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Wantok Gaming Systems Ltd v National Gaming Control Board [2014] PGNC 165; N5809 (2 June 2014)

N5809

[PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 678 of 2012

BETWEEN

WANTOK GAMING SYSTEMS LIMITED
Plaintiff

AND

NATIONAL GAMING CONTROL BOARD
First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

WS. NO. 744 of 2012

BETWEEN

DANIELS PLACE LIMITED
Plaintiff

AND
NATIONAL GAMING CONTROL BOARD
First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

WS. NO. 752 of 2012

BETWEEN

FAIRFAX NETWORK LIMITED
Plaintiff

AND
NATIONAL GAMING CONTROL BOARD
First Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Kandakasi, J.
2014: 02nd June

MEDIATION – Effect of orders for mediation – Case is appropriate for resolution by mediation - No issue warranting judicial consideration and determination presented - Parties duties and responsibilities – A party failing to proceed with court ordered mediation - Consequence of - "Bad faith" – Consequence of - Need to provide reasonable explanation and disclose existence of meritorious issue warranting judicial consideration and determination identified at mediation – Relevant facts to be disclosed in affidavit from relevant and appropriate officer in the case of a corporate entity – Failure to – Effect of – Conduct amounting to contempt of court and no issue warranting trial presented – Appropriate orders – Judgment and or orders due against defaulting party.

LAWYERS - Duties and responsibilities of lawyers in mediation – Lawyers to appropriately advice clients of nature of their cases, appropriate form of dispute resolution to use and seek appropriate instructions from clients – Based on instruction either apply for orders for mediation or to proceed with litigation if matter inappropriate for mediation – Need to advice client and secure appropriate instructions to proceed with court ordered mediation – Ensure self and client comply with orders for mediation – Duties of lawyers following certificate of "bad faith" – Advice client of its meaning and consequence - Seek and secure instructions and evidence demonstrating reasonable explanation for conduct leading to such a certificate – Failure and effects of – No issue warranting judicial consideration and determination presented.

Papua New Guinea Cases cited:

Koitaki Plantations Ltd v. Charlton Ltd trading as Kookabura Meats & Stuart Fancy (2014) N5656
Alex Awesa & Anor v. PNG Power Limited (2014) N5708
Hargy Oil Palm Ltd v. Ewase Landowners Association, (2013) N5441
Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636
PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288
POSF Board v. Sailas Imanakuan (2001) SC 677
NCDC v. Yama Security Services Pty Ltd (2003) SC707
PNG Power Ltd v Ian Augerea (2013) SC1245
Geoffrey R.E. Vaki v. Gari Baki & Ors (2014) N5612
Kalang Advertising Limited v. Visvanathan Kuppusamy (2008) SC924
Rage Augerea v. Bank South Pacific Ltd (2007) SC869
Credit Corporation (PNG) Ltd v. David Nelson (2011) N4368
Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705
Tian Chen Ltd v. The Tower Limited (No.2) (2003) N2319

Counsel:

I. Shepherd, for the Plaintiff
S. Liria, for the Defendants

29th October, 2014

1. KANDAKASI J: These are related cases which have been dealt with together. They raise one single question under r.10 (7) of the Rules Relating to the Accreditation, Regulation, and Conduct of Mediators promulgated on 30th March 2010 (the ADR Rules).

Question

2. The question presented is this. What is an appropriate sanction for a party's "bad faith" at mediation? My decision in Koitaki Plantations Ltd v. Charlton Ltd trading as Kookabura Meats & Stuart Fancy[1] and Alex Awesa & Anor v. PNG Power Limited[2] address the question in detail. Hence, I will allow myself to be guided by these decisions particularly in relation to the legal principles discussed and set out in those cases. Of course the application of the legal principles to this case will be varied to suit the particular facts of this case.

Background

3. Turning than to the background leading to the question presented, I note is simple. The dispute in each of these cases concerns mainly each of the Plaintiffs and First Defendant in each case, the National Gaming Control Board. The State has been named only as a nominal defendant. Between June – July 2013, the parties discussed and agreed in principle to submit all these three matters to mediation to be conducted by an external accredited mediator, Callum Campbell. The Gaming Board, through counsel, Mr. Liria nominated the mediator. Mediation was the next option to take

failing any resolution by out of court settlement discussions between the parties. Before mediation could take place, the Court repeatedly adjourned these matters at various directions hearing from June to August 2013, upon the parties request in the hope that the matter would settle without mediation. Following appearances in Court on 21st August 2013, the Plaintiffs through their lawyer, Mr. Shepherd, forwarded a formal settlement proposal to the Gaming Board on 29th September, 2013. Upon return of these matters before me on 11th September 2013, the Gaming Board had not yet responded to the settlement proposal. The Court therefore, ordered the Gaming Board to respond to the settlement proposal. At the same time the Court, directed the parties to come with draft orders for mediation if they failed to reach any final and determinative resolution of all or any of these matters and adjourned them to 16th October 2013. In a bid to expedite matters, I directed at the same time for the Gaming Board to respond to the Plaintiffs' settlement proposal by no later than 15th October 2013.

4. By letter dated 15th October 2013, Mr. Liria informed the Plaintiffs' lawyers that his client would forward a counter proposal by "next week". By 16th October 2013, the matter had not yet settled and all these matters were adjourned to 17th November 2013, on indications that an out of court settlement was still possible. At that time, Mr. Liria indicated that, his client would respond to the settlement proposal before 11th November 2013. On the return date, the Gaming Board had still not communicated its response to the settlement proposal. That meant that the parties were not able to have the matter settled through their own direct negotiations. That resulted in the Court subsequently making orders for mediation in all three matters on 04th December 2013. The orders were:

"1. Pursuant to section 7B (2) of the National Court Act and Rule 5(2) (a) of the ADR Rules, and the order of His Honour Justice Kandakasi on 3rd December 2013, this matter is referred to ... mediation by an accredited mediator.

2. Callum Campbell, who is an accredited external mediator, is appointed to conduct the mediation in co-mediation with a provisionally accredited mediator assigned by the Acting Assistant Registrar – ADR (AAR-ADR) by no later than 18th December 2013.

3. The parties shall pay in equal proportions the Court mediation services fees per Schedule 3 of the ADR Rules by 31st December 2013 and provide by both facsimile and email a copy of the receipt to the AAR-ADR and deliver to the mediators the original at the commencement of the mediation process.

4. The parties shall pay in equal proportions the external mediator's fees by 16th December 2013 into an account nominated by the external mediator.

5. The mediation conference shall be held at the ADR Centre, Waigani, National Capital District Court or such other venue as the parties and the mediators may agree upon.

6. The parties and if applicable, their lawyers as well, shall by 10th December 2013, notify the AAR - ADR, of their respective currently functional telephone numbers (land and mobile) and email and mailing addresses.

7. Provided term 3 and 4 of these orders are complied with, the mediation shall be conducted on the 27th and 28th of January 2014 or such other dates as the parties may agree but in any event before the date specified in term 8.

8. In accordance with Rule9 (3) of the ADR Rules, the mediation process shall concluded on or before close of business 3rd February 2014 with a mediator's certificate in Form 1 or Form 2 of the ADR Rules.

9. During the mediation process, the parties must be represented by a person with full capacity and authority to settle the proceeding who must come prepared with the relevant and necessary instructions and material required at mediation and negotiate in 'good faith.'

10. A failure to comply with all or any of these orders may be taken to mean lack of 'good faith' for the purposes of Rule 10 (7) against the defaulting party.

11. The proceeding shall return to Court on 4th February 2014 whereupon the Court may endorse any agreement of the parties either with or without modification for the finalizing of the proceedings or make such orders and issue such directions as are necessary to expedite the matter to trial if not fully resolved by mediation.

12. The time for entry of these orders is abridged to the time of settlement by the Registrar which shall take place forthwith."

5. At the time of making the orders, I was of the view that, these cases did not present any issue that warranted only a judicial consideration and determination. As can be noted from the terms of the orders for mediation, Callum Campbell, who is an accredited external mediator was appointed as the mediator. The mediation was to commence on 27th January 2013, and conclude by no later than 03rd February 2014. Unfortunately, the mediation did not proceed on any of the dates specified in the mediation orders. But the parties and the mediator agreed to the mediation taking place on 25th and 26th March 2014.

6. Before the arrival of the new mediation dates and before the Plaintiffs paid their share of the mediator's professional fees, they through their counsel, asked if the Gaming Board would be making any settlement offers at the mediation in view of the Gaming Board's lack of any meaningful response to the Plaintiffs settlement proposal. By letter dated 28th February 2014, the Gaming Board through its lawyer informed the Plaintiffs that, it "would not settle at mediation" and suggested the matter be progressed to trial. Counsel for the Plaintiffs duly informed the mediator of that development, whereupon the mediator issued a certificate of "bad faith" against the Gaming Board.

Consideration

7. In my recent decisions in the Hargy Oil Palm Ltd v. Ewase Landowners Association,[3] Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd,[4] Koitaki Plantations Ltd v. Charton Ltd & Anor and Alex Awesa & Anor v. PNG Power Limited cases, I went to some length in discussing the development, promotion and use of ADR and in particular, mediation. In these judgments, I highlighted both the reasons why the formal courts and governments worldwide are promoting and encouraging the use of mediation. I wish not to repeat everything discussed in those cases here save only aspects that are relevant and necessary for the present case.

8. In the Hargy Oil Palm case, I noted that, a very serious and ever increasing problem of backlogs in the formal courts' lists, forced on a movement toward the promotion, and use of ADR by the formal Courts and governments worldwide. Then I noted that, backlogs in the Courts "are in the main contributed to by many people involved in disputes either deliberately deciding not to or simply neglecting to reason with their opponents to have their disputes resolved." I also noted that even after the introduction of ADR and mediation, the backlog problem has not gone away. I attributed one of the main contributing factors to be the parties' failure to enter into fair, frank and open discussions of the matters in dispute between them and jointly explore options and resolve their disputes. This, I noted was the position despite provisions being made in a number of legislation and elsewhere, both, internationally and locally where the parties are encouraged to have their disputes resolved out of court. I noted, this may be due to a failure to appreciate the benefits of mediation and listed the various benefits.[5]

9. I then went on to note in the Hargy Oil Palm and later the Able Construction, Koitaki Plantations and Alex Awesa cases that, the Courts were not favorably viewing parties who fail to use mediation in good faith to resolve their disputes. Further, I noted that, the Courts were taking that position because of the objectives behind the introduction and promotion of mediation as well as its benefits.[6] With reference to my decision in PNG Ports Corporation Ltd v. Canopus No 71 Ltd,[7] I went on to observe that, the Courts were repeatedly making it clear that, "almost all disputes that enter the Court are capable of settlement, by the parties' direct negotiations." In so doing, I noted that, the Supreme Court in its decision in Public Officers Superannuation Fund Board v. Sailas Imanakuan[8] had already made that observation and highlighted the fact that, the "Courts are there only to help resolve or determine disputes that cannot be resolved by the parties themselves despite their best endeavors to do so."[9] Finally, I noted that, as high as the Supreme Court in PNG, in NCDC v. Yama Security Services Pty Ltd,[10] the Courts were repeatedly calling for more use of mediation. Finally, I noted that, in PNG, in 2008, Parliament endorsed the Courts call by amending the National Court Act. The new provisions in the Act allow for Court Annexed ADR with more emphasis on mediation and empowered the Judges by s. 7E to promulgate rules to make a system of court annexed mediation work. The Judges appropriately responded on 30th March 2010, when they promulgated the ADR Rules.

10. Then as I noted in the Able Construction Ltd case, all of these developments have come about because, it is now almost universally accepted that all disputes are capable of resolution by mediation. At the same time, in that case, I noted that the exceptions to that position by way of inappropriate cases for mediation are few. The exceptions include cases in which:

• a real possibility of setting a legal precedent is presented; or

• any out of court settlement is not in the public interest; or

• protective orders such as injunctions are required; or

• there is a clear case warranting summary judgment; or

• there is a genuine dispute requiring the Court to give a declaratory relief; or

• there is a family dispute especially involving child abuse, domestic violence, or the like; or

• the parties are in a severely disturbed emotional or psychological states that they cannot negotiate for themselves or others; or

• there is a genuine dispute requiring interpretation of a Constitutional or other statutory provision; or

• there is a genuine dispute over the meaning and application of a particular provision in a contract or an instrument, a determination of which will help finally determine the dispute; or

• a preliminary issue, such as, questions on jurisdiction, condition precedents,[11] statutory time bars and a failure to disclose a valid cause of action is presented; or

• there is a need for public sanction as in a criminal case for public health, safety and good order.

11. Later in the Koitaki Plantation case, I considered in detail the kinds of sanctions the Courts have been imposing from orders for costs to dismissal of cases or judgments and orders against parties acting in "bad faith". Then in the Koitaki Plantation case, I found Koitaki Plantation acted in "bad faith" when it deliberately decided against participating in a Court ordered mediation. The decision not to participate in the court ordered mediation came in three forms. First, Koitaki Plantation deliberately decided not to proceed with the mediation. Second, in line with that, it decided not to pay its share of the external mediator's fees. Thirdly, it refused to turn up on the scheduled date, time and venue for the mediation. I further found that, Koitaki Plantation took that position, after having consented to the matter being referred to mediation. In these circumstances, I found an order dismissing Koitaki Plantation's claim and entry of judgment against it in a cross-claim for a liquidated amount was warranted and made orders in those terms.

12. Later, what happened in the Koitaki Plantation case repeated in the Alex Awesa case. The only difference was in the decision on penalty. In appreciation of the fact that the damages needed proven and the fact that no issue warranting only a judicial consideration was presented, the Court entered judgment for the plaintiff and ordered the parties to go to mediation again on the question of damages. All past and future costs of the mediation were ordered against, PNG Power Limited, which was the party that acted in "bad faith".

13. In arriving at the decision in the Koitaki Plantation and Alex Awesa cases, I noted three factors were pertinent when it comes to deciding what penalty is appropriate for parties acting in "bad faith". The first factor I noted was this:

"...once an order has been made to refer a matter to mediation, the parties and everyone else who is required to do certain things for the purpose of giving effect to the [Court ordered] mediation must comply. This need for compliance is in the fact that a court of competent jurisdiction has made an order which needs to be fully complied with unless the orders are otherwise varied or set aside by subsequent and formal orders of the court. A failure to comply with a court order lends itself to the inevitable consequence of the defaulter being in contempt of court."[12]

14. I then made reference to the unanimous decision of the Supreme Court in PNG Power Ltd v Ian Augerea,[13] where the Court emphasized the fact that:

"...contempt of Court is a very serious matter as it is an affront to the rule of law and in particular the administration of justice. It is a serious offence that is not defined by any written law and its penalty not limited by any legislation. The courts have an almost unlimited power to impose such sanctions as it considers appropriate in the particular circumstances of each case.

15. I added that in recent times, persons who have been found guilty of contempt of court have been given custodial sentences of not less than 7 months. To emphasis this point, I cited the Deputy Chief Justice, Sir Gibbs Salika's decision in Geoffrey R.E. Vaki vs. Gari Baki & Ors.[14]

16. In the case of a breach of an order for mediation I said:

"... the order is from a court of competent jurisdiction. Unless it is varied or otherwise set aside, all parties and anyone else who is covered by an order for mediation have an obligation to comply with each of the terms of the orders in so far as they apply to them. A failure to comply with such orders without good cause, no doubt amounts to contempt of court. Where a party deliberately decides against compliance and takes a position which runs contrary to the grain of the orders for mediation that would in my view be contempt in the worse form or category, calling for serious penalties."[15]

17. Turning to the second factor, I said:

"... courts and governments all over the world are calling for the use of mediation as a preferred form of dispute resolution, given its benefits. Many countries have now gone further and required mandatory mediation either prior to the issuance of proceedings or before any trial takes place in court. In our case, the combined effect of rr. 4 and 5 of the ADR Rules ... presupposes mediation unless the court otherwise determines on the application of a party. The imperative therefore, is to explore prospects of out of court settlement through the direct negotiations of the parties and failing any settlement, through mediation in 'good faith'. This would apply to all kinds of cases that enter the formal court system. The only exception to this would be the cases which raise one or more of the kind of questions or issues outlined in paragraph 14 above."[16]

18. This led me to the third and final factor of the courts in PNG being ready in appropriate cases to:

"... dismiss or order judgment against defaulting parties for failure to comply with orders or directions of the Courts aimed at expediting a matter to trial or otherwise final resolution without further unnecessary delay and costs. "

19. The Supreme Court decision in Kalang Advertising Limited v. Visvanathan Kuppusamy[17] directly supported that proposition. There, Visvanathan sought damages in the National Court against Kalang for alleged breach of contract. Kalang failed to turn up at a directions hearing. That caused the Court to adjourn to a new date with a conditional order, which required Kalang to turn up in court on the new adjourned date and give reasonable explanations for its earlier failure. The Court also ordered that a failure to do so will result in a strike out of Kalang's defence and entry of judgment for Visvanathan.

20. On the next appointed date, Kalang's lawyer turned up and gave an unsatisfactory explanation. The explanation was without the support of any affidavit. This caused the Court to find the condition in the conditional orders being met and made the orders it forewarned of. Kalang appealed to the Supreme Court against both the conditional order and the consequential judgment. The Supreme Court dismissed the appeal and held that both the conditional order and the consequential orders constituted a proper exercise of judicial discretion.

21. In both Koitaki Plantation the Alex Awesa cases, I turned specifically to consider the provisions of r.10 (7) of the ADR Rules and said of them:

"The Court has a wide discretion or power to make such orders as it may think appropriate in the proceedings once a case of "bad faith" is made out against a party. I note this is not a vesting of a new power that the Court does not already have. Instead, as it has been repeatedly and abundantly made clear by this and the Supreme Courts under the first and third factors outlined above, r.10 (7) merely restates and reinforces a power the Court already has. It would follow therefore that, a case of "bad faith" could be met by any one or more of the following orders depending on the seriousness of the conduct and whether the conduct is deliberate or inadvertent:

(a) dismissal of the claim;

(b) permanent stay of the claim; or

(c) a stay of the claim pending a meeting of certain conditions; or

(d) a strike out of a defence and entry of judgment; and or

(e) order costs.

... Sanctions under (a) - (c) could be imposed in appropriate cases, if the defaulting party is the plaintiff or a cross claimant. Obviously, the sanction under (d) could be imposed against a defendant or a cross-defendant. Sanctions under (a) and (d) could be considered drastic. However, if the circumstances leading to a finding of "bad faith" is serious, such sanctions might very well be called for and warranted, when considered in the light of the kind of sanctions that could be and are being imposed for contempt of court or for breach of court orders. The final possible sanction of costs could be either on a solicitor/client or party/party basis. Such a sanction could be in addition to any of the sanctions under (a) - (d). If possible, the court could at the time of the order, fix the actual amount of costs payable or allow for taxation."[18]

22. I also considered the provisions of r. 10 (1) - (5) of the ADR Rules and noted that the orders for mediation in those cases[19] were in fact a restatement of the requirements of the provisions of the ADR Rules. I also noted that these orders were intended to ensure that the court ordered mediations proceeded smoothly. That in turn was intended to overcome delays and expedite outcomes in court cases. Then with reference to the decision in Hargy Oil Palm case, I observed that, in order to achieve that objective, the parties need to take the following steps[20]:

"(d) Promptly calculate and pay the mediation service fees as prescribed in Schedule 3 of the ADR Rules...

...

(g) Ensure to attend all mediation sessions from preparatory meetings to the first per party intake to the joint conferences and all other sessions required by the mediator until the mediation process is concluded;

(h) Where the parties are legally represented, the lawyers:

(i) advising their respective clients and properly preparing them for mediation;

(ii) providing and ensuring to provide accurate legal advice throughout the entire mediation process with a view to enabling the parties to reach an agreement unless there is a serious legal impediment; and

(iv) attending mediation with their respective clients on time and be ready to help with jointly drafting any agreement that might be reached at the mediation;

(i) Ensuring in the case of a corporate entity, that all of the above and in particular the various mediation sessions and process are attended to by an officer of the corporation who has the necessary power and authority to negotiate and settle the proceedings and thus bind the corporation;

(j) Attending the mediation in good faith ready and willing to genuinely explore ways and means of satisfactorily resolving the matters in controversy between the parties rather than treat the process as a fishing trip;

(k) Taking all other steps as are necessary to ensure that the mediation commences and concludes on the days and times stipulated by the Court appreciating that the Rules allow for mediation to conclude within 2 months from the date when the order for mediation was made."[21]

23. I then discussed the development of ADR, especially, mediation and the objectives behind that development. That discussion concluded with a highlighting of the fact that, there was an imperative for businesses or corporations to settle their disputes through direct negotiations and failing that mediation. This imperative could be achieved in the case of mediation with proper preparations and faithful participation at all of the relevant stages from preliminary in-take conferences to all other subsequent conferences until final conclusion or closure of the process. I pointed out that the servants and agents of corporations should:

"(1) seek and secure the relevant governing bodies or authorities' full and unrestricted authority or instructions to negotiate in good faith and find a solution;

(2) seek and secure their legal advices and if need be secure appropriate legal services for and during the mediation process;

(3) consult and get the inputs of other important and critical people where that is needed;

(4) have readily available persons they will need to consult or seek their approval during the course of mediation to promptly provide the required inputs or instructions;

(5) gather and put together all documentary and other evidence which they may required or wish to table at the mediation;

(6) carry out investigations and researches as may be considered relevant and necessary with results ready for use during the mediation process if need be;

(7) allow for quality undivided time and attention to the mediation process; and

(8) prepare and make full disclosure of information critical to arriving at a fair, just and a reasonable agreement."[22]

24. Further, I said a proper understanding of these duties and responsibilities by the parties would enable them to "participate in good faith" at mediations. That would in turn enable possible resolutions of the disputes. But a failure in these duties and responsibilities and in particular an absence of any of the following list of behaviors would lead to a finding of a party acting in "bad faith" resulting in no final settlement:

"(1) Complying with the various legislative provisions and other rules, standing orders or practice directions' or provisions that govern mediation;

(2) Complying with orders referring a matter to mediation;

(3) Personally attending (excluding attendance by telephone) at the mediation by all persons who are fully authorized to settle the dispute,

(4) Preparing for mediation by the parties and their representatives, which includes the exchange of any documents requested or as set forth in a rule, order or request of the mediator;

(5) Participating in meaningful discussions with the mediator and all other participants during the mediation;

(6) Acting in accordance with all contractual terms regarding mediation, the parties may have agreed to;

(7) Following rules set out by the mediator during the introductory phase of the process;

(9) Remaining in the mediation process until the mediator determines that the process is at an end or excuses the parties;

(10) Engaging in direct communication and discussions between the parties to the dispute, as facilitated by the mediator;

(11) Engaging in accurate and honest representations to the other parties or the mediator during and for the purpose of the mediation; and

(12) Refraining from filing any new motions until the conclusion of the mediation, in pending lawsuits."[23]

26. In both the Koitaki Plantations and Alex Awesa cases, I found the respective Plaintiffs failed to:

(1) comply with the call and encouragement for the use of mediation by legislation,[24] including the ADR Rules, the various Supreme and National Court decisions and many learned and authoritative publications;

(2) comply with the orders of the Court that referred the matter to mediation with their consent;

(3) personally attend through a duly authorized person having the necessary power and authority to bind them at the appointed time, date and venue for mediation as did the other parties and the mediators;

(4) prepare for mediation, which included:

(a) seeking and securing their board's full and unrestricted authority or instructions to negotiate in good faith and find a solution;

(b) the exchange of any documents requested or as set forth in a rule, order or request of the mediator;

(c) seeking and securing their legal advice and if need be, secure appropriate legal services for and during the mediation process;

(d) consulting and getting the inputs of other important and critical people where that was needed;

(e) ensuring the ready availability of persons who needed to consulted or seek their approval during the course of mediation to promptly provide the required inputs or instructions;

(f) gathering and putting together all documentary and other evidence which they may required or wish to table at the mediation;

(g) carrying out investigations and researches as may be considered relevant and necessary with results ready for use during the mediation process if need be; and

(h) allowing for quality undivided time and attention to the mediation process; and

(i) preparing to make full disclosure of information critical to arriving at a fair, just and a reasonable agreement.

(5) participate in meaningful discussions with the mediator and all other participants during the mediation;

(6) act in accordance with all contractual terms regarding mediation that the parties may have agreed to, given that the mediation orders were with the consent of the parties;

(7) follow rules that may have been set by the mediator during the introductory phase of the process or in his earlier communication with the parties;

(9) remain in the mediation process until the mediator determined that the process was at an end or excused the parties;

(10) engage in direct communication and discussions with the other parties with the mediator's facilitation;

(11) engage in accurate and honest representations to the other parties or the mediator during and for the purpose of the mediation.

27. I found these failures were serious impediments to the Court ordered mediation from proceeding. That left the other parties and this Court in the dark as to what were the real, serious and meritorious issues that were presented in the case and how they required only a judicial consideration and determination as well as how and where it might be on the list of cases or issues inappropriate for mediation. Further, I found that, if indeed the cases presented the kind of issues in question, that should have been made known and clearly presented to the Court prior to the order referring the matter to mediation. Furthermore, I found that, if indeed there was an issue of the kind in question, Koitaki Plantations and PNG Power (the parties acting in "bad faith"), should not have consented to the matter being referred to mediation and instead argue against that for such a reason.

28. In respect of the last point, I made this observation, which I consider is very important:

"It should be noted that, once a Court makes an order for mediation, it effectively means there is no serious and meritorious issue which falls into the list of cases or questions inappropriate for mediation. This immediately obligates the parties to use their best efforts and endeavors to resolve their dispute through the mediation process. If they faithfully discharged their respective duties and responsibilities in the way outlined above, settlement would be inevitable. The only exception to that would be cases in which the parties are able to agree that there is a serious impediment to settlement which was not clear as at the time of the order for mediation."

29. Applying these principles, I found in both cases a number of failures on Koitaki Plantations' and PNG Powers' parts. These were that:

(a) they failed to demonstrate to the Court's satisfaction that there existed in their respective cases, the kind of impediment and or type of issue discussed above;

(b) they conducted in a way that was contemptuous of the orders for mediation;

(c) their conducts ran against the grain of the various legislative, judicial and learned publications, encouraging and supporting the use of mediation to resolve human conflicts;

(d) their respective conducts forced the other parties, the Court and the mediator to waste their time, energy and effort in arriving at the decision to have the matter referred to mediation and setting aside time and generally preparing for it; and

(e) save only to point out that their decisions were not to settle the matter and hence not to give mediation a fair chance, they both failed to provide any good reason for taking that position.

30. In those circumstances, I determined that the most appropriate sanction would be an order for a dismissal of the case in the Koitaki Plantations' case. In summary, I found firstly that Koitaki Plantations' failed to demonstrate the existence of a meritorious issue warranting only a judicial consideration and determination thereby rendering the case inappropriate for mediation. Secondly, I found Koitaki Plantations did not provide any reasonable and convincing reason for its deliberated refusal to comply with the orders for mediation. This warranted an order; (1) to dismiss Koitaki Plantations' claim and (2) strike out its defence and enter judgment against it on a cross claim by the defendants.

31. In making the second part of the order, I noted that, the case concerned a simple supply of goods contract, namely live animals, and a claim of nonpayment for them according to Koitaki Plantations' claims and in the defense and cross-claim a claim of a failure to supply the animals and or an over payment for them. I was of the view that, this presented no meritorious issue that was beyond the reach of mediation and resolution by the parties. All that the parties had to do was to sit down with the facilitation of a mediator at mediation. At mediation they would have gone through the various and relevant purchase orders, delivery dockets, invoices, payment slips and evidence of payments and settle the claim after establishing the correct records of what happened in the various transactions.

32. In the Alex Awesa case, I arrived at a similar decision for the same reasons but with damages to be assessed as they were not liquidate. I then ordered the damages to be settled through mediation at the sole costs of PNG Power Ltd which was the defaulting party.

Present Case

33. In the present case, there is no affidavit from the managing director or the relevant and appropriate officer within the employ of the Gaming Board, who has the power and authority to bind it. The only affidavit is from Mr. Liria, who is the lawyer instructed by the Gaming Board. In his affidavit, Mr. Liria makes reference to his client having paid its share of the mediation fees on 15th January 2014 and him being in constant contact with the Acting Chief Executive Officer of the Gaming Board who was willing to attend mediation. However, when asked by Plaintiffs if there would be any settlement offers at mediation, the Gaming Board took the position not to settle, decided against going to mediation and insisting upon going to trial.

34. As was the case in Alex Awesa's, there is a lack of evidence in two respects. The first concern evidence on the kind of legal advice provided to the Gaming Board by Mr. Liria or the Gaming Board's lawyer or a proper officer who was to advice the board regard mediation. The second, aspect is in the area of the board's specific consideration of each of the advice and specific instructions regarding and concerning mediation. Such advice and instructions with the evidence of that should be at three different but related and follow on levels. These should be at (1), prior to the case being referred to mediation; (2) immediately post an order for mediation; and (3) immediately post a failed mediation or lack thereof resulting in an issuance of a "bad faith" certificate. I elaborated on these levels in the following terms in the Alex Awesa case:

"... The advice provided with the evidence of that for the first level should cover amongst others the following:

(1) a statement on the nature of the case outlining the kinds of issues presented, and an outline of the correct, relevant and applicable legal principles;

(2) then of the issues presented, whether any or all of them presented any question that was inappropriate for mediation;

(3) that should be followed by an outline of the kind of processes available namely, direct negotiations and failing any resolution, mediation and failing any resolution through that, the formal court process with advice on the advantages and disadvantages of employing any of those processes;

(4) in the context of item (3) there should be an outline of the party's worse alternative to a negotiated outcome (WATNO) or agreement (WATNA) and the party's best alternative to a negotiated outcome (BATNO) or agreement (WATNA).

(5) if the advice identifies the case as presenting issues inappropriate for mediation, it should also identify the issues, how such issues are presented, seek specific instructions to apply under r. 4 of the ADR Rules to proceed to litigation and thereby take the matter out of the pre-supposed requirement for mediation and outline the kinds of evidence required and who is to depose to them in support of any such application; and

(6) if the opposite of item (5) was the case, advice should have been provided to that effect and seek appropriate instructions to apply for appropriate orders, prepare for and proceed with mediation once ordered without delay.

... Immediately post an order for mediation, the advice and the evidence of that should cover the following:

(1) the fact that the Court has made an order for mediation with an emphasis on the need to comply with the order and why, including an avoidance of any possible contempt of court charges;

(2) an outline of the parties duties under r.10 (1) – (6) of the ADR Rules as elaborated and detailed in the case of Hargy Oil Palm and how those duties could be or should be discharged;

(3) following on from item (1) and (2) above, an outline of the possible consequences that would follow for any noncompliance of the orders and the requirements of the ADR Rules as elaborated and set out in the Koitaki case; and

(4) seeking specific instructions for an unrestricted authority to negotiate and settle on behalf of the company[25] but between its WATNO and BATNO, the board or the person with the power to bind the company to be on standby for any further or additional or alternative instructions that might be needed and provide any endorsement or approval that might be required.

.... Moving onto post a certificate of "bad faith", the advice and the evidence of that should cover the following:

(1) an outline of what could amount to a reasonable explanation for the conduct leading to the failure of mediation and the issuance of the certificate of "bad faith";

(2) highlight a need for instructions going into a provision of evidence disclosing a reasonable explanation for the conduct leading to the mediation failing and the eventual issuance of the "bad faith" certificate;

(3) where the failure of mediation is due to an identification of an issue that is inappropriate for mediation to resolve, highlight; (1) the need to demonstrate how that issue could not be identified prior to the order for mediation despite an exercise of due care and attention to do so; (2) how it was revealed after the order for and or during mediation; (3) the need to get the other party and the mediators agreement on such an issue surfacing during mediation; and (4) how it is an issue that is beyond the parties ability to resolve with the mediators help; and

(4) an outline of what steps the party against whom a "bad faith" certificate was issued took at the mediation to have any factual issue arising in the case resolved, which would clearly be an aspect the parties would be able to achieve, unless there were serious technical facts in issue which are incapable of resolution through any joint appropriate testing, inquiry and or assessment."

37. The evidence adduced by Gaming Board does not discuss what advice if any was given about mediation in any of the above three levels. The evidence from Mr. Liria does not disclose or state the issues that are presented in any of these cases. Similarly, and more importantly, he does not disclose how such issues arise and how they warrant only a judicial consideration and determination, by reason of which the issues are inappropriate for mediation.

37. Further, as was the case in Koitaki's case and that of Alex Awesa's, the Court made a decision to refer these matters to mediation for the parties to jointly considering the real issues between them, explore all possible options and arrive at an option that would satisfactorily and finally resolve these matters. The effect of that decision was that, this case did not present any issue that warranted only a judicial consideration and determination and hence present these cases as inappropriate for mediation. That meant, once the Court arrived at that decision, all the parties were obliged to fairly and openly discuss the matters of importance and concern to them, then jointly identify their issues, concerns or interests, consider all possible options for a resolution of each of the issues presented and arrive at an outcome that would finally resolve all issues between them. Instead of doing that, the Gaming Board took a position unilaterally and failed to take any real and meaningful step to give the Court ordered mediation a real go in good faith. Having earlier made a decision not to submit to mediation, it was merely waiting for an opportunity to opt out, rather than appropriately prepare, attend and participate at mediation in good faith.

38. As did the plaintiff in the Koitaki Plantation case and the defendant in the Alex Awesa case, the Gaming Board chose by its conduct to go against the order for mediation. In so doing, the Gaming Board failed specifically to:

(1) adhere to the call for and encouragement for the use of mediation by many legislation,[26] including the ADR Rules, the various Supreme and National Court decisions and many learned and authoritative publications;

(2) comply with the orders of the Court which referred the matter to mediation;

(3) personally attend through a duly authorized officer having the necessary power and authority to bind it at the appointed time, date and venue for mediation;

(4) prepare for mediation, which included:

(a) seeking and securing its board's full and unrestricted authority or instructions to negotiate in good faith and find a solution;

(b) the exchange of any documents requested or as set forth in a rule, order or request of the mediator;

(c) seeking and securing its legal advice and if need be, secure appropriate legal services for and during the mediation process;

(d) consulting and getting the inputs of other important and critical people where that was needed;

(e) ensuring the ready availability of persons who needed to be consulted or seek their approval during the course of mediation to promptly provide the required inputs or instructions;

(f) gathering and putting together all documentary and other evidence which it might have wished to table at the mediation;

(g) carrying out any investigations and researches as may be considered relevant and necessary with the results ready for use during the mediation process if need be; and

(h) allowing for quality undivided time and attention to the mediation process; and

(i) preparing to make full disclosure of information critical to arriving at a fair, just and a reasonable agreement;

(5) participate in meaningful discussions with the mediator and all other participants during the mediation;

(6) act in accordance with all contractual terms regarding mediation that the parties may have agreed to;

(7) follow rules that may have been set out by the mediator during the introductory phase of the process or in his earlier communication with the parties;

(9) remain in the mediation process until the mediator determined that the process was at an end or excused the parties;

(10) engage in direct communication and discussion with the each of the plaintiffs with the mediator's facilitation; and

(11) engage in accurate and honest representations to each of the plaintiffs or the mediator during and for the purpose of the mediation.

39. Having failed in this way, the Gaming Board also failed to provide any reasonable and convincing reason for its failures. They clearly amount to deliberate contempt of the orders referring this matter to mediation. This failure also includes a failure to clearly identify the issue or issues presented in this case and more importantly how all or any of them fall into the kinds of issues that are inappropriate for mediation as set out in the Able Construction Ltd case. Without the identification of any such issues, it is hard to tell how this case presents an issue that warrants only a judicial consideration and determination and therefore beyond the reach of mediation.

40. A careful consideration of all of the foregoing, places this case in much the same position as the case in the Koitaki Plantation and Alex Awesa cases but a bit worse than the Alex Awesa. Unlike the defendant in the Alex Awesa case which was able to point out at least an issue about interpreting a particular statute, there is not a single mention of any issue that warrants trial being pointed out or identified here by the Gaming Board. If parties attended mediation in good faith and were not able to resolve their dispute despite their best efforts, they have the duty under Rule 5(2) of the ADR Rules to "identify and limit the real and meritorious issues in the proceedings that warrant judicial consideration and determination" and reach agreement on how to conduct the litigation over those issues. By choosing not to go to mediation at the instigation of the Gaming Board, the parties failed to discharge that duty. This is serious because, when the Court decided to have the matter referred to mediation, it was of the view that, there was no issue warranting a court hearing and determination being presented. A review of that position could only come after the parties tried their very best to find a solution to their dispute and in the process discover an issue of the kind that is inappropriate for mediation as per the list provided in the Able Construction Ltd case.

42. In these circumstances, I consider an order for the parties to comply with the orders for mediation made on 4th of December 2013 with appropriate modifications is warranted. Then given that the National Gaming Control Board's bad faith that has led to no mediation and hence a breach of the orders for mediation an order for it to bear all of the costs on an indemnity basis would be in order. Additionally, I consider it also appropriate that the mediation now ordered should be conducted by a different accredited external mediator to avoid any apprehension of basis impartiality in the mediator.

43. Proceeding on the basis of the above I make the following formal orders:

(1) The parties shall take all relevant and necessary steps to fully comply with the orders for mediation dated 4th December 2013 subject to the modifications per a revised mediation order which incorporates the other terms of these orders.

(2) The National Gaming Control Board shall pay each of the plaintiffs' costs of the failed mediation on a full indemnity bases and fully and solely meet the external mediator's profession fees for the new mediation.
(3) Christine Jones who is an external accredited mediator is appointed to conduct the new mediation.

(4) The parties shall revisit the 4th December 2013, mediation orders and produce by 4th November a revised mediation order that reflects these orders and aimed at enabling the new mediation to commence and conclude by no later than 28th November 2014.

(5) If the National Gaming Control Board acts in bad faith again in any manner or form and such conduct leads to no resolution at the new mediation, there shall be judgment for each of the plaintiffs with damages to be assessed.

(6) The Plaintiffs' costs as ordered under term 2 of these orders shall be resolved by the agreement of parties within 7 days of the Plaintiffs providing the defendants with a bill of costs in taxable form and in any event prior to the new mediation.

(7) Failing any resolution on the Plaintiffs' costs, they shall be an issue for consideration and resolution at the new mediation.

(8) The parties shall return to this Court on 4th November 2014 at 9:30 for the Court to endorse a draft revised order for the new mediation.

(9) Upon return of the matter, the Court will endorse any draft order for the new mediation under term 4 of these orders or issue such orders varying the 4th December 2013 mediation orders.

(10) Time for the entry of these orders is abridged to take place upon the Court signing them.

_______________________________________________________

Ashurst Lawyers: Lawyers for the Plaintiffs
Liria Lawyers: Lawyers for the Defendant

^[1] (2014) N5656
^[2] (2014) N5708.
^[3] (2013) N5441 (delivered on 02/12/13).
^[4] (2014) N5636 (delivered on 18^th June 2014).
^[5] Listed and appearing at paragraph 32 of my decision in the Hargy Oil Palm case and repeated in Abel Construction and Koitaki cases.
^[6] From Koitaki case at page6, paragraph 11.
^[7] 2010) N4288 (delivered on 30/07/10).
^[8] (2001) SC 677.
^[9] See also Mark Ankama v. PNG Power Ltd (2002) N2362.
^[10] (2003) SC707.
^[11] This could include question for instance over the compliance or non compliance of provisions like s.54(6) of the Motor Vehicle (Third Party Insurance) Act or s.5 of the Claims by and Against the State Act in PNG
^[12] From Koitaki Plantation case at paragraph 25.
^[13] (2013) SC1245.
^[14] (2014) N5612.
^[15] From Koitaki Plantation case at paragraph 27 and cited at paragraph 16 in the Alex Awesa case.
^[16] From Koitaki Plantation case at paragraph 28 and cited at paragraph 17 in the Alex Awesa case.
^[17] (2008) SC924.
^[18]From Koitaki Plantation case at paragraph 33 and cited at paragraph 21 in the Alex Awesa case.
^[19] In terms similar to the pro forma orders being presently encouraged and used by the Court’s ADR Division.
^[20] (in so far as they are relevant for this case)
^[21]From Koitaki Plantation case at paragraph ... and cited at paragraph .... in the Alex Awesa case.

^[22]From Koitaki Plantation case at paragraph ... and cited at paragraph .... in the Alex Awesa case.
^[23] As set out in my decision in the Hargy Oil Palm, Able Constructions and Koitaki cases.
^[24] This included a list of legislation providing for the support and or use of mediation and other forms of ADR, namely ss. 333 - 336 of the PNG Constitution; ss. 42, 44 and 118 of the Organic Law on Provincial Governments and Local-level Governments; ss. 7A-7E of the National Court Act (Chp.38) as amended s.10 and 11 of the Adultery and Enticement Act 1988, ss. 22B -22D of the District Court (Chp.40) as amended; s.7 of the Fairness of Transactions Act 1993; s.11 of the Family Protection Act 2013, s.51 Industrial Relations Act (Chp.174) as amended; s.15 of the Inter-group Fighting Act (Chp.344) as amended; ss. 9 - 73 of the Land Disputes Settlement Act (Chp.45) as amended; s.5(5) of the Lukautim Pikinini (Child) Act 2009; ss.140(4), 143(4), 151(3)(d) of the National Information and Communications Technology Act 2009; s.121 of the Oil and Gas Act 1998, s.29 of the Public Services Conciliation and Arbitration Act (chp.69) as amended; ss.29 (c), 31 (2)(a)(iv), 32(2)(a)(i) of the Security (Protection) Industry Act 2004; s 95 (a) of the Superannuation (General Provisions) Act 2000; ss. 52 - 54 Village Courts Act 1989 and s. 4 of the Village Courts Regulations (Chp. 44) and finally, ss. 10 - 13 of the Y2K Fairness in Litigation Act 1999

^[25] If one of the parties is a company as in this case.
^[26] This included a list of legislation providing for the support and or use of mediation and other forms of ADR, namely ss. 333 - 336 of the PNG Constitution; ss. 42, 44 and 118 of the Organic Law on Provincial Governments and Local-level Governments; ss. 7A-7E of the National Court Act (Chp.38) as amended s.10 and 11 of the Adultery and Enticement Act 1988, ss. 22B -22D of the District Court (Chp.40) as amended; s.7 of the Fairness of Transactions Act 1993; s.11 of the Family Protection Act 2013, s.51 Industrial Relations Act (Chp.174) as amended; s.15 of the Inter-group Fighting Act (Chp.344) as amended; ss. 9 - 73 of the Land Disputes Settlement Act (Chp.45) as amended; s.5(5) of the Lukautim Pikinini (Child) Act 2009; ss.140(4), 143(4), 151(3)(d) of the National Information and Communications Technology Act 2009; s.121 of the Oil and Gas Act 1998, s.29 of the Public Services Conciliation and Arbitration Act (chp.69) as amended; ss.29 (c), 31 (2)(a)(iv), 32(2)(a)(i) of the Security (Protection) Industry Act 2004; s 95 (a) of the Superannuation (General Provisions) Act 2000; ss. 52 - 54 Village Courts Act 1989 and s. 4 of the Village Courts Regulations (Chp. 44) and finally, ss. 10 - 13 of the Y2K Fairness in Litigation Act 1999