N8716
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 1456 OF 2018

BETWEEN:
SEASIDE DEVELOPMENT LIMITED trading as CONCRETE
AGGREGATE
Plaintiff/Cross-Defendant

V

TAMATI MINAMA and MELTON MINAMA trading as PERPETUAL
QUARRIES
Defendant/Cross-Claimants

Waigani: Anis J
2020: 17th July
2021: 28th January

NOTICE OF MOTION – application for leave to amend defence and cross-claim – Order 8 Rules 50(1) and (2) – National Court Rules – application for referral of matter to mediation – Rule 5(2) & (3) – Alternative Dispute Resolution Rules – exercise of discretion

Cases Cited:

Stephen Asivo v. Bank of South Pacific Ltd (2011) N4252
Raikos Holdings Ltd v. Porche Enterprises Ltd (2012) N4776
Gerard Pain v. Independent State of Papua New Guinea (2012) N4708

Counsel:

Mr S Gor, for the Plaintiff/Cross-Defendant
Mr E Tolabi, for the Defendants/Cross-Claimants

RULING

28th January, 2021

1.	ANIS J:  This was a partly contested application.  The defendants sought 2 main relief.  The first was for leave to amend their defence and cross-claim, and the second was to have the matter referred to mediation.  The defendants moved their application on 17 July 2020.  The plaintiff did not contest the first relief.  However, it opposed the second relief and as such, I heard and reserved my ruling on the matter to a date to be advised.

2.	Parties have been notified so I will rule on it now.

BACKGROUND

3.	The pleadings appear lengthy, that is, in regard to the statement of claim, the defence and cross-claim.  But briefly, the matter concerns, amongst others, allege breach of various contracts.  The parties entered into various agreements to extract gravel from a riverbed on customary land and also for the sale and purchase of quarry plants and equipment.  The area is situated at Goldie River just outside Port Moresby.  The defendants appear as landowners.  They say they represent their clan, and they claim to own the area at Goldie River where the quarry is situated.  The plaintiff is a company whose business include river gravel extraction and aggregate.  Sometimes in 2009, the parties engaged into this business deal.  Various agreements including sale and purchase agreements, based on the pleadings, were entered into since 2009.

4.	But essentially, the agreements or understandings of the parties, based on the pleadings, were these.  The plaintiff would extract gravels from the river.  The plaintiff would pay a certain fixed rent per month to the defendants for the duration of the agreements.  The plaintiff would also pay a certain fee per cubic meter for gravels or aggregate that were extracted.  It was later also agreed that the defendants would purchase and own the quarry plants and equipment that the plaintiff had at that time which were used at the quarry.  A total of about 4 agreements were said to have been signed between the parties, 2 of which have been described as sale and purchase agreements, which were entered in 2018.

5.	The plaintiff’s claim briefly is this.  It says it has various valid gravel extraction agreements, including the sale and purchase agreements, with the defendants.  It claims the defendants breached these agreements when they purportedly terminated them and continued to occupy and use its plants and equipment for their own purposes.  It seeks a liquidated sum of K695,751.90 as an outstanding debt, or alternatively as damages for breach of contracts.

6.	The defendants however complain in their cross-claim that they want out of the sale and purchase agreements.  They claim that, given their disadvantaged positions, that they were unfairly taken advantage of or treated by the plaintiff under the various agreements that they have or had entered; they claim that the terms were very much favourable to the plaintiff and unfavourable to them.  As such, they, amongst others, rely on s. 5 of the Fairness of Transaction Act 1993 and request this Court to review the various agreements and declare them as null and void.  They also claim a liquidated sum of K860,575.  They claim that the sum was due to them but was withheld by the plaintiff to be used to pay for the quarry plants and equipment or debts as per the terms of the sale and purchase agreements.  The defendants’ position, as per their pleadings, is that they no longer want to purchase the quarry plants and equipment; that they want their monies returned.  The plaintiff acknowledges keeping the monies that were deducted from the defendants’ entitlements, but they deny that the defendants are entitled to receive these monies as per the terms and conditions of the various agreements that the parties have entered.

MOTION

7.	The defendants’ notice of motion was filed on 8 July 2020 (NoM).  As stated, relief 1 is not contested.  It seeks leave to file an amended defence and cross-claim.  I will grant the said relief at this juncture.  Relief 2 on the other hand, is contested, and it reads:

2.	Pursuant to Rule 5 of the Alternative Dispute Resolution Rules:

(a)	the dispute between the Plaintiff/Cross-Defendant and Defendants/Cross-Claimants be referred to mediation;
(b)	the Plaintiff/Cross-Defendant and Defendants/Cross-Claimants to return to Court with draft mediation orders on………2020.

ISSUE

8.	The main issue is this, whether this matter may be appropriately dealt with through mediation at this juncture, and if so, whether I should exercise my discretion and make the referral under Rule 5(2) & (3) of the Alternative Dispute Resolution Rules (ADR Rules).

RULE 5

9.	The ADR Rules are part of the National Court Rules.  Rule 5 reads, and I quote:

5.	Ordering Mediation.

(1)	At any time following commencement of proceedings the parties may agree to participate in a mediation of the issues to which the proceedings relate.
(2)	The Court shall on the request of all parties to a proceeding or on the application of any party to a proceeding or on its own motion order mediation for
(a)	a resolution of all or any parts of the proceedings; or
(b)	failing settlement, identify and limit the real and meritorious issues in the proceedings that warrant judicial consideration and determination; and or
(c)	enable the parties to reach consensus on the conduct of litigation.
(3)	At the time of considering whether or not to order mediation, the Court shall have regard to the following factors:
(a)	whether the mediation will result in prejudice to the rights of any of the parties;
(b)	whether it is reasonably within the ability and the power of a party to comply with an order for mediation having regard to matters such as any urgency in the proceedings, costs, multiplicity of parties or lack of resources;
(c)	whether the mediation will require substantial work which could be better directed to preparation for trial;
(d)	the nature of the relief sought and the suitability of a mediation result;
(e)	the timing of the mediation including by reference to the status of the pleadings, discovery and the alternatives of when trial is likely and the length and costs of trial;
(f)	the attitude of the parties to mediation though not significant;
(g)	whether mediation was earlier attempted and whether any good purpose will be served by an order for further mediation;
(h)	the appropriateness of deferring any final decision on a application for orders for mediation; and
(i)	what the interest of justice in the particular circumstances of the case require.
(4)	If the Court decides to make an order for mediation, the Court shall ensure to incorporate in its order for mediation the:
(a)	matters specified in Section 7B (4) of the Act; and
(b)	make an order in terms similar to one in Form 3 in Schedule 2.
(5)	Making an order for mediation does not:
(a)	automatically operate as a stay of the proceedings; and
(b)	imply any authority for the mediator to impose a decision on the parties.
(6)	The Court may revoke or vary an order for mediation at anytime but before the conclusion of the mediation.

10.	The NoM is made under Rule 5(2), that is, upon request of the defendants.  The jurisdictional basis of the NoM, in my view, is in order.  But more importantly and for this purpose, is Rule 5(3).  It sets out in mandatory terms 9 factors which the National Court is required to consider before exercising its discretion to order or refuse to order the matter to be mediated.  That said, I note that sub-rule (i) of Rule 5(3) appears to be the overall test or consideration after having regard to the first 8 requirements therein, that is, where it refers to the interest of justice; whether interest of justice requires that the matter should first be mediated.

11.	I have considered the submissions of the parties in this regard.  With respect, I note that they have not fully covered or addressed all the considerations that are set out under sub-rule (3).  I have also considered the pleadings and the nature of the claim and crossclaim, including the recent draft amended crossclaim where leave has now been granted for its inclusion, of the parties.  After careful consideration, what stands out to me from these claims are as follows.  As for the plaintiff, its intention is to recoup from the defendants what it claims is a debt of K695,751.90 which is based on those various transactions or agreements.  As for the defendants, it seems quite clear that they are happy for the plaintiff to keep back its plants and equipment which they, pursuant to the sale and purchase agreements, were supposed to purchase for a sum of K1,200,000.  On that basis, they would like the plaintiff to pay-back to them the monies that it had deducted and kept pursuant to the said sale and purchase agreements.  They initially sought the sum of K860,575.  However, in their recent amended defence and crossclaim which will now be filed, they have reduced the sum to K744,159.59.  I observe, based on the 2 pleaded sums, a difference of K48,407.69.

12.	With these material facts and probable intentions of the parties at hand, I consider as follows: (a) mediation will not result in prejudice to the rights of the parties, (b) it is reasonably within the ability and power of both parties to comply with a mediation order, (c) mediation will not cause substantial work for either party, (d) the nature of the relief sought, including the cross-claims, lend themselves to mediation, (e) a mediation at Waigani can be set up quickly and it should be convenient to the parties, (f) I note the plaintiff’s unwillingness to mediate but at the same time I give regard to the other factors which appear favourable to the matter as one that is suitable for mediation, (g) mediation has not yet been attempted and therefore it should be attempted at least once before the matter should progress to trial, (h) neither parties will lose their rights to have the issues of both liability and quantum tried in court, and (i) interests of justice always acknowledges settlement or mediation attempt(s) as the best and efficient method for resolving disputes, and in this case the interest of justice, in my view, requires that the matter should first be mediated given its nature and circumstances.  See cases: Stephen Asivo v. Bank of South Pacific Ltd (2011) N4252, Raikos Holdings Ltd v. Porche Enterprises Ltd (2012) N4776, and Gerard Pain v. Independent State of Papua New Guinea (2012) N4708.

SUMMARY

13.	Therefore, I am inclined to exercise my discretion and order that this matter shall be mediated pursuant to my powers under Rule 5(2) of the ADR Rules.  I will make an order for mediation of the entire proceedings including the defendants’ cross-claim.  Orders will include a direction for the parties to prepare the mediation orders as per the requirements under Rule 5(4) of the ADR Rules, and with a further order for the matter to return for the Court to endorse the draft mediation orders.

COST

14.	Cost was not sought as a relief in the NoM.  As such, I make no order in this regard.

ORDERS OF THE COURT

15.	I make the following orders:

1.	Leave is granted to the defendants/cross-claimants to amend their Defence and Cross-Claim filed on 10 December 2018, in terms of the draft Amended Defence and Cross-Claim as attached to the affidavit of Tamati Minama filed on 8 July 2020.

2.	Consequential to term 1 above:
(i)	the defendants/cross-claimants shall file and serve their Amended Defence and Cross-Claim within 5 days from the date of this order; and
(ii)	the plaintiff/cross-defendant to file and serve its Reply and Defence to the Cross-Claim within 14 days thereafter.

3.	Pursuant to Rule 5 of the Alternative Dispute Resolution Rules:

(a)	the dispute between the plaintiff/cross-defendant and defendants/cross-claimants is now referred to mediation;
(b)	the plaintiff/cross-defendant and defendants/cross-claimants shall return to Court with draft mediation orders for finalization under Rule 5(4) of the ADR Rules at 9:30am on Thursday 18 February 2021.

4.	Time for entry of these orders is abridged to the date and time of settlement by the Registrar which shall take place forthwith.

The Court orders accordingly. 
________________________________________________________________
Fiocco & Nutley: Lawyers for the Plaintiff/Cross-Defendant
Kopunye Lawyers: Lawyers for the Defendants/Cross-Claimants