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Asia Pacific Investment Ltd v Minister for Mines and Minerals [2025] SBHC 45; HCSI-CC 302 of 2021 (1 April 2025)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CRIMINAL JURISDICTION

Criminal Case No. 302 of 2021

BETWEEN

ASIA PACIFIC INVESTMENT LIMITED
Appellant

AND:

MINISTER FOR MINES AND MINERALS
First Respondent

AND:

MINERALS BOARD AND DIRECTOR OF MINES
Second Respondent

Date of Hearing: 4 August 2021
Date of Ruling: 1 April 2025

Counsel
Mr G Suri for the Appellant
Mr S Banuve for the First and Second Respondent

JUDGMENTS ON APPEAL

Introduction

1. This is an appeal against the decision of the Minister for Mines, Energy and Rural Electrification brought pursuant to section 71(5) of the Mines and Minerals Act [“the Act”].
2. The grounds of appeal are as follows:
   1. The composition of the Minerals Board that met on 24 March 2021 was contrary to section 10(2) of the Mines and Minerals Act therefore the recommendation to the Minister was invalid, null and void; and
   2. The Show Cause Notice issued by the Minister on 21 April 2021 was invalid, null and void as:
      • (a) The Notice contained irrelevant information;
      • (b) The Minerals Board and the Minister abused section 71(2) of the Act as an information gathering exercise; and
      • (c) The alleged contraventions were not adequately stated; and
      • (d) The Minerals Board had compromised itself by considering an application by Florida Mine Investment Company Ltd; and
      • (e) The Minister failed to comply with the contractual obligation of the Government under clause 36.2.1(a) of the Mining Agreement
      • (f) The Minister failed to give Notice of the Material Breach pursuant to clause 36.2.2(a) of the Mining Agreement before issuing the Show Cause Notice
   3. The Cancellation Notice dated 3 June 2021 issued by the Minister was invalid, null and void as:
      • (a) The Cancellation Notice failed to specify which particular ground the Minister relied on for cancellation of the Mining Lease; and
      • (b) The Minister failed to exercise his statutory power under section 71(2) to allow the Appellant to remedy any alleged material breach or failure under section 71(1)(b) of the Act; and
      • (c) The Minister gave insufficient or inadequate reasons for the decision to cancel the Mining Lease; and
      • (d) The Minister failed to consider the Appellant’s response to the Show cause notice and failed to consider an alternative to suspend the licence while any breach of the lease was remedied.

Factual Background

3. On 21 April 2021, the Minister for Mines and Minerals sent APID a letter contending to be a show cause notice pursuant to section 71(2) of the Mines and Minerals Act [‘Act’].
4. Section 71 provides:
   • "(1) The Minister on the advice of the Board may suspend or cancel a permit, licence or mining lease in the event that the holder-
     • (e) contravenes any provisions of this Act or any regulations made thereunder;
     • (f) commits a material breach of, or fails to comply with or observe, any provision of his permit, licence or mining lease unless such breach is due to an event beyond his reasonable control which could not have been reasonably foreseen or avoided; or
     • (g) dissolves, liquidates, becomes insolvent, commits an act of bankruptcy, makes an assignment for the benefit of creditors, petitions or applies to any tribunal for the appointment of a trustee or receiver for himself, or commences any proceedings relating to himself under any law pertaining to bankruptcy, arrangement, insolvency or readjustment of debt.
   • (2) The Minister, before exercising his powers under subsection (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 subsection (1) may allow such holder to remedy such breach within such time as the Minister may specify.”

Composition of the Board

5. Section 10 of the Act established the Minerals Board as the body responsible for general matters relating to the administration of the Act. The constitution of the Board is as set out in section 1 of the Schedule to the Act. Section 6 provides that the quorum for a meeting of the Board shall be five members of whom one shall be the chairman.
6. The minutes of the meeting on 24 March 2025 show that the meeting was chaired by the Director of Mines and seven other members present. There was therefore a quorum. The Appellant complains that the minutes show that the Permanent Secretary of the Ministry of Mines Minerals Energy and Rural Electrification was also present. The Appellant submitted that the Permanent Secretary’s attendance was without any lawful authority and he submitted that as a result the composition of the Board was invalid null and void.
7. While the position of Permanent Secretary is not one of the positions identified in section 1 of the Schedule it is understandable why he would be present as the person responsible for carrying out the directions of the Board. The Board considered the six papers that were scheduled for the meeting as well as an additional paper concerning an operation in Isabel. The paper with which the present appeal is concerned was the fourth paper considered. The presence of the permanent Secretary does not mean that his role was any greater than that of an observer and nothing has been put before me to persuade me that the his presence was unlawful nor that his presence rendered the composition or indeed the decisions of the Board invalid.
8. The Appellant further complains that the presence of the acting Director of Immigration rendered the composition of the Board invalid null and void. Section 1 of the Schedule makes provision for representation from Immigration and Labour. The Appellant argued that it was not necessary for the acting Director of Immigration to attend as the minute’s record that the undersecretary of the Ministry of Commerce, Industry, Labour and Immigration was also present. The Appellant submitted that this meant there was over-representation for the acting Director to attend as well.
9. Section 1(a) of the Schedule referred to representatives from five named Departments from which the Minister can make appointments. There was nothing before me to show that the acting Director of Immigration was not an appointed member of the Board. The same argument is raised for the presence of the Deputy Director Geological Survey Division in the Ministry of Mines Minerals Energy and Electrification. The attendance of the Deputy Director has not persuaded me that the decisions of the Board were invalid.
10. Finally there is a complaint about the attendance of the Provincial Secretary from Rennell and Bellona Province at the meeting. Counsel for the Appellant has acknowledged the proviso to section 1 of the Schedule which permits there to be a representative from the Provincial Government of the area in which land is situated when the Board considers an application for the issue of a permit, licence or lease. Counsel submitted that as the matter being considered in the paper concerned with the Appellant concerned a consideration of the cancellation of a mining lease that did not give authority for the Provincial Secretary to be present at the meeting. This argument overlooks paper 3 which was the consideration of a licence in Rennell and Bellona Province. The Provincial Secretary was entitled to be present at the meeting for the discussion on that paper. The minutes do not assist with whether her remained or made any contribution to the subsequent discussion.
11. The Appellant has not shown that the composition of the Board was flawed such that the decisions of the Board were invalid. Appeal ground 1 is therefore dismissed.

Show cause letter

12. On 21 April 2021 the Minister caused a letter to be sent to the Appellant which the parties have referred to as the ‘show cause’ letter. In it the Minister advised the Appellant as follows:
    • “I have been advised by the Mines and Minerals Board (the Board) of the current status and developments on your mining lease ML 01/2014, granted to your company, Asia Pacific Investment Development Ltd (APID), over West Rennell, Rennell and Bellona Province.
    • I have been further advised by the Board that APID and its contractors had been operating the mine without fully complying with its obligations under the terms and conditions of the Mining Lease ML 01/2014, Mining Agreement and the requirements of the Mines and Minerals Act (MMA) and its Regulations (MMR). Furthermore, there appears to be breaches to the Surface Access Rights Agreements with the landowners and the Community Development Agreement with the affected communities.”
13. The Minister advised the Appellant that he had been informed that the both the Foreign Investment and the Labour Divisions were taking action against the Appellant on the basis of breaches to their legislation. He drew the Appellant’s attention to the list of ‘major and very significant breaches’ which was the basis for the show cause notice. He annexed a table he had received from the Board. The table contained 17 alleged breaches. The last two entries were at 16 ‘Labour Division Prohibition Notice Order’ Under details the entry reads ‘BMSI to satisfactorily address shortfalls, breaches, etc listed in this order (as attached)’. Under the column headed ‘Requirements breached’ are the words ‘As attached’. The fact that nothing was attached suggests that the table was prepared for the Minister and/or the Board and was simply attached to the show cause letter. At 17 the entry reads: ‘Foreign Investment Division Show Cause Notice’. Under details the entry simply reads: ‘Refer to the attached DFI Show Cause Notice’. The inclusion of this item was likely to inform the Minister that the Appellant was already in receipt of a show cause notice relating to the Foreign Investment Division.
14. Counsel for the Appellant has referred to the entries at 16 and 17 as being irrelevant considerations. He has also submitted that as the Board has taken into account irrelevant considerations that are not identified in section 71(1) of the Act the Board cannot be said to have properly exercised its discretion.
15. Counsel also submitted that the Minister has used the section 71 procedure for information gathering rather than using section 6 of the Act. He relies on the Court of Appeal decision in Attorney General v Eight South Investment Pty Ltd [2021] SBCA 10. The Appellant also referred to this decision in their response to the Show Cause letter. Eight South Investment Pty Ltd supports the proposition that a section 71(2) show cause notice should not be used for general information gathering powers. It must be issued by the Minister on the advice of the Minerals Board to put the holder on notice and provide them with the opportunity to respond to the alleged contraventions of section 71(1) (a)-(c). The case does not discuss the validity in the circumstances where a show cause notice, approved by the Minerals Board, contains both relevant and irrelevant information.
16. Section 71(2) of the Mines and Minerals Act does not specify the particulars or information which is required to be included in the show cause notice. This is unlike, for example, a show cause notice issued pursuant to section 5(1) of the Deportation Act, which provides that “a notice signed by or under the authority of the Minister shall be served upon the person charged specifying the facts alleged against him with sufficient particulars as to give him reasonable information of the grounds upon which it is alleged that the order may be made against him under this Act, and requiring him to show cause before a magistrate at a time to be stated in the notice, why such order should not be made against him” (see Lopez v Attorney General (No 2) [1983] SBHC 29).
17. If the Parliament intended for the show cause notice to contain a requisite level of information regarding the allegations as to contravention of section 71(1) of the Mines and Minerals Act, it could have specified them directly in the Act as they have done in the Deportation Act.
18. The Court of Appeal held in SMM Solomon Ltd v Axion KB Ltd [2016] SBCA 1 at [207] that procedural fairness: “must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him; and then he must be given a fair opportunity to correct or contradict them” (citing Kanda v Government of Malaya [1962] UKPC 2; [1962] AC 322 (Denning LJ)).
19. In the absence of a statutory provision as to what the show cause notice must contain, the common law infers a requirement that it should contain enough information as to the specific allegations of breach alleged against the holder. Whilst, as the Appellant correctly identifies, there are items in the table attached to the show cause notice which do not relate to a contravention of section 71(1) of the Mines and Minerals Act, some do. It cannot be said that the Claimant has not been put on notice as to the position taken by the Minister (and Board) with respect to the cancellation of the licence and the basis for that position.
20. Therefore, the fact that the notice did not limit itself to particularising only the matters which could result in the cancellation of the licence pursuant to section 71(1) of the Mines and Minerals Act does not invalidate or nullify the giving of the notice pursuant to section 71(2) of that Act.
21. If the relevant decision maker, here being the Minister (potentially with the Minerals Board as set out in Eight South Investment Pty Ltd) makes the decision to suspend or cancel a licence under section 71(1) of the Mines and Minerals Act after issuing a show cause notice under section 71(2) of that Act. As long as the Minister only considers the factors that the statute directs him to (being those in section 71(1) of the Mines and Minerals Act), his decision will not be ultra vires.

Florida’s Application for a Prospecting Licence

22. Counsel for the Appellant submitted that the fact that the application by Florida was considered at the same meeting compromised the decision of the Board. The problem with this submission is that the Resolution of the Board was to defer the application and request the company to submit further information.
23. At the hearing of the appeal evidence was called concerning the land over which the proposed prospecting licence was sought. It is alleged that a person named Eric Tema had conducted his own mining on parcels of land said to belong to him. The Appellant disputed that claim. However it was over the land that Eric Tema had carried out his activities that Florida was seeking to obtain a prospecting licence.
24. While the Appellant complained of the claims of Eric Tema, it is not relevant to the appeal as the application by Florida was deferred and the information before the Board was that the Florida application was not over the land granted to the Appellant but rather over tenements previously owned by Worldlink Resources Ltd and Winning Company Ltd over two portions of land owned by Eric Tema. The evidence before me satisfies me that those lands were not owned by the Appellant.

Cancellation Letter

25. The Appellant complains that the cancellation letter failed to specify which of the breaches the Minister had relied on for cancelling the Mining Lease.
26. In the cancellation letter dated 3 June 2021, the Minister showed that he found the Appellant’s response to the show cause letter to be inadequate. The show cause notice had clearly set out reasons for the proposed cancellation and had given the Appellant the opportunity to respond. The passage from Axiom KB Ltd referred to in paragraph [18] above was complied with. The Appellant has been put on notice of what was alleged against him and has been afforded the opportunity to respond. That response has been considered before a final decision has been made.
27. The issues raised by the Appellant do not deal with the central issue with which the Board and the Minister were concerned. The material before both the Board and the Minister demonstrate that the Appellant was in serious breach of its licence and agreement. It had known for probably two years about the breaches. This is clear from the material provided in the sworn statements of William Tino. The Appellant had taken up the issue of the breaches with BMSI since 2019. There was a falling out between the two. The Appellant and BMSI then became involved in litigation which hampered the Appellant in meeting its obligations.
28. The Appellant placed the blame for the breaches on BMSI who had been contracted to provide the technical operation and ensure compliance with the Appellant’s obligations. The Director of Mines set out clearly in his sworn statement filed on 18 June 2021 at paragraph 8 the obligations as:
    • “The notice was issued to APID as the holder of ML 01/2014 and as a party to the Mining Agreement and it can be deduced from APID’s responses that it was not complying with its obligations because it expected BMSI to do so on its behalf. BMSI is neither the holder of ML 01/2014 nor a party to the mining agreement.”
29. The Board has been very clear in its recommendation to the Minister to issue the show cause notice. It identified breaches in paying for the previous 15 shipments of bauxite extracted. It had failed to pay its obligations to the Government, the Province and others who may be entitled to receive royalties. The comments in the details column were largely not information seeking but were identifying areas that should be addressed in responding to the show cause notice.
30. The Appellant submitted that the Minister had the power to suspend the licence or to allow time for the Appellant to comply. Although the Minister has those powers that does not mean he must follow those courses. The Minister found himself in the position that the main breaches identified were not denied. There had been no mining for 10 months. The breaches were so serious that the Minister was entitled to conclude that there was nothing to be achieved by either suspending the licence or giving time to remedy the breaches.
31. While the show cause notice referred to the Labour Division Prohibition Notice Order and the Foreign Investment Show Cause notice it did so on the basis that they were areas of concern outside the matters being raised under the section. The letter dated 3 June 2021 dealt specifically with the breaches so there is no evidence that the Minister in deciding to cancel the mining licence took into account matters that he should not have taken into account.

Clause 36.2.2(a) of the Mining Agreement

32. The Mining Agreement and the Act both contain provisions relating to the termination of the Mining Lease. The Appellant complains that the Minister had not complied with clause 36.2.2(a) of the Mining Agreement which provides:
    • “The Government may provide Notice to the Mining Company of a material breach of, or a failure to comply with or observe, a fundamental provision of this Mining Agreement. If the Mining Company fails or neglects to either diligently and consistently pursue a course of action that is reasonably intended to remedy that breach or failure within ninety (90) days (or a longer period as is reasonable in the circumstances) after Government gives a Notice requiring that the breach be remedied or the provision complied with or observed, or (ii) challenge the Government’s assertion of breach under section 32.0 of this Mining Agreement, the Government may terminate this Mining Agreement.”
33. The first thing to note is that the course outlined is discretionary. The use of the word ‘may’ in the first line makes that clear. In the circumstances of this case the failure to pay for the previous 15 shipments which should have been paid at least by November of the previous year and the failure to undertake any mining since August 2020 as well as the other breaches about which there was complaint make it understandably why the Minister had chosen to not exercise his discretion to use clause 36.2.2(a).
34. I return to the points raised in the second ground of appeal.
    4. The Show Cause notice did contain some irrelevant information. It however contained the necessary information to adequately inform the Appellant.
    5. The show cause notice did invite the Appellant to provide further information however I reject the argument that it was an information gathering exercise that should have relied on section 6 of the Act. The details column set out issues for the Minister. For the most part that did not need to be forwarded to the Appellant. The document certainly contained questions but it did so in a way that made it clear to the Appellant what breaches were alleged and what needed to be addressed in any response. Although there were questions posed I find that those questions do not invalidate the notice.
    6. I find the allegations were adequately stated. They made it clear what the breaches were and what the Appellant should address.
    7. The Minerals Board had not compromised itself by considering the application by Florida for a prospecting licence. The reason for this conclusion is that on the information before the Board the prospecting licence was not over the same lands as the Board understood were held by the Appellant. In any event the application was deferred. There is no substance to this point of appeal.
    8. The use of clause 36.2.2(a) was discretionary and not appropriate in the circumstances faced by the Government.
35. I return to the points raised in the third ground of appeal.
    1. The Appellant complains that the cancellation notice did not particularise the grounds relied on by the Minister. The grounds for cancellation were made clear in the notice. The ground on which the mining lease was that in the opinion of the Minister the reply to the show cause letter was inadequate. The show cause letter had already set out what the alleged breaches were. The Appellant had responded to those allegations and the Minister found the explanation inadequate. The requirements identified in paragraph [207] of the Axiom decision had clearly been complied with.
    2. The Minister had a discretion under section 71(2). Section 71(1) authorised him to suspend or cancel the licence which he did. Section 71(2) permitted the Minister to provide time to remedy the breaches if the two requirements of paragraph (b) were met. The Appellant had chosen to engage a contractor, BMSI, which the Appellant had been trying to force to remedies the breaches identified by the Appellant. Since 2019 the Appellant had not been successful in that effort. There was no reason identified by the Appellant to show why the Minister was required to allow further time to remedy the breaches. Had the answer to the show cause letter demonstrated a path where the breaches could have been remedied rather than blaming a third party the Minister may have taken a different view but he was not required to do so.
    100. Point (c) in ground 3 is merely a repetition of point (a) and for the same reasons must be rejected.
    4. The response from the Minister to the explanation given by the Appellant was clearly considered, contrary to the allegation. The letter dated 3 June 2021 recorded:
    • “Pursuant to section 71(2) of the Act, upon receipt of the recommendation of the Board, I issued to APID the Notice.
    • Accordingly, responses were received from Counsel Gabriel Suri for and on behalf of APID.
    • I have perused the response and make the following observations:
      • (a) ML 01/2014 was issued to APID;
      • (b) APID is responsible for compliance to the terms and conditions of the Mining Lease, Mining Agreement and the Act;
      • (c) Responses by APID have stated that a number of responsibilities under the Mining Lease, Mining Agreement and the Act were the responsibility of Bintan Mining (SI) Limited (“BMSI”).
    • The sole responsibility of compliance to Mining Lease, Mining Agreement and the Act remains with APID...”

The submission that the Minister failed to consider the response to the show cause letter was clearly contrary to the evidence and must be rejected.

36. I conclude that the Minister has not acted ultra vires his powers.
37. This is not the end of the matter however. Counsel for the Appellant has submitted that where a right to appeal is given to a court from a decision of and administrative authority in many cases that will entail a hearing de novo. Counsel referred to Ku-ring-gai Council v Bunnings Properties Pty Ltd [2019] NSWCA 28 and Builders Licencing Board v Sperway Constructions (Syd) Pty Ltd [1976]135 CLR 616 in support of this submission. He referred to a passage from the Sperway Construction case which concluded with:
    • “In all these cases there may be grounds for saying that an appeal calls for an exercise of the original jurisdiction or for a hearing de novo.”
38. Counsel for the Appellant submitted that this was one of the cases that should be heard de novo. I must bear in mind the restriction set out in section 4 of Schedule 3 of the Constitution which provides:
    • “4.-(1) No court of Solomon Islands shall be bound by any decision of a foreign court given on or after 7th July 1978. (2) Subject to the preceding provisions of this Schedule or any provision in that regard made by Parliament, the operation in Solomon Islands of the doctrine of judicial precedent shall be regulated by practice directions given by the Chief Justice.”
39. Without necessarily deciding whether I am required to consider the appeal de novo I find that the when considering the recommendation to the Minister by the Board, putting to one side those issues that are not relevant to a decision under section 71 and those where further information could be said to be sought, The recommendation to the Minister provided a clear basis on which the Minister was entitled to issue the show cause letter. Having done so and having considered the response to the show cause letter, again putting to one side any irrelevant material, the Minister was left with there being major breaches by the Appellant for which the Appellant placed the blame squarely on BMSI. The Minister was entitled to consider as he did that the responsibility lay with the Appellant as the holder of the Mining Licence and with whom there was a Mining Agreement. Amongst other failures that affected the community, the Appellant had not met the commitments for paying royalties for the previous 15 shipments, there was no longer an ongoing mining operation and mining had ceased from August 2020. In these circumstances the Minister was quite entitled to come to the view that he had no other cause available to him but to cancel the licence. So hearing the matter de novo on the material placed before me the decision to cancel the licence in the circumstances was the correct decision.
40. All the grounds raised on the appeal are rejected for the reasons set out in this judgment. The appeal is dismissed.

Orders

1. The Appeal is dismissed
2. The Appellant is to pay the costs of the First and Second Respondents, if not agreed to be assessed.

By the Court
Hon. Justice Howard Lawry
Puisne Judge