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National Court of Papua New Guinea |
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
2010: 10 September, 1 October
2011: 15 April
VERDICT
CONTEMPT – disobedience type of contempt – alleged failure to comply with court order to pay money to a party in court proceedings – whether the contemnor failed to comply – whether payment to the chairman of a company is payment to the company – whether failure to comply was deliberate.
The National Court ordered the defendant company to pay outstanding levy fees due under a logging and marketing agreement to the plaintiff company within 14 days. The defendant failed to pay any fees directly to the plaintiff, so the plaintiff brought a charge of contempt of court against it. The defendant conceded that the order was clear and unambiguous and that it had been served with the order but denied the charge, arguing that it did not fail to comply with the order as the order had been improperly obtained and it had already paid the fees in cash to the plaintiff's chairman and other board members and associates and further that, if it were found by the court not to have complied with the order, it should still be found not guilty of contempt as it did not deliberately breach the order in view of the fact that it had no knowledge of the plaintiff's bank account and therefore was unable to comply with the order.
Held:
(1) Proceedings for contempt are criminal in nature and the court must be satisfied beyond reasonable doubt of the three elements of the offence:
- the order was clear;
- it was properly served; and
- there was a deliberate failure to comply.
(2) The order was clear and unambiguous and it was properly served on the defendant so the first two elements were established.
(3) The third element (deliberate failure to comply) gives rise to three issues:
- Was there a failure to comply?
- Who failed to comply?
- Was it deliberate?
(4) Here there was a failure to comply as the plaintiff company was a discrete legal entity that was not paid anything by the defendant either before or after the order was made. As to the defence that the fees were paid to the plaintiff's chairman and others, the court was not satisfied that that was in fact the case but even if it were satisfied it would not have been a good defence as the order required the fees to be paid to the company, not to its officers.
(5) The defendant company is the person who failed to comply and the failure was deliberate, in that it resulted either from a conscious decision not to comply or a reckless disregard of the need to comply. It was no defence to argue that the defendant could not comply as any reasonable person in its position would have found a convenient way of complying with the order.
(6) Accordingly the defendant was found guilty of contempt of court.
Cases cited
Gawan Kuyan v Andrew Sallel (2008) N3376
Martin Kenehe v Michael Pearson, Chairman, Teaching Service Commission (2009) N3763
Moses Vua v Francis Mavu (2008) N3294
Newsat Ltd v Telikom PNG Ltd, ICCC and The State (2007) N3447
Peter Luga v Richard Sikani and The State (2002) N2286
Sr Dianne Liriope v Dr Jethro Usurup (2009) N3572
Yap v Tan [1987] PNGLR 227
NOTICE OF MOTION
This is a ruling on a motion for contempt of court.
Counsel
T Anis, for the plaintiff
S Toggo, for the defendant
15 April, 2011
1. CANNINGS J: The plaintiff, Raikos Holdings Ltd, has charged the defendant, Porche Enterprise Ltd with contempt of court and this is the court's ruling – the verdict – on whether the defendant is guilty.
2. The contempt charge arises from ongoing litigation between the plaintiff and the defendant. Raikos is a landowner company based in the Rai Coast District of Madang Province. It has a logging and marketing agreement with Porche and has commenced proceedings against Porche, claiming amongst other things damages for breach of contract.
3. On 5 February 2010, I made an interlocutory order in the present proceedings, OS Nos 616 & 924 of 2006, in these terms:
1 That Porche Enterprise Ltd pay Raikos Holdings Ltd the outstanding levy fees for 30 July 2009's shipment that are due under clause 15 of the Logging and Marketing Agreement dated 31 January 2007, pursuant to Section 155(4) of the Constitution.
2 Porche Enterprise Ltd shall pay these outstanding levy fees within 14 days from the date of this order.
4. Raikos claims that Porche has not paid the outstanding levy fees, that it has deliberately disobeyed the court's order and that it is guilty of contempt.
ELEMENTS OF CONTEMPT
5. The parties agree that proceedings for contempt are criminal in nature and that for Porche to be found guilty of this sort of disobedience contempt, the court must be satisfied beyond reasonable doubt of the three elements of the offence:
(See Peter Luga v Richard Sikani and The State (2002) N2286, Newsat Ltd v Telikom PNG Ltd, ICCC and The State (2007) N3447, Moses Vua v Francis Mavu (2008) N3294, Martin Kenehe v Michael Pearson, Chairman, Teaching Service Commission (2009) N3763.)
6. The parties agree that the order was clear and unambiguous and that under the logging and marketing agreement referred to in the order, Porche was required to pay Raikos the sum of K76,847.64 in respect of a shipment of logs dated 30 July 2009. The parties also agree that the order was properly served on Porche. So the first two elements have been satisfied. It is the final element that is contentious: whether there was a deliberate failure to comply.
DID PORCHE DELIBERATELY FAIL TO COMPLY WITH THE ORDER OF 5 FEBRUARY 2010?
7. As I suggested in Sr Dianne Liriope v Dr Jethro Usurup (2009) N3572 this element of a disobedience type of contempt charge gives rise to three issues:
Was there a failure to comply with the order?
8. Porche argue that it did not fail to comply as the order had been improperly obtained and it had already paid the fees in cash to the plaintiff's chairman and other board members and associates. Neither of these arguments is sound.
9. The question of whether an order was improperly obtained is irrelevant to the question of whether there was a failure to comply with the order. Every person has a duty to comply with an order of a court even if that person genuinely believes that the order is irregular or has been improperly obtained (Yap v Tan [1987] PNGLR 227).
10. As to the claim that Porche paid the fees in cash to the chairman of Raikos, Gawan Kuyan, and others, I am not satisfied with the evidence of these payments. I am unable to make a finding that the amount of K76,847.64 was in fact paid. However, if I had made such a finding it would not have been a good defence as the order required the fees to be paid to the company, Raikos Holdings Ltd, not to its officers.
11. There has been a failure to comply with the order, ie the order was disobeyed.
Who failed to comply?
12. The defendant company, Porche Enterprise Ltd, is the person who failed to comply. Mr Anis, for Raikos, submitted that the court should find that the Managing Director of Porche, Chua Han Hwee, also failed to comply and that he should also be found guilty of contempt. However, the order was not directed at Mr Chua so it was not him who disobeyed it. It was the company. Besides that Mr Chua has not been charged with contempt of court so it would be a violation of the principles of natural justice to find him guilty of contempt.
Was there a deliberate failure to comply?
13. Mr Toggo, for Porche, submitted that if the court concluded – as it has done – that Porche failed to comply with the order, it should nonetheless be found not guilty of contempt as it did not deliberately breach the order. There was no wilful disobedience, it was submitted, as Raikos did not have an operating bank account, and if it did, Porche had no knowledge of it. Porche was therefore unable to comply with the order. There was also confusion about who was controlling the affairs of Raikos due to an internal dispute between different groups of people claiming to be shareholders and directors.
14. It is true that there have been disputes within Raikos about ownership and control of the company. One of them went to trial and resulted in a ruling that declared who the directors and shareholders were and who the managing director was (Gawan Kuyan v Andrew Sallel (2008) N3376). A more recent dispute is yet to go to trial (David Yaga v Andrew Sallel, OS No 369 of 2010). However, that does not provide Porche with a reasonable excuse for failure to comply with the order. Nor does it mean that there has been no deliberate failure to comply with the order.
15. I reject the assertion that Raikos did not have in February 2010 an operating bank account. I find as a fact that the company had an account at Bank South Pacific Madang, into which the levy fees ordered by the court to be paid, could have been conveniently deposited. Even if the account had been closed or for some other reason there was a problem depositing funds into it (that being the prescribed method of discharge of Porche's liability for payment of levy fees under the logging and marketing agreement), Porche could have easily complied with the order by drawing a cheque in favour of Raikos and handing it, duly receipted, to an officer of the company. Any confusion about who a proper officer of the company was at the relevant time could easily have been resolved by consulting the Register of Companies. It is no defence to argue that Porche could not comply as any reasonable person in its position would have found a convenient way of complying with the order.
16. As I indicated in Newsat Ltd v Telikom PNG Ltd, ICCC and The State (2007) N3447 the court does not have to be satisfied that a contemnor was acting disingenuously or deceitfully or deliberately playing dumb. What must be proven is that non-compliance with the order was deliberate.
17. I am satisfied that Porche's failure to comply with the order was deliberate. It resulted either from a conscious decision not to comply or a reckless disregard of the need to comply. Porche wilfully disobeyed the order. The third element of contempt has therefore been proven.
CONCLUSION
18. I am satisfied beyond reasonable doubt of the three elements of the charge and Porche will be convicted and punished, which is the primary relief sought under the notice of motion filed on 8 July 2010. Raikos seeks other relief under that motion: that Porche be ordered to deal only with Mr Andrew Sallel and other persons whose appointment as company officers was sanctioned by the court in Gawan Kuyan v Andrew Sallel (2008) N3376 and that no changes be made to the Company Register regarding Raikos. However, I decline to grant that relief. The present proceedings have been focussed on the question of whether Porche is guilty of contempt of court. Contempt proceedings – as they are tantamount to criminal proceedings – should be dealt with separately from any related matters. Raikos can, of course, seek those sorts of orders by a separate notice of motion.
19. As these proceedings have been commenced as an adjunct to ongoing civil proceedings it is appropriate that the losing party pay the costs of the successful party.
ORDER
(1) The defendant, Porche Enterprise Ltd, is adjudged guilty of contempt of court, as charged, and is convicted accordingly and shall be punished.
(2) Other relief sought in the plaintiff's notice of motion filed on 8 July 2010 is refused.
(3) The defendant shall pay the plaintiff's costs of the contempt proceedings, on a party-party basis, to be taxed if not agreed.
(4) The court will proceed immediately to give directions for a hearing on punishment.
(5) Time for entry of this order is abridged to the time of settlement by the Registrar, which shall take place forthwith.
Verdict accordingly.
____________________________
Blake Dawson Lawyers: Lawyers for the Plaintiff
Daniels & Associates Lawyers: Lawyers for the Defendant
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URL: http://www.paclii.org/pg/cases/PGNC/2011/323.html