SC1353

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REVIEW NO 46 OF 2010

APPLICATION UNDER SECTION 155(2)(b) OF THE CONSTITUTION

BETWEEN

ANDREW NAGARI
Applicant

AND

NATIONAL DEVELOPMENT BANK
Respondent

Waigani: Makail, J
2014: 13th & 20th June

SUPREME COURT – PRACTICE & PROCEDURE – Application for an order for mediation – Application arising from application for leave to review National Court decision – National Court dismissed claim for unlawful termination – Jurisdiction of – Whether Supreme Court has jurisdiction to order mediation following dismissal of proceeding – Lack of jurisdiction – Jurisdiction to order mediation vested in National Court – Application misconceived – Application dismissed – Constitution – s. 155(2)(b) – Alternative Dispute Resolution Rules – Rules 3 & 5.

Facts

The applicant was the Managing Director of the respondent. He was terminated and he sued the respondent for unlawful termination. On 06th October 2010, the National Court dismissed the claim on the grounds that firstly, he was employed on a contract of employment with the respondent and not on a contract with the National Executive Council and secondly the contract was unenforceable as it was not approved by the Salaries Conditions and Monitoring Committee under s. 10 of the Salaries Conditions and Monitoring Committee Act 1988. The statutory time limit to appeal expired on 16th November 2010 and he failed to file an appeal by that date. As he was out of time, on 10th December 2010, he filed the within proceeding to seek leave to review the decision pursuant to s. 155(2)(b) of the Constitution. Pending that, he applied for an order for mediation pursuant to Rule 5 of the Alternative Disputes Resolution Rules ("ADR Rules"). The respondent opposed the application.

Held:

1.	According to Rule 3 of the Alternative Disputes Resolution Rules, the Court is defined as the National Court and it is the National Court that has exclusive jurisdiction to order mediation.

2.	As the proceeding in the National Court had been dismissed, there was no proceeding on which the National Court could order mediation under Rule 5 of the Alternative Disputes Resolution Rules. 

3.	The Supreme Court's inherent power under s. 155(4) of the Constitution is inapplicable because the National Court is given the exclusive jurisdiction to order mediation under Rule 5 of the Alternative Disputes Resolution Rules. The Supreme Court lacks jurisdiction to order mediation under Rule 5 of the Alternative Disputes Resolution Rules.

4.	The application for an order for mediation was misconceived and dismissed with costs.

No cased cited:

Counsel:

Mr J Kolo, for Applicant
Mr H Kevau, for Respondent

RULING

20th June, 2014

1.	MAKAIL, J: The applicant was the Managing Director of the respondent. He was terminated and he sued the respondent for unlawful termination. On 06th October 2010, the National Court constituted by Hartshorn J dismissed the claim on the grounds that firstly, he was employed on a contract of employment with the respondent and not on a contract with the National Executive Council and secondly, the contract was unenforceable as it was not approved by the Salaries Conditions and Monitoring Committee ("SCMC") under s. 10 of the Salaries Conditions and Monitoring Committee Act 1988. The statutory time limit to appeal expired on 16th November 2010 and he failed to file an appeal by that date. As he was out of time, on 10th December 2010, he filed this proceeding to seek leave to review the decision pursuant to s. 155(2)(b) of the Constitution. Pending that, he applies for an order for mediation pursuant to Rule 5 of the Alternative Disputes Resolution Rules ("ADR Rules"). The respondent opposes the application.

2.	Mr Kolo of counsel for the applicant advances two reasons in support of the application. First, the applicant has been and is still negotiating an out of Court settlement with the State through the Office of the Solicitor-General and secondly, the applicant has and is still sick and it has hampered or restricted him from pursuing negotiations with the State to settle the claim. 

3.	Delay is one of the considerations that must be taken into account by the Court when deciding an application of this nature. Time is an essential factor in the ADR Rules, particularly, Rule 5(3)(b), (c), (e) and (i) as this Rule amongst others, state that the Court must have regard to such matters as urgency in the proceedings, whether mediation will require substantial work which could be better directed to preparation for trial, the timing of mediation and interest of justice. The longer the matter, mediation may not be an ideal option. Secondly, where there is delay, a reasonable explanation is expected from the applicant. 

4.	On 06th October 2010, the National Court dismissed the claim. On 06th December 2010, the applicant filed the application for leave to review. The present application was not filed until 04th June 2014, almost 3 years and 6 months after the application for leave to review was filed. In my view this is a long delay. According to the applicant's various affidavits, he says that he was and is still negotiating an out of court settlement with the State through the Office of the Solicitor-General. He relies on a letter written by the then Secretary of the Department of Personnel Management Ms Margaret Elias to the Attorney-General dated 06th May 2005 to prove that he was negotiating settlement with the State. 

5.	According to this letter, Ms Elias stated that the applicant's termination was unlawful as his termination was not done in accordance with his contract of employment and he should be paid an ex gratia termination benefit equivalent to salary and allowances for the unexpired period of the four year contract term or the provisions consistent with the SCMC approved contract for contractual compensation as a result of premature termination. In terms of calculating the amount, Ms Elias provided a break-up of various heads of claim comprising of contract gratuity, money in lieu of leave, money in lieu of furlough, ex gratia payment and repatriation costs in the total sum of K382,886.68 gross and K289,889.04 after tax.

6.	Since the date of this letter, the applicant and his lawyers had relied on it and the amount stated therein to press the State to settle the claim out of Court, even after the National Court had dismissed the claim. This is evident from one of the letters from the applicant's lawyers to the Solicitor-General dated 27th June 2011 making reference to it and putting forward a revised amount of K707,844.00 . That letter does not state how the amount of K707,844.00 was arrived at. The other and a more recent letter is the one from the applicant's lawyers to the Solicitor-General dated 19th May 2014 which attempted to give the specific details by stating in addition to K382,886.68, a sum of K50,000.00 as general damages, K100,000.00 as out of pocket expenses and K200,000.00 as legal costs. This is the closest the applicant has quantified his damages but other than this and Ms Elias' letter, there is no evidence and it was conceded by Mr Kolo that the applicant did not provide a separate quantum submission to the State for consideration. 

7.	The respondent had maintained all along that the contract was void and unenforceable, hence not liable to damages and refused to settle the claim. Any purported negotiation with the State was without its expressed approval. The National Court decision was a confirmation of its position and since then, the position has not changed. This was Mr Kevau's submission based on his affidavit filed in opposition to the application.

8.	Following the commencement of the proceeding in the National Court, the applicant did not apply to have the dispute mediated. He gave no reason for not doing so, even after the filing of the application for leave to review before this Court. The delay in prosecuting the application for leave became a concern to the Court and as the application was set to be heard on 02nd June, the applicant's lawyers indicated that he would apply for mediation. The matter was adjourned to 05th June for hearing and further adjourned to 11th June. The application for mediation was finally heard on 13th June. 

9.	A further reason for the delay was the applicant's ill health. He produced a medical report from Dr Jack Apana of the Port Moresby General Hospital dated 18th September 2013 to prove his illness. It confirms that he had high blood pressure and malaria on 15th February 2013. As a result, he did not communicate with his lawyers to follow-up with the State on the offer to settle. That may be so but his lawyers had instructions and were negotiating with the lawyers for the State as evident from the numerous letters written to the Office of the Solicitor-General. There is no reason why negotiation and follow-ups should stop or delayed by reason of the applicant's illness. Interestingly, there is no evidence of any response by way of letters from the lawyers of the Office of the Solicitor-General to the applicant's offer to settle. The only reasonable inference to be drawn from the absence of a response from the State is that there was no prospect of a settlement. Despite this, the applicant and his lawyers pressed on and as a result, did not promptly apply for mediation. They allowed that opportunity to go by and it is now late to order mediation. 

10.	But in my view all these become irrelevant because the proceeding in the National Court has been dismissed. The National Court found that the applicant was employed under a contract that was unenforceable because it was subject to approval by the SCMC and was not approved by SCMC. As the proceeding has been dismissed, there is no proceeding on foot by which an order for mediation can be sought. Mr Kolo submitted this Court has inherent power under s.155(4) of the Constitution to order mediation. He cites no authority for this proposition. In my view the Court's inherent power has no application in this case because according to Rule 3 of the ADR Rules, the Court is defined as the National Court and it is the National Court that has the exclusive jurisdiction to order mediation. In my view this Court lacks jurisdiction to order mediation. This application is misconceived and is dismissed with costs. I shall now hear parties on the application for leave to review.

Ruling and orders accordingly.

_______________________________________________________________
Kolo & Associates Lawyers:	Lawyers for Applicant
Rageau, Manua &Kikira & Lawyers:	Lawyers for Respondent