Ngwele v Republic of Vanuatu
JUDGMENT
A. Introduction
1. In October 2018, the Government appointed a Commission of Inquiry (‘COI’) into an aircraft leasing contract between the Second Claimant Isleno Leasing Company Limited (‘Isleno’) and Air Vanuatu (Operations) Limited (‘AVOL’). The First Claimant Ms Clarence Ngwele, a director of Isleno, and Isleno are alleging that the COI report contained defamatory statements about them. They are also alleging that the Minister of Justice’s statements about the COI report were defamatory. Finally, they are also alleging that the Defendant owed them a duty of care to ensure the accuracy of the COI findings, and that they have suffered damage as a result of the COI breaching that duty by failing to conduct a thorough and impartial investigation.
2. The Claimants filed Sworn statements of Clarence Ngwele on 13 August 2024, 17 October 2024 and 25 March 2025. They filed the Sworn statement of Robert Sugden on 25 March 2025. The Defendant filed the Sworn statement of Job Sam Andy, the current Minister of Justice and Community Services, on 30 April 2025.
3. Counsel did not require any witness for cross-examination. They requested that the matter proceed to written submissions.
4. The Claimants filed submissions on 26 May 2025 and 18 June 2025. The Defendant filed submissions on 5 June 2025.
5. This is the judgment.
B. Facts
6. The following are the agreed facts:
a) The First Claimant Clarence Ngwele is the shareholder and director of the Second Claimant Isleno Leasing Company Limited (‘Isleno’), a company registered in Vanuatu;
b) The Defendant is the State;
c) On 20 August 2018, the Supreme Court issued a judgment in favour of Isleno against Air Vanuatu (Operations) Ltd (‘AVOL’) in Isleno Leasing Co Ltd v Air Vanuatu (Operations) Ltd [2018] VUSC 233; CC 212 of 2011 in which it ordered AVOL to pay Isleno a total sum of VT151 million;
d) On 29 August 2018, AVOL’s Board of Directors expressed its intention to appeal the Court’s decision and to seek the support of AVOL’s shareholders (the Government) to appoint a commission of inquiry into the contract between Isleno and AVOL which was the subject of the Supreme Court case in which judgment issued on 20 August 2018;
e) By Ministerial Order dated 12 October 2018, the Government appointed a Commission of Inquiry (‘COI”) to investigate allegations of fraud and breaches of fiduciary duties concerning the Claimants; and
f) On 15 November 201, the COI submitted its report to the Defendant’s Minister of Justice, and on 16 November 2018, it was published in the Daily Post.
7. On 3 September 2018, AVOL filed its appeal against the judgment dated 20 August 2018 in CAC 2371 of 2018 (‘CAC 18/2371’).
8. On 8 November 2018, the Court of Appeal heard the appeal.
9. The Court of Appeal then received submissions that it should delay the release of its judgment as to AVOL’s appeal until such time as an associated criminal case was heard. It decided to do so: Air Vanuatu Operation Ltd v Isleno Leasing Co Ltd [2024] VUCA 10.
10. On 29 April 2019 (also dated 10 May 2019), the Court of Appeal delivered the following judgment in which it ordered that the delivery of its judgment as to AVOL’s appeal be deferred until criminal proceedings against Isleno and others had been finally determined : Air Vanuatu (Operations) Ltd v Isleno Leasing Co Ltd [2019] VUCA 36; CAC 2371 of 2018 (10 May 2018):
1. The appeal in this matter is against a judgment of the Supreme Court which awarded the respondent substantial damages against the appellant. The appeal was argued on 8th November 2018 and set for judgment on 16th November 2018. However on that day after discussion with counsel the Court adjourned delivery of judgment until today.
2. Upon the matter being called today counsel for the appellant applied to have the delivery of judgment further adjourned. The application was made on the ground that criminal charges have recently being laid against the respondent, three of the witnesses who have given evidence in the Supreme court proceedings, and against a former employee of the appellant alleging offences of deception relating to the events of the subject of the Supreme Court claim. The application for the adjournment was opposed by the respondent which argues that as the parties have been in litigation since 2009 there should be no further delays.
3. In light of the criminal charges now laid, the Court has ordered:
(1) That the delivery of the judgment on this appeal be deferred until the present criminal proceedings, including any amendment to the charges laid, have been finally determined;
(2) In the meantime enforcement of the Supreme Court judgment is stayed;
(3) Liberty is reserved to either party to apply to this Court to lift or vary this order.
11. The Supreme Court heard the criminal case CRC 19/2630 and judgment given:
a) By Decision on Application dated 12 July 2022, Goldsbrough J dismissed the application to exclude evidence as well as the application for a permanent stay of those proceedings: Public Prosecutor v Isleno Leasing Company Ltd [2022] VUSC 101; and
b) By Decision on Stay dated 20 October 2023, Goldsbrough J granted the applications for a permanent stay of those proceedings and ordered that the proceedings were permanently stay in respect of all those on trial in the matter, namely, Isleno, Terence John Kerr, Clarence Lavinya Ngwele and Yoan Mariasua: Public Prosecutor v Isleno Leasing Company Ltd [2023] VUSC 235.
12. Consequently, on 16 February 2024, the Court of Appeal released its judgment in CAC 18/2371 (dated 29 April 2019) in which it dismissed AVOL’s appeal: Air Vanuatu Operation Ltd v Isleno Leasing Co Ltd [2024] VUCA 10.
C. The Pleadings
13. By the Claim filed on 23 May 2024, the Claimants alleged that the COI report published on 15 November 2018 contained false and defamatory statements that they were involved in fraudulent activities. The COI suggested that dealings between AVOL and the Claimants in relation to AVOL’s lease of a Britten-Norman Island aircraft from Isleno in October 2007 and subsequent transactions in 2008, 2009 and 2011 may constitute criminal offences. The COI also identified alleged breaches of fiduciary duty by AVOL’s board of directors, senior managers and accountants. As a result, the COI recommended the prosecution of the Claimants.
14. The Claimants alleged at para. 5(j)-(m) of the Claim as follows:
a) That the appointment process of the Commissioners for the COI was flawed and contrary to legal provisions in that although the State appointed the Commissioners, their remuneration was funded by the company, a violation of subs. 12(3) of the Commissions of Inquiry Act [CAP. 85]. Secondly, that the establishment of the COI itself was in contradiction to subs. 1(1) of the same Act; and
b) Two separate rulings by the Supreme Court in Criminal Case 19/2630 (‘CRC 19/2630’) dated 12 July 2022 and 20 October 2023 ‘deemed the COI as erroneous and unlawful.’
15. The COI report was handed to the Minister on 15 November 2018. It is also alleged in the Claim that it was handed over to the Minister the day before the Court of Appeal was due to deliver judgment in CAC 18/2371, and the handing over was conducted in a highly public manner in order to alert the Court of Appeal of impending prosecution proceedings against the Claimants. It is alleged that this alleged strategic timing and public announcement aimed to influence the pending judgment in CAC 18/2371 by casting a shadow of doubt or suspicion on the Claimants’ integrity and credibility.
16. It is also alleged in the Claim that the Minister of Justice made the following statements that were defamatory of the Claimants and false at a press conference and which the Daily Post published and publicized on the front page of its 16 November 2018 edition and on its website:
“This report indicates blatant examples of the worst form of corruption, said the Minister of Justice Don Ken.”
“We must show the people of Vanuatu that we do not tolerate such activities in our state-owned enterprises, Minister Ken said.”
“The Minister yesterday directed the Public Prosecutor to further investigate and where the evidence warrants to prosecute all parties to the full extent of the law.”
17. It is alleged that the false and defamatory statements caused damage to the Claimants including prosecution, harm to their reputation, emotional distress and significantly tarnished their personal and professional standing.
18. Finally, the Claimants also alleged negligence in the Claim. They alleged that the State owed them a duty of care to ensure the accuracy of the COI findings; that the State breached this duty by failing to conduct a thorough and impartial investigation; and that as a result of this breach, the Claimants have suffered damage.
19. The relief sought includes orders for VT25,000,000 general damages for defamation, VT71,516,500 special damages, VT15,000,000 aggravated and punitive damages, costs and any other orders that the Court deems just.
20. The Claim is disputed: Defence filed on 18 June 2024. The State denies that it published statements but that the Daily Post did. It claims qualified privilege, alleging that the Minister of Justice’s comments were fair comments and concerned matters of public interest. It denies negligence or malice on its part. It alleged that the Claim was statute-barred by the Limitation Act [CAP. 212] as it was brought after 6 years from the date of publication on 16 November 2018.
21. On 16 October 2024, the Claimants filed Reply to Defence. They denied that qualified privilege applies because the Minister’s statements were made with the intention to deceive the Court and obstruct the administration of justice.
22. The issues between the parties include the following:
a) Issue 1: Is the Claim statute-barred?
b) Issue 2: Has the COI been deemed as erroneous and unlawful?
c) Issue 3: Whether or not the State was negligent?
d) Issue 4: Whether or not the Claimants have a claim in defamation against the State in respect of the Minister of Justice’s statements?
e) Issue 5: Whether or not the COI report contained false and defamatory statements in respect of the Claimants?
f) Issue 6: Whether or not the defence of qualified privilege is available to the State, and if it was defeated by malice on the part of the State?
D. Evidence
23. The Claimant relied on the Sworn statements of Clarence Ngwele filed on 13 August 2024, 17 October 2024 and 25 March 2025. They also relied on the Sworn statement of Robert Sugden filed on 25 March 2025.
24. The Defendant relied on the Sworn statement of Job Sam Andy filed on 30 April 2025.
25. Counsel did not require any witness for cross-examination.
E. Issue 1: Is the Claim statute-barred?
26. Mr Ngwele submitted that any limitation period should apply from the date that the cause of action accrued. That is, after the Supreme Court in the criminal case ruled that the COI’s procedure was erroneous.
27. For the reasons which I set out below under Issue 2, I do not accept that the Supreme Court ruled or declared in the criminal case that the COI procedure was erroneous.
28. However, I accept that it is pleaded in the Claim that the COI was declared unlawful (which, as I have said, I do not agree with) hence the limitation period must run from the date of that alleged declaration, the earlier of which was the 2022 decision in the criminal case CRC 19/2630. The Claim is therefore not barred by the 6-year limitation period provided in the Limitation Act.
29. My answer to Issue 1 is, “No.”
F. Issue 2: Has the COI been deemed as erroneous and unlawful?
30. The Claimants alleged the following in the Claim:
a) That the appointment process of the Commissioners for the COI was flawed and contrary to legal provisions in that although the State appointed the Commissioners, their remuneration was funded by the company, a violation of subs. 12(3) of the Commissions of Inquiry Act [CAP. 85]. Secondly, that the establishment of the COI itself was in contradiction to subs. 1(1) of the same Act; and
b) That two separate rulings by the Supreme Court in CRC 19/2630 dated 12 July 2022 and 20 October 2023 ‘deemed the COI as erroneous and unlawful.’
31. However, I make the following points.
32. First, CRC 19/2630 was a criminal case. The Court’s objective in a criminal case is to determine the guilt or innocence of the accused in respect of the charges against that person. It was not a judicial review proceeding concerned with the State’s compliance with the provisions of the Commissions of Inquiry Act regarding who paid the remuneration of the Commissioners (members of the COI) or whether or not the establishment of the COI contradicted subs. 1(1) of that Act.
33. Secondly, neither decision dated 12 July 2022 and 20 October 2023 in CRC 19/2630 was a judgment in which factual findings were made. The decisions determined interlocutory applications to exclude evidence and seeking permanent stay of the proceedings.
34. Thirdly, neither decision dated 12 July 2022 and 20 October 2023 in CRC 19/2630 contains the word, “erroneous.” The decision dated 20 October 2023 also does not contain the word, “unlawful.”
35. In the decision dated 12 July 2022, the execution of the work of the COI was described as “unlawful” but not the COI itself – see Public Prosecutor v Isleno Leasing Company Ltd [2022] VUSC 101 at [31: “… the unlawful execution of the work of the Commission of Inquiry…”
36. Justice Goldsbrough specifically pointed out that others must perhaps consider the effects of the COI but that for the prosecution before him, all he needed to note was that the COI did no more than highlight the need for a police investigation – see Public Prosecutor v Isleno Leasing Company Ltd [2022] VUSC 101 at [32]:
32. Whilst the Commission of Inquiry may have had other effects, which others must perhaps consider, in terms of this prosecution it did no more than highlight the need for a police investigation, something which AVOL should have sought a long time ago but which was a stated objective following the relevant board meeting.
37. Justice Goldsbrough further stated in Public Prosecutor v Isleno Leasing Company Ltd [2022] VUSC 101 at [33]-[34] that whatever view one takes of the circumstances surrounding the appointment and working of the COI, it of itself did not affect the proper investigation of the alleged offences, which was a matter for those responsible for law enforcement:
33. Whatever view one takes of the circumstances surrounding the appointment and working of the Commission of Inquiry, it of itself did not affect the proper investigation of those alleged offences. The basis on which evidence may be excluded has its origins in considering the actions of those responsible for law enforcement, not the behaviour of alleged victims (AVOL), members of the Executive of the government of the day acting as shareholders of AVOL, members of the Commission of Inquiry or even the Minister responsible for Justice.
34. The Minister of Justice is not immediately responsible for the day-to-day administration of law enforcement. The police act under the directions of the Commissioner of Police who is subject only to the general direction of the responsible Minister (who is not the Minister of Justice).
38. In the Claimants’ reply submissions, Mr Ngwele submitted that the Supreme Court definitively declared the COI procedure irregular and directed that the prosecution against the Claimants be permanently stayed. With respect, I disagree. There was no definitive declaration by the Supreme Court about the COI procedure in its decisions dated 12 July 2022 and 20 October 2023 in CRC 19/2630 as it was a criminal case. I reject those submissions.
39. For the foregoing reasons, I reject the Claimants’ case pleaded in paras 5(j)-(m) of the Claim that the Supreme Court by decisions dated 12 July 2022 and 20 October 2023 in CRC 19/2630 deemed the COI as erroneous and unlawful. Neither decision contained any ruling or declaration that the COI was unlawful. Indeed, the Court could not rule or declare that the COI was unlawful as the proceeding was a criminal case and not a claim for judicial review. Accordingly, my answer to Issue 2 is, “No.”
40. This aspect of the Claim fails.
41. As I understood the rest of the Claim, the claims for defamation and negligence were pleaded on the basis that the Supreme Court had ruled in CRC 19/2630 that the COI was unlawful therefore its COI report was defamatory and negligently made.
42. Having found that the Supreme Court in CRC 19/2630 did not make such ruling, it would follow then that neither defamation or negligence claim could succeed, but in case I am wrong, I deal with each of those claims below.
G. Issue 3: Whether or not the State was negligent?
43. To prove their negligence claim, the Claimants must establish that the State owed them the duty of care alleged, that the State breached that duty, that the breach led to the damage alleged (causation) and that they suffered damage as a result of the breach of duty.
44. It is alleged in the Claim that the State owed a duty of care to the Claimants, “to ensure the accuracy of the COI’s findings.”
45. The Claimants have not cited any statute or case law imposing such an alleged duty of care on the State.
46. I must therefore determine whether or not the State owes the Claimants the alleged duty of care.
47. There is a three-stage conjunctive test to found a duty of care in negligence, which the House of Lords established in Caparo Industries PL v Dickman [1990] 2 AC 605, [1990] 1 All ER 568, [1990] UKHL 2. That case has been applied and is part of the law of Vanuatu: Siri v National Bank of Vanuatu Limited [2022] VUCA 12 at [26]; Bulememe v Republic of Vanuatu [2022] VUCA 10; Coconut Oil Production (Vanuatu) Limited v Terry [2007] VUCA 17.
48. The Court of Appeal set out the 3-stage conjunctive test to found a duty of care in negligence as follows in Siri at [27]:
i) Was the damage to the plaintiff reasonably foreseeable?, and
ii) Was the relationship with the plaintiff and the defendant sufficiently proximate?, and,
iii) Is it just and reasonable to impose a duty of care in such a situation?
49. The Court of Appeal stated in Bulememe at [17] that, “All three stages of the test must be pleaded and then established through evidence for an action to be successful.”
50. However, none of the 3 stages of the test have been pleaded in the Claim. I consider that the failure to plead the 3 stages of the test is fatal to establishing that the State owed the Claimants the duty of care alleged in the Claim to ensure the accuracy of the COI findings.
51. However, in case I am wrong, I will consider the evidence in light of the 3-stage test established by Caparo:
a) Was the damage to the Claimants reasonably foreseeable? The alleged damage suffered included the allegedly false and defamatory COI report, the Minister’s allegedly defamatory statements and the prosecution of the Claimants. However, it is not established that the COI report contained false and defamatory statements; that is in issue in the present proceeding. It is a circular argument then to assert that the COI report was false and defamatory as a basis to recognise the imposition of a duty of care, when no ruling or declaration has been made that the COI report contained false and defamatory statements. In addition, any act by the Minister and Public Prosecutor was secondary to and independent of the production of the COI report. Accordingly, I would answer that the alleged damage suffered was not reasonably foreseeable. This first stage of the 3-stage conjunctive test fails;
b) Was the relationship with the Claimants and the State sufficiently proximate? The statements complained of were in a COI report and by the Minister of Justice published in the Daily Post newspaper, respectively. Section 11 of the Act provides that the Commissioners (the members of a COI) shall make a report of their proceedings and of the result of their inquiry, and reasons, to the Minister of Justice. The reporting of the COI report findings and the Minister’s statements was not publicised by the State, but by publication in the Daily Post newspaper. The Public Prosecutor is not subject to the direction or control of any person in the exercise of his functions. Accordingly, I consider that the relationship between the Claimants and the State was not proximate because it was the Daily Post newspaper which published the statements complained of, and the Public Prosecutor who chose to prosecute the Claimants and he was not subject to the direction or control of the COI or the Minister in doing so. Accordingly, I would answer that the relationship between the Claimants and the State was not sufficiently proximate. The second stage of the 3-stage conjunctive test fails;
c) Is it just and reasonable to impose a duty of care in such a situation? In my view, having answered the first 2 stages of the test in the negative, I consider that it is not just and reasonable to impose a duty of care on the State in relation to the Claimants.
52. For the foregoing reasons, I find that the State does not owe the Claimants a duty of care as alleged in the Claim therefore answer, “No” to Issue 3.
53. The negligence claim fails.
H. Issue 4: Whether or not the Claimants have a claim in defamation against the State in respect of the Minister of Justice’s statements?
54. In a claim in defamation, the claimant must establish that the defendant published the statement alleged to be defamatory – see the elements of defamation set out in Bule v Tabiguru [2010] VUSC 132 at [20]-[21] per Macdonald J:
20. To succeed in a claim in defamation the claimant must establish three elements:
1. that a defamatory statement was made;
2. that the statement was about the claimant; and
3. that the statement has been published by the defendant.
21. Once those elements are established it is for the defendant to establish a defence.
[emphasis added]
55. The Minister made his statements at a press conference on 15 November 2018.
56. The following day, the Daily Post newspaper published the Minister’s statements in that day’s edition of the newspaper and on its website.
57. It is the Daily Post who published the Minister’s statements. Therefore, any defamation claim must be pursued against the Daily Post.
58. The State did not publish the Minister’s statements therefore no action in defamation lies against the State.
59. I therefore answer Issue 4, “No.”
I. Issue 5: Whether or not the COI report contained false and defamatory statements in respect of the Claimants?
60. The following was alleged in paras 5(a)-i) of the Claim in relation to the COI itself:
5. Commission of Inquiry
a. The Commission of Inquiry (COI) was appointed by Ministerial Order dated 12 October 2018.
b. Its mandate was to investigate alleged fraud, theft and breach of fiduciary duties stemming from the relationship between the Claimants and the Company.
c. Specifically, the investigation focused on the lease of a Britten-Norman Islander aircraft by Air Vanuatu from Isleno Leasing Company in October 2007, along with subsequent transactions in 2008, 2009, and 2011.
d. The COI utilized written records from various sources to conduct its investigation.
e. Based on its review, the COI reported suspicions of widespread collusions between directors, management, and the Claimants, purportedly to defraud Air Vanuatu.
f. The COI’s findings indicated that these activities had already incurred costs to the company exceeding VT70 million.
g. Moreover, the COI suggested that the actions concerning the dealings between the company and the Claimants may constitute criminal offenses.
h. Additionally, the COI identified numerous other apparent breaches of fiduciary duty by the company’s board of directors, senior managers, and accountants during this period.
i. Consequently, the COI recommended the prosecution of the Claimants.
61. The allegedly defamatory findings in the COI report are pleaded as follows in the Claim at paras 7(a)-(c):
7. Defamatory Findings
a. The COI report contained statements that falsely implicated the Claimants.
b. The COI report was published to and by the Defendant through its Minister of Justice at a press conference that was publicized in the Daily Post on the edition’s front page on 16 November 2018 and on the newspaper’s website. ‘
c. The Defendant in the much publicized press report suggested criminal activity on behalf of both the Claimants and the final report was extremely defamatory of my clients alleging multiple dishonest and fraudulent activities and recommended specific charges under the Penal Code [CAP. 135].
[emphasis added]
62. That was the extent of the pleadings. No actual statements from the COI report which are alleged to be defamatory were set out in the Claim.
63. What were the particular words used in the COI report?
64. The COI summarised its terms of reference, its findings and then set out its recommendations on pp 6-8 of the COI report as follows [Attachment “JAN5”, Sworn statement of Job Sam Andy]:
EXECTUTIVE SUMMARY AND RECOMMENDATIONS
The Commission of Inquiry (COI) members were asked to enquire into the relationship between Isleno Leasing Company Llimited (Isleno) and Air Vanuatu (Operations) Ltd (AVOL) to determine if fraud, theft or a breach of fiduciary duty was committed by any persons in the transactions between Isleno and AVOL and if so to refer the matter to the office of the Public Prosecutor for prosecution of perpetrators where appropriate.
The Terms of Reference provided that the Commission of Inquiry will investigate into the following matters:
A. The purchase of Britten Norman Islander aircraft AV003 by Air Vanuatu.
B. The acquisition of AV003 by Isleno Leasing. Was this an arms’ length transaction at fair market value?
C. The relationship between Directors and other Shareholders of Isleno and senior management and Directors of Air Vanuatu.
D. The Lease Agreement between Isleno and Air Vanuatu. Was this at arms’ length and at fair market value?
E. The Deed of Release between Isleno and Air Vanuatu. Was this an arm’s length transaction and at fair market value?
F. And any other matters pertaining to these transactions that are necessary to ensure a thorough investigation.
The COI worked with documentary evidence rather than interviewing persons suspected of crimes as it did not want to tamper with evidence trails.
The short answers to the matters the CIO was asked to investigate are:
A. The purchase of Britten Norman Islander aircraft AV003 by Air Vanuatu &
B. The acquisition of AV003 by Isleno Leasing. Was this an arms’ length transaction at fair market value?
There is a serious absence of documentation in relation to the purchase of RV3, but all the documents located indicate the AVOL was the purchaser and the Isleno somehow managed to gain ownership without paying any consideration for the Aircraft.
C. The relationship between Directors and other Shareholders of Isleno and senior management and Directors of Air Vanuatu.
There were numerous personal and business relationships between the various parties, as well as political connections.
D. The Lease Agreement between Isleno and Air Vanuatu. Was this at arms’ length and at fair market value?
None of the lease agreements between AVOL and Isleno can be considered to be arms length dealings at fair market value.
E. The Deed of Release between Isleno and Air Vanuatu. Was this an arm’s length transaction and at fair market value?
The making of the deed of release cannot be considered to be an arms length transaction at fair market value.
Recommendations
1. A number of suspected criminal activities have been identified. The COI report should be referred to the relevant State agencies for further investigation using police powers of search and seizure as necessary and prosecution. The recovery of the proceeds of any crimes should also occur.
2. In the event the prosecutions of leaders under the Penal Code are successful, subsequent prosecutions under the Leadership Code Act to prevent them from holding public office should occur.
3. The work of the COI was hindered by the lack of specific criminal activities legislation in relation to abuse of office or breach of fiduciary duty by Directors and time limits on prosecutions under the Leadership Code Act and Penal Code. Corruption related offences, penalties for such offences and time limits for prosecution under the Leadership Code Act should be reviewed.
4. Political interference in AVOL, as with all statutory authorities and state owned enterprises, is an ongoing risk. In addition to improving laws relating to prosecutions for breaches by Directors, clearer rules for both the appointment and operation of the Board of Directors should be considered. A State Owned Enterprises Act detailing principles of corporate good governance for all such entities could be explored further.
5. Leaders’ returns under the Leadership Code Act should have provided useful information, but many returns were not filed, and there returns that were filed were of limited use due in part to the fact that information is self reported, not verified and is incomplete or inaccurate. The provisions in the Leadership Code Act in relation to lodging annual returns should be reviewed. The content of returns, processes for verification, penalties for failing to file and penalties for false returns should all be considered in the review process. Where Directors and CEOs have trusts and/or companies, declarations of benefits through these structures must also be declared.
6. Poor record keeping by AVOL and some other Government agencies hindered the work of the COI. Instituting better electronic record keeping systems that, in the case of AVOL, as in accordance with sound corporate governance practices, would be beneficial.
7. Matters were reported to the Ombudsman in 2008. Consideration should be given to reviewing the Ombudsman Act to include a provision requiring the Ombudsman to report on issues affecting Government Institutions in a timely manner.
8. It was suggested to the COI that an Independent Commission Against Corruption be established to investigate and prosecute corruption offences. A number of Commissions of Inquiry have been established recently. An anti-corruption institution may be a more efficient and cost effective way carrying out this sort of work. The issue should be further considered, along with consideration being given to strengthening the Office of the Ombudsman and expanding its powers.
9. There should be a provision requiring all Government Departments and Statutory Authorities and Government Companies to conduct a due diligence check on all individuals and entities contracted with to ensure: beneficial ownership is disclosed; the entity is VAT registered if required; a business license is held and VIPA requirements met with an obligation on the contracting entity to have verified these with third party documentation.
10. All statutory bodies and government companies should institute a procedure for producing employment contracts that adhere to principles of corporate good governance and ensure that the interests of shareholders are reflected.
11. The CFO did not, apparently, report any suspicious financial transactions to the financial intelligence unit. Clear obligations on senior management to report suspicious transactions to a third party is needed, along with a power by a third body to halt transactions.
a. If, as mentioned above, a State Owned Enterprises Act detailing principles of corporate good governance for all such entities is created provisions, in respect of matters detailed in 10 and 11 could be included in this.
12. The COI has the power to summons persons, but the penalty for failing to comply with a summons is very small. Further there ought to be clear provision in the COI Act in respect to matters such as attempting to tamper with a COI, destroying evidence in relation to a COI, attempting to influence a commissioner, protecting commissioners from personal liability, and how information gained pursuant to a summons can be used by a COI.
65. First, were the statements complained of false? There is no Court decision which has found that the COI report was false or that it ‘falsely implicated’ the Claimants. The COI was reporting its findings from its investigation. Whether or not fraud or other criminal activity occurred was not a matter that the COI could determine – all it could do was recommend Police investigation and prosecution, which it did.
66. In my view, the Claimants have not proved and cannot prove that the statements in the COI report were false. This aspect of the Claim fails.
67. Secondly, were the words defamatory? The test for this was set out as follows in the Supreme Court judgment in Bule v Tabiguru [2010] VUSC 132 at [16]-[19] per Macdonald J:
16. In Vanuatu there is no statute that covers the tort of defamation and so it is necessary to turn to the common law.
17. It is possible to find a number of definitions as to what constitutes a defamatory statement. The one I adopt is a statement which may tend to lower the plaintiff in the estimation of right thinking members of society generally: Sim v Stretch [1936] 2 All ER 1237, 1240 per Lord Atkin (HL).
18. In deciding whether words are defamatory it is a question of looking at what they meant in context. The two categories of meaning are:
1. natural and ordinary meaning; and
2. innuendo - a further meaning that would be appreciated only by a limited number of people in possession of specific knowledge. That has no application in this case.
19. The test for the natural and ordinary meaning is the "reasonable person" test. In New Zealand this was summarised by the Court of Appeal in Magazines Ltd v Hadlee (CA 74/96, 24 October 1996). The Court affirmed that
1. The test is objective: under the circumstances in which the words were published, what would the ordinary reasonable person understand by them?
2. The reasonable person reading the publication is taken to be one of ordinary intelligence, general knowledge and experience of worldly affairs.
3. What matters is the meaning which the ordinary reasonable person would, as a matter of impression, carry away in his or her head after reading the publication. That includes what would be inferred.
68. Applying the 3-limbed “reasonable person” test set out in Bule v Tabiguru for the natural and ordinary meaning of the words in the COI report, I find as follows:
a) First, I consider that in the circumstances in which the COI published its findings and recommendations in the COI report, that the ordinary reasonable person would understand from them is that they identified a number of contractual dealings which they suspected constituted criminal activities. Hence they recommended to the Minister that their report be referred to the relevant authorities for Police investigation and prosecution. I consider that reader would also understand that that was but one recommendation out of twelve recommendations altogether. The recommendations were wide-ranging and aimed at improving the corporate governance of state-owned entities and the applicable legislative frameworks;
b) Secondly the reasonable person reading the COI report is taken to be one of ordinary intelligence, general knowledge and experience of worldly affairs. I consider the reader would understand that the COI had conducted an investigation and was reporting its findings and recommendations to the responsible person. Whether or not the report would be referred to relevant authorities was a matter for the Minister. Whether or not the Police undertook an investigation would be a matter for the Police, and similarly, it would be entirely a matter for the Public Prosecutor alone whether or not any prosecution was commenced. I consider that that reader with general knowledge and experience of worldly affairs would also know that the Claimants were presumed innocent until proven guilty; and
c) Finally, I consider that the meaning which the ordinary reasonable person would, as a matter of impression, carry away in his or her head after reading the COI report is that the COI had concluded that the Claimants had been involved in contractual dealings with the national airline, Air Vanuatu, which were not arm’s length transactions at fair market value and which merited Police investigation and prosecution, which the COI recommended occur.
69. In those circumstances, I cannot agree that the words in the COI report tend to lower the Claimants in the estimation of right thinking members of society generally.
70. Finding that the words in the COI report were defamatory would be to undermine the work of the COI discharging its function under the Commissions of Inquiry Act, particularly when, as it stated, it identified suspected criminal activities which warranted Police investigation and prosecution and then recommended that course of action.
71. In any event, I have found, as set out above, that the words in the COI report were not defamatory.
72. For the foregoing reasons, I consider that the COI report did not contain false and defamatory statements in respect of the Claimants. I answer Issue 5, “No.”
J. Issue 6: Whether or not the defence of qualified privilege is available to the State, and if it was defeated by malice on the part of the State?
73. I have found that no defamatory statements were made in the COI report.
74. However, if I am wrong on that, I now consider whether or not the defence of qualified privilege applies, as was the defence case.
75. The Court of Appeal described the defence of qualified privilege as follows in Jiang Su Provincial Contruction Group (Vanuatu) Ltd v Zhinjian Pang [2021] VUCA 33 at [35]-[38]:
35. ... the rationale of the defence of qualified privilege is the law’s recognition that there are circumstances when there is a need, in the public interest, for a particular recipient to receive frank and uninhibited communication of particular information from a particular source: see Reynolds v Times Newspapers Ltd [1999] UKHL 45; [1999] 3 WLR 1010. These occasions have been described, traditionally, in terms of persons having a duty to perform or an interest to protect in providing the information. We note further, that if, adopting the traditional formulation for convenience, a person’s dominant motive is not to perform this duty or protect this interest, he is outside the ambit of the defence.
36. In Horrock v Lowe [1975] AC 135 at page 150, Lord Diplock said this:
“Even a positive belief in the truth of what is published on a privileged occasion ... may not suffice to negative express malice if it can be proved that the defendant misused the occasion for some purpose other than that for which the privilege is accorded by the law. The commonest case is where the dominant motive which actuates the defendant is not a desire to perform the relevant duty or to protect the relevant interest, but to give vent to his personal spite or ill will towards the person he defames.”
37. Lord Diplock continued by noting that there may be other improper motives, which destroy the privilege. He instanced the case where a defendant’s dominant motive may have been to obtain some private advantage unconnected with the duty or the interest which constitutes the reason for the privilege.
38. Lord Diplock’s observations are on point to the extent that they enunciate the principle that express malice is to be equated with use of a privileged occasion for some purpose other than that for which the privilege is accorded by the law.
[emphasis added]
76. Applying the observations of the Court of Appeal in Jiang Su Provincial Contruction Group (Vanuatu) Ltd v Zhinjian Pang, I consider that the COI report is covered by the defence of qualified privilege because the COI were under a duty to carry out an investigation in accordance with their terms of reference and to produce a report to the Government, via the Minister, setting out their findings and recommendations.
77. In the Reply to Defence, the Claimants’ reply to the defence of qualified privilege is that, “the utterances in question were made with the intention to deceive the Court and obstruct the administration of justice.”
78. Was the defence of qualified privilege defeated by malice?
79. Bullen & Leake & Jacob’s Precedents of Pleadings (17th ed., Sweet & Maxwell) at [37-58] on p. 651 states as follows:
Pleading malice: libel and slander: honest comment and qualified privilege. If the claimant seeks to prove malice to defeat defences of qualified privilege or honest comment (see notes to those defences above), he must plead the particulars on which he relies by way of Reply (CPR PD 53 para 2.9). In the context of qualified privilege, a defendant is malicious if he abuses the privileged occasion, which the claimant must establish by proving a dominant improper motive on the defendant’s part. Such a motive is generally inferred by proof that he knew that the statement complained of was false when made or that he made the statement recklessly, not caring whether it was true or false. However, exceptionally, malice may be proved even where the defendant believed his words were true. The fullest and most well-known discussion of malice is to be found in the judgment of Lord Diplock in Horrocks v Lowe [1975] A.C. 135 at 149-151. For an analysis of the law on malice in the context of qualified privilege, see Rackham v Sandy [2005] EWHC 482. In the context of honest comment a more restrictive approach will be adopted following the judgment of Lord Nicholls in the Hong Kong Court of Appeal case Tse Wai Chun Paul v Albert Cheng [2001] E.M.L.R. 777 and Spiller v Joseph [2010] UKSC 53 at [67]-[69], [108]. Nothing short of proof that the defendant did not genuinely hold the view he expressed will suffice; spite or ill-will on its own will not of itself defeat the defence. If there is an issue whether the words are defamatory of the claimant, the claimant must plead that the defendant publisher knew that the ordinary, reasonable reader would understand the words complained of to convey a defamatory meaning (Bray v Deutsche Bank AG [2009] E.M.L.R. 12). An employer or principal is liable for the malice of his employee or agent in accordance with ordinary principles of vicarious liability. Otherwise malice of one co-publisher does not infect his co-publishers (Eggar v Viscount Chelmsford [1965] 1 Q.B. 248). A plea of malice must focus on the state of mind of the individual responsible for the defamatory statement: Broadway v Odhams Press [1965] 1 W.L.R. 805 at 813.
…
[emphasis added]
80. Mr Ngwele submitted that the timing of the publication of the COI report, immediately preceding the Court of Appeal’s scheduled decision, strongly suggests a deliberate attempt to influence the outcome of the legal proceedings by prejudicing the Court against the Claimants. He submitted that this allegedly malicious intent negates any claim of privilege.
81. With respect, I cannot agree. The Government obviously had concerns about the circumstances leading to a AVOL’s indebtedness which was the subject of the appeal before the Court of Appeal hence the Minister appointed the COI. It was obviously suspected that criminal conduct may have been involved. Thus it utilised the COI mechanism to investigate those suspicions which resulted in the COI recommending Police investigation and prosecution.
82. Time was obviously of the essence given that the civil proceedings were already before the Courts, hence once the COI identified that criminal activities were suspected, the civil action before the Court of Appeal had to give way to the criminal justice process running its course, which it did. There is nothing unusual in the Court of Appeal doing so. That ensured the integrity of the Court process and so that no judgment that it may issue in the civil proceedings would be undermined.
83. In addition, it was not pleaded, nor is there is any proof, that the COI or its members did not genuinely hold the views that they expressed in the COI report.
84. There is also no evidence that the COI members knew that their findings in the COI report were false or that they made the statements in the COI report recklessly, not caring whether the statements were true or false.
85. For the foregoing reasons, I reject the Claimants’ case that the State had an improper motive in publishing the COI report in order to influence the outcome of the civil proceedings and prejudice the Court against the Claimants.
86. I find that there is no evidence of malice hence the defence of qualified privilege applies.
87. My answer to Issue 6 is, “Yes.”
K. Result and Decision
88. In summary, I answered the issues as follows:
a) Issue 1: Is the Claim statute-barred? “No.”
b) Issue 2: Has the COI been deemed as erroneous and unlawful? “No.”
c) Issue 3: Whether or not the State was negligent? “No.”
d) Issue 4: Whether or not the Claimants have a claim in defamation against the State in respect of the Minister of Justice’s statements? “No.”
e) Issue 5: Whether or not the COI report contained false and defamatory statements in respect of the Claimants? “No.”
f) Issue 6: Whether or not the defence of qualified privilege is available to the State? “Yes.”
89. The Claim is dismissed.
90. Costs must follow the event. The Claimants are to pay the Defendant’s costs as agreed or taxed by the Master. Once settled, the costs are to be paid within 28 days.
DATED at Port Vila this 29th day of May, 2026
BY THE COURT
………………………………………….
Justice Viran Molisa Trief