Yam v Gold Export SI Ltd [2018] SBHC 43; HCSI-CC 36 of 2014 (3 April 2018)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Faukona, PJ)

Civil Case No. 36 of 2014

BETWEEN: AUSTIN YAM Claimant

AND: GOLD EXPORT SI LIMITED Defendant
Date of Hearing: 7^th September 2017, 30^th November 2017
Date of Judgment: 3^rd April 2018

Mr A. Radclyffe for the Claimant
Mr G. Suri for the Defendant

JUDGMENT

Faukona, J: A claim in Category A was filed on 13^th February 2014. There are four reliefs sought including costs. The major relief is mesne profits at $10,000.00 a month; claimed to have been accumulated from 1^st August 2013 to 18^th April 2015 when the Defendant Directors finally vacated the Claimant’s apartment by removing their personal effects.

Facts:

2. The Claimant is a registered owner of a fixed term estate PN No. 191-014-144 near Town Ground, Honiara (“the premises”). The premises was managed by the Claimant’s Company, Yam and Company.
3. The Defendant is a limited company incorporated in Solomon Islands with its registered office at shop 32, NPF Plaza, Honiara. The directors and shareholders are William Fredrick Olsson and Gloria Elizabeth Olsson.
4. In June 2012, the two directors of the Defendant Co.verbally agreed to rent an apartment in the premises for a term of 6 months from 1^st June 2012 at the rental of $10,000.00 a month. A written tenancy agreement was prepared and given to the Ollssons and was signed. By then the Olssons had occupied one of the apartments with their personal effects. The Defendants paid the Landlord a bond fee of $8,000.00 and the rent of $10,000.00 on request for 6 months grace period.
5. After six months, the parties verbally agreed to extend the agreement for further 6 months expiring on 31^st May 2013. The claimant gave the Olssons a draft new tenancy agreement at an increased rent of $12,000.00 a month, from 1^st June 2013.
6. The Defendant did not sign the tenancy agreement and did not agree with the terms. Despite none execution of the agreement the Olssons remains in the premises and paid the old rent of $10,000.00. The Defendant then withdrew the offer to renew the tenancy agreement.
7. On or about 8^th August 2013, the Olssons left Honiara to Australia and left their personal belongings in the premises.
8. In September 2013, the Claimant gave the Defendant advice to vacate the premises and removed belongings, but the Defendant did nothing or refused.
9. Eventually the tenancy agreement had expired and the belongings not being removed.
10. By then the Claimant wished to rent the premises to a new tenant at a rental rate of $12,000.00 but unable to do so because the Defendant’s failure to vacate the premises. As a result the Claimant suffered loss and damages.
11. The Defendant's version is that the directors agreed and signed the Tenancy Agreement with rental amount of $10,000.00 which was paid commensurated from September 2012 until August 2013. It agreed with the rental amount but not in respect of various terms and conditions which were unfair and irrelevant.
12. Upon entry into the apartment, the Defendant discovered the apartment was filthy and had problems with meter, gas, pests and safety. Therefore the Defendant installed certain improvements as bath cabinet $1,000.00, replacement of bathroom/shower fittings @ $3,556.00, installation of padlock @ $800.00 and supply of gas bottle @ $1946.00.

Analysis:

13. The apartment in the premises of the Claimant was going for $10,000.00 rental per month. The Directors of the Defendant disagreed hence refused to sign the tenancy agreement. Negotiations ensured and $10,000.00 rental was agreed upon, thereafter the tenancy agreement was signed. It was considered at the negotiations stage that such lower amount was acceptable for the first six months to allow the Directors of the Defendant to settle down with their business undertakings.
14. After the first six months, the parties verbally agreed to extend the agreement for further six months of which the Defendant had paid the same rent until September 2012.
15. After the expiry of the second six months the Claimant gave a new tenancy agreement at an increased rent of $12,000.00 from 1^st June 2013. It would appear the Defendant did pay $10,000.00 in June and July 2013. July 2013 was the last rental payable to the Claimant. Despite payment of $10,000.00 rent the agreement was never signed by the Defendants.
16. The act of refusal to sign the second tenancy agreement in June 2012 signalled bad time was looming. It would have been proper and simple if parties resolved by not pursuing further agreements, and withdraw the offer.
17. Occupying a premises without excuting a tenancy agreement implicated occupying a premises with no legal basis. At the same time accepting rental of $10,000.00 without the agreement being signed was acceptance, though other components of the agreement may not be agreed upon.
18. The reason given by the Defendant for not endorsing the agreements on 1^st June 2012 and in May 2013 was because of the dispute concerning electricity charges and their claim that the property was unsafe.
19. Whether it was before or after the first agreement was executed on 8^th August 2011, that upon entry into the apartment, the Directors of the Defendant installed certain improvement to the value of $7,796.00. These installations became part and partial of the set-off and counter-claim.
20. Those improvements can be perceived as relevant to the directors to enhance usual standard of living and improved and maintain work output capacity by accessing modern facility and amenities.
21. Even fascinating, those improvements were not part or partial of any claim for refund or deductions from the rental amount. Neither induce parties to even say a word until some years later. There is no evidences that any such costs was addressed or reduced from the amount of rental.
22. Any improvement undertaken by the tenant must not escape the consent of the Landlord. There must be pre-negotiations before work started. A tenant must not be allowed or have wider privilege to do anything he wishes. In reality those improvements were done without the consent of the Landlord. There is no evidence, that consent was given. Therefore, they become the Defendant’s own liability out of their own making and were done contrary to clause 5(m) of the 2011 tenancy agreement.
23. If the Defendant thought the condition of the apartment required improvement at an initial stage, then they had option whether to execute the agreement, or negotiate with the Landlord to install and renovate the defects, or if not look elsewhere. Honiara had never run short of private home rentals, they are always available, just flip over the daily newspapers, one can find there is never been a miss.

Unsafe apartment:

24. The manner in which the Defendant describe the general condition of the apartment was rather appalling in terms of unapproved re-wiring and installations, windows heavily barred, etc. It would appear that the apartment was in an absolute risk situation unfit for human habitation. Then why continue accept residing since June 2011.
25. I noted the complains arose when the second tenancy agreement was available for execution in June 2012. And perhaps this were the very reasons the directors of the Defendant refused to sign. I have alluded to earlier if such condition did exist from day one then the apartment was not fit for human habitation, it was a 100% risk, and the Defendant should look elsewhere to find another accommodation. To live within the resident for a year before raising complains that risk human life is an absolute nonsense bluff. All these, in my respectable view, boils down to the fact of refusal to pay increase rentals and claim high exorbitant SIEA bills. The Ollsons were given enough time to survey the apartment before signing the first agreement.
26. In normal and usual business of leasing out properties, a tenant is expected after one year of occupation, the rents to be increased. This is exactly what the Claimant did. After one year of occupation a new agreement with increase rental rate was given for signing. The Defendant refused and relied on the above complains. In my view, the complains may be valid but why waited until one year was over. The directors survived for the period of occupation, they were well and alive for one solid year. After that they complain of life-threatening elements.
27. It could be understood that the Defendant attempted to ensure the Claimant cured the risk, or accept the old rental rate. Eventually the old rate was continuously paid without any dramatic response.
28. There are bulk of submissions in terms of evidence concerning re-wiring not to standard, cabling was not approved, no inspection by SIEA, etc. Again they are good evidence including correspondences related to those. The reality is, if those complaints are life-threatening, they ought to be raised immediately to be addressed. In the current case the directors had waited for a year or more before raising it. By the time the intention for doing so can be easily manipulated.
29. The same can be said with heavily barred windows, one double deadlock door. I noted that the Defendant was not the first tenant occupying the same apartment. There could have been previous tenants. What the Defendant complained off could be resulted in physically re-construction of part of the entire apartment. I do not think the directors of the Defendant had rights to propose any part re-construction. The entire plan for construction was approved and the apartment was constructed according to the wish of the Claimant as the owner. The complaint by the directors was an attempt to discredit the Claimant’s property with disgruttles over various aspects.
30. Apparently few outbursts implicated the Defendant is very curious about spending money. Conclusion can be drawn that such an investor is not a genuine to invest in Solomon Islands. They could be probably opportunist who are seeking to live and survive. Or otherwise difficult tenants to deal with.

No separate meter:

31. It was agreed that the tenant was to pay electricity charges. How could this be when there is no separate meter box. Again it depends on how the Landlord can well allocate certain percentage in payment of the electricity bills. I have noted the law and evidence in terms of figures. I have calculated and compared the monthly payment which the Defendant required to pay. The amount is almost the same as my monthly bills, which is $900-00 per fortnight. That is for an ordinary employee. This amount had been almost stable for last six or seven years. How much more for an incorporated Defendant, it is expected to be little above.
32. If the first invoice was $20,000-00 after the first 12 months, then there is no difference in electricity bill. I paid $23,400.00 annual electricity bill in accordance to the above rate paid fortnightly. $20,000.00 bill a year is very cheap.

Removal of Defendant’s belongings:

33. On or about 5^th September 2013, the Claimant gave the Defendant notice to vacate the premises and removed personal effects, but the Defendant refused to do so.
34. Before being issued with notice to vacate, the Olssons on 5^th August 2013, departed Honiara for Australia leaving their personal effects in the apartment.
35. Sometimes in October 2013, the Olssons returned to Honiara. On 22rd October 2013, another letter was issued to the Olssons to remove their belongings, nothing was done. However, by virtue of the sworn statement deposed by Mrs Olsson filed on 14^th June 2017, paragraph 3.14, she deposed they were denied access to the apartment and their goods were spoilt or damaged.
36. What actually transpired on the day the Defendant attempted to get to the apartment but was locked out is not very clear. There is no evidence from the Police, there is no evidence from consumer rights personnel. However, I have read the letter signed by both Olssons dated 29^th October 2013 complaining about the locked out.
37. It ought to be noted that the relationship between the Claimant and the Defendant as Landlord and tenant had been deteriorated somewhat two months before the Olssons arrived back in Honiara. They were given notice to vacate on 5^th September 2013 but of no avail. Another notice was given on 22^nd October 2013 in early collection of personal effects. Probably one or two days after, the Olssons responded by attempting to get into the apartment, not physically present on sight but by way of phone. If there was an attempt made that was not properly arranged and supervised.
38. The issue of removing belongings would have taken place earlier than lying for two years in the apartment. The Claimant probably would have been corporated in October 2013 if the directors were genuine in their approach and made representation to the Claimant and not a Police Officer who actually requested the keys, and whose present was questioned by the Claimant. By then the matter would have resolved earlier.
39. On the other hand the Defendant had failed to honor two notices to vacate. Things would have smoothly organized and repatriation done in harmony initially. There would be no more, or less courts involved. Within those two years the Defendant did not even willing to remove their belongings. But hopefully the Claimant would give in, a hope which was not forthcoming. Eventally I find the Defendant is liable for the mesne profit as claimed.
40. In my view the Defendant is indeed a difficult tenant to deal with.

Set-off and Counter-claim:

41. Amended defence filed on 26^th May 2016 contain a counter-claim and set-off for consideration, should the court adjudged the Defendant is liable. The Defendant submits that losses incurred was in consequence of denial of access to the apartment.
42. In relation to installment and improvements which is claimed in the counter-claim and which should be set-off from the substantive claim, had been succinctly dealt with under paragraphs 19 – 23 above. Suffice to say that under the agreement the Defendant, as a tenant, was responsible for all fees and charges for services supplied to the premises including electricity, gas, meter and telephone. Therefore those items cannot become set-off as counter-claimed.
43. Concerning the rest of the items under the counter-claim, there is evidence that the Directors of the Defendant left for Australia on 8^th August 2013 without informing the Claimant. For that reason alone it implied the Directors had abandoned the premises leaving food in the refrigerator. As a result the Claimant’s representative had to enter the premises to dispose of the rotten food and cleaned the premises.
44. Because the directors had failed to pay the electricity charges, the SIEA had disconnected the supply resulted in the rotten food.
45. Whilst in Australia, the Directors were issued with notice dated 5^th September 2013 to vacate the apartment, nothing was done. Another notice was issued on 22^nd October 2013, then an attempt was made but was not fairely done. A person claim to be a Police Officer asked for the keys but was referred to the Claimant’s lawyer. Thereafter nothing was done. Again an opportunity to remove the personal effects with the Claimants supervision was given on 28^th February 2014, but the Defendant took no advantage.
46. The fundamental truth about being away in Australia by the Directors, was whether they were on vacation or an act of abandoning. In any event did not resolve all the issues that were left with the Claimant. In fact, the directors had left behind their personal effects, debt and other unresolved disagreements. Therefore, out of necessity they were liable, and more than needed to return to Honiara to remove their belongings and paid up their electricity bill.
47. Having realized their obligations, they paid their own airfares, had to be accommodated in Honiara, and of course had to spent money to live (ground expenses)and other expenses as parking or transfers. They were not forced by the Claimant to spend those monies but out of good cause to get their belongings out.
48. The directors argue that having incurred those expenses they were not permitted to remove their belongings, and said they were locked out. I have to reiterated again that there was no well orgaised and supervised approach to allow entry. The Claimant had denied any proper approach and supervision. Someone who claimed to be a Police Officer was referred to the Claimants lawyer and had disappeared without trace.
49. It appears there is no evidence coming from the so-called Police Officer of any attempt by the directors to get their belongings. There was no mention of any arrangement to release the director’s belongings by the Claimant, or its agents, or by its employees. It would appear there was nothing done. As a result notice to remove belongings were issued again on 28^th February 2014. Alas after 2 years, those personal effects were removed. In the light of that the $8,000.00 should not be refunded.
50. With those facts at hand, those losses were caused by way of obligation realized by the Defendant, and not the Claimant. Therefore the counter-claim must fail.

Orders:

1. Order the Defendant pay mesne profit at the rate of $10,000.00 a month from 1^st August 2013 to April 2015, 21 months, totaled up to $210,000.00.

2. Order interest at 5% payable on the amount awarded from the date of this judgment to when the above amount is finallly paid.

3. Costs is payable to the Claimant by the Defendant.

The Court.