Success Company Ltd v Takolu Timber Ltd [2011] SBHC 65; HCSI-CC 80 of 2009 (16 August 2011)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Chetwynd J)

Civil Claim No. 80 of 2009

BETWEEN

SUCCESS COMPANY Ltd
Claimant

And

TAKOLU TIMBER Ltd
First Defendant

And

RIMA Ltd
Second Defendant

And

PREMIER GUADALCANAL PROVINCE
(Representing Guadalcanal Provincial Executive)
Third Defendant

And

ATTORNEY GENERAL
(Representing Commissioner of Forests)
Fourth Defendant

Mr Tagini for the Claimant
Mr Keniapisia for the First Defendant
Mr Tegavota for the Second Defendant
Mr Damilea for the Fourth Defendant
Third Defendant not appearing or represented

Date of Hearing: 28th June 2011
Date of Judgment: 16th August 2011

JUDGMENT

1. The Claimant ("Success") filed a claim on 13th March 2009 seeking orders for a permanent injunction against the First Defendant ("Takolu") and the Second Defendant ("Rima"), damages for trespass and conversion of trees, "Any other orders the court deems fit" and costs. The statement of the case sets out the particulars of a timber felling licence being issued to Success (TIM 2/38) and the issue of a licence to Takolu (A10800) both covering the same area. It also states Rima are the sub-contractors actually carrying out the logging. The statement of case goes on to allege negligence against the Third Defendant ("the Province") by convening a timber rights hearing and negligence against the Fourth Defendant ("the Commissioner") for allowing the timber rights hearing and issuing a felling licence. It should be noted at this point, whilst the claim alleges negligence against the Province and the Commissioner; there is no claim for damages based on negligence against either. No one has taken the point. A defence filed by Takolu[1] alleges agreements (between Success and the landowners) dating back to 1993 had come to an end after 15 years. Alternatively they were at an end because there had been a breach of a condition that logging had to begin within 12 months of the signing of the agreements.

2. The basic facts are agreed. Success entered into timber agreements with the trustees for the landowners of Vai, Ravuneha and Huniata, Paru, Luana, Kotina, Takoka, Kolikiki, Tatomi, Kabaraho and Taburiu lands. Those agreements are dated September 1993. They followed a timber rights hearing held in August 1993. There were determinations published by the Province in October 1994. In December 1994 a felling licence was issued which was valid until 2004. The licence was renewed in 2004 and again, apparently, in 2010. It must be remembered the legislation appropriate at that time (1993/4) has been amended and the terminology used then was slightly different. I have used, purely for convenience, the terminology used today. No one has questioned the efficacy of the procedures and processes adopted then. The various documents and notices are exhibited in the court book. Ignoring all other considerations, it is no real part of any of the defendants' cases that the agreements and or licence were defective in any way.

3. In 2008 Takolu applied for approval to negotiate timber agreements. A timber rights hearing took place in April 2008. The Province made a determination and published it the same month. There was no appeal against the determination and in July and August 2008 a number of timber agreements were entered into. A felling licence was issued to Takolu in October 2008. There does not seem to be any dispute; the licence issued to Takolu covered the same areas as that issued to Success. Success has some issues with process and procedures which led to the grant of the Takolu licence but they are not at the heart of the matter.

4. The main issue arises because from October 2008 there were two felling licences issued to two separate entities covering the same land. The Claimant puts its case this way:

(At paragraph 9 of the statement of case), "All these customary lands have already been through a timber rights process and a valid licence covering the same lands have (sic) already been issued by the Fourth Defendant to the Claimant. The Claimants felling licence is valid until 23rd December 2010."

Success says as a result Takolu and Rima are trespassing into the concession area covered by its licence.

5. The legislation is clear, and there have been a number of decisions which reflect that, before the Commissioner can issue a licence there must be agreement between those who own the timber and whoever has applied for the licence. These are the timber agreements which are referred to above. The authority to carry out logging is, "... conferred not by the licence issued by the Commissioner under s 5(1A) but only by an approved agreement" [2]. That means at the time of issuing the licence there must be a valid timber agreement. It seems logical to assume that if a licence is renewed rather than issued there must be a valid timber agreement at the time of renewal. The evidence shows, without doubt, at the time of Success's renewal of TIM 2/38 in December 2004 there were valid approved agreements in place between Success and those persons determined by the Province in 1993 to be able to grant timber rights. The evidence also shows when Takolu was issued with its licence in 2008 there were valid agreements in place between it and those determined to be able to grant timber rights. For the reasons explained later, there were no valid approved agreements between Success and the "timber owners" when TIM 2/38 was renewed in 2010.

6. What can also be determined from the legislation and decided cases, is if the authority conferred by the approved agreement is withdrawn or otherwise ceases to exist, the licence on its own cannot supplant the agreement. The licence on its own does not authorise logging. An inelegant and not wholly appropriate analogy would be akin to permission to use a car and possession of a driving licence. If I give you permission to drive my car and you do so on a public road but you do not have a driving licence, my permission to use the car does not make your driving without a licence, lawful. If you have a driving licence but do not ask my permission to use the car, your possession of a licence does not make your taking of the vehicle without permission, lawful. In order to drive my car on the road lawfully, you need both a valid driving licence and my permission.

7. In terms of logging operations that is the effect of section 40 of the Forest Resources and Timber Utilisation Act [Cap. 40]. It says:-

"No licence or permit issued under this Act shall convey or be construed to convey any right which the Government does not have and in particular no such licence shall convey nor be construed to convey any right or authority to enter any private land nor take any action with respect to anything without the authority of the owner of that land or thing."

That raises the question, what authority did Success have to enter and log the lands named in TIM 2/38? The answer will vary depending on to what point in time the question refers.

8. The Defendants say they terminated the agreements negotiated and signed in 1993 between them and Success. If that is correct then from the date of the termination Success had a licence to fell and remove timber but they did not have authority to do so. If it is not correct they had both the licence and the authority. There is also the question of the duration of the licence. Did the agreements come to an end through effluxion of time? If they did then once again Success would have a licence but no authority. That is the point made in the earlier ruling (judgment dated 26th March 2010) in this case. It was made following the filing of a limited question to be answered by the court. In the terms of the question, and from the way it was argued, I held it to be misconceived. Whether the answer to question had been yes or no, it would not have had the consequence the parties anticipated. Whether the answer to the question had been yes or no, it would not have necessarily answered the question; did both Success and Takolu hold licences and authority at the same time and if so what was the result of that situation. It did not settle the issues in the case.

9. Various copies of the 1993 agreements have been supplied. There is no dispute that, apart from different names of landowners and land, the copy agreements exhibited to a number of sworn statements were all identical. There appear to be two dates when agreements were signed, either the 5th September 1993 or 10th September 1993. The effect of Clause 3 of the agreements is that they were all due for renewal either from 5th September 2008 or 10th September 2008. The agreements could last no longer than 15 years. They were not open ended as Success suggest. The agreements lasted for 15 years or for a shorter period. The shorter period being determined either on the provision of completion certificates by Success or by termination through breach.

10. Clause 2 of the agreements sets out a term or condition which states:-

"2. Commencement

The Company shall commence logging operations in the land covered by this agreement not later that (sic) twelve months from the execution of this agreement."

The intent of that term is clear, Success was to commence logging operations on the land within a year of signing the agreements. There was oral evidence as to the date logging commenced during the trial. Mrs Dettke said (during cross examination) that she could not remember when logging began but believed it possibly started in two areas in 1995. She later changed that to an assertion the company "went into work straight away". She didn't know when, and added ".. but the manager would". The Manager was not called to give evidence. Mr Limanisara said he thought some logging may have been carried out in 1996 or 1997 on Vai land. John Sara also thought there may have been logging in 1996, possibly on Vai land, but none took place on his land. He was only aware of logging, "... to the east".

11. On the best evidence available, even from the Claimant, I find that logging operations did not commence within 12 months of the signing of the agreements. There is a clear breach of the condition set out in clause 2. The clause does not expressly provide for the agreements to be revoked if logging did not commence within 12 months. In other words the agreements did not come to an end 12 months and one day from the date of signing. Instead the agreements provide a mechanism which allows the landowners to notify the company of alleged breaches and says what should happen in the meantime. The mechanism is set out in clause 40.

12. Clause 40 allows the representatives of and/or the timber owners to give formal notice of a breach of the any of Company's "obligations". Such notice was to be given through the Public Solicitor. There is no evidence of formal notice being given via the Public Solicitor's office. Nonetheless there is ample evidence Success was aware the landowners were unhappy about the lack of logging since 1993. At page 98 of the court book is Mrs Dettke's letter to Mr Limanisara dated 1st March 2007. That letter acknowledged the thirty day notice which had been decided upon by a meeting of landowners. The meeting took place on 4th February 2007. A copy of the minutes of the meeting is annexed to the sworn statement of Tobias Labaseni filed on 26th March 2009 as "TL 2". A copy was given to Success. It is not specifically mentioned in the evidence when the copy came to the Company's attention but it must have been on or before 1st March, the date of Mrs Dettke's letter. Copies of the minutes were also sent to the Commissioner and the Province. In the absence of an assertion, or evidence, to the contrary it must be presumed that none of the parties are saying that both the Commissioner and the Province did not receive copies. Despite the lack of involvement of the Public Solicitor the provision as to the giving of notice pursuant to clause 40 has been satisfied. It cannot matter whether notice of the alleged breach was given via the agency of the Public Solicitor or directly by the landowners. What is essential is Success had notice.

13. Having been given notice Success had 30 days to remedy the breach. As there is no evidence to confirm exactly when Success received the notice, the 30 days could probably be said to run from the only date that we can be certain about, the date of the letter from Mrs Dettke, namely 1st March. The major problem for Success is the passage of time. How could they possibly remedy the breach, i.e. commence logging operations within 12 months of the execution of the agreements, some 14 years after those agreements were signed? They could only try and re-negotiate the terms and conditions of the agreements. They could only ask for the landowners to waive the breach and to agree a new start date. That seems to be the purpose of the 1st March letter.

14. When the attempt at re-negotiations, and there is evidence they probably started in 2004, is examined the impression gained is that Success, in the belief that the licence was all important, adopted an aggressive stance. The company failed to see that, as mentioned previously, the authority to log comes from the agreements. At a subsequent meeting held on 14th March 2007 the landowners passed a "resolution" that any timber rights agreements with Success in respect of Kakau, Kidipale, Haubata, Lakuili, Luana, Kolikiki Takiga, Tabaru, Totomi and Paru lands be "revoked". Appended to the minutes of the meeting were lists of signatures of people who supported the resolution. In short, the landowners had rejected the attempt by Success to re-negotiate. A copy of the minutes of the meeting is at page 116 of the court book. That being so, and according to clause 40, Success had no option but to suspend all operations and as long as it was unable to remedy the breach complained of it had no authority to carry out any logging on the lands. There was no subsequent re-negotiation of the agreements which resulted in either amendments or waivers.

15. It is argued that those who purported to "terminate" the agreements could not do so as they were not the original signatories. That argument must fail. Those who originally signed in 1993 did so as representatives or trustees for all the landowners. They did not sign as individual legal land owners. The land in question is customary land. It is not land owned in the legal sense by individuals, it is owned by the clan or tribe. That concept in respect of customary land ownership is well settled. Success did not adduce any evidence to show those persons who attended the March 14th meeting were not members of the landowning tribes or clans. Success has not argued that those who attended the meeting and confirmed the revocation or termination of the agreements were in the minority or that the majority of tribal members wanted the agreements to continue. Even if the original signatories were or are all still alive, there is evidence most have subsequently died, they have an obligation to carry out the wishes of the majority of the beneficiaries. If the majority of the tribe wanted to end the agreements the trustees or representatives would have had to have acted accordingly.

16. The upshot of all this is Success had to suspend operations in the area, probably on or before 1st April 2007. The company could not resume operations until it had remedied the breach complained of. As explained above, it could never remedy the breach; the time for doing so had long passed. The exact wording of clause 40 leaves some doubt as to whether the agreements were "terminated" by the landowners because clause 40 only speaks of the Company terminating agreements. The effect of the notice was to terminate the agreements though as there was no way Success could put right what was said to be wrong. There would have to be a suspension of its logging operations on the lands and because it would never be able to remedy the breach and because it was unable to successfully re-negotiate the agreements, that would likely be a permanent suspension. A permanent suspension amounts to a termination in practical terms.

17. Whether there was a de facto termination or a permanent suspension the situation arrived at in mid-2007 is this. Success has a licence but it only has agreements giving it authority to log which are, at best, suspended. It could not and would not obtain clear authority to log unless and until it re-negotiated the terms of clause 2. That situation continued until February 2008 when Takolu submitted an application for approval to acquire timber rights (commonly known as Form 1). Did that action by Takolu give rise to any of the claims as set out by Success?

18. The claim is for damages for trespass[3]. The claim cannot relate to trespass to land, there is no evidence Success owned land which was entered into or onto by any of the defendants. It is not argued the agreements and/or the licence gave Success title of any kind to the land. There is no suggestion the defendants assaulted the Claimant in any way so there is no trespass against the person. In any event it is difficult to see how anyone could trespass against the "person" of a body corporate. That leaves trespass to chattels. That claim can only be based on the ownership of the trees. The licence did not pass ownership of the trees to Success. It is also doubtful the agreements passed immediate ownership to Success. The Timber Rights granted under an agreement are deemed to include all those specified in the Schedule to the Form of Agreement for Timber Rights. The present schedule is set out at page 1477 of Volume III of Laws of Solomon Islands. No evidence was presented, nor was the Court addressed, about the Timber Rights which would have been included in any agreement negotiated in 1993. On the basis they were the same as the present ones, there would be no trespass to chattels because the agreements only give a right to take possession of the timber, not immediate possession of it. Success was prevented from taking actual possession of any logs or trees by reason of it having to suspend its operations. It was not prevented from taking possession by anything Takolu did. In any event Takolu, by simply applying for approval to acquire timber rights would not have deprived Success of any possessory rights that it might have had. Similar comments would apply in respect of the claim arising out of conversion.

19. The situation changes in July 2008, when Takolu enters into agreements with the landowners. There is a clear intention by Takolu to obtain possession of timber on the land. However, for the reasons set out above, Success was not in possession of the timber at that time, at best it only had a right to take possession of it. Whilst the rights obtained by Takolu conflict with the earlier rights obtained by Success, there is no trespass. Conversion is another matter. Conversion requires an intentional dealing with a chattel which interferes with another's right to possess it. On the face of it that is what Takolu has done. It has entered into an agreement (or agreements) which gives it the right to take possession of timber. When carried into full effect, those agreements would deprive Success of its right to take possession of the self-same timber. However, it is well settled [4] at common law it is not conversion to deny someone else's title to chattels, even by asserting one's own inconsistent title. As Takolu had not physically removed any timber at this stage or taken any other action to prevent Success from taking immediate possession of any timber, that is all the signing of timber agreements with the landowner could have amounted to. There would be no conversion by Takolu.

20. We then arrive at the time when Takolu was granted a licence and actually entered into the land and started felling timber and removing it. There is no direct evidence of when that was but there is also no evidence to say that felling or any other logging operation occurred before the Commissioner issued the licence to Takolu. The licence was issued in October 2008. But for one small matter, Takolu's logging operations on the land would amount to a serious infringement of the rights granted to Success under the 1993 agreements. In other words Takolu's logging could have amounted to conversion. That small matter that prevents me from concluding there was conversion is the fact that after 10th September 2008 Success had no rights to take possession of the timber. As has set out in paragraph 9 above, all the agreements signed in 1993 had by that date come to an end. All that Success had was a licence which could not on its own give the company authority to log the land. As from 10th September 2008 Success was unable to maintain any claim in respect of logging or timber on the land.

21. The claims are also based on the premise that the timber and felling licence (TIM 2/38) issued by the Commissioner (and possibly the 1993 agreements) gave Success exclusive rights to all timber on the lands covered by the licence (and agreements). No argument was advanced and no authorities were provided on that point yet it is fundamental to the case. A careful study of the licence does not reveal any suggestion of exclusivity. The licence[5] is granted to Success Company Ltd to, "cut, fell and take away timber". I am unable to find anything in the legislation imbuing exclusivity to a licence holder. A similar careful study of the agreements also fails to reveal any element of exclusivity. In the agreements the Representatives, "grant to the Company the right to fell, harvest and extract timber for sale from the customary lands on Ward 1, Guadalcanal Province". The legislation, in so far as it relates to approved agreements, does not imply exclusivity in an agreement. For example, there is nothing in section 6 (found in Part III of the Act) and in the definition of timber rights to suggest they are exclusive in nature.

22. If neither the licence nor the agreements are exclusive, and even if the findings detailed above about trespass and conversion are entirely erroneous, Takolu would be able to rely on the licence granted to it and the agreements entered into by it as a defence to any claim grounded in trespass or conversion. Takolu would have equal rights with Success to cut, fell and take away timber or fell, harvest and extract timber for sale.

23. So far as the Third and Fourth Defendants are concerned the only claim against them is for negligence. It is based on the fact that the Province convened a timber rights hearing and the Commissioner had entertained a Form 1 application and subsequently issued a licence in respect of the customary lands already dealt with in 1993. Nothing in the legislation prevents them from doing so. There is no admonitory provision in the legislation to say they should not do what they did. Quite the reverse, sections 7, 8 and 9 of the Forest Resources and Timber Utilisation Act impose duties on them, particularly on the Province, if an application is made in the "prescribed form and manner". They cannot be negligent for doing what they are obliged to do. There is no allegation they were negligent in the way they did what they were obliged to do. The allegation is that they were negligent because they did what they were obliged to do. In any event as mentioned earlier (paragraph 1) there is no claim for relief based on negligence made by the Claimant.

24. In all the circumstances the Claimant cannot and does not succeed in any of its claims. Success may have a claim against the landowners for derogating from their grant, and that would depend entirely on the negotiations prior to 1993, but no such claim is made in these proceedings and I need say no more about it. All claims are dismissed and the costs should follow the event The Claimant shall pay the costs of all the defendants such costs to be taxed if not agreed. There was an injunction granted in the early stages of this matter. It was in favour of the Claimant it is possible it was amended. For the avoidance of doubt all interlocutory orders are hereby discharged. Any funds subject to an injunction are to be released to the defendants forthwith. The Claimant gave an undertaking as to damages. If any claim arises out of that undertaking full details must be filed in court 14 days from the date of delivery of this judgment. If no claim is filed within 14 days the Claimant's undertaking as to damages shall be discharged.

Chetwynd J

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^[1] Defence of First Defendant filed 14^th July 2009
^[2] Simbe v. East Choiseul Area Council [1999] SBCA 9; CA-CAC 8 of 1997 (9 February 1999) at paragraph 6
^[3] Paragraph ii) of the Claim (see page 2 of the court book)
^[4] Oakley v. Lyster [1931] 1 K.B. 148, C.A.
^[5] See page 626 to 632 of the court book