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Kulabule v Eagon Resources Development Co (SI) Ltd [1994] SBHC 17; HC-CC 285 of 1993 (6 July 1994)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 285 of 1993

JUDAH KULABULE

-V-

EAGON RESOURCES DEVELOPMENT. CO. (SI) LTD

High Court of Solomon Islands
(Muria, CJ.)

Hearing: 20 May 1994
Judgement: 6 July 1994

A. Radclyffe for the Plaintiff
J. Sullivan for the Defendant

MURIA, CJ: The plaintiff by his summons filed on 25 April 1994 seeks directions from the Court and an interim injunction against the defendant.

On 20 May 1994 during the hearing of the summons, Mr. Radclyffe of Counsel for the plaintiff did not pursue his client's claim for an interim injunction. Counsel, however, sought that the three co-trustees of The Choiseul Bay Association Trust Board ("the Trust Board") be joined in as defendants in this action.

In the alternative, Mr. Radclyffe sought that, if the co-trustees are not joined in this action, then a separate action be commenced against them. In addition Counsel also sought an order to have an accurate list of the members of the Association produced and a ballot of the members to determine who supports and who does not support the defendant's logging operation.

On 11 September 1993 three of the four trustees of the Association signed a logging agreement with the defendant to log part of the Association's land. The other trustee who is the plaintiff himself, did not sign the agreement.

It is conceded by Mr. Radclyffe that the agreement appeared to be legally binding between the Association and the defendant. It is for this reason that the claim for interim injunction was not pursued. It is still however, the plaintiff's case that the majority of the members of the Association opposed the defendant's logging operation.

In the light of the concession made by Mr. Radclyffe, Counsel for the defendant, Mr. Sullivan, asked the Court to dismiss, not only this application but the whole action. The action is for injunction, trespass and damages brought by the plaintiff in his own name whereas the Trust Board of the Association is the owner of the land over which the three trustees entered into an agreement with the defendant for logging operation. As such Counsel argued that the plaintiff has no standing to bring the action in this case.

In support of his argument, Mr. Sullivan cited the well-known case of Foss -v- Harbottle [1843] EngR 478; (1843) 67 ER 189. That case stands for the principle that where a wrong is done to a company or there is an irregularity in its internal management which is capable of confirmation by a simple majority of the members an action will not lie at the suit of a minority of members. The company alone may sue. This principle has now become known as the rule in Foss -v- Harbottle.

The Association in this case had been registered under the Charitable Trusts Act (Cap.115). Upon registration the trustees of the Association became a body cooperate and known as The Choiseul Bay Association Trust Board Incorporated.

The powers of the board are set out in section 8 of the Act which include the power to sue and be sued in its corporate name. Section 9 vests all property of the Association in the board of trustees and in this case the land in question, Parcel Nos. 015-002-2 and 015-002-3 containing some 2430.3 hectares, is registered in the name of the Trust Board. Section 10 confers on the Board of Trustees to enter into contracts under its common seal, attested to by the trustees or any two of the trustees. Section 11 then provides that all acts or deeds done by a trustee acting bona fide is valid.

The Board of Trustees in this case, acting in accordance with resolution of the Extra-ordinary General Meeting of the Association on 7 September 1993, entered into an agreement with the defendant on 11 September 1993 for the defendant to carry out its logging operation in the land in question. That agreement was attested to by three of the trustees with the common seal of the Trust Board affixed to it.

The main complaint of the plaintiff is that he opposed logging in the area concerned and because of that he did not take part in the signing of the agreement between the trustees of the Association and the defendant. He now claims in the main action that the agreement entered into between three of his co-trustees and defendant is invalid and that the defendant has trespassed onto the land in question. The claim is resisted by the defendant, relying of course, on the validity of the agreement it entered into with the Board of Trustees.

Accepting as I do, that the majority of the board of trustees had entered into an agreement (which has been rightly conceded by counsel as valid) with the defendant and in consequence thereof, the defendant carried out logging operation on the land in question, what interest has the plaintiff to protect by suing the defendant for trespass in this case? He is suing in his own name and claiming damages for trespass onto somebody else's (Trust Board) land. Why should the defendant be troubled by litigation over its lawful right to operate in the land owned by the Board of Trustees when that landowner has no intention of resisting the defendants operation? Why should the plaintiff be entitled to sue for a claim over the land owned by the Trust Board by suing the defendant for injunction, trespass and damages when the Trust Board who is the person mostly closely affected is not even a party to the proceedings? I am at a loss to see why the plaintiff should come to this court and seek remedies over a land in which he has no propriety interest. But even if, for argument's sake, the plaintiff has an indirect concern over the matter, I still do not see how this indirect concern can be said to amount to a substantial interest so as to justify the plaintiff in coming to this court claiming relief against the defendant.

In effect what the plaintiff is saying is that the Trust Board has no right to do what it did, that is, to allow the defendant to enter onto the land in Parcel Nos. 015-002-2 and 015-002-3 to carry out its logging operation. It is in reality an action seeking the court to declare the legality of actions of the Trust Board. That is the effect of paragraph 5 of the plaintiff's Statement of Claim. For that, the plaintiff would have to show that he has standing to challenge the Trust Board's action in entering into the agreement with the defendant.

In Offin -v- Rochford Rural Council [1905] UKLawRpCh 140; [1906] 1 Ch. 342 the defendants pulled down a fence erected by the plaintiff around the piece of land in question. The plaintiff issued a writ against the defendants claiming a declaration that the land belonged to him and an injunction to restrain them from trespassing on it. The defendant claimed that the piece of land belonged to them as forming part of the highway. The court refused to grant the declaration and found for the defendants. At page 358, Warrington J said:

"I think in order to justify an action there must still, as before that rule, be some cause of action, and all that the rule means is, that if there is a cause of action the plaintiff may ask, and the court may award, merely a declaration asserting his right without awarding damages or an injunction or any other form of specific relief. But in order to justify an action there must be still, as before the rule, a cause of action."

The rule referred to by Warrington J in that case was Order 25 r 5 of the old Rules of the Supreme Court of England which is in the same term as Order 27 r5 of our High Court (Civil Procedure) Rules, 1964. It will be observed that in Offin's case the defendants established their claim over the land and as such the plaintiff had no cause of action and therefore he could not invoke the Court's power under Ord. 25 r 5 (Ord. 27 r 5 of our Rules) for a merely declaratory judgement or injunction or any other form of specific relief.

The case of Offin is referred to Guaranty Trust Company of New York -v- Hannay & Co [1915] 2 KB 536 where at page 551 Buckley LJ said:

"In Offin -v- Rochford Rural Council [1905] UKLawRpCh 140; [1906] 1 Ch 342 the plaintiff failed in obtaining a declaration because, as the learned judge held, he had no cause of action. Whether he rightly so held or not I do not stay to inquire. If he had no cause of action, then the learned judge's words at p.358 in my opinion are right."

Speaking of the rule (Ord. 25 r 5) Pickford LJ said at page 562:

"I think therefore that the effect of the rule is to give a general power to make a declaration whether there be a cause of action or not, and at the instance of any party who is interested in the subject-matter of the declaration. It does not extend to enable any stranger to the transaction to go and ask the Court to express its opinion in order to help him in other transactions."

Bankes LJ, again speaking of the rule said at p.572:

"It is essential, however, that a person who seeks to take advantage of the rule must be claiming relief. What is meant by this word relief? When once it is established, as I think it is established, that relief is not confined to relief in respect of a cause of action it seems to follow that the word itself must be given its fullest meaning. There is, however, one limitation which must always be attached to it, that is to say, the relief claimed must be something which it would not be unlawful or unconstitutional or inequitable for the Court to grant or contrary to the accepted principles upon which the Court exercises its jurisdiction."

The dicta of Pickford and Bankes LJJ had been applied in Thorne Rural District Council -v- Bunting [1972] 1 All E R 439. In that case the defendant had a house in a rural district in Yorkshire and had various registered claims under the Commons Registration Act 1965 in respect of properties within the whole of the rural district. The plaintiff council who owned only a road in the area brought an action claiming four declarations that the defendant had no such rights and four injunctions against the defendant. The main complaint of the plaintiff council was that the defendant's registered claims within the area of the rural district had discouraged prospective developers from developing land in the rural district. A preliminary point of law was taken to determine whether the council had any locus standi as a plaintiff in the action. The court held that the Council had no substantial interest to justify claiming the declarations or injunctions except in respect of the road and as such it had no locus standi to sue the defendant for the declarations.

Counsel for the plaintiff council sought to rely on the various matters to show that the plaintiff council had sufficient interest to support its claim for the declarations sought. These were: the council was concerned financially for the rateable value of the properties in the area that might be affected; the council had delegated powers under the planning legislation and as such it was affected; and the Commons Registration Act 1965 did not restrict the right to object to claims to rights of common. Counsel for the plaintiff council subsumed his three argument under the general notion that the plaintiff council had an interest in the rural district and that it was for its good government. Megarry J (as the then was) then went on to conclude that what the plaintiff council was seeking was not 'relief' in any real sense of the word, that affected the council and further that the plaintiff council's complaint was too indirect and insubstantial to justify proceedings for a declaration relating to land in which they had no proprietary interest. The plaintiff council therefore had no locus standi to sue for the declarations sought.

Megarry J (as he then was) after referring to the various matters put in three ways by counsel for the plaintiff Council as constituting a sufficient interest for the plaintiff Council to support its claims for the declarations, said at page 442 - 443:

"It seems to me that these are somewhat shadowy interests to support the claim made for the declarations: and it was not suggested that the claims for injunctions could be in any better case. What is here in question is a series of declarations relating to the existence of rights over land owned by others..

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For myself, I am at loss to see why a local authority should be entitled to litigate a claim by A to rights of common over B's land by suing A for a declaration when B, who is the person most closely affected, is not even a party to the proceedings. If the local authority loses, why should B have his land encumbered by the consequent strengthening or apparent strengthening of an adverse claim over it which he might well have been able to defeat had he taken part in the proceedings? If the local authority wins, why should B have any consequent improvement of the value of his land effected at the ratepayers' expense? Why should A be vexed by litigation over his claim if B, the landowner, has no intention of resisting it, just because the local authority decides that it wishes to litigate the point? Further, even if the local authority is indirectly concerned with the existence or otherwise of the rights of common, and the matter is one of the consequent financial interest to that authority, I do not see that this indirect concern amounts to such a substantial interest as to justify the authority in making a claim for a declaration."

Although the cases cited dealt with claims of declarations and injunctions, it will be observed that the rights of the plaintiffs to claim those reliefs had been decided on the basis of whether the plaintiffs had a cause of action or not. In the case of Offin (supra), the plaintiff issued a writ and filed Statement of Claim alleging various matters against the defendants and then claimed (1) a declaration that the land was his and (2) an injunction against the defendants from interfering with the land and from trespassing on the land. The Court found that the plaintiff had no cause of action, refused to grant the plaintiff's claims and dismissed the action.

The authorities referred to clearly point out that to claim relief from the court, the plaintiff or applicant must show that he has a cause of action. That is the basis upon which he can say that he has sufficient interest in the relief he is seeking and thereby giving him locus standi to sue for it.

Accordingly, in my judgement in this case, the plaintiff cannot justify coming to this court claiming an interim injunction (which he now says he is not pursuing at this stage) against the defendant. His concern or better still his complaint is, in the words of Megarry J (as he then was) "too indirect and insubstantial" to justify a proceedings for an injunction relating to a land in which he has no proprietary interest. He has no locus standi to do so in this case.

Further, I feel that even if the plaintiff is not proceeding with his claim for interim injunction at this stage, he may well decide to pursue it at a later stage. In my opinion to allow that to happen would be to allow the plaintiff to prosecute a claim in which he has already been found to have no locus standi.

In the circumstances of this case, particularly, that of the concession made by the plaintiff on the validity of the agreement entered into between the Trust Board and the defendant, the application for interlocutory relief sought by the plaintiff cannot be allowed to stand and must therefore be struck out.

Mr. Sullivan has asked the Court not only to strike out the plaintiff's application for interim relief but has also asked the court to dismiss the whole action, in the light of the plaintiff's concession on the validity of the agreement. Counsel also relied on the argument that the plaintiff is not the proper party and as such he has no standing to sue in this matter. As such he has no reasonable cause of action.

There is power to strike out any pleading and to dismiss an action under Order 27 r 4 of the High Court (Civil Procedure) Rules 1964 where it is shown that there is no reasonable cause of action. Rule 4 says:

"The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer, and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just."

The power of the court in this regard is discretionary and must be exercised only where the court is satisfied that there is no reasonable cause of action or that the proceedings are frivolous and vexatious. However if the pleading is defective and the case can be improved by amendment so as to disclose a cause of action, then although the court may strike out the pleadings, leave may be granted to amend the pleadings. If the court is satisfied that no amendment will cure the defect, leave should not be granted. See Hubbuck -v- Wilkinson [1899] 1 QB 94.

In the present case the plaintiff's claim against the defendant is for damages for trespass and for an injunction a claim based on the agreement entered into between the defendant and the Trust Board. The plaintiff has now conceded through counsel that the said agreement appeared to be validly entered into. With that concession, the plaintiff's claim is basically decided. He clearly has no reasonable cause of action to pursue against the defendant. Even if the court were to allow the plaintiff to amend his Statement of Claim the court is satisfied that no amendment will cure the defect in this case.

Further the court cannot accede to the plaintiff's suggestion that his co-trustees be joined as defendants in this action in view of his concession that the agreement which they entered into with the defendant was valid. As to whether the plaintiff can commence a separate action against his co-trustees, that is a matter for him.

In those circumstances and for the reasons that I have stated in this judgement, the court must also order the Statement of Claim to be struck out and the action dismissed.

In view of the instructions given to Counsel for the defendant not to claim costs against the plaintiff, I shall make no order for costs.

Order: Application for Interim relief is dismissed.

The action is also dismissed.

No order for costs.

GJB Muria
CHIEF JUSTICE