Shortland Islands Shipping Company Ltd v Teneko [2007] SBHC 127; HCSI-CC 502 of 2006 (12 September 2007)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 502 of 2006

SHORTLAND ISLANDS SHIPPING COMPANY LIMITED
AND MOSES SYLVESTER BARIRI AND LAWRENCE TEIBI

-v-

HONOURABLE AUGUSTINE TANEKO AND MV BIKOI

Date of Hearing: 12 September 2007
Date of Ruling: 12 September 2007

B. Etomea for Plaintiff/Applicant
R. Kingmele for 1st and 2nd Defendant

RULING on application to strike proceedings

REASONS

Brown, J: The application by the 1st and 2nd defendants is to strike out the statement of claim on the grounds that it is an abuse of process, frivolous and vexatious and does not disclose any reasonable cause of action.

The 1st defendant also seeks to stay proceedings in the cause on the ground that the action was commenced without the proper authority of the 1st plaintiff.

The proceedings have been commenced by Writ of Summons and (later) amended statement of claim which sought the following relief,

"(a) A declaration that the Second Defendant is owned by the First Plaintiff who in turn is owned by the Chiefs and people of Shortland Islands represented by the Shareholders in trust.

(b) Rectification of the Certificate of Solomon Islands Registry of the Second Defendant to Shortland Islands Shipping Company Limited.

(c) An permanent order restraining the First Defendant, his wife, sons, daughters, servant’s agents or others, from entering the First Defendants office and from operating the Second Defendant.

(d) An order that the Second Defendant account for the income collected by the Second Defendant from the 18th of December 2006 to the date of the orders sought in this statement of claim.

(e) A declaration that under the Memorandum and Article of Association of the First Plaintiff the First Defendant does not have the power to terminate the Second Plaintiffs.

(f) A declaration that the termination letters issued to the Second Plaintiff’s are null and void".

The facts shortly are that the ship, MV. Bikoi is owned by the 1st plaintiff, a company incorporated under the Companies Act (cap. 175) on the 6 March 2006. By provisional certificate of registration given 5 November 2005, the ship was shown owned by Shortland Shipping Company.

The 1st defendant is the Honourable Member for the Shortland Islands Constituency. He is the Chairman of the Board of Directors of the 1st plaintiff (the company). The share holdings in the company are: A. Taneko 200 ordinary shares; Sir George Lepping 200 Ordinary; Dominic Tata 200 and; Moses Bariri 200. In addition to the shareholders, the Honourable Queensland Olga is also one of the directors.

Mr. Moses Bariri was the Managing Director of the Company. Lawrence Teibi Sinesine has been named as a 2nd plaintiff and is the operations shipping manager. In mid 2006, not long after the ship began operating to the Shortland Islands from Honiara and on charter, the company fell into financial difficulties evidenced by cheques drawn on the company account having been dishonoured on presentation, for no funds sufficient to meet the cheques were in the account. Cheques were for purchase of fuel from Shell, which was owned money for fuel supplied for the ship’s use.

On the 19 December 2006, the Chairman of the Company terminated the employment of Mr. Moses Sylvester Bariri (presumably as Managing Director, and the said Lawrence Tevi Sinesine as Operations Manager).

The matter proceeded by way of affidavit in preparation for trial until today when the 1st defendants summons to strike came before me.

Mr. Kingmele who represents the defendants, by written submission after reading particular material (including the affidavits filed in support of the defendants) said the proceedings are misconceived. The company, claimed to be a plaintiff never decided to bring such proceedings.

To name the company in this fashion without deliberation by the Board and a decision puts the lawyer at peril of acting without proper authority. He quoted authorities which reflect the law in the Solomon Islands. With his argument I agree. (See Danish Mercantile Co. Ltd v. Beaumont (1951) 1 ALL ER 925). There is no allegation in the claim that the company duly resolved to bring such proceedings. In fact on the evidence of the defendants the company did not so resolve. No meeting to that effect took place.

This case again illustrates the difficulty of reconciling system-made law with customary manners. Where the claim alleges that the intention was for the ship to be owned by the Chiefs and people of Shortland Islands and by 19(a) the ship is in fact owned by the company which in turn is owned by the Chiefs and people of Shortland Islands and thus reflects a trust holding, implied in the orders sought, no plea to that effect is made in pleaded in the claim.

There is by virtue of the effect of company law which must apply in this case, no claim by the company in these circumstances. It can hardly criticise itself for the manner of its constitution as it would appear to be seeking to do in this case.

The proceedings by the 1st plaintiff, then are stayed for that the purported act of the lawyer to presume to institute such proceedings (in the absence of a properly constituted Board’s decision) is a nullity.

The power to strike out the 2nd plaintiff’s claim is not to be exercised without the court being clearly satisfied that the pleadings are so defective that no amendment will cure the defect.

The pleadings do not particularise the grounds of any unfair dismissal, in fact they tend to inculpate the 2nd plaintiff’s in the mismanagement and imbroglio facing the company over the inability to pay its debts since one plaintiff was the Operations Manager and the other the General Manager. Their responsibility for the state of affairs is implied by their position in the company.

There is nothing on the pleadings to suggest unfair dismissal. Such pleadings cannot be cured by amendment.

The question whether the 2nd plaintiffs should seek redress through High Court Proceedings or complain to the Trade Disputes Panel may be left for another time since these proceedings against the defendants should be struck out.

The courts inherent jurisdiction to strike will extend "to all situations where the justice of the case requires it to be exercised".

(Tingulae v Stewardeson Stubbs and Collett Ltd (1965) NSWR at 418) per Justice Else – Mitchell.

Affidavits have been read in this case so I am appraised of the facts in issue. There are, nevertheless, in the claim matters which fail to make out a claim by the 2nd plaintiff against the 1st defendant. (There is clearly no claim against the ship for there is no argument over the registered owner).

It is not however, a matter where on the affidavits, a decision to strike has been made but one illuminated by the affidavits showing a misconception by the 2nd plaintiff’s of their position of employment viz a viz the 1st defendant. No amendment can help here.

The claim is struck out as disclosing no case of action.

Costs shall be in favour of the 1st defendant.

THE COURT