Griffiths v Goodhew [2011] SBHC 130; HCSI-CC 289 of 2010 (21 October 2011)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Chetwynd J)

Civil Claim No. 289 of 2010

BETWEEN

GRANT GRIFFITHS
Claimant

And

STEVE GOODHEW
Defendant

Mr Radclyffe for the Claimant
Mr Tagini for the Defendant

Date of Hearing: 11th October 2011
Date of Judgment: 21st October 2011

Judgment

1. This case involves the consequences of the working relationship between the parties souring and becoming unworkable. The Claim arises in this way. The Claimant runs a business selling pizzas. The Defendant runs or wanted to run, a business selling fruit juices. In late 2009 both became aware of the others business. At that time the Defendant was in the process of setting up the juice business, the Claimant was already running his. The Defendant had identified some premises at Rove but felt the rent was too high. He proposed a sharing arrangement so that he could operate his juice business and the Claimant his pizza business from the same premises. They looked at the property together and decided to rent it. Two things should be noted at this point. First, this was not an arrangement to set up a joint business and secondly, Honiara being a small town, the parties were not strangers.

2. The Claimant's case is that a "verbal" agreement was reached where, a) each party would pay for the cost of setting up his business; b) each party would pay half the costs of renovating the property; c) each would pay half the rent (and an initial bond equal to two months rent); d) the Claimant would pay the first months rent and agreed also to pay the bond with the Defendant reimbursing him for the latter from income to be received and e) the claimant would provide the services of his employees to do the renovation work.

3. The Defendant agrees with a), c) and d). As to b) he says the agreement was more along the lines of each of them contributing whatever he was able in cash or kind. There is some suggestion of an apportionment of the costs at some later date. The Defendant also says the Claimant agreed to provide labour with the Defendant supervising the workers. There was no agreement in writing, about any of this and negotiations were conducted in person or by Email.

4. What is abundantly apparent from the evidence, both written and oral, is that there was no actual meeting of the minds. All that can be said is both parties wanted to run a business, both agreed that the other's business might well be complimentary to their own and that a financial saving could be achieved if the businesses were run from the same premises. How that was to be achieved was left vague in an evolving business relationship. It is clear from the Emails exhibited the Claimant was busy with his other business interests and was happy to allow the Defendant to do much of the day to day work by way of planning and supervision at the Rove premises. The Defendant seemed happy with the arrangement. To begin with, the relationship worked well and whilst there may have been differences of emphasis on particular aspects of the project, both were working to a common goal. Evidence of that kind of relationship is seen in the Emails from around the period 11th, 12th December 2009. There were matters which were discussed face to face but there is scant evident about the detail of those discussions.

5. Based on the evidence before the court it is very difficult to say there ever was one concluded agreement. It could be said there was one basic contract, to lease the Rove property and use it jointly for each parties separate business. There were then a series of separate agreements about how best to complete the contract including what each should contribute to each business to benefit the whole. However, that is a very artificial way of looking at what transpired. What in fact happened was Claimant and Defendant agreed to agree. There is insufficient evidence to establish, on the balance of probabilities, the existence of a contract containing the terms set out in the claim. Whilst it was anticipated both parties would operate a business from the premises there was no contract to that effect and certainly not one where each agreed to start a business by a certain day. Accordingly, there was no breach of contract as alleged.

6. That does not dispose of the case though. The working relationship began to deteriorate and the Claimant decided to go his own separate way. There was some discussion about the expenses already incurred but the parties have failed to agree what those expenses were. As there was no contract the Claimant can only recover his expenditure on a quantum meruit basis. In order to arrive at a decision on what is fair and just it is necessary to look at what was originally contemplated and to examine how the relationship ended.

7. It is surprising the relationship ended the way it did. The Claimant was aware of the Defendant's financial position. He may not have known the exact details but as early as 11th December 2009 the Defendant was emailing the Claimant and saying, "I am, at this second, as poor as a church mouse..". The Claimant was also aware of the possibility of a large, or so it is implied, debt to be paid to the Defendant by one Christopher Porter. He also seems to have been aware the probability of the Defendant being paid was not 100%. The Claimant too had financial concerns. His Email of 3rd February 2010 speaks of his being, "not as liquid as I would like to be". The overwhelming impression left by all the evidence is that neither of them was willing or able to put large amounts of cash into the business. Instead they agreed to pool resources by, for example, using the Claimant's labour force with the Defendant giving his time to supervise them. The Emails from the Claimant make it quite obvious he thought there was a need for supervision. Both had items and materials "useful" in the renovation exercise and incorporated those into the work done. Both Claimant and Defendant now seek to recoup the cost of what was understood to be freely given in the first place. There is no doubt in my mind that resources freely and voluntarily "donated" cannot now be the subject of a claim by either of the parties, even one based on quantum meruit.

8. There is also the question of the tenancy. I asked Mr Radclyffe about that issue. His response was there was no counterclaim in respect of rent paid by the Defendant. In my respectful view, it is not as simple as that. The Claimant entered into a legally binding agreement. It is the only agreement that the court can be certain of. It was a tripartite agreement between the Claimant, the Defendant and the Landlord. The Claimant may have come to some arrangement with the Landlord, no details were given, but he certainly did not come to any arrangement with Defendant. At the very least the Claimant is liable for half the rent for the months of January, February and March. In law it could be argued he is liable for half the rent for the whole year. The fact the Defendant does not claim rent (other than for April) is no more than an indication of his intention to forego any claim in respect of rent.

9. Bearing all this in mind it is possible to come to a conclusion about what each party is liable to pay. The easiest issue is that of the rent and the bond. The Claimant paid the first months rent (that would have been for February because according to the tenancy agreement January was free) and the bond, a total of $19,500.00. Each party would have actually been liable (to the end of March) for half the rent and half the bond a total of $13,000.00. As the Claimant has already paid $19,500 he is entitled to a "credit" of $6,500. An alternative way of dealing with the bond is to order the Defendant to pay any refund at the end of the tenancy to the Claimant. It would be unfair to ask the Claimant to wait and as there is no guarantee all the bond will be refunded the most equitable solution is to order the Defendant to pay that now.

10. As for expenditure, the Defendant agrees the Claimant has been involved in expenditure of $36,113.34. That is set out in the Defendants Email of 3rd March 2010. The invoices for the expenditure are shown at pages 91, 92, 93, 97, 98, 100, 101, 103, 106, 108, 111, 115, 119, 124, 125 and 126. Some adjustments have to be made to the figures shown on those pages. The Defendant does not agree the exact figure on page 91; he only agrees a figure of $2037.20. Credit also has to be given (to the Defendant) of $354 in respect of page 103 [1]. Some of the pages show duplicated amounts, see pages 100 and 101 and pages 125 and 126. There is some uncertainty about the Claimant's expenditure on the fence (the invoices are at pages 121 and 123). The Defendant seems to agree a figure of $2880.00. It is unclear from the evidence whether the Defendant paid any of the costs. There seems to be a suggestion he paid something towards the fence but is has been assumed the final figure was paid by the Claimant.

11. The Defendant claims to have incurred expenditure in cash and materials of $7925.30[2]. From that should be deducted the cost of lunches and the water tank. The former because the Claimant does not agree it and the latter because the evidence suggests it was not installed at the time of the split. That leaves approximately $7000. The Claimant says he cannot agree that figure because there is no supporting documentation. However, he did agree in cross examination that the Defendant had incurred some expenses. He has not produced any evidence to counter the Defendant's claim about the values placed on those items.

12. The major difficulty is there is no cogent evidence to indicate what was used where in terms of resources. There is no indication which items were specifically used for the Claimant's business and which were used for the Defendant's. There is no doubt some items were for the "joint" benefit of the parties, for example the paint. It would be ridiculous to try and apportion what paint was to be attributed to which business. Some items can be seen as being specific to one business; the roof over the pizza oven is an example. There were materials installed on the basis that one or other of the parties felt they needed to be installed as a priority. The other party then adopted the prioritisation. One such example is the fence. The most equitable solution is to total up all the costs incurred and to halve them.

13. The total costs, ignoring the rent and bond element, would amount to (from the Claimant) $19,493.34 plus (from the Defendant) $7,000 making the final figure $26,493.34. Each would be liable to pay $13,246.67. However, the Defendant will obtain the most benefit from the expenditure and so even though the Claimant voluntarily walked away from the premises this must be reflected in each parties "liability". An equitable result would be for the Defendant to pay 75% of the total costs. This would mean the Defendant should pay $19,870.01 and the Claimant $6,623.33. The Claimant has already paid $19,493.34 and so he is in "credit" to the tune of $12,870.00.

14. The end result is, on a quantum meruit basis and not on because of any contractual relationship, the Defendant should pay to the Claimant the sum of $12,870.00 plus the "credit" in respect of the rent and bond (see paragraph 9 above) of $6,500.00. That would make a total of $19,370.00. As the Defendant appears to have forgone any payments for rent from March 2011 onwards no account has been taken of any sums subsequently paid in that regard by him. Judgment shall be given to the Claimant in that sum, namely $19,370.00. Costs are at the discretion of the court and in this case, no order for costs will be made.

Chetwynd J

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^[1] See Claimant’s Email of 11^th March 2010
^[2] Defendant’s Email 3^rd March 2010