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Bartlett v Hai Way International Company Ltd [2010] SBHC 73; HCSI-CC 258 of 2007 (9 November 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS


Civil Claim No. 258 of 2007


BETWEEN


ALEX BARTLETT
Claimant


And


HAI WAY INTERNATIONAL COMPANY Ltd
(Named as Highway International Limited)
First Defendant


And


LEE KWOK KUEN & COMPANY Ltd
Second Defendant


Mr Apaniai for the Claimant
Mr Tegavota for the First Defendant
Mr Tagini P for the Second Defendant


Date of Hearing: 12th October 2010
Date of Judgment: 9th November 2010


Judgment


1. The Claimant in this case, Mr Alex Bartlett, is seeking an order for specific performance (of an agreement) or alternatively damages for breach of contract, against the First Defendant and declarations and orders relating to a plot of land against the Second Defendant. Both defendants are companies. The First Defendant is Hai Way International Company Limited (Hai Way). It is wrongly named in the action as Highway International Limited. No one took the point. The Second Defendant is Lee Kwon Kuen Company Limited (LKK Ltd). The claim revolves around a memorandum of understanding signed by Hai Way and the Claimant and dated 28th February 2007 (the MOU).


2. The main issue in this case can be boiled down to the question, what is the legal effect of the MOU? There are additional issues to consider in relation to LKK Ltd, namely whether the transfer to it of parcel number 192-007-192 was fraudulent and whether it encouraged and assisted Hai Way to breach an agreement, that is the MOU.


3. The facts are largely agreed. Ms Kuo Fung Chi is a Director of Hai Way. She was the only Director resident in Solomon Islands. Hai Way owned plot 192-007-58. The plot was sub-divided on or about 16th October 2001 and it became two plots, 192-007-192 and 192-007-193. There is no dispute about the present ownership of 192-007-193. This case is all about 192-007-192. That plot was surrendered by Hai Way to the Commissioner of Lands (the Commissioner) by deed dated 25th January 2002 and registered on 8th February 2002. The plot was then registered in the Claimants name. A document from the Registrar of Lands [1] suggests this was as a result of a transfer of the land from Hai Way to the Claimant. Clearly that cannot be right as the land had been surrendered to the Commissioner and any transfer had to be between the Commissioner and the Claimant. The true position is set out in documents at pages 86 and 89 of the trial book. There is no dispute that the Claimant payed absolutely nothing to Hai Way for the land.


4. In 2003 [2] Ms Kuo Fung Chi on behalf of Hai Way wrote to the Commissioner making serious allegations against an officer inside the Ministry of Lands, one Mr J Hikimae. The Commissioner instigated an investigation and advised the Claimant by letter of his intent [3]. There is also evidence of criminal proceedings being commenced against the Claimant but that, according to the evidence of the Claimant [4], was not until later. In July 2004 and March 2005 [5] Solicitors instructed by Hai Way wrote to the Claimant and the Commissioner. The letter in March 2005 was addressed to, amongst others, Mr Apaniai and so by March 2005 there is no doubt the Claimant had access to legal advice about the matter.


5. In November 2005 Hai Way entered into a contract for the sale of plot 192-007-193, the undisputed land. The contract is dated 24th November 2005. Although this was a contract primarily for the sale of the undisputed land Clause 12 says,


The Vendor is attempting to regain title to the fixed term estate in Parcel No. 192-007-192. The parties agree that the Vendor will sell that parcel to the purchaser for $300,000.00 as soon as the title has been regained. Once the Vendor has title it will obtain the Commissioner of Lands consent to the transfer and the parties will prepare and sign a transfer document and the Purchaser will pay the sum of $300,00.00 to the Vendor.


I have no evidence about the completion of the sale of 192-007-193 but, as I said in my judgement in this case dated 15th March 2010, no one disputes that the sale has been completed.


6. According to the Claimant's evidence [6] he became aware (or "heard rumours" as he puts it [7]) of criminal investigations involving the registration of 192-007-192 in his name. He says he then decided to cooperate with Hai Way in sorting out any irregularities [8]. Negotiations were entered into between him and the then lawyers advising Hai Way and in February 2007 he (and Ms Kuo Fung Chi for Hai Way) signed the MOU.


7. Parcel No. 192-007-192 was surrendered to the Commissioner and he transferred title to Hai Way. The transfer was registered on 20th March 2007 and on registration Hai Way once again became the (registered) owners of the land, free of any encumbrances except the "usual" reservation in favour of the Commissioner as regards resumption and the obligations which were set out in First Schedule to the deed [9].


8. On 4th March 2007 4 "share partners" wrote to Ms Kuo Fung Chi from Taipei in Taiwan. It is not clear how or when that letter was delivered, it was possibly faxed. Ms Kuo Fung Chi forwarded a copy to the Claimant and attached it to a letter she wrote and which was dated 20th April 2007. What the "share partners" said in their letter was they were not happy with the arrangements set out in the MOU. They did not agree that 192-007-192 should be further sub-divided and a portion transferred to the Claimant. In her oral evidence Ms Fou Fung Chi says she is the "Representative" Director of Hai Way. In contemporaneous correspondence Ms Kuo Fung Chi acknowledges that she is bound by the majority decision of "my 4 major directors" [10] or "my 4 company's share partners" [11]. Probably as a result of the letter from Ms Kuo Fung Chi dated 20th April the Claimant lodged a caveat. It appears to have been registered on 16th May 2007.


9. There then follows some correspondence where Ms Kuo Fung Chi seems to resile from her earlier position and she says the MOU is "still binding on both parties". There are hints at alternative solutions or contingency plans. Despite that apparent change of heart Hai Way, acting through Ms Kuo Fung Chi, signed a transfer of the land to KKK Ltd. On 11th June 2007 KKK Ltd lodged an application with the Registrar of Titles for the registration of the transfer and a notice of dealing was given to the Claimant. The notice is dated 19th June 2007. The Writ of Summons in this matter (this was of course under the "old Rules") was filed on 18th July 2007.


10. All these facts are evident from the trial book. I now turn to the pleadings.


11. The statement of claim filed 18th July 2007 recites much of the above. It sets out, at paragraph 7, what the Claimant sees as the terms of the MOU. It then recites the surrender and transfer to the Commissioner and Hai Way respectively. The next recitals concern the transfer from Hai Way to KKK Ltd. There is an allegation of fraud on the part of KKK Ltd, namely the lodging of a transfer instrument "knowing (it) had not been duly executed". The Claims against the First Defendant, Hai Way, are for specific performance of the MOU or damages for breach of contract. As against the Second Defendant, KKK Ltd, the Claim is for a declaration that the transfer instrument between Hai Way and KKK Ltd in respect of 192-007-192 "is invalid, null and void". A further declaration is sought for the application to Register the transfer to be permanently stayed.


12. A Defence was filed by KKK Ltd on 30th March 2009. Although a Memorandum of Appearance was filed on 18th September 2007 it is not clear why a defence was allowed to be filed so late. Be that as it may there is a defence. It basically attacks the legality of the MOU. It does not answer the allegations of fraud.


13. The reply to the defence of KKK Ltd appears, on the face of it, to have been filed nearly a year later and simply "joins issue".


14. If the defence of KKK Ltd was late, the defence filed by Hai Way was even later. It was filed on 15th April 2010. It recites the fraud and duress which resulted in the surrender to the Commissioner in more detail. It makes serious allegations of criminality on the part of the Claimant or his agents. It also raises a point which was not argued in the trial and it is a point I shall return to later. On 1st September this year I refused an application by Hai Way for leave to file an amended defence and cross claim. The defence filed on 15th April stands as the defence of the First Defendant.


15. I propose to deal with this case solely on the paperwork. I will do so for the simple reason that I cannot have any confidence in the oral evidence presented at trial.


16. I found the Claimant to be a disingenuous witness. In his statement filed 19th August 2010, introduced as evidence in chief, he says (at paragraph 17) that a civil suit had been instituted by Hai Way prior to the MOU being signed. That is a reference to Civil Case 450 of 2007. That case was not filed until November 2007, some 9 months after the MOU was signed. In answer to questions put to him in cross examination the Claimant avoided giving answers about his role or involvement with the Malaita Eagle Force (MEF). He said he was merely a signatory to the Townsville Peace Agreement. He stated that the MEF disbanded in 2000, a view which can, at best, be described as one being seen through rose tinted spectacles. He said at one stage that he could not remember if he was Minister of the Crown round about the time of the surrender by Hai Way to the Commissioner. He changed that answer to, "Yes he was a Minister but not the Minister of Lands". He said he could not answer for anything J Hikimae may have done or said and that as far as he was concerned Hikimae was just doing what a Civil Servant usually did. He was asked in re-examination whether Hikimae had ever written to or verbally contacted him. He replied that it was, "All in his affidavit". There are references to Hikimae at paragraphs 4 and 5 of the sworn statement filed 19th August 2010. He does not, perhaps wisely, seek to explain the note or letter from Hikimae dated 21st October 2003 [12] which seems to disclose a slightly closer relationship.


17. He said (in re-examination) his main reason for signing the MOU was to facilitate the sub-division of the plot and to give her (Ms Fuo Kung Chi) a piece of land. In cross examination he said that the allegations of fraud and the agreement to cease all endeavours to bring them before the court were "not a major part" of the MOU. I do not accept his answers on those issues as being credible.


18. The Claimant also makes very light of the fact he paid nothing to Hai Way for the substantial plot of land he obtained (via the Commissioner). He was, "Just the beneficiary of property".


19. Ms Fuo Kung Chi, as witness for the First Defendant, was equally unsatisfactory. I accept Ms Kuo Fung Chi had been coerced when she agreed to surrender the land to the Commissioner. I have no doubt that she genuinely feared for her safety. However, later on she worked closely with Mr Lee to get the land back from the Claimant and then to sell it to KKK Ltd. In 2004 she agreed with KKK Ltd to sell both 192-007-192 and 192-007-193 to them for US$300,000 (about 2 million SBD). She signed a contract for the sale of both plots in November 2005. That contract seems to have superseded a 2004 written agreement. She then signed the MOU. All through this sorry saga she has been accepting money from KKK Ltd, to help fund her court case, to pay for trips to Taiwan and generally, "to support the land". She agreed with KKK Ltd to disguise the true amount of consideration for the land in order to avoid stamp duty. None of this artifice gives me any encouragement to believe her evidence is wholly truthful.


20. Neither can Mr Lee for the Second Defendant, KKK Ltd, escape the taint of duplicity. Having said that, I believe he was the most honest of the witnesses. He accepted that the purchase price under the contract signed in November 2005 had been understated to reduce stamp duty. He agreed that he had worked with Ms Kuo Fung Chi to get the land back so that his Company could purchase it. He freely admitted that he (and KKK Ltd) acted in the way they did not for any altruistic reason but because he, and the company, wanted to purchase the land, that is 192-007-192 and 192-007-193. Whilst his motives may be questioned, it is difficult to fault his candour.


21. For the reasons set out above and as indicated earlier, I am not prepared to rely on the oral evidence. In any event the documentation speaks for itself. I can now turn to the nub of this case, the MOU.


22. The MOU is nothing more nothing less than a written agreement. It must be looked at just as any other agreement. Calling it a Memorandum of Understanding gives it no more kudos than any other agreement. Its legal effect can be discerned from its terms. If they are unclear the agreement will be unenforceable. Alternatively, if there are obvious inferences that can be drawn from the agreement or the intention of the parties is clear, then, "...greater regard is to be had to the clear intention of the parties than to any particular words which may have been used in the expression of their intent" [13]. It is therefore necessary to examine the MOU in order to resolve the fundamental issue in this case and to discern what the MOU is. It clearly is not a contract for the sale of land. Read as a whole, it is an agreement between two parties to resolve an issue affecting them both. The two parties are named as Hai Way International Company Ltd, the First Defendant and Alex Bartlett, the Claimant. What is obvious from the outset is the Second Defendant is not a party to the agreement and cannot be bound by any of its terms. In plain English, the agreement has nothing to do with KKK Ltd.


23. There is one mystery as regards the parties. That is their description as complainant and respondent. No evidence has been given or reason put forward for those descriptions and it is pointless to speculate whether the terms were used legally (as in complainant in a criminal case) or figuratively (as in someone who has complained about another's behaviour).


24. The basis of the agreement, the reasons why the parties entered into it, are set out in the recitals. The first makes it clear Hai Way and the Claimant were aware of allegations of fraud against both the Claimant and others in respect of the surrender and transfer of 192-007-192. The second recital is an acknowledgement by the Claimant that all was not well with his title and that written admissions by a lands officer (presumably Hikimae but nowhere is it so stated) have discredited his legal claim to the land. The third acknowledges, as a result of the above, Hai Way could start legal proceedings for rectification of the title and is tacit acceptance that Hai Way has a strong case. The final recital recognises both parties want to settle the matter.


25. The operative parts of the agreement then follow. By clause 1 Hai Way agrees not to pursue its claim through the courts. Given the acknowledgement by the Claimant that Hai Way had a good case, the latter's promise not to sue for rectification constitutes adequate consideration[14]. The promise not to pursue the matter through the courts was what the Claimant was bargaining for. At this point it is necessary to consider an issue raised in Hai Way's defence but not argued before me. I alluded to it earlier [15]. A contract or agreement that interferes with the course of justice is against public policy and therefore void. In Collins v. Blantern [16] an agreement not to appear and give evidence at a criminal trial was held to be against public policy. That is not part of the agreement in this case. What Hai Way agrees to do is, "cease all its endeavours to bring it before the court". There is no reference in the MOU to criminal proceedings, recital 3 specifically mentions a civil suit. If there had been an agreement to halt criminal proceedings where a statement had already been made to the Police then the agreement is not only void but the act of agreeing to halt proceedings in itself would probably constitute the common law offence of attempting to pervert the course of justice [17]. Leaving aside the question of whether there is such a common law offence in Solomon Islands there is nothing in the MOU to show that Hai Way was going to halt criminal proceedings. It would not be against public policy for Hai Way to compromise its civil claim. As I have said, the issue was not argued before me, but as it was raised in Hai Way's defence I feel I should at least consider it. I have now done so.


26. Clause 2 creates a condition precedent. Title to the land must be transferred to Hai Way otherwise Hai Way is free to pursue its legal remedies. I would also suggest the provision means that the condition precedent has to be satisfied or else the whole agreement is void. In any event the Claimant surrendered his title to the Commissioner who then transferred it to Hai Way. The condition was satisfied. Clause 3 can be read with Clause 2 as it sets out what is expected of both parties with regard to Clause 2.


27. Clauses 4 and 5 can be read together. The provisions they contain are at the heart of this case. These are the terms which have caused the parties to litigate. What Hai Way promises to do in Clause 4 is, "in principle to partition the land subsequent to the rectification and allot to the respondent [meaning the Claimant in this case] a portion thereof". I have not been able to find any case in contract law where the phrase "in principle" has been given a particular meaning. It is well settled that, "Words are to be construed according to their strict and primary acceptation, unless from the context of the instrument, and the intention of the parties to be collected from it, they appear to be used in a different sense, or unless, in their strict sense, they are incapable of being carried into effect" [18]. There is nothing which can "be collected " from the MOU to show the parties did not intend the phrase "in principle" to have its natural meaning. What is evident from the MOU in general and Clause 5 in particular is that no portion of land had, at that time, been identified and any that was to be allotted (to the Claimant) was the subject of future negotiation. Taken together, Clauses 4 and 5 can only mean, so far as a transfer of land from Hai Way to the Claimant is concerned, the parties reached an agreement in principle only.


28. There was no complete or completed agreement that Hai Way would transfer land to the Claimant. The parties agreed in theory or in essence that there would be a transfer of land but the details were left unsettled. The parties agreed to negotiate a transfer at a later date and the details were left open for those negotiations to settle. That much is abundantly clear from Clause 5 where the parties agree that the portion of land "...shall be identified by way of mutual negotiation and agreement (my emphasis) by both parties at a later date...". It has been said the law," does not recognise a contract to enter into a contract" [19]. That is one way of looking at what the MOU is but it would be more accurate to say the parties completed a contract to negotiate. Following the reasoning in Chillingworth & Esche [20] and Hillas & Co Ltd v. Arcos Ltd [21], that seems to me what happened in this case.


29. A contract to negotiate has been held as too uncertain to be enforced [22]. It would have been different if the parties had agreed on most of the detailed terms of the future agreement and had contracted to negotiate on those terms but subject to fixing some other term, say for example the date. Morton v Morton [23] was a case where an agreement was made to enter into another agreement "containing the following clauses". The initial agreement was held to be a binding contract. That is not what happened in this case. All Hai Way and the Claimant contracted to do by way of the MOU was negotiate and try and reach agreement. The agreement, the MOU, is void for uncertainty and cannot be enforced.


30. Even if I am wrong and the contract is enforceable the court book contains enough evidence to show that Hai Way had in any event done all that was required of it under the MOU. Ms Kuo Fung Chi certainly had ostensible, even actual, authority to enter into a contract with the Claimant on Hai Way's behalf. She did so and negotiated with the Claimant about the transfer of land. However, as she acknowledges, there were other Directors who had a say in the Company's business and what should happen to its property (see paragraph 8 above). There is ample evidence to show, when either she reported to them or they became aware of the MOU, the other Directors decided not to proceed with the transfer of any land to the Claimant. However, in considering the question of what to transfer and/or whether to transfer, the Directors, including Ms Kuo Fung Chi, satisfied any obligation upon the Company that might be imposed by the MOU.


31. In view of the above the claim against Hai Way must fail in its entirety.


32. As for the claim against KKK Ltd, that too must fail in its entirety. There is no evidence to suggest the Transfer Deed [24] dated 17th May 2007 was not properly executed. All Ms Kuo Fung Chi has said is that she signed the transfer in blank. There is no suggestion that she did not intend the transfer to proceed. She has not said that neither she nor any of the other directors wanted to transfer 192-007-192 to KKK Ltd. All Ms Kuo Fung Chi was, or is, concerned about is that the full price agreed in the possibly somewhat dubious original deal (in 2004) with KKK Ltd has not been paid. Of course, the only reason it has not been paid in full is because the transfer has not been completed.


33. As for the claim that KKK Ltd "encouraged and assisted the First Defendant [Hai Way] to break the agreement", the evidence does not support that. What KKK Ltd were doing was protecting their rights under (clause 12) of the contract they entered into on 24th November 2005. They were perfectly entitled to do that. Their agreement with Hai Way was first in time. In any event, if, as I have found, the MOU is unenforceable it cannot broken.


34. I dismiss both claims against the First Defendant Hai Way and both claims against the Second Defendant KKK Ltd. The Claimant will pay the costs of both defendants. Such costs to be taxed if not agree.


35. I also direct that any caveats entered either by the Claimant or the First Defendant in respect of parcel 192-007-192 be discharged or vacated and the transfer to KKK Ltd be registered.


36. I will also direct that a copy of this judgment is placed on civil case file 450 of 2007. In view of the judgment in this case I strike out the claim in that case. I would only add that it is to be regretted that civil case 450 of 2007 was allowed to be filed in the first place.


Chetwynd J


[1] See page 99 of the trial book
[2] See page 164 of the trial book
[3] See page 171 of the trial book
[4] See sworn statement of Alex Bartlett filed on 19th August 2010
[5] See pages 102 and 104 of the trial book
[6] Paragraph 16 sworn statement filed 19th August 2010
[7] Paragraph 16 ibid
[8] Paragraph 18 ibid
[9] See page 276 of the trial book
[10] Letter dated 20th April at page 193 of the trial book
[11] Letter dated 23 May to the Commissioner at page 199 of the trial book
[12] See page 169 of the trial book
[13] S>A Maritime et Commerciale of Geneva v. Anglo-Iranian Oil Co. Ltd [1953] 1 W.L.R. 1379
[14] Miles v. New Zealand Alford Estate Co (1886) 32 Ch.D 267 and Alliance Bank v. Broom (1864) 2 Dr. & Sm. 289
[15] See paragraph 14 above
[16] (1767) 2 Wils.341
[17] R v. Panayiotou [1973] 1 W.L.R. 1032
[18] Mallan v. May [1844] EngR 1044; (1844) 13 M & W. 511 and Tielens v. Hooper(1850) 5 Exch. 830
[19] Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch.284, 288
[20] [1924] 1 Ch.97
[21] (1932) 147 L.T. 503
[22] Courtney & Fairbairn Ltd v. Tolani Bros. Hotels Ltd [1975] 1 W.L.R. 297
[23] [1942] 2 All E.R. 273
[24] See Exhibit HW 16 to the sworn statement of Kuo Fung Chi filed 24th September 2010


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