Iwane v Dai Island Sawmilling Co [1996] SBHC 86; HCSI-CC 372 of 1995 (3 July 1996)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No.372 of 1995

JOHN MANUI IWANE

-v-

DAI ISLAND SAWMILLING COMPANY

High Court of Solomon Islands
(Palmer J)
Civil Case No. 372 of 1995

Hearing: 17th June 1996, 24th June 1996, 2nd July 1996,
Ruling: 3rd July 1996

A. Nori for the Applicant
T. Kama for the Respondent

PALMER J: On 4th March 1996 this Court made a ruling that the First Defendant be given the liberty to arrange for the export of the logs already felled at the best possible price. It was made clear to the Court at that time, that the First defendant was not bound to export to the original buyer, Posum International Limited of Hong Kong. The price that was then offered was US180.00 per cubic metre.

The price that has been struck by the First Defendant is USD20.00 per cubic metre better off, and with a different buyer, B.C. Enterprise SDN BHD.

It must be made clear that the Court did not expressly require that the sale agreement be subject to the sanction of the High Court. All that it said was that the best possible price be negotiated. Despite the fact that there is evidence that shows that a better price could be obtained for the logs as from 5th June 1996, there is no evidence or little evidence to show that at that time in March of 1996, the best possible price was anything else than USD200.00 per cubic metre. There is no evidence or little evidence to show that at that time, the Plaintiff offered a buyer for the fallen logs at USD250.00 per cubic metre and that this had been communicated at or prior to the Agreement struck with B.C. Enterprise SON BHD. The price now put forward appears to have been obtained by the Plaintiff after.

Whilst on one hand, the terms offered by the new buyer appear to be more attractive, it came too late after the First Defendant had already struck up an agreement with a potential buyer. Given the liberty to re-negotiate for a better price, and the guideline of a best possible price, it would not be open to this Court to interfere with what has been entered into by the 1st Defendant, unless it can be shown that the First defendant had acted improperly when it entered into that Agreement at that time. A copy of that Agreement is annexed to the affidavit of Vincent Samo Wateniau filed on 27/6/96 and marked “VSW2”.

Having said that, I must express my concerns in the way that particular Agreement had been expressed. In the recitals, at clause “c”, there is a reference to the sale of “....approximately 12,000 cubic metres of Instia Bijugs (Kwila) in round log form....”. Now, if that is to be compared with paragraph 5 of the same affidavit of Vincent Samo Wateniau, it is quite interesting to note that there is a reference of logs felled totalling only some 5,000 cubic metres; 4,000 cubic metres already hauled and 1,000 cubic metres yet to be hauled. Where did the 7,000 cubic metres of Kwila species came from? It is significant too that, that 12,000 cubic metres referred specifically to only one particular species; “Kwila”.

It is important in my view that the proper and correct picture is presented by the First Defendant to the proposed buyer. I may be wrong, but the impression I get is that the rough estimate of all the logs felled as up to the date the Court imposed the restraining orders is 5,000 cubic metres. If that is so, then the “spirit” and the “letter” of that particular Agreement has been incorrectly made, and contrary to the terms of the Court injunction. It is only the logs felled that are for sale. No guarantees should be made as to how much of those logs felled are of the Kwila species unless that had been done with some certainty. If my observations are correct, then clearly they have been in breach, or if not, have not complied substantially with the terms of the Court Order, and must be re-negotiated with the correct picture put to that Buyer. This Court cannot allow an agreement which would anticipate the outcome of the Court’s decision as to ownership and any other relevant issues. I note that the annual export quota of the First Defendant Company in his licence is for 12,000 cubic metres. Subject to what I have said so far, the agreement must be varied to reveal the true and correct picture as to the amount of logs already felled and to be exported. It must be made very clear that there cannot be any further exports of logs apart from those already felled until the issues pending in this case have been finally determined. The First Defendant should also be at liberty to re-negotiate the price on which it is to sell, bearing in mind that a better price had been offered by another Buyer B.C. Enterprises SBN. BHD must be given opportunity to agree to the variation within 14 days from today, (3/7/96) failing which that Agreement should be terminated and the logs offered to the Buyer proposed by the Plaintiff. The Plaintiff must bear in mind that whatever expenses have been incurred and any other liabilities arising from the Agreement with B.C. Enterprises must be borne by both parties jointly; that is from the proceeds with the new Buyer.

If there are already 12,000 cubic metres of Kwila species on the ground prior to and up to the time the Court injunction was imposed, then I see no reason to interfere with that Agreement and paragraph 2 of the Summons of the Plaintiff filed on 7/6/96 should be dismissed.

As regards the Agreement entered into with Evergreen Forest Industries Ltd and Rafea and Kwaleuna Sawmilling Co-operative Society Ltd, by the First Defendant, I see no reason to interfere with such business agreements entered into voluntarily and in the course of normal trade and business relations. The only thing to bear in mind is that the rate of USD60.00 is to be paid on the export of the logs, when shipped. No advances can be allowed in view of the very limited amount of logs available for export. Orders made accordingly.

Costs in the cause.

A. R. PALMER
PUISNE JUDGE