Taiarata Development Company Ltd v Commissioner of Forests [2010] SBMC 1; Appeal Case 86 of 2010 (5 November 2010)

IN THE CENTRAL MAGISTRATES COURT
Appeal Case No. 86 of 2010.

Between:

TAIARATA INTEGRATED DEVELOPMENT COMPANY LTD and
PACIFIC VENTURE (SI) LIMITED
Appellants

And:

COMMISSIONER OF FORESTS
Respondent

Counsel for the Appellant: Mr James Apaniai
Counsel for the Respondent: Mr J. Muria
Date of Hearing: 3rd November 2010
Date of Ruling: 5th November 2010

RULING

1. On 23rd October 2010 the Respondent issued 2 seizure notices pursuant to section 33 of Forest Resources and Timber Utilization Act (FRTU)
   
2. The first Notice was issued on the 1st Appellant Charles Karaori who is the Managing Director of Taiarata Integrated Development Company Limited (TIDCL) and the second notice was issued on the General Manager of Pacific Venture (SI) Ltd which owns the shipping vessel MV Pacific BANGHU
   
3. The first Appellant held felling licence dated 15/2/10 and 11/8/10 exhibited as annexure CK1, CK2 respectively in the Affidavit of Charles Karaori and fell and extracted some 400 pieces of logs (2375.821 cubic metres) which were loaded on MV Pacific Banghu having sold the 400 pieces of logs for the gross sum of $1,595,047.02.
   
4. The notice served by the responded alleges that the 400 pieces of logs were extracted from IRAPAINA land over which the first appellant does not hold a licence.
   
5. This matter came before hearing on 3rd November 2010 and the parties agreed to the following matters and issues:
   

(a) It was agreed that the first seizure notice related to the following machines and equipment:

1. 1 x caterpillar bulldozer D6D, Chasis No. 6HC03789, Engine No. 10Z33127

[a] Condition - working

[b] Value - SBD220,000.00

2. 1 X Hitachi Excavator, Zaxix 200, Chasis No. 75ZXL05.21XA, Engine No. 4HK1XD1AA

[a] Condition - Working

[b] Value - SBD300,000.00

3. 1 x Caterpillar loader 966C

[a] Condition - Not working – Now in Honiara awaiting spare parts.

[b] Value - SBD180,000.00

4. 1 x Mercedes log truck, Registered No. 3836

[a] Condition - Not working – Now in Honiara awaiting spare parts

[b] Value - SBD300,000.00

5. 1 x chainsaw

[a] Condition - Working

[b] Value - SBD10,000.00

Total Value: - SBD1,010,000.00

6. Barge & Tug Boat - SBD1.2m

Both Counsels signed the list and agreed to the list of machines but not to the values attached thereto.

b. It was agreed that the 400 pieces of logs (2375.821 cubic metres were on board MV Pacific Banghu and the logs had been sold for $1,595,047.02 (gross value)

c. Issues for determination.

i whether the first appellant shall pay the entire sum of $1,595,047.02 into the court or an account nominated by the court and to be paid out to the rightful owners when determined by the court or otherwise agreed or whether he shall pay the sum after deducting the export fees and other associated operating costs and royalty.

ii As to whether the machines subject to the seizure notice should be held pending the determination by the court of the criminal charges to be laid against the first appellant under the provisions of FRTU

6. Both counsels made submissions on the two issues for determination and upon completion of the submissions both counsels agreed that I shall make an order allowing the vessel MV Pacific Banghu to depart the port of Noro where it was berth since the service of the seizure notice on 23/10/10 and I made an order that the vessel was at liberty to depart the port of Noro.
   
7. On the first issue for determination, the appellant's counsel has made submission that the First Appellant shall be ordered to pay the sum of $1,196,285.25 and this sum was arrived at after deducting the export duty of $398,761.76 (25%) from the gross sum of $1,595,047.02. Mr Apaniai further submitted that a certified operating costs and royalty payable to the land owners should be deducted. He relied on the case of Idale V Golden Fountains (SI) Company Ltd 1996 SBHC 85 a decision of Palmer J in which he stated:

"Whatever prices these logs are sold at, the defendant shall be entitled to deduct whatever reasonable expenses they have incurred in felling and removal of these logs to the pond for storage"

8. The respondent's Counsel has submitted that the entire sum of $1,595,047.02 shall be paid into an account to be nominated by the court. He relied on section 36 and in particular the following words " the property had it not been sold". He submitted that this means that the court is not entitled to make any orders for deductions.
   
9. I disagree with the interpretation placed by Mr J. Muria. What section 36 means is that if an order for sale was to be made for a property which had not been sold then, upon sale the associated cost are to be deducted before a value can be arrived at. This was the approach of Palmer J in the case of Idale V Golden Fountains (SI)Company Ltd (Supra) although he did not specifically refer to section 36 of FRTU.
   

10: So I order that subject to the parties agreeing to setting up an account the First Appellant is to pay the sum of $1,196,285.26 in that account and I further order the First Appellant shall be entitled to claim for incidental and associated costs and such costs to be certified by an accountant and to be determined by the court. In that respect the first appellant shall have the liberty to make further applications.

11: With respect to the second issue for determination regarding the return of the seized machines the counsel for the appellant has relied on the provisions of section 37 of FRTU. He submitted that he is not asking for an outright order for return of the machines. He said that he is seeking a conditional order and that should charges be laid against the first appellant under FRTU and in the event of a conviction being obtained the machines and items seized can still be subject to a forfeiture order pursuant to section 34 of FRTU. He further submitted that the appellant will provide undertaking that the machines will not be disposed off or further encumbered and the machines will be kept in good repair and order.
The respondent's position on this issue is that no order for the release of the machines shall be made. In the case of Regina v JP Enterprises Ltd [1999] SBHC 94 Palmer J dealt with the issue of forfeiture and said "I take into account this company has expended substantial sums of money in what it erroneously thought was a lawful operation."

12: I am not in any way pre-empting what the decision of the court would be if the appellant is charged with an offence under FRTU, however the fact remains that the appellant has incurred costs of $US 8000 (SBD 65,000) per day for 13 days and that will make the total of $SBD 845,000 (65,000 x 13 days)

If the appellant is convicted it will have no recourse to recover the sum of $SBD 845,000 and that in my view will be sufficient penalty. Again, I wish to reiterate that I do not in any way wish to foreshadow what the decision of the court would be if the appellant is charged.

13: Palmer J in the case of R v JP Enterprises Ltd did not make a forfeiture order whilst expressing dismay at the inadequacy of penalty of $3,000, which was the maximum fine then. In 2009 the Penalties Miscellaneous Amendment Act was enacted and the fine was increased to a sum of $20,000.

14: I do not think that I have powers to make a conditional order for the release of the machines seized and therefore order that all machines shall be returned to the first appellant forthwith.

15: I make no orders as to cost and order that costs shall be in the cause.

Shafi Khan
Principal Magistrate