Guadalcanal Resources Development Co Ltd v Dalsol Ltd [1996] SBHC 26; HC-CC 102 of 1996 (21 May 1996)

HIGH COURT OF THE SOLOMON ISLANDS

Civil Case No. 102 of 1996

GUADALCANAL RESOURCES DEVELOPMENT

v

size="3">DALSOL LIMITEDMITED,
CLERK TO GEANA AREA COUNCIL (Representing the Geana Area), VENI PAPANGU, JOHN TOGAVIA MARIO CHANGO,
KEREPINA VAI, VIRISILIO TAGARAKAMANA, LEONE KAKO
No 1

Before: Palmer,lmer, J

Hearing: 20th May 1996 - Ruling: 21st May 1996

Counsel: G. Suri for Applicant/1st Defendant - P. Tegavota for Respondent/Plaintiff, Third Defendant to Eighth Defendant in person (Spokesman - Fifth Defendant)

PALMER J:

By summons filed on 25th April, 1996, the Applicant seeks orders inter alia, for the interim Orders dated 10 April. 1996, granted ex parte, by this Court in favour of the Plaintiff, to be set aside.

The first ground put forward by the Applicant in support of his application challenges the locus standi of the Plaintiff to bring such an application in the first place, in that it is claimed the Plaintiff had no legal rights to initiate such an action against the Applicant/First Defendant. In support of this ground, the Applicant relied on the affidavit evidence of Mario Chango filed in Civil Case No. 122 of 1996 on 26 April, 1996, and affidavit of Peter Wateasi filed on 3rd May, 1996. The relevant parts of the affidavit evidence of Mario Chango (see paragraphs 4, 11, 12, and 13), and Peter Wateasi (see paragraphs 3 to 6), in essence sought to show that the procedures set out in Part IIA of the Forest Resources and Timber Utilisation (Amendment) Act 1990, had not been complied with by the Respondent/Plaintiff. It is implied from this that the Timber Rights Agreement executed between the Plaintiff Company and the Tangarare Hausava of Tangarare District on 17 February, 1994, was invalid. Subsequently, the argument of the Applicant/First Defendant is that the Licence No. TIM 2/37 issued on 23 December, 1994 in favour of the Plaintiff Company, was also invalid. (Copies of the Timber Rights agreement and Licence referred to above are annexed to the affidavit of Philip Tegavota filed on 3 April, 1996 and marked Annexures "F" and "G" respectively).

Mr. Suri, of Counsel for the Applicant/First Defendant, seeks to argue that based on the affidavit evidence of Mario Chango and Peter Wateasi, the Court should conclude that the Plaintiff Company does not have a valid timber rights agreement and a valid licence, and consequentially the Court should conclude that the Plaintiff Company had no legal rights to commence this action in the first place. With respect, attractive though this argument be, this is not the time to determine such arguable matters on the evidence before this Court. It is clear that the issue on the validity of the timber rights agreement and the licence relied on by the Plaintiff Company, is one of the crucial issues to be determined in this case. It IS an Issue that will be contested at trial, and to make a conclusive finding based solely on the affidavit evidence of Mario Chango and Peter Wateasi without hearing all the relevant evidence and submissions, would be improper and incomplete.

The primary consideration of the Court on the question whether an interim or interlocutory injunction should be granted is to determine on the evidence before it, whether there are legal or equitable rights of the Plaintiff Company that have been invaded or threatened to be invaded by the Defendants (see The Sirkina [1979] A.C. 210 at 256 per judgment of Lord Diplock). What is important is that there must be cogent evidence relating to the existence of such rights of the Plaintiff and the existence or threat of some invasion of that right by the defendant's. The test of cogency is not conclusiveness or even on the balance of probabilities. That will be done at trial. It is sufficient if it raises a "serious" or "triable" issue, such that although it is for the time being uncertain, it will be investigated and determined at trial (see Bryanstan Finance -v- de Vries (No 2) '1976] 1 Ch. 63 at 76, American Cyanamid Co. V- Ethicon Ltd. '1975] A. C. 396).

The first crucial question therefore before this Court is whether that had been done or shown on the evidence before it. In my respectful view this question must be answered in the affirmative. There is evidence before this Court which shows that there are serious issues raised as between the parties, or that those issues should be tried. See paragraphs 8-10, and Annexures "F" and "G" to the affidavit of Philip Tegavota filed on 3rd April, 1996. Also reference should be made to the action in Civil Case No. 122 of 1996 in which the existence of the felling Licence No. TIM 2/37, is recognised and the question as to its validity forms one of the subject matter for determination in that case. It is the very same Licence which the Plaintiff seeks to rely on in this case, 102 of 1996, and on which its legal rights is derived from.

The submission by learned Counsel, Mr. Suri for the First defendant that there is "no evidence" on which the Plaintiff can base its legal rights to raise issues pertaining to the validity of the timber rights agreement and licence of the First Defendant, is an arguable matter at this stage It is clear on the evidence that the Plaintiff Company has a timber rights agreement dated 17 February, 1994 and a licence No. TIM 2/37. Whether or not that timber right agreement and licence is valid or not, is arguable, and will be investigated and determined at trial, after all relevant evidence had been adduced and arguments on law had been heard. This would also include the submission raised by Mr. Suri, as to the effect of a breach of Clause 2 of the Timber Rights Agreement of the Plaintiff Company. The proper construction and effect of that clause, is also a matter that can be investigated and determined at trial.

Having perused the action in Civil Case No. 122 of 1996, it appears that there are conflicting and competing claims of interest in the timber rights agreements and licences of both logging companies, apparently on the basis that their timber rights and licences cover the same or roughly the same areas of customary lands. So In Civil Action 122 of 1996, the First Defendant is the Applicant and the Plaintiff Company is the First Respondent, and the subject matter pertains essentially to the validity of the timber rights agreement and licence of the Plaintiff Company. In this action (civil case 102/96), it is the validity of the timber rights agreement and licence of the First Defendant that is being challenged. The issues raised in both actions are the same or will be the same, and accordingly it is my view that both actions should be consolidated and heard together.

The second point raised by Mr. Suri in support of the application to set aside, is to argue in the alternative on the grounds of acquiescence. He argues that the Plaintiff Company sat back and took no action when the First defendant began road construction into those land areas and then commenced felling and removal of timber from the said areas between the period of 24th February 1996 to 10th April, 1996. Mr. Suri argues that the First Defendant had expended substantial sums of money in that initial operation and continues to incur losses on a daily basis. Mr. Tegavota, of Counsel for the Plaintiff Company on the other hand submits that the Plaintiff Company had not been sitting back in that period. See paragraphs 3-9 of the affidavit of Philip Tegavota filed on 3rd April, 1996, also the Writ of Summons and Statement of Claim filed on 25th March. 1996. and the Ex Parte summons filed on 3rd April, 1996. On the above evidence, as contrasted with that of the First defendant, I am not satisfied that it had been shown that the claim of acquiescence had been made out.

Another point raised was that of delay, but on the evidence before me I am also not satisfied that there had been undue delay on the part of the Plaintiff Company in taking appropriate steps for interim relief.

The fourth and final matter raised by Mr. Suri relates to the question of damages. The criteria as propounded in the American Cyanamid case (supra), is whether damages is an adequate remedy. This criterion is the determining factor in this case, and the reasoning for this is as follows. This case is not the usual type of logging case where a group of customary landowners are claiming separate ownership rights over the timber; the usual subject matter of the dispute. In those types of logging cases, the subject matter is the ownership of the trees and usually the landowners objecting are totally opposed to any large scale logging operations. In such instances, the Court recognises that the value of having those trees remain in their virgin state without interference, disturbance and destruction, is inestimable and damages will not be an adequate remedy. The circumstances surrounding this case however is different. The main players in this action are the logging companies. Both have similar objectives; profit making. In those circumstances, the question whether damages is an adequate remedy will have to be answered in the affirmative. Another related question however should be asked as well in the light of recent authorities (see Evans Marshall & Co. Ltd. -v- Bertola S.A. [1973] 1 W.L.R. 349), "Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?" Again, the answer with respect should be in the affirmative. The loss of the Plaintiff can be quantified in damages.

The clear proposition of law established in the American Cyanamid case is that if damages in the measure recoverable at common law would be an adequate remedy and the Defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. The clear submission put forward by Mr. Suri is that the First Defendant is able to meet whatever damages claim may arise, and is prepared to grant an undertaking to that effect. In contrast Mr. Suri points out, that the Plaintiff Company is not in a position to meet all the losses of the First Defendant, should the First Defendant win its case at the end of the day.

Having considered the various submissions on this criterion, I am satisfied, that damages will be an adequate remedy for the Plaintiff Company for the loss it would have sustained as a result of the First Defendants logging activities in the said customary lands. I am also satisfied that the First Defendant will be in a financial position to pay them. On the other hand, even if damages would not provide an adequate remedy for the Plaintiff Company in the event of it succeeding at trial, the Court should consider the alternative position where in the event the defendant should succeed at trial, in establishing his right to do what was sought by the Plaintiff to be restrained, whether it would be adequately compensated for by any undertaking by the Plaintiff as to damages for the loss that would have been incurred by the First Defendant, and whether the Plaintiff would be in a financial position to pay them. On these points, although I am satisfied that damages would be an adequate remedy to compensate the loss of the First Defendant, I am not satisfied on the second limb, as to its financial position to pay them for their loss. There is in effect very little evidence to support this.

Accordingly, I am satisfied that the interim injunction imposed by this Court by Order dated 10 April 1996, should be discharged in its entirety with immediate effect.

Both parties should now follow the normal procedures to expedite the hearing of this matter and the action in civil case 122 of 1996.

Costs of the Defendants in this application to be borne by the Plaintiff.

A. R. PALMER,
JUDGE