Yee v Panga [2013] SBCA 10; SICA CAC 10 of 2013 (6 November 2013)

IN THE SOLOMON ISLANDS COURT OF APPEAL

NATURE OF JURISDICTION:	Appeal from Judgment of the High Court of Solomon Islands (Mwanesalua J.)
COURT FILE NUMBER:	Civil Appeal Case No. 10 of 2013 (On Appeal from High Court Civil Case No.109 of 2010)
DATE OF HEARING:	28 OCTOBER 2013
DATE OF JUDGMENT:	6 NOVEMBER 2013
THE COURT:	Justice Glen Williams JA, Acting President, Sir Gordon Ward JA, Sir John Hansen JA
PARTIES:	Paul YEE 1st Appellant Diamond Corporation 2nd Appellant -V - Stephen Panga Respondent
Advocates: Appellants: Respondent:	Radclyffe 1st Appellant P. Afeau for 2nd Appellant W. Rano for Respondent
Key words	Specific performance – Uncertainty – Limitation.
EX TEMPORE/RESERVED:	EX TEMPORE
ALLOWED/DISMISSED	ALLOWED
PAGES	1- 5

JUDGMENT OF THE COURT

The Respondent's Claim against the Appellants is essentially based on a written agreement bearing date 23rd July 1995. The proceedings were not commenced until the 29th of March 2010. Paul Yee who was a signatory to the agreement died on the 6th of March 2008. Inconsequence of Yee's death the Agreement was not admitted on the pleadings but the trial Judge found that there was an agreement in terms of the document bearing date 23 July 1995. It is now necessary to set out the terms of that agreement.

"General agreement for Parcel 191-023-115 between Paul Yee and Stephen Panga.

1. We Paul Yee and Stephen Panga do hereby solemnly agreed, although Hon Stephen Panga applied for the plot of commercial land, Diamond Corporation Limited will facilitate logistic and other fees.
   
2. Upon completion of the Building Hon Stephen Panga will collect rental payments for the upstairs rooms while Paul Yee will collect rental for the rooms on the ground floor. (See Clause 6)
   
3. Diamond Corporation Limited will pay for all the necessary fees for the registration of the commercial land.
   
4. We Stephen Panga and Paul Yee have agreed that the commercial site will be of joint partnership, that is a (50%) share. In this agreement, the setting up of this shopping complex will be shared equally.
   
5. We had agreed that any loans sought from any commercial banks will be repaid equally and the same with the profits.
   
6. It was agreed, 35% will be from the individual Paul Yee and Stephen Panga contribution 17.5% each partner. We also agreed that 65% will sought from the commercial banks.
   
7. Diamond Corporation Limited will apply to the Registrar of Companies later to insert on Hon. Stephen Panga as party.
   

This agreement is dated 23/7/1995 between Paul Yee and Hon Stephen Panga."

The document was signed by Hon Panga and Yee.

Having found that agreement was made between the parties, ultimately the learned trial Judge ordered that it should be specifically enforced. His formal order was as follows:

IT IS ORDERED as follows:-

1. That the Claimant has an interest in equity over the Fixed Term Estate in Parcel Number 191-023-115 Lot 1061/1/Hon.
   
2. That the said interest is held in trust by the First Defendant and Second Defendant.
   
3. That pursuant to the Agreement dated 23rd July 1995, the Claimant has an interest in equity over the 50% of the shares in the Second Defendant.
   
4. Specific performance of the Agreement dated 23rd July 1995.
   
5. That the First and Second Defendants are estopped from denying the Claimant from acquiring the shares in the Second Defendant.
   
6. The Defendants to pay the Claimant's costs of this action.
   

It should be noted that in the last paragraph of his reasons, after indicating that he would make the Orders set out in the formal Order, the learned trial Judge went on to say "The other orders not referred to herein are refused."

At trial, the Appellants had raised the Statute of Limitations and had also submitted that in the circumstances the agreement was not capable of being specifically performed because of its terms. It was advanced by Mr Radclyffe and Mr Afeau on behalf of the Appellants at trial that the commencement for the running of the limitations period should be taken as the year 2003 when the building on the land was completed and it was available for tenancy. This being an action on a simple contract, the limitation period was for six years and in consequence, the limitation period would have expired in the year 2009 before the action was commenced on 29 March 2010. Unless there was something which operated to extend the limitation period, the action would have been statured barred.

The learned trial Judge relied on a Letter bearing date 19 June 2009 from the Solicitor for the Claimant addressed to Daniel Ma care of Diamond Corporation LTD. That Letter referred to an agreement between Panga and Yee and asserted that in consequence of that agreement, Panga was "to become eventually a shareholder of Diamond Corporation Limited". The Letter evoked no response from Diamond Corporation with respect to the assertion that Panga was entitled to shares in it.

The first point to note is that Diamond Corporation Limited was not a party to the 1995 agreement. That agreement expressly said that it was an agreement between the two individuals and there was no allegation either in the agreement itself or in the Claimant's claim as pleaded that Yee was acting as Agent for Diamond Corporation in entering into the 1995 agreement. If only because that Letter was addressed to an entity not party to the agreement, it could not operate to extend the limitation period. But in any event, the Letter itself does not have the consequence that the Respondent's cause of action only arose when there was no response to that Letter. It follows that the claim based on the 1995 agreement was statute barred. That is sufficient to dispose of the matter but in the circumstances; it is desirable to deal with the other grounds on which the Appellants contended that the agreement was not specifically enforceable.

It is obvious that there was an intention that there be some sort of joint venture involving Yee and Panga and that if that venture generated profits that those profits should be shared equally. Insofar as Paragraph seven of the agreement states that Diamond Corporation would apply later to the Registrar of Companies to have Panga inserted as a Party, it is really meaningless. One does not normally speak of partnership when one is speaking about shareholding. It does not indicate whether and to what extent there was to be a shareholding. Even the use of the word 'later' tends to suggest that at best it was contemplated there might be some future agreement in that regard.

It became obvious in the course of submissions today that there was a real issue as to whether or not the Claimant was really seeking 50% of the total shares in the company which is what the learned trial Judge ordered, or only 50% of the shares which Yee held in the Company. That uncertainty itself indicates that it is not appropriate to order specific performance of the agreement insofar as it was asserted it entitled Panga two shares in Diamond Corporation. Further as I have already indicated, Diamond Corporation Limited was not a party to the agreement and in consequence, a specific performance order could not be made against it. There is ample authority for the proposition that its only parties who are direct parties to an agreement who can be the subject of a specific performance order.

There is also no basis in the Agreement itself for concluding that the Respondent had an interest in equity over the Fixed Term Estate. It is really sufficient to indicate the inappropriateness of the claim for specific performance that the interest in equity is not defined by the Judge's Order. What sort of interest is it that the Respondent is supposed to have.

Further as was have pointed out, the Respondent was in breach of the agreement in that he had not repaid his share of the monies borrowed from Commercial Banks. Those matters would have had to have been taken into account if there was to be specific performance of the agreement. It is because of the fact that it is impossible to perform the obligations alleged to arise from the agreement that specific performance of it cannot lawfully be obtained. The agreement is just too vague and uncertain to be specifically enforced.

So even if the action was not barred by the Statute of limitations, there is no basis for making the orders for specific performance made by the learned trial Judge.

There was a counter claim in the matter and one of the orders sought in the counter claim was the removal of a Caveat on the land in question which had been lodged by the Respondent on the 29th of July 2009. Given that the Court is holding that the Respondent is not entitled to specific performance he has not established an interest in the land. That Caveat should be removed.

The real concern though is in relation to the balance of the counter claim. In terms of the pleading, the order sought by the second Appellant was as follows "An Order against the Claimant to account for and to transfer to the Second Defendant all payments including rental payments that he received in respect of the property."

As I indicated earlier right at the end of his Judgment, the learned trial Judge said that the Orders not referred to specifically were refused. One of the issues is whether or not that amounts to a dismissal of the counter claim. Only in one paragraph of his reasons did the learned trial Judge refer to the fact that the Claimant had received rentals for the upper rooms of the property. That was clearly a reference to Clause 2 in the Agreement of July 1995.

In the Court's view, the better view to be taken of his Lordship's decision in relation to the counter claim is that he really failed to address the issue and to make any formal order on the counter claim. The counter claim remains alive and in the circumstances, the matter should be remitted to the trial Judge for determination of the counter claim. In that regard, the Court makes the following observations:-

All the Tenancy Agreements are included in the Record Book and it is clear from a perusal of them that the total rental for the upper floor in question during the relevant period amounts to $2, 440, 000. 00 Solomon Island Dollars.

In the course of cross-examination by Mr Radclyffe, the Respondent admitted that he had retained and paid into a private bank account the sum of two million Solomon Island dollars. There was some other evidence, which indicated that an amount of $310, 000 Solomon Island Dollars had been paid to the Company. It is also clear that in collecting the rent, the Respondent was acting in effect agent for the Second Appellant and that he would have incurred some expenditure and certainly there was some labour incurred in what appears prima facie to have been management of the tenancies on the top level. They are matters that should be taken into account when determining what amount is due and payable by the Respondent to the Second Appellant. That does involve making findings of fact and assessing issues, which cannot be done by this Court on the evidence currently before it.

So in the circumstances the Orders will be: -

1. Appeal allowed.
2. Judgment below set aside.
3. Judgment for the Appellants, the Defendants below, on the Claim.
4. On the Counter Claim, Order that the Caveat lodged by the Respondent on 10th of July 2009 over Fixed Term Estate 191-023-115 be removed.
5. Order that the Counter Claim seeking an account of the money due in payable to the Second Defendant by the Respondent be remitted to the trial Judge for determination according to Law.
6. Finally order that the Respondent pay the costs of the First and Second Appellants of an incidental to the trial and of the Appeal to be assessed if not agreed. Certify for Counsel.
   

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Williams JA
President (Ag) of the Court of Appeal

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Hansen JA
Member of the Court of Appeal

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Ward JA
Member of the Court of Appeal