Eagon Pacific Plantation Ltd v Siuta [2012] SBHC 5; HCSI-CC 273 of 2009 (31 January 2012)

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DAVID SIUTA and OTHERS
(T/A Kalena Foundation Resources Development)
First Defendants

Mr Hapa for the Claimant
Mr Pitakaka for the First Defendants
Mr Sullivan QC and Mr Kama for the Second Defendant

Date of Hearing: 19th to 22nd September 2011
Date of Judgment: 31st January 2012

1. On 24th September 2010 His Lordship the Chief Justice ruled the First and Second Defendants had no arguable defence to the claim in this matter. He made an order (inter alia) the Claimant was entitled to damages for trespass, which damages were to be assessed if not agreed. The matter has now come before the court for an assessment of damages. In his judgment His Lordship observed, "The main documents relied on (by the Defendants) consisted of copies of original documents of transfer, of significance being a document titled "Agreement for Transfer of Land from a Solomon Islander to the Protectorate Government" dated 12 January 1964. A copy of that document is exhibited as "PH1" in the affidavit of Penny Haro filed 13 August 2010. This is a fairly comprehensive document consisting of four pages which set out in clear and plain terms the area of land being transferred. His Lordship also observed during the negotiations leading to the signing of the documents "The person who acted as interpreter was Penny Haro". As to the boundaries of the land transferred His Lordship said, "The original transfer documents relied on in this instance cannot be faulted for they had been undertaken with such care, clarity and certainty that the only reasonable conclusion that this court can arrive at is that the landowners who executed those instruments did understand, or must be deemed to have understood what they were doing". Shortly after His Lordship says, "The landowners had opportunity to correct or amend the description of the land or the boundary but did not". His Lordship then concluded his judgement by saying, "I am satisfied on the material filed before this court that there is no arguable defence to the claim. I note that there are disgruntled landowners who are unhappy about the outcome and legal effect of the transfer of their land in 1964, but in so far as the law that applies under the Land and Titles Act is concerned, they are bound by those decisions made by their elders and tribal leaders".

2. The First Defendants applied for and obtained a felling licence over lots 7 and 8. They were perfectly entitled to do that, the Claimant had no rights and has never claimed any rights over those two lots. However, as is clear from the Judgment of the Chief Justice, in the face of overwhelming evidence to the contrary and without even carrying out the most basic of checks, e.g. obtaining details of the Claimants registered title, the First Defendants insisted they were the customary land owners of the of the land between lots 7 and 8. The Claimant did not challenge the timber rights acquisition process because they had no interest in Lots 7 and 8. Had the Claimant realised what was being claimed by the First Defendants the situation may well have been different.

3. The Claimant has been operating on the land since 1996, when it obtained the lease. A felling licence (TIM 2/83) was issued in March 1996. A veneer processing mill was established close to the boundary of Lot 7. Re-planting has taken place since 1996. Much of the questioning of the Claimant's witnesses in regard to damage was premised on the basis that logging had taken place in the area before both by the Claimant and by others. "Eagon conducted logging in the area" (Mr Pitakaka to Mr Pita in cross examination), "Mr Wong logged as a contractor in that area 2001 to 2002" (Mr Sullivan to Mr Pita in cross examination). The Forestry Officers (Mr Rihuoha and Mr Vazu) and were asked about "old logging" in the area as were the witnesses dealing with environmental damage (Mr Pikacha, Mr Boseto and Mr Sirikolo). In short both the First Defendants and the Second Defendants were well aware of the Claimant's presence and operations on Lot 13.

4. There is also evidence the Attorney General wrote to the Permanent Secretary for the Ministry of Forests, Environment & Conservation in April 2004. The letter was copied to the Commissioner of Forests. It was in response to a claim for compensation for the destruction of Tabu sites on Lot 13. There is no evidence of what the PS or the Commissioner of Forests did as a result of the letter but it would be surprising if the "advice' from the Attorney General was not communicated to those making the claim. According to the letter, "Representatives of the persons who sold the land to the Government are now claiming compensation for damage to the tabu sites". According to evidence from the First Defendant, Kalena Foundation Resources Development is the landowners "organization" [1].

5. The overwhelming impression gained in this case is one of the First Defendants, as "landowners", regretting what was decided many years ago and now trying to re-write history. The position they adopt is set out by Mr Hoda in the "Review Report" produced as expert evidence [2] ('the Hoda report"). He has a heading in his report which reads, "the lawful deceit on original landowners". His contention is, and I repeat it is adopted with enthusiasm by the First Defendants, the landowners were unaware of what land they had leased, they were not consulted about "the lease to Eagon" and that Eagon somehow deceived the landowners into logging in the area. This was put forward in the Hoda report dated June 2011 despite the very clear findings of the Chief Justice in his written judgment [3] some months earlier. The First Defendants purport to be village people with no knowledge of how the Registered Land system worked. However, they knew exactly what the situation was on the ground so far as the boundary to the registered land was concerned and they also knew of Claimant's presence and operations there. Again the Hoda report has evidence of that, it refers (at page 3) under the sub heading "Field Investigations" to "the assistance from local villagers who had clear knowledge of the successive logging operations carried out within the particular area...". The report goes on to say, "Most of the young men ......had either worked with Eagon harvest subcontractors or Omex". The First Defendants embarked on a deliberate course of action. The Second Defendants agreed to go along with that course of action because it was convenient for them to do so. They have the benefit of many years of working in Solomon Islands and they also have easy access to legal advice. It appears as well that Mr Wong [4] had been a contractor working on the land previously. On several of the maps and plans produced by the Second Defendant (see for example the coupe plans) there is reference to "Eagon Camp" and yet Mr Wong says he did not know of the Claimant's presence in the area. The trespass by all the defendants has the appearance of being blatant and calculated.

6. The Claimant seeks damages as a result of the trespass. It says it is entitled to damages for the timber either cut and exported or cut and left lying in the bush. The Claimant also seeks compensation for environmental damage caused by the logging operation on Lot 13. So far as the value of the logs is concerned, the Claimant relies on the findings set out in the Forestry Field Assessment Report compiled by Messrs Rihuoha, Vazu and Luze ("the Rihouha report"). All the defendants challenge the report. They suggest the true value is as set out in the Hoda report and in particular the written submissions filed. As to environmental damage, the Claimant relies on the report in January 2011 by Messrs Sirikolo, Pikacha and Boseto ('the Sirikolo report"). Again, all the defendants challenge that report and urge the court to accept one produced by Ms Babaua and Mr Horohu from the Environment and Conservation Division of the Ministry of Environment, Climate Change, Disaster Management and Meteorology ("the Horohu report").

7. Dealing first with the question of the value of the logs. The main difference between the parties is the application of mathematics to the agreed data. It is put that way because the defendants do not seem to challenge the "stump" and "log" count set out in the Rihouha report. What they say is that the calculations contain some arithmetical errors (which was admitted) and the final figure arrived at was based on the most valuable of the timber exported. The defendants say all that timber with "extra" value came from land which was not owned by the Claimants, i.e. from lots 7 and 8.Therefore, they say, the final figure should be a lot lower. The defendants' case was put on the basis that the higher value logs, callophyllum and pometia, were all found on drier land and most of the Claimant's land is swampy.

8. Of course, this exercise would have been much easier if the Second Defendant had done what seems to be required by the logging and marketing agreement entered into between it and the First Defendants. All logs felled were supposed to be marked and details of their site of origin recorded. This was not done. No clear reason was put forward by Mr Wong. In cross examination he said he could get that information but he would have to go back to the staff because they would have the numbers. This begs the question as to why this information was not produced in the first place given the defence being put forward and the arguments now advanced. There is also a difficulty with the evidence from Mr Wong and others that the higher value logs came from Lot 7. In the documents which comprise the Harvesting Plan (tendered and marked as exhibit WCF1) is a copy of the coupe plan. The total area of Lot 7 is marked as "garden ground" and is outside of any of the coupe blocks. Mr Wong's evidence was that he couldn't comment on that and that "Sometimes the map is a little different". What is not disputed is that approval was given for logging in coupe blocks 1, 2 and 3, 5 and 7. That evidence comes from various sources but is comprised in several letters written by Munda office of the Commissioner of Forests [5]. According to the coupe plan attached to the letter in respect of coupe blocks 1 and 2 (which it must be said is markedly different from the map attached to the Harvesting Plan), a small area within Lot 7 could have been logged. There are no maps attached to the letter granting permission to commence operations in coupe blocks 5 and 7 but those coupes appear to be only partly comprised of Lot 8. The defendants are saying that all the high value logs either came from the areas in coupe blocks 5 and 7 which are within Lot 8 and from a very small part of lot 7 forming part of coupe block 1; or from areas in Lot 7 where there was no authority to log. Whilst it was agreed that Lot 13 has an extensive area of swampy ground the Claimant does not accept all of the land trespassed upon, and where logging took place, was swampy. In all the circumstances it is impossible to say where any of the exported logs came from and I do not accept the Defendants argument that most if not all the high value logs must have come from Lots 7 and 8. There is simply too much hypothesis presented as evidence to safely reach that conclusion.

9. Nor does the defendants' expert assist. In fact I found Mr Hoda to be most unhelpful in many respects. All he appeared to want to do is attack the experts relied on by the Claimant (in particular those involved in the Sirikolo report) rather than the evidence they produced. At page 16 of his report one of his conclusions is the, "The previous Environment report and its valuation component are totally rejected on grounds of possible mis-reporting and professional incompetency". He admitted he had no particular qualifications in environmental sciences, in fact no particular qualifications at all. His conclusions were based on his two days at the site and from walking, "...the main road from Opele landing and log pond site to Eagon's veneer mill site at Putaghita. The team then detoured east along a spur road then turned northwest to the end of a gravelled feeder road". He said to Mr Sullivan in re-examination that he had not gone in to Lot 7 or Lot 8. The one really sensible thing he did say was, "The independence of some people involving the whole dispute is questionable". Clearly not a thought he had in mind whilst writing his report.

10. However the Hoda report does highlight one area which may have a bearing on the claim for damages. No one has challenged the Rihouha report's assumption that the number of stumps counted should represent the number of logs exported. As I understand the methodology used, the number of lying logs was counted and then the number of stumps. The total of lying logs was then deducted from the number of stumps. Ignoring the third overseas shipment and two to Honiara the total number of stumps from Lots 7, 8 and 13 should equal the number of logs exported. The figures simply do not tally. From the two shipments set out in detail in the evidence a total of 1,578 pieces or logs were exported. The total number of stumps counted was 923. As Mr Hoda pointed out there was a shortfall (of stumps) of 51 per cent. Put another way, there are 655 pieces unaccounted for. The average volume of the logs exported is roughly 2.778 cubic metres. That would mean something like 1,820 cubic metres of timber is unaccounted for, worth a possible USD117,000 or more. If the pieces from the third shipment and Honiara shipments are included the inconsistency in numbers would be even greater. The third shipment had 312 pieces and the two Honiara shipments had 188 pieces. Even if a proportion of the exported logs were cut in two for ease of loading there is still the likelihood of a substantial discrepancy.

11. The possibility of such a discrepancy encourages me to accept the methodology used in the Rihouha report rather than that proposed by the defendants. Neither is wholly accurate but with the possibility of 655 logs unaccounted for, the submissions based on which species of tree was possibly cut from what area is much less attractive. The "lost" logs cannot be identified by species obviously, but there is a possibility as a total they could alter the percentage calculations put forward in submissions. Even if it is accepted that one species is less predominant in the swampy area, it would be more equitable to use averages based on known figures.

12. In evidence Mr Rihouha admitted he had made an error in the maths detailed in his report. This was in relation to the number of stumps counted. He was able to produce corrected additions showing stump counts in Lot 7 of 163; Lot 8, 141 and Lot 13, 619. He produced a figure for volume of timber representing those stumps by using an average volume based on the actual figures of exported timber provided by the Second Defendant. As I have indicated, that is the fairest method of calculating the volume of timber belonging to the Claimant and wrongly exported by the Second Defendant. The average volume per log is 4384.705 divided by 1578 or 2.778 cubic metres. Whilst logic dictates that not all the logs exported are accounted for by the stumps, the figure accepted by the Claimant is 619. The total volume of the Claimant's logs exported is therefore 2.778 x 619 or 1,719.582 cubic metres. To that figure must be added the "left lying" logs. Both the number and volume of those logs in respect of Lot 13 is known. There are 676 logs making up 914.078 cubic metres. The total volume of logs is 2,633.66 cubic metres. In reaching that figure no allowance has been made for the 600 plus lost logs or those undoubtedly left as a matrix in the swamp. As to the former, I repeat there is no evidence of where they came from and as to the latter; there is no evidence as to the numbers involved.

13. The value of the timber must also be calculated by averages. That can be ascertained by the figures from the Second Defendant. We have a total of 4384.705 cubic metres exported which was valued at USD 282,113.06. The average value per cubic metre must be USD 64.34. The total value of the "converted" logs, on an averaging basis would be USD 169,450.36.

14. An alternative approach would be to halve the value of the logs exported, because it seems to be accepted that about 50 per cent of them came from Lot 13, and add the average value of the left lying logs. That would give a figure of (282113.06/2) + (914.078 * 64.34) [6] or USD 199,868.31. This method would take account of the lost logs the first method would not. Neither method would take account of the matrix logs. The real difficulty with this second method is the complete lack of information about the lost logs. It cannot be said with any real certainty that any did or did not come from Lot 13.

15. A further complication as to figures is found in the documents attached to the sworn statement of Wong Chin Fatt (Mr Wong) filed 1st July 2001. From pages 132 to 140 inclusive there appear to be details of timber shipped to Honiara, to Lungga sawmill. There is detail of something in the region 230 cubic metres being shipped to Honiara. This timber does not seem to figure in either the Claimant's or the Defendants' calculations. It is not clear what the value of the timber is as it is set against an entry saying, "Royalties on Sales Proceeds". The total value involved is approximately SBD 15,000.00. A value of $50 is listed as being the price/value per cubic metre. As there are no submissions or arguments raised that I have been able to relate to this timber I shall ignore it. However, as mentioned previously the existence of the shipments to Honiara emphasise the difficulty of saying where any of the logs cut by the Second Defendant came from. The value of timber "converted" is therefore as set out in paragraph 13 above, namely USD 169,450.36.

16. The Defendants say the cost of production should be deducted from any value of the timber. Evidence was introduced by Mr Tepano the office manager of Yam & Co accountants. His opinion was tendered as RT1. His certified figure per cubic metre was SBD 383.80. If I am to deduct anything from the value of timber converted I am not minded to accept this figure. Looking at the value of the timber [7] shipped in three shipments overseas and two in country you arrive at a figure in the region of SBD 2,663,291.35. This is shown in the table below;

Shipment	USD value	Exchange rate	SBD value
MV Hikawa v-41	118.109.99	0.1261	936,637.50
MV Treasure v-02	164,003.07	0.1261	1,300,579.46
MV Treasure v-06	52,246.94	0.1261	414,345.28
Lungga 1			7671.60
Lungga 2			4057.50
		TOTAL SBD	2,663,291.35

Even if the Lungga figures are drastically undervalued and the true figure for the value of those shipments is nearer SBD 150,000 to 200,000, the production costs in RT1 are close to 70 to 80 per cent of the total value of all the timber from Lots 7, 8 and 13. This is far more than the Second Defendant was entitled to pursuant to its agreement with First Defendant and it would mean it was working at a loss. There has been no evidence the Second Defendant was working at a loss. Either the values of the timber shipped are wrong or costs included in Mr Tepano's certificate are costs relating to other logging operations carried out by the Second Defendant. I appreciate Mr Tepano can only work on the figures given to him. It is not suggested he is misleading the court. However, I seriously doubt I can rely on his certificate to give an accurate figure for production costs of the converted timber. The cost is averaged over a total quantity of timber amounting to 5,459.215 cubic metres and so it is impossible to say with any certainty how much it cost to fell and transport the 2,633.660 cubic metres belonging to the Claimant. The most that could be deducted in accordance with the agreement is 60 per cent of the total value of the "converted" timber. The Second Defendant is obliged to pay 15% royalties and the Government duty payable [8]. There is no evidence of any duty remission so the duty would be 25%. It is also obliged to make additional payments set out in the Supplemental Agreement dated 17th April 2009.

17. The real question is should there be any deduction for the Second Defendant's costs. The Defendants say the Court of Appeal have said there should be. The case I believe Mr Sullivan was referring to was Tropical Forestry (SI) Ltd and another v. Pou and another CAC 26 of 2006. In that case the Court of Appeal was referred to a,

"....longstanding practice in the Solomon Islands to the effect that where there is a dispute over the ownership of logs, the Court will require either:

(b) the gross proceeds of the sale of disputed logs, less duties and operating expenses, be paid into Court or a trust fund to abide final judgment.

Of course the case was dealing with funds which had been restrained by court order. That is not the case here. There may well be a longstanding practice relating to the release of operating costs from funds restrained in some way pending resolution. In this case we are dealing with an assessment of damages and there is nothing in the Tropical Forestry case which requires operating costs to be deducted from the value of timber exported or otherwise disposed of in an assessment of damages.

18. The starting point must be a consideration of the fundamental principal underpinning damages. It was said by Lord Blackburn [9];

"I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation."

The rationale behind that view of the law was the need to separate the way civil wrongs were dealt with by the courts as opposed to criminal wrongs. A conviction for a crime involved punishment whereas the righting of a civil wrong involved compensation. However as his Lordship observed shortly after;

"That must be qualified by a great many things which may arise - such, for instance, as by the consideration whether the damage has been maliciously done, or whether it has been done with full knowledge that the person doing it was doing wrong. There could be no doubt that there you would say that everything would be taken into view that would go most against the wilful wrongdoer - many things which you would properly allow in favour of an innocent mistaken trespasser would be disallowed as against a wilful and intentional trespasser on the ground that he must not qualify his own wrong, and various things of that sort."

In short, a successful Plaintiff faced with a "wilful wrongdoer" could recover more in damages than could one who was faced the "innocent mistaken trespasser".

19. The earlier case of United Merthyr Collieries Company [10] (also involving trespass underground to coal owned by the Plaintiff) shows how the normal rule operated i.e. where the Defendant was the innocent mistaken trespasser;

"It is a useful illustration of what the Court meant to decide in the particular case where that expression is to be found; but the principle of the decision is that the Plaintiff, although he has suffered a wrong, shall not have any more than he would have had if that wrong had not been committed. That I take to be the clear and plain principle. If he had himself severed the coal, he could only have done so by means of disbursements. If he had brought it to the pit's mouth when severed, he could only have done so by means of disbursements. If he himself had severed and brought the coal to the pit's mouth, whatever the value of it might then be would have to be deducted, because he would have borne the expenses on both these heads, which would have been actual disbursements, not profit; nor do "just allowances" mean profit".

"There can be no doubt as to what "the actual cost" means. The trespasser is not to charge as if somebody else had employed him to sever. If he had paid a certain sum to his workmen, and by the custom of the trade was entitled to charge a certain other sum, he is not to have the larger sum. The Plaintiff is to be put in the same situation as he would have been in, neither better nor worse, if he himself had severed the coal and brought it to the pit's mouth. That must have been done, and could only have been done by means of disbursements, not by any profit, not by any allowance in the trade, not by any artificial mode of guessing at it; but the books he must have kept would shew how much money he spent in severing the coal, and how much money he spent in bringing it to the pit's mouth".

The different circumstances acknowledged in the Rawyards Coal Company case where different considerations applied were set out in Trotter v. Maclean [11];

"Now, what do the cases decide with regard to the severer or the milder rule? The cases are numerous, and I believe, with two or three exceptions, they have all been cited. The milder rule has been applied where the Courts have said that the defendant has acted inadvertently in taking the coal: that is the language of Vice-Chancellor Malins in Hilton v. Woods. (Law Rep. [1867] UKLawRpEq 114; 4 Eq. 432.). Again it has been applied where the Courts have said that the defendant has acted under a bonâ fide belief of title: of that Hilton v. Woods, Jegon v. Vivian (ibid .6 Ch.742) and Ashton v. Stock [1877] UKLawRpCh 135; (6 Ch. D. 719.) are examples. It has been applied again when the Courts have said that the defendant has acted fairly and honestly: that was the language of Lord Wensleydale in Wood v. Morewood (3 Q. B. 440, n.). It has been applied in cases of mere mistake: that is the language of Vice-Chancellor Bacon in In re United Merthyr Collieries Company (Law Rep. [1872] UKLawRpEq 168; 15 Eq. 46.). The harsher rule has been applied where the Courts have found fraud: of that there are numerous illustrations, one being Ecclesiastical Commissioners for England v. North Eastern Railway Company [1877] UKLawRpCh 20; (4 Ch. D. 845.). It has been applied where there has been negligence: that was the language of Lord Wensleydale in Wood v. Morewood . It has been applied when the act of the defendant has been said to be wilful, as in Martin v. Porter (35 M. & W. 351). It has been applied where the Court has said that the defendant has acted in a manner wholly unauthorized and unlawful, which was the language of Vice-Chancellor Bacon in Llynvi Company v. Brogden (Law Rep. [1870] UKLawRpEq 221; 11 Eq. 188.), and it was applied by Vice-Chancellor Malins in Ecclesiastical Commissioners for England v. North Eastern Railway Company, where he thought the workings were the result of a mistake. But I find no case which throws any direct light on the question whether the harsher or the milder rule should be applied where there has been the bonâ fide expectation of a contract, and where there has been a knowledge on the part of the owner of the coal that that expectation would be immediately acted upon by an entry upon the property. But the observations of Lord Hatherley in Jegon v. Vivian seem to me to throw light upon the way in which I ought to answer the inquiry in the present case. He said, "I think that the milder rule of law is certainly that which ought to guide this Court, subject to any case made of a special character which would induce the Court to swerve from it; otherwise, on the one hand, a trespass might be committed with impunity if the rule in paenam were not insisted upon; so, on the other hand, persons might stand by and see their coal worked, being spared the expense of winning and getting it." Those observations are very material in two ways. In the first place, they express the view of the Lord Chancellor that the milder rule is to be assumed when the propriety of applying the contrary rule is not shewn, and they throw the burthen on him who asserts that the severer rule ought to be applied; and so his language has been interpreted by Vice-Chancellor Bacon in, I think, more than one case. In the next place, Lord Hatherley points out that the milder rule should be applied where persons stand by and see their coal worked.

20. The difficulty in the Common law was what to call damages which were more than the purely compensatory and how were they quantified. The non-compensatory awards were variously labelled aggravated, punitive, exemplary, vindictive and retributory. How they were to be applied and quantified was, according to some commentators clarified and settled, and according to others, made more confusing and restrictive, by Lord Devlin's judgment in Rookes v Barnard [1964] UKHL 1; [1964] 1 All ER 367. That was later examined in detail by the House of Lords in Cassell & Co Ltd v Broome and another [1972] UKHL 3; [1972] 1 All ER 801. Lord Devlin's view was that aggravated damages were compensatory but any enhancement of the amount awarded would have to be attributed to the Defendant's behaviour:

"...the injury to the plaintiff has been aggravated by malice or by the manner of doing the injury, that is, the insolence or arrogance by which it is accompanied".

"In awarding aggravated damages, the natural indignation of the court at the injury inflicted on the plaintiff is a perfectly legitimate motive in making a generous rather than a more moderate award to provide an adequate solution. But that is because the injury to the plaintiff is actually greater and, as a result of the conduct exciting the indignation, demands a more adequate solution"

Referring back to the coal mining cases (see paragraph 18 above) purely compensatory damages are those following the "milder" rule and aggravated damages, whilst still compensatory, are those following the "harsher" or "severer" rule.

21. Exemplary damages are intended to be purely punitive they were described by Lord Devlin this way [12]:

"In a case in which exemplary damages are appropriate, a jury should be directed that if, but only if, the sum which they have in mind to award as compensation (which may of course be a sum aggravated by the way in which the defendant has behaved to the plaintiff) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it, then they can award some larger sum."

"The difference between compensatory and punitive damages is that in assessing the former the jury or other tribunal must consider how much the plaintiff ought to receive whereas in assessing the latter they must consider how much the defendant ought to pay. It can only cause confusion if they consider both questions at the same time. The only practical way to proceed is first to look at the case from the point of view of compensating the plaintiff. He must not only be compensated for proved actual loss but also for any injury to his feelings and for having had to suffer insults, indignities and the like. And where the defendant has behaved outrageously very full compensation may be proper for that. So the tribunal will fix in their minds what sum would be proper as compensatory damages. Then if it has been determined that the case is a proper one for punitive damages the tribunal must turn its attention to the defendant and ask itself whether the sum which it has already fixed as compensatory damages is or is not adequate to serve the second purpose of punishment or deterrence. If they think that that sum is adequate for the second purpose as well as for the first they must not add anything to it. It is sufficient both as compensatory and as punitive damages. But if they think that sum is insufficient as a punishment then they must add to it enough to bring it up to a sum sufficient as punishment. The one thing which they must not do is to fix sums as compensatory and as punitive damages and add them together. They must realise that the compensatory damages are always part of the total punishment."

21. There are other considerations required by judgements in Rookes v. Barnard and Cassell & Co Ltd v Broome to which I will return shortly. Those considerations relate to the exemplary damages which the Claimants say they are entitled. In respect of the quantum of damages for the converted logs, the loss suffered by the Claimant, it is possible to arrive at the compensatory figure.

22. The total value (as set out in paragraph 13 above) is USD 169,450.36. Whilst it is accepted the Claimant had no intention of immediately felling and exporting the logs, if it had done so it would have been involved in expenses. One clearly defined and inescapable expense would have been the export duty. That is fixed at 25%. There has been no evidence produced by the Claimant that it was or would be exempt from paying duty at that rate. The total duty payable on all the timber would have been USD 42,362.59. However, not all the timber was exported. Duty is only payable on the timber actually exported. The duty to be deducted must be calculated by reference to the value of such timber or in other words, the value of the left lying timber is excluded. The quantity of exported timber was 1719.582 which would have had a value of USD 110,637.91 and the duty on that would amount to USD 44,255.16. The Claimant would also have had expenses of felling and transporting the timber. The Second Defendant has produced a certificate to say its cost per cubic metre in that regard was SBD 383.80. For the reasons explained previously I am unable to accept that as the true figure. The most the Second Defendant would have been able to recover is 60%. That is the undeniable effect of the "agreement" it had with the First Defendant. The most it would have been entitled to realise from its endeavours would have been USD 101,670.22 or 60% of 169,450.36. According to the Supplemental Agreement it would have also have had to pay 10 SBD for every cubic metre shipped. The sum remaining must also include a profit element. As I have already found both the First and Second Defendants acted in a calculated and blatant manner, with "insolence and arrogance" in the words of Lord Devlin, it would be inequitable if they profited from their trespass. It fairly easy to deal with the First Defendants, it was not their land and not their timber. They are not entitled to any of the value attributable to the converted timber. They should receive nothing by way of allowances as they have not been involved in any expense either. The 15% set out in the "agreement" should not be deducted from the value.

23. In relation to the Second Defendant, the situation is not so clear. As I have said, I do not accept the Second Defendants calculation as to its production costs per cubic metre but if I did it seems to show the Second Defendant would have incurred costs of USD 127,461.72 [13] in felling and transporting the 2,633.660 cubic metres of timber for which it would only have received, on the basis of the average value, a total of USD 169,450.36. Clearly that cannot be correct. The most it could have received was USD 101,670.22[14]. The Second Defendant should not "profit" from its trespass but there is no evidence of the profit margin it operates on. Despite the exhortation not to arrive at a figure, "by any artificial mode of guessing at it" [15] there appears to me to be no alternative in this case but to make a reasoned estimate of the profit margin. In other cases I have used a figure of 12%. Therefore from the figure of USD 101,670.22 there should be deducted 12% or USD 12,200.43. The costs of production amount to 89,469.84.The damages payable in respect of the converted timber are calculated to amount to USD 35,725.36. Converted to Solomon dollars at the rate of 0.1261 the figure is SBD 283,309.75. The calculations are set out below.

24. The Claimant also seeks damages for the harm to the environment. Despite the many logging cases that have taken place in Solomon Islands there is very little precedent as to how such damages are calculated. In some cases a value per square metre has been used. In others a global figure has been awarded. The experts instructed by the Claimant in this case surveyed the area affected, assessed the damage caused and put forward their opinions on the cost of rehabilitation. They adopted a calculation of quantum based on "benefit transfer". For the Defendants a report based on field work by Ms Babaua and compiled by Mr Horohu was along the lines of an audit. It identified impacts on the environment and the degree to which it had been affected. Mitigation measures were set out but there was no opinion expressed as to the cost, in monetary terms, of rehabilitation.

25. The Defendants submit there were a number of fundamental flaws with the Sirikolo report. At the heart of the criticisms was the methodology involved in the benefit transfer approach. The Defendants complained that in using the benefit transfer approach too much emphasis was put on references to overseas examples. Given that the approach adopted involves an estimate of the costs of a particular aspect of rehabilitation based on studies of actual costs elsewhere and given that very few studies have been undertaken in Solomon Islands, it was understandable there was considerable reference to overseas examples. The main criticism was that the 15 heads of benefit were simply allocated an amount of USD 100,000.00. The Defendants say there is no evidence of how any particular amount was calculated although they accept there must be a reasonable cost involved. They then says let's call it 20,000 instead of 100,000. The criticism of the experts was based on their use of a round figure and all the Defendants can suggest as an alternative is to use another round figure but make it lower.

26. The Defendants also say the extent of the damage as put forward by Sirikolo et al was wildly exaggerated. As an alternative they suggest Ms Babaua's views were more appropriate. I cannot accept that. It was generally common ground that the area had been logged before but that it had been left largely untouched for some time. Different areas had been left for differing lengths of time. Some since the Claimant acquired the lease in 1996, although some areas had been partially logged or worked in 2003. Ms Babaua did not explain how between 14 and 6 years of growth could all rejuvenate and come good in a period of between 3 and 5 years.

27. When he was asked about the relevance of the benefit transfer methodology Mr Horohu likened it to a comparative analysis. Mr Horohu admitted his knowledge of benefit transfer methodology was limited but did not dispute it was a valid and accepted tool in environmental studies. He felt estimate of the costs of the damage at 1.5 million US dollars was, "Just too much" and his estimate of the cost of putting right the environmental damage caused by the logging was USD 600,000.00. In submissions it is said he revised his original estimate of SBD 600,000.00 only after, "sustained leading questioning by the judge". My recollection is that Mr Horohu was asked what currency he was calculating his estimate of costs in. He corrected his earlier answer by saying he meant to say US dollars not Solomon dollars. He agreed with Mr Hapa, wetland ecosystems were very fragile.

28. There was a clear difference between the experts about the extent and nature of the damage to the environment caused by the Second Defendants operations. There would have been less scope for difference if the Second Defendant had complied with its obligation under the Environment Act. Initially Mr Wong said he had a Development Consent from the Director of Environment. On being given time to check his records he admitted there was no Development Consent and none had been applied for. As a result there was no public environmental report or environmental impact statement. All the experts carried out their assessments in 2011, some 2 years after the cessation of operations. Everyone agrees the area had been logged before but there is no direct evidence about the ecology of the area immediately before and immediately after the logging operations by the Second Defendant. What can be accepted as fact from putting together the information from various reports is that the area was not subject to clear felling (the Horohu report talks of selective felling) but that there was extensive felling (the Sirikolo report talks of random and chaotic extraction); that "old" logging roads were used as well as new skidding tracks constructed (using some timber cut as a matrix); that the area is regenerating but not as previously intended by the Claimant and that although the area will never recover fully it will substantially recover but only after some considerable time, i.e in the order of 10 to 20 years. Had the area not been logged, by amongst others, the Claimant in the past I would have been minded to accept the figure suggested in the Sirikolo report. As the area was not virgin forest I will accept the figure put forward by the expert called by the Defendants and order the Defendants to pay USD 600,000.00 damages for the environmental harm resulting from their trespass. At an exchange rate of 0.1261 that would amount to SBD 4,758,128.47.

29. The Claimant is also seeking exemplary damages. The Defendants say the Claimant is not entitled to exemplary or punitive damages. The cases cited earlier have a bearing on this issue. In Rookes v. Barnard Lord Devlin set out three sets of circumstances where he felt exemplary or punitive damages might be appropriate. The first was where there had been oppressive, arbitrary or unconstitutional action by servants of the government. Second, where a defendant's conduct had been calculated by him to make a profit which may well exceed the compensation payable to the plaintiff. Thirdly, where exemplary damages were expressly authorised by statute. The House of Lords loosened those criteria when they considered the appeal in Cassell & Co Ltd v. Broome but by and large adopted them. It is true to say that in other Commonwealth jurisdictions Lord Devlin's limitations were not universally accepted. In Canada the Supreme Court said awards of exemplary damages should be limited to cases of extreme conduct deserving of condemnation and punishment [16]. More famously in Australia the High Court ruled that exemplary damages could be awarded where there was a contumelious disregard of the rights of a plaintiff [17]. The court distinguished between aggravated and exemplary damages. The defendant's state of mind was relevant in the latter but not in the former. In a later case the High Court stressed the usefulness of the deterrent effect of exemplary damages [18]. In Ireland there seemed to be initial acceptance of Lord Devlin's strictures but in a more recent unreported case the High Court accepted a wider availability of the remedy [19].

30. There does not appear to be any precedents in this jurisdiction regarding exemplary or punitive damages. However there is no need to consider whether, as was said by the Privy Council, this court "was entitled to develop the common law" of Solomon Islands, "according to local policy considerations in areas of the common law which were developing, not settled", [20] because the present case seems to fit squarely within the second category of cases set out by Lord Devlin. There was a course of conduct by all the defendants where they showed a deliberate disregard for the Claimant's rights with the aim of making money from the proceeds of sale of timber when, the First Defendants in particular, they knew they did not own the timber or have anything except an historical but obsolete claim to ownership of the land on which it stood. There was no innocent mistake by the First Defendants. The words of His Lordship the Chief Justice come to mind again, "I note that there are disgruntled landowners who are unhappy about the outcome and legal effect of the transfer of their land in 1964, but in so far as the law that applies under the Land and Titles Act is concerned, they are bound by those decisions made by their elders and tribal leaders".

The Second Defendants rely on the proper process being followed under the Forest Resources and Timber Utilisation Act but its officers and agents were well aware of the Claimants operations in the area and it deliberately closed its collective eyes to the dangers [21]. It did so with the intention of making money and knowing it would probably end up paying only a proportion of the sale proceeds. This is a case where exemplary damages are appropriate.

31. Having made that decision it is necessary to bear in mind the other considerations set out by Lord Devlin and the House of Lords in Rookes v. Barnard and Cassell & Co Ltd v Broome, the need for restraint and contemplation of the means of the parties. In particular the words of Lord Hailsham must be remembered;

"I think that the inescapable conclusion to be drawn from (these) authorities is that only one sum can be awarded by way of exemplary damages where the plaintiff elects to sue more than one defendant in the same action in respect of the same publication, and that this sum must represent the highest common factor, that is the lowest sum for which any of the defendants can be held liable on this score."

On that score it is First Defendants who represent the highest common factor. They are effectively village people and their means are not extensive. Whilst they are the most culpable in all this, they would be the least able to meet any claim for damages. On that basis the exemplary damages will have to be far less than if the Second Defendant was sued on its own. Whilst it is true the First Defendants received 15% of the sale proceeds as royalties and that was no doubt a considerable sum, plus payments under the Supplemental Agreement; exemplary damages should be moderate and I assess the amount as SBD 20,000.00.

32. Allowing for a slight rounding up, the First and Second Defendants shall pay damages for trespass totalling SBD 5,061,440.00.The Claimants are entitled to interest from the date of filing of the claim to judgment at the statutory rate on the figure of SBD 5,061,440.00 and to interest on the total sum from the date of judgment until payment. The Defendants shall pay the Claimant's costs such costs to be taxed on a standard basis if not agreed.

^[1] See sworn statement of Cornelius Murray filed 16^th July 2010
^[2] See page 141 of the sworn statement of Wong Chin Fatt filed 1^st July 2011.
^[3] See paragraph 1 above.
^[4] See paragraph 3 above and answers in Mr Wong’s cross examination by Mr Pitikaka.
^[5] See Exhibit WFC3 sworn statement of Wong Chin Fatt filed 10^th August 2009 and exhibits tendered at the hearing (21/9/11) and marked as WCF 2 and WCF 3.
^[6] Half the value exported plus the volume of left lying logs multiplied by the average value
^[7] Using the documents attached to Mr Wong’s sworn statement 1^st July 2011
^[8] See clauses 12 and 13 of the Logging and Marketing Agreement dated 17^th April 2009
^[9] Livingstone v. The Rawyards Coal Company (1880) 5 App.Cas. 25
^[10] In re United Merthyr Collieries Company Law Rep. [1872] UKLawRpEq 168; 15 Eq. 46. Per Sir James Bacon, V.C.
^[11] Trotter v. Maclean [1879] UKLawRpCh 335; (1879) 13 Ch.D. 574 per FryJ
^[12] ([1964] 1 All ER at 411
^[13] Calculated as (4353.242 x 383.80) x 0.1261
^[14] See paragraph 22 above
^[15] See the remarks of Sir James Bacon VC cited above in paragraph 19 above
^[16] Vorvis v. Insurance Corporation of British Columbia (1989) 58 DLR (4^th) 193
^[17] Uren v. John Fairfax & Sons Pty Ltd and Australian Associated Press v. Uren [1966] HCA 40; (1968) 117 CLR 118 and (1968) CLR 117 185
^[18] XL Petroleum (NSW) Pty Ltd v. Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448
^[19] McDonald v. Galvin 23 February 1976
^[20] Invercargill City Council v Hamlin [1996] 1 All ER 756
^[21] See paragraphs 1 to 6 above.

High Court of Solomon Islands

Eagon Pacific Plantation Ltd v Siuta [2012] SBHC 5; HCSI-CC 273 of 2009 (31 January 2012)