Hatanga Ltd v KCM Properties Ltd [2008] SBHC 62; HSCI-CC 134 of 2006 (19 September 2008)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No.134 of 2006

HATANGA LIMITED

V

KCM PROPERTIES LIMITED

AND:

NATIONAL BANK OF SOLOMON ISLANDS

AND:

REGISTRAR OF TITLES

IZUAKO, J.

Date of Hearing: 18 August 2008
Date of Ruling: 19 September 2008

P. Lavery esq. for the Applicant/Defendant
A. Radclyffe esq. for the Respondent/Claimant
J.G. Katahanas esq. for 2nd Defendant

RULING

Izuako, J.

The plaintiff Hatanga Limited brought an action against the three defendants alleging fraud in the transfer and registration of a parcel of land No. 191-023-117 to the 1 defendant KCM Properties Limited, which said parcel of land belongs to the plaintiff. The plaintiff seeks from the court various reliefs against the defendants inter alia:

(a) Rectification of the Lands and Titles register in respect of the said property

(b) A declaration that the transfer is a forgery and therefore null and void.

(c) An order for removal of the charge of the 2nd defendant on the said property.

Pleadings having been filed and settled, the 2nd defendant had raised a preliminary issue arguing that whether the sale of the property to the defendant was fraudulent or not, the 2nd defendant had a valid charge over the land which the court cannot remove and that a caveat lodged by the plaintiff against the said charge the said change was of no effect. On April 4 2007, the court saw no merit in the preliminary objections raised.

On 18 August 2008, the 1st defendant argued an application for a stay of proceedings in this case based on the tort felony rule. Learned counsel for 1st defendant Patrick Lavery esq. traced the historical background of the tort felony rule. The effect of the rule, he argued, is that civil proceedings were suspended if the facts disclosed that a felony was alleged to have been committed until that felony had first been prosecuted.

Learned Counsel submitted that in modern day application of the rule, the High Court of Solomon Islands in the unreported case of Brownless Zaku and Others v. Public Service Commission, had endorsed the rule to protect an accused person from answering incriminating questions before a prosecution is concluded.

The rule better known as the rule in Smith v. Selwyn in England became extinct upon the abolition of the distinction between felonies and misdemeanours by Section 1 of the Criminal Justice Act 1967.

Applicant’s Counsel continued that Kennedy LJ in enunciating the rule in the case of Smith v. Selwyn [1914] UKLawRpKQB 94; (1914) 3 KB 98 at 103 stated thus:

"This, however is certain, that the Court has a right if not an imperative duty to stay proceedings in a civil action for damages, if it is clear test that which is the basis of the claim in the action is a felony committed by the defendant against the plaintiff".

According to counsel’s submissions, on the question as to how long the civil case would be stayed, it would be until the completion of criminal proceedings as decided in the Australian case of Wonder Heat Property Limited v. Bishop 1960.

In the English case of Olori v. Ali (1965) 3 AER 829 at 830, it was the view of the court that the rule would have been complied with if the matter were reported to the Police and left in their hands.

On whether the rule is applicable in Solomon Islands in spite of having been abolished in England in 1967 and having ceased to apply in most states in Australia, learned counsel submitted the rule is applicable here. He referred to Schedule 3 of the Solomon Islands Constitution and set them out as follows:

"1. Subject to this Constitution any Act of Parliament of the United Kingdom of general application and in force on 1st January 1961 shall have effect as part of the law of Solomon Islands..........

2. - (1) (Subject to non applicable limitation) the principles and rules of the common law and Equity shall have effect as part of the law of Solomon Islands.

(2)..................notwithstanding any revision of them by any Act the Parliament of the United Kingdom which does not have effect as part of the law of Solomon Islands.

4. - (1) No court of Solomon Islands shall be bound by any decision of a foreign court given on or after 7th July 1978."

He submitted that in view of the law as stated above, the tort felony rule was one of the principles of the common law in force in England inherited by this jurisdiction being in force on 1st January 1961. He submitted further that the Solomon Islands is not affected by the Criminal Justice Act of 1967 of the United Kingdom.

On the question of the applicability of the tort felony rule to this case, counsel submitted that the plaintiff has made allegations of forgery and fraud and under S. 336 of the Penal Code; these are felonies punishable with life imprisonment and imprisonment for 14 years. He argued that although the Lands and Titles Act provides a statutory remedy of rectification, nowhere does the Act exclude the tort felony rule and therefore the rule is binding in civil cases.

Considering that the plaintiff has not reported a case of fraud and forgery to the Police and that the 1st defendant has made similar allegations against the plaintiff, counsel was of the view that all the allegations should be reported and this matter ought to be stayed pending police investigations. This would be in observance of the tort felony rule.

Finally learned counsel for the 1st defendant submitted that there is a serious public policy issue which the court ought to consider in this case. It is the principle that no one should be accused of a criminal offence in the course of civil proceedings without those allegations being properly tested under the criminal procedures.

In reply, A. Radclyffe esq. of counsel for the claimant/respondent opposed the application that the tort felony rule be brought to bear in this case. He submitted that the rule does not apply in Solomon Islands because:

(i) There are no jury trials here.

(ii) Section 77(1) of the Constitution gives the High Court unlimited jurisdiction in civil and criminal matters.

(iii) The right to fair hearing within a reasonable time will be abridged by its application.

(iv) Paragraph 2(1) of Schedule 3 to the Constitution states that the principles and rules of the common law and equity shall have effect as part of Solomon Islands law except where they are inconsistent with the Constitution or with an Act of Parliament and where they are inapplicable to or inappropriate in the circumstances of Solomon Islands from time to time.

Counsel also submitted that the tort felony rule is inconsistent with Section 10(8) of the Constitution and Section 229 of the Land and Titles Act. He submitted further that the rule is inappropriate in the circumstances of Solomon Islands.

Counsel noted that the rule has been abolished in England where there are jury trials and can therefore not be relevant here. If the tort felony rule is applied, it would have the possible effect, he said, of depriving a person of his right to apply to the High Court and have the remedy of rectification made available to him within a reasonable time. A complaint made to the Police may not be acted upon for months or even years. If as decided in the case of Olori v. Ali op cit, the rule can be satisfied by simply reporting to the Police then it accomplishes nothing.

Learned Counsel for claimant sought to draw the Court’s attention to the fact that in the Solomon Islands case of Mike v. Tavake (2003) SBHC 1479 where the court held that the rule was applicable, only the plaintiff was legally represented and the court did not invite submissions on the applicability of the rule. He submitted that this decision and that of Brownless Zaku v. Public Service Commission (2003) SBHC @ 58 are not binding on the Court.

Learned counsel finally submitted that the rectification is being sought against the 1st defendant, a limited liability company. Criminal proceedings would be against an individual, he said, and the tort felony rule is therefore irrelevant here.

J.G Katahanas esq. for the 2nd defendant submitted that at independence in 1978, the tort felony rule had been abolished in the United Kingdom by an Act of Parliament eleven years earlier. If it was found inappropriate in England, it follows that it cannot be appropriate to be admitted by the independence constitution. He went on to urge the court to exercise it’s discretion against applying the tort felony rule.

In considering this application for a stay of proceedings sought on the basis of the tort felony rule, I have carefully looked at the history and the origins of the rule in the common law. The locus classicus on this rule is the case of Smith v. Selwyn op cit, in which Swinfen Eady LJ enunciated the rule as follows:

"where injuries are inflicted in an individual under circumstances which constitute a felony, that felony cannot be made the foundation of a civil action at the suit of the person injured against the person who inflicted the injuries until the latter has been prosecuted or a reasonable excuse shown for his non- prosecution".

Learned counsel for the applicant did submit that the tort felony rule was abolished in England in 1967 and that it has ceased to apply in most states of Australia. A plethora of authorities show that the courts have moved away from the rule in Smith v. Selwyn. The Court of Appeal in England in the case of Jefferson Ltd v. Bhetcha (1979) IWLR 898, the New South Wales Supreme Court in the case of McMahon v. Gould 7 (1982) ACLR 202 and the Federal Court of Australia in the case of Re Cameron’s Unit Services Pty Ltd v. Whelpton and Associates (Australia) Pty Ltd & anor have all held that the grant of a stay of proceedings in the civil cases when criminal prosecutions arising from the same events are also pending is a matter for the discretion of the court to be exercised by weighing competing considerations.

In the Australian case of McMahon v. Gould op cit, Wootten J in departing from the tort felony rule stated as follows:

"The origin of the rule in Smith v Selwyn has been the subject of a great deal of consideration by learned writers... whether the rule was based upon the ‘public policy’ of a bygone age when no police existed, or whether the origin of the rule lay in the fact that the property of a convicted felon was forfeited to the crown, its foundation has clearly disappeared, if indeed it ever existed, in New South Wales, despite our retention, for no discernible reason, of a totally artificial version of the archaic distinction between felonies and misdemeanours. What remains is the immutable principle that the Common Law will have regard to the requirements of public policy."

He continued:

"I greatly sympathise with this view, and trust that the rule will stay buried, so that its ghost does not again rise to rattle medieval chains (albeit refurbished in Victorian times) in modern litigation."

Learned counsel for the applicants P. Lavery esq. argued that the tort felony rule even if no longer viable in other jurisdiction, applies in Solomon Islands. In support of this argument, he cited the 3rd Schedule of the Solomon Islands Constitution particularly its paragraph 1, paragraphs 2(1), 2(2) and 4(1). He concluded that by virtue of the said Schedule 3, the tort felony is applicable in Solomon Islands.

On his part, Learned counsel for claimants/respondents A. Radclyffe esq. contended that the rule does not apply in this jurisdiction because there are no jury trials here and also S. 77 of the constitution gives the High Court unlimited jurisdiction in civil and criminal matters. In support of his argument, he cited S. 10(8) of the Constitution which guarantees the right to fair hearing within a reasonable time. He has also cited paragraph 2(1) of Schedule 3 where it is stated that the principles and rules of the common law and equity shall have effect where they are not inconsistent with the Constitution or an Act of Parliament and where they are inapplicable or inappropriate in the circumstances of Solomon Islands from time to time. It was his submission that the tort felony rule is inappropriate here. I cannot agree more.

In a decision of a Committee of the Privy Council in the Jamaican appeal of Donald Parton & 2ors v. Financial Institution Services Limited (2002) Privy Council Appeal No. 95, their Lordships in considering whether the Smith v. Selwyn rule was part of the law of Jamaica, agreed that a change in the law of England did not automatically carry over into the law of Jamaica. They stated however that it is common experience that courts of jurisdictions which were initially subject to the Blackstone rule or some variation of it frequently choose to follow developments of the common law as they occur elsewhere.

And going further when considering whether the Jamaican Court of Appeal erred when it refused to grant a stay of suspension sought by the applicants, their Lordships were of the view that the plaintiff had the right to have its civil claim decided. It was for the defendants to show why that right should be delayed. The defendants had to point to a real and not merely a notional risk of injustice. A stay would not be granted merely to serve the tactical advantages that the defendants might want to retain in the criminal proceedings.

In the Jamaican case, the appellants were defendants in criminal and civil proceedings arising from the same set of events. They had sought a stay of the civil proceedings until the completion of the criminal trial without success in both the High Court and the Court of Appeal of Jamaica.

The Privy Council had also referred to the constitutional guarantee of a right to fair hearing within a reasonable time in dismissing the appeal. In the case before me, no criminal proceeding is pending. No report of the commission of a criminal offence has been made to the Police. It is my view that even where criminal proceedings are pending arising from the same set of actions upon which the action is based, sufficient reasons must be mustered to support this application for a stay of proceedings.

Any application of the tort felony rule in this case can only stall proceedings, send this action into a deep slumber and thereby defeat the ends of justice. No court works to defeat Justice.

Learned counsel for the applicant Mr. Lavery had raised the issue of public policy to support the application of the tort felony rule. Public policy in his view meant that those who make accusations of criminal acts against others in the course of civil proceedings or newspapers who write false reports must be called to account. This to my mind is an irrelevant consideration in this application and has no bearing on public policy.

I cannot agree that the tort felony rule is part of the laws of Solomon Islands today. Nothing in the Constitution of Solomon Islands suggests that archaic rules in the common law, already discarded elsewhere must be upheld in this jurisdiction. Indeed the rule is caught by paragraph 2(1(b) of Schedule 3 to the Constitution for being inappropriate in the circumstances of Solomon Islands. This country cannot be a legal dump site for out-dated common law rules.

The common law and doctrines of equity received into former British colonies are not cast in stone. They are dynamic and move on affected by time, circumstances, development and the appropriate application by courts. The constitutional guarantee to the right to a fair hearing by an independent and impartial tribunal within a reasonable time must also be taken into consideration and is to be upheld and not defeated by the tort felony rule or any other rule. A provision of the constitution surely does not compete with a law or rule inconsistent with it.

In the light of the foregoing, the application for a stay of proceedings under the tort felony rule is hereby refused.

Justice Nkemdilim A. Izuako
Puisne Judge