Kikile v Kalahaki Ltd [2011] SBHC 78; HCSI-CC 431 of 2007 (31 August 2011)

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DANIEL KIKILE and JACK HANIGARO
(Representing the Lakuili Tribe)
Claimants

Mr Tagini for the Claimants
Mr Lepe for the First and Second Defendants
Mr Damilea for the Third Defendant
Mr Ipo appeared for the Applicants in the Interpleader Summons

1. This is a hearing supposedly to deal with the assessment of damages following a judgment against the First and Second Defendants dated 12th March 2009. Directions were given in respect of the assessment of damages some while ago. The proceeding has stuttered and stumbled on for some considerable time. A number of applications have been made. This occasion was no different, prior to the assessment hearing yet another application was lodged. In the interests of justice Mr Ipo was given leave to present what was described as an interpleader application.

2. Whatever the application was, it was not an interpleader summons or application. The Applicants (they were Joseph Tausuli, Nikasio Loho, Mathew Heno, Kalani Perole, Abdon Parai, Joseph Kesale and Memorio Tangisivaki representing the Laukili Tina, Haubata and Kidepale tribes) were simply repeating what had been argued before, namely the Claimants were not the true owners of all the land. The applicants referred to Timber Rights hearings in 1982. There was the obligatory reference to the "fraudulent decision by the Chiefs". This was a rehash of the issues dealt with by Goldsbrough J in April 2010. His decision was confirmed by a single judge of the Court of Appeal and then by a full court. His Lordship made it plain these present proceedings concerned a, "...decision made under the Timber and Forest Resources Utilisation legislation in 1994 by an Area Council and subsequent decision of the Commissioner of Forests. Those proceedings are not the subject of challenge and those decisions, whether they were made in error or not, are not open to debate in 2010". There was no attempt to explain why the Applicants should be in a better position than the Defendants in these proceedings.

3. In any event the application was not a properly constituted interpleader application. It was not an application by a stakeholder (see Rule 22.1 of the Solomon Islands Courts (Civil Procedure) Rules 2007) or by the Sheriff. If anything it was an application, made it must be said a long time after judgment, to join in additional parties. It was clearly another attempt to avoid the consequences of the default judgment. It raised nothing new of consequence that had not already been argued before Goldsbrough J and for the reasons he gave, this application was doomed to failure. The application was refused.

4. Evidence in connection with the assessment was then given and submissions made. The facts do not need to be recited in detail. So far as the damages now being assessed are, they were for trespass, conversion of trees, environmental damage and loss of future earnings. Just as in any other aspect of civil proceedings, as regards evidence for assessment of damages the burden of proof on the Claimants and is on the balance of probability.

5. There was very sparse evidence about loss of future earnings. Mention was made of previously taking tourists to see the hot springs but no figures were produced. Given the burden on the Claimant no assessment is possible for those damages.

6. As for conversion, evidence has been introduced about the commercial value of the timber as exported. The argument is advanced that the export value is the measure of damages for conversion. I do not accept that argument. The proper measure is the value of the trees. So far as a landowner is concerned the generally accepted value is 15% of the export value. Most approved timber agreements that pass before the court, and there are a good many, provide for the landowner to receive 15 % of the value. The usual arrangement is 60% goes to cover the loggers expenses, 25 % goes to the Government as duty and the balance to the landowner. In order to realise the true value of the trees as timber a landowner would be involved in expense. As a measure of damages he is only entitled to the net value of the timber. As I understand the evidence, the Claimants do not say the timber was going to be milled and used locally. For the purposes of assessing damages for conversion in this case it is appropriate to use the export value but not the full value. The most obvious deduction is the 25% Government duty. If the Claimants had exported the timber themselves they would have had to pay that. They would also have incurred costs in felling and transporting the timber to where it could be exported. As indicated above the logger usually gets 60 % as his expenses. That figure must include a profit element. It cannot possibly be an accurate measure of the expenses alone. The loggers are in business to make money, to make a profit, and logically the 60 % must include that profit element.

7. There is no evidence provided on that question. However, it is reasonable to assume a profit margin of between 10 and 25 per cent. The correct figure for damages for conversion would be expressed by the formula EV – (DT + (EX – PM)) where EV equals the gross export value, DT equals the duty paid, EX equals the expenses and PM equals the profit margin. In this assessment and given the lack of real evidence it would be reasonable to "fix" the profit margin at 17.5%. The individual elements of the formula above would be calculated thus. DT would equal EV multiplied by 25 (the duty figure) and divided by 100. A complicated way of saying 25 per cent. EX would be represented by EV multiplied by 60 and divided by 100 (or 60%). PM is calculated by multiplying EX by 17.5 and dividing by 100 (or 17.5%).

8. The Claimant says the gross export value is to be found in two places. It can be ascertained from the invoices or it can be found in the market value certificate from the Central Bank. The Defendants say it is the value to be found in the invoices. I would have to agree with the Defendants.

9. The Claimants' claim is that all the timber exported came from the "disputed land". The Defendants say the logs exported came from the disputed land and other areas and the Claimants have not introduced evidence to seriously challenge that assertion. The log tallies, summaries and invoices confirm the Defendants' claim in any event.

10. The Claimants produce a report prepared by Matthew Ata. The Defendants do not attack Mr Ata's credentials. His findings are that some 11,102 pieces of timber were removed from the Claimants' land. He has arrived at that figure by counting tree stumps. That is the only certain way of determining how many trees have been felled. Unfortunately that figure may not be of great assistance in the assessment of damages because the Defendants' evidence is that landowners have been felling timber for their own use as well. The Claimants have produced no evidence to contradict what the Defendants say. There is absolutely no reason to doubt Mr Ata when he says he found eleven thousand stumps but as he visited the area after logging had stopped there would be no way he could say all those stumps were the result of the Defendants' logging operations. The Defendants also say the area was previously logged. The previous logging was some years ago. As the Defendants have not challenged Mr Ata's credentials he would no doubt, as an experienced Principle Forrester, have said if any of the eleven thousand stumps he saw were "old" ones from the previous logging operations. There is another difficulty with Mr Ata's report, he has not delineated the area surveyed with any certainty and there is the distinct probability it included "other" or properly disputed land. It is entirely possible the count of 11,000 stumps includes some that are not on land owned by the Claimants.

11. The reader might be forgiven for thinking the answer to the question of how many trees were converted could be found by looking at the tally sheets and summaries produced by the Defendants and accepted as accurate by the Claimants. Unfortunately that is not the case as the Defendants' evidence is they felled and used trees to repair old and build new bridges and culverts. The Defendants also say some logs were rejected for shipment. The answer to the question of how many trees were converted is therefore going to be a figure of less than 11,102 but more than the total of "pieces" set out in the summaries. The court is going to be left with deciding an arbitrary but reasonable figure.

12. The problems do not end there. The summaries of pieces felled and exported from the land do not differentiate between species of timber or sizes. The invoices do. All the court can do is to average the cost per piece by dividing the total value set out in the invoice by the number of pieces which make up that value. Again it may appear arbitrary, but it is the only reasonable course that can be adopted given the evidence produced.

13. The following table sets out the date and number of logs exported from the "disputed land", the average value per piece (in US dollars) and the total calculated value of the timber (in US dollars):

Date	No. of logs	Average value	Calculated export value
24/9/07	None
6/11/07	805	244.84	197096.20
10/3/08	826	265.55	219344.30
23/5/08	56	293.88	16457.28
30/6/08	None
18/7/08	32	400.44	12814.08
28/8/08	870	344.26	299506.20
20/9/08	None
		Total	745218.06

It can be seen from the above the total number of logs exported is 2589; using Mr Ata's number of stumps counted figures, that leaves 8513 logs unaccounted for. It is reasonable to divide that number between the landowners and the Defendants. In other words the Defendants used, for their own purposes, a further 4000 logs otherwise unaccounted for. Again using an arbitrary but reasonable presumption a third of those logs were rejected or wasted, that is 1,333 logs were rejected by the export customer or otherwise wasted. Those should be valued at the average of the average value namely USD 309.80. That gives a figure of USD 412,963.40 to be added to the total above. The Total export value is therefore USD 1,158,181.46. That is the figure to be used as the value of EV in the equation set out in paragraph 7. From that figure the element DT can be calculated at USD 289,545.37, the element EX is 694,908.88 and the element PM is 121,609.05. The equation can now be completed and it gives a figure of USD 295,336.26.

14. To that figure must be added the value of the remainder of the logs unaccounted for and presumed to have been used (to build bridges and culverts) by the Defendants. They are valued as standing timber rather than exported timber. The value per log can be determined by reference to the usual value of standing timber to landowners, namely 15 per cent of the export value. Fifteen per cent of the export value is 173,727.22. If that figure is divided by the number of logs actually exported (2589) a value of 67.10 is arrived at. That value is multiplied by the number of logs used (2/3 of 4000, see paragraph 13 above) which is 2666 giving a value of USD 178,894.07. The total damages, in respect of the claim for conversion of trees, amount to USD 474,230.34.

15. Turning now to the claim for environmental damage, there are two conflicting reports. One prepared by Mr Boeau for the Claimants and one by Mr Labaseni for the Defendants. The report by the latter summarises the position by saying the, "past operation poses no lasting threat or detrimental long term impact on the environment". That seems to fly in the face of all existing evidence. Mr Boeau catalogues some of the undoubted environmental damage caused by logging and provides photographic examples. Mr Labaseni also broadens his report so that its scope also involves determining, "the true ownership of Vaqulu............customary land blocks". His comments on that issue are irrelevant and have been ignored.

16. Assessing the value to be placed on environmental damage is always going to be difficult [1]. In a recent decision I suggested the approach of assessing the cost of putting right what had been harmed [2]. That case involved a relatively small area. Here the area is much larger and that would be a much more difficult exercise. It would help in all cases if an assessment was made of the area damaged in relation to the whole of the area concerned. In other words was the land extensively damaged or was only a small portion or percentage affected. A description of the nature of the terrain would also be of assistance. For example, as a matter of logic, in areas with steep slopes a small region of actual damage can have detrimental effects far out of proportion to its size. The plain fact is there can be no hard and fast rules but the litigant claiming environmental damage must set out the basis on which such claim is made and the methodology used to calculate the amount of damages claimed.

17. In this case the report by Mr Boeau concentrates on actual damage to the surface of the land caused by the construction of roads and skidding tracks. Environmental harm caused to waterfalls, hot springs and Tambu sites is not specifically dealt with although there is photographic evidence of such harm. Mr Boeau has calculated the extent of the damage and put a value on that. The approach is entirely acceptable but the valuation isn't. In the case of Larimae and Others v. Mega Enterprises and Another [3] His Lordship the Chief Justice accepted as "the going rate" for damage a figure of $7.50 per square metre. Using that rate and the measurements produced by Mr Boeau the damages in this case would amount to SBD 2,953,965.00. This figure is arrived at by reference to the 211,120 m² of damage caused by road construction and the 182,742 m² of skidding track.

18. Whilst the "damage" caused by the construction of a road can be mitigated by the benefits a road can bring, as there is no specific claim for damage to areas which are not roads or tracks I see no reason not to accept that figure. The Defendants' own expert, Mr Gorapava, does not challenge the extent of the "damaged area" he challenges the amount per square metre. I accept his objection is valid as to the amount per specific area and having substituted the rate accepted by His Lordship in the Larimae case for that put forward by the Claimant, the objection is dealt with.

19. Damages for conversion to trees are assessed at USD 474,230.34. I have left the amount as a US currency figure and the exchange rate will be the one applicable at the time of payment. For guidance only, using the current exchange rate that would amount to roughly SBD 3,400,000. Damages for trespass and environmental damage are assessed at SBD 2,953,965.00. Again for guidance only, the total SBD figure is approximately 6,353,965. The amount apparently already paid by the Defendants to the Claimants, the evidence is not entirely clear, shall be deducted from the amounts set out above. The damages shall be paid by the First and Second Defendants to the Claimants. As the Claimants sue as representatives of the Lakuili Tribe the damages are paid to them as Trustees and they cannot simply use the money for their own benefit. They are accountable to the rest of the members of the Lakuili Tribe for every cent.

20. The First and Second Defendants shall pay the costs of the Claimants, such costs to be taxed at the standard rate unless agreed.

^[1] Maximus International v. Iputu and Others Civil Appeal case 13 of 2007
^[2] Razak and Anor v. Van Cesar and Others Civil case 288 of 2010
^[3] Larimae and Others v. Mega Enterprises and Anor Civil case 183 of 2008 judgment dated 8^th March 2011

High Court of Solomon Islands

Kikile v Kalahaki Ltd [2011] SBHC 78; HCSI-CC 431 of 2007 (31 August 2011)