Omex Ltd v Malanga [2000] SBHC 69; HCSI-CC 109 of 2000 (17 October 2000)

CC, 109, 2000.HC

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No.109 of 2000

OMEX LIMITED

-v-

JOSEPH ALEVE MALANGA, ALOWYN PITU, SAMUEL ALOTINI HAPE
AND KIMO LILIVAE SALEMAN
(Trading under the firm, name or style of Valahoana Company Intergrated Development)
And JOSEPH ALEVE MALANGA, ALOWYN PITU, SAMUEL ALOTINI HAPE, AND KIMO LILIVAE SALEMAN

High Court of Solomon Islands
(Muria, CJ.)
Civil Case No.1 09 of 2000

Hearing: 16 August 2000
Judgment: 17 October 2000

J. Katahanas for Plaintiff
C. Ashley for second Defendant

JUDGMENT

MURIA CJ: This is an application by the second defendants seeking the orders prayed in the Notice of Motion filed on 22nd May 2000. The orders sought by the defendants are those contained in paragraphs (1) and (2), of the Notice of Motion namely:

“1. The plaintiff puts up security up to 50% of the total proceeds of the logs exported from the 1st and 2nd Defendants concession/land to date or in the alternative the Plaintiff pay into Court 50% of the total proceeds of logs exported on the 1st and 2nd Defendants undertaking as to damages.

2. That royalties due to the 2nd Defendants (including royalties paid into court be relased forthwith to the 2nd Defendants.”

Before I proceed further with this matter, I make it plain that the first defendants trading as “Valahoana Company Intergrated Development” are not represented here and so no consideration of their position will be dealt with. As Mr. Ashley of counsel for second defendants rightly pointed out that this application is mainly between the plaintiff and second defendants. Further, I need also mention, that in so far as paragraph (1) of the Notice of Motion is concerned, Mr. Ashley is not pursuing the alternative sought in that paragraph.

There are two main issues which the Court is concerned with in this case. Firstly, should the plaintiff be ordered to pay security of up to 50% of the total proceeds of the logs exported and secondly, whether royalties, including those paid into Court, be released to the second defendants. In this regard, the order made by this Court on 12th April 2000 would have to be borne in mind.

The second defendant's case is that they want 50% of the proceeds of the sale of logs paid to them, if not, paid into Court since the plaintiff is only a paper company with no assets upon which the defendants could enforce their rights or benefits. Thus the payment of 50% of the proceeds especially into Court would be a form of security for the second defendants to benefit from their natural resources.

Mr. Katahanas strongly opposed the second defendants' application on the ground that it was an abuse of the process of the Court. Counsel submitted that the same argument was raised on 12 April 2000 and the Court having considered then the matters raised, including the question of payment of all proceeds of the long sales into Court as security, decided that only royalties should be paid into Court. I have to say that I agree with Mr. Katahanas that Counsel raising the matter now had, on 12 April 2000, argued the same point and at the end of the arguments on that occasion, this Court had decided that only royalties due to the defendants under the logging and marketing agreement dated 22 September 1998 be paid into Court within 14 days of any such royalties being due to the defendants. To raise the same argument again in the circumstances of this case would give rise to an abuse of the Court process. This Court has an inherent power to prevent such abuse, although in the present case, I feel I should not exercise it. The reason for not doing so is that at this hearing the defendants specifically argued for 50% of the logs proceeds to be deposited in Court as security whereas at the hearing on 12 April 2000, no specific amount of security was sought. Nevertheless, the question of security of payment was raised then by Counsel and he ought to be aware of that.

The fear by the second defendants, as submitted by Counsel, is that the plaintiff has no capacity to meet its obligations under its logging operations. No satisfactory evidence had been shown by the second defendants to support that contention. On the contrary, there is evidence from the Chief Executive Officer of the plaintiff company that it has the ability to meet its obligations under its logging operations, including meeting 50% of the sale proceeds of the logs exported. Not only that the plaintiff company has the ability to meet its financial obligations, it is also a Solomon Islands incorporated company with Solomon Islanders who are directors of the company and resident and operates in this country. In those circumstances it would not be appropriate to order payment of security of costs or of whatever against the plaintiff.

The Rules of Court, in particular 0.65 r 4 and 5 of the High Court (Civil Procedure) Rules, which provides as follows:

4. In any cause or matter in which security for costs is required, the security shall be of such amount, and be given at such times, and in such manner and form, as the Court shall direct.

5. A plaintiff ordinarily resident out of the jurisdiction may be ordered to give security for costs, though he may be temporarily resident within the jurisdiction.”

would not, in the ordinary way, allow security for costs (which is really what the defendants are seeking in this case) to be ordered in the circumstances of the present case. The order sought by the defendants in paragraph 1 of their Notice of Motion therefore is refused.

The second order sought by the defendants is for royalties paid into Court to be released to the second defendants. I feel that in deciding this question, the Court will have to bear in mind the legal relationship of the parties in this case as established under the Logging and Marketing Agreement signed on 22 September 1998.

The first defendants in this case are trading collectively under the name “Valahoana Company Intergrated Development.” Under the Logging and Marketing Agreement signed between the plaintiff (the Company) and the first defendant (the Licencee) on 22 September 1998, royalty based on 12.5% of FOB value shall be paid by the company to the Licencee within seven days after each shipment. It would appear that if the Court were to release royalty to the landowners, it would have to do so to the licencee who would then distribute it to the landowners. Thus in the present case, royalty payments having been made by the company to the Court, such payments could only be relased to the first defendant Licencee who would have to make the necessary application to the Court. However the Licencee distributes royalty monies to the landowners is a matter for the Licnecee and the landowners. The first defendant (the Licencee) is not represented in this application nor did it apply for the royalty to be released to it. The second defendants who sought the release of the royalties are not the appropriate party to seek the release of the monies in view of the agreement between the Licencee (first defendant) and the plaintiff mentioned above. Thus the order sought in paragraph 2 of the Notice of Motion cannot be granted.

Having found against the second defendants on both issues in this application, it is within the power of the Court to consider what should the proper course to take in respect of the conduct of the action from here onward. The Court must be very mindful of the frequent practice used by some legal practitioners of loading the Court with numerous interlocutory applications in an action commenced by writ of summons. Such practice can sometimes lead to the main issues in dispute between the parties being cluded or even lost. Not only that, it can also result in mounting costs unnecessarily incurred by the parties. It is for such reasons that the Court is granted powers such as those contained in O. 32 r 2(1) of the High Court (Civil Procedure) Rules to direct as to the manner in which the action is to proceed Rule 2(1) & (2) of 0.3, provide:

“2. (1) Upon the hearing of the summons or at any later times before Judgement, the Court shall have power to give any such directions as to the proceedings to be taken in the action and as to the costs thereof as the Court thinks proper.

(2) Without prejudice to the generality of the last proceding paragraph, the Court may -

(a) make such order as may be just with respect to any of the following matters, that is to say discovery and inspection of documents, interrogatories, inspections of real or personal property, and admissions of fact or of documents;

(b) subject to paragraph (3) of this Rule, order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the trial on such conditions as the Court may think reasonable, or that any witness whose attendance in Court ought for some sufficient cause to be dispensed with, be examined before a Magistrate;

(c) order that evidence of any particular fact or facts, to be specified in the order, shall be given at the trial by statement on oath of information and belief, or by production of documents or entries in books, or by copies of documents or entries or otherwise as the Court may direct;

(d) order that no more than a specified number of expert witnesses may be called;

(e) record any consent of the parties either wholly excluding their right of appeal or limiting it to the Fiji Court of Appeal or limiting it to questions of law only;

(f) make such order as may be just with respect to pleadings and particulars;

(g) in cases where two or more torfeasors are sued together in respect of the same tort or damage and anyone of them in the same proceedigns claims contribution from the other or others, order that a written offer of contribution made by any one of such tortfeasors to the other or others of them shall be treated for the purposes of such claim as a notice of payment into Court;

(h) order that the action shall be tried with the aid of assessors if such action may lawfully be tried with the aid of assessors and stating the numbers of assessors with which the action shall be tried.

And may revoke or vary any such order.”

In the light of the power granted to the Court in above provisions of the Rules, I feel that it is not necessary to drag the parties back to Court and incur further expresnes for another interlocutory hearing again. I shall therefore made the following directions to be included in the orer of the Court in this application as to the conduct of this case, as if summons for directions had been taken out in this case.

Order

I make the following orders:

1. The second defendants’ application by Notice of the Motion filed on 22 May 2000 is regused.

2. The second defendants to deliver further and better particulars of their Defence and Counter-Claim filed on 26 May 2000 with 14 days from the date of this order.

The plaintiff to file Reply to the second defendants’ Defence and Defence to the second defendants’ counter claim.

4. Discovery of documents by the parties within 7 days.

5. Interrogatories (if any) to be deivered within 7 days and answers thereof to be given with 7 days thereafter.

6. Inspections of documents with 7 days thereafter.

7. Trial to be set down upon request by either of the parties with a certificate of readiness and bundles of documents for the trial judge filed.

8. Trial to be in Honiara at a date to be fixed by the Registrar of High Court with 90 days from the date hereof.

9. Cost of this application to be paid by the second defendants.

(Sir John Muria)
CHIEF JUSTICE