IN THE SUPREME COURT OF THE REPUBLIC OF VANUATU
Judicial Review Case No. 16 of 2014
(Civil Jurisdiction)

BETWEEN:

PETER BONG
First Claimant

AND:

ALAN CARLOT
Second Claimant

AND:

KEVIN ABEL
Third Claimant

AND:

ALAIN LEW
Fourth Claimant

AND:

AIRPORT VANUATU LTD
First Defendant

AND:

ROWLAND KALSONG
Second Defendant

Coram: Mr Justice Oliver A. Saksak

Counsel: Felix Laumae for First, Second and Third Claimants
 Robin T. Kapapa for Fourth Claimant
 ViranMolisaTrief, Solicitor General for First and Second Defendants.

Date of Hearing: 30th – 31st October 2014.
Date of Decision: 3rd November 2014
Date of Judgment: 7th November 2014

JUDGMENT

Introduction

1.	This Judgment provides reasons for the decisions of the Court issued on 3rd November 2014.

2.	By way of background the following facts are relevant-

First Claimant ( Peter Bong)

a)	The First Claimant was at the relevant time employed by the First Defendant as Chief Executive Officer under a Contract of Employment dated 15th February 2012 for a period of 3 years to 15th February 2015.

b)	On or about 11th February 2014 the Minister of Finance and Economic Management and the Minister of Foreign Affairs convened a Shareholder's meeting and resolved to remove the old Board of Directors and appoint a new Board of Directors consisting of Maxwell Maltok ( Chairman) Andrew Kausiama, Nakat Willie ( deceased) Thierry Bourgeoise and Tony Ata. ( the new Board)

c)	By letter dated 21st March 2014 the new Board informed the First Claimant of their decision, the grounds for his suspension and of the opportunity to respond to the three allegations after thorough investigation, before a final decision was to be made.

d)	On 3rd July 2014 the new Board wrote a letter to the First Claimant informing him that he had been terminated at their meeting held on 2nd July 2014.

e)	The First Claimant sought Orders to have those decisions reviewed on grounds they were unlawful. He further sought declarations and Orders for reinstatement to his position and a prohibition order, and costs on an indemnity basis.

Second Claimant ( AlanCarlot)

a)	At the relevant time he was employed by the First Defendant as General Manager, Commercial under a Contract of Employment dated 12th January 2012 until 12th January 2015.

b)	Since 2000 he held the position of secretary to the Frist Defendant Company. He was present as secretary at the shareholders meeting on 11th February 2014.

c)	On 24th June 2014 the Second Defendant as the Acting Chief Executive Officer of the First Defendant wrote a letter to the Second Claimant informing him that his employment was terminated. He was suspended from his duties from 2nd May 2014.

d)	The Second Claimant sought Orders quashing his suspension and termination on grounds that the suspension and termination were unlawful. He sought declarations and Orders for reinstatement, a prohibition order and costs on an indemnity basis.

Third Claimant ( Kevin Abel)

a)	At the relevant time he was employed with the First Defendant as Air Traffic Controller under a Contract of Employment dated 28th February 2012 until 28th February 2015.

b)	By letter dated 27th June 2014 the Second Defendant wrote to the Third Claimant to inform him that pursuant to its decision made on 30th May 2014 the new Board has terminated his employment for reasons stated in the letter.

c)	He sought orders quashing his termination on grounds that it was unlawful. He sought declarations and orders for his reinstatement, a prohibition order and costs on an indemnity basis.

Fourth Claimant ( Alain Lew)

a)	He is the Chairman of the Board of Directors nominated and appointed pursuant to Article 76 of the Articles of Association of the First Defendant.

b)	He has never received any notice of resolution of shareholders of his removal. Any purported removal of him as a member of the Board of Directors on 11th February 2014 was unlawful and should be called up and quashed. He sought an order to reinstate him and the other members of the Board namely BakoaKaltonga, Johnson Iauma and Thomas Taite. He sought an order for costs.

3.	In the alternative, the first, second and third Claimants sought declaratory orders that their respective terminations were unjustified and therefore claimed damages therefor, to be assessed.

Evidence

4.	The Claimants filed and relied on their evidence by sworn statements by Peter Bong dated 22ndAgust 2014 ( Exhibit C4), by Alan Carlot also dated 22nd August 2014( Exhibit C5), by Kevin Abel also dated 22nd August 2014 ( Exhibit C6) and Alain Lew dated 13th August 2014 refiled on 21st August 2014 ( Exhibit C3), of 23rd September 2014 ( Exhibit C1) and of 29th October 2014 ( Exhibit C2). The Claimants confirmed their evidence orally and were cross-examined by Mrs Trief.

5.	The defendants filed a defence on 28th October 2014 to the Claimants claims filed on 1st August 2014 and 29th September 2014, well outside the mandatory requirement of 14 days required in Rule 17.7 (1) of the Civil Procedure Rules ( the Rules). They filed an amended defence on 30th October 2014, after obtaining leave of the Court. They denied every allegation made by the Claimants.

6.	The Defendants relied on their evidence by sworn statements filed by the Minister of Finance. Hon.MakiSimelum dated 30th October 2014 (Exhibit D1) by Maxwell Maltok dated 30th October 2014 (Exhibit D2) by Rolland Kalsong dated 30th October 2014 (Exhibit D3) and by Benson kanas dated 30th October 2014 (Exhibit D4). Only the Minister confirmed his sworn statement orally and was cross-examined by Counsel for the Claimants. Counsel did not wish to cross-examine Mr Maltok, Mr Kalsong and Mr Kanas. There was a fifth statement filed by Thierry Bongeouise on 30th October 2014. Mr Laumae objected to the admissibility of this statement.

Discussions

7.	At the outset of the hearing the Court heard Counsel in relation to Rule 17.8 of the Rules. The Court was satisfied that the criteria in Rule 17.8 (3) ( a)-(d) had been made out by the Claimants. The Claimants had applied on 19th September 2014 for abridgment of time to hear their claims on an urgent basis. The Court accepted their was urgency and abridged time. The Fourth Claimant had applied for enlargement of time on 23rd September 2014 and for joinder on 26th September 2014. The Court accepted those applications on 24th October 2014 and allowed them. The only application the Court did not deal with was the Claimants application for restraining orders filed on 17th October 2014.

8.	For the record Mr Laumae informed the Court during closing submissions that the First, Second and Third Claimants were not pressing for their alternative relief of damages. As a result the Court did grant the declaratory relief sought but did not order that damages be assessed.

9.	Further the Court did not grant the prohibition order sought by the Claimants. From the evidence by the Defendant's witnesses in particular, by Maxwell Maltok, Rolland Kalsong, and Benson Kanas there appears to be allegations of misconduct and mismanagement on the part of the First, Second and Third Claimants which, in the view of the First Defendant as employer, warranted dismissals. As employer, the First Defendant should be given opportunity to exercise that discretion, but that discretion ought to be exercised reasonably and with regard to and in compliance with procedures required by the Companies Act and the Articles of Association of the First Defendant Company, the Contracts of Employments of the Claimants and the Employment Act.

10.	I turn now to the issues-

a)	First, whether the shareholders meeting held on 11th February 2014 was properly convened? From the evidence of the Minister of Finance, Mr Maki Simelum there were two shareholders and both shareholders were present at the meeting held on 11th February 2014. The other shareholder present was the Minister of Foreign Affairs, Mr Edward NipakeNatapei. The Minster relied on annexure "MS3" to his sworn statement(Exhibit D1) in support of this assertion. The Minute records that Alan Carlot, Second Claimant was present as secretary. The defendants relied also on the evidence of Benson Kanas in support of this defence. Mr Kanas annexed as "BK2" the Annual Return of the First Defendant dated 21st September 2014. That document contains contradictory evidence rather than confirm the evidence of the Minister. Under paragraph 5 of the Annual Return there are listed three members holding shares. These are named as Hon. EsmonSaimon, Hon. Sato Kilman and Hon. Maki Simelum. That document is not stamped by the Financial Services Commission. But assuming it was duly received and accepted, it does not reflect the members present at the Shareholders meeting held on 11th February 2014. The validity of the shareholders meeting is therefore questionable on that basis.

b)	" Member" is defined in Article 3 of the Articles as " Members of the Company" Article 10 states-

Every person whose name is entered as a member in the Register of Members shall be entitled without payment to one certificate for all his shares, upon payment of such sum, not exceeding two hundred vatu for every certificate after the first as the Directors shall from time to time determined to several certificates, each for one or more of his shares. Every certificate shall be issued under the seal of… share seal and shall specify the shares to which it relates and the amount paid thereon. In the case of a share held jointly by serveral persons, the company shall not be bong to issue more than one certificate therefore and delivery of a certificate for one share to one of several joint holders shall be sufficient delivery to all" ( Emphasis by underlining).

The Defendants failed to produce the share certificates.

For those reasons the Court concluded that the purported meeting held on 11th February 2014 was not a shareholders meeting.

c)	Secondly the Fourth Claimant complained that he did not receive notification of the meeting and therefore questioned the validity of the purported removal of himself and BakoaKaltonga, Johnson Iauma, Louis Abel and Thomas Taite as members of the Board of Directors.

d)	It is recorded in the Minute of the Meeting held on 11th February 2014 that a verbal notice was given to the secretary to convene a shareholders meeting. Alan Carlot confirmed that fact. The minute records that it was resolved that the "Current Board of Directors be terminated". That refers to the Board chaired by Alain Lew.

e)	For removal of Directors section 196 of the Companies Act is the relevant provision. It states-

f)	" Removal of Directors

(1) A company may by ordinary resolution remove a director before the expiration of his period of office not withstanding anything in its articles or in any agreement between it and him.

Provided that this subsection shall not in the case of a private company, authorise the removal of a director holding office for life on the commencement of this Act, Whether or not subject to retirement under an age limit by virtue of the articles or otherwise.

(2) Special notice shall be required of any resolution to remove a director this section or to appoint somebody instead of a director so removed at their meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director under this section the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting". (emphasis by underlining)

g)	It is abundantly clear that in a meeting of shareholders who intend to remove or appoint directors, section 196 (1) and (2) of the Companies Act requires a mandatory special notice to be served on the director or directors to be so removed. 

Mr Alain Lew's evidence was that he was not served with any notice. Alan Carlot confirmed the notice given was only a verbal notice. That could not have been a "special" notice in writing required by section 196 of the Act.

The length of the special notice should have been either 21 days or 14 days or for a shorter period under Article 53 of the Articles of Association depending on what type of meeting it was. It is not apparent from the Minute or from the evidence of the Minister of Finance what type of a meeting it was that the shareholders purported to hold on 11th February 2014. The mandatory legal requirement was that a special notice in writing must be given to a director to give him the opportunity to attend at the meeting and answer any allegations against him or make representations.

 It is apparent that section 196 of the Act was not followed. Article 54 of the Articles of Association states that an accidental omission to give notice of a meeting or non-receipt of it does not invalidate the proceedings at the meeting. The defendants raised this in their submissions but that submission is intenable. The giving of a verbal notice fell short of the legal requirement.

h)	For that reason the removal of the members of the Board of Directors chaired by Alain Lew was unlawful and therefore void and of no legal effect.

i)	Thirdly, whether the appointment of Maxwell Maltok, Andrew Kausiama, Nakat Willie (deceased) Thierry Bourgeouise and Tony Ata was validly done?

The evidence of the Minister of Finance was that these appointments were made by resolution dated 11th February 2014 and that it was made pursuant to Article 79 (g) of the Artilces of Association. It states-

"(g) If a Resolution of shareholders of the Company is passed requiring him to vacate his office as Director, immediately upon the passing of any such resolution such Director shall be disqualified from voting at any meeting of Directors and from exercising all or any of his rights and powers as a Director under these Articles. The shareholders may be Resolution elect any person a Director of the Company in place of any Director removed pursuant to the foregoing provisions"

j)	Artilce 79 (g) must be exercised or done in conjunction with Article 76 which states-

"Unless and until otherwise determined by the Company in general meeting, the number of Directors shall be five, to be appointed as follows:-

a.	One member nominated by the Minister of Infrastructure and Public Utilities,

b.	One member nominated by the President of the Chamber of Commerce,

c.	One member representing the tourism industry by the Chairman of the Vanuatu Hotel and Resorts Association,

d.	One member nominated by the Chairperson of the Vanuatu Financial Centre Association, and 

e.	One member nominated by the Director General of the Ministry of Finance and Economic Management." ( Emphasis by underlining)

k)	The evidence of the Minister of Finance was that on 11th February 2014 the shareholders resolved to appoint Maxwell Maltock, Andrew Kausiama, Nakat Willie ( deceased), Tony Ata and Thierry Bourgeouise new members of the Board of Directors. However that was only part of the requirement. The other requirement were the nominations to have been made by the Minister, President, Chairman, Chairperson and Director General of the Ministry of Finance. There is no evidence showing the nominations of these persons so appointed. Indeed the Claimants produced evidence showing that the Vanuatu Hotels & Resorts Associations never nominated Nakat Willie (deceased) as their Board Nominee and confirmed Thomas Taite as their nominee. Further the Financial Centre Association confirmed that the late Nakat Willie was never the nominee of the FCAV. Still further the Chamber of Commerce confirmed that Thierry Bourgeouise was never the nominee of the VCCI but that Alain Lew is their confirmed nominee. These confirmations and denials are annexed as "AL1", "AL2" and "AL3" in the sworn statement of Alain Lew ( Exhibit C2).

l)	The evidence of Peter Bong (Exhibit C4) at paragraph 9 indicates that Maxwell Maltok is the First Political Advisor to the Minister of Infrastructure, Andrew Kausiama is First Political Advisor .(deceased) was the First Political Advisor to Minister of Foreign Affairs, Thierry Bourgeouise as owner of Intraco and Tony Ata was the Ministry of Internal Affair's representative. 

Clearly these appointments fell outside the scope and requirements of Article 76. That was sufficient to lead the Court to the conclusion that the purported appointments of the new Board of Directors chaired by Maxwell Maltok was tainted with illegality and was therefore unlawful, void and of no legal effect.

m)	Further, evidence show that Maxwell MaltokTheirryBourgeouise and Alain Carlot and Alain Lew show that at the time when all suspensions and terminations were made, there was also a Task Force established for the Airport concession. Indeed it appears from evidence that a couple of the members of the new Board of Directors chaired by Maxwell Maltok were and are members of that Task Force. The evidence by the Minister of Finance show that the new Board of Directors had very specific Terms of Reference annexed to his sworn statement (Exhibit D1). The usual and normal terms required of the Board of Directors under the Companies Act and the Articles of Association are those specified in paragraphs 1,2, and 6-10 of the Terms of Reference. However the duties listed under paragraphs 3,4 and 5 of the Terms were duties that gave rise to the necessity for the shareholders to take the decisions that they purported to take on 11th February 2014. But even if those tasks were of high priority and importance to the Board, it did not absolve the shareholders and/or the Board of Directors to cause removals and or suspensions and terminations of the First, Second, Third and Fourth Claimants from complying with the legal procedures set out in the Companies Act, the Employment Act, the Articles of Association and the Contracts of Employment, for no one is above the law. Failure and/or omission to comply with legal procedures and requirements as expected of the defendants lead only to one conclusion, and that is that the shareholders and the new Board of Directors had ulterior motives in taking their decisions to remove the old Board members and appoint new members, and for the new Board to decide to suspend and terminate the First, Second and Third Claimants.

n)	Fourthly, whether the removal of the Second Claimant as Company Secretary was valid? The Court concluded that the answer was in the negative, for reasons already stated.

o)	Fifthly, whether the suspensions and terminations of the First and Second Claimants and the termination of the Third Claimant were validly done? The Court concluded that those suspensions and subsequent terminations were unlawful and were done in breaches of their respective contracts of employment in that they were not given the opportunity to answer the allegations made against them. This was simply a legal issue based on section 50 (4) of the Employment, Act Cap 160. It states-

"(4) No employer shall dismiss an employee on the grounds of serious misconduct unless he had given the employee an adequate opportunity to answer any charges made against him and any dismissal in contravention of this subsection shall be deemed to be an unjustified dismissal". (Emphasis by underlining).

p)	That was sufficient legal reason to quash the decisions of the Board of Directors terminating Peter Bong, Alan Carlot and Kevin Abel and to reinstate them to their respective offices and positions.

q)	The Court issued an order staying the two Civil Claims instituted by the First Defendant against the First, Second and Third Claimants. There were arguments made based on the allegations made in these two proceedings that alleged the Claimants had come to seek equitable remedies with unclean hands. That argument was untenable and rejected. Unless and until the defendants have given the Claimants the opportunity to answer those allegations that argument of "unclean hands principle" cannot be used as a ground to refuse the grant of orders sought by these Claimants. And unless and until that is done, it seems just and appropriate to stay those proceedings. Accordingly the Court so Ordered.

r)	Finally costs. The Claimants were put to great expense in prosecuting their claims and having succeeded it follows that they must be entitled to their costs of and incidental to the proceeding on the standard basis as agreed or be determined by the Court.

DATED at Port Vila this 7th day of November 2014.
BY THE COURT

OLIVER.A.SAKSAK
Judge