Suncoast Loggind Pty Ltd v Whittal [2004] SBHC 40; HC-CC 110 of 2004 (13 May 2004)

HIGH COURT OF SOLOMON ISLANDS
Civil Case No. 110 of 2004

SUNCOAST LOGGIND PTY. LIMITED AND OTHERS

-v-

ANTHONY WHITTAL

HIGH COURT OF SOLOMON ISLANDS
(KABUI, J.).

Date of Hearing: 10^th May 2004
Date of Ruling: 13^th May 2004

P. Lavery for the Applicants.
A. Nori for the Respondent.

RULING

Kabui, J: This is an application filed by the Plaintiffs on 25^th March 2004 for an order that-

1. The property referred to and itemized in the affidavit of the Second Plaintiff sworn on the 24^th of March 2004 and filed herewith be removed from a domestic premises situated at Kaibia Honiara being the residence of the Defendant and detained and preserved in guarded commercial premises to be nominated by the Plaintiffs forthwith pending resolution of any dispute as to ownership title or right of possession of or to the said property as between the parties.

2. Such other consequential Orders as may be necessary to preserve the said property or otherwise as the Court deems just.

3. Costs be reserved.

The application is supported by an affidavit of the 2^nd Plaintiff filed on 25^th March 2004. The grounds in support of the application are set out in that affidavit.

The brief background

The 2^nd and 3^rd Plaintiffs are the owners of the 1^st Plaintiff, a company incorporated in Australia. Some years back, the 2^nd Plaintiff and the Defendant with others visited Solomon Islands. They went to the Shortlands in the Western Province, accompanied by Sir George Lepping. Nothing came off that trip. Nothing more happened until in 2003 when the Defendant contacted the 2^nd Plaintiff by telephone about doing logging business in Solomon Islands. A man by the name of Raju Keniapu came up in conversation and the Defendant paid for the 2^nd Plaintiff to visit Solomon Islands again at the Defendant's expense. The 2^nd Plaintiff met Raju Keniapu and then went to Malaita to see some logging machinery kept there at Bina Harbour. An agreement was finally reached whereby a Company to be called JAK was to be formed and the preparatory work was to be undertaken by the Defendant. In the meantime, the 2^nd and 3^rd Plaintiffs acquired some equipment in Victoria, Australia, and shipped them to Honiara. The 2^nd Plaintiff then returned to Honiara on 15^th May 2003 and after discovering Raju Keniapu being an unsuitable business partner both the Defendant and the 2^nd Plaintiff decided to let go of Raju Keniapu. The Makira project did not get off the ground for some reason and machinery sent from Australia were not being used as intended. To use the words of the 2^nd Plaintiff, "The machinery sat idle in Honiara losing money."

The 2^nd Plaintiff also paid AUS60,000.00 to enable the project to operate. Another attempt to visit the Russell Islands with Roland Timo was not successful and the 2^nd Plaintiff returned to Australia. The name Dettke came up in conversation in Australia but the 2^nd Plaintiff showed no interest. The 2^nd Plaintiff returned to Honiara and discovered that the equipment had been moved to the Defendant's residence at Kaibia in Honiara. Attempts by the 2^nd Plaintiff to inspect the equipment kept at Kaibia were not successful and the 2^nd Plaintiff returned to Australia. The 2^nd Plaintiff on behalf of all the Plaintiffs filed a Writ of Summons and a Statement of Claim on 25^th March 2004 being an action to recover title to the property, or damages for trespass to the property or damages for breach of contract.

Relief sought.

This is an interlocutory application because the main dispute is yet to be heard by the Court on a date to be fixed. There are undoubtedly triable issues arising in the main dispute between the parties. Although this application is not for an injunctive order it is being brought pending a dispute to be resolved later in the High Court. In that respect it has the appearance of an application of an interim injunction. However, it is not an application for an injunction. Order 53, rule 4 of the High Court (Civil Procedure) Rules, 1964 states-

"...It shall be lawful for the Court on the application of any party to a cause or matter, and upon such terms as may be just, to make any order for the detention, preservation, or inspection of any property or thing, being the subject of such cause or matter, or as to which any question may arise therein, and for all or any of the purposes aforesaid, to authorize any persons to enter upon or into any land or building in the possession of any party to such cause or matter, and for all or any of the purposes aforesaid to authorize any sample to be taken, or any observation to be made or experiments to be tried, which may be necessary or expedient for the purposes of obtaining full information or evidence..."

In the above rule, three things are stated, namely, detention, preservation and inspection of property or thing. This application is about preservation of property being some logging equipment in the custody of the Defendant. The total value of the equipment was AUS 226,900.00. The value of part of the equipment in the custody of the Defendant is about AUS102, 147.74. The intention of the 2^nd Plaintiff however is that the property in custody of the Defendant be removed from there to a commercial premises to be nominated by the 2^nd Plaintiff on behalf of the Plaintiffs pending the resolution of the dispute between the parties.

Whether the relief sought should be granted?

There is no doubt that this Court does have the power to make this order under Order 53, rule 4 above. The question however is whether or not the facts of this case do warrant such an order to be made in this case. In other words, on what basis such orders usually are made by the Courts? To answer this question, one must look at some precedents, if any. Both counsel for the parties did not cite any authorities on this point to assist the Court. My own research has revealed the following cases. The first is Leney & Sons, Limited v. Callingham and Thompson [1907] UKLawRpKQB 167; [1908] 1 KB 79. In that case, the lessor took action to recover possession of his hotel which had been leased to the lessee for 21 years for gain. The lessee had failed to pay rent resulting in the closure of the hotel for short periods with attendant consequences. In the meantime, the lessor applied for the appointment of a receiver and the court did so. One of the orders made by the court was that the receiver was entitled to appoint any fit and proper person to occupy the premises and hold the licences and to carry on the business under the supervision of the receiver. From that decision, the defendant appealed to the Court of Appeal. Having dismissed the appeal, Farwell, L.J. at page 84 said-

"...The preservation of property pending litigation is an old head of equity; and in former days bills quia timet to preserve property were of common occurrence. The mode of preservation, in cases in which preservation ought to be granted, was in the judicial discretion of the Court. The modes were various, and they are now, by reason of Order L., even more various; receivers may be appointed, injunctions granted, and directions given for money and property to come into Court, and sales of goods for the sake of preservation may be ordered. But the question of the exercise of the judicial discretion was always based, and is still based, upon this, that there is property in dispute to some interest in which the plaintiff shews a prima facie title; and preservation is ensured until the rights of the parties can be finally determined..."

At that same page, Fletcher, L.J. said-

"...It appears to me that when licences are property which is the subject of a claim we are entitled to and bound to do what is necessary to preserve them pending the action..."

The second is Steamship New Orleans Company v. London and Provincial Marine and General Insurance Company [1909] UKLawRpKQB 46; [1909] 1 KB 943.

In that case, the ship-owners took action claiming loss to the ship. The defendants applied for an order that the ship be brought back to England because she was lying un-repaired in Singapore for its preservation and inspection. The application was granted. The defendants bore the cost getting the ship back to England. Against that decision, the plaintiffs appealed. The appeal was dismissed. The third is Hatton v. Car Maintenance Company, Limited [1915] 1 Ch. 621. In that case, under an agreement, the owner of a car was to provide the car but the defendant was to maintain it and provide a driver. The owner of the car was to pay a fixed annual sum for a limited mileage and at a rate per mile beyond that limit. The car was kept in the defendant's garage. The owner having failed to pay, the defendant took possession of the car and claimed a lien on it. The application for a receiver was appointed accordingly by the Court and the car returned to its owner.

The alleged claim to ownership of the equipment by Fladriff Pty Limited

In this case, there is some doubt about the ownership of the property in dispute. The story that emerges from the affidavit filed by the Defendant on 16^th April 2004 is this. This is his story. Initially the equipment had been purchased in Australia by the 2^nd Plaintiff assisted by the 3^rd Plaintiff. However, the equipment is now part of the assets of Fladriff Pty Limited, an entity incorporated in Australia and owned by the Defendant, his wife and a third person. Fladriff Pty Limited acting as a conduit for the operation in Solomon Islands had been understood by the 2^nd Plaintiff. The understood arrangement was that following the FIB approval, the 2^nd Plaintiff would receive shares in Fladriff Pty Limited as well as shares in a local company to be incorporated locally. The delay in the incorporation of the local company was due to the 2^nd Plaintiff having imposed severe conditions on the operation in Solomon Islands and his change of attitude, one of which was the dislike of local workers.

The reasons for doing what is currently being done with equipment in dispute were that Fladriff Pty Limited having got FIB approval was obliged to do business. For example, there was the agreement between Fladriff Pty Limited and Aroba Development Holdings Limited. Work was being done on Santa Ysabel, harvesting rosewood and hardwood using a Lucas Sawmill. One of the reasons for taking the equipment was that Raju Keniapu was trying to lay claim to the equipment so he took the equipment to his house at Kaibia. The attitude shown by the 2^nd Plaintiff gave him no choice but to proceed to put the equipment to use to make some money. However, how Fladriff Pty Limited came to own the equipment in dispute in terms of legal ownership is not stated by the Defendant. On the evidence before me, the 2^nd Plaintiff clearly has a prima facie case against the Defendant.

The Defendant's argument

Counsel for the Defendant, Mr. Nori, argued against the granting of the order sought by the 2^nd Plaintiff because to do so would destroy the subject-matter of the dispute. He explained that to hold the equipment as suggested by the 2^nd Plaintiff would have the effect of bringing the operation to a halt. I can well understand that but the main dispute is over the ownership of the equipment or breach of contract regarding the use of that same equipment. It seems to me that the 2^nd Plaintiff is concerned with the wrong use or the unauthorised use of the equipment by the Defendant which he claims to be his property. Not so much that the equipment will lose its value by being used though that may well be the case but rather to be put under the control and in custody in safety of a third party to be nominated by the 2^nd Plaintiff to his satisfaction pending the resolution of the standing dispute between the parties.

The orders of the Court

The Court in the exercise of its discretion grants the orders sought by the 2^nd Plaintiff. The Defendant will pay the cost of this application. Since the 2^nd Plaintiff's application specifically relates to the equipment being kept at the Defendant's residence at Kaibia, it is necessary to make further consequential orders that are necessary to protect the property. The terms of the orders are to be drawn up by Counsel for the 2^nd Plaintiff for my approval and signing after the rising of this Court.

F.O. Kabui
Puisne Judge