HIGH COURT OF SOLOMON ISLANDS

Case No. 04998

Messrs E & S Cameron T/a B-KOOL DAIRY

–v-

HONIARA TOWN COUNCIL

Solomon Islands High Court
(Registrar Chetwynd)

Hearing 10th October 2000
Ruling	22nd December 2000

Registrar Chetwynd:	On the 11th May this year Interlocutory Judgment was entered against the Defendant Council with damages to be assessed. On the 10th October the hearing in respect of the assessment was held. The evidence on the question of damages was in affidavit form and I have referred to the affidavits of Mr. Simon Cameron dated 31/1/00 and Mr. Mark Anders dated 26/9/00. I heard oral submissions and I was also presented with written submissions (undated) from the Defendant and from the Plaintiff (dated 11/10/00).

The facts are relatively simple. The Plaintiffs had a business in the “old” Central Market. In detail, the Plaintiffs held a 21 year lease on premises from which they ran a business, B-Kool Dairy. The Plaintiffs produced and sold ice cream from those premises. In 1995 the Defendants, from whom the Plaintiffs rented the property, asked the Plaintiffs to vacate so that the Central Market could be re-developed with the benefit of aid money. There was, it is said, a clause in the lease which provided for the tenants (i.e. the Plaintiffs) to be compensated in such circumstances. I have not had sight of the lease or the clause. I am mindful of the fact that at one stage the Defendant was arguing that the original lease did not contain any compensation provision (see the affidavit of Mr. Roger Johnson dated 28th February 2000 at paragraph 13) but it is my view that I cannot now go behind the interlocutory judgment. What is not disputed is that some kind of compensation was in the minds of all parties in this dispute and one wonders why this would be so if the lease did not provide for it.

In any event there were negotiations about compensation in 1995 and 1996. The parties did not reach complete agreement as to the amount of, or indeed the nature of, compensation that was to be paid by the Defendants to the Plaintiffs. Clearly there were a number of meetings and discussions. I have no direct evidence as to what was agreed at those meetings. The best guide as to what might have been discussed is probably Mr. Radclyffe’s letter of 19th November 1997 exhibited to Mr. Simon Cameron’s affidavit. The ‘theme” of the negotiations, if I can put it like that, was that the Plaintiffs would be paid a cash sum and given alternative premises. This makes perfect sense from a commercial point of view. The Plaintiffs ran a fairly profitable business at the Central Market. They had come to recognize that the area was, in estate agency terms, in a prime area. They were being asked to give up a profitable site and so wanted to ensure that they could resume a business in the same area when the defendants had completed their re-development. They would also require some capital (the cash element) to open up new premises.

Unfortunately, sometime in May 1996 the Plaintiffs vacated their premises to allow the Defendants to re-develop the Central Market area. The Plaintiffs had a number of proposals which the Defendants were considering but there was no completed compensation agreement. I have no doubt that the Plaintiffs were being “helpful” and did not wish to stand in the way of the development plans of Honiara Town Council but one wonders if they were being a little naïve. Even if they were, that is no reason to deprive them of compensation. It must also be said that the Defendants had made a partial payment of $200,000.00 and so perhaps the Plaintiffs had good reason to accept the bona fides of the local authority.

The Plaintiffs claim that there were several concluded agreements and now claim damages for breach of each of those agreements. In my respectful view there is only one breach. The Defendants were, clearly are, in breach of the provision in the lease providing for compensation to be paid for an early voluntary surrender of the lease. As I have indicated, I do not know the exact terms of the provision in the lease. Having seen the affidavit evidence I do not think it essential that I do know the exact terms. This is because the parties entered into negotiations with a view to agreeing adequate and acceptable compensation and that would be the measure of damages in any event. My view is that the meetings, discussions and correspondence from 1995 to 1999 show that the parties were never ad idem as to what was right and proper as compensation and, more importantly, what was agreed.

As an example one should look at the correspondence between April and June 1997 passing between Mr. Simon Cameron and the Council. [It is exhibited in the affidavit of Mr. Cameron dated 31/1/00 as H4,H5 and H6]. The first letter asks if the Council will rent “retail space” to the Plaintiff. It is clear that this was being requested as part of the “compensation settlement”. The response H5, contains an offer of a site. No exact terms are set out, (e.g. the rent payable etc) but there is an offer of a site, that is, “the hut closiest (sic) to the Market Hall”. The Plaintiff responds, H6, with partial agreement but also a request for additional “space for our customers to sit down”. This seems to be the history of this case. There is evidence of offer, counter offer, further offer and so on. There is no compelling evidence to indicate that the parties came to an agreement in the complete sense of that word. There being no evidence of a completed agreement it falls to me to assess damages in this case.

In my respectful view I should approach the assessment of damages on the basis that the Plaintiffs should be, as best as can be managed, put in the position they would have been in if they had not given up the lease. That is, assess damages on the basis that the Plaintiff is entitled to proper and adequate compensation for the voluntary and early surrender of the premises it originally leased from the Defendants at the Central Market. My view is that the proper measure of damages is the loss of net profit suffered by the Plaintiff as a result of it surrendering the lease. In exact terms, the loss of income from its retail outlet formerly at the Central Market Honiara from May 1996 to date together with market value of that property less any payment already made by the Defendant. 

The only evidence I have for such an assessment is the affidavit evidence of Mark Anders contained in the affidavit made by him on 29th September 2000. That evidence is not contested.

Based on that affidavit evidence I am of the opinion that the loss suffered by the plaintiff is set out on the first page of the report exhibited as “MA” in respect of the pre-existing business. The sum stated in that report for the pre-existing business is $3,147,096.00. To that must be added the capital loss of $585,306. That makes a total of $3,732,402.00. From that must be deducted the $200,000 already paid leaving a total of $3,532,402.00. Of course, those figures are only true up to August of last year. Normally one would be able to extrapolate on the figures already provided to arrive at a figure for today. However, the events of June 2000 must have had an effect on what would have been possible and, although there is some guidance from Mr. Anders on that issue, I do not feel competent enough to make those calculations myself.

What I intend to do then is enter judgment for the Plaintiffs for a sum that I can be certain of and allow the parties to either agree the appropriate figure for the period from September 2000 to date, or allow the parties to appear before me again to argue the point. I would hope that the parties could reach agreement.

The order I make today is therefore:

1.	Judgment be entered against the Defendant in the sum of $3,532,402 in favour of the Plaintiff;

2.	Damages for the period September 2000 to date be assessed unless agreed by the Parties hereto;

3.	The Defendant shall pay the costs of the Plaintiff, such costs to be taxed if not agreed.

Dated 22nd December 2000

R D Chetwynd
Registrar High Court