Bigue v Latu [2011] TOSC 7; CV 148 of 2009 (1 December 2011)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

CV 148 of 2009

BETWEEN:

LIN BIGUE
PLAINTIFF

AND

SELINA LATU
FIRST DEFENDANT

POLICE (OFFICER) NAPA'A
SECOND DEFENDANT

KINGDOM OF TONGA
THIRD DEFENDANT

K. Piukala for the Plaintiff
First Defendant in person
A.Kefu (Solicitor General) for the Second & Third Defendants.

JUDGMENT

[1] The plaintiff is a Chinese national who told me that he had a visa to work in Tonga expiring in November 2011. He has never, at any material time, had a business license issued to him under the provisions of the Business License Act 2002.

[2] The First Defendant is the owner of shop premises at Nukunuku. She is a Tongan national who told me that she held a business license to operate the shop until 2009.

[3] In May 2006 the Plaintiff and the First Defendant entered into a tenancy agreement (Exhibit P1). Under the agreement the First Defendant agreed to let the shop to the Plaintiff. Paragraph 6 of the agreement states:

"6 – the [First Defendant] will help the [Plaintiff] get the permission from the government all the necessary paper to let the tenant running the store and the [Plaintiff] should pay all the charges during the first two and half years period of their agreement."

[4] Under Paragraph 3 of the same agreement the Plaintiff was:

"allowed to make renovation and any addition to the store, also build a room and park one vehicle inside the premise at any time upon signing of this agreement."

[5] Under paragraph 2 of the same agreement it was agreed that upon signing, the Plaintiff would pay the Defendant a lump sum of TOP $15,000 for the first 2 ½ years rent and thereafter would pay rent at the rate of TOP $600 per month.

[6] The Plaintiff told me that he moved into the shop shortly after signing the agreement, that he paid the TOP $15,000 and that he renovated the shop and built some living quarters at the rear.

[7] On 29 December 2006 a second agreement (Exhibit P2) was entered into. It appears that this second agreement was intended to complement the first agreement, not replace it. Relevantly, the sum of TOP$21,600 is substituted for the previous sum of TOP$15,000 and two paragraphs 4 and 9 were added. Paragraph 4 states:

"the tenant pays $100 every month to the landlord for using his name to license the store".

Paragraph 9 states:

"If the tenant happens to do something wrong, the business will be closed until the problem is solved. When the problem is solved, then the business opens again."

[8] It appears that the arrangement worked satisfactorily until about April 2009. The Plaintiff told me that he had paid the TOP $21,600 to the Defendant. He also told me that he had spent TOP $88,000 on renovating the shop and building on a dwelling. He did not know why only TOP$26,000 was claimed in paragraph 7 (iv) of the Statement of Claim.

[9] The plaintiff told me that in April 2009 he made a complaint to a lawyer about an invoice which he received from the Commissioner of Inland Revenue. He complained that he had paid the Plaintiff a total of TOP$ 2075 for tax for the years 2006 and 2007 but that apparently the First Defendant had not forwarded this sum to the Commissioner. After he made the complaint to the lawyer there was an exchange of correspondence between the parties. On 29 April 2009 the First Defendant came to the shop and told him to vacate.

[10] The Plaintiff told me that when he refused to vacate, pointing out that he had an agreement, had spent substantial sums on the premises and had done nothing wrong, the First Defendant telephoned for the police. The Second Defendant arrived at the shop shortly thereafter and he was forced to vacate.

[11] The Plaintiff's claim is for damages for breach of contract by the First Defendant. He also claims general damages in tort against the Second Defendant police officer and against his employer, The Kingdom.

[12] Much of the evidence was directed at the questions of whether the Plaintiff or the First Defendant had breached the agreement, whether the Plaintiff's wife had indeed threatened the Second Defendant with a shovel, whether the Second Defendant (who is related to the First Defendant by marriage) was acting as her agent when the Plaintiff was forced to leave the shop, or whether he was only there to keep the peace. The question which however emerged and upon which I called for submissions from counsel, was whether the agreement between the Plaintiff and the First Defendant was, in fact, illegal.

[13] In Holman v Johnson [1775] EngR 58; (1775) 1 Cowp. 341, 343 Lord Mansfield explained that:

"The principle of public policy is this: ex dolo malo non oritur actio (out of fraud no action arises). No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If, from the plaintiff's own stating or otherwise the cause of action appears to arise ex turpi causa (out of an illegal or immoral consideration) or the transgression of a positive law of this country [emphasis added] then the court says he has no right to be assisted. It is upon the ground the court goes; not for the sake of the defendant but because they will not lend their aid to such a plaintiff".

[14] The "positive law" of Tonga relevant to this case is the Business Licenses Act 23/02. Section 4 states that:

"Subject to this Act, every foreign business person in the Kingdom carrying on a business activity shall hold a valid business license"; and

Section 13 states that:

"A business license is not transferable"; and

Section 19 states that:

"Any person who carries on a business activity without a business license commits an offence."

[15] In my opinion the circumstances in this case are similar to those in Levy v Yates [1838] EngR 567; (1838) 8 A&E 129 in which the court refused to enforce a contract since "the agreement could not be carried into effect without a contravention of the law", that is, without the grant of license. In the present case the Plaintiff carried on business without having a license "using [The Defendant's] name to license the store" see paragraph 4 of Exhibit P2".

[16] In my view paragraph 4 of the second agreement, which effectively replaced paragraph 6 of the first agreement in December 2006 was an agreement to evade the provisions of the Business Licenses Act 2002 and as such was illegal.

[17] Mr. Piukala suggested that the license arrangement between the parties could somehow be severed. I do not agree; in my opinion without the aim of evading the requirement for the Plaintiff to be licensed there would have been little purpose in entering into the agreement at all.

[18] Having reached the conclusion that the contract was unenforceable, it follows that no remedies arise from its breach. I have some sympathy for the Plaintiff who made a very poor investment. I was not impressed with the First Defendant who seemed to have difficulty keeping to the truth. I was also inclined to favor the Plaintiffs account of what happened on 29 April 2009. But neither sympathy nor merit affect the rule that in pari delicto potior est conditio defendentis (in a case of mutual fault the circumstances of the defendant are better.)

[19] There will be judgment for the Defendants.

CHIEF JUSTICE

1 DECEMBER 2011