CC No 49, 98, HC

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No 49 of 1998

EARLSTON CAMERON AND SIMON CAMERON (Trading as B-KOOL DAIRY)

-v-

HONIARA TOWN COUNCIL

High Court of Solomon Islands 
(Muria, CJ.) 
Civil Case No. 49 of 1998 

Hearing: 27 March 2001 
Ruling: 30 March 2001 

A. Radclyffe for Appellants
S. Manetoali for Defendant 

MURIA CJ: The appellants are businessmen trading as B-Kool Dairy. In fact they are father and son. They used to sell dairy products, operating a successful Ice Cream outlet at the Honiara Market for some years until March 1996. The land upon which the appellants operated their business is government land with a fixed term lease of 50 years owned by the respondent who in turn subleased it to the appellants for 21 years commencing on August 1992.

The respondent planned to re-develop the Honiara Main Market and so the appellants were asked to vacate the site. As expected, of course, the question of compensation to the appellants had to be addressed. In May 1996, the appellants vacated their premises to allow for the respondent to redevelop the Honiara Main Market. The respondent had made a partial payment of $200,000.00 to the appellants sometime after they vacated the premises. The total compensation agreed upon was $500,000.00. Negotiations as to the payment of the balance of the agreed compensation and other matters between the parties had not been resolved and so the appellants issued court proceedings against the respondent.

The Writ and Statement of Claim were filed in this Court on 23 March 1998 and served on the respondent 25 March 1998. No appearance had been entered by the respondent. Interlocutory judgment was entered against the respondent on 11 May 1998. The respondent sought to have the judgment set aside but the learned Registrar of High Court refused the application on 23 May 2000. No appeal had been taken against that decision. The question of assessment of damages was considered by the learned Registrar of High Court and his decision was made on 22 December 2000 and released to the parties on 15 January 2001. The appellants, not being satisfied with the learned Registrar’s assessment, now appealed against the learned Registrar’s decision. 

Effect of the Interlocutory Judgment 

Before I deal with the grounds of appeal in this case, I feel I need to say a word or two on the point raised by Mr. Manetoali in the course of his argument. Counsel submitted that the Registrar of High Court’s decision of 23 May 2000 was not a default judgment. 

It is true that the learned Registrar’s judgment of 23 May 2000 is not a default judgment. It is a judgment refusing to set aside the judgment entered on 11 May 1998. In effect the judgment of 23 May 2000 confirmed the judgment of 11 May 1998 which in truth is a judgment obtained in default. The other judgment of 22 December 2000 is equally a judgment made as a consequence of the default of the defendant in the first place. The sum effect of the three judgments we have in this case is that this is a case where the defendant had been in default resulting in the judgments now obtained against it. The principles applicable to default judgments will in general apply to a judgment obtained in consequence of the default such as the present case before us.

I now turn to the appeal points raised by the appellants. However, it is worth noting, before dwelling into the appeal points, the general principle, that this Court, in exercising its appellate jurisdiction in such a case this, would not lightly interfere with the exercise of discretion by the learned Registrar except on grounds of law. See Kayuken Pacific Limited -v- Harper [1987) SILR 54; also Selwyn Dika & Ors -v- David Lenga Somana (1999) Civ. Case No. 242 of 1996 (H.C.) (Judgment given on 27 August, 1999). 

With that general principle in mind, I now deal with the appeal points. 

Appeal Point 1. 

This point alleges that the learned Registrar was wrong in law to go behind the interlocutory judgment of 11 May 1998 by holding that there was only one breach of contract and not several breaches pleaded in the Statement of Claim. The argument advanced by Mr. Radclyffe is that the judgment in default entered on 11 May 1998 “for the relief claimed in the Statement of Claim” meant that damages must be assessed in respect of all the claims in the Statement of Claim. It must be taken, argued Counsel, that everything in the Statement of Claim is correct. In support of his contention, Mr. Radclyffe relied on the cases of Kok Hoong -v- Leong Cheong Kweng Mines Ltd [1964] 2 WLR 150; Mullan -v- Conoco Ltd [1997] 3 WLR 1032; and Pople -v- Evans [1968] 3 WLR 97. 

I have read the authorities cited by Counsel and I found them to be useful in dealing with the issue raised in Appeal Point 1. In Kok Hoang -v- Leong Cheong Kweng Mines Ltd, the Privy Council accepted that a default judgment was capable of giving rise to an estoppel per rem judicatam. However the Court went on to add that the Court must scrutinise the default judgment for the purpose of ascertaining what it is the judgment had actually decided, since the default judgment can only operate as an estoppel for what has been necessarily and precisely determined by the default judgment. It is worth bearing in mind then what the Court stated in that case. At page 156, delivering the judgment of the Court, Viscount Radcliffe said: 

“In their view there is no doubt that by the law of England, which is the law applicable for this purpose, a default judgment is capable of giving rise to an estoppel per rem judicatam. The question is not whether there can be such an estoppel, but rather what the judgment prayed in aid should be treated as concluding and for what conclusion it is to stand. For, while from one point of view a default judgment can be looked upon as only another from of a judgment by consent (see In re South American & Mexican Co.) and, as such, capable of giving rise to all the consequences of a judgment obtained in a contested action or with the consent or acquiescence of the parties, from another a judgment by default speaks for nothing but the fact that a defendant for unascertained reasons, negligence, ignorance or indifference, has suffered judgment to go against him in the particular suit in question. There is obvious and, indeed, grave danger in permitting such a judgment to preclude the parties from ever reopening before the court on another occasion, perhaps of very different significance, whatever issues can be discerned as having been involved in the judgment so obtained by default.”

Clearly, there the Court was very mindful to point out that it is necessary to ascertain the particular issues or matters which can be rightly treated as being concluded by the default judgment. This is because default judgment can only operate as an estopple upon those issues or matters which the judgment can be said to have conclusively decided upon. 

The earlier position as expounded in the earlier cases, such as Henderson -v- Henderson (1843) 3 Hare 100 and Howlett -v- Tarte (1861) 10 C.B.N.S. 813 was somewhat rigorous. In the former case, Wigram V-C stated at page 115: 

“The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

The Court in Kok Hoong -v- Leong Cheong Kweng Mines Ltd, however, found that it would be wrong to apply the full regour of the principle as that formulated in Henderson -v- Henderson where a judgment in default comes into question. In this modern age of litigation, the Court in Kok Hoong -v- Leong Cheong Kweng Mines Ltd, preferred the approach taken in New Brunswick Railway Co. -v- British and French Trust Corpn. [1939] A.C.1; [1938] 4 All. E.R. 747; 55 TLR 260 and said 

“In their Lordships’ opinion the New Brunswick Railway Co. case can be taken as containing as authoritative reinterpretation of the principle of Howlett v. Tarte in simpler and less specialised terms. This reinterpretation amounts to saying that default judgments, though capable of giving rise to estoppels, must always be scrutinised with extreme particularity for the purpose of ascertaining the bare essence of what they must necessarily have decided and, to use the words of Lord Maugham L.C., they can estop only for what must ‘necessarily and with complete precision’ have been thereby determined.”

The case of Kok Hoang -v- Leong Cheong Kweng Mines Ltd was considered in Mullen -v- Conoco reiterating the modern approach to litigation where a judgment in default comes into question. 

Thus on the authorities referred to, it would be wrong to approach the question of assessment of damages following a default judgment on the basis that everything in the Statement of Claim was correct as argued for by Counsel for the appellants. The proper approach would be, in assessment of damages following the default judgment, for the Registrar to ascertain what was it that was necessarily and precisely determined by the default judgment and proceed to assess damage on the basis of what was ascertained to be conclusively determined by the default judgment. 

The learned Registrar, in this case, considered the claim by the appellants that there were several concluded agreements and that each merited separate compensation. I, too, have considered the Statement of Claim and the learned Registrar’s judgment and having done so I must say that I am entirely in agreement with the learned Registrar when he said that there was only one breach which was a breach of the provision of the lease providing for compensation for an early voluntary surrender of the lease. The appellants claim in this respect is set out in paragraphs 5 and 6 of the Statement of Claim which state: 

“5. In 1995 the Defendant informed the Plaintiffs that it proposed to redevelop the market. A series of meetings was held between Simon Cameron, the Plaintiffs’ agent Patterson Mae and representatives of the Defendant including its Legal Advisor to discuss the compensation package to be paid to the Plaintiffs in accordance with the terms of the lease. 

6. During the discussions referred to in paragraph 5 above the Plaintiffs informed the Defendant that compensation of $500,000.00 was being claimed and that was accepted in principle by the Defendant. This sum represented the value of the Plaintiffs’ buildings on the land, goodwill and loss of trade based on one year’s trading.”
 
The “compensation package” amounted to $500,000.00 which sum “represented the value of the plaintiffs’ buildings on the land, goodwill and loss of trade based on one year’s trading.” What was it that the appellants were entitled to recover under the judgment obtained in default on 11 May 1998? In my judgment the appellants were entitled to recover a sum of money as compensation for a breach of contract. That had clearly been decided upon by the learned Registrar in this case, a decision which in my respectful view, was very generous in that he awarded the appellants $3,532,402.00 with further damages to be assessed for period September 2000 to date unless agreed upon by the parties. 

The learned Registrar was not going behind the judgment of 11 May 1998, rather he was giving effect to it precisely as the judgment had determined what the appellants were entitled under it. I see no error of law in what the learned Registrar did and this ground is dismissed as having no merit. 

Appeal Point 2 

This point can be briefly dealt with. Counsel for the appellants submitted in effect that when Counsel made admissions in his submission on facts alleged by the appellants, then it must be taken as establishing the facts of the claims in paragraphs 3, 7 & 9 of the-Statement or Claim. With respect, this is a bad point. Statements in argument, either orally or written, are nothing more than views put forward in support or opposition to an issue before the Court. By themselves, they do not have substance and of no value unless the Court accepts them. Giving effect to those statements in argument, is a matter for the judge. In the present case, the learned Registrar considered the submissions by Counsel and evidence before him and concluded that although the plaintiffs claimed several agreements, there was in fact only one. Nothing contained in the submissions can change that except the appellate Court. Appeal Point 2 is rejected. 

Appeal Point 3 

This point is linked with the first appeal point which had failed. This point too must be rejected. The learned Registrar had clearly considered Mr. Anders’ evidence in the process of making his decision. 

Appeal Point 4 

The complaint here is that the learned Registrar was wrong to hold that the appellants voluntarily surrendered their lease. The nature of the evidence as disclosed in the affidavit materials before the Court reveals that the settlement negotiated between the parties was for compensation for the early surrender of the appellants’ lease. Annexure “F” to Simon Cameron’s affidavit filed on 31 January 2000 supports the suggestion that the appellants had surrendered their lease voluntarily. The Statement of Claim itself shows that the claim of compensation was for giving up the lease in favour of allowing the redevelopment of the market. These factors have clearly supported the learned Registrar’s comment that the appellants voluntarily surrendered their lease. He was entitled to so hold arid I see no reason to disagree with him. This ground in also rejected. 

Appeal Point 5 

This ground complains that the learned Registrar failed to assess damages for the loss of the Appellants’ Central Market Premises. Having read the learned Registrar’s judgment, I am of the view that this ground cannot succeed. In his assessment the learned Registrar gave the appellants $3,147,096.00 for the pre-existing business. To that he added the capital value of the property in the sum of $585,306.00 and then deducted $200,000.00 already paid. The total amount still owing to the appellants is $3,532,402.00. In arriving at the sum of $585,306.00 for the capital value of premises, the learned Registrar took into account the report exhibited “MA” to Mark Anders’ affidavit filed on 26 May 2000. Page 11 of that report shows the same figures namely, $493,000 and $324,000 for the lessee’s leasehold interest and market value of the property respectively, as those contained in the Valuer’s report (Exh. “C” to Simon Cameron’s affidavit). I therefore do not see how it can be successfully said that the learned Registrar failed to assess damages for the loss of the appellant’s Central Market premises. This ground of appeal must also be rejected.

Appeal Point 6

The appellants’ complaint under this ground of appeal is that the learned Registrar failed to award interest as claimed by the plaintiffs. It is true that the learned Registrar did not award interest on damages in this case. But he is right not to do so. Interest on debt or damages may only be awarded by a Court upon any proceedings being “tried” in the Court and as such cannot be awarded on a judgment obtained by default such as the one we are dealing with here. See s.3 of the Law Reform (Miscellaneous Provisions) Act, 1934 (UK) which applies in Solomon Islands: Cheung-v- Tanda [1984] SILR 108. Section 3(1) of the Law Reform (Miscellaneous Provisions) Act provides as follows: 

“(1) In any proceedings tried in any court of record for the recovery of any debtor damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment: 

Provided that nothing in this section - 

(a) shall authorise the giving of interest upon interest; or 

(b) shall apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or 

(c) shall affect the damages recoverable for the dishonour of a bill of exchange.”

Section 3 of the Law Reform (Miscellaneous Provisions) Act 1934 confers a four-fold discretion on the Court: (1) whether to grant interest at all; (2) to fix the rate of interest; (3) whether to grant the interest on the whole or part of the debt or damages; and (4) to fix the period for which the interest is to cover. That four-fold discretion is not given to the Registrar in some jurisdictions. In this jurisdiction, the learned Registrar is given power pursuant to 0.57, r1A of the High Court (Civil Procedure) Rules to deal with all such business and jurisdiction transacted by a Judge or the Court in Chambers save for some exceptions. He would therefore have jurisdiction, in my view, to deal with the question of interest on judgment. However, as I have already stated that, in a judgment obtained in default, he cannot award interest on the judgment since the proceedings resulting in the judgment is not “tried” in any Court. 

If I may suggest, the proper course in such a case, would be for the parties to apply for an order for the “interest to be assessed.” That would ensure that the question of interest is “tried” when the learned Registrar comes to assess it, in the same way as he did with damages. There are two fundamental reasons for such a course of action to be followed in relation to claiming interest on default judgment. Firstly, the natural justice requirement makes it specially important that the defendant be afforded an opportunity to be heard before a judgment for interest is made against him, in the same way as being given an opportunity to be heard when damages is being assessed. Secondly, in our jurisdiction, where the Registrar is given power to deal with matters dealt with by a Judge or the Court in Chambers, it would then allow the Registrar to exercise the jurisdiction to have the question of interest on judgment “tried” which would otherwise have to be dealt with by a Judge or the Court subsequently. 

Thus on this ground of appeal, it is true that the learned Registrar omitted to award interest on damages. Although he has power to deal with it, he could not have exercised it in this case and he was entitled not to have done so in the circumstances of this case. 

Conclusion. 

All the appeal points having been unsuccessful, this appeal is dismissed with costs. 

(Sir John Muria)
CHIEF JUSTICE