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Earthmovers (Solomons) Ltd v Thao [1997] SBCA 8; CA-CAC 6 of 1997 (11 December 1997)

THE COURT OF APPEAL OF SOLOMON ISLANDS

Civil Appeal No.6 of 1997

JUDGMENT

THE COURT: This appeal relates to one of a series of orders made by the primary judge (Lungole-Awich J.) by way of granting interlocutory relief to the appellant. The relief was granted in an action in which the appellant claims, among other things, that the first respondents were logging timber in lands over which the appellant has a licence to fell and remove trees. It is alleged that this situation has come about because the second respondents granted timber rights to the appellant over parts of the lands in question and later granted similar rights to the first respondents.

The primary judge found that there was a serious issue to be tried in relation to logging by the first respondents on lands in which the appellant has a licence to fell and remove trees, particularly with respect to the boundaries of three areas of the lands the subject of the appellant’s licence. The primary judge, by order 3, restrained all the respondents from carrying on the business of logging on those areas, the areas being described in the order as “Sasaka, Betikiki and Tenegao lands said to be part of Ngalivavatu.”

The making of that order left unresolved what was to be done about logs already felled by the respondents and not removed and other logs which had been removed and sold and were awaiting export. Orders 4 to 7 (inclusive), which dealt with that matter, were in these terms:

“4. The defendants may remove logs already felled and are to file records showing among other details the number, species and value and may sell them. Plaintiff’s representatives are to be invited to observe the removal.

5. The proceeds of the logs already sold in the latest shipment referred to in supporting affidavit and for the logs in paragraph 4 [above] are to be paid into joint interest bearing bank account of the solicitors for defendants and solicitors for the plaintiffs.

6. Business expenses and taxes are to be paid out of the account. In the event that the parties do not agree on what may be regarded as business expenses they may apply to the court.

7. Up to 50% of the revenue, excluding business expenses and tax is to be released from the joint account to the first defendants.”

The case for the appellant is that the primary judge erred in providing in order 7 that up to 50% of the net revenue after expenses and tax is to be paid out to the first respondents. It appears that at no stage of the proceedings before the primary judge did counsel for the respondents submit that there should be paid out of the joint account to his clients any part of the revenue credited to that account after payment of expenses and tax. Counsel for the respondents very properly conceded this to be the position.

The judgment of the primary judge contains no explanation for the inclusion of this provision in order 7. N or do the materials in the record of proceedings provide an explanation for the provision or for the amount being fixed at “up to 50%” of net revenue. The establishment of the joint account was designed to provide the appellant with protection in the event that the appellant is successful in the action. In that event the appellant, having a proprietary interest in the logs, would be entitled to the whole of the net revenue, if the proceeds represent sale of timber logged in the area to which the appellant’s licence relates.

In these circumstances, to give the first respondents an entitlement to a part of the net revenue credited to the account, on top of the business expenses which they are entitled to receive under order 6, is inconsistent with the purpose of establishing the account, that is, the protection of the appellant’s claimed interest. It is not to the point that the appellant might lose the case because order 9 caters for that possibility by requiring the appellant to provide substantial security for damages by depositing $80,000 in the joint account of the solicitors or by providing bank guarantee or insurance indemnity to the extent of $120,000.

In the result the appeal must succeed.

ORDERS

1. Leave to appeal granted.

2. Appeal allowed.

Orders made by Lungole-Awich J. varied by deleting therefrom order 7.

By consent each party to pay its own costs.

MASON P,

McPHERSON J.A,

CASEY J.A