Takisi v Attorney General [2018] SBHC 74; HCSI-CC 376 of 2011 (27 April 2018)

HIGH COURT OF SOLOMON ISLANDS

Case name:	Takisi v Attorney General
Citation:
Date of decision:	27 April 2018
Parties:	Leonard Takisi, Upu Takisi v Attorney
Date of hearing:	20 July 2016, 14 February 2018
Court file number(s):	376 of 2011
Jurisdiction:	Civil
Place of delivery:	High Court of Solomon Islands, Court Room one
Judge(s):	Faukona; PJ
On appeal from:
Order:	1. The Claim is dismissed forthwith 2. Costs are payable to the defendant by the Claimant
Representation:	Mr. C. Hapa for the Claimant
	Mr. A. Banuve for the Defendant
Catchwords:
Words and phrases:
Legislation cited:	Truth and Reconciliation Commission Act 2008. Public Finance and Audit Act
Cases cited:

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 376 of 2011

LEONARD TAKISI AND UPU TAKISI
Claimant

v

ATTORNEY GENERAL
(Representing the Truth and Reconciliation Commission)

Date of Hearing; 20 July 2016, 14 February 2018
Date of Judgment: 27 April 2018

Mr. C. Hapa for the Claimant
Mr. A. Banuve for the Defendant

JUDGMENT

Faukona, PJ

Introduction: The aftermath of the ethnic turbulence had left behind trails of tears, agony, hatred and desperation. It was a period to search for resolution, to defuse tension and encourage unity and harmony in the communities. The major rationale was to encourage truth, reparation and reconciliation. The calumniated effects of the event had conferred immense responsibility upon the legitimate government to act hazily and responsibly to bring about institutional reforms, at least guarantee some fraction of sustainable security and normalcy.

2. Being succumbed by the fragile situation the government thought the way forward was to promote accountability, pursue truth and reconciliation, provide reparations and bring about institutional reforms. The Government therefore enacted a piece of legislation, which was termed as the Truth and Reconciliation Commission Act 2008.
3. Under the Act five (5) Commissioners were to be identified and appointed. It also provided for two Executive Secretaries. One is an Executive secretary and the other is the Deputy Executive Secretary. Their functions are to prepare ground work and manage the general operation of the Truth and Reconciliation Commission (TRC).

Background facts:

4. Next was to find an Office for TRC with potential capacity to accommodate up to 103 staff expected to be recruited. The option was to rent Lennzine Motel owned by the Claimants in this case.
5. The Deputy Secretary then negotiated with the Claimants. Subsequently consensus was reached that the TRC will rent the Motel building based on the following arrangements, and other terms as well;

(a). The Claimants would renovate and convert six motel rooms top floor to form five Offices for the five Commissioners.

(b). The Claimants would dismantle their living quarters on the ground floor and laundry for the Motel and moved else-where.

(c). The UNDP would renovate the ground floor and pay for it to make offices for the expected 103 staff and a conference/ interview room.

(d). The Claimants would also replace the wire mesh fence with concrete fence at their own costs.

6. Subject to that arrangement, work on renovation and restructuring of the building commensurate. According to facts pleaded in the claim, the Claimants had dismantled their living quarter on the ground floor and built a dwelling house at the back of the property by the end of March 2009.
7. At the end of April 2009, work on renovation and conversion of six motel rooms upstairs to form five officers were completed. And by the end of August 2009, the Claimants had replaced the wire mesh fence around the property with concrete fence.
8. On 7th May 2009, the parties executed the Lease Agreement and were finally endorsed by the Commissioner of Lands on 13th May 2009.
9. By letter dated 9th July 2010, three months’ notice was given to the Claimants by the Ministry of National Unity, Reconciliation and Peace (MNURP), for the termination of the Lease Agreement by 30th September 2010.
10. It was this early termination of the tenancy agreement that prompted the Claimants to institute this cause of action.

The Claimants’ case:

11. Including the execution of the Lease Agreement on 7th May 2009, the Claimants also rely on the agreement reached between them and the Deputy Executive Secretary. The content of that agreement is rehearsed in paragraph (5) above.
12. Further, the Claimants deplore the pre-mature termination of the Tenancy Agreement without reasons conveyed. As a result of early termination Claimants suffer damages and loss.

The Defendant’s Case:

13. The Defendant’s position is that the matters raised by the Claimants were not reflected in the terms of the lease agreement signed between them and the Government. In fact the terms of the lease agreement state the exact opposite. However, it contains the entire terms governing the arrangements between the parties. The matters pleaded by the Claimants cannot constitute implied terms of the lease agreement either.
14. That the Claimants property rented under the Lease Agreement never had the lower floor renovated or habitable for occupation despite rental was paid. This was a clear breach of the terms. The rental amount was ludicrous, nevertheless was executed by the permanent Secretary of the Ministry of National Unity, Reconciliation and Peace (MNURP) and the Government.

Purported agreement between the Claimant and TRC Deputy Executive Secretary:

15. I say it was a purported agreement, whether they were substantially important, or impliedly, were not entrenched in the Lease Agreement which the same Deputy Executive Secretary, the negotiator, had signed as a witness to the agreement.
16. On the outset, one of the reliefs sought is business loss from the closure of the motel business. Reconstruction and renovation were done to pave the way for leasing of the building. This is indeed an issue require proper evaluation and assessment. If am I to refer to the pre-contractual negotiations, the Claimant had agreed with the modification of the top floor converting six motel rooms into five office rooms for the five Commissioners.
17. That agreement seemed to denote acceptance and incurrence of costs and permanent modification of the motel structure. No doubt, parties would have contemplated that costs and changes would be replenished in full by the right amount of rental. This was exactly what was hoped for and anticipated. Subsequently, the rental amount in the formal Lease Agreement reflected a settled mathematical balance.
18. A valid point which could have been considered by the Claimant during negotiations was that the structure of the top floor will be permanently removed. There will be no more motel but offices. He was also expected to consider the question that the term of the lease will roughly be for two years. Then after two years what will happen next. He may wish to change business from accommodation to providing office blocks that is up to him. A permanent change in relation to the nature of business is an important consideration, unless the Claimants could foresee office rental business is better than motel accommodation hence induced by its prospects.
19. To come to court and sought remedy as expressed in the Claim, is somewhat alluding grievance for the change of business nature which they had not been prepared for. In other words they had been influenced by Mr Tuhanuku that green pastures are looming in the horizon therefore agreed. Further, by terminating the Lease Agreement had given rise to loss of business from Motel accommodation to Office leasing.
20. What the Claimants ought to understand, that leasing arrangement they had agreed to was temporal, was intended for two years only. What will happen after two years? Would the Claimants reversed back to the original intention of the structure? Of course it will require remodelling of the premises with further costs.
21. The conclusion possibly to draw is that the Claimants upon serious consideration, should not have agreed at the initial stage to the idea of restructuring the building because it would be a permanent change thereafter. Unless they had intended to change the nature of their business. Even if the Defendant would continue rent the building for full two years would not change the new structure. So it is a cry over spilt milk.
22. In respect to dismantling of the living quarter, and construction of a new security fence, the approach applied as above can be equitably expressed here. The Claimants must acknowledge they had agreed to dismantle and constructed a new concrete fence. That arrangement will become permanent features of their property.
23. Quite apart from that, the renovation on the bottom floor of the building was never materialised, though it was part and partial of the negotiations and arrangement (verbal agreement). Probably there was no money coming from UNDP as parties would have expected. Or maybe the funds were made available to the Ministry of NURP but were not inwardly transferred to the Commission. In any event, this boils down to the processes whereby which donor assistance provided through International Support Facility (ISF) managed by UNDP in collaboration with the Ministry of NURP. Of course in government circle donor funding are not directly paid to any legal establishment, though independent in stature. Naturally such funding is required to be managed under Public Finance and Audit Act, Financial Instructions and other enactments.
24. Probably under that arrangement that expectations were to fulfilled, hence, no finances were made available directly to renovate the bottom floor.
25. With some compliance to the oral arrangement, the Claimants eventually had completed three tasks by the end of April 2009, except for the renovation work on the ground floor.
26. From initial negotiations to the end of April 2009 when work on the three tasks were completed, the Ministry of NURP was never seen as a participatory party. Evidence has proved that to be true. In the sworn statement of Mrs Kere filed on 29th may 2013, she stated in paragraphs 14, that there was no close co-ordination and consultation with the Ministry on the Commission’s work plan, operation and budget. Therefore, the logistical arrangement was merely done between the Claimants and Mr Tuhanuku.
27. Despite hazy beginning the national Commissioners’ were formally appointed on 29th April 2009. However, there was no one occupying the office space on top and the bottom floors. This led me to question, had Mr Tuhanuku foresee that the ground floor would accommodate 70 staff or 103 staff as he assumed on paragraph 22 of his sworn statement?
28. The opposite can be viewed at paragraph 15 (ii) of Mrs Kere’s sworn statement who stated that Lennzine building was incomplete, too small, and too expensive. It required extensive renovation and construction work before it could be occupied. Those citations were conveyed to Mr Tuhanuku but were either ignored or not taken heed of.
29. There is clear indication, by virtue of Clause (iii) that the first rental payment of $270,000.00 was made on the date of signing of the lease agreement. And that rental should cover both top and bottom floor, see Clause (i) and (ii) of the Lease Agreement. Therefore the first rental payment was made on 7th May 2009, back-dated to 1st April 2009, and occupation by the Commissioners commenced on 7th August 2009, three months after the first quarter rental was paid.
30. Since the first quarter was paid in May back dated to April, the second quarter would have been paid in the month of July before occupation commenced August 2009. It appears without doubt that the Claimants would have received two set payments of $270,000.00 before the Commissioner actually occupied the premises. There is therefore, some truth in Mrs Kere’s sworn statement that the Commissioner had actually assisted the Claimants by paying rental for almost five months before actual occupation.
31. That arrangement can be viewed as irregular and contrary to the principle that payment of rental commences on the date of occupation. However, that can be changed depending on the party’s terms of agreement. In this case the parties had consented to such arrangement, though in the view of the Ministry was not properly done.

The formal lease agreement:

32. The formal lease agreement was signed on 7th May 2009. The Commissioner of Lands was also a signatory on behalf of the government. Mr Tuhanuku was signed as a witness.
33. The most significant term of the lease agreement was the period of tenancy which is 24 months and the amount of rental of $90,000.00 per month commencing 1st April 2009 – see Clauses 1, ii, and iii respectively.
34. It is my respectful perception that the amount of $90,000.00 rental was a result of diligent calculation and computation considering the four tasks the Claimants had obliged to do which they had accomplished three, with exception of one. Work on conversions, demolition and restructuring were done prior to execution of the agreement. It was contemplated renovations of the bottom floor would be forthcoming.
35. Unfortunately, as time draws on, work on the renovations continued to delay. Subsequently it was never done. This therefore poses a question whether $90,000.00 rental per month was an equitable value for renting of five office spaces. There was no evidence of an alternative amount suggested. Hence attributes difficulties in asserting standard rental.
36. In my respectable view, the rental amount should accommodate expenses of the improvements of the Claimants’ property. Therefore, it is completely out of sense and logic to claim, because of the pre-mature termination of the agreement resulted in the Claimants suffered loss in the change of nature of business. They had fully aware with sufficient knowledge, at the negotiation stage of the changes and improvements. And they had agreed to perform the changes themselves which they had accomplished.
37. This claim is quite ambiguous in form and construction. The Claimant should have focussed on the unlawfulness, if there was any, of the pre-mature termination that deprived them from obtaining balance of rental for 2 years. They ought only to proof the issue of unlawful termination of the agreement pre-maturely. To extend the claim to cover damages for changes and improvement which they had agreed on and had themselves performed is a real set back to the claim.
38. Another cardinal issue arises from pleadings and arguments is that why should terms in the verbal agreement were not entrenched in the formal Lease Agreement? There is argument that the formal lease agreement was a standard agreement. Undoubtedly that is true.
39. However, there are two answers to the question as I view it. One, they were terms raised during negotiation period. Since they were terms related to initial performance not subjective to any fundamental term intended as a lifeline of the Lease Agreement. Therefore what had been agreed upon at the negotiation stage can be accepted as an oral agreement. Secondly, it can be reduced into a separate written agreement prior to the lease agreement.
40. Second answer is that those terms raised at the negotiation stage can be entrenched, all at once, in the lease agreement as initial clauses subjective to full compliance, before the Claimants would qualify for $90,000.00 monthly rental. The construction of the language in the terms must be written in such a way that improvements to the premises required standard rental of $90,000.00 per month. In both alternatives there was nothing done. This Court is obliged to regard the verbal agreement in the negotiation stage as accepted agreement and was not necessary to be entrenched in the major Lease Agreement.
41. The effect of such verbal agreement, in particular the terms, was never objected to by the Ministry of NUPR. The only objection raised was the amount of $90,000.00 rental was unreasonably high and did not warrant it. This is due to uncompleted work at the bottom floor of the premises.
42. It appears to me that the rental rate was fetched partly as rent and partly as a remedy to reimburse the Claimants for the improvements accomplished according to the wish of the Commission. This was reflected in the lease agreement when it was executed on 7th May 2009 but back dated to have effect as of 1st day of April 2009.
43. In any event, for the next 18 months from April 2009 regular payments were made to the Claimants totalling up to $1,620,000.00 including final month of September which concluded the three months’ notice. One million six hundred and twenty thousand dollars was indeed an unmerited payment. The Claimants were receiving rentals which included the bottom floor which was never completed. The high rental rate therefore serves a wrong purpose. It may tantamount to fraud, because monthly rental was still received whilst the bottom floor was yet to be renovated or completed. For 18 months work could have been done if the Claimants utilized the rental to do renovation work at the bottom floor, rather than anticipating funds from UNDP. It would have been proper that way.
44. This has nothing to do with change of business nature following improvements. That had been settled by consensus which had been performed accordingly. This has nothing to do with funds either coming from UNDP or was halted by the Ministry. It only concerns a question whether a fundamental term of the lease agreement was breached. If so, by which party. And so it calls for whether the letter on 9th July 2010, giving three months’ notice for termination of the lease agreement was valid or not?
45. By virtue of Clause 5 (ii) of the lease agreement a party may terminate the agreement by giving three (3) months’ notice, or the tenant transacting payment equivalent to three months’ rent without notice.
46. The clause is quite common in almost all standard lease agreement. The fundamental issue is giving of three months’ notice or in this case three months advancement payment without notice. There is no allegation that three months’ notice was not given. The only complaint raised by the Claimants is that there was no reason given for giving of the notice of termination.
47. It ought to be acknowledged that in such clause giving reasons for termination is not necessary. If the giving of notice is complained of in a manner explained by Clause 5 (ii) then reasons for termination is not a legal requirement at all. It is non- justiciable and cannot be enforced.
48. It is crystalline clear that the notice for termination was made in accordance with Clause 5 (ii). And three months payment in advance was made out as well. The Claimants cannot rely on reasons for terminations as part of the Clause; there is none, it was not provided for, hence not an issue.
49. The Defendant can only be liable if breached other Clauses which by giving such notice in haste was an attempt to escape liability. There is no allegation of such in the current case. I must therefore adjudge that the notice of termination given on 9th July 2010 and to take effect from 1st July 2010 was a valid notice.

Notice of termination issued by none party:

50. The notice of termination was by a letter of 9th July 2010 and was written by Mrs Betty Fakarii, Permanent Secretary (Supervision) of the Ministry of NURP. The question, is the Ministry of NURP a party to the Lease Agreement, therefore, bound by the terms of the agreement?
51. I noted the Commissioner of Lands was the signatory to the Lease Agreement representing the Government or the Ministry of NURP for that matter. In any event the notice was not issued by him. What transpired is that neither of the parties raise this issue at pleadings, in particular the Claimants. Therefore, it is only proper to abandon it and not to consider it at all
52. From the approaches and legal opinions I have set in my reasoning, I find the Claimants have failed to proof their case on the balance of probability. Therefore dismissed the claim accordingly with costs.

Orders:

1. The Claim is dismissed forthwith.
2. Costs are payable to the Defendant by the Claimants.

THE COURT