South Pacific – PNG - Seafoods Co Ltd v The NEC

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi, J
• Judgment Date: 25 September 2017
• Citation: (2017) N6888
• Court: National Court
• Year: 2017
• Judgement Number: N6888

Full : WS. NO. 492 of 2013; South Pacific –PNG- Seafoods Co Limited v The National Executive Council and Independent State of Papua New Guinea (2017) N6888

National Court: Kandakasi, J

Judgment Delivered: 25 September 2017

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, r. 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,

(2014) N5636.

1 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...