Totorea v Grainger Corporation (Vanuatu) Ltd [1997] SBHC 118; HCSI-CC 74 of 1995 (28 July 1997)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 74 of 1995

JOSEPH RODI TOTOREA

v

GRAINGER CORPORATION (VANUATU) LTD AND OTRS

Before: Palmer Jearing:ring: 16th June, 1997
Judgment: 28th July, 1997

Counsel: F. Waleilia for the Applicant/Plaintiff
Sol-Law for the First and Second Defendants

PALMER J.:/p>

This is an appl application by summons filed on 2nd June, 1995 for the appointment of a receiver pursuant to Order 53 Rule 6 of the High Court (Civil Procedure) Rules, 1964. The main thrust of the argument of the Applicant is that it would be just and convenient to do so in the circumstances of this case where it is clear that funds of Honiara Gaming Club have been dissipated by the Defendants. The appointment of a receiver therefore is vital for the preservation of the property of Honiara Gaming Club pending determination of the substantive issues in the case.

Lengthy submissions have been made by learned Counsel for the Applicant, Mr Waleilia, on documentary evidence obtained by subpoena duces tecum with the aim of showing to the Court that a very strong possibility exists that money had been dissipated instead of being paid into the Solicitor's Trust Account sanctioned by the Court and that thereby the Applicant stands to lose out at the end of the day if those funds are not properly accounted for and managed pending trial of the substantive issues in this case. This included claims that funds have been diverted into the Defendant's new gaming business set up after the closure of the Honiara Gaming Club, and that these are being enjoyed at the expense of the Applicant. Also that property of Honiara Gaming Club had been removed and possibly used in the new gaming business of the defendants and are being subject to wear and tear, which would affect their value if at the end of the day the Applicant wins his case.

The main argument of the Respondents in opposition to the application of the Applicant is that considerable time had lapsed since the closure of business of Honiara Gaming Club and that in the circumstances it would not be just and convenient to have a receiver appointed at this late hour. Whatever assets and property of the business there are, are being looked into, collected and managed by Mr Fargas, Attorney for the First Defendant and General Manager of Honiara Casino Limited, and that in the circumstances, no further advantage would be gained by the appointment of a receiver.

I do not consider it necessary to go through all the affidavit evidence and documents produced by witnesses who had been subpoenaed in an attempt to show that there are funds in existence which needed to be accounted for and which possibly may have been diverted into the gaming business of the Defendants. It is my respectful view that the very fact that the business had closed down warrants the appointment of a receiver (an independent person) for the preservation of the property (in this instance the money proceeds and assets of the business) pending determination of the substantive issues in the case. Especially in the light of affidavit evidence produced before this court which seek to show on a prima facie basis (though I accept that these are matters which can be fully canvassed at trial), that there may have been equipment and money proceeds diverted into the new gaming business of the Defendants (Honiara Casino Limited), and are being used to the prejudice of the Applicant's claim, who has to wait patiently for the outcome of his case, which case touches on the ownership of those items. In such situations, it is important that the assets of the business and whatever money proceeds there are should be traced and preserved. Whilst I appreciate that Mr Fargas may have done the best he could in the circumstances to collect and manage whatever property there are, I am still not satisfied that he is the best person to carry out that responsibility in view of the fact that he also has the interests of the First Defendant in mind. A receiver (being an independent person) would be in a superior position with his accounting background, to be able to trace those funds and assets and collect and preserve them. If the Applicant wins his case at the end of the day, he would at least have the benefit of property that has been preserved and not run down by wear and tear. Also if there are funds that belong to the business then they would be earning some form of interest if collected and preserved in an interest bearing account.

I have also weighed the effects if any that such an appointment may have on the defendants, but with respect, any prejudice caused will be minimal.

There have been some suggestions that the Applicant had acquiesced in having the properties, if any, of Honiara Gaming Club and any funds dissipated enjoyed by the defendants as against their alleged rights by delaying to take immediate steps to address this issue. Unfortunately, it is clear on the records that the Applicant had sought to take positive steps immediately towards the appointment of a receiver as early as June of 1995, when it became clear to him that there were funds and property of the Honiara Gaming Club which were not being accounted for and possibly being removed. Unfortunately, due to so many factors intervening, and with much opposition from Defendants, the application was not completed until this year. I am not satisfied blame should be placed on the shoulders of the Applicant for the delay in this application. He had done all he could in difficult circumstances to have a receiver appointed to protect and preserve the assets and property of Honiara Gaming Club pending determination of the substantive issues in this case.

This brings me to consider the costs of having a receiver appointed. Mr Waleilia has sought to submit that if one were to be appointed then at the most, his costs can be limited to say $5,000.00 so that at least the expenses do not go beyond what can safely be collected and preserved. Taking into account, the affidavit evidence and documentary evidence that have been adduced, I am satisfied this is a reasonable figure within which the receiver can work within.

The primary purpose of the receiver in the circumstances of this case would be to collect and secure whatever funds or property of Honiara Gaming Club there are, pending determination of the substantive issues in this case.

ORDERS OF THE COURT:

1. Order that a Receiver be appointed, subject to the approval of this Court, to collect and secure, whatever funds and property of Honiara Gaming Club and to account for them until final judgment or further order.

2. Costs of this application to be borne by the Defendants.

THE COURT