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Solo v Wale [2022] SBMC 1; Civil Case 27 of 2021 (25 March 2022)


IN THE CENTRAL MAGISTRATES’ COURT )
OF SOLOMON ISLANDS AT HONIARA )
(Civil Jurisdiction)


Civil Case: 27 of 2021


IN THE MATTER OF: MONEY CLAIM (CATEGORY B)


BETWEEN


FRANCIS SOLO
Claimant


-v-


JOE WALE
Defendant


Date of hearing: October 22, 2021
Date of submissions: November 12, 2021
Date of written judgment: March 25, 2022
Hearing on-papers


Mr. Christopher Fakarii for the Claimant
Mrs. Lilly Ramo for the Defendant


JUDGMENT

Introduction

[1]. A Claim in Category B was filed by the Claimant on April 8, 2021.

[2]. The reliefs sought in the Claim are: (1) Judgment against the Defendant for the sum of SBD $45,000 in reimbursement, for breach of contract and unjust enrichment. (2) An Order for interest of 5% from the date of filing to the date of Judgment. (3) Any orders the court deems just. (4) Cost against the Defendant.

[3]. The Defendant filed his defence on April 19, 2021. In the same defence, the defendant also made a Counter-Claim.

[4]. The Claimant, being the defendant to the Counter Claim, filed his Reply and answer to the Defence and Counter Claim on May 5, 2021. And, the Defendant filed his Reply to Defence to Counter Claim on July 5, 2021. Accordingly, pleadings were closed.

[5]. On October 10, 2021, and November 11, 2021, respectively, the Claimant’s counsel filed his submissions in support of the claim. Both counsels conceded on a hearing on-papers, after which they have collaboratively agreed on the agreed facts and evidences. As far as the evidence is concerned, most of them are uncontested, except for matters of law. I shall now delve into discuss the examination of the facts, evidences, law, and my finding.

Agreed facts

[6]. On March 12, 2015, the Claimant entered into an agreement with the Defendant for the sale and purchase of a vehicle from the Defendant at the sum of SBD $45,000 (Forty Five Thousand Dollars).

[7]. The material terms of the agreement were that: “(1) that the Claimant would make an initial deposit of the sum of $35,000; and that the balance of $10,000 would be settled by weekly instalments of $1,000 - $1,500 over a maximum period of 6 weeks.”[1]

[8]. On March 12, 2015, the Claimant made a down payment of $35,000 and took possession of the vehicle.

[9]. On August 8, 2015, the Claimant made a further payment of $2,400.

[10]. On September 6, 2015, the Claimant and the Defendant entered into a second agreement because the Claimant had not complied with the terms of the initial agreement. The material term(s) of the Second agreement, are as follows: “(1) the Claimant would make full outstanding payment of $7,600 within a period of one month; (2) if the outstanding sum of $7,600 is not paid within the one-month period, the Claimant would return the vehicle to the Defendant; (3) the vehicle is to be kept in the possession of the Defendant until full payment is made; (4) if no payment is made after one (1), then the Defendant would do whatever he wants to do with the vehicle to settle the outstanding sum.”[2]

[11]. On October 10, 2015, the Claimant returned the vehicle to the Defendant. At that time, the Claimant had been in possession of, used and or benefitted from the use of the vehicle for a total of 214 days.

[12]. The Defendant, upon repossessing the vehicle, sold the vehicle to a third party for $12,000.

Agreed Issues

[13]. Counsels have agreed on the following issues:

Additional issues suggested by the Court

[14]. The Court, after having gone through the submissions, and agreed facts and issues, raised additional issues and gave time for both counsels to provide submissions on it. And in adherence to the direction order, Counsel for the Claimant, filed an additional submission. These are those issues:

Claimant’s submission

[15]. As to the original agreed issues, Mr. Fakarii of counsel for the Claimant, submitted that the 2nd Agreement cannot be relied on as evidence, and the Defendant should not have pleaded it in the pleadings. In bolstering his argument, counsel made Specific reference to section 9[3] of the Stamp Duties Act (cap. 22), and referred the court to the case of Austree Enterprises PTY Ltd v Guo HC CC [2012] SBCA 19; SICOA CAC 7 of 2012, where the Court of Appeal held that: “In the absence of any saving provision S.9 must be given its mandatory effect. It cannot somehow be read subject at s. 20 dealing with the time limit for stamping and penalties for late payments. As well, as was pointed out in Dent, it is not the duty of the court to be astute in finding ways to defeat the object of the Act of the Legislature.” He concluded his argument by stating, that the second agreement cannot be relied on, or is inadmissible, and should not have been part of the pleadings from the start.

[16]. Second, the issue on reselling of the vehicle to a third party. Counsel submitted that, it is an accepted fact that the Claimant and Defendant entered into an agreement (MOU) for the sale and purchase of vehicle Registration No. 7654, where the Defendant sold to the Claimant, the vehicle in the sum of $45,000. He further submitted that, the Claimant paid a total sum of $37,400 towards the vehicle over the course of 6 months. And, during the time, the Claimant held on to the vehicle. As such, the Defendant was only entitled to receive the sum of $7,600. Instead, the Defendant repossessed the vehicle and sold it to a third party for only $12,000. The Claimant was then left without a vehicle. The Defendant kept the money collected from reselling, and deprived the Claimant from the perpetual use of the vehicle. In totality, counsel submitted that, the Defendant’s action is a general breach of the spirit and intention behind the Sale and Purchase Agreement, which is to ensure that the Claimant receives title and possession of the vehicle and the Defendant gets the sum of $45,000 from the sale.

[17]. Regarding the Defendant’s Claim for $85,000 for use of the vehicle. He submitted that the figure is without basis, and that the Claimant was only interested in settling the $7,600. Therefore, seeks that the Defendant’s Counter-Claim be dismissed with costs. The return of the vehicle to the Defendant was made in view, that he would recover the outstanding $7,600, instead he sold it for $12,000.

[18]. In relation to the supplemental submission, the Claimant submitted that, first, the principle of equity applies or lies in chattels. He referred the Court to a case in Fiji, Carpenters Fiji Limited v Bali Mohammed SC 449 of 1984, and stated that, in that case although it concerns insurance and loan repayments, the Fiji Supreme Court accepts that equity also applies to chattel. Therefore, he argued that the Claimant had equity in the vehicle at the time of sale by the Defendant.

[19]. Second, he submitted that, regarding the ownership of the vehicle, the Claimant had acquired part ownership of it upon paying part payment of the selling price, as the amount he deposited is more than half of the purchase price, being $37,400, leaving only $7,600 outstanding. Thus, he hold part ownership of the vehicle.

[20]. Third, he submitted that the initial agreement (MOU), constitutes an agreement to sell as the agreement is subject to some conditions that are yet to be fulfilled by the parties before the transfer of the cab’s ownership is to take place. The conditions in that agreement is for the Claimant to pay outstanding balance within one month and failure to do so will result in returning the cab to the Defendant.

[21]. Fourth, the Claimant submitted that his action in failing to pay the balance of sale purchase price within the agreed time and period, amounts to a fundamental breach to the terms of contract, however, it does not give the right to the Defendant to repudiate the contract, repossess and resell the vehicle to a third party. By taking into consideration his circumstances, the breach should not give rise to claim for compensation and not a right to repudiate the whole contract. Also by taking into consideration the fact that the Defendant failed to notify the Claimant of his intention to sell the vehicle to a third party, the Defendant has breached his right to resell. Thus, the Defendant cannot repudiate, repossess and resell the vehicle to a third party.

[22]. Fifth, he submitted that the Defendant’s conduct to repossess and resell the vehicle to another third party constitute a fundamental breach of the terms of the contract, thereby the Claimant have the right to claim the $37,400 he deposited for the vehicle and not the $45,000 purchase price.

[23]. Lastly, he submitted that the Defendant is not entitled to claim for the sum of daily hiring as there is no agreement made concerning the issue of daily hiring between him and the Claimant.

Defence’s submission

[24]. The Defence had filed no submission. There were two occasions of which the Court had made directions for both Claimant, and Defendant to file their respective submissions; October 15, 2021, and November 10, 2021. However nothing was forthcoming from the defence. Mrs. Ramo of counsel for the Defendant, had conceded to tendering of the Sworn Statements, and agreed facts. Therefore, the Court will proceed to rule on what is before it to make a just and fair finding on the above-stated issues, as far as, defence’s part is concerned.

Court’s consideration and discussion

[25]. Consequent to the supplemental submission, Mr. Fakarii of Counsel for the Claimant, tendered his submission in support of the claim for $45,000 in reimbursement for breach of Contract and unjust enrichment. I will now address the issues raised in the Claimant’s submission, as well as, the supplemental issues. Where necessary, I will discuss those that are interconnected, together.

Transfer of ownership title

[26]. It is undisputed that the Claimant and the Defendant, entered into an initial agreement, referred to as the Memorandum of Understanding (MOU), agreed and signed on, 12th March, 2015. The terms of this agreement were: “first, the seller sells the car at $45,000. Second, the Buyer agrees to purchase the car for over ¾ of the selling price of $35,000. Third, Buyer is willing to settle the remaining part of the selling price ($10,000) within 4 to 6 weeks’ duration, and will be reviewed in case of any unforeseen circumstances. Fourth, the Buyer to settle the remaining amount by payment of $1,000 to $1,500 weekly (adjustable from time to time – increase).”[4]

[27]. Following the payment of $35,000 by the Claimant to the Defendant, the Claimant took physical possession of the vehicle. He later paid an additional $2,400, which calculated to a cumulative amount of $37,400, paid to the Defendant, leaving only $7,600 outstanding. Apparently, there is no clear ‘retention or Romalpa clause’ to specify when the ownership rights were to transfer, apart from the clear understanding that the selling price was, $45,000, and was part of the terms of the contract. Both Counsels submitted in agreement, that the Sale of Goods Act 1893, is applicable in this case. I accept their submissions, but where cavities exist, the principles of contracts under common law, applies. According to the Sale of Goods Act 1893, two provisions emerge to address this issue, sections 17 and 19. Sections 17 (1)(2) and 19 of the Sale of Goods Act 1893, provides:

S.17 (1) (2) “Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.”


S.19 (1) “where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee or custodier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled...”


[28]. Reading the above provisions and applying them to the facts, I am convinced that, even without a ‘Romalpa Clause’[5], the parties’ intention during the making of the initial contract was, for the title or ownership to transfer upon full payment of $45,000. This is augmented with the existence of Clause 4, of the initial contract: that the buyer will settle the remaining amount weekly, by installment payment of $1,000 to $1,500. The purchase price of $45,000 and the proposed installment payments are conditions required to be fulfilled by the Claimant before the ownership title could be transferred to him. I accept that these conditions for installment payments had reserve the right of disposal of goods on the Defendant until they are fulfilled. Therefore, because the Claimant had not settle the balance of $7,600, to fulfil the $45,000 purchase price, the ownership title remained with the Defendant, all throughout, and even at the time of the sale to the third party. The Defendant was however, prohibited by the contract from disposing the vehicle to any party outside of the contract, except a lawful repudiation of the entire contract, or through other lawful means, including but not limited to, discharging parties of their contractual obligations by agreement.

Breach of Contract

[29]. The Claimant’s conduct in failing to regularly meet the deadlines for the installment payments, under both agreements, cannot be argued as a breach of contract. I agree that, the Claimant had defaulted on his outstanding installment payment, as per the terms of the initial agreement, entered between parties on March 12, 2015. However, the Claimant’s unsteady performance was redeemed, through the creation of the subsequent agreement, giving him a right to perform on varied terms. The initial agreement (MOU) was therefore, varied and superseded with the subsequent agreement (MOU) signed between parties, on September 6, 2015.

[30]. The subsequent agreement, essentially, was made intentionally to alter, and forego the initial terms and to necessitate for the Claimant’s payment of outstanding installment of $7,600 on varied terms. At this point, it is clear that the Defendant has waived his right to assert a breach of contract in regards to the initial agreement.

[31]. Two months’ into the second MOU, the Claimant failed to pay up. So was the Claimant now in breach of contract for not settling the outstanding sum, the second time? Again, I humbly disagree. Clause 1, of the subsequent agreement cannot be read in isolation, but must read in-conjunction with clauses 2, 3, and 4. This would thus, dislodge the avenue for the Defendant to argue breach, on the Claimant’s default of installment payment of $7,600 within one month. I accept that the latter clauses ‘only’ confers the right for the Defendant to repossess the vehicle and garage it until payment is done, and if no payment within one month, for him to use it in whatsoever way to settle the outstanding payment. Therefore, I find that the Claimant’s conduct does not in any way amount to breach of the terms and conditions of both agreements (MOUs).

Stamp duty issue

[32]. Clause 4, of the subsequent agreement, gives permission for the Defendant to repossess the vehicle and do whatever with it to settle the outstanding payment. However, the Claimant argued that, the subsequent agreement (MOU), is inadmissible, as per the law set down in Austree Enterprises Pty Limited v Guo [2012] SBCA 19; SICOA CAC 7 of 2021 (2nd November 2021); because the stamp duty was made after proceedings had commenced before this Court, hence, should not have pleaded in the pleadings. Unfortunately, I do not buy this argument. As apparent from the face of the Claim, and the reply and answer to the Defence and Counter Claim, the Claimant neither raise the issue of stamp duty, nor contest the existence and application of the Subsequent Agreement. Worse yet, counsel had conceded to have the subsequent agreement, exhibited in the sworn statement of the Claimant, and was tendered to Court by consent of the Defence. Hence, leave no avenue for him to now dispute what has already became part of the evidence before the court. If he had intended to dispute it, a proper course was for him to make submission on Vior Dire hearing, on the admissibility of the ‘subsequent agreement’. Unfortunately, that opportunity is defunct. Accordingly, I accept the validity of the subsequent agreement, that it is an uncontested evidence and will rely on to assist my finding. Similar issue was raised in Tito v Lazarus [2021] SBHC 138; HCSI-CC 68 of 2021 (29 October 2021), and Keniapisia, J addressing the issue, stated at paragraph 9 of his ruling on summary judgment:

“...For the defence he filed on 6/7/2021, did not raise stamp duty, as an issue. Hence stamp duty will not become issue for trial in this matter...Court will only proceed to trial, if there are contentious issue between the parties about a material fact. But where the defence does not plead stamp duty issue, does not become a material fact in dispute, to warrant lengthy investigation at trial.”


Discharge by agreement

[33]. The construction of Clauses 3 and 4 of this subsequent agreement (MOU), was made in view to discharge[6] both parties of their contractual obligations by way of ‘accord and satisfaction’[7]. The Defendant accepts the varied obligation, specifically under clause 4, that in the event the Claimant fails to meet its obligation under clause 1, he will repossess and use the vehicle to recover the unpaid $7,600, and thereafter, for him to return the vehicle to the Claimant, so that both parties would fully discharged themselves of their contractual obligations.

Reselling of the vehicle

[34]. From the sequence of events, according to the agreed facts, the Claimant was given at least eight months to settle the outstanding installment payment. At this point, the Claimant had paid $37,400, approximately 83% of the purchase price, a substantial performance on his part. However, unbeknown to him, the Defendant went and sold the vehicle to a third party. The Defendant’s argument, under its defence is that, he has the right to sell the car to a third party, for reason that the Claimant had not faithfully performed his obligation.

[35]. The crucial question is, under the terms of the subsequent agreement, can the Defendant resell the vehicle to a third party? I totally disagree. There is nothing in its provision to effectuate such a performance. In the same way, the reselling of the vehicle to a third party, cannot be argued as an act of repudiation, because there was no breach on the Claimant’s part to justify such a recourse, rather, a flagrant breach to the terms and conditions of the subsequent agreement (MOU) by the Defendant himself. The intention of parties for the discharge by agreement, was for the Defendant to recover the $7,600, and return the vehicle, to give effect to clauses 3 and 4. Instead, he sold the vehicle to a third party.

[36]. Moreover, the words of Clause 4: “...if full payment is not complete, after the one (1) week, cab seller shall have the right to do whatever with the cab in order to settle the outstanding payment” – cannot be construed as conferring a right to resell the vehicle to a third party. And, it cannot be impliedly assumed that, the reselling was the performance of it, for it would defy the purpose of the subsequent agreement and intention of parties, to discharge of themselves of their contractual obligations. In my view, Clause 4 does no more than preserving the right to ‘recover’ the outstanding sum.

[37]. Conversely, it could reasonably be presumed that, the given period for which the Defendant was to recover the outstanding sum, was sufficiently proffered to him by the Claimant. It was he who, after benefitted from the use of vehicle, went and sold it to a third party. In my opinion, as far as the Claimant’s contractual obligation is concerned, his part had been fulfilled, and the sale of vehicle to a third party was a breach to the conditions. The Defendant did not provide any payment to the claimant, for reselling the vehicle to the third party. The Claimant suffered huge detriment for loss of vehicle, and the amount of $37,400.

[38]. Accordingly, I find that the Claimant’s contractual obligations under the subsequent agreement (MOU) had been fulfilled, and the Defendant was in breach of a condition under subsequent agreement (MOU), for reselling the vehicle to a third party, which had led to a wrongful termination of the entire contract. I also accept that the wrongful termination of contract is in itself, a fundamental breach that is ‘repudiatory’.

Defendant’s Counter-Claim

[39]. The Defendant argued that the Claimant had breached the agreement for the sale of the car, as such, the agreement is repudiated and the Defendant reserved the right to retrieve the car and dispose of the same. Unfortunately, as I have alluded to above, I fail to see any breach committed by the Claimant, for it is the Defendant himself who has conceded to the varied terms in the subsequent agreement, and the intention to discharge them of their contractual obligations. In my view, the contract was outrightly breached by the Defendant, and the repudiation and termination were wrongful in nature.

[40]. In addition, the Defendant’s counter-claim of $85,600, for daily hiring on a rate of $400, from March 12, 2015 to October 10, 2015, is unfounded and baseless. There is nothing in the subsequent agreement’s provision to indicate any intention for the Claimant to hire the vehicle. In my reading of both agreements, there is also nothing to restrict the Claimant from using the vehicle for his own benefit, during the period after taking possession of the vehicle. I accept that it was the parties’ intention for the Claimant to have exclusive use and benefit of the vehicle, on condition that he was to pay the installment payments, and after which the legal title was to transfer to him. It is established that the construction of the subsequent agreement to vary the initial one, has relinquishes the Defendant’s right to seek remedy for breach of contract on Claimant’s failure to pay the outstanding installment payment. Accordingly, I find that there is no evidence to support the Defendant’s counter-claim of $85,600, hence, reject it in its entirety.

Conclusion:

[41]. I have had the opportunity to comprehensively assess and consider the evidences by way of sworn statements, tendered before it, and the agreed facts and submissions advanced by Counsels. After much time and consideration on it, I find that: First, for the title of vehicle, it remained with the Defendant, all throughout, and even at the time of the sale to the third party. The Defendant was however, prevented from any sale to third party by virtue of the contract, except a lawful repudiation of the entire contract, or through other lawful means, including but not limited to, discharging parties of their contractual obligations by agreement. There is nothing to justify the sale to the third party. Second, the Claimant’s conduct of failing to pay the installment payments on deadlines were exculpated by the mutual alteration, or variation of the initial agreement, and the introduction of the subsequent agreement (MOUs). As such, no breach on the Claimant’s part. Third, the parties’ intention during the making of the subsequent agreement was to discharge themselves of their contractual obligations by agreement. Therefore, the Defendant cannot rely on sale of vehicle to a third party as a performance of the subsequent agreement. Fourth, it is accepted that the Claimant’s contractual obligations under the subsequent agreement (MOU) had been fulfilled, and the Defendant was in breach of a condition under subsequent agreement (MOU), for reselling the vehicle to a third party, which had led to a wrongful termination of the entire contract. I also accept that the wrongful termination of contract is in itself, a fundamental breach that is ‘repudiatory’. Finally, for the counter-claim, I find that there is no evidence to support the Defendant’s claim of $85,600, hence, reject it in its entirety.

Available remedy for the Claimant

[42]. Having established that the Defendant has fundamentally breached a condition, which also cascaded into a wrongful termination of the contract, it is now open for the court to consider the appropriate available remedy for the Claimant.

[43]. I acknowledge that the matter pertains to a breach of a sale and purchase agreement, by way of installment payment method at a given value. Thus, the amount of monetary loss is quantifiable, or can easily be calculated, and because there is no available option to continue with the contract, due to the breach and wrongful termination; I am persuaded to accept compensation as the viable and pragmatic remedy for the Claimant. This is to put the Claimant back to the position he was, prior to the breach. In view of the Claimant’s fulfilment of his contractual obligation, or that he had paid $37,400 to the Defendant, and had also adhered to Clauses 2, 3, and 4 in releasing the vehicle to the Defendant for the use to recover the $7,600; any compensation must be paid in full at the amount of SBD$45,000.

[44]. In view of that, the Defendant will pay the amount of compensation of SBD$45,000, plus the interest of 5% per annum – from April 8, 2021, which is the date of filing, to March 25, 2022, the date of judgment.[8]

[45]. I intend not to deliberate on the issue of equitable rights and remedies, including unjust enrichment, since I have thoroughly explained the route I have embarked on to reach my finding. Therefore, I resolve to invoke common law remedy of compensation.

Orders:

[1]. Grant Judgment against the Defendant for the sum of $45,000 in compensation, for breach of Contract, and wrongful termination of contract.
[2]. Grant interest of 5% per annum from the date of filing of claim to the date of Judgment.
[3]. Refuse to grant the Defendant’s counter-claim.
[4]. The Defendant will pay the costs of the Claimant on standard basis. Those costs to be taxed at a standard rate if not agreed.

BY THE COURT


-------------------------------------------------
MR. LEONARD B. CHITE
Principal Magistrate


[1] At page 1, paragraph 2 of the “Agreed Facts”, filed on September 10, 2021.
[2] At page 1, paragraph 5 of the “Agreed Facts”, filed on September 10, 2021.
[3] “No document executed in Solomon Islands or relating, wheresoever executed, to any property situated in Solomon Islands or to any matter or thing done or to be done in Solomon Islands, shall, except in criminal proceedings, and in civil proceedings by a Collector to recover any duty or penalty under this Act, be pleaded or given in evidence or admitted to be good, useful or available in law or equity unless it is duly stamped in accordance with the law in force at the time when it was first executed.”

[4] See Exhibit “FS2” of the Sworn Statement of Francis Solo, dated 27th of May 2021
[5] “The underlying consideration of the clause is to protect the security of the seller until such a time as the buyer fully discharges the price.” Romalpa Clause and Transfer of Property, ‘Commercial Law and Practice in the South Pacific’, at pg. 272-273.

[6] See Principle of Discharge by Agreement –Termination by Separate Agreement, ‘Contract Law, Commentaries, Cases and Perspectives’, at page 564-565.
[7] See Butler v Fairclough [1917] HCA 9; (1917) 23 CLR 78

[8] See Rule 17.65 (a) (i) ‘Interest up to Judgment’, of the Solomon Islands Courts (Civil Procedure) Rules 2007

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