Grossmitt v Biku [2008] SBHC 89; HCSI-CC 331 of 2007 (5 November 2008)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 331 of 2007

LAVALYN GROSSMITT AND ELMA KASA

V

REX BIKU
1st Defendant

DELTA COMPANY LIMITED
2nd Defendant

FAUKONA, J.

Date of Hearing: 7 October 2008
Date of Ruling: 5 November 2008

F. Waleanisia for the 1st & 2nd Applicants/Claimants
N. Tongarutu for the 1st and 2nd Respondents/Defendants

RULING ON APPLICATION FOR INTERIM INJUNCTION

Faukona, J

This is an application for restraining orders. The relief sought by the Claimant’s are:

1. Declaration that the First Respondent account for all proceeds in the form of royalties or any other form being paid to date from the operations of the Second Respondent in Kazukuru land.
   
2. An order directing the Second Respondent to pay any proceeds in the form of royalties or any other form still outstanding and any future payments yet to be paid, into a Trust Account to be set up by the Solicitors of the Plaintiffs and the Defendants.
   
3. Order restraining the Second Respondent from proceeding with the operations pending the determination of the trust issue.
   
4. Any other orders the court deem necessary.
   
5. Costs
   

Material Facts

After progressed through Part III of the Forest Resources and Timber Utilisation Act, Cap. 40, FRTUA, the Second Respondent was issued with a Logging Licence No. A10346 on 3rd November 2004. The Licence permitted the Second Respondent to harvest and sale of logs from the Kazukuru left hand Customary Land (KLHL).

The Gumi tribe is one of the five tribes among other tribes which own KLHL. As a Chief representative and trustee, the First Respondent participated in the signing of all documents in respect of the logging activities. As the agreement was made on behalf of the tribe, any payment of royalty proceeds in respect thereof received by the First Respondent were for the benefit of all members of the tribe including the Claimants who are also members of the Gumi tribe.

However the Applicants admit receiving initial royalty payment, but deny receiving their full and fair share or amount they are entitled to. They claim that no proper accounts were kept, nor record produce in respect of the royalty payments due to Gumi tribe by the First Respondent.

The Issues

The usual issues in interparte application for interim injunction are:-

1. Whether the Applicants have locus standi?
   
2. Are these triable issues?
   
3. Where will the balance of convenience lie.
   

Has the Applicants Locus Standi

The Applicants need to establish that they have sufficient interests which qualify them to come to Court. Mr Waleanisia refer to the Statement of Ward CJ in case of Ombudsman v Attorney-General,[1] applying Thorn RDC v Bunting[2] which define the test as;

"I deal first with the claim to locus as a private individual. In matters which affect the public at large, the party seeking to sue must show his own interest are particularly affected by the Defendant’s conduct. The courts will exercise their discretion widely in such cases but it will not exercise it in favour of a plaintiff whose claim is too interest or insubstantial and would not give him relief in the sense of something that will relief him from any liability disadvantage or difficulty. It is clear that the Ombudsman suing as a member of the public in this case cannot satisfy the test".

Having read the First Applicants affidavit filed on 10th September 2007, and Second Applicants affidavit filed on 4th September, 2007, I have no doubt, that both are directly related to the First Respondent and they are all members of the Gumi Tribe. There is no dispute that First Applicant had received initial payment of royalty monies.

The Second Applicant says she owns and has direct control of Blocks 16 and 24 as per her affidavit filed on 4th September 2007. In the Statement of Claim both Applicants claim ownership of Blocks 16, 22 and 24. The First Applicant says she owns Block 16 and has a direct control over; refer to her affidavit filed on 19th September 2007. Their claims are denied by the First Respondent in his affidavit filed on 19th May, 2008.

Block 16 actually went before Chiefs on 6th August 2007. I must stress here that Section 12(1) of the Local Courts Act which gives power to the Chiefs to hear and determine customary land disputes, in particular Section 12(1) (b) which gives power to the Chiefs to resolve disputes in a traditional and amicable way. It would be improper and impossible for the Chiefs to resolve disputes when one party does not attend, as in this case. The First Respondent denied in his affidavit filed on 23rd June 2008 having any knowledge of the Chiefs hearing date, perhaps was not informed. In the absence of one party what would be the issues the Chiefs are called to consider and to resolve? The Section simply states, in a circumstance where all traditional means to solve the dispute have been exhausted, and can do no further, they must refer the matter to the appropriate Local Court. One circumstance is where one party does not attend though he may or may not been served with a notice.

Traditional means, of resolving dispute require both litigants to appear and present their case. The Chiefs do not function like the formal courts, that upon proof of service and the served party fail to file notice of appearance or fail to file defence within required time, the other party can apply for default judgment. Never at any time can the chiefs possibly assume power vested on the courts or similar to the courts.

My reading of the Chiefs decision reflects general position concerning those who may own blocks of land in Kazukuru left hand land. It does not specifically state who owns which block. There is nothing to show who owns blocks 16 in the decision. In fact they were mere statements of opinion as to the rights of the party.

I must say, that decision does not give right to the First Applicant to own block 16. And the assertion by both applicants to have direct control of ownership of blocks 16, 22 and 24 are claims in custom which need to be established through the right forum. This court is not the right forum, see Simbe – v- East Choiseul Area Council and Others[3].

It is no doubt that the Applicants and the First Respondent are from the same tribe. Surely as a Trustee any particular action by him will affect the interest of the Applicants.

The question of representative party is raised by Mrs. Tongarutu, which the court requires that to be answered under Rule 3.42. Both Applicants come to court and state they have been authorised by their immediate family and Gumi tribe. In other words they represent their immediate families and the Gumi tribe which implicates the whole tribe.

The Ombudsman’s case was decided in 1987 and the Solomon Islands Court (Civil Procedure) Rules came into force in 2008. Rule 3.42 states:-

"Any person entitled in custom to represent a community tribe, line or group within Solomon Islands may be sue or be sued on behalf of as representing the Community, line or group, but the court, on the application of any party, or on its own, initiative, may require that person to provide proof of their entitlement in custom to act as such a representative before any further stop in the proceeding may take place".

I have perused the file thoroughly and do not seem to find any application by either party requiring the Applicants to provide proof of their entitlement in custom to act as a representative. Neither the Court on its own initiative requires the Applicants to provide proof of their entitlement to represent the Gumi tribe or their immediate families. However, I note "Exhibit RB1" attached to First Respondent’s affidavit filed on 7th November 2007, that the elders of the tribe express their concern. In their note, they deny approving the Applicants to represent the Gumi tribe in this case.

In the absence of such, the Applicants standing to come to court and sought injunctive orders must base on the option expressed in Ombudsman’s case, that their individual rights have been adversely affected by the conduct of the First Respondent, as equal as those whom they may represent, though proof of authorisation has not been acquired. I must say, there are short falls in the legal process initially to obtain such proof. In those circumstances it is only fair to say that the Applicants have locus standi to come to court and seek injunctive orders as individuals.

Is there a serious issue to be tried?

It is not disputed that the First Respondent holds a position of trust. He signs the logging contract on behalf of Gumi tribe. In custom he is a proper customary trustee recognised by his tribe.

Having assumed that fiduciary duty, the First Respondent established a mechanism for recipient and distribution of royalty proceeds. Firstly a Deed of Trust was established (Exh. KB2) attached to First Respondents affidavit filed on 9th May 2008. Paragraph 6 shows it is a Discretionary Trust. Clause 7 (31) (b) provides that the trustee and the tribal Committee to determine the percentage and thereafter make the distribution. Paragraph 4(8)(c) (ii) provides for annual reports to be provided to the beneficiaries on the affairs of the Trust, and paragraph 4(8)(d) provides that beneficiaries of the timber royalties and other benefits due to them through the logging operation to fairly receive their share of the royalty payments.

Secondly the First Respondent established a mechanism in accordance with the Supplementary Agreement made on 15th December 2004, paragraphs 4, 5, 7 and 8 in his affidavit filed on 9th May 2008. Under these arrangements a Royalty Management and Distribution Committee was formed to represent Gumi, Gemu, Veo, Biku and Zomoro Clans. And by clause 7(31)(c) the beneficiaries Committee representing the beneficiary group of each trustees groups shall jointly with their trustees ensure that the distribution of the royalties is fairly dealt with.

Despite those mechanisms, has the First Respondent with his distribution committee complied with the clauses in the Deed of Trust and the Supplementary Agreement. The Applicants denied; receiving once at the initial stage of the logging and that is it. The Second Applicant perhaps not at all.

The Clauses in the Deed of Trust and Supplementary Agreement provides for the basis of fair distribution and accountability by furnishing annual reports to the beneficiaries. If this is not done as claim, then this is where the core of the issue lies. Why it has not been done. It may be argued that it is the work of the distribution Committee. That can’t be so. The Deed of Trust under clause 7(31)(c) and 4(8)[c] vested the duty on the trustees jointly with the distribution Committee to ensure fair distribution and accountability is done. This is a real issue which must be resolved when this matter is tried.

In Kasa v. Biku[4], his Lordship Muria CJ said,

"It is essential in ensuring accountability on the part of those who take charge of family or tribal properties. If anything, it is my fair view that in today’s changing conditions in the way customary land is used, the principles of accountability must be made to form part of the customary jurisprudence to be applied in determining the relationship and status of a representative who acts on behalf of his landowning tribe in customary land matters".

The Second issue is the allegation that the First Respondent and other members of his family are using royalties obtains from logging on Kazukuru left hand land for himself or other people he choses to share with. See the Statement of Claim paragraph 7(iii). This is a very serious issue that has to be tried in court, and evidence must be adduced to that effect. The level of allegation is serious which require the court to fully inquire into it. (See Talasasa (Jnr.) and Talasasa (Snr) v. Wesley Talasasa and Attorney-General[5].

The third issue relates to the financial reports encompassing 2005-2007 drawn by Biku party. This was in respond to Orders made by this court on 27th June 2008. Actually there are two reports. One was filed on 23rd July 2008, and an amended summary report was filed on 8th September 2008. Already there are questions raised in relation to certain items in the report, in particular by the First Applicant in her sworn statement filed on 3rd October 2008.

These are real issues which need to be considered by the Court on trial. This will ensure that the First Respondent comply with Deed of Trust and Supplementary Agreement, and ensure annual reporting is made available to the beneficiaries and a sense of being accountable, a duty he owes to members of Gumi tribe.

In all respect I find there are a number of issues raised and argued by the parties. It is most appropriate that they are best left for the main trial where they can be fully argued.

Balance of Convenience

As there are serious questions to be resolved, is it at all necessary to restraint the logging company (Second Respondent) to cease operation until this case is heard on trial. Noted from First Applicant’s sworn statement filed on 17th June 2008, which she says on paragraph (9) that they are applying not to stop the logging operation by the Second Respondents. What they want is for the First Respondent to be accountable for the proceeds derived from the logging operation which due to them.

The amended financial report filed on 8th September 2008, was by virtue of an order of this court. Thus should give a hint whether the First Respondent has performed his duty by way of accountability to the beneficiaries. The report may not reflect all the necessary information that a beneficiary may expect to know. However, whether the injunction orders are granted or not the substantial issue still goes to trial. And in preparation for trial it may be of assistance to the parties and the court that further and better particulars may be sought. That will enhance further details in respect to the reports. Meantime what the Applicants may have desired had been done by order and financial report filed. Whether such a financial report be compiled every year as demanded, is a duty by the First Respondent to fulfil, and ought to be done.

The subject matter which needs to be protected is the access to royalty proceeds which the Applicants pleaded that all outstanding and future payments yet to be paid must be paid into a Trust Account to be set up by the Solicitors representing the parties.

Most crucial to the balancing exercise is this particular point. Is it necessary to preserve all the outstanding and future royalty payments into a trust account until trial of this matter, so that not doing so, will bring injustice and would expose the Applicants to a potentially significant loss would do irreparable harm to the Applicants if interim injunction is not granted. On the other hand would the First Respondent suffered from being prevented to exercising his legal rights.

I have made my comments earlier that the Applicants have not provided proof to their entitlement in custom to act as representative of the Gumi Tribe or their group or their community. This can be done on application of any party to the court, or by court on its own initiative to require the Applicants to proof they are authorised to represent Gumi tribe or others. This has not been done, and I have determine earlier in the absence of legal process to require whether the Applicants were authorized, that they have legal standing as individuals whose interests have been peculiarly affected by the First Respondent’s action to come to court.

In balancing the interest of the two individuals against perhaps the majority of the Gumi tribe including clans, it would be unfair and unjust to consider the majority interest as prevalent. There is no guarantee the substantive issues be heard soon. Knowing in fact that Christmas Vacation is coming. To order that all royalty proceeds be paid into a joint trust account of the counsels would mean those benefits will not be accessed until trial of the matter. This is seen as with-holding what actually is the entitlement of the majority which is due and ought to be distributed. To halt on interim bases will cause injustice to the majority whose rights have to be unjustly interfered with for the sake of two individuals’ interest.

My personal view in regards to distribution and accountability is that they are more or less administrative matters, which I feel should be best sorted out at the tribal level. It requires corporation, working together and sorting out the indifferences previously confronted by the tribe. I notice as well that the same names seemed to repeatedly appear in cases concerning the same tribal group. If there should be any grudges after all these cases; that should be iron out by the tribe itself to allow for equal sharing and benefiting from their resources which they jointly own as members of the Gumi tribe. I agree with the quote by Nuatali from the case Kasa v Biku[6] that how money is to be distributed is best resolved by the members of the tribe themselves. The court can only assist if needed. Simply, the courts will assist should the paries are unable to resolve their problems.

Having said all that I make the following orders which I consider best in the overall justice of the case.

1. Declaration that 1stRespondent account for all royalty proceeds, had been done by order of this court on 27th June 2008 and filed on 8th September 2008.
   
2. Order directing all royalty proceeds be paid into Trust Account until t rial of the matter – refused.
   
3. Order restraining 2nd Respondent to stop operation, refused.
   
4. Cost of this application be paid by Applicant to Respondent.
   

THE COURT

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^[1] . [1987] SILR 5
^[2] [1972] 2 WR 577
^[3] Appeal Case No.8 of 1997
^[4] [2000] SBH 62 Page 6 paragraph 2
^[5] [1999] HC CC 104 of 1999
^[6] [1999] Civil Case No. 12 of 1999, Page 7.