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Wantok Gaming Systems Ltd v National Gaming Control Board [2017] PGNC 71; N6685 (6 April 2017)

N6685

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]


WS. NO. 678 of 2012


BETWEEN
WANTOK GAMING SYSTEMS LIMITED
Plaintiff


AND

NATIONAL GAMING CONTROL BOARD

First Defendant


AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant


WS. NO. 744 of 2012


BETWEEN

DANIELS PLACE LIMITED

Plaintiff


AND

NATIONAL GAMING CONTROL BOARD

First Defendant


AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant


WS. NO. 752 of 2012


BETWEEN

FAIRFAX NETWORK LIMITED

Plaintiff

AND

NATIONAL GAMING CONTROL BOARD

First Defendant


AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant


Waigani: Kandakasi, J.

2015: 17th July

2017: 6th April


MEDIATION – Second order for mediation following “bad faith” under first order– Second mediation proceeded well until the First Defendants chairman reached his limit not earlier disclosed – Board increased settlement proposal – Plaintiff not accepting offer – Whether First Defendant’s conduct amounted to “bad faith”? – Inappropriate to find for “bad faith” without any evidence of the likelihood of plaintiffs succeeding in their respective claims and the defendant’s defence failing – Lack of such evidence – Better option - Matter go to trial and have the question of “bad faith” or not determined at the end of the trial with appropriate orders to issue – Depending on the amount awarded after trial, such orders could include costs on full indemnity basis for the mediation and all subsequent costs including the trial.


Papua New Guinea Cases cited:
Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636
Alex Awesa& Anor v. PNG Power Limited (2014) N5708
Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705
Hargy Oil Palm Ltd v. Ewase Landowners Association (2013) N5441
Koitaki Plantations Ltd v. Charlton Ltd trading as Kookabura Meats & Stuart Fancy (2014) N5656
Wantok Gaming Systems Ltd v. National Gaming Control Board (2014) N5809


Counsel:
I. Shepherd, for the Plaintiffs
E. Hampalekie, for the First Defendants
No Appearance, for the Second Defendants


6thApril, 2017


1. KANDAKASI J: These are related cases dealt with together and were referred to mediation twice. The First Defendant (Gaming Board) acted in “bad faith” in respect of the first mediation. This resulted in no mediation and no settlement. The Court ordered mediation for the second time in a detailed judgment delivered on 2nd June 2014 (the first Judgment).[1]Mediation did take place under the second order but the parties failed to reach agreement. In the offers to and from the parties they reached the Chairman of the Gaming Board’s limit of K5 million, not earlier disclosed. The Plaintiffs rejected that offer. Later the Gaming Board’s board increased its offer by K1.5 million, which the Plaintiffs also rejected.


Relevant Issues


2. Each of the Plaintiffs claim the Gaming Board acted in “bad faith” when its Chairman failed to disclose the limit on his authority at the beginning or at the commencement of the mediation process. The Gaming Board claims it acted in good faith and made the offers despite having a number of good legal defence against each of the Plaintiffs’ claim. Obviously, these claims give rise to the following issues:


(1) Did the Chairman of the Gaming Board act in bad faith when he did not disclose the limit on his authority to settled?


(2) If the answer to the first question is in the affirmative, is the “bad faith” serious enough to warrant judgment for the Plaintiff?


Did the Chairman of the Gaming Board act in bad faith?


3. I deal firstly with the first issue and if need be will go on to consider the second issue. In respect of the issue of “bad faith” there are number of judgments on point, mainly from myself. The relevant decisions are those in Koitaki Plantations Ltd v. Charlton Ltd trading as Kookabura Meats &Stuart Fancy,[2]Alex Awesa& Anor v. PNG Power Limited[3]and the first judgment in this case. I will allow myself to be guided by these decisions particularly in relation to the legal principles discussed and set out in those cases. Of course, the application of the legal principles to this case will be varied to suit the particular facts of this case.


The Relevant Facts


4. Turning to the background leading to the question presented, I note it is simple and straight forward. The dispute in each of these cases concerns contracts each of the Plaintiffs had with the Gaming Board. The State has been named only as a nominal defendant. These contracts were for the provision of technical services and goods to the Gaming Board. Daniels Place Limited’s claim concerns a contract dated 13th November 2007 between itself and the Gaming Board. The contract was for the development of a software program to manage the Gaming Board’s Central Monitoring System to monitor gaming machines for a certain agreed price or consideration. Daniels claims it developed and implemented the computerised program, rendered its invoice for work done and is yet to be paid.


5. Fairfax Network Limited’s contract with the Gaming Board concerns a contract entered into between itself and the Gaming Board on 02nd March 2009. Under that contract, Fairfax was to perform the functions of a gaming machine operator and manage the gaming machines for a period of 10 years. Fairfax was to be paid a fee of five (5) percent from the monthly Gaming Machine gross revenue from all its gaming sites. Subsequently, on 07th March 2012, the Gaming Board’s new management reviewed the engagement and decided to terminate it through a board decision. Fairfax is making a similar claim to that of Daniels but specific to its own contract.


6. As for Wantok Gaming Systems, its claim concerns a contract it entered into with the Gaming Board in March 2009.Wantok was required to import parts and assemble gaming machines in Papua New Guinea and then sell them to the Gaming Board and others. On 16th March 2009, Wantok was issued with a manufacturer’s license. After a review of the contract by the Gaming Board’s new management, the Gaming Board decided to terminate the contract.


7. Each of the Plaintiffs’ took the Gaming Boards actions as a repudiation of their respective contracts and issued these proceedings claiming damages for breach of contract. For their damages, each of the Plaintiffs are claiming the balance of their respective contract prices and damages for goods and services supplied under their respective contracts but not paid for by the Gaming Board. In their pleadings, the Plaintiffs also plead the Gaming Board’s decision to terminate their respective contracts was illegal and seek to rely on a decision of the Supreme Court in SCR 1 of 2012 - Special Reference by the Dr Allan Marat and SCR 2 of 2012 – Special Reference by the National Parliament.


8. The Gaming Board claims that the contracts were not properly and legally entered into. Further, it claims that the contracts did not get the required proper approval of its board and failed to meet the public tender requirements for contracts that involved substantial sums of money under the Public Finance (Management) Act 1995 (PFMA). As for the Supreme Court decisions, it claims the decisions do not apply either retrospectively or at all.


9. As noted, on 19th November 2014 the mediation proceeded under the second order. That meant that, the parties duly complied with other orders that needed to be complied with for the mediation to take place. At the commencement of the mediation, the mediator asked if each of the parties had the necessary authority to negotiate and settle the matter, if possible. All parties confirmed having such authority. At the appropriate stage, parties started to make settlement proposals until the Gaming Board was able to offer settlement up to K5 million. The plaintiffs did not accept the offer. At that stage which was around 4:30pm, the Chairman of the Gaming Board, Mr. Lesley Hoffman, indicated, that was the highest figure he had authority to offer, whereupon the parties confirmed parties failed to reach agreement to settled. At the same time however, the Gaming Board representatives undertook to seek their board’s approval to increase the offer before the matter returned to court on 4th December 2014. By letter dated 28th November 2014, the Gaming Board increased its settlement offer to K6.5 for all of the three claims. The plaintiffs rejected the offer. On 19th November 2014,the mediator issued a certificate which states: “I certify that the parties made reasonable efforts but were unable to resolve the issue in dispute”.


10. The plaintiffs filed a motion seeking judgment against the Gaming Board in each of the cases claiming “bad faith” at mediation by the Gaming Board. The Court dealt with that motion on 17th July 2015 upon a return of the matter. I received written submissions from the parties for which I am most grateful. I then reserved my decision to give me the opportunity to consider the submissions and come to a decision when I was ready. Judgement was however delayed due mainly in part to two of the three files going missing. I am indebted to the parties and counsel who provided me with the relevant documentation used in the application. This has enabled me to give this judgment today.


Consideration


11. In my decisions in Hargy Oil Palm Ltd v. Ewase Landowners Association,[4]Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd,[5]Koitaki Plantations v. Charton (supra) and Awesa v. PNG Power(supra)as well as the first judgment in this case, I went to some length in discussing the development, promotion and use of ADR and in particular, mediation. In these judgments, I highlighted both the reasons why the formal courts and governments worldwide are promoting and encouraging the use of mediation. I wish not to repeat myself and instead refer only to those judgements and in particular the first judgment in this case.


12. In those judgments, I discussed in some detail the duties and responsibilities of parties and their lawyers in mediation. Having done that, I proceeded to provide an answer to the important question of what amounts to “bad faith”. The answer to this question is in paragraph 24 which quotes from my earlier decisions and it reads:


“24. ... I said a proper understanding of these duties and responsibilities by the parties would enable them to “participate in good faith” at mediations. That would in turn enable possible resolutions of the disputes. But a failure in these duties and responsibilities and in particular an absence of any of the following list of behaviours would lead to a finding of a party acting in “bad faith” resulting in no final settlement:


‘(1) Complying with the various legislative provisions and other rules, standing orders or practice directions’ or provisions that govern mediation;

(2) Complying with orders referring a matter to mediation;

(3) Personally attending (excluding attendance by telephone) at the mediation by all persons who are fully authorized to settle the dispute,

(4) Preparing for mediation by the parties and their representatives, which includes the exchange of any documents requested or as set forth in a rule, order or request of the mediator;

(5) Participating in meaningful discussions with the mediator and all other participants during the mediation;

(6) Acting in accordance with all contractual terms regarding mediation, the parties may have agreed to;

(7) Following rules set out by the mediator during the introductory phase of the process;

(9) Remaining in the mediation process until the mediator determines that the process is at an end or excuses the parties;

(10) Engaging in direct communication and discussions between the parties to the dispute, as facilitated by the mediator;

(11) Engaging in accurate and honest representations to the other parties or the mediator during and for the purpose of the mediation; and

(12) Refraining from filing any new motions until the conclusion of the mediation, in pending lawsuits.”


13. Also, where corporations are involved, I made specific reference to their duties and said the servants and agents of corporations should:


“(1) seek and secure the relevant governing bodies or authorities’ full and unrestricted authority or instructions to negotiate in good faith and find a solution;

(2) seek and secure their legal advices and if need be secure appropriate legal services for and during the mediation process;

(3) consult and get the inputs of other important and critical people where that is needed;

(4) have readily available persons they will need to consult or seek their approval during the course of mediation to promptly provide the required inputs or instructions;

(5) gather and put together all documentary and other evidence which they may require or wish to table at the mediation;

(6) carry out investigations and researches as may be considered relevant and necessary with results ready for use during the mediation process if need be;

(7) allow for quality undivided time and attention to the mediation process; and

(8) prepare and make full disclosure of information critical to arriving at a fair, just and a reasonable agreement.”


14. Further, in my earlier judgments, I turned specifically to consider the provisions of r.10 (7) of the ADR Rules on the kinds of penalty the Court could impose against a party that is guilty of “bad faith” and said:


“The Court has a wide discretion or power to make such orders as it may think appropriate in the proceedings once a case of “bad faith” is made out against a party. I note this is not a vesting of a new power that the Court does not already have. Instead, as it has been repeatedly and abundantly made clear by this and the Supreme Courts under the first and third factors outlined above, r.10 (7) merely restates and reinforces a power the Court already has. It would follow therefore that, a case of “bad faith” could be met by any one or more of the following orders depending on the seriousness of the conduct and whether the conduct is deliberate or inadvertent:


(a) dismissal of the claim;

(b) permanent stay of the claim; or

(c) a stay of the claim pending a meeting of certain conditions; or

(d) a strike out of a defence and entry of judgment; and or

(e) order costs.


... Sanctions under (a) - (c) could be imposed in appropriate cases, if the defaulting party is the plaintiff or a cross claimant. Obviously, the sanction under (d) could be imposed against a defendant or a cross-defendant. Sanctions under (a) and (d) could be considered drastic. However, if the circumstances leading to a finding of “bad faith” is serious, such sanctions might very well be called for and warranted, when considered in the light of the kind of sanctions that could be and are being imposed for contempt of court or for breach of court orders. The final possible sanction of costs could be either on a solicitor/client or party/party basis. Such a sanction could be in addition to any of the sanctions under (a) - (d). If possible, the court could at the time of the order, fix the actual amount of costs payable or allow for taxation.”


15. Applying the principles outlined above, I found in both the Koitaki Plantations v. Charlton (supra) and Awesa v. PNG Power (supra) cases, the respective Plaintiffs failed to:


(1) comply with the call and encouragement for the use of mediation by legislation,... including the ADR Rules, the various Supreme and National Court decisions and many learned and authoritative publications;

(2) comply with the orders of the Court that referred the matter to mediation with their consent;

(3) personally attend through a duly authorized person having the necessary power and authority to bind them at the appointed time, date and venue for mediation as did the other parties and the mediators;

(4) prepare for mediation, which included:

(a) seeking and securing their board’s full and unrestricted authority or instructions to negotiate in good faith and find a solution;

(b) the exchange of any documents requested or as set forth in a rule, order or request of the mediator;

(c) seeking and securing their legal advice and if need be, secure appropriate legal services for and during the mediation process;

(d) consulting and getting the inputs of other important and critical people where that was needed;

(e) ensuring the ready availability of persons who needed to consulted or seek their approval during the course of mediation to promptly provide the required inputs or instructions;

(f) gathering and putting together all documentary and other evidence which they may require or wish to table at the mediation;

(g) carrying out investigations and researches as may be considered relevant and necessary with results ready for use during the mediation process if need be; and

(h) allowing for quality undivided time and attention to the mediation process; and

(i) preparing to make full disclosure of information critical to arriving at a fair, just and a reasonable agreement.

(5) participate in meaningful discussions with the mediator and all other participants during the mediation;

(6) act in accordance with all contractual terms regarding mediation that the parties may have agreed to, given that the mediation orders were with the consent of the parties;

(7) follow rules that may have been set by the mediator during the introductory phase of the process or in his earlier communication with the parties;

(9) remain in the mediation process until the mediator determined that the process was at an end or excused the parties;

(10) engage in direct communication and discussions with the other parties with the mediator’s facilitation;

(11) engage in accurate and honest representations to the other parties or the mediator during and for the purpose of the mediation.


16. In both cases:


“I found these failures were serious impediments to the Court ordered mediation from proceeding. That left the other parties and this Court in the dark as to what were the real, serious and meritorious issues that were presented in the case and how they required only a judicial consideration and determination as well as how and where it might be on the list of cases or issues inappropriate for mediation. Further, I found that, if indeed the cases presented the kind of issues in question, that should have been made known and clearly presented to the Court prior to the order referring the matter to mediation. Furthermore, I found that, if indeed there was an issue of the kind in question, Koitaki Plantations and PNG Power (the parties acting in “bad faith”), should not have consented to the matter being referred to mediation and instead argue against that for such a reason.”


17. Then in respect of the last point, I made this observation, which I consider is very important:


“It should be noted that, once a Court makes an order for mediation, it effectively means there is no serious and meritorious issue which falls into the list of cases or questions inappropriate for mediation. This immediately obligates the parties to use their best efforts and endeavours to resolve their dispute through the mediation process. If they faithfully discharged their respective duties and responsibilities in the way outlined above, settlement would be inevitable. The only exception to that would be cases in which the parties are able to agree that there is a serious impediment to settlement which was not clear as at the time of the order for mediation.”


18. Applying these principles, I found in both cases a number of failures on Koitaki Plantations’ and PNG Powers’ parts. These were that:


(a) they failed to demonstrate to the Court's satisfaction that there existed in their respective cases, the kind of impediment and or type of issue discussed above;

(b) they conducted in a way that was contemptuous of the orders for mediation;

(c) their conducts ran against the grain of the various legislative, judicial and learned publications, encouraging and supporting the use of mediation to resolve human conflicts;

(d) their respective conducts forced the other parties, the Court and the mediator to waste their time, energy and effort in arriving at the decision to have the matter referred to mediation and setting aside time and generally preparing for it; and

(e) save only to point out that their decisions were not to settle the matter and hence not to give mediation a fair chance, they both failed to provide any good reason for taking that position.


19. In those circumstances, I decided in Koitaki Plantations v. Charlton (supra) that the most appropriate sanction would be an order for a dismissal of the case. Accordingly, I ordered a dismissal of Koitaki Plantations’ claim and ordered a strike out of its defence with judgment entered against it on a cross claim by the defendants. In making the second part of the order, I noted that, the case concerned a simple supply of goods contract, namely live animals, and a claim of none payment for them in the plaintiff’s claims and in the defense and cross-claim a claim of a failure to supply the animals and or an over payment for them. I was of the view that, this presented no meritorious issue that was beyond the reach of mediation and resolution by the parties. All that the parties had to do was to sit down with the facilitation of a mediator at mediation and settle that claim. At mediation they would have gone through the various and relevant purchase orders, delivery dockets, invoices, payment slips and evidence of payments and settle the claim after establishing the correct records of what happened in the various transactions.


20. In the Alex Awesa case, I arrived at a similar decision for the same reasons but with damages to be assessed as they were not liquidate. I then ordered the damages to be settled through mediation. I ordered costs against the PNG Power Ltd which was the defaulting party.


21. In the first judgment in this case, I came to the conclusion after considering all the arguments and evidence put before me then as well as my earlier decisions that:


“...this case is in much the same position as the case in the Koitaki Plantation and Alex Awesa cases but a bit worse than the Alex Awesa case. Unlike the defendant in the Alex Awesa case, which was able to point out at least an issue about interpreting a particular statute, there is not a single mention of any issue that warrants trial being pointed out or identified here by the Gaming Board. If parties attended mediation in good faith and were not able to resolve their dispute despite their best efforts, they have the duty under Rule 5(2) of the ADR Rules to “identify and limit the real and meritorious issues in the proceedings that warrant judicial consideration and determination” and reach agreement on how to conduct the litigation over those issues. By choosing not to go to mediation at the instigation of the Gaming Board, the parties failed to discharge that duty. This is serious because, when the Court decided to have the matter referred to mediation, it was of the view that, there was no issue warranting a court hearing and determination being presented. A review of that position could only come after the parties tried their very best to find a solution to their dispute and in the process discover an issue of the kind that is inappropriate for mediation as per the list provided in the Able Construction Ltd case.


22. I therefore considered that:


“...an order for the parties to comply with the orders for mediation made on 4th of December 2013 with appropriate modifications [was]... warranted. Then given that the National Gaming Control Board’s bad faith ... [had] led to no mediation and hence a breach of the orders for mediation an order for it to bear all of the costs on an indemnity basis ... [was] in order. Additionally, I consider it also appropriate that the mediation now ordered should be conducted by a different accredited external mediator to avoid any apprehension of ... impartiality in the mediator.”


23. I then issued appropriate orders including term 5 which reads:


“(5) If the National Gaming Control Board acts in bad faith again in any manner or form and such conduct leads to no resolution at the new mediation, there shall be judgment for each of the plaintiffs with damages to be assessed.”


Present Case


24. In the present application, the Plaintiffs claim the Gaming Board acted in “bad faith”. That resulted in no agreement. Consequently, they argue for judgment to be entered in their favour pursuant to term 5 of the orders issued under the first judgment. Two main arguments are presented in support of that argument. Firstly, they submit that, throughout these proceedings the Gaming Board has engaged in questionable conduct. Such conduct resulted in the first judgment against the Gaming Board. Despite that, the questionable conduct has continued. Evidence confirming this is in the Gaming Board’s indicating at the commencement of mediation on 19th November 2014, that its representatives led by its Chairman had full authority to settle. However, after 7 hours of mediation, the Chairman changed that to say he had a limit of up to K5 million. This resulted in the mediation ending with no agreement. The Gaming Board’s later board decision to increase their offer to K6.5 million was with conditions that were unacceptable to the Plaintiffs because no provision was made for interest to compensate for the delayed payments. Finally, the Plaintiffs also pointed out that, despite orders for payment of their costs on indemnity basis under the first judgment, the Gaming Board has made no payments yet.


25. Secondly, the Plaintiffs submit that, no complexed legal issues are presented which warrant any judicial consideration and determination. They suggest therefore that, this case calls for resolution with good faith negotiations at mediation. In so submitting, the Plaintiffs point out that, the Gaming Boards defence are not sustainable. Further, they point out that the requirements under the PFMA were met through certificates of inexpediency. Furthermore, they argue that even if the Gaming Board’s defence is sustained, the Plaintiffs would still be entitled to damages on a quantum meruit basis as was the case in Fly River Provincial Government v. Pioneer Health Services Ltd.[6]


26. I agree that the Gaming Board through its earlier counsel Mr. Liria, engaged in conduct that was clearly questionable. A certificate of bad faith issued by the mediator confirmed that. However, that was prior to and up to the date of the first judgment, which formed the basis for that judgment. The conduct of the parties up to the date of that judgment is sufficiently accommodated and reflected there. They are therefore, no longer open for us to return to. What is relevant and important is the parties conduct since the first judgment. In respect of that, there is no dispute that the parties did go to mediation and did participate in the process for 7 hours on 19th November 2014. Inferring from the evidence before the Court, it is obvious to me that, aside from the preliminaries, parties did get into a discussion of the Plaintiffs’ damages. That resulted in offers to and from the parties until the Gaming Board’s Chairman said the highest he could offer was up to K5 million. That was not the end of the steps taken toward settlement by the Gaming Board. Its board approved an increase on its offer to K6.5 million to be paid in instalments over 5 years as its cash flow was being affected by being required to support the National Budget. Clearly, what the Gaming Board did here was much better than what it failed to do prior to the first judgment. The certificate issued by the mediator after the second mediation confirms the parties acted in good faith at mediation and despite that, they were not able to resolve all of the matters in dispute between them.


27. The critical question is, did the Gaming Board act in “bad faith” when its representatives attending the mediation did not disclose the limit on the Chairman’s authority? The Plaintiffs raise this issue despite the good faith certificate from the mediator. Often times, parties engaged in settlement discussions do not freely and easily disclose if indeed, there is a limit on how far they can go in terms of how much they can offer in settlement. Many parties and lawyers usually hope that they can settle within the limits of their instructions or what they consider is a reasonable amount to settled and sometimes leave room to go back to whoever has the authority to go beyond what has already been offered, if there is good reason to do so. This is a legitimate tactic some parties, their servants or agents including their lawyers use in their settlement negotiations.


28. For parties entering into good faith negotiations, they would have arrived at the maximum limits after a careful consideration and assessment of the opponent’s claim and the strengths or weakness of their own positions. It is also a well-known practice at least in PNG that, most plaintiffs often inflate their claims in their statement of claims. That is why in most cases they do not after a trial or through settlement negotiations get the exact amounts pleaded. It is therefore, unsafe and indeed, most inappropriate to infer “bad faith” merely on the basis of a party not disclosing its limit at the commencement of mediations. Disclosing one’s limit upfront especially in precise terms might immediately prevent even the process of negotiation from commencing at all. It is therefore, important that a claim of “bad faith” must be properly contextualized and the Court must be careful not to proceed in the abstract or without any evidentiary foundation, if the Court is to do justice. This is necessary, for very good reason. The subsequently disclosed amount might be the ultimate allowable damages in the case. Hence, a party who wishes the Court to find for “bad faith” must provide evidence establishing its claim. If a plaintiff is claiming “bad faith” against a defendant as in this case, based on a contract, the plaintiff must provide evidence of the:
(1) contract;

(2) contract meeting all of the relevant statutory and other requirements for a legally binding and enforceable contract;

(3) plaintiff itself faithfully meeting and satisfactorily performing all of the terms of the contract as they apply to it;

(4) proper invoices have been rendered and demonstrate their payment or non-payment;

(5) steps taken to mitigate the plaintiffs loss or damages;
(6) the full amount of damages properly due and payable;
(7) defendant’s defence having no likelihood of success; and

(8) likelihood of the Court entering judgment in its favour beyond what has been offered or the defendants stated limit.


29. In the present case, the Plaintiffs have the duty and obligation to adduce evidence to support their application. They filed only one affidavit by their lawyer Mr. I. R. Shepherd with nothing from any of the Plaintiffs. It is settled law that, lawyers evidence can only be evidence of his instructions but not evidence of the matters in contention between the parties unless he is a witness to the facts. Hence, it was for the Plaintiffs to rebut the evidence produced against them. The evidence for them had to come from the proper officers or persons who possess the primary and direct evidence supporting each of the Plaintiffs’ claims. The Plaintiffs failed to adduce any such evidence. This failure of the Plaintiffs has resulted in them failing to produce evidence of:

(1) a copy each of their respective contracts;

(2) each of them meeting all applicable legislative requirements including the object of such provisions;

(3) the value of each of their respective contracts;

(4) how much of the terms and conditions of the contracts have been fulfilled;

(5) the total amount due, how much of that was paid and how much remains to be paid.


30. On the other hand, the Gaming Board filed a number of affidavits. These were by its Chief Executive and other officers. An examples of that are the affidavits by its acting Chief Executive Officer, Imelda Agon[7] and its Finance Manager Paul Ketombings’[8] in the Daniels’ claim (which is reflective of the two other plaintiffs’ claims with some variation). From these evidence, it is clear the contract concerns a contract dated 13th November 2007 between the Gaming Board and Daniels Place. The contract was initially valued at K3 million but later varied and increased by K8 million making the total K11 million. The contract was for the development of a software program to manage the Gaming Board’s central monitoring system to monitor gaming machines for a certain agreed price or consideration. The evidence produced by the Gaming Board[9] shows Daniels have been paid the following between 2007 and 2011:

(1) K13, 753, 825.31 (K2, 753, 825.31 more than the contracted value);

(2) K10, 926, 300.00 for poker machines;

(3) K17, 116, 325.33 for systems upgrade; and

(4) K7, 341, 985.00 for monitoring fees.


31. In the formal defence filed by the Gaming Board, it takes issue with each of the claims on the basis of its board not approving the contracts and the contracts not meeting the requirements of the PFMA. This is a critical matter as was emphasised by the Supreme Court in Fly River Provincial Government v. Pioneer Health Services (supra). The Plaintiffs’ response is that, certificates of inexpediency were issued for each of the contracts. However, the Gaming Boards evidence suggest that the certificates of expediency were intended to cover circumstances as in the case of an emergency following a natural disaster or something like that, which call for a suspension of the normal public tender process. It goes on to point out that, no such circumstances existed in this case to warrant the issuance of certificates of inexpediency. A satisfactory response from the Plaintiffs should have been a provision of evidence of the circumstances that existed to warrant the issuance of their alleged certificates of inexpediency and therefore the certificates were lawfully issued and are properly in place. Similarly, the Plaintiffs have not addressed by any appropriate evidence the Gaming Boards claim that, its board at the relevant time did not have the necessary authority and did in any case approve each of the contracts.


32. Given the lack of evidence from the Plaintiffs in terms of what I outlined above, it is difficult to work out exactly which of the terms of the contract were allegedly performed by each of the Plaintiffs and which parts of the contract remains unperformed or fulfilled with their respective values. Similarly, there is no evidence of what steps, if any, each of the Plaintiffs took to mitigate their losses from when it might have become clearer that the Gaming Board was taking issue with the contracts and it was not going to pay them. In these circumstances, it is difficult to conclude that the Gaming Board Chairman’s belated announcement of his limit and subsequently the Board deciding to increase its offer by another K1.5 million could be said to be an act of “bad faith”. This also highlights the risk or chance of a trial arriving at a finding that the Plaintiffs’ are not entitled to any damages or if they are, such damages are up to or below the amounts offered by the Gaming Board. If this turns out to be the case, it will demonstrate clearly that the Gaming Board was more than generous or reasonable and acted in “good faith”. Of course, if the opposite turns out to be the case, the opposite will be the case. What this demonstrates is this. It is too premature to call it “bad faith” and order judgment for the Plaintiffs in the terms sought by the Plaintiffs. I consider in the particular circumstances of these cases that, the fairest decision is to decline the Plaintiffs’ application and let the parties go to trial. After the trial, if the Plaintiffs’ recover over and above what was offered by the Gaming Board, the Gaming Board could be ordered to bear the Plaintiffs’ costs of the second mediation, this application and going to trial on a full indemnity or solicitor client basis. If however, the opposite turns out to be the case, the Plaintiffs could be ordered to pay the Gaming Board’s costs of the mediation, this application and the trial on an indemnity or solicitor client basis. Accordingly, I make the following orders:


  1. The application for judgment by each of the Plaintiffs against the National Gaming Control Board for “bad faith” at mediation is declined.
  2. The costs of the application and the mediation are ordered to be costs in each of the causes.
  3. These matters shall return to Court on 19thApril 2017 at 9:30 am for directions as to the further conduct of the proceedings.
  4. Time for entry of these orders is abridged to take place forthwith upon the Court signing them.

_______________________________________________________
Ashurst Lawyers: Lawyers for the Plaintiffs
Liria Lawyers: Lawyers for the Defendant

[1]The judgment is now published under the reference, Wantok Gaming Systems Ltd v. National Gaming Control Board (2014) N5809.
[2](2014) N5656.
[3](2014) N5708.
[4](2013) N5441.
[5](2014) N5636.
[6](2003) SC705.
[7] Affidavit sworn on 15th June 2015, document number 48 in Daniels Place’s proceedings.
[8] Affidavit sworn on 1th June 2015, document number 49 also in the Daniels Place’s proceedings
[9] See affidavits of Imelda Agon sworn on 15th June 2015 (doc # 48) and affidavit of Paul Ketombing sworn on 1th June 2015 (doc # 49). Most of the evidence is from these affidavits.

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