Lasi v North New Georgia Timber Corporation [1998] SBHC 134; HCSI-CC 253 of 1996 (9 November 1998)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 253 of 1996

KIKIBOY LASI, GORDON RENCE
(Directors representing the Gerasi Tribe)

-v-

NORTH NEW GEORGIA TIMBER CORPORATION

High Court of Solomon Islands
(Muria, CJ.)
Civil Case No. 253 of 1996

Hearing: 30 June 1998
Judgment: 9 November 1998

P. Tegavota for Applicants
J. W. Talasasa for the Respondent

Judgment

MURIA CJ: The applicants have sought a number of orders by way of a Notice of Motion filed on 1 November 1996 against the respondent who is represented in this matter by the Chairman of its Board of Directors. In the main, the applicants are seeking an order that the respondent appoint a Board of Directors to perform its obligations under the North New Georgia Timber Corporation Act, 1979 as amended. The Orders sought in the Notice of Motion are:

“1. That an order of Mandamus be issued to Command the respondent’s Board of Directors to hold a meeting or meetings for the following purposes:

(a) For the determination of the respondent’s revenue that would be available for distribution to the tribal chieves of Gerasi Tribe on behalf of their tribe pursuant to Section 6(e) and Schedule 3 part 1 Paragraphs 1, 2 and 3 of the North New Georgia Timber Corporation Act 1979 as amended.

(b) For the preparation of an annual statement of account to be laid before the respondent at its General Meeting and to be thereafter submitted to the Minister of Forests Environment and Conservation for transmission to the Auditor General within twenty eight (28) days of its receipt pursuant to paragraphs 2, 6, 7 and 8 of part II of the Third Schedule of the north New Georgia Timber Corporation Act 1979 of the said Act.

2. Such order of Mandamus shall also command the respondent to make available its accounts or books of accounts or books of account relating to its financial affairs in the previous years since Mr. John Talasasa was appointed as Chairman of the respondent’s Board of Directors pursuant to paragraph 5, Part 2 of the Third Schedule of the said Act.

3. Such other orders as the Court shall see fit.

4. That the Respondent be ordered to pay costs of this application.”

The applicants relied on the affidavit evidence of Mr. Gordon Rence. In response the respondent relied on the affidavit evidence filed by Mr. John Talasasa who now regard himself as the care-taker Chairman of the respondent’s Board of Directors. This matter is therefore to be determined on the strength of the evidence disclosed by the affidavits filed on behalf of each party.

The respondent was established by an Act of Parliament on 1979. That Act was the North New Georgia Timber Corporation Act, 1979 which had been amended in 1980 and 1984. Section 3 of the Act which established the respondent and its Board of Directors provides as follows:

3. (1 ) There is hereby established for the purpose of this Act a Corporation (hereinafter referred, to as “the Corporation”) to be known as the Timber Corporation the principal object of which shall be to promote the utilisation of the timber resources of North New Georgia for the benefit of the customary lands owners of the New Georgia land.

(2.) There shall be a Board of Directors of the Corporation which shall be responsible for the policy and affairs of the Corporation.

(3) The second Schedule shall have effect in relation to the appointment of the Board of Directors of the Corporation, and other matters connected therewith.

(4) There powers of the Corporation shall not be affected by any vacancy in the membership of the Board.

The principal object of the Act is to promote the utilisation of the timber resources of North New Georgia for the benefit of the customary land owners of the area. To enhance that objective, the Act confers, the ownership of all timber standing on the customary land of the land owners of the New Georgia lands to the respondent as a trustee for the landowners.

As far as the Board of Directors are concerned, they are appointed by the Minister for a period of two years representing their respective tribes in the Corporation. The Chairman is nominated from among the members of the Board of Directors and holds office for two years commencing from the date the Board is constituted. In this case, the present Board of Directors were constituted prior to 13 July 1995. Although it has not been made clear to the Court by the parties, I take judicial notice of the fact that the appointment of Board of Directors of the respondent was made by the Minister for Forests, Environment and Conservation on 15 June 1995, and published in the Solomon Islands Gazette on Friday 21 July 1995. The period of appointment therefore commenced from 15 June 1995 and lapsed on 15 June 1997. The chairman was chosen on 13 July 1995 at an Ordinary Meeting of the Board of Directors. In terms of the Act, his chairmanship also lapsed on 15 June 1997.

The complaint-in this case by the applicants is one of non-compliance by the Respondent’s Board of Directors of its obligations under the Act in that it did not meet to consider the question of distribution of revenues to the tribal chiefs of the Gerasi Tribe. In his affidavit evidence Mr. Renee deposed that the last two distributions of royalties he and his tribe received were in December 1994 and June 1995. Since then they have not yet received any further royalty payment due to the Board not having met.

Mr. Talasasa who was the Chairman of the Board of Directors of the respondent deposed that during his term as Chairman, the Board met several times as stated in paragraph 12 of his affidavit. While that may be so, the applicants’ case is that the respondent failed to convene the meeting required under the Act for the purpose of distribution of profits. Section 6 of the Act provides for the functions of the respondent one of which is stated in subsection (1) (e)

“6(1) The principal functions of the Corporation shall be -....

(e) after meeting the running expenses of the Corporation and after setting aside such moneys as members may determine in accordance with paragraph (d) and such money as the Board may determine are required for the Reserve Fund created in accordance with paragraph (dA), to distribute the balance of the revenue of the Corporation in the manner prescribed in Part 1 of the Third Schedule.”

The manner prescribed in Part I of the Third Schedule to the Act is that which is described in paragraph 2 of that schedule. It provides:

“2. Twice a year at the meeting convened for that purpose the Board of Directors shall determine the amount of the revenues of the Corporation available for distribution to members after meeting the running expenses of the Corporation and setting aside such moneys as they have been directed in accordance with section 6(1) (d) to set aside together with such moneys as the Board may determine are required for the Reserve Fund created in accordance with section 6(1) (dA)”,

Under this provision the Board is required to meet twice a year for the purpose of determining the profits of the respondent available to be distributed to the members of the tribes within the area of the New Georgia Lands. This is a meeting specifically provided for under the Act for the purpose of distribution of profits. In addition to this meeting, there are other meetings provided for, either of the Board or the corporation. In the present case, while Board might have convened the meetings deposed to by Mr. Talasasa, there clearly, was no meeting of the Board for the purpose of section 6(1) (e) and paragraph 2 of the Third Schedule since June 1995. As a matter of fact Mr. Talasasa admitted in the course of his submission that “it is true that the Corporation should distribute the royalty money. But until the Corporation meets to approve the distribution of the profits the Corporation has the legal authority over the money”.

He further reiterated that “the Corporation will not meet until the Court of Appeal dealt with the appeal marked ‘JWT 21.’ This is in accordance with our legal advice.” The respondent clearly, not only admitted that it had not met since 1995 but that it is determined not to meet at all until such time as the Court of Appeal deals with the appeal against the decision of Palmer J in another case, Luxton Zovere -v- Jacob Makoto & North New Georgia Timber Corporation, CC138/94 (High Court Judgment given on 14 August 1996). In the course of hearing, the Court asked Mr. Talasasa whether the respondent would be in breach of the Act if it were not to meet on the basis that it was waiting for the Court of Appeal. His answer was that the applicants had caused the delay by taking the respondent to Court, so they had to wait for the Court of Appeal. I do not see the substance of that argument.

The requirement of the law must be complied with. The respondent agreed it had not complied with it but now tries to explain its way out of it. A breach of the Act has occurred in this case by the respondent. It failed to perform a function required of it. Its failure to do so, in my judgment deprived the applicants and their tribe of their entitlement to their share in the profits available for distribution to them as accorded to them under the Act.

The next question is what should be done now that the Board's term had already expired. The respondent's contention is that the present Board can continue to act as care-taker Board until such time as the new Board is appointed. Unfortunately the Act does not provide for a care-taker Board of Directors. The Act clearly provides that the Chairman and other members of the Board of Directors “shall hold office for a period of two years” from the date of the constitution of the board. There is no qualification to the words used. So that once the two year period is up, the term of that Board also expires and a new Board ought to have been constituted. This is what should have been done here.

The proper course to take in this case is to order that as the term of the present Board had already expired, a new Board must be constituted by the Minister responsible in terms of the Act. The new Board shall within 30 days of its constitution convene a meeting in terms of section 6(1)(e) and paragraph 2 of Part I of the Third schedule for the purpose of determining the distribution of funds to the applicants’ tribe.

In terms of the orders sought in the Notice of Motion, the order sought in paragraph 1 (a) is granted in the terms set out in this judgment, that is to say, that a new Board of the respondent be constituted by the Minister responsible. That Board shall be constituted within 60 days from the date of this judgment. Within 30 days thereafter, the new Board shall convene a meeting for the purpose of determining the distribution of funds to the applicants’ tribe.

The orders sought in paragraphs 1 (b) and 2 are also granted and the respondent’s new Board is given a further 60 days after it is constituted to comply with the said orders.

Application is granted with costs against the respondent to be taxed if not agreed.

Order accordingly.

(Sir John Muria)
CHIEF JUSTICE