Rimua v Ekanda [2011] PGSC 12; SC1094 (19 April 2011)

SC1094

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA NO. 16 OF 2011

Between:

RENDEL RIMUA & 2 OTHERS
Appellants

And:

SIMON EKANDA & 31 OTHERS
Respondents

Waigani: Injia, CJ
2011: 13, 14, 18 & 19 April

APPEAL – Leave to appeal - Interlocutory decision - Decision to refer 34 LNG-Project related cases to mediation - Judicial case management decision - Terms of Mediation Order still under consideration - No formal Mediation Order in existence to base appeal - Application misconceived - Application dismissed – Supreme Court Act, s 14 (3); National Court Act, s 7B - E; National Court Mediation Rules 2010, rr 5, 6, 9 & 59.

Cases Cited
No cases are cited in the judgment.

Counsel:
Mr Manda with Mr Lome and Mr Pate, for the Appellants
Mr Eagan, for the Seventh Respondent
Mr Haiara, with other counsel, for the First, Fourteenth, Sixteenth & Eighteenth Respondents
Mr Nasil, for the Second, Third, Ninth, Tenth, Seventeenth, Twenty-first & Twenty-eight Respondents
Mr Lakakit, for the Fourth, Thirty-first & Thirty-second Respondents
Mr Kubak, for the Nineteenth Respondent
Mr Wilson, for the Twenty-second Respondent
Mr Henry, for the Fifth Respondent
Mr Dusava, for the Twenty-sixth Respondent
Mr Waranike, for the Thirteenth Respondent
Mr Kolo, for the Twenty-seventh Respondent

RULING ON APPLICATION FOR LEAVE TO APPEAL

1. INJIA CJ: This is a contested application for leave to appeal. The application is made by way of a Supplementary Notice of Application for Leave to Appeal.

2. The application relates to a decision of the National Court that is said to have been made on 21st December 2010, 2nd March or 8th March 2011, to refer various LNG-Project related proceedings commenced in the National Court to mediation under s 7B of the National Court Act (the Act) and National Court Mediation Rules 2010 (Mediation Rules). There is no dispute that the decision is, if so made, interlocutory and leave to appeal is necessary.

3. Arguments of counsel were heard over two days last week. Those arguments were centered on the application of the established principles on grant of leave to appeal to the circumstances of this case.

4. It is convenient to summarize those principles. The grant or refusal of leave to appeal is discretionary. The applicant must persuade the Court that the application has merit. That principle is expounded in a judgment of Lay, J in Matiabe Oberia v Police and the State (2005) SC 801. Justice Lay discussed the main authorities on grant of leave including decisions of the pre-independence Supreme Court: Breckwoldt v Gronoyke [1974] PNGLR 106, Sir Julius Chan v Ombudsman Commission of Papua New Guinea [1999] PNGLR 240, Rimbink Pato v Anthony Manjin [1999] PNGLR 6, Baing v PNG Stevedores Pty Ltd (2000) SC627, Boyepe Pere v Emmanuel Ningi (2003) SC711. The main criteria stated in question form are as follows:

(1) Is there an arguable or prima facie case demonstrated that the trial judge was wrong?

(2) Was the ruling within the discretion of the Court? Has it been shown that its exercise was manifestly unreasonable, exercised on wrong principle or a mistake of fact?

(3) Does the decision have any bearing on the final determination of the issues between the parties?

(4) Will it affect the primary rights of the parties or prevent the determination of the issues?

(5) Will substantial injustice be caused by allowing the decision to stand?

(6) Does the appellant have recourse in the Court below?

(7) Has cause been shown that the trial process should be interrupted by an appeal?

5. In civil appeals which involve the trial Judge's exercise of discretion on a procedural matter within the Court's jurisdiction, such as the interlocutory judgment given in this case, the test is much higher than in appeals against other types of interlocutory judgments. A passage from the majority view in Chan v Ombudsman Commission is pertinent. I quote from page 258:

"So to obtain leave to appeal an interlocutory judgment, it is not simply a matter (of) asserting there is an arguable case; that there has been some error. It is not the case that every error will effect the outcome of the substantive proceedings. What must be shown is, not only that there is patent error, but that the error effects a party's substantive rights or will prevent the proper determination of the issues."

6. I have given thought to the material and arguments placed before me and discerned the main issues that arise for my determination. I state those issues in question form, as follows:

(1) Is the Supplementary Notice of Application for Leave to Appeal competent?

(2) Did the Court make an order for mediation that is a proper subject of appeal? More specifically, did the Court make a mediation order on 21st December 2010, 2nd March 2011 or 8th March 2011?

(3) If a mediation order was made, is the order valid in that it conforms to the requirements of s 7B of the Act and Rules 5 and 6 and Schedule 2 Form 3 of the Mediation Rules? Has the applicant demonstrated that the Court was prima facie wrong in law in that the mediation order is inconsistent with those statutory requirements?

(4) If a prima facie error of law or error in the exercise of discretion is demonstrated –

• (a) is the error patent or manifestly erroneous; that the primary rights of the parties are affected or prevents litigating of the case?
  
• (b) Does the applicant have recourse in the mediation proceedings to opt out of participating in the mediation or terminate the mediation after it has commenced and proceed to litigate the matter?
  
• (c) Has the applicant shown cause that the mediation process should be interrupted?
  

7. Apart from the issue of competency, the other four issues are inter-related and I propose to deal with them together.

8. On the issue of competency, it is open to this Court to raise issues of competency of the supplementary notice of application for leave at any stage of the appeal proceedings. If a party wish to raise an issue of competency, that party must employ the procedure provided in Supreme Court Rules 0 7 r 14, by filing and serving a notice of objection to competency of the leave application. In the instant case the Court did not raise any such issue and the respondents did not file an objection as to competency. In the circumstances, it is not open to the respondents to raise those competency issues. I accept submissions of counsel for the applicants and the 7th respondent on this point and dismiss the various grounds of objection to competency raised in the submissions of counsel.

9. In respect of the other issues, I deal with the arguments collectively in this manner. First, the scheme of s 7B of the Act is that a mediation order is the sole foundation upon which mediation is conducted by a Mediator. A mediation order is based on three basic conditions having been met, as follows:

(a) The subject matter of the proceedings is appropriate for mediation: s 7B(1)(a), (2) the Act; Rule 5(1),(2) & (3) of Mediation Rules.

(b) A mediator is available to mediate in the matter and is so appointed: s 7B(3) of the Act; Rules 6 and 7 of Mediation Rules.

(c) Mediation is conducted and concluded by the Mediator and reported back to the Court within the time fixed by the Court: s 7B(4) of the Act; Rule 9 of Mediation Rules.

10. For purposes of formulating and issuing a mediation order, the Court may issue such directions or orders including appropriate orders for the costs of the mediation, as are necessary to determine those three basic terms of the mediation order: s 7B(4) of the Act. Those directions or orders form part of terms of the mediation order. An order for mediation once made should identify the proceedings the subject of mediation, the Mediator appointed by the Court and his or her fees and stipulate a time frame for the conduct and completion of mediation: Rule 5 (4). Section 7A-7E of the Act do not prescribe the form and content of a mediation order. However Mediation Rules, r 5 (3) & (4) prescribes the matters to be considered and determined which are then captured in the prescribed form of a Mediation Order appearing in Schedule 2 Form 3. Amongst other things required by s 7B to be spelt out in the mediation order, Form 3 requires specific matters to be set out. Those matters include insertion of the court file reference, description and title of the Court proceedings, the Mediator's name and the commencement and completion dates of the mediation. There is no suggestion by the parties in the present case that the form and content of the mediation order in Form 3 is inconsistent with the provisions of s 7B of the Act. I too find that Form 3 is consistent with the requirements of a mediation order stipulated in s 7B of the Act.

11. Upon the making of a mediation order, the Mediator takes control of the conduct of the mediation at an appropriate venue outside of the Courtroom and on a date and time set by the Mediator: Section 7C(1) of Act; Rule 9 (3) of Mediation Rules. The mediation is conducted in private and all communications entered into by the parties in the course of the mediation are privileged; s 7C(2) of Act. The mediator enjoys immunity from suit in respect of the conduct of mediation: s 7C(3) of Act. The Court awaits a report on the conclusion of the mediation. If the mediation fails the matter goes to litigation: s 7D(4) of Act. If the mediation is successful and a mediated settlement is reached, the parties may submit the settlement for endorsement by the Court that issued the mediation order: s 7C (3) of the Act.

12. In a case where the parties consent to the trial judge being appointed as a mediator, that does not relieve the Court from the necessity of a mediation order and compliance with the rules of conduct of the actual mediation including fixing an appropriate venue and time for the conduct of the mediation. This is necessary to draw a clear demarcation between the judge's adjudicative function and mediation function in the matter to which the mediator has appointed himself or herself as a mediator.

13. An appeal lies by leave of the court from an interlocutory judgment of the National Court. There is no question that a mediation order is an interlocutory judgment and leave to appeal is necessary. There is also no question that a mediation order is made in the Court's exercise of its judicial discretion and it is appealable.

14. The question is whether the Court made a Mediation Order at all in respect of LNG related cases; and more specifically on the 21st of December 2010, 2nd March 2011 or 8th March 2011. This was one of the main issues argued before me.

15. To determine the issue I prefer to go by the Court's record of proceedings for those dates. The court proceedings of 21st December 2010 cannot be transcribed and made available to this Court because those proceedings were not recorded due to a misunderstanding by the Court Recording Service that those were ADR/Mediation proceedings and as such were privileged. There was also no formal order issued by the Court and no order was taken out by the parties in respect of proceedings on that date. The next best record of proceedings is the transcript of proceedings of 2nd March 2011 and 8th March 2011 which is before this Court. Also the Court issued signed orders on those dates and those are before this Court.

16. In the transcript of proceedings of 2nd and 8th March 2011, the Judge is recorded on several instances as saying a mediation order was made on 21st December 2010 to refer all LNG – Project related proceedings to mediation. The orders issued by the Judge on 2nd and 8th March 2011 do not expressly make reference to a mediation order made on 21st December 2010 but they appear to deal with specific matters arising from a mediation order that may have been made on 21st December 2010. Further a Mediation Order in Schedule 2 Form 3 was not issued by the Court on any of those dates.

17. The absence of a Mediation Order in the prescribed form, lends strong support to the appellants' argument that a Mediation Order was not made on 21st December 2010, 2nd March 2011 and 8th March 2011. This could only mean that whatever decision was made by the Court to refer all LNG – Project related cases to mediation and all the matters addressed by the Court in the proceedings conducted on those dates were dealing with settling the terms of the mediation order that is or was to be made by the Court.

18. It appears that at the conclusion of proceedings before the Judge on 8th March 2011, the terms of the three basic conditions of a mediation order were still being addressed by the Court and are yet to be concluded or finalized by the Court. The process adopted by the Court appears to be consistent with the scheme of s 7B of the Act and Rule 5, 6 and 9 of the Mediation Rules that I have canvassed earlier. Matters relating to the three basic conditions to be expressly spelt out in a Mediation Order that I have alluded to, which were yet to be concluded and settled, include the following:

(1) Identification and confirmation of all parties to the 34 Court proceedings listed in the Court order of 2nd March 2011. Not all parties were represented and heard. For those parties that were represented at the hearing, it appears that some of them did not give their consent for their cases to be included on the list and others were undecided;

(2) Only four of the matters were properly before the Court and the rest of the matters were enlisted en masse without due and full consideration to matters set in s 7B of the Act and Rule 5(3) of the Mediation Rules;

(3) The appointment of mediators including appointment of the directions Judge as a Mediator and the costs of the mediation including Mediator fees were disputed by some parties. It appears Mediator fees that may have been proposed by some Mediators were not within the range of financial resources of many parties;

(4) The terms of the TOR and a Mediation Agreement, both of which appear to have no foundation in the Act or the Mediation Rules, did not involve the participation and consent of every party named in those 34 proceedings; and

(5) The dates for the conduct of the mediation were not fixed by the Court.

19. As intended by s 7B of the Act, a mediation order will have to be made for every proceeding on a case by case basis. The decision by the Court to refer all LNG- Project related cases to mediation is a general blanket order and on its face appears to be in order for the reason that the Court considered that was the most appropriate way of approaching the resolution of those related proceedings. That appears to be a general determination as to judicial management of those related cases and it is not advisable to treat that case management decision as constituting a mediation order.

20. Following from that judicial case management decision, specific mediation orders would have to be promulgated and issued for each of the 34 cases listed in the schedule to the TOR and endorsed by Court order of 2nd March 2011. The matters to be considered include those matters set out in Form 3. In addition to determinations as to the requirements of s 7B of the Act, a decision is required to be made in respect of every proceeding in respect of every consideration set out in Rule 5(3). The considerations enumerated in Rule 5 (3) are designed for the Court to ensure that only cases that are feasible and have prospect for a mediated settlement are allowed to proceed to mediation and a mediator is appointed to conduct the mediation within a fixed period. Such an order (Mediation Order) can only be made on a case by case basis.

21. I accept the respondents' submission that when a mediation order is in the formative stages in the judicial proceedings conducted under s 7B of the Act, it is a misconception to seek leave to appeal a mediation order which does not exist, both in form and substance. I understand the appellant's concern that their case may be rushed into submission in a mediation order when the Judge in no uncertain terms repeatedly says the Court made a mediation order on 21st December 2010 and if parties are aggrieved by that decision, that they can appeal.

22. On the face of the record, there is a prima facie case that the Court erred in law in insisting that an order for mediation was so made. An arguable case on this point has been demonstrated. However it remains to be considered whether the error is patent or grossly erroneous, that it affects the primary rights of the parties and prevents parties from litigating their case in Court.

23. This Court is faced with a situation where there is no mediation order in place in accordance with Form 3 because its terms are still not finalized. In the circumstances, it cannot be said that an order for mediation exists which can properly be the subject of an appeal. An appeal brought in respect of an interlocutory judgment under s14 (3) of the Supreme Court Act is premised on the existence of an interlocutory judgment or order as such. In the instant case, no such order exists. Parties and the Court below should be well advised to work out the precise terms of the mediation order on a case by case basis which in the end result should produce a mediation order for every case, which then and only then, will give rise to an appeal under s 14 (3) of the Supreme Court Act.

24. If the terms of the mediation order cannot be settled by agreement of the parties or otherwise by the Court and a mediation order is not issued in every case, the matter should be listed for trial. If a mediation order is reached in every case and the matter proceeds to mediation, there is provision in rules 5 and 6 of the Mediation Rules for a party to apply to the Court to revoke the mediation order or to revoke the appointment of a mediator. In rule 59, a party has the right to terminate the mediation after commencement of the mediation, in which case the Mediator reports that event to the Court and the matter proceeds to trial. If the mediation is successful in that a mediated settlement is reached, the issue of primary rights of the parties being adversely affected does not arise. Under any one of those scenarios, the primary rights of the parties are not affected and their right to litigate the matter in court is also not affected.

25. If the mediation is successful in that a mediated settlement is reached, there is no cause for any willing participant in the mediation to harbor any sense of grievance about the mediation process and its outcome.

26. From what I have said so far, it is obvious that the error made by the Judge in rushing to pronounce a mediation order is not patent, that it was not grossly erroneous and that the error does not affect the primary rights of the parties to litigate the matter or prejudice their case.

27. It is also obvious that there is recourse in the Court below. There is still opportunity for parties to participate in the interlocutory proceedings that are underway to persuade the Court the non-existence of the three basic conditions of a mediation order in every case and to persuade the Court not to issue a Mediation order in form 3. If after hearing the parties the Court issues a mediation order in Form 3 in respect of a particular proceeding, a party aggrieved by such mediation order may properly appeal against the interlocutory mediation order. If the Court refuses or declines to issue a Mediation order in Form 3 either because the Court has previously made a blanked mediation order or specific mediation order or for any other reason, contrary to the views expressed in this opinion, that order too is an appealable interlocutory ruling.

28. For the foregoing reasons, I refuse leave to appeal and discharge the interim stay orders. As to costs of the application, costs should normally follow the event, which in this case means the appellant and the 7th respondent will pay the other respondents' costs of the application. However, if costs is an issue, I may have to defer hearing submissions on the issue until I resume duties as Chief Justice after 7th May 2011.

________________________________________________________

Greg Manda Lawyers: Lawyer for the Appellants
Steeles lawyers & Other Law Firms: Lawyer for the Respondents
Esso Highlands Ltd: Lawyer for the 7th Respondent