Uluhoru v Isabel Timber Company Ltd [1999] SBHC 140; HC-CC 197 of 1999 (18 October 1999)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 179 of 1999

JOHN ULUHORU AND OTHERS

-V-

ISABEL TIMBER COMPANY LTD

High Court of Solomon Islands
(LUNGOLE-AWICH J)

Date of Hearing: 7 September 1999
Date of Judgment: 18 October 1999

G Suri for the plaintiffs
P Tegavota for the defendant

JUDGMENT

(LUNGOLE-AWICH J): The Application to be Decided: This is judgment in the application of the defendant/applicant, Isabel Timber Company Ltd, the ITC, dated 2.9.1999 and filed at Court the same day. The application asked for orders that the claims of the plaintiffs/respondents, John Uluhoru and others, in their originating summons case No. HCCC197/99, filed on 3.6.1999, be struck out on the grounds that the claims do not disclose reasonable causes of action, or are frivolous, vexatious and abuse of court process. The application also asked for “other or further orders as [the Court] sees fit”, the usual precautionary prayers to answer possible argument that the Court may not grant orders not applied for.

Previous Related Case about the Same Land

The facts which ITC relied on became common ground, they were these: On 29.10.1991 ITC obtained licence No. 2/32 to harvest and export timber logs from land area which included LR674 and part of LR 673 on Isabel Island. The land included part of Paehena land. Subsequently another logging company, Eastern Development Enterprises Ltd, the EDE, entered upon the land and commenced logging, asserting that it had licence No. 2/78, authorising it to carry out logging on part of the land. ITC had not commenced its logging operations, it brought an action at the High Court, in case No. HCCC56/99, (not this case), claiming permanent injunction and other relief against EDE, and upon that applied for and obtained interlocutory injunction stopping EDE’s operations until final determination of the case. Following that, parties negotiated settlement out of court and signed a deed of settlement which they presented to Court and had it made order of Court by consent on 31.8.1999. Among other clauses in the deed, ITC gave up its right to enter the land and log thereon, agreed to discontinue the case and not to bring any new court cases or make any new claims against EDE, instead it was to assist EDE in the event that there were interferences with the operations of EDE on the land. In return, EDE paid $200,000 to ITC.

The Present Substantive Case

The present plaintiffs/respondents in this case, No. HC-CC 197/99, were not parties in the earlier case No., HC-CC 56/99. Their case, now in Court, is based on their assertion that they are trustees of the owners of Paehena land, part of which was included in land the subject of case HC-CC 56/99, and further, they said that they had entered into agreement with EDE, and had transferred “timber rights” over Paehena land, to EDE, and EDE had obtained logging licence, No. 2/78, based on the agreement. They said that they were desirous of doing logging business with EDE, not with ITC. They contended that ITC wrongly interfered with the logging operations carried out by EDE, the operations which were the subject of case No. HC-CC 56/99, now settled. They claimed that ITC has thereby caused loss to them, the respondents.

The respondents’ case is by challenging the validity of licence, No. 2/32, obtained by ITC. They alleged that the licence was improperly obtained without compliance with the provisions of the Forests Resources and Timber Utilisation Act, Chapter 40 in the Laws. They have asked for declaration of this Court to that effect and for declaration that ITC is not entitled to carry out logging operations on the Paehena part of the land. In their amended originating summons they have, in addition, claimed $200,000 from ITC as money that they contended was “wrongly received” by ITC from EDE, “under the deed of settlement,” between ITC and EDE. They have also asked for order requiring ITC to account for all monies it has received in connection with the land, and for damages for lost royalty.

Determination of the Application to Strike out

The application may be conveniently considered in two parts because different reasons apply. One part of the consideration is whether the claims for the sum of $200,000 and for the order that ITC is to account for all monies received and damages for lost royalty may be struck out. The other part is whether the declaratory relief posed in the 3 questions, and several others arising from the 3, together with the declaration that ITC has no right to carry out logging on the Paehena part of the land, may be struck out.

The Claim for the sum of $200,000 and Related Claims

The claim for the sum of $200,000 and related claims were introduced into the proceeding by amended originating summons dated “2.9.1999”, filed at Court on 3.8.1999. I take it that the date “2.9.1999” was a mistake, it should read 2.8.1999, because the originating summons could not have been filed before it had been drawn. The amended originating summons does not state the authority by which the amendment was made, whether it was by leave of Court or by a rule in the High Court (Civil Procedure) Rules. In other jurisdictions that would have to be specified on the amending document, usually in the heading. I have not been able to identify from the case papers on the case file, the authority for the amendments. I take it that leave had not been obtained. Order 30 rr 2 and 3 which allow for certain amendments without leave do not include amendment to originating summons. Moreover, r 6 specifically directs that intended amendments which the rules do not exempt from leave must be by application to Court for leave. The practice in England from where we adopted our Rules is that amendment of originating summons is only by leave of Court. As the amendments filed on 3.8.1999 were not by leave of Court, I am compelled to strike them out and I do so by this judgment. The claims of the plaintiffs for the sum of $200,000 and all the related claims stated in paragraphs 5, 6 and 7, all introduced into the proceeding by the amended originating summons are struck out. The entire amended originating summons is struck out from the record, the original one filed on 3.6.1999 at the commencement of the case remains the case paper before Court to be considered in the application.

There are other reasons for striking out the claim for the sum of $200,000 and the related claims. The respondents did not specify the head of law by which they claimed that they were entitled to the sum of $200,000 and the related claims. About the sum of $200,000 they simply stated that; “the defendant [be ordered to] pay to the plaintiffs the sum of $200,000 that it received wrongly without any lawful right from Eastern Development Enterprises Ltd under their deed of settlement.” About the relief of providing accounts of all monies received and damages for lost royalty, the respondents did not provide sufficient descriptions of the wrongful acts of the applicants in connection with the land apart from the allegation of invalidity of the applicants’ licence which it has not even used, and how the wrongful acts affected or were connected to the respondents and therefore to liability of ITC. In all the three claims, the respondents did not claim that EDE was their agent or representative in some way according to law. They did not state whether they rely on trespass, conversion, contract or any known head of law. They have not pointed out any known principle of law by which ITC would be liable to them. The basis of the right of the respondents to the sum of $200,000 and the related claims must be stated. The act that interfered with the right must also be stated, and it must be stated that it was the act of the applicants in some way. Without those facts there is no cause of action. The claims of the respondents for the sum of $200,000 and the related claims are lacking in those particulars; they lack causes of action, they are struck out.

The order of Court by consent and the deed of settlement between ITC and EDE were order and contract between only those two; the respondents were not privy to them. There is no clause in the order or deed of settlement which entitles the respondents to the sum of $200,000, royalty and the related claims so that they could demand enforcement of the order. As strangers to the contract, the respondents cannot sue on the contract. That rule was sated as early as 1883 in Price -v- Easton [1833] EngR 334; [1833] 4 B & AD 433 and later in notable cases such as McGruther -v- Pitcher [1904] UKLawRpCh 114; [1904] 2 Ch 306 and Dunlop Pneumatic Tyre Co. Ltd -v- Selfridge & Co. Ltd [1915] UKHL 1; [1915] AC 847. A more modern case is Beswick -v- Beswick [1967] UKHL 2; [1968] AC 58. In the last two cases the contracts even provided for benefits to the plaintiffs, but they failed to enforce the contracts because they were strangers to the contracts. Had the settlement been in a simple contract form and not in a deed there would have been the added reason that the respondents did not provide consideration in return for the consideration of the applicants.

An order or judgment of Court made by consent of parties is binding on all the parties and acts as an estoppel in any subsequent case between the parties about the same subject matter - see Kinch -v- Wallcott [1929] AC 483 and in Re South American, Company, Ex Parte Bank of England [1894] UKLawRpCh 184; [1895] 1 Ch 37. Sometimes an order of court and court recognisance are loosely described as contracts of record; they are not contracts, they are really authority of court. A court order is authority of court converting and confirming the rights and obligations in a case to a form in which they may be enforced. An Order by consent is not any less enforceable than an order reached as the result of full deliberation and judgment by court. A deed of settlement or simple agreement which has become part of an order by consent, or has been evidenced by the order is a contract like any other. However, the order, like all orders of court obtained summarily, may be set aside, and indeed a deed of settlement or simple agreement incorporated into or evidenced by an order by consent may be set aside on any grounds that vitiates a contract - see Huddersfield Banking Company Ltd -v- Henry Lister and Son Limited [1895] UKLawRpCh 64; [1895] 2 Ch 273 and Re South American Company Ex Parte Bank of England. It must be noted, however, that the order to set aside can be made only in a case specifically brought to set aside the order and deed.

The consent order and deed of settlement in case No. HC-CC 56/99 became enforceable on 31.8.1999, the date on which the order was made. There has been no proceeding to have them set aside and so they remain enforceable to this date. No judgment or order of court other than on appeal, can be made to destroy their enforceability when they have not been set aside. The amended claims of the respondents in effect seek to destroy the order and deed of settlement without having them set aside or vitiated. That cannot be allowed. The amended claims for the sum of $200,000 and the related claims cannot be allowed to proceed. They are struck out for the additional reasons.

The Claim about the Validity of Licence No. 2/32 and Declaratory Relief

The original case of the respondents put in questions form and a request for two declarations is really a single issue upon which they seek a declaration to invalidate licence No. 2/32 of the applicant, and a declaration that the applicant has no right to carry out logging on the land said to belong to the respondents. I think the case could have been put more simply in narrative other than questions form. The respondents could have simply stated that they seek declarations from the Court that licence No. 2/32 issued to ITC on 29.10.1991 is invalid on the ground that it was obtained without due compliance with the provisions of the Forests Resources and Timber Utilisation Act and that as the result, the applicants have no right to carry out logging on part of the land which is Paehena land. If they wished they could particularise very briefly some of the facts constituting the non-compliance with the provisions of the Act in the statement about their grounds for the claim. Detailed facts are materials to go into the supporting affidavit.

Learned Counsel Mr P Tegavota, for ITC, made very clear submission to support the application of ITC, that the entire case of the respondents be struck out. He said that the issue that the present case raises, that is, that the licence of ITC is invalid on the ground that the respondents’ consent was not properly obtained, was the same issue raised by EDE in case No. HC-CC 56/99. Mr Tegavota’s argument proceeded that ITC has never and is now not carrying out logging operations on the land, and since it has, by deed of settlement, abandoned its right conferred by the licence and it does not intend to log on the land anymore, and since the deed has been made order of Court, the issue about the licence of ITC has already been resolved by Court, there is no issue left over the land, in which issue, ITC can be a party. He asked that the respondents’ case No. HC-CC 197/99 be struck out for those reasons.

Learned counsel Mr Suri, for the respondents, met Mr Tegavota’s submission with the reply that a declaratory judgment or order may be sought even if the plaintiff merely seeks declaration and does not seek any specific relief for himself, it is not necessary that there be a cause of action for a declaratory judgment to be sought. He relied on Order 27 rule 5 in the High Court (Civil Procedure) Rules, which states:

“5. No action or proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether any consequential relief is or could be claimed or not.”

The two submissions have posed the question as to whether this Court can pronounce a merely declaratory judgment in this case, stating the position of the licence of the applicant without also granting consequential relief to the respondents. Mr Tegavota’s submission that after the conclusion of case No. HC-CC 56/99 no issue is left to be brought to court about the licence of ITC in this case No. HC-CC 197/99, is part of the wider question.

Order 27 r5 adopted word for word, Order 15 rule 16 of the Rules of the Supreme Court, 1965, in England. The English rule 16 was taken from its predecessor, rule 5 of Order 25 of the earlier Supreme Court Rules, 1883. Their distant origins were in the Chancery Act, 1850 and the Judicature Acts, 1852. The provision of our Order 27 r5 (O15 r16 of the Supreme Court, England) was intended to change the rule of the Common Law, that a declaratory decree could not be made unless there was a right to consequential relief capable of being had in the same Court or in some other Court - (see Strimantho Moothero Vijia Regoonadah Ranee Kolandapuree Natehear -v- Dorasinja Tever (1875) 2 LR IA 169, judgment of the Privy Council in a case from India). Also see Clough -v- Radcliffe [1847] EngR 532; (1847) 1 De G & S 164 where Vice Chancellor Bruce said:

“...........nakedly to declare a right, without doing or directing anything else relating to the right, does not belong to the function of this Court.”

The rule was consistent with the view widely held and is still valid to a large extent, that courts do not decide hypothetical and academic questions.

I think the two declarations sought in this case would even meet the requirement of the old rule anyway. In my view the second declaration sought, that ITC has no right to carry out logging on the respondents’ land, if made, has the effect of conferring consequential relief on the respondents because the land would be declared free of the licence of ITC over it, and should ITC attempt to use its licence, the respondents would enforce their rights in the declaration. That is different from saying that the respondents already have a cause of action. As I understand it, a cause of action arises when there is a right and there is interference, actual or threatened, with the right; appropriate relief may then be claimed. In this case there has been no interference with the asserted right yet. The circumstances are similar to those in Burghes -v- Attorney General [1911] UKLawRpCh 57; [1911] 2 Ch 139.

The Common Law rule has been modified by successive Rules of Court and has progressed so that courts will now allow a litigant to pursue a case for merely a declaration of right whether or not he seeks other consequential relief. It is now subject only to the discretion of court to refuse to grant the declaration, usually on the ground of it being inequitable or contrary to accepted principles upon which courts usually exercise jurisdiction. Important English cases in which the rule has been progressively established are; Dyson -v- Attorney General [1910] UKLawRpKQB 203; [1911] 1 KB 410, Guaranty Trust Company of New York -v- Hannay & Co. [1915] 2 KB 536 and Rediffusion (Hong Kong) Ltd -v- Attorney General (Hong Kong) [1970] UKPC 12; [1970] AC 1136.

Recently, the Court of Appeal of Solomon Islands stated some of the factors to be considered in deciding whether the Court would proceed to hear and determine an appeal, when its judgment would be merely declaratory without specific relief resulting to the plaintiff/appellant because the question in the case had been overtaken by events and rendered moot before the appeal came up for hearing, and consequential relief to the appellant was no longer possible. The case is The Prime Minister -v- Governor General, Civil Appeal No. 14/98. In the case, application was made to strike out the appeal because the orders in the judgment of the High Court had already been carried out by Parliament sitting as directed by the High Court. The Court of Appeal refused to strike out the appeal, it went on to decide the question as to whether under the Constitution, the Governor General may call Parliament to sit if it has become apparent to him that the Prime Minister no longer has the support of the majority of Members of Parliament. The Court answered that the Governor General had no power to call Parliament to sit, an answer which would have resulted in Parliament not being called by the Governor General and Parliament would have not sat, had the judgment of the Court of Appeal been available early. The Court approved the considerations to be taken into account stated in cases from England and Australia, namely, that the plaintiff must have a real interest in raising the question - Russian Commercial and Industrial Bank -v- British Bank of Foreign Trade Ltd [1921] 2 AC 433 - Ainsworth -v- Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, and that the power to grant declaration should be exercised with a proper sense of responsibility and with a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making - Ibeneweka -v- Egbuna [1964] 1 WLR 219, judgment of the Privy Council in appeal case from Nigeria. The Court of Appeal pointed out the added reasons in the case before it that, the questions to be decided had occurred on earlier occasion and could recur, and that the questions raised were important constitutional questions affecting Parliament and the political process of the Solomon Islands.

Mason, President of the Court of the Court of Appeal, was not in the country, during the events that led to the case, he lived in Australia, but the added reasons he stated in the judgment were very much true, the events leading to the case created great and dangerous anxiety in the country. The High Court and the legal profession had expected the question to be answered in 1994 in an earlier appeal case between the Governor General and an earlier Prime Minister, Hilly -v- Pitakaka Civ. Appeal No. 10/94. It was not answered, the Court of Appeal simply ordered Parliament to sit without answering the legal question. Not surprising, the question was back in Court in 1998.

As I proceed to make determination on the facts of this case as presented in the original originating summons of the respondents, it is appropriate to remind myself that although a merely declaratory judgment may be claimed without necessarily proving a cause of action in the plaintiff, it is still a requirement that a real and genuine question must have arisen in which the plaintiff has interest to seek a declaration. Beyond that consideration, and if the Court finds that there is a genuine question in which the plaintiff is interested, the court may still decline to make the declaration on the particular facts as a matter of discretion if it will be inequitable or contrary to the principles upon which courts will usually exercise discretion, for example, if making the declaration will lead to an abuse of court process.

The first declaration sought, that licence No. 2/32 obtained by the applicants was obtained without compliance with the provisions of the Forests Resources and Timber Utilisation Act, is a declaration sought alone without an accompanying consequential relief. The second declaration sought, that ITC had no right to carry out logging on land said to belong to the respondents, may, on the face of it, appear to be seeking specific consequential relief for the respondents. In reality however, it confers no relief because ITC has never entered upon the land and does not intend to. There is therefore no cause of action in the respondents in the second declaration. It is a declaration without consequential relief claimed, just as the first. Do they qualify though, as putting forward real and genuine questions in which the respondents are interested so that the Court may make determination about them?

In their affidavits the respondents said, among other things, that they are owners of the land and that they never entered agreement transferring their timber rights to ITC. Their argument would then be that the licence obtained by ITC was obtained without compliance with the Forests Resources and Timber Utilisation Act and therefore invalid. If the respondents prove that they are the owners of the land and that they never transferred timber rights to ITC, they will, should this Court proceed to make determination in this case, come to know whether their land is free or not from the licence of ITC, even if no specific relief is conferred upon them. In my view their case seeking the two declarations raises a genuine question as to whether the respondents’ right to the land is subject to the licence of the applicants or not. That would give them standing to seek even merely a declaratory judgment without any specified consequential relief to them.

Discretion based on Abuse of Court Process

The question will arise as to whether a possible declaration at the final determination of this case, that the licence of ITC is invalid may not be with-held by the Court on the ground that its effect on case No. HC-CC 56/99 may amount to an abuse of court process by reopening the dispute between ITC and EDE. The submission of Mr Tegavota that there is no longer an issue in which ITC can properly be a party in court because court has already adjudicated the issue comes in here. I have resolved that the question should wait until final determination, when full and accurate facts will have been ascertained. The Court will then at that time decide whether there will be grounds to exercise discretion to decline to pronounce the declaratory judgment because of its implication on case No. HC-CC 56/99. For now the declarations sought by the respondents can be adjudicated upon, they are issues between ITC and the respondents, not between ITC and EDE. On the facts of this case, to decide the point now will deny the respondents opportunity to be heard in as far as their own interest in the land and therefore in the licence of the applicant is concerned. It may well be that on the full facts, abuse of court process is not disclosed nor is intended.

Limitation of Actions

Although the question of limitation of action had not been raised in the application of ITC until submission stage, I allowed it to be argued. Limitation of action is a point which must be specifically raised in defence. My experience tells me that if I do not deal with it now, it will be included in the defence and will most likely be raised in a preliminary application. The result will be that more time of the Court will be spent on them than necessary. Mr Suri has answered the questions of limitation satisfactorily. The question as to whether the respondents are the persons entitled to transfer timber rights over Paehena land, depends on their right in the customary land. It is on that right in customary land that the respondents’ argument that their agreement was not properly obtained depends. Section 3 of the Limitation Act exempts question about right in customary land from the limitation periods under the Act.

I have one general observation to make. I have always wondered whether making preliminary application to strike out claim or to have a point of law decided in limine in a proceeding by originating summons, serves useful purpose. I say so because originating summons proceeding is usually reserved for cases in which facts are not in dispute, so can the point in the preliminary or interlocutory application not be heard in the hearing of the originating summons straight away other than having two or more hearings on facts which will have not changed? May be this suggestion will be considered when the time for revising the Rules of Court has come. I have made this observation based on my experience that there seems to be a tendency among some solicitors to make several interlocutory applications in one case with the result that the conclusion of the case is much delayed.

Costs

Costs are reserved to the final determination of the case.

Delivered this Monday the 18th day of October 1999
At the High Court
Honiara

Sam Lungole-Awich
Judge