World Link Resources Ltd v Laba Abadi Shipping SDN BHD [2021] SBCA 11; SICOA-CAC 14 of 2020 (1 February 2021)

IN THE SOLOMON ISLANDS COURT OF APPEAL

Case name:	World Link Resources Ltd v Laba Abadi Shipping SDN BHD
Citation:
Decision date:	1 February 2021
Nature of Jurisdiction	Appeal from Judgment of the High Court of Solomon Islands (Faukona J)
Court File Number(s):	14 of 2020
Parties:	World Link Resources Limited v Laba Abadi Shipping SDN BHD
Hearing date(s):	October 2021 Sitting
Place of delivery:
Judge(s):	Goldsbrough P Lunabek JA Gavara-Nanu JA
Representation:	Kwaiga L for Appellant Radclyffe for Respondent
Catchwords:
Words and phrases:
Legislation cited:
Cases cited:	Crown v Clarke [1927] 4 CLR 227, Jackson v Broatch [1900], 37 S.L.R 707
ExTempore/Reserved:	Reserved
Allowed/Dismissed:	Dismissed
Pages:	1-9

JUDGMENT OF THE COURT

1. The appellant appeals the decision of Faukona PJ, given on 21 April, 2020, in which his Lordship awarded US$292,503.25, in damages to the respondent pursuant to a Category A Claim the respondent issued against the appellant in the High Court in Civil Case No. 376 of 2018. The respondent alleged the appellant breached the two lease agreements (agreements) they entered into on 15 December, 2016.
2. The respondent is a Malaysian registered company which owned two vessels, one was a tug boat called Mulia Permata and the other was a barge called Permata Hijau (“Vessels”). The appellant is a mining company registered and operating in Solomon Islands. The respondent (lessor) and the appellant (lessee) agreed that the appellant would lease the vessels for a period of one year. Pursuant to clause 2 of the agreements, one year period would commence from the date the appellant picked up the vessels.
3. The agreements were in exact terms and the rents for the vessels were same. The only difference between the two agreements was the names of the vessels for each of which an agreement was executed.
4. The learned trial judge found that the terms of the agreements commenced on 15 December, 2016, that being the day the vessels arrived in Solomon Islands.
5. Pursuant to clause I of the agreements, the monthly rent for each vessel was US$27,500.00 which had to be paid within the first seven days of each month. Thus, for the two vessels the total amount the appellant had to pay was US$55,000.00. Then pursuant to clause 3, the appellant also had to make two months’ deposit of US$55,000.00, for each vessel. Thus the appellant had to pay the total deposit of US$110,000.00. The first month’s deposit had to be made on the day the agreements were executed and the second month’s deposit had to be made once the vessels arrived in Solomon Islands.
6. There is no issue regarding the validity of the two agreements. Thus, the agreements were valid and enforceable on their terms.
7. Under clause 8.2 the appellant had the right to terminate the agreements upon three months written notice being given to the respondent.
8. However, in a letter to the respondent dated 21 March, 2017, the appellant terminated the agreements with immediate effect because of what the appellant claimed were failures by the respondent to carry our repair work it had requested on the ramp door and the side walls of the barge. The claim was denied by the respondent.
9. The respondent claimed US$302,500.00 in damages for an alleged breach of each contract by failing to give the three months written notice as required under clauses 8.2 of each of the agreements. From the amount of US$302,500.00, the amount of US$137,500.00 was for unpaid charter fees and the amount of US$165,000.00 was for three months charter fees in lieu of the three months notice, plus interest at 5% per annum from 21 March, 2017, until the amount claimed was paid.
10. The learned judge relied solely on the sworn statement of Walter Ting Hua Aik in support of the respondent's claim. This was because the only sworn statement the appellant sought to tender was refused by the Court for late filing. In addressing this issue, the primary judge said:
    • "The problem with the defendants (sic.) argument is that those facts were pleaded in paragraph 3.5 of the defence. But it lacks evidence to support (sic.); the only statement that (sic.) intended to support the defence was ruled out as inadmissible for late filing late on the morning of the day of trial. Hence the Court cannot consider those facts as they are part of the pleadings that has no evidence to proof (sic.).
    • It therefore remains the evidence by the claimant that the defendant had breached Clause 8.2 of the Agreements for not giving the claimant three months notice before termination of the Agreements. For breach of the Lease Agreements a sum of US$165,000.00, that is US$55,000.00 multiply by 3 months Charter fees in lieu of notice. I am satisfied on the evidence in support of the amount claim (sic.), therefore I must award US$165,000.00".
11. Earlier in the judgment, his Lordship among others said:
    • “I have perused the first statement of account prepared by the Claimant which concluded with a balance due as US$137,500.00. Little difference to that is the second statement of account which concluded with balance due of US$127,503.25.
    • From the statement of accounts drawn as from 5th December 2016 to 24th March, 2017, I could also (sic.) able to read that the Claimant had expended money on vessels, also received monies from the Defendants which were accounted for as either unpaid or partly paid lease which finally balance (sic.) as US$137,503.25 as balance due.
    • However, upon reading of (sic.) the second statement which recorded all transactions up to 24th March, 2017, eighteen days more than the first statement, I notice the balance due is US$127,503.25. Notably, there is one transaction more than the first that is refund of rental deposits of US$110,000.00.
    • I do not know much about accounting but the second statement should finally settle the claim. US$127,503.25 should settle claim (sic.).I therefore award that amount". (Our underlining).
12. The appellant’s Notice of Appeal is in these terms.
    • WORLDLINK RESOURCES LIMITED having been the DEFENDANT in Civil Case No. 376 of 2018 in the High Court hereby gives notice of appeal against the judgment or order of that court given on the 21^st April, 2020.
    • The appellant appeals against (stage (sic.) whether whole or part only, and what part of the judgment or order is appealed from):-
    • Part only of the Judgment of Faukona J dated 21^st April 2020 relating to the sum of USD$127,503.25 mentioned in paragraphs 11, 14, 15, 16, 17, 18, and Order 1.
    • The grounds of appeal are:-
    1. 1.The Court below erred when it found the sum

of $127,503.25 to be in US currency and not in

Solomon Islands currency as adduced in evidence at trial.

1.1 In the sworn statement of Walter Ting Hua Aik at Exhibit 4 the sum due and owing on the Lease Agreement dated 15^th December, 2016, was SBD$127,503.25
1.2 The sum of USD$127503.25 was never pleaded in the statement of case nor were there evidence adduced to show that the Defendant owed the Claimant the said sum.

2. In consequence to the error in Ground 1, the court erroneously made the order referred to as Order 1 mistakenly enriching the Respondent in the sum of SBD$854,271.27 (Solomon Islands currency).
3. By the said mistake, the Court had deprived the Appellant of the sum of SBD$854,271.77 (Solomon Islands currency).

The appellant seeks the following judgment in lieu of that appeal (sic.) from:-

1. The Order 1 in the judgment of the Court below dated 21^st April, 2020 be set aside and replaced with USD$165,000.00 being for three months charter fee in liu of notice and SBD$127,503.25 being balance due and owing to the Respondent on the Lease Agreement dated 15^th December, 2016;
2. And further all the references to sum of USD$127,503.25 in paragraphs 11 to 15 of the judgment of the Court below dated 21^st April, 2020 be mended and replaced with SBD$127,205.25.
3. Costs.

13. The appellant has no issue about US$165,000.00 being awarded to the respondent for three months charter fees in lieu of notice. It however, takes issue with US$127,503.25, being awarded to the respondent. It argued that this amount should have been awarded in Solomon Islands currency, viz; SBD$ 127,503.25. This is the only issue for determination by the Court.

14. The learned primary judge awarded total of US$292,503.25 which is made up of US$165,000.00 and US$127,503.25. If the appellant’s argument is accepted, the amount it would pay would be US$165,000.00 plus an amount that is equivalent to SBD$127,503.25 in US dollars, which would be much less than the amount awarded to the respondent.
15. The basis of the appellant’s argument is the statement of accounts annexed as Exhibit "WTHA 4" to Walter Ting Hua Aik's statement in support, purportedly showed the amount of SB$127,503.25 in Solomon Islands currency. According to the appellant, that was the amount due for it to pay.
16. The gist of the appellant's arguments seem to us to appear at paragraphs 20 to 26 of the appellant's Outline of Submissions and paragraphs 2 to 4 of the appellant's Submissions in Reply.
17. The essence of the submissions by Mr. Lazarus Kwaiga, of counsel for the appellant in paragraphs 20 to 26 of the appellant's Outline of Submissions is that the learned primary judge erred in finding that US$127,503.25 was the amount owed for payment by the appellant. He argued that the primary judge fell into error for two reasons. First, the amount was never pleaded by the respondent in the Statement of the Case. Second, there was no evidence that this amount was due for payment by the appellant. In paragraph 2 of the appellant's Submissions in Reply, Mr Kwaiga argued that Walter Ting Hua Aik's affidavit, which the primary judge relied on showed that the amount of US$137,500.00 was due for payment. However, he argued that this amount was shown to be due for payment by the first Statement of Account recorded up to 6 March, 2017, whilst the sum of SBD$127,503.25 was the amount due for payment. This amount was shown by the second Statement of Account recorded up to 24 March, 2017. This is reflected in paragraph 3 of Mr. Kwaiga's submission where he said - " The second Statement of Account was more recent statement and the learned trial Judge referred to it as such at Paragraph 15 of his Judgment and I quote: "I do not know much about accounting but the second statement should finally settle the claim...".
18. His Lordship's remarks in paragraph 15 of his judgment reads: "I do not know much about accounting but the second statement should finally settle the claim. US$127,503.25 should settle claim (sic.). I therefore award that amount". (Our underlining).
19. Thus, Mr. Kwaiga argued that the learned judge erred in stating that the second Statement showed US$127,503.25, which is the amount awarded and not SBD$127,503.25 in Solomon Islands currency "as was shown in the second Statement of Account".
20. It is clear to us that the learned primary judge's remarks in paragraph 15 of his judgment were misconstrued by the appellant's counsel in so far as his submissions seemed to have suggested that the learned primary judge did not consider the records of the second Statement of Accounts. As it can be noted from the excerpts of the judgment we reproduced above, the learned primary judge considered the records of both Statements of Accounts relating to all the transactions from 5 December, 2016 to 24 March, 2017. His Lordship's remarks in paragraph 15 of his judgment were based on his findings from the records from both Statements of Accounts. His Lordship also made a specific finding that US$127,503.25 was the correct amount due for payment by the appellant under the terms of the agreements. We cannot find any error in the learned primary judge’s findings and we reject the arguments put forward by the appellant.
21. The appellant is essentially asking this Court to substitute US$127,503.35 (in US currency) with SB$127,530.25, in Solomon Islands currency to reflect what it says was shown in the respondent’s statement of account. This argument is clearly misconceived and has no merit.
22. There is also a fundamental legal reason for this Court to refuse the appellant's arguments. That is, it is an established principle of the law of contract that the rights and obligations of parties to a contract flow from the terms of the contract. Those terms spell out the intention of the parties. In this case, according to the terms of the agreements, which we find are clear and unambiguous, the parties agreed that the rents and the charter fees for the two vessels would be paid by the appellant in US currency. Also, the parties have already performed their respective obligations under the agreements. In the appellant's case, it had already made payments for the vessels' rents and charter fees in the US currency. Accordingly, the learned primary judge also found that pursuant to the terms of the agreements, the amount of US$127,503.25 was due for payment by the appellant. We do not find any error in the learned primary judge's finding.
23. The above principles were emphasized by Isaacs ACJ in The Crown v. Clarke [1927] HCA 47; [1927] 40 CLR 227, in which his Honour said:
    • “...that to create a contractual obligation there must be both offer and acceptance. It is the union of these which constitutes the binding tie, the obligation.
    • But acceptance is essential to contractual obligation, because without it there is no agreement, and in the absence of agreement, actual or implied, there can be no contract. Lord Kinnear in Jackson v. Broatch (1900), 37 S.L.R. 707, at p. 714 said: It is an excellent definition of a contract that it is an agreement which produces an obligation...”
24. For these reasons, the appeal is dismissed.
25. The appellant will pay the respondent's costs of and incidental to this appeal. Such costs to be taxed, if not agreed.
26. Orders accordingly.

Goldsbrough P
Lunabek JA
Member
Gavara-Nanu JA
Member