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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS (CC2) No. 935 of 2019
BETWEEN:
UNUNG-SIITE LTD
Plaintiff
V
GILFORD LIMITED
Defendant
Waigani: Anis J
2021: 11th October, 9th November
2022: 9th March
ENFORCEMENT OF MEDIATION AGREEMENT – Rules 12(b) and (3) and 14 – Alternative Dispute Resolution Rules – seeking to enforce mediated agreement sanctioned as a court order – seeking to also enforce subsequent mediated agreement which was not a court sanctioned mediation agreement – preliminary considerations – validity of the mediated agreements, their nature and effects – who were the parties to the agreements? - whether the subsequent mediated agreement or purported arrangement superseded the earlier agreement – whether subsequent agreement binding upon the parties – whether the pleadings are vague and the relief tenable or attainable given findings on preliminary issues – whether proceeding should be dismissed on the preliminary findings by the Court
Cases Cited:
Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441
Clinton Capital Partners Pty Ltd v. Kumul Petroleum Holdings Ltd and Ors (2020) N8668
Soka Toligai v. Sir Julius Chan (2012) N4842
Ben Maoko v. Kevin Ling (2008) N3293
Christian Life Centre v Associated Mission Churches of PNG & Others (2002) N2261
Able Construction Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636
Counsel:
S. Ketan, for the Plaintiff
W. Frizzell, for the Defendant
JUDGMENT
9th March, 2022
1. ANIS J: This matter was trialed on 11 October and 9 November in 2021. I reserved my ruling to a date to be advised.
2. This is my ruling.
BACKGROUND
3. The defendant is an oil palm developer or operator of an agricultural or oil palm project called the Sigit – Mokus Oil Palm Project in West Pomio of East New Britain Province (the oil palm project/project area). In 2010, it entered into various project agreements and sub-leases with the landowners of the project area. The landowners created 4 separate companies to represent them. The first 3 were (i), Pomata Investment Ltd, (ii), Nakiura Ltd and (iii), Ralopal Investment Ltd (the 3 landowner companies). The defendant signed separate project and sub-lease agreements with the 3 landowner companies on or about 29 November 2010. About a year later, on or about 22 July 2011, it signed separate project and sub-lease agreements with the plaintiff over land described as Portion 27C. The plaintiff was the 4th landowner company of the project area.
4. The project and sublease agreements for the 4 groups of landowners were or are set out in similar terms and conditions.
5. Pursuant to these agreements, the 4 landowner companies leased their blocks of land to the defendant to have access to, grow oil palm trees and carry out its commercial activity, that is, to produce, harvest and sell oil palm products. The tenures of the subleases were for a period of 60 years.
6. Several years later, the landowners were aggrieved with the defendant. They wanted the terms of the agreements and their benefits renegotiated. So, in 2016, they filed proceeding WS 1562 of 2016. The 3 landowner companies plus the plaintiff sued the defendant therein. The 3 landowner companies later obtained leave and withdrew their claims in that proceeding. The plaintiff herein was the only landowner company in proceeding WS 1562 of 2016 who had remained to prosecute its claim against the defendant herein. The parties therein then entered into negotiations and eventually a settlement was reached. The settlement was resolved through a Court ordered mediation. Accredited mediator Craig Jones was appointed by the parties as their mediator. Consequently, an agreement was reached on 27 March 2018 (2018 mediated agreement). As a result, proceeding WS 1562 of 2016 was concluded the next day on 28 March 2018. The terms of the agreement as written are not disputed by the parties in this proceeding. However, the defendant strenuously argues that the 2018 mediated agreement ceased or ended after the parties had entered into a subsequent agreement in 2019. The 2019 agreement was conducted through mediation whereby accredited mediator Craig Jones was re-engaged by the parties to mediate on the matter. The outcome was successful, and the parties signed a second ‘mediation’ agreement on 3 March 2019 (2019 agreement). The agreement is written, and the parties have no issues with its written terms and conditions.
7. However, 2 main challenges in relation to the 2 agreements are as follows. The parties dispute whether the agreements exist or co-exist together, or whether the latter agreement has effectively superseded the former. And secondly, the parties dispute the relief and consequential relief that are sought by the plaintiff in this proceeding. The issues for these challenges are preliminary in nature and so I intend to address them first in my judgment, and subject to my findings, proceed to consider the merits of the claim or the enforcement proceeding.
8. According to the Originating Summons, and the Statement (statement of claim) which was filed later, the plaintiff seeks the following main relief:
9. In short, this is an enforcement proceeding, that is, the plaintiff seeks to enforce the 2 agreements. Relief 2, I note, is sought as consequential to the main relief which is relief 1.
EVIDENCE
10. The parties gave both sworn and written evidence in Court. Some of the evidence were tendered by consent, and all the tendered evidence were marked with exhibit numbers. Witnesses were also subjected to cross-examinations.
PRELIMINARY CONSIDERATION
11. Throughout the hearing, the plaintiff tends to portray a picture that it was not just a landowner company that was acting for or on behalf of the landowners of Portion 27C but that it was acting or pursuing the matter for or on behalf of all the landowners of the project area. The plaintiff also tried, by adducing its evidence, to show that the 2018 mediated agreement was conducted and agreed to by all the landowners of the project area where the 4 companies represent. The defendant argued otherwise and submitted that the negotiating parties were the representatives of the plaintiff or the landowners who were, and if I may put it neatly, the shareholders of the plaintiff only and not the other landowners or representatives of the other 3 landowner companies of the project area. The defendant submitted that the agreements that it had signed with the 3 landowner groups and their companies are intact and that these landowners continue to work with it over the project.
12. I have considered generally the evidence of the parties at this juncture and their submissions on this preliminary matter.
13. In my view, the issue is not difficult to address. Most of the arguments by the plaintiff on this preliminary matter, in my view, are misconceived and baseless. I say this for this simple reason. The plaintiff is bringing this action not on behalf of any other group of landowners except itself and the group of landowners that it represents or as it claims to represent. The other landowners of the project area are represented by the 3 landowner companies who have existing project and sub-lease agreements with the defendant. Evidence adduced by both parties generally suggests to me that other landowners may also have been involved or had participated in the Court sanctioned mediation discussions that had been had between the plaintiff and the defendant on 27 March 2018. However, Mr Ketan, counsel who had acted for the plaintiff in the said mediation discussion, which was held in Kokopo in East New Britain, confirmed in Court that he was at all material times acting for the plaintiff only and not for the 3 landowner companies. This fact is not an issue before me and so I accept that to be the case. I also note that mediation discussions and disclosures are generally confidential and cannot be brought before a Court for consideration or further inquiry. But regardless or putting all that aside, the 2018 mediated agreement and the 2019 agreement (the 2 agreements), were or are binding agreements. Like a contract, the parties to it, to the exclusion of all others, were or are bound by their terms and conditions. See case: Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441. The mediator that was engaged was Craig Jones, and the parties had lawyers who acted for them in the 2 mediations and in the signing of the 2 agreements. The parties to the 2 agreements were the plaintiff and the defendant.
14. Had it been the parties’ intention to include the 3 companies into the 2 agreements, it was however not captured accordingly therein. For example, the 2 agreements could have easily included the 3 landowner companies or landowner groups as parties, and they could have all signed accordingly. That did not occur at all in this case. I note that various clauses of the agreements make references to these 3 landowner companies where they state what the parties herein expect etc. of them. However, that to me is a different thing altogether and does not in any way bind the 3 landowner companies or mean that they are or were parties to the 2 agreements. Given the high-level mediation statuses of the matters and the fact that both parties had lawyers who had acted for them, it is highly unlikely that the parties may have accidently left out the 3 landowner companies as parties to the mediation discussions and agreements. In fact, I find to the contrary, that is, that the agreements were express or precise between the parties to it which were the plaintiff and the defendant. I find that the agreements, their terms, and the parties to them were deliberate, and I also find that the 2 agreements are express and that their terms and conditions must speak for themselves.
15. So, it must be concluded, and I also find, that the 3 landowner companies are not privy to the 2 agreements and the parties therein. I find that the only parties who are privy to the 2 agreements are the plaintiff and the defendant herein. See cases: Clinton Capital Partners Pty Limited v. Kumul Petroleum Holdings Ltd and Ors (2020) N8668, Soka Toligai v. Sir Julius Chan (2012) N4842, Ben Maoko v. Kevin Ling (2008) N3293, and Christian Life Centre v Associated Mission Churches of PNG & Others (2002) N2261. It is therefore not, in my view, proper for the plaintiff to table the 2 mediated agreements before Court and argue that the agreements were actually agreed or consented to by all the landowners of the 4 companies or groups within the project area when the written agreements say otherwise. There is no valid legal argument here, in my view, that is worth considering. At the same token, the plaintiff tries to seek to enforce the 2 agreements which I note may have significant consequences against the 3 landowner companies and the defendant when they all (i.e., the 3 landowner companies and the defendant) have existing legally binding project and sub-lease agreements over the project area between themselves whereas the plaintiff has none. In other words, the plaintiff is also not privy to these existing agreements between the defendant and the 3 landowner companies, and as such, it cannot in my view, ‘paint a broader picture’, so to speak, to include them into the mediation agreements and then seek to enforce the mediation agreements which would have significant consequences upon the 3 landowner companies and their separate business dealings and agreements which they currently have with the defendant where the plaintiff is not a party to. The above, gives us an idea or perhaps demonstrates how flawed or untenable this enforcement proceeding may appear to be.
16. Now, the 2 agreements have been tendered and I restate them both in part as follows:
MEDIATED PROCESS AGREEMENT
Dated 27th of March 2018
(signed by both lawyers for the plaintiff and the defendant)
................................................................................................
Mediation agreement between USL and Gilfore Ltd 3 March 2019 at Port Moresby
Dated 3 March 2019
(signed by both lawyers for the plaintiff and the defendant)
17. Out of the 4-landowning groups of the oil palm project, it was the plaintiff who had wanted out of its project and sub-lease agreements that it had had with the defendant. The 2018 mediated agreement ensured of that. The plaintiff, as it is to this day, has no legally binding project agreement and sub-lease agreement with the defendant.
18. The parties herein, as stated, do not dispute the validity of the 2019 agreement. The contention however is whether it was an extended mediated agreement from the 2018 agreement and forms part of it thus raises this preliminary issue. The defendant submits that the 2018 mediated agreement ended or was concluded by consent of the parties or by agreement, that is, as per clause 1 of the 2019 agreement. It also submits that the 2019 agreement was a separate agreement and not an ADR agreement. I note that these issues were also highlighted in the filed Statement of Agreed and Disputed Facts and Legal Issues.
19. So, we now come to this pressing question which is this. “Was the 2018 mediated agreement concluded or whether it still exists or co-exists with the 2019 agreement?” The straight and obvious answer is this. “The 2018 mediated agreement was concluded. It ended or ceased to exist, by a separate agreement, that is, the 2019 agreement. Clause 1 of the 2019 agreement is express. It reads, Mediation agreement of 27/3/18 is concluded.
20. The parties herein had reached the 2018 mediated agreement. Consequently, proceeding WS No. 1562 of 2016 was discontinued on 28 March 2018 and the plaintiff had its project and sub-lease agreements with the defendant terminated. Evidence adduced by the parties in general shows that various issues had arose in regard to the 2018 mediated agreement. The parties herein then negotiated the latter agreement which is the 2019 agreement. Evidence adduced by both parties again generally shows the meeting and agreement conducted by Craig Jones who presided as their mediator. The mediation was attended to by the lawyers and representatives of both parties. This fact is not disputed and is evident in the pleadings and for example from what is deposed to at paragraphs 6 and 7 of Exhibit P2 [Affidavit of Archbishop Francisco Panfilo filed on 22 January 2021]. The 2019 agreement was not a court sanctioned mediation. There was also no pending Court proceeding at the material time of its mediation and signing. These facts are not disputed thus leads me to this next question, which is this. “Whether the 2019 agreement may be termed as a mediated agreement within the terms or jurisdiction of the ADR Rules.”
21. The term ‘mediation’ under the ADR Rules states and I quote:
“mediation” means the process a mediator uses to help the parties in a dispute to identify their disputed issues, develop and evaluate options, and enable them to make their own decisions about how to forward and or enhance their communication in a way that addresses their mutual needs with respect to their individual interests with future actions and outcomes and enable them to reach their own agreement or make a decision based on the principle of self determination and includes blended processes and customary forms of mediation;
22. The term mediator is also defined under the ADR Rules. It means, and I quote:
(1) a neutral third party who helps and facilitates parties in a dispute to communicate with each other and help them to, identify, clarify and explore issues, develop and evaluate options, consider alternative process for bringing their dispute or conflict to a conclusion and enable them to reach an agreement or make their own decisions about how to forward and or enhance their communication in a way that addresses their mutual needs with respect to their individual interests with future actions and outcomes and enable them to reach their own agreement or make a decision based on the principle of self determination; and
(2) a neutral third party who has the necessary expertise and may with the consent of the parties use a blended process and
(3) includes a provider of other forms of ADR;
who is accredited as such under these Rules;
23. And the term ADR, also defined under the ADR Rules means:
......alternative dispute resolution which includes mediation, arbitration, conciliation, expert case appraisal, early neutral evaluation, any combination of them and such other forms of dispute resolution that are different from the formal court process and includes any process undertaken to avoid or otherwise minimise prolonged disputes in the future; [Underlining mine]
24. The provisions and jurisdiction of the ADR Rules covers a wide area of matters that may be resolved by alternative means outside of the normal court process. Its vast application and limitations within its provisions were highlighted in Able Construction Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636. On the same token, ADR Rules appears to focus mainly on Court sanctioned or ordered mediation (Rules 4, 5 and 6). That is, mediation in cases where proceedings have been filed and are pending hearing. But the extent of the definition of ADR, in my view, extends to mediation that may be conducted by parties with a duly accredited mediator without or before filing of Court proceedings. Parties that follow this method are of course required to appoint an accredited mediator whose credentials are approved or certified under the relevant provisions of the ADR Rules. And mediation conducted in this manner, like a Court sanctioned mediation, are required or obligated to observed the provisions of the ADR Rules. The only difference it seems in my view, apart from those highlighted above, is that the mediator does not get to fill in an order form or certificate as required to in a Court sanctioned mediation. But like a Court sanctioned mediated agreement, any agreement that is reached between the parties would be binding and enforceable. And an aggrieved party may seek its enforcement under Rule 12 of the ADR Rules.
25. So, my answer to the question is this, “a mediated agreement that is entered between the parties without any Court proceeding being filed but that complies with or observes the provisions of the ADR Rules, is valid and enforceable within meaning or jurisdiction of the ADR Rules.” In the present matter, the latter agreement was mediated in that manner, which resulted in the 2019 agreement. It was a mediated agreement.
26. Having answered that, I now come to or refer to the substantive relief which reads That pursuant to Rule 12(b) & (3) of the ADR Rules of the National Court Rules, the Mediated Agreement reached between the Parties out of Proceedings WS No. 1562 on 27th March, 2018 which was merged into a Court Order on 17th May 2018 and the subsequent Reviewed Mediation Agreement reached on 3rd March, 2019 be enforced, and ask myself this next crucial question, which is this, “whether such a relief is attainable given my preliminary considerations and findings.”
27. The plaintiff cites Rule 12(b) and (3) as its source for commencing this proceeding. There is no Rule 12(b). This is obviously an error. The correct rule is Rule 12(2)(b). Rule 12(2)(b) and (3) read:
12. Enforcement.
......
(2) Any party to a mediation conducted by a mediator may apply to the Court for an order giving effect to an agreement reached during the mediation by:
(a) notice of motion if the proceedings are current; or
(b) Originating Summons if the proceedings have been concluded.
(3) Subject to sub rule (2) an agreement reached during the mediation shall have the same force and effect, and may be enforced in the same manner, as if it were an agreement reached otherwise than during a mediation. [Underlining mine].
28. Given my preliminary findings that the 2018 mediated agreement has concluded, it means that the only agreement that remains is the 2019 agreement. The 2019 agreement, as I have determined, is a separated mediation agreement which is binding between the parties to it, namely, the plaintiff and the defendant. The 2019 agreement was entered into by the parties, it appears, by abiding to the rules and jurisdiction of the ADR Rules. I say this because Craig Jones being a certified external mediator under the ADR Rules had been appointed by the parties to conduct the mediation. Mediation was conducted in 2019 whereby the 2019 agreement was reached and signed off by the parties. There was no requirement under the ADR Rules for a mediator to issue a certificate, like in a Court ordered mediation, so I note that no such certificate was issued in regard to the 2019 mediated agreement. But of course, that has no effect or relevance to the 2019 agreement which remains binding and enforceable upon the parties. No material arguments have been raised against that, apart from those raised which I have determined herein, so, I will presume for this purpose that mediation proceeded by observance of the rules as prescribed under the ADR Rules.
29. I also find, as a preliminary matter, that the plaintiff has correctly invoked Rule 12(2)(b) and (3). The original claim, proceeding WS 1562 of 2016, ended and there was no pending Court proceeding where the plaintiff could have sought enforcement by way of a notice of motion. I find that the plaintiff has correctly filed this originating process pursuant to Rule 12(2)(b) of the ADR Rules.
30. However, the relief sought have issues, and in regard to relief 1, I have addressed that above. In summary, I found that the 2018 mediated agreement ceased to exist by the consent of the parties herein on 3 March 2019. As such and therefore to seek for its enforcement is baseless and without any merit.
31. This then leaves behind the 2019 agreement which I have found to be the only mediated agreement that exists between the plaintiff and the defendant. However, I note that the plaintiff’s claim and relief is premised on the 2 agreements on the basis that they both co-exist or that the latter mediated agreement was a revived mediated agreement. And the plaintiff has pleaded various allegations of breaches of the terms of the 2 mediation agreements in its statement of claim. This firstly and in my view, makes the entire claim partly and directly dismissible in view of my finding that the 2018 mediated agreement ceased to exist. Not only that but secondly, it also makes the entire claim vague and untenable. I say this because the pleadings herein are premised on both agreements being enforceable when that is not the case. The third reason is this. The plaintiff’s pleadings, evidence, and submissions, as I have observed, were premised on this misconceived assumption or perception that both agreements were entered into by not just the plaintiff and the defendant, but by the plaintiff with the 3 companies or other 3 landowners of the project area and the defendant. The argument by the plaintiff in this regard is not supported with the backing of law and evidence. All I see, and if I am to accept the plaintiff’s evidence at its highest point, is evidence of persons who say that everyone had shown up in regard to both mediated forums and that therefore is or should be sufficient for this Court to accept and as a consequence enforce the 2 agreements and grant the relief and the consequential relief. As I have stated above in my findings, the argument is simply flawed and has no merit whatsoever. It is made without regard to the basic principles or elements of a legally binding contract. It is also made without regard to the already existing project agreements and sub-lease agreements that these 3 landowner companies have with the defendant where the plaintiff is not a party to.
32. The fourth reason is this. Relief 2 which is sought in the originating process, in my view, is fatally flawed. The plaintiff relies on Rule 14, which reads:
Subject to Rule 11, at any time following the commencement of proceedings any party or mediator may apply to the Court for directions in relation to any matter relating to the mediation of issues in those proceedings. [Underlining mine].
33. The plaintiff seeks, under this relief, directional orders, as consequential to relief 1. However, Rule 14, in my view, applies in a case where proceedings have been filed and where the dispute has not yet been resolved but is pending determination in Court or settlement through alternative dispute resolution. At such a time, a party or a mediator may invoke Rule 14. This proceeding, however, is at the enforcement stage. Its original proceeding and disputes had concluded, and an agreement had been reached and signed by the parties, namely, the 2018 mediated agreement. The new set of events after that was the second mediated agreement which was not Court sanctioned but was sanctioned by the parties’, by their consent and by their conformity to the provisions of the ADR Rules. I have already ruled on that above in my judgment. The second mediation was successful because the parties eventually signed an agreement which is the 2019 agreement. And as stated, this proceeding is at the enforcement stage. The plaintiff filed its originating summons invoking Rule 12(2)(b) because there was no pending Court proceeding where the plaintiff could have applied back to for enforcement. So, Rule 14, as invoked by the plaintiff as the second relief in the originating process is clearly without merit. It was obviously an error committed by the plaintiff and thus must be dismissed.
34. There is a final consideration which is interest of justice or commonsense consideration which takes into account the following factors or facts. The plaintiff’s area is yet to be developed by the defendant. Development or planting of oil palm trees has not reached its area. The second factor is this. From the 4 companies or groups of landowners of the project area, the plaintiff is the only person or group that has since rescinded its agreements with the defendant. The other 3 companies or group of landowners continue to have their respective agreements intact with the defendant and its operation of the project. And their agreements contain express provisions including provisions for review of their terms and conditions or benefits. They are the ones who are directly affected in the project area and are the ones who are receiving benefits, not the plaintiff. With these considerations on the one hand and given the uncertainty or vague clarities in the pleadings and also taking into account the findings of the Court on the other legal preliminary matters, interest of justice requires that this proceeding should end or be dismissed on the preliminary basis without proceeding further.
35. I am therefore inclined to dismiss this enforcement proceeding in its entirety. The preliminary findings in my view, favours the dismissal. I find the pleadings and relief sought substantially flawed, untenable and the relief sought unattainable. I find the proceeding filed based on a misconceived view regarding the 2 agreements and who the parties were and what relief should be obtained. I also find on the balance of probabilities, that the plaintiff fell short of establishing a case where enforcement may be warranted thus requiring a response from the defendant.
36. I find that the 2019 agreement binding between the parties to it. However, because of the unfounded, improper and vague manner in which the pleadings and relief are set out herein including consequential orders proposed, I am not minded to proceed further for the reasons that I have stated above in my judgment. In my view, the plaintiff may have to reconsider its position and recommence proceeding after this. Should that occur, the claim must be properly thought out through, and it must also be properly pleaded which should be limited to the plaintiff’s interest and rights over the matter and must not involve or include parties that are not privy to the 2019 agreement.
SUMMARY
37. This proceeding will be dismissed. I note that the defendant has filed a cross-claim. The main relief sought is injunctive in nature, and damages. I note that these have not been addressed by the defendant in its written submission, so I presume that the claim has been abandoned. I therefore will make no further order nor addressed that herein.
COST
38. Awarding of cost is discretionary. I will order cost to follow the event. The plaintiff shall pay the defendant’s cost of the proceeding on a party/party basis to be taxed if not agreed.
ORDERS OF THE COURT:
39. I make the following orders:
The Court orders accordingly.
________________________________________________________________
Ketan Lawyers: Lawyer for the Plaintiff
Warner Shand Lawyers: Lawyer for the Defendant
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