PNG Aviation Services Pty Ltd, Douglas Neil Valentine, York Andrew Mendoza, and Walter Andrew Lussick v Michael Thomas Somare and The Independent State of Papua New Guinea [1997] PNGLR 515

• Jurisdiction: Papua New Guinea
• Judge: Sheehan J
• Judgment Date: 20 December 1996
• Court: National Court
• Citation: [1997] PNGLR 515
• Year: 1997
• Judgement Number: N1493

Full Title: PNG Aviation Services Pty Ltd, Douglas Neil Valentine, York Andrew Mendoza, and Walter Andrew Lussick v Michael Thomas Somare and The Independent State of Papua New Guinea [1997] PNGLR 515

National Court: Sheehan J

Judgment Delivered: 20 December 1996

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 312 OF 1987

WS 313 OF 1987

WS 290 OF 1987

WS 1059 OF 1988

BETWEEN:

PNG AVIATION SERVICES PTY LTD

DOUGLAS NEIL VALENTINE

YORK ANDREW MENDOZA

WALTER ANDREW LUSSICK

Plaintiffs

And:

MICHAEL THOMAS SOMARE — 1st Defendant

And:

INDEPENDENT STATE OF PAPUA NEW GUINEA — 2nd Defendant

Waigani

Sheehan J

19 July 1993

6 September 1993

20 December 1996

DEFAMATION — Defamation Act Defence of Privilige and or Qualified Privilige — Claim of Malice and or lack of good faith.

Counsel:

Mr I Molloy & Mr J Shepherd for Plaintiffs

Mr K Cullinane QC & Mr B Frizell for Defendants

20 December 1996

SHEEHAN J: On 16 August 1985 the Prime Minister of Papua New Guinea the Hon Mr Michael Somare addressed Parliament in answer to questions that had been put to the Government by the Leader of the Opposition Mr Paias Wingti.

The Government was challenged in its dealings relating to the sale of purchase of government aircraft. The Opposition through its Leader accused the government of accepting bribes in return for business favours. At that time the issues raised by those questions were a matter of considerable public interest.

Mr Somare in his reply to the House denied any impropriety in Government's or his own business dealings and launched a severe and scathing attack on the Opposition Leader. In the course of this speech he made equally severe and damaging assertions about the plaintiff company PNG Aviation Services and its directors Messrs Valentine Mendoza and Lussick.

Following that speech in the House the Prime Minister caused report of it published under the State crest in advertisements printed over three days in each of 4 newspapers circulating in PNG at the time. It reads as follows:

Statement by Prime Minister Michael Somare in reply to a statement by Opposition Leader Wingti, August 16, 1985

Dear Mr Speaker,

Yesterday, the Opposition Leader made a statement about Government negotiations leading to the sale of Kumul 1 and the purchase of Arava Aircraft for the Defence Force.

Sir, in that statement he made a number of vicious, dishonest and slanderers allegations about my conduct in this House. He accused me of deliberately lying to this House and of associating with criminals.

Sir, I believe the member for Hagen has — in his enthusiasm for the opposition role — overstepped the mark dramatically.

Sir, Mr Wingti is relatively inexperienced, and perhaps he doesn't fully understand legal documents, so I would like to give him the chance to retract his statements (if he doesn't offer to retract).

Mr Speaker, since the honourable member does not choose to retract his statement full responsibility for it must fall on his head. And, Sir, it is a dreadful responsibility. The member for Hagen will for many years regret his rashness and ill-considered words on this subject.

For, Sir, the leader of the opposition not only mislead this House on this issue — yesterday he deliberately mislead honourable members. He lied to this House!!!

Sir, Mr Wingti lied repeatedly and he deliberately misinterpreted my statements and various legal documents to suit his own ends.

Sir, I will demonstrate to every member of this House how the member for Hagen has lied and I will use his own documents and words to do it!!!

Mr Speaker the dishonesty exhibited by the Opposition Leader is on a level rarely seen in this house previously. It is dishonesty which must bring upon the Opposition leader's head the condemnation of all decent thinking citizens.

Sir, I will deal with his scurrilous allegations in the order they were delivered.

First, Sir, I was accused of lying to this House in a statement I made on June the seventh.

Sir, I do not lie!!!

I stand by every word of that statement. I have nothing to hide! and I have nothing to apologise for.

Sir, the Opposition Leader has been manipulated by a disreputable foreign owned company.

Sir, PNG Aviation Services have tried repeatedly to mislead and cheat this Government and when they failed to do that they have tried to embarrass us by leaking documents to the gullible members of the opposition.

Sir, yesterday Mr Wingti tabled a number of documents and claimed and here I quote: "These documents are total proof that PNG Aviation Services Pty Ltd was appointed the Sole Agent for the sale of Kumul 1".

End of quote.

Sir, the member for Hagen continued to say that these documents proved I was lying.

Sir, that statement not only proved that Mr Wingti is not very wise it showed that he is rash and irresponsible. These documents demonstrate only that PNG Aviation Services entered into a preliminary agreement — an escrow agreement with the Government of Papua New Guinea.

Sir, for the Opposition Leaders' Information an escrow agreement is merely a conditional agreement. It is not a firm contract it is an agreement conditional upon certain actions.

Sir, in this case PNG Aviation Services did not fulfil the conditions of the escrow and it lapsed.

Sir, to anyone who understood these documents and after serving the National Executive Council, the member for Hagen should understand them the import is quite clear.

The heading alone should be enough.

It says and Sir I have the document here 'Seller's Escrow Instructions'.

It is not a contract it is not a firm commitment it is a condition agreement as page two of the document makes quite clear.

Sir, I quote from the part headed 'General Provisions' Part Two:

'Time is of the essence in this escrow', unquote.

Sir, PNG Aviation Services had an escrow — and an escrow only — on the sale of the Kumul.

It was a limited escrow for three weeks from August the third, 1983.

The company failed to live up to the conditions of the escrow and because of this failure was not appointed as an official agent for the sale of Kumul 1.

Sir, the conditions of the escrow were not met so PNG Aviation Services failed in their bid to become an agent for the aircraft. The appointment documents signed by my colleague the Minister for Finance was conditional on the terms of the escrow being met.

They were not met and PNG Aviation Services were not appointed as official agents.

Sir, the conditions the company failed to meet are set out in part four of the general provisions. And here Sir, I quote again "five hundred thousand United States dollars, (US$500,000) and seven (7) days prior written notification to the Independent State of Papua New Guinea of proposed date of inspection and details of persons forming inspection team to enable the state to have its representative available for the inspection and acceptance flight test". End of quote.

Sir, that company failed to meet the conditions of the escrow.

They were not official agents of the PNG Government then and to the best of my knowledge they have not been agents for the Government in relation to any other transaction.

Sir, my officials found that, not only did PNG Aviation Services fail to meet the conditions of the escrow, they tried to undermine them and sneak by without fulfilling their legal obligations.

Sir, PNG Aviation Services and its principals are completely untrustworthy and dishonest.

Their own documents prove this.

Sir, that company deliberately and with criminal intent sought to defraud the Papua New Guinea Government during the negotiations leading up to the sale of Kumul 1.

Sir, to substantiate these allegations I table two documents.

The first consists of information provided to a Minister, Sir Barry Holloway by Mr Valentine of PNG Aviation.

The second is the report of the official government inspection of the aircraft which was prompted by Mr Valentine's communication.

(Table documents)

Mr Speaker, it is typical of Mr Valentine's behaviour that he did not operate through the correct channels he attempted to politically manipulate ministers just as he is manipulating the member for Hagen now.

Sir, document one makes a number of spurious allegations about the condition of Kumul 1. Mr Valentine claims the interior of the plane was in terrible condition, it had been left out on the tarmac and so on.

Sir, all these claims were later proven to be absolute lies!!

The intent of this document we believe was to make us distrust the company we were dealing with and transfer our business to PNG Aviation Services.

In other words having failed to win the business legitimately PNG Aviation Services were trying through slander and innuendo to undercut their rivals.

Sir, these were serious accusations so my department head, Mr Yauieb, immediately ordered an office of Civil Aviation official, Mr EC Johnston, superintendent of Air worthiness, to fly to Copenhagen to inspect the aircraft.

His report is Document 2.

Sir, this...