PacLII Home | Databases | WorldLII | Search | Feedback

High Court of Solomon Islands
You are here:  PacLII >> Databases >> High Court of Solomon Islands >> 2019 >> [2019] SBHC 31

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

Eight South Investment Pty Ltd ACN 148002233 v Attorney General [2019] SBHC 31; HCSI-CC 224 of 2018 (5 April 2019)


HIGH COURT OF SOLOMON ISLANDS


Case name:
Eight South Investment PTY Ltd ACN 148002233 v Attorney General


Citation:


Date of decision:
5 April 2019


Parties:
Eight South Investment Proprietary Limited ACN 148002233(Formerly AU Capital Mining PTY Ltd) v Attorney General


Date of hearing:
23 November 2018 and 14 March 2019(Supplementary Written Submissions)


Court file number(s):
CC 224 of 2018


Jurisdiction:
Civil


Place of delivery:



Judge(s):
Keniapisia; PJ


On appeal from:


Order:
Minister’s decision to cancel ESIPL’s license by letter dated 24th May 2018, is beyond power and is hereby quashed and declared null and void.
The ESIPL PL No. 01/2016 was still valid by 24th May 2018.
Board to decide on ESIPL’s license cancellation, whether there was breach of the Act, Regulation or license conditions.
Cost against defendants, including reserved costs, with certification for overseas counsel, to be assessed. I will assess costs.


Representation:
Mr. J Ivanisevic and Mr. B Hiele for the Claimant
Mr. S Banuve for the first and Second Defendants


Catchwords:



Words and phrases:


Legislation cited:


Cases cited:

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION


Civil Case Number 224 of 2018


EIGHT SOUTH INVESTMENTS PROPERTY LIMITED CAN 148002233(Formerly AU Capital Mining PTY Limited)
Claimant


V


ATTORNEY GENERAL
First Defendant
(Representing the Minister for Mines, Energy and Rural Electrification)


ATTORNEY GENERAL
Second Defendant
(Representing the Director of the Mines and Minerals Board)


Date of Hearing: 23 November 2018 and 14 March 2019 (Supplementary Written Submission)
Date of Decision: 5 April 2019


Mr. J Ivanisevic and Mr. Hiele for the Claimant
Mr. S Banuve for the First and Second Defendants

MINISTER OF MINES ACTED BEYOND POWER IN CANCELLING A LICENSE WITHOUT MINERAL BOARD’S DECISION AND ADVICE

  1. Claimant seek quashing orders against the first defendant Minister’s decision to cancel its Prospecting License No. 01/2016[1]. Of the nine remedies sought in the judicial review claim filed 16/07/2018, this is the most crucial and breathing remedy, which I will concentrate on. Claimant alleged that the Minister’s decision is ultra vires of the Mines and Mineral’s Act (Cap 42), Regulations and License.
  2. The Minerals Board (“the Board”) granted Prospecting License No. 01/2016 (PL No. 01/2016) to claimant under its former business name at the end of December 2015. Due to administrative issues[2] in the mother Ministry, the said license was actually given to the claimant on or around 26th April 2016. Claimant commenced prospecting activities on or around 28th of April 2016[3].
  3. Agreed fact No. 8[4], noted that claimant’s personnel collected 702 soil and sub-soil samples from 291 separate sites in the area of PL No. 01/2016. Each site required a separate hole to be drilled. That work was done by hand auger drilling of the earth to between 3 metre and 6 metre below the surface. At agreed fact No. 12[5] - 400 soil samples were sent to Australia for laboratory testing and analysis of assay. At commencement of prospecting, claimant encountered resistance from various objecting groups (Provincial Government, people on the ground and other overseas investors). So from June 2016 to April 2018, claimant (“ESIPL”) ceased all prospecting activities and sought amicable solutions to the resistance and objections coming from the various objecting groups. There were road blocks and threat of life to company personnel. Claimant choose to engage in dialogue, consultation and negotiation over legal recourse. By April 2018, ESIPL was eating success with its efforts to restore peace and normalcy. A MOU[6] that reconciles the opposing interests was executed towards end of April 2018. A reconciliation program was planned for end of April 2018.
  4. The mother Ministry was fully aware of the problems ESIPL was encountering through its quarterly reports. Officials from the mother Ministry also took part in awareness programs held in mid-October 2017, in attempts to restore peace and normalcy. The Ministry Officials Report noted the need for proper consultation to have preceded the granting of the prospecting license. Report also noted that the opposing groups were not the landowners[7] who signed the Surface Access Agreement with ESIPL; but those who are opposed to mining generally. This sounds familiar for developments taking place in rural Solomon Islands.
  5. By letter of 24th May 2018[8], after ESIPL has signed a MOU with opposing groups, the Minister cancelled its PL No. 01/2016. Minister’s cancellation of the license, followed a show cause notice, he issued to ESIPL on 25th April 2018[9]. ESIPL responded[10] to the show cause notice, outlining the difficulties it faced and the efforts it engaged in to amicably resolve the resistance. Nevertheless Minister went ahead and cancelled the license.

Issues to be determined – Claimant’s Application for determination of preliminary issues of law – filed 6/11/2018

  1. The primary issue is “Whether the Minister’s decision to cancel claimant’s license was made ultra vires of the Minister’s powers under the Mines and Minerals Act (Cap 42), or its Regulations and the License conditions? Although 6 issues were agreed for the Court to determine as preliminary issues of law[11]; I will concentrate on Agreed Issue No. 1[12], which I paraphrase briefly herein, in italics. If I decide on Issue No. 1, it will settle the other remaining 5 issues of law.

The law

  1. Section 71 (1) and (2) of the Mines and Minerals Act (Cap 42) – (“the Act”) relevantly states:
    1. “The Minister on the advice of the Board may suspend, or cancel a permit, license or mining lease in the event that the holder:
      1. Contravenes any provision of this Act or any regulations made there under.
      2. Commits a material breach of or fails to comply with or observe, any provision of his permit, license or mining lease unless the breach is due to an event beyond his reasonable control, which could have been reasonably foreseen or avoided;
      1. ...”
    2. “The Minister, before exercising his powers under sub-section (1), shall call upon such holder to show cause within reasonable time as he may specify, why the holder’s rights should not be suspended or cancelled, as the case may be, and if such holder fails to show cause within the time so specified or if the cause shown is, in the opinion of the Minister, inadequate, the Minister may take such action as specified in subsection (1), or in the case of any breach mentioned in paragraph (b) of sub-section (1) may allow such holder to remedy such breach within such time as the Minister may specify” (underlined my emphasis).

Analysis and Application of the Law

  1. Section 71 (1) and (2) of the Act, are very clear, simple and does not require a magician to interpret. I read Section 71 (1) and (2) of the Act many times. And the conclusion I reach in interpretation remain substantially the same. The same substantive conclusion is that, the Minister could only cancel a license based on advice from the Board. I had some Board experience before becoming a judge. A Board would have issues for discussion before it. An efficient functioning Board operates in similar manner that a court operates. Issues would be placed before the Board. Issues would be elaborated on or supported by evidence. A Board should normally hear two sides to an issue. On a Board will be experts who will scrutinise the issues and analyse the evidence or materials[13] to make an informed decision. It may become necessary at times to defer a decision on an issue, if the Board feels that it needs further information before making an informed decision. A decision of the Board must be precisely recorded in the form of a Board resolution. Board resolution normally followed a detailed discussion and analysis of the issues deliberated on. Chairman/Secretary will then convey the Board resolution to relevant bodies, who will implement the Board’s decision. In other words, the Board will advise a third party; whom will then act to implement the Board’s decision.
  2. These are best Board governance practices that I know of, having sat on Boards[14] in this country. These are exactly what I will look for in here. That the Board has decided to cancel ESIPL license. And that the Board has precisely recorded such decision. And that the Board has advised the Minister to cancel ESIPL license. The Board meeting minutes before me will assist me to ascertain the facts in these regard. The Board meeting of 9th March 2018 had before it an issue of concern on the non-commencement of ESIPL’s prospecting in the tenement areas on Nende, since grant of PL No. 1/2016 in December 2015. But agreed fact No. 8 noted above (in paragraph 3) says that ESIPL had actually commenced prospecting and had send overseas soil samples for testing.
  3. It is apparent from the Minutes and adopted in Agreed Fact[15] that:-
    1. The 9th March 2018 meeting did not decide to cancel the license, but only to issue show cause notice to: exert pressure on ESIPL and to assess the situation from any ESIPL responses triggered by the show cause process. The show cause notice will be issued subject to Attorney General’s advice. I read the Minutes many times and the conclusion remain substantially the same. The same substantive conclusion is the “Board did not decide to cancel ESIPL’s license”. The Board instead wanted further information on “ESIPL license issue” before it can decide whether or not to cancel. Invoking the show cause process, was intended to obtain further information; so the Board could assess the situation better and make an absolute decision whether or not to cancel ESIPL license. My understanding of Board functions and best Board governance practices, is that the Board deferred a decision to cancel ESIPL license pending further information (to come from the Minister’s show cause process).
  4. Agreed facts shows that the Board did not reconvene to assess[16] and the Board did not separately advised the Minister to issue the show cause notice[17]. It is not surprising therefore that the Minister acted outside of the Board’s intention, in issuing the show cause notice. For the Minister after a response from ESIPL, went ahead and cancel the license. Had the Minister been properly briefed, he would have knowledge of the purpose of the show cause. Purpose was for the Board to exert pressure, obtain further information, assess properly ESIPL’s situation and reconvene to decide; whether or not to cancel ESIPL license.
  5. The Board meeting of 9/03/2018, had decided to cancel 3 different licenses recorded at page 11, of the Minutes. The relevant Board resolution had precisely captured the decisions following detailed discussions, as follows:
  6. I should take from the Minutes a resolution to the same wording or same effect in regards to the cancellation of ESIPL’s license. But there is/was none. As noted above, the Board deferred a decision to cancel ESIPL license, pending further information to come from invoking Minister’s show cause process (under Section 72 (2)). When the Minister had received the requested information, the Board should reconvene to make a final decision on whether or not to cancel. And should then advice the Minister. Neither of these two eventuated[18]. Whatever actions the Minister may take in the show cause process under Section 71 (2); any decision that the Minister will take to cancel a license (PL No.1/2016) must have its basis in Section 71 (1) – that the Board must decide and advice the Minister to cancel. The Board’s advice will be based on the Board’s discussions and decisions. This accords well with the objective of the Act. The objective[19] of the Act is to establish the Board to control and regulate mining and related matters in Solomon Islands. One of the main functions of the Board’s control and regulation powers is granting[20] and cancellation[21] of licenses. In both instances, the Board must advise the Minister, who will then convey the decision to the company concerned. Where the Board’s decision and advice is to cancel, Minister must first comply with show cause process under Section 71 (2).
  7. If one reads Section 6 (a) (ii) together with Section 71 (1), of the Act; the objective or intention of Parliament is crystal clear, that in granting (S. 6 (a) (ii)) and cancelling (S. 71 (1)) a prospecting license; the Minister must and can only grant or cancel (mandatory) on the advice of the controller and regulator (the Board). Parliament has wisdom in taking the control and regulation powers from the hands of the Minister. And I need not elaborate on the wisdom; suffice to say that the Minister may not be knowledgeable in mining matters. So he/she should be advised by a competent body. That competent body under the Act is the Board[22] whose membership is comprised of people from different spectrums of expertise; ranging from lawyer, mining expert, financial expert, environment, immigration, investment just to name a few. This is the biggest Board, I ever come across, because it has more than 15 members on it. I note that the Chairman is an expert in mining matters (Acting Director of Mines).
  8. Here the Minister cancelled ESIPL license unilaterally without Board’s decision and advice[23]. This is not only ultra vires of Section 71 (1) and (2), but fundamentally is also ultra vires of the objective of the Act (reaffirm paragraphs 13 and 14). And as case law[24] has demonstrated, this Court has power to quash a decision of the Minister that is made in blatant disregard or violates or is ultra vires of the objective of a Statute. In Y Sato case, the objective of the Statute[25] concerned is to raise revenue for this country. High Court held the Minister acted ultra vires of the very purpose of that Statute, when he issued ad hoc remission letters to Y Sato, so that Y Sato could be exempted from paying tax on its imported containers. High Court quashed the Minister’s decision to exempt Y Sato from paying tax; for non-compliance with the objective of the Statute. High Court held the various remissions and exemptions letters Minister of Finance granted to Y Sato defied the objective of the Statute, were beyond power and null and void.

Conclusion a1nd Orders

  1. On the authority of Y Sato; I can quash the decision of the Minister, because he cancelled ESIPL license without advice of the Board. I repeat paragraphs 7 – 15 above to conclude that the Minister acted beyond power in cancelling ESIPL license and that the Minister’s decision is null and void. I reject Solicitor General’s (SG) preposition that; the Board does not have to separately meet, decide and advised the Minister; after show cause process, because the Minister has discretion on whether or not to cancel. I agree with SG, but on condition that the Board has made a prior decision to cancel. And had advised the Minister. Here the Board did not decide and did not advice the Minister to cancel. I would further add that the Board has confused the Minister as well. There are other ways to obtain further information like requesting a report from ESIPL directly or hearing ESIPL’s officials at a reconvened Board meeting. This is to preserve the “show cause process” purely, to instances where the Board has made a prior decision and was advising the Minister of cancellation. So that in activating the “show cause process”, should the Minister decide to cancel, the Minister can exercise discretion to cancel, guided by the Board’s decision. Without the Board’s decision, what justifications will the Minister use in the exercise of his/her discretion? And if this is the case, “Is it good governance in the modern world of good governance?” It is bad governance, in my considered view.
  2. In all that I say; I am satisfied that the Minister acted ultra vires of the Act, in that the Board (controller and regulator) did not decide to cancel ESIPL license. And the Board did not advice the Minister to cancel ESIPL license. Yet the Minister went ahead and cancel ESIPL license unilaterally. The Minister’s decision will therefore be quashed accordingly for non-compliance with the fundamental objectives of the Act, reconciled with Section 71 (1) and (2) of the Act. It is unfortunate that there was lack of clear communication between the Board and the Minister, resulting in the Minister making a decision that went beyond power. Chairman/Secretary of the Board and the Minister reside in one Ministry/premises. What could have caused lack of communication? Aren’t they supposed to be working together?
  3. The orders of the Court are:-

THE COURT
JUSTICE JOHN A. KENIAPISIA
PUISNE JUDGE

[1] See reliefs 3 & 4 combined - Category C Judicial Review Claim filed 16/07/2018; Page 15 Amended Court Book (ACB) filed 22/11/2018.
[2] See Agreed Fact No. 7 filed 6/11/2018 – Page 10 ACB.
[3] See Agreed Fact No. 6 filed 6/11/2018 – Page 10 ACB.
[4] Agreed Fact No 8 - Amended Statement of Agreed Facts filed 12/3/2019 - Further Amended Court Book (FACB) – Page 283.
[5] Agreed Fact No. 12 of FACB – Page 283.
[6] Memorandum of Understanding is at page 250 – 252 of ACB.
[7] See Report at pages 75 – 109 of ACB – especially top paragraph on page 80 ACB.
[8] Letter at page 254 – 255 of ACB.
[9] Letter at page 129 of ACB.
[10] Letter at page 131 – 133 of ACB.
[11] See Application for determination of preliminary issues of law, filed 06/11/2018 at pages 1- 8 of ACB.
[12] See also Reliefs 7 (a) – (c) combined of the said application – combined effect is ultra vires declaration – Page 3 ACB, at the top.
[13] Materials can be Board papers, reports, written submissions, applications etc. Materials distributed to Board members prior to meeting.
[14] Solomon Power Board (Legal Advisor & Secretary), Citizenship Board (Member) and Television Board (Member & Secretary – Minute Taker).
[15] See Agreed Fact No. 19A (a) and (b) and 19C (a) and (b) – Page 284 of FACB.
[16] See Agreed Fact No. 33A – Page 287 of FACB.
[17] See Agreed Fact 19D of FACB – Page 285.
[18] See Agreed Fact No. 33A and 33B of FACB – Page 287.
[19] See objectives of the Act in capital letters at the beginning, top of the Mines and Minerals Act (Cap 42).
[20] Section 6 (a) (ii) of the Act.
[21] Section 71 (1) of the Act.
[22] Minerals Board established under Section 10 of the Act.
[23] Agreed Fact No. 33A and 33 B of FACB – Page 287.
[24] Y Sato (Roviana) and Company Ltd v Attorney General [2003] SBHC 120; HCSI-CC 038 of 2003 (14th August 2003)
[25] Customs and Exercise Act (Cap 121) and Goods Tax Act (Cap 122).

PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/sb/cases/SBHC/2019/31.html