N4301

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS NOS 616 & 924 OF 2008

RAIKOS HOLDINGS LIMITED
Plaintiff

V

PORCHE ENTERPRISE LIMITED
Defendant

Madang: Cannings J
2011: 13, 24 May

PUNISHMENT

CONTEMPT – failure to comply with court orders – punishment – corporate contemnor – determination of maximum penalty where maximum not prescribed by law – identification of starting point – assessment of mitigating and aggravating factors – fine of K200,000.00 imposed.

The contemnor, a corporation, was found guilty of contempt of court for deliberately failing to comply with an order of the National Court. A hearing was then held to address the question of punishment. The contemnor argued that a fine of K5,000.00 was sufficient. The prosecuting party, however, submitted that a fine in the order of K10 million should be imposed.

Held:

(1)	There being no maximum penalty prescribed by law for contempt of court, it is appropriate to fix a notional maximum for a corporation by considering the maximum penalties under the legislation governing its business and affairs.

(2)	An appropriate notional maximum in this case, by reference to the Forestry Act 1991, is K1 million.

(3)	A useful starting point for punishment purposes is the middle of the range: K500,000.00; and then the court should look at mitigating and aggravating factors to determine the amount of the fine.

(4)	Mitigating factors are: the contemnor is a 'first-time offender'; the contemnor made some attempt to comply with the order it breached; the contemnor was to some extent confused about how it should comply; imposition of a substantial fine may have an adverse impact on the company, which is relatively small.

(5)	Aggravating factors are: the contempt of which the contemnor is guilty was wilful; there has been no purgation of the contempt; lack of remorse.

(6)	After weighing the mitigating and aggravating factors, it was appropriate that the fine be set below the starting point. Accordingly, the punishment was a fine of K200,000.00, half of which is suspended on condition that the amount due to the plaintiff under the original court is paid within 21 days.

Cases cited

The following cases are cited in the judgment:

Newsat Ltd v Telikom PNG Ltd (2008) N3673
Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448
Raikos Holdings Ltd v Porche Enterprise Ltd (2011) N4254

PUNISHMENT

This is the punishment of a company for contempt of court.

Counsel

T Anis, for the plaintiff
S Toggo, for the defendant

24 May, 2011

1. CANNINGS J: The contemnor, Porche Enterprise Ltd, has been found guilty of contempt of court for failing to comply with an order of the National Court. The question now before the court is what punishment should it be subject to.

2. The order that Porche failed to comply with was to pay levy fees of K76,847.64 to Raikos that were payable under a logging and marketing agreement. I made the order on 5 February 2010 in the context of ongoing litigation between Raikos and Porche and allowed 14 days for payment. Porche did not pay any fees to Raikos, so Raikos prosecuted Porche for contempt. Porche claimed that it had paid the fees to Raikos's chairman. However, I held that there was insufficient evidence of that, and even if there had been, it would not have been a good defence as the order required the fees to be paid to the company, not its officers. I held that the failure to comply with the order was deliberate and therefore convicted Porche of contempt. Further details of the circumstances in which the contempt was committed are set out in the judgment on verdict, Raikos Holdings Ltd v Porche Enterprise Ltd (2011) N4254.

DECISION MAKING PROCESS

3. To determine the appropriate punishment I will take the same approach as in Newsat Ltd v Telikom PNG Ltd (2008) N3673, a case in which the contemnor was fined K5 million for contempt of court. Thus:

•	step 1: what form of punishment should be imposed?
•	step 2: what is the maximum punishment?
•	step 3: what is a proper starting point?
•	step 4: what should the punishment be in this case?
•	step 5: should all or part of the punishment be suspended?
•	step 6: who should receive the benefit of the punishment?

STEP 1: WHAT FORM OF PUNISHMENT SHOULD BE IMPOSED?

4. Contempt of court is prosecuted under Division 14.6 of the National Court Rules. Order 14, Rule 49 (punishment) deals with contempt by a corporation:

Where the contemnor is a corporation the Court may punish contempt by sequestration or fine or both.

5. Sequestration entails the court-sanctioned seizure of a contemnor's assets. As I said in Telikom, sequestration should be reserved for cases of extreme contempt or perhaps where a corporation does not have the financial capacity to pay a fine. It is not an appropriate form of punishment in the present case and the plaintiff did not press for it. The appropriate form of punishment is a fine.

STEP 2: WHAT IS THE MAXIMUM PUNISHMENT?

6. The National Court Rules do not fix a minimum or maximum punishment for contempt and there is no other law that fixes a minimum or maximum. The court has a very wide discretion. In deciding how that discretion should be exercised it is useful to set a notional maximum by reference to the penalties that are available for offences under the laws that govern the business and affairs of the corporation.

7. Mr Toggo, for Porche, submitted that the relevant law in this case was the Companies Act 1997 and that by referring to that law the notional maximum should be K10,000.00. I reject that submission. First, the Companies Act is a law of general application. It applies to all corporations established under the Companies Act. Reference should only be made to it for the purposes of setting a notional maximum if there is no other relevant law. Here, there is a directly relevant law, which I will explain later. Secondly, the maximum penalty for offences under the Companies Act is not K10,000.00, but K200,000.00. See, for example, Section 414(3).

8. The major law governing Porche's operations is the Forestry Act 1991 and the most serious offence created by it is in Section 122(1): a forest industry participant which engages in forest industry activities except in accordance with a timber permit, timber authority, licence, or forest clearing authority is guilty of an offence, the maximum penalty for which is a fine of K1 million or five years imprisonment or both.

9. Committing contempt of court amounts to an interference in the administration of justice and a subjugation of the Rule of Law (Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448). The Constitution recognises the significance of contempt of court as an offence in various provisions. Section 37(2) states generally that nobody may be convicted of an offence that is not defined by, and the penalty for which is not prescribed by, a written law – but creates an exception in the case of contempt of court. Sections 160(2) and 163(2) provide that the Supreme Court and the National Court are superior courts of record, each one having "the power to punish the offence against itself commonly known as contempt of court". Contempt of court must be treated with at least as much seriousness as the sort of offence created by the Forestry Act. Therefore the appropriate notional maximum penalty is a fine of K1 million.

STEP 3: WHAT IS A PROPER STARTING POINT?

10. Judges often refer to a starting point when they are determining a sentence, ie a reference point against which the case before them can be assessed. The judge assesses whether the case is more, or less, serious than the starting point. If it is, to what extent is it more serious or less serious?

11. I noted in Telikom that no starting points or punishment guidelines had been set for contempt of court so I set the starting point in the middle of the available range. I take that approach here and use a starting point of K500,000.00.

STEP 4: WHAT SHOULD THE PUNISHMENT BE IN THIS CASE?

12. I will now highlight the mitigating and aggravating factors and determine the amount of the fine, if any, that should be imposed on Porche. The more mitigating factors, the more likely it is that the fine will be below the starting point. The more aggravating factors, the more likely that the fine will be above the starting point. However, just like the process of sentencing in normal criminal cases, fixing the amount of a fine for a corporate contemnor is not an exact science. It is a discretionary process. When a factor is marked as mitigating or aggravating it does not mean necessarily that it is given the same weight as another mitigating or aggravating factor. A mitigating factor might be 'strongly mitigating' or 'mildly mitigating' or somewhere in-between. The same goes for aggravating factors.

Mitigating factors

13. First, Porche is a 'first-time offender'. Mr Toggo submits that Porche has not previously been convicted of contempt or any other offence. There was no evidence to counter that proposition so I accept the statement as truthful. It is a strong mitigating factor.

14. Secondly, Porche made some attempt to comply with the court order of 10 February 2010 – albeit a clumsy and ineffectual one – by making some form of payment to Raikos's chairman, Gawan Kuyan. Although it was not found as a fact that full payment had been made, there was evidence of some form of payment.

15. Thirdly, there has been a series of disputes about ownership and control of Raikos Holdings Ltd, so that Porche was, to some extent, confused about who it should be dealing with. I found in the decision on verdict that this did not provide Porche with a defence but I accept Mr Toggo's submission that it can be taken into account as a mitigating factor.

16. Fourthly, although nothing is in evidence about Porche's turnover or the size or profitability of the company, it is not a large company on the scale of Telikom PNG Ltd, and this is something that should be taken into account when fixing the amount of a fine. In that sense its relative 'smallness' is regarded as a mitigating factor.

Aggravating factors

17. First, the contempt of which Porche is guilty cannot be regarded as 'technical' or unintentional. Disobedience of the order was wilful.

18. Secondly, there has been no purging of the contempt. Porche has still not paid to Raikos the sum of K76,847.64 it was ordered to pay in February 2010. The contumacious conduct has continued unabated for 15 months. This is a major aggravating factor.

19. Thirdly, Porche has shown no remorse or contrition. An apology to the court from the Managing Director or the company secretary would have been appropriate but none has been forthcoming.

20. Before weighing the mitigating and aggravating factors, there was one aggravating factor proposed by Mr Anis, for Raikos, with which I have difficulty: that Porche, being a foreign enterprise, is under a higher duty to respect the laws of PNG than a national enterprise. I can find no support for such a proposition in any law and Mr Anis was unable to refer to any. The best approach is to regard foreign enterprises as being under an equal obligation as national enterprises to obey the laws of the country. I also reject Mr Anis's submission that the appropriate penalty is K10 million. That would be well over the notional maximum, and manifestly harsh and oppressive.

Weighing the relevant considerations

21. The three aggravating factors are strong. This was a serious case of contempt of court, for which there has been no purgation or remorse. Against those factors must be weighed strong mitigating factors, in particular the effect that a substantial fine would have on a company the size of Porche Enterprise Ltd. Those factors warrant a fine below the starting point. The punishment must fit the crime, however. The fine should be a measure of the seriousness of the offence, while at the same time not be so high that it is harsh or oppressive in its operation. Taking all those matters into account, I impose a fine of K200,000.00.

STEP 5: SHOULD ALL OR PART OF THE PUNISHMENT BE SUSPENDED?

22. Suspending all or part of the fine is an option under Order 14, Rule 49(3) of the National Court Rules, which states:

The Court may make an order for punishment on terms, including a suspension of punishment or a suspension of punishment where the contemnor gives security in such manner and in such sum as the Court may approve for good behaviour and performs the terms of the security.
 
23. Having regard to the nature of the order that Porche breached (which was for payment of a particular sum to another party in ongoing court proceedings) it is appropriate to suspend half of the fine on condition – or "terms", to use the wording of the rule – that that sum is paid within a set time. I will allow 21 days for payment of the amount of K76,847.64 to Raikos.

STEP 6: WHO SHOULD RECEIVE THE BENEFIT OF THE PUNISHMENT?

24. This was a live issue in Telikom as the court was faced with an argument that it would be counterproductive for Telikom to pay a fine to the National Government as it could easily find its way back to Telikom. Other authorities to which the fine could be paid were proffered as alternatives. I rejected the argument as the law is fairly clear. Fines are public moneys and must be paid, through the Registrar of the National Court, into the Consolidated Revenue Fund. That is the effect of Section 13 of the Public Finances (Management) Act, Section 18 of the Interpretation Act and Order 12, Rule 5 of the National Court Rules, which states:

(1)	Where the Court imposes a fine, the Court shall order that the person on whom the fine is imposed pay the fine to the Registrar.

(2)	The Registrar shall pay into the Consolidated Revenue Fund all moneys paid to him on account of any fine imposed by the Court.

25. I will make an order in those terms in the present case.

COSTS

26. These contempt proceedings have been an adjunct to civil proceedings and I consider that it is appropriate that the successful party have its costs paid by the losing party. Porche is being punished for committing contempt of court but I am not satisfied that the company has acted in bad faith, to the extent necessary to warrant the awarding of costs on a solicitor-client or an indemnity basis.

ORDER

27. I make an order in the following terms:

(1)	Porche Enterprise Ltd shall be punished for contempt of court by payment of a fine of K200,000.00, on the following terms:

(a)	Half of the amount of the fine will be suspended if, within 21 days after the date of entry of this order, Porche Enterprise Ltd pays to Raikos Holdings Ltd the sum of K76,847.64, in accordance with the order of 10 February 2010;

(b)	There shall be a further mention of this matter on 17 June 2011 at Madang for the purpose of determining whether the sum of K76,847.64 has been paid and determining when the amount of fine shall be paid to the Registrar of the National Court.

(2)	Porche Enterprise Ltd shall pay Raikos Enterprise Ltd's costs of these proceedings on a party-party basis, to be taxed if not agreed.

Ruling accordingly.
____________________________
Blake Dawson Lawyers: Lawyers for the Plaintiff
Daniels & Associates Lawyers: Lawyers for the Defendants