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Tion v Court Appointed Manager for Development Bank of Solomon Islands [2019] SBHC 9; HCSI-CC 479 of 2010 (6 February 2019)
HIGH COURT OF SOLOMON ISLANDS
Case name: | Tion v Court Appointed Manager for Development Bank of Solomon Islands |
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Citation: |
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Date of decision: | 6 February 2019 |
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Parties: | Rasite Tion and Agnes Tion v Court Appointed Manager for Development Bank of Solomon Islands, Attorney General, Josephine kairoronga
Ben |
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Date of hearing: | 5 November 2018 |
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Court file number(s): | Civil Case Number 479 of 2010 |
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Jurisdiction: | Civil |
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Place of delivery: | High Court of Solomon Islands |
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Judge(s): | Faukona PJ |
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On appeal from: |
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Order: | In the judgment I have awarded costs to the Claimants reduced to 70% only. I also awarded costs to the first Defendant on its counter-claim.
Costs awarded either way are on standard basis |
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Representation: | No one for the Claimant (Mr. J Taupongi absent) Mr. B Upwe for the first Defendant Second and Fourth Defendant do not involve in assessment of damages, claim against them was dismissed |
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Catchwords: |
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Words and phrases: |
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Legislation cited: |
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Cases cited: | Chow v Attorney General, Mappa V PNG Electricity Commission |
IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION
Civil Case Number 479 of 2010
RASITE TION AND AGNES TION
Claimants
V
COURT APPOINTED MANAGER
(CBSI) FOR THE DEVELOPMENT BANK OF SOLOMON ISLANDS
First Defendant
ATTORNEY GENERAL
(Representing the Registrar of Titles)
Second Defendant
ATTORNEY GENERAL
(Representing the Commissioner of Lands)
Third Defendant
JOSEPHINE KAIRORONGA BEN
(As administrator of the estate of Joseph Kairoronga)
Fourth Defendant
Date of Hearing: 5 November 2018
Date of Decision: 6 February 2019
No one for the Claimant (Mr. J Taupongi absent)
Mr. B Upwe for the first Defendant
Second and Fourth Defendant do not involve in assessment of damages, claim against them was dismissed
DECISION ON ASSESSEMENT OF DAMAGES
Faukona PJ: On 27 the January 2017, this court delivered its judgment after trial. The relevant orders to this application are one and two. Order
one, that order for damages against the first Defendant payable to the Claimant was at 70% damages to be assessed and costs to be
decided at the assessment hearing. The second order required the Claimants to pay the outstanding loan including interest to the
first Defendant plus costs in the counterclaim.
- On 15th June 2017, the Claimants applied for assessment of damages and costs. The application was premised on the allegation of fraudulent
misrepresentation or deceit by the first Defendant in its advice given to the Claimants.
- Fraud is a deceit which carries the same meaning that is, “use of false representation to gain an unjust advantage.” The
word “miss-representation” is wrongly represented as “giving a false account or idea”[1]
- Black Law Dictionary[2] defines “fraud” as “knowing misrepresentation of the truth, or concealment of a material fact to induce another to act to his own detriment”.
The second meaning expounded, is as a misrepresentation made recklessly without belief in its truth to induce another person to act”
- Misrepresentation as defined by the Black Law Dictionary[3] means “the act of making a false or misleading assertion about something usually with intent to deceive. The second meaning
is “the assertion so made; an assertion that does not accord. The New Zealand Oxford Dictionary, T. Deverson[4], also term misrepresentation as false representation.
- My personal opinion on the act of fraud or misrepresentation which the Claimants alleged, is that fraud which is a tort or when accompanied
by willful is a criminal act, must have as an element of prior knowledge of the truth, however, conceded or misrepresented to the
other person (Claimants in this case) upon which the Claimants acted accordingly.
- Or that the reality was recklessly misrepresented without belief of its truth in order to induce another person as the claimants.
- In the light of those definitions the meaning which comes little close to fraud is misrepresentation by reckless act. It would appear,
apparently, which I do not think, if existed, that the advice from the firs Defendant was intentionally to deceive the Claimants
to lose their business operations and earnings in Honiara and to continuously expended money in an attempt to revive a rundown business
to their detrimental.
- I noted the first Defendant had failed to release or lend the loan promised. That can be viewed as an irrational false promise which
I do not think tantamount to fraud, in the absence of intention to conceal the truth, but more tilt towards reckless misrepresentation
to belief the truth of the fact that the Defendant could still grant loans.
- Indeed it is not making false statement with intention to deceive, but reckless about the truth of the material fact, hence 70% damages
were awarded.
- The Claimants claim damages under 3 headings. The first is damages for loss of business. The second heading is damages for loss of
land, and recovery of expenses for construction of the final stage of the Noro building. They claimed they had incurred those losses
because of the first Defendant’s advice that it had rights over that parcel of land at Noro and willingness to provide further
funds for construction and business use.
- The reliefs sought in the amended claim were for damages and expenses under four (4) heads; loss of revenue/profit, loss of land,
expenses incurred and costs.
The first Defendants case:
- The first Defendant’s case is that there is no evidence presented by the Claimants to establish damages for loss of business.
In such circumstances the Claimant should only be awarded a sum that is appropriate in the circumstances.
- In respect to loss of Kukum land, the first Defendant’s version is that the loss in regards to that land is too remote. There
is no evidence showing the actual value of the land and property. In the absence of evidence court should award an appropriate sum
as well.
- In regards to expenses incurred on renovating the building at Noro, the first Defendant argues that there is no material evidence,
for instance, receipts or invoices for materials bought and used. There was no breakdown of expenses disclosed. Therefore the Claimants
are not entitled to such an amount under that head of expenses.
Head (1), loss of business:
- The Claimants’ approach related to damages for loss of business is in two fold. One is basically to maintain and uphold the
reliefs sought in the amended claim that is to assess this class of damage to the limited amount as $500,000.00 plus interest of
5%. Therefore the sub-total for 15 years is $853, 976.72.
- The second approach is the actual loss of profit of which a document purported to reflect the financial position of the Claimants’
company for the year ended 31st December 1997 was disclosed. It shows an average net profit of $437,919.00 in 1996, and net profit of $321,446.00 in 1997.A mean
net profit for the 2 years is $379,682.50, less $30,384.00 loan repayment, the net profit should be $359,278.50 per annum then multiplied
by 15 years , the total should be $5,239,477.50, plus interest of 5% but reduced to 70%. The sub-total should be $5,486, 766.42.
- In the first approach the Counsel for the Claimants have admitted there is no material evidence or otherwise supported the figure
of $500.000.00. The amount sought in the relief was a limited figure. Quite often a claim for limitation figure, does not allow a
consideration beyond such. At the same time such approach is resumed because of lack of evidence to substantiate the reality, so
consideration is only confined to the limitation exposed by the relief.
- The major controversy is that, in any application for assessment of damages, the applicant must proof damages by quantification in
real figures; he must proof his loss, where possible, as this case by documentations.
- In this case the Claimants admitted offering no evidence to prove they had loss of profit for 15 years but claim not limited to $500,000.00.
- For reasons outline hereunder, I must on the outset, reluctant to accept option 2, on grounds of luck of evidence to support, and
by its nature the figures are exaggerated.
- In the case of Chow V Attorney General[5], the Court stated,
- “As much as her business had been disrupted, her claim for loss of profit for duration of 40 weeks without the pleading of
the loss of assets through damages or destruction and evidence to prove such loss cannot be sustained”.
- It is crystalline clear without evidence to proof business or profit loss in support of the reliefs cannot be sustained.
- On the second approach the submissions seem to accord certain exhibits, or if not all, attached to the sworn statements of Mrs. Tion
filed on 17th May 2018, 13th July 2018 and 16th August 2018. Those exhibits according to the submissions, rated as reflecting reality of business loss suffered by the Claimants.
- Evidential exhibits manifested under the sworn statements filed on 17th May 2018 and 13th July 2018 were evidence proving that the Claimants had indeed run a business selling second hand quality clothing in their shops
in Honiara and Munda. However, there is no dispute that the Claimants had run a second hand quality clothing business. The truth
about those evidentiary exhibits is that they do not proof any business loss that can be assessed and quantified in terms of actual
figures loss. They are merely proving the existence of second hand clothing shops owned and run by the Claimants which is a non-issue.
- The next pack of exhibits was attached to the sworn statement filed on 16th August 2018, which is marked as Exh. “AT 11”. Noted from trading, profit and loss account the Claimants made profit in
their business trading for the years ending 1996 and 1997. For the two years the Claimants had made profits of $437,919.00 and $321,446.00
respectively, which is totaled to $759,365.00 profits.
- On 14th April 1998, the Claimants borrowed $72,000.00 from the first Defendant and an additional loan of $30,000.00 on 3rd May 1999. By the end of 31st December 1998, eight months after the first loan, the outstanding loan was $67,370.66, with a repayment amount of $8,629.34.
- By the end of 31st December 1999, the outstanding loan was $71,338.14 short fall of few hundred dollars from the principle amount of $72,000.00 borrowed
at the first place. By the end of 31st December 2000 the Claimants failed to make better progress in repayment of their loan. The outstanding loan remained at $71,950.46.
- Apparently, evidence has placed into perspective that the Claimants had began to default in their loan repayment since 1999. Therefore
in June 1999 negotiations ensured to reschedule the manner of loan repayment. This is evidence by the statement from the first Defendant
in 2010, that by the end of 2001, the Claimants had defaulted in the sum of $74,235.20. By the end of July 2002 the balance of loan
stood at an increase amount of $78,811.68, with no progress made.
- In or about 2002 the parties entered into pre-negotiation which later materialized into an agreement. The Claimants then took on board
$160,000.00 from the existing debt of Mr. Waneteroai, which then totaled up to $235,656.00. A new repayment schedule was agreed upon.
- By 23rd August 2004, the Claimant was indebted to the first Defendant in the sum of $315,047.01, an increase of $79,391.01. The debts
were accumulated since August 2002 when the Claimants stopped repayment.
- With all that debt hanging over the Claimants heads how would they made profit at the end of 1996 and 1997 in the sum of $759,365.00,
a year before they took the first loan from the first Defendant. Submissions seem to suggest that the median net profit were received
for fifteen years, a mere projection which is unrealistic and unsubstantiated.
- Borrowing $72,000.00 in 1998 when a total net profit made at the end of 1997 was $759,365.00 speaks volume of how unrealistic and
discredited the Claimant were in adducing evidence supporting damages as to loss of profit and business.
- Any logical thinker would conclude that to borrow a small amount in the midst of plenty to advance and thrives business to another
level is far from the truth.
- There is also evidence that the Kukum land and property was mortgaged by the Claimants to Westpac Banking Corporation for money borrowed
in connection with Honiara business. That property and land was eventually sold by Westpac to recover the loan which the Claimants
also failed to pay.
- With the credible standing of net profits for 1996 and 1997, and the fact that that the Claimants had been in business in Honiara
since 1989, it is amazing they could not able to service their loans. Both loans were current and due and interests were accruing
daily.
- It would appear the Claimants are only interested in providing profit and loss account for 1996 and 1997. There was no financial report
on profit and loss account since 1989 to 1995. There was nothing as well for 1998 to 2001. It makes one wonder why picked on two
years? This is important because it determines the business capabilities of the claimants whilst in Honiara before moving to Noro
in 2002.
- I also noted on the report the financial standing of Claimants in terms of cash at bank stood at ($180,000.00) yet the following year
the Claimants borrowed from the first Defendant, and the years that follow had drastically failed to pay their loans when due on
monthly basis. For sure that was the situation the Claimants encountered before moving to Noro in 2002. That they had already experienced
cash flow problem and could not even service their loans before the negotiations to take over Mr. Waneteroia’s loan.
- In the situation as reflected, it is doubtful that the Claimants could have financial business standing as expedited by the report.
With the net profit show, reflected a business that is well thrived and progressing in a vast profitable manner. In reality financial
standing and position was such that was depending on loan which was grounded in debt.
- The report is unethical and its unauthenticity is subject to question. If it was done by an auditor/accountant then it must be endorsed
by that person. There was no signature of affirmative on the report.
- On annexure 1, is a projected profitability statement for twelve (12) months. Net profit for one year shown by the table is $205,445.00.
That figure if maintained since 1989 to 2001 when the Claimants run business in Honiara, they would have become excellent standing
in running a business and there is no need to borrow from any bank, if so, there would be no arrears standing to their good names.
The truth is that the opposite was occurring in this case. That assists me to question the genuineness of the financial standing
by the Claimants in terms of profit and loss account and profit projection.
- Conclusively, there is no evidence in favor, or support the assessment figures the Claimants refer to as loss of damages for business,
or profit loss incurred by the Claimant due to ill-advised given to them. The notion urged to adopt and accept the act of fraud or
fraudulent misrepresentation does not fit the facts of this case. One element of fraud is that the person alleged to have committed,
did so to the peril of others and himself benefit from the misrepresentation. There is nothing of that sort occurring in the current
case.
- Besides Exhibit “AT 11” the Counsel for the first Defendants submits by referring to PNG case authorities which disclose a kind of evidence to be brought
before the Court to establish claims for loss of profit arising from business venture or operations.
- In the case of Mappa V PNG Electricity Commission[6], .states “if you wish to establish matters like loss of profit from operation of modern business then it is necessary to comply
with modern law, such as produce records as required by law. “Comply with modern matters like tax law. This would require appropriate business records to show where any profit over and
above business running costs were earned, and then if a profit was earned there is the requirement to pay taxes. The Courts have
been referring to these requirements in recent years especially in the operation of shop or trade store business”
- In this case there is no evidence of business record at all. All that was enclosed were trading assumptions and projections based
on what the Claimants told the Accountant and what they themselves constructed.
- The Counsel also submits in the absence of evidence, to proof on the balance of probability; the Court should only award a sum appropriate
in the circumstances.
- Quite apart from that, Judge Wood who determined the Mappa Case, also concluded that whatever amount the plaintiff stated in their
affidavit or oral evidence, unless disproved or contradicted by other evidence, may be accepted and relied upon by the Court to calculate
the amount of damages.
- Having considered that evidence, a relevant approach which I opted to accept is by exercising discretion to award an appropriate amount
in the circumstances of this case, that is to fetch an award of $400.00 as assessment of damages for inadequate advice and misrepresentation
which led to the Claimants loss of business. Noted only 70% of the total awarded be payable to the Claimants.
- Damages awarded is $400,000.00
Interest of 5% is $282,410.95
Sub-total is $682,410.95
Item Head 2:
- Head 2 itemizes the Claimants loss in respect of their Kukum land and property which eventually was sold by Westpac Bank, sometimes
in 2003, for failure to pay outstanding loan. The Claimants averred that because of the ill-advice given by the first Defendant,
they shifted business to the West and took on board Mr. Waneteroi’s loan which over committed them, hence unable to pay up
Westpac loan.
- Prior to 9th December 1999 the Claimants obtain a housing loan/overdraft from Westpac Bank to build a house on PN 191-035-164. On 11th November 1999, by guarantee the Claimants guaranteed to pay all sums due to the Bank with interest. On 9th December 1999, as varied, the Claimants entered into a first charge with the Bank in respect of fixed term estate at Kukum to secure
the repayment of the loan of $220,000 with interest. As at 14th October 2002 the loan was outstanding with interest accruing from 15th October 2002.
- In the middle of 2000 the Claimants closed all their 4 shops in Honiara because of the ethnic tension and try to move to Munda. Towards
the end of 2000 only one shop was reopened. In August 2002 a branch was opened at Munda. From the years 2000 to 2002 the Claimants
business turnover was low therefore find it difficult to satisfy loan repayment obligations. (These facts were extracted from Agnes
Tion’s affidavit filed on 27th February 2003 in the Westpac case against the Claimants (Case No. 242 of 2002).
- It is evident there was an admission that the business turnover was slow down due to the direct effect of the ethnic tension and not
entirely on the ill advise made by the first Defendant. In this case the Claimants’ reason for the loss of their property at
Kukum was because of the fraudulent advice conveyed to them by the first Defendant.
- In view of that, my perception is completely different. The reality is that Claimants began to default in repayment of their Westpac
loan prior to 9th July 2002. That was probably at the same time the Claimants moved to Noro in 2002. On 10th July 2002 a letter of demand was sent to them. From August 2002 to February 2003 the Claimants still failed to pay the amount required.
I doubt the first Defendant had actually reckless in advising the Claimants which by acting upon suffer loss by losing their Kukum
property. The truth from evidence is that the Claimants had defaulted in both loans before the Branch Manager of DBSI, Munda, first
consulted the second named Claimant and discussed the issue of moving to Noro at the beginning of 2002.
- As it is now emerged, it would be completely erroneous and wrong to blame the first Defendant for advice which eventually led to Westpac
bank selling the Kukum property by public tender on 21st March 2003, after obtaining judgment on 5th March 2003. That case was completely different from the current case with no integration whatsoever. The reason for the Claimants’
failure to pay loan arrears is different from the current. The reason is the direct effect of the ethnic tension which affected their
capabilities of making loan repayments.
- I must therefore dismiss the application for assessment of damages as there was nothing to assess in head 2. The Westpac Bank case
against the Claimant was totally different and premise on different issues and is quite remote to be included with this case.
Head item 3:
- Head item 3 is expenses incurred by the Claimants in construction of the Noro land building from 2011 until the filing of this case.
There is no evidence or records of expenses incurred by the Claimants in terms of receipts, invoices etc, therefore claim a limited
amount of $48,000.00.
- Extra expenses under this head should, in my view, appropriate item to be claimed. This should be a direct effect of the careless
and ill-advised render to the Claimants, which upon acted suffered loss. I accept no evidence is available to proof the figure; however,
I take heed of the case of Mappa quoted above and other five cases from which his Lordship Woods discovered two Schools of thought.
- For the relevance of this case, School (2) is more relevant and applicable. The Court stated, “If there is no evidence to the
contrary or evidence disproving or contradicting the evidence in support of the claim for loss of profit, the Court merely relies
on the affidavit or evidence of the plaintiff to assess an appropriate amount of loss of profit”. This means whatever amount
the plaintiff’ state in the affidavit or oral evidence, unless disproved or contradicts by other evidence, may be accepted
and relied upon by the Court to calculate the amount of damages.
- In the current case there is no receipt or invoice produced or proper statement from an accountant to support the claim for extra-expenditure.
However there is evidence which is not denied, that the Claimants had indeed engaged in renovation work of the Noro building. Therefore
premise on the authority of the above case I accept $48,000.00 as the extra expenses incurred to renovate the building.
- The calculation of the expenses is $48,000.00 plus interest of 5% which is $12,573, totaled up to $60,573.40.
- In summary the assessment of loss of profit and plus extra expenses with interest is $682,410.95 plus $60,575.40 totaled up to $742,986.35,
70% of it is $520,090.44.
Quantum of damages-counter-claim:
- The Claimants have agreed and have no issue with first Defendant’s final assessment of loan arrears which is $426,160.66. Take
the loan arrears from $520,090.44 will left with $93,929.78. That amount is the final assessment which the first Defendant has to
pay to the Claimants.
Costs
- In the judgment I have awarded costs to the Claimants reduced to 70% only. I also awarded costs to the first Defendant on its counter-claim.
Costs awarded either way are on standard basis.
- Under the Court Rules inclusion of disbursements are not permissible in this case, therefore the first Defendant is only entitled
to claim costs for a matter that went to trial, which in the current case, an amount of $22,700.00.
- For the Claimants 70% reduction of their cost should be $15,890.00. Less the figure from $22,700.00 will come to $6,810.00. That amount
is reasonable which should be paid by the First Defendant to the Claimant.
- As pointed out which seem appropriate that costs should be offset from the total damages and expenses which the first Defendant is
liable to pay to the Claimant. Take $6,810.00 from $93,929.78 to $87,129. 28.
- In the final assessment of total damages including cost the figure $87,129.28, is the amount which should be payable to the Claimants
by the first Defendant.
THE COURT.
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REX FAUKONA
PUISNE JUDGE.
[1] University Press 2005.
[2] Eighth Edition.
[3] Ibid (2)
[4] Ibid (3) and (3).
[5] (2003) SBHC 94; HC-CC 127 of 2000 (April 2003).
[6] (1995) PNNC 13, (1995) PNGLR 170 (4 October 1995).
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