Leo v Mas Solo Investment Ltd [2016] SBHC 73; HCSI-CC 399 of 2015 (27 May 2016)

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 399 of 2015

BETWEEN:

BARNABAS HETA LEO
Claimant

AND:

MAS SOLO INVESTMENT LIMITED
First Defendant

AND:

ELLIOT HAVILEGU
(Representing himself and the Posamogo Moi
Clan of Mablosi, Isabel Province)
Second Defendant

AND:

ATTORNEY-GENERAL
(Representing the Commissioner of Forests)
Third Defendant

Date of Hearing: 22th April 2016.
Date of Ruling: 27th May 2016.

No appearance for the Claimant/Respondent.
Mr. R. W. Kingmele for the First and Second Defendants/Applicants.
No appearance for the Third Defendant.

KENIAPISIA; PJ:

RULING ON APPLICATION TO RELEASE PART OF RESTRAINT FUNDS

1. Claimant obtained interim restraining orders (ex parte) against the defendants perfected on 15/9/2015 by Mwanesalua, J. There was no order on funds restraint. There was a subsequent Consent Order perfected by Faukona J, on 12^th/11/2015. Subsequent Order Number 3 restraint proceeds of logs felled from Block A to be placed in a joint Solicitors account. Second defendant’s application, heard today, is for release of 60% in respect of operating costs, to be paid to second defendant, from restraint funds. That application was filed on 16/3/2016, with a supporting sworn statement (ss) by Mr Matai.
   
2. Today, I should also conduct an inter- partes hearing. Claimant or his legal representative is not in Court, without prior notice. That hearing was vacated. I do not think it is proper for parties to obtain ex-parte interim orders and sit on it for a long time.
   
3. As is normal, this case is about allegations of illegal logging. On the materials before me, the alleged illegal logging was carried out in good faith at the claimant’s invitation initially. Claimant subsequently renegaded on his invitation, as per the standard logging agreement^[1] he executed to permit the First Defendant do logging on Block A, Gonogano land, Isabel Province.
   
4. The first defendant’s argument is that it is entitled to 60% of its operating cost from the proceeds restraint in trust fund. Its operating costs are verified by an accountant and that there is no special circumstance in this case to justify the continuance of restraint of the full proceeds. That the practice followed in this jurisdiction is to release 60% of verified operating costs, unless special circumstances, justify otherwise.
   
5. The law the applicant relied on can be relevantly summarised:^[2]
   

“...there is a long standing practice in the Solomon Islands to the effect, that, where there is a dispute over the ownership of logs but log production has commence, the Court will require either:

(a) Royalties and damages to be paid in respect of disputed logs; or

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

6. In this case, I prefer a hybrid approach. And so I order as follows: the first defendant will get 50% of its operating costs. The remaining 10 % balance to be held in respect of damages to abide final judgment. Royalty portion is also restraint. Government tax should have already been deducted.
   
7. I make the above orders, been satisfied that there are no significant special circumstances in this case, not to release the contractor’s entitlement. I nevertheless still restraint the contractor’s 10 % because logging companies operate in an industry characterised with great fluidity. Logging companies faced many challenges peculiar to this industry and logging companies may disappear at any time. In this scenario, I feel that, if nothing is secured now for “damages” and claimant should win his case; it may render his claim nugatory. On the other hand, should the first defendant win, it will get its remaining 10 %.
   

8. I make the conclusions in the preceding paragraph based on my experience generally. Also in a similar case where land owners won in this Court for illegal trespass in logging, but found it hard to enforce the judgment debt against a contractor because the contractor company has disappeared^[3]. Mr. Matai who swore ss for the contractor, in this case, is involved with the contractor in the other case – Civil Case 158/2007. When I last dealt with the other case in March 2016, Mr. Matai told the Court, by ss evidence, the contractor company has closed down. The directors shareholders are no longer in the country. Mr. Matai’s involvement is a small special circumstance that warrants restraining portion of the operating cost. The matters I mentioned on fluidity of the logging industry are matters I take judicial notice of based on my personal experience with industry players and the case referred to herein.

9. Orders of the Court are:-

9.1. 50 % of the first defendant’s operation cost is released.

9.2. The 10 % remaining balance will continue to be restraint in trust funds.

9.3. Royalty portion is also restraint in trust funds.

9.4. Costs reserved.

THE COURT

JOHN A KENIAPISIA
PUISNE JUDGE

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^[1] See ss by Claimant filed 14/8/2015; where he disclosed signing a standard logging agreement with the 1^st defendant and later rescinded it alleging fraud.

^[2] Tropical Forestry Limited –v- Pou (2007) SBCA, 18, Court of Appeal.
^[3] See Civil Case 158/2007.