High Court of Solomon Islands
: 1">
Before: Kabui, J.
Hearing: 13th December 2001
Judgment: 20th
December 2001
Mr. J. Katahanas for the
Plaintiffs
Mr. J. Apaniai for the 1st
Defendant
Mr. C. Ashley for the 2nd
Defendants
JUDGMENT
:
By Summons filed oned on 3 December 2001, the 2nd Plaintiff sought the
following orders –
1. Upon the Second Plaintiff by
its counsel unding to revoke the Seizure Nure Notice (as varied) referred to
in the Order
of the High Court made on 3 August 2001, but without prejudice
to the Second Plaintiff’s right to proceed with its proposed
prosecution
under s.18 of the Commodities Export Marketing Act (Cap. 36) -
(a) ;&nbssp; The sume sum S SBD72,000.00 paid into into Court plus any accretions be paid out of Court to the
Plaintiff's
solicitors Trust Account;
class="MsoNormal" style="margin-top: 1; margin-bgin-bottomottom: 1">
(b) mone s heyd in
in
t trust by the Plaintiffs' solicitors (including the said sum of SBD72,000.00)
be paid
as follows –
(i) &nbssp; 5BD 10.,00to00 to
th the Second Plaintiff or its solicitors;
0pt">
(ii) & SBD5,000 to b held
i in trust to abideabide any fine that may be imposed by the Magistrate's Court
should
First Defendant be found guilty in respect of the said prosecution
and to be paid to the First Defendant if acquitted;
(iii) &nbssp; The bale balance to the
First Defendant or its solicitors.
 an>
2. The costs of and incidental
to this application to be costs in the cause.
At the ccement of the
hearing, Counsel for the 1st and 2nd Plaintiffs (ffs (the
Plaintiffs) told me that there were two applications before me. The first
was the 2nd Plaintiff’s application seeking to withdraw monies
from the Court and the trust account held by Sol - Law for the Plaintiffs.
The other was an application by Motis Pacific Lawyers who were the
Solicitors for the 2nd Defendant but would like to withdraw their
service due to late payment of their fees (after several demands) by the 2nd
Defendant. I heard Motis Pacific Lawyers’ application to withdraw and
granted them leave to do so. Mr. Ashley of A &
A Legal Services who was
already acting for International Comtrade & Shipping Limited in
Civil Case No. 338 of 2001 was also at the bar table ready to make an
exparte application before me in that case. In fact, this was the third
application
that I would have to deal with that afternoon. It was to be
withdrawn later before the Court rose for the day. Upon Motis Pacific
Lawyers withdrawing from Civil Case No. 206/2001, Mr. Ashley told me that he
had been instructed to act for the 2nd Defendant and would
undertake to file a notice of change of advocate. He also asked that the
matter be adjourned because
he said he had no time to study the papers. This
application for an adjournment was strenuously opposed by Counsel for the
Plaintiffs, Mr. Katahanas. Mr. Katahanas pointed that the sudden change of
advocate at the bar table was the fault of
the 2nd Defendant
because Motis Pacific Lawyers had notified the 2nd Defendant in
writing as far back as 28 November 2001 that they would cease to continue
acting for the 2nd Defendant because of its failure to pay their
fees promptly. He said, the 2nd Defendant did nothing. He said he
served Mr. Ashley with the Court papers in the morning of the date of this
hearing.
He said he did not want his client’s application for the release of
its own monies to be jeopardised by the 2nd Defendant’s own fault
in not acting promptly in its own interest. Counsel for the 1st
Defendant, Mr. Apaniai, also supported Mr. Katahanas. Mr. Apaniai said that
the release of his client's monies was for
the purpose of payment of wages
of its workers at Yandina in the Russell Islands. I refused to grant the
adjournment
sought by the 2nd Defendant. My view was the monies
being sought to be released were the proceeds of the 722 metric tonnes of
copra taken
away and sold by the 2nd Defendant. In this regard, the Court
order dated 3rd August 2001 speaks for itself. The point in issue
was not a complicated point of law so as to call for an adjournment to
another time. Mr. Ashley did say that he had been served with the Court
papers just before 11 am on the date of the hearing
and had only looked at
them at lunchtime. I took his point into account but I do say that a quick
look at the same Court
papers would have revealed immediately that the main
concern of the 2nd Defendant was its recovery of its debt of more than
$2
million which it had already submitted to the provisional liquidator on 14
September 2001. There would have been nothing
else to say about the
distribution of the proceeds of the sale of the 722 metric tonnes of copra
under the authority
of the provisional liquidator of the 1st
Defendant. The monies to be paid out were the property of the 2nd
Plaintiff and the 1st Defendant. The 2nd Defendant had
no proprietary interest in them than its wish to recover its debt. Any
adjournment would have been, in
my view, unnecessary. In fact, Ashley did
argue his case fairly well after I refused his application for an
adjournment.
He said all that were to be said on behalf of the 2nd
Defendant. I did not believe that had I granted an adjournment, his position
would have improved any better than what
he had already told me from the bar
table. The High Court had closed for official business since 10th
December 2001. The 2nd Plaintiffs application was listed because
of its urgency in that the workers of the 1st Defendant needed to
be paid their wages by the provisional liquidator before Christmas. Mr.
Katahanas also revealed that
he was leaving for Australia that same
afternoon of the date of hearing. The need for an adjournment, he said, was
out
of the question as far as he was concerned. He would have preferred the
matter to be concluded before he would leave for Australia.
The 2nd Plaintiff's
application then proceeded after 2.30 pm. At the conclusion of the hearing,
I granted the orders sought by
the 2nd Plaintiff but said I would
give my reasons at a later date. I do so now.
On 28/5/2001, the 1st
Plaintiff advanced to the 2nd Plaintiff the sum of USD503,201.40.
This sum of money was forward purchase for copra yet to be supplied. This
debt was
secured by a Bill of Sale duly registered over all copra product
bearing the date 28 May 2001. The 1st Plaintiff also holds
a final judgment
against the 1st Defendant on 13 August 2001 in Civil Case No. 027
of 2001 in the sum of USD 180,968.80 plus interest and costs. Again, this
sum had been advance payment made to the 1st Defendant for
coconut oil yet to be supplied by the 1st Defendant which the 1st
Defendant had not supplied as agreed. Prior to 19 July 2001, the 1st
Defendant had been exporting copra as agent of the 2nd Plaintiff
under a licence granted by the 2nd Plaintiff, it being the legal
authority under its Act to have control over all commodities export out of
Solomon Islands.
In about February, 2001, the 1st Defendant and
International Comtrade and Shipping Limited, (ICSL) signed an agreement
whereby ICSL was to purchase all
copra coconut oil etc from the 1st
Defendant. This Agreement was entered into without the knowledge of the 1st
Defendant's shareholders. In or about July, 2001, the 2nd
Plaintiff became aware of the 2nd Defendant carrying ors business
in Solomon islands without the approval of the Investment Board under the
Investment Act (Cap. 142). On 19 July 2001, the 2nd Plaintiff
revoked the 1st Defendant’s authority to export copra as the
agent for the 2nd Plaintiff. On 23 July 2001, the 1st
Defendant and ICSL loaded 807.302 metric tonnes of copra on board the 2nd
Defendant's ship “MV Pacific Emerald”. 86.856 metric tonnes of the 807.302
metric tonnes were the copra belonging to
and being the property of the 2nd
Plaintiff. The 86.856 metric tonnes of copra was secured by a Bill of Sale
over all the 2nd Plaintiff’s copra stocks. On 31 July 2001, the 2nd
Plaintiff issued a Notice of seizure seizing both the “MV Pacific Emerald”
and the 86.568 metric tonnes of copra. On
3 August 2001, the Court ordered
that SBD72,000.00 be paid into Court and USD 100,650.00 into the Plaintiff’s
trust account
being proceeds of the seized copra. The Notice of Seizure was
varied on 3 August 2001 to allow the “MV Pacific Emerald” and
the copra to
leave Solomon Islands.
The 2nd Plaintiffs
Case
The 2nd Plaintiff's case was that it had promised to revoke the seizure notice but maintaining
its righ right to prosecute under section
18 of its Act and therefore would allow
on those conditions the payment out of Court the sum of SBD72,000.00 into
the
Plaintiffs’ Solicitor trust account and the payment of SBD 157,000.00 to
the 2nd Plaintiff or its Solicitor’s account. The balance would
be paid to the 1st Defendant or to its Solicitor’s account. The
sum of $5,000 was to be kept pending the outcome of the criminal proceedings
being mounted in the Magistrate Court under section 18 of the Act. The 2nd
Plaintiff relied upon the terms of the Court order dated 3 August 2001 in
support of this application.
The 2nd Defendant’s
Case
Counsel for the 2nd
Defendant, Mr. Ashlpposed this application on the basis that the 2nd
Defendant did have an interest in the proceeds of the 722 metric tonnes of
copra sold by it outside of Solomon Islands.
In support of this argument,
Mr. Ashley cited the 2nd Defendant’s claim in the sum of
$2,374,878.61. It was not disputed that this sum was an unsecured debt yet
to be admitted
by Mr. Morris, the provisional liquidator of the 1st
Defendant. Mr. Ashley argued that there was a triable issue on foot and
therefore the matter should proceed to trial
first before the monies held in
Court and in the trust account could be dealt with in any way. He revealed
that the 2nd Defendant was intending to counter-claim against the
Plaintiffs and the granting of the orders sought would have the effect
of
negating this intent.
Court’s determination
It is not disputed that this
Court by its order da September 2001, appointed Mr. Morris, a chartered
ac accountant in
Honiara, to be the provisional liquidator in respect of the 1st
Defendant. It is also not disputed that the monies paid into Court and into
the Plaintiffs’ Solicitor’s trust account
were the proceeds of the sale of
722 metric tonnes of copra. (see para 4 of Court Order).
Furtre, there is no
dispute that the 2nd Defendant had sold the 722 metric tonc tonnes of
copra on board outside of Solomon Islands and thereby recovered its loss in
Solomon Islands in respect of that same tonnage of copra. Although this
application was brought by the 2nd Plaintiff, it had the support
of the 1st Plaintiff, the 1st Defendant and the
provisional liquidator, Mr. Morris. In his affidavit filed in support of
this application on 11 December
2001, Mr. Morris explained that the funds
were needed urgently to meet urgent requirements so as to allow the 1st
Defendant to operate pending a possible scheme of arrangement with
creditors. This course of action is well within the
terms of his appointment
as a provisional liquidator under the Companies Act (Cap. 175). In
particular, paragraph 8 of the order of appointment invests in the
provisional liquidator all the powers
of a liquidator except the power
contained in section 232(l) (d) of the Act. In terms of paragraph 3 of the
Court order,
the provisional liquidator took into his control the property
of the 1st Defendant of all descriptions on 7 September 2001, the
date of his appointment. In paragraph 6 of his affidavit above, the
provisional liquidator did acknowledge the 2nd Defendant’s debt
but said that he had not yet admitted it to proof. In my view, the 2nd
Defendant cannot hold back the powers of the provisional liquidator in the
carrying on of the business of the 1st Defendant in an attempt to
secure in advance the payment of what appeared to be an unsecured debt. The
2nd Defendant would have to await its turn in the que of
creditors and hope that its debt will be admitted to proof by the
provisional liquidator. Mr. Ashley’s other argument that there is a trial
issue in this case does not, in my view, hold water.
The 2nd Defendant’s
debt is not a triable issue in this Court. It is a matter to be dealt with
by the provisional liquidator
at another date. In fact, none of the relief
sought in the Statement of Claim on behalf of the Plaintiffs does raise the
2nd Defendant’s debt as a triable issue. The 2nd
Defendant’s debt as a triable issue is non - existent in the Plaintiffs’
Statement of Claim. That argument is misconceived
and I reject it. It is
upon this basis that I found in favour of the 2nd plaintiff on 13
December 2001. I granted the orders then sought accordingly.
F.O. Kabui
Judge
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