Seleso v Attorney General [2010] SBHC 62; HCSI-CC 151 of 2007 (14 October 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS
(GOLDSBROUGH J)

Civil Case No. 151 of 2007

BETWEEN:

ROLLAND SELESO
(Representing South Guadalcanal Fibre Glass Canoe Project)
Claimant

AND:

ATTORNEY-GENERAL
(Representing Infrastructure Development & Ministry of Finance)
First Defendant

AND:

DAVID DAY PACHA
Second Defendant

Date of Hearing: 27 September 2010
Date of Judgment: 14 October 2010

Radclyffe A for the Claimant
Tagini M for the Defendant
Firigeni R for the Attorney-General

JUDGMENT

GOLDSBROUGH J:

1. By claim filed 26 April 2007 the claimant seeks the recovery of $148,957.28 which sum of money he maintains was previously held by the First Defendant on his behalf but without authority given to the Second Defendant. There is little by way of dispute of fact within these proceedings. There is dispute as to the duty owed to the claimant by the First defendant, and whether the First Defendant could be said to have properly discharged that duty, if any, when it paid the Second Defendant the money after the Second Defendant provided an assurance that he would 'facilitate' the claimant's project.
   
2. The claimant became the beneficiary of funding from a foreign government. His development project was to provide work and build capacity in boat building within an area of South Guadalcanal. The funding came from the Prime Minister's discretionary fund provided by the foreign government. When the funds were made available, in this case in two almost equal halves, it was deposited in the Treasury to be administered by the Department of Infrastructure and Development within the Ministry of Finance. On behalf of the donor country, the Ministry of Finance was to hold and then distribute the funds following submission of details of expenditure.
   
3. The first half of the funding was received and distributed without problem. The Project had been approved and endorsed by the then sitting Member of Parliament for the Constituency within which the Project was to take place. By the time of the second distribution there was a new Member of Parliament who had not been previously involved with this Project. He was advised, as was the then Prime Minister, of the availability of the second instalment, and made a request to the Ministry of Finance for the release of that money to himself.
   
4. In making the request for the money to be given to himself the Member of Parliament indicated in writing, a fact which is not disputed, that he would on receipt of the money 'facilitate the project'. In his letter of 30 October 2006 addressed to the Department of Infrastructure and Development he correctly named the Project as the South Guadalcanal Fibreglass Project.
   
5. It is again not in dispute that the Member of Parliament did not facilitate the project as he had said he would do, but spent the funds he received on buying canoes and out board motors. Again it is not in dispute that this was not the purpose of the project. The purpose of the project was and is as set out in the project document submitted to the donor for approval. That project proposal is admitted into evidence before this Court.
   
6. In the trial the Second Defendant gave evidence that he was aware of the purpose of the Project because it was set out in the letter to him from the donor dated 31 July 2006. That letter was in evidence, and showed only that the Project had a name. Nowhere in the letter was the purpose of the project set out. It is therefore not possible to find as a fact that the Member of Parliament discovered from that letter the purpose of the project. At most he could ascertain from the letter was the name of the Project.
   
7. There was an indication from the pleadings that the Member of Parliament had another source of information as to the purpose of the Project, but nothing was introduced into evidence about that.
   
8. On agreed facts, therefore, it is possible to determine that the money came from the donor into the Treasury, in the sum pleaded, and that the Treasury released the money to the Second Defendant and that the Second Defendant did not give the money to the Claimant who was the intended beneficiary.
   
9. The issue raised by counsel for the First Defendant in its defence was that there was no duty of care owed to the First Defendant and in the alternative that in providing the money to the Second Defendant it had discharged its duty of care by taking an assurance form the Second Defendant that he would channel the money through his Constituency Account to the Claimant.
   
10. It is clear when the Treasury receives money admitted to be for the benefit of others the Treasury owes a duty of care to both the donor and the intended recipient. In this regard the Treasury is in no different position to any individual who receives money on trust for the benefit of another. Acceptance of the money on those terms by the Treasury is itself enough to establish that duty. It is not necessary that there is set out in writing that the trust relationship exists.
    
11. It would be possible to demonstrate that the duty under the trust had been satisfied when the Treasury gives the money to a person other than the donor, as was submitted in the alternative by counsel for the First Defendant. To do that, however, successfully, it is necessary for the party to demonstrate by evidence that when this was done, it was done with an honest and reasonable belief that the money would reach the intended beneficiary. On the face of it, the evidence, as in this case, of a written assurance that the sitting Member of Parliament for the constituency would ensure the funds were used to facilitate the project might be sufficient to demonstrate that honest and reasonable belief.
    
12. In this instance, however, because of the way in which the case for the First defendant has been pleaded and because of the way in which the defence and counterclaim have been presented, it is apparent that the Ministry officials who dealt with the Second Defendant when he requested the money did not believe that he would release it to the Project. They were not wrong in their suspicions, as it turned out.
    
13. Given that the First defendant cannot establish that there was any belief in the written assurance, it is not then possible for the First defendant to establish that they did discharge the duty of care owed to the Claimant.
    
14. As to the Second Defendant, he admits to receiving the money but maintains that he used the money on the purpose of the Project. That, it is established by evidence, is wrong in fact. He did not use the money for the purposes of the Project, but as he mistakenly understood the project without any reasonable basis for that belief. Worse than this, it is clear from evidence filed on his behalf that some of the receipts for expenditure date more than two years after receipt of the funds, after the start of these proceedings.
    
15. In those circumstances the First Defendant released the money belonging to another to a third party knowing or believing that it would not reach the intended recipient. It suggests that the First Defendant cannot escape liability as regards the Claimant.
    
16. No authorities were produced by any party to these proceedings is support of their case. No indication was given by the claimant of the origin of the claim, whether it was contractual or tortious in nature. There is a vague reference to a duty of care but no pleadings to establish that any relationship giving rise to a duty of care exists. It is not fatal in these proceedings since the facts tend to speak for themselves, but it is still incumbent on a claimant to indicate the legal basis on which he or she makes a claim. Certainly if it had been seriously challenged in these proceedings the claimant would have encountered some difficulty.
    
17. Although not a tangible asset such as a motor vehicle the money which was provided by the donor government for the benefit of the South Guadalcanal Fibreglass Project represented an asset which did not belong to the First Defendant and did not belong to the Second Defendant. When either of those two Defendants dealt with that asset in a manner inconsistent with the Claimant's right to it, they make themselves liable to the Claimant for its value. It is on that basis that this court finds both the First and Second Defendant liable to the Claimant for $148,957.28. Their liability is joint and several. Costs of this action will also be ordered to be paid by the Defendants to the Claimant, equally such costs to be agreed or taxed.
    
18. In their counter claim as against the Second Defendant, the First defendant has successfully demonstrated that he did receive the $148,957.28 from them and that he did not apply it for the purposes that he said he would. The First Defendant therefore is entitled to recover from the Second Defendant any money that they in fact pay to the Claimant under the judgment.
    

Dated this 14th day of October 2010

GOLDSBROUGH J