Hargy Oil Palm Limited v Ewasse Landowners Association Incorporated (2013) N5441

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi, J
• Judgment Date: 02 December 2013
• Court: National Court
• Citation: (2013) N5441
• Docket Number: OS. NO. 189 of 2010
• Year: 2013
• Judgement Number: N5441

Full Title: OS. NO. 189 of 2010; Hargy Oil Palm Limited v Ewasse Landowners Association Incorporated (2013) N5441

National Court: Kandakasi, J

Judgment Delivered: 2 December 2013

N5441

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 189 of 2010

BETWEEN:

HARGY OIL PALM LIMITED

Plaintiff

AND:

EWASSE LANDOWNERS ASSOCIATION INCORPORATED

First Defendant

Waigani: Kandakasi, J.

2013: 10th May

02nd December

MEDIATION – Benefits of – Better avenue for parties to negotiate and arrive at resolutions they can live with – Agreement reached at mediation – Same effect as legally binding and enforceable contracts – Parties duties and responsibilities – Duty to act in “good faith” – “Good faith” does not require a compulsion to settle but to explore all possibilities – Difficulty with defining “good faith”- Suggested guide to determining - Parties under duty to comply with Court orders and do everything possible to enable mediation to proceed unimpeded – Breach of duties amount to “bad faith”- Duty includes requirement for a corporate entity, including the State to ensure person with power and authority to negotiate and reach agreement attends the mediation well prepared with all relevant material and unrestricted instruction to explore all possible options for resolutions and reach agreement if possible - Corporate entities failing to do so – Cannot form basis to opt out of agreement reached at mediation – Agreements reached at mediation open to invalidation on establishment of known and accepted groups for voiding contract not contributed to by party seeking to opt out - Rule 10 of Rules Relating to the Accreditation, Regulation and Conduct of Mediators

CONTRACT – Essential elements of a valid contract – Grounds for setting aside valid contracts considered – Agreements reached at mediation enforceable contracts provided essential elements of contract exist – A failure to disclose lack of authority and power in corporate representative during mediation process no basis to opt out of a mediated agreement but basis to find “bad faith” and finding that contract is binding – A party can opt out of a mediated agreement only upon establishing one or more of accepted basis for voiding contracts not contributed to by the party seeking to opt out.

LAWYERS – Duties of lawyers, before and during the course of mediation – Provide sound, accurate and fair advice to client and appropriately prepare client for mediation – Attend mediation with client and continue to provided legal advice as required - Lawyers have duty to assist parties to produce detailed written agreement reflecting and enshrining what the parties have agreed to at mediation.

LEGISLATION – Interpretation of statutory provisions – Unless word used by legislation is so plain that the ordinary meaning is to apply, a fair, large and liberal interpretation to be adopted and applied - Rule 10 of Rules Relating to the Accreditation, Regulation and Conduct of Mediators – Duties of Parties ordered to go to mediation – Duty to act in “good faith” – Difficulty with defining “good faith”- Suggested guide to determining - In summary parties under duty to comply with Court orders and do everything possible to enable mediation to proceed unimpeded – Breach of amount to “bad faith”- Duty includes requirement for a corporate entity, including the State to ensure person with power and authority to negotiate and reach agreement attends the mediation and before that properly prepare with all relevant and unrestricted instructions – Sch 1.5 (2) Constitution - Rule 10 of Rules Relating to the Accreditation, Regulation and Conduct of Mediators .

Cases Cited:

Papua New Guinea Cases

Shell Papua New Guinea Ltd v. Speko Investment Limited and Peandui Koyati (2004) SC767.

AGC (Pacific) Ltd v. Woo International Pty Ltd [1992] PNGLR 100.

Manorburn Earthmoving Ltd v. The State (No 2) (2008) N3287.

Hilary Singat v. Commissioner of Police (2008) SC910.

The State v. Zachary Gelu & Monoburn Earthmoving Limited (2003) SC 716.

Polem Enterprise Ltd v Attorney-General of Papua New Guinea Mr. Francis Damem (2008) SC911.

NCDC v. Yama Security Services Limited (2005) SC835.

Fly River Provincial Government v Pioneer Health Services (2003) SC705.

Andrew Daiva and Ome Ome Forests Ltd v. Lawrance Pukali and Benedict Waede; Ome Ome Forests Ltd v Ray Cheong, Jackson Whong and Bill Garey (2002) N2289.

Mark Ankama v. Papua New Guinea Electricity Commission (2002) N2362.

PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288

Beecraft No 20 Limited v. Dr Fabian Pok as Minister for Lands and The Independent State of Papua New Guinea, (2001) N2125.

NCDC v. Yama Security Services Pty Ltd (2003) SC707

NCD Commission v. Yama Security Services (2005) SC835

Public Officers Superannuation Fund Board v. Sailas Imanakuan (2001) SC677

Overseas Cases Cited

In Anthony v. Andrews, 2009-Ohio-6378 (Court of Appeals of Ohio, 11th District, 2009),

In re A.T. Reynolds & Sons, Inc., 452 B.R. 374 (S.D.N.Y. 2011).

In re A.T. Reynolds & Sons, Inc., 424 B.R. 76, 78 (Bankr. S.D.N.Y. 2010).

Nick v. Morgan’s Foods, Inc., 270 F.3d 590, 596-97 (8th Cir. 2001)

Articles referred to:

“Developing A System of Court Annexed ADR In An Ever Increasing Litigious Society, Arguments For and Against: The PNG Experience” by Ambeng Kandakasi, Malayan Law Journal: Article Supplement, LexisNexis, 2007.

The United Nations General Assembly announcement GA 11242, 23rd May 2012. www/un.un.org/News/Press/docs/2012/ga11242.doc.htm and European Union Directive EU Directive 2008/52/EC, 13th June 2008.

“Good-faith participation in compelled mediation” by Thomas J. Sartory and Gary M. Ronan, Daily Record: Oct. 31 2012 issue.

“Using Dispute System Design Methods to Promote Good-Faith Participation in Court-Connected Mediation Programs,” by Professor John Lande ,50 UCLA L. Rev. 69, 77 & n.25 (2002).

Counsel:

R. Lindsay, for the Plaintiffs

C. Narokobi, for the Defendant

02nd December 2013

1. KANDAKASI J: This case presents two interesting questions which revolve around one of the important principles in mediation, namely the need for parties to “attend mediation and negotiate in good faith”. The questions are:

(a) What are the duties and responsibilities of parties attending mediation?

(b) On what basis can a higher authority or the governing body of a corporate entity opt either wholly or partially out of agreements reached at mediation?

Background

2. The background to these questions is simple. Hargy Oil Palm Limited (the Company), took out this proceeding against the Defendants who are local landowners (LOs) in the Bialla District of the West New Britain Province. The Defendants are coastal people living close to or near coastal areas in which the Company discharges waste from its oil palm milling plants. They claim that the Company’s discharges and related activities has caused substantial damage to their marine areas resulting in serious and substantial damage to marine life, which they say they rely upon for their survival. They therefore claimed substantial amounts of money in compensation formally pursued in Court through a separate writ of summons proceeding. The Company declined to entertain that claim. That caused the LOs to take matters into their own hands resulting in some interference of the Company’s business and operations generally. On the application of the Company, the Court granted an interim restraining order against the LOs. Then subsequently, with the agreement of the parties, the Court ordered them to go to mediation and attempt to have the matter resolved.

3. The Court ordered mediation took place on 23rd November 2012, at Kimbe. At the mediation, all parties except the State attended. The Company was represented by its General Manager Mr. Graham King and Miss Sohpie Mission who is the Company’s Environment and Sustainability Manager. In attendance also for the Company was a Mrs. Joyce King with the Company’s lawyer Mr. Robert Lindsay. For the LOs, the executives of their Association, with their lawyer, Mr. Camillus Narokobi attended. The mediation resulted in a resolution under the following six (6) main headings or categories:

1. Communication

· Quarterly progress on agreement/dispute resolution meeting as necessary.

· Village meeting to communicate progress on agreement after each committee meeting.

· Committee meeting will have formal agenda and outcomes published.

· Company will present grievances to the village committee as necessary.

2. Rehabilitation

· K500, 000.00 @ K50, 000.00 per year for 10 years as minimum funding to rehabilitate plan via LMMA.

· Hargy & Ewasse Landowners & LMMA will develop an MOU to govern the...