Delta Timber Company Ltd v Hong [2007] SBHC 135; HCSI-CC 7 of 2007 (29 October 2007)

HIGH COURT OF SOLOMON ISLANDS

Civil Case Number 7 of 2007

DELTA TIMBER COMPANY LTD

V.

SYMEON HONG AND OTHERS Trading as Bolopoe Corporation And
SYMEON HONG as representative of the Bolopoe Customary Landowners, And
STEVE LETHY AND OTHERS representing Borokua Log Pond Owners.

(Palmer CJ.)

Date of Hearing: 24th August 2007
Date of Judgment: 29th October 2007

W. Rano for the Plaintiff
J. Katahanas for the Fourth Defendant
G. Suri for the 1st, 2nd and 3rd Defendants.

Palmer CJ.: Delta Timber Limited ("Delta") is a logging company. It was engaged by the first defendants, Bolopoe Corporation to carry out logging at Bolopoe customary land. Their relationship however encountered difficulties and the agreement with Delta was terminated. Delta now claims damages for breach of contract.

They rely on a number of agreements entered into with Bolopoe Corporation and the second and third defendants as the basis of their claim for damages. These included the following:

(a) a Financing Agreement, dated 10th August 2002.

(b) a Management Agreement, dated 25th May 2006

(c) a Log Pond Agreement, dated 8th September 2006, and

(d) a Access Agreement dated 29th September 2006.

Delta says it has suffered actual loss and damages as a result of the termination of the agreements.

In the meantime Bolopoe Corporation had engaged another logging company, Omex Limited to carry out logging in Bolopoe customary land.

In this application, Delta comes to Court to restrain 15% of the FOB proceeds of logs extracted and exported from Bolopoe Customary Land by Omex Limited. Delta wants 15% of the proceeds to be restrained in essence to secure its claim. It fears that if it wins its case at the end of the day it might get nothing from the defendants.

It relies on two grounds. First, under Order 53 rule 1 of the High Court (Civil Procedure) Rules, 1964 ("the Rules") and secondly, on the inherent jurisdiction of the Court.

Delta says that a prima facie case of liability has been established and that the defendants defence is essentially one of a right to be relieved wholly or partially from such liability. As to the inherent jurisdiction of the court they say that as long as there is a right which can be asserted in law or equity the court has power to grant an injunction – see Mareva Compania Naviera SA v. International Bulkcarriers SA[1]. In that case Lord Denning had held that the court had wide general powers to grant injunctions where a legal or equitable right can be shown. Mr. Rano also relied on the statement of the Court of Appeal in Tropical Forestry Limited & Dalgro (SI) Ltd v. George Pou, ("Tropical Forestry’s Case") unreported, Court of Appeal of Solomon Islands, CC 26 of 2007 (10th May 2007) in which it was held that the court may restrain funds pending litigation on special circumstances. The Court of Appeal pointed out that it is not unusual for such a course of action to be taken if it can be established that if a restraining order is not made the claim may be rendered nugatory. Mr. Rano says that the court accordingly should make an order for preservation or interim custody of the subject matter of the litigation.

The defendants on the other hand say that (i) the Finance Agreement relied on had been breached by Delta. (ii) They say that the Finance Agreement is unenforceable as against them as its validity is dependent upon the validity of the Standard Logging Agreeement which had already lapsed on 19th September 2006. (iii) They say that in respect of the Management Agreement the plaintiff had also breached its terms. As a consequence it was terminated on 16th November 2006. The plaintiff therefore was not entitled to any damages.

That there are triable issues before this court cannot be denied. The principal issue being liability under the various agreements executed between the parties. That issue will have to be determined at trial.

Whilst a prima facie case of liability may have been established the question whether any restraining or preservation orders should be made is a discretionary matter for the court. For the following reasons the application for restraining orders must be denied.

1. The subject-matter of the litigation relates to alleged breaches of a number of contracts and claims for damages arising thereby. The Plaintiff holds no timber rights or licence other than a claim for damages in contract yet to be litigated upon. There is simply nothing for this court to preserve.

2. There is no property or fund in existence to be preserved. The issue of risk of dissipation or destruction accordingly does not arise in this instance. The crucial requirement referred to by the Court of Appeal in Tropical Forestry’s Case at page 6, being, the existence of property or a fund the right to which is in question, simply does not exist in this case. Delta cannot point to the existence of any property or fund other than a monetary claim for damages in contract. Tropical Forestry’s Case therefore can be distinguished from this case by the fact they held timber rights as well as a timber licence over the disputed land.

3. The logging agreement entered into between Omex Limited and Bolopoe Corporation is a separate and distinct agreement. Delta has no interest or right in that arrangement and therefore no right over any of the proceeds obtained in that logging operation.

4. The question whether damages will be an adequate remedy must be answered in the affirmative. At the end of the day if the plaintiff wins his case irrespective of whether an order is made now, damages will be an adequate remedy and is more an issue for enforcement than anything else.

5. There is no status quo to be maintained in this case. The plaintiff’s claim is premised on proving liability and damages for breach of contract.

6. The court is not required to exercise its discretion as to where the balance of convenience lies for the plaintiff’s claim is separate and distinct from the new logging agreement entered into between Omex Limited and Bolopoe Corporation.

This application therefore is misconceived and must be dismissed with costs.

Orders of the Court:

Dismiss application with costs.

The Court.

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^[1] The case of Mareva Compania Naviera SA v. International Bulkcarriers SA [1975] 2 Lloyd’s Report 509 was relied on.