N2484

PAPUA NEW GUINEA

[National Court of Justice]

WS 756 of 2001

BETWEEN

BEWA TOU on his own behalf and on behalf of Isou Clan
of Krissa Village, Vanimo, Sandaun Province
Plaintiffs

AND

PAPUA NEW GUINEA FOREST AUTHORITY
First Defendant

AND

VELE IAMO
Secretary for Department of Finance
Second Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani	:	Sevua, J
2003		:	6th & 10th October

AND IN RE CONTEMPT OF COURT PROCEEDINGS AGAINST VALENTINE KAMBORI, Chairman of National Forest Board, TERRY WARRA, Acting Managing Director, National Forest Authority AND JOSEPH PEA, Acting Finance Manager, National Forest Authority

CONTEMPT – Contempt of Court – Order to pay interest and costs – Disobedience of order – Whether order ambiguous - Whether disobedience constitute contempt.

Cases cited:
Yap v. Tan and B & T Engineering Pty Ltd and Ors [1987] PNGLR 227
Spokes v. Banbury Board of Health (1865) LR 1 Eq 42 at 48
Ross Bishop and Ors v. Bishop Bros Engineering Pty Ltd and Ors [1988-89] PNGLR 533
Iberian Trust Ltd v. Founders Trust and Investment Co Ltd [1932] 2 KB 87 at 95
Re Bramblevale Ltd [1970] Ch 128; [1969] 3 All ER 1062
Knight v. Clifton [1971] Ch 700 at 707; [1971] 2 All ER 378 at 381
Dean v. Dean [1987] 1 FLR 517

Counsel:
Mr. P. Pakop for Plaintiffs
Mr. P. Mills for Defendants

10th October 2003

SEVUA, J:	This is an application by the plaintiffs by way of a notice of motion seeking that the present Acting Managing Director of the first defendant, Terry Wara, the Director of Finance of the first defendant, Robby Lovae, but in his absence, the Acting Finance Manager Joseph Pea and the Chairman of the first defendant’s Board, Valentine Kambori be cited for contempt of court.

The application relates to an order that this Court issued on 24th April 2003 in which default judgment in the sum of K942,809.96 was entered against the first defendant with interest and cost. Since that order, the first defendant has not complied with it, and the plaintiff complained that not only has the first defendant not complied with the order but had refused to obey the order.

The evidence in support of this application came from the affidavit of counsel for the plaintiffs, Powes Parkop sworn on 23rd September 2003 and filed on 26th September 2003. That evidence is undisputed and the Court accepts it.

Perhaps, at this juncture, and for the benefit of Mr. Mills, counsel for the contemnors, some factual background should be established so that he appreciates the basis for the plaintiff’s application since it is evident that he has not been fully instructed on this case, therefore does not seem to know much about the case.

The original writ of summons in this action was filed on 8th June 2001 and was served on the defendants on 12th June 2001. The first defendant filed its notice of intention to defend on 20th June 2001 and its defence on 25th July 2001.

On 7th December 2001, the plaintiff filed an amended writ of summons with amended statement of claim which was served on the first defendant on 13th December 2001. The first defendant filed its amended defence on 14th January 2002.

However, on 11th December 2001, the plaintiffs had filed its notice of discovery which was served on the first defendant on 12th December 2001. It seems the first defendant had failed to give discovery which led to the plaintiff filing a notice of motion seeking summary judgment or alternatively that the first defendant’s defence be struck out and judgment in default entered.

On 21st November 2002, Kandakasi, J made some orders, one of which was refused the plaintiff’s application for summary judgment. Another order was for the funds totalling K942,809.76, held in the Provincial Treasury at Vanimo under Timber Royalties Trust Account 360-82 be paid into the National Court Trust Account that day.

The order for payment into Court was not complied with which led to the plaintiffs filing a motion for contempt.

It is to be noted that up to this stage, the first defendant has always been represented by its inhouse lawyers, Jacqueline Boga and Dick Korowa.

The plaintiffs notice of motion filed on 16th December 2002 together with a statement of charge sought orders that the Secretary for Finance, Theaddues Kambanei, the Managing Director of the first defendant, David Nelson, the Director of Finance of the first defendant, Robby Lovae and Jacob Yafai of the Department of Finance be charged with contempt of court.

On 13th January 2003, Pius Kingal & Associates filed an appearance for the first defendant and the two officers of the first defendant, Messrs Nelson and Lovae.

This matter first came before me on 17th March 2003 when I sat as the Motions Court that month. Court records will show that the matter came before me again on 26th March 2003, 28th March 2003, 16th April 2003 and 24th April 2003 when I ordered that the first defendant’s defence be struck out and default judgment in the sum of K942,809.96 with interest and cost, which order is the subject of the present contempt proceedings.

It must be emphasized that the order dismissing the first defendant’s defence was based on the plaintiff’s notice of motion which had been on foot since 4th November 2002.

It must also be emphasized that the order of payment of monies into Court was made on 21st November 2002 and up to 24th April 2003, the first defendant and the Department of Finance had continuously failed to comply with it. So for over 5 months, the first defendant had blatantly refused to comply with Justice Kandakasi’s order until 24th April 2003.

I recall, I threatened to jail the first defendant’s officers if the money, the subject of the order by Kandakasi, J on 21st November 2002 was not paid immediately into Court. Consequently, the first and second defendants paid two cheques into Court totalling K942,809.76, the next day.

That is part of the chequered history of this case. So as Mr. Mills will note and appreciate, this background clearly demonstrated the attitude of the first defendant, the Papua New Guinea Forest Authority, and the Chairman of the National Forest Board, Mr. Valentine Kambori.

Now returning to the contempt proceedings before this Court, I reiterate that the affidavit evidence of counsel for the plaintiff, is undisputed. There is no dispute that this Court granted the order of 24th April 2003. There is no dispute that, that order was served on the relevant authorities including the Papua New Guinea Forest Authority and Mr. Kambori. There is no dispute that the first defendant has not complied with that order.

This Court is therefore satisfied, and I find as a fact, that the first defendant including the three officers that are charged with contempt herein have not complied with the order of 24th April 2003.

One aspect of this case which should be highlighted is this. From the evidence before me, the first defendant lodged an application for leave to appeal and a notice of appeal on 2nd June 2003. I understand that appeal was against my order. That application for leave to appeal and the notice of appeal were discontinued on 24th July 2003.

The first defendant and the contemnors rely on the affidavit of Terry Wara sworn on 18th October 2003 and filed in Court at the hearing of the plaintiffs motion. Mr. Mills made reference to an affidavit by Mr. Shepherd, however that affidavit is not in the Court file, however, I have perused a letter from Mr. Shepherd to the first defendant offering his opinion to the first defendant.

The essence of the evidence in Terry Wara’s affidavit is that, firstly, he says the officers concerned have no authority to make any payment to the plaintiff unless authorized by the National Forest Board. And secondly, he apologizes for the conduct of the first defendant’s previous lawyers as to the issue of interest and costs.

Mr. Mill’s submission is basically that the contemnors could not be found guilty of contempt of court because the order as to interest and costs is unclear and ambiguous. But there has been no satisfactory explanation, let alone evidence, as to why the issue of interest and cost is being raised today in the contempt proceedings when such could have been raised soon after the order of 24th April 2003. I have continued to raise this question since the matter was mentioned before me on Monday, 6th October and no satisfactory explanation has been advanced. All Mr. Mills could say is that he or his firm have only been instructed and he is unable to assist the Court as to what had previously transpired as the first defendant had been previously represented by other lawyers.

The Court maintains that if the first defendant, and indeed, Mr. Kambori and Mr. Wara had taken issue with the order as to interest and costs, why didn’t they raise this in April after the order of 24th April 2003? Or better still, why didn’t they raise this issue in August 2003, after the plaintiff’s lawyer had submitted a calculation of interest and costs on 22nd August 2003 to the first defendant?

There can be no doubt in anyone’s mind that the first defendant including its officers and the first defendant’s Board had wilfully ignored and disobeyed the order. Had they been genuine they would have returned to Court to raise the issue of interest and costs. But, I find that they just sat back and decided not to do anything thereby wilfully disobeying the order of this Court, until they were served with the plaintiffs notice of motion and statement of charge that they decided to appear in this application for contempt and raise the issue of interest and costs.

I think I would prefer the submissions of Mr. Parkop that this application is not to deal with the issue of interest and costs, but the contempt charge. In my view it is too late to be raising this issue today when the first defendant and the contemnors have had all the time and opportunity to raise it previously but failed to do so.

As I alluded to earlier on, the first defendant including the National Forest Board and the contemnors do not dispute that the order exists. They do not dispute that this order was given on 24th April 2003. They have not explained that they have done nothing until the contempt proceedings were instituted. I consider that Terry Wara’s affidavit is a lame excuse to attempt to deceive the Court that he had no authority to make payment. Even if that was accepted, he has not offered any explanation nor given any evidence as to any attempt he might have made to take the order to the attention of the Board. It is my view that the contemnors have no defence.

I find that the contemnors have wilfully disobeyed the court order of 24th April 2003 and the issue of interest and costs is merely an excuse to cover their blatant and wilful disobedience. The reasons for this finding of fact are these.

Firstly, neither the first defendant nor the Board made any genuine attempt to return to Court after 24th April 2003 to have the order rectified if they had been concerned about the implication of interest and costs. They had all the opportunity in the world to do that, but they failed to do that.

Terry Wara’s affidavit makes no mention of any attempt by him or the previous Managing Director or Robby Lovae or Joseph Pea to refer this issue to the Board for deliberation. If I were to accept what they are raising now, they did nothing to refer this issue to the Board.

Secondly, they had another opportunity on 22nd August 2003 or soon after when they were served with the plaintiff’s calculations of interest and costs. If they had disputed these calculations they should have responded to the plaintiffs’ lawyer and arrange to return to Court to rectify whatever it is they were disputing. Again they failed to do anything.

Thirdly, when the Chairman of the Board, Valentine Kambori was served with the plaintiff’s calculations sometime in August or September 2003, he made no genuine attempt at all to bring this matter to the Board’s attention. If he did, he has given no evidence of that. I find that he did not. If I were then to accept that he disagreed with the calculations of interest and costs, he made no effort whatsoever to return to Court to rectify what he might have perceived to be an unclear and ambiguous order. There is no evidence that he took this issue to the Board. As Chairman of the Board, he had the opportunity to have this issue rectified if he had believed the order to be ambiguous, however he failed.

Fourthly, the first defendant, the Board and the contemnors had another opportunity on or after 22nd August 2003 when the Prime Minister had written to the Chairman of the Board, Valentine Kambori on that date and the Prime Minister had stated in his letter that he had considered and reviewed the facts of this case and was satisfied that the judgment obtained by the plaintiffs were competent for the first defendant to settle in accordance with the decision of the National Court.

There is no evidence by the Chairman that this matter and the letter from the Prime Minister were deliberated upon by the Board. To my mind, the attitude of the Chairman and the first defendant can best be described as arrogant and wilful. The fact that the Authority and the Board Chairman did nothing clearly demonstrated that his disobedience of the order was intentional and wilful.

Finally, the contemnors still had another opportunity when they were served with contempt proceedings documents on 29th September 2003. If they were genuine about their attitude towards the order for interest and costs, they did not communicate with the plaintiff’s lawyer, perhaps to persuade the plaintiffs and their lawyer to withhold such contempt proceedings until they resolve the issue of interest and costs. I find as a fact that they had that opportunity but did nothing until they came to Court on 6th October 2003 and raised it through their counsel. As I asked time and again, why didn’t they raise this issue soon after the order was made or when the opportunities I have alluded to presented themselves?

I therefore find as facts that the contemnors had all the opportunities to raise the issue of interest and costs prior to yesterday, but failed to utilize those opportunities.

In my view, the failure by the first defendant, its Board and the contemnors to pursue this issue amounted to a wilful disobedience of the Court order of 24th April 2003. The issue they are raising now is nothing but a smokescreen to hide their guilt and their arrogance and disobedience.

The law is clear and I find that the issue being raised now is not a defence but a last minute attempt to divert the attention of the Court. I find that the contemnors have no defence to the contempt charge and I am inclined to cite them for contempt of court. In my view, the issue raised now will be relevant if they are convicted of contempt of court.

Their excuse does not stand to reason even though they might have accepted the opinion of Mr. Shepherd per his letter of 2nd October 2003.

I consider that the first defendant and the contemnors have misconceived the law of contempt. I reject Mr. Shepherd’s opinion that the contempt proceedings are flawed for various reasons. With respect that is not the law.

I refer to Supreme Court decision in Yap v. Tan and B & T Engineering Pty Ltd and Ors [1987] PNGLR 227 where the Court held inter alia that:

"(1)	It is a civil contempt of Court to refuse or neglect to do an act required by a judgment or order, or to disobey a judgment or order……..

(2)	Where an order is made by a Court of competent jurisdiction it is the obligation of every person against, or in respect of, whom the order is made, to obey it unless and until that order is discharged; the obligation extends to cover were the person affected by the order believes it to be irregular or even void." (my emphasis)

In the light of that authority, I consider that the contemnors were obliged to obey the order of 24th April 2003, even if they felt the order was irregular, as I note from Mr. Shepherds advice. Until that order is set aside, they had the obligation or legal obligation to obey the order. If they felt that the order was ambiguous, they still had the obligation to comply and the only way they would comply is to come back to Court to have the order clarified so that they could comply.

I consider that the contemnors had the opportunities I have alluded to, and it was open to them to come back to Court if they wanted to, so that they could comply with the order. However, as I have found, they did nothing despite the fact that they had the opportunities and the time to ensure compliance of or obedience to the order.

I am satisfied that the failure to obey the order or comply with it was intentional and wilful. The actions and attitude of the contemnors suggest that they are above the law and that they shall not bend to the law. On that, I need to say what Chief Justice McKean of the United States Supreme Court said in 1778, Cited by Fox: The History of Contempt of Court (1927) p.47:

"Since, however, the question seems to resolve itself into this, whether you shall bend to the law, or the law shall bend to you, it is our duty to determine that the former shall be the case."

The case of Yap v. Tan & Ors (supra) is supported by Spokes v. Banbury Board of Health (1865) LR 1 Eq 42 at 48 where Wood, VC said:

"the simple and only view is that an order must be obeyed, that those who wish to get rid of that order must do so by the proper course, an appeal. So long as it exists the order must be obeyed and obeyed to the letter……………"

I think that is an old Canadian case, but never mind how old it is, the point has been made and that statement of the law reminds me of what the evidence has revealed, and which I now wish to refer to very briefly.

The first defendant had filed an application for leave to appeal and a notice of appeal in the Supreme Court on 2nd June 2003. The application and the notice of appeal were discontinued on 24th July 2003. The order of 24th April 2003 therefore was still valid and the first defendant should have obeyed it. For it to come to this Court and say it wanted to reopen the appeal is contemptuous, in my view. It had exercised its right of appeal but subsequently discontinued its appeal therefore the first defendant cannot come to this Court and tell the Court it wanted to reopen its case in the Supreme Court. Frankly, I see no basis for that course, but that is not the issue here. In any event, that appeal is of no consequence to the proceeding of contempt in this Court.

Both counsels had referred to Ross Bishop and Ors v. Bishop Bros Engineering Pty Ltd and Ors [1988-89] PNGLR 533. Counsel for the contemnors submitted that the order of 24th April 2003 was unclear and ambiguous while the plaintiffs’ counsel submitted that the order was clear and unambiguous. The Supreme Court held inter alia, that in proceedings for contempt of court for failing to obey a court order, the order must be clear and unambiguous, and furthermore, failure to obey the terms of the order must be wilful.

I have already found that the disobedience to the order of 24th April 2003 was wilful. In respect of the issue of clarity and ambiguity, I am of the view that the order for interest and costs was quite clear and unambiguous. It was open to the first defendant to seek clarification if it felt the order required clarification.

In any event, I am of the opinion that the issue of ambiguity in that case is distinguishable from the present case. In that case, it was ordered that "the first, second and third plaintiffs be granted access to, possession of and use of their goods referred to in the writ of summons herein situated in the premises of the defendant."

The ambiguity in that order was that the appellants had thought that the order "access to, possession of and use of" had meant that they were entitled to immediate possession of their goods. I believe that, that situation is different to the one in the present case therefore the contemnors in the present case could not claim ambiguity. The order in that case was an interim ex parte order which was to be fully argued on the return date, but prior to that date, the appellants had sought to have access to and possession of their properties purportedly pursuant to the ex parte order.

I am of the view that, this present case can be distinguished from Bishop’s case. Whilst I appreciate that a person cannot be convicted for contempt for disobeying a court order unless the order is clear and unambiguous, I believe that the present case is not the same as Bishop’s case.

It is my view that technically, there is an order which the contemnors have not obeyed. In my view, the contemnors cannot get around the disobedience of the order as the first defendant was ordered to pay interest and costs. Strictly speaking therefore, there is an order in place which the Papua New Guinea Forest Authority and its officers have not obeyed or complied with. The order that judgment by default in the sum or K942,809.96 with interest and costs was made, in my view was specific. It directed that the first defendant pays interest and costs as well. It was for the parties to agree to the calculations, in my view.

Here the order was specific and clear. The terms of the order did not say the first defendant "can" or "may" pay interest and costs. In my view, it was directed to pay interest and costs.

In Iberian Trust Ltd v. Founders Trust and Investment Co Ltd [1932] 2 KB 87 at 95, Luxmore, J said, "If the Court is to punish anyone for not carrying out its orders, the order must in unambiguous terms, direct what is to be done." I believe that the order of 24th April 2003 directed the first defendant to pay interest and costs and I do not see how those terms are unclear and ambiguous.

There are cases where the Courts have made orders for interest and costs without specifying the rate of interest and the amount of costs. Parties then are able to resolve the amount of interest and costs. On the other hand, there are cases where Courts have made specific orders as to the rate of interest and the amount of costs where the plaintiffs are able to calculate these and submit them to the Court making the orders.

I do not see how the first defendant could say that the order was wrong and irregular or void. In essence, what the first defendant and the contemnors are acknowledging is that there is an order in existence, the terms of which are unclear and ambiguous.

This leads me to the question of the standard of proof in contempt cases.

In Bishop’s case the Supreme Court held that the standard of proof is proof beyond reasonable doubt. This is because contempt of court is an offence that is criminal in nature as the penalty is. This is consistent with the common law principles relating to contempt. In English law, it is established that the standard of proof is that applicable to criminal cases so that the breach must be proved beyond all reasonable doubt.

In Re Bramblevale Ltd [1970] Ch 128; [1969] 3 All ER 1062; an appeal to the English Court of Appeal, the Master of Rolls, Lord Denning said:

"A contempt of court is an offence of a criminal character. A man may be sent to prison for it. It must be satisfactorily proved. To use the time - honoured phrase, it must be proved beyond all reasonable doubt…………………….."

That case has since been followed by another Court of Appeal decision Knight v. Clifton [1971] Ch 700 at 707; [1971] 2 All ER 378 at 381 where Russell LJ said:

"Contempt of court, even of the type that consists in breach of an injunction or undertaking, is something that may carry penal consequences, even loss of liberty, and the evidence required to establish it must be appropriately cogent."

Another English case, Dean v. Dean [1987] 1 FLR 517 also shares the same principle. Dillon LJ said at 521:

"I have no doubt that the procedure in contempt is of a criminal nature and that the case against the alleged contemnor must be proved to the criminal standard of proof."

In the present case, I have already made certain findings of facts, one of which is that the contemnors and, indeed the first defendant, do not dispute that the order was made on 24th April 2003. There is no evidence by the contemnors that this fact is denied. There is no dispute that the order exists. There is therefore no doubt in my mind that the contempt has been made out to the required standard. Accordingly, I am satisfied beyond all reasonable doubt that the plaintiffs have proven the contempt.

Whilst the order of 24th April 2003 is directed at the Papua New Guinea Forest Authority, in so far as Valentine Kambori is concerned, he is the Chairman of the National Forest Board. By virtue of s.9 of the Forestry Act 1991, the Board shall carry out the functions and objectives, manage the affairs and exercise the powers of the Authority. Since he and the Board can exercise the powers of the Authority, I find as a matter of law that he failed to exercise the function and authority of the Authority in obeying the court order. I find him guilty of contempt of Court.

In relation to Terry Wara and Joseph Pea, they are officers of the Papua New Guinea Forest Authority, the first defendant. They are therefore responsible to exercise the functions of the Authority. Terry Wara is the Acting Managing Director thus the Chief Executive of the Authority. Joseph Pea is the Acting Finance Manager responsible for money matters. I find that both officers are responsible for the exercise of some of the functions of the Authority.

Whilst I have noted that the affidavit evidence of Terry Wara handed up in Court yesterday, I have made a finding of fact that his evidence is merely an excuse especially when he states that they have no financial authority to approve or pay the amount being claimed. The fact is both officers did nothing at all to refer the matter to the Board if they claim that the approval of funds is the function of the Board. I have found that they made no attempt at all and this I have found amounted to making no attempt at all to comply with the Court order. That is the basis that I found them to have wilfully disobeyed the order. I also find that they are both guilty of contempt of Court.

For all the reasons, I am satisfied beyond all reasonable doubt that all three contemnors are guilty of the offence of contempt of court and I convict them accordingly.

Finally, I think that in view of the effect of s.9 and s.5 of the Forestry Act, all the Members of the Board and the Authority itself including Robby Lovae should have been charged with contempt as well. However, that is a matter for the plaintiff to consider. Because they have not been charged, the Court cannot deal with them at this stage.

The Court will now hear the contemnors and both counsels in mitigation.
____________________________________________________________________
Lawyer for Plaintiffs		:	Powes Parkop Lawyers
Lawyer for Defendants		:	Blake Dawson Waldron