IN THE COURT OF APPEAL OF SAMOA
Tevaga & Ors v Polu & Ors [2018] WSCA 2

Case name: 	Tevaga & Ors v Polu & Ors 	
		
Citation: 	[2018] WSCA 2	
		
Decision date: 	13 April 2018	
		
Parties: 	PESETA VAIFOU TEVAGAENA a.k.a VAIFOU TEVAGA (Appellant) and LOCAL PARTNERS & ASSOCIATES LIMITED (Second Appellant) and 
ALDAN CIVIL ENGINEERING CONSTRUCTION COMPANY LIMITED (Third Appellant) vs. APULU LANCE POLU, of Saleimoa, Sagaga Le Falefa and MARTIN JONATHAN SCHWALGER of Aleisa, Sagaga Le Falefa (First Respondents) and LAÁULI LEUATEA SCHMIDT (Second Respondent) and LOCAL PARTNERS & ASSOCIATES LIMITED (Third Respondent) and MAOTA O SAMOA CONVENTION & LEISURE COMPLEX LIMITED (Fourth Respondent)	
		
Hearing date(s): 	10 & 11 April 2018	
		
File number(s): 	CA16/17	
		
Jurisdiction: 	CIVIL	
		
Place of delivery: 	Court of Appeal of Samoa, Mulinuu	
		
Judge(s): 	Honourable Justice Fisher
Honourable Justice Panckhurst 
Honourable Justice Hansen	
		
On appeal from:	Supreme Court of Samoa, Mulinuu	
		
Order:	The appeal is dismissed.
The respondents are entitled to costs to be the subject of memoranda if the parties cannot agree.	
		
Representation: 	O Woodroffe for appellants 
S Leung Wai for respondents	
		
Catchwords: 	Apparent bias – recusal – appeal against judgment 	
		
Words and phrases:		
		
Legislation cited:	Companies Act 2001 ss. 41; 87(2); 97.	
		
Cases cited:	Erris Promotions Ltd v Commissioner of Inland Revenue (2003) 16 PRNZ 1014 (CA);
R v Reekers [2011] NZCA 125;
Reupena v Senara & Ors [2017] WSCA 1;
Stehlin v Police [1993] WSCA 5. 	
		
Summary of decision:		

IN THE COURT OF APPEAL OF SAMOA
HELD AT MULINUU

CA 16/17

BETWEEN:

PESETA VAIFOU TEVAGAENA a.k.a VAIFOU TEVAGA of Apia, Company Director.
Appellant

AND:

LOCAL PARTNERS & ASSOCIATES LIMITED a company with its registered office at C/- Maiava V Peteru, Barrister & Solicitor, Pat Ah Him Building, Vaimauga Sisifo, Export Company.
Second Appellant

AND:

ALDAN CIVIL ENGINEERING CONSTRUCTION COMPANY LIMITED a company with its registered office at Vaitele, Faleata Sisifo, Construction Company.
Third Appellant

AND:

APULU LANCE POLU, of Saleimoa, Sagaga Le Falefa, Company Director and MARTIN JONATHAN SCHWALGER of Aleisa, Sagaga Le Falefa, Company Director.
First Respondents

AND:

LAÁULI LEUATEA SCHMIDT Businessman.
Second Respondent

AND:
LOCAL PARTNERS & ASSOCIATES LIMITED a company with its registered office at C/- Maiava V Peteru, Barrister & Solicitor, Pat Ah Him Building, Vaimauga Sisifo, Export Company.
Third Respondent

AND:

MAOTA O SAMOA CONVENTION & LEISURE COMPLEX LIMITED a company with its registered office at Tuanaimato, Faleata Sisifo, Convention and Leisure Complex Company.
Fourth Respondent

Coram:
Honourable Justice Fisher
Honourable Justice Panckhurst 
Honourable Justice Hansen

Counsel:
O Woodroffe for Appellants 
S Leung Wai for Respondents

Hearing: 	10 & 11 April 2018

Judgment:	13 April 2018

JUDGMENT OF THE COURT
Introduction
1. 	The first appellant (Peseta), claiming to be a shareholder of the second appellant (LPA) and as the holder of 50% of the shares in the third appellant (Aldan), brought proceedings against the respondents for alleged breach of duties in their dealings with him and the other appellants.  On 21 December 2015, on his ex parte application, he was granted leave by Vaai J. to bring proceedings on behalf of LPA under s.97 of the Companies Act 2001 (the Act).  Vaai J also appointed an interim manager to be responsible for the daily administration of the financial affairs of LPA and made orders restricting the ability of the respondents to engage in the operations of LPA.
2. 	After a trial lasting seven days, Tuala-Warren J found against the appellants on all causes of action.  Amongst other things, she found that Peseta was not a director or shareholder of LPA and, accordingly, had no standing to bring to proceedings on its behalf.
3. 	The appellants appeal against the judgment.  They claim the judge erred in fact and in law, including her finding that Peseta was not a shareholder or director of LPA.  Supported by an affidavit filed for the purpose of the appeal, they also claim that the trial judge had connections with the respondents which gave rise to an apprehension of apparent bias which should have disqualified her from hearing the case.  This was the only ground of appeal ultimately pursued. 
Background
4. 	LPA was incorporated on 25 October 2012 following discussions between Peseta and the second respondent (Laáuli).  It was formed for the purpose of processing and marketing nonu juice.  The original shareholders were the second named first respondent (Mr Schwalger), who was the nephew of Laáuli, and Danny Schwenke (Mr Schwenke) who is Peseta’s son.  Both owned 50,000 of the 100,000 shares of the company. Both were appointed directors.  The judgment of Tuala-Warren J records that Peseta and Laáuli decided not to become shareholders of LPA as they were members of Parliament.
5. 	At a board meeting on 21 January 2013 LPA changed its name from Local Partners Limited to Local Partners & Associates Ltd.  Shares were reallocated with 32,500 shares held by the first named first respondent (Apulu) and Mr Schwalger and the remaining 35,000 held by Mr Schwenke.  Apulu was appointed a third director. 
6. 	LPA made a successful bid for the assets of Pure Pacifica, a group of companies which had been in the nonu juice business and had gone into receivership.  For this purpose LPA obtained a loan of $1.8m from Samoa National Provident Fund (SNPF).  The loan was secured by the assets acquired from the Pure Pacifica group which included land at Vaitele, and also by land belonging to Aldan.  Apulu and Mr Schwalger provided personal guarantees.
7. 	Relations between Peseta on the one hand and Apulu, Mr Schwalger and Laáuli on the other, deteriorated soon after LPA began operations in 2013.  Peseta’s case was that at a meeting of directors held on 29 May 2013 it was agreed that 50% of the shares would be held by him and 50% by Apulu and Mr Schwalger jointly and that he would replace Mr Schwenke as a director.  Peseta said in evidence that those present – Apulu, Mr Schwalger, Mr Schwenke, Laáuli and himself – all agreed to the changes which were subsequently recorded in a document described as a notice of resolution purported to be signed by Peseta and Mr Schwalger.  The authenticity of this document was of pivotal importance, at the hearing. 
8. 	Laáuli, Mr Schwalger and Apulu all said in evidence that there was no meeting in May as claimed by Peseta and no agreement to the change in shareholding and to appoint Peseta as an additional director.  Mr Schwalger denied signing the notice.
Judge’s finding
9. 	In the Supreme Court the appellants relied on the decision of Vaai J giving leave to bring proceedings on behalf of LPA and also findings in a criminal prosecution for forgery brought against Peseta in which the Supreme Court found that the notice of resolution was not a forgery.  They contended that these findings could be relied on for the purpose of establishing the appellants’ case.  The Judge rejected the appellants’ argument, noting that a leave application does not require a final determination of the issues and the criminal proceedings had no bearing on the civil proceeding.
10. 	The Judge went on to consider the evidence and concluded that Peseta had failed to establish that he was a director or shareholder of LPA.  She disbelieved his evidence that a meeting occurred on 29 May 2013, preferring the evidence of Laáuli, Apulu and Mr Schwalger.  She noted also the absence of any of the formalities required by the Act for the purpose of effecting a change of shareholding or directors.  There was no evidence of a notice of resignation as director (s.87(2)).  There had been no resolution of shareholders appointing Peseta a director or his consent to the appointment in writing.  Rights of pre-emption required under the Model Rules of LPA were not observed.  There was no evidence of the “gift” of shares by Mr Schwenke as Peseta claims to have occurred.  Finally, the Judge noted that none of the parties had produced LPA’s share register which, pursuant to s.41 of the Act, would provide evidence of legal title to the shares.
11. 	The finding that Peseta was not a shareholder was fatal to the claims he made in his capacity as a shareholder and to the derivative actions brought on behalf of LPA.  The Judge nevertheless went on to make findings on the key complaints made by Peseta.  Each was rejected.  It is unnecessary to go into the judge’s reasons for doing so. 
Apparent bias/recusal
12. 	The claimed grounds for disqualification and/or bias arise from Tuala-Warren J’s past association with Tuala Law, lawyers of Apia.  Between 2005 and 2008 she was successively employed as a lawyer and then a partner of the firm.  Her association with the firm ceased in 2008 when she was appointed the first Law Reform Commissioner of Samoa.  She became a Judge of the District Court in August 2013 and a Judge of the Supreme Court in August 2016.  The Judge’s brother, Siaki Tuala, with whom she had been in partnership, continued the practice of Tuala Law until 4 September 2013 when he was appointed Chief Executive Officer of the Gambling Control Authority.
13. 	The matters raised on behalf of the appellants in support of the claim of apparent bias, as set out in the affidavit of Peseta, are:
•	On 08 May 2008 Tuala-Warren J appeared as counsel for Laáuli in a civil claim brought by SNPF.
•	In March/April 2013 Tuala Law acted for LPA on instructions from Apulu on the purchase of assets from the firms in receivership previously engaged in the production of nonu juice. 
•	Through her brother, Siaki Tuala, the Judge was associated with two companies in which the respondents have an interest, Samoa Construction and Engineering Limited of which Mr Tuala was a director together with Mrs Rosary Mumia Leilua, a daughter of Laáuli, and Malosi o le Nuu Co Ltd of which Mr Tuala, Mrs Leilua and Apulu were directors.
14. 	Affidavits in opposition by Siaki Tuala and Apulu were filed.  We were told they were filed and served on 19 March 2018.  However, Mrs Woodroffe said they did not come to her notice until the day before the hearing.  In the circumstances we gave her the opportunity to give further consideration to the affidavits overnight and complete her submissions the following day.  
15. 	In his affidavit Mr Tuala confirms his sister’s involvement with Tuala Law as earlier set out.  He also confirms that he was instructed by Laáuli in 2008.  He was asked to act on four claims brought by the SNPF against Laáuli in relation to the late payment of employee contributions.  Mr Tuala was overseas when the matter was first called for mention and requested his sister to appear as counsel.  She did so, including making application to excuse Laáuli’s non-appearance.  The matter was subsequently settled and Mr Tuala appeared for Laáuli on 21 November 2008 when the charges were withdrawn.
16. 	Mr Tuala confirms acting for LPA when it purchased the land and assets of Pure Pacifica.  He deposes that he did not act for Apulu personally but was instructed by him as the person responsible for the day to day management and operations of LPA.  Mr Tuala said that at this time he was also instructed by Aldan to discharge an existing mortgage over its land in order for the land to be mortgaged to the SNPF to secure the loan to LPA.  He said that both Peseta and Mr Schwenke were clients of Tuala Law.
17. 	Mr Tuala explains that Samoa Construction and Engineering Co Ltd was incorporated in 2016 for an overseas investor based in Australia.  He was appointed as a nominee director on 23 September 2016 and remained a director until 1 November 2017.  Ms Leilua was the other director.  At the time Mr Tuala ceased to be a director, the company had not carried on business.
18. 	Mr Tuala deposes that Malosi o le Nuu Co Ltd was incorporated at the same time for the same overseas investor.  The directors were Mrs Leilua and Apulu.  He became a nominee director on 20 November 2017 after Mrs Leilua and Apulu had ceased to be directors.  He is the nominee holder of 1,000,000 shares in the company.
19. 	Mr Tuala says that since his sister was appointed Law Reform Commissioner in 2008 he has been careful not to have any professional contact or dealings with her.  He has not discussed his involvement with the two companies or any other matters that might prejudice or compromise her position as a Judge.
20. 	In his affidavit Apulu confirms that he instructed Tuala Law on behalf of LPA in relation to the purchase of the assets of Pure Pacifica.  He says that, with Mrs Leilua, he was a director and shareholder of Malosi o le Nuu Co Ltd and that the investors nominated Mr Tuala to be the sole director and sole shareholder following their withdrawals.  He no longer has any interest in the company. 
Legal test
21. 	The question of what constitutes apparent bias has been formulated in slightly different terms by the United Kingdom Courts on the one hand and those of Australia and New Zealand Courts on the other.  In Reupena v Senara & Ors [2017] WSCA 1 this Court summarised the position as follows at [6] and [7] 
“[6]	...The Courts in the United Kingdom, Australia and New Zealand have described what amounts to apparent bias in slightly difference language. The United Kingdom approach is to ask whether there is a “real danger” of bias: R v Gough [1993] AC 646. The Australian and New Zealand Courts have united in saying that, subject to considerations of waiver or necessity – neither or which is relevant in this case – a judge is disqualified “if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”; the question is one of possibility (“real and not remote”), not probability: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 33 (HCA) at 345 and Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 72; [2010] 1 NZLR 35 at [3]. It has been said that the respective tests of apparent bias are essentially the same: Saxmere at [3].
[7] 	Importantly the court must examine the matter in two steps:
(a) 	first, the identification of what it is said might lead a judge to decide a case other than on its legal and factual merits; and
(b) 	secondly, there must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.”
Discussion
22. 	Mrs Woodroffe argued that all of the matters linking Tuala Law and Mr Tuala on the other hand and the respondents or members of their family on the other should be taken into account in considering, as a first step, what might have led the judge to decide the case other than on its merits.  She said it had to be borne in mind that Samoa is a small country with an enhanced risk that a Judge may be possessed of knowledge acquired outside a direct professional relationship.
23. 	We accept that the Courts must be cognizant of the realities of life in a small jurisdiction.  Indeed, as was noted in Reupena v Senara at [8], Cooke P remarked in Stehlin v Police [1993] WSCA 5 that the doctrine of disqualification for alleged bias has to be applied somewhat robustly in a jurisdiction the size of Samoa.  That said, the conditions required to establish an appearance of bias are not to be assumed or the subject of speculation.  They must be shown to exist in the usual way.  And here the unchallenged evidence of Mr Tuala is that since his sister became a Judge in 2013 he has been scrupulous to refrain from any communications with her that might compromise her judicial function.
24. 	There is, therefore, no reason to have regard to any of the dealings between the parties and Tuala Law or Mr Tuala personally since Tuala-Warren J left the firm in 2008.  The only possible source of apparent bias is the appearance she made on Laáuli’s behalf in 2008 and arguably his relationship then with a firm of which she was a partner.
25. 	In arguing that even a relatively fleeting association some years previously is sufficient to found an apprehension of bias, Mrs Woodroffe referred us to the decision of the New Zealand Court of Appeal in R v Reekers [2011] NZCA 125 in which the presiding Judge disqualified himself from sitting on an appeal because he had represented the appellant 32 years previously.  He had no recollection of doing so but, relying on observations in Erris Promotions Ltd v Commissioner  of Inland Revenue (2003) 16 PRNZ 1014 (CA), the Court accepted that a fair-minded lay observer might reasonably apprehend that the Judge’s impartiality may be ‘subconsciously affected’ by the previous professional relationship.
26. 	Reekers was a highly unusual case as the Court itself acknowledged (at [16]) and is not, in our view, authority for the proposition that long distant, even forgotten, associations could normally give rise to an apprehension of bias.  Each case must be judged on its own facts having regard in particular to the nature and duration of the association, the time that has passed and whether (as in Erris) the issues in the case had some connection with the subject matter of the earlier association.
27. 	Here, the direct association between the Judge and Laáuli was transitory and purely mechanical. The case itself was resolved and the brief came to an end soon after.  We do not think an association of that nature, eight years before the hearing, could give rise to an apprehension in the mind of a fair-minded lay observer that the Judge might not bring an impartial mind to bear on the case.
28. 	Mrs Woodroffe supported her argument with references to passages in the judgment which showed, she said, that the Judge had in fact been biased.  In her written submissions she contended that a finding that Laáuli’s wife was an experienced business woman running several businesses was unsupported by the evidence and based upon the Judge’s own prior knowledge.  Mr Leung Wai referred us to passages in the evidence that showed the Judge’s finding to be firmly founded on the evidence.
29. 	In her oral submissions Mrs Woodroffe took us to other passages of the judgment in which the Judge had preferred the evidence of the respondents or in other ways made findings adverse to the appellant.  But they were all findings that were open to the Judge to make on the evidence and which could not possibly support a finding that she had not acted impartially.
30. 	We are satisfied that there is no basis for a finding of apparent bias.
Result
31. 	The appeal is dismissed.
32. 	The respondents are entitled to costs to be the subject of memoranda if the parties cannot agree.

HONOURABLE JUSTICE FISHER
HONOURABLE JUSTICE PANCKHURST
HONOURABLE JUSTICE HANSEN