N5718

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 37 OF 2014

ROBERT KAIDAI FOR HIMSELF AND ON BEHALF OF
120 OTHER EMPLOYEES OF LUTHERAN SHIPPING, MADANG
Plaintiffs

V

AGUA NOMBRI
Contemnor

Madang: Cannings J
2014: 3, 4 June, 2, 8, 11, 29 July, 2, 5 September

CONTEMPT – disobedience contempt – alleged failure of chief executive officer of company to comply with court orders that company employees be paid salaries and wages on time, that he must cooperate with employees in ensuring orderly resumption of operations, that he shall reinstate a particular employee – whether there was a failure to comply with orders – whether failure to comply was deliberate.

The National Court made various interim orders in a human rights case commenced by the employees of a company, including that the CEO of the company (the contemnor) pay the employees their salaries and wages on time, that he cooperate with the employees in ensuring the orderly resumption of operations after a strike and that he reinstate a particular employee by a particular date and time. A number of the employees who had commenced the human rights case commenced fresh proceedings, by originating summons, charging the contemnor with contempt of court for disobedience of orders made in the human rights case. The contemnor pleaded not guilty so a trial was conducted.

Held:

(1)	Proceedings for contempt are criminal in nature and the court must be satisfied beyond reasonable doubt that the three elements of a disobedience type of contempt have been proven to exist:

•	the order was clear;
•	it was properly served; and
•	there was a deliberate failure to comply.

(2)	The orders were clear and unambiguous and were served on the contemnor, and he did not take issue with those elements of the offence of contempt.

(3)	The third element (deliberate failure to comply) was contentious and in the case of each order it was necessary for the plaintiffs to prove that the contemnor failed to comply with the order and that the failure to comply was deliberate.

(4)	As to the order requiring the employees to be paid on time, there was a failure to comply as the order required them to be paid "without failure, and that if for some reason this cannot happen an affidavit explaining the reasons shall be filed in the National Court immediately", and there were numerous instances in the seven-month period after the order was served on the contemnor, of the employees being paid late without an explanatory affidavit being filed. The contemnor failed to comply and it was a deliberate failure on his part as it was within his power to comply with the order but he failed to take adequate steps to ensure that the order was complied with.

(5)	As to the order requiring that he cooperate with the employees, failure to comply with this order was not proven.

(6)	As to the order requiring that he reinstate the lead plaintiff, failure to comply with this order was not proven.

(7)	The contemnor was accordingly found guilty of contempt of court in respect of the charge alleging disobedience of the first order and not guilty in respect of the charge alleging disobedience of the other two orders.

Cases cited

The following cases are cited in the judgment:

Elias Padura v Stephanie Valakvi (2012) N4830
Ian Augerea v Todagia Kelola & South Pacific Post Ltd (2014) N5582
Martin Kenehe v Michael Pearson (2009) N3763
Mathew Michael v John Glengme & Isaac Gladwin (2008) N3429

ORIGINATING SUMMONS

This is the verdict for a person charged with contempt of court.

Counsel

Y Wadau, for the plaintiffs
A Daugl & O Amemai, for the defendant (contemnor)

5th September, 2014 

1. CANNINGS J: This is the verdict on charges of contempt of court laid against Agua Nombri, the Chief Executive Officer of Lutheran Shipping (the trading name of the company, Kambang Holdings Ltd). Mr Nombri is referred to in this judgment as 'the contemnor', being a person who, in accordance with Order 14, Rule 37 of the National Court Rules, is a person alleged to be guilty of contempt of court. The charges were laid in the following circumstances.

2. In October 2013 the operations of Lutheran Shipping in Madang came to a halt. The employees of the company had a number of grievances with the management, in particular, the contemnor, and staged a stop-work protest. On 11 October 2013 a number of employees commenced National Court proceedings against him by filing an application for enforcement of human rights: HRA No 105 of 2013, Michael Belem for himself and on behalf of 150 other employees of Lutheran Shipping v Agua Nombri. They claimed amongst other things that the contemnor had breached their human rights by ordering that they not be paid their salaries and wages.

3. On 18 October 2013 the Court, having heard motions by both the employees and the contemnor in which both sides sought various orders, made interim orders that required both sides to do, and refrain from doing, certain things with a view to restoring the operations of Lutheran Shipping. The Court ordered, amongst other things, that:

8(a) The defendant [the contemnor] shall ensure that the plaintiffs are paid their wages and salaries on time, without fail, and that if for some reason this cannot happen an affidavit explaining the reasons shall be filed in the National Court immediately ….

(d) All plaintiffs and the defendant [the contemnor] shall cooperate with each other and the Court in ensuring an orderly resumption of operations of Lutheran Shipping and the expeditious resolution of the disputes and grievances underlying these proceedings.

4. On 21 November 2013 the Court, having heard motions by both the employees and the contemnor in which both sides sought various orders, made further orders including the following:

1 ... the defendant [the contemnor] shall reinstate with effect from 12 noon on 25 November 2013, the following employees:

Andrew Mingai
Emmanuel Akau
Phillip Pomahun
Robert Kaidai.

5. On 5 February 2014 Robert Kaidai, one of the employees whose reinstatement was ordered on 21 November 2013, acting for himself and 120 other Lutheran Shipping employees (the plaintiffs), commenced fresh proceedings against the contemnor, by originating summons, charging him with contempt of court. The plaintiffs allege that the contemnor disobeyed each of the three orders set out above. In effect the contemnor is facing three charges. It is alleged that:

1	he breached order 8(a) of 18 October 2013 by not ensuring that the employees were paid their wages and salaries on time and not immediately filing an explanatory affidavit when it became apparent that wages and salaries could not be paid on time;

2	he breached order 8(d) of 18 October 2013 by not cooperating with the plaintiffs to ensure an orderly resumption of operations of Lutheran Shipping;

3	he breached order 1 of 21 November 2013 by not reinstating Robert Kaidai by 12 noon on 25 November 2013.

The contemnor pleaded not guilty so a trial has been held.

PRELIMINARY ARGUMENT

6. Mr Daugl, for the contemnor, raised what he termed a 'preliminary issue' at the beginning of submissions, which, he argued, if upheld by the Court, would result in the charges of contempt of court being summarily dismissed. The argument is based on the fact that Kambang Holdings Ltd went into voluntary liquidation on 26 May 2014 as a result of the appointment by the board of the company of Mr David Guinn as liquidator. Mr Daugl submitted that the continuance of the contempt proceedings against the contemnor was subject to the agreement of the liquidator or an order of the Court under Section 298(1)(c) (effect of commencement of liquidation) of the Companies Act. Mr Guinn had not given his agreement and the Court had not ordered otherwise, so the proceedings should be dismissed.

7. This argument is not supported by the wording of Section 298(1)(c), which states:

With effect from the commencement of the liquidation of a company … unless the liquidator agrees or the Court orders otherwise, a person shall not—

(i)	commence or continue legal proceedings against the company or in relation to its property; or

(ii)	exercise or enforce, or continue to exercise or enforce, a right or remedy over or against property of the company.

8. These proceedings are not against the company or in relation to its property. The plaintiffs are not purporting to exercise or enforce a right or remedy over or against the property of the company. The proceedings are against the contemnor in person. The fact that he is alleged to have failed to comply with court orders that required him to do things in his capacity as CEO of the company, Kambang Holdings Ltd, is of no consequence. The originating summons seeks principally an order punishing the contemnor for being in contempt of court. If he is found guilty he will be punished by committal to prison or by an order for payment of a fine, or both, in accordance with Order 14, Rule 48 of the National Court Rules. The contemnor's preliminary argument is rejected. The case will proceed on its merits.

ELEMENTS OF CONTEMPT

9. The plaintiffs have charged the contemnor with committing on three occasions a 'disobedience' contempt. To prove each charge, the plaintiffs must prove three things:

1	the order was clear and unambiguous;
2	the order was properly served on the defendant; and
3	the defendant deliberately failed to comply with it.

10. Contempt of court is a criminal matter and the plaintiff must prove the existence of the three elements beyond reasonable doubt (Martin Kenehe v Michael Pearson (2009) N3763, Elias Padura v Stephanie Valakvi (2012) N4830, Ian Augerea v Todagia Kelola & South Pacific Post Ltd (2014) N5582).

THIS CASE

11. The contemnor concedes that each of the three orders was clear and unambiguous and was served on him. He knew of the orders and what was required. He therefore concedes the first two elements of each charge. He takes issue with the third element of each charge. He says that he did not fail to comply with any of the orders, but if the Court finds otherwise, he did not deliberately fail to comply. Each charge will now be considered, the issue being whether the plaintiffs have proven that the contemnor failed to comply with the order and if he did, whether it can be regarded as such, a deliberate failure, to warrant the conclusion that he is guilty of contempt.

THE FIRST CHARGE: ORDER 8(a) OF 18 OCTOBER 2013

12. The plaintiffs adduced evidence by several employees who deposed that in the seven-month period from 18 October 2013 to 26 May 2014 (when Kambang Holdings Ltd went into voluntary liquidation) wages and salaries were not paid on time. This evidence was given by Tony Tapalia, Engineering Superintendent, Oliver Miami, Accountant, and Cathy Ayu, Paymistress.

13. I have found the evidence of Cathy Ayu instructive and convincing. She deposed in her affidavit (exhibit P12) that she had been the Paymistress for Lutheran Shipping for 29 years. She is aware of the employees' grievances over payment of salaries that led them to file the human rights complaints and the Court orders issued to both the employees and the contemnor. She explained that Lutheran Shipping has two categories of employees, contract employees and management and permanent employees, with each category having different pay-days. She annexed to her affidavit a table comparing the actual dates of payment for the two categories of employees with the scheduled pay-days, and indicating the occasions on which late payments were made. This table can be relevantly summarised as follows.

Employee category	Scheduled payday	Date paid	Remarks	
Permanent 	25/10/13	23/10/13	OK (2 days early)	
Contract	1/11/13	1/11/13	OK (on time)	
	15/11/13	18/11/13	3 day delay	
	29/11/13	28/11/13	OK (1 day early)	
Permanent 	8/11/13	12/11/13	4 day delay	
	22/11/13	20/11/13	OK (2 days early)	
Contract	13/12/13	11/12/13	OK (2 days early)	
	27/12/13	31/12/13	4 day delay	
Permanent	6/12/13	4/12/13	OK (2 days early)	
	2012/13	19/12/13	OK (1 day early)	
	3/1/14	7/1/14	4 day delay	
Contract	10/1/14	13/1/14	3 day delay	
	24/1/14	27/1/14	3 day delay	
Permanent	17/1/14	21/1/14	4 day delay	
	31/1/14	6/2/14	6 day delay	
Contract	7/2/14	12/2/14	5 day delay	
	21/2/14	5/3/14	2 week delay	
Permanent	14/2/14	19/2/14	5 day delay	
	28/2/14	6/3/14	6 day delay	
Contract	7/3/14	17/3/14	10 day delay	
	21/3/14	3/4/14	2 week delay	
Permanent	14/3/14	18/3/14	4 day delay	
	28/3/14	3/4/14	1 week delay	
Contract	4/4/14	23/4/14	3 week delay	
	18/4/14	7/5/14	3 week delay	
Permanent	11/4/14	7/5/14	3 week delay 	
	25/4/14	9/5/14	2 week delay	
Contract	2/5/14	Not paid	Outstanding	
	16/5/14	Not paid	Outstanding	
Permanent	9/5/14	Not paid	Outstanding	

14. That evidence reveals that in respect of the 30 scheduled paydays in the period after the date of the order, 18 October 2013, to May 2014, employees were paid late on 23 occasions, the length of the delay varying from three days to three weeks. I take judicial notice, arising from an inspection of the court file HRA No 105 of 2013, that on only three of those occasions was an affidavit filed by or on behalf of the contemnor explaining the reasons for wages and salaries not being paid on time. He swore affidavits that were filed on 17 March, 31 March and 14 April 2014 giving reasons for late payment of wages and salaries. On six of the seven occasions on which wages and salaries were not paid late, they were paid one or two days early. On only one occasion were employees paid on the scheduled payday.

15. The contemnor did not challenge these facts. I find that it has been proven that he on 20 occasions failed to comply with order 8(a) of 18 October 2013 in that he failed to ensure that wages and salaries were paid on time and failed to immediately file (or cause to be filed) an affidavit explaining the reasons for the delay.

16. The next question is whether the failure to comply with the order was deliberate. The contemnor gave evidence that he did his best to comply with the order but during the period in question the company was suffering from a significant cash shortfall due to a number of its ships being unserviceable, delays experienced in receiving revenue due to it under container hire agreements with Consort Express Lines, delays in getting company cheques signed (the authorised signatories being in Lae) and delays caused by the banks in processing the payments into employees' bank accounts.

17. I take judicial notice of the precarious financial position of the company during the relevant period. The fact that the company went into voluntary liquidation in May 2014 is testimony to that. However, the other reasons given for the consistently late payments are rejected. They are unconvincing and unreasonable excuses. The contemnor has offered no explanation for his failure to file an affidavit explaining the reasons for the delayed payment of wages and salaries on each occasion (apart from three) that payment on a scheduled payday was not met. It is reasonably to be inferred that it was physically within his power to file the necessary affidavits and that no person or event was preventing him filing them. He was not in the same position as the contemnors in Mathew Michael v John Glengme & Isaac Gladwin (2008) N3429 who were found not guilty of contempt as although they failed to comply with a court order they had done all in their power to comply with it and were prevented from complying by the conduct of another person.

18. As I recently stated in Ian Augerea v Todagia Kelola & South Pacific Post Ltd (2014) N5582 it is not necessary, in order to establish the deliberateness of the failure to comply, to prove a conscious intention on the part of a defendant to disobey the court's order. Reckless or careless disregard to the requirements of a court order is sufficient. I find that the plaintiffs have proven that the contemnor recklessly or carelessly disregarded the requirement to file an explanatory affidavit on each occasion that wages and salaries were paid late. That is tantamount to a deliberate failure to comply with the order. The third element of the first charge has been proven. Therefore the contemnor is guilty of that charge.

THE SECOND CHARGE: ORDER 8(d) OF 18 OCTOBER 2013

19. The plaintiffs argue that the contemnor failed to comply with the order that he cooperate with them in ensuring an orderly resumption of operations. They have adduced evidence that when they returned to work in compliance with the order of 18 October 2013 the contemnor failed to organise any meetings at which the plaintiffs could have discussed with him their grievances, failed to address the operational requirements of the company, favoured only employees who supported him, failed to provide effective management and leadership and failed to release funds for the purpose of resuming shipping operations with the three ships that were operational.

20. I find that this evidence is too general in nature to support a finding that the contemnor failed to comply with order 8(d). The contemnor was in an invidious position. The company was in crisis and I cannot accept that he was not making a genuine attempt in extremely difficult circumstances to manage the crisis to the best of his ability. It has not been proven that he failed to comply with the order. He is not guilty of the second charge.

THE THIRD CHARGE: ORDER 1 OF 21 NOVEMBER 2013

21. It is not in dispute that the contemnor reinstated three of the four persons referred to in the order of 21 November 2013: Andrew Mingai, Emmanuel Akau and Philip Pomahun. The charge is that he did not reinstate Robert Kaidai.

22. I find that it has not been proven that he failed to reinstate Robert Kaidai. The contemnor has presented evidence that he prepared a letter of reinstatement addressed to Mr Kaidai and caused it to be served at his house, adopting a similar procedure to that applied to the other three reinstated employees. Mr Kaidai and other plaintiffs have given evidence disputing the existence of the reinstatement letter and its service upon him. I find that this state of affairs came about due to a breakdown in communication. The contemnor did what he was required to do by the court order. There was no failure to comply with the order. He is found not guilty of the third charge.

VERDICT

23. The contemnor, Agua Nombri, is:

(1)	guilty of contempt of court in respect of the charge that he disobeyed an order of the National Court, namely order 8(a) of 18 October 2013 in HRA No 105 of 2013, and is convicted accordingly and shall be punished for that contempt; and

(2)	not guilty of contempt of court in respect of the charge that he disobeyed an order of the National Court, namely order 8(d) of 18 October 2013 in HRA No 105 of 2013; and

(3)	not guilty of contempt of court in respect of the charge that he disobeyed an order of the National Court, namely order 1 of 21 November 2013 in HRA No 105 of 2013.

Verdict accordingly.
___________________________________________________________

Young Wadau Lawyers: Lawyers for the plaintiffs
Napu & Company Lawyers: Lawyers for the defendant