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:

The purpose of an interlocutory injunction is to maintain the status quo until the rights of the parties can be determined at the hearing of the suit. In order to secure an injunction a plaintiff must show that there is a serious question to be tried (in the sense that the plaintiff has made out a prima facie case) and that the balance of convenience favours the granting of the injunction. This enquiry requires the Court to look at the impact on the parties of a granting or the refusal of an order. Finally, an assessment of the overall justice of the case is required. If it can be shown that a plaintiff will be adequately compensated in damages and will suffer no irreparable injury if the injunction is not granted that is an important factor against the making of an order. However, the grant of an interim injunction involves the exercise of a discretion and the approach that I have outlined cannot be taken as suggesting a rigid or mechanical approach.

[11] The Chief Justice then dealt with the question of whether there was a serious question to be tried under a subheading "The threshold". 

[12] Before setting out the approach the Chief Justice took to this threshold question, it is convenient to set out the terms of s.57 of the Revenue Services Administration Act 2002: 

57. (1) All documents and information coming into a taxation officer's possession or knowledge in connection with the performance of duties under any revenue law shall be confidential.

(2) Nothing in subsection (1) shall prevent the disclosure of any document or information to –

(a) the Tax Tribunal or Supreme Court in relation to proceedings under this Act;

(b) any person in the service of Government in a revenue or statistical department where such disclosure is necessary for the performance of the person's official duties;

(c) the Auditor-General or any person authorised by the Auditor-General where such disclosure is necessary for the performance of official duties; or

(d) to the government of another country with which Tonga has an agreement, to the extent permitted under that agreement.

(3) All documents or information received by a person under subsection (2) shall be confidential.

(4) Any person who contravenes this section commits an offence and shall be liable upon conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years, or both.

(5) In this section, "taxation officer" means any person employed by the Revenue Services Department in any capacity.

[13] In his discussion of the threshold, the Chief Justice said the following about Tongasat's case based on s.57:

Tongasat bases its breach of confidentiality claim on section 57 RSA and on equitable principles. The defendants argue that the overriding public interest dictates that the law not protect the confidential information. The extent to which it is necessary for a Court at this stage to examine the legal merits of the arguments will vary from case to case. Whilst I make no final findings, of course, at this interlocutory stage I do not find the plaintiffs' reliance upon section 57 compelling. The plaintiffs' submissions did not articulate a preferred interpretation of section 57 but it appears that the plaintiffs regard it as a very broad secrecy provision binding tax officers and the public alike and protecting all correspondence and documents provided to any taxation officer or emanating from any taxation officer in connection with the performance of his duties. I do not find support for that in the wording of the section. I read and considered the large number of authorities that the plaintiffs' Counsel referred me to on secrecy provisions in taxation and other legislation in other jurisdictions but derived very little assistance from them. What I can say is that the plaintiffs have satisfied me to the extent that I consider there is a serious issue to be tried on the breach of confidentiality claim based on equitable principles notwithstanding the defendants' intended reliance upon an iniquity defense.

[14] From this point in his reasons, the Chief Justice addressed what he described as "the more difficult question", namely where the balance of convenience lay. He addressed a submission that there had been delay in seeking to discharge the restraining orders, concluding that the respondents had not been guilty of excessive delay. He then addressed a submission that the tax documents had been removed unlawfully from the offices of the Ministry of Revenue concluding that this was not an important consideration as there had been no suggestion that the respondents were involved in the removal and, as had been disavowed by counsel for Tongasat, there was no suggestion that the respondents had been engaged in criminal behaviour.

[15] The Chief Justice then addressed a proposition that disclosure of the information might cause irreparable harm to Tongasat or damages might be difficult to assess. On this question the Chief Justice said that although he considered the litigation had a "distinctly public flavour", he thought these were very important considerations to which he said he gave full weight in the balancing exercise. The Chief Justice next addressed an argument of the respondents that the restraining orders or their effect was a classic "gagging writ" in circumstances where the appellant's argument about s.57, central to the argument which secured the restraining orders, was very weak if not untenable. The Chief Justice indicated he was satisfied that as a general principle the Supreme Court should only restrain rights of free expression where there are clear and compelling reasons to do so.

[16] The Chief Justice next addressed an argument from the respondents that an extraordinary feature of the case was that Tongasat (and the other plaintiffs) had not pleaded that the Commissioner's letter did not reflect the true position. Effectively, the Chief Justice rejected this argument having regard to the pleadings. However the Chief Justice appeared to take cognizance of an argument that none of the plaintiffs' deponents asserted that the published statements derived from the Commissioner's letter were untrue. As to an argument by the respondents that there had already been publication, at least ofthe letter of 1 February 2013, the Chief Justice said this was not a strong point in the respondents favour as the publications in question have all been by them. He noted that if the publications were in breach of Tongasat's rights the Court "should be hesitant of allowing a repetition of the publication simply because of the effect of the earlier breach".

[17] The penultimate consideration addressed by the Chief Justice was what he described as the "real and genuine public interest in knowing how [Tonga's orbital slots (clearly very valuable assets of the nation)] have been managed and how revenue generated from them has been used". The Chief Justice then posed the question of whether this public interest overrode the competing need that Tongasat said it had to protect its confidential tax records.

[18] The Chief Justice concluded by saying that having taken these various arguments into account (and later reviewing the relevant evidence):

…the matter that in my view is decisive in tipping the balance in favor of discharging the restraining orders is that there is almost no evidence before the Court that Tongasat will suffer any harm for the disclosure of the documents in question or that the payment of damages would not be sufficient remedy if it does.

[19] The final conclusion of the Chief Justice was: 

Taking all the matters I have mentioned above into consideration I have formed the clear view that the balance of convenience favors discharging the restraining orders. Standing back and looking at the overall justice of the case my view is confirmed by the fact that there will now be considerable delays in having this case determined as a result of the manner in which the plaintiffs' claims have been presented. There is no opportunity that the case can be fast tracked. It is unjust in those circumstances that the restraining orders should remain in place on an open ended basis.

[20] We now turn to consider the arguments advanced by Tongasat in the appeal. At the forefront of those arguments was a proposition concerning s.57. It was that the true construction of the section was contrary to the view taken by the Chief Justice when exercising his discretion to discharge the orders. Allied to this proposition was the argument that the Chief Justice gave no weight to the fact that the respondents knew or ought to have known that the documents were confidential tax documents and that they had not been given or disclosed lawfully and that bore upon the way in which they were received. Reference was made to R v Commissioners of Inland Revenue ex parte National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2. Various passages from the judgments of their Lordships were quoted in Tongasat's written submissions concerning, amongst other things, the secrecy provisions of the UK Inland Revenue and taxation legislation.

[21] However ultimately the issue which falls for determination in relation to this argument of Tongasat is the meaning and effect of s.57 of the legislation of the Kingdom of Tonga and not broadly analogous provisions of legislation in other countries. The key to determining the proper construction of s.57 and therefore the scope of the section's operation are the opening words "all documents and information coming into a taxation officer's possession or knowledge … shall be confidential". Thus the section focuses only on information or documents which have "com[e] into the … possession" of a taxation officer. Fairly plainly this concerns documents and information provided by taxpayers as part of the process of assessing tax liability or documents or information gained or obtained by a taxation officer in the course of investigating the tax liability of a taxpayer. There is an obvious public purpose achieved by such a provision. As a broad generalisation, a taxpayer is liable to pay tax on, inter alia, taxable income. There needs to be a process whereby a taxpayer can disclose taxable income without fear that such disclosure will have consequences on the position of the taxpayer beyond the imposition of tax. A classic example would be a taxpayer who was engaged in immoral or even illegal activities generating income. Similar protection has to be provided, for the same reason, to documents or information gained or obtained during the investigation of a taxpayer's affairs.

[22] If this analysis of the section is correct, it militates against a conclusion that s.57 has a wider operation, as contended by Tongasat, to create statutory confidentiality (the breach of which attracts criminal sanctions) in relation to correspondence from the Commissioner of Revenue to a taxpayer setting out its tax liability as assessed by the Commissioner. It is our provisional view that it does not. It is true that the contentious documents contained information about the amount received by Tongasat for a particular transaction. It is conceivable that this information was otherwise not available in the public domain. However, even so, the argument of Tongasat proceeds on the premise that the documents are confidential by operation of s.57. We doubt very much this is so. While almost certainly the documents were confidential, it is not a confidentiality founded on taxation legislation the breach of which attracts criminal sanctions.

[23] Accordingly, we agree with the Chief Justice that a central element of Tongasat's case in the proceedings in the Supreme Court in opposition to the rescission of the restraining orders is not a strong one. 

[24] Other alleged errors in the approach the Chief Justice were relied on by Tongasat.

[25] Allied to the submission that the documents were confidential by operation of s.57, was a submission that they were of the same character as those protected by the section. That is, some of the documents emanated from the Commissioner of Revenue's Office and this, it is apparently said, gave them a special character seemingly requiring a greater level of protection. But absent protection by s.57, those documents were no more than confidential documents concerning the financial affairs of Tongasat involving communications with a third party, the Commissioner, about Tongasat's tax liability. They appear to us to be of the same general character as other confidential commercial documents concerning Tongasat's financial affairs. In this and other contexts, Tongasat relies on passages from Gatley on Libel and Slander, 12th Ed in Chapter 22 concerning the misuse of private information. This commentary relates, specifically, to Article 8 of the European Convention on Human Rights and Fundamental Freedoms (which declares that everyone has the right to respect for his private and family life, his home and his correspondence) and concerned "private information". However we are prepared to assume, for present purposes, that private information is information that is subject to the equitable principles concerning breach of confidentiality.

[26] Tongasat points to a passage at 22.5 in Gatley which says that, amongst a list of many and varied classes of information, a person's personal financial and tax related information is private information. We note that tax related information is referred to, in an undifferentiated way, with financial information. More importantly it is not suggested in the text that taxation information has some special status that distinguishes it from other categories of private information. As confidential information, it is almost certainly the case that the publication of tax related information is protected by the equitable principles concerning breach of confidentiality. But, in assessing whether there was a serious question to be tried in the context of granting or refusing interlocutory injunctive relief, it would not have been appropriate for the Chief Justice to proceed on the basis, as suggested by Tongasat, that the level or nature of the protection of taxation information differs from the protection afforded other confidential commercial information. Another potentially relevant distinction emerging from the application of Article 8 is between personal information and business information. However it is unnecessary for us to pursue this issue.

[27] It must be remembered that the Chief Justice accepted, in relation to the claimed breach of confidentiality, that there was a serious question to be tried. That necessarily involved an acceptance, for the limited purpose of assessing whether there was a serious question to be tried, that the documents in question were confidential. No error is revealed in the approach taken by the Chief Justice.

[28] This leads us to the second alleged error identified by Tongasat. It is to the effect that the Chief Justice erred in including in the mix of matters informing his consideration of the balance of convenience, the question of whether Tongasat would suffer damage or harm by the republication of the documents and discussion about them. However this proposition is tantamount to saying that interlocutory injunctive relief should continue pending trial simply by virtue of the fact that confidential documents had come into the possession of the respondents by means which were probably unlawful (on the part of the person or persons who provided the documents to the respondents). In our view, it cannot be the case that the risk of future or further harm to a plaintiff who alleges breach of confidentiality is irrelevant in deciding whether to grant or continue interlocutory injunctive relief. This is all the more so when, as discussed shortly, this risk of harm arising from a breach of confidentiality which is ultimately about damage to Tongasat's reputation and the commercial consequences of that damage, has to be balanced against other considerations concerning freedom of speech and the right of the public to be informed about matters of real and substantial public interest.

[29] This issue was addressed by Eady J in Lord Browne of Madingley v Associated Newspapers Ltd [2007] EWHC 202, an authority relied on by both Tongasat and the respondents. Eady J was dealing with an application for interlocutory injunctive relief restraining the publication of information concerning both the personal life of the plaintiff and his business dealings. At [28] and [29] Eady J discussed the intersection of a claim based on breach of confidentiality (though rooted in the provisions of the European Convention on Human Rights and Fundamental Freedoms) and the principles derived from Bonnard v Perryman [1891] 2 Ch 269 giving pre-eminence to the right of free speech in defamation cases. The following was said at [29] after a reference to the importance of not undermining the policy underlying Bonnard v Perryman:

It is, therefore, appropriate in my view to ask the question in such a case as the present, whether, even though the claim is brought on the basis of breach of confidence, nevertheless the true object of the complaint is the protection of reputation. If it is, then it is probably right that the higher hurdle contemplated in Bonnard v Perryman should have to be surmounted.

[30] That higher hurdle has been discussed in Tonga in Pale v Pohiva [2006] Tonga LR 148. The test was propounded in a variety of ways. But its essence is that it would only be in a compelling case that publication dealing with a matter of public concern would be restrained in a way that would curtail freedom of speech. The Chief Justice did not err in this matter in considering, as a factor in the mix of factors informing the balance of convenience, the extent to which Tongasat would, in the future, suffer damage if there was no interim injunctive relief. In the event, as noted earlier (above at [18]) that there was almost no evidence to show that Tongasat would suffer harm from republication or that damages would not be an adequate remedy if it did. 

[31] The third and related error identified by Tongasat was the Chief Justice's approach to the public interest exemplified by his comments in para [88] of his reasons. They were to the effect that Tongasat was managing orbital slots that were clearly very valuable assets of the nation and there was a real and genuine public interest in knowing how those assets had been managed. Stripped to its essentials, the submission of Tongasat was that matters concerning freedom of speech and the public interest in informing the public of matters of importance must yield to the right of Tongasat to protect the confidentiality of the documents. However, for our part, we do not discern any error in the approach of the Chief Justice. He was engaged in a balancing exercise and he was entitled, as he did, to weigh in the mix of considerations informing the balance of convenience, the right of the public to gain an appreciation of the way Tongasat operated particularly in the light of other allegations in the public domain about Tongasat's business activities involving the allegedly unlawful payment to it of aid money in the sum of approximately US$25 million provided to the Kingdom by the Peoples' Republic of China.
 
[32] As noted earlier, the decision of the Chief Justice to discharge the orders was a discretionary decision. In an appeal from the exercise of a discretion it is necessary for the appellant to demonstrate that the discretion was exercised on wrong principles, involved some fundamental misapprehension of the facts or involved taking into account irrelevant considerations or failing to take into account relevant considerations. These principles were recently affirmed by the Court of Appeal in Moala v Public Service Commission [2012] Tonga LR 44 at para [10]. In the present case the appellant has not identified error of this type and accordingly has not established a basis for interfering with the exercise of the discretionary power by the Chief Justice to discharge the restraining orders made by Supreme Court in 2014. The issues raised by the appellant and the factual context in which they arise are of some significance in the Kingdom of Tonga. In these circumstances it is appropriate to grant leave to appeal. However as no appealable legal error has been established, the appeal should be dismissed.

[33] Accordingly, the Court orders:

1.	Leave is given to the Friendly Islands Satellite Communications Limited to appeal against the order of the Chief Justice of 19 May 2015 discharging the restraining orders of 26 August 2014 and 12 November 2014.

2.	The appeal is dismissed.

3.	The Friendly Islands Satellite Communications Limited pay the respondents' costs of the application for leave to appeal and of the appeal as agreed or taxed.

Moore J

Blanchard J

Hansen J

Tupou J