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AfricanHills Ltd v Bred (Vanuatu) Ltd [2024] SBCA 14; SICOA-CAC 60 of 2023 (25 March 2024)

IN THE SOLOMON ISLANDS COURT OF APPEAL

JUDGMENT OF THE COURT

1. This is an application for leave to appeal out of time pursuant to rule 9(1) of the Court of Appeal Rules against the judgment of the court below dated 1^st November 2023.
2. The orders of the court below pertain to the refusal of the Court to grant leave to the Applicants to amend their defence and counter-claim filed on 3^rd April 2023.

Brief background of the case.

3. On the 14^th March 2023, a Category A Claim was filed by the Claimant/ Respondent. The claim was for payment of the sum of $3,775,850.44 plus interest at the Claimant’s contractual rate from 1^st March 2023, and an order for the sale of the Second Defendant’s Fixed-Term Estates in Parcel Nos.: 191-008-122 and 191-052-593, plus costs.
4. The Claim is made pursuant to two loans and an overdraft facility on a cheque account that had been taken out by the First Defendant.
5. Those loan accounts and overdraft facility were secured by the issue of two charges over two properties owned by the Second Defendant.
6. On or about the 18^th October 2018, the Defendants executed a guarantee to secure the payments of the debts due to the Claimant.
7. The claim has arisen following the failure of the Defendants to repay the moneys owing as agreed to with the Claimant, which resulted in a letter of demand having to be issued and served on or about the 14^th September 2022.

The Defence

8. Two grounds are relied on in essence in the defence. The first being pleading ignorance to the loan agreements and secondly, that the requirement to provide charges to secure the loans being unfair and unreasonable.

Counter-claim.

9. The counter-claim in essence also re-states the defence raised that the loan agreement admitted to in the Statement of Claim is inter alia, voidable.

Application to amend Defence and Counter-Claim

10. An application to amend the defence and counter-claim was filed on the 25^th September 2023. It was supported by the sworn statement of Emeka Onyenso filed on the same date and a copy of the proposed amended defence and counter-claim attached.
11. The application however was opposed by the Respondent/ Claimant and a hearing convened.

Rules 5.34 – 5.36 of the Solomon Islands Courts (Civil Procedure) Rules 2007 (“the Rules”),

12. Rules 5.34 – 5.36 provides for the amendment of the Statement of Claim as follows:
    • “5.34 A party may amend a statement of case to:
      1. better identify the issues between the parties; or
      2. correct a mistake or defect; or
      100. provide better facts about each issue.
    • 5.35 The amendment may only be made with the leave of the court or the consent of the parties.
    • 5.36 In deciding whether to allow an amendment, the court must have regard to whether another party would be prejudiced in a way that cannot be remedied by:
      • (a) awarding costs; or
      • (b) extending the time for anything to be done; or
      • (c) adjourning the proceedings.
13. The essential elements for consideration for amendment under the rules are:
    • (a) To better identify the issues between the parties; or
    • (b) correct a mistake or defect; or
    • (c) provide better facts about each issue.
14. The objection by the Respondent to the application for amendment is fairly straightforward on the grounds that the essential facts pleaded for the establishment of the claim against the Applicant/ Defendant have not been disputed. Those being that:
    1. The First and Second Defendants agreed that two loan accounts and an overdraft facility were taken out by them.
    2. The Defendants admitted that they would repay the balance of the accounts outstanding and on demand together with interest as agreed.
    3. The Defendants admitted they entered into a first charge with the Claimants over the fixed-term estate in Parcel No.: 191-052-593 to the Claimant to secure the repayment of the sum of money up to $2,120,000.00 together with interest. It is important to note that this is a normal arrangement to secure or guarantee the repayment of the moneys borrowed in the event the borrower defaults.
    4. The Defendants admitted that they entered into a charge with the Claimants over a second property in fixed-term estate parcel no. 191-008-122 to the Claimant to secure the repayment of moneys up to $1,500,000.00 together with interest thereon. Again this is a normal arrangement to secure or guarantee repayment of the loan moneys etc. in the event of a default. There is nothing unusual or irregular about such arrangements and the Applicant/ Defendant should have been aware of these standard requirements by Banks before even venturing out into a loan arrangement.
    5. The Defendants admitted that a guarantee was taken out dated 18^th October 2018 to guarantee the debts due to the Claimant.
15. In her decision, at paragraphs 5 and 6, the learned Judge formed the view that the proposed amended defence and counter-claim merely restated what was already agreed to in the defence or counter-claim, and did not set out any other facts to better identify the issues between the parties, correct a mistake or defect, or provide better facts about each issue. In the light of the admissions by the Defendants, the learned judge formed the view that the essential elements of the Claim had been conceded and that there was nothing further required other than during interrogatories stage, when further facts and evidence can be addressed regarding issues raised in the defence and counter-claim. She declined to grant leave on that basis.

Is there any merits raised in the application for leave?

16. In order for leave to be granted in an application for appeal of an interlocutory order or direction it is necessary that some merit^[1] is shown so that there is reasonable prospect of success of the appeal.
17. I have had the opportunity to review the defence and counter-claim raised and the proposed amendments and note that there is nothing ambiguous or unclear about what is alleged in the defence and the counter-claim already filed.
18. Those are matters which can be better articulated during discovery and interrogatories stage. I am not satisfied that the proposed amendments will better identify the issues or facts as already set out in the defence and counter-claim.
19. With the substance of the claim in essence admitted to, it is difficult to conceive how a valid and legal agreement voluntarily entered into can then be sought to be denied when the benefits of the agreement had been accepted and implemented. I am not satisfied any error in law or fact has been sufficiently demonstrated in this application for leave to appeal.
20. The matter should rightly be progressed on to the next stage for hearing and not unnecessarily delayed.

Decision.

21. The application for leave to appeal should be dismissed with costs.

Orders of the Court:

1. Refuse leave to appeal out of time herewith.
2. The Respondents (Claimants) to have their costs as ordered by the Court below.

Sir Albert R. Palmer CBE
Judge of Appeal.

^[1] Price Waterhouse v. Reef Pacific Trading Ltd [1996] SBCA 5; CASI-CAC 5 of 1995 (29 April 1996).