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Pundari v Setto [2025] PGNC 483; N11624 (4 December 2025)

N11624

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO. 552 OF 2023 (IECMS)(CC2)

BETWEEN:
JOHNSON PUNDARI
Plaintiff

AND:
DARELL SETTO – IN HIS CAPACITY AS THE BOARD CHAIRMAN OF NDB AND HIS INDIVIDUAL CAPACITY
First Defendant

AND:
JASON GILAI- IN HIS CAPACITY AS THE DEPUTY BOARD CHAIRMAN OF NBD AND IN HIS INDIVIDUAL CAPACITY
Second Defendant

AND:
KERYN FLYNN-HARGREAVES – IN HIS CAPACITY AS MEMBER OF THE BOARD OF NDB AND IN HER PERSONAL CAPACITY
Third Defendant

AND:
JOHN AUNA- IN HIS CAPACITY AS A MEMBER OF THE BOARD OF NDB AND IN HIS INDIVIDUAL CAPACITY
Fourth Defendant

AND:
AUGUSTINE BIRE- IN HIS CAPACITY AS A MEMBER OF THE BOARD OF NDB AND IN HIS INDIVIDUAL CAPACITY
Fifth Defendant

AND:
GRAHAM KING – IN HIS CAPACITY AS A MEMBER OF THE BOARD OF NDB AND IN HIS PERSONAL CAPACITY.
Sixth Defendant

AND:
NATIONAL DEVELOPMENT BANK LIMITED
Seventh Defendant

WAIGANI: COATES J
20 OCTOBER, 4 DECEMBER 2025

DEFAMATION – Internal employment document highly critical of applicant –Applicant claims it defamed him – no evidence that the document went to outsiders – institutions and companies have a fiduciary duty to ensure proper management including the making of comments on officers – communications which remain private are protected

Cases cited
Mohammed Hegab v The Spectator Limited and Douglas Murray, KB-2023-003636 (5 August 2025

Counsel
S Kati, for the plaintiff
B Nutley, for the defendant

DECISION

1. COATES J: The plaintiff, formally the Chief Executive Officer (CEO) of the National Development Bank (the Bank), seeks damages for defamation from the defendants, including the Bank.
   
2. He was the Bank’s CEO from 4 May 2022 until his resignation on 6 October 2023.
   
3. He states that he was defamed by way of a submission prepared by the directors of the Bank, dated 5 June 2023, which recommended his termination as CEO.
   
4. The 17-page submission is an internal document prepared and sent between the Bank’s directors, although the plaintiff claimed it had gone to others.
   
5. The submission, signed by each defendant but for the Bank (the seventh defendant), is addressed to the Chairman, Kumul Consolidated Holdings (KCH) and is headed “Board Submission to Kumul Consolidated Holdings for Termination of the Chief Executive Officer of the National Development Bank Limited”.
   
6. The Bank comes under KCH, which has the power to terminate his appointment.
   
7. It is signed by the defendants in their capacities as directors of the Bank’s Board.
   
8. The submission was the Board’s evidence for their positive recommendation to terminate the plaintiff’s contract of employment.
   
9. Termination was recommended on numerous grounds stated in the submission and consideration taken into account included the Bank’s poor performance, loan book management issues, undue pressure on credit staff to approve loans, security issues, misrepresentation of key performance indicators, press releases without the Board’s approval, harassment of credit lending staff for declining loan applications for relatives and family, absence from work without leave approval and insubordination.
   
10. The submission stated that the final implication was the recommendation of termination for gross misconduct and pathological lying about the bank’s performance.
    
11. In his Writ of Summons filed 24 November 2023, the plaintiff lists particulars of defamatory allegations, made “to tarnish and disrepute [sic]... [his] good working ethics and professionalism”, including allegations that he approved his own leave, that he was absent without leave and at the Aviat Club drinking and gambling when in fact he was conducting interviews for the position of Deputy Managing Director Corporate Services of the National Fisheries Authority as he was Deputy Chairman of that Authority, his branding as a pathological liar and that he had not served the bank faithfully and diligently.
    
12. In fact, after making specific allegations, his case was that the entire 17-page document defamed him.
    
13. The plaintiff stated that he had built a reputation over a number of years as a public figure, was a director on a number of boards, was a role model for young professionals, was a community leader, a father and husband and that the damage done to him was “unimpairable” and that he continues to suffer damage. I interpret the word “unimpairable” to mean irreparable.
    
14. He stated that his future employment with other state-owned enterprises and government departments and private corporations was shattered and narrowed as he will be seen as a gambler and compulsive liar.
    
15. He also stated that he will be seen as being a person who is not fit and proper and with a bad employment record.
    
16. He stated he is suffering psychological stress because of the allegations.
    
17. He is claiming K2,000,000 for general damages for defamation, an order for K1,000,000 for future loss of employment, and unspecified damages for trauma, mental distress, physiological stress and anguish to be assessed, as well as costs and interest.
    
18. The plaintiff relies on sections 2 and 24 of the Defamation Act as the power to bring this proceeding.
    
19. Section 2 of that Act creates a legal wrong when a person’s personal or working reputation is injured or likely to be injured or he or she is likely to be shunned, avoided, ridiculed or despised.
    
20. The definition expresses the meaning of whether the alleged fact is capable of bearing a defamatory meaning as a question of law.
    
21. The defendants filed a joint single defence.
    
22. Their principal argument is in the alternative, that the Statement of Claim has not pleaded or satisfied the elements to support a cause of action in defamation, being that they have either not made a defamatory imputation of the plaintiff, or that they have published such, or that any statement was protected, justified or excused by law.
    
23. While part of this defence relies on s.11 of the Defamation Act which gives qualified protection to statements made in good faith or made by having authority over the plaintiff, the defendants also rely on their fiduciary duty as directors of the Bank’s board. In particular, apart from provisions of the Defamation Act giving protection, they rely on s.23(6) of the National Development Bank Act 2007 and s.46R of the Kumal Consolidated (Authorisation) (Amendment) Act 2021 and Part VIII of the Companies Act 1997 and Clause 8 of the Contract of Employment. In plain terms, a fiduciary duty imposes an obligation to act in the best interest of another party, including having loyalty and maintaining confidentiality.
    
24. The Board’s power to comment on the plaintiff performance comes under Section 23(6) of the National Development Bank Act 2007 Act and Clause 18 of his Contract of Employment. The power to make recommendations to the National Executive Council (the NEC) on to Kumal Consolidated Holdings (KCH), institutions within the Bank’s governing Act, for his termination, was not questioned in this proceeding, the claims being that the submission was published to others.
    
25. The defendants’ case is that these provisions absolutely set out their duties, and even if there was publication of the submission, the plaintiff could not have been defamed as claimed.
    
26. While I would not normally set out lengthy statutory provisions in giving judgment, this case requires the following to be stated.
    
27. Section 23 of the National Development Bank Act, states sets out the CEO’s position, as follows, and s.23(6), (7) and (8) is particularly relevant:
    

23. MANAGING DIRECTOR.

(1) The Managing Director appointed under this Act shall be the Chief Executive Officer of the Bank, the head of staff of the Bank and will be responsible to the Board for the efficient carrying out of the functions of the Bank.

(2) Subject to this section the Managing Director shall be appointed by the National Executive Council from a short list of candidates recommended by the Board to the Minister.

(3) The Managing Director shall –

(a) possess at least a graduate degree in a related field to the activities of the Bank; and

(b) be eligible for membership to the Papua New Guinea Institute of Directors; and

(c) must have significant experience in banking, financial services or commerce.

(4) Prior to his appointment as the Managing Director, approval must be sought by the Ombudsman Commission that the Managing Director is a fit and proper person.

(5) The Managing Director shall be appointed for a term of four years and on such terms and conditions determined by the Board and is eligible for reappointment.

(6) Where the Managing Director –

(a) becomes incapable for any reason of performing his duties;
(b) other than with the consent of the Board, engages in any paid employment or carried on business outside the duties of his office;
(c) becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his creditors or makes an assignment of his salary for their benefit;
(d) resigns his office in writing, signed by him and delivered to the Bank;
(e) is convicted of an offence that is punishable under a law;
(f) ceases to be a resident of Papua New Guinea;
(g) upon the service of objection to the Managing Director and the Ombudsman Commission stating that the Managing Director is not fit and proper person to hold the Managing Director’s position, his appointment shall be terminated.

(7) The Managing Director may be terminated on such other grounds as are provided in his contract of employment.

(8) Any contract, arrangement or understanding under which the Managing Director may be entitled to any compensation or payment in respect of the termination of his appointment other than as provided for above is void and of no force or effect.

28. The defendants also referred to s.46R of the Kumal Consolidated (Authorisation) (Amendment) Act 2021, as a source of their power to make recommendations on the plaintiff’s future.
    

Division 8. - Chief Executive Officer.

46R. CHIEF EXECUTIVE OFFICER.

(1) Notwithstanding the constitution of the Majority State Owned Enterprise or the Companies Act 1997 or any other legislation, the Chief Executive Officer of a Majority State Owned Enterprise shall be appointed by the National Executive Council in accordance with this section.

(2) he Chief Executive Officer shall be appointed for a term of three years and on such terms and conditions, including salary and allowances, as are determined by the Board of the Majority State Owned Enterprise in consultation with the Corporation.

(3) At least three months before the expiry of the Contract of Employment of the Chief Executive Officer, the Board of the Majority State Owned Enterprise shall -

(a) conduct a performance review in accordance with the Contract of Employment of the Chief Executive Officer; and

(b) the result of the performance review shall be submitted to the Corporation with a recommendation from the Board of the Majority State Owned Enterprise as to whether the Contract of Employment of the Chief Executive Officer should be renewed or terminated by effluxion of time.

(4) Where the Board of the Majority State Owned Enterprise resolves that the Contract of Employment of the Chief Executive Officer should terminate by effluxion of time, the Board of the Majority State Owned Enterprise shall, at least two months before the expiry of the Contract of Employment –

(a) notify the Corporation of the circumstances giving rise to the creation of the vacancy; and

(b) advise the Corporation of the qualification, knowledge, skills, experience and attributes required for the position of Chief Executive Officer and a term of reference for the position; and

(c) the Corporation shall engage the services of a professional recruiting firm to advertise the position at least two months prior to the expiry of the Contract of Employment and to lead the candidate search, assessment and interview process.

(5) The Corporation shall submit to the Minister a shortlist of three candidates with a recommendation for the appointment of a Chief Executive Officer and the National Executive Council shall appoint the candidate so recommended.

29. Further, the defendants rely on the Companies Act, Part VIII, as having a role with regard to their directors’ duties, and especially those provisions which require a director to act when circumstances dictate that they act, their case being that they had to act against the CEO.
    

WITNESSES

30. In assessing the witnesses, a close and thorough application of these statements of law must be applied to the facts elicited from the witnesses, on the basis that the Board members say individually and collectively they have responsibility for the Bank’s proper functioning – part of the fiduciary duty.
    
31. The plaintiff’s case was perplexing.
    
32. He introduced witnesses who confirmed that he was not at the Aviat Club on a certain day (5 May 2023) drinking and gambling, but conducting interviews for the National Fisheries Authority, of which he is a deputy managing director.
    
33. He introduced these witnesses to prove that the allegations that he was drinking and gambling were just wrong.
    
34. This type of evidence became neutralised, because, as submitted and as I accept, the plaintiff's resignation as CEO was an exercise in which he denied himself the opportunity to answer all of the allegations.
    
35. The defendants made an assumption and they were under a fiduciary duty to the Bank to ensure that their assumption about what the plaintiff was doing was also a correct assumption.
    
36. To do so, they were duty-bound to afford the plaintiff natural justice and give him the opportunity to explain, but he resigned before such opportunity was given.
    
37. The plaintiff is in the same position with regard to the allegations that he was a pathological liar, that the Bank was performing poorly, that there were loan book issues, that he applied undue pressure on credit staff to approve loans, that he misrepresented key performance indicators, that he disseminated press releases without the Board’s approval, that he harassed credit lending staff for declining loan applications for relatives and families, was absent from work without leave approval and insubordination, that he engaged in gross misconduct and that he was a pathological liar about the bank’s performance.
    
38. The plaintiff claimed that all the allegations were unfounded, but his witnesses testified to a particular day, and the allegation that his office car was seen at the Aviat club.
    
39. However, as far as that evidence goes, it shows that the allegations against the plaintiff on that day were unfounded.
    
40. He did not present evidence on the important issues of the Bank’s alleged poor performance and possible attempts to interfere with bank staff responsible for loans.
    
41. This became important because the evidence emerged during cross-examination that the plaintiff had resigned as CEO before any decision to sack him was made.
    
42. That raised the issue the plaintiff claimed was the case – that the submission was made public?
    
43. He claimed the Minister saw the submission.
    
44. While, as a matter of law, I would have to decide whether the Minister seeing the document put the document in the position of being determined to be defamatory, a requirement of s.2 of the Defamation Act, the plaintiff did not prove the Minister saw the document. The plaintiff admitted he only believed that to be the case. He had the onus to prove his case and his claim became mere belief. That is not proof.
    
45. Further, the plaintiff’s witnesses did not confirm ever seeing the submission, so at their highest, the evidence only confirms that some statements about the plaintiff were incorrect.
    
46. That brings me to the document.
    
47. Some of the statements are very clearly nasty, and I would have no difficulty in holding that they could be defamatory, however, cross-examination of witnesses for the defendants carefully avoided hard questions going to claims that he was a pathological liar or misrepresented the Bank’s performance. Who knows, they may have given evidence of going to particulars of what was alleged in the submission. The submission made general comments as stated here, but no particulars, for example, of pathological lies, were given.
    
48. But the s.2 definition of defamation in the Defamation Act requires publication as a basis for such to be held to injure reputation.
    
49. Publication was not publication between the directors, as they acted as one in producing the document, in discharge of what they said was their duty.
    
50. While the onus falls on a defendant when defamation is claimed, the plaintiff has the onus of proving its publication.
    
51. At no stage in his evidence-in-chief, confirmed in his cross-examination, did the plaintiff prove publication.
    
52. He attempted to discharge the onus by claiming a secretary typing the submission saw the document.
    
53. However, he could not identify any secretary who may have typed the document and in any case, if a secretary typed the document, then I would have to hold that such employee was in a position whereby any publication to her would be protected as she would be part of the Bank staff.
    
54. I would also add that these days, and even when the submission was constructed, computers and programs allowing for documents to be created by dictation straight to a computer, exist and have existed. No questions were directed as to the initial author of the submission.
    
55. An understanding of what must be proven in defamation was stated in the decision by Johnson J recently, in the English High Court Kings Bench division, in Mohammed Hegab v The Spectator Limited and Douglas Murray, KB-2023-003636 (5 August 2025.
    
56. The nature of the alleged defamatory comments, very detailed in the judgment, made by and in The Spectator Magazine, in articles about street violence between Hindus and Muslims, was that the plaintiff whipped up his followers, meaning that he caused trouble between religions and by inciting racial hatred.
    
57. His Honour stated:
    

“74 The tort of defamation involves a publication that conveys a defamatory imputation concerning the claimant, which causes or is likely to cause serious harm to the claimant’s reputation. It is a defence to show that the imputation is substantially true.

...

76 The court must determine the single meaning that is conveyed by the publication to the hypothetical reasonable reader, and whether that meaning expresses effect or opinion. The applicable principles to set out in Koutsogiannis v Random House [2019] EWHC 48 (QB); [2020] 4 WLR 25 per Nicklin J at 11-17.

...

95 I accept Mr Henderson's submission that, in the abstract, the natural probability is that the imputation conveyed by the article, published as it was in a well-known, reputable, widely read publication, is seriously damaging to reputation such that it is likely that it would cause serious reputational harm. That is the more so in the light of the claimant's profile as an academic and a public speaker and commentator on politics, religion and society within the British Asian community. It is, however, necessary for the claimant to prove that the article has in fact caused serious reputational harm or that it is likely to do so in the future.

96. The claimant has not discharged that burden.”

58. In plain language, that decision, upheld on appeal, requires both publication and evidence of the damage.
    
59. Publication here is not between the defendants, it must be to others not connected to the Bank.
    
60. In this particular case, the plaintiff as former CEO of the Bank has not proven publication to the public at large.
    
61. However, if that assessment of the evidence is incorrect, the plaintiff must also prove injury and the defendants also rely on a defence under s.14 of the Defamation Act, which requires the Court to determine whether the person defamed was likely to be injured, if there was publication.
    
62. He does that by a very simple statement, that he has not been able to gain employment.
    
63. It is not enough for the plaintiff to say he has applied for positions and has failed to be appointed. There may be many reasons for such failure, including the availability of better-qualified candidates, however what is required is a particularised statement of what he applied for, what had been said, and how such shunning can be seen to be connected to the alleged discriminatory submission in question.
    
64. While certain aspects of the submissions are repugnant, the plaintiff resigned and in so doing, denied himself the opportunity to answer the allegations, either raising them himself or awaiting demand that he answer them.
    
65. There is no evidence, after he resigned, that the submission went to any person who would not have the defence that they viewed it in a protected environment, and no evidence that it went anywhere else.
    
66. I am not then satisfied that there has been a publication to the general public or to others who may have responsibility for employing the plaintiff within organisations, both public and private, which he may have an interest in joining.
    
67. In this case, that was always the defence, that there had been no publication outside, and the Bank could not discharge its duties if prevented from making statements of the perceived behaviour of its officers.
    
68. In any case, it is also a defence to defamation that the person claiming injury was not likely to be injured by the publication, and even if it was published, the plaintiff has not proven injury.
    
69. For those reasons, I will dismiss the Writ of Summons and award costs against the plaintiff.
    

ORDERS

1. The Writ of Summons filed on 24 November 2023 is dismissed.
   
2. The Plaintiff will pay the costs of the defendants as agreed or as assessed.

Decision accordingly

Lawyers for the plaintiff: Craneworth & Cartwright Lawyer
Lawyers for the defendants: Goodwin Bidar Nutley Lawyers