Fareast Enterprises (SI) Ltd v Tsuki [2003] SBHC 100; HC-CC 042 of 2001 (6 May 2003)

CC No 042, 01, HC

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 042 of 2001

FAREAST ENTERPRISES (SI) Ltd

-v-

MARTIN TSUKI

Hearing: 23rd October 2002
Judgment: 6th May 2003

Crystal Lawyers for the Plaintiff
A & A legal Services for the Defendant

Registrar Chetwynd: This is an assessment of damages following an order made by Palmer J on 31st July 2002 which set aside an earlier assessment made by me. I made that earlier assessment based on figures provided solely by the Defendant as the Plaintiff did not appear and was not represented. I now have affidavit evidence from both sides to consider. I believe the starting point in this assessment should be the Defence and more particularly the Counter Claim lodged on 30th May 2001. I say that because it appears to me that the Judgment for the Defendant entered on 1st August 2001 must still be effective. The Counter Claim reads [at paragraph 21] :-

The Defendant therefore claims from the Plaintiff the following

(a) An account of the export prices of the 10 containers of timbers already sold by the Plaintiff to overseas buyers; and

(b) 40% of the profit under clause 5 of the Remuneration contract dated 2nd October 2000; and

(c) Damages for breach of contract to be assessed; and

(d) Costs and interest; and

(e) Any further Order the Court deems fit to make

In reality paragraphs (b) and (c) are the same thing and I view them as alternative claims. I said as much in my earlier assessment taking the view that if the Defendant recovers (b) then he would not be able to recover (c) in addition. It seems as if Counsel for the parties took the same view as much of the argument before me was in respect of the quantities of timber exported and in respect of the price obtained for that timber. The Parties were asking me to calculate the figure claimed at clause (b). Unfortunately the parties do not agree either the amount of timber exported or the price paid for it. It is not simply a question of a straightforward calculation on my part.

Certain figures were “agreed” or rather certain figures were not disputed. Mr Zheng, a Director of the Plaintiff Company, has filed 2 affidavits. One on 7th August 2001 and the latest one on 14th August 2002. From those documents it is “agreed” that 8 containers of timber were exported. The Defendant says 10 containers were exported. So we have 2 apparently “missing” containers. The containers are not actually missing though, a point I will come back to. What is disputed, as I understand the evidence, is exactly what was in the 2 missing containers. The other main dispute is that the Defendant says that the export price of the timber was 800 Australian dollars per cubic meter whilst the Plaintiff says that figure is excessive and the true figure is 700 dollars.

Perhaps the easiest part of this assessment to deal with is the price. The Defendant has produced a letter from Mr C J Olver of Williamstown Victoria in Australia. That is exhibited to the affidavit dated 2nd March 2002 sworn by the Defendant as “MT2”. Mrs Samuels for the Plaintiff says that the letter just shows a mere offer to purchase at $800 per cubic meter. She says that the eventual buyer did not write the letter, it was written by some one merely negotiating with the Defendant. She says, on behalf of the Plaintiff, that the true figure is reflected in the hand written notes forming part of exhibit “PZ2” attached to Mr Zheng’s affidavit sworn on 14th August 2002.

What those figures represent is set out in the affidavit at paragraph 11. What I do not understand is why the Plaintiff’s buyer can fax a copy of some documents but not confirmation of the price. There is no explanation why the buyer could not or cannot get this information to the Plaintiff.

What the Plaintiff wants me to accept is some handwritten notes. The affidavit evidence does not exactly say who made those notes. In paragraph 11 Mr Zheng says, “On or about 28th July the buyer phoned and informed me of the information [“The information” is described in paragraph 9 as the exact quantity and the value of the 8 containers]. The buyer also faxed the copy of its record of tally of the 8 containers of timber. Now shown to me marked “PZ2” is a true copy of the said tally.” Exhibit “PZ2” consists of 2 pages. The first of them is clearly some kind of tally. There is no description of what the second page is. I do not know from the affidavit evidence whether this is part of the record of tally (i.e. notes written by the buyer and faxed to Mr Zheng) or whether it is Mr Zheng’s notes of the telephone conversation he had on or about 28th July. It could be either. I would have thought that the Plaintiff could produce better evidence than this.

I prefer the evidence exhibited to the Defendant’s affidavit, namely the letter from Mr Olver. Whilst I accept that Mr Olver is merely making an offer to buy timber his offer, in my opinion, has more evidential weight than some scribbled notes made by some undisclosed person. That opinion is strengthened by the fact that Mr Olver went further than making a mere offer and that the Defendant was in the process of exporting timber to him when it was injuncted. In other words a commercial agreement had been concluded. In my considered view, the Defendant has produced more credible evidence about the value of the timber than the Plaintiff. I therefore accept that the value of the timber is $800 Australian per cubic meter.

The next issue to consider is the volume of timber exported. This is where I need to establish the actual situation with regard to the two “missing” containers. What I can be sure of from all the evidence is that 8 containers were exported. Everyone seems to accept that. The Defendants says there were another 3 containers. The Plaintiff says he did not export more than 8. What is strange is that both versions are probably quite true. What I can be sure of is that there were at least another 2 containers. They were the subject of an order made by Kabui J on 21st March. They are specifically containers numbered MLCU2656141 and CRXU2733160. According to Kabui J’s order those containers were put in the possession of the Plaintiff. What is not entirely clear is whether that happened or whether there was some kind of agreement to allow the exportation of timber already arranged by the Defendant. It seems from Mr Zheng’s affidavit of 14th August 2002 (at paragraph 2) that it was the Plaintiff who exported them. Either way we now have 10 containers accounted for.

Trying to account for what was in them is yet another matter. According to evidence adduced by Mr Zheng (exhibit “PZ2” of his affidavit dated 21st March 2001) CRXU2733160 contained 11.52 cubic metres of Rosewood. That evidence actually comes from a container packing list and a customs and excise form. Mr Zheng also says in that affidavit (paragraph 18) that the Defendant shipped a total of 54.04 cubic metres of timber and that that timber was transferred to containers CRXU2733160 and MLCU2656141. However, the only evidence of what was in CRXU2733160 and MLCU2656141 (the “Noro” containers) seems to come from the Defendant and is exhibited as “PZ4” to Mr Zheng’s affidavit of 21st March. That exhibit shows that in one of the “Noro” containers was 17.8350 cubic metres and in the other there was 16.6026 cubic metres. That makes a total of 34.4376 cubic metres. I bear in mind that at the time Mr Zheng was convinced he was being cheated and was trying to show that the Defendant was trying to export some 54 cubic metres. In other words Mr Zheng did not believe the figures in the exhibit “PZ4” provided by the Defendant. Later Mr Zheng produces tally sheets (exhibit “PZ1” affidavit of 14/8/02) which shows only 27.1885 cubic metres.

It is again unfortunate that no one has seen fit to provide the Court with evidence as to exactly what was in the two containers which were injuncted. As I have mentioned above, the detail of CRXU2733160 is known. There is no similar evidence in respect of MLCU2656141. It is for the Defendant to prove his claim. It was known that there was a dispute about the quantity of timber involved and I would have thought it a simple matter to provide the exact detail. In all the circumstances I have to conclude that there is only evidence to satisfy me that the amount exported in the last two containers was 34.4376 cubic metres.

What concerns me is that the counterclaim by the Defendant mentions 10 containers and “1 container pending exportation”. [Paragraph 19]. It is not clear from the evidence where this 11th container is. If it is with the Defendant then he should surrender it to the Plaintiff or give credit for it’s value. If it is with the Plaintiff then it would form part of the claim. As I cannot be sure that it exists I have ignored it for the purposes of this assessment.

Having reached this stage I find that the Defendant’s claim is for the profits from 8 containers holding some 130.427 cubic metres and 2 containers holding 34.4376. Quite naturally there is a dispute about the contents of the 8 containers. Quite naturally there is no independent evidence of the quantity of timber that was actually in those containers. I am prepared to accept the figure of 130.427. The total amount of timber we are talking about is therefore 164.8646 cubic metres valued at $800 per cubic metre. The total value is therefore $131,891.68. The exchange rates varied throughout the history of this matter and I propose using the figures from Mr Justice Palmers ruling of 31st July 2002. I therefore find that the value of timber exported, and thus forming the basis of the Defendant’s claim, was ((130.427 x 800)/.3822) [for the 8 containers] making SBD 273,002.62 and ((34.4376 x 800)/.378) [for the 2 containers] SBD 72,883.81 making a total of SBD 345,886.43.

Based on clause 5 of the agreement dated 2nd October the Plaintiff was to keep 20 % of the profit and the remainder [of the profit] was to be shared. It seems, and I should not really be surprised I suppose, that there is a difference between parties as to how the profit was to be shared. I accept the Defendant’s submission that in the absence of an express provision the remainder of the profit was to be divided equally. In effect, this means that the Defendant is entitled to 40% of the profits.

There is a huge variation in the figures put forward as to the costs of the operation. I prefer the Defendant’s version, that is to say that the Plaintiff paid out the sums of $100.812 and $191,493.00. I say this because one of the figures the Defendant relies on was actually set out in the Plaintiff’s pleadings. I therefore find that the total costs amounted to SBD 292,305.00. The profit from this enterprise would therefore amount to SBD 53,581.43. Forty percent of that profit amounts to $21,432.57. The Defendant is also entitled to interest on that figure at the Judgment debt rate from 21st March 2001 (the date of Mr Justice Kabui’s order) to date and continuing interest until the Judgment is discharged. The Defendant is also entitled to his costs and those costs will be taxed if not agreed.

Order:

1. Judgment for the Defendant in the sum of $21,432.57;

2. Interest at Judgment debt rate from 21st March 2001 to date of Judgment;

3. Continuing interest at the Judgment debt rate from date of Judgment until payment;

4. The Plaintiff to pay the Defendant’s costs, which costs are to be taxed if not agreed.