GK Enterprises Ltd v Korean Enterprises Ltd [2016] SBCA 2; SICOA-CAC 15 of 2015 (22 April 2016)

IN THE SOLOMON ISLANDS COURT OF APPEAL

NATURE OF JURISDICTION:	Appeal from Judgment of the High Court of Solomon Islands (Faukona, J)
COURT FILE NUMBER:	CivilAppeal Case No. 15 of 2015 (On Appeal from High Court CivilCase No. 132 of 2013)
DATE OF HEARING:	14 APRIL 2016
DATE OF JUDGMENT:	22 APRIL 2016
THE COURT:	Goldsbrough P Ward JA Hansen JA
PARTIES:	GK ENTERPRISES LIMITED - v - KOREAN ENTERPRISES LIMITED
ADVOCATES: Appellant: Respondent:	Mr M. Pitakaka together with Ms. Taupongi Mr. A. Radclyffe
KEY WORDS:	Termination of lease: consensus ad idem in contract
EX TEMPORE/RESERVED:	RESERVED
ALLOWED/DISMISSED	DISMISSED
PAGES	1- 5

JUDGMENT OF THE COURT

1. On 28^th August 2015 the Appellant Company filed a notice of appeal against the decision of the High Court dated 31^st July 2015 in civil claim number 132 of 2013. In that judgment, published that same day of July 2015 and thereafter set out in an order perfected on 14 August 2015, it was ordered that the Appellant’s claim be dismissed with costs.
2. That originating claim had been filed on 2^nd May 2013 in the High Court and sought declaratory order in relation to a tenancy agreement between the parties and damages for wrongful repudiation of the tenancy agreement by the Respondent Company.
3. A counter claim was thereafter filed seeking damages for unpaid utility charges and damage to the Respondent Company’s property. No orders appear to have been made on the counterclaim but equally the appeal material does not raise any lack of disposition.
4. The Respondent Company owns and operates premises in Honiara known as Hyundai Mall. An agreement between the parties to lease part of that Mall to the Appellant Company was executed on 31 December 2010. There were pre-contract discussions between the parties which were the subject of disputed evidence and about which the trial judge was obliged to make findings.
5. Whilst not agreed between the parties as to type, the Appellant Company sought to run a bakery business making and selling those baked goods and providing café facilities in which the baked goods might be consumed by patrons of their business and the Hyundai Mall generally. In dispute is the scale of the bakery facility, whether small commercial or merely ancillary to the provision of other refreshment.
6. The trial proceeded on the basis of a statement of agreed issues signed by counsel and filed on 21^st May 2014 which appears in the unpaginated Appeal Book. Those issues included opening hours, bakery scale, equipment weight limitations, effect of a stop work notice, effect of requests for technical reports, termination and repudiation rights and whether the purported termination of the tenancy agreement by the Respondent Company of 28 March 2011 was a valid termination.
7. The Notice of Appeal includes eight grounds of appeal, seven of which relate to erroneous findings of fact on the evidence and one which relates to a matter of pleading.
8. The pleading point is a simple point. The Appellant Company contends that the judge was in error in accepting the submission of the Respondent Company that there was no consensus ad idem when the Respondent Company had not pleaded the issue and was therefore barred from raising the issue at trial. The pleadings reveal several areas of dispute between the parties on pre contract discussions and whether questions were asked or, if asked, answered and to what effect. By 9^th March 2011 the Respondent Company through its representative James Kim indicated that, in his view, discussions between the parties were “going nowhere” and so the Respondent Company had referred the matter to its lawyers.
9. Between that time and 31 March 2011 correspondence was exchanged between lawyers resulting in a termination of the Tenancy Agreement by the Respondent Company for breach. In his letter of 28 March the lawyer for the Respondent Company indicated breach of clauses 21 (1) (a) and (e) although the exhibited Agreement has no Clause 21 (1) (e) and the authority to cancel is to be found in clause 23 where there are both sub clauses (a) and (e). Neither party to this appeal sought termination of the agreement between them because there was no consensus ad idem. The Respondent Company terminated under the clauses referred to above and the Appellant Company in its pleadingschose not the seek specific performance but damages for breach of the agreement. There is therefore no merit in this appeal point.
10. To run the bakery business with any degree of success, the Appellant Company believed that its employees needed to start work long before the bakery opened each day for business. To that end a request was made, not for extended public opening hours, but extended access hours for employees engaged in that preparatory work. This question could only be determined properly if one know the nature of the bakery intended. Cakes and pastries, unlike yeast based bread products, perhaps would not require such an earlier start in the morning to be ready for public opening. If fresh bread was to be available for sale at opening time, then it seems clear that a much earlier start would be required of the bakery staff. It is this nature of business that was an issue between the parties.
11. Equally the nature dictated to some extent the necessary equipment. Commercial baking ovens, it seems, can be substantial items of equipment, no doubt both in terms of cost and size. Consumables are equally problematic, particularly in a jurisdiction where there may be supply issues not applicable in a larger jurisdiction.
12. Clause 17 of the executed agreement sets out provisions for the use of the premises and contains restrictions on the permissible weights described as ‘heavy articles’. It is a clause aimed at avoiding overloading and exceeding design and construction limits for the premises. In this regard there is dispute as to which party was responsible for raising the issue and what each party must do. Was it the responsibility of the respondent Company to tell its tenant the relevant weight restrictions or was it for the tenant to indicate the weight of their equipment and ask if that was an acceptable use? This was raised in two of the agreed issues. In his judgment the learned trial judge dealt with the issue, finding that the “Stop Work” notice pending the receipt of sufficient information to make a decision on weight was a reasonable step to take in the circumstances. We do not believe that his decision was anything but correct on the evidence.
13. Following the “Stop Work” the offending oven and what is described as a heavy quantity of flour was removed from the premises. It never returned, and the commercial venture as envisaged by the Appellant Company never opened in the Hyundai Mall. Thus, the tenant complained of lack of income from not being able to open its commercial venture and the landlord complained of non-payment of rent.
14. At trial, the judge considered each of these issues. Having determined that the Respondent Company was entitled to protect its premises from overloading pending determination of the relevant weighting and loading, he further determined that the Appellant Company failed to produce adequate material for the Respondent Company to consider, noting that the report from a New Zealand based firm was written without visiting the premises but based on a series of assumptions about which there was no other evidence. We find nothing wrong with that approach, which the trial judge was entitled, if not bound, to adopt.
15. The trial judge further found that the parties were not at one over the nature of the business, hence the first appeal point. He was, we find, entitled to arrive at that conclusion. Having properly reached that conclusion, we consider that subsequent complaints contained in the grounds of appeal going to findings of fact no longer assist the Appellants. It was not, for example, for terms to be implied into the lease agreeing early access hours when there was not agreement as to the nature of the business. It is only if the trial judge found that there was consensus as to the business nature that it may be possible to imply terms not found in the lease.
16. The final appeal point concerns the findings on costs incurred by the Appellant Company during this failed venture. As the trial judge recognizes, given his findings he would not be awarding damages but decided that he would set out his views on those amounts claimed. He did not appear particularly satisfied with the claims as he says at paragraphs 41 and 42 of his judgment. Whilst it may be the case that his findings on that were not entirely in accordance with the evidence, we consider that, given his decision on the substantive breach of the terms of the lease, this matter does not materially affect the order made in these proceedings in the court below.
17. This lease came to an end when notice was given by the lawyer acting for the Respondent company in his letter dated 28 March 2011. In that letter can be found the reason for the cancellation of the agreement under clauses 21 (3) (a) and (e). From his findings at trial, which we have indicated we agree with, the trial judge was entitled to find that the cancellation was effective for the reasons given.
18. In the event this appeal is dismissed. The orders made in the court below are confirmed and the costs on this appeal will be paid by the Appellant to the Respondent such costs to be agreed or, in the event of a failure to reach agreement, assessed by the Registrar.
    

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Goldsbrough P

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Ward, JA

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Hansen JA