Ted Taru v Pacific MMI Insurance Ltd

• Jurisdiction: Papua New Guinea
• Court: National Court
• Judge: Kandakasi, J.
• Judgment Date: 30 May 2016
• Citation: (2016) N6305
• Judgment Number: N6305
• Year: 2016

Full : WS. No 453 of 2006; Ted Taru and Elsie Taru v Pacific MMI Insurance Limited and David Randle and Henry Smith (2016) N6305

National Court: Kandakasi, J.

Judgment Delivered: 30 May 2016

N6305

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO.453 of 2006

BETWEEN

TED TARU

First Plaintiff

AND

ELSIE TARU

Second Plaintiff

AND

PACIFIC MMI INSURANCE LIMITED

First Defendant

AND

DAVID RANDLE

Second Defendant

AND

HENRY SMITH

Third Defendant

Waigani: Kandakasi, J.

2014: 03rd June

2016: 30th May

MEDIATION – Mediated agreement – Competing applications, one to enforce mediated agreement and another to set aside - Application to set aside – Claims of intimidation, duress, acceptance of strictly legal arguments and denial of others – Lack of clear identification and or statement of facts forming basis for allegations and lack of evidence – Evidence adduce mainly submissions, arguments, opinions and conclusions without supporting facts – Objection upheld - No clear statement of the legal arguments or points and demonstration of likelihood of being upheld in favour of party raising them – Relevant possible legal points or arguments in the case - Not likely to be determined in favour of party complaining – Application to set aside mediated agreement dismissed – Application to enforce – Failure of application to set aside – Effect of – No impediment to enforcement of – Orders enforcing mediated agreement granted.

MEDIATION - Confidentiality - Rule 13 of ADR Rules – Application of Rule – There must first be a clear statement of facts and evidence against which the rule may apply – Lack of - No need for consideration and application of the rule – Importance of existence of the rule – Parties right to refuse to sign agreements for good reason – Failure to – Meaning and effect of – Need to protect court annexed mediation process – Application of finality in litigation principle - Written agreement valid and enforceable – Rule against extrinsic evidence and Rules 11, 12 and 13 of the ADR Rules could operate against adducing of evidence other than the agreement itself.

MEDIATION - Bad faith in – Consequences of – Court could stay proceedings until all costs paid or final judgment against defaulting party – Where mediation proceeds to settle case despite bad faith agreement enforceable subject to valid contract and or valid basis for set aside tests – Bad faith directed at lawyer on breach of undertaking – Subject to hearing the lawyer judgment could be entered against the lawyer.

Papua New Guinea Cases cited:

Emas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215.

Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441.

Kerry Lerro v. Philip Stagg, Valentine Kambori & Anor (2006) N3050.

Mekere Morauta v Aloysius Eviaisa (2002) SC685.

Mount Hagen Urban Local Level Government v. Sek No. 15 Ltd (2009) SC1007.

Mudge v. Secretary for Lands [1985] PNGLR 387.

PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126.

Rage Augerea v. The Bank South Pacific Ltd (2007) SC869.

Shell Papua New Guinea Ltd v. Speko Investment Limited and Peandui Koyati (2004) SC 767.

Legislation and other material cited:

Rules Relating to the Accreditation, Regulation, and Conduct of Mediators 2010

Counsel:

B. Ovia, for the Plaintiffs

K. Imako and M. Tumul, for the Defendants

30th May, 2016

1. KANDAKASI J: On 23rd April 2014, the parties went to mediation and arrived at a mediated agreement. Before me are two notices of motion one filed by the Plaintiffs, Ted and Elsie Taru (the “Tarus”) and another by the Defendants, both filed on 28th May 2014 also. The Tarus are seeking a set aside of the mediated agreement while the Defendants are seeking its enforcement under Rule 12 of the ADR Rules. The Tarus in their submissions claim duress and acceptance of strict legal arguments by the mediator and intimidation by the Defendant’s lawyers at the mediation. The Defendants deny the Plaintiffs claims.

Relevant Issues

2. The specific issues this Court must consider and determine are:

(1) Have the Plaintiffs made out their claims as against the mediator of duress and acceptance of strict legal arguments?

(2) Have the Plaintiffs made out their claims of intimidation by the Defendants at mediation?

(3) If the answer to either or both of the 1st and 2nd questions is in the affirmative are they sufficient to warrant a set aside of the mediated agreement?

(4) Subject to answers to questions (1), (2) and (3), have the parties reached an agreement at mediation that is enforceable under Rule 12 of the ADR Rules?

Relevant Factual Background

3. The relevant background facts giving rise to these issues and this proceeding are these. Until his termination on 16th January 1998, Niugini Insurance Corporation (NIC) employed the first Plaintiff, Ted Taru. Under a home ownership scheme provided by NIC to its employees, the Tarus bought a residential property. The property was a State Lease consisting and described as Section 40, Allotment 9, Papua Place, Boroko, National Capital District (the property). The NIC, lent the Tarus K90, 000.00 toward the purchase price, under its home ownership scheme. In return, the Tarus gave and the NIC had a registered mortgage over the property as security for the repayment of the loan. In their statement of claim, the Tarus claim that upon and after the termination of Mr. Taru’s employment, NIC did nothing about the loan and mortgage.

4. The Tarus claim that in 2000, the first Defendant, Pacific MMI Insurance Limited (Pacific MMI) and the second Defendant David Randle (Mr. Randle) through their servants and agents fraudulently sold the property to the Third Defendant, Henry Smith (Mr. Smith). As at the time of the sale, the Tarus claim, the property was valued at K600, 000.00 and had K200, 000.00 in personal effects. They go on to claim that Pacific MMI did not have any legal or equitable right in the property and did not have any authority from the NIC to sell the property. This they claim resulted in the loss of their property, their personal effects, possible rental income at the rate of K1, 950. 00 per month and K40, 000.00 in repayments they made on the loan. By way of relief, they are claiming a reversal of the title in the property to themselves and other consequential orders. This does not acknowledge the fact that, there has been two more transfers of the property after the initial transfer to Mr. Smith. The first one was by Mr. Smith to a Family Federation For World Peace and Unification Inc. and from that Federation to a Giorgio Boin on 18th May 2012.

Affidavit of Andrew Gogo sworn on 23rd October and filed on 1st November 2013.

11

5. By orders of the Court on 22nd May 2007, Mr. Randle was removed as a party in this proceeding. That left the claim only as against the Pacific MMI and Mr. Smith, who has taken no active step in this proceeding. This may be due to the fact that he sold the property to Family Federation For World Peace and Unification Inc. Neither that entity nor Giorgio Boin has been named and served with the proceedings.

6. In defence filed for the Pacific MMI on 27th November 2007, with leave of the Court and with support of affidavits filed for the Defendants, the Defendants plead that the Tarus claim is res judicata. This is based on an order of the National Court made on 11th April 2000 requiring the Tarus to give vacant possession in proceeding OS No. 31 of 2000. The Pacific MMI took out that proceeding to secure vacant possession to complete the sale and transfer to Mr. Smith. An appeal lodged by the Tarus on 19th May 2000 referenced SCA No. 36 of 2000 was also resolved against the Tarus when they had it withdrawn in response to an application seeking to have the appeal dismissed for want of prosecution. Further, the Defendants plead that, Mr Taru on behalf of both himself and his wife, signed a Deed of Release in favour of the NIC and the Independent Public Business Corporation (IPBC) which subsequently got vested with the assets and liabilities of NIC. By that deed, the Tarus released both NIC and the IPBC in respect of claims for his unlawful termination and loss of personal properties and personal effects. In return for that release, the Tarus’ received a payment of K83, 945.92 in full and final settlement of their claims. Additionally, the Defendants plead that, NIC exercised its powers as mortgagee and sold the property to Mr. Smith. The relevant contract of sale and other documents were executed by authorized officers of the NIC under the corporations seal. By reason of this the Defendants deny the Tarus claim of fraudulent sale of the property. Based on their pleadings and with the support of a number of affidavit material, the Defendants filed a notice of motion on 21st February 2014, seeking a dismissal of the...