Philip v Mola [2019] SBHC 72; HCSI-CC 439 of 2013 (31 July 2019)

HIGH COURT OF SOLOMON ISLANDS

Case name:	Harry Philip v Mola
Citation:
Date of decision:	31 July 2019
Parties:	Harry Philip v Francis Mola, Francis Sawane Junior, Dominic Walebalia, John Waletofea and Gerena Sawane, Constance Sawane and Gerena Sawane
Date of hearing:	24 May 2019
Court file number(s):	439 of 2013
Jurisdiction:	Civil
Place of delivery:
Judge(s):	Faukona PJ
On appeal from:
Order:	Refuse to grant declaration that Memorandum of Agreement entered into by the parties on 4th November 2011, after being stamped on 25th September 2013, is valid and binds the parties. Refuse to grant order that judgment by the High Court in CC No. 456 of 2011 was obtained by fraud. It is a question of jurisdiction which this Court cannot review its own decision, except by the Court of Appeal. Refuse to grant damages in all the heads attributed to by the Claimant in terms of loss of business earning whilst the ship was held by the Admiralty Marshall in breach of the Memorandum of Agreement in terms of the following: 3.1 Wharf charges prior to sales agreement. 3.2 General damages for breach of contract. 3.3 Refused to grant costs in defending High Court CC no. 465 of 2011. Refuse to grant interest of 5%. Award the Defendant’s counter-claim to be assessed if not agreed. Cost in the current case be paid by the Claimant on indemnity basis.
Representation:	Mr N. Laurere for the claimant Mrs M. Bird for the First and Second Defendants
Catchwords:
Words and phrases:
Legislation cited:	Stamp Duty Act, s9, Partnership Act 1890 (UK),s2
Cases cited:	Austree Enterprises Pty Ltd V Shiyao Gua and others, Air Transport Limited v Island Construction Limited [1999] SBHC 22, Great Woods Ltd v Springhill ltd [2012] SBCA 14

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 439 of 2019

HARRY PHILIP
(Owner of HP Shipping Service)
Claimant

V

FRANCIS MOLA, FRANCIS SAWANE JUNIOR, DOMINIC WALEBALIA, JOHN WALETOFEA, AND GERENA SAWANE
(Trading under Waletofea Shipping Services)
First Defendant

CONSTANCE SAWANE AND GERENA SAWANE
(Personal representative of the deceased estate of the late Francis savanna (Snr)
Second Defendants

Date of Hearing: 24 May 2019
Date of Judgment: 31 July 2019

Mr. N Laurere for the Claimant
Mrs. M Bird for the First and Second Defendants

JUDGMENT

Faukona PJ: A claim in category C was filed by the Claimant on 8^th November 2013, with a subsequent amendment on 28^th November 2014, to divert from Category C to Category A.

2. The reliefs sought in the claim are that the Memorandum of Agreement entered by the parties on 4^th November 2011 was valid and binds the parties. Secondly it seeks an order to declare that the judgment entered for the first Defendants on 31st may 2013, in CC No. 465 of 2011, was obtained by fraud on the Court and was void ab initio. And thirdly, claim for damages for loss of business earning, wharf changes, general damages, and costs incurred in defending CC No. 465 of 2011 on indemnity basis.
3. A defense was filed by the first Defendants on 8^th December 2014, with a Counter-Claim attached. Parties also involved in a number of pleadings which was concluded by filing a reply to the Claimant’s defense of the Counter Claim.
4. The second Defendants are personal representative of the late Francis Sawane (Jnr). The late Sawane (snr) was the father of the four first named Defendants and the husband of the fifth named first Defendant.
5. It may appear that there was in existence a link between the first and the second Defendants, in particular through Gerena Sawane, (snr).
6. The claimant is the owner of HP Shipping Services. The first Defendants are the owners of the Waletofea Shipping Service.

Brief fact.

7. At all material time the first Defendants were the owners of Waletofea Shipping Services which operated the ship M.V Gerena (referred to as the “Vessel”).
8. On 4^th November a Memorandum of Agreement was signed by the Claimant and the late Francis Sawane (Snr) for the sale of the vessel M.V Gerena.
9. At that time the vessel was hired by the Claimant and he was operating it.
10. Dispute arose between the parties, at some point in time, and the vessel was held by the Admiralty Marshall from 5^th December 2011 to 28^th July 2012.
11. The dispute was dealt with by this Court in Civil Case No. 465 of 2011 on 28^th July 2012. At that material time stamp duty on the Memorandum of Agreement was not paid yet and the document was not stamped.
12. The previous court heard arguments on the validity of the agreement and it was held that the agreement was not binding on the first Defendants. Upon appeal to the Court of Appeal it was dismissed on 8^th October 2013, because no stamp duty was paid. Not only that but the Court had found that there was no merit in the application in the light of Court of Appeal decision on Great Woods Ltd v Springhill Ltd^[1]. It also discussed the issue of when the transfer in the property occurs and the effects on the document if the party obligated failed to pay stamp duty and etc.

Reason for recommencing this case.

13. Before the application for leave to appeal was heard by the Court of Appeal the Claimant had already paid the stamp duty on the agreement on 25^th September 2013. That occurred even before filing of this case on 8^th November 2013.
14. Without slightest doubt, the current proceeding is a revival of CC No. 465 of 2011 after the payment of the stamp duty. The Counsel for Claimant relies on the authority of Austree Enterprises Pty Ltd V Shiyao Gua & Others^[2], with assistance of reading S.9 of the Stamp Duty Act.
15. However, S.9 states that all documents related to a matter or thing done with no exception must be stamped except to matters related to criminal proceeding. That must be done according to the requirement of law at that time when it was first executed.
16. In the Austree case which the Counsel refers to as authority to reinstate this cause of action, is not quite the same in facts and applicable law. In that case the payment of the stamp duty was done before the appeal was heard. In fact, the Court of Appeal was well aware of, and had noted there was evidence related to the payment. The evidence of payment of the stamp duty was not before the Court of Appeal in the current case.
17. As a result, the Court of appeal in the Austree case ordered that the case be reheard in the High Court with a different registered civil case number. The Court also noted the consensus expressed by the parties of their interest for the case to be reheard in the High Court, since the stamp duty had been paid.
18. In the current case, no such evidence was made available before the Court of Appeal. Therefore, there was no order for rehearing in the High Court. And the parties did not consent for such re-hearing at any stage at that material time.
19. However, it would appear the Counsel for the Claimant assumed that with the stamp duty being paid, despite in the absence for any order, he could institute this proceeding which he subsequently did.
20. In my opinion, assumption should not be accepted as part and partial of Court processes of evidence that payment had been done. He could merely simply inform the Court of Appeal of such. He failed; hence, no order for rehearing was made. This is a very significant point which I consider as of prevailing situation.

Whether the first Defendants were parties to the MOA.

21. The major issue where by which the Claimant anchored his claim on was that the Memorandum of Agreement was executed on 4^th November 2011 by the Claimant, Mr Sawane (snr) and Mr Walebalia on behalf of the Waletofea Shipping Services, constituted a valid agreement for sales of the vessel MV Francis Gerena, to the Claimant.
22. Arguments should be focused upon execution of the MOA that should provide transfer after the consideration was fully paid. There is evidence that a receipt was issued for the sum of $249.000.00. By simple application of the law of contract an agreement should have been completed.
23. It does not end there, the first Defendants who were persons registered to trade under Waletofea Shipping Services, denied any prior discussions between them and the Claimant. Discussions took place only with the late Francis Sawane (Snr).
24. Being aggrieved by the first Defendants filed CC No. 465 of 2011 against the Claimant and the late Francis Sawane (Snr) on 29^th November 2011, as an amended on 2^nd April 2012.
25. Since the current case is a replication or revival of CC 465 of 2011, sworn statement filed in that case is accepted to be utilized in this case as well.
26. The first argument advanced by the Claimant is that all the first Defendants were present at the time of the execution of the MOA except for John Waletofea. The reason for his absent is immaterial, as the Claimant asserts that the majority of the parties were present, then that is credible evidence. The Claimant relies on the evidence of Eddie Donga and the Claimant himself to substantiate his claim.
27. However, Mrs Constance Sawane admitted in her sworn statement filed on 24^th November 2011, that the idea to sell the vessel was the idea initiated by their father Mr Sawane (Snr), but had failed to consult the family members including the first Defendants.
28. Mrs Constance Sawane was one of the daughters of the late Sawane (Snr) and had the right to swear a statement as a beneficiary of the operation of the vessel. Her evidence was supported by Mr Walebalia Sawane who affirmed that their late father (Mr Sawane (Snr)) had knowledge of the date for the execution of the agreement but he did not inform them (the children). That implicated that there was no prior meeting or discussion among them before execution of the agreement.
29. If there was prior consultation, it was expected that all the parties would attend the signing. If there was an agreement then a Partner as Mr Sawane (Snr) would have execute on their behalf, then there must be a note of authorization, authorizing Mr Sawane (Snr) and Mr Walebalia to sign. There was no evidence of any authorization note.
30. The Claimant argues that any such authorization is immaterial because all the partners were present at the date of execution, a video tape was taken on the atmosphere showing all the partners and the late Sawane and Mr Walebalia were present and the late Sawane and Mr Walebalia signed the Agreement.
31. The problem with videotaping is that unless the parties agreed that the incident of signing be videotaped. If there is no evidence of any consensus then the tape cannot be admitted as evidence. In this case there was no evidence that parties to the signing had agreed that the signing occasion be videotaped.
32. In the ruling by His Lordship Justice Mwanesalua on 31 May 2013, there was no mentioned of any video tape. If the attention of His Lordship was drawn to such, he would, without doubt, commented on it, there was none.
33. On the issue of who were present at that material time of the execution of the MOA, it was the Claimant and others on one side, and the late Sawane and one of his sons Mr Walebalia. That showed the other partners were not present because they were not aware of it. The video clip cannot be trusted because technology now days can be manipulated. And as it appears the rest of the party were not consented that such tape be taken on the signing occasion. Despite none consensus the Claimant now capitalize on it and use it as evidence against the first Defendants. As such is unfair and biased against the first Defendants. It may seem some kind of controversial act was being pursued. Therefore, I must rule that the tape is inadmissible and cannot be used in this case.
34. What is left now for the court is to belief the evidence of the Defendants that only the late Sawane and one of his sons Walebalia were present on the occasion of signing of the Memorandum of Agreement.
35. On the issue of signing the late Sawane and Mr Walebalia did sign on behalf of the Defendants. However, Mr Walebalia by his sworn statement filed on 19^th November 2012, attested that he was under duress and was forced to sign. It went as far as the late Sawane slapped him on his face before he signed the agreement. Initially he maintained he could not sign. Later he signed because of the threat and force.
36. Conclusively, as I rule disqualifying the tape as in admissible evidence, and the fact that four of the partners were not present and signed, and in their absence no authorization document permitting the two signatories, and the fact that the late Sawane was not a registered partner owning Waletofea Shipping Services which operate the vessel MV Francis Gerena. And in the circumstance outline in paragraph 35 above simply reflected that the MOA was not properly executed, therefore was null and void.
37. That’s not the only reason but Partnership Act 1890 (UK) S.2 provides the rules for determining existence of the partnership. By definition the Defendants were operating as a partnership as they were registered as a business under S.1 (1) (a) and S. 2 (b) of the acts of Partners.
38. To conclude the late Sawane was not a partner in the firm Waletofea Shipping Services, his actions and decision cannot bind the partners of the firm. Therefore, the late Sawane’s execution of the agreement on 4^th November 2011 was not valid; he was not authorized to do so.
39. This issue had been determined by the previous High Court case in CC 465 of 2011. It was appealed but the appeal was dismissed by the Court of Appeal. By paying the stamp duty fee which was one of the lacking requirements was considered in CC 465 of 2011, even so, has not changed the circumstances.
40. It would be an abuse of process if I would review an issue which this Court had determined. The right forum is to appeal to the Court of Appeal which had been done but was dismissed. This proceeding now is a clear abuse of process.

Whether judgment in CC No. 465 of 2011 obtained by fraud.

41. On the outset the question to pause is who had actually committed the offence of fraud? The manner in which the Claimant brought this case is rather rehearsal, exactly desiring or urging this Court to review the judgment of this Court on 31^st May 2013 in CC no. 465 of 2011. In a straight forward process this Court has no power to review the judgment in CC 465 of 2011.
42. If the Claimant is so anxious about the fact that the stamp duty had been paid, then my reasons record earlier in this judgment makes me fear to decide whether the judgment made was obtained by fraud.
43. The Counsel attempted to particularize the fraud by making reference to the sworn statement of Constance Sawane and the sworn statement of the late Francis Sawane.
44. It ought to be noted that the judgment in CC No. 465 of 2011 was never declared as being obtained by fraud. The only privilege available is to apply to obtain a review order through an appeal which was done but thrown out.
45. In reality the judgment was never obtained premise on the sworn statement of the late Sawane and Constance. The relevant parts exposed in those sworn statements were considered and the outcome was the judgment made. In all circumstances, not all the part of a sworn statement is relevant, some parts are not. Those which are not, are either irrelevant or cannot be believed.
46. I have read the sworn statements and nothing, even a sport of it suggested any act of fraud or even impliedly. If there was any act of fraud, and if proved, will this Court change the judgment of his Court on 31^st May 2013? I’m afraid this Court be even to criticize it. To declare it as obtained by fraud is simply the most inappropriate thing to do, can only be done by the Court of Appeal.
47. The first Defendants must be seen as active parties to the agreement for sale of the vessel. The ridiculous thing is the late Sawane consequently became a vendor; he could not have been so. By signing the agreement meant he sold the property which did not legally belonged to him.
48. The agreement expressly stated that the late Sawane was the owner of the ship. It was the Claimant who prepared the agreement and to his knowledge that was so, in fact was absolutely diverted from the real truth. That can be tantamount to fraud. That statement can be read beneficial to the Claimant and not to the Defendants.
49. The first Defendants were not parties to the agreement or was legally represented by the two signatories, therefore cannot be said to have breached that agreement. Having aggrieved they commenced CC 456 of 2011. If the actions of Mr Sawane were consented to, there would be nothing to challenge in Court. They were perfectly entitled to do so, and the Court had made its decision.
50. The issue of invalid agreement and stamp duty are different. Even if the stamp duty was paid this agreement under the condition outlined above can still be invalid and I must decide it is so.

Claim for damages.

51. It is obviously clear from the above ratio decendi and reasoning’s that though the payment had been made, the ownership of the vessel had not been transferred. The agreement was assumed it had been concluded without the true owners of the vessel consented and executed the agreement. Therefore, the Claimant cannot claim damages as a result of him being restrained from continuing with the shipping services.
52. The claim of three million six hundred and sixty-eight thousand dollars was fake and unsubstantiated. The Calculations made were without any receipts. I noted any such claim is premature to consider at this stage. The issue of whether the agreement was breached must be considered first. If the Court rules on behalf of the Claimant then application must be filed for assessment of damages. It is still premature to file claim for damages and disclose calculations etc.
53. In any event, Counsel for the Defendants was rightfully exposed that if the Court granted orders (a) and (b) as reliefs sought, then before the Court can deal with the issue of damages. I have held that the agreement was invalid. Even so it is further decide that the agreement was frustrated when the vessel sunk on 18^th December 2013.
54. The Claimant knew very well the conditions and the defects of the vessel. It was absolutely not seaworthy. Nevertheless, the Claimant decided to use it for shipping services. He knew there were orders given by the Marine Office not to operate the vessel but continued to do so on his own peril, see the case of Air Transport Limited v Island Construction Limited^[3].
55. In the current case reliefs (a) and (b) have been refused, hence, it is irrelevant to deal with the issue of damages at this stage.

Counter-claim by the first and second Defendants.

56. The Counter-Claim by the Defendants is on the value of the vessel which was sunk on 18^th December 2013.
57. Prior to the Memorandum of Agreement the Claimant was well versed with the fact as to the defects and the condition of the vessel. When he operated it he knew the vessel was not seaworthy.
58. Even at that material time of executing the agreement on 4^th November 2011, the vessel was not seaworthy. Assuming that the agreement was conclusive upon payment of the price, the Claimant took possession and immediately operated the vessel.
59. On 30^th July 2011, according to the sworn statement of Claimant on 22^nd May 2012, before execution of the agreement, the Claimant had already intended to charter the vessel for $35,000.00 but the boat had engine problems. This is an implication that the Claimant had well versed with the status and condition of boat that it was not seaworthy.
60. On 13^th September 2013, this Court in the previous case, made orders that the profits be paid into joint trust account of the Solicitors. The Order was not complied with and further Order was made on 9^th December 2013, still not complied with.
61. The Order required the Admiralty Marshall to take possession of the ship. Those orders were not complied with. Instead the vessel left Honiara for Malaita and Sunk on 18^th December 2013. It was through the actions by the Claimant disobeying orders that the ship sail from Honiara which subsequently met its fate between Ngella Island and Malaita Island.
62. Indeed the asset was owned by the partnership which subsequently lost through direct actions of the Claimant. This statement carries the truth premise on my earlier reasoning that the agreement executed was invalid; hence the Claimant has no right of possession of the vessel.
63. Therefore I must award the Counter-claim to the Defendants. The loss by the Claimant in regards to purchase of the vessel should be subsumed into the value of the sunken vessel, when the assessment of damages is determined.

Conclusion.

64. I have eventually decided the Memorandum of Agreement executed on 4^th November 2011, lacked validity. Two individuals who were said to have executed the agreement on behalf of the partners were not authorized. One was not a partner at all, (late Sawane) and the other who was a partner Mr Walebalia, was unduly forced by the late Sawane, even to the extend by slapping him to sign the agreement. Two reasons given are sufficient enough to invalidate the agreement.
65. The case of video tape is not admissible evidence in Court due to two reasons. One, that there is no evidence that the parties to the agreement had given consent to be videotaped on the occasion of signing. Secondly the modern technology has allowed editing and other causes to be manipulated. Any unpresented scenery can be manipulated to appear as someone was present at that time of that particular occasion.
66. The stamp duty issue is different from the execution of the memorandum of agreement. Even if the stamp duty was paid in time, but if the agreement was invalid for the purposes alluded to above then the whole entire agreement could still be flawed.
67. There was no stamp duty at the initial stage to verify validity of the agreement when the parties had concluded the contract, in particular when the consideration was paid. Parties would have acted upon their obligations. To reverse after the later payment, would cause some havoc to the agreement, in particular if it was partially, or worst still if fully implemented. Without doubt it will complicate the circumstances.
68. No wonder in the case of Austree, the Court of Appeal made subsequent order for the rehearing because the Stamp Duty was paid later paid. Not only that, but the Court was made aware of, and parties themselves agreed for re-hearing thus omitted any obligation that had been committed in the initial implementation of the contract.
69. In the light of those reasoning it is pertinent that I refuse to grant reliefs sought by the Claimant but award Counter-Claim for damages to the boat to the Defendants to be assessed.

Orders:

(1) Refuse to grant declaration that Memorandum of Agreement entered into by the parties on 4^th November 2011, after being stamped on 25^th September 2013, is valid and binds the parties.
(2) Refuse to grant order that judgment by the High Court in CC No. 456 of 2011 was obtained by fraud. It is a question of jurisdiction which this Court cannot review its own decision, except by the Court of Appeal.
(3) Refuse to grant damages in all the heads attributed to by the Claimant in terms of loss of business earning whilst the ship was held by the Admiralty Marshall in breach of the Memorandum of Agreement in terms of the following:

• 3.1 Wharf charges prior to sales agreement.
• 3.2 General damages for breach of contract.
• 3.3 Refused to grant costs in defending High Court CC no. 465 of 2011.

(4) Refuse to grant interest of 5%.
(5) Award the Defendant’s counter-claim to be assessed if not agreed.
(6) Cost in the current case be paid by the Claimant on indemnity basis.

The Court.

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^[1] CAC 41 of 2011
^[2] Civil Appeal No. 7 of 2012
^[3] CAC 1 of 1999.