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Solomon Rice Co Ltd v Chan [2022] SBHC 121; HCSI-CC 34 of 2019 (23 December 2022)

HIGH COURT OF SOLOMON ISLANDS


Case name:
Solomon Rice Co. Ltd v Chan


Citation:


Date of decision:
23 December 2022


Parties:
Solomon Rice Company Limited v Ms Bobo Chan


Date of hearing:
5 August 2022


Court file number(s):
34 of 2019


Jurisdiction:
Civil


Place of delivery:



Judge(s):
Faukona; DCJ


On appeal from:


Order:
1. The Claim is accordingly strike out
2. The Claimant is to pay the cost of these proceedings on standard basis if not agreed upon.


Representation:
Mr G Fa’atoa for the Claimant
Mr P Afeau for the Defendant


Catchwords:



Words and phrases:


Legislation cited:
Solomon Island (Civil Procedure) Rules 2007, r9.75, r9.76, Companies Act 2009, S 198 (1), Business Names Act 2014 s 11 and 12 (3), S 11 (1) and S 12 (3), S 27 (c)


Cases cited:
Wabia v BP Exploration Co. Ltd [1998] C 117, Mauaia v Solomon Taiyo [1997] SBHC 106, Abe v Minister of Finance [1994] SBHC 118, Hunter v Chief Constable of West Midlands Police [1981] UKHL 13; [1982] AC 529, General Steel Industrial Inc v Commissioner of Railways [1964] 112 CLR, Gatu v SIEA [1998] 78 CCR 62, Day v Victoria Railways Commissions [1949] 78 CCR 62, Tikani v Motui [2002] SBHC 10, Sa’oghatago v Mugaba Atoll Resources Company [2015] SBCA 4, Wenlock v Moloney [1965] 1 WLR 12

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION


Civil Case No. 34 of 2019


BETWEEN


SOLOMON RICE COMPANY LIMITED
Claimant


AND


MS BOBO CHAN (TRADING AS WINGS SUPERMARKET)
Defendant


Date of Hearing: 5 August 2022
Date of Ruling: 23 December 2022


Mr G Fa’atoa for the Claimant
Mr P Afeau for the Defendant

RULING ON APPLICATION TO DISMISS/STRIKE OUT THE CLAIM

Faukona DCJ.

  1. A claim in category B was filed by the Claimant on 25th January 2019. The claim is for a monetary sum of SBD$11,753,902.66 plus interest, damages and costs.
  2. A defense and counter-claim was filed by the Defendant on 25th February 2019.
  3. This application was filed by the Defendant on 5th July 2019, to strike out or dismiss the claim pursuant to Rule 9.75.
  4. The rule specifically provides that;
If in any proceeding it appears to the Court in relation to the proceedings generally or in relation to any claim for relief in the proceeding:
the Court may, on the application of a party or on its own initiative, order that proceeding be dismissed generally or in relation to the claim.
  1. If a claim, in its structural form, contain any of those defects, the Court may order the proceedings be dismissed or in relation to a particular part of the claim.
  2. Rule 9.76 gives the power to the Court, on optional basis, may receive evidence on the hearing of the application for an order under R 9.75.
  3. The terms used in R 9.75 as being the key words, have no comprehensive definitions. However, in a nutshell, the case of Wabia V BP Exploration Co. Ltd, His Lordship[1], Sevua J stated as thus;
  4. As to test for reasonable cause of action the Court in Mauaia V Solomon Taiyo[2], stated, that in considering whether there is reasonable cause of action, it is necessary to show that the pleadings contain essential facts or particulars which disclose some cause of action, see Abe v Minister of Finance[3].
  5. In respect to abuse of process, involves a misused of court procedure which would be manifestly unfair to a party to the litigation before it, or would otherwise bring the administration of justice into disrepute among right thinking people. See Hunter V Chief Constable of West Midlands Police[4].
  6. In summing up the required tests, the Court of Appeal in Allison V Medlin[5], refer to General Steel Industrial Inc V Commissioner of Railways (NSW)[6], stated that a pleading fails to provide a reasonable cause of action where it is obvious untenable that it cannot possibly succeed, manifestly groundless or so manifestly faulty that it does not admit an argument.
  7. In the case of Gatu V SIEA[7], citing Day V Victoria Railway Commissions[8], held that proceeding must be useless and futile.
  8. In Gatu’s case the court further stated that a case must be very clear indeed to justify summary intervention of a court to prevent a plaintiff submitting his case for determination in the appointed manner of the Court.
  9. The famous passage in the case of Tikani V Motui[9], omitting Wenlock V Molony which the court stated;
  10. In the case of Sa’oghatoga V Mugaba Atoll Resources Company[10] the Court pointed out that R9.76 replaces the earlier qualification under Wenlock V Moloney[11].
  11. The tests propounded by the case authorities are clear as crystals and very precise and concise.
  12. Applying the test to the facts and evidence in the current case it is the case of the Claimant attributed by the claim in Category B, filed against the Defendant, MS Bobo Chan (Trading as Wings Super-mart), for the recovery of debt from her.
  13. The Claimant alleges that it supplied goods in terms of rice to the Defendant who received but failed to pay for the goods. Therefore, she was sued as a sole trader and personally responsible for the Claimant’s debt of $11, 753, and 902.66.
  14. The Defendant denies that such goods were supplied to her personally as a sole trader using the names Wing Super-mart or Wings Supermarket. However, she refuted the goods in fact supplied to Chan Wing Motors Limited which own and trade under that business name. She contests she is being wrongly sued and not the right party to be sued for the debt.
  15. Therefore, she believes the Claimant has no cause of action against her and that must be struck out.
  16. The Claimant’s background facts commenced on 20th March 2017 to 26th April 2017 when the Defendant ordered from the Claimant certain quantities of rice on credit basis. Upon receipt of the orders the Claimant supplied the quantities to the Defendant and invoices were issued. However the Defendant failed to pay the costs in the invoices, hence accumulated to the figure being the subject of this claim.
  17. I have the privilege to observe the invoices issued to Wings Super Market per Exh. NE2 – 8 attached to Mr. Ellis sworn statement 2 filed on 4th November 2012 and also two Local Purchase Orders.
  18. Beside the invoices, I also observe Honiara City Council Business License – 2018. That Business License was issued to Chan Wing Motors (T/A Wings Supermarket).
  19. Also, noted is a cheque dated 1st April 2017. The cheque was a payment of $131,600.00 to Solrice. The cheque was owned by Chan Wing Motors Ltd.
  20. Whilst the invoices were directly addressed to Wings Supermarket, and the cheque own by it, which is the business, there is further evidence that expose the ownership of the business in Honiara City Council Business License 2018, which was issued to Chan Wing Motors (T/A Wings Supermarket). Mr. Ellis testified that he believed in the authenticity of the License and has no reason to doubt. Having acknowledge that, yet initiated a proceeding against the Defendant whose names did not appear in the license, is it not an abuse of Court process?
  21. The same can be said as to the cheque that was issued on 1st April 2017. If the Defendant is the sole proprietor of Wings Supermarket why not the cheque and license issued in her personal name, but in the name of the other entity.
  22. That culminates a significant point that all Local Purchase Orders did not have the name of the Defendant but Chan Wing Motors Limited as owner of the business.
  23. Despite those evidence Mr. Kieldie assumed it was a breach of Business Name Act 2014. If there were such breaches or omission why the Claimant should raise defections during the thirty (30) years of business relationship.

Social and business relationship with the Defendant.

  1. Mr. Ellis attested that over five years of business and social relationship with the Defendant had created familiarity and closeness, but he Defendant never denied she was the sole trader of Wings.
  2. In my respective view Mr. Ellis’s words are not evidence to proof a fact. He should utter in evidence an occasion in which he asked the Defendant whether she was the sole trader of Wings Super Market; date and time of the meet to be more specific, is good evidence. If she admitted she was a sole trader is good evidence and not mere assumptions.
  3. The best evidence to proof someone owns a business is by way of documentations through incorporation documents, through business license, ownership of cheques, local purchase orders etc, and not through behaviors and assumptions.

Proof by NPF documentations.

  1. At paragraph 12 of the Defendant’s sworn statement Exh. “BC 6”, is a copy of SINPF Form A for the month of September 2017. That form recorded Chan Wing Motors Ltd paying NPF contributions as owner of the business, for its employees.
  2. That piece of evidence is not challenged, however, the Claimant submits that the Defendant was not an employee of Wings hence not listed in the Form A returns for September 2017.
  3. She may not be employed but in her background information Chan Wing Super market Ltd is a company owned by their family and had involved in various business activities. One of such is trading as Wings Super Mart or Wings Supermarket.
  4. The Supermarket used to be managed by expatriates, but since 2000 the expatriates left the country due to social unrest. The Defendant then had to step in and look after the family business.
  5. That explanation is sufficient and logic to answer why her name was not included in the Form A return for September 2017.
  6. Not only that, but explain why her name was not enlisted in PAYE Tax Form IR 9 for employees working in the Wings Supermarket – see Exh “BC-7”.
  7. Further poof by NPF document is the Lease Agreement Exh. “BC4” paragraph 10 of the sworn statement of the Defendant. The lease agreement was between Chan Wing Motors Ltd Trading as Wings Super Market as Lessee with NPF Board as Lessor in respect of the shop premises rented at the NPF Building, Point Cruz. That documentation was not challenged. But clearly indicated the owner of Wings Supermarket/Wings Super Mart. There is no way one can find the personal name of the Defendant as sole trader in any part of that agreement.
  8. The Claimant also argues if Wings is owned by Chan Wing Motors then why the Defendant failed to inform the Claimant about it. All along the Claimant knew about Wings Supermarket. It was well established by evidence when Mr. Elis by his sworn statement of 9th November 2020, cited at the entrance of the door to the liquor outlet business, displayed for public view the Honiara City Business License 2018. A photograph was taken of the Licence and Exh. Marked NES – 6 in Mr. Elis’s sworn statement.
  9. Notwithstanding that, it was a clear unambiguous evidence of who was the owner of the business and the fact that Mr. Ellis believed in the authenticity of the Licence, yet wielded a litigation. That can be attributed to abuse of process.

Evidence of non-disclosure.

  1. The Claimant argues that Wings is not owned by Chan Wing Motors Limited. The Defendant’s position is otherwise. The Claimant’s reason for alluding the proper status of the Defendant is upon reminiscing the trading relationship between the parties before this proceeding was initiated. That at no time the Defendant had informed the Clamant that Chan Wing Motors Limited owned the registered business name “Wings Supermarket.”
  2. Further the Defendant had failed to provide executed board resolutions, employment agreements, authorized delegation instruments or corporate instruments from Chan Wing Motors Limited, or Directors appointing the Defendant as General Manager, or authority for the Defendant to incur substantial debt on behalf of Chan Wing Motors Limited. The Claimant attesting that those documents were not provided during the course of the negotiations.
  3. The documents not disclosed including corporate document that Chan-Wing Motors Limited is recorded as owner of rice stock for that legal entity, or that purchase orders were raised by that entity, or that there recorded in corporate holder of Chan-Wing Motors Limited.
  4. In my respectful opinion prier negotiations for debt recovery should focus on how nearer in which the debt be settled. If such documentations are not acquired at that stage, then it is incumbent to file a request. In a business world if nothing is requested then nothing will be provided. The Claimant should know by 100% who it is dealing with in its business trading.
  5. In the current case the issue of which entity owned Chan Wing Motors Limited had not yet arise at that time before initiating the proceedings. It only arise after defense and sworn statement were filed.
  6. This is not the time to raise the issue of identifying which entity the Claimant was dealing with in business trading. It should know perfectly right from the start. Nevertheless the Honiara City Council Business License 2018 in which Mr. Ellis believed in its authenticity in which he exhibited a photograph of it (Exl. NEZ-5) answered it all which entity the Claimant was dealing with, that is Chan Wing Motors Limited and not the Defendant in her personal name as a sole trader.
  7. Having knowledge of that evidence, the claimant decided to sue the defendant in her personal name. That is not a prudent act at all, in fact it is a vexations proceeding putting the Defendant to trouble with expenses.

Lease Agreement in P/No: 191-020-86, NPF Plaza.

  1. The Claimant submits that lease agreement signed with NPF in respect to Unit 55 does not show Chan Wing Motors Limited as a party, the name listed is Chan Wing Limited trading as Wings Super Market which is not the same entity as Chan Wing Motors Limited. It also argue the name was fake, Chan Wing Motors Limited could not legally occupy or conduct business from the names.
  2. The Defendant however attested to an error in typing the name of the Lessee in that the word “Motors” was missing. It should be typed between the words “Wing” and “Limited” and not Chan Wing Limited”.
  3. In her oral evidence in Court she affirmed the mistake and confirm she had the authority to sign the Lease Agreement on behalf of the Lessee.
  4. Wings Supermart or Wings Supermarket has never been known by, or labeled as Chan Wing Limited. By admitting on error exclusion of the word “Motors” gives a hint to a logical name that Chan Wing Motors Limited is a legitimate party to the Lease Agreement and not Chan Wing Limited, a name that never existed.
  5. In any event it is in agreement between the Lessor and the Lessee and there has been no issue in respect to the identity of the parties which is valid in all respect.
  6. Similarly, the same attribute can be said to an issue raised by the Claimant that the Business License 2017 carries the name of Chang Wing Motors Limited a different entity. I must accept the submissions conveyed by the Defendant that there was a typing error in the name of “Chang” it should be Chan. This issue is so minute to contribute as proof that Defendant is the sole owner of Wings Supermarket.
  7. It is an error capitalized by the Claimant. The 2017 and 2018 Business Licences were the same being No. 2011292. This is business registration number of Chan Wing Motors Limited shown on the Company Extract. Capitalizing on minute issues is venturing attempt to find fault against the Defendant, This error is too minute to alter the course of reality, therefore must not be accepted.

Breach of S.198 (1) Companies Act.

  1. The Claimant submits that the Defendant as a Director or sole trader had failed to correct the purchase orders, invoices and correspondence to the Claimant that Chan Wing Motors Limited was the party transacting with the Claimant therefore liable for the debt.
  2. By withholding information has misled the Claimant to be deceived about the entity the Claimant was dealing with, therefore the Defendant had acted in bad faith.
  3. It is a well understood fact, that Chan Wing Motors Limited was trading under the name Wings Supermarket or Wings Supermart, trading in wholesale and retail of merchandised goods. Wings Super Market or Wings Supermart had its own manager, who is the Defendant.
  4. I do not cite any irregularity if the Manager of Wings Supermarket raised purchase orders, invoices and write correspondences to trading partners in the names Wings Supermarket. Wings Super Market in my view, operates as a business name under Chan Wing Motors Limited.
  5. If the Defendant fails as a Director or Shareholder of Chan Wing Motors Limited by making false entry under s.198 (1) of the Companies Act 2009, then penalty is provided for under subjection (3), a fine not exceeding 1000 penalty units or imprisonment for a term not exceeding 7 years or both. It has nothing to do with being liable for the debt. The debt was incurred by the company that trade under the business name Wings Supermarket or Wings Supermart which is Chan Wing Motors Limited.
  6. The same approach can be recited in the allegation that the Defendant has breached s.11 and 12 (3) of the Business Names Act 2014. The only logical explanation is that, if the Defendant in her personal capacity as a Manager of Wings Supermarket, failed to comply with ss. 11(1) and 12(3) of the Act, penalty is provided for under the provision of 5,000 penalty units or imprisonment for 6 months or both. This means the Claimant has to file a criminal charge against the Defendant which is an appropriate process to achieve finality for any breaches. This has nothing to do with any debt.
  7. The Claimant submits that the Defendant in her capacity as a sole trader under Wings which is not registered to any known owner, carried out business with the Claimant whilst the Business Name Wings Supermarket or Wings Supermart has not been registered to the entity (Chan Wing Motors Limited), therefore breaches s.27 (c) of the Business Names Act. The mindset that the Defendant is the sole trader of Wings Supermarket has been erased from the chart. Evidence from documents reflected Chan Wing Motors Ltd own the supermarket. The supermarket operated under its own management which the Defendant was the Manager.
  8. In conclusion, with the narratives I have alluded to above and reasons I have concluded herewith, and applying the relevant principles in the authorities to the facts of this case, the only option left is to strike out the claim. The Defendant is a wrong person to sue. The claim is an abuse of process and a cause of action which is frivolous and vexations. Accordingly, the claim is hereby strike out and the Claimant must meet the cost of this proceedings.

Orders:

  1. The Claim is accordingly strike out
  2. The Claimant is to pay the cost of these proceedings on standard basis if not agreed upon.

THE COURT.
Hon. Justice Rex Faukona.
DEPUTY CHIEF JUSTICE.

[1] [1998] C 117.
[2] [1997] SBHC 106.
[3] [1994] SBHC 118, HC-CC No. 117 of 2015 (12 August 1994).
[4] [1981] UKHL 13; [1982] AC 529, per Lord Diplock.
[5] [996] SMCA 3.
[6] [1964] 112 CLR 112.
[7] [1998] 78 CCR 62.
[8] [1949] 78 CCR 62.
[9] [2002] SBHC CC 029/1
[10] [2015] SBCA 4 SICOA – SICOA – AC 2 of 2015.
[11] [1965] 1 WLR 12. 38.

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