Xiang Lin Timbers Ltd v Asia Pacific Investment Development Ltd [2023] SBHC 79; HCSI-CC 265 of 2020 (28 July 2023)

HIGH COURT OF SOLOMON ISLANDS

Case name:	Xiang Lin Timbers Ltd v Asia Pacific Investment Development Ltd
Citation:
Date of decision:	28 July 2023
Parties:	Xiang Lin Timbers Limited v Asia Pacific Investment Development Limited
Date of hearing:	6 June 2023
Court file number(s):	265 of 2020
Jurisdiction:	Civil
Place of delivery:
Judge(s):	Bird; PJ
On appeal from:
Order:	1. The Defendant is liable to reimburse the $500,000-00 it received as advance from the Claimant. 2. The Defendant to pay interest at 5% from the date of Judgment until the amount is paid in full. 3. Cost against the Defendant to assess if not agreed. IRA.
Representation:	Kilua S & Soaika W for the Claimant/ Applicant Suri G for the Defendant
Catchwords:
Words and phrases:
Legislation cited:
Cases cited:

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 265 of 2020

BETWEEN

XIANG LIN TIMBERS LIMITED
Claimant

AND:

ASIA PACIFIC INVESTMENT DEVELOPMENT LIMITED
Defendant

Date of Hearing: 6 June 2023
Date of Ruling: 28 July 2023

Kilua S & Soaika W for the Claimant/Applicant
Suri G for Defendant

JUDGMENT

KOUHOTA J

The Claimant on 16^th June 2020 filed a category (B) claim against the Defendant seeking

(a) An order that the sum of $500,000.00 paid in advance to the Defendant on 9^th March 2017 and 22^nd March 2017 be refunded.
(b) Interest of 5 % from the date the money was paid until Judgment.
(c) Cost of the Action.

Claimants Claim

The Claimant is at all material time a Company Registered under the Companies Act 2009 and is a Logging Company.

The Defendant is a Company Registered under the Companies Act 2009 and carries on Logging and Mining.

On 28^th March 2017 the Claimant entered into an agreement with the Defendant for the Claimant to carry out Logging under the Defendant’s Felling Licence Number A101693 over lease hold estate in parcel No. 298-005-1 situated on Rennell Island.

Pursuant to the Agreement the Claimant advance to the Defendant on 9^th March 2017, $300,000 and on 22^nd March 2017, $200,000-00 and a total of $500,000.00 in advance.

Owing to the cancellation of the Defendant Felling licence by the Commissioner of Forest and the continuing litigation by the Defendant over the area affect by its licence, the Claimant was prevented from performing the Agreement and demands the Defendant to refund its money.

The Claimant also claim monthly interest of $2083.33, which up to the date of filing amounts to $82,582.23.

The Claimant alleged the Defendant either failed, neglect or refused to repay the money it received from the Claimant thus causing loss to the Claimant.

The Defence

The defendant in its defence filed on 29th September 2020 admitted paragraphs 1, 2 and 3 of the claim. At paragraph 4 of the defence the defendant denied that it had received the $500,000.00 but says,

1. The $500,000.00, was a payment to the Local people who previously held customary interest in their land prior to registration for them to allow access to the defendant’s licenced area.
2. The $300.000.00 was paid pursuant to clause of the Head Agreement made between parties in 2017. However, since there was vast the $300,000.00 was in sufficient to distribute among the Original Customary Landowner, and so an additional $200,000 .00 was required.
3. The additional $200,000.00 was paid pursuant to negotiation and Oral agreement between the Original Land Owners and the Claimant.
4. The $300,000.00 was a Temporary Advance as agreed upon in the Head Agreement that would be deducted from log shipments.

Assessment of the facts

Despite what the Defendant said in its defence, on the materials before the Court I am satisfied the Defendant had received $500,000.00 from the Claimant under the Head Agreement.

The question therefore as submitted by the Claimant is whether the Defendant is contractually or legally liable to reimburse the Claimant the sum of $500,000.00 or part thereof with interest in the aborted logging operation planned for Parcel NO. 298-005-1.

The Defendant says that the Claimant has delayed in seeking performance until after the death of late Ray Chu who negotiated and sign the Agreement on behalf of the Defendant and who has the controlling cooperate brain of the Defendant. The Defendant thereby is unfairly prejudice by the delay. The Claimant is therefore estopped by the doctrine of laches from pursuing any claim against the Defendant.

I do not accepted that contention. The matter was brought within three years of breaching of the contract and the Claimant did not anticipate that Mr Ray Chu will die quickly.

On the materials before the Court I am also satisfied that Mr Ray Chu, as the director of the Defendant had received the money on behalf of the Defendant and used the money to negotiate and procured the consent of the Original Land Owners. This was confirmed by Mr Maui who in his evidence confirmed that he used the money to pay the Original Land Owners to get their consent to allow the parties to carry out logging on the land. The action taken by Mr Maui in obtaining the consent of the Original Land Owners was in accordance to the Head Agreement.

Counsel for the Defendant submitted that clause 19.1 contains two indicators which support the Defendant argument, it never indent contractually that APID would refund the money from its own finance.

The indicators were;

1. The first indicator is that the money would be paid over to the Original Land Owners, hence it was never kept as income for APID.
2. The second indicator is that the monies would be recovered from the Shipments

Counsel for the Defendant therefore submits that since there was no shipment, there is no express agreement or contractual basis to force the Defendant to reimburse the monies. The parties only agree upon one method of recovery of the monies, and that is from the three shipments. The Claimant cannot impose unilaterally another mode of recovery of the money upon the Defendant. I had consider that the case authorities submitted by the Counsel but found none of the authorities cited is on the same issue which is the subject of this proceeding.

I had already said that I accept the monies was received by Mr Ray Chu on behalf of the Defendant. My view of the Head Agreement is that the expense of paying to obtain the consent of the Original Land Owners was an expense to be met by the Defendant. That is why they seek and advance and promise to reimburse the Claimant via the first three shipment of logs. However, since the logging did not take place as agreed by the parties, the question is whether the Defendant was liable to reimburse the Claimant. To answer the question, the Court must consider what or who causes the logging operation not to go ahead as agreed.

The Head Agreement

The Head Agreement was that, the Logging operation was to be contacted within three (3) months of the date of the execution of the Agreement under the Felling licence of the Defendant. The Agreement was executed on 28th March 2017 and should run for five (5) years. I noted that the $300,000 was paid before contract was executed but I am still satisfied it was paid in accordance with the Head Agreement and for the intended purpose.

Three months from the date of the Agreement would be 28th June 2017. The Commissioner of Forest however, issued a notice to cancel the Defendant’s felling licence on 28^th April 2017, only a month after the Agreement was executed between the parties. I am sure this was reason why the claimant did not carry out the logging operation because there was no felling licence to operate under.

The Claimant cannot perform its part of the contract because of a problem pertaining to the cancellation of the Defendant’s Felling /logging licence. The Defendant licence was cancelled due to the Defendant not been a member of The Solomon Islands Forestry Association. It was the Defendant’s problem that lead to the cancellation of its felling licence. The Claimant had not contributed to the Defendant’s problem which lead to the cancellation of its licence which make impossible for the Claimant to carry out the Logging Agreement.

Conclusion

Since it was the Defendant’s problem which makes it difficult for the Claimant to carry out the agreed Logging Operation as in the Agreement, the Defendant is liable to the Claimant for any loss the Claimant suffered due to the Logging Agreement not going ahead. As such they are liable to reimburse the Claimant because it is clear that the money the Defendant received from the Claimant was an advance to them and the evidence show that they has used the money to obtain the consent of the Original Land Owners.

Because of the cancellation of the Defendant’s felling licence, the claimant cannot carry out the agreed Logging Operation as agreed, so there is no export of logs to allow instalment payment based on shipment of logs as agreed.

The money was an advance by the Claimant to the Defendant for the Defendant to obtain the consent of the Original Land Owners. The expense of obtaining the consent of the Original Land Owners was a matter for the Defendant and they seek an advance from the Claimant for that purpose. Since the logging did not take place for the Defendant to reimburse the Claimant by instalment payment based export of logs, I think in the circumstances the Defendant had to pay the claim through other means using its own funds. To allow the Defendant avoid liability would be tantamount to granting undue enrichment to the Defendant. I give Judgment for the Claimant.

Order

1. The Defendant is liable to reimburse the $500,000-00 it received as advance from the Claimant.
2. The Defendant to pay interest at 5% from the date of Judgment until the amount is paid in full.
3. Cost against the Defendant to assess if not agreed.

IRA.

THE COURT
Emmanuel Kouhota
Puisne Judge