Lema General Store v Chungsol Co Ltd [2013] SBHC 134; HCSI-CC 134 of 2012 (4 October 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

LEMA GENERAL STORE LTD
Claimant

AND:

CHUNGSOL COMPANY LTD
First Defendant

AND:

J. VEKO & OTHERS
Second Defendants

AND:

KAMAN TRADING LTD
Third Defendant

AND:

SOUTHERN PACIFIC WOODS COMPANY LTD
Third Party

Date of Hearing: 9 September 2013
Date of Judgment: 4 October 2013

Mr. D. Nimepo for the Applicant/Third Party
Mr. W. Togamae for the Claimant
No appearance for the First, Second and Third Defendants

RULING

Apaniai, PJ:

Introduction.

1. This is an application by the Third Party, Southern Pacific Woods Company Ltd ("applicant"), for an order to stay the sale by the High Court sheriff of 41 containers of tubi logs, which have been advertised for sale by auction on 10 September 2013. The tubi logs contained in the 41 containers are said to be owned by the applicant.
   
2. I heard the application at 3.30pm on 9 September 2013 and gave ex tempore judgment at the end of the hearing granting an order restraining the sheriff from conducting the sale of the 41 containers of logs until the hearing of the application to set aside the freezing order or until further orders of the court. I said I would deliver the reasons for the judgment later. I do so now.
   

The facts.

3. The facts leading up to this application can be stated shortly.
   
4. On 25 June 2013, the claimant obtained judgment for general damages against the Second Defendants, J. Veko and others (trading as Sufa Corporation Milling Project) as well as the Third Defendant, Kaman Trading Co. Ltd ("Kaman"), in the sum of $3,970,586.14 ("Judgment sum") and costs. The Judgment sum comprises $1,967,476.20 being the value of tubi trees alleged to have been felled and taken by the defendants from the claimant's land. The balance of $2,003,109.94 was for general damages for trespass. No appeal has been made against the judgment.
   
5. It appears that of that Judgment sum, a sum of $308,512.90 has been paid leaving a balance of $3,662,073.24 yet to be settled.
   
6. On 11 July 2013, the claimant filed an application for freezing orders against the properties of the Second and Third Defendants in respect of the remaining balance of the judgment sum of $3,662,073.24.
   
7. On 17 July 2013, a freezing order was granted. In that order, the applicant was named as a "Third Party" and the 41 containers of tubi logs were also restrained under the order.
   
8. The applicant became aware of its joinder in the action, and of the freezing of the 412 containers, only when the freezing orders were served on it. The applicant then filed an application on 29 July 2013 to set aside the freezing orders on the grounds that, first, it (ie, Southern Pacific Woods Company Ltd) was not a party to the proceedings; second, that it was not served with the application for freezing orders and the supporting sworn statements and was not aware of the hearing of the application; and third, that the 41 containers belonged to it and not to Kaman or any of the other defendants against whom the Judgment sum was awarded.
   
9. The application to set aside the freezing orders is still on foot and has not yet been heard. It appears that no date has yet been fixed for the hearing of the application.
   
10. Meanwhile, a notice has appeared in the Solomon Star newspaper on Sunday 25 August 2013 stating that an auction sale of the 41 containers of tubi logs would be conducted by the High Court sheriff on 8 September 2013. This date was later changed to 10 September 2013.
    
11. On 30 August 2013, the applicant filed this application seeking a stay of the enforcement order (that is, a stay of the proposed sale by auction by the High Court sheriff of the 41 containers of tubi logs) until the hearing of the application to set aside the freezing orders.
    

Rule 17.77

12. This is an application under Rule 17.77 of the Solomon Island Courts (Civil Procedure) Rules 2007. The Rule allows a party wishing to make an application for stay of judgment or order to make such application either when the judgment or order is made or at a later time after the making of the judgment.
    
13. Under Rule 17.78, the court may make an order for stay, in the case of an appeal, from the time when the appeal is filed until the hearing of the appeal, or it may grant a stay for such period ending on the happening of an event or it may dismiss the application.
    
14. The Rules are silent in respect of the circumstances in which such application may, or may not, be granted. However, it has been held in Kololeana Development Company Ltd v Amiki[1] ("Kololeana") that "special circumstances" must be shown in order to justify a grant of stay of execution of a judgment. In Burnet v Francis[2] ("Burnet"), it was said that in considering whether or not there is "special circumstance", the court should consider the nature of the claimant's claim; the extent of the identity between the defendant and other parties; the inter-relationship of the respective claims by the claimant against the defendant and by the other parties against the claimant; the strength of the other parties' claim; the size of the other parties' claim relative to the claimant's claim; the likely delay before the merits of the other parties' claim against the claimant would be decided; the extent of the prejudice to the claimant if he was denied the fruits of his judgment until the other parties' claim was determined; and, the risk of prejudice to the other parties if the defendant were to make payment to the claimant under the judgment.
    
15. In Kanna v National Fisheries[3] ("Kanna"), it was held that a stay would be granted if it is "just and reasonable" and that what is "just and reasonable" depends on the circumstances of each case.
    
16. With these principles, I totally agree. Each case must be considered in the light of its own circumstances and if, having regard to those circumstances, the court comes to the conclusion that it would be just and reasonable to grant a stay then it should do so. Otherwise, it should reject the application.
    

Circumstances of this case.

17. In this case, the applicant was not a party to the main claim. It is also a separate legal entity from Kaman against whom the judgment was obtained. The reason why it was included in the freezing order was because it occupies the same office premises which Kaman used to occupy and is probably directed and managed by the same person, Michael Mai Yung Fu ("Mr. Fu"), who is also said to be a director and the manager of Kaman. Kaman appears to have vanished into thin air. The whereabouts of its directors is not known and no one knows what is the status of that company although it still exists according to the records of the Registrar of Companies. Since the applicant now occupies the same office premises which Kaman used to occupy and since Mr. Fu, who was the former manager of Kaman, now claims himself to be the manager of the applicant, it is suspected that the Tubi logs now in the 41 containers belong to Kaman and not the applicant. It is for those reasons that the applicant was included in the freezing orders and its 41 containers frozen. Those containers are now to be sold by auction by the sheriff.
    

Orders.

18. Would it be "just and reasonable" to order a stay of the proposed auction sale of the 41 containers by the sheriff in those circumstances? I think so. If the 41 containers include tubi logs felled by Kaman, then the applicant should be given the opportunity to be heard in that regard. Until that is done, the 41 containers should not be sold.
    
19. The orders of the court are that the 41 containers shall remain in the custody of the sheriff but shall not be sold until further order of the court. The applicant's costs of this application shall be paid by the respondent/claimant to be taxed if not agreed.
    

THE COURT

James Apaniai
Puisne Judge

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^[1] [2003] SBHC 77; HC-CC 083 of 1998 (5 November 2003).
^[2] [1987] 2 All ER 323.
^[3] [2001] SBHC 159; HCSI-CC 033 of 2000 & HCSI-CC 055 of 1999 (18 January 2001).