Chan Wing Motors Ltd v Attorney-General [1997] SBHC 77; HC-CC 258 of 1997 (28 October 1997)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 258 of 1997

CHAN WING MOTORS LIMITED

-V-

ATTORNEY-GENERAL

High Court of Solomon Islands
(Palmer J)

Hearing: 27th October, 1997
Ruling: 28th October, 1997

J. Sullivan for the Applicant
P. Afeau - Attorney-General

PALMER J.: The Applicant applies for inter alia, a declaration against the Solomon Islands Government and Comptroller of Customs and Excise, that the Applicant be entitled to possession and control of six (6) containers of Victoria Bitter beer presently held in the Plaintiffs bond store at Chinatown Honiara, plus a shipment of eight (8) containers about to be off-loaded at the wharf today or in the next day.

The Applicant relies on an agreement entered into with the Minister of Finance for and on behalf of the Government of Solomon Islands on or about the 18th August, 1997. A copy of the said agreement is exhibited in the affidavit of Thomas Ko Chan, filed 13th October, 1997, and marked "CWL 2". That agreement granted to the Applicant according to the Attorney-General a duty remission of SI$5.11 per litre on the import duty levied (see paragraph (2) of page 1 Exhibit "CWL 2"). The Applicant accordingly was obliged under the agreement to pay to the Government the balance of $3.89 per litre of VB beer imported. This was a means of raising funds for the Rove Prison Complex drawn up between the Government and the Applicant. The Applicant however appears to contend that the only obligation he has under the agreement is the payment initially of the sum of SI$812,500.00 per month for a period of 24 months commencing in October of 1995. This will bring the total amount due under the agreement to $19,500,000.00 and is the amount due under the agreement for the remission granted of $5.11 per litre referred to in paragraph 2 of page 1 of exhibit "CWL 2". I note there appears to be a dispute as to the correct amount of duty or money due under the agreement for the period October 1995 to about June 1996. According to exhibit "CWL 6" in first affidavit of Thomas Chan, arrears for 8 months were calculated at $6,500,000.00. It appears a demand has been made for this. The Applicant however disputes this claiming that no formal notice of assessment of arrears had been issued pursuant to the agreement.

On or about 18th June, 1996 the agreement was varied with an increase in remission of duty (see affidavit of Thomas Chan filed on 13th October, 1997 paragraph 11-12 and exhibit "CWL 9). The amount required to be paid by the Applicant on a monthly basis was now reduced to $361,221.00 effective from 31st June, 1996 for 24 months.

The agreement appears to be further varied on or about 15th July, 1997 further reducing the amount payable per month to between $200,000.00 and $140,000.00, payable in weekly instalments of between $50,000.00 and not less than $35,000.00 (see para. 14 and exhibit "CWL 11" of first affidavit of T. Chan).

On or about 23rd September, 1997, the agreement was purportedly terminated by the Comptroller of Customs and Excise with effect from 19th September, 1997 (see para. 15 and exhibit "CWL 12"). By letter dated 25th September, 1997, the Applicant rejected the termination as a wrongful repudiation of contract and elected to affirm. It has continued since to perform its obligations as it perceives them under the agreement pending determination of the substantive issues in this case.

Unfortunately, the parties cannot come to agreement as to what should be done with the containers of beer under the current agreement. The Attorney-General initially took the view that because the agreement had been terminated, that the containers of beer now attract the full duty of about $9.00 per litre, and that the Applicant was obliged to pay up on the arrears calculated by the Comptroller of Customs, I believe for the period from October 1995 to about June of 1996. After much discussion, the parties still cannot agree on suitable interim arrangements pending determination of the substantive issues. The Applicant wishes to have his application heard forthwith because of the urgency of the situation and the repercussions on its business if the issues are not sorted out quickly. The Attorney-General on the other hand, seeks an adjournment to allow him to take instructions and file affidavits. Whilst the Applicant is prepared to consent to an adjournment, it views the matter regarding the six containers of beer currently under bond and those about to be landed if not already landed in storage, as extremely urgent and cannot be deferred. It therefore seeks interim orders for the release of those containers on suitable just terms if the court is minded to grant an adjournment.

Having considered the application of the learned Attorney-General I am satisfied it would be in the interest of the justice of this case that such an adjournment is given. That does not mean however, that I have overlooked the concern of the Applicant as to the reasons for raising urgency in their case. In my respectful view, the status quo between the parties should be preserved as much as is possible pending the determination of the substantive issues in dispute, but at the same time ensuring that the parties are not prejudiced by the orders of the Court. Taking all factors raised into account, I make the following interim orders:

1. The amount of $175,000.00 so far paid as advance duty towards the containers of beer as per the agreement between the parties be credited towards payment of duty due in respect of the six (6) containers currently held in bond store at Chinatown, Honiara at the rate of $1.67 per litre.
   
2. The Applicant shall have the right to possession and control of six (6) containers of Victoria Bitter beer presently held in the Plaintiffs bond store at Chinatown Honiara on payment of the outstanding amount due or such containers as shall be covered in the sum of $175,000.00 paid so far.
   
3. The rate of $1.67 per litre shall continue to apply as the duty payable under the agreement for the eight (8) containers already landed or about to be landed on shore.
   
4. The weekly payment of not less than $35,000.00 shall continue to be made as payment towards that duty and the Applicant entitled to take out such containers as have been paid for.
   
5. The Applicant files an undertaking within 24 hours that in the event the Respondent wins this case and it be found that more duty is payable that it will pay up including any other damages that might have accrued to the Respondent as a result within thirty days. This undertaking shall include any arrears properly assessed and declared to be outstanding.
   
6. Mr Thomas Chan to file a guarantee also within 24 hours that in the event the Applicant defaults, that he shall be personally liable to pay up within 30 days. I have considered the submission of the learned Attorney-General that a bank guarantee be put up, but in my respectful view that is not necessary in the circumstances of this case. First, no allegation or submission has been made that Mr Chan personally may not be able to fork out the necessary money if the Applicant should default. There is no suggestion that Mr Chan intends to escape his responsibilities in the near future by leaving the shores of this country and hiding somewhere. On the contrary, this Court takes judicial notice of the fact that Mr Chan has all or most of his business interests stabilised in this country and that therefore questions of accessibility and capacity appear not to be in issue at this stage. The Court is mindful of the fact that millions of dollars are at stake, but there is no suggestion that the Applicant or Mr Chan personally may not be able to come up with the required sums if found to be lawfully due. As rightly pointed out by Mr Sullivan, requiring a bank guarantee at this early stage of the proceedings and bearing in mind the likely prospects of success (put by him as very strong), I am satisfied it would be unjust to impose such a burden which would have the effect of unnecessarily tying up his other business interests over this one issue.
   
7. The Comptroller of Customs to issue a formal notice of assessment of arrears as soon as possible but shall not be more than thirty (30) days from the date hereof. If no dispute arises, then suitable arrangement should be worked out between the parties for payment on monthly instalments. If a dispute arises pursuant to the agreement, then that dispute should be included in the substantive hearing of this case.
   
8. Liberty to apply on two days notice.
   

9. Costs in the cause.

THE COURT.