Lema General Store v Chungsol Co. Ltd [2013] SBHC 157; HCSI-CC 134 of 2012 (29 November 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

LEMA GENERAL STORE LTD
Claimant

AND:

CHUNGSOL COMPANY LTD
1st Defendant

AND:

J. VEKO & OTHERS
2nd Defendant

AND:

KAMAN TRADING LTD
3rd Defendant

AND:

SOUTHERN PACIFIC WOODS COMPANY LTD
3rd Party

Mr. D. Nimepo for the Applicant/3rd Party.
Mr. W. Togamae for the Claimant.
No appearance for the 1st, 2nd and 3rd Defendants.
Date of hearing: 2nd November 2013
Date of Judgment: 29th November 2013

RULING

Apaniai, PJ:

Introduction.

1. This is an application by the 3rd Party, Southern Pacific Woods Company Ltd ("Applicant"), for an order to set aside the orders by Justice Mwanesalua perfected on 17 July 2013.
   
2. Those orders have restrained all logs and timber that Kaman Trading Ltd ("Kaman") and the Applicant have in their possession or at their timber yard at Ranadi – JJ Auto area or at Ports and Customs area at the Point Cruz wharf.
   
3. The orders have also frozen bank accounts owned by Kaman as well as those owned by the Applicant including those owned by Mai Yung Fu. Mr. Fu is said to be a director of both Kaman and the Applicant.
   

Background.

4. The facts leading up to this application have been set out in my judgment delivered on 4 October 2013 in an application by the Applicant seeking orders to stay the sale by the High Court sheriff of 41 containers of tubi logs which have been advertised for sale by auction on 10th September 2013. For the sake of convenience, I will repeat those facts again.
   
5. On 25 June 2013, the Claimant obtained judgment for general damages against the 2nd Defendants, J. Veko and others (trading as Sufa Corporation Milling Project) as well as the 3rd Defendant, 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. It appears that of the Judgment sum, $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 2nd and 3rd 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. In that same order, the bank accounts of Kaman as well as those of the Applicant and Mr. Fu have all been restrained as stated in paragraphs 2 and 3 above. The Applicant became aware of its joinder in the action, and of the freezing of the 41 containers, only when the freezing orders were served on it.
   

This application.

8. The Applicant then filed this application seeking orders to set aside the freezing orders.
   
9. The grounds for the application, as appear from the sworn statements by Chief Nicholas Kuli and Christina Minu filed in support of the application on 29 July 2013 are as follows:-
   

[a] The Applicant was not a party to the proceedings;

[b] The Applicant was not served with the application for freezing orders and the supporting sworn statements and was therefore not aware of the hearing of the application. In other words, it was not given the opportunity to be heard when the freezing orders were made; and,

[c] The 41 containers belonged to the Applicant and not to Kaman or any of the other defendants against whom the Judgment sum was awarded.

10. There are other grounds which the Applicant has further raised in support of the present application. They include the fact that the claim against Kaman has been discontinued so that Kaman is no longer a party to the claim. It is submitted on behalf of the Applicant that since the Applicant was brought into the case through its alleged connections with Kaman, the Applicant should not remain a party to these proceedings now that the claim against Kaman has been discontinued.
    

Confusions.

11. The various applications which have been filed, and orders made, in connection with this case have caused a very confused state of affairs. One has to find his way through the jungle of applications, sworn statements, court orders and various amendments to the claim and to the applications in order to ascertain what has happened and where the case has reached. Even more confusing is the fact that, although judgment has already been obtained, new parties are still being joined and further amendments are still being made to the claim. These amendments appear to be in breach of the Solomon Islands Courts (Civil Procedure) Rules 2007 ("Rules") for I have not sighted any orders granting leave to amend or to join or add new parties as required by the Rules.
    

Representation on 17 July 2013.

12. I now turn to the grounds for this application.
    
13. Clearly, this is an application under Rule 17.55(a) of the Rules. The Rule allows a party against whom an order was made in his absence to apply to have the order set aside. So the first issue is whether the freezing orders on 17 July 2013 were made in the absence of the Applicant.
    
14. The Applicant says the freezing orders were made in its absence while the Respondent says that the Applicant was represented at the hearing by Mr. Pitakaka of Michael Pitakaka Law Chambers therefore the orders were not made in its absence.
    
15. Apart from the sworn statement by Christina Minu ("Minu") filed on 29 July 2013, none of the parties have tendered any evidence in relation to the question of representation on the 17 July 2013. Minu said in her sworn statement that she was not aware that the Applicant, Southern Pacific Woods Company Ltd, was a party in the case until she was served with the court order dated 17 July 2013. She said upon receipt of the order she contacted Michael Pitakaka whom she knew represents the 3rd Defendant, Kaman Trading Ltd. She instructed Mr. Pitakaka to apply for a variation of the order. She said the court had refused to hear the application unless proper application was filed. After that refusal, she instructed Light Lawyers to represent Southern Pacific Woods Company Ltd in the proceedings.
    
16. A perusal of the court records would confirm Minu's sworn statement. The records show that on the 14 June 2012, the solicitors for the Claimant were Togamae Lawyers while the solicitors for the 1st, 2nd and 3rd Defendants were HM Lawyers[1]. The representation of the Claimant had not changed except for that of the Defendants. On 26 July 2012, Michael Pitakaka Law Chambers filed a Notice of Change of Advocate stating that they now represent the 3rd Defendant replacing HM Lawyers. The records also show that on the 2 August 2012, Michael Pitakaka Law Chambers filed another Notice of Change of Advocate stating that they now represent the 2nd Defendant replacing HM Lawyers. On 15 October 2012, Light Lawyers filed a Notice of Change of Advocate stating that they now represent the 1st Defendant replacing HM Lawyers. That is the representation as it now stands.
    
17. The above chronology of representations shows that on 17 July 2013, Togamae Lawyers were the solicitors for the Claimant while Light Lawyers were the solicitors for the 1st Defendant and that Michael Pitakaka Law Chambers were the solicitors for the 2nd and 3rd Defendants. The Applicant was not yet a party to the case at that time.
    
18. As such, the appearance by Michael Pitakaka Law Chambers at the hearing on the 17 July 2013 was as representatives of the 2nd and 3rd Defendants and not as representatives of the Applicant. There is no evidence that Pitakaka Law Chambers were instructed to represent the Applicants at the hearing on 17 July 2013.
    
19. It is also clear that the Applicant was made a party only when that application was filed. There is no evidence that the Applicant was served with the application or with the supporting sworn statements. Service of those documents on Michael Pitakaka Law Chambers could not amount to proper service on the Applicants.
    
20. I am satisfied that the Applicant was not represented at the hearing on 17 July 2013 and therefore did not have the opportunity to be heard when the orders were made on that date. As such, those orders are not final orders but were interlocutory orders as far as the Applicant is concerned and therefore the Applicant is not barred from making the present application to have those orders set aside.
    

Should this application be granted?

21. So, it is clear the Applicant was not represented at the hearing on 17 July 2013 and that the Applicant was not properly served with the application and the supporting sworn statements. It is also clear that the orders of 17 July 2013 were made in its absence. There is also no dispute that the Applicant is a separate legal entity and there is strong evidence that the 41 containers of tubi restrained by this court belong to the Applicant. Those are factors that must be taken into consideration when deciding whether or not to grant this application.
    
22. The Applicant was joined as a party in this claim simply because of suspicion that the tubi logs in the Applicant's containers were tubis felled and extracted by Kaman. The basis of the suspicion was that Kaman and the Applicant were occupying the same premises at Ranadi and were allegedly managed by the same person, Mr. Michael Myan Fu. However, the sworn statements by Minu and Chief Nicolas Kuli have alleged that the tubi logs were harvested by the Applicant pursuant to a technology agreement signed between the Applicant and Marion Nohe tribe under a milling license No. A201265 issued to Hairi Milling to fell logs in Hugu/Hairi customary land on San George Island. The inference to be drawn from those sworn statements is that the tubi logs in the 41 containers were logs felled in Hugu/Hairi customary land on San George Island by the Applicant and not by Kaman.
    
23. The suspicion by the Claimant may have some merits and cannot simply be brushed aside. They raise questions that need to be answered. While there may seem to be no question that the 41 containers are owned by the Applicant and that Mr. Fu was the manager of Kaman, the question is, why did Mr. Fu sign off the customs entries for the containers if the containers, or their contents, were not owned by Kaman? Why did Mr. Fu write to the Customs Department as Director of the Applicant informing the Department that it had obtained a permit to export 300 cubic but had only so far exported only 113.054 cubic? Why did Mr. Fu sign a Timber Sales Contract on 10 July 2013 on behalf of the Applicant for the sale of tubi trees to Par Natural Terr International Co, Ltd if he was not an employee or director of the Applicant? Interestingly, in his sworn statement filed on 22 May 2012, Mr. Fu said that he was one of the directors of Chung Sol Ltd and Kaman Trading Ltd. He did not say he was a director of the Applicant. Yet he signed customs entries and wrote letters. These are issues that must be investigated but the approach to the investigations must done properly and through the proper process where the Applicant is given reasonable opportunity to be heard before such orders can be made against it. That has not been done in this case.
    

Orders.

24. I am satisfied the circumstances of this case are such that it would be unfair to the Applicant if the orders made on the 17 July 2013 are allowed to remain. Those orders are set aside.
    
25. The costs of the 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] See defence filed on behalf of the 1^st, 2^nd and 3^rd Defendants by HM Lawyers on 14/06/12.