IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction
(Maina J)

Civil Case No. 386 of 2012

BETWEEN:

ERICO (SOLOMON) LTD
claimants

AND:

MIDDLE INVESTMENT PTY LTD
Defendant

Date of Ruling: 10th April 2015

Ms. Ramo L for the Claimants
Mr. Hapa C for the Defendant

RULING

Maina J:

Introduction

This is an application under Rule 12.11 and 12.12 of Civil Procedure Rule 2007. The Counsel for the Defendant raised a preliminary issue relates to law which requires ruling on that issue before proceed with the trial proper.

Defendant contended that the agreement subject to this case is inadmissible because the required penalty for the stamp duty under the Stamp Duty Act (Cap 126) was not paid by the Claimant. He seeks that the agreement be excluded as evidence because of this legal requirement.

I made my ex tempore ruling and exclude the agreement as evidence, would provide the reasons of the ruling and I now do so.

Brief Background

An agreement prepared by the Defendant to engage the Claimant as contractor to fell and extract merchantable timber logs from Timber Licence No. A10147. The Claimant signed the agreement on 1st August 2010.

The stamp duty of the agreement of $50.00 was paid on 28th April 2011. And there are arrears but no evidence to show that the arrears were paid.
The Claimant's claim was filed in Court on 17th October 2012 after the agreement was stamped with the payment of the duty.

The Issues

Whether the required fees and penalties, if any was paid by the parties to the collector of Stamp Duty for the Agreement signed on 1st August 2010.

The Claimant signed the agreement on 1st August 2010 and the stamp duty of $50.00 was paid on 28th April 2011. It is after about 9 months before the fees was paid.

The Law

Section 3, 9 and 20 of the Stamp Duties Act [Cap. 126] are in the following terms;

3. "(1) Subject to the exemptions contained in the Schedule hereto, there shall be raised, collected and paid to a Collector upon and in respect of the several documents specified in the said Schedule, the several duties in such said duties being denoted by affixing Solomon Islands adhesive stamps to, or impressing a die approved by the Chief Collector of Stamp Duties upon, the said documents.

(2) It shall be lawful for the Minister by order from time to time to add to, alter or amend the duties payable under this Act and such addition, alteration or amendment shall be deemed to be embodied in this Act.

(3) It shall be lawful for the Minister to exempt any document or class or description of documents from the duties payable under this Act and such exemption shall be deemed to be embodied in this Act.

9. No document executed in Solomon Islands or relating, wheresoever executed, to any property situated in Solomon Islands or to any matter or thing done or to be done in Solomon Islands, shall, except in criminal proceedings, and in civil proceedings by a Collector to recover any duty or penalty under this Act, be pleaded or given in evidence or admitted to be good, useful or available in law or equity unless it is duly stamped in accordance with the law in force at the time when it was first executed".

20. If any document, required by this Act to be stamped, is not duly stamped within two months of the execution thereof, it shall only be stamped upon payment to a Collector of the following penalty, that is to say a penalty of ten per centum or ten dollars, whichever is greater if stamped within two months of the execution thereof, or if not stamped within two months of the execution thereof, a penalty of twenty-five per centum of the duty payable or ten dollars whichever is greater for each period of three months that the duty remains unpaid after the expiration of the said period of three month".

The starting point is Section 3 of the Act, which requires the documents as this agreement to be stamped by affixing Solomon Islands adhesive stamps to, or impressing a die approved by the Chief Collector of Stamp Duties on the document. And by Section 9 of the Act if agreement is not stamped it is inadmissible in Court.

In order for the process of the Stamp Duty on the document to be complete, it includes paying the appropriate fees and penalties, if any or and the method of paying penalty is in Section 20 of the Act. 

There is no evidence to show that the penalty for the period from the signing of the agreement until the fee was paid on 28th April 2011 was also paid to the collector. And the Counsel for the Claimant was not able to explain but seemed to agree that no penalty was paid when she said it is a matter on part of the collector and her clients.

The Section 3, 9 and 20 of the Act must be complied with as they are mandatory necessities. Stamp duty and penalty, if any must be settled before commencement of proceeding as it is a statutory obligation.

In the Court of Appeal case of Austree Enterprises PTY Ltd. Civil Appeal No. 7 of 2012 the Court said that where proceeding in Solomon Islands are founded on an instrument it must be stamped with the appropriate duty before commencement of such proceeding.

The document must be stamp duty must be paid within two months, if not stamped with duty thereafter it shall only be stamped inclusive with the payment of fees and penalties.

For the Claimant situation while the appropriate stamp duty for the agreement he signed on 1st August 2010 was paid on 1st April 2011, the penalty for the 9 months is still outstanding.

The Claimant failed to pay appropriate penalties under Section 20 of the Stamp Duties Act and so the Agreement which he signed on 1st August 2010 cannot be pleaded or is inadmissible as evidence in this case.

ORDERS

1.	The penalty for not stamping the document is not paid or still outstanding.

2.	The Agreement signed by the Claimant on 1st April 2010 or subject to the proceeding of claim filed in Court on 17th October 2012 is inadmissible as evidence in the case.

3.	Cost in the cause.

The Court

………………………………………………………..
Justice Leonard R Maina
Puisne Judge