Gegeu v Solomon Islands National Provident Fund [2015] SBHC 64; HCSI-CC 157 of 2013 (5 August 2015)

IN THE HIGH COURT OF SOLOMON ISLANDS
FAUKONA J:

CC: NO. 157 OF 2013

BETWEEN:

ANDREW GEGEU
(Trading as Crystal's Kitchen of P O Box 1072, Honiara, Solomon Islands)
First Claimant

AND:

SAMSON MAENIUTA AND PRISCILLA MAENIUTA
(Trading as Pizza Leaf Hut of Honiara)
Second Claimant

AND:

MARYLENE MASA
(Trading as MM Kaikai Shop of Honiara)
Third Claimant

AND:

SERAH OSIAPU
(Trading as Ozzy's Kitchen of P O Box 1671, Honiara)
Fourth Claimant

AND:

JULIETH KETI
(Trading as Keti's Food Shop and Kitchen of Honiara)
Fifth Claimant

AND:

PITI MASIKA
(Trading as Piti's Food Shop of Honiara)
Sixth Claimant

AND:

Solomon Islands National Provident Fund
(Abbreviation "SINPF")
Defendant

Date of Hearing: 22nd May 2015
Date of Judgment: 5th August 2015.

Ms L. Ramo for the Claimants
Mr P Afeau for the Defendant

JUDGMENT

FAUKONA PJ: An amended claim in Category B was filed on 15th August 2013 by all the Claimants. Relief sought are five altogether and in the following terms; order nullifying the lease agreement signed, the lease agreement was unlawfully terminated by the Defendant, as a result the Claimants loss business and business interests, which the Defendant must indemnify, order for damages of business loss and interest and claims for interest of 10%, and of course, cost on full solicitor/client bases.

Background Facts

2. A Lease Agreement was signed by all the Claimants except the second Claimant (who executed later) with the Defendant on 1st April 2011 to renew the old agreement which was expired in April 2011. The renewed Lease Agreement was for another two years until April 2013. The terms of the Lease Agreement were similar in all respect.

3. The subject of the Lease Agreement was for the lease of the Defendant's Leaf Huts premises located at PN No. 191-020-86 Pt. Cruz, Honiara. The lease was for a rental consideration in the sum of $1855.92 per month.

4. The purpose for leasing the leaf huts was for the Claimants to engage in cooking and selling of locally prepared food, such as boiled bananas, eggs, taro, pana, cabbage, fruits, fish and chips, cassava rolls, sandwiches, egg burgers, roti, cakes, scones, hot dogs and snacks.

5. On 26th July 2011, Ms Patricia Soqoilo, a Health Inspector from Honiara City Council Environmental Health Division conducted an inspection of the premises. This was following public complaints made to the Defendant. A report to that effect was produced on 28th July 2011. In the report, she recommended that the conditions of these food premises were unfit and unsound for food preparation or production. The general cleanliness and structural requirements in the kitchens were of very low hygiene standard and posed health risk to public who frequent the place. The Defendant was given one month notice to remedy the defects and put the premises in a hygienic and sanitary manner as required by Pure Food (Food Control Regulation) 2010.

6. On 27th October 2011, the Defendant issued a close notice letter to all the Claimants to vacate the premises as of 18th November 2011. The letter also stated in paragraph 2 that a full re-designing and development of the premises will see the food huts area have a full face lift. A day before the notice lapsed, the Defendant wrote another letter extending vacation date to 31st December 2011. At the end of paragraph 2 the letter re-emphasised that vacation was necessary so that the Defendant will proceed with its plans to upgrade the food courts. By letter dated 3rd January 2012, the vacation dated was extended further to 14th January 2012. In all, the period of vacation notice was two months and eighteen (18) days.

The Effect of the Health Report

7. The report was specifically compiled to ascertained public complain about the general and hygienic conditions of the leaf huts. It was a report made directly to the Defendant because it was the Landlord which owned the premises. Nothing is prejudicial should the reports got into or been received by the Claimants. The purpose of the report was so that the Defendant would act upon the recommendations to remedy the conditions of the premises as they were unfit and unsound for food preparations and productions.

8. Originally, the report was meant for the Defendant, however, recommendations had took on board the Claimants as well, as food related operators; both of whom were obliged to adhere to the Act and Regulations. In fact, both were at fault in not complying with the Regulations in allowing the premises to reach unhygienic state that is probably the view of the parties.

Whether Termination of Lease Agreement were Lawful

9. The relevant clauses of the Lease Agreement are Clause 9 (a) and (c) and Clause 30 (a). To appreciate the express terms, I will paraphrase each clause.

Clause 9 (a) "The Lessee shall at all times during the terms of the lease in a proper and workmanlike manner and to the satisfaction of the Lessor will and sufficiently repair, maintain, cleanse and keep the interior of the premises and all windows, walking, catches, appliances, electrical wiring and appurtenances and Lessor's chattels (if any) with the premises in the same good clean, tidy, and proper and tenable order, condition and repair as the commencement of this lease".

Clause 9 (b) "....................

Clause 9 (c) "that Lessee will advise the Lessor promptly in writing of any damages sustained to the premises or defective operation of any of the appurtenance in the premises".

Clause 30 (a) Early Determination

Notwithstanding any express or implied provision to the contrary contained in the Lease –

(a) The Lessor may determine this lease at any time in the event of the rent (or any portion thereof) reserved under this Lease being in arrears for 14 days (whether) formerly demanded or not) or in the event of any of the covenants on the part of the Lessee is not observed or performed.

10. Clause 30(a) has expressly stated in no uncertain terms, that the Defendant was vested with mandatory power and right to exercise by prematurely determine the lease in the event the rent was not paid or being in arrears for 14th days or that the Claimants have failed to observe or perform any of the covenants in the Lease Agreement. The relevant covenants are provided in Clauses 7 to 22. However, the inspection report (which was not disputed,) revealed a gross non-compliance and failure by the Claimants to observe Clause 9(a) and (c). That the conditions of the premises from which the Claimants prepared and cooked food were unfit, unsound and in a state of dilapidation. According to health standards that environment is not favourable for preparation and production of foodstuff consume by human. The circumstance is such that the Defendant must resort to drastic action to remedy the defects. Hence, a letter to vacate was issued to all the Claimants.

11. The Counsel advocate on behalf of the Claimants submits that the Inspector has failed to comply with Pure Food (Food Control) Regulations 2010, which prescribed the minimum food safety standard required to be observed, and the penalties. She refers to the enforcement procedures for non-compliance with prescribed minimum food safety standards laid down by Section 16 of the Pure Food Act, 1996.

12. I think the Counsel has misconceived herself and perhaps misconstrued the Law with a wrong representation. Any agreement whether it be Lease Tenancy Agreement, personal or commercial contract, the terms expressed therein and which had been executed, binds the parties, hence, take precedent over any legislation. Unless the contract expressly stated, in the event of breach by any party, such breach be enforced by procedures laid down by a prescribed Act. It would appear there is no clause in the Lease Agreement. Therefore, it would be futile to argue that the Inspector had failed to comply with the prescribed enforcement procedures enacted by the Pure Food Act 1996.

13. Once a report was compiled, the Defendant is obliged to act on any recommendation directed to it. If the report identified areas needed to be remedied, the Defendant must ensure it was remedied. The report has given the Defendant one month notice to rectify the defects to a hygienic and sanitary manner.

14. It would appear the report had identified areas and that can be translated as breaches of Clause 9 (a) and (c). The Defendant therefore responded by exercising its power under Clause 30 (a) of the Lease Agreement and issued the termination letter to vacate. The reason according to the Defendant is because of the report and of course it had a plan that a full re-designing and development of the premises will see the food huts have a full facelift. There is no need to advice the Inspector or herself to yield to comply with the enforcement procedures enacted by the Pure Food Act. The report is enough to persuade the Defendant to act according to the agreement. The Pure Food Act and Pure Food (Food Control) Regulation 2010 merely paved a way for the report to be compiled, the Defendant will accomplish complying with procedures prescribed by the Principal Act and the Regulation attached to it. As such, there is no need for someone to be convicted of any offence under the Regulation before qualified to be vacated.

Health Inspect Report

15. The parties have no issues with the report. However, the Counsel for the Claimants may have misused or misinterpret certain parts of the report. Firstly, the one month notice given to the Defendant did not mean that the Defendant must completely remedy the defects within one month. In my own view, the notice urged the Defendant to commence remedy the defects within one month. During the period of work, the Claimants had to cease operation. It may be viewed as a temporary closure. The fact is that the Inspector may not be aware of the Defendant's plans to facelift the whole entire premises. All she did was inspected and compiled a report.

16. She did not issue any temporary closure order. There is no revelation of such in the report. The temporary closure order was her assumption, a remedy the Defendant had resorted to, to address structural and sanitary defects. That cannot be taken as an order directed from her as a source. Again, this is another misconception of the report.

17. Further, the recommendations did not include the Claimants to take necessary steps to put the premises in a clean and sanitary condition as well as rectifying the recommended structural defects. They could have done that long before the inspection. They have seen it, work in it and involved in it. It only requires someone with good judgment to perceive what is good and what is bad. If the Claimants could not be able to see and feel the kind of environment they produce food for public consumption, then it does not matter; what matters most is money and not risk that will affect the health of others.

Failure by the Defendant to have Regular Inspections

18. The Counsel for the Claimants argues that the Defendant cannot insist on compliance with the relevant clauses now. It had never raised the issue of responsibility and liability under the Lease Agreement. Therefore its right is deemed to have waived compliance with the Agreement. The Counsel refers to the case of Ramlu –v- Native Land Trust Board.[1]
19. I noted there is evidence that the Claimants had occupied the demised premises for a number of years ranging from 6 – 20 years. During the period, the Claimants were not reminded of any breach of any term of the Agreement nor did the Defendant made any inspection at all. That may be true; however, Clause 16 which the Claimants rely on only provides different function from the principle of waiving rights and which the above case had discussed.

20. Clause 16 basically focussed on the Claimants' right to enter the demised premises for the purposes of viewing the state of repairs or carrying out any repairs, resulting from normal wear and tear, reconstruction, structural alterations, or additions or other work which may be necessary. Upon reading of the Clause, it seems to appear ambiguous. It does not provide for prior inspection before actual physical work gets started. It only provides allowance for the Defendant to enter the premises to see the state of any repair work that is actually carried out on the ground. As such the Defendant may probably reply on Clause 9 (c) expecting the Claimants to promptly in writing, repair any damages sustained to the premises or the defective of any appurtenances. There is evidence that Claimants had never reported any such damages to the Defendant during the cause of lease period.

21. At the end of the day, who shall bear full responsibility, is it the Defendant? I don't think so. The Claimants have full responsibility to report any damages and defects sustained by the premises promptly to the Defendant. Hence we cannot now say the Defendant's right to rely on the Agreement has been waived because of its failures. There is no failure that I can note, nothing has been identified by the Lease Agreement either. Rightly, I am confident to say that the Fiji case of Ramlu the Counsel for the Claimants refers to is not applicable in this case. In the Fiji case, the principle of unclean hands applied differently. The Plaintiff was denied the equitable remedy of waiver by reason of her failure to honour the Tenant/Landlord relationship. The question is, was the tenancy relationship provided foresaw the events of 1985 cyclone, an event occurred long after the Agreement was executed. Probably the failure by the Plaintiff was she failed to report promptly to the Defendant that her family was moving out of Fiji to Australia after the effects of the 1985 cyclone.

22. In this case, the Defendant relies on Clause 9(c) expecting the Claimants to submit promptly of any change sustained before repairs, renovations or additional work be carried out.

Frustrating Event

23. Parties seem to have equivalent view on this principle. I do not think both the Claimants and the Defendant are equally at fault. The whole bulk of blame is vested upon the Claimants. Clause 9 is absolutely breached by the Claimants. The Health Inspection report was made and done following complaints. Prior to that, the Claimants had never reported any deteriorated condition of the premises. Because of that, the Defendant thought nothing was wrong, and business was carried out as usual. The inspection report has never constituted a frustrating event. In fact, it was made at the right time after public complaint.

24. To conclude, I find the claim was filed on the wrong assertion from the real interpretation and application of the Lease Agreement and the Law. Therefore, I must dismiss the claim accordingly.

ORDERS:

1. The amended claim filed by the Claimants in their own rights, be dismissed.
   
2. Cost of this case is paid to the Defendant by all the Claimants.
   

THE COURT

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^[1] It’s a Fiji case with no citation supplied