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Asia Pacific Investment Development Ltd v Attorney-General [2015] SBHC 97; HCSI-CC 243 of 2015 (25 November 2015)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Faukona PJ)

Civil Case No. 243 of 2015

BETWEEN:

ASIA PACIFIC INVESTMENT DEVELOPMENT LIMITED
First Claimant

AND:

BINTAN MINING SI LIMITED (201414165)
Second Claimant

AND:

ATTORNEY-GENERAL
(Representing Minister of Mines, Energy and Rural Electrification)
First Defendant

AND:

ATTORNEY- GENERAL
(Representing Mines and Minerals Board)
Second Defendant

Date of Hearing: 10th October 2015
Date of Ruling: 25th November 2015

Mr J. Ivanisevic and W. Togamae for the First and Second Claimants
Mr S. Banuve for All the Defendants

RULING ON APPLICATION FOR INTERIM INJUNCTION

Faukona PJ: This application was filed by the first and second Defendants on 31st August 2015 pursuant to Rules 2.9 and 7.5 of the Solomon Islands Court (Civil Procedure) Rules 2007. The application sought eight restraining orders against the Claimants.

2. The interim restraining reliefs were sought pending the determination of a claim for Judicial Review, filed by the Claimants on 10th June 2015 against the decision of the Minister of Mines, Energy and Rural Electrification issued on 7th May 2015. The decision of the Minister was a Show Cause Notice pursuant to S.71(1) of the Mines and Minerals Act (the "Act") Cap 42; issued to the Claimants to show cause as to why Mining Lease ML: 01/2014 ought not be cancelled. The Show Cause Notice was issued premised on the advice by the Attorney-General.

3. The first Claimant is Asia Pacific Investment Development Limited (APID) is the holder of Mining Lease No. ML: 1/2014 granted on 5th September 2014. By such grant conferred to it exclusive right for 25 years to carry out mining operations in or on those pieces of land situated on West Rennell, Rennell Island, for the purposes of mining bauxite with rights to obviate and market the said minerals.

4. The second Claimant Bintan Mining SI Limited (BMSIL) is a contractor, contracted by the first Claimant to undertake mining operations.

5. The grant of mining lease conferred upon the first Claimant exclusive rights pursuant to S.43 of the Act to mine for minerals and may enter upon the areas subject to mining lease to carry out mining, including rights spell out by sub-sections (a) – (g). Further, S.43 (2) conferred exclusive rights upon the first Claimant to remove or dispose of any mineral under its lease, as its own property upon the extraction of that mineral from the mineral ore body.

6. Whilst carrying on business under the mining lease, the Minister thereby issued a letter on 7th May 2015, to the first claimant, a notice to show cause pursuant to S.71 of the Act, why its rights under the mining lease should not be cancelled.

7. On 18th May 2015, the first Claimant responded to the show cause notice which is summed up in five points (a) – (e) on paragraph 12 of the submissions.

8. On 10th June 2015, the first Claimant commenced by filing a claim for judicial review of the Minister's decision and other related incidental relief. That case has yet been given a trial date.

9. On 14 August 2015 an application to strike out the claim for judicial review was filed by the Attorney-General. That cause of action is yet to be given a trial date as well.

This proceeding:

10. This application was filed premised on the claim for judicial review filed by the claimants on 10th June 2015. And may probably base on the application to strike out the claim for judicial review filed by the Defendants in response.

11. There is argument that the notice to show cause was invalidly issued and ultra-vires because it was not based on an event specified in S.71 (1) of the Act, see the case of B2 Net Ltd V HM Treasury[1]. That should be an issue to be raised at trial. For now it is inappropriate to consider as it would be premature to do so. However, I will examine in brief the Minister's rationality and reasons for issuing the notice. Perhaps at the end thereof, the issues will be surfaced into light and become clearer.

12. Meantime, it is important to note that some facts that are made available are facts which will support arguments which should be left for trials of both cases. At this juncture, I agree with the Solicitor General that this is not the time to valiantly engage in expository arguments in both facts and law. That should be left for trial of the matters. The function of this court at this stage is to identify triable issues or serious issues to be tested at trial. Thereafter, if so find, then move on to consider where the balance of convenience lies, and that requires other factors to be considered as well.

The standing of the Attorney-General:

13. Without the slightest taint, the Solicitor-General imparted that the decision to issue show cause notice to the first Claimant was in accordance with the advice from the Attorney-General. He is the Principle Legal Advisor to the Legislative and Executive Government of Solomon Islands and its organs. Unfortunately, that advisory function is taken and described as tainted by "dual role" apparently played by the Attorney-General.

14. It is sad to note that someone with a calibre as Australian Counsel, paradoxically who knows nothing about the background and the events, would describe the Attorney-General of Solomon Islands as performing "dual role" and in a position of "hopeless conflict" in performing his duties conferred upon him by S.42(1) of the Constitution.

15. Such description certainly comes from a source with little or no research at all, to substantiate such serious allegations. For the purpose of knowledge input, the current Attorney-General, whose title appeared as parties in this case, was appointed to the post of AG 2-3 months ago. Before that, he was a private practitioner in law and may have represented clients who may have had opposed the first Claimants mining operations. In fact there is no proper evidence available as to when the AG took up his position and when he relinquished his private practice. All that is available by knowledge is that he is in the office of AG for the last 2-3 months. In any case, he who alleges must proof. That is the onus.

16. In any event, no lawyer in his right mind will perform a Public Office in a duel manner. I will never belief, the current Attorney-General who was a former Judge will ever perform as the Counsel for the Claimants described. It is a description of utter disrespect to the Attorney General of Solomon Islands whom the Government and the people of Solomon Islands do respect and appreciate for the work being done. In this case he is rightly representing two organs of the government of Solomon Islands.

Triable issues/serious issues:

17. Should there be any triable or serious issue, that should derive from the notice to show cause issued to the first Claimant. The Minister's concern about the legitimacy of the Mining Lease No. ML: 1/2014, issued to the first claimant was the primary reason for the issuant of the notice. Furthermore, that he seeks to exercise his statutory powers under Mines and the Minerals Act S.71 (1) and (2), to review the processes that warrant the legitimacy of issuant of the mining lease. I will not determine any issue related to the legal processes, but examine in order to extract whether the Minister's suspicion of an abuse of process is legitimate and whether a review as propose is a cause in the right direction.

18. The primary reasons presupposes given for the issuant of the notice to show cause are summed up in three points below;

i. The Mines and Minerals Board had not advised the Minister (not the Board) pursuant to s.6 and 11 of the Mines and minerals Act to issue the mining lease to the first Claimant.

ii. Certain conditions required by the Mines and Minerals Board to be complied with by the first Claimant before a mining lease be issued had not been met when the mining lease was granted by the Minister,

iii. At the point in time the mining lease was issued, the first Claimant did not have a valid prospecting licence.

19. Those three grounds form the basis upon which the Minister issued the notice to show cause. A significant question is, was the notice issued in accordance with S.71 as refer to by the Counsel for the Claimants. I noted S.71 impedes with the issue of abuse of mining lease. However, the Minister's vision went further than that, hence utilise subsection (1) as the basis for activating subsection (2) which states the Minister before exercising his powers under subsection (1) shall call upon the holder to show cause within time as he may specify, and before any cancellation or suspension of mining lease the Minister must act in accordance with the advice of the Board.

20. The Claimants are saying that the purported show cause notice is one that is capable of being reviewed. Because once a decision is made, engages S.71, and puts the first Claimant at risk. Therefore, the first Claimant need not to wait until final decision is made. And the Counsel submits there are very good reasons to do so.

21. Besides that, the Claimants are also saying that the notice was invalid and incorrect. Those are serious issues of law to be tested at trial and not necessary to be considered in this application.

22. In respect of ground (iii), extension of prospecting licence is an issue S.71 (A) of the Mines and Mineral (Amendment) Act 1996 catered for. Apparently the Defendants may not be well versed with, or not aware of the existence of such provision. However, it provides very useful solution to the issue. Anyway that is another issue to be debated at trial.

23. Let me now examine the law in brief to ascertain by reference to provisions, whether the Minister had complied with the Mines and Minerals Act in issuing the Mining Lease. I am not determining the truth of the matter or any fault thereof, but where the issues can be identified or lie, to enable the Court hears the actual arguments on the issues.

24. Apparently, it appears the Minster is so mindful about the legitimacy of the mining lease. The fact that he may not have emphasised that in his sworn statement, however, the issuant of the notice to show cause is sufficient replication manifested his stand. It may be subject to argument, as expected, even on the ground of presumption of regularity, which to the effect, where an act done which can only legally be done after the performance of some prior act(s), for instance the grant of mining lease is a prima facie proof of prior acts having validly occurred –see case of Morris V Kanssen.[2]

25. I now turn to the relevant provisions of the Mines and Minerals Act. Before doing so, I am so mindful of words of Lord Diplock in the case of American Cyanamid V Ethicon Ltd[3], who stated the Court needs only to be satisfied that there is a serious question to be tried on the merits. The result is that the Court is required to investigate the merits to a limited extent only.

26. In investigating the merits, I turn to S.32 (4) of the Mines and Minerals Act, which states, where a commercial discovery has been made, the Director may thereafter, in consultation with the applicant, enter into negotiations with the landowners or any person, or groups having interest in the land to acquire surface access rights for mining. By subsection (5) where there is no dispute and agreement is reached as to subsection (4), such agreement shall be reduced in writing and the content thereof is a prime face evidence of the names of the landowners or land holding groups having rights over the land and amount of surface rental and compensation.

27. By S.32 (1) where the Board accepts the application for mining lease, the Minister shall inform the applicant in writing of his intention to issue the mining lease if at that time no surface access rights were acquired by the Director. If surface access rights had been acquired for mining, the Minister may grant the applicant a mining lease subject to S.36 of the Mines and Mineral Act.

28. Crystalline clear from those provisions, that it is the Director of Mines who must assist the landowners and the applicant so that surface access rights are acquired. It is not the work of the applicant or agencies. The Director is expected to do negotiations and consultation with the applicant and the landowners or land owning groups to achieve surface access rights. Thereafter make arrangement for surface rental and compensation for any damages. The Minister may grant a mining lease to an applicant if he is satisfied that surface access rights have been acquired, and the rest of the requirements under S.36 of the Mines and Minerals Act. Where the applicant has not acquired surface access rights before or at the time of application for mining, the Minister must inform the applicant of his intention to issue mining lease pending acquisition of surface access rights.

29. The only reason that will delay the Minister's intention to issue mining lease is the surface access right which has yet to be acquired. If there are other reasons apart from that, then in my opinion, the Minster is not necessarily need to express his intention in writing. All that he perhaps would do is informing the applicant that they are considering the application together with other pertinent requirements, a kind of an administrative function before considering issuant of the mining lease.

30. Of course any decision the Minister may take in regards to prospecting licence or mining lease must first obtain advice from the Board pursuant to Section 6 and 11 of the Mines and Minerals Act.

31. In the present case, the reasons given by the Minister for issuing the show cause notice are similar to the requirements (except for two additional). The Board by its letter of 26th June 2014 said that it resolved that the application for mining lease has been approved with the following conditions: to be fulfilled as part of the mining lease; third party review of the mining proposal; land acquisition, registration and agreement, and more landowners and community awareness.

32. There is argument advance by the Counsel advocates for the Claimants that the Board's letter demonstrates misunderstanding of its role. That the Board does not approve the grant of a mining lease and cannot set conditions. I would concur to that submission because it contradicts the functions of the Board as majoring in advisory function specified in Sections 6 and 11 of the Act. This is part of the whole entire case which the Minister wishes to review; whether administratively or by a cause of action in court. It is a matter left upon the Minister himself.

33. It was that misunderstanding of the functions and roles under the Act which are at stake which the current Minister so desirous to critically address by way of review.

34. However, whilst anticipating the conditions to be fulfilled as a prerequisite administrative requirement, whether the conditions were valid or not, and whether they were part of foreseeable good and proper administration, the Minister saw fit therefore issued the Mining Lease ML: 1/2014 to the first Claimant on 5th September 2014. The question whether such action was a result of an advice from the Board or not, an issue which still remain dwindling. However, I noted from annexure "DP2" attached to the Minister's sworn statement that the former Minister issued the mining lease based on resolutions agreed by the Board on 12th and 26th June 2014 to issue mining lease to the first Claimant. Having perused the exhibit in depth, it reflected that the Board meeting on 12th June 2014 did not resolve by approving the issuant of a mining lease to the fist Claimant. And the Board meeting on the 26th June 2014 the Board resolved to uphold its decision on the 12th June 2014. It boils down to the very question whether the Minister had acted on the advice of the Board before issuing the mining lease to the first Claimant or not.

35. It is the process viewed at stake and questionable, which the current Minster wishes to rectify by way of review. The path to resolve the impasse commences by issuant of the notice, acknowledging the fact that any claim to review the former Minister's decision to issue the mining lease may be far from reach considering time as a factor.

36. It pauses a very critical question, how would the Minister, if not being advised, have right to issue the mining lease out of his own accord? Was he duly exercising his powers under the Mines and Mineral Act? Or was he not been induced by some forces? And whether the Board had given him the advice to issue the mining lease. Those are serious and genuine questions of law and facts which ought to be answered in a proper forum, to resolve the issue once and for all. It cannot be brushed aside.

Balance of convenience:

37. This case concern assessment whether granting or withholding an injunction is more likely to produce a just result. The basic principle is that the court should accept or take which ever course seems likely to cause least irremediable prejudice to one party or the other. See American Cyanamid Co. V Ethicon Ltd[4]. Even not necessary to give full weight to list of various matters[5] to be considered in decision where the balance lies.

38. Having decided there are serious legal and factual issues to be tried on merits, the balance whether to grant or withhold the injunction premise on the test that, if damages will be an adequate remedy for the Defendants, there are no grounds for interference with the Claimants freedom of action by the grant of an injunction. If as found there is a serious issue to be tried and the Defendants could be prejudiced by the acts or omissions of the Claimants pending trial and the cross-undertaking remedy if in turns out that its freedom of action should not have been restrained, and then an injunction should ordinarily be granted.

39. In the current case there is doubt whether damages can be adequately remedied the Defendants (Applicants). Section 2 of the Mines and Minerals Act has vested in the people and the Government of Solomon Islands rights to any mineral resources. The first Defendant as representatives of the people and the government of Solomon Islands may have a sound concern on the legitimacy of the first Claimants mining lease ML: 1/2014. On a positive note, took initiative by filing a legal process to upheave and rectify where possible, resolve the issue more professionally and according to law-see R V Mansfield[6] (failure to take account of a relevant consideration).

40. If the application is refused, extractions of bauxite ore will continue from the mining tenement resources. By the time the substantive issue is heard, a good portion of the resources would have depleted and irreplaceable and irreversible. Indeed damages would not be an adequate remedy in this instance.

41. In this case the Defendants have filed undertaking as to damages on 28th August 2015 as a sure financial remedy required to compensate the Claimants for any loss incurred during the currency of the injunction, if it appears later that the injunction was wrongly granted.

42. In assessing the convenience I noted there are arguments that continuous mining operation adds further revenue to the Government by any of royaltys, taxes, compensation to landowners, development and infrastructure, provision of transport and medical services.

43. There could be huge loss for the Claimants should injunction is granted. The Government will be liable for damages by way of breach of agreement and under- taking provided. There will be loss of employment who will be dismissed.

44. Additionally, payment of access fee, goodwill payment and annual sum would not be fully utilised. Furthermore the Claimants would be at risk of claims for breach of contract from customers, which will give rise to significant loss and damage.

45. In balancing the evidence before me, the overriding issue was the action by the former Minister, whether the legal link between him and the Board was maintained as required by law. That ought to be resolved, and whether he was in fact advised by the Board to issue the mining lease to the first Claimant or not. These issues must be resolved. There will be a mass of arguments surrounding it, no wonder it inherits the status of a real serious legal issue.

46. The famous case of American Cyanamid where Lord Diplock stated at Page 408,

"It would be unwise to attempt to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case".

47. The losses and the prejudices enumerated by the Counsel for the Claimants are usual facts in any mining operation, in particular where interlocutory orders are argued. They are not new. Lord Diplock has said it all in the above paragraph. In all that I say, I must conclude that the balance of convenience favours the Defendants. I therefore grant all the orders prayed for by the Defendants.

Orders:

1. That the Claimants their servants or agents is restraint from entering and/or remaining on Tenement A and/or B on West Rennell and/or any other part of Rennell Island refer to as "Mining Areas" until trial or further orders.

2. That the Claimants their servants and/or agents be restrained from extracting and/or removing any soil, stone, gravel or other mineral substance from the mining areas, and/or carrying out any mining activity of whatsoever nature in the said mining areas, until trial or further orders.

3. That the Claimants, their servants and/or agents be restrained from exporting and/or selling any soil, stone, gravel or other mineral substance extracted from the mining areas (and now waiting shipment or export) until trial or further order.

4. Where any soil, stone, gravel or other mineral substance extracted from the mining areas are, or have already been, loaded onto any vessel which is still within the territorial waters of Solomon Islands, that the Claimants including the Captain of any such vessel immediately unload such soil, stone, gravel or other mineral substance from the vessel.

5. Where soil, stone, gravel and/or other mineral substance extracted from the mining areas already exported or sold prior to the date of these orders the proceeds of such export or sale are hereby restrained and that the Claimants, their servants and/or agents are hereby ordered to pay or release such proceeds to the Central Bank of Solomon Islands ("CBSI") to be held there until or further order.

6. That the Controller of Customs and Excise and his Officers are hereby authorised, and directed, not to clear any vessel referred to in paragraph (4), or carry out any clearance on board such vessel, until the Controller is satisfied that the paragraph has been complied with.

7. That all commercial banks in Solomon Islands are hereby restrained from releasing to the Claimants, its servants and/or agents, the proceeds (or any part of such proceeds) referred to in paragraph (5) and shall pay or release the said proceeds to CBSI as required under that paragraph.

8. That the claimants and their servants and/or agents remove all their mining machines from mining areas within 72 hours from the date of service of this orders on them.

9. That a penal notice be attached to Orders (1) to (8) above.

10. That the Royal Solomon Islands Police is hereby authorised to assist in the enforcement of these Orders.

11. Costs of this application are paid to the Defendants.

The Court.

^[1] (2010) EWHC 51 QB (13 January 2010)
^[2] (2006) SBHC 49
^[3] (1996) AC 459
^[4] Ibid 4
^[5] Ibid 5
^[6] (1985) QB 613