QQQ Holding Ltd v Attorney General [2017] SBHC 9; HCSI-CC 73 of 2014 (21 February 2017)

IN THE HIGH COURT OF SOLOMON ISLANDS

(Faukona PJ)

Civil Case No: 73 of 2014

BETWEEN: QQQ HOLDING LIMITED Climate

AND: ATTORNEY-GENERAL First
(Representing the Permanent Secretary Defendant
of the Ministry of Communication and
Aviation)

AND: ATTORNEY-GENERAL Second
(Representing the Tender Board of the Ministry Defendant
of Communication and Aviation)

Date of Hearing: 23^rd November 2016

Date of Decision: 21^st February 2017

Mr D. Marahare for the Claimant
Mrs R. Soma for the First and Second Defendants

DECISION

Faukona PJ: The Claimant is a Company incorporated in Solomon Islands and had been engaged in whole-selling and retailing of general merchandise goods.

2.	The First Defendant is the administrative head of the Ministry of Communication and Aviation (“the Ministry”) and also a Chairman of the Second Defendant. The Second Defendant is a body established by law within the Ministry to administer tender processes affecting the functions and development aspirations of the Ministry.
3.	On 1st January 2011 there was a tenancy agreement signed by the Claimant (as the “Tenant”) and the Permanent Secretary of the Ministry of Civil Aviation on behalf of the Solomon Islands Government (as the “Principal”). The tenancy agreement was purposely for the Claimant to operate and manage a duty free shop at the Henderson international terminal. The tenancy agreement should be valid for five years, until 31st January 2015.
4.	Since the date of execution of the agreement, the Claimant had accessed to and had been operating and managing the duty free shop at that location.
5.	On 17th June 2013, the First and Second Defendants issued a one month notice to the Claimant to vacate the premises on the ground that the duty free shop would be renovated and to enhance further development aspirations.
6.	Before the notice was served, on 1st November 2011, Mr Lelau, the Airport Manager issued a letter to the Claimant conveying the Airport Facilitation Committee’s concern that there was a great need for the improvement of the outlook of the shop. The letter strongly requested the Claimant to work with Civil Aviation Division Property Manager to come up with a much more desirable outlook of the shop.
	The issues:
7.	The issues are, whether the second Defendant had the requisite power to terminate the agreement, and secondly whether both Defendants had acted lawfully in terminating the tenancy agreement.
8.	In determining the issues, it is not necessary to conduct a research from other sources, but focussed on the tenancy agreement which contain initial intention of the parties. The agreement is a document that contains the final consensus of the parties after initial negotiations. If is supposed to be a conclusive document which hold the final ultimatum, and which vested rights and obligations upon the parties.
9.	Under clause 2 (iii) of the written agreement the parties had agreed that the tenancy agreement may be terminated by either party giving one month notice in writing. It would appear though the agreement was made on 1st day January 2011; it was signed on 27th April 2011.
10.	What actually transpired is that six months after signing of the agreement, the Airport Manager Mr Lelau wrote to the Manager of the Claimant and conveyed that there is a great need to improve the outlook of the duty free shop. No particular area was mentioned but implication can be had to general outlook of the shop. Whether it was in terms of the kind of, concerning varieties of stocks, set up and arrangement of stocks. I guess something that will beautify and attractive as to the general outlook of the shop. I do not think that letter was referred to space because that could not possibly be expanded, but may make reference to refurbishment in terms of painting, varnishing, furnitures etc. Quite significant that letter was copied to the Permanent Secretary of Ministry of Communication and Aviation who is the current First Defendant. However, it would be sufficient and proper if the letter indicated certain areas of improvement; better still a proposal for further discussion is necessary.
11.	From 1st November 2011, the date of the letter by the Airport Manager, to the date the termination letter was issued on 17th June 2013, what improvements had the Claimant made to the duty free shop? There is no evidence by the Claimant to attest affirming such improvement had been done or attempted to have been done after 1st November 2011.
12.	Probably the failure resulted in the issuant of the notice of termination of the tenancy agreement. I noted the reasons therein quoted the word “developments”. The word development in its natural and ordinary meaning means by trying to build or improve the standard or condition from one level to another.
13.	The second reason for issuant of the termination notice actually stated that improvement ought to be done to the facilities, that should probably mean the shelves, counters, arrangement of stocks etc.
14.	Those two reasons can be read interchangeably or complimenting one another. The fact is that there was no improvement done by the Claimant to uplift the face of the duty free shop though probably given 19 months to do so, from 1/11/2011 – 17/6/2013.
15.	Following the letter of termination, there was a meeting held on 24th June 2013 by the interested parties. To that effect, a letter of 1st July 2013 signed by Mr Laurence Quan and addressed to the Permanent Secretary suggesting a number of options including a temporary solution be provided to facilitate service, or temporary occupancy of the premises until renovation work commenced, or making available site and plan drawn to review the propose development.
16.	Those proposals seemed unattractive in all respect, hence, finally demised by a letter from the Permanent Secretary dated 20th July 2013, that the Ministry will no longer engaged the Claimant to operate the duty free shop and that work contract had been awarded to a contractor to carry out renovation work which was currently underway.
17.	Where a clause in the written agreement expressly stated that either party can terminate the contract by giving one month’s notice, it is arguable whether the reasons for termination has to be reasonable and valid. In this case there is no argument that one month notice was lapsed. The reason for termination was not gravely argued. Probably for the very reason that the Claimant had failed to allude to the first letter issued by the Airport Manager to improve the out-look of the shop. So long as the clause that contains the notice had been complied with what is left is for the parties to resolve any obligation or responsibilities due.
18.	In my personal view, a duty free shop at an international airport terminal is significant. It supposed to be attractive in all its features. To fall below international standard is a shame for Solomon Islands. Such shop should show case what Solomon Islands is like, a glimpse will draw impression the heart of beauty that Solomon Islands been endowed with. Perhaps this was the standard the Defendants were expecting. There was no response by the Claimant within six weeks to make an attempt to improve the outlook of the shop, hence questions whether the Claimant deserves to be terminated from the tenancy agreement?
19.	The question is, does the second Defendant has the power in law to terminate the agreement, and does both the first and the second Defendants acted unlawfully in terminating the tenancy agreement?
20.	The second Defendant was the Tender Board of the Ministry of Communication and Aviation. I guess the Tender Board decided who to operate the duty free shop. The First Defendant was the Permanent Secretary of the Ministry and was the Chair-man of the Tender board. In reality the establishment provided dualistic power upon the Permanent Secretary. As the Chairman of the Tender board, he has power and his board members to determine termination of the tenancy agreement.
21.	If the structure within the Ministry of Communication and Aviation appears dubious, what is the alternative structure where responsibility is well defined to avoid duplicity of functions? There is nothing provided by the Claimant, it has to establish with proof. If the first and the second Defendants have no power, then who else have it. I think the firs Defendant has the power because of the dualistic role vested on him. He did sign the termination letter and that should formally rescind the agreement. It was not an act of unlawful termination; the notice was issued for more than a month, during which period the issue of improving the outlook of the shop was not resolved hence the agreement was terminated.
	Refund of outstanding rental:
22.	The Counsel for the Defendants had agreed that part of $58,000.00 being rental for 5 years still outstanding to be refunded. Deducting 29 months of occupying the shop leaves $19,000.00. Since $15, 250.00 had been paid; the outstanding amount still stands at $3,750.00. That amount is to be paid to the Claimant with 5% interest - see R17.75.
	Damages and missing assets:
23.	The Claimant also pleaded that the Defendants by themselves or their agents entered the shop and removed a fridge, mess wire, a shelf and counter belonging to it. The total value of all the assets is approximately $30,000.00.
24.	The evidence I could able to deduce from the materials are that the letter of notice for termination of the tenancy agreement was issued on 17th November 2011. On 24th June 2013 there was a meeting held if the issue complained of could be resolved, nothing was resolved and the notice was maintained.
25.	After all, and by virtue of the notice, the Claimant should have moved out of the premises by 17th December 2011. By 26th July 2013, 19 months after the notice of termination was due, the Claimant was still occupying the premises, hence, by the Permanent Secretary’s letter on 26/7//13, requested the Claimant to remove all its properties by 27th July 2013 before 4 pm. The letter further indicated should the Claimant have failed by then the contractor may force entry and continue with renovation work.
26.	It is a simple common knowledge that once an agreement has been terminated, the tenant must move out with all its assets with immediate effect, unless change of circumstances takes precedent. In this case there was no change of circumstances and the decision to terminate the agreement still stood. The question is why the Claimant continued to occupy the premises with its assets for 19 months after the notice had lapsed. There is no reason given, even so, I perceive there is no validity in it. To continue occupy the premises for 19 months after notice of termination had been expired, with expectation that a miracle decision would come by, was an elusive and or illegal occupying of the premises.
27.	I presume renovation work could have started before the Permanent Secretary’s letter to the Claimant on 20th July 2013. The question is whether the contractor had forced entry into the premises resulted in damaging those assets. If so, then the Claimant would have failed to remove all its assets on 27/7/13 by 4 pm.
28.	The Claimant had 19 months to remove its assets. There was no likelihood or even foreseeability that the notice will be withdrawn. Had the Claimant acted accordingly its assets could not have been damaged or stolen. I think the Claimant is to be blamed for losses of its assets. It could have been avoided but allowed to occur. In my assessment the Claimant had contributed to the risk at 100% therefore the claim for restitution for the loss or damages of those assets is dismissed. This also applies to the fix telephone line. The claimant was bound to move out it should also move its telephone line to avoid someone accessing it. Again the Claimant was careless and contributed immensely for its loss facility. Unauthorized use of it was possible because of the Claimant’s negligently contributed to it by not removing it probably for 19 months. I must also dismiss the claim for expenses for using the telephone line.
	Breach of tender rules and process:
29.	I noted breaches of tender rules and processes were pleaded but there is no evidence in support in terms of which particular tender law or rules was breached, or which tender processes was not complied with. Whether the tender processes are mandatory because a particular law or regulation had provided for. None of those was established by evidence.
30.	I noted a significant fact that a duty free shop at Henderson international terminal is a shop which has to be opened almost at all hours for international travellers get their free duty items and souvenirs from Solomon Islands. To close the shop for even a week or two has put Solomon Islands in a sport light as a nation without anything to show to the world. That will certainly reflect negative implication of our nation.
31.	In a situation where the shop was not opened for 19 months, what could a prudent Ministry responsible do? If it would mean someone has to operate the shop as soon as possible, after the notice of termination expired, the Ministry ought to have someone in place. If tendering process could delay having someone operating such an important shop, the Ministry has total obligation to do what is best to have the shop up and running rather than idling itself for nineteen months.
32.	I perceive the Defendants had done the best they could in the situation and have the third party to operate the shop. The particular Ministry is the owner of the premises and whether tender notices were displayed or not it’s a sole responsibility of the Ministry. With those reason it is prudent and fair that the Ministry acted abruptly. I do not find both Defendants breached any law of processes in selecting the third party to operate the duty free shop at Henderson international terminal.
	Order:
	1.	Refuse to grant orders (1) and (2) sought in the claim.
	2.	Order that the Defendants pay as a refund of outstanding rental of $3, 750.00 plus 5% interest.
	3.	Refuse to grant declaratory order as sought in relief 5.
	4.	Refuse to grant declaratory order as sought in relief 6.
	5.	Claimant to pay cost and incidental to this hearing to the Defendants.
	The Court.