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Eastern Development Enterprises Ltd v Zae [2000] SBHC 3; HC-CC 350 of 1999 (4 February 2000)

HIGH COURT OF SOLOMON ISLANDS


Civil Case No. 350 of 1999


EASTERN DEVELOPMENT ENTERPRISES LIMITED


–v-


STANLEY ZAE AND OTHERS


High Court of Solomon Islands
(F.O. KABUI), J)


Date of Hearing: 1st February 2000
Date of Judgment: 4th February 2000


G. Suri for the Plaintiff
C. Ashley for the Defendants


JUDGMENT


(Kabui, J): Eastern Development Enterprises Limited (the Plaintiff) filed on 21st October 1999 a Writ of Summons and a Statement of Claim against Stanley Zae and Nicholas Bako (the First Defendants) and Simon Lamata, Elite Manehe, Samuel Sago and Amina Gosali (the Second Defendants) all of whom are the Defendants in this case. The Plaintiff also filed on that same day a Notice of Motion seeking the following interlocutory orders against the Defendants:-


  1. An order restraining, until further orders of this Court, the First and Second Defendants (whether by themselves, their relatives, agents or servants or otherwise howsoever) from inviting allowing or negotiating with any company or person for purposes of felling, harvesting and extracting timber within the said Zazao land whether for sale or otherwise.
  2. An order restraining, until further orders, the First and Second Defendants (whether by themselves, their relatives, agents or servants or otherwise howsoever) from stopping interfering threatening or carrying out any illegal activities that will hamper delay or cause stoppage to the logging operations of the Plaintiff within the said Zazao land.
  3. Costs of and incidental to this matter be in the cause.
  4. Further or other orders as the Court deems fit.

I heard the Plaintiff on 12th November 1999 but had to adjourn the hearing to give Stanley Zae who appeared for the Defendants the opportunity to consult his lawyer, Mr. Ashley of A & A Legal Service. Mr. Ashley, solicitor for the Defendants filed a Memorandum of Appearance on 12th November 1999 together with a defence and a counter-claim.


On 28th January 2000, Mr. Ashley filed a Summons seeking the following interlocutory orders against the Plaintiff:-


  1. The Plaintiffs are to deliver to the Respondents solicitors its logging plan for LR703 AND 704 within 7 days; and
  2. The Plaintiffs whether by itself or its agents/servants be restrained from carrying out any logging activity whatsoever on Zazao land also referred to as LR703 and 704 except for the following:-
  3. The permitted activities referred to in sub-paragraphs (a) to (e) of 2 above be completed within 90 days or such other period as agreed to between the parties;
  4. The Plaintiffs pay to the First and Second Defendant Solicitors Trust Account the amount of $40,000.00 in accordance with clause 2(1) of the Supplementary Agreement;
  5. The parties be at liberty to apply to the Court for a variation of the above Orders on two days notice;
  6. Costs of this application be in the cause; and
  7. Any further order the Court deems fit.

The Defendants’ application was obviously based upon the Defendants’ counter-claim made by them against the Plaintiff. I heard both applications together on 1st February 2000 each seeking interlocutory orders against each other.


The Facts


The Plaintiff is a Company incorporated in Solomon Islands. It carries on the business of logging in Solomon Islands. It entered into two Agreements with the Trustees of the Bahai clan and Kusa clan, the customary owners of Zazao land on Isabel Island in the Isabel Province. The Defendants are all members of the Bahai clan. The First Defendants are two of the five trustees representing the Bahai clan. The two Agreements were signed by the parties on 10th July 1997. The first being the Standard Timber Rights Agreement and the second being a Supplementary Agreement. Sometime in May, 1999, the Plaintiff brought its logging equipment to Kilokaka village to commence its work under the terms of the said Agreements. The logging equipment never went ashore. The Defendants stopped the said equipment from being unloaded at Kilokaka Village. The said equipment had to be returned for this reason. The Plaintiff had obtained Licence No. TIM 2/101 for its intended logging operation on Zazao land from the Government on 21st August 1997 following the signing of the said Agreements. The Licence will expire on 1st August 2002.


The Plaintiff’s Case


The Plaintiff’s case as put by its Counsel, Mr. Suri was this. The Plaintiff and the First Defendants were parties to valid Agreements signed on 10th July 1997 upon which a valid Licence was issued on 1st August 1997. The Licence was issued after the completion of all the procedural steps prescribed in the provisions of the Forest and Timber Utilization Act (Cap. 40) for the acquisition of timber rights on customary land. The Plaintiff therefore had an interest in the trees covered by its Licence. The Plaintiff therefore had locus to come to Court to protect its interest. Also, the Plaintiff stood to lose money if the injunction sought was refused. That is, the damage it would suffer could not be compensated by the Defendants. Whereas, the Defendants would only suffer damage for breach of contract which could be measured in monetary terms. Therefore for these reasons, the balance of convenience would lie in its favour in this case, there being triable issues at hand. Furthermore, in terms of clause 36 of the Supplementary Agreement, this Agreement would take effect from the date of landing of the first equipment in the harbour for campsite construction. Therefore, the Defendants’ conduct in preventing the landing of the first equipment at Kilokaka in May, 1999 was a breach of clause 36 of the Supplementary Agreement. The Defendants’ conduct was an obstruction to the Plaintiff’s duty to perform its obligations under the signed Agreements. They would not, for this reason, be entitled to seek the assistance of the Court to protect their breach of contract. The Court must therefore weigh the strength of each party’s case and decide in favour of the Plaintiff.


The Defendant’s Case


Like the Plaintiff, the Defendants’ case as put by their Counsel, Mr. Ashley was this. There were three triable issues in this case, namely, the validity of the Agreements signed on 10th July 1997, breach of the Supplementary Agreement and whether or not the First Defendants as two of the five Trustees for the Bahai clan had the authority of the members of the Bahai clan to challenge the Plaintiff. The Defendants conceded order (i) sought in the Notice of Motion filed by the Plaintiff on the ground that the Defendants would also agree to refrain from inviting in any other logging Company or persons until the dispute between the parties was sorted out. The Defendants would however resist order (ii) in the same Notice of Motion. Instead, orders sought by the Defendants in the Summons filed on 28th January 2000 should be granted by the Court. Damages to be suffered by the Defendants if their injunction was refused would outweigh any damages suffered by the Plaintiff and therefore the balance of convenience would lie in favour of the Defendants.


The Plaintiff’s Motion


The Defendants rightly conceded the granting of Order (i) sought by the Plaintiff’s Notice of Motion. I am prepared to grant Order (i) above on that basis. The Defendants however, resisted Order (ii) on the ground that they had a stronger case than the Plaintiff’s case for an injunction. The terms of Order (ii) are general and rather embracing in nature. The Plaintiff believes it is necessary because of the Defendants conduct in May 1999. There is a fear that the Defendants may repeat their conduct and may do other things to disrupt the smooth operation of the Plaintiff on Zazao land. The kind of injunction often asked for in this sort of case is called “quia timet” injunction. It means “since he fears”. (See Equitable Remedies Injunctions and Specific Performance by I.C.F. Spry, 1971 at 340-344). The granting or otherwise of this kind of injunction depends upon the circumstances of each case. However, in general, the Plaintiff must show that the injury apprehended is substantial and that such threat of injury is imminent. Where the fear is a repeat of the conduct of the offending side, an injunction of this kind may also be granted. There must however be evidence of intention to repeat or continue such conduct. In this case, the Defendants would probably repeat their conduct only if the Plaintiff attempts to land its logging equipment at Kilokaka village a second time. I doubt the Plaintiffs would do this under the present circumstances so as to spark off confrontation. Also, there is no evidence to suggest that the Defendants are intending to disrupt the smooth operation of the Plaintiff although the risk is there if the Plaintiff should force its way in before the trial of the issues between the Plaintiff and the Defendants. I do not think the Plaintiff would do that for obvious reasons. There are obviously triable issues between the Plaintiff and the Defendant. The validity of the said Agreements is clearly in issue. There is also the issue of breach of the Supplementary Agreement. The Plaintiff’s case is therefore not frivolous or vexatious. The next question is where does the balance of convenience lie in this case? If I refuse order (ii), would the Plaintiff be adequately compensated for any loss incurred by it if it wins its case? If the answer is yes, then I need not grant order (ii) as requested by the Plaintiff. I would, however, if the Plaintiff undertakes to compensate the Defendants for any loss ordered by the court if that would adequately compensate the Defendants for damages incurred up to trial. Failing these criteria, all other factors must be taken into account bearing in mind the need to keep the status quo. The comparative strength of each party’s case may also be a determining factor in the balancing exercise of the merits of each party’s case.


In this case, the first test does not apply. The question of damages does not arise. There is no evidence of it before me. The second test does not also apply. The Plaintiff has not entered into an undertaking to meet the damages that may be ordered by the Court in favour of the Defendants. I would apply the third test. That is, taking into account all the factors in this case, keeping in my mind the need to keep the status quo. In my view, the granting of order (i) is enough to maintain the status quo in this case. Furthermore, the fear the Plaintiff has against the Defendants about imminent danger of threat is unfounded. There is no evidence of it. I therefore refuse order (ii) above sought by the Plaintiff.


The Defendants’ Summons


Order 2 sought by the Defendants in their Summons is an injunction against the Plaintiff to prevent it from carrying out logging on Zazao land. Its intent is however limited in view of the permitted activities in (a) to (e) of Order 2. Its effect is that the Plaintiff may bring in its equipment into Zazao land but only for the limited purposes in (a) to (e) of Order 2. The injunction sought is therefore to prevent the Plaintiff from carrying out actual logging operation in Zazao land. The same triable issues identified in the Plaintiff’s case are present in the Defendants’ Counter-claim. An addition is the issue of whether or not the Defendants do have the authority to represent all the members and trustees of the Bahai clan. I bear in mind the relevant tests to be applied in deciding whether or not an injunction can be granted. In applying the first test, I am confronted with the difficulty of there being no evidence of loss by the Defendants. There is the risk of loss but how much. I can speculate but the loss ought to be specific in my view for me to decide whether or not if I refuse the injunction, the Defendants would be adequately compensated. The answer is not clear in this case either way. Again, the Defendants have not given any undertaking to underwrite any loss that may be awarded by the Court to compensate the plaintiff’s loss. I must again look at all the factors in this case bearing in mind the need to keep the status quo.


Paragraph 4 of Mr. Lam’s affidavit sworn on 21st October 1999 and filed that same day bears out the intention of the Plaintiff. Paragraph 4 above states,


“In or about May 1999 the Plaintiff company transported logging equipment and machines to Kilokaka village on Isabel Island but were stopped by the Defendants from unloading the said equipment and machines. It was the intention of the company to carry out community projects first (i.e. clinic, school and church) before moving those equipment and machines to the proposed site for logging at Gajuhonari.”


Clearly, the Plaintiff’s intention is exactly the demands of the Defendants in (a) to (e) in Order 2. The arrival of the Plaintiff’s logging equipment in May, 1999 at Kilokaka was in accordance with clause 36 of the Supplementary Agreement to commence the activities in (a) to (e) in Order 2 though 22 months later after the signing of the said Agreements. Activities (a) to (e) above would have commenced in June, 1999 had the Defendants allowed the unloading of the first logging equipment at Kilokaka. They are to be blamed for the Defendants failure to commence any of the activities in (a) to (e) in Order above. They cannot now turn around and enforce these obligations against the Plaintiff as though the Plaintiff refused to carry them out in breach of the Supplementary Agreement. The Defendants must come to the Court of equity with clean hands. Clearly, what the Defendants are asking for in Order 2 is exactly what the Plaintiff intends to do under the Agreement. No work is being done because of the Defendants own conduct. The request for an injunction by the Defendants therefore does not hold water because the Plaintiff is not threatening to start logging operation at Gajuhonari. There is no evidence of such a threat. I can see no proper basis for an injunction in favour of the Defendants. I would refuse Order 2. I would also refuse Order 3 as read with (a) to (e) of Order 2. Furthermore, I refuse Order 4 as there is no evidence that the Plaintiff has refused to honour its commitment under clause 2(1) of the Supplementary Agreement. Finally, I refuse Order I also. I think the matter raised in Order (1) is a matter that the Defendants are entitled to raise at the trial proper as it would seem to concern aspects of the validity of the said Agreements. In summary, I hereby grant Order (i) sought by the Plaintiff in its Notice of Motion but refuse Order (ii) therein. I refuse all the Orders sought by the Defendants in their Summons. As I have said, the restraining Order 1 sought by the Plaintiff against the Defendants is enough to maintain the status quo until trial.


The Order of this Court in terms of Order (i) in the Plaintiff’s Notice of Motion is that the First and Second Defendants (by themselves, their relatives, agents, servants or otherwise howsoever) be restrained from inviting allowing or negotiating with any Company or person for purposes of felling harvesting or extracting timber within Zazao land for sale or otherwise until further order of this Court. Cost be in the cause.


F.O. Kabui
Judge

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