IN THE HIGH COURT OF KIRIBATI
CIVIL JURISDICTION

HIGH COURT CIVIL CASE 16 of 2023

BETWEEN:	MICHAEL JOSEPH GAHAN 
	Plaintiff

AND:	THE DIRECTOR OF CIVIL AVIATION	
Defendant

Date of Hearing:	10 March, 17 April, 22 April, 26 May, 7 August, 17 Sept 2025
Date of Judgment:			10 November 2025

Appearances:		Mr. Banuera Berina for the Plaintiff
                                            Mr. Mikaere Kakiareirei for the Defendant

JUDGMENT

The case
1.	This is a negligence case by the plaintiff for damages arising from the breach of the defendant’s statutory duties imposed on the defendant by the Civil Aviation Act 2019. 
Case background.
2.	The plaintiff is a resident of Australia and has been employed as the chief executive officer of the Airport Kiribati Authority (AKA) since 2018.

3.	The defendant is the director of Civil Aviation appointed under section 22 of the Civil Aviation Act 2019. One of her roles as director is to investigate and assess whether the plaintiff is a fit and proper person to continue serving as Chief Executive Officer of the Airport Kiribati Authority.
4.	The plaintiff, as Chief Executive Officer, was required to meet the criteria of a fit and proper person under sections 12 and 13 of the Civil Aviation Authority Act 2019.

5.	The defendants concluded that the plaintiff was not a fit and proper person for the position. The High Court, after an appeal by the plaintiff, determined that the defendant's decision should be overturned due to a breach of natural justice, because the defendant failed to disclose some prejudicial information upon which she based her decision. This was documented in High Court Civil Appeal 9 of 2021.

6.	The defendant's negligence and breach of statutory duty caused the plaintiff to incur loss and damages. Details are provided below;
Wages $800 per day for 22 days per month for 12 months = $211.200
Expenses waste awaiting hearing of appeal $5000 per month for 12 months = $60,000
The plaintiff also suffered from anxiety and humiliation as a result of the adverse finding made by the defendant.
In total damages in the sum of $271,200 plus general damages in the sum of $100,000.
7.	The defendants denied liability and pleaded the limitation of liability under the Government Liability Act 2010. 
Submissions and Analysis 
8.	Let me first address the issue of limitations of liability. The defendant argues that the Civil Aviation Authority is a government agency and, therefore, subject to the limitations outlined in the Government Liabilities Act 2010. 

9.	Section 7 of the Government Liability Act states that a lawsuit against the Government must be filed within one year from the date the cause of action arises; otherwise, the claim would be barred by statute. The legislation also sets a cap of $50,000 on claims for damages against the government. 

10.	In support of this argument, Counsel for the defendant referred this court to several documents as listed below; 
-	State Owned Enterprises Act,
-	Ministry’s strategic plan,
-	Establishments register.

11.	The State-Owned Enterprises Act applies to non-governmental bodies. The Act's schedule lists all non-governmental bodies to which it applies. The defendant’s counsel submits that the Civil Aviation Authority of Kiribati is not listed in this schedule among other non-governmental bodies, which means that the defendant is a Government body. Counsel also referred to the ministry's strategic plan, which shows that the Civil Aviation Authority is a Government agency and part of the ministry, as all its existing posts are listed in the Government establishment register. The defendant's office is also part of the ministry's strategic plan, and the ministry also provides its budget. The Government minister of the relevant ministry also appoints board members. Therefore, the Government Liability Act applies to them.

12.	The plaintiff, on the other hand, argues that the legislation does not apply because the defendant is not the Government but an independent entity established under the Civil Aviation Act of 2019. Section 4 of this Act states that the Civil Aviation Authority is a corporate body with perpetual succession and a common seal, with the authority to acquire, hold, and dispose of land and other property, enter into contracts, and sue or be sued in its own name. The plaintiff emphasizes that this provision shows that the Civil Aviation Authority is an independent corporate entity, separate from the Government.

13.	In support of this argument, the plaintiff refers to case law from PNG, specifically the case of Wamena Trading Company LTD v Civil Aviation Authority of Papua New Guinea [2006] PNGNC 57; N3058 (10 May 2006). The case involves a lease agreement between the plaintiff and the Civil Aviation Authority. The plaintiff sought to evict the Civil Aviation Authority from the premises and the property, so an injunction was issued to prevent the defendants from entering the premises. One of the grounds was based on the defendant being part of the Government; therefore, a notice should have been given to them under section 5 of the Claims By and Against the State Act, if the intended proceedings were against the State. The court found that the defendant, Civil Aviation Authority, was not the State. Paragraph 41 of the judgment states as follows;
“41. Under the Civil Aviation Act 2000, the minister has the general oversight of civil aviation policy and legislation (s 8), but does not have management powers or the power to direct the functions of state aviation enterprises. He may seek information.(s 9). You may keep policy directions, but not so as to achieve a particular result in a particular case (s 19). The act establishes a department and a Civil Aviation Authority, the latter being the defendant in these proceedings. The revenue of the Civil Aviation Authority includes any monies appropriated by the parliament; revenue generated itself and any other revenue lawfully available to it, such as grants, donations, or loans (s 35). It is a trading enterprise (s 34). The chief executive officer of the authority is the director, and neither the minister nor the department here attempts to influence him in the exercise of these functions (s 17(5). The minister's powers are limited, and the authority, its director, and its board enjoy a significant degree of autonomy authorized by the Act. 
To my mind, none of those provisions, separately were together, compelled the conclusion that the difference is the state. It is a state in instrumentality, it is a governmental body, but it is not part of the three system of government. Its members are not elected by the people it does not meet most of the criteria applied in the reasoning of the Supreme Court in SCR 1 of 1998; reservation pursuant to s15 off the Supreme Court act.”
14.	The plaintiff also cites another PNG case, Plumtrade Ltd v Papua New Guinea University of Technology [2011] PGNC 236; N4798 (19 April 2011). In this case, the defendant moved to strike out the claim based on section 5 of the Claims By And Against The State Act, which requires that notice be served on the State of the party's intention to make a claim against the State. The court decided that notice is unnecessary because the defendant is not a State, for the same reason cited in the other case, which it finds applies to statutory corporations that have independent corporate status and are also subject to ordinary laws as corporate citizens, since they are considered separate or distinct legal entities.

15.	After considering Counsel’s submission, I also took some time to review the relevant legislation to determine if the Civil Aviation Authority is considered part of the Government and protected by the Government Liability Act. This legislation contains only 11 provisions. Section 2(2) states that the word ‘Government’ refers to the Government of Kiribati. Part IV addresses claims against the Government. Section 11 under Part IV discusses the protection of Government assets, which states that,

“No assets of the Government, any local government, any statutory authority or any entity in which the Government or any local government owns or controls a majority of the beneficial interest shall be seized, attached or subject to execution with respect to any claim or to satisfy any judgement.”

16.	 The Act’s Explanatory Memorandum, although it has no legal effect, also mentions in the second paragraph that;
“The Act is divided into four parts containing eleven sections. Part I deals with preliminary matters. And it is worth to note the wider application of this Act where the word "Government" extends to councils, statutory corporations and government owned company or an entity the majority of shares is held by either the Government or the council.”

17.	My view on this issue is that the defendant, as the Director of the Civil Aviation Authority of Kiribati, is a government entity. The legislation is clear. There is no need to look for the answer in other case law. The several documents referenced by the defendant's counsel also suggest that the Civil Aviation Authority is part of the Ministry of Information, Communication, and Transport. The Establishment Register 2024 for this Ministry also lists the Civil Aviation as one of its divisions, along with the Ministry’s Recurrent Budget 2025, which shows that Aviation staff wages and operational budgets are included in the Ministry’s Recurrent Budget. 

18.	Section 8 of the Civil Aviation Authority Act 2019 states that the Board's objective is to oversee operational matters, make decisions related to the Authority's operations, ensure the Authority functions according to its objectives, and report directly to the Minister on administrative issues. This supports the argument that the defendant is part of the Government ministry. The Government Liability Act 2010 is more explicit about its scope through section 11.

Duty of care
19.	According to the plaintiff, the defendant owed a duty of care to the plaintiff in her exercise of statutory duties that could adversely affect him. The defendant has a statutory obligation to investigate and assess whether the plaintiff is a fit and proper person to continue as Chief Executive Officer. As part of this duty, the defendant is required under section 13(5) of the relevant legislation to provide or disclose information that might seem prejudicial and that she relied on in making her decision, giving the plaintiff a reasonable opportunity to respond. In breach of this duty, the defendant failed or refused to provide the plaintiff with the prejudicial information before relying on it to make an adverse finding. The defendant made this decision against the plaintiff without properly giving him a chance to respond to the information used. As a result, the plaintiff suffered a loss when he lost his job and had difficulty finding new employment.

20.	I agree with the plaintiff that although the defendant denied this allegation, the High Court in Civil Appeal 9 of 2021 found that the defendant breached her statutory duty by disregarding the rules of natural justice by not disclosing all prejudicial information she relied on in making her decision, (s13(5).

21.	The key issue to determine is whether a common law duty of care exists between the parties. The House of Lords established the Caparo test in the famous case of Caparo Industries Plc v Dickman [1990] 2 AC 605 to decide if a duty of care in negligence exists. Briefly, Caparo Industries purchased shares in Fidelity PLC, believing it would be successful, based on an account claiming the company had made a pretax profit of £1.3 million. This account was incorrect, as Fidelity actually suffered a significant loss. Caparo argued Fidelity was negligent and sued to recover its economic loss. The court ruled against Caparo, stating Fidelity did not owe a duty of care to a third party or shareholder who relied on the negligently prepared account, since that was not the account’s purpose. The court established that for a duty of care to exist, there must be reasonable foreseeability of harm, sufficient proximity between the parties, and it must be fair, just, and reasonable to impose such a duty. Since the defendants did not know the plaintiff Caparo or the purpose for which they would rely on the account, there was no proximity, and no duty was owed. 

22.	From the Caparo case, it established three parts of the test as follows: Reasonable foreseeability: Was the harm reasonably foreseeable because of the defendant’s conduct? Proximity: Was there a sufficient relationship of proximity between the claimants and the defendants? Fair, just, and reasonable: Would it be fair, just, and reasonable to impose a duty of care?

23.	While the plaintiff argues that the defendant owed him a duty of care, the defendant, on the other hand, argues that due to the lack of proximity in their relationship, the defendant did not owe a duty of care to the plaintiff. This is because the defendant was not the plaintiff's employer. Counsel cited the case of Stovin v Wise [1996] AC 923, paragraph eight of page one of the judgment, which states that ‘proximity is a convenient shorthand for a relationship between two parties, which makes it fair and reasonable that one should owe the other a duty of care.’

24.	Counsel for the defendant also argues that the termination of the plaintiff’s employment contract was caused by his employer, not the defendant. The employer was the Airport Kiribati Authority, AKA. The termination letter did not indicate that the defendant’s assessment was the sole reason for the plaintiff’s termination. According to the defendant, the termination was also based on other reasons driven by the plaintiff's employer, Air Kiribati Authority, including legal concerns such as the lack of a formal extension of the plaintiff’s employment contract and the necessity to advertise the CEO's vacant position. The defendant asserts that she was simply fulfilling her statutory duty to assess the plaintiff under section 13 of the legislation.

25.	I agree that the defendant has a statutory duty to disclose prejudicial information she relied on in reaching her conclusion, but does this automatically become the common law duty of care? I believe that having a statutory duty does not automatically establish a common law duty of care. The two are separate and distinct areas of law. However, the Caparo principle can be used to determine whether the defendant’s breach of statutory duty also amounts to a breach of a common law duty of care. The three elements of the test—whether the harm is foreseeable, the relationship is proximate, and it is fair, just, and reasonable to impose a duty of care—must be evaluated.

26.	Was the harm foreseeable because of the defendant’s conduct? The purpose of section 13(5) is to provide natural justice to the plaintiff, as the person being evaluated, by allowing him to respond to prejudicial information that the defendant considered in her assessment. In my view, this kind of provision offers protection to the person evaluated due to the nature of the information considered. Since the information is prejudicial, the assessment result would likely be unfavorable to the person evaluated, which is the exact outcome for the plaintiff when he was found not to be a ‘fit and proper person.’ The preliminary obligation for the defendant to disclose prejudicial information reflects the duty to exercise caution or to take extra care when making her assessment because the harm is foreseeable. In the plaintiff’s case, he lost his job, as he did.

27.	The relationship between the parties is not that of employer and employee; however, it is established and governed by legislation, specifically section 13 of the Civil Aviation Act, 2019. Under this provision, the defendant has a statutory duty to assess whether the plaintiff is a suitable and proper person for the position he held at that time as the Chief Executive Officer at the Airport Kiribati Authority. Their relationship can be categorized as the assessor and the person being assessed. The defendant’s statutory duty as the assessor is further detailed in section 13(5), which requires her to disclose to the plaintiff any information that may be prejudicial to the person being assessed, on which she relied when making her decision. Based on this, I would consider this relationship as proximate.

28.	For ease of reference, section 13(5) is stated below;

“If the Director proposes to take into account any information that is or may be prejudicial to a person, the Director shall, subject to subsection 6, disclose that information to that person and, in accordance with section 14, give that person a reasonable opportunity to refute or comment on it.”

29.	Section 13(5) also refers to section 14 of the Act, which addresses the rights of individuals affected by proposed adverse decisions, including the right to appeal under section 156. Since the relevant Act protects the plaintiff's interests, there is an implied obligation on the defendant to exercise reasonable care toward the plaintiff, akin to a common law duty of care. Therefore, in my view, it is fair, just, and reasonable to impose a duty of care on the defendant in performing her statutory duties. 

30.	For the reasons stated above, and since the defendant has been found in breach of her statutory duty, I also find her in breach of her common law duty of care when she made her adverse decision without disclosing to the plaintiff the prejudicial information she relied on, which resulted in the plaintiff losing the opportunity to make submissions on that prejudicial information.  

Liability
31.	As a result of the breach of the defendant’s duty of care, the plaintiff suffered loss and damages as follows;
Wages $800 per day for 22 days per month for 12 months = $211.200
Expenses whilst awaiting hearing of appeal $5000 per month for 12 months = $60,000
The plaintiff also suffered from anxiety and humiliation as a result of the adverse finding made by the defendant.
In total damages in the sum of $271,200 plus general damages in the sum of $100,000.

32.	As correctly argued by Counsel for the plaintiff, the purpose of awarding damages is to restore the innocent party to the position it would have been in if the defendant had not committed the wrongful acts. Counsel for the plaintiff refers to a PNG case of Mofu v Kumbia [2023] PGNC 325; NI0485 92 October 2023). 

33.	The defendant, on the other hand, refused to be responsible for the plaintiff’s claim, which was based on his loss of wages under his employment contract with his employer, Airport Kiribati Authority, because of the absence of privity of contract. I disagree with this argument; it is not relevant. I understand that the plaintiff uses this figure to show how much he would have earned had the defendant not made her adverse decision, and his contract would have continued for another 12 months, from April 2021 to April 2022.

34.	The key issue is whether his contract would be extended for another 12 months to support the claim for lost wages. This forms the basis of the plaintiff’s argument: he believed his contract would have been extended if not for the adverse assessment made by the defendant. The termination letter from his employer states, ‘I do hope that in the future opportunities will open to engage you once again for AKA.’ According to the plaintiff, this statement supports his claim that his employment would have been extended if not for the defendant’s negative assessment.

35.	The plaintiff was already entering his second year of his contract when he was terminated. In fact, he was already near the end of his contract at the time of termination. The initial contract was signed between the plaintiff and his employer, the Ministry of Information, Communication, Transportation, and Tourism Development, on April 19, 2019, for one year, ending on April 20, 2020, as referenced earlier. The second year spanned from April 21, 2020, to April 22, 2021. The plaintiff was terminated by a letter dated March 17, 2021, leaving him with only 36 days remaining before the contract's expiry.

36.	The termination letter stated that the second reason for termination was that his employer was unaware that his contract had already expired because the plaintiff did not flag it. However, he only informed his employer that his contract was automatically renewed. Still, the employer found that there was no written extension agreement or anything similar, as required by the contract clause titled ‘Start Date and Duration,’ which states, ‘The contract will commence from 19 March 2019 and end on 20 March 2020 with an option to extend in writing.’

37.	Based on the above, I find there is no substantial evidence to prove that the plaintiff’s employment would have been extended if not for the adverse finding. The statement in the termination letter mentioned in paragraph 32 was merely a polite gesture often used in termination letters. The plaintiff’s contract lasted only 12 months, with a written option to renew. His situation after the contract expires is uncertain. He might not receive a renewal. He could be unemployed for a while searching for new job opportunities. This is a common reality unless one has already secured another offer elsewhere before their current contract ends, ensuring no wage gap from the previous contract.

38.	The plaintiff argues that even if his contract with AKA was not renewed, he would have found employment elsewhere on slightly better terms. He cites his wages under his current contract with Muru, which began on July 1, 2022, shortly after his reputation was cleared. At the hearing, the plaintiff stated that he struggled to find a job due to his damaged reputation and only secured his current position after his reputation was restored. However, he did not provide evidence of a job offer elsewhere as part of his preparation in case his contract with AKA was not renewed. This is important because, without termination, there might have been no wage gap after the end of his AKA contract, and his wages from that potential offer could have served as a baseline to support his claim for wage loss starting from the contract's end. Without this evidence, I am not convinced that his wages would have continued after his contract with AKA ended if it had not been renewed. Nonetheless, I accept that his tarnished reputation made finding a job difficult and that a wage gap would have existed during the time he searched for another job. Therefore, a claim for 12 months of lost wages is unrealistic, and 6 months seems reasonable. This amounts to $105,600. However, damages are capped at $50,000 under the Government Liability Act 2010.  

39.	The plaintiff is also entitled to claim for his waiting period; however, I do not believe he should have waited for 12 months. The plaintiff has the obligation to minimize his own expenses by remaining in Kiribati for as long as his case has been filed. He can leave the rest to his lawyer, as his case was an appeal, which normally does not require the appellant’s attendance in court. He could always communicate with his lawyer via the internet if there is a need for preparation before the hearing of his appeal. Likewise, the plaintiff is entitled to general damages for anxiety and distress, as he stated in his affidavit. Again, the defendant’s liability is limited by the Government Liability Act, so there is no need to quantify the amounts of each claim here as the award for the loss of wages has already exceeded the award ceiling.

Outcome
40.	In light of the above reasons, the defendant is liable for breaching her common law duty of care. 
41.	The plaintiff is entitled to both special and general damages totaling $50,000 as per the Government Liability Act.
42.	Cost is awarded to the plaintiff, to be agreed or taxed.
Order accordingly.

The Hon. Tetiro Semilota Maate Moaniba
Chief Justice