Mele v Worwor [2006] VUCA 17; CAC 25-06 (6 October 2006)

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IN THE COURT OF APPEAL
OF THE REPUBLIC OF VANUATU
(Civil Appellate Jurisdiction)

BETWEEN:	NATU MELE & THOMPSON LIU
	First Appellants

AND:	JIMMY EDWARD
	Second Appellant

AND:	GAETON PIKIOUNE, HOSEA NEUV & TERRY PIKIOUNE
	Third Appellants

AND:	EDOUARD ALGUET, LEON OVA & JOEL BOEVILVIL
	Fourth Appellants

AND:	PIERRE CHANNEL WORWOR & JOHN NOEL
	First Respondents

AND:	SAMSON SAMSEN
	Second Respondent

AND:	LEON KATTY WARSAL, SILAS ROCROC, JOSEPH TABIRAP, STEVEN SAU, WILLIE PLASUA, MARK URELELESS, DAVID PAIALOLOSO, JOHNSEN BOE, JOHN TAMATA, ERICK GIDEON, WYCLIFF ULAS, MOSES WINE & OWE ISAIAH
	Third Respondents

Coram: Hon Chief Justice Vincent Lunabek
Hon. Justice J. Bruce Robertson
Hon. Justice John W. von Doussa
Hon. Justice Daniel V. Fatiaki
Hon. Justice Christopher N. Tuohy

Counsel: Mr. Felix Laumae for Appellants
Mr. Saling Stephens for 1st & 2nd Respondents
Mr. George Boar for 3rd Respondents

This is an appeal against orders made by Saksak J in the Supreme Court sitting at Luganville on 7 July 2006 when he found each of the appellants guilty of contempt. Reasons for his findings were published on the 17 July 2006. The judge did not proceed to punish as it was clear that there were going to be appeals against his orders.

The substantive case in the Supreme Court is Civil Case 9 of 2006 which began its life as a Court challenge to the dismissal of Antoine Pikioune from his executive position in the North Island Stevedoring Limited (NISCOL).

It is clear that there has been division of opinion between the Directors and Shareholders of this company. For reasons which are totally beyond our comprehension, this body (whose task is to oversee shipping and stevedoring in part of the Republic, and has among its shareholders various provincial councils) has some 16 odd Directors who are paid fees of millions of vatu per annum. Such a large number of directors increases the potential for division and dissension within their ranks.

Matters got to such a bad state between the various factions that on 16 May 2006 some Shareholders and/or directors resolved to terminate the appointment of some of the other Directors and to reinstate Mr. Pikioune who had been dismissed from his executive position. Having formed the view that they had been successful in achieving that, the initial claim was discontinued by some of the directors.

This decision did not include other of the Directors. But they went before the Court on the 18th of May and Saksak J made the following orders which were against some directors and shareholders:

We have difficulty with these orders in deciding what they mean. In particular we note that orders 1 and 2 do nothing beyond what the general law of the country require. The law says you can only take action as a Director and or Shareholder of the company in terms of the Companies Act and its Regulations. It is an exercise in futility for the Court to make an order telling people to do what Parliament has said has to occur in any event.

If the Court were concerned that because of a situation which has developed in a company everybody had to be restrained from any action then it should have said so.

Another problem is that Order 4 gives no indication as to who the assets, property and equipment are to be handed to. All the directors of company have clear statutory duties. They can only be altered by the most clear and unambiguous words.

On 19 May some Shareholders in NISCOL issued to Directors (it is not clear which ones) a request for an extraordinary meeting of the company. We assume that it was in terms of section 131 of the Companies Act.

Under that provision if no action is taken within 21 days by the Directors the shareholders could call a meeting themselves by giving a further 14 days notice.

The complaining shareholders attempted to hold a meeting on 7 June. Nothing transpired at that meeting as there was violence and disorder. Nothing could have been effective because of the sort span of time.

The shareholders then gave notice they were going to have a meeting on the 11 June.

It appears that that meeting was, in law, ineffective because the necessary statutory requirements had not been complied with. That is no big deal. It simply means that they attempted to take an action which did not work. It is not the sort of matter which links itself to an action for contempt.

Somewhere about this time, those on the appellants’ side of the dispute commenced another proceeding in the Santo Court in Civil Case 18 of 2006. They asked for a declaration that the meeting held on 11 June had been lawful. We are told that that proceeding has since been discontinued which seems a wise course of action because on the most basic consideration of what occurred a meeting on that date could not have been a valid exercise of powers under the Companies Act.

Despite the combined experience of this Bench and the assistance of three counsel before us, we could not get clear in our minds what the orders made on the 18 May really prevented or required of the persons enjoined.

In all Court proceedings there needs to be absolute clarity and precision. Lawyers who are asking a Court for restraining orders of any sort must, as a matter of course, prepare and present to the Court a draft of the orders they seek so that the judge can fully apprehend what is contemplated and decide whether it is appropriate. That did not happen in this case.

A fundamental flaw in this case is that we have this extraordinary array of Directors all of whom have statutory rights and powers under the Companies Act but the Court appears to have decided that some of them were to be prevented from exercising their powers during a period from May to August.

We could understand if the Court had decided that all the Directors and Shareholders should be restrained in the Company’s interest from doing anything. But we have not been persuaded it was open for the Court to prefer one of these disputing groups. What has occurred is a clear demonstration of the folly of having a Board of Directors of this size dealing with a statutory entity of this nature.

We have considered with care the reasons provided on the 17 July for the judge’s findings. We are not satisfied that the breaches of the Orders 1 and 2 can as a matter of law be sustained because of the lack of clarity and precision and the fact that the orders did nothing more than repeat what Parliament has said in the Companies Act. The people at whom the orders are aimed were not in a fair and proper way, put on notice as to what they were restrained from doing. Orders of this kind should not leave it to a defendant to judge whether his or her conduct complies with the law. The order should specify exactly what acts are restrained.

Order 3 is in its words a little clearer. The question which has exercised us however is what appears to have been the alleged breach of the order. The fact that there was a distribution of some letters by someone who was not one of the defendants in their original proceeding appears to be the basis of the finding that a breach of Order 3 occurred. It was said to be on behalf of others who were restrained. But the alleged contempt that was detailed in the Application for Contempt was that the "Defendants trespassed to the NISCOL premises ...during shareholders meeting on 7th June 2006". That allegation is not addressed by the findings that were made in relation to Order 3. There is no proper evidential basis for the finding of a breach of Order 3. We also note that it is inappropriate for a Court to issue an order of the type in order 6 directing the police to enforce the Court orders "in the event of" any breaches. The Court must decide if there is breach and how it is to be handled. Involving the police where there is an allegation of breach is wrong.

This Court In re Civil Contempt of Court v de Robillard [1997] VUCA 1; Civil Case 1 of 1997 set out the nature and import of contempt proceedings. Contempt in the present case has been used in an entirely inappropriate way. The approach to the matter by counsel on both sides has been misguided. Contempt is a remedy which should never be debased or minimalised. It has been employed in this case in ways which were thoroughly inappropriate.

We have no doubt that the findings of contempt should be set aside because of lack of clarity in the original orders.

There is an urgent need for this company, and everybody who has statutory duties and responsibility towards it, to get together and sort out their future. Contempt proceedings are not part of this resolution process and they do nothing towards achieving a solution.

The appeal is allowed. The orders that the appellants were in contempt are set aside. All costs orders made in the Supreme Court are quashed.

There is no reason why the appellants should not receive costs in the usual way in respect of this appeal.

The company however is not responsible for such costs. The company has a divided group of Directors and some have chosen to use this quite inappropriate proceeding to advance their position against others.

There will be costs in favour of all the appellants jointly in the total sum of VT120,000 which is to be paid by the first, second and third respondents jointly and severally. The responsibility to pay the costs is that of these individuals personally and must not be debited against the company (NISCOL).

Hon. Chief Justice Vincent Lunabek	Hon. J. Bruce Robertson J.

Hon. John. W. Von Doussa J.	Hon. Daniel Fatiaki J.

Hon. Christopher N. Tuohy J.

Court of Appeal of Vanuatu

Mele v Worwor [2006] VUCA 17; CAC 25-06 (6 October 2006)