Ado Solomons Corporation Ltd v Lagwaeano Sawmilling and Logging Company Ltd [2000] SBHC 30; HC-CC 103 of 2000 (1 August 2000)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 103 of 2000

ADO SOLOMONS CORPORATION LTD

-V-

LAGWAEANO SAWMILLING & LOGGING COMPANY LTD,
JOSEPH TAEGA & OTHERS AND JOY ITAIA
(trading as OCEANIA TRADING)

High Court of Solomon Islands
(Kabui, J)

Date of Hearing: 31st July, 2000
Date of Ruling: 1st August, 2000

Mr J. Hauirae for the Plaintiff
Mr C. Ashley for the Defendants

RULING

(KABUI, J): The Plaintiff seeks the following orders -

1. That the proceeds of sale of 800m³ of round logs of the species pometia to be exported by the 1^st, 2^nd, 3^rd and 4^th Defendants on the 22^nd of July, 2000 for the sum of US81,000 or SBD$420,000 be not released to them but the said sum be paid into Court until inter-partes hearing between the parties when the said order could be varied and/or new orders made by this honourable Court.
   
2. That this honourable Court, through the Registrar of the High Court lists the inter-partes as soon as possible and that all Court documents be served on all the Defendants.
   
3. That copies of the ex-parte summons together with the affidavit in support and Court order be served on all the Defendants.
   
4. That there be no order as to costs of this application.
   

These proposed orders are contained in an Ex parte Summons filed by the Plaintiff on 31^st July, 2000. The Ex parte Summons was served upon Counsel for the Defendants, Mr. Ashley, at 2:30 pm the same day and Mr. Ashley was accordingly present in Court for the Defendants in response to that service on him.

The Background

The Plaintiff filed a Writ of Summons against the Defendants on 4^th April, 2000, asking in the Statement of Claim for the following –

(a) an order or declaration that a management agreement entered into on 10^th November, 1999 and a sub-contractor agreement entered into on 12^th November, 1999 were unlawful and void as they were entered into in breach of an earlier contract entered into on 14^th February, 1997;

(b) an order for specific performance of the contract entered into on 14^th February, 1997 above;

(c) an order that the plaintiff is entitled to 50% of the balance of the export sales from the first, second and any future shipments of logs felled on Lagwaeano Land financed by the Plaintiff in the sum of SB$3,945,000 between April and December, 1997;

(d) such other order or orders as the Court sees fit; and

(e) costs.

The Plaintiff also filed an Ex parte Summons that same day seeking an injunction against the release of the sum of US$240,000 or SB$1,200,000 to the Defendants but that the sum be paid into Court until inter-partes hearing or until the order was varied or until further orders of the Court. Palmer, J. granted the injunctive order in those terms that same day. On 26^th April, 2000, the Defendants filed a summons seeking the discharge of the Palmer, J's injunctive order of 4^th April, 2000 or in the alternative, the order be varied on the Defendant's suggested terms. The hearing of the Defendant's Summons was adjourned by Awich J on 2^nd May, 2000 due to the absence of Counsel for the Plaintiff.

A consent order was subsequently filed in the Court on 8^th May, 2000 which varied paragraph 1 of the injunctive order made by Palmer, J. on 4^th April, 2000. On 27^th April 2000, the Defendants filed their Defence and Counter-Claim having entered appearance on 18^th April, 2000. On 16^th May, 2000, the Plaintiff filed its reply to the Defendant's Defence and its Defence to the Plaintiff's Counter-Claim and joined issue. On 30^th May, 2000, the Defendants filed their reply to the Plaintiff's Defence to their Counter-Claim and likewise joined issue. Nothing more happened after the close of pleadings in terms of fixing a hearing date until a Notice of Change of Advocate was filed by Mr. Hauirae of A & H Lawyers on 26^th July, 2000. In the meantime, the proceeds of logs exported by the Defendants on 22^nd July, 2000 worth US$81,000 or SBD$420,000 were due to be received in Solomon Islands on the date of the Plaintiff's Ex parte Summons or soon thereafter.

The Basis for the Relief Sought

The Plaintiff was the financier for the logging operation on Lagwaeano Land. Under clause 3 of the Agreement (Exhibit "AL1") attached to Mr. Loboi's affidavit filed on 31^st July, 2000, the Plaintiff was committed to providing finance for logging operation up to SBD 5 million dollars. The actual sum already expended by the Plaintiff at the time of filing its Writ of Summons stood at SBD 3,945,000 dollars. This sum was largely spent on the cost of plant hire, equipment, fuel, wages and road construction. The Plaintiff's money was to be repaid from the export revenue of the logs harvested on Lagwaeano Land and sold overseas. (clause 3 of "AL1") above. The Agreement (Exhibit "AL1") above was to run for a period of 15 years under clause 31 of that Agreement. However, the 1^st Defendant inspite of this clause, terminated the Agreement (Exhibit "AL1") above and substituted it with another Agreement, the 3^rd Defendant being the other party and the terms of which are 60% and 40% sharing ratio of the sale proceeds of the logs. Also, the 1^st and 3^rd Defendants in breach of the Agreement (Exhibit "AL1") above entered into a sub-contract Agreement with the 4^th Defendant the terms of which are 57%, 40% and 3% sharing ratio of the sale proceeds of the logs. The Plaintiff clearly has an interest in the proceeds of the sale of the logs harvested from the Lagwaeano Land being the recovery of its funds so far expended in that logging operation.

The Relief sought by the Plaintiff and Conclusion

As set out in its Ex parte Summons above, the Plaintiff is seeking an injunctive order to prevent the proceeds of the sale of 800m? of round logs being dissipated by the Defendants thus jeopardising the full recovery of its funds. There are clearly triable issues disclosed in the Plaintiff's Statement of Claim. The Plaintiff clearly stands to lose if it does not act to prevent the proceeds of the sale of logs in the hands of the Defendants from being used up before the resolution of its case by the Court. Once the logs harvested on Lagwaeano Land have been sold and gone with the sale proceeds gone also, the Plaintiff would certainly be sure that its claim against the Defendants would never be satisfied. The only source of revenue are the logs being felled and sold overseas for money. Once that source is gone, the revenue also stops. The Defendants have not given any undertaking so as to cushion the loss that the Plaintiff may suffer if I refuse the injunctive order and the Plaintiff wins its case. It is obvious that if I refuse the injunctive order in favour of the Defendants, the Plaintiff would certainly suffer a lot more damage than the Defendants. The Defendants have not shown to me by evidence what damage they would suffer and to what extent, if any, if I grant the injunctive order being sought by the Plaintiff. Counsel for the Defendants, Mr. Ashley, said that the Plaintiff had been guilty of delaying the inter-partes hearing by failing to request the Registrar of the High Court for an earlier hearing date and the fact that it had waited to spring upon the Defendants in this way was more than unfair to the Defendants. As I have said, Mr. Hauirae was only instructed by the Plaintiff as early as 26^th July, 2000. If there is any fault at all, Mr. Teutao, the first solicitor for the Plaintiff, would be the one to explain the reasons for such a delay. There is no merit in that point. Mr. Ashley also said that by coming to Court in this way and asking for an injunctive order was an interference with the logging operation in breach of paragraph 3 of the Consent Order dated 8^th May, 2000. There is also no merit in this point. There is in my view no connection between paragraph 3 of that Consent Order and the Plaintiff's present application. The Plaintiff is bound to come to Court if its claim is likely to be defeated by the result of the conduct of the Defendants in that the receipt and dissipation of the proceeds of the sale of logs from Lagwaeno Land ahead of the hearing of its claim by the Court would be prejudicial to the full recovery of the Plaintiff's money. Mr. Ashley further said that the third shipment of logs consisted of logs felled under the Defendants' own arrangements and had no connection with the Plaintiff. Whilst they may be so depending on further evidence, the fact remains that these logs were extracted from Lagwaeano Land, the source of revenue from which the Plaintiff's money was to be repaid under the Agreement (Exhibit "AL1") above. This point also has no weight. I am therefore of the view that the Plaintiff's position needs to be protected until the final resolution of the main dispute between the Plaintiff and the Defendants. I therefore in exercising my discretion grant orders (1) and (4) as set out in the Plaintiff's Ex parte Summons. That is to say, I Order that -

1. the proceeds of the sale of 800m³ of round logs of the species pometia exported by the Defendants on 22^nd July, 2000 in the sum of US$81,000 or SBD$420,000 be paid into Court by the Defendants forthwith until further order of the Court;
   
2. there will be no order as to costs.
   

I order accordingly. How soon the inter-partes hearing will be fixed is a matter for the Plaintiff to discuss with the Registrar of the High Court in the usual manner. I do not need to make an order for that to be done. Service of documents on the other side is the usual practice. I make no order as to that practice. I refuse to make orders (2) and (3) as set out in the Plaintiffs Ex parte Summons. I grant the Plaintiff’s application on these terms.

F.O. Kabui
Judge