N9460

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 1648 OF 2018

BETWEEN:
PHILIP NAUGA
Plaintiff

AND:
PETER SIPERAU
First Defendant

AND:
GABRIEL KOH
Second Defendant

AND:
CAROLYN MARAMBINI as the investigator, NATIONAL FRAUD SQUAD & ANTI-CORRUPTION DIRECTORATE of the DEPARTMENT OF POLICE AND INTERNAL SECURITY
Third Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Gavara-Nanu J.
2020:   9th December
2021: 22nd September

DAMAGES - Malicious Prosecution - Principles - Common law principle - Burden of proof - Liability.

DAMAGES – Evidence – Affidavit – Consent Orders – Effect thereof – Prejudice.

Cases Cited:
Papua New Guinean Cases

Assemblies of God Boroko Association Inc. v. Lucas Dekena (2014) N6385
Kipahi v. Nambos [2020] PGNC 222; N8437
Thomas Serowa v. Pacific Hires Limited and Richard Tenguli and Paulus Koim Kunai (2021)SC2146
William Yano Kapi v. Kambang Holdings Ltd (2011)) N4451

Overseas Cases

Kinch v. Walcott [1929] A.C 483.
Mitchell v. John Hein and Son (1983) 38 SR (NSW) 466
Serrao v. Noel (1985) 145 QBD 549

Counsel:

E. Dauma, for the Plaintiff
P.Ohuma, for the Defendants

22nd September, 2021

1.	GAVARA-NANU J:	The plaintiff is claiming damages against the defendants for malicious prosecution and breach of his rights under s. 37 of the Constitution.

Background 

2.	The plaintiff was the former Auditor General of Papua New Guinea.  The first and second defendants were formerly unattached officers of the Office of the Auditor General.  The third defendant is a police officer attached to the National Fraud and Anti-Corruption Directorate of the Royal Papua New Guinea Constabulary which operates within the Department of Police and Internal Security at Konedobu Police Headquarters.

3.	The plaintiff was arrested and charged for abuse of Office; official corruption; conspiracy to defraud and misappropriation under ss. 92 (1); 87(1); 406 (6) and 292 (1) of the Criminal Code Act, Chapter 262.

4.	The charges were laid after a request was made by the first and second defendants in a letter dated 26 March, 2018, to the police to arrest and charge the plaintiff for the above offences.

5.	The request was based on allegations that the plaintiff awarded contracts to a private accounting firm namely, ‘Frank Benabo & Associates’ in or about June, 2013 to conduct investigative audits of Mendi District DSIP Books for the period between 1 January to 31 December, 2012, at a cost of K123,750.00 and Aitape District DSIP Books for the period between 1 January to 31 August, 2012, at a cost of K123,750.00.

6.	On 27 March, 2018, the plaintiff was invited by the police to the National Fraud and Anti-Corruption Directorate at Police Headquarters at Konedobu for an interview regarding the abovementioned allegations.  The interview resulted in the plaintiff being remanded in custody at Boroko Police cells for two days from 27 to 28 March, 2018.  

Submissions
Plaintiff’s claims of malicious prosecution

7.	The plaintiff claims he was denied bail upon instruction by the National Fraud and Anti-Corruption Directorate.  He was later granted cash bail of K1,500.00 for which his two guarantors, namely Rocky Douveri and Reverend Gada Agaru each paid cash surety of K500.00.

8.	When the case returned to the Committal Court as proceeding NCC No. 52830 of 2018 – Police v. Philip Nauga, on 17 April, 2018, his Worship Cosmos Bidar was the presiding Magistrate. The plaintiff claims the learned Magistrate suggested to the Police Prosecutor, Chief Sergeant Sandra Holland, who is a biological sister of the current Auditor General, Mr. Thomas Holland, to reduce the four charges against the plaintiff to two because the four charges were related and overlapping.

9.	When the case returned again to the Committal Court on 24 April, 2018, Chief Sergeant Holland told the Court that there was a directive from Fraud and Anti-Corruption Directorate that the charges remain as they were.

10.	On 9 August, 2018, the learned Magistrate dismissed the information containing all four charges for insufficient evidence. The plaintiff was discharged from all the charges under s. 95 (1) and (2) of the District Courts Act, Chapter No. 40.

11.	The plaintiff claims his rights under s. 37 of the Constitution were breached when he was unlawfully arrested and escorted in public to the Boroko Police cells;  when he was unlawfully and improperly detained for two days and two nights at the Boroko Police cells; when he was unlawfully kept at the police cells before being brought to Court on the third day and when he was not accorded a lawyer at the time of his arrest until after the fourth day of his arrest upon his request when a lawyer, Mr. Anthony Vaira gave him legal aid.  The plaintiff claims as a result of the above treatment by the defendants he was embarrassed, ridiculed and defamed, which were a direct result of the breach of his rights under s. 37 of the Constitutions by the defendants.

12.	The plaintiff claims as a leader and a constitutional Office-holder from Central Province, he was ridiculed, embarrassed and belittled in the eyes of the people of Central Province.

13.	The plaintiff further claims that, being the former Auditor General, his name and duties were well-known and much publicised throughout Papua New Guinea in both print, electronic and social media. He claims because of his arrest, his detention in the police cells and subsequent appearances in the Committal Court, he was labelled, branded, stigmatised, and regarded as a criminal, guilty of the charges, although he was innocent until proven guilty.  Furthermore, he was regarded as having improperly conducted himself.

14.	The plaintiff claims he was maliciously prosecuted by the defendants because the hand-up brief by the police against him contained no credible evidence.  The evidence in the hand-up brief was all hearsay and conjecture. The plaintiff claims the third defendant being a senior and experienced police officer ought to have known that there had to be strong credible evidence against him before arresting and charging him with the alleged offences.  Thus, the actions of the defendants were malicious and done with bad faith, which brought the plaintiff’s name into disrepute, thus damaging his reputation, name, character and standing in the community.

15.	The plaintiff claims he explained to the police during his interview that the audit of the DSIP Funds for Mendi was requested by a Member of Parliament who had concerns over the disbursements of the funds and the audit of the DSIP Funds for Aitape was requested by the Department of Foreign Affairs, which had similar concerns.  Following those requests, Frank Benabo & Associates was engaged to carry out the audits. The accounting firm duly submitted its quotes for the two audits. It is important to note that the accounting firm was engaged after it successfully tendered for the work.

16.	The plaintiff claims his arrest and charges were motivated by malice and were done in bad faith because although the initial complaint against him was made in 2013, he was not arrested and charged until on 27 March, 2018, just two days before his contract of employment expired.  The plaintiff claims his arrest was made only because of the request by the first and second defendants in a letter to the police dated 26 March, 2018, asking for his arrest.  The arrest was made five years after the initial complaint by the first and second defendants.  Mr. Thomas Holland the blood brother of the Police Prosecutor was subsequently appointed Auditor General and the first and second defendants were also reinstated as substantive employees of the Auditor General’s Office.  Significantly, the principal of the accounting firm was not interviewed by the police before arresting and charging the plaintiff.

17.	The plaintiff relies on the findings of the learned Magistrate that the hand-up brief by the police did not disclose sufficient evidence to support the charges laid against him and the charges were defective. The police were supposed to have amended or withdrawn the charges but failed to do so.  Thus, there was no prima facie case against him on all the charges, as a result the plaintiff suffered loss and damages from malicious prosecution.   The police failed to carry out proper and full investigation on how the accounting firm was engaged.  Had they done that, they would have found that the accounting firm had been engaged by the Auditor General’s Office besides other accounting firms in the past for similar work. The accounting firm was not engaged personally by the plaintiff, it was engaged by the internal Tenders Board within the Auditor General’s Office.  The accounting firm tendered its quotes for the work which the internal Tenders Board of the Auditor General’s Office considered in awarding the audit works to the accounting firm.  More importantly, the plaintiff also had power under s. 16 (7) of the Audit Act 1989, to engage accounting firms to carry out audit work.   All these were not considered by the defendants before arresting and charging the plaintiff for the abovementioned offences.

18.	The plaintiff claims from the foregoing it can be reasonably inferred that the defendants colluded with each other to bring malice and disrepute to his name.  It is claimed that this inference can be drawn from the fact that the plaintiff was arrested and charged about five years after the initial complaint was made against him by the first and second defendants. Furthermore, he was arrested only after a written request to the police by the first and second defendants for him to be arrested and was arrested and charged two days before his contract of employment expired.  The defendants also failed to amend and or withdraw the charges and failed to produce credible evidence to support the charges, all these point to malicious intent.  Furthermore, the brother of the police prosecutor was appointed Auditor General and the first and second defendants were reinstated soon after the plaintiff was arrested. Also, the principal of the accounting firm was not interviewed by the police. The first and the second defendants were disciplined by the plaintiff resulting in them being made unattached officers of the Auditor General's Office.  

Claims for damages

19.	The plaintiff claims General as well as Special and Exemplary and Punitive damages with 8% interest and costs.

20.	The plaintiff relies on affidavits sworn by him and Frank Benabo, the principal of the accounting firm which carried out the investigative audits on the use of Mendi and Aitape District DSIP funds.

Defendants’ defence

21.	The defendants conceded that the first and second defendants officially requested that plaintiff be arrested as pleaded by the plaintiff in paragraph 6 of the Statement of Claim, but claim the request was based on the official complaint FCR 193 of 2013, against the plaintiff.  They claim the third and fourth defendants conducted investigations on the alleged offences for which the plaintiff was eventually charged by the National Fraud Squad.

22.	The defendants claim the plaintiff was investigated for the alleged criminal offences and was arrested and charged accordingly under the Criminal Code Act, Chapter No. 262.  The defendants deny breaching plaintiff’s rights under s. 37 of the Constitutions. 

23.	The defendants argue the plaintiff is same as any other Papua New Guinean and is not above the law.  The police had reasons to arrest and charge him for offences he was suspected of committing.  Furthermore, the defendants’ actions were based on a formal complaint made against the plaintiff and were proper.

24.	The defendants also rely on three affidavits.  These affidavits were sworn by Carolyn Marambani, who is the third defendant. She is the investigation and arresting officer.  The other was by Gabriel Koha, who is the second defendant, sworn on 13 November, 2020.  The third was sworn by Peter Siperau who is the first defendant, on 16 November, 2020.

Objection to the use of affidavits by both plaintiff and defendants.
Plaintiff’s objection to the use of affidavits by the defendants 

25.	The plaintiff has objected to the three affidavits relied upon by the defendants because they were filed well outside the date by which the defendants were ordered to file and serve their affidavits, which was 31 July, 2020. The plaintiff was ordered to file and serve his affidavits by 27 July, 2020.  These dates were mutually agreed to by the parties by way of Consent Orders which all parties endorsed on 14 July, 2020.

26.	The defendants have not disputed that they were supposed to have filed all their affidavits by 31 July, 2020; and that they endorsed the Consent Orders.  

27.	The plaintiff claims he has been prejudiced by the affidavits because he was estopped by the Consent Orders from filing and serving further affidavits, especially in response to the affidavits filed outside the date given in the Consent Orders by the defendants.  For the same reason, he was also not able to cross-examine the deponents of the affidavits.

Defendants’ objection to the use of affidavits by the plaintiff 

28.	The defendants have also objected to a number of affidavits of the plaintiff which they say amounted to submissions rather than deposing to facts in support of his claims.  It was submitted that these affidavits breach s. 34 of the Evidence Act, Chapter 48. 

Consideration 

29.	I am obligated under Order 12 r 9 of the National Court Rules (NCR) to take judicial notice of the Consent Orders.   

Can the defendants rely on their affidavits?

30.	This question turns on the effect of the Consent Orders.  It is trite law that valid consent orders are binding on the parties who agreed and endorsed those orders.  For this reason, consent orders can be the basis of an estoppel lying against a party or parties if they act in breach of those orders.  See, Kinch v. Walcott [1929] A.C 483 and Serrao v. Noel (1985) 145 QBD 549.  In Assemblies of God Boroko Association Inc. v. Lucas Dekena (2014) N6385, in stating these principles, the Court said: 

"The real issue before the Court is whether the purported Consent Orders are valid and binding.  

Ordinarily, consent orders are by their very nature those orders, the terms of which, are agreed to and endorsed by all the parties to a proceeding by signing them. By signing the orders, the parties agree to be bound by their terms. 

 In deciding whether such consent orders are valid and binding, the Court need not look further than the endorsements of the orders by the parties viz; whether the parties have signed the orders: Chardless-Chardless v. Nicholson [1942] 2 K.B 321 and Thorne v. Smith [1947] K.B 307. 

A fundamental principle regarding valid consent orders is that their terms constitute a binding and an enforceable agreement between the parties. It is important to note that in certain cases, the parties may pursuant to the terms of the orders even agree to abandon and forgo their rights or interests in the proceeding as part of the terms of settlement between the parties. The terms of consent orders can also create enforceable rights and obligations for the parties.  

Having regard to these principles, following fundamental errors and defects are noted in regard to these draft Consent Orders. First, they are not signed by the applicants. Second, the applicants are not named in the Orders.  Third, the purported Consent Orders were endorsed by the Court in the absence of the applicants. The essence of these is that the applicants are not parties to the purported Consent Orders and therefore cannot be bound by their terms. 
   
In the circumstances, all that the applicants need to show to be granted the relief they are seeking, is that they have not signed the orders and that is where the matter should end. It is not necessary for the applicants to satisfy the other usual requirements for the setting aside of orders. For example, they do not have to explain any delay in making this application, if there is a delay, and whether there is a reasonable explanation for the delay; whether there is a defence on the merit and why the orders were allowed to be entered. 

In Titus Waluka v. Philip Taufuso and West New Britain Provincial Administration (2009) N3848, the Court said a draft consent order should be endorsed by the Court only when all conventional practices and requirements are followed and met.   I respectfully concur with this view. The conventional practice and requirement of consent orders is that their terms be agreed to and endorsed by all the parties to the proceeding by signing them.  This requirement is mandatory because it goes to the jurisdiction of the Court. It follows that in this case, the Court lacked jurisdiction when it endorsed the Consent Orders. 

It is important to note from the terms of the Draft Consent Orders that if they are enforced, the applicants would relinquish their title and proprietary rights on the property. The draft Consent Orders are in that regard clearly prejudicial to the applicants.  

The Court having lacked jurisdiction when it endorsed the Consent Orders, the entry of the Orders was clearly irregular.

Consequently, the principal relief sought by the applicants, which is to set aside the Consent Orders, is granted.  

In regard to costs, it was incumbent on the plaintiffs to ensure that all the parties were duly served with the draft Consent Orders and that they endorsed them by signing them.  In this case, the applicants were not 	aware that the draft Consent Orders were signed by the other parties and subsequently endorsed by the Court and entered".  

31.	The Assemblies of God v. Lucas Dekena (supra) can be contrasted from this case because in this case the parties signed and endorsed the Consent Orders.

32.	Having regard to these principles, the following factors emerge as the criteria for Consent Orders to be binding:

(i)	The Consent Orders were drawn up in terms agreed to by the parties and are expressed as “Consent Orders”.

(ii)	The Consent Orders must be endorsed (signed) by the lawyers acting for each of the parties; if not, by the party or parties if the party/parties is or are not legally represented.

(iii)	The Consent Orders must be endorsed by the presiding judge, sealed, and entered.

(iv)	The lawyers representing the parties or parties themselves, if they are not represented by lawyers have the duty to ensure that the terms of the Consent Orders are expressed fully, clearly, and precisely, as they carry into effect the intention of the parties, so that there is no ambiguity or possibility of a conflict in construction.

(v)	The Consent Orders contained in (i) to (iv) above have same force and effect as an Order of the Court.

33.	There are several reasons given by Ms Dauma of counsel for the plaintiff why the three affidavits filed by the defendants should be rejected by the Court:

(i)	the case was already set down for trial. 
(ii)	the three affidavits were filed well outside the date Ordered by the Court (Consent Orders) for the defendants to file and serve all their affidavits.
(iii)	the Statement of Agreed and Disputed Facts and Legal Issues had already been settled by the parties by being filed and served.
(iv)	the plaintiff was estopped from filing affidavits in response to the defendants’ three affidavits, by the Consent Orders which were given and entered on 14 July, 2020.
(v)	the plaintiff was not able to cross-examine the deponents of the affidavits.
(vi)	the plaintiff is for the reasons stated in (i) to (iv) above prejudiced by the affidavits.

34.	Having regard to the above principles, I am of the opinion that estoppel lies against the defendants from relying on the three affidavits.  Estoppel is based on the fact that the defendants’ affidavits are an abuse of process, which would prejudice the plaintiff if they are accepted by the Court.  For these reasons, all the affidavits by the defendants are rejected.  If the defendants wanted to file anymore affidavits beyond the date agreed to by the parties in the Consent Orders, a proper application should have been made for leave to file affidavits out of time.  That would have also given the plaintiff an opportunity to be heard on the application and allowed the Court to make appropriate orders and give necessary directions to ensure fair trial.  I should also explain that I have rejected the affidavits sworn by Carolyn Marambani because although it was sworn on 28 July, 2020, it was not served on the plaintiff until well outside the date by which the defendants agreed in the Consent Orders to file and serve all their affidavits.  See, Thomas Serowa v. Pacific New Hires Limited and Richard Tenguli and Paulus Koim Kunai (2021) SC 2146.

35.	The defendants have also objected to the use of certain affidavits by the plaintiff.  They argued that contents of these affidavits are not facts which the plaintiff could depose to, thus they are embarrassing.  The defendants do not raise any other reasons or basis for objecting to these affidavits.  I propose to look at the affidavits and if there are parts which I consider embarrassing to the defendants, they will be ignored or removed.  I am not inclined to reject the affidavits simply because of possible embarrassing paragraphs in them. I have to look at the affidavits to make proper and informed decisions.

36.	That leaves me to consider whether the plaintiff was maliciously prosecuted and whether the defendants are liable to damages claimed by the plaintiff.  

Was the prosecution of the plaintiff done with malice and bad faith?

37.	The tests to be met to establish malicious prosecution are settled in this jurisdiction.  A long line of case law has affirmed these tests.  Firstly, the plaintiff must show that the defendants are responsible for instituting the criminal proceedings against him.  Secondly, the defendants instituted the criminal proceedings without reasonable or probable cause.  Thirdly, the defendants were motivated by malice or some other improper purpose.  Fourthly, the criminal proceedings have been resolved in plaintiff’s favour.

38.	The action for damages for malicious prosecution is a common law remedy, it is founded on the principle of abuse of court processes by the wrong doer wrongfully setting the law on motion for an improper purpose. The action for damages is designed to prevent the machinery of justice from being perverted by such abuse of process. The plaintiff carries the burden to prove on the balance of probabilities that prosecution against him is without a probable cause.   

39.	In Kapi v. Kambang Holding Ltd (2011) N4451, Cannings J, in stating the tests for malicious prosecution said the plaintiff must prove that there was no good reason for any complaint being made against him and that there were no proper or reasonable grounds for the defendants to believe or could believe that the plaintiff was guilty of the offences charged or even if the defendants held such belief, there were no proper or reasonable grounds to entertain such belief. The plaintiff must prove that there was malice in instituting criminal prosecution.  His Honour said it is not enough for the plaintiff to simply show that the defendants were careless or negligent.  I respectfully agree with his Honour’s remarks. See, also Kipahi v. Nambos [2020] PGNC 222; N8437.  

40.	The prosecutor had to believe that the accused was probably guilty of the offences charged and the belief had to be based on information which was in the possession of the prosecutor which pointed to such guilt, the belief should not be based on mere imagination or surmise.  The information could be based on things the prosecutor observed personally or things told to him by others, which the prosecutor believed to be true.  Such belief had to be based on reasonable grounds and that, if such information was seen or heard by a third party (person) of ordinary prudence such person would be justified in believing that the accused was guilty. See Mitchell v. John Hein and Son (1983) 38 SR (NSW) 466.

41.	The defendants have argued that all these tests were met in this case, thus the prosecution of the plaintiff was based on a probable cause that he was guilty of the offences charged.

42.	The plaintiff argued that the prosecution had no information upon which such belief could be held.

43.	Damages can be claimed under three heads. (1) damage to the person, (2) damage to property and (3) damage to reputation.  Damage to reputation can be presumed and the test is whether a third party (person) of ordinary prudence becoming aware of the information upon which the plaintiff was charged could be led to believe that the plaintiff was guilty.  The Court must also be satisfied that the proceedings had reached the stage where damage to plaintiff had resulted.

44.	Could the prosecutor, based on the available information reasonably believe that the plaintiff was guilty of the offences charged? There is undisputed evidence that principal of the accounting firm which was engaged to conduct the audits was not interviewed before the plaintiff was charged with the offences.  There is no evidence that the defendants made inquiries regarding the Auditor General’s powers to engage company auditors to carry out private audits, especially under s. 16 (7) of the Audit Act.  Coupled with these was that the charges were laid at the request of two disgruntled unattached officers of the Auditor General’s Office, who the plaintiff disciplined. Then the Police prosecutor being related to the current Auditor General. All these factors in my opinion clearly point to malice in the prosecution of the plaintiff.  There is also undisputed evidence that the work done by the accounting firm was scoped and the accounting firm tendered for the audit works and submitted quotes for its work. The audit work was awarded to the accounting firm by the internal tenders’ board within the Office of the Auditor General.  Thus, in my opinion there is basis for a fully informed third party (person) of ordinary prudence of these facts to hold a view that the plaintiff was not guilty of the offences charged and that there was no probable cause against him. The Court therefore finds that the prosecution was done with malice.

45.	I should state that parts of the plaintiff’s affidavits which amounted to submissions and which I considered were not deposing to facts have been ignored or disregarded. The findings I made and the conclusions I have reached in my decision are based on the relevant overall facts, including those facts deposed to in the affidavits in support of the plaintiff’s claims.  

46.	Consequently, I find that the defendants are liable to damages claimed by the plaintiff.  

47.	I order that the matter be set down for assessment of damages.

________________________________________________________________
Nelson Lawyers: Lawyers for the Plaintiff			
Solicitor General:	Lawyers for the Defendants