OS 225 OF 2006; Madang Development Corporation Limited v Rabtrad Madang Limited and Rabtrad Niugini Limited and G. Litz & Company Limited (Third Defendant/First Cross Claimant) and Andersons Foodland Limited (Second Cross Claimant) (2013) N5259

• Jurisdiction: Papua New Guinea
• Judge: Hartshorn, J
• Judgment Date: 13 June 2013
• Court: National Court
• Citation: (2013) N5259
• Year: 2013
• Judgement Number: N5259

Full Title: OS 225 OF 2006; Madang Development Corporation Limited v Rabtrad Madang Limited and Rabtrad Niugini Limited and G. Litz & Company Limited (Third Defendant/First Cross Claimant) and Andersons Foodland Limited (Second Cross Claimant) (2013) N5259

National Court: Hartshorn, J

Judgment Delivered: 13 June 2013

N5259

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 225 OF 2006

BETWEEN:

MADANG DEVELOPMENT

CORPORATION LIMITED

Plaintiff/Cross Defendant

AND:

RABTRAD MADANG LIMITED

First Defendant

AND:

RABTRAD NIUGINI LIMITED

Second Defendant

AND:

G. LITZ & COMPANY LIMITED

Third Defendant/First Cross Claimant

AND:

ANDERSONS FOODLAND LIMITED

Second Cross Claimant

Waigani: Hartshorn, J.

2012: December 12th,

2013: February 11th, 21st, March 20th, June 13th

Contempt – disobedience contempt – practicing lawyer – failing to comply with court order to pay K700,000 from his trust account – contempt continuing - penalty to be imposed - whether a term of imprisonment appropriate

Facts:

The contemnor Mr. Emmanuel Mai pleaded guilty to a charge of contempt of court for knowingly and wilfully failing to comply with an order of this court. This is the decision concerning the punishment to be imposed upon Mr. Mai. Mr. Mai is a lawyer and at the relevant time practiced on his own account as Mai Lawyers.

Held:

The very substantial amount of money that remains owing, the continuing breach of the court order and the fact that Mr. Mai was a practicing lawyer at the time that the court order for payment was made leads to the conclusion that a monetary penalty is not appropriate.

Cases:

Yap v. Tan [1987] PNGLR 227

Ross Bishop v. Bishop Brothers [1988-89] PNGLR 533

Bishop Brothers v. Ross Bishop (1989) N690

Concord Pacific Ltd v. Thomas Nen [2000] PNGLR 47

Liriope v. Usurup (2009) N3931

Bank of South Pacific Ltd v. Anton Sekum & Ors (2011) N4588

Milupol Development Corporation Ltd v. Garai (2012) N4635

Counsel:

Mr. W. Bigi, for the Plaintiff

Mr. B. Ovia, for the Contemnor

13th June, 2013

1. HARTSHORN, J: The contemnor Mr. Emmanuel Mai pleaded guilty to a charge of contempt of court for knowingly and wilfully failing to comply with an order of this court. This is the decision concerning the punishment to be imposed upon Mr. Mai. Mr. Mai is a lawyer and at the relevant time practiced on his own account as Mai Lawyers.

2. The order of this court with which Mr. Mai failed to comply was made on 11th May 2012 and required him to pay the sum of K700,000 together with any interest earned into the trust account of Henao’s Lawyers within three days (Payment Order). The sum of K700,000 was being held in the trust account of Mai Lawyers on behalf of the plaintiff, Madang Development Corporation Ltd. The Payment Order was made after Henao’s Lawyers were instructed to act for the plaintiff instead of Mr. Mai.

3. Mr. Mai has admitted that he did not comply with the Payment Order as he had applied the sum of K700,000 for his own use. He had intended to repay the money to his trust account from legal fees due to him. The payment of these legal fees however did not eventuate and he was not able to replace the sum that he had taken from his trust account. Mr. Mai has since made a part payment of K100,000 to Henao’s trust account. This has been confirmed by Henao’s Lawyers. Mr. Mai has ceased to practice as a lawyer because of his inability to repay the K700,000 and is now engaged in project consultancy work to try and repay the money owing.

4. No maximum punishment is prescribed for contempt. Pursuant to Order 14 Rule 49(1) National Court Rules, where the contemnor is not a corporation, the court may punish contempt by committal to prison or fine or both.

5. The category of contempt in respect of which Mr. Mai has pleaded guilty is referred to as disobedience contempt. That is, the failure to comply with an order of the court or an undertaking given to a court. The punishments that have been imposed in this jurisdiction for disobedience contempt were considered by Cannings J in Liriope v. Usurup (2009) N3931. Cannings J noted that in four of the seven cases considered, the primary punishment was committal to custody and in two cases, Yap v. Tan [1987] PNGLR 227 and Bishop Brothers v. Ross Bishop (1989) N690 (appeal against conviction upheld: Ross Bishop v. Bishop Brothers [1988-89] PNGLR 533), committal to custody was the default penalty. In Yap (supra) and Bishop (supra), where fines were imposed with committal to custody being the default penalty, the contempts were in relation to the operation of businesses. In the case of Concord Pacific Ltd v. Thomas Nen [2000] PNGLR 47 in which the contempt was business related, the punishment was an order for costs on a solicitor client basis against the contemnor.

6. In Bank of South Pacific Ltd v. Anton Sekum & Ors (2011) N4588, I sentenced the contemnor who had been found guilty of a disobedience contempt that was business related, to a fine and imprisonment if not paid within thirty days, and costs to be paid on a solicitor client basis. Then in Milupol Development Corporation Ltd v. Garai (2012) N4635, I sentenced the contemnor who had also been found guilty of a disobedience contempt that was business related, to a fine and imprisonment if not paid within six months and costs to be paid on a solicitor client basis.

7. As I said in Anton Sekum (supra):

“The punishment of a fine with or without a default penalty and an order for the payment of costs, to an extent, reflects the punishment that was imposed for disobedience contempt historically. This was referred to in Australian Consolidated Press Ltd v. Morgan (1965) 112 CLR 483 by Windeyer J:

“When contempt lies in disobedience of a court’s order to do something, the contemnor may be imprisoned, until by doing what was ordered he purges his contempt. When contempt lies in disobedience of an injunction not to do something, the contemnor is ordinarily permitted to purge his contempt by an apology to the court, making reparation for the damage done by the forbidden act and paying the costs as between solicitor and client.”

The imposition of a fine, which was not permitted in earlier times, can be seen to have replaced the making of reparations in the passage cited.

The payment of a fine with or without imprisonment as the default penalty is often the punishment for disobedience contempt imposed in the courts of Australia. The Federal and High Courts of Australia have the power to order that a contemnor, “pay a fine, be committed to prison or both pay a fine and be committed to prison.” The decisions of these Courts are persuasive in this jurisdiction.

In the recent case of Vaysman v. Deckers Outdoor Corporation Inc [2011] FCAFC 17, a decision of the Full Court of the Federal Court of Australia, Gray J said that:

“The starting point for the process of reasoning in sentencing is the gravity of the offence… In the case of contempt of court involving contravention of, or failure to comply with, court orders, that means assessing the seriousness of the defiance of the Courts authority.”

Then later,

“… Restraint is appropriate in imposing sentences of imprisonment for contempt of court involving contravention of, or failure to comply with, orders of the Court. The authority of a court can be brought into disrepute, rather than enhanced, by too great a tendency to punish severely in cases that do not warrant severity.”

In the judgment of Bromberg J in Vaysman (supra), His Honour had this to say as to punishment for contempt:

“…. The question is whether by reference to the harm done, the seriousness of the contempt, any prior relevant misconduct and the physical, mental and other personal conditions of the person to be sentenced, no sentence other than imprisonment is (in all the circumstances) appropriate.” “… non-compliance with court orders necessarily constitutes an interference with the administration of justice and thus the public interest of vindicating judicial authority is raised….” “The vindication of judicial authority must necessarily reflect the nature of the challenge to that authority inflicted by the conduct in contempt in question.” “Imprisonment, as a disciplinary sanction for contempt, ought to be confined to the most serious of contempts..” “As Keane CJ, Dowsett and Reeves JJ recently observed in Jones v. Australian Competition and Consumer Commission [2010] FCAFC 136 at [36], there would be a serious question of the propriety of...