HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 483 of 2004

NATIONAL BANK OFFICERS’ ASSOCIATION

-V-

DENNIS JAMES McQUIRE

HIGH COURT OF SOLOMON ISLANDS
(Mwanesalua, J.)

Date of Hearing: 19th November 2004
Date of Judgment: 22nd April 2005

C. Ashley for the Applicant
A. Radclyffe for the Respondent

JUDGMENT

Mwanesalua, J: The Summons before the Court arise out of a Trust Deed “the Deed” dated 27th February 2002 between the Bank of Hawaii, International Inc. as Settlor and the Respondent, Dennis James McGuire as Trustee. The Trust constituted by the Deed is known as the NBSI Employees Trust. The Trust was established by the Settlor to enable the employees of the NBSI to share in the profits of the Trust and to provide retirement and death benefits for the employees of the NBSI.

The Originating Summons

The Applicant filed an originating summons against the Respondent on 22nd October 2004 for the determination of the following questions and the granting of consequential orders:

1. Whether the spirit and intent of the Trust Deed dated 27th February 2002 between the Bank of Hawaii, International Inc., as Settlor and the Respondent, Dennis James McGuire as Trustee, is that the Respondent should make provisions for a Trust for the benefit of the local employees of the National Bank of Solomon Islands for whom the Applicant, National Bank Officers’ Association represents and

2. If the answer to question 1 is “Yes”, whether upon the proper construction and interpretation of the provisions of the Trust Deed, the Trustee would be acting in contravention of the known principles of Trust Law and

3. If the answer to question 2 is “Yes”, whether the Applicant through its members as beneficiaries of the Trust can exercise their rights to choose a new trustee to replace the Respondent and

Where the answer to any or all of the above three questions is in the affirmative, the Applicant seeks the following orders:

A. An order that the Respondent, Dennis James McGuire shall forthwith cease to act as the Trustee of the NBSI Employees Trust; and

B. An order that the Applicant shall within seven (7) days appointment its own Trustee to represent the local employees of the National Bank of Solomon Islands; and

C. An order that the Respondent shall personally bear the costs of these proceedings.

The Respondent’s Summons

The first summons before the Court is a summons on behalf of the Respondent for the following Orders:-

1. That the Originating Summons filed on 22nd October 2004 be struck out as it does not comply with Order 58 of the High Court (Civil Procedure) Rules;

2. If the above Order is not granted that the Applicant provide security for costs in the sum of $7,500.00 or such other amount as the Court thinks fit on the grounds that the Applicant is impecunious; and

3. That a pre-trial directions be given in such terms as the Court thinks fit.

The Applicant’s Summons

The Second Summons before the Court is a summons on behalf of the Applicant for the following Orders:

1. That the Respondent, Dennis James MacGuire, having filed appearance to the Applicant’s Originating Summons has submitted himself to be heard on the said Originating Summons and as such has forfeited any right to apply to the Court to set–aside the originating summons; and

2. That the Registrar be directed to provide a hearing date within seven(7) days for the Applicant’s Notice of Appointment to hear the originating summons filed on 2nd November 2004; and

3. That any affidavit(s) of the Respondent personally be filed and served within two(2) days thereafter; and

4. That the Respondent shall bear the costs of this application.

Order 58, rr 1 and 2 and Order 69, rr 1, 2 and 3 of the High Court Rules.

Order 58, rr 1, and 2 state –

“1. Any person claiming to be interested under a deed, will or other written instrument, may apply by originating summons for the determination of any question of construction arising under the instrument and for a declaration of the rights of the persons interested.

2. Any person claiming any legal or equitable right in a case where the determination of the question whether he is entitled to the right depends upon a question of construction of any provision of a written law, may apply by originating summons for the determination of such question of construction, and for a declaration as to the right claimed.”

Order 69, rr 1, 2 and 3 state –

“1. Non-compliance with any of these Rules, or with any rule of practice for the time being in force, shall not render any proceedings void unless the Court shall so direct, but such proceedings may be set aside either wholly or in part as irregular, or amended, or otherwise dealt with in such manner and upon such terms as the Court shall think fit.

2. No application to set aside any proceeding for irregularity shall be allowed unless made within reasonable time, nor if the party applying has taken any fresh step after knowledge of the irregularity.

3. where an application is made to set aside proceedings for irregularity, the several objections intended to be insisted upon shall be stated in the summons or notice of motion”.

The Application to Strike Out

The Respondent sought to strike out the originating summons on the ground that it does not comply with Order 58 of the High Court (Civil Procedure) Rules 1964 (“the High Court Rules”). His objections to the Applicant’s action by way of the originating summons are as follows. First, that the second question on the originating summons is so vague in its terms that the Court cannot tell whether or not it comes within r 1 of Order 58. Second, the originating summons does not specify the parts of the Deed which offend “the known principles” of Trust Law or the principles of law which the Applicant claims have been contravened. Third, that the Applicant lack locus standi to bring the action against the Respondent. And fourth, that the Applicant should bring the action upon a Writ as it is seeking Orders and not declarations.

The Applicant’s Response

The Applicant submits that the Respondent’s summons to strike out the originating summons cannot succeed as he has failed to comply with Order 69, rule 3 of the High Court Rules.

Findings on the Application to Strike Out

It is clear that the second question in the Originating Summons is vague. It does not specify the “known principles of Trust Law” which the Respondent as Trustee would be acting in contravention of if the first question in the originating summons is answered in the affirmative. An originating summons is prepared in the same way as a writ. It must state the exact questions which the Applicant seeks the determination or direction of the Court. The Court will in general only determine the exact points raised, and will not determine anything not specifically raised unless the Applicant agrees (see Re: Carter (1893) 41 W.R. 140).

In this case, the Applicant is the Association of the employees of the National Bank of Solomon Islands (“the NBSI”). It was registered as a Trade Union on 16th March 1984. There is evidence in the affidavits filed on behalf of the Applicant in support of the originating summons that the NBSI recognizes the Applicant as the Association representing the interests of the employees of the NBSI. First, in Exhibit “SM2” annexed to the affidavit of Stanley Muliloa filed on 22nd October 2004, the Chairman of the NBSI Board of Directors, John Sullivan, said,

“In around July or August, Dennis McQuire, the Trustee of the NBSI Trust, will start discussions with the Staff Association and Management to establish the rules by which employee entitlements will be calculated. It is envisaged that each employee will have his or her own retirement benefit account, which will grow annually depending on how well the trust does. This means that the size of any annual profit sharing payment and your retirement benefit will depend very much on yourselves. You are all members of a team. If you work hard together you will make the bank profitable and in turn you will benefit”.

Second, in Exhibit “SM4” annexed to the same affidavit of Stanley Mulilioa filed on 22nd October 2004, the Respondent, said,

“Points to Note:-

1. The Rules of the trust will not be developed until after the present proposal is disposed of one way or the other (i.e. until after 31st March 2003).

2. The NBSI Employees Association representatives will work closely with myself as your trustee to develop those rules for the best benefit of all the employees”.

The NBSI Employees Trust (“The trust”) was established on 27th February 2002 by the Bank of Hawaii, International Inc. as Settler for the benefit of the employees of the NBSI. The Deed which established the Trust confers certain responsibilities upon the Applicant in its capacity as the Association representing the interests of the employees of the NBSI. Three of such responsibilities are as follows. First, that the Respondent first consults the Applicant before he establishes the Employee Retirement Fund Rules. The Applicant will be responsible for acquainting the employees about their rights and entitlements under those rules. Second, the Respondent first consults the Applicant before he establishes the Employee Profit Fund Rules. The Applicant will likewise be responsible for acquainting the employees about their rights and entitlements under those rules. And third, the Respondent first consults the Applicant before paying, applying or setting aside any part or parts of the net income of the Trust on any financial year to the Employee Retirement Fund and the Employee Profit Fund. My view is that the Applicant would have locus standi to bring representative action against the Respondent in its capacity as the “the Association” representing the interests of the employees of the NBSI in terms of the Deed in this case.

The employees of the NBSI are interested persons under the Deed. They stand to benefit from the Employee Profit Fund and the Employee Retirement Fund which are to be established by the Respondent under the Deed. First, they ask the Court to determine three questions of construction arising under the Deed. Second, they seek three consequential orders from the Court. They come to this court upon an originating summons under Order 58 of the High Rules. This order is in similar terms with order Liv.A of the old English Rules of the Supreme Court. Order Liv.A, rule 1 provides:

“In any Division of the High Court, any person claiming to be interested under a deed, will or other written instrument, may apply by originating summons for a determination of any question arising under the instrument, and for a declaration of the rights of the persons interested”.

In Lewis-v-Green [1905] 2 Ch 340 at p.343, Warrington, J. said,

“The order is confined to enabling the Court to decide question of construction and nothing else, and the order does not enable the court to grant any relief, it can only determine the question of construction, and declare the rights of the parties.” His Lordship went on to say this about the order at p. 334. ”It is only intended to enable the court to decide questions of construction where the decision of those questions, whichever way it may go, will settle the litigation between the parties. It is not intended that questions of construction which, if they are decided in one way only will settle the dispute between the parties, should come up for decision on an originating summons”.

In my view, the scope of Order 58 of the High Court Rules is the same as that in Order Liv.A of the old English Rules of the Supreme Court, as pointed out by Warrington, J. in Lewis -v- Green, as cited in this judgment. The result is that, Order 58 only vests power in the court to decide questions of construction which arise under the Deed (r.i), and to declare the rights of the parties. The order does not vest power in the court to grant relief. Thus, in this case, the Court will not be able to grant the Orders asked for by the originating summons. (Also see Silvania Products (Australia) Ltd-v-John William Storey [1990] SILR 41, at p.43, per Ward CJ). Whilst the Respondent has pointed out certain irregularities in the originating summons, he has failed to comply with r 3 of Order 69. He did not state the objections he insisted upon in his summons filed on 2nd November 2004.

It was contended on behalf of the Respondent that the originating summons be struck out as the Applicant is seeking orders rather than declarations. In reality, the Applicant is also seeking the determination of questions of construction under the Deed rather than merely seeking orders. The case of Jack Lagobe and 5 others-v-David Gina and the Attorney-General HC-CC 50 of 2003 is not applicable in this case. In that case, no question of construction under any written instrument or under any provision of a written law was placed before the Court. On the contrary, here, questions of construction under the Deed are placed before the Court. I think proceedings by way of an originating summons would be the appropriate procedure for determining questions of construction in this case and any points of law which may be raised for determination.

Findings on Applicant’s Summons

The main contention in the summons by the Applicant is that the Respondent is obliged to be heard on the originating summons as he has lost the right to have it set aside by entering an appearance to it. It is plain that the Applicant raises non-compliance under Rule 2 of Order 69 as a ground to oppose the Respondent’s application to strike out the originating summons. The originating summons was filed by the Applicant on 22nd October 2004. It was then served on the Respondent. The Respondent knew about the defects in the original summons prior to 29th October 2004. However, he entered appearance to it on 1st November 2004. The Respondent has clearly taken fresh step in the action by entering unconditional appearance in the full knowledge that the consequential orders sought in the originating summons are outside the scope of Order 58 of the High Court Rules. He has effectively waived the irregularities and put an end to the right to object to the jurisdiction of the Court. (See Silvania Products (Australia) Ltd-v-John William Storey [1990] SILR 41, 43-44, per Ward CJ and Kumagai Gumi Limited -v- Attorney-General HC-CC 92 of 2002 1, 2-3 per Palmer ACJ as he then was).

Decision

After dealing with the objections raised by the Respondent, I am satisfied that the originating summons can be cured by amendment under Order 69 r1 of the High Court Rules. The questions, declarations and principles of law to be determined by the Court are to be clearly raised in the amended originating summons. The application by the Respondent to strike out is according dismissed. The summons by the Applicant is allowed, but limited order 1 only.
Orders of the Court

1. Dismiss Summons by the Respondent to strike out.

2. Allow Order 1 of the Summons by the Applicant.

3. I direct that an Amended Original Summons be filed and served within seven (7) days.

4. I direct that the Respondent file affidavit(s) within seven (7) days thereafter.

5. I direct that the Registrar fix dates for hearing within seven (7) days thereafter.

6. I direct that the Applicant provide Security for costs in the sum of $7,000.00 before the hearing.

7. Each party is to bear own costs.

F. Mwanesalua
Puisne Judge