Ngwele v Isleno Leasing Company Ltd
JUDGMENT OF THE COURT
Introduction
1. This is an appeal from orders made by a judge of the Supreme Court. The appellants are Clarence Ngwele and Isleno Leasing Company Limited (Isleno) and the respondent is the Republic of Vanuatu.
2. The appellants brought a claim against the respondents seeking general damages, special damages, aggravating and punitive damages and costs. The appellants relied on two causes of action. First, they alleged that they had been defamed in a report prepared by a Commission of Inquiry (COI) appointed by Ministerial Order dated 12 October 2018 and by comments made by the Minister of Justice at the time the report was released. Secondly, the appellants alleged that the respondent owed them a duty of care with respect to the conduct of the Inquiry and the preparation of the report and that it had breached that duty. The primary judge rejected the appellant’s claims. Her Honour made an order dismissing the claim and an order requiring the appellants to pay the respondents’ costs.
The Facts
3. The parties agreed a number of facts. The primary judge set them out in her reasons (Judgment (J)[6]). The agreed facts are as follows:
(1) The First Claimant Clarence Ngwele is the shareholder and director of the Second Claimant Isleno, a company registered in Vanuatu;
(2) The defendant is the State;
(3) On the 20th of August 2018, the Supreme Court issued a judgment in favor of Isleno against Air Vanuatu (Operations) Ltd (AVOL) in Isleno Leasing Co Limited v Air Vanuatu (Operations) Ltd [2018] VUSC 233; CC 212 of 2011 in which it ordered AVOL to pay Isleno a total sum of VT 151 million.
(4) On the 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 the 20th of August 2018;
(5) By Ministerial Order dated 12 October 2018 the Government appointed a Commission of Inquiry to investigate allegations of fraud and breaches of fiduciary duties concerning the Claimants; and
(6) On the 15th of November 2018, the COI submitted its report to the Defendant's Minister of Justice, and on the 16th of November 2018, it was published in the Daily Post.
4. In addition to these facts, there was no dispute about the following.
5. On 3 September 2018, AVOL filed its appeal against the judgment dated 20 August 2018 in CAC2371 of 2018 (‘CAC’ 18/2371’).
6. On 8 November 2018, the Court of Appeal heard the appeal.
7. 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 Limited v Isleno Leasing Company Limited [2024] VUCA 10.
8. On 29 April 2019 (also dated 10th of May 2019) the Court of Appeal delivered judgement 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).
9. The Supreme Court heard the criminal case CRC 19/2630 and the Court gave judgments as follows:
(a) With respect to an application dated 12th July 2022, Goldsbrough J made orders dismissing an application to exclude evidence and an application for a permanent stay of the proceedings: Public Prosecutor v Isleno Leasing Company Limited [2022] VUCA 101; and
(b) With respect to an application dated 20th of October 2023, Goldsbrough J granted a permanent stay of the proceedings and ordered that the proceedings be permanently stayed in respect of all those on trial in the matter, namely, Isleno Terrence John Kerr, Clarence Lavinia Ngwele and Yoan Mariasua: Public Prosecutor v Isleno Leasing Company Limited [2023] VUSC 235.
10. Following the decision in the criminal case, the Court of Appeal released its judgement in CAC 18/2371 (dated 29 April 2019) on 16 February 2024. The Court dismissed AVOL's appeal: Air Vanuatu Operation Ltd v Isleno Leasing Co Ltd [2024] VUCA 10.
The “Publication” which the Appellants alleged was Defamatory
11. In the Court below, the appellants alleged that the COI report contained defamatory statements of and concerning them. The report was handed to the Minister of Justice by the chairman of the COI on 15 November 2018. This was done at a press conference where members of the media were present, including representatives of the Daily Post. The handing over of the report was witnessed by the chairman of directors and the chief executive officer of AVOL. The Minister made certain comments at the press conference. The following day, the Daily Post published a photograph showing the handing over of the report and an article dealing broadly with the following matters: the purpose for, and background to, the preparation of the report; the sources of information used by the COI in preparing the report and the outcome expressed in the report. The article in the Daily Post went on to say that the report had identified activities which may be criminal and made a number of recommendations including prosecution where the evidence warrants it and better laws and processes to help ensure that such issues do not arise again in the future. In addition, the article said that Vanuatu may wish to consider a law to better regulate all state-owned enterprises.
12. The article in the Daily Post ended with the comments by the Minister of Justice which we will identify shortly.
13. The following matters about the article in the Daily Post should be noted: the investigation conducted by the COI concerned allegations of fraud, theft and breach of fiduciary duties. The allegations are said to relate to commercial relations between AVOL and Isleno and include allegations of collusion between directors and management at each organisation.
14. As we have already said, in the Court below the appellants alleged that the report of the COI contained false and defamatory statements about them. The primary judge rejected that case (J [72]) and as we understand it, the appellants do not challenge that aspect of Her Honour’s conclusions in this Court.
15. We mentioned earlier comments made by the Minister of Justice at the press conference on 15 November 2018 and reported in the article in the Daily Post on the following day. The Minister’s comments were as follows:
“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”.
16. These comments by the Minister are the focus of the appellants’ challenge to the conclusions of the primary judge with respect to the appellants’ claim in defamation. We say that for the following reasons. The appellants do not challenge her Honour’s conclusions with respect to the COI report. Furthermore, the Minister’ comments are the subject of three of the four issues identified by counsel for the appellants as the issues raised on the appeal.
17. The four issues identified by counsel for the appellants are as follows. First, the appellants submit that the primary judge was wrong in concluding that the Minister’s comments were not published by him. We put to one side for the moment the issue of whether the respondent is responsible for the Minister’s comments. Secondly, the appellants submit that the primary judge erred in not going on to find that the Minister’s comments were defamatory. Thirdly, the appellants submit that the Minister is not entitled to claim that his comments are protected by qualified privilege. At one point in the course of his submissions, the appellants’ counsel seemed to concede that the Minister’s comments were made on an occasion of qualified privilege and that his case was that the privilege was defeated by malice.
18. The fourth of the issues identified by counsel is that the primary judge erred in deciding that the respondent did not owe the appellants a duty of care with respect to COI report. It follows that three of the issues on the appeal relate to the Minister’s comments and the final issue relates to the COI report.
19. It is worthwhile making a couple of points at this stage about the appellants’ pleadings and arguments with respect to the duty of care because it illustrates a point we will make about the appellants’ pleadings in the next section of these reasons.
20. Except for what might be implied from the appellants’ Statement of Claim, the only pleas in that document relating to the alleged duty of care are that the respondent owed a duty of care to the appellants to ensure the accuracy of the findings in the COI report and that the respondent breached that duty by failing to conduct a thorough and impartial investigation.
21. The primary judge referred to the appellants’ claim in negligence and, in particular, the plea that the respondent owed a duty of care to the appellants to ensure the accuracy of the COI’s findings. Her Honour proceeded on the basis that was the duty alleged. That was entirely understandable in view of the pleading.
22. In their written submissions on the appeal, the appellants submit that the respondent failed to ensure that the COI was conducted fairly, lawfully, impartially and on credible evidence. That plea suggest a different duty. In oral submissions on the appeal, the appellants claimed that the duty was breached because the COI did not thoroughly consider the issues and, among other things, they referred to the fact that the inquiry was paid for by AVOL.
The Importance of Pleadings
23. This Court has emphasised on a number of occasions the importance of pleadings to the proper conduct of a trial (see, for example, Richard Lo trading as LCM v Alick Sagan [2003] VUCA 16; Pakoa Toara & Sandy Bell v Moi Dinh and Kalo Kalran [2004] VUCA 25). The pleadings must identify the issues with precision so as to ensure that the trial is conducted properly and each party knows the issues it must meet, the pleas it may wish to raise in response to the other party’s case and the evidence, both oral and documentary, it considers will be relevant at the trial. There are two reasons for this. First, a trial judge must be in a position to identify all the issues in the case and to address them in his or her judgment. Furthermore, where there is an appeal, the appeal Court must be in a position to identify the precise issues raised at the trial.
24. Secondly and relatedly, a party to litigation must be accorded procedural fairness and must be given clear notice of the allegations raised by the other party.
25. Unfortunately, the appellants’ Statement of Claim in this case does not meet these requirements. Some examples will suffice. First, the appellants do not identify the passages in the COI report which they rely on as giving rise to the defamatory imputations. Secondly, except for an allegation that the COI report suggested criminal activity by both appellants and was extremely defamatory of the appellants “alleging multiple dishonest and fraudulent activities and recommended specific charges under the Penal Code [ CAP 135]”, there is no clear statement of the imputations which arose from the COI report and/or the Minister’s comments. Thirdly, it is not clear from the appellants’ pleading about the COI in paragraph 5 of the Statement of Claim how each allegation relates or is linked to the causes of action pleaded. Fourth, we have already referred to the one plea describing the alleged duty of care and the and the one plea of breach. The appellants have not provided any particulars of these pleas. This failure is of particular importance in the case of the plea of breach. The appellants have not provided any particulars of how it is said that the respondent failed to conduct a thorough and impartial investigation. If it was intended to rely on some of the pleas in paragraph 5, then that should have been made clear.
26. In fairness to the appellants, there was some further clarification of their case in the first appellant’s sworn statement dated 13 August 2024, but it was far from complete and, in any event, the material allegations must appear in the pleadings.
27. We turn now to consider the appellants’ case in defamation with respect to the Minister’s comments.
Were the Minister’s comments published?
28. The primary judge found that the Minister did not publish his comments and that his comments were published by the Daily Post (J at [57]).
29. With respect, this was an error. The publication of defamatory comments or statements may be to only one person, but that is sufficient to satisfy the publication requirement. The size of the audience is a matter which is relevant to the assessment of damages.
30. At the very least, the Minister’s comments were published to the persons present at the press conference. In fact, publication by the Minister goes further than that. It is well established that a person may be liable for republication if the republication is reasonably foreseeable (Clerk & Lindsell on Torts, Twenty-Third Edition, Sweet & Maxwell at [21-60]. (Clerk & Lindsell)). There cannot be any doubt that in this case that requirement is satisfied. The Minister’s comments were made at a press conference. Not only was it reasonably foreseeable that his comments would be republished, that was the whole point of the exercise.
Were the Minister’s comments of and concerning the appellants?
31. Neither appellant is identified in the Minister’s comments. In our view, that is not the end of the inquiry. The article refers to the following: (1) the Inquiry and the investigation into alleged fraud, theft and breach of fiduciary; (2) a reported suspicion of widespread collusion between directors and management at AVOL and Isleno to allegedly defraud AVOL; (3) some of the activities between AVOL and Isleno may be criminal; and (4) a number of other apparent breaches of fiduciary duty by Board members and other senior managers and accountants in this period have also been identified.
32. We consider that although not all of these statements are to be attributed to the Minister, it can be said that for identification purposes it was reasonably foreseeable by the Minister that his comments would be published in a way which identified Isleno and the directors and management of Isleno.
33. The next question relates only to the first appellant and it is whether the reference to the directors and management of Isleno identifies the first appellant (among others) such that the Minister’s comments are of and concerning her. We consider that question should be answered in the affirmative. A small and limited class is identified in the article and it should be inferred that at least some people are aware that the first appellant is a director of the second appellant (Clerk and Lindsell at [21-14]).
34. We conclude that the Minister’s comments were of and concerning the appellants.
Were the Minister’s comments defamatory?
35. The test of whether matter is defamatory is whether it would “tend to lower the plaintiff in the estimation of right-thinking members of society generally” (Sim v Stretch [1936] 2 All E.R. 1237 at 1240 per Lord Atkin). The test is an objective one and the Court does not take into account the defendant’s intention in publishing the matter or the plaintiff’s reaction to the publication. The meaning of the words used is in the ordinary case heavily influenced by the context in which they appear. Gatley sets out these propositions in greater detail (Gatley on Libel and Slander, Thirteenth Edition, Thomson Reuters at [29-02]), but what we have said is sufficient for present purposes.
36. An issue that sometimes arises is whether a publication referring to a suspicion that a person has committed a criminal offence is defamatory. The authorities make it clear that the answer to this question depends on the words used and the context in which they appear. The sting of the matter might be that the plaintiff has in fact committed a criminal offence or that there are reasonable grounds to suspect that he or she has committed a criminal offence or that there are grounds for investigating whether the person has committed a criminal act. All of these imputations are defamatory (Clerk and Lindsell at [21.38] footnote 201). It might be noted a defence of truth will often be available. The respondent did not raise a plea of truth in this case in relation to the Minister’s comments. The defence raised in relation to the Minister’s comments is qualified privilege.
37. We consider that the Minister’s comments were defamatory. At the very least the Minister’s comments give rise to an imputation that there were reasonable grounds to suspect that the appellants (among others), had been involved in corruption. The question is whether the Minister’s comments go further and the imputation is that the appellants (among others) had been involved in corruption. The article is titled, “Alleged Fraud, Theft and Breach of Fiduciary Duties”. The article itself refers to collusion between the directors and management of each organisation to allegedly defraud AVOL. The article states that some of the activities in relation to the dealings between Isleno and AVOL may be criminal and, although it is not clear whether the next comment relates only to AVOL, a number of apparent breaches of fiduciary duty have been identified. The article goes on to say that the recommendations of the COI included a recommendation for prosecution where the evidence warrants it.
38. The Minister’s comments start with a statement the report indicates blatant examples of the worst form of corruption. The word, “indicates” might be taken to mean that is what the report states or that is what the report suggests. In any event, the first statement of the Minister seems to be a statement that corruption has taken place. The second statement may be put in the same category having regard to the use of the phrase, “such activities”. The third statement involves something of a qualification in that it refers to further investigation by the Public Prosecutor and prosecution where the evidence warrants it. There will be further investigation by the Public Prosecutor who will prosecute where the evidence warrants it. The Minister is not saying that these offences have occurred.
39. Even if this approach be regarded as too technical, we are of the view that the meaning of the Minister’s comments must be judged in the context of the article as a whole. The Minister’s comments are meaningless without regard to the context. As we have seen the other parts of the article use the words, “allege”, “allegedly”, “may be”, “apparent” and “where the evidence warrants it”. We consider that reading the Minister’s comments in context, then like the rest of the article, they rise no higher than an imputation that there are reasonable grounds to suspect.
Are Minister’s comments protected by qualified privilege? Is the privilege defeated by malice?
40. The primary judge addressed this issue, albeit in the context of the case in defamation based on the COI report. Nevertheless, her Honour’s analysis is of assistance.
41. In Jiang Su Provincial Construction Group (Vanuatu) Ltd. v Zhinjian Pang [2020] VUCA 33 (Jiang) this Court considered the defence of qualified privilege. The Court noted the rationale for the privilege. The rationale for the privilege is that there are circumstances where it is in the public interest, that a person be able to receive frank and uninhibited communication of particular information. Traditionally, the privilege has been put in terms of a person having a duty to perform or an interest to protect. Information provide by a person whose dominant motive is something other than performing the duty or protecting the interest falls outside the privilege.
42. The Court went on to consider the well known decision of Horrock v Lowe [1975] AC 135 where Lord Diplock considered the test for malice which, as we have said, defeats the privilege. It may not be sufficient for a person claiming the privilege to show that he or she had an honest belief in the information or comments provided. The privilege will be defeated if that person has misused the occasion for a purpose, “other than that for which the privilege is accorded by the law” (at 150 per Lord Diplock). In our respectful view, in considering whether the privilege arises and, if so, whether it is defeated by malice, a helpful approach is as follows. Does the person providing the information have a duty to provide the information or an interest to protect in providing the information? Does the person receiving the information have an interest in receiving it? By interest in receiving the information mere curiosity or gossip or the like is to be excluded as an “interest”. Does the person providing the information have a dominant purpose or motive other performing the duty or protecting the interest. Examples of an improper purpose or motive are acting for a private advantage or out of spite or ill will. Of course, there may be other reasons for an improper purpose or motive.
43. It may be difficult for a person claiming the benefit of the privilege to show the requisite duty or interest, or public interest as it has been put more recently, in the case of publication to the world. The appellants made this point in their submissions.
44. We have reached the conclusion that the Minister’s comments were made on an occasion of qualified privilege. The comments related to a public carrier, an airline in which the Government was the major shareholder. The comments were made after a COI had conducted an investigation into allegations of a most serious kind. The CIO had found that further investigation and, if warranted, action was necessary. As we will explain, we reject any suggestion that the CIO was established for an improper purpose.
45. The public had an interest in receiving the Information provided by the Minister and the occasion was one of qualified privilege.
46. The appellants put various arguments in support of a submission that the privilege was defeated because the Minister had acted with malice or had an improper purpose in making his comments. In our opinion, the appellants’ arguments may be reduced to two broad propositions. First, the CIO was illegally established and it conducted its investigation in an illegal fashion This supports a finding that the Minister had an improper motive. Secondly, the timing of the release of the report is significant. The report was released immediately before the Court of Appeal was due to deliver judgment and the timing of the release supports a finding that the Minister had an improper motive of seeking to influence the decision of the Court. We reject these arguments and the plea of malice.
47. The appellants relied on the decision of Goldsbrough J. in the criminal proceedings. The relevant decision is Public Prosecutor v Isleno Leasing Company Limited and others [2023] VUCA 235 and the relevant passages are at [21]-[26]. Justice Goldsbrough found that there were various irregularities in the appointment of the COI and the way in which it proceeded including the establishment of the COI when there were legal proceedings pending, the COI was paid for by AVOL and the fact that the first appellant and others did not give evidence to COI. No doubt Goldsbrough J. had to decide these issues for the purpose of the criminal proceedings before him, but we are not bound by his findings and it may be observed that generally such issues would be determined on an application for judicial review in which the appellants would seek an order quashing the findings made against them. We do not consider this matter any further for this reason. These matters are and must be directed to a finding that the Minister had an improper motive in making the comments he did. The appellants’ case must be that the respondent had an improper motive from the beginning. There is no plausible evidence as to what this improper motive could be or that it is established. The same may be said of the appellants’ argument that the timing of the release of the report was intended to influence the Court of Appeal. The COI was established, it carried out its investigation and delivered its report. With respect, this Court’s decision to adjourn the delivery of its reasons in light of the criminal proceedings was entirely understandable and acceptable and not evidence that the “plan” had succeeded.
48. Finally, although, as we have said it is not conclusive, there is no evidence the Minister made his comments for private advantage or out of spite or ill will
49. In our view, the Minister’s comments were made on an occasion of qualified privilege and the appellants have not established malice.
50. The appellants’ challenge to the primary judge’s conclusion with respect to their defamation claim must be rejected.
The duty of care question
51. The appellants claim the respondent owed them a duty of care with respect to the CIO investigation and subsequent report and was in breach of that duty. We reject this argument for the following reasons.
52. First, it is not clear upon what basis the appellants claim the respondent, the Republic of Vanuatu, owed them a duty of care in relation to work done by the COI and the report it produced. There are two alternatives The first is reliance on agency or vicarious liability. Neither of those are relevant. The COI was not the respondent’s agent and the case does not fall within any of the traditional categories of vicarious liability such as an employment relationship. Secondly, there is no basis for holding that the respondent owed the appellants a duty of care with respect to the investigation or report. The respondent was not in a position to control the CIO or direct it as to how it would carry out its work.
53. Secondly, the pleaded duty of care could not possibly arise. It cannot be the case that the COI owed a duty in negligence to ensure the accuracy of its findings. At best, a duty in negligence acting reasonably.
54. Thirdly, insofar as the appellants formulate the duty by reference to what they claim was the breach, that is to say a failure to conduct a thorough and impartial investigation, we reject this case. There are no particulars of these failures. This is no mere pleading point. These are serious allegations. They involve complex concepts. Particulars are essential. A party cannot say that by reason of the fact that it does not like the result of the inquiry, the investigation was not impartial or lacked thoroughness. Furthermore, we do not think that there is any plausible evidence to suggest the COI did not act impartially or did not conduct a thorough investigation.
55. Finally, the appellants’ complaints would ordinarily be raised on an application for judicial review where the complaints could be considered and decided by reference to the well-known public law concepts.
56. We reject the appellants’ case that the respondent owed them a duty of care. Even if it did, the appellants have not established a breach of duty.
Conclusion
57. For these reasons, the appeal must be dismissed. The respondent does not claim costs.
DATED AT Port Vila, this 14th day of August 2026
BY THE COURT
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Honourable Chief Justice Vincent Lunabek