Commodities Export Marketing Authority v Kwan How Yuan Pty Ltd [2010] SBHC 43; HCSI-CC 117 of 2006 (3 August 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

COMMODITIES EXPORT MARKETING AUTHORITY
Claimant

AND:

KWAN HOW YUAN PTY LTD
First Defendant

AND:

CHRISTOPHER KWAN
Second Defendant

AND:

JEREMY RUA
Third Defendant

AND:

REGISTRAR OF TITLES
Fourth Defendant

Date of Hearing: 15 July 2010
Date of Decision: 3 August 2010

Mr. J. Muria Jnr for claimant
Mr. Radclyffe for first and third defendants
No appearance for second and fourth defendants

DECISION ON APPLICATION FOR ORDER OF SPECIFIC PERFORMANCE BY WAY OF SUMMARY JUDGMENT

Cameron PJ:

1 The claimant applies by way of summary judgment for an order for specific performance of an agreement for the sale of land dated 19 December 1994 it made with the first defendant. Under that agreement the first defendant, which was the lessee of a warehouse from the Solomon Islands Ports Authority, agreed to transfer its interest under the lease to the claimant for the purchase price of SBD$300,000. The relevant parcel number is 191-021-18.

2 The sale was conditional on the consent of the owner, the Commissioner of Lands, and the head lesser the Solomon Islands Ports Authority. The Solomon Islands Ports Authority consented to the sale by letter dated 11 January 1995, although mistakenly described the parcel number as 191-020-18 (and not 191-021-18). It is not contended that the sale never became unconditional, and from this I infer that the consent of the Commissioner of Lands was also obtained.

3 A written transfer of the leasehold dated 27 January 1995 and made pursuant to the agreement was then signed by the parties, under which the land was again misdescribed as 191-020-18. On the material before the Court, it is plain and I so find that this misdescription was unintentional, and that the parties intended that the transfer document operate so as to transfer the leasehold estate in parcel no. 191-021-18 to the claimant.

4 There is uncontradicted evidence that the entire purchase price of $300,000 had been paid by the claimant to the first defendant by 27 January 1995.

5 Some events following this are not entirely clear. What is clear is that in late 2001, some 6 years later, the claimant decided to sell what it understood to be its leasehold interest in the shed, and in that process discovered for the first time that its interest had never been registered. At this time it also discovered that the written transfer to it of the first defendant's leasehold interest mistakenly described the parcel no. as 191-020-18, when it should have been 191-021-18. I readily infer that this was the reason that the transfer was never registered against the relevant title.

6 It is clear from the sworn statement of Moses Pelomo, who was then the General Manager of the claimant, that subsequently the matter was raised with the first defendant. It is also clear that in a letter dated 6 February 2003, the claimant was advised that the first defendant contended that it still owned the lease of the shed. I infer from the sworn statement that this was the first advice the claimant had received from the first defendant that it did not intend to honour the original agreement of 19 December 1994.

7 The first defendant chose not to file any sworn statements in opposition to the application for summary judgment. Instead, it relies on a defence which is filed, which raised by way of a defence to the claims that the Limitation Act applied. Through its counsel it argued that the time for filing any claim commenced to run from 31 January 1994, which was the date in the original agreement for completion of the sale.

8 However, for claims in contract, the 6 years time limit commences to run from the date of the breach complained of. This occurred on or about 6 February 2003, when a Mr. Rua acting on behalf of the first defendant first advised the claimant that the first defendant contended that it remained the owner of the leasehold. In other words, the claimant was being told for the first time that the first defendant did not intend to comply with the obligations under the agreement. This constituted an anticipatory breach of that agreement by the first defendant, and from that point time began to run under the Limitation Act. Proceedings were issued by the claimant on 24 March 2006, well within the 6 year limitation period. I reject the argument by the counsel for the first defendant that the first defendant would have been in breach of its obligations on 31 January 1994, the last date for completion as specified under the agreement. The argument was that completion had not then occurred because the first defendant had not delivered to the claimant a duly executed transfer in registrable form, given that the transfer document was defective. This is a specious argument, as in executing and handing over the transfer to the claimant for registration, clearly all parties believed it to correctly describe the land, and therefore there was no actionable breach by the first defendant of its obligations. The failure to provide a valid transfer only became actionable once the defect was discovered and once the first defendant was requested to and refused to provide a valid substitute, in effect on or about 6 February 2003. I add that if in fact the first defendant knew the transfer to be defective when it was handed over, then that would constitute fraud on its part and would be outside the ambit of the constraints of the Limitation Act.

9 Another argument against the application was that there has been delay on the part of the claimant in applying for specific performance and the doctrine of laches should apply. In answer to that I say that the conduct of the first defendant, since the mistake was discovered, has been nothing short of disgraceful. Despite the fact that the claimant completely performed all it obligations under the agreement, including paying in full the purchase price of $300,000 in January 2005, the first defendant has steadfastly and obstinately refused to acknowledge that it had sold the leasehold to the claimant. The first defendant even went as far as denying in its statement of defence that it was paid the $300,000 pursuant to the agreement, when clearly it had been. Then, in 2005, with the knowledge of the dispute, the lawyer on behalf of the first defendant sought the consent of the Solomon Islands Ports Authority to re-sell the leasehold to a third party. This is surprising indeed given the background of the matter. Fortunately Mr. William Barile, the Chief Executive Officer of the Ports Authority, recognised and identified the reality of what lay behind the request and what had earlier occurred, and refused to consent. His actions are to be commended. In short, the antics of the first defendant are such that it is precluded from complaining about delay on the part of the claimant.

10 I am satisfied them there is no arguable defence to the claim for specific performance. I make the following orders by way of summary judgment:

(1) An order that the first and second defendants specifically perform the written agreement dated 19 December 1994 between the first defendant and the claimant.

(2) Authorising the Registrar of Titles to cancel the registration of the first defendant as the lessee of parcel no. 191-021-18, and to register the claimant as the lessee of that interest pursuant to a vesting order effective from 31 January 1994.

(3) Ordering the first defendant to pay costs on an indemnity basis in favour of the claimant in an amount to be agreed or taxed and in any event within 28 days from the date of this order.

(4) Declining to grant summary judgment in respect of any of the other orders sought, adjourning all outstanding matters sine die.

(5) Giving the parties liberty to apply further on 7 days notice.

BY THE COURT

___________________________
Justice IDR Cameron
Puisne Judge