Molaisuva v MV Francis Gerena [2013] SBHC 59; HCSI-CC 465 of 2011 (31 May 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Mwanesalua J)

Civil Case No. 465 of 2011

BETWEEN:

FRANCIS MOLAISUVA, FRANCIS
SAWANE JR, DOMINIC WALEBALIA,
JOHN WALE TOFEA AND GERENA
SAWANE
Claimants

AND:

THE MV FRANCIS GERENA, THE SHIP
First Defendant

AND:

HARRY PHILIP
(Owner of HP Shipping Services)
Second Defendant

Hearing : 30 April 2013
Ruling : 31 May 2013

Mr. Tegavota for the Claimants/Applicants
Ms. Bird for the Defendant/Respondent

RULING

1. This is an application by the Claimants Francis Molaisuva, Francis Sawane (Jr), Dominic Walebalia, John Waletofea and Gerena Sawane ("the Applicants"), filed on 2 November 2012 for the following orders: (1) whether the Claimants having registered under the name Waletofea Shipping Services are deemed to be equal partners; (2) whether the sale of the MV Francis Gerena will require the authority of all the Applicants; (3) whether the Memorandum of Agreement dated 4 November 2011 signed by the Second Defendant and one of the Applicants namely Dominic Walebalia for the sale of MV Francis Gerena (a) constituted a valid sale of the ship to the First Defendant and/or constituted a valid agreement for the sale of the ship and any other orders or further orders as the court thinks fit.
   
2. The Applicants carried on the business of Distribution, Tourism, Entertainment and Catering, Transportation and Telecommunication under the Business name of Waletofea Shipping Services. Their Certificate of Registration No. BN683 of 2011 was issued by the Registrar of Companies on 9 August 2011 pursuant to the Registration of Business Names Regulations of 1971.
   
3. The Persons registered to trade under Waletofea Shipping Services are Francis Molaisuva, Francis Sawane (Jr), Dominic Walebalia, John Waletofea and Gerena Sawane.
   
4. The MV Sawane was built by the Second Defendant and registered by the Marine Department Ship Registry in Honiara, Solomon Islands, on 23 March 2005 under the Business name of Waletofea Shipping Service No. 834. A declaration of transfer and ownership of the MV Gerena by Waletofea Shipping Services was made on 25 February 2011.
   
5. Over the years since 2005, the MV Gerena Sawane has been providing Shipping Services to various provinces within Solomon Islands.
   
6. The Claimant did not convene any meeting to discuss the sale of the MV Gerena Sawane with the First Respondent. But, such discussion did take place between the First and Second Respondent.
   
7. On 4 November 2011, the First Respondent executed a memorandum of Agreement ("MOA") with the Second Respondent, and one of Claimants, namely, Mr. Walebalia Sawane for the sale of the MV Gerena Sawane. Mr. Francis Nolaiasi witnessed the execution of the MOA. Mr. Walebalia Sawane says that he was forced by the Second Respondent to sign. This was confirmed by the Second Respondent himself in his sworn statement before he passed away.
   
8. The Claimants were aggrieved by that sale and filed a claim seeking relief against the Respondents. The Respondents filed their defences to the claim.
   
9. The Claimants filed an application seeking determinations of questions of law as set out in paragraph 1 above.
   
10. With regard to the first question, subject to any agreement, all members of a partnership are entitled to share equally in the capital and profits of the business. And they must contribute equally towards losses whether of Capital or otherwise, sustained by the partnership (See section 24 of the Partnership Act 1890 of UK).
    
11. In relation to the second question, the sale of the MV Gerena Sawane as a partnership asset was instigated by the Second Respondent who was not a member of the partnership. But in general, a sale of the only most vital asset of the business ought to have been made through the authority of the Claimants. However, it is noted though, that seem to be no agreement between the members that would cover, among other things, the manner in which the assets of this business are to disposed of.
    
12. In relation to the validity and the effect of the sale of the MV Gerena Sawane to the First Defendant, this court determines as follows: (1) the sale was done under MOA by a non-member of the partnership and without the authority of the members of the partnership. (2) on the validity of the sale, the provisions of section 9 of the Stamp Duties Act (Cap. 126) are relevant. The terms of this section are mandatory. It reads: "No document executed in Solomon Islands or relating to wheresoever executed, to property situated in Solomon Islands or to any matter or thing done or to be done in Solomon Islands, shall except in criminal proceedings and civil proceedings by a collector to recover any duty or penalty under this Act, be pleaded or given in evidence or admitted be good, useful or available in law or equity unless it is duly stamped in accordance with the law in force at any time when it was executed."
    
13. In Dent v Moore (1919) 26 CLR 316 at 324. The court stated: "But here, acting impersonally on the bargain finally embodied in an "instrument", and therefore contained nowhere else, it strikes that instrument with sterility (to borrow an expression from another branch of the law) unless and until the public requirement of taxation has been complied with until that has happened, the instrument (except in criminal proceedings) is not 'available' and not effectual – that is, it has no effect for any purpose whatsoever at law or in equity: in other words, it cannot be considered as an instrument giving title, or as one which could be made the means of compelling anyone to give title. It is in the eye of the law a nullity, except for criminal proceedings and, of course, for purposes of being stamped".
    

In Austree Enterprises PTY Ltd. Civil Appeal No. 7 of 2012 (On Appeal from High Court Civil Case No: 381 of 2011, the Court of Appeal said at p.11: "where proceedings in Solomon Islands are founded on an instrument it must be stamped with the appropriate duty before commencement of such proceeding".

14. It is obvious that the MOA under which the sale of the MV Gerena Sawane was not duly stamped as mandated by section 9 of the Act referred to herein. The result is that the MOA and the sale of the MV Gerena Sawane by the Second Respondent to the First Respondent are null and void.
    

ORDER: (1) This application is allowed.

(2) The MOA and the sale of MV Gerena Sawane by the Second Respondent are null and void.

(3) The Applicants costs are to be paid by the First Respondent.

Order accordingly.

THE COURT