Marine Exports Ltd v Attorney General [2011] SBHC 142; HCSI-CC 42 of 2006 (25 November 2011)

IN THE HIGH COURT OF SOLOMON ISLANDS.
(Faukona J).

Civil Case No. 42 of 2006.

BETWEEN:

MARINE EXPORTS LIMITED
Claimant

AND:

ATTORNEY GENERAL
Defendant

Date of Hearing: 21st November, 2011.
Date of Decision: 25th November, 2011.

Mr Rano for the Claimant.
Mr Banuve for the Defendant.

DECISION ON ASSESSMENT OF DAMAGES.

Faukona J: Following the default judgment orders on 13th December 2006, in which the Court had imposed four orders. For the purposes of this assessment I herein quote orders 1 and 2.

Order 1: Judgment for the Plaintiff in terms of paragraph 20(с) of the Statement of Claim; that damages to be assessed on a date to be fixed by the Registrar. (Paragraph 20(c) refer to by order 1 concerning damages for wrongful interference with the contract refer to in paragraph 9 of the Statement of Claim).

Order 2: Exemplary damages awarded to the Plaintiff on the grounds of the oppressive arbitrary of the Minister of Fisheries and the Solomon Islands Government in proceeding to publish the said Regulation, damages to be assessed on a date to be fixed by the Registrar.

2. The Claimant is a limited company incorporated in Solomon Islands on 3rd March 2002. Its speciality is to capture wild dolphins, keep them in captivity in a purpose built facility, breed and train them, and from time to time export them overseas. The Claimant was first granted export permit and had exported dolphins to Mexico in 2003.

3. On 13th January 2005, the cabinet decided to effectively ban export of any live dolphins from Solomon Islands. A letter of the same date laid out the policy reasons for the ban. On 4th March 2005 Counsel for the Claimant acknowledged receiving the letter dated 1st March 2005.

4. On 8th June 2005 the Claimant executed a contract with Wildlife International Network Inc of Orlando, Florida, USA, to purchase twenty five (25) bottlenose dolphins.

5. On or about September 2005 the Claimant lodged an application for export permit for 25 dolphins with the Ministry of Fisheries and the sum of $100.00 paid as required fee. The application was never granted. It is to be noted that there ought to be two licences possess by an entrepreneur dealing with export of life dolphins. The first is a licence to capture life collection and holding of marine mammals in sea pen, Section 34 of Fisheries Act. The second is an export permit normally issued under the discretionary power of the Director of Fisheries for the purpose of export under section 32(1) of the Fisheries Act.

6. In October 2005 the Claimant in a Civil Case No. 511 of 2005, commenced proceedings for mandamus to compel the Director of Fisheries to issue the export permit to it.

7. On 24th November 2005, the Minister for Fisheries made an order entitled Fisheries (Prohibition of Export of Dolphins) Regulation 2005, per Legal Notice No. 123, gazetted on 25th November 2005. Attached to the legal notice was a specific mention of species of dolphin which the Claimant was breeding and intended to export.

8. The basic argument advance by Mr. Rano premise on the very fact of wrongful interference with the contract, and it is an act of tort. He refers to the case of Quinn V Leathem[1] where Lord Macnaghten said as follows;

"... - that was not, I think, .. - but on the ground that a violation of legal right committed knowingly is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference".

9. Interference with contract can be subdivided into three elements. In Torgusy Hotel Co v Cousins[2] His Lordship Denning MR set out three elements as follows;

(1) there must be interference in the execution of the contract;

(2) the interference must be deliberate;

(3) the interference must be direct.

10. Mr Rano argues that the Claimant was precluded from performing the contract dated 8th June 2005 to export twenty five (25) live dolphins as a result of unexpected promulgation of a law prohibiting the export of the dolphin. It appears that the law was made directly against the Claimant's business, acknowledging that the Claimant was the only business in Solomon Islands which captures wild dolphins and export them. The Claimant had shown that a wrong had been committed as judgment had been given in its favour. And that an arbitrary and oppressive act had been committed by the state which deprives its business by making an unconstitutional law to prohibit it from exporting dolphins.

11. Mr Banuve submits and denies any unlawful interference by the state. It is not imposition of the regulation that hinders the execution of the purchase contract. What transpired is that the Claimant has never had a permit to export live dolphins from Solomon Islands in 2005. The Claimants only possess fish processing licence to capture wild dolphins and breed and kept in a pen. It has never had a special authority from the Director of Fisheries as export permit pursuant to Section 32(1) of Fisheries Act.

12. The second issue which Mr. Banuve raise is that the ban was a cabinet decision made on 13th January 2005 under section 32(1) (с) of the Act. That ban was brought to the attention of the Claimant on 4th March 2005, who by his legal representative acknowledged receiving and responded by making a reply. That the Claimant had knowledge of the ban prior to entering into the purchase contract on 8th June 2005. It knows it would not be granted an export permit because the ban is still current and is inoperative. The Claimant cannot base on the promulgation of the regulation which in force later in the year, as basis to claim damages. The fact is that they were not given export permit which is a discretionary power vested upon the Director of Fisheries pursuant to section 32(1) of the Fisheries Act. It therefore cannot be said because of the regulation the contract was not honoured.

13. It would seem from the defendant Counsel's tone that this Court is engaged in determining the issue of liability. Mr. Banuve denies his submissions are not, in any way, support the issue of liability, but to put into perspective the element of interference which, as it appears falls on the claimant itself for the mischief it now claims. In any event the defendant's submission is an attempt to divert the liability on the claimant's own fault for being ignorant of the process or, as it would be an act to pressurise the Director of Fisheries to grant the export permit. At the end of the day the Claimant should be responsible for its own loss.

Any submissions touch on liability is quite remote to consider now. The privilege has long gone. The defendant should have filed defence to argue its case. It has failed to do so.

14. The first point to consider is, under which section of the Fisheries Act that empowers the Cabinet to impose ban on export of live dolphins from Solomon Islands. I have the liberty to run through the entire Act. Unfortunately there is nothing in the Act to assist. Hence orders of the Court on 13th December 2006, nullifying the Regulation for being made for an improper purpose, is correct and proper.

Duty to Mitigate:

15. Counsel for the Defendant argues that the grounds upon which the Claimant relies on require mitigation. He submits that Claimant has option, being aware of the fact that a ban policy was in place, and it did not have an export permit, why should it enter into a contract. It became realistic that entering into a contract is a vehicle to put pressure on the Director of Fisheries to issue export permit. Counsel further reiterates that claimant entered into a contract knowing fully well that it has no export permit and policy was current. Counsel further suggests that those dolphins could have been used for the other business which is not sufficiently addressed.

16. It is to be noted that the circumstances faced by the Claimant cannot be avoided. There is only one option out that is to challenge the ban. The sister company which runs a tourist centre depends on tourist visiting the centre. The question whether there is five or thirty eight dolphins does not increase the revenue according to head; the fees remain the same. In this case the Defendant alleges that the Claimant failed to take reasonable steps to mitigate its loss. With such allegation the burden of proof shifted to the Defendant according to Halsbury's laws. It is clear the Defendant shows nothing to proof on the balance of probability.

The measure of damages:

17. In the textbook A.S. Burrows, Remedies for Torts and Breach of Contract (1987), Butterworths, pages 158-159, the author says that;

"[To] put the plaintiff into as good a position as there had been no such interference he can recover damages for all the expenses caused by and gains forgone because of the interference, subject to the usual limiting principles".

18. The claimant's proper measure of damage is under three headings. And they are losses incur because of the interference with the contract and the claimant's business as well. The three heads are;

(1) Loss of profit (loss from contract).

(2) Recovery of expenses caused

(3) Loss of property.

Loss of profit (loss from contract):

19. It appears to me that loss of profit cannot be equated to loss from contract. They are two separate heads with distinguishable features. Loss of profit is profit regularly derived from the business of trade concerning twenty five (25) dolphins before the ban, or even during the ban period, so long as they live. There is nothing pleaded in this particular damage and loss. Therefore the claimant cannot benefit out of it.

20. Loss from contract is calculated and amounted to $4,785,600.00 for the twenty five dolphins. It is not clear whether the amount is a legitimate expectation if the contract was honoured, or is it an amount paid to the buyer because the claimant did not honour the contract it signed. In any event it is not clear. And nothing further coming from the buyer apart from $957,120.00 incurred which has been reimbursed. As clear as it may, there is no pleading in regard to this particular loss. In my view it would be difficult to plead because it does not exist. The claim for loss of 25 dolphins comes under the next sub-heading. To assess the same loss now would mean a double loss of twenty five (25) dolphins which contrary to the spirit enunciated in A. S. Burrows textbook above. That cannot be correct because both losses from contract and loss of property carry the same price for each dolphin with expected profit attach to.

21. The point I am able to see is that, if the dolphins could not be sold because of interference and consequently died or let out into the wild because of lack of funds to sustain them, they still carry the same price tag, and would be improper to claim double portion compensation. In my view loss from the contract should appropriately be subsumed into the loss of property to have one claim for loss for all the mammals at once.

Loss of property:

22. Though evidence may not specifically show how many dolphins actually died and how many were let out into the wild, it is accepted that all the thirty (38) dolphins were either died or release into the wild. And that is a loss incurred by the Claimant. Sworn statement of Christopher Porter filed on 1 September 2010 stated on paragraph 21 the loss of thirty eight dolphins in 2006 amount to $7,527,733.75. That is the amount he assessed for the loss of property. I accept that is true and correct and award accordingly.

Loss from feed:

23. The sworn statement of Christopher Porter filed on 1st September 2010 clearly outline feeding monthly summary for 2004 and 2005. There is no evidence to specifically point out when the last dolphin died or left the pen. It would appear that all the thirty (38) dolphins died or let out of the pen on the same date that is 31 December 2005 so the feeding cost was stable throughout; it can't be. Feeding rate should gradually lower as dolphins gradually died or let out in the wild.

24. In any event I have considered the expenditure incurred for two years with expectation that in the end something of reward be received. Unfortunately it did not turn out as the Claimant anticipated. Total expenditure for feeding and maintaining the thirty eight (38) dolphins which is $2,073,600.00 be awarded as loss being assessed.

Exemplary damage:

25. The orders of this Court on 13th December 2006 expressed clearly that exemplary damages is awarded to the Plaintiff on the grounds of oppressive arbiter action of the Minister of Fisheries for proceeding to publish the said Regulation.

26. The principle of exemplary damage is pronounced in Rooke v Barnard (No.1)[3] and approved in Cussell and Co. Ltd v Broome (No.1)[4], that is to say those exemplary damages is recoverable where the act concern amounts to an oppressive, arbitrary and unconstitutional act of the state.

27. Mr. Rano submits that the act of the State was calculated to deprive the Claimant's business. By promulgation of the Regulation was a response to the Claimant seeking an order for mandamus in Civil Case No. 511 of 2005. Mr. Satu's Sworn statement suggested that $500,000.00 is the proper amount for exemplary damages. The reason is for making the ban which caused the Claimant substantial loss.

28. Counsel for the Defendant argues that there is no basis to grant exemplary damages. The reason for the Claimant not to export its dolphins was because it did not have the export permit which was not granted by the Director of Fisheries who exercises discretionary powers in doing so.

29. Counsel further argues that Halsbury's law define category of persons who are liable for exemplary damages for their oppressive, arbitrary or unconstitutional actions. This category includes persons who are exercising functions of a Government character, like the Police. Finally he submits that there is no evidence to proof exemplary damages.

30. Order for exemplary damages had been made by this Court. I have decided above that the Regulation is a reinforcement of the ban imposed in January 2005 which has no basis in the Fisheries Act. What remains now is the assessment of how much would the damage worth. No point in arguing whether such damages be granted or not. The time to argue such point has long been gone. I am of the view that exemplary damage falls under first category stated by the Halsbury's law's which include persons exercising function of government like Police. Minister of Fisheries exercises function of the government. The Court has found the promulgation of the Regulation was for improper purpose consequentially null and void. That function exercise by the Minister on behalf of the Government was oppressive and arbitrary and cause loss and damages to the Claimant's business.

31. Having said that, I have decided that exemplary damages have to be paid by the defendant as a punitive order for making a Regulation for improper purposes. The sum of $500,000.00 is the calculated sum.

Interest:

32. There is argument following application by the claimant for interest to be awarded. Counsel for the Defendant submits that interest though provided under the Rules, it only applies where interest is pleaded. He argues the Claimant use the Rule to fix interest; it may be true for cost but not interest. Counsel refer to Halsbury's laws which says interest be specifically pleaded.

33. Counsel for the Claimant submits that Rule 17.65 cater for issue of interest. If not properly requested or pleaded the court has jurisdiction to grant interest of 5%.

34. Application for loss of interest without pleading is an application which stands on no ground. Rule 17.65 gives discretionary power to the Court whether to award interest or not, to be included at 5%. I accepted the general view that claims for interest must specifically pleaded in the body of the pleading and in the prayer. In this case there is nothing I therefore decline to award any loss of interest.

Assessment of damage orders.

1. Order for Loss of profit (loss from contract) in the sum of $4,785,600.00 refused.

2. Order for loss from feed in the sum of $2,073,600.00 granted.

3. Order for loss of property (38 dolphins) in the sum of $7,527,733.75 granted.

4. Order for exemplary damages in the sum of $500,000.00 granted.

5. Order for interest to be included refused.

6. Total sum assessed for damaged is $10,101,333.75 be paid by the Defendant.

7. Cost of this hearing be paid by the Defendant

The Court.

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^[1] [1901] UEHL 2 (5/8/1901) L.
^[2] Cited in Veir, A case book on Tort, 17^th Edn (1992).
^[3] [1964] UKHL 1 (21 January 1964).
^[4] [1972] UKHL 3 (23 February 1972).