IN THE HIGH COURT OF SOLOMON ISLANDS
(FAUKONA PJ)

CIVIL CASE NO. 121 OF 2011

BETWEEN:

BANK OF SOUTH PACIFIC LIMITED
Claimant

AND:

EXFIELD CONFECTIONARY LIMITED
First Defendant

AND:

PETER EKE AND MARILYN EKE
Second Defendants

AND:

C.W. CAKE SHOP LIMITED
Third Defendant

Date of Hearing: 23rd June 2014
Date of Ruling: 29th July 2014

Mr A. Radclyffe for the Claimant
Mr B. Etomea for Defendants 1,2 and 3

RULING

Faukona J: This is an application by the Defendants to stay enforcement of orders of this Court made and perfected on 19th July 2011. Those orders were made by way of default judgment against the Defendants. Up until now there was no application filed to set aside that default judgment. It has been more than three years now and has been late and nothing much can be done. 

2. The second Defendants are husband and wife and they own the first and third Defendants' incorporated companies. In 2008, the first Defendant obtained a loan for 7.1 million dollars from the Claimant.

3. The first Defendant agreed to repay the balance of the loan account outstanding on Claimant's prevailing rate. 

4. On 28th March 2008, the second Defendants entered into a first charge with Claimant where they charged their fixed term estate in Parcel Numbers: 191-029-243 and 191-029-244 to Claimant to secure up to $1,005,000.00 together with interest. 

5. On the same date the third Defendant entered into a first charge with Claimant whereby it charged its fixed term estate in Parcel No. 192-002-117 to the Claimant to secure repayment of loan up to $7,000,000.00 together with interest.

6. Again on the same date a Deed of Cross guarantee which each of the Defendants guaranteed that they would repay the first Defendant's debt with interest and costs. 

7. By an Equitable Mortgage dated 28th March 2008, the first and second Defendants charged to the Claimant all their assets and undertaking.

8. The Defendants have failed to repay their loans, therefore letter of demand have been served on them on or about 29th December 2010. Despite letters of demand, the Defendants still failed to pay loan arrears and interests.

9. Consequent to such failure the Claimant had filed a claim in category A against the Defendants. Because no response and defence was filed the Claimant obtained three default judgments against the Defendants. One was perfected on 19th July 2011, the other was perfected on 9th March 2012 and the last being perfected on 19th March 2014. The claimant relied on default judgment dated 19th July 2011 to reinforce their stand in opposing this application. 

10. In spite of the default judgments, the Defendants filed two applications to stay. The first was filed on 11th April 2014 to stay the enforcement of the orders. The second application was filed on 15th April 2014 to stay an application or order for leave to sale the property in parcel number 192-002-117 at Ranadi. 

11. The first application is more or less of a general nature. The second one is specifically to stay any application for leave to sale and specifically refer to fixed term estate PN 192-002-117 at Ranadi.

12. The Defendants' application to stay enforcement premises on the presumption that since 28th May 2014, it is anticipated with the likelihood that ANZ Bank would approve their application to refinance their loan outstanding arrears with BSP.

13. What may appear dubious in the submissions by Counsel for the Defendants is that the third Defendant was deregistered on 1st May 2013 therefore charge on fixed term estate PN 101-002-117 was ceased and hence public tender of that parcel number is defective and cannot be relied upon. Further the Counsel has blamed the Claimant for not or delay in reregistering the third Defendant. In the later course of his submissions the Counsel seem to adorn the reregistration of the first and third Defendant companies thereby guarantee some confidence that their application for refinancing by ANZ Bank will be considered. 

14. The first argument by the Counsel appears to be based on some sort of law but that authority is not reveal in the submissions. However, logic dictates that once an incorporated company is deregistered its legal existence is no longer in the register. With that status, it does affect the company's assets and liabilities. But who is directly responsible for registration of a deregistered company? In all cases, the owner of the company is responsible. In this case, the third Defendant was deregistered because of failure to file annual return for 2012. It was a failure which the second Defendants are responsible for. And this was done after the first two default judgments had been entered against them. I am convinced that deregistration was done deliberately to prevent the bank receiving the judgment debt. 

15. To align the facts into an orderly sequence the Counsel for the Defendants should have considered the latest developments, that is re-registration of the two companies rather than inclusion of deregistration which now become a thing of the past. From then evaluation and decision on what are their chances in their application to ANZ Bank to refinance the loan arrears.

16. I am of the view that it is improper and waste of time to give any consideration to deregistration and the effect it may have on the liability of the Defendants. The fact is that the Defendants through their Counsel seem to agree to the process of re-registration, which had been done recently on May 27th and 28th 2014. That should maintain their status quo and eligibility for refinancing package.

17. However, I am convinced there is material evidence that ANZ Bank has refused the Defendant's application to refinance. A letter dated 17th February 2014, from Head of business of ANZ Bank; Mr Kepui clearly affirms that after careful assessment, they have decided to let the business pass in respect of the Defendants' application. 

18. Furthermore, Mr Radclyffe submits that no commercial bank would accept any application for refinancing from the Defendants because of their failure with BSP. This is quite important, as it reflects on the Banks stance in relation to granting of loans. Someone who maintains good reputation with Bank finds less difficulty to acquire loan or refinancing of loan arrears. The Defendants in this case had failed to repay their loans hence had foster a strain relationship with the Bank. In such situation, it would be really difficult to convince any bank to accept their application to refinance.

19. I am not convinced that to stay enforcement orders could give and allow privilege for the Defendants to pay their loan arrears. The Banks are well aware of the Defendants' reputation and nothing better could be expected from them. With reasons, I have stated herein I hereby refuse to grant application to stay enforcement orders.

Orders:
1. Refuse to grant order to stay enforcement orders; simply Defendants' applications to stay are dismissed. 

2. Leave is granted for Claimant to sale the third Defendant's fixed term estate in PN192-002-117 to Central Development Ltd for $8,300,000.00. 

3. The Registrar signs the transfer of the said property for the third Defendant. 

4. The second Defendants and other occupants of the said property PN192-002-117 to vacate the said property immediately.

5. Cost of this application is to be paid by the Defendants to the Claimant.

The Court.