Dalgro (SI) Ltd v Concrete Industries Ltd [2000] SBHC 98; HCSI-CC 184 of 2000 (25 September 2000)

CC 184/00 HC

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case 184 0f 2000

DALGRO (SI) LIMITED

V

CONCRETE INDUSTRIES LIMITED

High Court of Solomon Islands
(Palmer J)

Civil Case Number 184 of 2000

Hearing: 5th July 2000
Judgment: 25th September 2000

Sol-Law for the Plaintiff/Applicant
Bridge Lawyers for the Defendant/Respondent

PALMER J: This is an application of Dalgro (SI) Limited (hereinafter referred to as “Dalgro”), by Amended Summons filed 27th June 2000, for orders inter alia, for specific performance of the agreement dated 11 October 1996 (hereinafter referred to as “‘the Agreement”) in accordance with the Minutes of Judgment annexed; in the alternative, directions as to the pleadings in and further conduct of the action.

The facts in so far as they are not in dispute can be summarised as follows. In or about 11th October 1996, Dalgro entered into a written agreement with Concrete Industries Limited (hereinafter referred to as “Concrete”) (see Exhibit “KD2” annexed to the affidavit of Keith Douglas filed 14th June 2000), for the sale and purchase of part of the Fixed-Term Estate in Parcel No. 192-016-12 (hereinafter referred to as “the Property”) situate at Burns Creek, Honiara for the sum of $200,000-00. It was a term of the Agreement inter alia, that:

“(c) The balance of the Sale Price shall be offset against cost to the value of SBD100, 000-00 being for reclamation of the area being sold. Its demarkation points to be determined but no less than 1.00 hectare in area.”

The area of the land to be transferred was subsequently demarcated by reference points agreed to by late Alan Boso in his capacity as a Director of the Defendant, and Keith Douglas, Managing Director of Dalgro (see paragraph (4) of the affidavit of Keith Edward Garland Douglas and annexure marked ‘‘KD-3”‘filed 14th June 2000). The area was estimated at approximately 1.2 hectares (see annexure “KD 3”).

Clause (b) of the Agreement required the payment of 50% of the purchase price to be in cash. This was paid as follows:

(1) $49,930.22 paid on 22nd November 1996,

(2) $30,000.00 on 1st October 1997, and

(3) $20,000.00 on 22nd December 1997.

It is not in dispute the amount outstanding is minimal, $69.78. Dalgro argues it had complied with Clause (b) of the Agreement. I do not think this can be seriously contested by the Defendant.

Clause (c) of the Agreement required:

“the Balance of the Sale Price to be offset against cost to the value of SBD100, 000.00 being for the reclamation of the area being sold......”.

Dalgro also argues it had complied with the second requirement as well. In the circumstances, they argue, Concrete was obliged to give effect to the transfer of the Property in favour of Dalgro.

It is not in dispute, the Fixed-Term Estate in Parcel Number 192-016-12 was duly sub-divided on 3rd December 1997 into parcel numbers 192-016-14 and -15 (see paras 8 and 9 of the affidavit of Douglas and exhibits “KD-5” and “KD-6”). Consent for the subdivision had been sought by the Defendant from the Commissioner of Lands (hereinafter referred to as “the Commissioner”) by letter dated 19th August 1996 (see exhibit “KD-6”). By letter dated 16 February 1998, the Commissioner granted his consent to the transfer of the Fixed-Term Estate in Parcel Number 192-016-14 to Dalgro. On 21st January 1998, Concrete and Dalgro executed a transfer of the Fixed-Term Estate in Parcel Number 192-016-14. A copy of that transfer instrument is marked Exhibit “KD-7”. The amount of the consideration entered was $150,000.00. This has been conceded by the parties to have been an underestimation of the real consideration for the transfer. The true consideration should have included the cost of the reclamation works; the sum of $100,000.00. The true value of the consideration thus should have been $250,000.00. Dalgro concedes more stamp duty should have been paid and are willing to pay the correct amount of duty if their application for specific performance is granted.

Sometime in early February 1998, Keith Douglas of Dalgro and Mr Peter Boyers, Director of Concrete agreed orally for the purchase price to be increased by an additional sum of SBD50, 000.00. This was paid in two instalments; $25,000.00 on 10th February 1998 and another $25,000.00 on 26th March 1998 (see copies of receipts issued marked “KD-8”). On or about 5th March 1998, Dalgro wrote to Concrete attaching a cheque in the sum of $5,625.00 being payment of stamp duty for the transfer of the Property Parcel No. 192-016-014 (see “Exhibit KD-9/Document 1”). On or about 6th March 1998, the said transfer was lodged for stamping with the Commissioner of Inland Revenue (see “Exhibit KD-9/Documents 2 and 3). Paragraphs (2) and (3) of the letter dated 6th February 1998 (note the month of “February” appears to have been a typographical error- it should read “March” instead) reads:

“Please do call up the Registrar’s Office for your title registration.

Once again, thank you for your usual assistance and now we close our file.”

Dalgro assumed all was well and proceeded to have a charge registered over the said Property in due course. To its surprise the charge was returned with a note that the fixed-term estate in the said Parcel No. 192-016-14 remained the property of Concrete (see Exhibit “KD-10”). Dalgro realized lines had crossed somewhere. It consulted its Solicitor and a “Notice to Complete” was subsequently delivered to Concrete requiring completion by 28th April 2000 (see Exhibit “KD-13”). Concrete refused to comply resulting in this action for inter alia, specific performance.

Concrete have filed Memorandum of Defence on 4th July 2000. A number of matters have been raised in the defence. First, Concrete disputes that the value of the reclamation work came to $100,000.00. It argues the value of the reclamation work was much less. Dalgro argues the reclamation work was to be done for the value of $100,000.00. It claims it had fulfilled its part of the bargain and therefore its work must be offset by the $100,000-00. Concrete cannot now go back on its word and say that the work was done for only less.

The relevant clause in the Agreement is Clause (c). It reads:

“The Balance of the Sale Price shall be offset against cost to the value of SBD100, 000.00 being for reclamation of the area being sold.”

Clause (c) is premised upon the assumption that the reclamation work to be done by Dalgro would be to the value of $100,000.00. It failed in my respectful view to take into consideration, what if its value was to be less, or more, than the $100,000.00 envisaged in the Agreement. The Agreement simply did not take that contingency into account.

I accept as correct, what Mr Boyers says in his letter dated 19th April 2000, at paragraph 1, (Exhibit “KD-14”), that the reclamation cost was at its cost. This meant if the cost of the reclamation work for instance, had been more than $100,000.00, it would have only been reasonable it seems, for Dalgro either to seek to bill Concrete for the extra cost incurred, or work out an offset. Similarly, if the value of the work had been much less as alleged by Concrete, then the amount outstanding could be off-set by cash payments, or other suitable arrangements. What is relevant is that the value of the reclamation work has been queried; the Agreement does not provide for it and thus, would have to be determined on trial. Evidence would have to be adduced to prove the value of the work done by Dalgro on the reclamation work. If it turns out to be more, Concrete will be required to reimburse Dalgro for the cost, and vice versa.

The second issue raised in defence pertains to the total area to be transferred. Concrete argues that the area initially agreed to be transferred for $200, 000.00 was 1 hectare. When it became clear later that the total area would be increased by 0.2 hectares, it was agreed to increase consideration by a further $50, 000.00. Concrete argues this is consistent with its view that any increases in the area was not to be made without appropriate monetary payment.

Clauses (a) and (c) of the Agreement are the relevant clauses.

“(a) The sale price shall be Two Hundred Thousand Solomon Bank Dollars.

(c) The Balance of the Sale Price shall be offset against cost to the value of SBD100, 000.00 being for reclamation if the area being sold. Its demarcation points to be determined but no less than 1.00 hectare in area.”

Clause (a) fixed the sale price at $200, 000.00. The area unfortunately was vaguely described as “not less than 1.00 hectare.....”. I do not agree with the view that this phrase is not ambiguous. Two possible constructions can be made regarding this phrase. The first construction is that taken by Concrete; that the price of $200, 000.00 was to be for 1.0 hectare only. If it was to be increased beyond 1.0 hectare, the sale price would have to be re-negotiated. The other possible construction is that taken by Dalgro that the area does not necessarily have to be exactly 1.0 hectare. It might be slightly more. The ambiguity which arises is by how much more.

My view on the matter is that the construction sought to be placed on the agreement by Concrete is the correct construction; that the Agreement only envisaged the area of 1.0 hectare to be sold for $200, 000.00. I am fortified in this view, by the fact that, when it was later estimated that the area to be transferred was to be 1.2 hectares, a further payment of $50,000.00 was agreed to be made. The matter unfortunately was complicated when it was discovered after the demarcation points were finally plotted, the final area turned out to be 1.7 hectares; 0.5 hectares more than what was originally estimated and agreed upon.

Dalgro contends the extra $50,000.00 was for the all the remainder of the area included in the transfer (see paragraphs 11 - 13 of the Affidavit of Mr Douglas filed 14th June 2000) and not merely for the 0.2 hectares claimed by Concrete. Herein lies the bone of contention.

Concrete have adduced affidavit evidence, (see Paragraph 4 of the Affidavit of Peter Boyers filed 5th July 2000) that the price agreed upon ($200,000.00 - see Clause (a)) was for the purchase of 1.00 hectare of land. I have ruled in favour of this view. Concrete have also adduced evidence which sought to suggest that the payment of the extra $50,000.00 agreed to by the parties, was for payment of the extra 0.2 hectares it was initially estimated the area of the demarcated land would turn out to be (see Paragraphs (4) and (5) of the Affidavit of Peter Boyers filed 5th July 2000). On discovering the final area demarcated was 1.7 hectares, Concrete refused to complete unless payment was made for the extra 0.5 hectares included (see Paragraphs (6) - (8) if same affidavit if Peter Boyers). At paragraph (10) of his affidavit, Mr Boyers gave reason as to why the transfer document had been executed.

One of the arguments raised by Dalgro against the defence sought to be put forward by Concrete was that these were mere assertions without evidentiary support. Unfortunately, I disagree. I have already pointed out the matters deposed to by Mr Boyers in his affidavit which would have to be tested in evidence at trial. What is clear to me at this point of time is that there exist a valid dispute as to whether there was a verbal agreement between the parties, to vary the Agreement, by increasing the purchase price by $50,000.00, to cater for the extra 0.2 hectares it was initially assumed the demarcated area of the Property was going to be, or whether the extra $50,000.00 was for the full and final settlement price of the Property.

This brings me to consider next the Notice To Complete (Exhibit “KD-13”) issued by Dalgro requiring Concrete to complete within 14 days.

The Notice to Complete issued in this particular case in essence sought to make time essential to the performance of the Agreement requiring Concrete to complete within a prescribe time period, failing which Dalgro would exercise its option to either affirm the Agreement and transfer and sue for specific performance, or rescind the said Agreement.

Concrete however did not complete, raising the same two arguments in its defence; that Dalgro had not done reclamation work to the value of $100,000.00 and secondly, that it had acquired more than what was initially agreed. Dalgro does not deny that the area acquired was initially estimated at 1.2 hectares (see paragraph 8 of the Plaintiff’s Submissions) and that the additional $50,000.00 was agreed to reflect this discrepancy. The affidavit evidence adduced by Concrete on the other hand differs to the extent that the $50,000.00 was specifically to cater for the extra 0.2 hectares it was estimated the area to be transferred was going to be and not merely for any discrepancy which might arise thereafter. In paragraph 10 of his affidavit, Mr Boyers deposes that the transfer was executed to allow for a single transfer to be made in respect of the agreed portion and the extra area of 0.5 hectare to be agreed to later by discussions. To that extent it raises the existence of an agreement between the parties regarding the price to be fixed on the extra land included in the transfer. Concrete’s action in refusing to lodge the transfer instrument for registration is consistent to that extent with that view. These are matters with respect, for determination on evidence at trial. I can not be satisfied therefore to that extent on the submission of Dalgro, that these are mere assertions without evidence. These are triable issues.

To that extent whilst I can accept that the Notice To Complete given was valid in the circumstances in this case, and that it gives Dalgro the right to come to this Court for specific performance, it must be understood that this is a discretionary remedy. For instance it may be refused where the plaintiff has himself acted unconscionably, or if damages would be an adequate remedy, or if the claim is a trivial one (Hinde McMorland Sim “Introduction to Land Law” Butterworths New Zealand paragraph 1.055).

DISCRETION TO GRANT SPECIFIC PERFORMANCE

Should specific performance be granted in the circumstances of this case? In my respectful view the answer would have to be no. Whilst I am satisfied on the affidavit evidence adduced before me, that a concluded transfer instrument had been duly executed by the parties, with the document even duly stamped (though underpaid), and that all that was left was for the document to be lodged for registration, I find on the other hand, triable issues had been established on the affidavit evidence adduced before me by Concrete.

Two issues have been identified, both related to each other. One pertains to the question whether the extra $50,000.00 was in respect of the 0.2 hectares only or for the balance of the area of 0.7 hectares transferred. If it was only for the 0.2 hectares, this leaves unresolved the question as to the amount to be paid for the extra 0.5 hectares included in the transfer. These are matters of evidence as to whether an agreement exists concerning the extra 0.5 hectares included in the transfer. This could in turn affect the true value of the consideration for the transfer. In the circumstances, I am not satisfied it would be appropriate to grant the order for specific performance. The alternative orders sought for further directions instead should be granted.

ORDERS OF THE COURT:

1. REFUSE ORDER FOR SPECIFIC PERFORMANCE.

2. GRANT ORDER FOR DIRECTIONS AS FOLLOWS.

(i) DISCOVERY AND INSPECTION WITHIN FOURTEEN DAYS.

(ii) INTERROGATORIES SEVEN DAYS THEREAFTER.

(iii) MATTER TO BE LISTED FOR TRIAL THEREAFTER.

(iv) LIBERTY TO APPLY ON TWO DAYS NOTICE.

(v) COSTS IN THE CAUSE.

THE COURT