(KABUI
J): By Summons filed th March, 2001, the Defendant has
asked the Court to make the following orders –
1. p; that the orde9 of 9thup>th March 2001 be revoke;
2.
&nbs; &nbbsp;  t that the proceedingsdings be stayed in accordance with section 5 of the
Arbitration Act (Cap 2) on the grounds set out in the affidavit f
with
 an>
The
Order of 9thh, 2001 was an Order I made made upon the application
of the Plaintiff for an injunctive order restraining the Defendant from
dealing with the remaining quantity of coconut oil in the Defendant’s
Yandina storage tanks or elsewhere in the possession
or control of the
Defendant. I also made consequential orders. However, the main purpose of
the Defendant's present application
is to remove the proceedings commenced
by the Plaintiff against the Defendant in the Court to be dealt with by way
of
arbitration under section 5 of the Arbitration Act (Cap. 2). Section 5 of
the Act states,
“If
any party to a submission, or any person claiming through or under him,
commences any legal proceedings in the Court against
any other party to the
submission, or any person claiming through or under him, in respect of any
matter agreed to be
referred, a y party to such legal proceedings may at any
time after appearance, and before delivering any pleadings or before
taking
any other steps in the proceedings, apply to the Court to stay the
proceedings, and the Court, is satisfied that
there is no sufficient reason
why the matter should not be referred in accordance with the submission, and
that the applicant
was at the time when the proceedings were commenced, and
still remains, ready and willing to do all things necessary to the
proper
conduct of the arbitration, may make an order staying the proceedings.”
The
Facts
The
Plaintiff is a Company iorated in Singapore and carries on business
there. Ite. It deals in commodity trading in coconut
oil, copra cake and cocoa in
the Western Pacific and South East Asia for many years. It had done business
with Solomon
Islands Commodities Marketing Authority (CEMA) and Russell
Islands Plantation Limited (RIPEL) for about 20 years. In July/August
2000,
the Defendant, through its General Manager, one Solomon Ilala and its
Financial Controller, one Eric Notere, obtained
from the Plaintiff the sum
of US$600,000 to enable the Defendant to continue in business. The Plaintiff
and the Defendant
agreed that in return for the sum of US$600,000, the
Defendant would supply to the Plaintiff 260 metric tonnes of coconut oil
from the Yandina storage tanks. The agreed price. was US$235.00 per metric
tonne. In early December, 2000, the Defendant
supplied to the Plaintiff
1829.92 metric tonnes of coconut oil. The remaining balance of coconut oil
co International
Comtrade (ICSL) 1469 metric tonnes on 18th
November, 2000 and again sold 424 metric tonnes to that same buyer on 31st
December, 2000. The Defendant still has not supplied the Plaintiff with the
remaining 770.08 metric tonnes of coconut
oil being the property of the
Plaintiff. The agreement dated 3rd November, 2000 which contains
the terms of the transaction is subject to arbitration in the United
Kingdom. The agreement
is also governed by the terms of the standard
contract 53 used by the Federation of Oils, Seeds and Fats Associations
Limited FOSFA International.
class="Mso="MsoNormal" style="margin-top: 1; margin-bottom: 1">
The
Issues
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The
issues in this case are whether or not on the facts of this case, the
proceedings already commenced in the Court by
the Plaintiff be stayed so
that they can be dealt with by arbitration in London according to clause 29
of contract FOSFA
53 and whether or not the Order I made on 9th March, 2001
be revoked accordingly.
The Law
I have
already cited section 5 of the Arbitration Act in the beginning of this
judgment. There is no dispute that the agreement of 3rd November,
2000 between the Plaintiff and the Defendant is a submission within the
terms of section 5 of the Act.
Counsel
for the Plaintiff, Mr. Sullivan, conceded this point. The oThe other matters to
be considered in terms of the
content of section 5 or what it says are
whether (i) any party has commenced legal proceedings in the Court (ii) any
matter was agreed to be referred to arbitration, (iii) appearance has been
entered by the other party to the proceedings in
the Court and (iv) no
pleadings or any other steps have commenced in respect of the proceedings
commenced in the Court.
If these matters are satisfied, the other party may
then apply to the Court to stay the proceedings commenced in the Court.
If
the Court is satisfied the matter should be referred to arbitration and that
the applicant is ready and willing to
do all things necessary to the proper
conduct of the arbitration at the time of the procee and since then,
the
Court may make an order staying the proceedings.
The
Applicant’s Case
Counsel
for the Defendant, Mr. yffe, argued that there was a matter to be
referred tred to arbitration in London, the
matter being the failure of the
Plaintiff to collect the oil at Yandina. He argued that all the conditions
specified
in section 5 of the Act had been satisfied so that the Court in
its discretion should be able to grant the order to stay the
proceedings as
asked for by the
Defendant. He argued that there was a dispute in this
case in terms of clause 29 of the FOSFA
contract 53 and for that purpose, the word “dispute”
should be given ordinary meaning. He
pointed out that the Defendant had filed appearance on 12th
March, 2001 but had not pleaded or taken any other steps in the proceedings
before filing the Summons on 30th March, 2001. He urged me to
disregard the filing of account as Exhibit 2 filed on 23rd March,
2001 as constituting anything like “taking any other steps in the
proceedings” within the meaning of section 5 of the Act as
Exhibit 2 was merely an act of compliance
with the Court Order of 9th March,2001. He however admitted that
the Defendant’s financial situation did not allow arbitration to take place
in
London
but nevertheless it was a possibility in the light of Government assistance
to the tune of $5.5 million. He however
urged me to place weight on the fact
that the agreement of 3rd November,2000 does have an arbitration
clause which in my view speaks for itself. On the whole, Mr. Radclyffe urged
me
to grant the Defendant’s application and make the orders sought in the
Defendant’s Summons.
The
Plaintiff’s Case
Counsel
for the Plaintiff, Mr. Sullivan, applied that judgment be t be entered in favour
of the Plaintiff on the ground
that Mr. Solomon Ilala did admit in evidence
from the witness-box when cross-examined by Mr. Sullivan that there was no
dispute between the Plaintiff and the Defendant as regards the rights of the
Plaintiff to 770.08 metric tonnes of coconut
oil in the storage tanks at
Yandina. Mr. Sullivan cited Order 34, rule 6 of the High Court (Civil
Procedure) Rules 1964
(the High Court Rules) in support of his position.
Mr.
Sullivan argued that Mr. Radclyffe failed in four ways to substantiate the
Defendant’s case. First, he said, Mr. Radclyffe
failed to show that any
matter was agreed to be referred to arbitration. Second, ,Mr. Radclyffe
failed to show that the
Defendant had not taken steps in the proceedings.
Third, Mr. Radclyffe failed to show that there was reason for the Court to
be satisfied that the matter should be referred to arbitration. Fourth, Mr.
Radclyffe failed to show that the Defendant
was ready and willing to do all
things necessary to the proper conduct to the arbitration. Mr. Sullivan
concluded his
submission by reiterating his stand under Order 34, rule 6 of
the High Court Rules.
The
Evidence
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The
position was that the Plaintiff advanced US$600,000 to the Defendant paid in
four tranches, the last being paid on
17th October, 2000. By
letter dated 22nd November 2000, Solomon Ilala, the General
Manager of CEMA and Eric Notere, the Financial Controller of RIPEL told Mr.
Chek Ai Ming that as of 15th November , 2000, there were 3068
metric tonnes of coconut oil in the storage tanks at Yandina of which 2,600
metric tonnes
belonged to the Plaintiff (see Exhibit “CAM-3” attached
to Mr. Chek Ai Ming’s affidavit filed on 7th March,2001). The
fact was that 2,600 metric tonnes of coconut oil had already been paid for
by the Plaintiff. The tonnage
of coconut oil was already the property of the
Plaintiff as from 17th October,2000. This fact was admitted by
Solomon Ilala, the Managing Director of the Defendant when being
cross-examined
by Mr. Sullivan on his affidavit evidence filed on 30th
March, 2001. Solomon Ilala confirmed that Exhibit ‘CAM -3” attached to Mr.
Chek Ai Ming’s affidavit filed on 7th March 2001 was correct in
terms of its content. In his own words, Solomon Ilala said “2600 tonnes
of oil is the property of the Plaintiff”. When asked by Mr. Sullivan to
explain the second sentence in paragraph 5 of his affidavit filed on 30th
March 2001, Solomon Ilala in his own words said,
“
Earlier contract was similar and also had an d an arbitration clause. Plaintiff
defaulted earlier. I feel there is a
case under the earlier contract for
arbitration…. Under 2nd contract there is no case to answer”.
Furthermore, Solomon Ilala admitted under -examination that the
Defendant had no funds from the start and would not
be in a position to
arbitrate in London although the Defendant had thought about it. He also
admitted that funding from
the Government though looked promising was no
guarantee for arbitration to take place immediately or soon in London. He
said the possibility was there but could not say when the funds would be
made available for use by the Defendant.
Decision
Clearly, Solomon Ilala was confused over two contracts each of whic which has an
arbitration clause. The firs contract which
he called the “earlier
contract” (see paragraph 5 of his affidavit) seemed to be the one that
called for arbitration in his own view because the Plaintiff had
failed to
collect the coconut oil from the Defendant at Yandina. There was in his view
a dispute to be arbitrated. As
regards the contract of 3rd
November, 2000, he said there was nothing to arbitrate about. 770.08 metric
tonnes of coconut oil belonged to the Plaintiff.
In other words, the
Defendant should not have filed the Summons and asked for the orders therein
in the first place.
That is to my mind what Solomon Ilala was telling the
Court from the witness-box. Clearly, Solomon Ilala was admitting that
the
Order I made on 9th March, 2001 should not be revoked and that
the proceedings already commenced by the Plaintiff in the Court should
continue
and conclude in the Court. There is no dispute in this regard
between the Plaintiff and the Defendant. The Defendant’s application
must
therefore fall on this ground. I do not need now to consider the arguments
for and against the Defendant’s application
put to the Court by the Counsel
of both parties. There is however, Mr. Sullivan’s application to invoke
Order 34, rule
6 of the High Court Rules. Rule 6 states
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“ Any
party may at any stage of a cause or matter,
where admissions
of facts have been made, either on the
pleadings, or otherwise, apply to the Courtsuch judgment or o or order as
upon such
admissions he may be entitled to, without waiting for the
determination of ther question between parties; he Court may upon
upon
such application made suce such order, or give such judgment, as the Court may
think just”.
Whilst I
can see where Mr. San is coming from, I do not think I can accept his
po position. It is the Defendant’s application
that I must decide and no other.
I feel it is iopriate to decide Mr. Sull Sullivan’s application under Order
34, rule
6 of the High Court Rules on an admission by the Defendant over
another issue though between the same parties. Normally, such
application is
heard on the Summons for directions or if it is made at any other time, it
is made by way of motion for
judgment to be heard by the Court. (see page
438 of the Supreme Court Practice 1973, Volume 1 Part 1). As much as I am
tempted by Mr. Sullivan’s powerful argument, I would reject it on the ground
of its inappropriateness in the context of this
case. The issue here are
whether the proceedings commenced in the Court by the Plaintiff by Writ of
Summons filed on
7th March, 2001 should be stayed in view of the
application of section 5 of the Arbitration Act and whether the Order I made
on 9th March, 2001 be revoked accordingly. I have already decided
these issues in favour of the Plaintiff on Solomon Ilala’s own admission.
The Defendant's application is refused with costs.
F. O.
Kabui
Judge
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