IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

CTP INTERNATIONAL (SI) CO. LTD
Claimant

AND:

BERNARD GHIRO
1st Defendant

AND:

GULF THREE LIMITED
2nd Defendant

AND:

GULF FIVE LIMITED
3rd Defendant

Mr. P. Tegavota for the Claimant
Mr. C. Hapa for the 1st and 2nd defendants.

Date of hearing: 2 May 2014.
Date of Judgment: 10 June 2014.

RULING
Apaniai, PJ:

Introduction.

1.	On 15 February 2014, ex parte orders were obtained by the claimant, CTP International (SI) Co. Ltd, ("Respondent") against the 1st defendant, Bernard Ghiro, the 2nd defendant, Gulf Three Ltd, and the 3rd defendant, Gulf Five Ltd, ("Applicants").

2.	The orders were in the following terms:-

"[1]	That the 1st defendant personally, the 2nd and 3rd defendants, their servants, agents, employees, contractors or persons authorised by the said defendants, are hereby restrained forthwith from the date of these orders not to carry out any further:-

[a]	Felling and extraction of logs,
[b]	Hauling of logs down to the log pond area,
[c]	Construction of logging and other access roads,
[d]	Paying out or releasing any funds from any bank accounts being derived from the current log shipment undertaken per MV Starford, and,
[e]	Conducting any other logging related activities,

within various customary lands within Ward 11 and part of Ward 10 in East and Central Bauro of Makira Province, and particularly those lands covered by the claimant's renewed felling licence No. A10442 issued by the Commissioner of Forests on 27 June 2013 until further orders.

[2]	That the 3rd defendant shall from the date of these orders, to forthwith advise its buyer to amend the letter of credit by deleting the name of the 3rd defendant and inserting the name of the claimant as beneficiary to the said letter of credit.

[3]	That upon completion of loading, the 3rd defendant's buyer's shipping agent shall produce all original shipping documents to the claimant including commercial invoice so that the said claimant can negotiate the letter of credit.

[4]	That out of the total sales proceed from the current log shipment 60% shall be paid into an interest bearing bank account in the joint names of the solicitors for the parties immediately after shipment proceeds are cleared.

[5]	That the 1st, 2nd and 3rd defendants shall within 30 days from the date of these orders deposit into the joint trust account a further sum equivalent to 60% of the total sales proceeds derived from the two previous log shipments and the funds so injuncted shall not be released until further orders. 

[6]	That the 1st and 2nd defendants shall produce by way of sworn statement details of the total sales proceeds derived from the two previous log shipments on MV Starford and MV Zhang Hong 2 setting out:-

[a]	the total volume of the logs shipped,
[b]	the species that were shipped,
[c]	the total market value,
[d]	the export duty payable,
[e]	the calculation of royalties, and,
[f]	the amount representing 60% of the total market values received by the said defendants.

[7]	That any logs still left in the bush after the date of these orders shall be extracted and brought down to the log pond area to be exported in consultation with the claimant.

[6]	That the 2nd and 3rd defendants shall not remove any logging machines and equipment out of the licensed concession of the claimant but shall bring them down to the log pond area to be stored until further orders and,

[7]	That the 1st defendant is hereby restrained:-

[a]	not to deal with any affairs of the claimant as a registered entity;

[b]	not to deal with any matter affecting the rights of the claimant over various land covered under felling license No. A 10442;

[c]	not to sign any letter or document or agreement purporting to do so on behalf of the claimant; and,

[d]	not to deal with any matter whatsoever generally affecting the rights of the claimant, its directors and shareholders as a legal entity and or as a license holder under felling license No. A 10442.

[8]	That until further orders, the 1st, 2nd and 3rd defendants, their servants agents and employees or persons authorised by the said defendants shall not deal with any customary lands within Ward 11 and part of Ward 10 in East and Central Bauro of Makira Province, for the purposes of logging and particularly those lands covered by the claimant's renewed felling license No. 10442 issued by the Commissioner of Forests on 27 June 2013.

[9]	Costs of and incidental to this application be paid by the 1st and 2nd defendants on standard basis."

3.	The orders were obtained on the basis of the evidence contained in a sworn statement by Cesar T. Paulo ("Mr. Paulo") filed on 6 February 2014.

4.	In this application, the Applicants now seek to discharge those interim orders.

5.	The grounds for the application are, first, that the sworn statement by Mr. Paulo filed on 6 February 2014 contained misleading and untrue facts and, second, that it is likely Mr. Paulo and Edmondo Mayamaya ("Mr. Mayamaya") may have committed fraud when the shares of the 1st defendant were reduced without his knowledge / consent on 30 April 2012 and when the 1st defendant was removed as a shareholder on 1 August 2013.

6.	The orders were obtained ex parte despite the fact that the Applicants, or at least the 2nd and 3rd Applicants reside in Honiara and could easily have been served with the application to enable them appear at the hearing.

Observations.

7.	Before turning to the real issues in this application, and, having regard to the constant "urgent ex parte applications" now coming before the court, it is necessary, to make certain observations about urgent and ex parte applications.

8.	The first observation is that there seems to be a general misconception by some lawyers that every interlocutory application is urgent and that every urgent application must be heard ex parte. Unfortunately, that is not so. All applications, including urgent applications, must be made on notice unless otherwise provided for in the civil procedure rules or by some statute or regulations.

9.	The point has been made clear as long ago as 1998 in Elima v Everbright Commercial Enterprises Pty Ltd where His Lordship Justice Longule-Awich said:

"There seems to be a misconception by some solicitors that all urgent interlocutory applications seeking court order of injunction or order of restraining nature are brought ex parte. That is not the rule of practice. Even under urgent applications, that is, applications in which the court is asked to waive the requirement of due notice (under O55 rr5 and 14 and O57 r. 7) for not less than 2 clear days to the Respondent, must be brought on notice, even if it be a very short notice of only hours before the hearing, to suit the urgency, unless the rule under which the application is made requires that the application be made ex parte or conditions for making applications ex parte are met. If that was not the case, there would be no point for the Rules to state specific occasions on which applications may be made ex parte. The other reason is that O53 R7 which provides for making applications ex parte states the authority in language which retains discretion. And it is to be noted that under the rule, only the plaintiff may make the application ex parte, any other party, which includes the defendant, must make his application on notice."

10.	The introduction of the Solomon Island Courts (Civil Procedure) Rules 2007 ("Rules") has not changed the position. Rule 7.6 of the Rules makes it obligatory that all applications must be served. Rule 7.7 requires such service to be effected at least 3 days before the return date.

11.	Where the applicant wishes the application to be heard on a shorter notice than the 3 days required under Rule 7.7, an application must be made to the court under Rule 26.6 for the court to abridge or waive the 3 day rule.

12.	Likewise, where the applicant wishes the application to be heard in the absence of the other party, he must also make an application to that effect supported by such evidence as will satisfy the court either that the application is so urgent that it should be heard in the absence of the other party or that the application need not be served.

13.	The second observation I wish to make is that even where the application is made ex parte, the applicant must still satisfy the usual conditions for the granting of interlocutory orders. That is to say, the applicant must satisfy the court on the evidence that there is a serious issue to be tried; that the balance of convenience lies in favour of granting the injunction; and, (unless an undertaking as to damages is waived on recognised grounds) that an undertaking as to damages has been made and that the applicant is, and will be able, to compensate the respondent for any loss which the order may cause the respondent in the event that it is later adjudged that the injunction should not have been granted. Unless these requirements are satisfied, no ex parte orders should be granted on ex parte application.

14.	I now turn to the present application. The present application is one which seeks to discharge the ex parte interim injunctions granted to the Respondent on 15 February 2014.

15.	The interim injunctions having been granted, though ex parte, I must assume that the court was satisfied that the usual conditions for the granting of those injunctions were satisfied. As such, to discharge the interim injunctions, the burden is on Applicants to satisfy the court that none of the conditions for granting the interim injunctions existed or, as put forward in the present application, that the sworn statement by Mr. Paulo filed on 6 February 2014 contained misleading and untrue facts.

16.	By alleging that the sworn statement by Mr. Paulo contained misleading or untrue facts, I take it that the Applicants mean to say that there was non-disclosure by the Respondent.

17.	The rules regarding non-disclosure are clear. When making an application for injunction, in particular ex parte applications, the applicant has a duty to make full disclosure to the court. Full disclosure means disclosing all relevant facts that support the application as well as all relevant facts which are unfavourable to the application. The applicant must not withhold relevant facts, nor must he mislead the court either in what he says or in not saying what he is supposed to say. Relevant facts are those which have a clear connection with the relief sought in the application. Those facts must be disclosed.

18.	Where these requirements are not met, there is non-disclosure and the court will, as a general rule, discharge the injunction because, by suppressing the facts or by making misleading statements, the court was presented with a case which is different from what actually exists.

19.	As earlier stated, the ex parte interim injunctions obtained on 15 February 2014 were granted on the basis of the evidence placed before the court in the sworn statement filed by Mr. Paulo filed on 6 February 2014. There was no evidence by the Applicants before the court at that time and neither was the applicants heard at that time.

20.	Now that the Applicants have filed sworn statements in reply to that of Mr. Paulo and having had the opportunity to be heard, have the Applicants shown that there are no triable issues before the court or that the balance of convenience favour the discharge of the injunctions or that the applicant is not, and will not be able, to compensate the respondent for any loss which the order may cause the respondent in the event that it is later adjudged that the injunction should not have been granted.

Serious Issue
21.	I have read the submissions and the sworn statements filed herein as well as the verbal testimonies of Mr. Paulo, Mr. Mayamaya and Mr. Ghiro. I am satisfied on the evidence that there are serious issues surrounding the validity of Mr. Ghiro's shareholding in the Respondent. It is also clear that there are issues about Mr. Ghiro's position as a director of the Respondent. There are also issues regarding the validity of Mr. Ghiro's conduct in engaging Gulf Five under the technology agreement signed on 11 November 2013 to carry out logging in the Respondent's concession areas. These are issues for trial. I am satisfied there are triable issues in this case.

Balance of convenience.

22.	I have also considered whether the balance of convenience favours the continuation of the interim orders or in discharging them. I ask myself whether it will do more harm than good if the interim injunctions remain in force.

23.	It is my view that the balance of convenience does not favour the continuation of the interim injunctions. The reason being that there is evidence to suggest that the involvement of Gulf Five in this case came about as a result of a technology agreement entered into between the 3rd defendant and the Respondent, represented by Mr. Ghiro, dated 11 November 2013. Mr. Ghiro appeared to be a director and a majority shareholder (5,100 shares) in the Respondent since 3 September 2011. The other director was Mr. Mayamaya. Mr. Paulo was no longer a director at that time.

24.	The evidence shows that Mr. Ghiro became involved with the Respondent when Mr. Mayamaya approached him for help because the Respondent's logging license had expired and Mr. Mayamaya wanted the license renewed. He said Mr. Mayamaya promised him shares in the Respondent as well as a position of director if he came in and help secure the renewal of the Respondent's license. He said he agreed to the proposal and brought about the renewal of the Respondent's license. He said he paid $250,000.00 of his own money to the Commissioner of Forest as Guarantee Bond for the Respondent's logging operations as well as $10,000.00 of his own money to secure an extension of the Respondent's license. He said everything he did, including the execution of the technology agreement with Gulf Five, was done in the interest of the Respondent and on his understanding that he was a shareholder and director of the Respondent. He said he was aware that he was a director and shareholder in the Respondent but was not aware of his removal as a director and shareholder in August 2013.

25.	I am satisfied that the actions of Mr. Ghiro were in the interests of the Respondent. He attended to the renewal of the Respondent's logging license and paid his own money to ensure that the license was renewed. According to the records of the Registrar of Companies, Mr. Ghiro was a registered majority share holder and director of the Respondent. He was entitled to see that the interests of the Respondent are protected. The actions of Mr. Ghiro were approved by the other director at that time, Mr. Mayamaya. In any event, Gulf Five was an innocent party. On the basis of Mr. Ghiro's shareholding and directorship of the Respondent, Gulf Five was entitled to assume that Mr. Ghiro had the authority to enter into the technology agreement on behalf of the Respondent. Gulf Five was entitled to perform its obligations under the agreement, which it did, and therefore it is entitled to its money as agreed under the technology agreement. To enable Gulf Five to have its money, the interim orders need to be discharged. 

Undertaking as to damages.

26.	The remaining question is whether the Respondent will be able to compensate the Applicants for any loss which the order may cause them in the event that it is later adjudged that the injunctions should not have been granted.

27.	I note that the Respondent has made an undertaking as to damages in support of its application for ex parte injunctive orders. To make a proper assessment as to whether or not the Respondent will be able to make good its undertaking as to damages, the Respondent must provide sufficient information to the court as to its financial positions.

28.	In the present case, the Respondent has not provided sufficient evidence as to its financial position and there is evidence to show that it was Mr. Ghiro who had been meeting the financial obligations of the Respondent. I am not convinced that the Respondent is in a position to honour the undertaking. That, in my view, is a further reason for me to exercise my discretion in favour of discharging the interim orders granted on 15 February 2014.

Non-disclosure.
29.	The evidence shows that Mr. Paulo left for the Philippines in 2008 and returned to Solomon Islands in January 2014. Mr. Paulo confirmed that for the five years he was away from Solomon Islands, Mr. Mayamaya was in charge of the Respondent. He denied approving both the transfer of shares to Mr. Ghiro and the appointment of Mr. Ghiro as director of the Respondent. He said he was of the understanding that the Respondent was not engaged in any logging operations from 2003 to 2014 and upon learning through someone on his return to Solomon Islands that the Respondent was carrying out logging, he asked Mr. Mayamaya why the Respondent was carrying out logging operations. As a result, he filed this claim.

30.	Mr. Mayamaya, however, said in his evidence that Mr. Ghiro's shareholding and appointment as director were approved by Mr. Paulo. He said he was in constant contact with Mr. Paulo and had secured Mr. Paulo's consent in everything he did in regards to the Respondent including the approval of Mr. Ghiro's shareholding and his directorship.

31.	I accept the evidence by Mr. Mayamaya that Mr. Paulo was aware of, and had agreed to, the transfer of shares to Mr. Ghiro and Mr. Ghiro's appointment as a director of the Respondent. I do not believe Mr. Paulo's evidence that he was not aware, and did not approve, of Mr. Ghiro's shareholding and directorship position. In paragraph 24 of his sworn statement filed on 6 February 2014 in support of the ex parte application, Mr. Paulo said that Mr. Ghiro acted without the authority of CTP and its directors in dealing with the logging affairs of CTP.

32.	In the light of Mr. Mayamaya's evidence, which I accept, I am satisfied Mr. Paulo was not honest in his evidence. I am not convinced he was telling the truth. His demeanour in the witness box and the manner he answered questions does not speak well of him. He was hesitant and evasive when answering questions. I am satisfied he has misled the court by his sworn statement.

33.	In paragraph 28 of his sworn statement filed on 6 February 2014, Mr. Paulo stated that unless restrained by the court, CTP will continue to suffer losses from the acts of trespass by the 2nd and 3rd defendants and unlawful conversion of export proceeds from log shipments. Again, this is an untrue statement. Clause 10.2 of the technology agreement between the Respondent and the Gulf Five stipulates that Gulf Five will export the logs and the distribution of the log proceeds will be made at the ratio of 60% to Gulf Five and 40% to the Respondent. It is therefore not true that CTP will suffer losses. The interim orders have restrained the distribution of the export proceeds from being distributed according to the ratio. I do not see how the Respond will suffer loss if the orders are discharged.

34.	I am satisfied the above untrue statements by Mr. Paulo amounted to material non-disclosure which would justify the discharge of the interim injunctive orders granted on the 15 February 2014.

35.	In any event, Gulf Five was entitled to assume that Mr. Ghiro, being a director and shareholder, had the necessary authority to execute the technology agreement on behalf of the Respondent. The Respondent is therefore estopped from asserting that Mr. Ghiro had no authority to enter into the technology agreement with Gulf Five.

36.	Having attended to the renewal of the Respondent's license and paid his own money to ensure the renewal and extension of the license and having ensured that logging proceed in the Respondent's concession areas, I do not see the justification in now stopping the Applicants from proceeding with the logging operations or from exporting the logs which have already been felled in the concession areas. The logs must be exported and the proceeds must be applied in accordance with the ration stipulated in the technology agreement.

Decision and orders.

37.	It follows that the interim restraining orders granted in favour of the Respondent on 15 February 2014 are set aside and the Respondent is to pay the costs of the Applicants on standard basis.

38.	The orders are:-

[1]	The restraining orders obtained by the Respondent on 15 February 2014 are set aside.

[2]	The Respondent shall pay the costs incurred by the Applicants in connection with this application on standard basis to be taxed if not agreed.

THE COURT

_________________________
James Apaniai
Puisne Judge.