Country Wood Resources Co Ltd v Manele [2018] SBHC 30; HCSI-CC 347 of 2017 (6 March 2018)

COUNTRY WOOD RESOURCES -V- BONAVENTURE
COMPANY LIMITED, MANELE & OTHERS,
GALLEGO RESOURCES APEX PACIFIC
LIMITED LIMITED, ATTORNEY
(1^st, 2^nd Claimant) GENERAL
(1^st,2^nd,3^rd Defendant)

HIGH COURT OF SOLOMON ISLANDS
(BROWN J)
Civil Case No.347 of 2017

Date of Hearing: 20 February 2018
Date of Judgment: 6 March 2018

R. Kingmele for claimants
J. Duddley for 1^st defendant
J. Taupongi for 2^nd defendant
Solicitor General for Attorney General

Application to vary earlier interlocutory order directing funds to be withheld pending findings and judgment.

Brown J:
This short application by the 2^nd defendant seeks this court’s order releasing moneys to be paid into trust by that defendant from the proceeds of the sale of logs overseas, logs claimed by the 1^st and 2^nd claimants. By particular earlier order of this court made on the 30 August last, the 1^st and 2^nd defendants were to pay all proceeds of logs sold from Parachichi and Vungati customary lands at Ward 5, West Guadalcanal into a joint solicitors trust account. Disbursement of such moneys would depend upon the determination of the issues in dispute between the parties.
On the 20 September 2017 the 2^nd defendant applied to the court to vary that particular earlier order by substitution of the following;
“An order the interim court order made on August 29, 2017 be varied by deleting paragraph 4 and substituting in its place the following new paragraph 4:
“The First and Second Defendants jointly and severally pay all proceeds of the sale of logs extracted from the disputed land and shipped on board MV Sea Adelaide, Voyage Number 1704, into a joint solicitors account in the names of the solicitors for the Claimant, the First Defendant and the Second Defendants, less:

1. The Second Defendant’s certified operational cost in the sum of SBD1,059,094 to be paid to the Second Defendant; and
2. 25% FOB of the said proceeds, being the export duty, to be paid to the Second Defendant to pay to the Solomon Islands Government.””

By exhibit YCW-16” to the sworn statement of Yee Choo Wei filed in support on the same day, a commercial invoice no. APL001 directed to CAM United PTE LTD Singapore by Apex Pacific Ltd claimed an amount of USD$231,432.38 for the sale of logs shipped on MV Sea Adelaide Voy 1704. It would seem this is conceded to be the logs the subject of the earlier court order.

Mr. Taupongi for the 2^nd defendant has submitted it is an accepted practice in this jurisdiction to allow the contractor, the 2^nd defendant, its operational expenses. He submitted it was common practice to be applied unless special circumstances dictate otherwise. He distinguishes this case from the special circumstances found by the Court of Appeal to justify refusal to allow the contractor its operational expenses. They are where an order would diminish the fund available for the payment of an award of damages available to meet such award in circumstances such as this where argument relates to possible conflicting licence area grants by the Commissioner of Forests and where logging has prima facie been shown to have been carried out without licence.

The second special circumstance does not concern us. The first however, is satisfied by the retention of a 5% licence fee of the 2^nd defendants and the 25% export duty payable the Government, for this is a case where, if found to be at fault, the Government may lose its entitlement to the duty.^[1]
I accept the argument on this point. There would be moneys to be awarded the claimants if ultimately successful.

The third test to be satisfied before release of the operational expenses may be allowed is that such expenses need be established to the satisfaction of the court.^[2] It is this test which Mr. Kingmele disputes for whilst apparently conceding discretion in the court while it addresses the question, he does not concede the operational expenses have been sufficiently proved on the documents put forward by Yee Choo Wei, the managing director and sole shareholder of the 2^nd defendant.

I do not accept the suggestion the court may exercise a discretion. The Court of Appeal in the Kalena Timbers case, stated operational costs, when claimed, should be properly proved not from an accountant’s estimation, but by the adducing of appropriate evidence. In some cases that may well require expert evidence.^[3]

In other words, this court need be satisfied on the civil onus and has no discretion.
The evidence on which the 2^nd defendant relies is that found in the annexure “YCW-17”^[4] and “YCW-18”. No objection was raised by counsel for the claimant to the use of the annexures on any evidentiary basis, rather Mr. Kingmele criticized the fact the accountant’s figures had been taken at face value. There was no claim to cross-examine the accountant nor was there evidence filed in rebuttal.

The Accountants Report, annex “YCW-17” was of the report and income statement for Apex Pacific Ltd for the period 1 June 2017 to 31 August 2017. By sworn statement, Mr. Yee deposes to the fact the harvest operation only took place over a three month period and the logs exported agreed by the Forestry for Central Bank authority on 30 August 2017 totaled some 1800.074 cubic meters, shown also by “YCW-16”. I accept the report and income statement covers the relevant 3 month period. The Directors Report, signed by the director, Mr. Yee states in the opinion of the Board, the income statement was drawn up in accordance with the provisions of the Companies Act so as to give a true and fair view of the state of affairs of the Company and the results of their business for the financial period. By the Accountants Report for members of Apex Pacific Ltd, George Ting, certified practicing accountant of Ting & Co., Chartered Accountants, PO Box 362, Capital Park Commercial Centre stated the firm had compiled the company report and income statement on the basic information provided by the directors of the company. The information in “YCW-18” appears to correspond with the income statement relating to the Cost of Project.
Since the court has information uncontested on which the 2^nd defendant seeks to rely to prove its operational expenses, this court accepts the evidence properly proves the operational expenses. It is not an accountant’s estimation.
From the total cost of project shown, SI$ 2,062,156, Export Duty was fixed at SI$ 441,290 and Royalties were shown to be SI$264,774. The remaining moneys or cost of operational expenses then amounts to SI$1,356,092.
The actual claim by the company is by terms of the draft amending order, $1,059,094 for the operational expenses to be released and a sum of $441,290 to be paid the 2^nd defendant on account of Government duty, leaving moneys in trust to abide the courts later decision. I accordingly vacate my earlier order 4 by substituting the order 1 in the application to vary filed on the 20 September last.
I give liberty to apply in relation to the carrying out of this order.
Costs of the application shall be reserved.

__________________
BROWN J

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^[1] Kololeana v Amiki [2005] SBHC 134; HCSI-CC 083 of 1998 (28 October 2005)
^[2] Kalena Timber v Bilopoe Co Ltd [2013] SBCA 12; SICA CAC 03 of 2013 (8 November 2013)
^[3] Kalena Timber above at para 23
^[4] Statement of Yee Choo Wei filed 20/09/2017