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Orion Ltd v Renown Surf & Cargo Ltd [2024] SBHC 59; HCSI-CC 544 of 2023 (20 March 2024)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 544 of 2023

BETWEEN

ORION LIMITED
Claimant

AND:

RENOWN SURF & CARGO LIMITED
First Defendant

AND:

RODO DEVELOPMENT COMPANY LIMITED
Second Defendant

Date of Hearing: 6 March 2024
Date of Ruling: 20 March 2024

Mr. J. S. Taupongi for Applicants/ First and Second Defendants
Mr. G. Goroa for the Respondent/Claimant

RULING ON APPLICATION FOR DISMISSAL OF PROCEEDING

Commissioner Aulanga

1. This is an application to strike out or dismiss the claim under Rule 9.75 of the Solomon Islands Courts (Civil Procedure) Rules 2007 on the basis that it was filed more than six years after the cause of action has accrued and is therefore statute barred under section 5 of the Limitation Act (Cap 18).
2. Alternatively, the claim can also be dismissed due to the agreement entered into between the Claimant and the First Defendant was never performed since formation and execution. The application was filed with a sworn statement of Thomas John Crawford, both filed on 5^th December 2023.
3. The Claimant brought this proceeding in claim category A against the First and Second Defendants on 3^rd November 2023. The claim is for general damages, to be assessed for logs extracted and felled for November 2018 up to 9^th May 2019, collectively by the two Defendants from Havahava land in Vangunu, Western Province, a concession area lawfully granted to the Claimant.

Summary of facts

4. The brief facts are that the Claimant obtained felling license FL A10215 for concession area named Havahava customary land in Vangunu, Western Province. That license has an expiry date of 9^th May 2019. Upon expiration, it was never renewed.
5. The Second Defendant also has felling license FL A10202 for Rodo customary land in Vangunu as well. That license has been renewed every five years. The next expiry date will be on 16^th September 2027. By description, Havahava is considered to be within the Rodo and is part of Rodo customary land. The First Defendant was contracted by the Second Defendant to do logging operations inside Rodo.
6. To avoid dispute and court litigation, on 14^th June 2017, the Claimant entered into Technology and Marketing Agreement (“TMA agreement”) with the First Defendant.^[1] That agreement essentially is to permit the First Defendant to carry out logging operations inside Havahava under the felling license FL A10215 of the Claimant. It is acknowledged under clause 9 of the TMA agreement that the First Defendant would make payments to the Claimant and the landowner trustees and other fees from the sale of each shipment of the logs.
7. Despite the TMA agreement, the First Defendant did not carry out the logging operations inside Havahava based on the reason that Havahava was not a virgin forest. The delay to log Havahava concession area continued until the expiration of the Claimant’s felling license on 9^th May 2019.
8. The first shipment of the logs after the execution of that agreement was completed on 28^th July 2017 via MV Universal Alliance Voy. No. 1703. Unfortunately, the First Defendant did not make any payment to the Claimant. Technically, that amounted to breach of the TMA agreement, hence, the filing of the claim.
9. It is on that basis that the First and Second Defendants in this application say that any cause of action to bring this proceeding must have accrued on or shortly after 28^th July 2017 when the Claimant became aware of the non-payment of the proceeds from that shipment of logs. Hence, as averred by the Defendants, this matter ought to be dismissed.
10. On 11^th December 2023, Court issued directions for the Claimant to file and serve response and supporting sworn statement by 15^th January 2024. The First and Second Defendants would file Reply to the response (if any) to be followed suit on 2^nd February 2024. Both counsels were present in Court when the directions were issued.
11. Regrettably, the Claimant did not file any response to the application. It, however, filed a sworn statement of Chan Chee Min on 31^st January 2024 which address matters, inter alia, relating to the boundary and ownership of the two concession areas which are unrelated to the application and in fact, are matters of custom which could potentially oust the jurisdiction of this Court to undertake such enquiry. No explanations had been given by the Claimant about the non-filing of the Response to the application which is contemptuous.

Law on accrual date of cause of action

12. For this application, the issue is whether the claim is statute barred under the Limitation Act or alternatively, it should be dismissed on the ground of non-performance of the agreement. This issue requires a consideration on when the cause of action actually accrues. An alternative issue is whether the claim should be dismissed for non-performance or execution of the agreement. An affirmative finding on the first issue will resolve the matter without addressing the second issue.
13. Section 5 of the Limitation Act states:
    • “Except as otherwise provided in this Act, no action shall be brought, nor any arbitration shall commence, after the expiration of six years from the date on which the cause of action accrued.”
14. And section 37 (1) of the same legislation gives the Court the power to make consequential orders to a claim that is caught under section 5 above:
    • “37. (1) Where an action is brought in any court after the expiration of the prescribed period, the court shall dismiss the action, unless the court acts under section 39 notwithstanding that the bar of limitation has not been specifically pleaded as a defence to that action.”
15. So, what is the accrual date of the cause of action for this matter? For the purpose of explanation, it is important to traverse the law on this as recognised in our jurisdiction and common law.
16. The expression “cause of action accrued” as an element in section 5 of the Limitation Act is not defined in that Act. In Halsbury’s Laws of England^[2], it explains the time which the cause of action accrued to mean “If the contract is to do something at a particular time or upon the happening of a contingency, and the thing contracted for is not done, the cause of action arises at the time specified or upon the contingency happening”^[3]. This definition of “cause of action accrued” has been made more precise by Lindley LJ in Reeves v Butcher^[4] to mean “the earliest time at which an action could be brought”^[5]. Caution must be taken when determining the accrual time for a cause of action as this will vary and contingent on case by case basis.
17. To exemplify the explanations further, for actions for breach of a contract, the date the action accrues begins at the date the contract is breached. These case laws, though persuasive, have helpfully canvassed this point: Nunulrea v PNG Harbours Ltd^[6] and Otto v Raka^[7] where the Courts held that a cause of action accrues when a contract requires a thing to be done and it is not done at the time.
18. As a general rule, it is not necessary to show that the breach caused the Claimant to suffer damage since the action will be barred after the breach even if damage has been suffered at any time within the time limitation, which in our case, is six years of the action being brought. For further discussions on this, see: Battley v Faulkner^[8]; Howell v Young^[9]; Ward v Lewis^[10] and Lynn v Bamber^[11].
19. It is equally important to understand that a breach of a contract depends on the nature of the breach and the terms of the contract. Where the breach consists of a positive act which the Defendant promised not to do, the breach occurs on the date of the act. More often, the breach consists of failure to perform as promised. In most instances, the breach of contract can occur as follows: where the contract specifies that performance will take place at a particular time, the breach takes place at the time the performance was promised;^[12] where the contract provides that performance is due on the happening of a particular contingency, the breach takes place when the contingency occurs^[13]; where the Defendant has promised to perform at an unspecified time, the breach occurs when the contract ceases to be effectively capable of performance, that is, after the latest time when it could be performed^[14] and in the case of failure to perform a continuing obligation, every daily breach gives rise to a separate cause of action^[15].
20. In Feratelia v Solomon Islands Mission to the Seventh Day Adventist Church^[16], Faukona J (now Deputy CJ), resonates the meaning of the word “accrued” in a cause of action to mean “The word “accrued” is used to refer to the date the Claimant had knowledge of the cause of action or when the cause of action arises.”^[17] This definition accords well with the meaning of “accrued” as held and recognised in common law.

The accrual date of the cause of action for present proceeding

21. As said earlier, the Claimant did not file any response to this application. During the course of hearing, which counsel Taupongi did not appear as well due to bereavement, counsel Goroa for the Claimant submitted for the Court to dismiss the application due to unresolved boundary disputes between the Rodo and Havahava concession areas. I interjected and enquired as to the relevance of that submission to the issue in the application. That is, for dismissal of the claim since it was filed after six years from the accrual date of the cause of action and therefore statute barred under section 5 of the Limitation Act. Counsel unfortunately conceded that he had nothing further to assist the Court on this point.
22. The present claim in reality is based on the breach of the TMA agreement entered into between the Claimant and the First Defendant on the 14^th June 2017. That agreement essentially is for the First Defendant to do logging operations under the felling license of the Claimant inside the Havahava concession area. The Second Defendant was imputed or joined in the proceeding for its role as the licensee over the Rodo concession area. At the end of the day, the expectation is that the Claimant should receive proceeds from the sale of the logs from each shipment from that logging operation, and this should be paid by the First Defendant.
23. It is an undisputed evidence that the first shipment of the logs after the execution of the TMA agreement was completed on the 28^th July 2017. In the normal course of dealings expected from that agreement, any payment of the proceeds from that shipment should be contingent on the 28^th July 2017. The cause of action arising from that breach as a result of the failure of the First Defendant to make payments to the Claimant must have accrued on the 28^th July 2017. By mathematical calculation from 28^th July 2017 to 3^rd December 2023 as the date of filing the claim, is 6 years and almost 4 months of time had passed. Unfortunately, this duration now has caught up with the caveat imposed under section 5 of the Limitation Act. As said by the Court of Appeal in Kiritee v Ome,^[18] “...the Limitation Act in this jurisdiction, in its scheme and provisions is similar to those that exist in a number of other relevant jurisdictions. First, for good public policy reasons the legislature saw fit to have a cut-off date of six years for the bringing of proceedings after the cause of action accrued. This is the starting point and the overall purpose of the legislation.”^[19] And in Solomon Islands Mission to the Seventh Day Adventist Church v Feratelia^[20], the Court of Appeal also warned that the Court should dismiss a claim that is brought after the prescribed time of limitation unless on compellable grounds supported by clear evidence.
24. The Claimant says its claim is only for the shipments for November 2018 up to 9^th May 2019 in light of the Limitation Act. I disagree with this. I do not think one can postpone or carry forward a cause of action haphazardly or on piecemeal basis to accommodate that arrangement. This is unheard of in the light of the TMA agreement that is crystal clear on the obligations of the parties.
25. Even if there is an implied term for the First Defendant under clause 1.3 of the TMA agreement not to enter into any another contractual work with the Second Defendant during the term of the agreement, the Claimant’s cause of action must have accrued from the first shipment of the logs that was completed on the 28^th July 2017. As said by the Court in Reeves v Butcher^[21], that is “the earliest time at which an action could be brought”^[22]. Whether or not the cause of action is a continuing wrong unfortunately, is a matter that was not addressed by the Claimant due to no evidence. In other words, the Claimant did not have any evidence to clarify this despite it has been directed by the Court to do so.
26. The application to dismiss the claim must be granted with costs to be paid to the First and Second Defendants on standard basis. Having reached this finding, it is needless for me to consider the alternative issue of whether the claim should be dismissed as a result of the agreement was never performed or executed.

Orders of the Court

(1) The application to dismiss the claim pursuant to rule 9.75 of the Solomon Islands Courts (Civil Procedure) Rules 2007 is granted.
(2) In consequence hereof, the claim filed on 3^rd November 2023 is dismissed pursuant to rule 9.75 of the Solomon Islands Courts (Civil Procedure) Rules 2007.
(3) Cost of this application is to be paid by the Claimant on standard basis.

BY THE COURT
Augustine Sylver Aulanga
Commissioner of the High Court

^[1] Annexed as “TJC 7” in Thomas John Crawford sworn statement filed on 5^th December 2023. It was stamped with Stamp Duty before commencement of proceeding.
^[2] Vol 28, 4^th Edition.
^[3] At paragraph 662.
^[4] [1891] 2 QB 509.
^[5] At page 511.
^[6] [2005] PGNC 156.
^[7] N2197.
^[8] [1820] 3 B & Ald 288, 106 ER 668.
^[9] [1826] 5 B & C 259, 108 ER 97, Bayley J at 265.
^[10] [1897] VicLawRp 74; (1896) 22 VLR 410.
^[11] [1930] 2 KB 72, M CCardie J at 74.
^[12] See: Re McHenry [1894] 3 Ch 290.
^[13] See: Waters v Earl of Thanet [1842] EngR 69; (1842) 2 QB 757, 114 ER 295.
^[14] See: Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384.
^[15] See: Shaw v Shaw [1954] 2 QB 429.
^[16] [2018] SBHC 18.
^[17] At paragraph 47.
^[18] [2022] SBCA 31.
^[19] At paragraph 28.
^[20] [2018] SBCA 22.
^[21] [1891] 2 QB 509.
^[22] At page 511, see fn 5.