Solomon Tropical Products Ltd v Solomon Islands Electricity Authority [2017] SBHC 40; HCSI-CC 68 of 2016 (4 December 2017)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction
(Maina J)

Civil Case No. 68 of 2016

BETWEEN: SOLOMON TROPICAL PRODUCTS LTD - Claimant

AND: SOLOMON ISLANDS ELECTRICITY AUTHORITY - Defendant

Date of Ruling: 4^th December 2017

Mr. Sullivan J & Kingmele R for Applicant/Claimant
Mr. Rano W Defendant/Applicant

RULING

Maina PJ:

Introduction

The Defendant applies to vary injunctive orders of 27^th February 2016 that compel the Defendant to continue supplying the power to the Claimant per the arrangements between the parties.

And the application seeks that in effect the power supply arrangements will cease in November 2017 in accordance with those notices.

Background

The parties entered the Co-Generation Agreement (‘CGA’) on or about 18 June 2009. The agreement was for the Claimant to provide the generation of power by sustainable means and supply of that power to the Defendant.

The CGA was to continue for an indefinite period of time unless terminated under the requirement or the clause that sets out the circumstances of termination

However in November 2014, the parties agreed to terminate the CGA. They undertook a new arrangement a new standby power generation agreement to accommodate a new larger generator (‘SGA’), though the substantive terms were agreed and reduced to a draft agreement it was not formally executed.
Despite the non-formal execution of the draft SGA the parties conducted themselves according to its terms that the superseded CGA.

And it can be said that the Claimant’s new generator was commissioned and connected to the Defendant’s grid. And the Defendant paid and the Claimant accepted the tariff provided for in the draft SGA for power provided by the Claimant to the Defendant

The draft SGA provided for termination for breach on 30 days’ written notice and a failure to remedy the breach and the new agreement to continue for a period of three years, subject to a possible extension of one year by mutual agreement.

Again on 13 November 2014, the parties entered into a separate Power Purchase Agreement to govern the supply of power to the Defendant’s grid generated by the Claimant using and additional generator and transformers capable of supplying 2MW of power to the Defendant (‘PPA’)

This arrangement provides for termination of the PPA on the Defendant giving 30 days’ written notice of a breach and that breach not being remedied in that time. It also provides for the term of the contract to be for three years, subject to a possible extension of one year by mutual agreement.

With the claim or proceedings, the Defendant has purported to terminate all agreements between the parties and it is an issue in the proceedings.

For this application it is on the interim injunctive orders of 27^th February 2016 that compelling the Defendant to continue with the arrangements between the parties or matter that will go on trial.

The interim injunctive orders requires the Defendant to continue to pay for the supply of electricity into the grid pursuant to the terms of the draft SGA and pursuant to the PPA.

On or about 11 July 2017, the Defendant by its solicitors served two notices on the Claimant to the effect. It did so without admission that the same had not already been terminated.

This application was filed on 3 August 2017 seeks variations to the injunction so that, in effect, the power supply arrangements will cease in November 2017 in accordance with those notices.

Issue

The issue is whether, properly construed, the power supply arrangements under the agreements between the parties will cease in November 2017 by effluxion of time – 13 November 2017 in the case of the PPA and 30 November 2017 in the other case.

The Court

There are issues in this case. One is the claim or proceedings in this case and the other is or relate to this application of variation of interim injunctive orders on 27^th February 2016 or whether agreement by the parties should come to end by November 2017 as construed by the arrangement.

Generally there is no dispute on the fact in this application and the issue relate to the contractual construction which can be described as “arrangements”. It is so on the fact the SGA only on draft but the parties mutual complied with the terms until the dispute and the interim injunctive orders were made.

The interim injunctive orders on 27^th February 2016 compelled the Defendant to continue with the arrangements. Since the orders the Defendant has paid and continues to pay for the supply of electricity into the grid pursuant to the terms of the draft SGA and pursuant to the PPA.

The Defendant by its solicitors on or about 11 July 2017 served two notices on the Claimant to the effect that, without admission that the same had not already been terminated. The purpose of the notice and relates to this application that:

1. With the PPA the Defendant did not intend to extend the PPA which expire no later than 13 November 2017. They would cease to take power from the Claimant or make payments for power supplied under the PPA after that date.
   
2. With the case of the draft SGA, the Defendant did not intent to extend the arrangement which would expire no later than 30 November 2017. They would cease to take power from the Claimant or make payments for power supplied under the draft SGA after that date.
   

Counsel for the claimant did not argue the issue raised in this application but concern only on the issue relates to damages, a claim for this proceeding which I have said earlier it is a dispute that would be pursued or dealt in the trial. The counterclaim and sworn statement of Kingmele filed in court and relate to the facts and issues in this application and on the lapse or end of the arrangement by 30^th November 2017 is not replied and answered by the Claimant. That would mean the Claimant is not disputing the facts relate to the end of the arrangements under the terms of the draft SGA and pursuant to the PPA.

The contractual terms for the relevant agreement to end after three years by effluxion of time unless extended for a year by mutual agreement. However there is no such mutual agreement to extend except or otherwise the interim injunctive orders of 27^th February 2016 that cannot extend the draft SGA and PPA.

The arrangements between the parties or draft SGA and PPA ends by effluxion of time and that is 30^th November 2017 pursuant to the draft SGA and PPA unless extended which not the case.
The question if the injunctive orders of 27^th February 2016 would also be one for the purpose or extension. I will rule that it not so as the order is for the parties to comply with the arrangement as required by the draft SGA and PPA.

ORDERS

1. By or with effluxion of time the draft SGA and PPA ends on 30^th November 2017.
   
2. The injunctive orders that compel the Defendant to continue supplying the power to the Claimant also ends on 30^th November 2017.
   
3. With the claim or proceedings that is an issue for perusal by the Claimant in the proceedings.
   
4. Cost to be paid by the Claimant with certification Queen’s Counsel to be assessed if not agreed.
   
5. Matter for mention on 31^st January 2018
   

THE COURT

......................................................
Justice Leonard R Maina
Puisne Judge