Yam and Company v China Limited (SI) Corporation Ltd [2010] SBHC 23; HCSI-CC 54 of 2010 (10 June 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 54 of 2010

BETWEEN:

YAM AND COMPANY
Claimant

AND:

CHINA LIMITED (SI) CORPORATION LTD
Defendant

Date of Hearing: 21 May 2010
Date of Decision: 10 June 2010

Mr. Radclyffe for claimant
Ms. Tongarutu for defendant

DECISION ON APPLICATIONS TO SET ASIDE
DEFAULT JUDGMENT AND ENFORCEMENT ORDER

Cameron PJ:

1 On 6 June 2008 the Registrar of the High Court entered default judgment in favour of the claimant and against the defendant for the sum of $61,600 plus interest and costs. The ground of default was the failure of the defendant to file any defence to the claim. The defendant now applies to have that judgment set aside, as well as the enforcement order which resulted from it.

2 It is clear that the parties were in a landlord/tenant relationship in respect of a residential property on Lengakiki Ridge, Honiara. The claimant sued the defendant for losses said to have arisen pursuant to a written tenancy agreement dated 17 August 2007, under which the claimant leased a home to the defendant for the 6 month period 1 September 2007 to 29 February 2008. The claimant alleged that the defendant, in breach of the agreement, prematurely vacated the property on about 31 October 2007 and refused to pay any rent for the period 1 October 2007 to 29 February 2008.

3 The claim for which judgment was entered was for costs of repair to and cleaning of the property, cost of replacement of missing items, cost of security guards following the vacation of the property and prior to its reletting, costs of unpaid electricity and water charges, and unpaid rent for the period October 2007 to 29 February 2008 (less new rental received from 19 January 2008 to 29 February 2008).

4 The defendants applied to set aside the defendant judgment on 12 July 2008, about one month following its entry. For some reason that application was not served and not allocated a date for hearing, by which stage the claimant had taken various steps in an attempt to enforce the judgment. On 12 April 2010 a new application to set aside the default judgment was filed.

5 There is an explanation of sorts from the defendant as to why it did not file a defence prior to judgment by default being entered. It is apparent that the proceedings were served on 26 February 2008, and brought to the attention of the defendant on 2 April 2008. Thereafter the defendant contacted a lawyer about the matter, who asked another lawyer in the same firm to handle the matter. It transpired that the other lawyer had a conflict of interest and could not represent the defendant, and so no steps were taken prior to the entry of judgment.

6 The explanation is of course not entirely satisfactory, and nor is the fact that the subsequent application to set aside the judgment was not served or brought on for hearing, despite being filed in July 2008.

7 It is necessary for me to consider, though, whether any meritorious defence has been disclosed by the defendant before deciding on the overall justice of the situation.

8 Mr. Radclyffe for the claimant quite properly conceded that a defence has been disclosed, in that the defendant denies leaving the property in a condition which required the landlord to spend money on repairing and cleaning it. There was also an acknowledgement that the issue of whether the landlord sufficiently mitigated its loss in the obtaining of a new tenant is a live one.

9 I consider that a much more significant defence has been raised by the defendant. It would appear that the defendant first moved into the property as a tenant in about December 2006, pursuant to a written tenancy agreement dated 6 December 2006. That tenancy agreement was for 1 year, but significantly (and unlike the later tenancy agreement of 17 August 2007 under which the claimant sued) either party could vacate on giving 1 month’s notice in writing.

10 Then followed a course of events between the parties which was not entirely amicable, with the claimant allegedly giving notice to the defendant (during the tenancy period) of its intention to cancel the agreement so as to increase the rental from $7,000 to $12,000 per month.

11 It would appear that a new tenancy agreement was entered into for the period 1 February 2007 to 31 August 2007 at a rental of $11,000 per month, and then a further and last one for the 6 month period 1 September 2007 to 29 February 2008 at a rental of $12,000 per month. The last tenancy agreement under which the claimant sued contained no clause permitting the parties to terminate the tenancy on 1 month’s notice.

12 The defendant alleges it was intimidated into signing some of the tenancy agreements.

13 I consider that the defendant does have an arguable defence that having signed the first tenancy agreement of 6 December 2006 granting the defendant occupation for a 12 period at a rental of $7,500 per month, the claimant was in breach of that agreement by giving notice of termination during that period for the specific purpose of effecting an increase in the rental being paid by the tenant. I also consider that the course of dealings between the parties and the landlord’s apparent unwillingness to adhere to its original bargain was such that there may well be real substance in the complaint of intimidation (which is essentially a claim of duress). This complaint is that the defendant was coerced into signing tenancy agreements subsequent to the initial written agreement.

14 The nature of these defences, and particularly the one as to duress, outweigh the unsatisfactory delays in this matter, and require the original claim to go to trial. I decline to direct any payment into Court by the defendant.

15 For these reasons, I allow the application to set aside the default judgment, and dismiss the enforcement order/s which followed. I direct that the Sheriff of the High Court release to the defendant any items seized pursuant to any such order/s. I direct that the defendant file a defence within 28 days of the date of this decision. I order that the costs of this application be in the cause.

BY THE COURT

Justice IDR Cameron
Puisne Judge