and brought this action seeking relief against the defendants.

The plaintiff’s claim	
9.	The plaintiff, brought its claim against the defendants, arising from its occupation of a government land based on the promise that its application for a sublease had been approved and that a formal lease document would be prepared and signed by defendants and the plaintiff, a promise that was never fulfilled.

10.	In basic terms, the plaintiff comes to the Court seeking relief under the principle of legitimate expectation, relying on the defendant’s promise and assurance to its detriment and unfair treatment by the conduct of the defendants’ administration.
	
Facts not in dispute
11.	It would be helpful, first to set out the facts that are not in dispute and as such, I find them as established facts in this case.  These are as follows:
i.	In 2010, the plaintiff applied to the second defendant, seeking to sublease a piece of Government leased land on Funafuti.  That piece of land is at Kavatoetoe.
ii.	On 11th August 2011, the second defendant wrote to the plaintiff confirming the Government’s approval of the plaintiff’s application to sublease the plot next to Taupili Nikotemo’s Fuel Station.  The plot is measured 10 x 10 metres and that the sublease documents would be prepared by the defendants for “signing in due course”.
iii.	With the approval of its application and assurance that a sublease agreement would be prepared and to be signed between the parties, the plaintiff moved onto the piece of land and commenced its business operation at Kavatoetoe.
iv.	The plaintiff’s business operations at Kavatoetoe commenced and continued from about 2011 to July 2023 with no objection or interference by the defendants for more than 10 years.
v.	On 19th October 2022 the first defendant wrote to the plaintiff giving it notice to vacate the land due on Australian Project.  The plaintiff did not vacate the land then, and so on 27th January 2023 the defendants issued a final notice to the plaintiff to vacate the land by the 4th February 2023 (seven days notice).
vi.	As to compensation, the defendants stated that they would not compensate for business losses but only for property losses which the defendants evaluated at $50,000.00.

12.	As demonstrated by the factual background of this case the plaintiff occupied and conducted its business operation on a Government leased land at Kavatoetoe for more than 10 years based on its approved sublease application.  However, despite the approval of the application by the defendants, no formal lease agreement has ever been finalised.  The Government now reclaims the land for the Australian Project (Building the Australian High Commission premises) while the plaintiff is now seeking compensation for its losses.

Issues Arising for the Court’s Determination
13. 	From the agreed facts, several issues stand out, namely
i)	whether the conduct of the defendants give rise to a legitimate expectation that a sublease would be granted;
ii)	whether the plaintiff relied on the defendants’ promise to its detriment;
iii)	whether the defendants’ failure to formalise and honour their approval for, the sublease was unfair and unlawful,
iv)	if so, what appropriate remedy is the plaintiff entitled to.

14. 	It will be remembered that the plaintiff, at first, sought damages for breach of contract and negligence.  Subsequently, the plaintiff opted, for a claim for just and fair compensation for the losses it incurred as a result of being forced to move out from the land which it had been occupying for a little over 10 years and on which it had established and operated its business for the said years, on the assurance that a formal lease agreement between itself and the Government would be prepared and signed.  That had not been forthcoming and now it had moved out from the land incurring heavy financial losses.

15.	“What can the law do” for the plaintiff?  This same question was asked in Guest and Another –v- Guest [2022] UKSC 27.  Those who know the facts of this present case, and most certainly, the owners of the plaintiff company, would feel that the plaintiff had been unfairly treated by the defendants.  It is in such a situation that the courts are tasked to provide a remedy in equity as was done in Guest and Anor –v- Guest.  

	Is the plaintiff entitled to compensation?
16.	The answer to the question of whether in this case the plaintiff is entitled to compensation depends on what remedy is available to the plaintiff.  As already indicated, the plaintiff is not pursuing a claim in contract or tort but a claim for fair and just compensation 
for the losses it incurred because of the failure of the defendants to fulfil their assurance of a grant of a sublease which it waited for but never materialised for 10 years.  But for the defendants’ failure the plaintiff would not have suffered financial losses incurred as a result of being forced to vacate the land on which it was operating its business.

17.	The Courts have the power to step in and to bring justice to the parties through the principles of equity since statutory and common law strict legal rules would not help.  One of the principles of equity is that what the law cannot give, equity will supplant.  The case law is replete with authorities on this principle, starting with the earliest authorities such as Earl of Oxford’s Case (1615) 1 Ch. Rep 1; Walsh –v- Lonsdale (1882) 21 Ch.D 9 and many others since then.

18.	In this present case, the plaintiff applied for a sublease of a specific piece of a Government leased land, the plot next to Taupili Nikotemo’s Fuel Station.  The defendants approved the plaintiff’s application.  The letter confirming the approval is set out at the commencement of this judgment.  Relying on the defendant’s approval and assurance for a sublease of a piece of the Government’s leased land at Kavatoetoe, the plaintiff entered on to the land and commenced its business operation.  Unfortunately, no sublease was forthcoming and the plaintiff was forced to vacate the land 10 years later.  Realising that statutory and common law 

principles would not come to its aid, the plaintiff now come to this court to seek remedy in equity.	

	Defendants’ case
19.	The defendant’s case is that the plaintiff had been occupying the government leased land illegally for over 10 years without a valid lease and as such there is no legal basis for its claim of compensation  It is also contended on behalf of the defendants that in the absence of a legal instrument (lease agreement) the Government owed no duty or obligation to the plaintiff.

20.	It is also the defendants’ case that the threatened eviction of the plaintiff was legal and did not warrant compensation, whether the plaintiff moved out of the land under eviction order, or vacated the land voluntarily.  The rationale of this argument is that the land belongs to the Government.

21.	With regard to the financial loss claimed by the plaintiff, the defendants’ case is that the sales Report produced by the plaintiff has not been authenticated.  Similarly, the defendants argued that the Medical Report on adverse health effects experienced by the plaintiff’s Managing Director, Mr Polau Kofe, has not been authenticated. The defendants submitted that both Reports should not be accepted as justifying compensation.

22.	As to the amount of compensation claimed by the plaintiff, the defendants argued that the defendant had been enriched over the 10 
years without making any rental payment for the land it occupied and operated its business on.  As such the defendants’ offer of AUD50,000 is adequate and reasonable compensation.

Plaintiff’s response
23.	The plaintiff responded to each of the defendants’ argument.  On the question of illegal occupation of the Government leased land, the plaintiff’s case as put by its Counsel, Ms Kofe, is that the plaintiff entered the land based on the approval and assurance of the defendants as demonstrated by the letter dated 11 August 2011 from the second defendant.  [The contents of that letter are set out at the beginning of this judgment].  Counsel relied on the case of Central London Property Trust Ltd –v- High Trees House Ltd [1994] KB 130 (The High Trees House) which established the priniciple of promisory estoppel, that a party is estopped from going back on a promise of the other party has relied on it.

24.	With regard to the question of eviction, the plaintiff’s response is that the eviction process itself did not comply with legal process.  In any case, the plaintiff would still be entitled to compensation arising out of the defendants’ action resulting in the plaintiff’s vacation of the land.

25.	With the Sales Report and Medical Report, Counsel for the plaintiff submitted that these Reports are supported by affidavit evidence filed in Court.  They were tendered in Court and accepted at the trial.

26.	With regard to the quantum of compensation, the plaintiff said that the defendant’s offer of $50,000 AUD is plainly inadequate.  The plaintiff has demonstrated that it has suffered much more than the AUD50,000 offered by the defendants.  The plaintiff relies on the case of Premus International Holding Company Ors –v- Triumph Controls – UK Ltd [2020] EWCA Civ 1228, although that case is strictly based on a contractual warranty case. 

27.	Ms Kofe firmly submitted that this case is not just about land and business, it is about trust, fairness and justice.  The plaintiff suffered not only financial loss but also emotional distress.
 	
Whether the plaintiff has a legitimate expectation.
28.	On the facts as I have found them established and set out in paragraph 11 above of this judgment, the plaintiff applied for a sublease of a piece of Government leased land at Kavatoetoe, the Government approved the application with assurance that the sublease agreement would be worked on to formalise the sublease arrangement and would be advised of signing of the formal sublease document.  While waiting for the formal sublease document to be inked between them, the defendants (Government) wished the plaintiff’s development and future endeavours on the said land the best of luck.  The plaintiff reasonably relying on the unqualified assurance of the defendants, proceeded to establish and carried out its business operation (supermarket retail trading) on the land in question for 10 years, uninterrupted and without objection.

29.	It is pertinent to note the actions taken by the second defendant, following his letter dated 11 August 2011 to the plaintiff, as set out by Counsel for the plaintiff as follows:
“The involvement of the Lands Department is crucial here.  The Plaintiff’s occupation and development of the land were not based on mere verbal promises but were guided by formal actions.  The land surveyors physically showed the Plaintiff the designated area, marking boundaries relative to neighbouring properties, thereby reinforcing the Plaintiff’s understanding and belief that their right to the land was secured and recognized by the Defendants.”
	
30.	It has been established that where a public body or authority makes a clear, unambiguous and unqualified representation, and a party reasonably relies on it, a substantive legitimate expectation arises:  see R –v- North and East Devon Health Authority , ex parte Coughlan [2002] QB 213 where the management of the North and East Devon Health Authority made several representations to Miss Coughlan who was severely disabled and receiving nursing care at the Mardon House health services facility that she would be able to live out her days in Mardon House.  The Health Authority later decided to shut the facility down to save costs.  Miss Coughlan sought judicial review, claiming that the Authority’s representations had induced in her a legitimate expectation that Mardon House would be her “home for life”.  The Court clarified that the doctrine of substantive legitimate expectation arises where the authority makes a representation and a person relies on it.  In such a case it would be unfair for the Authority to renege on its lawful promise.

31.	In Attorney General of Hong Kong –v- Ng Yuen Shiu [1983] 2 AC 629 (PC) the Privy Council held that an illegal immigrant has legitimate expection to be heard based on the statement or undertaking by a public authority that illegal immigrants would be interviewed and be given opportunities to be heard and their cases be treated on merits, and that when a public authority makes representations it must act fairly in implementing them.

32.	In the present case, this court is satisfied that the defendants approval and assurance of a grant of a formal lease created a substantive legitimate expectation in the plaintiff.

	Detrimental Reliance
33.	The plaintiff in the present case, relied on the defendants’ representation assuring it of a grant of sublease following its successful application to the defendants, proceeded to occupy the allocated plot of land, constructed permanent structures and operated a commercial business for a decade.  On the evidence before the Court, the plaintiff had invested significantly, both financially and operationally, based on the defendants’ approval and assurancce that its occupancy of the plot of land was regular and that it would be formalised.  Unfortunately, after 10 years of occupancy and substantial investment, the assured formal lease never eventuate.  Instead, the plaintiff was forced to cease its commercial operation and vacate the land.

34.	There can be no doubt that the consequence of the changed conduct of the defendants is that the plaintiff has suffered considerable financial loss.  This is demonstrated by the evidence of the plaintiff’s Managing Director, Polau Kofe and the plaintiff’s Manager, Wayne Suliano.  In his affidavit sworn to on 16th July 2024, Mr Kofe deposed:
		“Closure of Kavatoetoe Retail Outlet
On July 21, 2023, our Kavatoetoe retail shop was forced to cease operations due to the Defendants’ demands.  This closure, beginning in July 2023, extended beyond June 30, 2024, resulting in significant financial losses for Sulani Trading Co. Ltd.
Impact on Cash Flow and Sales
Based on a detailed analysis of sales data from August 1, 2022 to February 28, 2023, excluding Sundays, our retail shop’s average daily sales is $1,672.67.  This figure was derived from real-time sales data extracted from our point of sale (POS) system.  Sales data from the POS system are annexed and marked as Exhibit 3.
Calculation of Total Sales Loss
1.	The total closure period so far, excluding Sundays, is 313 days.  The total sales loss is calculated as follows:  Total Sales Loss = $1,672.67 x 313 = $523,545.71.
2.	Therefore, the total sales loss due to the retail shop’s closure amounts to $523,545.71 over a 313 day period.
Financial Damages Claimed
3.	The disruption in our cash flow led to difficulties in meeting our repayment obligations to Federal Pacific Financing and various other suppliers.  The latest Statement of Account (SOA) from Federal Pacific Financing shows a significant outstanding amount due to the accumulation of unpaid principal and interest resulting from the closure of our retail outlet.
4.	The total outstanding amount includes interest accumulated due to the disruption in repayments, as detailed in the SOA dated 24th May 2024.  Correspondence from financing institutions and suppliers is annexed and marked exhibit 4.”

35.	Similarly, Mr Suliano deposed as follows in his affidavit:
		“Operational Impact
2.  The closure of the Kavatoetoe outlet profoundly affected our day-to-day operations, leading to substantial reorganization of staff roles, layoffs, and adjustments in our inventory management.
Financial Impact
3.  The daily sales for Sulani Trading Co.  Ltd. Dropped dramatically, causing significant financial challentes to the overall operation.
Cash Flow and Repayment Issues
4.	The disruption in our cash flow resulted in difficulties meeting our repayment obligations to our suppliers, particularly Federal Pacific Financing.  The latest Statement of Account, dated May 24, 2024, indicates a significant increase in both interest and principal amounts due to the accumulation of unpaid balances.
Mitigation Efforts
5.	Sulani Trading took various measures to mitigate the impact of the closure, including seeking alternative revenue sources, implementing cost-cutting measures, and negotiating with creditors.
6.	Despite these efforts, the financial strain remained substantial, significantly impacting the company’s overall financial health.”

36.	Looking at it realistically and on the evidence before the Court, the plaintiff’s financial loss is clearly substantial which includes loss of its business premises, loss of operations, loss of clientel and revenue streams, costs of relocation and re-investment, and other related losses and costs.  In the Court’s view, this case is a clear example of detrimental reliance suffered by the plaintiff at the hands of the defendants and the court, applying equity must intervene.

37.	The recent case of Guest –v- Guest affirmed, the doctrine of propertary estoppel which provides that if a promise is made in relation to property, and the promisee reasonably relies on that promise to their detriment, equity may intervene to avoid unconscionable outcomes.  In other words, where a promisor reneges on his promise to the promisee in a way that is detrimental to the promisee, the promisee may have a cause of action against the promisor.  

38.	In the present case, the evidence clearly established that the promisee (the plaintiff) relied on the assurance of the promisor (the defendants) to its detriment.  This entitles the plaintiff to a cause of action against the defendants, requiring this Court to award a remedy to the plaintiff for the loss it suffered, although such award should not be more generous to the plaintiff and more burdensome to the defendants than is necessary to achieve the underlying purpose for which the remedy is granted: See also Thorner –v- Major [2009] UKHL 18 where the House of Lords held that where there is a sufficient assurance about property and the claimant relied on it to his detriment equitable estoppel applies.  See also Jennings –v- Rice [2002] EWCA Civ 159 where monetary compensation was awarded proportional to the detriment suffered.

39.	The case of Giumelli –v- Giumelli (1999) 196 CLR 101 (High Court of Australia) supports the position that monetary compensation may be awarded to represent the value of the equitable claim of a party to a promised plot where land transfer is not possible.  In the 

present case, any order to transfer the promised plot to the plaintiff is no longer possible since the Government allocated the land for 
the construction of the Australian High Commission office in Tuvalu.  A monetary compensation is the only viable option.

Administrative fairness and Conduct of Defendants
40.	For 10 years the defendants permitted the plaintiff to occupy and operated its commercial operations on an approved and allocated plot of land at Kavatoetoe with an expressed representation and assurance by the defendants that they would grant a sublease to the plaintiff.  The defendants have now reclaimed the land for the Australian Project and offered a mean sum of only $50,000 as compensation, which sum did not factor in any consideration of the loss and adversed impact on the plaintiff  as a consequence of the defendants’ conduct.  Such a conduct on the part of the defendants falls short of the standard of administrative fairness by a government entity.

41.	The plaintiff has no quarrel with the Government’s development project of the construction of the Australian High Commission premises at the plot of land in question.  However, in the circumstances of the present case, the need to treat the individual, such as the plaintiff fairly cannot be overridden, especially as the legitimate exceptions held by the plaintiff, in this case, were induced by (the Government) itself.  The case of Commonwealth –v- Verayen (1990) CLR 394 is in point which also supports the principle that estoppel applies against government conduct that induced 

detrimental reliance.  See also Attorney General of Hong Kong –v- Humphreys Estate [1987] I AC 114 where the Privy Council held that while Courts are cautious in applying estopped to government bodies, where representation or assurance is clear, the conduct is prolonged and consistent, and the claimant’s detriment is significant, estoppel may bind public authorities.

42.	The above case law authorities and in particular, Guert and Another –v- Guest, pertinently established that where a landowner or landowning authority makes an unequivocal assurance that a claimant will be accorded rights in a property, and the claimant relies on that assurance to his detriment, the principle of proprietary estoppel can apply to prevent the landowner from reneging on that promise.  Consequently the court has discretionary power to grant the claimant the promised or the assured interest in the property or appropriate financial compensation, depending on what is fair and just in the circumstances.

43.	On the facts and the established circumstances of this case, this court is more than satisfied that the plaintiff has established its claim in equity for a fair and just compensation for the detriment it has suffered at the hands of the defendants for reneging on their promise.  The defendants are liable to compensate the plaintiff for the losses it suffered as a result of relying on their promise and assurance of a sublease to its detriment.

Appropriate award and legally recognisable Losses
44.	This is a claim based in equity (proprietary estoppel) and on the evidence before the court there can be and that the only appropriate award in this case is financial compensation.  To award the promised or assured interest (sublease) in the land is no longer feasible since the plot of land in question had been given to the Australian High Commission for the construction of its official premises.  The defendants had not offered an alternative site to the plaintiff.

45.	The defendants offered AUD50,000 to the plaintiff as compensation at the time it was threatened with eviction.   The sum of AUD50,000 said the defendants, is for profiting over the land for over the years without making any rental payments and is fair and reasonable compensation.  In support of its argument, the defendants relied on the affidavit of Melipa (PWD) sworn to on 21st April 2023.  Paragraphs 9 and 10 of Mr Saufatu’s affidavit set out the basis for the defendants’ assessment of the compensation amount of AUD50,000 as follows:
“9.  Our assessment was based on the sum provided by Sulani on the initial construction cost of their property is $90,000, and in addition, there were maintenance cost provided through out each year from 2010 – 2022 to a sum of $88,000.

10.	The department considered the above costs, initial cost of the property and its maintenance however we applied depreciation methodology, given the property’s structure diminish every year, thus the outcome of our assessment of the property of $50,000.

46.	Apart from Mr Saufatu’s affidavit evidence regarding the amount of AUD50,000, the defendants simply denied the plaintiff’s claim for compensatory relief for financial and other losses it suffered substantially as a result of detrimentally relying on the defendants’ representation and assurance, and put the plaintiff to strict proof.  The plaintiff produced evidence at the trial in support of its claim for compensation for the financial loss it suffered.  The extent of the losses were demonstrated by the evidence from the plaintiff’s Managing Director, Polau Kofe, and set out in paragraphs 34(above) of this judgment.

47.	In addition, the affidavit evidence of the plaintiff’s Manager, Mr.Wayne Suliano, further buttresses the extent and impact of the loss suffered by the plaintiff as direct consequences of relying on the defendants’ assurance and representation to its detriment.  The evidence of Mr Suliano is set out in paragraph 35 (above) of this judgment.  There is no answer from the defendants or there has been no evidence from the defendants to counter the plaintiff’s evidence on its financial loss.

48.	The defendants’ offer of $50,000, if it is intended to cover all the plaintiff’s losses, is obviously low when one takes into account the business operations and investment by the plaintiff for 10 years in expectation of the promised sublease, together with the established evidence-based claim of $523,545.71 financial loss.  In this case, the $50,000 offered by the defendants is clearly unfair and unreasonable in the eyes of the Court.  The purpose of remedies in equity in a case such as the present one is to avoid unfair outcomes from broken promises and assurances where the plaintiff clearly relied on to its detriment.  The case law authorities referred to and many others more, established that the Courts have held government bodies and public authorities to their equitable promises and where the claimant relied on such promises over a long period to his detriment, and encouraged or permitted to do so by a public authority it is a recognised ground for compensation.  This is clearly established by Commonwealth –v- Verwayen and cases such as Waltons Stores (Interstate) Ltd –v- Maher (1988) 164 CLR 387; Crabb –v- Arun District Council [1976] Ch 179.

49.	With the knowledge that they had agreed to allocate the specific piece of the Government’s leased to the plaintiff and with a promise and assurance in writing that they would formalise that which they had agreed to do, the defendants now have chosen to resile from their promise under the cover of statutory power.  It did not occur to the defendants that they had the legal responsibility or commitment to provide an alternative location for the plaintiff where it could continue its business activities or pay the appropriate compensation for all the losses suffered by the plaintiff as consequences of their actions.
	
50.	The seriousness of the plaintiff’s financial loss has an immense impact on its ability to pay its creditors overseas as shown by the evidence of Polau Kofe and Wayne Suliano.  Some of these creditors are:
		Creditor 1	-  Federal Pacific Financing (NZ) AUD$700,333.22
		Creditor 2	-  Fexco Fiji Ltd (Western Union)(Fiji)$136,000AUD
		Creditor 3	-  Motibhai & Co. Ltd (Fiji) $46,927.18 FJD

Creditor 4	-  NPT Agency (For Nepture Pacific Direct Line) Fiji $127,199.46
		Creditor 5	-  Punjas & Sons (Fiji) $41,973 & (FJD)
		Creditor 6	-  Binaco Textiles (Fiji) $361,211.03 (FJD)

51.	As aptly put by Mr Kofe in his affidavit quoted above, “the disruption in our cash flow led to difficulties in meeting our repayment obligations to Federal Pacific Financing and various other suppliers.” There is no dispute at all that these financial difficulties were the result of the closure of the plaintiff’s Kavatoetoe retail outlet.

52.	As already made clear in this judgment, this is a case in which the plaintiff, relying on the defendants’ promise and assurance, operated its business for 10 years on a land only to be forced out from the land without the protection of a promised formal lease.  Having found that the defendants are liable to compensate the plaintiff for its loss, the followings are some legally recognisable losses which the plaintiff may be eligible to seek in a claim in equity:

a)	Loss of sales or profits
The undisputed evidence of Polau Kofe supported by the evidence of Wayne Suliano established that the plaintiff suffered a loss of sales or profits in the sum of $523,545.71.  This evidence had not been countered in anyway at all by the defendants.  The court hereby grants the loss to the plaintiff and order the defendants to compensate the plaintiff in the sum of $523,545.71 for loss of sales or profits.

b)	Future loss of business opportunities
The plaintiff claims the sum of $130,464.00 for this loss representing an estimated loss of three months earning based 
on the total loss of sales as shown in paragraph(a) above.  This category of loss is also claimable by the plaintiff in this case although it is not clear how the amount of $130,464.00 came to be even if forecasts can be based on past earnings of the plaintiff.  Trading in Tuvalu is done only 6 days a week.  With an estimated daily taking of $1,672.67 would roughly come to about $40,000 per month.  Given, the disruption in the business, two months loss would, in the Courts view, be reasonable period in this case.  The court therefore grants $80,000 compensation for future loss of business to the plaintiff.

c)	Loss of Building and Accessories
This is the loss of Capital Investment and other related costs to the plaintiff.  The only evidence on the cost or value of the plaintiff’s building is that given by the defendants which is $50,000.00.  There is no evidence on the types of accessories, although relevantly, fixtures and fittings such as air-conditioning, counters, shelving etc, would be included.  The Court feels for this loss category, the appropriate amount of compensation should be $60,000 (50,000 for building & $10,000 for furniture’s and fittings).  It is so awarded.

d)	Costs of Relocation
The plaintiff claims $124,000 for relocation.  In a claim such as this the plaintiff is eligible to claim relocation costs which include the cost of a new premises, cost, fees, permits, 
installing new utilities and cost of moving to the new location.  The evidence of Mr Kofe, Exh. 4(c) itemised the “Moving Expenses” and “Set up of New Location” which cost $124,000.  There is no evidence to suggest that the estimated cost is not right or is excessive.  The Court accepts that the estimate of $124,000 is reasonable and it is hereby granted.

e)	Loss of Goodwill
This loss is also claimable in a case such as this.  The plaintiff claimed $50,000 under this category.  However, some evidence of loss in terms of clientele and its established market and reputation in the now abandoned area is necessary to justify the amount claimed.  One thing is certain and that is, the plaintiff operated a successful a business operation and have lost its customers who frequented its retail trading services at Kavatoetoe.  The court feels that some measure of compensation must be paid to the plaintiff for its loss of goodwill and the sum of $10,000 would be appropriate in this case.  It so awarded.

f)	Aggravated and Punitive Damages
The plaintiff also claimed aggravated damages in the sum of $13,000 and punitive damages in the sum of $5,000.  

Aggravated damages are imposed in addition to the ordinary damages to reflect the added seriousness of harm done to the plaintiff by the defendants’ conduct.  While aggravated damages is rare in purely commercial disputes, it is still 
possible to award such damages where a defendant’s conduct is egregious.  Here the plaintiff is a company which does not have feelings as far as the law is concerned.  The aim is to restore financial losses.  See Addis –v- Gramophone Co.Ltd [1909] AC 488. In Uren –v- John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 which pointed out that aggravated and punitive damages are two distinct form of damages and that both can be awarded if the circumstances of the case justified them.

Punitive damages are meant to punish and deter wrongdoers for their actions.  Courts are very reluctant to award such damages against public bodies who are acting for public purposes.  In Rookes –v- Barnard [1964] AC 1129 punitive damages only allowed in exceptional cases. .  See Whiten –v- Pilot Insurance Co. 2002 SCC 18 where the Supreme Court of Canada held that punitive damages may be awarded in cases of “high handed, malicious, arbitrary or highly reprehensible misconduct.”  

53.	In the present case I am not satisfied that aggravated and punitive damages are appropriate.  The Court refuses the plaintiff’s claim for aggravated and punitive damages.

Effect on Managing Director’s health
54.	Counsel for the plaintiff has also submitted that the Managing Director Polau Kofe, has suffered mental and emotional stress due to the traumatic effect of the financial hardship and loss to which the plaintiff has been put through by the actions of the defendants.  As such, Counsel submitted, the Managing Director should be entitled to claim damages for emotional and for mental stress.  It is contended that the financial loss and other hardship suffered by the plaintiff have greatly affected the health of the Managing Director.

55.	While it may be the case that the plaintiff’s financial stress and loss have adversely affected the Managing Director’s health, the first point of entry into this discussion is to note that the parties in this are Sulani Trading Ltd, as the plaintiff and Tuvalu Government, represented by the Tuvalu Government Chancery Taskforce (first defendant) and Lands Department (second defendant).  Secondly, the Managing Director, Polau Kofe, is not a party to the proceeding Consequently, the Managing Director cannot claim damages for his personal mental or emotional stress or adverse health conditions in the present case.  The plaintiff is Sulani Trading Ltd and loss claimed is that of the plaintiff company only.

56.	The classic principle is that set out in Salomon –v- Salomon & Co. Ltd [1897] A.C.22 which established that a limited company is a separate and distinct legal entity from its directors and shareholders.  Consequently, any loss suffered by the plaintiff company in the present is its own loss, and not the personal loss of 

Managing Director and/or the shareholders.  See the rule in Foss –v- Harbottle (1943) 2 Hare 461 which states that the only person who can seek relief for harm done to the company, where the company has a cause of action, is the company itself.

57.	It is not unheard of a situation where managing directors experiencing emotional stress or health distress due to their company’s financial hardships, the financial troubles belong to the company and the law does not permit the managing directors to claim personal damages for such loss.  The only way for the managing director to claim for personal loss is to bring a separate claim if he can show that he has a separate cause of action.

58.	In common law jurisdictions it was consistently held by the Courts that director or shareholders cannot claim for personal damages arsing out of the company’s loss.  See Sevilleja –v- Marex Financial Ltd [2020] UKSC 31 where the court ruled that under the “rule against reflective loss,” a director or shareholder cannot claim relief which flows indirectly from the company’s loss.  The Managing Director’s health,  mental or emotional stress claimed in this case would be regarded as reflective of the loss suffered by the plaintiff company.

59.	A further aspect to the Managing Director’s claim is that he is not named as a party and as such he has no locus standi or legal standing to claim damages personally for his health, mental or emotional stress.  Should he wish to claim for relief for his health or 

mental or emotional stress he should have issued a separate action or applied to join as a party to the case, subject to satisfying the legal requirements of the Rules on joinder of causes of actions.  See O.20 High Court (Civil Procedure) Rules 1964.  No application was made in this case.

60.	Consequently, the Managing Director (Polau Kofe) cannot maintain his claim for relief for the adverse effect on his health arising out of the plaintiff company’s financial loss in the present case.

Conclusion and Order
61.	In the circumstances of this case and for the reasons set out in this judgment the court orders as follows:

1)	The plaintiff had a right of legitimate expectation that it would be granted a sublease over the plot of the government leased land at Kavatoetoe as assured by the defendants’ letter dated 11th August 2011.
2)	The defendants’ failure to honour that legitimate expectation was unlawful and inequitable.
3)	The defendants shall pay the following award of compensation to the plaintiff:
i.	Loss of sales or profits in the sum of $523,545.71
ii.	Loss of future business opportunities in the sum o $80,000
iii.	Loss of Building and Accessories in the sum of $60,000
iv.	Costs of Relocation in the sum of $124,000

v.	Loss of Goodwill in the sum of $10,000
vi.	The claim for Aggravated damages is refused
vii.	The claim for punitive damages is refused
viii.	The claim on behalf of the Managing Director (Polau Kofe) for emotional, mental and health stresses are unsustainable and are refused.
ix.	The plaintiff is entitled to costs including legal fees, reimbursement of airfares, for counsel and costs occasioned by this action.

Order accordingly

Dated 3rd June 2025.

Hon. Justice Sir John Muria
Resident Judge and Acting Chief Justice
High Court of Tuvalu