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In re the Estate of Sunny Wun San Tong [1995] SBHC 1; HCSI-CC 032 of 1991 (2 March 1995)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No: 32 of 1991

(Palmer J.)

T. Kama for Co-AdministratorsK. Milte for Madalene Tong

PALMER J: The Co-Admiators apply by s by summons filed on the 13th of January, 1995 for orders from this Court to sanction certain agreements entered into by the Co-Administrators. These were in respect of the property in fixed-term estate Parcel No 191-034-119 (herein-after known as the "East Kola Ridge house"), and land in l No. 191-0191-034-47(Vacant land).

In support, the Administrators have filed an affidavit executed on the 23rd of February, 1995, and a report, cning a summary of the Estate's position as on the 22nd of F of February, 1995.

The application for orders to sanction the above agreements first came before this Court on the 23rd of February, 1995. The matter was further adjourned at the request of the Applicant pending outcome of the payment of the remaining amount of the purchase price of the shares in Cape Esperance Company Ltd. by Esthepia International Limited. As at the close of business on the 28th of February, 1995, the remainder of USD817,500.00 had not been received by the Co-Administrators.

The Co-Administrators now seek the Court's sanction for the sale of those two properties to be proceeded with.

Both properties had been tendered out, and the highest bids received have been processed for approval by the Court. For the East Kola Ridge house, the highest bid was for SBD320,000.00, offered by Choiseul Bay Association Inc. The highest bid for the vacant land was SBD31,000.00 by Kenneth Charles Ferris

There has been a submission by Mr. Milte that there should be a re-valuation of the above properties. No evidence or submission however has been produced to show why that should be necessary. The valuation and tender documents are available for inspection at the Offices of Mr. Emery, and unless it can be shown that there is something drastically wrong or improper, it is unnecessary in my view to order a re-valuation for the sake of it, as it will entail in my view unnecessary costs. However, that does not prevent Madalene Tong from carrying out a valuation, but that will be at her own costs, and maybe, if it can be satisfactorily shown that the valuation obtained by the Administrators had been grossly under-valued, or that there had been improper dealing, then the Court may consider re-imbursing her costs.

In the report submitted to Court on the 23rd of February, 1995, by the Administrators, the available cash at the Bank is SBD40,980.00. This is the only amount that is available for payment of immediate expenses.

The moneys received from the rental of the lower and upper house at Kola Ridge are all committed as shown in the summary, and tied up with repayments of current debts at the Westpac Bank and the National Bank of Solomon Islands Ltd.

The Report shows at page 2 that the Westpac Bank debt stands at SBD47,000.00, whilst the National Bank of Solomon Islands Ltd. debt at SBD33,100.00, as at the 22nd of February, 1995. At the current rates of repayment, the Westpac Bank debt should be completed in a years time (about 13 months at $3,500.00 per month), whilst the National Bank of Solomon Islands Ltd., loan should be repaid in about 22 months time at $1,500 per month; but note that this may be reduced if the proceeds of the rental applied to the Westpac Bank debt are channelled towards the National Bank of Solomon Islands Ltd. loan.

What the above figures show is that even if the East Kola Ridge House is not sold and allowed to be rented out, moneys from the rental will be tied up at the least, for another 13 months or so, to cover the Westpac Bank debt. The option of continued renting of that property therefore does not address adequately the serious shortage of cash available, to meet the on-going expenses and commitments of the Estate and its administration.

The immediate expenses of the Estate, which must be paid are:

(i) the legal fees of Mr. Brandis and Stephens & Tozer totalling SBD34,250.00;

(ii) Maintenance payments for Madalene Tong at SBD6,500.00, for the month of March;

(iii) Metway Mortgage for the month of March at SBD3,360.00; and

(iv) Mendana Hotel and Budget at SBD800.00.

It must be pointed out too that a substantial amount of the Administrator's professional fees totalling some SBD412,600.00 is yet to be paid.

On top of that is an application for Sharon Tong's tertiary fees for attendance at a private college, Design College Australia, in the sum of SBD5,925.00 also to be paid out of the Estates funds.

It is obvious that SBD40,980.00 is just not enough to even cover the immediate expenses of the Estate. It is understandable therefore why the Administrators are pressing for the sale of the East Kola Ridge house and vacant land.

Madalene Tong on the other hand has not suggested any realistic alternative. She prefers to take the 'wnd see'approach, pch, preferring to wait for the outcome of an application still pending before this Court to be heard, I believe on the 28th of this month and not the 20^th, as ave been suggested. This isis is the application to have the Administrators discharged from the administration of the Estate, and other orders. Following through this submission, if the Administrators should be discharged by the Court after that hearing, then they would have to be paid all their professional fees as approved to date. Where will this money come from? I think the Administrators will say without hesitation that the East Kola Ridge House and vacant land will then have to be sold, and part of the sale proceeds to be applied towards their fees.

The impression however. that I seem to be getting from the way Mr. Milte was presenting his submissions was that. it is possible that by that time, there may be alternative funds available. And the only logical explanation which seems to stem from this suggestion, is based on his submission that his client is seeking to arrange a meeting between Toshio Hashimoto and the Administrators to try settle the pending case, in which, as at the 1st of March, 1995, there is some SBD2,035,174.00 held at the National Bank of Solomon Islands Ltd but subject to an Injunction by Hashimoto. (If a settlement is struck with Esthepia International Ltd in the next 14 days, or another buyer is found, then the figure may increase by as much as SBD2.7 million.)

If a settlement is arrived at, then at least some funds will be available to pay off those outstanding claims and may be, those properties would then not have to be sold.

Mr. Kama has sought to submit. that as far as he can foresee, there is no way that Toshio Hashimoto, will change his mind. There is however, no harm in giving opportunity to Madalene Tong making the necessary arrangement and getting the parties to sit down and discuss, especially she is now properly represented by legal Counsel. I think that opportunity should not be totally disregarded. I repeat what I said some two years ago that I prefer to see the Administrators and the Beneficiaries actively seeking to work together in the administration of this complicated Estate.

If the Administrators should succeed in the 28/3/95 application, then most likely, those two properties will have to be sold.

The realities of the situation must be addressed. The obligations of the Estate must be met. Based on the availability of cash at a sum of SBD40,980.00, I will direct that the following payments be made:

(1) Part payment of G.H. Brandis-Counsels fees at..............$24,250.00

(2) Stephens and Tozer - Solicitors fees .................................3,000.00

(3) Madalene Tong - Maintenance (March) ....................:.......6,500.00

(4) Metway Mortgage (March. 1995).............................:.......3,360.00

(5) Mendana Hotel and Budget..................................................800.00

Sub-Total.............. $37,910.00

I will defer sanctioning the sale agreements with Choiseul Bay Association, and Kenneth Charles Ferris, until after the 28th of Mar95, or until further orders from this Court.

I appreciate the concerns raised conceroncerning Sharon's fees. However, that must be deferred until after the 28th of March 1995, or further orders from this Court.

There is liberty to apply on notice to the other party, should there be a change of circumstances and which may then require an application to be brought before this Court before the 28/3/95.

Finally, negotiations may be entered into now with other interested buyers, subject as usual to the Court's approval. If however, Esthepia should come up with the figure of USD817.500.00 within the next 14 days, then priority should be given for a possible revival of the contract now terminated. The figures for negotiation as a guideline for potential buyers should be not less than USD820,000.00.

Costs in the administration of the Estate. (including Madalene Tong's legal fees)

ALBERT R. PALMER
JUDGE