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National Court of Papua New Guinea |
[PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS. NO. 1276 of 2014
BETWEEN
KOITAKI PLANTATIONS LTD
Plaintiff
AND
CHARLTON LIMITED trading as KOOKABURA MEATS
First Defendant
AND
STUART FANCY
Second Defendant
Waigani: Kandakasi, J.
2014: 6th March
11th July
MEDIATION – Bad faith - Parties duties and responsibilities - Breach of - Consequences for bad faith - Deliberate refusal to comply with consent orders for mediation - Effect of - Deliberate disobedience of court order - Contempt of court - Refusal to appreciate imperative to use mediation to resolve disputes - No good reason or explanation offered - Case not falling in inappropriate cases for mediation - No meritorious issue warranting only judicial consideration and determination presented in terms of case being inappropriate for mediation - Effect of orders for mediation - No meritorious issue for judicial consideration and determination - Sanctions for bad faith - Consideration of - Court can impose sanctions including orders dismissing proceedings signing judgment against defaulting party.
Papua New Guinea cases cited:
Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636
Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441
PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288
Superannuation Fund Board v. Sailas Imanakuan (2001) SC677
Mark Ankama v. Papua New Guinea Electricity Commission (2002) N2362
NCDC v. Yama Security Services Pty Ltd (2003) SC707
PNG Power Ltd v. Ian Augerea (2013) SC1245
Kalang Advertising Limited v. Visvanathan Kuppusamy (2008) SC924
Geoffrey R.E. Vaki v. Gari Baki & Ors (2014) N5612
Overseas cases cited:
Breffny Investments Pty Ltd v. Clean Space Australia Pty Ltd [ 2011] QCATA 63.
Real Bank Inc. v. Samsung Mabuhay Corporation GR N. 175862.
Calalang v. Court of Appeals G.R. No. 103185.
Bank of the Philippines Islands v. Court of Appeals 362 Phil (1999)
Harrelson v. Hensley 891 So2d 635.
Hernando County School Board v. Nazar 920 So2d 794.
Re A.T. Reynolds & Sons, Inc., 452 B.R. 3.D.N.Y. 2011)2011).
Kerestan v. Merck & Co. Long Termbility Plan, 2008 2008 U.S. Dist. LEXIS 50166 (S.D.N.Y. 2, 2008).
O'Donnell v. Pennsylvania Department of Corrections, 2011 U.S. U.S. Dist. LEXIS 11438, 818 (M.D. Pa. Feb.011).
Other ther sources cited:
"Saying an 'An Ounce of Prevention is Worth a Pound of Remedy', Secretary General" UN General Assembly GA/11242 (found at http:www.un.org/News/Press/docs/2012/ga11242.doc.htm
EU Directive 2008/52/EC on certain aspects on civil and administrative matters (reference in http:www.kennedys-law.com/article/mediationineurope.
"'Mandatory' Mediation: LC Paper No. CB(2)1574/01-02(01).
Developing A System of Court Annexed ADR In An Ever Increasing Litigious Society, Arguments For and Against: The PNG Experience, Malayan
Law Journal: Article Supplement, LexisNexis, 2007.
1 http://www.lexology.com/library/detail.aspx?g=c6ac59b9-043b-48be-bcc5-5ac07f1bddaa.
Counsel:
A. Warokra,for the Plaintiff/Cross-Defendant
M. Nale, for the Defendant/Cross-Claimant.
11th July, 2014
1. KANDAKASI J: This is one out of four matters in which a single question has arisen before me for the first time 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 is this. What is an appropriate sanction for a party deliberately refusing to participate in court ordered mediation and therefore acting in "bad faith"?
Background
3. The background to the question presented is this. By consent of the parties, the Court made an order for this matter to go to mediation to be facilitated by an accredited mediator. Given that the parties were financially able to meet an external mediators fees, the Court ordered mediation to be conducted by an accredited external mediator. This required amongst others, the parties meeting in equal proportions the mediators professional fees and all the other terms of the order.
4. Charlton Ltd trading as Kookabura Meats and Stuart Fancy, the first and second defendants respectively (the Defendants), paid their share of the agreed mediators fees and turned up for mediation on the date set for the commencement of mediation, which was 23rd September 2013. On the other hand however, Koitaki Plantations (Koitaki) deliberately decided against the Court ordered mediation. Based on that decision, it decided not to pay its share of the agreed mediators fees. Then on the appointed date, the mediator and the Defendants turned up for mediation but Koitaki did not. This led to the mediator issuing a certificate of "bad faith" in Form 1 of the ADR Rules.
The legal position
5. As I noted in my decision in Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd,[1] the PNG Judiciary is not alone in the promotion of the use of mediation. Instead, it is a part of a worldwide movement. The movement started in the United States of America in the 1970s with followings in the United Kingdom and Australia in the 1980s. Eventually, as late as 23rd May 2012, the United Nations, through its General Secretary, Ban Ki-moon, issued a circular asking member states to embrace and use mediation as a preferred form of conflict resolution.[2] Four years before that, on 13th June 2008, the European Union issued a directive in similar terms.[3] Following the EU directive, Italy enacted legislation for compulsory mediation before litigation. Canada allows filing before mediation but requires mediation before trial.[4] Recently, in 2011, Australia past its Civil Procedure Act 2011, requiring litigants to attempt to resolve their disputes through mediation first before litigation.
6. The objective behind this movement, as I noted in Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc[5] was to:
7. A very serious and ever increasing problem of backlogs in the formal courts' lists forced this movement. Many people involved in disputes either deliberately deciding not to or simply neglecting to reason with their opponents and have their disputes resolved, contributed significantly to that problem. This, in the world's most recent history, saw many people turning to the formal court system for a resolution of their disputes. Sadly however,[6] the courts resources are very limited and they can do only so much, in terms of the need to dispose of the cases efficiently and effectively in a timely and less costly manner. Consequently, a vast majority of the cases joined the ever increasing list of pending cases thereby causing serious backlogs in the formal courts' list.
8. Even after the introduction of ADR and mediation. The serious problem of delays and backlogs have not gone away. A number of factors contribute to this problem. But one of the main factors is again, the parties' failure to enter into fair frank and open discussions of the matters in dispute between them and jointly explore options to resolving their dispute and resolve them. This is so despite provisions being made in a number of legislation and elsewhere both internationally and locally which encourage the parties to have their disputes resolved out of court.
9. In either deliberately or inadvertently failing to use mediation, litigants seem not to appreciate the benefits of using mediation, which can be summarized in terms of mediation:[7]
(a) is the only conflict resolution process that is often future-focused whilst accepting but moving from what has happened in the past;
(b) is usually very cheap because it takes a very short time to resolve;
(c) helps restore any broken relationships and build new ones and/ or improve any fractured existing ones by involving everyone that is affected by the problem through a process of informed consensus reaching that accommodates the wishes and aspirations of all of the parties as best as is possible;
(d) works when direct negotiations between the parties do not seem to work and they make an informed choice to use it;
(e) empowers the parties own their dispute and decided on its resolution as opposed to their lawyers with the assistance of an independent third party trained and experienced mediator usually chosen by them;
(f) helps the parties to better understand and appreciate each other's positions and enable them to arrive at an agreement they can live with as opposed to one imposed on them;
(g) has rules like, it being a confidential process, parties required to make good faith efforts to finding a solution and the process being voluntary with the parties retaining the right to walk out at anytime which in turn makes it more conducive to have fair and open communication between the parties;
(h) requires only people who have the power and authority to make binding decisions to attend or participate in the process;
(i) able to address any power and other imbalances or otherwise make the negotiation environment as comfortable and conducive;
(j) respectfully gets to the real concerns and issues, widely, explore all of the issues involved and the ways in which they could be resolved and then arrive at an agreed resolution;
(k) allows for checking of how the agreed outcome is going to work who is required to do what, when and how and provide for them and thereby clarity and certainly on what the parties have agreed
(l) enable better communication and understand between the parties and enable them to remain focused on the most important things in their lives or businesses;
(m) enables commercial contracts and other projects negotiated and arrived at with a mediation model of facilitation to last longer and achieve full implementation;
(n) enable businesses to spend less time, money, energy and other resources on conflict and spend much of that in furthering their business and other very useful and beneficial pursuits.
(o) enable businesses to promote and maintain a good public image and relations, keep their trade secrets and other confidential information confidential; and
(p) serves as a nation building tool through more prompt resolution of disputes, increase investor confidence, frequent and more use of it enable people to be focused on work, business and other important pursuits.
10. It is now almost universally accepted that all disputes are capable of resolution by mediation. As noted in Abel Constructions case, there a only few exceptions to that position and they involve cases in which:
• there is a real possibility of setting a legal precedent; or
• an out of court settlement is not in the public interest; or
• am immediate protective order such as an injunction is required; or
• there is a clear case for summary judgment;[8] or
• a genuine dispute requiring the Court to give a declaratory relief is presented; or
• family disputes especially involving child abuse, domestic violence is presented; or
• the parties are in a severely disturbed emotional or psychological state that they cannot negotiate for themselves or others[9]; or
• a genuine dispute requiring interpretation of a Constitutional or other statutory provision is presented; or
• 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 is presented;
• a preliminary issue such as questions on jurisdiction, condition precedents,[10] statutory time bars and a failure to disclose a valid cause of action is presented; or
• a public sanction as in a criminal case is needed for public health, safety and good order.
11. In the light of the movement toward more and more use of mediation and as noted in the Hargy Oil Palm case, the formal courts worldwide have fully come to fully embraced mediation and have taken firm positions against parties who fail to use it in good faith. Hence, the courts have made orders against such parties. In most cases it has been orders for costs on an indemnity basis. The decision of this Court in PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288 highlights this position. There defendant, Canopus made numerous representations PNG Ports for out of court settlement. All that however fell on deaf ears until the matter came to Court and the Court directed the parties to settle out of Court and they did. They then left only the question of who should pay the costs and at what rated. The Court decided that PNG Ports should pay the costs on an indemnity basis for its failure to give any serious consideration to the various attempts at settlement by Canopus.
12. In the light of the movement toward more use of mediation both this Court and the Supreme Courts have been calling for and encouraging the use of mediation.[11] Parliament heard that call and consequentially in 2008, amended the National Court Act. This amendment allowed for Court annexed ADR but with more emphasis on mediation. At the same time, Parliament empowered the Judges by s.7E of the Act to promulgate appropriate rules to enable mediation to function efficiently and effectively alongside the National Court. Pursuant to that mandate, the Judges on 30th March 2010, promulgated the ADR Rules.
13. In full appreciation and acceptance of these developments, the provisions of r. 4 of the ADR Rules were included. These rules were arrived at as a compromise between the Law Society and the ADR Committee following a seriously debate on the question of whether mediation should be a pre-condition to filing court proceedings.[12] The compromise on that as may be obvious from the provisions of r. 4 in particular is this. Rather than requiring mediation before filing of proceedings, litigants are permitted to issue proceedings. However, once any of the three triggers under r.4 occurs, the Court is required to refer the matter to mediation, without even waiting for an application for mediation orders from one or all of the parties in any proceeding. In that regard, mediation is pre-supposed once any of the three triggers occurs. If any party wants to get out of mediation, that person needs to formally file and move an appropriate application to the Court with proper supporting affidavit evidence demonstrating any of the following two positions:
(1) the parties have been to mediation conducted by an accredited mediator and were not able to arrive at a resolution despite their best "good faith" efforts to find a solution because of a serious and meritorious legal impediment; or
(2) the case presents a meritorious issue never considered and determined by a court before, which warrants judicial consideration and determination and that the case falls into one of the few cases in which mediation is usually considered and or accepted inappropriate because it falls into one or more of the kinds of cases listed under paragraph 10 above.
14. Where the National Court orders a matter to mediation, the parties are required to comply with the terms of the order. This includes the obligations imposed on them by r. 10(1) - (6) of the same rules. These obligations were discussed in detail in the Hargy Oil Palm case. A summary of them were listed in terms of the kind of conduct parties should engage in to avoid a finding of "bad faith" in the following way:
" (1) complying with legislative and other rules, standing orders or practice directions' or provisions that govern mediation;
(2) complying with orders referring a matter to mediation;
(3) personal attendance (excluding attendance by telephone) at the mediation by all parties who are fully authorized to settle the dispute,
(4) preparation 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) participation in meaningful discussions with the mediator and all other participants during the mediation;
(6) acting in accordance with all contractual terms regarding mediation that the parties may have agreed to;
(7) following the 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 discussion 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) in pending lawsuits, refraining from filing any new motions until the conclusion of the mediation."
Present Case
15. Here, there is no contest that Koitaki acted in "bad faith" when it deliberately decided against participating in the Court ordered mediation. That came about after having consented to this matter being referred to mediation. The decision not to participate in the court ordered mediation came in three forms. The first was a deliberate decision by Koitaki not to proceed with the mediation. Secondly, it refused to pay its share of the external mediators fees. Thirdly, it refused to turn up on the scheduled date, time and venue for the mediation.
16. As noted at the beginning of this judgment, this is one of four case that have come back to the Court after failed mediation on account of a party's "bad faith." Rule 10 (7) of the ADR Rules provides has to what is to occur if a party acts in "bad faith." This provision reads:
"(7) Where the Court is satisfied that a party has not participated in good faith in the mediation or has impeded the mediation, it may:
(a) order that any claim for relief by the defaulting party is stayed until further order;
(b) take the defaulting party's conduct into account in awarding costs in the proceedings; or
(c) make such further or other order as it may think appropriate in the proceedings."
17. I am indebted to both leaned counsel's submissions. These submissions, especially that of Mrs. Warokra, learned counsel for Koitaki led me to a number of overseas decisions. Her submissions demonstrates that, according to a number of overseas cases, there are two main kinds of sanctions imposed against parties acting in "bad faith" at mediations. One line of cases are from our closest neighbor, Queensland, Australia, out of the Queensland Civil and Administrative Tribunal (QCAT). The starting point there is s. 48(1)(g) of the Queensland Civil and Administrative Tribunal Act 2009. This provision gives the Tribunal the power to proceed to make final determinations in proceedings before it upon a parties non attendance at mediation. On appeal from a Tribunal member Senior Member, Richard Oliver considered this provisions in the case of Breffny Investments Pty Ltd v. Clean Space Australia Pty Ltd.[13] There, Breffny after having failed to secure an adjournment of a scheduled mediation failed to attend the mediation. Consequently, the tribunal proceed to deal with Clean Space's application and ordered payment of certain sums of money owed to it by Breffny. In dismissing Breffny's appeal, the tribunal found that Breffny did not offer any explanation for its non attendance at the schedule mediation which was detrimental to its appeal.
18. A similar legislative provision to that of the QCAT exists in the Philippines according to learned counsel for Koitaki's submissions. The relevant provision there is s.5, r.18, of the Rules of Court which expressly provides for the Court to dismiss proceedings, if for instance a plaintiff fails to attend mediation. Counsel referred to a decision in the matter of Real Bank Inc. v. Samsung Mabuhay Corporation,[14] where the trial Court dismissed the proceedings on account of the plaintiff's failure to attend mediation. On appeal, the Court of Appeal set aside the trial judge's decision. Then on application for review of the decision on appeal, the First Division Court was of the view that, substantive rights of the plaintiff should not be dismissed by any unwarranted strictness in the application of a rule of procedure
19. The second line of cases seem to follow from above final decision that orders other dismissal or final judgment are appropriate. Learned counsel for Koitaki, also referred to two further decisions from the Philippines. These are the decisions in Calalang v. Court of Appeals;[15] Bank of the Philippines Islands v. Court of Appeals[16] According to counsel's submissions these decision seem to stand for the proposition that unless a party's conduct is so negligent, irresponsible, continuous or dilatory, the Court should consider lesser sanctions instead of dismissal of proceedings for a plaintiff's failure to turn up at mediation.
20. Learned counsel for Koitaki, also referred the Court to two further decisions. According to counsel's submissions, these decision are from the United States. They are Harrelson v. Hensley[17] and Hernando County School Board v. Nazar.[18] In these two cases, the Court imposed costs orders against parties who failed to attend Court ordered mediations.
21. I have neither been provided with copies of any of the decisions referred to and relied on by counsel, nor have I been provided with information that would enable me to easily access the decisions. Hence, I am left with no assistance in appreciating the reasons for the decisions in the cases counsel referred to. My own attempts to access this decision have been futile. It did however take me to some secondary source material such as Mediation Case Update - Florida[19] which has been of some assistance in respect of the American cases.
22. My own research also landed me with a few more decisions from the United States like the one in Re A.T. Reynolds & Sons, Inc.[20] There the District Court decision consistent with prior decisions by other New York District Courts found violations of the duty to mediate in good faith, and imposed corresponding sanctions on a party. Most of the prior decisions held that an order for costs against the defaulting party would be sufficient penalty. An example of that is the decision in Kerestan v. Merck & Co. Long Termbility Plann,[21] There the Court ordered the plaintiff to pay $1,600 for failing to apin person at a settlement conference. The court took the view that, the plaintiff's failureilure to appear at the mediation meant the plaintiff's counsel had no authority to engage in settlement discussions. Hence, the Court found sanctions were warranted.
23. Another decision is the decision in Outar v. Greno Indus.[22] There, the plaintiff physically attended the mediation, but failed to participate in the proceedings. That was so even after being requested to do so by his counsel. When faced with an allegation of "bad faith" and possible sanctions, Outar pleaded ignorance of the legal system. The court found that Qutar's "clinging ignorance of the process, refusal to listen to more knowledgeable professionals, and his level of distrust are [sic] of his own doing" and amounted to abuse of the process of the Court which warranted sanctions. New York courts also take a dim view of attorneys who demonstrate a lack of respect for a scheduled mediation and fail to notify the mediator and other parties of changed circumstances.[23]
24. Without being able to go to the source material, I am not able to determine whether the reasoning in this line of cases are appropriate and applicable in PNG in accordance with the provisions of Schedule 2.3 (1) (d) of the PNG Constitution as to the reception of foreign court's decisions. This is critical, because much depends on the legislative provision be it Acts of Parliament or rules of court. Notwithstanding that, however, I note that, a quick survey of the above line of cases and others, it is clear that, the courts will not let a party get away with "bad faith" at a court-ordered mediation. The courts have demonstrate a readiness even sua sponte,[24] to sanction a party that does not abide by certain fundamental courtesies that went beyond filing the required documents and showing up with the proper representatives.[25] Courts have the power to imposing coercive or punitive sanctions in these circumstances.[26]
25. What ever the arguments are, either for or against sanctions for "bad faith" at mediation, three factors are pertinent and must never be forgotten. These are first, 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 mediation order 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.
26. As the unanimous decision of the Supreme Court in PNG Power Ltd v Ian Augerea,[27] will clearly show, 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. In recent times, persons who have been found guilty of contempt of court have been given custodial sentences of up to 7 months. The recent decision by the Deputy Chief Justice, Sir Gibbs Salika in the matter of contempt by Toami Kulunga in Geoffrey R.E. Vaki v. Gari Baki & Ors[28] is a case on point.
27. Again I repeat, in the case of an order for mediation, 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 such order 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.
28. The second factor is one earlier outlined in this decision which is that, the 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 effect of r. 4 of the ADR Rules as already noted presupposes mediation unless the court otherwise determines on the application of a party. The imperative therefore is for disputing parties to explore prospects of out of court settlement and where possible settle through their direct negotiations and failing any settlement there, through mediation in "good faith".
29. Finally, the third factor is that, the Courts in our jurisdiction have not been slow in appropriate cases to dismiss or order judgment against defaulting parties for failure to comply with orders or directions of the Courts which were aimed at expediting a matter to trial or otherwise final resolution without further unnecessary delay and costs. The decision of the Supreme Court in Kalang Advertising Limited v. Visvanathan Kuppusamy[29] is a case on point. In that case, Visvanathan Kuppusamy commenced proceedings against Kalang Advertising Limited in the National Court, claiming damages for breach of contract. At the time and date set for directions hearing, only Visvanathan Kuppusamy's lawyer appeared. The Court therefore adjourned the matter to a new date with a conditional order. The conditional order was in these terms:
"Unless the defendant turns up in court and provides reasonable explanation for not turning up in court and assisting at directions hearing for today ... the defence shall be struck out and judgment entered for the plaintiff with damages to be assessed. "
30. On the next appointed date, Kalang Advertising Limited's lawyer turned up and gave an unsatisfactory explanation, which was without the support of any affidavit setting out facts relied on. Consequently, the Court found the condition in the conditional orders was met. Accordingly, it ordered a strike out of Kalang Advertising Limited's defence and entered judgment against it with damages to be assessed. Kalang Advertising Limited being aggrieved by that decision appealed to the Supreme Court against both the conditional order and the consequential judgment.
31. The Supreme Court dismissed the appeal and held that both the conditional order and the consequential orders constituted a proper exercise of judicial discretion. It also held that, r.15 of the Listings Rules 2005 permits the National Court to summarily determine a matter on its own initiative if a party or its lawyers fail to appear at a directions hearing. The Court also held that the lawyer's explanation for not appearing in court was not supported by any affidavit evidence. That correctly formed the foundation for the National Court's finding that there was no satisfactory explanation. Finally, the Supreme Court also found that, Kalang Advertising Limited failed to meet the conditions stipulated to avoid a strike out of its defence and entry of judgment.
32. The above and other cases that have either dismissed a claim or entered judgments depending on who was at fault, do either expressly or in effect acknowledge that the rules of the Court are only a means to an end and not an end in themselves. At the same time, they acknowledge the fact that Court orders are serious and that they must be complied with for the expeditious disposition of cases. Allowing disobedience of Court orders and directions come with the risk of disrespect for the Courts and hence the whole legal system, which could form a perfect foundation for chaos and disorder in society.
33. Returning specifically to the case at hand, I note that the stipulation in r.10(7) of the ADR Rules is very clear. 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.
34. 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 generally. 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 ordering coast, fix the actual amount of costs payable or allow for taxation.
35. In the case before me, the parties through their lawyers consented to this matter being referred to mediation. Draft orders formalizing their agreement were endorsed by their respective lawyers on 4th September 2013. The draft consent orders were approved and endorsed by the Court with some changes. The orders in essence did the following:
(1) This matter was referred to mediation to be facilitated by an accredited mediator, namely Callum Campbell.
(2) At mediation parties with the assistance of the mediator were to jointly explore in good faith options for a resolution of their dispute and settle it if they can or failing that identify what if any real and meritorious issue exists warranting Court trial .
(3) The parties pay in equal proportion the mediators professional fees by or before 13th September.
(4) The mediation was to commence on 23rd and conclude on 27th September 2013
(5) The matter was then to return to the Court on 15th October 2013.
36. The orders for mediation were a restatement of what is already provided for in r. 10 (1) - (5) of the ADR Rules. The purpose of the orders and the ADR Rules apart requiring parties to attend mediation, was and are usually to ensure that a Court ordered mediation proceeds smoothly on the dates and times fixed at the venues specified. Recently, in Hargy Oil Palm case, this Court elaborated on these duties and responsibilities. There the Court speaking in terms of the objective of the provisions of r.10(1) - (5) in so far has is relevant for our purpose here said:
"...once a matter is ordered and or parties agree to submit to mediation, they are obliged to do or take certain steps. First and foremost, the parties are required to take all of the steps that need to be taken to ensure that the mediation process proceeds smoothly without any unnecessary delay. Those steps, unless a Court making an order for mediation otherwise orders, obviously includes:
...
(g) ...attend[ing] 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;
....
(i) Ensuring in the case a of 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."
37. Here, Koitaki, deliberately refused to; (1) participate in mediation; (2) pay its share of the mediator's professional fees; (3) turn up for mediation on the appointed day, date, time and venue for the mediation. These deliberate refusals or failures of Koitaki seriously impeded the Court ordered mediation from taking place. This meant that the mediation could not take off the ground from the first important stage of intake per party, through to the critical part of identifying the real issues and the possible resolution of the identified issues to final closure possibly with a mediated agreement or as the case might have been. Koitaki has not in any manner or form clearly identified what if any real and serious meritorious issues are presented and how they warrant only a judicial consideration and determination by demonstrating how such issues fall under one or more of the cases that are inappropriate for mediation by reference to the list at paragraph 10. Further, if indeed this case does present such an issue, Koitaki has not explained how was that not apparent and how it was not able to raise it prior to consenting to mediation and prior to the Court ordering mediation.
38. By consenting to this matter being referred to mediation, Koitaki effectively represented that, there is no issue presented in this cases that warrants only a judicial consideration and determination. That meant that, Koitaki and the defendants had the obligation to use their best efforts and to resolve their dispute through the mediation process. If they faithful discharged their respective duties and responsibilities in the way outlined above, settlement would have been possible. Of course, if the parties in the process of mediation come to a serious legal impediment to settlement which was not apparent as at the time of the order for mediation, and is something they parties cannot through the best of their efforts overcome, that could properly take them out of mediation. In this case, Koitaki, has failed to demonstrate to this Court's satisfaction that there exists such an impediment or issue for this Court to hear and determine.
39. I find that, Koitaki's conducts are obviously contemptuous of the orders for mediation. Not only that, Koitaki's conduct runs against the various legislative, judicial and learned publications, encouraging and supporting the use of mediation to resolve human conflicts from the more simple disputes to the most complicated. Further, I find that, Koitaki's conduct has forced and wasted the defendants and this Court and the mediator's time, energy and effort in arriving at the decision to have the matter referred to mediation and setting aside time and generally preparing for mediation. Save only to point out that, it made a decision not to comply with the orders for mediation and hence not to proceed with the Court ordered mediation, Koitaki has failed to provide any good reason for taking that position. Further, Koitaki did not clearly demonstration the existence of a meritorious issue, which is beyond the reach of mediation in terms of clearly showing that such an issue is one of the kinds of cases in which mediation is inappropriate and that a judicial consideration and determination is necessary and warranted.
40. The Courts time and resources are limited and very precious. That limited time and resources should be used to deal with cases that are genuinely inappropriate for mediations l, going by the listed in paragraph 10. Courts do not exists to reward people who are determined to be unreasonable and seek to avoid having their disputes resolved, either by direct negotiations or through facilitated negotiations as in mediations. Such people become an unnecessary burden on the Courts and the tax payers who fund the Courts and become serious impediments to all stakeholders calls for expedited resolutions of matters entering the formal court system at less costs. If the Courts are serious about delivering on that call, they have to seriously deal with litigants who have or display the kind of attitude displayed by Koitaki here. It follows therefore that, if such litigants are given softer sanctions such as an order for costs, that would encourage more people to repeat Koitaki's kind of behavior. This would spell dangers of putting an end to the fragile but firm and good steps thus far taken to make court annexed ADR or mediation an integral part of the National Court process to assist in the Courts desire to deliver on the peoples wishes. Imposing softer penalties or none against litigants with Koitaki's attitude, would cause more and more litigants to easily and ready disobey Court orders. That would be a very serious affront to the rule of law and therefore peace and good order in the country, which the nation can ill afford especially at a time when the rule of law is being seriously tested on a daily basis in recent times in our country
41. Taking into account all of the above, I consider a most appropriate sanction should be an order for a dismissal of Koitaki's claim and would so order. I have not arrived at that decision lightly but have done so after carefully considering all of the matters referred to above and the evidence before me. This is necessary to avoid further unnecessary delay and costs to the parties by allowing this matter to go to trial. Such a sanction is called for particularly when Koitaki has not clearly demonstrated what if any meritorious issue exist by reference to the list of the kind of cases listed in paragraph 10 of this judgment, which warrants only a judicial consideration and determine. From the pleadings and submissions before me as well as the evidence, I note this is a simple contract for sale of live animals. The allegations go into the actual supply or not of the animals and payment for them. This is something that could be easily resolved by the parties sitting down at mediation or a settlement conference and going through their records of invoices, delivery details and details of payment and resolution arrived at. Koitaki deliberately refused to do that and instead wants the Court to use its limited resources to conduct a trial and come to a decision when there is no meritorious issue warranting judicial consideration and determination. In these circumstances, allowing the matter to go to trial by imposing softer sanctions like an order for costs, will in fact be rewarding Koitaki for its unreasonableness, deliberated disobedience and hence breaches of this Courts orders, and not being able to show a meritorious issue which warrants only a judicial consideration and determine in the way discussed and set out above.
42. Consequential on a dismissal of Koitaki's claim, the defendants cross claim will remain to be dealt with. In respect of that, I consider an order striking out Koitaki's defence to the cross claim and entry of judgment in the liquidated amount of K330,957.33 is called for. This proceeds on the same factors and consideration above. Additionally, this is on the basis of Koitaki not being able to demonstrate to the satisfaction of this Court by appropriate affidavit evidence that it has a meritorious defence to the cross-claim, which is likely to succeed and one which could not be resolved by mediation. Costs should of course, follow the event against Koitaki. That would be inclusive of the defendants costs of mediation in terms of the mediators fees, the defendants themselves, and their lawyers attendances for the purposes of the mediation that failed on Koitaki's account.
43. Based on the foregoing, I make the following orders:
(1) The Plaintiff's claim is dismissed.
(2) The defence to the cross-claim filed 10th September 2014 is struck out.
(3) Judgment in the liquidated sum of K330,957.33 entered for the Cross Claimant/Defendants.
(4) The plaintiff shall pay the Defendant/Cross-Claimant's costs inclusive of the costs of mediation.
____________________________________________________________
Gema Lawyers: Lawyers for the Plaintiff/Cross-Defendant
Robert Bradshaw Lawyers: Lawyer for the Defendants/Cross-Claimants
[1] (2014) N5636, delivered on 18th June 2014.
[2] "Saying an 'An Ounce of Prevention is Worth a Pound of Remedy', Secretary General" UN General Assembly GA/11242 (found at http:www.un.org/News/Press/docs/2012/ga11242.doc.htm
[3] EU Directive 2008/52/EC on certain aspects on civil and administrative matters (reference in http:www.kennedys-law.com/article/mediationineurope.
[4] "'Mandatory' Mediation: LC Paper No. CB(2)1574/01-02(01).
[5] (2013) N5441.
[6] As I noted in my article Developing A System of Court Annexed ADR In An Ever Increasing Litigious Society, Arguments For and Against: The PNG Experience, Malayan Law Journal: Article Supplement, LexisNexis, 2007.
[7] Listed and appearing at paragraph 32 of my decision in the Hargy Oil Palm cases
[8]These and the above from UK Civil Court Mediation Manuel at p.7 and can be located at: www.judiciary.gov.uk/.../civil_court_mediation_service_manual_v3_ma...; For similar statements see also www.fedcourt.gov.au/case-management-services/ADR/mediation for the Australia Federal Court's position and for an Indian Courts and others' position go to http://highcourtofuttarakhand.gov.in/pages/display/212-concept-of-mediation;
http://keralamediation.gov.in/Mediation%20Proceedings.html; http://www.mediationforresults.org/content/view/13/38/#notsuitable.
[9] These and the one above from the Hong Kong Judiciary's website covering amongst others ADR, found at http://mediation.judiciary.gov.hk/en/mediation_faq.html#05
[10] 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
[11] See Superannuation Fund Board v. Sailas Imanakuan (2001) SC677; Mark Ankama v. Papua New Guinea Electricity Commission (2002) N2362; NCDC v. Yama Security Services Pty Ltd (2003) SC707.
[12] From my knowledge and involvement as chair of the ADR Committee and as presented to the Judges in March 2010 at a meeting at the
Hideaway Hotel at which the draft ADR Rules were present and accepted for promulgation by the Judges.
[13] [2011] QCATA 63; located at http://archive.sclqld.org.au/qjudgment/2011/QCATA11-063.pdf.
[14] GR N. 175862.
[15] G.R. No. 103185.
[16] 362 Phil (1999).
[17] 891 So2d 635.
[18] 920 So2d 794.
[19]which is available at, http://199.242.69.27/gen_public/adr/bin/A9%20Appellate%20Mediation.pdf
[20] 452 B.R. 374.N.Y. 2011)2011), referred to in the Hargy Oil Palm case.
[21] 2008 U.S. Dist. LE0166 (S.D.N.Y. July 2, 2008); also cited in Hargy Oil Palm case.
[22] 2005 U.S. Dist. LEXIS 34657 (N.D.N.Y Sept. 27, 2005) referred also to decision in Hargy Oil Palm case
[23] http://www.lexology.com/library/detail.aspx?g=c6ac59b9-043b-48be-bcc5-5ac07f1bddaa
[24] Latin: "of his, her, its or their own accord") or suo motu describes an act of authority taken without formal prompting from another
party.
[25] O'Donnell v. Pennsylvania Department of Corrections, 2011 U.S. Dist. LEXIS 11438, *18 (M.D. Pa. Feb. 4, 2011) (quoting Taberer v. Armstrong World Industries, [1992] USCA3 63; 954 F.2d 888, 892 n.3 (3d Cir. 1992):
[26] http://www.eckertseamans.com/uploads/publications/ForerLegalIntelligencer031213.pdf
[27] (2013) SC1245.
[28] (2014) N5612.
[29] (2008) SC924.
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