Kalena Timber Company Ltd v Bolopoe Corporation [2014] SBHC 158; HCSI-CC 362 of 2012 (16 December 2014)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Faukona PJ)

CIVIL CASE NO. 362 OF 2012

BETWEEN:

KALENA TIMBER COMPANY LIMITED
First Claimant

AND:

RERESARE DEVELOPMENT COMPANY LIMITED
Second Claimant

AND:

BOLOPOE CORPORATION
First Defendant

AND:

BOLOPOE CORPORATION COMMUNITY COMPANY LIMITED
Second Defendant

AND:

MIDDLE ISLANDS INVESTMENT PTY.LTD
Third Defendant

AND:

COMMISSIONER OF FORESTS
Fourth Defendant

Date of Hearing: 7th November 2014
Date of Ruling: 16th December 2014.

Mr G. Suri for the First Claimant
Mr T. Kama for the Second Claimant
Mr B. Hiele for the First Defendant
Mr W. Rano for the Second Defendant
Mr W. Togamae for the Third Defendant
Mr D. Damilea for the Fourth Defendant

DECISION ON APPLICATION FOR DETERMINATION ON QUESTION OF LAW

Faukona PJ: The application for determination on questions of law was filed by the Counsel for the first Claimant on 18th February 2014. There are two questions. One is whether the second and third Defendants without a felling licence issued, are entitled to carry on logging operations in land areas described by the second and third Defendants as blocks B3, B4 and B6 or as described by the First Claimant as blocks C-16B, C16A and C-15, which also covered by a felling licence to the Claimants pursuant to Forest Resource and Timber utilisation Act (FRTU) Act Cap.40.

2. The second question is whether the Technical Operations and Marketing Services Agreement dated 5th May 2012 is valid in the absence of a valid licence issued to the second and third Defendants under the FRTU Act.

3. On 20th June 2014, the second Defendant filed an amended cross application also on questions of law as a reply to the first Claimant's application. The application raises two questions to be answered. One is whether the second Claimant had properly and lawfully obtained timber rights over the disputed land specifically Reresare land generally. Secondly, if the second Claimant lawfully acquired timber rights over the disputed area, can it still lawfully carry out logging on the same in the absence of consent or approval by Bolopoe tribe who are the owners and proprietors in customs of the disputed land?

4. The major cause of action emanates from the processes parties resumed to, to acquire amended and renewal of their timber felling licences, and of course the issue of common boundary.

Chronology:
5. The second Claimant applied for and was granted felling Licence No. A10007 on 9th December 2004 in respect of Reresare customary land (stage I). That was following timber rights determination on 4th November 2002. Throughout the years transformation, development and changes occurred and eventually held felling licence No.A10007A granted on 21st July 2010 for a term of two years.

6. To acquire the licence the second Claimant applied for extension of its licence to cover reresare customary land (stage II) as contiguous land pursuant to section 5(3) of the FRTU Act, which was issued on 18th February 2011, but backdated to take effect from 21st July 2010.

7. The first Defendant also applied in the name of Bolopoe Barekasi Corporation in 2002 and was granted a felling licence No. A 10237 on 23rd May 2006, which eventually was expired. It later applied for renewal, which was granted on 1st May 2012 in respect of Bolopoe customary land.

8. The mischief became materialised when the third Defendant submitted its harvesting plan for 2012, which covered blocks 3, 4 and 6. Those blocks were the same blocks but marked as C-16B, C-16A and C-15 in the first Claimant's harvesting plan. It became apparently clear that the concession areas of land under both licences overlapped each other. Despite the overlap the second and the third Defendants entered onto the land and carried on logging operations commencing June 2012.

9. A request for assessment on the alleged overlap was done and a report to that effect was produced by Forestry department in Gizo, which showed the overlap area.

Boundaries of Reresare and Bolopoe customary lands:

10. Reresare customary land and Bolopoe customary land lie adjacent to each other. Reresare land to the north and Bolopoe land to the South on the island of Vella La Vella, Western Province. Traditionally two lands adjacent to one another are expected to have a common boundary. It is the common boundary that is currently in dispute between the respective customary landowners from both lands.

11. The Claimants submit that the issue of ownership and boundaries of Reresare land were finally determined by Vella La Vella Local Court between Jack Lagobe and Dalcie Tozaka V Frank Lezutuni, and on appeal to Western Customary land Appeal Court (WCLAC) was dismissed.

12. In respect of Bolopoe land the common boundary between both lands runs from sielo river mouth to omaua, zioloudu, sirekajo then goes to maereo vaso up to Mt kuboana to sekevaviutu down to veala then to sielo river. The boundary was established by the Jado House of Chief on 14th January 2013.

13. With two conflicting and variable views, the common boundary between the two lands is heavily contested. Frankly speaking, this Court lacks jurisdiction to determine the issue, suffice to say, but facts deposed are directly pinch on the issue of evidence, which ought to be considered in deciding the points of law. Whilst that may so be, the issue of boundary must be litigated before a rightful forum authorized to exercise jurisdiction.

14. However, the current status is that the Jado House of Chiefs had determined the boundary on 14th January 2013, indifferent from the boundary as it stood was determined by the Local Court on 27th April 1994; which was the only legal decision that stood the time. When the Claimant's licence was issued and extended to take effect from 21st July 2010, the decision was accepted as a guiding principle. The same was presumably expected of the second Defendant's felling licence which was renewed on 1st May 2012. The facts provided here are of very significant and paramount as they guide the applications for extension and renewal of the licences. As it occur the parties challenges the manner in which those licences were granted to the other party.

The extension of 2nd Claimants license No. A10007:
15. The second Defendant challenges the manner in which the second Claimant's extended licence was granted and the processes that were obliged to follow were not prescribed by the timber rights process under the FRTU Act, therefore the licence is not valid.

16. On 12th October 2009, the second Claimant lodged Form l application to acquire timber rights purposely to extend its licence to cover stage II including the whole of Reresare customary land. It was scheduled to be heard on 26 January 2010 but was injuncted by interim orders dated 29th January 2010. The application for injunction was subsequently struck out on 10th June 2010.

17. By letter of 9th September 2010, Mr. Kama wrote to the Commissioner of Forests and carbon copies sent to the Minister of Forests and Attorney-General. Paragraph 5 and 6 of the letter clearly stated that the application under Form 1 which, initiated the process was vacated; instead he applied on behalf of the second Claimant for the extension of the licence to included reresare customary land stage II as a contiguous land. In fact the application sought to obtain specific direction from the Minister pursuant to section 5 (3) of the Act. Mr. Kama did not verify the meaning of contiguous land in subsection (3) rather merely referring to a map. A second letter by Mr Kama a 17th January 2011 was a follow up from the first one. Eventually the Commissioner of Forests granted an Amended Licence No. A10007A on 18th February 2011.

18. The word contiguous in Longman Dictionary of Contemporary English mean touching, next, having a shared border. To appreciate the arguments it is perhaps pertinent to quote S.5 (3) of FRTU Act,

"The Commissioner of Forest Resources may, subject to a general or special directions that may be given by the Minister, at any time alter or amend a license issued under subsection (2) to include or exclude any land contiguous or island adjacent to any public land or land leased by or on behalf of the Government or land in respect of which the Government has a profit to fell and take away tress comprised in the licence".

19. I noted Mr Kama's reason for the application was based on the same grantors who were identified and determined in the Form 1 application, and as well as the local court decision in 1994 which was validly in existence at that time of lodgement.

20. In an attempt to give meaning to S.5 (3) Mr Rano pointed out three situations. Whilst I agree with three situations he pointed out, has failed to give meaning to the word contiguous. In my respectful opinion, the word contiguous was constructed in a sense to stand independently of its own and have its own meaning. In other words the target land must touch, next or having shared the same border. In this case, the target land is stage II, within the scope of the second Claimant's plan, which actually touched and next to stage 1. It has nothing to do with public land, or lease land by or on behalf of the government etc. The three situations which Mr Rano submits as being properly provided for under the section is not existed, as I perceived, and do not apply to the rest of the requirements in the subsection. The word contiguous used in the provision is structured to apply generally, and stands isolated from being associated to any government or public interest.

21. Whilst I appreciate a proper meaning ought to be given, the application may have taken into account the boundaries and the ownership of reresare customary land, which was owned by the reresare tribe pursuant to the Court decisions. If we are to particularise in pursuit of legality, then the only legal decision prevail at that time was the Court decision. Correspondingly, if one portion of reresare land is subjected to a felling licence, then by utilising the subsection for further extension into the rest of the portion of land (stage II) is legally sensible. The path taken by the second Claimant in lodging an application under S.5 (3) is within the bounds of the section. It is up to the Minister whether to direct a grant or not. It is a discretionary power vested upon him and should be exercised with liberty upon his own good judgment.

22. This prompted me to say that such amendment to a licence to include contiguous land is quite distinguishable from an exempted case in section 4(c)(d) or in the case of Dalapakia V AG[1]. In Dalapakia's case, the Claimant had acted beyond the provisions of the FRTU Act. His decision to deviate from the process which identified him and others as grantors no longer needs to follow the statutory process but instead circumvent the earlier finding by having a difference company which they wish to do business with. In this case what the second Claimant did by lodging an application for extension utilising the provision was valid within the law, a step differed significantly from Dalapakia's case. Therefore, the precedent in Dalapakia case is not parallel and in any way applicable here.

Renewal of first Defendant's felling licence No. A10237:
23. The second Defendant's case is, at that time the logging operation commenced the felling licence was in the name of the first Defendant and says that was a mistake made by the Commissioner of Forests. Later, the Commissioner was advised that the renewal licence be made to the second Defendant or in its name. In a simple ordinary and literal interpretation, the advice contains an intention to transfer the felling licence from one entity to another.

24. The second Defendant contends that was legal and was within the bounds of law premised upon the restructuring of both entities. The restructuring was a comprehensive effort to pave way to validate the technology agreement executed by the second and third Defendants. How did it take effect? On 14th September 2011 a statutory declaration was deposed by two Chiefs of bolopoe tribe. This was inevitable to maintain the number of trustees and grantors of the first Defendant who had three deceased, hence a replacement was necessary. Therefore, three new trustees were identified and were traditionally appointed. Whether the names of the three trustees were formally registered or not is an argument, which is in the negative. Having done so, on the same day (14/9/2011) a new standard logging agreement was executed.

25. On 14th November 2011, two months after the new SLA was executed, the second Defendant was incorporated. On the same day counsel wrote to the Commissioner of the restructure and advised the first Defendant's licence is expiring and should be renewed in the name of the second Defendant. Finally, the executed SLA was forwarded to the Commissioner who on 1st December 2011 recommended to the Western Provincial Executive to endorse the SLA and return with duly signed Form III. Eventually the felling licence was renewed on or about 1st May 2014 for a term of five years in the name of the first Defendant.

26. It is apparent that change of proprietorship of the first Defendant was registered on 12th September 2013 two years after the SLA was executed, see Exh "MGI" Certificate of registration of business name attached to sworn statement of Grace Mali filed on 27th June 2014. It would appear therefore, the SLA executed on 14th September 2011 was endorsed by the old proprietors or trustees and perhaps three unregistered new ones of the first Defendant, whoever living on that date. On the basis of that SLA, Form III was endorsed and grant of a renewal licence effected. Although the instructions was for the renewal licence be in the name of the second Defendant, that was not so. The basic reason is crystalline clear; it was the old and three unregistered proprietors or trustees of the first Defendant who executed the SLA. Therefore, the renewal licence was in the name of the first Defendant. There was no mistake about it. In furtherance, it was visible that the second Defendant was yet to be incorporated at that time of execution, therefore not a party, and executed nothing at all.

27. The question one may ponder is how is it that the second Defendant executed a Technical Operation and Marketing Services with the third Defendant on 5th May 2012, since it did not own or possess any felling licence at all? The argument advance by the second Defendant is because of the Management Agreement it signed with the first Defendant. Clause B of the agreement states that the first Defendant is desirous to engage the second Defendant to manage its rights under the licence including outsourcing the concessionaire to interested third party. The thrust of that clause is that the second Defendant was authorized to broker, convey and executed any timber rights agreement with any interested person concerning the rights granted in the concession area of land.

28. One option that will make that strategy workable is to transfer the first Defendant's licence to itself. The Second Defendant relies on the Management Agreement and the Technology Operations and Marketing Services Agreement it executed. Armed with those documents it induced the Western Provincial Executive and the Commissioner of Forests to endorse and bless the strategy. And this provides a basis for argument advanced by Mr Rano that a licence issued without an agreement is a bare licence. That may be true, but any agreement executed under the process provided under FRTU Act should only confine between the grantors, licence holder and contractor. Has the second Defendant fall into one of those three categories? I don't think so. In the final analysis the felling licence had never ever transferred to the second Defendant at any time? The first Defendant as a licence holder did not sign the technology agreement; therefore, the Western Provincial Executive had wrongly exercised its discretion in endorsing Form III. There was no deed of assignment of rights and obligation under SLA and licence. In normal circumstance a deed of assignment be entered into to protect the rights of the grantors. The said agreement had no consideration which would require the approval of the fourth Defendant under Clause 39 of the SLA. Such agreement has no useful purpose.

29. I noted a transfer or assigned of a licence is prohibited under paragraph 27 of licence No. 10237, but in a commercial undertaking can be formulated by deed of assignment of licence which could bind the licence holder and grantors which they have contractual obligation under the SLA entered by both parties. That was never done in this case; instead the second Defendant wrongly assumed the role of the first Defendant and claims the licence.

30. The fourth Defendant should have on record that the amended felling licence of the second Claimant was granted on 18th February 2011 to cover reresare stage 1 & 2, of which a map was attached during Form 1. Given that in existence, the fourth Defendant had been erratic to include first Defendant's licence to cover the overlapped land which preparatory work for the renewal was commenced on 14th September 2011, seven months after the amended licence was granted to the second Claimant to cover the same area. This is contrary to paragraph 6 of the Court of Appeal decision in Choe Integrated Development Company Ltd V Maekera[2], "which stated the Commissioner may only issue one felling licence per area of land covered by the licence". Therefore, the decision to endorse by the Commissioner is wrong in its entirety.

31. I noted Mr. Togamae's submissions in which he refers to the case of Success Co. Ltd V Takolu Timber Ltd[3]. The relevant quote is, "if a licence is renewed rather than issued there must be valid timber agreement at the time of renewal". Of course there was a timber agreement pre-existed and valid and was an agreement between the bolopoe customary land owners and the first Defendant as a licence holder. When the licence was sought to be renewed it was when the second Defendant intervened and advised the Commissioner to renew it in its own name. I noted the second Defendant had never executed the SLA to pave a way to acquire the licence. Unfortunately, it was renewed in the name of the first Defendant. A twist was necessary and thus labels the action by the Commissioner in doing right as a mistake. That is a misconception of the real situation.

32. Third party notice filed on 26th February 2013, the first Defendant stated that the felling licence was owned by it in respect of bolopoe customary land. And denied not at any time it was assigned to the second Defendant neither authorized the second Defendant to enter into any technology transfer agreement with the third Defendant. Submissions on behalf of the fourth Defendant reinforces that stand, and even conclude that the second Defendant has no legal right to assign or grant to the third Defendant any right or privilege under licence No. A10237. The same notice was questioned by Mr Symeon Hong in his sworn statement file on 13th December 2012, as to what right it got to enter into a technology transfer agreement on 5th May, 2012.

33. Mr Hong further added that there was no offer by the second Defendant and acceptance by the former registered owner of the first Defendant for the second Defendant to apply to renew its felling licence since it did not exist until incorporation on 14th November 2011.

The Jado Chiefs decision:
34. Amidst a litigation process pending, a twist was thrown into the arena, which created a marvel odour. This process was commenced by way of ex-parte application filed on 2nd October 2012. On 18th October 2012, Mr Rano filed an application for variation of the orders. On 22nd December 2012 Mr Rano again filed an application to strike out. On 28th November 2012 Mr Tagini filed an application for contempt. On 13th December 2012 Mr Afeau filed on behalf of the first Defendant on application for interim injunction against the second and third Defendants.

35. Those brief chronologies reflected Counsels had already engaged by parties to advance their cases. By 14th January 2013 Jado house of Chiefs delivered their decision concerning the boundary of the overlapped land, in favour of bolopoe tribe. The determination was attached as Exh "MG4" to Mali's sworn statement filed on 27th June 2014. In her sworn statement filed on 6th October 2013, she also disclosed a copy of the Jado house of Chiefs determination but was undated.

36. In the early stages of the Court process parties had engaged Counsels who had participated fully on behalf of their clients. A question which must attract some answers is, had all the Counsels aware of the arrangement or a proposal of the Chiefs hearing? And were they acknowledged that it was a significant process to determine the ownership and the boundaries of the overlapped land which claimed by reresare and bolopoe tribes. The chief's determination is an important document, which affirms the issue of ownership. At the same time should parties concur to its conduct privilege must be granted to other Counsels to obtain their views. I could not able to sight any sworn statement from other parties filed in response. All that was available are arguments as to its validity in the submissions.

37. The situation seems to reflect there being no legal obstacle to thwart disputed parties going to the Chiefs. It is accepted that both parties had never litigated their claims neither before the Chiefs nor in any Local Court previously. I accepted the parties can go to the Chiefs to determine the issue of ownership and the boundaries of the land in dispute.

38. However Section 12 (1) (a) of the Local Courts Act stated that notwithstanding anything contained in this Act or in any other law, no Local Court shall have jurisdiction to hear and determine any customary land dispute unless it is satisfied that the parties to the dispute had referred the dispute to the Chiefs. The law requires parties who are involved in the dispute must agree that the dispute be referred to the Chiefs. In this case Counsels had already involved and represented both disputing parties. Were the Counsels for the Claimants aware of such reference and were they consented to such? If the answer is in the negative then the chiefs hearing was an orchestrated process to put at stake the current case. However, I noted the content of the decision was disputed that it was not in a proper form.

39. Whatever form or nature the Chiefs decision is featured, in my view, not a requirement according to the status of this case. Section 12 (2) of the Act expressly stated that it shall be an evidence that S12 (1) (a) – (c) have been fulfilled if a party referring the dispute to the local Court produces a certificate, as prescribed in Form 1 of the Schedule. Form 1 of the schedule is unaccepted settlement form and form 2 under the schedule is accepted settlement form. Either of the forms is filled by a party referring the dispute to the Local Court. If nothing is referred to the Local Court we expect neither of the forms be filled. Therefore, the argument that the decision of the Chiefs be either in Form 1 or 2 is not valid.

40. I have examined the decision more thoroughly and able to conclude that the Chiefs decision was based on two grounds. One that the late Mrs Dalcie Tozaka had acknowledged in her letter dated 9th March 2012 to the Commissioner of Forests, that the boundary should be changed and according to an attached map marked with orange high light. There was no such map identified to me or shown clearly to the Court. Mrs Tozaka in her letter basically referred to Mr Symeon Hong's letter of 2nd March 2012. The question is had Mrs Tozaka really aware of Mr Hong's letter written seven days ago. Indeed there was no carbon copy of Mr Hong's letter addressed to her. In fact the boundary Mrs Tozaka had agreed upon is not clear.

41. Secondly, did all the members of reresare tribe support the boundary claim by bolopoe tribe as sielo river and which Mrs Tozaka agreed to in her letter.

42. The most significant point to note is that late Dalcie Tozaka and other members of reresare tribe may have agreed on the boundary claim by bolopoe tribe as shown, but if the local had decided the boundaries of reresare land in 1994, there was nothing to change it not even late Dalcie Tozaka. Only a higher court with a competent jurisdiction can change the decision of a Local Court or a Customary Land Appeal Court.

43. The second part of the Chiefs decision merely concern the previous Court hearing in 1994 between people of reresare themselves. What could have been expected of the Chiefs is to actually hear the claims and rights and usages associated with rights of ownership. If the first and second Defendants were represented by a lawyer, then proper advice that Chiefs must hear customary evidence that supports the claim of ownership and boundaries of the land. By relying on a letter which did not implicate any boundary and which is difficult to alter that which had been set by local Court in 1994 is an error.

44. If there was indeed a resolution by Mrs Tozaka by herself with the rest connected to bolopoe tribe and land, then the balance cannot be accepted. Any reconciliation and resolution made by two disputed tribes must be done by full tribal representation and consent and not just by one person. The reconciliation and resolution is subjected to question of its genuineness. By 14th November 2012, Mr Rano had already been involved and represented the second Defendant. A proper reconciliation and resolution document could have been drafted. Meantime on the face of the document, per se, is far from believing. It is more or less a one sided view expressed by Mrs Tozaka alone, which at the end of the day will benefit the bolopoe tribe 100%. Such document, in my view is far from the real truth.

45. I am not satisfied the material evidence intended to reflect by the Chiefs determination could be believed. In my respectable view, it is subject to critical scrutiny and full of controversy. The truth of it can be finally determined in an appropriated Local Court. Meantime I will not accept and place minimal reliance on it as a document proving ownership.

46. In all that I say I must answer the two questions pose by Mr. Suri on the negative and dismiss the cross application by Mr. Rano.

Orders:
1. Question 1 the answer is No.

2. Question 2 the answer is No.

3. Order is granted directing the Commissioner of Forest to determine whether the land area in dispute is covered by the second Claimant's felling licence No. 10007 or the first Defendant's licence No. 10237.

4. By order declaring that the second and third Defendants have trespassed onto the land in dispute and have felled trees unlawfully and converted trees or logs thereon without valid authority pursuant to section 40 of the Forest Resources and Timber Utilisation Act.

5. Consequently, grant orders for damages for trespass to land and conversion or unlawful extraction of trees to be assessed by the Court.

6. Damages on environment to be assessed by the Court.

7. Costs on standard basis payable to the Claimants.

8. Dismiss cross application filed by Mr. Rano. Both questions asked should be answered yes.

The Court

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^[1] [2010] SBHC 96; 36 of 2010 [16 August 2010]
^[2] [2012] SBCA; CA-CAC 01 of 2011 (30^th March 2012).
^[3] [2011] SBHC 65, paragraph 5.