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Ah Kuoi v Faapo II [2007] WSSC 77 (14 September 2007)

IN THE COURT OF APPEAL OF SAMOA
HELD AT APIA

BETWEEN

SONNY AH KUOI
Appellant

AND

PALUSALUE FAAPO II
First Respondent

AND

SO’OIALO DAVID FONG
Second Respondent

Coram: Honourable Justice Baragwanath
Honourable Justice Salmon
Honourable Justice Paterson

Hearing: 07 September 2007
Judgment: 14 September 2007

Counsel: S F Ainu’u for Appellant
L Tuala-Warren for First Respondent
S Leung Wai for Second Respondent

JUDGMENT OF THE COURT

Introduction

[1] The appellant Sonny Ah Kuoi appeals against dismissal by Vaai J of claims under alleged guarantees by the respondents the Hon Palusalue Faapo II MP and So’olalo David Fong of a civil liability owed to him by one Leafe Leaupepe.

[2] The issues are whether the learned Judge erred:

(1). in holding that the Hon Mr Faato is not liable for signing a surety document which the Judge found he believed related to the different topic of whether Mr Leaupepe would attend court to face sentence in a criminal proceeding;

(2). in finding that Mr Ah Kuoi had failed to prove that Mr Fong had signed a similar surety document.

Background facts

[3] Mr Ah Kuoi operates a car rental business in Apia. Mr Leaupepe, a visitor from New Zealand, having hired a car from Mr Ah Kuoi damaged it in a collision with another vehicle.

The criminal proceeding

[4] On 22 July 2004 Mr Leaupepe was charged in the District Court with negligent driving causing injury to two occupants of the other vehicle and he was remanded in custody. The following day he was released on bail on condition that he surrender his travel documents. He later entered a plea of not guilty. On 18 August he was granted a variation of his bail terms to permit him to go back New Zealand on condition he provide two sureties in the amount of $5000 each to ensure his return for the trial scheduled for 17 November 2004.

Sureties in the criminal case

[5] Mr Fong, who is qualified to practise law, is a relation of Mr Leaupepe. He instructed Mr Harry Schuster (as he then was) to represent Mr Leaupepe in the District Court prosecution. Mr Leaupepe asked Mr Fong to act as one surety. The judge found that, in accordance with the practice of most lawyers, he declined to do so. That finding is challenged by Mr Ah Kuoi in this Court.

[6] The Hon Mr Faapo, then a Cabinet Minister, told Mr Schuster he was prepared to act as a surety because his wife is Mr Leaupepe’s niece. He received confirmation from the Chief Executive Officer of the Ministry of Justice that it was proper for him to do so.

[7] No surety forms were ever completed in the criminal case.

The first civil proceeding

[8] On 26 August 2004 Mr Ah Kuoi filed in the Supreme Court a civil statement of claim and summons seeking from Mr Leaupepe damages for repairs to the car and loss of revenue. He also claimed costs. On the same day he obtained from the Supreme Court an order under Rule 184 of the Supreme Court (Civil Procedure) Rules 1980 for the arrest of Mr Leaupepe as an absconding debtor about to leave Samoa and a warrant was issued. The civil proceeding was served on Mr Leaupepe the following day. Much later, on 14 June 2005, Mr Ah Kuoi obtained judgment by default against Mr Leaupepe for $23,896.19.

The second civil proceeding: contentions and result

[9] In his subsequent claim, against the respondents, Mr Ah Kuoi contended in the Supreme Court that on 3 September 2004 both the Hon Mr Faapo and Mr Fong executed documents headed "undertaking to provide surety" which, he submitted, imposed liability upon them. Since Mr Leaupepe subsequently left Samoa and has never returned it follows, he argued, that Mr Ah Kuoi is entitled to judgment against each surety for the amount of his judgment and costs.

[10] The Hon Mr Faapo admitted in his pleading that he had executed the surety document. But he asserted that he was not independently advised and that the document was never witnessed before a solicitor of the Supreme Court as the form of the document contemplated. In the Supreme Court he was permitted to contend that he signed the document under the mistaken belief that it made him a surety only for the criminal case and that he had no knowledge of the civil case. That argument was accepted by the learned Judge who dismissed the claim against the Hon Mr Faapo.

[11] Mr Fong pleaded and asserted at trial that a purported signature to a surety document was not his. The learned Judge accepted his evidence and gave judgment in his favour.

Submissions on appeal

[12] Before us similar arguments were advanced. We deal in turn with the appeal in relation to each respondent. The onus lies on Mr Ah Kuoi to prove his case against each.

The appeal in relation to the Hon Mr Faapo

[13] The document signed by the Hon Mr Faapo was in the following form:

[14] In this case as in that against Mr Fong, while each signature had purportedly been executed in the presence of Mr Roma, solicitor of the Supreme Court of Samoa, Mr Roma acknowledged in evidence that he had added his signature as witness to a document that had already been signed and in the absence of the signatory. The point is academic in the case against the Hon Mr Faapo, given his admission of having signed the document. But it is of real importance in the case against Mr Fong. Witnessing the signature under a statement "Before me" in the absence of the signatory should not have happened and should not recur.

[15] It is common ground that draft forms of surety document were prepared by Mr Meredith, solicitor for Mr Ah Kuoi, and sent to Mr Schuster for addition of the names of the sureties and execution. It was Mr Schuster’s recollection that having completed two forms, each providing for execution by one of the sureties (whose name we take to have been supplied by Mr Leaupepe), he had handed both to Mr Leaupepe for him to arrange execution. But the evidence of the Hon Mr Faapo was that he had received his document direct from Mr Schuster at a Rugby meeting. Ms Tuala-Warren sensibly accepted that, while there is no doubt as to Mr Schuster’s credibility, the Hon Mr Faapo as the party potentially liable would have more reason to recall the event specifically. We proceed on that basis.

[16] As both an experienced lawyer and the author of the final version of the surety document in the name of the Hon Mr Faapo, Mr Schuster would have been fully aware of its significance and the fact that it related to Mr Ah Kuoi’s civil warrant rather than to the terms of bail in the criminal proceeding. Ms Tuala-Warren did not suggest that Mr Schuster would have suggested otherwise to the Hon Mr Faapo. Rather her submission was that Mr Schuster had previously asked the Hon Mr Faapo whether he would be prepared to offer himself as surety in the criminal case and that at the Rugby meeting he did not offer further specific advice as to its significance. Accordingly the Hon Mr Faapo believed, as the Judge found, that the document related to the criminal case. So that was his state of mind when he signed it and passed it back to Mr Schuster. Ms Tuala-Warren submits that on that evidence and the Judge’s findings he should, as the Judge held, be relieved of liability to Mr Ah Kuoi.

[17] We have only the brief note of the evidence taken by the Judge. It does not record what if anything Mr Schuster recalled of the episode. We were told that, as may be expected of a Samoan Government Minister, the competence in English of the Hon Mr Faapo is not disputed.

[18] The learned Judge did not enjoy the access to legal authority which we have had. The principle is stated in the leading text Law of Guarantees (4th ed 2005) by Geraldine Andrews QC and Richard Millett QC at page 125:

"A guarantor cannot avoid liability simply on the basis that he misunderstood the contract, even if the Court forms the view that he would not have signed it had he appreciated what its provisions actually meant, for example, if he signed an "all monies" guarantee believing it to be limited in amount or limited to specific transactions. However, if he can prove that he was under a fundamental mistake as to the nature or effect of the guarantee or its subject-matter at the time when he entered into it, and that the creditor knew this and failed to correct his mistake, the guarantee will be voidable, or alternatively it may be rectified to accord with the surety’s understanding of its term."

[Emphasis added]

It is supported by English, Scottish, Australian and Canadian decisions. We accept that it states the common law of Samoa.

[19] There is no suggestion that Mr Schuster knew that the Hon Mr Faapo had not read the document, which states so clearly at the top that it relates to the civil claim by Mr Ah Kuoi. Still less is it suggested that Mr Schuster knew that the Hon Mr Faapo was labouring under a belief that it related to criminal rather than civil proceeding and did nothing to correct his mistake.

[20] It follows that on the Judge’s factual finding of mistake by the Hon Mr Faapo the result in law favours Mr Ah Kuoi.

[21] We add that technical arguments that the document signed by the Hon Mr Faapo was not executed as a "deed" in terms of s 4 of the Property Law Act 1952 and that, not being a deed, there was absence of consideration, were not pursued.

The appeal in relation to Mr Fong

[22] In this case there is no evidence to counter the evidence of Mr Schuster that, having completed the surety document (here in the name of Mr Fong), he handed it to Mr Leaupepe to arrange its execution by Mr Fong.

[23] The next stage of the evidence was that Mr Roma received a signed document, added his signature as witness, and sent it on to Mr Schuster. A search of the Court file shows that, on the same day – 3 September 2004 – as the date of that purported surety document and of the similar document signed by the Hon Mr Faapo, those documents were filed and the order in the civil proceeding for Mr Leaupepe’s arrest was accordingly discharged. As a result the Mr Leaupepe was able to retrieve his passport and to leave Samoa.

[24] The claim against Mr Fong was supported by Messrs Roma and Schuster, each of whom deposed that as a result of business dealings he was familiar with Mr Fong’s signature, of which an example was before the learned Judge. It bears a distinct resemblance to the challenged signature. But the judge accepted Mr Fong’s defence, finding that:

Similarity in signatures is not sufficient. It is a very simple signature and I am not satisfied the two witnesses have had a sufficient opportunity to acquire knowledge of the signature of [Mr Fong] to accord their opinion evidence more credibility over that of [Mr Fong].

[25] The New Zealand edition of Cross on Evidence states:

20.19 Opinion evidence as to handwriting

"Witnesses who have not seen the document in question written or signed, and who are not handwriting experts, may nevertheless depose to their opinion that the writing is that of a particular person. Such opinion may be based upon the witness’s acquaintance with the handwriting of the person in question through having seen the person write on former occasions. It makes no difference whether these occasions were many or few, and whether the signature was merely that of the signatory’s surname without the addition of the Christian names appearing on the document before the court. These matters will affect the weight of the evidence".

[26] It was therefore a pure question of fact for the judge whether Mr Ah Kuoi was able to prove that the signature was that of Mr Fong.

[27] Mr Schuster agreed in cross-examination on behalf of Mr Fong that he only discussed the criminal matter with Mr Fong.

[28] Mr Ainu’u invited us to reverse the judge’s fundings in favour of Mr Fong both on the basis of the evidence of Messrs Schuster and Roma and by our own examination of the disputed signature against an actual signature. He also referred to certain events of many years ago as going to credibility. Mr Leung Wai submitted that the appellant was unable to meet the stringent test stated by Somers J in Hutton v Palmer [1990] 2 NZLR 260 at 268:

"The principles are not in doubt. An appeal such as the present is by way of rehearing and the Court has an obligation to come to its own conclusion. Running across that principle is another, namely, that an appellate Court is under the disadvantage that it has not seen or heard the witnesses. In a case which depends on an opinion as to conflicting testimony an appellate Court will not interfere unless it can be shown that the trial Judge has failed to use or has palpably misused his advantage; it ought not to reverse the conclusions at which he has arrived merely his advantage; it ought not to reverse the conclusions at which he has arrived merely from its own comparison and criticisms of the witnesses and its own view of the probabilities of the case; SS Hontestroom v SS Sagaporack [1927] AC 37, 47

[29] We have examined the respective documents but have no reason to disagree with the judge’s assessment. The fact that the document was given to a man with a strong incentive to secure means to leave Samoa to avoid potential criminal responsibility tells in support of the submission on behalf of Mr Fong.

[30] On the whole of the evidence there is no basis for us to reject the finding of the learned Judge that Mr Fong did not sign the document. It was well open to him to accept Mr Fong’s account. The appeal against that part of his decision must fail.

Decision

[31] Mr Ah Kuoi’s appeal against the Hon Mr Faapo succeeds. The judgment against him in favour of the Hon Mr Faapo is set aside. Mr Ah Kuoi is entitled to judgment against the Hon Mr Faapo for the amount of the default judgment against Mr Leaupepe $23,896.19 as from the date of the Supreme Court judgment 17 October 2006.

[32] Mr Ah Kuoi’s appeal against Mr Fong fails and is dismissed.

[33] Costs must follow the event. As noted by Bisson J in Tofilau Eti Alesana Samoa Observer Company Limited CP 42/97 16 September 1998 (Supreme Court), the rates fixed under the Supreme Court (Fees and Costs) Rules 1971 and in this Court under the Judicature Ordinance 1961 are out of date. Rule 26 of the Court of Appeal Rules empowers us to make such order as in the circumstances appears just. We heard argument from counsel and have examined the costs orders recently made in this Court. Thanks to the helpful written submissions of counsel the submissions in this Court were succinct. The New Zealand Rules Committee has recognised, and we endorse, the injustice of assessing costs on appeal without recognising that careful preparation will shorten the hearing time. The same comment applies to preparation for trial where, however, greater allowance for preparation is usually required. We do recognise that, as in this case, counsel in this Court may be more senior than counsel at trial. We were provided with the costs submissions of counsel in relation to the one day’s hearing in the Supreme Court. The case against Mr Fong was dismissed at the conclusion of the evidence. The case against the Hon Mr Faapo was the subject of further written submissions. Rather than put the parties to further delay and expense we have decided to fix costs in both Courts.

[34] The Hon Mr Faapo is ordered to pay Mr Ah Kuoi costs in this Court of $1500 and in the Supreme Court $2000 plus in each case disbursements as fixed by the Registrar. Mr Ah Kuoi is ordered to pay Mr Fong costs in this Court of $1500 and in the Supreme Court $2000 plus in each case disbursements as fixed by the Registrar.

Honourable Justice Baragwanath
Honourable Justice Salmon
Honourable Justice Paterson