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Eelguin Ltd v Elite Enterprises (SI) Ltd [2025] SBHC 12; HCSI-CC 180 of 2022 (21 January 2025)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 88 of 2022

BETWEEN

EELGUIN LIMITED
Claimant

AND

ELITE ENTERPRISES (SI) LIMITED
Defendant

Date of Hearing: 30 August 2024
Date of Ruling: 21 January 2025

For the Claimant: Etomea B
For the Defendant/ Applicant: 21 January 2025

RULING ON ASSESSMENT OF DAMAGES

Kouhota PJ

On 3^rd May 2024, the Court found that the Defendant’s delay was intentional and contumelious and a disobedience of the lawful orders of the Court, the Court therefore struck out the Defendant’s defence that was filed out of time and entered default judgement for the Claimant in the terms of the claim.

Pursuant to an application by the Defendant, the Court order assessment of damages to be conducted on 2^nd August 2024 and direct parties to file written submission. The parties have complied and filed their submissions.

Since the Court had already entered judgment in default against the Defendant and the default judgment was not set aside or appealed, liability is no longer an issue. This assessment hearing is only for the Court to consider a fair amount to be awarded to the Claimant.

The Claimant’s claim is for $5,272,000-00, based on the following calculations;

(a) 65,900 m3 total logs felled and exported) x 8% regulated percent volume 5,272 ( licensee entitlement to mill;
(b) 5, 272 m3 x SBD $1000.00 per cubic based on average of all logs exported. The Claimant in support of his claim relied on the sworn statements of Makiva Hiele filed on 24^th May 2022 and 22^nd July 2024 which were tendered as evidence at this hearing. Mr Hiele in his sworn statement says that he had raised his concern about the issue of 8% logs for milling with the managing director of the defendant Mr Philp Hu but there was no positive response from Mr Hu. Mr Hiele said if there was a positive response, a supplementary agreement will be made to transport the logs to a nearby licence mill to mill because the licensee has no milling licence.

The Defendant relied on the sworn statements of Mr Edwin Cacas in support of the assessment of damages. Mr Cacas filed two sworn statements, one on 17/7/2024 and one on 28/8/2024. In his sworn statement of 17/7/2024, Mr Cacas displayed records of all royalties paid to the Claimant and landowners. I do not need to go through them in details as all the exhibits of the payments are on the record and not disputed. Mr Cacas states that no 8% of the quota were set aside and all the logs were exported, therefore 8% was part of SBD$ 8,159,322.96 royalties which was paid to the Claimant and the land owners. He states that the 8% does not include vitex, rose wood, or kwaila as they are restricted species. Mr Cacas says that since the Defendant did not set aside 8% of the exported volume then it means all the logs were exported and subject to royalty payment under the TMA, which means the Claimant has received a share of the proceeds as shown in exhibit EC 2-5.

The issues before the Court are;

1. Is the Claimant entitled to the value of 8% of the proceeds of logs exported by the Defendant’
2. Whether the Claimant was entitled to 8% of the quota of exportable logs in absence of any milling establishment by it,
3. Whether the Claimant have been paid with royalties from logging operations,
4. Whether the Claimant has been able to mitigate its losses by taking steps necessary to ensure logs under 8% were set aside.

I had considered the submissions of counsels made in this hearing and will now proceed to consider the agreed issues to be determine by the Court. I will proceed to answers agreed issue number 3 first. Concerning issue number 3, there is evidence that the Claimant had been paid royalties as per the terms of the Technology Management Agreement between the landowners and the parties to this proceeding.

With regard to issue number 4, there is evidence that the Claimant had approach the Defendant about the 8% of logs that should be milled as stipulated under the Forest and Timber utilisation (Felling Licences) Amendment Regulation 10 (zg) 2017 Regulation. In that respect I am satisfied that the Claimant had taken steps to mitigate its losses. With regard to Regulation 10 (zg) counsel for the Defendant, submit that the regulation is discretionary and that the milling requirement must be expressly included in the licence to be enforceable. Regulation 10 (zg) reads “a licence must;

1. If the licensee also holds a milling licence under section 18 of the Act, mill;
   • (A) 8 % of the total volume of logs felled each month; and
   • (B) 8% of the total volume of logs felled annually;
   • (C) 8% of total volume of logs felled during the period of the licence; and

(ii) If the licensee does not also hold a milling licence, supply to a licenced mill for milling;

• (A) 8% of the total volume of logs felled each month; and
• (B) 8% of the total volume of logs felled annually and
• (C) 8% of the total volume of logs felled during the period of the licence”

I had consider the wording of Regulation 10 (zg) and I do not agree with the submission of counsel for the Defendant, that the Regulation 10 (zg) is discretionary. My reading of the regulation is; the regulation is mandatory and therefore the milling requirement does not have to be expressly included in the licence to be enforceable. The milling of 8% volume of logs felled is therefore a mandatory requirement whether the licensee has a milling licence or not.

Issues number 1 and 2 will be considered together as they about the same benefit. I am of the view that the Clamant is entitled benefits raised in agreed issue number 1 and agreed issue number 2. While the Defendant paid the Claimant royalties, the royalties is not the value of the 8% logs that should be set aside for milling but were instead exported by the Defendant. I consider the correct amount the Defendant should pay the Claimant should be values of the 8% that should be milled but were instead exported by the Defendant. I agree with the calculation of 8% made by the Defendant, which is SBD $4,289,319.42 and not SBD $5,272,000.00 as claimed by the Claimant. While the Defendant have stated it had incurred expenses in exporting the 8% volume of log that was supposed to be milled, the Defendant does provide any evidence of any specific expenses that it had incurred in the process.

After considering the submissions of counsel and materials before the Court, I consider the fair amount that the Defendant should pay the Claimant, is the values of the logs that should be milled but exported which is $4,289,319.42 minus 8% of the royalties, which paid to the Claimant and landowners. The total royalty paid to the Claimant and landowners is SBD$ 8,159,322.96 x 8%= SBD$ 652,745.83, The value of logs that should be milled but exported which is SBD 4,289,319.42 minus 8% of the royalties which is SBD $652,745.83=SBD $3,636,573.59. I consider that should be the fair amount the Defendant to pay the Claimant. I so order with cost for the Claimant.

The Court also order that any previous order of this Court made in this matter that is subsisting to be discharged and dismissed forthwith.

Orders

1. Defendant to pay the Claimant SBD $3,636,573.59
2. All existing orders made earlier in this matter are discharged and dismissed forthwith.
3. Cost for the Claimant to be taxed if not agreed.

THE COURT
Justice Emmanuel Kouhota
Puisne Judge