AGC Finance (SI) Ltd v Maguwere Enterprises Ltd [1997] SBHC 59; HC-CC 318 of 1995 (12 May 1997)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 318 of 1995

AGC FINANCE (SI) LIMITED

-V-

MAGUWERE ENTERPRISES LIMITED AND JACOB MATE

High Court of Solomon Islands
(Lungole-Awich), J)

Hearing: 12 May 1997
Judgment: 12 May 1997

J Sullivan for the plaintiff
C Ashley for the Defendants

JUDGMENT

(LUNGOLE-AWICH, J): Introduction; the Transaction: The plaintiff is AGC Finance (SI) Limited, a finance company. On 27.10.1993 it entered a lease agreement with the first defendant, Maguwere Enterprises Limited in terms of which it purchased a new commercial vehicle, a 15 seater bus, for $77,187 and let it to the first defendant. In turn the first defendant was to pay rental of $2,580 per month for 24 months. The second defendant, Mr Jacob Mate is a director in the first defendant company. On the same day of the lease agreement between the plaintiff and the first defendant, the second defendant entered a contract of guarantee wherein he promised to pay the debt of the first defendant in the event that the latter fails. Apart from testimonies, evidence of the two agreements were presented in the form of the written agreements, received in court as exhibits No. 1 (the two in the one document).

The Plaintiff’s Claim

The plaintiff alleged in its claim that the first defendant, by the date of the claim, 17.10.1995, had failed to pay the rentals and was in arrears of $59,730.00, had taken the vehicle to a garage for repair and had failed to pay the repair costs of $3,177.40; the garage had exercised lien upon the vehicle. The defendant paid the repair costs and took possession of the vehicle, and subsequently sold it for $18,000. The plaintiff therefore claimed the total sum of $20,652.40.

The Defence

The defendants entered appearance and filed defences and counter claim through their solicitor Mr Ashley. Pleadings came to a close and Mr Ashley signed a certificate of readiness dated 23.10.1996 and filed at court on 10.2.1996. The case was listed for trial today 12.5.1997. Learned counsel Mr Sullivan for the plaintiff was in court ready to present the plaintiff’s case. He had witnesses subpoenaed. Mr Ashley, for the defendants, was not in court nor were the defendants. Mr Ashley reported to court later, and explained that he wished to remain in court during the trial and watch the proceedings, but he would not conduct the defendants’ case. He said that the defendants had failed to respond to his letters and therefore he had no instruction to proceed to present their cases in court. Mr Sullivan urged the court to proceed with the trial; he cited Order 38 at rule 5 of the Civil Procedure Rules of the High Court. I saw no reason not to proceed and so I directed the case to proceed as provided in Order 38 rule 5.

The Trial and Evidence

Despite being aware that there would be no cross examination, because of the absence of the defendants, Mr Sullivan was meticulous in leading evidence to prove each fact alleged in the pleadings. He led evidence among others to establish the lease and the contract of guarantee, now exhibits No. PW1 in court, the purchase of the new vehicle, supported by invoice, now exhibit No. PW2, failure of the first defendant to pay the correct sum of rentals right from the first month until March 1995 when the vehicle was repossessed, failure to pay off repair bills, sale of the vehicle after advertisement in newspaper, valuation of the vehicle and that $18,000.00 was the best price the plaintiff could obtain. Further Mr Sullivan called evidence to prove that notice was given to the second defendant, of the default of the first and that the second defendant has failed to pay up the debt of the first defendant. Mr Sullivan’s proof of the material facts cannot be faulted in any way. I find that he has, on behalf of the plaintiff, proved all the facts upon which the plaintiff’s claims against the two defendants are based.

The Law and Decision

In terms of the lease, exhibit No. P1, at paragraphs 4 (a) and 5 (ii) (a) in particular, the plaintiff was entitled to discharge repairer’s lien and to repossess the vehicle, as the result of the default of the first defendant to keep the vehicle free of lien, and to pay the monthly rental. The defendants default in paying the rental was continual. Witnesses said that the first defendant was in default right from the first payment. His record, exhibit No. PWO4, confirmed so.

The plaintiff was also entitled to call upon the second defendant, the guarantor, in terms of the contract of guarantee, to pay up the debt of the first defendant upon the default of the first defendant. The defences raise by both defendants have been completely negatived by the evidence adduced by the plaintiff.

Mr Sullivan made the point that default in payment of hire instalments is repudiation of the lease. He cited two cases in support of that proposition: Bowmakers Limited -v- Barnet Instruments Limited [1944] 2 All ER 579 and Interoffice Telephones Limted -v- Robert Freeman [1957] 3 All ER 479. In my view, Mr Sullivan made that submission out of abundance of caution; he had already amply established his case based on the terms of the lease and the contract of guarantee.

I note that the latter case, Interoffice Telephones Ltd -v- Robert R Freeman, is useful authority or persuasion in assessment of damages in hire cases. I have applied it in this case. The starting point is the general rule that, “........................as far as possible, he who has proved a breach of a bargain to supply what he contracted to get, is to be placed, as far as money can do it, in as good a situation as if the contract had been performed” - per Viscount Haldane LC in British Westinghouse Electric and Manufacturing Company Limited -v- Underground Electric Rys Company of London, Ltd (6) [1912] UKLawRpAC 43; [1912] AC 673 at page 689. That principle was applied in sale of goods contracts, in the important cases of Re Vic Mill Ltd (1) [1913] UKLawRpCh 31; [1913] 1 Ch 465 and Thompson -v- Robinson (2) [1955] 1 All ER 154. Jenkins L J in Interoffice Telephones -v- Robert Freeman Company [1957] 3 All ER 479, the case cited by Mr Sullivan, said that he saw no reason why the principle, as applied in sale of goods contracts should not apply in the case of hire. I take that as the correct approach in assessment of damages in this case in our court. The correct assessment of damages is to aim at putting AGC, the plaintiff, in the situation as if all the 24 hire instalments have been paid. That way, the element of the profit in the business is included. In effect what the court awards to the plaintiff is the total sum for the 24 instalments, less the total sum that has been paid by the defendant, and further, less $18,000.00, the sum for which the repossessed vehicle was sold.

The second case cited, Bowmakers Limited -v- Barnet Instruments Limited, is really about ownership in the once very popular contracts of hire-purchase, and about the effect of illegality in that case as regards the right of ownership in the goods. The hirer there had defaulted and in fact had sold away the goods, the subject of hire.

The Judgment Order

Judgment is given for the plaintiff against both defendants for:

1. the sum of $20,652.40 being the aggregate of all the 24 instalments, less the sum paid up to the date of repossession, and the sum that the vehicle was sold for, and add the sum paid for repair so as to discharge lien.
   
2. Interest at 20% from 20.9.1995 to date of judgment, and further, from the date of judgment to date of full payment. The rate of 20% was pleaded in the statement of claim dated 17.10.1995 and filed on 18.10.1995.
   

The defendants’ counter-claims cannot succeed. The interpretations of the lease agreement, as given by the defendants in their filed defences are incorrect. The defendants’ verbal offer to pay $15,000 so as to revive the agreements were not supported by tendering of the money. Even so, it was not a matter of right they could raise with the plaintiff. In any case it fell short of the sum required to make good the defendants’ default. The counter-claims are dismissed.

Order for Costs

Costs for the plaintiff’s claim and for its success in defending the counter-claims are awarded to the plaintiff, against the defendants.

The Conduct of the Case

I must mention here that the court is much obliged for the most able assistance that learned counsel Mr Sullivan has rendered to court in this case. He was systematic and thorough in the presentation of his case. He had the legal authorities with citations ready for the propositions of law he advanced to support his case. He made it possible for court to prepare judgment fast. I hope that some practitioners who are not in the habit of researching their cases and presenting authorities will take note.

Dated this 12th day of May 1997
At the High Court
Honiara

Sam Lungole-Awich
Judge

CC 318 OF 1995

AGC

-V-

1. MAGUWERE ENTERPRISES LTD
2. JACOB MATE

LIST OF EXHIBITS

P1: AGC Lease agreement dated - stamped 29.10.1993.

PWO2: Tongs Invoice for IX New Isuzu 15 Seater Bus.

PWO3: Cheque Voucher (Backing) dated 26.10.1993, for $77,187.00

PWO4: Lease Payment Schedule (Account) No.51003-0980-001 in the name of Maguwere Enterprises Limited.

PWO5A: JJ Auto Repair invoices No.5817.

PWO5B: JJ Auto Repair invoices No. 5987.

PWO5C: JJ Auto Repair invoices No. 7422.

PWO5D: JJ Auto Repair invoices No. 7527

PWO5E: JJ Auto Repair invoices No. 7529.

PWO5F: JJ Auto Repair invoices No. 7585.

PWO6: Cheque voucher (Backing) dated 30.3.1995 for $3,177.40.

PWO7: Statement of Bank account of AGC in which cheque No. OO8385 for $3,177.40 appears.

PWO8A: Star Newspaper Advertisement.

PWO8B: Star Newspaper Advertisement.

PWO8C: Voice Newspaper Advertisement.

PWO9A: Letter of Tender dated 28.5.95.

PWO9B: Letter of Tender dated 31.5.95.

PWO9C: Letter of Tender dated 30.5.95.

PWO9D: Letter of Tender dated 29.5.95.

PWO9E: Letter of Tender dated 29.5.95.

(A. S. Vilaka).

PWO9F: Letter of Tender dated 26.5.95.

PWO10: Hand written note dated 29.5.95.

PWO11: Harvest Pacific Limited, Assessment of Market Value for vehicles with-held.

PWO12: Letter of Tender dated 5.9.95.

PWO13: File note dated 18.9.95.

PWO14: Letter to QBE Insurances dated 19.9.95.

PWO15: Letter of Motor Vehicle Licensing Officer dated 19.9.95.

PWO16: Letter to Directors, Maguwere Enterprises Limited dated 19.9.95.

PWO17: Letter to Alfred Haynes dated 9.6.95.

Sam Lungole-Awich
Judge

Date: 12 May 1997