N6888

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 492 of 2013

BETWEEN
SOUTH PACIFIC –PNG- SEAFOODS CO LIMITED 
Plaintiff

AND
THE NATIONAL EXECUTIVE COUNCIL
First Defendants

AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: 	Kandakasi, J
     2016:	6th April & 2nd June    
     2017:	25th September    

LAWYERS – Duties and responsibility of lawyers – Duty to resolve matters promptly and avoid unnecessary delays and increased costs – ADR Rules providing a process to assist lawyers to properly and meaningful discharge their duties and responsibilities – Lawyers role is to give effect to orders for mediation, before during and after conduct of mediation – Breach of – No evidence of lawyer discharging his duties - Client to determine if lawyer should reimburse fees and costs forced upon them by lawyers failures – Lawyer to be dealt with swiftly for contempt in the face of the Court if contemptuous conduct continues - Professional Conduct Rules r. 8 (6) and (7) and r. 15 (2), (4) (a) and (b) and (10), r. 20 (1), r. 3 (a), (b), & (c), and r.15 (4)   - ADR Rules, rr. 5 (2) 9(3), and 10 (7) 

MEDIATION – Second mediation order – Repeated bad faith at mediation by defendants – Failure to attend mediation conference despite agreeing to date – Repeated failures to comply with Court orders amounting to clear case of contempt – No satisfactory and or reasonable explanation offered – No issue warranting resolution by trial presented by the defendants  – Most suitable case for mediation but fair opportunity not given – Appropriate consequence – No disclosure of defence on the merits by appropriate affidavit evidence – Effect of – No sustainable defence on the substantive merits of the case – Appropriate consequence - Strike out defence and entry of judgment for the plaintiff with damages to be assessed – Costs on Solicitor client basis also ordered.

MEDIATORS & OTHER PERSONS – Trained, accredited mediators and others appointed by the Court for a particular purpose or task – Effect of – They are an extension of the Court – Lawyers duty of courtesy under r. 15 (4) Professional Conduct Rules 1989 to the Court applies with appropriate modification to such persons.

Papua New Guinea Cases cited:

Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636.
Koitaki Plantations Ltd v. Charlton Ltd trading as Kookabura Meats & Stuart Fancy (2014) N5656.
Alex Awesa & Anor v. PNG Power Limited (2014) N5708.
Wantok Gaming Systems Ltd v. National Gaming Control Board (2014) N5809.
Meckpi v. Fallon and Dekenai Constructions Ltd (2017) N6708.
Kanga Kawira v. Kepaya Bone & Ors (2017) N6802.
Alex Awesa v. PNG Power Ltd (2016) N6359.
Wantok Gaming Systems Ltd v. National Gaming Control Board (No.2) (2017) N6685.

Counsel:

C. Joseph, for the Plaintiffs
K. Akeya, for the Defendants

25th September, 2017

1.	KANDAKASI J:  A “bad faith” certificate has been issued for the second time against the Defendants for their failure to again participate in a Court ordered mediation.  That was despite numerous adjournments and other orders issued to assist and enable them to properly prepare and attend the mediation.  This brought into play Rule 10 (7) of the ADR Rules. Before receiving submissions under that provision, the Court on 6th March 2017, ordered the Defendants’ counsel to file and serve affidavits disclosing what he has done to get his clients prepared for and attend the mediation appointments and participate in good faith.  He failed to do so and thus placed himself in a case of possible contempt of Court in the face of the Court. 

2.	Consequential on the Defendants “bad faith” and failures, the Plaintiff argues for a strike out of the Defendants’ defence and entry of judgment against them.  Counsel for the Defendants Mr. Kaiyoma Akeya in his submissions chose to leave what consequence should follow against him and his client to the discretion of the Court without any assistance as to the Court as to how that discretion should be exercised. 

Main Issue

3.	The main issues presented for resolution are therefore:

(1)	Whether a strike out of the Defendants’ defence and entry of judgment for the Plaintiff is warranted on account of the Defendants’ bad faith in the particular circumstances of this case?

(2)	Are the Defendants and their lawyer guilty of contempt in the face of the Court?

(3)	If the answer to question (b) is yes, how then should the Defendant and their lawyer be dealt with?

Issues 1 

Striking out defence and entry of judgment? 

4. 	I will deal firstly with the first issue.  This requires a consideration of the:

(a)	basis upon which the Court ordered mediation;
(b)	steps each of the parties took to comply with mediation orders;
(c)	basis upon which the mediator issued the bad faith certificate against the Defendants for the second time; and
(d)	the parties’ arguments on the consequence that should follow the issuance of the second bad faith certificate 

(i)	Relevant factual background

5.	The relevant factual background is straight forward as they appear from the pleadings and the various affidavit material that has been filed.  The plaintiff is a company that is owned by a number of provincial and local level government’s business arms and Provincial Governments.  They are Manus Fishing Corporation Limited (Manus Provincial Government), Palmalmal Investment Coy. Limited (Pomio District Administration), Central Provincial Government and Morobe Provincial Governments. Through a National Executive Council decision, NEC Decision 155/2009 dated 30th September 2009, the State decided to make the Plaintiff its strategic private sector partner to develop and implement its Coastal Fish Port Development Project (the Project). 

6.	In order to implement the Project, the shareholders of the Plaintiff, namely Manus Fishing Corporation Limited, Palmalmal Resources Coy. Limited and Central Provincial Government paid K0.5 million each to meet its counterpart funding requirements.  The Plaintiff also obtained by way of loan a further K1.5 million from one of its shareholder, the Manus Provincial Government and an additional K1.2 million from Westpac Bank.  These funds were then deposited with the Westpac Bank as a bond payment to allow for a loan of K150 million to fund the Plaintiff’s counterpart funding requirements from the Bank Negara of Indonesia.  The plaintiff at its expenses carried out preliminary works such as Port Survey works in Pomio, Manus, Central and Morobe Provinces, seek further funding from other international sources and setup a head office in Port Moresby to enable a successful implementation of the Project. 

7. 	Unfortunately, the State through the Fisheries Ministry failed to honour its part of the commitment on the Project Agreement. It also failed to take all steps necessary to ensure a successful implementation of the Project.  That was despite, numerous follow ups by the Plaintiff and its servants or agents.  This failure on the State’s part caused the Plaintiffs international partners and or financiers to back away.  According to the Plaintiff, this resulted in the Project not proceeding and it suffered damages in excess of K4.2 million and other damages which the State has failed to make good. That gave rise to this proceeding which claims a breach of contract and negligence.  In their defence, the Defendants deny being negligent and there existing any legally binding and enforceable contract.   

8.	Through a number of directions hearing, the Court had a meaningful discussion with the parties regarding the prospects of having this matter resolved by their direct negotiations or by mediation.  The parties as well as the Court came to the view that, this case did not present any issue of the kinds listed at paragraph 8 of my decision in Able Construction Ltd v W.R. Carpenter (PNG) Ltd, warranting resolution by trial.  Proceeding on that basis, the Court ordered mediation with the consent of the parties on 20th October 2015.  However, the Defendants failed to take the steps required of them including a failure to attend mediation on the appointed date and time at the agreed venue on 5th November 2015.  Consequently, the mediator terminated the mediation and issued a bad faith certificate against the Defendants.  The only explanation offered then by counsel for the Defendants, per Mr. Akeya’s affidavit sworn and file on 3rd December 2015 was an oversight on the date for the mediation conference.  This was despite follow ups and reminders by the Plaintiff and the mediator.  The Court reject this as a reasonable explanation and found that the Defendants bad faith conduct denied the parties of the opportunity to use the mediation process to fully explore the prospects of settling this matter by mediation.  At mediation, the parties would have with the assistance of a neutral third party namely an accredited mediator, considered the options open to them and have the matter settled.   Accordingly, the Court ordered the parties to again give mediation a real chance this time to help resolve the matter or failing resolution identify the issues warranting trial and agree on the relevant facts.  The Court issued the relevant orders on 8th February 2017.

9.	The second mediation order was issued again with the consent of the parties.  Mediation under those orders were fixed for 28th February 2017.  The orders also allowed for the parties and the mediator to fix an alternative date if need be as long as that was before 3rd March 2017, when the matter was scheduled to return to the Court.  In a bid to ensure that the mediation proceeded in accordance with the Court’s orders, the mediator by email dated 8th February 2017, confirmed his availability to conduct the mediation on 28th February 2017 and directed the parties to attend on him on 13th February 2017 for further mediation directions.  While the Plaintiff and its lawyer turned up for that appointment, the Defendants and their lawyers failed to do so.   The mediator nevertheless issued the following directions to enable the mediation to proceed smoothly:

 (a)	The Plaintiff to provide to the Defendants any documents which they intended to rely upon at the mediation conference on 28 February 2017 at 9.30;
 
(b)	The Defendants to provide to the Plaintiff and the Mediator the name and contact details of the representative of the Defendants who will attend the mediation conference by 21 February 2017; and 

(c)	The Defendants to deliver to the Plaintiff the documents they intend to rely upon at the mediation conference and file proof of service by 23rd February 2017.

10.	By a letter dated 17 February 2017, counsel for the Plaintiff, Mr Joseph informed the Defendants of these directions.  At the same time, he provided them with copies of documents the Plaintiff intended to rely upon for the purpose of the mediation.  The Defendants failed to comply with any of the directions. Then on the day of the mediation, 28th February 2017, at 9:00am, a Mr Tapie and Mr Joseph for the Plaintiff and the Mediator, his Honour, Shepherd J turned up at the ADR conference room at Waigani ready to proceed with the mediation.  The Defendants and their lawyers did not turn up until 9:45am when the Defendants’ lawyers arrived but without their clients.  On the Mediator checking with the Defendants, it was clear that, the Defendants had failed to comply with certain of the mediation orders in that: 

 (a)	The Defendants or their lawyers failed to provide their contact details to the Acting Assistant Registrar – ADR Services;

(b)	The Defendants failed to pay the ADR Services fee;

(c)	The Defendants failed to notify the Acting Assistant Registrar – ADR Services of the details of their authorised representatives;

(d)	Authorised representatives of the Defendants were not present in the mediation conference room on 28 February 2017.

11.	In view of these failures, the Mediator said to the parties that he could not proceed with the mediation and terminated the mediation process. Thereafter, he issued the second bad faith certificate against the Defendants.  Immediately after the termination of the mediation, counsel for the Plaintiffs had a brief discussion with Mr Akeya, Counsel for the Defendants.  In that discussion, Mr. Akeya informed the Plaintiff’s Counsel, Mr. Joseph that, he had instructions from his clients not to settle at mediation and that they should proceed to trial.  

12.	Then on 6th March 2017, when the matter eventually returned to the Court, the Court adjourned the proceeding to 6th April 2017 to receive submissions under r. 10 (7) of the ADR Rules.  At the same time, the Court issued the following orders:

“2.	Mr. Kaiyoma Akeya shall file and serve an affidavit of evidence of steps he has taken in relation to enabling the court-ordered mediation to take place on the set dates and time.

3.	In preparing his affidavit, Mr. Akeya shall have regard to the decision in Hargy Oil Plam Ltd v. Ewasse Landowners Association Inc. (2013) N5441, which sets out the duties of lawyers in regard to a court-ordered mediation.

4.	Mr. Akeya shall also provide evidence of the instructions from his clients and the basis for his clients instructing against mediation and how those instructions place this case in the kinds of cases inappropriate for mediation having regard to the judgment in Able Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636.”

13.	Upon return of the matter on 6th April 2017, Mr. Akeya had not complied with the foregoing orders. He also did not come with any meaningful submissions for and on behalf his clients in response to those for the Plaintiff.  The Plaintiff’s counsel handed up written submissions and took the Court through it.  Those submissions point out that the Mediator had good basis to issue the second bad faith certificate against the Defendants.  The relevant basis were that the Defendants breached the Court order by failing to:

(a)	pay the court mediation services fees;

(b)	notify the Acting Assistant Registrar – ADR Services and the Mediator of their contact details;

(c)	notify the Acting Assistant Registrar – ADR Services and the Mediator of the details of their authorised representatives who have authority to settle in the mediation;

(d)	attend the mediation directions hearing conducted by the Mediator on 13th February 2017;

(e)	provide to the Plaintiff the documents they intended to rely upon at the mediation in accordance with the directions issued by the Mediator on 13th February 2017;

(f)	attend the main mediation conference on 28 February 2017 through their appropriate officer or officers with authority to settle or at all; and

(g)	instruct the lawyers to settle at mediation and instead instruct them to proceed to trial.

14.	Of these breaches, the failure to ensure persons with authority to enter into negotiations and where possible settle the claim was critically important.  A failure to meet that requirement was the reason for the mediation not proceeding under first set of orders for mediation.   This is why the Plaintiff raised it and the Court made specific provisions for Mr. Akeya to seek specific instructions from his client.  This was incorporated in terms 2 and 3 of the orders of 6th February 2017 and effectively repeated in term 8 of the orders of 8th February 2017.   Term 9 of the orders of 8th February 2017, then stipulated that “a failure to comply with any of these orders may be taken to mean lack of ‘good faith’ for the purposes of Rule 10 (7) against the defaulting party.”  In breach of the orders of 6th March 2017, Mr. Akeya and or his clients failed to file any affidavit explaining and providing reasonable reasons for their failure to comply with the second mediation orders which resulted in the second bad faith certificate.  In the absence of any affidavit evidence from Mr. Akeya, it is not clear if counsel duly informed and appropriately advised his clients of the meaning and effect of the mediation orders and got his clients appropriately prepared to attend and took every step possible to ensure his clients’ attendance at mediation in accordance with the second mediation orders.  

Relevant Law

15.	The only issue left to be dealt with, must be answered by reference to the relevant law.  The relevant law on bad faith at mediation is clear.  Once the Court decides to order mediation and makes the appropriate orders, compliance of those orders is what is required next. There are number of judgments on this point.  This includes amongst others, my decisions in Koitaki Plantations v. Charton,Awesa v. PNG Power (first Alex Awesa decision), Wantok Gaming Systems Ltd v. National Gaming Control Board and Roger Meckpi v. Fallon and Dekenai Constructions Ltd.  A more recent judgment on point is my decision in Kanga Kawira v. Kepaya Bone & Ors.

16.	In these judgments, I went to some length in discussing the development, promotion and use of ADR and mediation for an expedited, efficient and effective resolution of disputes.  Additionally, I highlighted the reasons why the formal courts and governments worldwide are promoting and encouraging the use of mediation.  Further, I discussed in some detail the duties and responsibilities of the parties and their lawyers once an order for mediation is made.  Thereafter, I proceeded to provide an answer to the important question of what amounts to “bad faith” which gave rise to those judgments.  I answered that question in all of these judgments in the same way.  In so doing, I pointed out that an absence of any of the following list of behaviours would lead to a finding of a party acting in “bad faith”:

“(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.”

17.	Where corporations are involved, I also pointed out that, their servants and agents 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 input 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 require 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.” 

18.	Then on the question of appropriate penalties or consequences for any breach of the requirements for “good faith” at mediation, I noted that the starting point is r.10 (7) of the ADR Rules.  This provision stipulates the kinds of penalties the Court could impose against a party that is guilty of “bad faith”.  I have expressed the view that, this vests in the Court 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.”  Further, I noted that, in so doing, the rule was merely restating and reinforcing 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.”

19.	Applying the principles outlined above, I found in the Koitaki Plantations v. Charlton (supra); the first Alex Awesa decision; Wantok Gaming Systems Ltd v. National Gaming Control Board (supra) and Roger Meckpi cases, a complete failure to discharge the kinds of duties listed at paragraphs 16 and 17 above.

20.	In all of these cases, the Court found the bad faith conducts seriously impeded the Court ordered mediations from proceeding. That denied the parties an opportunity to resolve the respective matters and failing that, enable the parties with the assistance of the mediators to identify the existence, if any, of a serious and meritorious issue that was inappropriate for resolution by mediation but they warranted only a judicial consideration and determination as specified in Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd.  The Court also pointed out that, once a Court decides to refer a matter to mediation it means no issue warranting only a judicial consideration and determination is presented. This necessarily imposes an obligation on the parties to use their best efforts in good faith to have the matter resolved.  A failure to do so, constitutes contempt of Court which may be met by any of the orders the Court can make under r.10 (7) of the ADR Rules apart from the traditional penalties for contempt of court.
 
21.	In the first two cases, the Court found that the Plaintiff and the Defendant respectively:
(a)	failed to demonstrate to the Court’s satisfaction that there existed in their respective cases, the kind of impediment and or type of issues discussed above;
(b)	conducted in a way that was contemptuous of the orders for mediation;
(c)	conducted against the grain of the various legislative, judicial and learned publications, encouraging and supporting the use of mediation to resolve human conflicts;
(d)	by their 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 failed to provide any good reason for taking that position.

22.	In those circumstances, the Court decided in the Koitaki Plantations case that the most appropriate sanction would be an order for a dismissal of the Plaintiff’s case.  Accordingly, the Court ordered a dismissal of Koitaki Plantations’ claim and ordered a strike out of its defence with judgment entered against it on a cross claim by the defendants.  In making the second part of the order, the Court noted that, the case concerned a simple supply of goods contract, namely live animals, a claim of non payment for them in the plaintiff’s claims and in the defence 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 and settle that claim.  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. 

23.	In the first Alex Awesa decision, the Court arrived at a similar decision and ordered judgment for the plaintiff with damages to be assessed as they were not liquidated. The Court then ordered the damages to be settled through further mediation.  Costs were ordered against the party acting in bad faith, PNG Power Ltd.  The parties did proceed with the mediation under the second order for them to do so. During the mediation however, Mr. Awesa raised a number of issues which frustrated and prevented the mediation process from resolving the question of his damages.  This resulted in the parties agreeing on a set of questions and the facts giving rise to those issues after which the matter returned to the Court.  That resulted in a decision in the case published as Alex Awesa v. PNG Power Ltd (second Alex Awesa decision).  At paragraph 82 of the judgment the Court summed up its decision in these terms:

“… the issues raised at mediation and referred back to Court prevented the parties from resolving the issue at mediation. I have now considered the questions referred and answered all but one question in favour of Mr. Awesa. They effectively demonstrate that, Mr. Awesa did not have any proper foundation in the pleadings, facts or the law to raise those questions at the first place and take the position he has taken in his submissions before me. The questions thus lack merit and were raised unnecessarily. Consequently, they unnecessarily frustrated the mediation process. If the questions were not raised at the mediation the parties could have easily resolved the question of damages and all relevant and related questions. These factors dictate an order for costs against Mr. Awesa for all costs concerning and connected to an assessment of his damages. I would further order that such cost be agreed within 14 days and failing that taxation.”
	(Underling mine)

24.	In Wantok Gaming Systems Ltd case, after considering all the arguments and evidence put before the Court as well as the earlier decisions, the Court concluded, unlike the defendant in the first Alex Awesa decision, which was able to point out at least an issue about interpreting a particular statute, there was no mention of any issue that warranted consideration and determination only by trial being pointed out or identified by the Defendant.  The Court also pointed out that, if the 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 litigation over those issues as was done in the second Alex Awesa decision.  By choosing not to go to mediation at the instigation of the Gaming Board, the parties failed to discharge that duty. This, the Court found was serious because, when the Court decided to have the matter referred to mediation, it was of the view that, no issue warranting only a court hearing and determination was presented.  A review of that position could only come after the parties tried their very best to find a resolution 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. In these circumstances, the Court considered ordering the parties to return to mediation and have the matter resolved was appropriate. Hence, the Court referred the matter back to mediation for the second time at the National Gaming Board’s costs on account of its bad faith conduct.  Mediation did take place with certain offers being communicated to and from the parties. Unfortunately, those did not result in any settlement.  However, upon returned of the matter, the Court on their request gave the parties further opportunity to settle the matter out of Court and they did. This followed the Court making certain observations about the strengths and weakness of each of the parties’ cases. 

25.	In Roger Meckpi’s case, I found the Defendants against whom the mediator issued a bad faith certificate and their lawyer that they: 

 “(a)	failed to engage in meaningful out of court settlement discussions;
(b)	failed to comply with Court orders and directions for direct settlement discussions;
(c)	were being discourteous to Roger Meckpi by not honouring counsel’s indication of wanting to have this matter discussed with him and resolved;
(d)	despite repeated adjournments and opportunities given to them both by the Court, the mediators and Mr. Meckpi for them to attend and participate meaningfully in the Court ordered mediation failed to turn up on each of the appointed dates; and
(e)	failed to give any explanation at all for their failure to engage in settlement discussions, failure to turn up for mediation on the various appointed dates and their failure to participate at mediation in good faith.”

26.	Further, I found the Defendants conducts were consistent with their attitude from earlier on in the proceedings, which saw repeated failed applications for dismissal, and various other interlocutory and interrogatory processes, some of which were without good reason and unnecessary.  Those unnecessary actions caused more than a decade in delays in having the matter disposed of promptly resulting in unnecessary increased costs.  Also, I found that, the Defendants conduct breached a number of their respective duties of the kind set out at paragraph 16 and 17 above. 

27.	As against Mr. Peri, I found he failed in his professional duties.  As I noted, the relevant duties are at three stages namely; (1) when a matter is referred to mediation, (2) immediately post a mediation order and (3) immediately post a bad faith certificate.  The specific duties were outlined earlier in first Alex Awesa decision.  At the first stage, the following kinds of advice should be given to clients by their lawyers:

“(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 resolution there,  mediation and only as a last resort, the formal court process with advice on the advantages and disadvantages of employing any of these 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) is the case, advice should been provided to that effect and seek appropriate instructions to apply for appropriate orders, prepare for and proceed with mediation once ordered without delay.”

28.	Then at the second stage, the lawyers’ advice 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 Plantations’ case.
(4)	seeking specific instructions for an unrestricted authority to negotiate and settle on behalf of the company 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.”

29.	Finally, at the third stage, the lawyers’ advice 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 and appropriate testing, inquiry and or assessment.”

30.	In a number of cases, with the latest being my decision in the Roger Meckpi’s case, I have repeatedly pointed out that, when a case goes back to the Court on a bad faith certificate, lawyers for the parties acting in bad faith must provide evidence of having provided the kind of advice required. This was not done in the first Alex Awesa and the Roger Meckpi cases and in the most recent case of Kanga Kawira. Consequently, I found in all cases that, the respective lawyers failed in their respective duties to appropriately advice at each of the stages, their respective clients.  In these and other cases, I pointed out further that, when the Court decided in each case to refer the matters to mediation, it was effectively of the view that the “case did not present any issue that warranted only a judicial consideration and determination and therefore presented an inappropriate case for mediation.” That effectively, obligated the parties 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.”

31.	In the first Alex Awesa decision and Wantok Gaming Systems Ltd v. National Gaming Control Board (supra), I considered the evidence then before the Court and found that, instead of taking such steps, the parties against whom bad faith certificates had been issued, took steps unilaterally and failed to take any real and meaningful step to give the Court ordered mediation a real go in good faith. In those circumstances, I considered it appropriate that each of the matters should be referred back to mediation at the defaulting parties’ costs.  

32.	In Roger Meckpi’s case, I found there was a complete lack of evidence of what steps if any, learned counsel for the defendants took to appropriately inform, advice and prepare his clients for the Court ordered mediation to take place on any of the set dates.  Despite changes to the dates for mediation to enable the defendants to attend and participate, they did not make any attempt at all. This deprived the parties the opportunity to resolve the matters and or failing that, enable them to clearly identify the issues which warranted resolution only by a judicial consideration and determination. Mr. Peri, failed in respect of all of his duties at all stages that called for a considered discharge of his duties and responsibilities.  This failures directly resulted in the Court ordered mediation not taking place on the dates fixed by the Court or the mediator in consultation with the parties. Given that, the mediator issued a “bad faith” certificate against the defendants. I then clearly expressed the view that, the defendants’ and their lawyers conduct constituted repeated acts of contempt of court without good reason or excuse at the highest. 
 
33.	I went on to find that the kinds of conduct the defendants and their lawyers engaged in that case, was far worse than those displayed in the previous cases discussed earlier in this judgment.  I also noted that, the case presented no issue of the kinds listed in Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd or at all that warranted a judicial consideration and determination.  Instead, it was a simple claim for liquidated damages out of a tenancy agreement. In their defence, the defendants amongst others, took issue with Mr. Meckpi owning the property and the lack of a written agreement between the parties.   Based on their claim of Mr. Meckpi not being the owner of the property, the defendants, made repeated applications for a dismissal of the proceedings.  In response, Mr. Meckpi adduced evidence of the defendant’s occupation of the property and their failure to pay agreed rents. The Defendants adduced no evidence rebutting Mr. Meckpi’s claim as supported by his evidence.  In the end, all of the defendants’ repeated applications failed and I finally ordered the parties to have the proceedings resolved by mediation. I ultimately found that, the defendants and their lawyers by their conduct denied the mediation process from taking place and hence an opportunity for the parties to consider all options and settle the matter without any good basis. In these circumstances, I decided to strike out the defendants’ defence and ordered judgment for Mr. Meckpi with costs against the Defendants. 

34.	Also, in the light of the apparent failures of the defendants’ lawyer Mr. Peri, I gave some serious thought to making orders against him personally.  However in the light of no evidence from the Defendants and their earlier sustained but unsuccessful applications against Mr. Meckpi’s claim, I decided against making such an order and left the issue to the Defendants and their lawyer to sort out.  This meant that, if the lawyer acted on the Defendant’s instructions, the Defendants would be responsible for the costs.  If however, the lawyer failed to keep his clients informed of all developments and obligations as they befall on the Defendants and failed in his duties to appropriately advice, prepare and take the defendants to the Court ordered mediation process and the respective appointments, the defendants would be at liberty to seek recovery from their lawyer, both the damages and the costs as ordered against them. 

35.	Recently in the Kanga Kawira case, issues affecting the Plaintiffs’ and the First Defendants’ tribe and clan rights and interests were raised.  This necessarily required an involvement of the full membership of the tribe or clan to resolve the issues fully and finally.  The Court was convinced that the case did not present any issue that warranted judicial consideration and determination going by the decision in Able Constructions Ltd.  Instead, the Court was convinced that, the issues presented were ideal for resolution by mediation in the village where the Plaintiffs and the Defendants’ full clans and tribal membership could attend to resolve the matter.  The Court found that, the First Defendants’ by their conduct did not want to take the matter back to the people in the village.  In particular, the Court found the First Defendants with the support of their lawyer repeatedly failed to comply with Court orders and directions and specific orders by consent for mediation.  This was despite repeated adjournments for them to comply with the orders.   They also failed to attend appointed mediation intake sessions and failed to make any effort toward fully complying with the mediation orders.  

36.	Further, the Court found the position taken by the First Defendants through their counsel was in total defiance of the import of the relevant law on point as clearly brought out by the various judgments as discussed and set out in foregoing parts of this judgment.  In particular, the Court found the position taken by counsel for the First Defendants resonated with what Mr. Peri, counsel for the Defendants did in the Roger Meckpi case.  Further, the Court found that the position and steps counsel for the First Defendants took or failed to take were deliberate and without good reason, factual or legal.  These failures lead to an issuance of the bad faith certificate against the First Defendants.  In these circumstances, the Court found that the First Defendants’ and their lawyer’s conduct denied any opportunity being given to the mediation process to attempt to help resolve the matters in dispute between the parties.  

37.	In arriving at that decision, the Court observed that, once the orders for mediation were issued, they required compliance by the parties and the mediator within two months according to the provisions of r. 9 (3) of the ADR Rules.  This meant that the parties should have taken all the steps they were required to take to enable the mediation process to commence and conclude in accordance with the dates fixed by the orders for mediation.  In other words, this meant that,  once the order for mediation were issued, all the parties including the First Defendants, whether they consented or not, were obliged to take meaningful steps to give the mediation process a fair go to allow it to assist them to arrive at a workable and lasting solution for the issues presented in the case.  In the circumstances, the Court found the mediator had good basis to issue his bad faith certificate against the First Defendants.  To this, the First Defendants provided no satisfactorily or reason explanation.   The Court found the First Defendant and their lawyers were in clear contempt of Court on each of the occasions they failed to comply with the orders of the Court, most of which, were in the face of the Court not once but repeatedly.  That made the case a worse case of bad faith at mediation compared to the earlier cases.  Further, the Court noted that, on each occasion of the breach of the Court’s orders, it was prepared to excuse the breach of the orders and hence the clear contempt of Court hoping that counsel and his clients would finally get around to complying with the Court’s orders.  That was to avoid shifting attention away from having the substantive matter disposed of promptly through mediation. Accordingly, the Court ordered the parties to go back to giving mediation a fair opportunity to try and help resolve their issues.   Also in the light of the First Defendants and their lawyer’s contemptuous and bad faith conduct, the Court ordered them to take the lead in ensuring a compliance of the second mediation orders and ensure that mediation takes place this time.  Additionally, the Court warned that, should the First Defendants and their counsel fail to comply with the orders for mediation, they will be dealt with for contempt.  Costs were ordered against the First Defendants to be borne by their counsel or themselves depending on who caused the bad faith conduct and breach of the first mediation orders.

38.	When issuing the warning, the Court noted with concern that the First Defendants’ lawyer who is very senior lawyer had deliberately failed to discharge his duties under the lawyers Professional Conduct Rules, r. 8 (6) and (7) to his client and to the Court under r. 15 (2), (4) (a) and (b) and (10).   The Court pointed out that, these rules require all lawyers to take all steps necessary to promptly dispose of their client’s claims and to avoid a wastage of the Court’s time.  In particular, the Court noted that, lawyers are required to promptly settle their clients’ claim and avoid delaying proceedings and thus increase costs for their clients.  Further the Court noted that these provisions were enacted or promulgated long before the ADR Rules.  The Court went on to note that, the ADR Rules help to provide a clear and better avenue for the lawyers to discharge their duties to promptly bring about lasting, efficient and effective outcomes to their clients as opposed to Court proceedings which can go around in vicious circles, without any finality in sight for some time. The Court also pointed out that, a lawyer who fails and worse still, take the kind of position the lawyer took in that case would clearly be in breach of the lawyer’s duty to the client and to the Courts. Such a conduct could attract personal liability both in costs and the substantively on account of the breaches. 

Present Case

39.	In the present case, as already noted in a recital of the relevant facts in the earlier part of this judgment, the Court ordered mediation twice.  The second followed failure to comply with the first order and hence bad faith on the part of the Defendants and their lawyer, Mr. Kaiyoma Akeya.   The Court issued the first of the two mediation orders with the consent of the parties.  Mediation under those orders were to commence and conclude in the month of October 2015.   However, they did not proceed at all because most critically amongst others, counsel for the Defendant was not able to produce someone with authority to settle or at all for the defendants.  That was despite the mediator and the Plaintiff giving counsel and the Defendants more time to comply with the relevant provisions of the mediation order.   This led to a bad faith certificate against the Defendants. The only explanation offered by counsel for the Defendants then per Mr. Akeya’s affidavit sworn and file on 3rd December 2015 was an oversight of the date for the mediation conference.  This was despite follow ups and reminders by the Plaintiff and the mediator.

40.	Upon having heard the parties following the first bad faith certificate issued against the Defendants, the Court issued the second of the orders with specific dates set for the mediation to take place. At the same time, the order allowed some flexibility on the dates. As already noted, with the aim of ensuring that the mediation did proceed in accordance with the Court’s order, the mediator confirmed his availability to conduct the mediation and directed the parties to attend on him before the date set for mediation for further mediation directions.  While the Plaintiff and its lawyer turned up for that appointment, the Defendants and their lawyers failed to do so.  Notwithstanding that, the mediator issued a number of directions to enable the mediation to proceed smoothly.  Again whilst the Plaintiff complied with the directions as they applied to it, the Defendants failed. This was despite the Plaintiff’s counsel informing the Defendant’s counsel of the issuance of the directions.

41.	Then on the day of the mediation, while the Plaintiff attended with its lawyer, on the set date, time and venue, the Defendants failed to turn up on time. About 45 minutes later, their lawyers turned upon without any person having authority ready to participate at the mediation in good faith and if possible settle the matter.  This was despite specific orders for them to produce such a person.  On the mediator checking with the parties, it was clear that the Defendants had failed to comply with certain other terms of the mediation order.   These failures cause the mediator to terminate the mediation and issue the second bad faith certificate against the Defendants. 

42.	Further, unbeknown to the mediator and the Plaintiff’s lawyers, the Defendant appears to have made a deliberate decision not to negotiate and settle at mediation.  This was confirmed by Mr. Akeya, counsel for the Defendants in his representation to the Plaintiff’s counsel, Mr. Joseph immediately after the termination of the mediation.  If indeed, there was such an instruction based on proper legal advice, it was incumbent upon the Defendant’s counsel to immediately upon being instructed in those terms to communicate that instruction to the mediator and the Plaintiff’s counsel and ultimately the Court. Such communication had to be accompanied with the basis for such instructions which had to make it clear that a question inappropriate for resolution was being presented.  Counsel failed to so communicate or at all.  Clearly, therefore counsel for the Defendants, Mr. Akeya, failed to extend common courtesy to his professional colleagues, the lawyers for the Plaintiff.   In so doing in my view he breached r. 20 (1) of the Professional Conduct Rules 1989 which require a lawyer to “treat his professional colleague with utmost courtesy and fairness.”  

43.	Further, in my view counsel for the Defendants’ conduct breached the requirements of the provisions r.3 (a), (b) and (c) of these Professional Conduct Rules. This provisions in particular terms call for lawyers to act and conduct themselves in a manner that is competent and professional within the bounds of professional ethics and etiquettes, all to ensure they do not bring the legal profession into disrepute and above all, ensure not to act and conduct in a manner that is prejudicial to the administration of justice.  Additionally, counsel for the Defendants in my view breached his duty to the Court under r.15 (4).  This rule amongst others requires a lawyer to be courteous to the Court and avoid any wastage of the courts time and expenses and inform the Court promptly of any development affecting any information already before the Court.  To the extent that mediators under the ADR Rules are trained, accredited and appointed by the Court and they deal with cases referred to them by the Court, they are an extension of the Court. Accordingly, this rule in my view applies with appropriate modifications to Court appointed mediators and other persons to perform certain tasks for the expeditious dispensation of justice.   In this case, the mediator is a serving Judge of both the National and Supreme Courts.  This therefore, made it necessary and obligatory for all counsel to observe the requirements of these rules and act appropriately but sadly counsel for the Defendants failed for no good reason.

44.	These failures of counsel for the Defendants continued and escalated into contempt of Court when counsel failed to comply with the orders specifically directed at him on 6th February and 6th March 2017.   Not only that, when the time came for parties to address the Court on what consequences should follow the Defendants’ bad faith, counsel for the Defendants did not come with any meaningful submissions for and on behalf his clients in response to those for the Plaintiff, as if what he and his client failed to do were light matters.  

45.	The Plaintiff’s counsel handed up written submissions and took the Court through it.  Those submissions point out that the mediator had good basis to issue his second bad faith certificate against the Defendants. Those submissions highlight the various breaches of the Defendant and their counsel as discussed above.  Of the breaches highlighted, the failure to ensure persons with authority to enter into negotiations and where possible settle the claim was critically important.  A failure to meet that requirement was the reason for the mediation not proceeding under the first set of orders for mediation. This is why the Plaintiff raised it and the Court made specific orders for Mr. Akeya to advise and seek specific instructions from his client for which purpose orders in terms 2 and 3 of the orders of 6th February 2017 and effectively repeated in term 8 of the orders of 8th February 2017 were issued.   Term 9 of the orders of 8th February 2017, then stipulated that “a failure to comply with any orders of these orders may be taken to mean lack of ‘good faith’ for the purposes of Rule 10 (7) against the defaulting party.  Despite these orders, the Defendants did not comply or ensure to attend on the appointed date for mediation with a person with the necessary authority to settle. 

46.	I find this is a worse case of bad faith.  Here is why that is so.  Unlike the earlier cases in which bad faith certificates were issued, this is a case in which such a certificate has been issued twice.  In the earlier cases in which bad faith certificates were issued and the Court re-ordered mediation, there were compliances.  Also, unlike the earlier cases of bad faith in this case, the Defendants have not offered any explanation for their various failures and inactions.   They have also not filed and served any affidavit evidence setting out facts disclosing an issue of the kinds listed at paragraph 18 of my decision in the Able Construction Ltd case being presented here.  In that case, I listed the following kinds of cases as inappropriate for resolution by mediation if the case presents:
  
“• 	a real possibility of setting a legal precedent through a judicial determine which would clarify the law or inform public policy is presented;
• 	any settlement out of court is not in the public interest;
• 	protective orders such as injunctions are required immediately; 
• 	there is a clear case warranting summary judgment;11
•	a genuine dispute requiring the Court to give a declaratory relief is presented; 
•	family disputes especially involving child abuse, domestic violence, etc, is presented;
•	the parties are in a severely disturbed emotional or psychological state, such that they cannot negotiate for themselves or others; 12
•	a genuine dispute requiring interpretation of a constitutional or other statutory provision is presented; 
•	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; 
•	a preliminary issue such as questions on jurisdiction, condition precedents,13 statutory time bar and the disclosure of valid cause of action requires determine before anything else; or
•	a public sanction as in a criminal case is needed for public health, safety and good order.”

47.	In their defence filed on 16th August 2013, the Defendants deny the Plaintiff’s claim and claim there was no legally binding contract.  However, these are mere allegations and so are those of the Plaintiffs.  After some meaningful discussion of these competing claims, the Court and parties came to the conclusion that this case is suitable for resolution by mediation. This was critically important when the Plaintiff is a business arm of a number of Provincial Governments and one District Authority taking meaningful steps to help the National Government achieve one of its policies.   This is unlike a case in which a large number of private persons and companies who come up with all sorts of contracts with some not meeting the requirement of the nation’s laws walking away with large sums of money with any delivery of any goods or services.   Here, the Plaintiffs shareholders raised their own funds and took real and meaningful steps to give effect to a major national project.   A consideration of this and other factors led to the orders for mediation by consent of all parties initially for the first on 20th October 2015 and repeated for the issuance of the second order for mediation on 8th February 2017. Despite these consent orders and issuance of a bad faith certificate earlier, the failure to comply by the Defendants for undisclosed reasons has repeated.  It is not clear if counsel for the Defendants Mr. Akeya has been properly advising his client on the progress of this matter and more so the various mediation orders and what his clients needed to do to comply especially after their first bad faith conduct.  It is also not clear if counsel advice his clients appropriately and properly positioned them to argue against any adverse consequence following them after the issuance of the bad faith certificates.  This is the position notwithstanding the specific orders of 6th March 2017 directing Mr. Akeya to file affidavits to that effect.  Despite having one whole month from the date of the order to the date when the matter returned to Court, Mr. Akeya filed no affidavit in due compliance of the orders in question. This is the case, in addition to the Defendants’ failure to file and serve any affidavit evidence disclosing a defence on the substantive merits of the case.  Undoubtedly, Mr. Akeya is in contempt of Court in the face of the Court.  Subject to any evidence, the Defendants might subsequently provide as to their knowledge of the various orders and their counsel’s advice, they are also in contempt of the Court orders. 

48.	In my view, having regard to the particular circumstances in this case, orders similar to those made in the Koitaki Farms and Roger Meckpi cases are called for and warranted. Accordingly, I ordered the Defendants defence be struck out and judgment be entered for the Plaintiff with its damages to be assessed.   I also order costs to follow that event. 

49.	Then in the light of the apparent failures of the Defendants’ lawyer Mr. Kaiyoma Akeya, as highlighted earlier, I have given some serious thought to making orders against him personally and have him appropriately dealt with for contempt.  In this regard, I note that I gave a similar consideration in the Roger Meckpi case in respect of Mr. Peri who was counsel for the Defendants there.  There, I decided against making such an order and decided to leave the issue to the Defendants and their lawyer to sort out.  That was in the light of no evidence from the Defendants and their earlier sustained but unsuccessful applications against Mr. Roger Meckpi’s claim.  There I made the point that, if the lawyer acted on the Defendant’s instructions, the Defendants would be responsible. If however, the lawyer failed to keep them informed of all developments and obligations as they befall on the Defendants and the lawyer failed in his duties to appropriately advice, prepare and take his clients to the Court ordered mediation appointments and meaningfully participate at mediation in good faith, the Defendants would of course be at liberty to seek and recover from the lawyer both the damages and the costs as ordered against them.  I am minded to arrive at a similar decision here but with a strong warning that, the Court will swiftly move to deal with Mr. Akeya should he ever place himself in a position of contempt of Court in the face of Court or otherwise fails to comply with any orders or directions the Court issues either in this case or in any other case in future.

49.	In the end, I make the following orders:

1.	The Defendants defence filed on 16th August 2013 be struck out for bad faith at mediation.

2.	Judgment be entered for the Plaintiff with damages to be assessed.

3.		Costs on full indemnity basis be ordered against the Defendants, to be taxed if not agreed.

4.	Depending on whose conduct or failure has led to the breach of the various orders of the Court and failure to comply with the mediation orders of 8th February 2017 and the issuance of the bad faith certificate against the Defendants, the Defendants may recover from Mr. Kaiyoma Akeya the costs and the damages they pay to the Plaintiff.

5.	The matter is adjourned to return on 4th October 2017 at 9:30 am or soon thereafter for appropriate directions hearing for an expedited hearing and determination of the plaintiff’s damages.

_______________________________________________________________
Ashurst Lawyers:	Lawyers for the Plaintiff
Solicitor General:	Lawyers for the Defendants