Guo Feng Li v Simukaha [2018] SBHC 69; HCSI-CC 158 of 2014 (5 April 2018)

HIGH COURT OF SOLOMON ISLANDS

Case name:	Guo Feng Li v Simukaha
Citation:
Date of decision:	5 April 2018
Parties:	Guo Feng Li v Mathias simukaha, Guo Feng Ming, Feng Zu Tian
Date of hearing:	9 June 2017 and 12 June 2017
Court file number(s):	158 of 2014
Jurisdiction:	Civil
Place of delivery:
Judge(s):	Faukona PJ
On appeal from:
Order:	1. The court hereby declares that the 1st and 2nd Defendants are jointly and severally, liable and indebted to the Claimant in contract for the amount of SB$650,000.00. 2. Declare that the 1st, 2nd 3rd Defendants, jointly and severally committed deceit or fraud upon the Claimant by their respective false misrepresentation which caused the Claimant to suffer loss of an amount of SB$650,000.00. 3. Order that the 1st, 2nd and 3rd Defendants jointly and severally, pay to the Claimant, within 14 days the debt of SB$650,000.00. 4. Order that the 1st, 2nd and 3rd Defendants, jointly and severally, pay an interest on the debt amount of $650,000.00 at the rate of 5% to the Claimant from date of judgment to date of final payment of the judgment debt. 5. Order that the Registrar of Titles register a charge over PN 192-010-230 in favor of the Claimant for the amount of SB$650,000.00 advanced to the first and second Defendants by the Claimant. 6. Costs of and incidental to the proceeding on indemnity basis be paid by the first, second and third Defendants to the Claimant.
Representation:	Mr. Gabriel Suri for the Claimant Mr. Chritoper Hapa for the Defendant
Catchwords:
Words and phrases:	Civil Procedure Rule
Legislation cited:
Cases cited:	Talasas v Paia & Anor, Majoria v Jino, NPF Board of Trustees v Maladina, Taisol Government Corporation (SI) Ltd, Emery and Sullivan v Hashimoto

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION
Civil Case No. 158 of 2014

GUO FENG LI
Claimant

MATHIAS SIMUKAHA
First Defendant

GUO FENG MING
(Alias Robin Guo)
Second Defendant

FENG ZU TIAN
(Trading as Lili Shop)
Third defendant

Date of Hearing: 9 June 2017 and 12 June 2017, Claimant file submissions on 6 July 2017, Defendants file submissions on 6 November 2017,
Reply by Claimant submission on 8 December 2017
Date of Judgment: 5 April 2018

Mr. Gabriel Suri for the Claimant
Mr. Christopher Hapa for the Defendant

JUDGMENT

1. Faukona, J: A claim in Category B was filed on 28th May 2014. The claim was structured in a manner to pursue on two fronts. One is a claim for $650,000.00 owed and done under a contract. Secondly, in the alternative, a claim for $650,000.00 obtained by Defendants by deceit or fraud committed by false representation.

Background Facts:

2. The Claimant carries on business in Honiara under the name of Dodo Trading Company Limited. Prior to registrations of Dodo Trading, the Claimant was trading in marine products under the company name Hong Li Ltd.
3. The Claimant and the Defendant are blood sisters originated from Taiwan. The second Defendant is the wife of the first Defendant, a man from Ontong Java in Solomon Islands. The third Defendant is a Chinese carrying on business in Honiara under the business name Lili Shop.
4. At that material time the Claimant was buying beach-de-mer and trochus shells. She exported the trochus shells but did not export beach-de-mer. She merely bought them from local divers.
5. From 2005 to 2007, the Claimant advanced substantial amount of monies to the first and second Defendants to assist them in their business.
6. The total amount advanced to both Defendants was $1,413,233.20, but she is only claiming $650,000.00 in this case. The amount was reduced because the Claimant and the second Defendants had agreed to fix the debt owed at $650,000.00 upon plea by the second Defendant.
7. The monies were advanced under five contractual arrangements from 2005 to 2007, as pleaded in paragraph 7 of the claim. Four of those agreements were executed between the Claimant and the first Defendant. It involved a total amount of SI$530,000.00. One of the agreements was between the Claimant and the second Defendant which involved SI$393,339.00. The total amount owed by the first and the second Defendant from the Claimant is $923,339.00. Another agreement concerns the amount of $20,000.00.
8. To secure those borrowed monies, the first and second Defendants offered security in the interest in the fixed term estate PN 192-010-230, and a bus No: AB851. The agreement concerning $20,000.00 was secured by a land at Naha.
9. Further amounts were incurred from goods taken from GMG shop and monies advanced; all totalled up to $553,394.20. $60,000.00 was deducted payable to the second Defendant for her hard work, hence, left with $489,894.00. Total owed by the first and second Defendants was $1,413,233.00.
10. Two days before all the parties met at the Crown Restaurant at Point Cruz, the Claimant had a meeting with the second Defendant at her home, at Ranadi. At that meeting both had agreed that the first and second Defendants to pay their debts at a reduced amount of $650,000.00, instead of $1,413,233.00.
11. By their defence, all the Defendants admitted at paragraph (7) receiving the monies, but had paid $631,262.00 to the Claimant through six cheques paid to the third Defendant. Again by the statement of agreed facts and issues which the Defendants signed and contain in paragraphs (4) – (7) of their defence, agreed advancing monies as particularised in paragraph 7(1) and (2) of the claim.
12. The question ought to pause now is, has the first and the second Defendants paid all that monies they had borrowed? The claimant avers she had never been paid any money yet? All the Defendants said they had completely paid the amount following the arrangement agreed upon at the meeting held at Crown Restaurant.
13. Again by a sworn statement by the first Defendant filed on 22nd March in CC No. 262 of 2008, admitted receiving monies advanced by the Claimant but contended that the third Defendant had settled the debts. There is also sworn statement filed by Mr Frank Li on 22rd March 2011, on behalf of the third Defendant, admitted receiving the cheques and contended the debts had been settled.

Issue on pleading in respect of $1,413,233.00:

14. The Counsel for the Defendants submits that the evidence given by the Claimant does not carry, or lacks credibility, or of no probative value. One of the reasons for that attestation is that the original advance of $1,413,233.00 was never raised in the Claimant’s pleadings and sworn statement.
15. Other reasons the Counsel relies on, related to documents owned by GMG and whether the Claimant can affirm or not of its truth. The fact is that they are not her documents.
16. By making references to the sum of $1,413,233.00 and GMG documents, the Counsel attempts to point out the claim lacks evidence to support. Not only was that but the amount not pleaded and relying on documents which were not the Claimant's. Therefore the claim should not sustain for lack of evidence to support.
17. Apparently, it is not difficult to see that the $1,413,233.00 was not pleaded. If there is no evidence to support, then it's not a big deal either. The fact is that the amount is not the core issue before this court, neither the amount of $923,339.00. The verbal agreement by the Claimant and the first Defendant, is that the Defendants should only be liable to repay $650,000.00 to the Claimant.
18. There is evidence outlined in paragraphs (12) and (13) above that the Defendant’s agreed owing $650,000.00. And the total value of $631,262.00, being the value of the 6 cheques was an intended settlement of the $650,000.00 amount owing. That implicated the liability and that the amount was still owing.
19. The Claimant is not concerned with any figure outside of or beyond $650,000.00, being the agreeable amount owed by the first and second Defendants. The Defendants by evidence conceded that the amount owed is $650,000.00 payable to the Claimant.
20. In an attempt to settle the debt the Defendants called a meeting at the Crown Restaurant which the Claimant was invited to attend. The act by signing of the six post-dated ANZ cheques and payable to the third Defendant reflected that eventually the Claimant will be paid by the third Defendant.
21. Unfortunately the total amount of the cheques is only $631,262.00, a short fall of $18,738.00, that for sure cannot off-set the full debt.
22. The defendants argue that the verbal agreement made at Crown Restaurant in November 2007 is the subsisting agreement. By having in custody of the six signed cheques, the third Defendant would ensure $650,000.00 be paid to the Claimant.
23. That raises the next question, has the Claimant received the amount of $650,000.00 or $631,262.00 from the third Defendant. There is evidence the Claimant received nothing from the third Defendant until today.
24. The defendants further argue that the transmission of US$34,210.00 per telegraph transfer application form dated 18th September 2007, to the Claimant’s husband in Taiwan, was the payment of the Claimant’s debt of $650,000.00.
25. The problem the Defendants encounter is that the equivalent value of US$34,210.00 in Solomon dollar is $266,849.00. If that is the only money transacted as repayment of the agreed amount borrowed, then the Defendants need to expand further in their dealings in this case.
26. The amount of $266,849.00 is not even half of $650,000.00 being the subject issue in this case. And not even half of $631,262.00 being the value of six (6) post-dated cheques payable to the third Defendant. So at what time was $650,000.00 paid to the Claimant? There was none paid until today.
27. I accepted the Claimant’s evidence that the US$34,210.00 (SI$266,849.00) was paid to her husband in Taiwan by the third Defendant from proceeds of 1,326.54 kg of beach-de-mer, sold to the third Defendant by the Claimant. I noted that is the only money ever paid by the third Defendant outside of his business in association to the Claimant. There was no $650,000.00 or $631,262.00 paid to the Claimant or to anyone else authorized by the Claimant, or even to her husband in Taiwan. There is simply no evidence to affirm any such transaction at all. Any reliance on telegraphic transfer payment to the Claimant's husband in Taiwan as a set-off of $650,000.00 debt was not even mention and agreed upon at the meeting at Crown Restaurant.
28. I have studied the cheques. They were obtained from ANZ Bank Gizo branch. It bears no one’s account. I accepted, it must be the Gizo ANZ Bank branch official account. But how the official cheque leaves were obtained and used as they were could not be comprehended. If they are official ANZ Gizo branch account then could only be issued when cash is actually paid into the bank. In other words it’s an exchange. You paid in cash and the bank will issue you with official bank cheque in the same amount, of course with some fees, so that no one will question whether the cheque has sufficient funds in it or not. That is the sole purpose for using a bank cheque. Secondly to give confidence to the receiver in respect to his business dealings.
29. To obtain an empty official bank cheque, and signed it somewhere else, pause more questions than answers. Is that a normal banking dealings? The Defendants must answer this including Bank Officers in Gizo who were working there at that time when the cheques were obtained. (For instance I have a cheque account with ANZ Bank, I have my full name printed in all the cheque leaves). That should apply to any business as well. Unless the cheque leaves were photocopied for reasons only the Defendants would knew.
30. I also take note of Mr Suri’s submission that the cheques have no marks or stamps to indicate they had been presented to the bank. And of course they were disclosed by the Defendants.
31. From evidence I could able to adjudge that there is nothing paid to the Claimant yet. $650,000.00 agreed to have been borrowed by the first and the second Defendants is yet to be repaid.

Res-judicata

32. The Defendants argued that this cause of action is now legally barred from being reraised. The law on res-judicata was well outlined in Talasasa v Paia & Anor^[1]. His Lordship Daly CJ enumerated the following essential elements of the principle of res-judicata:
    1. on earlier case in which the cause of action or point in dispute was really the same;
    2. a final determination by a court of that cause of action or point on its merit; and
    3. the raising of the same cause of action or the same point which has been distinctly put in issue by a party who has had the action or point solemnly and which certainty decided against him.
33. Those re-known essential elements were adopted by many cases in this country. One of which was in Majoria v Jino^[2]
34. In applying the requirements of law to the current case, the case referred to by the Defendants as had determined the same cause of action between the same parties was CC No. HCSI – CC 262/2008.
35. It is without any question the previous case was dismissed on the grounds the Claimant being not complying with the orders of the Court on 16th February 2012, and secondly the loan agreements pursuant to S.9 of the Stamp Duty Act were not stamped. In fact they were stamped but after the claim was filed against the Defendants.
36. The orders which the Claimant failed to comply with were orders to file reply to the amended defence, counter-claim and cross-claim, and probably failed to pay $5,000.00 to the fourth Defendant.
37. As a requirement of the second element, there must be a final determination by the court of that cause of action or point on its merit. In the previous case there was no final determination on its merit was made. Therefore the principle of re-judicata does not apply, therefore rule 17.60 come into play.
38. According to R.17.60 which states, subject to the order of dismissal, the dismissal does not prevent the Claimant from starting a fresh proceeding or claiming the same relief in a fresh proceeding. This is exactly the step the Claimant now pursued. That dismissal did not follow a decision on merit, so that it will bar the Claimant from seeking relief in the same cause of action in this case – see Rule 17.61.
39. Indeed the defence of re-judicata is misconceived and must be flawed.

Defendants’ Counter-claim:

40. The Defendants’ counter-claim premised on a cause of action in respect of 26 bags of beach-de-mer owned by the Claimant but was unlawfully taken by the Defendants. On 11th November 2009, Court granted a freezing order that proceeds of 26 bags be paid into a joint trust account, and that the beach-de-mer be removed from Lili Store’s possession to the Claimant’s storage.
41. As a result of non-compliance with the above orders, the Court had on 1st December 2009, ordered that all proceeds of 115 bags of beach-de-mer be paid into a Solicitor’s Trust Account.
42. Ultimately, the court assessed damages related to the issue of 26 bags as a result of default judgment in favor of the Claimant. The cost of 26 bags and loss of profit was awarded to the Claimant in the sum of $656,138.25.
43. The 115 bags was eventually sold by the Claimant locally for a price of $525,281.40. The Defendants argue that the price obtained by the Claimant is very low. Should have been higher than value of 26 bags which is $721,207.25.
44. It appears the Defendants are in fact counter-claimed for an undisclosed amount with an intention to off-set part of or whole of the Claimant's claim of $650,000.00.
45. I consider the Claimant's argument that the 26 bags were 50kg bags which contain choked fish which had higher value than 115 bags weighing 30kg each which contain species of different values or prices. In any event the prices must therefore be lower than choked fish.
46. I am convinced by the Claimant’s argument and responses. The Defendants had failed in two fronts to proof their count-claim. One, that there is no evidence pointed out to an amount in the counter-claim. And secondly, the case the count-claim based on, had already been heard. It was a different course of action with different issues, though with the same parties. I therefore do not accept to entertain such unfounded counter-claim and therefore must be dismiss accordingly.

New introduced case:

47. The Claimant attested that the Defendants during cross-examination, asked questions which suggested that they were introducing a new defence. This relates to the original written agreements and the claim of $650,000.00 which is now being the subject of this case.
48. Also concern with the fact that the Defendant had sold the 20 bags of beach-de-mer to Lili shop and after gave $20,000.00 to the Claimant.
49. The Claimant’s Counsel argues this is a new defence which must be pleaded at the pleading staged and not at the submissions. The Counsel then refers to the case of NPF Board of Trustees v Maladina^[3].
50. This issue like the counter-claim should not attract any judicial determination at all. They are issues which were misconceptionally raised, and that they should not have been raised at all.
51. The original agreements were made on 27/5/2003, 28/7/2006, 23/8/2007, and 27/9/2007. The total amount borrowed shown in the agreement was $923,339.00.
52. In November 2007, the parties held a meeting at the Crown Restaurant which agreed to fix the debt owed to the Claimant by the first and second Defendants.
53. Two days before the meeting at Crown Restaurant, the Claimant and the second Defendants agreed to fix the debt owed at $650,000.00. That agreement superseded hence cancelled the amount of $923,339.00 or even $1,413,233.20. That amount was fixed and agreed upon even before CC No. 262 of 2008 was fixed on 19th August 2008 and this current case.
54. Therefore, there was no new agreement agreed to at the Crown Restaurant. The six posted cheques payable to the third Defendant was an attempt to repay the $650,000.00 owing. From evidence, it is clear as crystal, there was nothing paid to the Claimant by the third Defendant to off-set $650,000.00 Evidence given by the Defendants that the amount was paid was all fake. In fact as Mr Suri puts it, it is all but misrepresentation.

Conclusion:

55. The Claimant’s evidence is unrebuttable. There is proof of admission of written, partially written, and oral binding contracts between the Claimant and first and second Defendants. There is also no evidence to prove and to show the Defendants had repaid the amount of $650,000.00 to the Claimant.
56. I accepted that the Defendants had employed a scheme whereby which six posted cheques were issued to the third Defendant who in turn will settle the monies owed to the Claimant. The total value of the cheques had failed to equate with $650,000.00 but fall short of $18,738.00 that reflected a miscalculation of everything. Worst of all nothing out of $631,262.00 emphactically signed was paid to the Claimant. The cheques were merely shown and signed to give confidence to the Claimant that something positive is coming, nothing at all was forthcoming, even a cent was denied being received by the Claimant from the third Defendant. So indeed the scheme was a continuation of false representation – see the case of Taisol Government Corporation (SI) Ltd, Emery and Sullivan v Hashimoto^[4], which define the word “false representation.”
57. All in all, I find on the balance of probability, the Claimant has proved her case, and agreed amount $650,000.00 is yet to be paid to the Claimant by the Defendants. The Defendants must pay the full amount to the Claimant with costs.

Orders:

1. The court hereby declares that the first and second Defendants are jointly and severally, liable and indebted to the Claimant in contract for the amount of SB$650,000.00.
2. Declare that the first, second and third Defendants, jointly and severally committed deceit or fraud upon the Claimant by their respective false misrepresentation which caused the Claimant to suffer loss of an amount of SB$650,000.00.
3. Order that the first, second and third Defendants jointly and severally, pay to the Claimant, within 14 days the debt of SB$650,000.00.
4. Order that the first, second and third Defendants, jointly and severally, pay an interest on the debt amount of $650,000.00 at the rate of 5% to the Claimant from date of judgment to date of final payment of the judgment debt.
5. Order that the Registrar of Titles register a charge over PN 192-010-230 in favor of the Claimant for the amount of SB$650,000.00 advanced to the first and second Defendants by the Claimant.
6. Costs of and incidental to the proceeding on indemnity basis be paid by the first, second and third Defendants to the Claimant.

The Court

---

^[1](1980/81) SILR 93
^[2] (2007 SBCA 20; CA-CAC 36 of 2006 ( 1November 2007)
^[3] (2003) PGNC 16; NZ486 (5 December 2003)
^[4] (1995)SBGH 79; HC-CC 301 of 1993 (26 May 1995).