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Friendly Islands Satellite Communications Ltd v Pohiva [2015] TOCA 14; AC14 of 2015 (16 September 2015)

IN THE COURT OF APPEAL OF TONGA

CIVIL JURISDICTION AC 14 of 2015

NUKU'ALOFA REGISTRY [CV 64 of 2014]

BETWEEN:

FRIENDLY ISLANDS SATELLITE COMMUNICATIONS LIMITED (TRADING AS TONGASAT)
Appellant

AND:

1. LAUCALA POHIVA TRADING AS THE KELE'A NEWSPAPER
2. MATENI TAPUELUELU
3. MELE TEUSIVI 'AMANAKI
4. PUBLIC SERVICE ASSOCIATION INCORPORATED
Respondents

Coram: Moore J
Blanchard J
Hansen J
Tupou J

Counsel: Mr. S. Stanton SC & Mr. W. Edwards for the Appellant
Dr. R. Harrison QC SC for the Respondents

Date of Hearing: 14 September 2015
Date of Judgment: 16 September 2015

JUDGMENT OF THE COURT

[1] This is an application for leave to appeal from an interlocutory order of Lord Chief Justice Paulsen of 19 May 2015 discharging restraining orders made by a judge of the Supreme Court on 26 August 2014 and 12 November 2014. The hearing before the Court of Appeal proceeded on the basis that the parties would put their submissions on leave to appeal and, at the same time, their submissions on the appeal in the event that leave was given. Generally we will, for convenience, refer in these reasons to these proceedings as the appeal.

[2] The background was summarised by the Chief Justice in his reasons and it appears to have been an uncontentious summary though made with the appropriate qualification that it was made at an interlocutory stage on the basis of limited material. It is convenient to repeat that summary in this judgment. We will, for the purposes of repeating this summary, continue to refer to the parties by reference to their status in the proceedings in the Supreme Court.

[3] The first plaintiff Friendly Islands Sattelite Communications Ltd (Tongasat) was the exclusive agent for the Kingdom of Tonga in the management of its orbital slot positions. The second and third plaintiffs were at all material times the managing director and marketing and finance directors respectively of Tongasat. The plaintiffs commenced this action against seven defendants. It includes a claim for breach of confidentiality. The first four defendants were involved in one capacity or other with the Tongan newspaper the Kele'a. Two of them are respondents to this appeal, namely the first defendant/respondent who published Kele'a and the second defendant/respondent who edited the newspaper. The fifth and sixth defendants/respondents were, respectively, the Tonga Public Service Association Inc (Tonga PSA) and its Secretary-General.

[4] On 1 February 2013, the Deputy CEO at the Commissioner of Revenue's office wrote to the Tax Agent for Tongasat advising that an objection by Tongasat to a 2010/2011 income tax assessment had been disallowed. The result was that Tongasat was said to owe $12,135,941.31 in income tax. On a date prior to 11 August 2014 the letter of 1 February 2013 was delivered to the offices of the Kele'a by a person unknown who slipped an envelope containing it under the Kele'a's office door. On 11 August 2014 a copy of the letter and other documents relating to Tongasat and its tax affairs, were separately delivered to the Tonga PSA in the same manner. The person or persons who delivered the documents to the Kele'a and the Tonga PSA was unknown to the plaintiffs and to the first to sixth defendants. There was no sharing of the documents received between the Kele'a and the Tonga PSA.

[5] On 11 August 2014 there were articles published in the Kele'a on pages 4 and 13 under the headline "Previous Sale of Satellite Slot in exchange of letters with Tax Department". On the same day Kele'a published on its website a similar article under the same headline. The focus of the article on page 4 of the Kele'a was past Government decisions and actions and in particular whether it had leased or sold orbital slots. The Commissioner of Revenue's letter of 1 February 2013 was referred to in the article as well as being reproduced in full. Its relevance to the subject matter of the article was as showing that a satellite slot had been sold. There was mention of the fact that the Tonga PSA and Mr 'Akilisi Pohiva had taken Court action to challenge that transaction. The second article in the Kele'a that day, on page 13, discussed in more detail the content of the letter of 1 February 2013. It noted that Tongasat had unsuccessfully sought a tax exemption on money received from the sale of orbital slots and that "the outstanding tax due for Tongasat remains unchanged at $12,135,941.31". The article also discussed whether orbital slots were sold or leased and concluded by asking whether Tongasat's tax remained unpaid.


[6] On 18 August 2014, the Tonga PSA issued a press release No 14/14 entitled "Concerns on Tax Arrears of Tongasat and its Employees". The press release complained of expressed concerns that the Tonga PSA had about the tax arrears of Tongasat with a recommendation for the Ministry of Revenue to conduct an internal compliance audit of "Tongasat's income for confirmation of tax due to Government for leasing out the orbital slots that belonged to Tonga". It asserted that it was not fair that small businesses paid their taxes in a timely manner while Tongasat had tax arrears from 2010/2011 in the millions of dollars. With reference to the letter of 1 February 2013 the press release stated that Tongasat's tax arrears were around $12 million and that "Tongasat had sued Government for this income tax charged to them and lost". It was asserted also that not included in the $12 million was PAYE tax as well as tax payable on revenue that it was estimated Tongasat had earned from leasing satellite slots under existing commercial contracts since 2009 totaling approximately $19.5 million and that it was not known whether Tongasat had declared this income to the Ministry of Revenue. The press release also focused on an agreement for the sale of two orbital slots at 134°E and 138°E said to have been negotiated by the Minister of Finance, Mr 'Aisake Eke, which it was said would produce taxable income to Tongasat. The press release opined that the agreement should be submitted to Parliament for approval. The press release contained a prominent picture of Her Royal Highness Princess Pilolevu, and identifies her as the "Chairlady of Tongasat" who had "directed for the sale price of the two orbital slots" and also a picture of Mr 'Aisake Eke the Minister of Finance.

[7] On 25 August 2014 there appeared in the Kele'a an article authored by the Tonga PSA headed "Pay all your taxes appropriately". The article complained of what might, on one view, be regarded as a public spirited attempt to have "rich companies" pay their taxes but its focus was on Tongasat. Tongasat was mentioned five times and no other companies were named. The article also referenced the letter of 1 February 2013 "from the Department to Tongasat requesting that they pay their tax due 2010/2011 which was T$12m odd tax due" and went on to make the point that more money may be owed for PAYE and Tongasat's "dues on 2011/20012 & 2012/2013?". Tongasat was said to have used the assets of the nation but not "meet their payment" and "That is why PSA suggested to the department that an audit should be done to Tongasat". 


[8] On around 22 January 2015 the Tonga PSA was invited by the new Prime Minister, Mr. 'Akilisi Pohiva, to speak to Cabinet. Its presentation was on upholding the rule of law as the key to the sustainable socio-economic development for Tonga. On 23 January 2015 the Tonga PSA issued a further press release No 01/15 describing its presentation to Cabinet which was published both in hard copy and in electronic form on the Tonga PSA's Facebook page. The press release dealt with the broader controversies over Tongasat's administration of satellite slots, non-payment of license fees and appropriation of funds received from the People's Republic of China. It referred to millions of dollars in lost revenue to the Government of Tonga. It also questioned the legality of outright sales of orbital slots. It called for an investigation and the transfer of the Minister of Finance to another portfolio.

[9] The issues raised in this appeal are, first, whether the Chief Justice erred in discharging the orders which had been made ex parte on 26 August 2014 on the application of Tongasat restraining the first to fifth defendants from, amongst other things, further publishing information about Tongasat's taxation affairs. The orders were, relevantly, in the following terms:

...restraining the [first to fifth defendants] from further publishing disseminating and/or referring to or parting with possession of the documents (being confidential tax documentation and information of ... [Tongasat]) including their destruction.

And, secondly, whether the Chief Justice erred in discharging the orders made on 12 November 2014 requiring the fifth defendant, on behalf of the Tonga PSA, to provide written undertakings to this effect:

(i) She on behalf of the PSA Association has no further documents emanating from the tax file relating to Tongasat that are confidential.

(ii)   That no further publication or use of those documents in any further publication will be made by her, her servants or agents on behalf of the Association.

(iii)   That those documents and indeed the affidavit she has filed in this proceeding will be treated as confidential to this litigation and are not to be given or allowed to be read by any person other than a party including counsel to this litigation. All documents are confidential to the court until further order.

[10] The Chief Justice dealt with the issue of the rescission or variation of the ex parte restraining orders in a discrete part of his reasons under a heading to that effect. Under a subheading "The principles to be applied", the Chief Justice indicated he adopted the approach in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA). He described that approach in the following terms: