Bais v Ilius [2020] PGSC 89; SC2002 (18 September 2020)

SC2002

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCR NO. 6 OF 2020

APPLICATION FOR REVIEW
UNDER SECTION 155 (2) (B) OF THE CONSTITUTION

BETWEEN:
CHRIS BAIS, CHIEF EXECUTIVE OFFICER, PNG POWER LIMITED
First Applicant

AND:
PNG POWER LIMITED
Second Applicant

AND:
JOHN ILIUS AND NIAMAI ILIUS as joint Tenants
Respondents

Waigani: Thompson J
2020: 18^th September

SUPREME COURT REVIEW - Application under S 155 (2) (b) of Constitution and SCR Order 5 - Draft unsigned Mediation Agreement - bad faith - Court ordered party to implement unsigned Agreement or have Defence and cross -claim struck out - Notice of Appeal filed but struck out as incompetent – principles include exceptional circumstances manifesting substantial injustice – factual and legal errors determinative of outcome can be exceptional circumstances and substantial injustice – clear legal grounds meriting review.

Counsel

Mr. M Tumul, for the Applicant
Mr. R Tamarua, for the Respondent

18^th September, 2020

1. THOMPSON J: This is a contested application for the grant of leave to review a decision of the National Court, pursuant to S 155 (2) (b) of the Constitution. The decision was made on 6 December 2018. Leave is required under Order 5 Rule 1, as the Applicants have lost their right of appeal.

2. The law in relation to such applications for leave is reasonably well-settled, and both parties have referred me to the relevant case authorities (see Avia Aihi v The State (No. 2) (1982) PNGLR 4, Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120, and many subsequent cases).

3. Where a right of appeal has not been exercised, the criteria for the grant of leave are usefully set out by Hartshorn J in the recent decision of MVIL v Fura Opeta (2020) SC1954, decision of 10 February 2020. It must be in the interests of justice, there must be exceptional circumstances resulting in substantial injustice, and there must be clear legal grounds meriting a review of the decision. The last matter includes that the Applicant must have standing, must give a reasonable explanation as to why the right of the appeal was lost, and the application for leave has been made promptly.

4. However, the cases say that even if there has been delay and no satisfactory explanation, leave may still be granted if there are exceptional circumstances showing substantial injustice, and it is in the interests of justice. The merits of the case may far outweigh the lawyer’s conduct. (New Zealand Insurance Co. Ltd v Chief Collector of Taxes (1988) PG SC 25).

5. Different considerations may arise where the Applicant’s right of appeal has been exercised. In Telikom (PNG) Ltd v Kila Rava and others (2018) PGSC 39, the Applicant had lodged an appeal within time against the judge’s decision. However, the appeal was subsequently dismissed for want of prosecution. The Court held that it was an abuse of process for the Applicant to come to court for a second bite of the cherry after its earlier appeal was dismissed, and it was irrelevant that the dismissal had been summary, and not on the merits.

6. That is similar, although not identical, to the facts of this case. Here, the Applicants lodged an Application for Leave to Appeal against the judge’s decision, and the Application was granted on the basis that a Notice of Appeal had to be filed within 21 days. Due to a mistaken belief that the time-limit did not run during the court vacation, the Applicants did not file the Notice of Appeal until after the 21 days had expired. The Notice of Appeal was therefore found to be incompetent and the Appeal was dismissed.

7. In the present case, there are two issues relating to abuse of process which raise difficulties, which were not fully addressed by the parties. First, can the Applicants be said to have exercised their right of appeal, and secondly, if they did, can this Application be an abuse of process where the Appeal had not been dismissed on the merits.

8. In relation to the first issue, an Applicant has no right of appeal from an interlocutory decision or on questions of fact, unless leave to appeal is granted. The Applicants here did not file a competent Notice of Appeal. This may be different from an Applicant who has not filed a Notice of Appeal at all. The Applicants here were granted leave to appeal, and so on that date, had a right to appeal. They then exercised that right by filing a Notice, but one which was incompetent, and so was dismissed. This places the Applicants in a similar position as the Applicant in the Telikom case.

9. In that Telikom case, the then Chief Justice Injia raised the question of whether or not summary dismissal of an Appeal for being incompetent or for want of prosecution, could in fact be binding on the merits of the appeal so as to amount to an abuse of process. He expressed the view that summary dismissals are based on Court policy and case management, which should perhaps not override important points of law which may need consideration on an appeal. However, as the issue had not been addressed, he could not determine the point.

10. This view is consistent with the case authorities regarding abuse of process. In G. R. Logging Ltd v David Dotaona and ors (2018) PGSC 34, the Court held that a dismissal of proceedings for reasons other than a determination on the merits of the substantive questions in the cause of action, is not final, and does not make a subsequent claim pleading the same cause of action, res judicata. A dismissal which is not made on the merits is not final, and cannot form the basis of a subsequent of claim of res judicata.

11. Here, the decision to dismiss the appeal for being filed out of time, was not a determination of the merits of the claim, and does not make a subsequent claim pleading the same grounds, res judicata. It therefore is not an abuse of process on that basis.

12. In the case of Michael Wilson v Clement Kuburam (2016) PGSC7, the Court considered a similar issue, where the Application for leave to appeal had been dismissed for being out of time, and so was incompetent. The Court found that the dismissal was not a determination on the merits, so was not an abuse of process on the basis of it being res judicata. However, the Court confirmed that it could always be an abuse of process on the basis of the dilatory and contumelious conduct of the Applicants and this was more the basis of the Respondent’s argument in the present case.

13. In the present case, I take the view that as the Appeal was not dismissed on the merits, it was not res judicata, and this Application could not be an abuse of process on that basis. The Court always has the power to prevent any abuse of process. It can be an abuse based on the conduct of the lawyers, but there is no evidence here of such misconduct. I do not accept the Respondent’s submission that the failure to file an appeal in time, is an abuse of process.

14. The evidence here shows that there has been some delay. I have considered the time which has elapsed since the primary decision in December 2018. Most of this was due to the fact that after the appeal was filed in January 2019, the Respondents did not apply to have it struck out until 29 August 2019, and it was not heard until 26 February 2020, while the decision was delivered on 28 February 2020. By the time the Applicants became aware of the decision in March 2020, the process of complete and then partial lockdowns by the Court resulted in delay in filing the documents and obtaining a hearing date. There was no evidence of any deliberate or wilful misconduct. A reasonable explanation has been given.

15. The Applicants are a party, and have standing. The remaining issues relate to the merits of the claim and exceptional circumstances showing substantial and justice.

16. It appears from a quick perusal of the documents that the main basis of the primary judge’s decision was that the parties had arrived at a Mediated Agreement which was therefore legally binding and enforceable, and that although the Applicants did not in fact approve or authorize or sign the Agreement, this was done in bad faith, so the Agreement remained valid, and that the most appropriate remedy for such bad faith in the Mediation was to enforce the Agreement, and/or strike out the Defence and Cross-claim and enter judgment for the Plaintiff.

17. The effect of this decision is that even if the parties to a Mediation do not reach a signed agreement, one party can come to Court and ask the Court to order the other party to agree. This is the very opposite effect of the mediation process, which requires mutual agreement. Where mutual agreement is not reached, the parties must resume the legal proceedings and have the dispute determined by the Judge after a hearing in the usual way, as the order for mediation does not automatically operate as a stay of the proceedings.

18. The grounds of the Appeal against this decision, are essentially that in fact no Mediated Agreement was reached, there was only an agreement to refer a draft agreement to the Board for approval, which was not given, and that if this showed bad faith, then the appropriate remedy was to order the Applicants to pay all the indemnity costs of the wasted Mediation. It was not appropriate to order enforcement of the draft Agreement or to order the striking out of the Defence and Cross-claim when they disclosed merits, and the Respondents had failed to file a defence to them, thereby entitling the Applicants to apply for summary or default judgment against them.

19. The Respondents submit that the Court was entitled to order summary dismissal of the Applicant’s Defence and Cross-claim, because of their bad faith. However, as the Deputy Chief Justice Kandakasi found in Wantok Gaming Systems Ltd v National Gaming Control Board (2017) N6685, the Court could not enter summary judgment for the Plaintiff after a finding of bad faith against the Defendant in the Mediation, because there were issues for Trial, which needed to be determined at a Trial. That is the same position as in this case.

20. The Defence and Cross-claim plainly disclose a prima facie good defence and cross-claim, to which the Respondents had not replied. If default or summary judgment were not to be entered for the Applicants, the issues needed to be determined at a trial, and as the primary judge found in the Wantok Gaming case, that would be the fairest and most appropriate decision.

21. There is no doubt that pursuant to ADR Rule 10, the Applicants were under a duty to give authority to settle, to the persons attending the mediation, unless the Mediator otherwise directed. Here, the Applicants informed the Mediator and the parties at the outset, that they did not have authority to settle, and Board approval was required. Neither the Mediator nor the Respondents appear to have objected, and they did not terminate the Mediation. The evidence showed that the Mediation proceeded on the basis that any proposal had to be approved by the Board.

22. Pursuant to ADR Rule 12, if the parties agree a resolution to the Mediation, the Agreement shall be written down and signed by each party. The Agreement referred to in this Mediation, was not signed by each party. The Mediators Certificate says that there was an Agreement to be drafted and settled by the lawyers, but no such draft was finalized or signed. Prima facie, therefore, it can be said that no binding or enforceable agreement was reached at the Mediation.

23. This raises an important question relating to Mediated Agreements. The difference between a Mediation and a trial is that in a Mediation, in order to attain a result both parties have to mutually agree, and the Mediator cannot impose his will on either party, whereas in a trial, the parties have not agreed, and a result is attained after a trial by the Judge imposing his decision, which will be against one party.

24. ADR Rule 5 (5) clearly states that an order for mediation does not imply any authority for the Mediator to impose a decision on the parties. Where there has been a Mediation with no signed Agreement, if it is the case that the Court can subsequently impose one party’s will against the other party, without a trial, the very nature of a mediated settlement may be called into question.

25. The absence of a mediated Agreement signed by each party, raises a clear legal ground meriting a review of the Court’s decision to enforce the Agreement, that manifests in substantial injustice to the Applicants.

26. I respectfully adopt the approach of Injia CJ in the case of Paul Unas & ors v Rabaul Shipping Ltd (2017) PGSC 16. I am satisfied that exceptional circumstances have been shown that the primary judge may have erred in making findings of fact and reaching conclusions on material aspects of the evidence relating to what happened during the mediation, and on the validity of the unsigned draft agreement, as well as the appropriateness of ordering summary dismissal where the pleadings showed a prima facie good defence and cross-claim, which errors were determinative of the outcome of the case. There are serious questions arising from those findings and conclusions, demonstrating substantial injustice.

27. I am therefore satisfied that it is in the interests of justice that the decision of the National Court be reviewed by an Appeal Court.

28. In relation to costs, it is relevant that this Application was necessitated by the Applicant’s own conduct.

29. I therefore make the following Orders:

(1) Leave is granted to the Applicants to file and serve a Review of the National Court Decision made on 6 December 2018 in WS 1007 of 2016, within 14 days.

(2) The proceedings on WS 1007 of 2016 including the said decision of 6 December 2018, are stayed pending the determination of the Review hearing.

(3) The Applicants are to pay the Respondent’s costs on a party/party basis, to be agreed or taxed.

(4) The time for entry of these Orders, is abridged.

__________________________________________________________________
Allens Lawyers: Lawyers for the Applicants
Lomai & Lomai Attorneys: Lawyers for the Respondents