Russo & Russo v International Finance Trust Co Ltd [1998] VUSC 60; Civil Case 151 of 1996 (29 September 1998)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

CIVIL JURISDICTION

CIVIL CASE No. 151 OF 1996

BETWEEN:

Mr NICK RUSSO and Mrs CAROL RUSSO
of 37 Studley Road, Ivanhoe Victoria, Australia.
Plaintiffs/Defendants in the Counter-Claim

AND:

INTERNATIONAL FINANCE TRUST COMPANY LIMITED
of C/- Moore Stephens, Moore Stephens House, Kumul Highway, Port Vila,
Efate in the Republic of Vanuatu.
Defendant/Plaintiff in the Counter-Claim

Coram: Acting Chief Justice

Counsel: Mr Hurley for the Plaintiffs/Defendants in the Counter-Claim.
Mr Juris Ozols for the Defendant/Plaintiff in the Counter-Claim.

PER">PRELIMINARY RULING

This is a Counter-Claim seeking for recovery of fees for the professional services supplied.

For the of simplicity, the Defendant International Finance Trust Cost Company Limited (IFTCL) in the principal action becomes the Plaintiff and the Plaintiffs become the Defendants in this counter-claim action.

The total amount sought to recover by the Plaintiff is US$8,872.50 and interests on that sum.

The hearing began on Friday 25th September, 1998 and was adjourned to Monday 28th September, 1998 at 2 o’clock p.m. At that time, upon hearing both counsels on behalf of the interested parties, the Court ordered that the 3 legal issues raised by Mr Hurley ought to be resolved by the Court first before any factual issues can be determined by the Court or be referred to a referee.

The 3 legal issues raised are as follows:

1. Whether the Plaintiff/I. F. T. C. Ltd is entitled to charge at all for the period prior to the company Management Agreement was entered into by the parties on 23rd April 1996.

2. Whether the Plaintiff/I. F. T. C. Ltd is entitled to charge at all in the situation where Mr and Mrs Russo/the Defendants have accepted a quote from Moore Stephens office in Hong Kong, which was passed on to them by I. F. T. C. Ltd/Plaintiff.

3. Whether the Plaintiff/I. F. T. C. Ltd is entitled to charge after the dispute arose, that is, after the Defendants received invoices of I. F. T. C. Ltd/Plaintiff.

I will now deal with the 3 issues in turn.

Issue 1: Is the Plaintiff entitled to charge at all for the period prior to the Company Agreement was entered into by the Parties on 23rd April 1996?

The answer to this question depends on the intention of the parties which must be gathered from the terms of agreement between the parties.

By an agreement in writing made between the Plaintiff and the Defendants dated on or about 23rd April 19967 and known as Company Management Agreement ("CMA"), it is agreed, inter alia, between the parties that:

In Clause 2: Services and Instructions.

"2. (i) IFTC hereby agrees to provide the following administration and management services (hereinafter called "Statutory Services") by itself or through any nominee in accordance with the instructions given by the Owners or Authorised Person:

(a) ...

(ii) If requested by the Owners or Authorised Person, IFTCL will provide "Additional Services" including but not limited to:

(a) ...

...

(e) such other services as may be requested by the Owners or Authorised Persons.

Clause 3: Instructions from Owners.

"3. (i) Instructions shall normally be given in writing, signed by the Owners or Authorised Person, or in such manner as may be agreed between the parties hereto including, but without limitation, by letter, facsimile, telex, cable or similar method ... and such instructions may be accepted by IFTCL in the same manner.

..."

Clause 4: Fees

"4. (i) IFTCL or any nominee shall be entitled to charge and the owners hereby agree to pay the fees quoted by IFTCL’s Fees Schedule from time to time for statutory services, and on a time spent basis for such additional services as may be agreed.

..."

It is submitted for the Defendants that there is no agreement between the parties as to the rate to be charged or method of charging or what services would be charged.

It is pointed out that prior to the Agreement of 23rd April 1996, there was no agreement reached as to additional services. The agreement reached by the parties related to statutory services and the Defendants paid US$2.00 on the basis of the Plaintiff’s fee schedule provided to the Defendants.

It is then urged upon this Court to rule that the Court can only look at the agreement of 23rd April 1996 which is the starting point of any dealing between the parties but not prior dealings. It is also stated that there is no issue as to whether the parties had entered into relation and such alleged claim prior to April 1996 cannot be characterised as "Additional Services".

It is contented for the Plaintiff/IFTCL that there are prior dealings with the parties. Mr Russo sent various documents to Mr Robert Agius of Moore Stephens (Vanuatu) dealing with Moore Stephens of Hong Kong.

It is stressed that there is an agreement between the Defendants and the Plaintiff company as at the beginning of February 1996. The agreement is that the Plaintiff incorporates the Defendants company for a fixed fee and the Defendants paid the price.

It is then stated that if after Mr Russo/Defendants paid the price and asked the company to do additional work, he will be appropriately charged on the basis of local rate schedule. It is put before the Court that that is the correct interpretation of Clause 4 (i) of the Agreement.

In my view that is not the correct interpretation of Clause 4(i) of the Agreement in regards to "Additional Services" since as per Clause 4 (i) of the agreement, IFTCL or any nominee shall be entitled to charge and the owners agree to pay on a time spent basis for such addition services as may be agreed. (emphasis added).

This means, in my view, that there must be prior agreement between the parties as to such additional services by way of instructions from the owners as provided under Clause 3 (i) of the agreement. Clause 3 (i) ought to be interpreted strictly as meaning instructions provided by the owners. This is to be understood in view of the reading of Clause 4 (i) of the agreement which makes reference only to "Owners" and not otherwise.

Further in this instance case, there is nothing in the counter-claim pleadings which show that it is the intention of the parties to include as terms of the agreement, prior dealings between the interested parties.

I therefore, accept that the starting point of issue must be the executed agreement of 23rd April 1996 between the parties.

The answer to Issue 1 is in the negative.

Issue 2: Is the Plaintiff entitled to charge at all in the situation where Mr and Mrs Russo/the Defendants have accepted the quote from Moore Stephens office in Hong Kong, which was passed on to them by IFTCL/Plaintiff?

It is submitted in substance for the Defendants that they had accepted a quote from Moore Stephens office in Hong Kong. they were bound by its terms and Moore Stephens Office in Hong Kong rendered its charges to IFTCL in Vila (Vanuatu). The relationship between Moore Stephens of Hong Kong and IFTCL was that Moore Stephens of Hong Kong acted as principal and IFTCL acted as the agent.

It is said notwithstanding the amount contained in the quote, an amount of HK$29,437 is exceeding the quote.

It is further put for the Defendants that the scott schedule indicate that the work done goes back to Hong Kong.

It is contended that Russo had no other agreement with Moore Stephens in Hong Kong. The only agreement they have is between Russo and the IFTCL. The beneficial request sought was for the Quote.

They submitted that in the absence of any other agreement in relation to additional services, they are entitled to rely upon the functions as set out in the quote and if extra-charges were incurred, it is a matter between IFTCL and Moore Stephens office in Hong Kong.

It is submitted for the Plaintiff/IFTCL that they are not claiming any fees from Moore Stephen office in Hong Kong. But they are claiming for the time spent for additional services done at the request of the Defendants.

In my view, the Defendant’s submissions is to be accepted for the same reasons as provided under Issue 1. Under Issue 2, the ruling is that the services provided by the Plaintiff/IFTCL (Vanuatu) shall be built into the particular quoting agreement.

The answer to Issue 2 is: No.

Issue 3: Is the Plaintiff/IFTCL entitled to charge after the dispute arose, that is, after Russo received invoices of IFTCL?

The answer to this question is obviously: No.

If there is dispute between the parties, then any charge made after the dispute cannot be characterised as "Additional Services" since the charge is calculated on a time spent basis for such additional services as may be agreed. (see Clause 4 (i) of the Agreement). This is not the case here).

p>Dated at Port Virt Vila, this 29th day of September 1998.

Vincent LUNABEK
Acting Justice

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