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Grace Logging Ltd v Attorney General [2022] SBCA 26; SICOA-CAC 36 of 2021 (18 November 2022)

IN THE SOLOMON ISLANDS COURT OF APPEAL

JUDGMENT OF THE COURT

1. This is an appeal against the orders of the High Court dated 18^th November 2021, in which the learned judge had determined that the Commissioner of Forests (“CoF”) had power to penalise the 1^st Appellant and 2^nd Appellant for encroaching onto the neighbouring customary lands of Kobolutu and Manuku and uplifting the Performance Bond (“PB”) of $250,000 and ordering that it be paid to compensate the two tribal owners of those lands.
2. The Notice of Appeal, as filed, raised five grounds as follows:
   1. That the learned judge erred in law and/ or fact and thereon miscarried when he determined that the Commissioner of Forests action in withdrawing the Performance Bond was not ultra vires without considering that an appeal under Section 39(2) of the Forest Resources and Timber Utilization Act was still pending before the Minister of Forestry and had yet to be decided and thereon rendered any acts of the Commissioner of Forest being ultra vires.
   2. That the learned Judge erred in law and/ or fact and thereon miscarried when he found that the 1^st Appellant was not denied natural justice without considering that the evidence filed by the Appellants showed that the representations made by the Appellants were not considered by the Commissioner of Forests despite being served thereupon.
   3. That the learned Judge erred in law and in fact and thereon miscarried when he adjudged that the Commissioner of Forests was entitled to withdraw the Performance Bond without considering that the issues before the Commissioner of Forests were issues that were sub judice and under consideration by the High Court in Civil Case No. 391 of 2019 and 169 of 2020.
   4. That the learned Judge erred in law and/or fact and thereon miscarried himself when he determined that the Commissioner of Forests lawfully withdrew the Performance Bond without considering that the Commissioner of Forests did not have the power either under statute, common law or custom to determine the boundaries of customary land and thereon make a finding of trespass.
   5. That the learned Judge erred in law and/or fact and thereon misinterpreted the conditions of Felling Licence No. A101869 applicable to the circumstances of the case before him by placing emphasis only on conditions (3) and (8) of the said felling licence without considering condition (4) of the said felling licence that provided for any disputes relating to ownership, boundaries or use of land.
3. The Appellant sought the following orders in lieu thereof:
   1. That the Appeal be allowed;
   2. That the Judgment and Orders of the High Court made on 18^th November 2021 be set aside;
   3. That this Honourable Court adjudge and order that the withdrawal of the performance bond by the Respondent is ultra vires, a denial of the Appellants natural justice and unlawful;
   4. That this Honourable Court adjudge and order that the Respondent refund the Performance Bond to the 1^st Appellant;
   5. In the alternate to Order (3) and (4), an Order that the matter be referred back to the High Court to be tried de novo before a different Judge; and
   6. That the Respondent pay the Appellants cost of, and connected to, this Appeal to be assessed if not agreed.
   7. Any other orders this honourable Court may deem fit to make.

The Claim in the High Court.

4. The claim in the Court below was for judicial review of the decision of the CoF to forfeit the PB of the 1^st Appellant to compensate the landowners of the tribes of Kobolutu and Manuku, who claimed ownership of the neighbouring lands to Sasalo Concession Land. It is claimed the 1^st and 2^nd Appellants had trespassed onto those neighbouring lands in their logging operations.
5. The 1^st Appellant (1^st Claimant in the court below), is a logging company and holder of Felling Licence No. A101869 over the Sasalo Customary Land ("Sasalo Land").
6. It is also the holder of the PB held by the Respondent (CoF) at the Pan Oceanic Bank ("POB") by virtue of the Licensing Agreement under the Felling Licence no. A101869.
7. The 2^nd Appellant (2^nd Claimant) is a member and representative of the Vato tribe and was the grantor of the timber rights over the Sasalo Customary Land.
8. There is no issue that the 1^st Appellant is the lawful holder of the felling licence under the Forest Resources and Timber Utilisation Act ("the FRTUA") over Sasalo Land and was entitled to conduct logging operations within the said customary land.
9. The forfeiture of the PB arose out of the allegations/ claims by the two neighbouring tribes of trespass by the 1^st Appellant into their neighbouring lands, Kobolutu and Manuku customary lands. They assert ownership rights in custom over the two customary lands. As a consequence of the alleged trespass, they lodged a complaint with the Respondent, (the CoF). The CoF in turn caused an enquiry to be done into the complaint to verify if trespass had occurred. A report was compiled and found that trespass had occurred into the neighbouring tribal lands. The Report also recommended that the CoF consider disciplinary actions against the 1^st Appellant.
10. Based on that recommendation to punish the 1^st Appellant, the CoF decided to utilise condition 8 of the 1^st Appellant's licence to withdraw the PB money of $250,000 and had it paid in equal shares as compensation to the Kobolutu and Manuku tribes.
11. It is this decision and action of the CoF that was the subject of the judicial review claim in the High Court. The Appellants say that this decision was ultra vires, unlawful and plain wrong.

The High Court Decision:

12. There were three issues that were raised in the court below for consideration by the court:
    • (i) Whether the CoF decision to withdraw the PB money was justified and lawful?
    • (ii) Whether or not the 1^st Claimant (1^st Appellant) was denied the right to natural justice?
    • (iii) Whether or not the time for the PB money withdrawal was premature as there were pending appeals to the Minister of Forest pending cases over the subject land before the High Court?
13. In his decision, when dealing with the first issue, the learned Judge posed the question whether the CoF had the power to authorise the payment of the PB money to compensate the landowner claims for trespass. In addressing this issue, he asked the question, “Does the COF have power under the licence to authorise the withdrawal of the PB money, invoking CN3 read with CN8 and Regulation 10(h) of the Forest Resources and Timber Utilisation (Felling Licences) Regulations 2005 to pay the PB money to Kobolutu and Manuku tribes for the alleged trespass?”
14. In answering this question, he took into account the field assessment report as the starting point, which the CoF had produced. He agreed that trespass had occurred and that compensation should be paid to the two disputing tribes. He agreed that the CoF accordingly was entitled to have the PB money withdrawn and paid as compensation in equal shares to Kobolutu and Manuku tribes.
15. The determinations of the learned judge regarding the report are set out in more detail at paragraphs 12 – 16 of his judgment. At paragraph 17, he accepted the conclusion made by the CoF regarding the issue of trespass.
16. His Lordship then went on to consider the question of jurisdiction of the CoF to withdraw the PB money and have it paid as compensation to the two tribes claiming trespass. He concluded that trespass having been established, conditions 3 and 8 of the Licence Agreement gave jurisdiction to the CoF to have the PB withdrawn and paid as compensation to the two disputing tribes.
17. Therein lies the error committed by the learned judge in stating that the CoF had power to use the PB to compensate the two disputing tribes.

Discussion
The jurisdiction of the Commissioner of Forests

18. It is important to note that the Felling Licence No. A101869 is an agreement between two parties, the Licensor, (CoF) on the one part, and the Licensee (1^st Appellant), Grace Logging Limited, of the other part. It is important also to note that this is an exclusive, binding agreement between the two parties. The terms and conditions, including rights and obligations are to be construed strictly as applying to both parties only. Unless expressly provided for, any third party or other party is precluded from seeking any relief or remedy, or asserting any right under the terms of that licence. There is simply no basis in law for such a claim by the two disputing tribes under that licence agreement.
19. We note that condition 8(b) of the Licence A101869 mirrors the provisions of the Forest Resources and Timber Utilisation (Felling Licences) Regulations 2005 at Part 4 – Conditions of Felling Licence and more particularly at regulation 10(h).
20. We quote Condition 8(b):
    • “8. Before commencing carrying out any operations under the licence, the licensee shall enter into, and give to the Commissioner of Forests Resources a copy of, a performance bond of $250,000 that shall –
    • (a) be in the form of a bank guarantee or equivalent instrument acceptable to the Central Bank of Solomon Islands; and
    • (b) provide security for –
      • (i) payment of taxes, duties, levies, fees, royalties, rent, compensation and other charges or amounts that may be payable by him to the Government or the relevant provincial government under this Act or a provincial ordinance; and
      • (ii) payments arising from a contravention of the conditions of the licence, the Act and subsidiary legislation made under the Act; and
    • (c) be enforced by the Commissioner of Forest Resources against the issuing bank, insurance company or other authority if the licensee fails to pay a sum secured by it.” (Emphasis added).
21. Paragraph 8(b) (i) specifically provides that any payment of inter alia compensation and other charges or amounts that may be payable by the licensee, are to be paid to the Government or the relevant provincial government under the Act or any provincial ordinance. This paragraph does not provide for the payment of inter alia any compensation to others.
22. At Condition 10 of the Licence, it reiterates the emphasis that payments of inter alia compensation, are to be made to the Government etc.
    • “(10) The licensee shall pay all taxes, duties, levies, fees, royalties, rent, compensation and other charges or amounts as they fall due and payable by him as licensee to the Government or the relevant provincial government under the Forest Resources and Timber Utilisation Act or a provincial ordinance;” (Emphasis added ).
23. Again the emphasis and focus could not be clearer, any compensation arising from the licence agreement are payable to the Government etc. and not to any other party. The CoF being the Administrator of the FRTUA on behalf of the Government, where appropriate can direct that compensation be paid to the Government. That is the intent and purpose of that legislation to oversee the activities of the logging company that it complies with the requirements of the law.
24. The two disputing tribes asserting rights of trespass against the 1^st Appellant on the other hand, are not privy to the licence agreement and therefore have no immediate rights or claim under that licence agreement. This means they cannot rely on Conditions 3 and 8 of the licence agreement to justify payments of damages for any trespass of the logger onto their lands and the CoF has no power to use the PB money for that purpose.
25. The CoF simply does not have power under the Licence Agreement to have the PB withdrawn and paid as compensation to the two disputing tribes, Kobolutu and Manuku tribes. His actions in doing so were clearly ultra vires and an abuse of his position. He just doesn’t have the mandate to do so under the terms of the licence agreement.

Effect of section 39 of the Forest Resources and Timber Utilisation Act [cap. 40].

26. The most he can do is to issue a show cause letter or notice, in the light of the purported trespass why the licence should not be cancelled or suspended. This power is expressly provided for under section 39 of the Forest Resources and Timber Utilisation Act [cap. 40] (“FRTUA”). Section 39(1) provides as follows:
    • “39. - (1) Where the Commissioner of Forest Resources is satisfied that the holder of a licence or permit issued under this Act has contravened any of the provisions of this Act, or that there has been a contravention of any of the terms of conditions of such a licence or permit, he may by notice in writing cancel or suspend the licence or permit:
    • Provided that no such licence or permit shall be cancelled or suspended without giving such holder of licence or permit an opportunity of being heard.” (Emphasis added).
27. Subsection 39(1) expressly provides that where there is any purported contravention of any provisions of the FRTUA, or any of the terms of conditions of the licence or permit, the CoF may by notice in writing, cancel or suspend the licence or permit. He does not have power to impose damages for a separate breach and claim by another party (landowner). That is beyond his powers (ultra vires). The most he can do in the circumstances is to determine whether or not to cancel or suspend the licence or permit after giving notice in writing to the 1^st Appellant.
28. Subsection 39(2) in turn provides for a right of appeal to the Minister, whose decision thereon shall be final.
    • “(2) Any person who is aggrieved by the cancellation or suspension of his licence or permit under subsection (1) may within two months thereof appeal in writing to the Minister whose decision thereon shall be final.”
29. It is not in dispute that following suspension of the licence, the 1^st Appellant exercised its’ right under subsection 39(2) of the FRTUA to appeal the decision of the CoF.
30. Again, we note that the learned judge erred in his decision, in finding that this was a separate matter to the issue of trespass when both were directly related to each other. By virtue of the alleged trespass, it was within the jurisdiction of the CoF to determine whether to cancel or suspend the licence of the 1^st Appellant. The error perpetrated was when he went on to make a finding to award damages (compensation) to the disputing tribes for the alleged trespass, which is disputed by the 1^st Appellant.

The rights of the asserting trespass.

31. The two aggrieved tribes in turn have a right to sue the 1^st Appellant for trespass and claim damages (compensation) under that process. We note that this was what was sought to be done in the two civil claims, civil claim 391 of 2019 and cc 169 of 2020.
32. Civil Claim 391 of 2019 is a claim by Chief Lijie Seama, representing himself and his immediate family members of the Vato Tribe, against Jacob Sogavare of the Manuku Clan. This claim challenges the issues of dispute of ownership in custom of their respective customary lands. This is yet to be finally determined.
33. The second claim, cc 169 of 2020 is a claim by Chief Caleb Mathias and Royal Sata of the Togole tribe who assert ownership over the Kobulutu customary land, and the 1^st Appellant and Chief Lijie Seamakana and Others of the Sasalo Customary land holding group on the other part. This also challenges the issues of ownership over their respective customary lands. This dispute is yet to be determined.
34. It is relevant to note that the claims of dispute over the disputed boundaries are yet to be finally determined or resolved in the appropriate courts. It is therefore premature and presumptuous even for the CoF to say that trespass had occurred into those other customary lands, when those issues are being determined in the court below.
35. The learned judge accordingly erred in his construction of Condition (8) by stating that the CoF was entitled to withdraw the PB as a result of the breach of the licence and have it paid as compensation to the two disputing tribes. He simply does not have that power.
36. We reiterate condition 8 (b) (i) and (ii) (set out in para 20 above) in particular should be given the purposive and literal construction in the specific circumstances of the agreement. They can only apply to the parties to the agreement.

We are satisfied the learned judge erred in principle in his construction of the terms of the licence agreement when he concluded that it empowered the CoF to forfeit the PB money and have it paid to other parties who were not privy to the licence agreement. We are satisfied as well, that the legislation does not confer any such power on him to do so.

37. We now turn to consider and answer the appeal grounds herewith.

Disposal of the appeal

APPEAL GROUND 1. That the learned judge erred in law and/ or fact and thereon miscarried when he determined that the Commissioner of Forests action in withdrawing the Performance Bond was not ultra vires without considering that an appeal under Section 39(2) of the Forest Resources and Timber Utilization Act was still pending before the Minister of Forestry and had yet to be decided and thereon rendered any acts of the Commissioner of Forest being ultra vires.

38. This ground should be allowed as the right of the Appellants to appeal the decision of the CoF for the suspension was yet to be determined. The learned judge erred in determining that the actions of the CoF was not ultra vires when he had no power to have the PB forfeited and paid to the disputing landowners. The legislation expressly provides for a right of appeal on the question of cancellation or suspension of the licence of the 1^st Appellant.
    • APPEAL GROUND 2. That the learned Judge erred in law and/ or fact and thereon miscarried when he found that the 1st Appellant was not denied natural justice without considering that the evidences filed by the Appellants showed that the representations made by the Appellants were not considered by the Commissioner of Forests despite being served thereupon.
39. This appeal ground simply relates to the fact that the submissions of the Appellants were not properly considered as they relate to the powers and obligations of the CoF regarding his decision to forfeit the PB money and have it paid as compensation to the two disputing tribes. We are satisfied had that fact been given due consideration, the decision to have the PB money withdrawn would not have been made. We allow the appeal on this ground on the basis that the CoF erred by failing to take into account a relevant matter.
    • APPEAL GROUND 3. That the learned Judge erred in law and in fact and thereon miscarried when he adjudged that the Commissioner of Forests was entitled to withdraw the Performance Bond without considering that the issues before the Commissioner of Forests were issues that were sub judice and under consideration by the High Court in Civil Case No. 391 of 2019 and 169 of 2020.
40. We are satisfied this appeal ground should also be allowed. The rights of the disputing tribes are being addressed in the appropriate forum^[1] in Civil Case no. 391 of 2019 and Civil Case 169 of 2020 and had that been taken into account, the learned judge would have recognised that the CoF did not have the power to do what he did. His actions purported to usurp the powers of the courts that have express jurisdiction to deal with land disputes and issues in custom.
    • APPEAL GROUND 4. That the learned Judge erred in law and/or fact and thereon miscarried himself when he determined that the Commissioner of Forests lawfully withdrew the Performance Bond without considering that the Commissioner of Forests did not have the power either under statute, common law or custom to determine the boundaries of customary land and thereon make a finding of trespass.
41. We are also satisfied this appeal ground should be allowed, in that in making the finding that he did the CoF assumed that the customary boundaries had been determined in custom and that he was entitled to make such finding when he did not have that power. The only power that he had was to determine in the light of the report received whether the licence can be cancelled or suspended pursuant to section 39 of the FRTUA. Any disputes with regards to customary land, including bound disputes are matters for the land courts to deal with.
    • APPEAL GROUND 5. That the learned Judge erred in law and/or fact and thereon misinterpreted the conditions of Felling Licence No. A101869 applicable to the circumstances of the case before him by placing emphasis only on conditions (3) and (8) of the said felling licence without considering condition (4) of the said felling licence that provided for any disputes relating to ownership, boundaries or use of land.
42. This appeal ground should also be allowed in that the law clearly provides relief or remedy for any one aggrieved by any disputes arising from the ownership, boundaries or use of the land as has occurred in this case. That was being addressed in the civil claims 391 of 2019 and cc 169 of 2020 and had that been carefully considered or taken into account by the CoF, he would have not forfeited the PB as he had done.

DECISION AND ORDERS.

43. We are satisfied the appeal should be allowed. The judgment and orders of the High Court made on the 18^th November 2021 are set aside. The withdrawal and payment of the PB by the CoF is ultra vires, without basis and accordingly should be refunded. The costs of the appeal to be paid by the CoF to be taxed, if not agreed. We issue orders accordingly.

Justice J. Hansen, VP
Palmer, CJ
Justice V. Lunabek, JA

^[1] See paragraphs 26 -30 of Judgment.