Isleno Leasing Company Ltd v Republic of Vanuatu

JUDGMENT OF THE COURT

Introduction

1.    In these proceedings before the Supreme Court Isleno Leasing Company limited (Isleno) are suing the Republic of Vanuatu (ROV) seeking damages arising from the leasing of aircraft by Isleno to Air Vanuatu (Operations) Ltd (AVOL).

2.    Isleno has a judgment from the Supreme Court (confirmed on appeal) against AVOL for damages arising from the lease and now says ROV should be responsible for the judgment sum due by AVOL plus further damages.

3.    This appeal challenges a decision of the Supreme Court to refuse an order sought by Isleno under rule 18.11 for judgment to be entered for Isleno arising from ROV's failure to comply with a court order for disclosure.

4.    On 13 February 2025 the Court ordered Isleno if it wished to file and serve an application for disclosure it should do so within 14 days. On 20 February 2025 Isleno filed and served on ROV an application for disclosure. On 20 March 2025 the parties agreed on an order of the Court which provided for the mechanics of disclosure and inspection.

5.    A further hearing was held before the Court on the 22nd of May with a subsequent court memorandum dated 13 June 2025 which recorded that disclosure had not occurred. A costs order was made against the ROV. Counsel for Isleno advised the Court an application under            R 18.11 was to be made.

6.    The R 18.11 application was filed on 7 July 2025 and sought that judgment be entered for              VT 245,896,000 plus interest, an assessment of unliquidated damages arising from the litigation between Isleno and ROV, assessment of damages for negligence and costs on the grounds that ROV had failed to comply with the order for disclosure.

7.    Rule 18.11 applies when a party fails to comply with an order in the proceedings. Here the alleged failure related to the orders of the court requiring disclosure. The application under R 18.11 is to show cause why an order should not be made against the non complying party. The Court has wide powers under R 18.11(4)

8.    ROV responded to the application. It complained about the extent of the discovery sought, suggested some requests for disclosure were no more than objectionable fishing expeditions and explained the difficulties of access to documents given a recent cyber attack, tropical cyclones and an earthquake in Vanuatu. They sought better specificity of the documents sought. It does not appear that the ROV complaints were addressed by the Court at that time.

The Judgment.

9.    The Judge in the Supreme Court dismissed the R18.11 application.

10.    The judge accepted the evidence from the ROV regarding the loss of important documents. He said at para 20:

“It is common knowledge these occurrences are acts of God and they should be accepted as such. It is common knowledge and ground that these natural disasters caused extensive damages and losses everywhere to all alike. No one was immuned (sic) from them. If therefore these directors of government departments and ministers explain in their sworn statements the reasons for not being able to disclose any further documents as a result to these natural disasters, then why press for disclosure when the obvious answer and result is that it is highly unlikely those documents will be found and disclosed”.

11.    As to the defendant's allegation that some of the requests were essentially fishing expeditions the judge said at 21:

“It appears to me from the persistence of the claimant that they are out on a mere fishing expedition”. Although no particular disclosure request that came within this category was identified.
Although no particulars disclosures request that came within this category was identified. 

12.    Finally the judge said at 24:

“It appears the claimant is out to seek more documents to establish a relationship that existed between the government and AVOL and to establish a duty between these entities and the claimant and to show there was a breach of duty. But I ask don't they have some documents already in their position to establish that aspect of their case from the sworn statement of Clarence Ngwele? This is a civil. Case and it suffices for the claimant to prove its claim for negligence on the balance of probabilities.”

13.    And in part at 25:

“Why therefore need more documents to be disclosed or discovered through more sworn statements?  Is it really necessary? It is settled law that sworn statements do not reveal matters in question but it is pleadings that determine whether documents sought should be disclosed.

14.    And at 27:

“From the pleadings it appears to me the real issue for determination is not whether the government had a duty of care and it breached that duty in failing to pay AVOL’s debts. This is a question of fact which requires factual evidence”

15.    And at 28:

“the real issue rather is whether the Government is liable and should be made so to pay off AVOL’s debts. This is a question of law which requires only legal submissions in my considered view. No further evidence is necessary to determine this issue. Only a further submissions hearing is necessary to be allocated for this purpose.”

16.    The judge then rejected the application and dismissed it with costs in favour of ROV.

Submissions

17.    Isleno submits in support of the appeal that the ROV failed to comply with the orders for disclosure in multiple ways. The Supreme Court judgment failed to acknowledge the extent of the failures. The ROV had failed to list any actual documents; they had not adequately explained why they could not access documents from damaged buildings; they had not adequately inquired of all relevant government departments if they possessed relevant documents; they had not listed the documents where they claimed privilege nor had they identified why they claimed privilege; and some government entities had wrongly refused disclosure.

18.    This illustrated an extensive failure to comply with the disclosure order. Isleno submitted the judge effectively ignored these failures. He did not decide the R 18.11 application on the basis of the criteria applying to such applications. In his decision therefore the judge effectively refused to require ROV to disclose any documents on the basis that the case could be decided on a question of law without any further factual inquiry arising from disclosed documents.

Discussion.

19.    We are satisfied the judge's approach was an error. We agree with the criticisms of the appellant that the judge effectively ignored the inadequacies of ROV’s disclosure. 

20.    The judge was not in a position to decide the claim on the question of law he identified that is whether the Republic of Vanuatu was liable for AVOL's debts to Isleno.

21.    Disclosure of documents in litigation is an important part of determining the facts and therefore of doing justice between the parties. Disclosure is based on the principle that both sides to civil litigation should, with exceptions, have access to the same documents.

22.    Here the judge was faced with what appeared to be inadequate disclosure and a failure to comply with Court ordered disclosure to the full extent required. However, the judge decided to focus on what he considered was going to be the real issue for determination at trial. Based on that analysis he decided that the only issue was a straightforward question of law which did not require further evidence to resolve. This was the wrong approach. The judge was not in a position at such an early stage of the proceedings to identify what would be the issue or issues at trial. Counsel had not been invited to make submissions on this approach.

23.    Ultimately the case may result in a decision as to whether ROV should pay AVOL’s debts to Isleno. To reach that conclusion however the Court will have to find proven one or more of the causes of action pleaded. That proposition in turn entitles Isleno to obtain proper disclosure of the relevant documents.

24.    Given the errors in the judgment identified we would ordinarily have allowed the appeal, set aside the costs order and referred the matter back to reconsider the R 18.11 application based on a proper application of the law.

25.    However, we have concluded in this case that the judge was correct to dismiss the R 18.11 but for quite different reasons. We now explain our reasons.

26.    The order for disclosure made by the Supreme Court in this case was no more than a general order requiring disclosure made on 20 March 2025. The application for disclosure by Isleno of 20 February 2025 sought disclosure of documents that appeared to be well beyond the parameters of the causes of action. For example, the application sought all correspondence between the AVOL board and shareholders; all correspondence between the Council of Ministers or any member of government and AVOL; all press statements by the government relating to AVOL.

27.    There was no attempt to refine these requests so that they were tied back to the causes of action and therefore relevant to the proceedings.

28.    On that ground alone the R18.11 application could have been refused or if not refused orders made requiring the refinement of the application for disclosure. There would have been no basis to enter judgement as requested by Isleno in their application.

29.    There was another difficulty with the application for disclosure and the consequential order. As we have observed the disclosure is based on relevance to the pleaded causes of action. Some of the causes of action were inadequately pleaded. As a result, it was not clear exactly what documents were relevant and what were not relevant.

30.    Some examples of inadequately pleaded causes of action are detailed below.

31.    Isleno pleaded an agency relationship between AVOL and the ROV which in turn gave rise to the pleaded claim that the ROV was responsible for AVOLS debts to Isleno. An agency cause of action typically requires proof of an express or implied agreement of agency; the fact the agent has actual ostensible authority to bind the principal as far as third parties are concerned; the relevant acts complained of; the breach of a legal obligation and that breach caused the loss.

32.    The appellant's pleadings did not identify all of these requirements nor how they were met by the alleged facts. This meant there could be uncertainty what documents were relevant and what were not.

33.    Under a cause of action described as the “Government agreement to pay” there was no specific pleading of the words said to constitute such an agreement nor other relevant facts to identify relevant documents requiring disclosure. 

34.    In summary the application for disclosure on which the order for disclosure was based sought a far wider range of material than was likely relevant and the pleadings did not adequately identify the causes of action on which disclosure must be based. 

35.    Given these conclusions we are satisfied the judge was correct to dismiss the R18.11 application but as we have identified for quite different reasons.

36.    At the hearing of this appeal, we advised counsel that if we dismissed the appeal, we had suggestions as to the way forward for this litigation. These proceedings began in 2024. They have not moved beyond the interlocutory stage. They involve large damage awards sought which are of considerable importance to both parties to the litigation.

37.    At the hearing counsel welcomed our suggestions for a way forward to trial. We stress our suggestions are no more than that. The parties’ rights to pursue all and any interlocutory applications pre trial are preserved.

38.    First amending the statement of claim. We have already identified some shortcomings in the pleadings. In proper pleading each of the elements of a cause of action are identified and the pleading identifies how the element pleaded is met by the specific facts of the case. We suggest Isleno will need to reassess each cause of actions based on this approach and decide if an amended statement of claim is required.

39.    Once an amended set of pleadings is complete and any challenge to the pleadings resolved Isleno could seek disclosure. As we have said in this judgement the disclosure sought must relate only to specific relevant documents and no wider than can be justified by relevance. Relevance will be determined by reference to the causes of action.

40.    Once any interlocutory issues regarding the application for disclosure are resolved the ROV will need to respond by filing a sworn statement detailing disclosure.

41.    In this case the ROV's response to the application for disclosure was inadequate. No sworn statement identifying all relevant documents was filed. Four sworn statements from senior public servants in various ministries were filed all in similar form. The sworn statements listed groups of documents based on the disclosure application. None were specified. None of those documents were said to be in the possession of the ROV. The public servants claimed that a combination of cyber attack tropical cyclones and the December 2024 earthquake all contributed to these losses. It was not clear whether the records that were said to be lost were electronic or paper it was unclear whether the material had been destroyed in the various disasters or currently unable to be accessed. It was not clear whether any inquiries had been made of the recipients of the documents or emails as to whether they had copies of the relevant documents. Many of the documents sought seemed predate the cyber-attack the cyclone and the earthquake and yet there was no explanation for their absence.

42.    The Republic of Vanuatu asserted privilege with respect to a group of documents. None of the documents were specified nor was there any explanation as to what privilege was claimed with respect to each document. This approach did not meet the ROV’s disclosure obligation.

43.    Therefore, once the pleaded inadequacies have been remedied and an appropriate application for disclosure made the Republic of Vanuatu will need to respond with full disclosure statements which identify, each document individually and where that is not possible because of document destruction evidence might be appropriate to identify the extent of the destruction and efforts to reconstruct the record. Where privilege is claimed each document must be identified and with the reason for asserting privilege that will where appropriate enable a challenge to the asserted privilege.

44.    For theses reasons we dismiss the appeal.

45.    However, in the circumstances we also set aside the cost order in the Supreme Court given we have found quite different reasons to dismiss the appeal.

46.    We make no order as to costs. In this appeal. We have identified what we consider to be inadequacies on the approach of both Isleno and the ROV.

DATED AT Port Vila, this 14th day of August 2026
BY THE COURT

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Honourable Chief Justice Vincent Lunabek