Origin Energy Solomons Ltd v Solomon Fuel and Gas Ltd [2018] SBHC 1; HCSI-CC 119 of 2017 (15 January 2018)

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION
(KENIAPISIA; PJ)

Civil Case Number 119 of 2017

BETWEEN: ORIGIN ENERGY SOLOMONS LIMITED - Claimant

AND: SOLOMON FUEL AND GAS LIMITED - Defendant

Date of Hearing: 6^th November 2017.
Date of Judgment: 15^th January 2018.

Mr. A. Radclyffe for the Claimant.
Mr. P. Afeau for the Defendant.

JUDGMENT

KENIAPISIA; PJ:

Background and Introduction

1. Initially, Speedy Gas. Later, Boral Gas. Now, Origin Gas. Claimant company current operations in Solomon Islands is called Origin Energy Solomons Limited (“Origin”). Origin was around since 1970’s, but under two previous company and product names (Speedy Gas and Boral Gas). Today, it is popularly known as Origin Gas or Boral Gas^[1].
   
2. Origin has enjoyed long period of monopoly since independence. In year 2013, we have seen the entry of a competitor, Solomon Fuel and Gas Limited (“SFGL”). As a result of competition, issue of ownership of Origin cylinder bottles has come before this Court.
   

Claimant’s Case

3. Origin says that it owns the cylinder bottles in varying sizes of 4.5 kg, 9 kg and 45 kg (the common ones). Origin says that, its ownership of these cylinder bottles is evidenced by the engraving of its name on the handle and on the main body of the cylinder bottles. Origin also say in oral evidence, the cylinder bottles appear as asset on the company’s balance sheet. Furthermore as the owner, Origin is responsible for the maintenance, repair and safety of the cylinder bottles through charging of “usage fee” paid by new customers on new bottles.
   
4. Evidence shows that engraved on the handles^[2] of the cylinder bottles at the very top are the words “PROPERTY OF ORIGIN ENERGY”. And on the body^[3] is the Origin emblem or sign in red colour, with the word “Origin”. As a matter of public knowledge; there are vehicles driven in town with the same Origin sign and emblem on them. Undoubtedly, these are prima facie evidence of Origin properties, in the same way as other companies in town, put their company signs on their vehicle properties.
   
5. Origin is inter alia pursuing the return of its cylinder bottles, damages for conversion and permanent injunction against SFGL and Didds Gas Reseller (“DGR”) from doing business with its cylinder bottles (refill and sell of gas to public).
   

Defendant’s Case

6. Solomon Fuel and Gas Limited do not dispute Origin’s ownership. Solomon Fuel and Gas Limited do not claim any interest in the concerned cylinder bottles. As a supplier of LPG Gas, SFGL is refilling those empty cylinder bottles, with Origin’s name on them, but which its customers and agents, including DGR (Toata Molea) brought for refill, claiming they own the cylinder bottles, having bought them from Origin.
   
7. In other words, Origin’s customers/agents like DGR, convinced SFGL that they own the bottles and so SFGL accepted to do business, refilling the cylinder bottles with its own LPG Gas. Evidence further shows that SFGL does not only accept and refill Origin cylinder bottles, but pasted its own stickers onto the bottles, to tell customers that SFGL is responsible for the content of the bottles^[4].
   

Issue – Ownership of Cylinder bottles with Origin signs and emblems printed or engraved on them.

8. The central issue is who owns the cylinder bottles with Origin signs and emblems printed/engraved on them, which Origin agent like DGR convinced SFGL that it owns the bottles and so SFGL accepted to do business, refilling the bottles with its own LPG gas? Is ownership and title retained by Origin or passed onto the customer/agent/reseller like DGR?
   

Origin’s Nature of Business – Long Established business practice, trade, custom and usage

9. Origin is the sole supplier of gas in Solomon Islands, since independence and prior to that. Origin sells gas in cylinder bottles of different sizes from its base at Ranadi and through a network of resellers who are agents.^[5] The practice consistent with Mr. Kapu’s evidence is that Origin sells gas in cylinder bottles of various sizes. Origin sells the gas, but not the cylinder bottles. Ownership of the cylinder bottles remain at all times with the claimant. Origin’s cylinder bottles are engraved with “PROPERTY OF ORIGIN ENERGY” and badged with the name “Origin” in red coloured letters.
   
10. Mr Kapu’s evidence is important as it explains Origin’s process of dealing with its customers/agents and the cylinder bottles. Mr Kapu explained:
    

“When a new customer buys gas from the claimant for the first time, he is charged the price for the gas, which is set from time to time by the Government Price Control Unit. He is also charged a usage fee. This is a one off fee that all customers pay when they take their first gas cylinder. It is a fee for the life time use of the cylinder. This fee is to cover the claimant’s cost of repairing and maintaining the cylinders. When the customer no longer wants to purchase gas from us, we will refund the usage fee, if the cylinder is returned to us in good condition”^[6].

11. Mr Kapu continued in oral evidence that Origin’s agents/re-sellers like DGR know these very well. That agents/resellers do not own the cylinders. Agents do not spend money on repairing and maintaining the cylinders. Court questioned Mr. Kapu how the agents knew these. Mr Kapu said in oral evidence there is a re-seller agreement or suppliers agreement, which he believed he has, but not disclosed in the Court book. Court later found out from counsels that there is no such agreement between claimant and its agents/resellers.
    
12. There is room for confusion in the absence of any clear governing agency/suppliers agreement. Agents like DGR are misled to believe that by paying for the one off fee on the first cylinder bottles, before refilling and re-selling to the public on rotational basis, agents like DGR thought they bought and owned the bottles. Didds Gas Reseller admitted been an agent of Origin since 1996; but with this misapprehension on ownership of the cylinder bottles.
    
13. Whatever it is called (Non-Refundable Usage fee or Refundable Usage fee), it is actually confirmed in Kapu’s evidence that it is the landing cost of new cylinder bottles. Customers/Agents are actually paying for the import of new bottles into Solomon Islands. This is where the confusion above may creep in.
    
14. Again Origin says it sells gas but not the bottles. Ownership of bottles remain at all times with Origin. Court also heard oral evidence from Mr. Saitala, a director of SFGL that it carries on its business in the same manner. From this the Court imply that SFGL has its own cylinder bottles, which its agents may use for refill and sell to customers. And that SFGL owns the cylinder bottles not the agents. And that SFGL has its own network of agents to distribute and sell its product to customers. And that SFGL ensures safety, repair and maintenance of the bottles. And it would appear cheaper to do business with the SFGL, because SFGL is paying for half of the landing cost and asking agents not to pass the cost to customers^[7].
    
15. Court has to accept that Origin has a long established business practice, based on the nature of this kind of business. On the basis of this long established business practice, trade, custom and usage; Court is inclined to conclude that ownership of the cylinder bottles rests with Origin. Accordingly, Court is satisfied on the balance of probabilities, that Origin own the bottles. Ownership comes with responsibility and Origin convinced the Court that it assumes full responsibility to maintain and repair the bottles for safety purposes. Didds Gas Reseller on the other hand claims ownership but lacked responsibility for the safety of the bottles and users. This makes perfect legal and commercial sense, because Origin sells its LPG gas product through a network of reseller agents like DGR. Origin retains ownership and full responsibility for safety of the bottles. As agent, DGR is employed and expected to act on behalf of Origin, the Principal. The Principal is saying it sells gas but retains ownership of the bottles. Agents must sing along with Principal, in the ordinary implication of the word. The confusion here is as I find above, due to lack of clear written suppliers agreement.
    
16. In view of the confusion caused to agents like DGR, due to absence of suppliers’ agreement, Court will order that DGR and SFGL return all cylinder bottles with Origin signs/emblems on them to Origin. Origin to refund returned bottles to DGR and SFGL at the landing cost, with no deductions, for each returned cylinder bottle.
    

Court take Judicial Notice of the Practice

17. It is public knowledge and Court take judicial notice of this long established business practice. That Honiara house hold consumers buy gas mainly from agents/resellers like Didao service station (Kukum); Solomon Motors service station (Point Cruz) and recently GTL Holdings Limited service station (Lungga/Henderson). Large consumers like agents, hotels, restaurants and companies buy direct from Origin depot in Ranadi, for Honiara customers, in large quantities. From personal experience, I used to work as Legal Advisor and Secretary to the Board at the now Solomon Power from 2004-2008/2009. I was part of the Senior Management Team.
    
18. There were about 7 Senior Management members. We were entitled to free supply of cooking gas under our contract of employment. We were supplied with the 45 kg cylinder bottles. Origin would come and drop our bottles each time our bottles need a refill. I left Solomon Power in 2008/2009. Since 2008/2009, I had been purchasing my 9 kg cylinder bottle at Origin agents like Didao service station (Kukum), Solomon Motors service station (Point Cruz) and recently GTL Holding Limited service station (Lunnga/Henderson). There are other smaller outlet agents, I know of around town. When I first bought my new bottle, I paid a deposit, plus the refill cost. What I understood as deposit, Origin call it, a “usage fee” which is meant for repair and maintenance of the bottles and is refundable on conditions.
    

Conclusion and orders

19. The orders of the Court are:
    

19.1. It is hereby declared that all the cylinder bottles supplied by the claimant to DGR or any of claimant’s agents/resellers under claimant’s long established business practice with Origin signs and emblems on them are the property of the claimant.

19.2. Defendant, DGR or other agents of the claimant are ordered to immediately return to the claimant the concerned cylinder bottles (in the event they choose to do business with defendant).

19.3. Defendant, DGR or other agents of the claimant are permanently restraint from using or dealing in any way whatsoever with the claimant’s cylinder bottles.

19.4. For every returned cylinder bottles, claimant has to refund to DGR, defendant and other agents the landing cost^[8] with no deductions whatsoever, depending on the sizes of each retuned bottle.

19.5. Costs to the Claimant on standard basis.

THE COURT

JOHN A KENIAPISIA
PUISNE JUDGE

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^[1] In year 2000’s Origin was called Boral Gas – Mr. Kapu’s oral evidence. Mr. Kapu became General Manager of “Boral Gas in 2002” and current General Manager of now “Origin”.

^[2] See Pages 21 and 22 of Bundle of Documents (“Court Book”).
^[3] See Page 23 of Court Book.

^[4] Confirmed in Satala’s sworn statement filed 8/9/2017 – See paragraphs 12, 13, 15 and 16.
^[5] Agreed fact No. 4 – Page 5 Court Book.
^[6] Paragraph 7 of Kapu’s statement at Page 8, Court Book.
^[7] Paragraphs 9 and 10 of Saitala statement at Page 30, Court Book.
^[8] Current cylinder prices as agreed in correspondence evidence and in oral evidence are: $180.00; $300.00 and $900.00 for 4.5 Kg, 9 Kg and 45 Kg bottles respectively – See Pages 19 and 37 of Court Book.