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Greenland Enterprises Ltd v Kokoro [2025] SBHC 55; HCSI-CC 493 of 2024 (29 April 2025)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 493 of 2024

BETWEEN:

GREENLAND ENTERPRISES LIMITED
Claimant

AND:

JOHN KOKORO, JERRY PAKIVAI, JEFFREY STEVEN SERO AND ALOSI JONAH
(Purporting to represent Volaikana tribe of South Choiseul, Choiseul Province)
First Defendants

AND:

NEW VENTURE LIMITED
Second Defendant

AND:

FOO KUEK KIONG
Third Defendant

AND:

EVERWIND LIMITED
Fourth Defendant

Date of Hearing: 2 April 2025
Date of Extempore Ruling: 29 April 2025

Mr. L. Chite for the Claimant
Mr J Iroga for the First Defendants
Mr S Kwaiga for the Second and Fourth Defendants

RULING

Aulanga; PJ

1. There are two contested applications before the Court. The first, by the Claimant, seeking interim restraining orders. The second, by the First Defendants, seeking the determination of preliminary legal issues, particularly the legality and enforceability of a Memorandum of Agreement dated 29 March 2013 (“2013 MOA”) and a Supplementary Agreement dated 11 January 2023 (“2023 SA”), both entered into between the Claimant and the First Defendants. The First Defendants further seek dismissal of the substantive claim, and as consequential relief, orders to restrain the Claimant and its agents from interfering in the First Defendants' dealings with the Second to Fourth Defendants, with costs.
2. The Second Defendant is a private limited liability company that engages in the business of logging in the forestry sector. The Third Defendant is the sole director and shareholder of the Second Defendant. The Fourth Defendant is a private limited liability company that engages in the business of logging in the forestry sector.

Background Facts

3. The Claimant commenced proceedings under Category B, alleging breach of the 2013 MOA and 2023 SA entered into with the First Defendants, led by Chief Kokoro and Hence Vaekesa of the Volaikana tribe.
4. Under the 2013 MOA, the Claimant was permitted to conduct logging operations on Robroy Island and agreed to provide financial support to the tribe, including litigation expenses. The First Defendants undertook to sign a Standard Logging Agreement with the Claimant upon approval of timber rights by the Choiseul Provincial Executive (“CPE”). The 2013 MOA also included a clause prohibiting the First Defendants from entering into any agreements with third parties that would frustrate the MOA, with penalties including reimbursement of expenses and SBD5 million in damages.
5. The Claimant’s application for timber rights over Robroy Island was rejected by the CPE, leading to a series of court proceedings. The customary ownership of the Robroy Islands was also litigated. The Customary Land Appeal Court, by order of the Court of Appeal in CAC 22/2022, settled the ownership dispute. The issue of timber rights remains pending before the Court of Appeal in CAC 2/2024.
6. Despite the ongoing legal proceedings, certain members of the First Defendants entered into agreements with the Second and Third Defendants in 2022. In response, the Claimant executed the 2023 SA to reinforce the obligations under the 2013 MOA.
7. Clauses 5.5 to 5.7 of the 2023 SA prohibit the First Defendants from negotiating or contracting with other companies, including New Venture Ltd (Second Defendant), and require the revocation of any previous dealings with the Second Defendant. Clause 7.3 imposes SBD50 million as compensation for breach of the agreement. Clause 7.6 authorizes the Claimant to sue any tribal trustee who breaches the 2013 MOA or the 2023 SA.
8. While the timber rights issue remains before the Court of Appeal, the First Defendants have entered into new agreements in support of the Fourth Defendant’s timber rights application over the Robroy Island. This, the Claimant alleges constitutes a breach of both agreements. As a result, the Claimant seeks interim injunctive relief.

Preliminary Questions of law

9. The Court first considers the First Defendants’ application under Rule 12.11 of the Solomon Islands Court (Civil Procedure) Rules 2007 (“CPR 2007”) to determine the legality and enforceability of the 2013 MOA and 2023 SA. The First Defendants assert the agreements are void as they relate to unlawful moneylending. Should the application succeed, they seek dismissal of the claim and restraining orders against the Claimant.
10. The First Defendants have abandoned the argument concerning section 26 (1) of the Consumer Protection Act.
11. In submissions, counsel for the First Defendants focuses on the alleged unconscionability, ambiguity, and inequality in bargaining power, contending that certain clauses (notably 5.1, 7.1–7.3 of the 2013 MOA) are oppressive and promote illegal and unlicensed moneylending. This is unenforceable on the ground of public policy.
12. With respect to the 2023 SA, clauses 5.5 to 5.7 are said to impose indefinite and unreasonable restrictions, rendering the agreement void. The SBD50 million compensation clause is cited as further evidence of inequality and exploitation, reflecting a significant inequality in bargaining power between the parties that, as perceived by the First Defendants, to have rendered the agreement unenforceable.
13. The First Defendants argue that these issues are legal questions and should be resolved preliminarily in their favour before trial.
14. The Second to Fourth Defendants did not make any submissions on the application since they are not privy to the agreements. However, they have asked the Court to consider the proceedings should be timed barred and that the right course is for the Claimant to take is to make an objection against the grant of the timber rights during the timber rights public hearing pursuant to the Forests Resources and Timber Utilisation Act.
15. The Claimant on the other hand argues that the First Defendants’ contentions raise factual disputes that are inappropriate for preliminary determination under Rule 12.11 of the CPR 2007, particularly since they were not pleaded in defence. Hence, the First Defendants are not allowed to raise them at this stage since they are controversial or disputed matters that ought to be tested and considered at the trial. It is the Claimant’s case that the application is incompetent and must be dismissed.

Court’s determination

16. For this application, the starting point is to determine is whether or not the matters raised are questions of law and whether they are pleaded in the defence so that to give the Claimant a fair notice of the issues that are to be raised at this hearing.
17. In Black Law’s Dictionary (11^th Ed), a question of law is a question that requires the interpretation or application of legal principles or statutes, rather than the determination of facts. A question that requires factual support cannot be considered a question of law.
18. Rule 12.11 of the CPR 2007 states:
    • “The court may hear legal argument on preliminary issues of fact or law between the parties if it appears likely that, if the issues are resolved, the proceeding or part of the proceeding will be resolved without a trial, or the costs of the proceedings or the issues in dispute are likely to be substantially reduced.”
19. Rule 12.12 of the CPR 2007 states:
    • “If the parties have agreed on the facts but there remains a question of law in dispute, the court may hear argument from the parties about the question of law.”
20. The entire argument of the First Defendants on the 2013 MOA and the 2023 SA boils down to the purported illegality and unenforceability of the agreements. They are, in the views of the First Defendants, unconscionable and cannot be enforced.
21. In my view, the issue of illegality, unconscionability or unenforceability of an agreement, is a substantive defence. Hence, it must be pleaded in the statement of defence.
22. I have looked at the First Defendants’ defence and unfortunately, they did not plead the illegality, unconscionability or unenforceability of the two agreements in the statement of their defence. It is trite law in our jurisdiction that all material and legal defences must be pleaded upfront. This is to give the opposing party, herein the Claimant, a fair notice of the issues to be addressed and to ensure procedural fairness. The failure to do so will render the Court to disallow the First Defendants’ legal arguments brought under Rule 12.11 of the CPR 2007.
23. Another important matter is the issue pertaining the illegality, unconscionability or unenforceability of the two agreements, herein, the 2013 MOA and the 2023 SA. Any allegation that raises the issue that the agreements are illegal, unconscionable or unfair typically requires factual support. That is, whether there is an inequality in bargaining power or the contractual terms are unfair to one of the parties requires the consideration of facts before a decision on their legality can be made. These, in my view, are questions of mixed fact and law. They are not purely questions or matters of law as perceived by the First Defendants. Therefore, it is settled law in this jurisdiction that questions of mixed fact and law may not be appropriate to be considered at a preliminary hearing stage as held in Attorney General v Ji Hui Chan [2017] SBCA 5 and followed in Vunagi v Isabel Customary Land Appeal Court [2024] SBCA 31, where the Court of Appeal stated (at paragraph 31):
    • “This can be a useful mechanism for early resolution of proceedings without incurring the financial and other costs of a full trial. However, the question for determination must be carefully framed and recorded. If it is a question of law, it may not be possible for it to be determined in advance of the determination of relevant facts. If it is a mixed question of fact and law, it may not be possible for it to be determined as a preliminary question.” (underlined mine).
24. It is my view that unless the First Defendants amend their defence to include all these matters and more importantly, convinces this Court that the matters raised herein do not require factual support, it is not opened for the First Defendants to raise them at this stage. For the reasons held, the application must be refused. The questions are considered in favour of the Claimant. Consequently, these matters are reserved and ought to be considered at the trial.

Application for Interim Injunctive Orders

25. This application can be easily decided. The Claimant brought the application pursuant to Rules 7.3 – 7.5 and 7.38 of the CPR 2007 as supported by a sworn statement of William Yeh, as one of the Directors of the Claimant.
26. The Claimant relies on clause 7.6 of the 2023 SA as the basis to apply for the interim injunctive orders, besides the need to maintain the status quo of the case while the substantive matter pertaining the purported breach of the 2013 MOA and 2023 SA is still before the Court.
27. All the Defendants opposed the application and submit that in light of the purported illegality of the 2013 MOA and the 2023 SA, there is no apparent prima facie case, a ground to refuse the application.
28. Although there is reliance on clause 7.6, the application herein must be determined according to the principles in American Cyanamid Co v Ethicon Ltd [1975] AC 395. They are; (a) there is a serious question to be tried; (b) damages would not be an adequate remedy; (c) the injunction must satisfy the balance of convenience; and (d) the applicant provides undertaking as to damages. It must be understood that the granting of the orders is discretionary on the Court and must be done on a proper legal basis.
29. From the materials, I find there is a serious or triable issue before the Court. That is, the issue of the purported breach of the 2013 MOA and the 2023 SA entered into between the Claimant and the First Defendants and their Volaikana tribe, and damage arising from the breach that need to be investigated at trial. This is a genuine dispute that deserves to be heard at trial. It is clear from clause 7.6 of the 2023 SA that the parties have acknowledged the seriousness of the potential breach of the agreement that an injunction lawsuit, in the circumstances of this case, is anticipated. The Claimant therefore satisfies the first limb.
30. In terms of damages would not be an adequate remedy, it is my view that damages would be an inadequate remedy considering that the First Defendants may be unlikely to pay the monetary amount of SBD50 million as compensation to the Claimant. If they are not restrained and are allowed to venture into new logging arrangements with the other Defendants or any other third party for that matter while the proceedings are still before the Court, that will make the damages difficult to quantify. In any event, the financial loses will be minimised if the First Defendants are restrained from undertaking further dealings with the other Defendants or any third party if they are unsuccessful in the matter. Viewed in that context, this aspect of case also favours the granting of the interim orders, which otherwise would ultimately render the reliefs in the claim redundant. The materials relied on by the Claimant have satisfied this second limb.
31. For the consideration that the injunction must satisfy the balance of convenience, the paramount question to ask is whether it will do more good than harm to all the Defendants if the orders are not granted. In other words, will the harm to the Claimant is greater than the harm to be suffered by the Defendants if the orders are not granted. In my view, the balance of convenience favours the granting of the orders. At this point of time, the balance of convenience also requires to maintain the status quo of the case until the issues in the claim are finally determined.
32. I note the Claimant has filed the usual undertaking for damages in the event that the decision goes against it at the trial, which also favours its case for restraining orders to be issued.
33. For all these reasons, the application for the interim restraining orders is granted.

Orders of the Court

1. The application by the First Defendants for determination of preliminary questions of law pursuant to Rule 12.11 of the Solomon Islands Courts (Civil Procedure) Rules 2007 is refused.
2. Consequently, the determination of preliminary questions of law is answered in favour of the Claimant.
3. The application by the Claimant for interim restraining orders is granted in that the First Defendants, by themselves, their families, relatives, agents, and/or invitees are restrained from:
   • (a) negotiating, signing, facilitating or entering into any Agreement or understanding with any person or company including the Fourth Respondent by inviting them to carry out logging in Robroy Island situated in South Choiseul, Choiseul Province; or
   • (b) in the event that any Agreement or Understanding referred to above has been executed in a manner inconsistent with the terms and obligations stipulated in the Memorandum of Agreement dated 29^th March 2013 and its Supplementary Agreement dated 11^th January 2023, the First Defendants including any other party shall immediately refrain from undertaking any further actions or steps to implement, enforce, or give effect to such Agreement or Undertaking; or
   • (c) attending, presenting, or making any appearance, whether directly or indirectly before the Choiseul Provincial Executive to advocate for timber rights in support of the Fourth Defendants application at any upcoming timber rights hearing, where such actions would be inconsistent with the terms and obligations set forth in the Agreements executed with the Claimant; or
   • (d) undertaking any action that is inconsistent with or contrary to the terms and obligations set forth in the Memorandum of Agreement executed with the Claimant on 29^th March 2013, and the Supplementary Agreement dated 11^th January 2023.
   • (e) All the above orders shall continue until further orders of the Court.
4. Costs of these two applications shall be paid by all the Defendants on a standard basis.

THE COURT
Hon. Justice Augustine S. Aulanga
PUISNE JUDGE