Hite v Society for the Crippled People in Solomon Islands [2008] SBHC 73; HCSI-CC 207 of 2006 (12 December 2008)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 207/2006

MATHEW JERRY HITE
Claimant

V

SOCIETY FOR THE CRIPPLED PEOPLE IN SOLOMON ISLANDS Defendant

IZUAKO, J.

Date of Hearing: October13 and November05 2008

Date of Judgment: December12 2008

Claimant’s counsel: A. Nori esq.
Defendant’s counsel: A. Radclyffe esq.

JUDGMENT

Izuako, J.

This action was filed on 30 May 2006. The Claimant sought the following reliefs:-

1. Specific performance against the defendant of a contract dated 13 July 2003 for the transfer of parcel number 191-015-92 to the Claimant.
   
2. In the alternative damages for breach of contract in the sum of SBD20,000.00
   
3. Interest per the said agreement at the rate of 15%
   
4. Costs.
   

In his statement of case, the claimant pleaded that sometime around July 2003 the defendant, a registered Charity under the Charitable Trust Act Cap 55, found it was unable to fulfil its obligations towards the ageing and disabled and so asked him for financial help in the sum of SBD20, 000.00. The defendant was expecting funds from Aid Donors in the following months of August or September 2003. The claimant and defendant therefore entered into a contract on 13 July 2003 for the said sum of SBD20, 000.00 to be loaned the defendant for its use. The money was to be repaid with an interest of 10% over a ten-month period to be agreed by the parties and a further 5% interest until final repayment. The defendant pledged as security for this loan its land with parcel no. 191-015-92 which situates along Mbokona Road. It was a term of the loan agreement that the claimant shall lay claim to the property if a default in repayment occurred. The defendant was unable to repay the loan and accordingly agreed to transfer its parcel of land to the claimants. The defendant has since failed to transfer the land as agreed to the claimant.

A memorandum of appearance was entered on behalf of the defendant on 22 June 2006. In a statement of case for the defence, it was denied that the defendant requested financial assistance from the claimant at any time. The defendant’s board of trustees did not pass any resolution as required by law in respect of the agreement alleged by the Claimant and did not sign such a contract or authorise it. One Nelson Rofo who the claimant said represented the defendant was never authorised to enter into such an agreement on behalf of the defendant or to apply the defendant’s common seal to it, neither did Nelson Rofo who is now deceased account to the defendant for the money said to have been collected from the claimant. The defendant stated that it is not indebted to the claimants at all and that it refused to transfer its property parcel No 191-015-92 to the claimant because it did not have any loan agreement or enter into any contract with him.

Issues having been joined and documents exchanged and inspected, the matter was set down for hearing.

The claimant opened his case on October 13 2008. He was the sole witness and he told the court in his testimony that in 2003, he had certain transactions with the defendant. One Nelson Rofo approached him to print calendars for the defendant for the year 2004. The said Nelson Rofo told the claimant that he was the treasurer and national coordinator of the defendant and also asked him for a loan of SBD20, 000 to be used for office publications of the defendant. The loan was to be paid back in ten monthly instalments from grants provided to the defendants by the government of Solomon Islands and other donors.

The claimant said he believed that Nelson Rofo was a true representative of the defendant because he was both treasurer and national coordinator and the only person working in the offices of the defendant. The claimant added that in November 2002 the said Nelson Rofo had also arranged with him for the defendant to celebrate jointly with the claimant’s music group on 05 December of that year. Throughout his meetings and dealings with Nelson Rofo, the said Rofo told the claimant that he was working with the defendant.

The claimant continued that the agreement made with Nelson Rofo on 13 July was put into writing. He then tried to tender the document but learned counsel for the defence A. Radclyffe esq. objected. The objection was based on the following grounds:-

1. The document was only a photocopy, a secondary document.
   
2. The document was not stamped as required by S. 9 of the Stamp Duties Act Cap. 126 and therefore inadmissible.
   

Learned counsel for the claimant A. Nori esq. replied to the objections raised but the Court upheld the submissions of learned defence counsel Mr Radclyffe and ruled that the document could not be admitted and therefore cannot form part of evidence before the court. At this stage an adjournment was granted at the request of claimant’s counsel.

When hearing resumed on November 05 2008, A. Nori esq. for the Claimant said he had filed an amended statement of case for the claimant. A. Radclyffe esq. for the defence objected but the court allowed the amended statement of case of the claimant and deemed it properly filed and served.

The claimant continued his testimony. He said that the defendant had not repaid the SBD20, 000.00 loan and Mr Nelson Rofo having died by late 2003 or early 2004, he then met with the president of the defendant who promised to transfer the landed property to him. The said president then wrote for the consent of the Commissioner of Lands in transferring the defendant’s parcel of land at Mbokona to the claimant. The claimant tendered a copy of the letter which was admitted as exhibit "A". The property still has not been transferred to him.

When cross-examined by A. Radclyffe esq. of counsel for the defence, the claimant said the only person he had any dealing with concerning the SBD20, 000.00 was Nelson Rofo. He said Rofo had told him that he was both treasurer and national coordinator of the defendant and that he had taken the money on behalf of the defendant. The claimant said he gave the money to Rofo in cash in Rofo’s office in China town and that no one else was present at the time. The claimant said Rofo gave him a receipt but that he had misplaced it while moving house. He said Rofo died in late 2003 or early 2004 after the ten months they had agreed the debt would be repaid elapsed. He said that when he followed up for payment of his money, Rofo died and so he went to the president of the defendant and that he did not know who had taken Rofo’s place. He could not go on with the transfer of the property with the president because the president was sick and had gone overseas. The claimant in answer to one of the questions asked said that Rofo told him that the money borrowed from him was to be used in finding a new office space for the defendant. He said that when Rofo died, he was still using the old office and that he was not sure what Rofo used the money for. He said that he knew that the defendant is a registered charity but did not go to check if Rofo was the treasurer.

The defendant did not call any witnesses. A. Radclyffe esq. made a closing address to the court as follows:-

1. The amended claim is for repayment of debt as opposed to the original action for specific performance.
   
2. Defendant is a charitable, registered trust. The evidence of the claimant is that Nelson Rofo borrowed money from him and told him he was doing so on behalf of the defendant. At the time of the so-called transaction, the only parties were the claimant and Rofo. The claimant says he made the payment in cash and lost a receipt given him by Rofo. Only the claimant has given evidence of this loan transaction.
   
3. No weight can be attached to exhibit "A", as it does not show that SBD20, 000.00 was owed by the defendant to the claimant.
   
4. The claimant has not proved that he gave a loan to the defendant or that defendant knew anything about the money given to Rofo.
   

The learned counsel submitted that the claimant had failed to prove his claim on the balance of probabilities and invited the court to dismiss the claim.

In his reply A. Nori esq. for the claimant submitted as follows:-

1. There is evidence that the defendant through Rofo requested SBD20, 000.00 from the claimant on 13 July 2003 and that the claimant gave the money to Rofo and that it was not repaid.
   
2. Evidence shows that the parties agreed that the money would be repaid over ten months and that failing that, the defendant was to transfer title in its landed property to the claimant which has not been done.
   
3. There is evidence before the court that this was a contract existing between Rofo on behalf of the defendant and the claimant.
   
4. The evidence of the claimant shows that he dealt with Rofo in good faith believing Rofo was the treasurer of the defendant. There is no evidence from the defendant to show that Rofo is not the treasurer or national coordinator or that he was not employed by the defendant. He invited the court to hold that Rofo was acting for the defendant or was reasonably believed to be so acting.
   
5. Exhibit "A" strengthens the claimant’s case, counsel said. The president of defendant did not dispute the capacity of Rofo to borrow money.
   
6. Although the claimant has lost his receipt, his claim is not rebutted.
   
7. Finally, it was his submission that on the balance of probabilities, the claimant had proved his case.
   

A review and determination of the foregoing claim and evidence in support will seek to deal with three crucial questions:-

1. Was Nelson Rofo a representative of the defendant for the purposes of entering into legal transactions and especially the purported loan agreement with the claimant?
   
2. Did the claimant give the sum of SBD20, 000.00 as loan or for any purpose at all to Nelson Rofo?
   
3. If the Claimant gave any money to Nelson Rofo on behalf of the defendant, did he do so in good faith as submitted by learned counsel for the claimant Mr. Nori?
   

Nelson Rofo as Representative of Defendant?

The entire case and testimony of the claimant revolves around a man named Nelson Rofo who is said to have died since late 2003 or early 2004. According to the claimant, Nelson Rofo had approached him in November 2002 to arrange for the claimant’s musical group to have a celebration together with the defendant’s members on December 05 2002. In 2003 the said Nelson Rofo again approached the claimant to print calendars for the defendant. By July 2003 Nelson Rofo was asking the claimant for a loan of SBD20, 000.00 purportedly on behalf of the defendant. The claimant had been told by Rofo that he was the treasurer and national coordinator of the defendant. The claimant in his pleadings had stated that the defendant is a charitable organisation registered under the Charitable Trusts Act Cap.55 Laws of Solomon Islands for the ageing and disabled. The defendant’s pleadings admit as much and refer to the provisions of S.10 of the said Charitable Trusts Act as not having been complied with. The Section states as follows:

"Deeds may be made by any board of trustees under its common seal, attested by the trustees or any two of the trustees for the time being constituting the board of trustees; and all other contracts may be made in writing, signed by any person in the name and on behalf of the board of trustees acting under a resolution in writing passed at a meeting of the board of trustees".

And at section8, the Act provides:

"Every board of trustees incorporated under this Act shall have perpetual succession and a common seal, and may hold real and personal property of whatever nature, sue and be sued in all proceedings civil or criminal, and do and suffer to be done all that corporate bodies may do and suffer to be done"

The provisions of the above-quoted S. 10 are clear and unequivocal. There is no evidence before the court that Nelson Rofo had entered into the purported contract giving rise to this action in the name and on behalf of the board of trustees who would have passed a resolution in writing at a meeting of the board. Without such a resolution in writing, it is evident that no one may properly enter into any contract with the defendant. Under S. 8, the property of the defendant is held by the board. Nelson Rofo was not the board of trustees and never approached the claimant armed with a resolution of the said board at all times material to this case. In other words, Nelson Rofo was not a representative of the defendant for the purposes of entering into any contract including the purported loan transaction giving rise to this case. Nelson Rofo did not hold the property of the defendant and so could not give what he did not have. In other words, he was not in a position to alienate or promise or give away the property of the defendant without a resolution of the defendant’s board of trustees.

Was SBD20,000.00 given to Rofo by Claimant?

The evidence of the claimant Mathew Jerry Hite is that he gave SBD20,000.00 to Nelson Rofo on 13 July 2003. His story is that he lost the receipt given him by Rofo when he moved house in 2006. Exhibit "A" tendered by the Claimant and dated 29 October 2004 shows that as at 2004, the claimant was already making serious efforts at enforcing a contract purportedly made between him and the defendant by meeting with the defendant’s president to have the property of the defendant transferred to him. It is curious that while in the thick of such efforts, he lost Rofo’s receipt while moving house in 2006. It is even more so that the loan was advanced to Rofo without any witness. My finding is that the Claimant has not proved that he gave SBD20, 000.00 to Nelson Rofo on 13 July 2003.

Good Faith

The pleadings and oral testimony of the claimant are replete with the story of how the claimant gave the defendant a loan through Nelson Rofo. Learned counsel for the claimant A. Nori esq. in his final submissions urged that the claimant had acted in good faith in giving the sum of SBD20, 000.00 loan to Rofo on behalf of the defendants and that he therefore ought to recover the said sum from the defendant. The law requires all persons in their transactions to act with good faith –or in other words with honest intentions. Good faith implies a sincere belief or motive without any malice or the desire to defraud others.

The good faith doctrine in law may provide a defence founded on public policy. But even where good faith is used as a defence, the party invoking it must pass certain tests. In the matter before the court, these test would include:

(a) Whether the claimant is a lending institution or a money lender

(b) Whether the claimant observed reasonable standards of transparency expected in a money transaction.

The claimant in his evidence said he is a businessman engaged in printing business. He is not in the business of lending money. According to his pleadings, he lent SBD20, 000.00 to the defendant through Nelson Rofo at a 10% interest and another 5% to be paid by defendant as a gesture of goodwill. He therefore expected to make a profit of 15% in the said transaction over a period of ten months. All these would be taken from grants from government and Donor Aid made or donated for the care of the ageing and crippled.

It can also be gleaned from pleadings of the claimant that the money was given to Nelson Rofo to fulfil the defendant’s obligations to the ageing and disabled in Solomon Islands but in his evidence-in-chief he said be gave the money to Rofo for office publications of the defendant. In replying to a question in cross examination, claimant said he gave the money to Rofo to pay for new office accommodation. As to where the transaction took place, the claimant said he went to the defendant’s office in China town to give the money to Rofo. On how he gave the SBD20, 000.00, the claimant said he gave the money to Rofo in cash with no witness present. Such a clandestine transaction with no paper trail made to bind a charitable trust governed by law can certainly not speak to good faith.

In the course of reviewing this case, the court is drawn to view with a great deal of seriousness and concern the contents of paragraphs 9 of the claimant’s pleadings. I shall hereunder reproduce the said paragraph 9:

"The plaintiff (claimant) through his solicitors thus attempted to facilitate transfer of the land from the defendant to him but despite having consented to the transfer, the defendant’s secretary refused to sign the transfer documents".

The court is concerned about this state of affairs as stated in the statement of case because these pleadings were drafted by a lawyer.

It is expected that a competent solicitor who has been briefed in this matter would find that the board of directors of the defendant and not the secretary holds the properties of the defendant and the authority to alienate such property. It is shocking that a solicitor would be working to facilitate the transfer of real property belonging to a corporate entity with a person described as secretary of the defendant who eventually rightfully refused to sign any transfer documents. My view is that such a practise on the part of the solicitor is unethical.

On the whole, it is the judgment of this court that the claimant has not proved his case on a balance of probabilities and as required by Law. His claim therefore fails. The claimant shall pay out of pocket expenses inclusive of costs assessed and fixed at..................................

Hon. Justice Nkemdilim A. Izuako
Puisne Judge