Newsat Limited v Telikom PNG Limited and Independent Consumer and Competition Commission and The Independent State of Papua New Guinea (2008) N3673

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 29 August 2008
• Court: National Court
• Citation: (2008) N3673
• Docket Number: WS NO 1350 OF 2006
• Year: 2008
• Judgement Number: N3673

Full Title: WS NO 1350 OF 2006; Newsat Limited v Telikom PNG Limited and Independent Consumer and Competition Commission and The Independent State of Papua New Guinea (2008) N3673

National Court: Cannings J

Judgment Delivered: 29 August 2008

N3673

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1350 OF 2006

NEWSAT LIMITED

Plaintiff

AND

TELIKOM PNG LIMITED

First Defendant

INDEPENDENT CONSUMER AND COMPETITION COMMISSION

Second Defendant

THE INDEPENDENT STATE OF

PAPUA NEW GUINEA

Third Defendant

Waigani: Cannings J

2008: 14 January, 29 August

PUNISHMENT

CONTEMPT – failure to comply with court orders – punishment – corporate contemnor – determination of maximum penalty where maximum not prescribed by law – identification of starting point – assessment of mitigating and aggravating factors – fine of K5 million imposed.

The contemnor, a large corporation, was found guilty of contempt of court for deliberately failing to comply with an order of the National Court. A hearing was then held to address the question of punishment. The contemnor argued that payment of the prosecuting party’s legal costs was sufficient punishment and no fine should be payable. The prosecuting party, however, submitted that a substantial fine, in the order of K5 million to K10 million, should be imposed.

Held:

(1) There being no maximum penalty prescribed by law for contempt of court, it is appropriate to fix a notional maximum for a corporation by considering the size and status of the corporation and the maximum penalties under the legislation governing its business and affairs.

(2) An appropriate notional maximum in this case is K10 million.

(3) A useful starting point for punishment purposes is the middle of the range: K5 million; and then the court should look at mitigating and aggravating factors to determine the amount of the fine.

(4) Mitigating factors are: the contemnor is a ‘first-time offender’; the contemnor has, to some extent, complied with the court order since being found guilty of contempt; imposition of a substantial fine may have an adverse impact on the company.

(5) Aggravating factors are: the contempt of which the contemnor is guilty cannot be regarded as ‘technical’; the contemnor did not plead guilty; the contemnor is a large, prominent, State-owned corporation, with a special duty to maintain the Rule of Law; lack of contrition.

(6) After weighing the mitigating and aggravating factors, it was appropriate that the fine be set at the starting point.

(7) Accordingly, the punishment imposed for contempt of court in this case was a fine of K5 million, payable, through the Registrar, to the Consolidated Revenue Fund, within 30 days.

Cases cited

The following cases are cited in the judgment:

Concord Pacific Ltd v Thomas Nen [2000] PNGLR 47

Manu Kovi v The State (2005) SC789

Newsat Ltd v Telikom PNG Ltd, ICCC and The State (2007) N3447

Peter Luga v Richard Sikani and The State (2002) N2286

Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448

Re Contempt of Court Proceedings against Valentine Kambori (No 3) (2003) N2490

Richard Sikani v The State and Peter Luga (2003) SC807

Ross Bishop and Others v Bishop Brothers Engineering Pty Ltd [1998-89] PNGLR 533

The State v Bart Kiohin and Henry Kevi (2005) N2811

The State v Dominic Kurai (2008) N3435

The State v James Yali (2005) N2989

The State v Justin Ipa (2008) N3439

Yap v Tan and B & T Engineering Pty Ltd and Wong and Baptiste and Tau [1987] PNGLR 227

Abbreviations

The following abbreviations appear in the judgment:

CEO – chief executive officer

ICCC – Independent Consumer and Competition Commission

J – Justice

Ltd – Limited

N – National Court judgment

NEC – National Executive Council

No – number

PNG – Papua New Guinea

PNGLR – Papua New Guinea Law Reports

Pty – Proprietary

SC – Supreme Court judgment

v – versus

VSAT – very small aperture terminal

WS – writ of summons

PUNISHMENT

This is the punishment of a company for contempt of court.

Counsel

G Poole, for the plaintiff

A Mana, for the 1st defendant, the contemnor

29 August, 2008

1. CANNINGS J: In May 2007 I found the contemnor, Telikom PNG Ltd, guilty of contempt of court for failing to comply with an order of the National Court. I now have to decide what penalty, if any, Telikom should be subject to.

2. The National Court order was made by Justice Salika in September 2006. It followed a motion by the plaintiff, Newsat Ltd, which had, a year earlier, entered into a contract with Telikom for provision of satellite-based broadband, called VSAT services in PNG. Newsat commenced legal proceedings against Telikom and two other parties, claiming damages and other remedies, including injunctions, against Telikom. Salika J upheld Newsat’s motion and ordered Telikom to do certain things in relation to the contract. Amongst other things, his Honour ordered Telikom to:

· accept service requests/customer contracts submitted to it for the provision of Newsat services and received by it prior to the close of business on 26 September 2006 (of which there were at least 101); and

· perform its obligations to customers pursuant to all service requests/customer contracts accepted by it prior to the close of business on 26 September 2006.

3. Newsat claimed that Telikom did not comply with the order and brought a contempt motion against Telikom under Division 14.6 of the National Court Rules.

4. After a hotly contested trial, I held that Salika J’s order was clear and unambiguous, that it was properly served on Telikom, that Telikom failed to comply with it (by not accepting any of the service requests/customer contracts for provision of Newsat services submitted to it) and that the failure to comply was deliberate. I concluded that Telikom had wilfully disobeyed Salika J’s order and that it was therefore guilty of contempt of court.

5. Further details of the circumstances in which the contempt was committed are set out in Newsat Ltd v Telikom PNG Ltd, ICCC and The State (2007) N3447.

DECISION MAKING PROCESS

6. To determine the appropriate penalty I will adopt the following decision making process:

· step 1: what form of punishment should be imposed?

· step 2: what is the maximum punishment?

· step 3: what is a proper starting point?

· step 4: what should the punishment be in this case?

· step 5: should all or part of punishment be suspended?

· step 6: who should receive the benefit of the punishment?

7. There are very few local cases involving punishment of corporate contemnors, which would have provided precedents for me to consider. So I am approaching the task of “punishment”, as it is called in the National Court Rules, in this way, as contempt of court is akin to a criminal offence.

8. Though Telikom can be regarded as having committed a civil contempt, the prosecution of an individual or a corporation for contempt is essentially a criminal proceeding. If found guilty, the contemnor can be subject to criminal-style penalties, eg committal to prison (in the case of individuals) and fines (corporations and individuals). (Yap v Tan and B & T Engineering Pty Ltd and Wong and Baptiste and Tau [1987] PNGLR 227; Ross Bishop and Others v Bishop Brothers Engineering Pty Ltd [1998-89] PNGLR 533; Peter Luga v Richard Sikani and The State (2002) N2286; Richard Sikani v The State and Peter Luga (2003) SC807.)

9. It follows that the task of punishment should be carried out by adopting the same sort of sentencing practices and principles that are applied when sentencing offenders, whether individuals or corporate bodies, for other criminal offences.

STEP 1: WHAT FORM OF PUNISHMENT SHOULD BE IMPOSED?

10. Contempt of court is prosecuted under Division 14.6 of the National Court Rules. Order 14, Rule 49 (punishment) deals with contempt by a corporation:

Where the contemnor is a corporation the Court may punish contempt by sequestration or fine or both.

11. Sequestration entails the court-sanctioned seizure of a contemnor’s assets. Mr Mana, for Telikom, submitted that, despite what the National Court Rules say, Telikom’s assets are immune from sequestration by virtue of Section 50(3) of the Independent Public Business Corporation of Papua New Guinea Act 2002. I do not think that that provision has that effect but it is not necessary to consider the point any further as I agree with Mr Mana that sequestration would be a rather drastic punishment, particularly in the case of a corporation like Telikom, a State-owned enterprise providing essential services to the country.

12. Although it is available as a punishment, sequestration should be reserved for cases of extreme contempt or perhaps where a corporation does not have the financial capacity to pay a fine. It is not an appropriate form of punishment in the present case and the plaintiff did not press strongly for it. I consider that the most appropriate form of punishment is a fine.

STEP 2: WHAT IS THE MAXIMUM PUNISHMENT?

13. The National Court Rules do not fix a minimum or maximum punishment for contempt and there is no other law that fixes a minimum or maximum. The court has a very wide discretion. In deciding how that discretion should be exercised I think it is useful to set a notional maximum. Courts, generally, look first at the maximum penalty for an offence when deciding on a sentence for a...