I keep having a look at The High Court site and this is the last...

I keep having a look at The High Court site and this is the last mention of SMM. It is worth a read because this is the High Court version of things.


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SMM Solomons Ltd v Attorney General [2012] SBHC 52; HCSI-CC2 58 of 2011 (12 June 2012)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Chetwynd J)
Civil Claim No. 258 of 2011

BETWEEN

SMM SOLOMONS Ltd and OTHERS
Claimants

And

ATTORNEY GENERAL and OTHERS
Defendants

And

BUGOTU MINERALS Ltd
Cross Claimant



Civil Claim No. 296 of 2011

BETWEEN

LONSDALE MANASE
Claimant

ATTORNEY GENERAL
Defendant




Mr Sullivan QC and Mr Kingmele for the Claimant
Mr Mathews and Mr Togamae for the Cross Claimants
Mr Williams SC, Mr Shearer and Mr Pitakaka for the 6th Defendant
Mr Banuve for the First to Fourth Defendants
Mr Hapa for the Seventh Defendant

Date of Hearing: 23th March 2012
Date of Judgment: 18th June 2012

Ruling on preliminary issues


1. The parties have asked for a number of preliminary issues to be dealt with. This was at the suggestion of the Court of Appeal where their Lordships mentioned, at the hearing of the Sixth Defendant's ("Axiom") appeal, that two or three preliminary issues might dispose of the matter or at the very least reduce the length of the case. This was followed up by comments in their Lordship's published judgment (admittedly published after the hearing on the preliminary issues started) where they said;

"If this litigation is to continue, the Court repeats its suggestion made on the oral hearing of the appeal that the parties should attempt to agree a short list of preliminary and determinative issues for consideration and disposal of the matter at trial"[1]

Counsels' first attempt was a list of some 22 questions. I voiced the opinion this was nothing like the two or three issues or the short list envisaged by the Court of Appeal and the main protagonists were trying to get an expedited hearing of all the issues. The "revised" list has 4 basic questions. They can be divided into two areas which all involved referred to as the "mining issue" and the "land issue".

2. Their Lordships' comments earlier in paragraph (31) from which the above is extracted are also worth mentioning:

"...... we deprecate the manner in which the whole issue was put before the Court, with voluminous documentation, prolix and highly repetitive submissions, each descending into a maze of legal and factual minutiae more appropriate, if at all, to conduct of the case for trial".

This has continued in the hearing dealing with the preliminary issue. I gave up trying to gauge the extent of the documentation by reference to the number of pages, it is simpler to do so by calculating the height of the paperwork in feet and inches.

3. At this stage some detail of the dramatis personae in this particular theatre might be helpful. Broadly speaking the Claimants ("SMM") are a mining company and the Second to Seventh Claimants landowners who support the company. The First to Fourth Defendants are components of the State apparatus who or which either have executive responsibility for the mining industry or administrative responsibility for land in Solomon Islands. The Fifth Defendant ("PIDL") is another mining company interested in acquiring mining rights over the land in question. The Sixth Defendant, Axiom, is yet another mining company. The Seventh Defendants are the "trustees" of land. We also have the Cross Claimant in Civil Case 296 of 2011. He also represents the Vihuvunagi Tribe. He is mainly interested in the land issue. The parties' allegiances are largely split along party lines and obviously all have their own interests to look after as well but some do lend support to other parties, for example the Cross Claimant supports the Claimants on the land issues. The main protagonists are SMM and Axiom.

4. Turning to the preliminary questions to be dealt with; the first two can be answered as a combined question. It is:

Was the letter to SMS dated 23 November 2010 a valid and effective letter of intent for the purposes of the Mines and Minerals Act [Cap.42] as amended?

Further to question 1, if it was a valid and effective letter of intent at the time of its issue, did it lapse because of SMM's failure to lodge a form 1 application within 30 days?

There are a number of issues which arise from those questions. The letter referred to is to be found at page 408 of volume 2 of the Court Book. Axiom argue the answer to the question should be no and attack the whole process of tender and the subsequent issue of the letter. To make sense of it all it might help to look at an abbreviated or potted history of events. In brief, the Solomon Islands Government ("SIG") wanted to:

"issue a Prospecting Licence to an investor to:

(i) re-evaluate and upgrade nickel and cobalt resources in each of the three prospects (Jejevo, Takata and San Jorge) of Isabel Nickel Deposit, and

(2) encourage the development of a mine and associated mineral processing facilities that will secure significant financial and other benefits to the Government and people of Solomon Islands".[2]

To that end SIG issued an international tender document ("the tender notice") and SMM submitted their tender. It can be seen starting at page 256 of Vol 1of the Court Book. It runs on for over 100 pages. SIG, in the person of the Minister of Mines, Energy and Rural Electrification ("the Minister") wrote to SMM (page 406 Vol. 2) on 4th October 2010 informing it that the bid was successful. The formal letter of intent followed on 23rd November 2010. That letter was subsequently "withdrawn" by another letter from the Minister dated 17th January 2011[3]. At the same time the Minister issued a letter of intent to PIDL covering the area set out in the tender document. In April 2011 the First Defendant, the Minerals Board ('the Board"), advised the Minister to issue Axiom with a letter of intent over South San Jorge and Takata land and subsequently the Minister granted Axiom a prospecting licence over Takata land. Those abbreviated facts give rise to the mining issue.


5. In February 2011 the Fourth Defendant ('the Registrar") registered the Seventh Defendants as registered proprietors of the perpetual estate in parcel number 130-004-1. This followed a vesting order made by Third Defendant ('the Commissioner"). A lease of 130-004-1 was then granted to Axiom. Those abbreviated facts give rise to the land issue.

6. In regard to the mining issue, Axiom say the tender process under the Act (the Mines and Minerals Act) and the Mines and Minerals Regulations ('the Regulations") was never engaged and even if it was the Director of Mines ("the Director") was obliged to refuse the application from SMM. With regard to the first point, Axiom argues there was no area specified in the tender notice nor had the Minister published a notice in the Gazette detailing the specified area. Axiom contends SMM already held three or more prospecting licences and the Act requires the Director to refuse further applications if the applicant holds that many licences and has not applied, in respect of them, for a mining lease or commenced mining. This is the provision against "land banking".

7. All the parties are in agreement the "Act" concerned is the original 1990 Act as amended by the 1996 Act and the 2008 Act. The "Regulations" are the 1996 Regulations as amended in 1997, 1999 and 2010. One could be forgiven for thinking that after three attempts at legislation and four at promulgating regulations the whole area would be problem free.

8. The provisions relating to tender are to be found in various sections of the Act. There is a definition of tender at section 3. I am not aware of any argument raised or submission made which suggests the International Tender Document (the tender notice) was anything other than an invite or a solicitation or the placing of a land area on the open market. Section 20, as amended, contains some provisions which are in contention in this case. Section 80 gives the Minister authority to make regulations which are applicable in the application and tender process. The operation and/or purport of some of the regulations subsequently made are in contention as well.

9. Axiom argues the tender notice was never effective because there was no specified area. They refer to Regulation 3A. It states that the "specified area" means an area under Regulation 3B. Turning to Regulation 3B(1) it says the Minister "may, on the recommendation of the Board, specify an area as a proposed area for prospecting, by notice in the Gazette". Axiom says this must mean the publication in the Gazette is mandatory. If there is no publication there is no specified area and therefore the tender process falls at this first hurdle. SMM say no, that is not the case. The amendments in the 2008 Act to section 20(4) mandate the Board to call for tenders over a specified area and all such tenders shall comply with the prescribed procedures. The prescribed procedures are set out in the 2010 Regulations. It would be wrong, so it is argued, to allow the Minister to have the final say as to the specified area under the Regulations when the Act confers the power to the Board. It could be said the preferred argument depends whether you look at the process as horse and cart or cart and horse. It is just as logical for the Board to make a recommendation to the Minister about a specified area, have the Minister Gazette the details and then call for tenders (horse and cart) than it is for the Board to call for tenders and then make a recommendation to the Minister to Gazette details of the specified area (cart and horse). However, it appears from the natural meaning of words of Regulation 3B(1) that the Minister has a discretion whether or not to Gazette the details. It would make perfect sense to require a Gazette Notice in order to make known the Board's and the Ministers intentions. However the Regulation does not compel the Minister to publish a notice it merely says he "may" do so following a recommendation by the Board. The Regulation is couched in terms which are in stark contrast to others where the word "shall" is used in regard to the obligations of the Board, the Minister and applicants. If the concern is publicity about the proposal, the requirements of Regulation 3C are far more effective to achieve that purpose and say the Board "shall issue and publish" the tender notice.

10. I also find some difficulty in accepting that a term in the Act is defined by the Regulations. The land which was meant to be subject to the tender notice was fully set out in the document issued by SIG. There are full descriptions and maps. Anyone looking at the tender notice would have been under no misapprehension as to which land was involved. The First to Fourth Defendants suggest a "critical policy" of the Act would be evaded by failure to Gazette the area. Given the requirements to negotiate surface access agreements with all the landowners which are set out in detail in the Act, and which are recited in letter of intent, it is difficult to understand the logic behind this argument. In short, the lack of a Gazette notice detailing the specified area does not nullify the tender process when it is fully described in the tender notice and specific definitions in relation to "area and grid references" are required to be supplied in the tender document by the tenderer.

11. The next issue pursued by Axiom relates to the land banking provision. SMM do not dispute it held, "three or more prospecting licences over different prospecting areas" and had not, "applied for a mining lease or commenced mining" in any of the areas covered by those licences. That being so Axiom argues, the application, the tender, should have been refused by the Director. They emphasise the importance of section 20(5) (c) saying it is fundamental to the purpose of the Act. I prefer the arguments of SMM. The amendments to section 20 in the 2008 Act start at subsection (1). The old subsection (1) was deleted and in its place a new subsection was inserted. It states:

"1) Except in cases of tender, each application for a prospecting licence shall be made to the Director........"

There was also an amendment to subsection (4). The words in the "old" Act "the requirements of this section" were deleted and in their place was substituted the phrase "the prescribed procedures". The cumulative effect must be to set out two separate processes with different requirements; one where there is a normal or ordinary application and one where there is a tender. The plain meaning of the words in both subsections can only mean that if there is a normal or ordinary application for a licence it would be made and considered subject to and in accordance with section 20. That is section 20(1) (a) to (k); section 20(2), (3), (5), (6) and (7). If the application is by way of tender, section 20(1) (a) to (k) does not apply because of the opening words of the amended section. There can be no other reason for the wording of the amended section. In plain and simple language the section says if you apply for a prospecting licence you do this but if you apply for a prospecting licence by way of tender you do something else. The something else is set out in section 20(4) which requires a tender to comply with the procedures set out in the Regulations, that is, those set out in the 2010 Regulations. The practical effect is, with a tender, section 20(2) is superfluous but preserved because of the requirement to pay the tender fee in Regulation 3C (6)(b). Similarly section 20(3) is repeated by Regulation 3C(6)(a) but in terms the tender must satisfy the tender specifications. What those should be are set out in Regulation 3C(5). The requirements are extensive and the tenderer must comply with them because Regulation 3C(6) clearly makes it mandatory for the tenderer to do so. The clear difference is an ordinary or normal application is dealt with by the Board "in accordance with section 20" [4] whereas a tender is dealt with in accordance with part of section 20 but mainly by reference to the Regulations and the prescribed procedures which are set out in them.


12. Another difference between an ordinary or normal application and a tender is the involvement of a Screening Committee which considers the latter but not the former. The functions of the Screening Committee are set out in Regulation 3D. In a tender the function of the Director seems to be to receive and acknowledge the tender document and pass it on the Screening Committee for its detailed consideration. He is also there to assist the Screening Committee in its deliberations. In this manner the requirements set out in the Regulations adequately protect what Axiom submit is the fundamental purpose of the Act.

13. In all the circumstances I conclude section 20(5) does not apply to an application by way of tender except to say it forms part [5] of the detailed considerations that the Screening Committee are bound to look at under the prescribed procedure set out in the Regulations. The Screening Committee was well aware of the other prospecting licences held by SMM because they are referred to in the tender document. Even if the Screening Committee somehow missed the several references to those licences, it is required to carry out its duties with the assistance of the Director and he surely would have known of SMM's past history in Solomon Islands. It is inconceivable the Screening Committee did not deal with SMM's previous history in Solomon Islands in its report to the Board.


14. The next point of contention relates to the lack of a Form 1 application. Axiom's case is; if there was a valid and effective letter of intent it lapsed because no Form 1 application was submitted within 30 days. Again reference to the Regulations sees a difference in wording. An ordinary or normal application is, as indicated above, subject to section 20(1) and an application is to be made "in the prescribed form" which is Form 1[6] . A tender is excepted from the requirements of section 20(1) and instead what is needed in the case of a tender is set out in Regulation 3C (6)(b). It says:


(6) The tenderer shall submit to the Director the following-
(a).....
(b) an application for prospecting licence, including the prescribed fee.

There is no conflict between the Regulations and the Act. At the risk of boring by repetition, the Act states, at section 20(4);

The Board may call for tenders for a prospecting licence over a specified area, in which case all such tenders shall comply with the prescribed procedures.
The Regulations setting out the prescribed procedure also require an application but not in the prescribed form. Looking at Form 1 (which is about 2 ¼ pages of A4 long) and the information required by it, and looking at the tender document of some 100 pages and the information it contains; it is obvious the latter provides all the information the former demands. It is also patently obvious from the tender notice that it is an invitation to tender for, in other words to apply for, prospecting licences. The part of the tender notice under the heading TENDER INFORMATION AND INSTRUCTION at Section 1.1 (see at page 228 of the Court Book) explicitly says so. Subsection 3 of that part of the document says, "Therefore parties are invited to define the area and grid references of the licences they wish to apply for" (my emphasis). The tender document is the application and there can be no doubt SMM applied by way of tender for three prospecting licences. The covering letter [7] clearly states that is what the tender is for. It has not been argued or even suggested that SMM did not pay the requisite fee when submitting its application by way of tender. Looking at Regulation 3C (6)(b), the application fee for the prospecting licence(s) was the fee set and required for the tender. I have no idea what that was, it does not seem to be set out in the tender notice (but according to the Regulations it is between 5,000 and 10,000 US$). It is plain from Regulation 3C(6)(b) the tender document was the application and the application fee for the prospecting licence was the fee required on submitting the tender. It seems to me to be a nonsense to suggest SIG could require another application and another fee. There is no mention of that in the Ministers letters of 4th October and 23rd November. I am not required to make a ruling on the point but in my view it was unlawful for SIG to demand, in the conditions set out in the tender notice, the tenderer submit another (pointless) application and pay an additional fee over that required by Regulation 3C(6)(b). Neither the Minister, the Board nor the Director have any authority, statutory or otherwise, to request two applications and two fees for the one licence.


15. It is agreed that in any event SMM did lodge separate applications after 30 days but given my reasoning above there is no need to consider whether the late lodgement was effective or not. My answer to question 1 is yes and my answer to question 2 is no.

16. Question 3 reads:

Assuming the additional facts in paragraphs A-C below, is the prospecting licence No. 74/11 in favour of Axiom KB a valid prospecting licence under the Mines and Minerals Act as amended?

The "additional facts" are not repeated in this ruling.

I propose to answer question 3 quite simply. The answer is no. It is agreed that SMM held 3 licences and there is no dispute about their validity. It is also agreed there was an overlap in that the licence issued to Axiom included areas covered by those licences. The Act does not permit such overlap. That is the undoubted effect of section 20(5).

17. I have previously answered question 1 yes and question 2 no. Absent any other considerations, that would mean there was a valid letter of intent covering much if not all of the area included in the prospecting licence No. 74/11.That seems to be the conclusion of the Board from the minutes of their meeting [8]. The Board's own view was the application for the prospecting licence by Axiom covered the areas put out to tender by SIG and which were subject to the letter of intent issued to SMM. As I have already indicated, section 20(5) does not allow any discretion in the matter; the Director has to refuse any application which relates to land already subject to either an application for a prospecting licence or mining lease or the existence of a prospecting licence or mining lease. Even if I am totally wrong in respect of the answers to questions 1 and 2, there is the "application" by PIDL. None of the agreed facts deal with what happened to the letter of intent issued to that company, as I understand it, on 17th January 2011. There is no evidence it was withdrawn or otherwise made irrelevant. If it still subsisted at the time of Axiom's application then section 20(5) applies equally to it as it would do to SMM's "applications".


18. It also has to be said once the application by Axiom had been erroneously accepted the Board, the Director and the Minister, particularly the latter, acted in a fashion which at best could be called cavalier, at worst downright negligent. The letter of intent issued to Axiom was conditional. It appears the conditions were either waived or ignored. The provisions of the Act [9] were seemingly ignored as well in that there was inadequate consultation with customary landowners.


19. Turning to the land issue, the fourth question asked is whether the "registration" of the perpetual estate in favour of the Seventh Defendants was void ab initio or effective. It is agreed the vesting order upon which the registration is based was supposed to be the result of acquisition hearings in 1992 under Division 1 of Part V of the Lands and Titles Act [Cap. 133]. A good starting point is the Court of Appeal;

"There is no general provision in the Act allowing for the conversion of customary land into registered title. Part V of the Act is entitled "PURCHASE OR LEASE OF CUSTOMARY LAND...". That Part prescribes a procedure by which purchase or lease of customary land can take place."[10]

The Lands and Titles Act then has 10 detailed sections which set out the process which must be followed in order for there to be an effective "conversion of customary land into registered title". If that process is not followed there is no registration. Central Government or Local Government can also compulsorily acquire land "for public purposes" under Division 2 of Part V. The process under Division 2 is not relevant in this case because there is no suggestion by anyone that the land was compulsorily acquired. There is a third process for converting customary land to registered land;

"The procedure for converting customary land interest into registered interest is provided for under Part IV of the Act. It is called land settlement scheme. This is the scheme that is open to the public at large although it has been rarely used in recent years."[11]

Again, there is no suggestion the land was registered following a process under Part IV of the Lands and Titles Act. There is no suggestion the land in this case was anything other than customary land before the vesting order was effected. There being no other way in which customary land can be converted into registered land, it follows that the registration of the perpetual estate in the names of the Seventh Defendants must have been under Division 1 Part V of the Lands and Titles Act. The question then is whether the process set out in sections 60 to 70 inclusive of the Lands and Titles Act was followed.

20. It clearly was not. The Seventh Defendants are not the persons who were found by the Acquisition Officer in 1992 to be the persons who purport to be or were found to be the owners of the land or duly authorised representatives of such owners. It must also be remembered the land acquisition process carried out in 1992 was the subject of an appeal and the High Court made orders as to who those proper persons were[12]. It is suggested the Registrar was provided with adequate "evidence" the Seventh Defendants were the right persons to register as owners. I find that very hard to accept. On the face of the agreed documents which are said to support that view there are matters which should have raised questions in the Registrar's mind. As for the Commissioner of Lands, the vesting order he signed is riddled with inaccurate statements which again were evident from the very documents he supposedly relied on to compile it. There are fundamental errors apparent from reading the document such as references to the wrong sections of the relevant Act and he even names a Limited Company as beneficiary.


21. In any event, even if it were accepted the Seventh Defendants were, by some act of transmogrification, the proper persons to be registered as owners of the perpetual estate the difficulties do not end there. Once the identification process and any appeals from it have been dealt with, other sections in Division 1 Part V come into play, in particular section 69. It dictates what should happen next;


69.—(1) An agreement shall, for the purposes of sections 67 and 68, be implemented—

(a) (not relevant in this case)

(b) in the case of a lease of the land, by the Commissioner—

(i) making an order vesting the perpetual estate in the land in the persons named in the agreement as lessors;

(ii) requiring the persons so named to execute a lease in favour of the Commissioner in accordance with the terms of the agreement;

(iii) paying to such persons any premium or rent payable in accordance with the terms of the agreement; and

(iv) taking possession of the land;

It is abundantly clear there was no lease to the Commissioner; instead there was a lease by the Seventh Defendants to Axiom. The lack of that mandatory step in the process; the absence of a lease being taken by the Commissioner, renders the whole registration process void. The registration never happened and the land remains customary land. In the court of first instance giving rise to the Hiva appeal that is what Goldsbrough J found. The Court of Appeal did not overturn His Lordship's decision. In fact they said;

"In our view the learned Judge was correct in his decision. The appeal shall be dismissed with costs."

In the Sipisoa case Kabui J reached the same conclusion when dealing with a defective process under Division 1 Part V. He said;

There being no evidence Malaita Provincial Assembly wishing to acquire Namona'ako Land within the meaning of section 60(1)(a) of the Act, the acquisition process conducted in this case is therefore invalid, null and void."

In yet another case [13] Her Ladyship Izuako J reached a similar conclusion about a defective process;

"The acquisition proceedings instituted by the Commissioner of Lands.... In respect of Gwarimodu land between 1976 and 1977 was done contrary to the provisions of the Lands and Titles Act. The said acquisition proceedings is hereby declared null and void and of no effect whatsoever."

Earlier in her judgment Her Ladyship had said;

"My answer is that section 110 is not relevant to this case. The section refers to rights of an owner of a registered interest and I find that such a registered owner must be validly determined to be the owner."

22. The thread running through all these cases is that the process of converting customary land to registered land is one that must be followed to the letter of the law, as set out in the Lands and Titles Act, otherwise the registration is never effective. It is void ab initio, invalid, null and void and of no effect whatsoever. Whilst Sipisoa and Ramoau talk about the acquisition process it is clear this is not intended to limit the consequences of defective process to that part involving just the acquisition officer. It applies to the whole process from start to finish as set out, in respect of registration under Division 1 Part V, in sections 60 through to 70. That can be the only consequence of the plain words of the Lands and Titles Act particularly taking into account the unique position of customary land in Solomon Islands. The defendants submit that being a Torrens system it is one of "title by registration" as opposed to a system of registration of title. I find that very hard to reconcile with the accepted position taken in this jurisdiction that decisions affecting the ownership of customary land are decisions in personam and not decisions in rem. In all situations where the rights of customary landowners are likely to be affected; such as under the Mines and Minerals Act or the Forest Resources and Timber Utilisation Act, there is an extensive process of public consultation and rigid adherence to the requirements contained in the Acts in order for third party rights to be effective. The situation under the Lands and Titles Act should be no different. I accept that once land is correctly and validly registered there is protection afforded to others dealing with the registered owner. However, to allow that protection to exist when there has been such a bastardisation of the first registration process involving customary land, as appears to be the case here, would be wrong. There never was a registration because it was void ab inito. The answer to question 4a, is yes and to 4b, it is no. Given those answers, question 5 must be answered no.

23. Even though the answers provided favour the Claimants, it would be inappropriate to make any order for costs other than costs in the cause. There will also be the appropriate certification for Senior and Queen's Counsel.

Chetwynd J

[1] Axiom KB Ltd v SMM Solomon Ltd and Others Civil Appeal Case 28 of 2011 (24th March 2012)

[2] Executive Summary of the International Tender Document at Volume 1 page 224 of the Court Book

[3] Volume 2 page 412 of the Court Book

[4] See section 21 of the Act

[5] See Regulation3D(3)(b)

[6] See the Mines and Minerals Regulations 1996 Reg 3

[7] See page 256 of the Court Book

[8] Starting at page 557 of the Court Book

[9] Section 21

[10] Rodney Hiva and Others v. Ivin Mindu and Others CA-CAC 13 of 2008 (23rd July 2009)

[11]Sipisoa v. Acquisition Officer and Others Land Appeal Case No.8 of 1996 per Kabui J

[12] Bugoro v. Tango and Dinimana Land Appeal Case No 5 and 6 of 1995

[13] Ramoau v. Fatakalua and Others [2009] SBHC 46; HCSI – CC 255 of 2007

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