Wanimop v Aka [2005] PGDC 43; DC229 (1 January 2005)

DC229

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE NO 1192 OF 2004

BETWEEN

Lucas Wanimop
Complainant

V

Bernard Aka
First Defendant

Bank of South Pacific
Second Defendant

Port Moresby: Gauli, Magistrate
2005

Counsel
For The Complainant: In Person
For The Defendant : Mr. Imako

DECISION OF THE COURT

Nature of the Complaint

The complainant claims against the defendants a sum of K5,986.14 being for the complainant’s final entitlement payments and his staff superfund contributions following termination of his employment. He claims that he was wrongfully terminated but he does not challenge his termination.

Brief Facts

The complainant is a former employee of the second defendant, the Bank of South Pacific Limited. The first defendant Bernard Aka is an employee of the second defendant as a Manager for the Policy and Industrial Relations with the Bank. The second defendant is a Banking Institution in Papua New Guinea.

The complainant was employed by the second defendant, the Bank, from the 1st of October 1996 until his dismissal on the 26th of September 2002. He was suspended without pay on or about 24th July 2002 as he was been investigated for fraud allegation within the Bank. Whilst the internal investigations were been carried out by the Bank, the complainant was referred to the Police and eventually he was charged for fraud. While the criminal charge was still pending completion by the Court, the defendants dismissed him on 26th September 2002. His criminal charge was dismissed by the Court in March 2003 for insufficient evidence. Following his dismissal he was not paid his final entitlement in the sum of K2,570.47 nor his staff superfund savings in the sum of K3,415.67 a total of K5,986.14.

The parties provided affidavit evidence and written submissions before my brother magistrate Mr. Danny Wakikura in the year 2004. He has since transferred to Boroko District Court. No cross-examination was done and his worship Wakikura never made a decision on the matter. Since the evidence were received by way of affidavits and the deponents not being cross-examined I have been asked to make a decision based on the affidavit evidence and the written submission as presented before the Court.

The defendants also filed a cross-claim. The defendants denied the complainant’s claims. The defendants in their counter-claim claims that as a result of the fraud committed by the complainant during the period and by virtue or his employment, the second defendant (the Bank) has suffered loss in the sum of K8,200.00. The defendant claims the right of set-off against the sum of K5,986.14 claim by the complainant.

The Issues

The Court is asked to determine the following issues:-

1. Whether the second defendant wrongfully dismissed the complainant.

2. Whether the complainant is entitled to his entitlement upon his dismissal.

3. Whether the second defendant is entitled to recover the monies obtained by the complainant during and by virtue of his employment with the second defendant.

I now discuss these issues.

Issue No.1 Whether the second defendant wrongfully dismissed the complainant.

The complainant claims that he was wrongfully terminated. In support of his claim he filed his own affidavit dated 7th April 2004. He claims that while the Bank was carrying out its own investigations, the Bank referred him to the Police and he was eventually charged for fraud. And while his criminal charge was still pending before the Waigani Grade Five Court, the defendant went ahead and dismissed him from his employment on 26th September 2003. His criminal charge was dismissed by the Court on 26th March 003 due to lack of credible evidence. And he further claims that the Bank failed to give him four weeks notice of the defendant’s intention to terminate him.

The counsel for the complainant submitted that by the provision of S.34 of the Employment Act (Chapter 373) the defendant is required to give four (4) weeks notice pursuant to Subsection (4) (d) of the Section 34 of the Act where there is no provision in a contract of service for notice of intention to terminate. He submitted that the breach of this provision is sufficient to hold that the complainant was wrongfully dismissed.

Counsel for the defendant submitted that an employer may terminate the employee’s employment without notice or payment instead of notice pursuant to Section 36(1) of the Employment Act. Section 36(i)(a)(ii) of the "Act" states that:

"An employer may terminate a contract of service without notice or payment instead of notice where the employer misconducts himself by an act or omission or commission that is inconsistent with due and faithful discharge of his duties".

The evidence before this Court established that, as per the affidavit of Mr. Bernard Aka who is the Manager, Policy in the Human Resources Division of the Bank, the complainant in the course of his employment with the Bank made unauthorized paperless withdrawals on the following accounts:-

Account No. 201 6048761 in the name of Betty Andalo and;

Account No. 294 2311066 in the name of Waim Umba,

In the months of May and June 2002 where an amount of K5,600.00 and K2,600.00 were respectively withdrawn from these accounts. When the Bank investigated these unauthorized transactions, the complainant in his written statement to the Bank dated 9th July 2002 admitted that he withdraw monies from these two accounts to pay back his debts.

The complainant in his affidavit said he made these admissions because he feared he might loose his job and that by making that admission the Bank may be merciful to him and he would retain his job.

The complainant does not deny making those paperless withdrawals. It would be foolish to admit an act or omission or commission which you did not actually commit. I find that the complainant did make the withdrawals from these accounts without actual authorized paper withdrawals for his own benefit. The complainant had misconducted himself in this respect. That being the case Section 37(i)(a)(ii) of the Employment Act applies that an employer is allowed to terminate a contract without notice required by Section 34 (4) of the Act.

It was held in the case of Ridge -v- Valdwin [1963] UKHL 2; [1964] AC 40 that:-

"The law regarding master and servant is not in doubt. There cannot be specific performance of a contract of service and the master can terminate the contract with his servant at any time and for any reason or for none---"

This Common Law principle was adopted in over jurisdiction in a number of cases including the Ela Motors Ltd -v- McCrudden: Ex parte Hdepper [1973]PNGLR 436 and Iambakey Okuk -v- Fallscheer [1980] PNGLR 274. Justice Kapi, as then he was held in Okuk-v- Fallscherer at page 286:

"Therefore I would adopt these common law principles in these cases as part of the underlying law of Papua New Guinea".

In an unreported National Court decision in Paddy Fagon -v- Negiso Distributors Pty Ltd N/900 WS 589 of 1995 His Honour Justice Kiriwom held that:

"In Common law the employer need not give reason for his decision to hire and fire which is applicable in this case".

The view taken in the case of Steamships Trading Co. Ltd -v- Joel [1991] PNGLR 133 at 141 is that if there were no misconduct of duties, a notice under Section 34 of the Employment Act would have to be given within the prescribed period. If however there is misconduct or habitual neglect of duties present, then that notice is not necessary and the employee can be terminated without notice or be paid in lieu of any notice.

I find that in the present case the complainant had breached the trust placed on him by his employer in misconducting himself during the cause off his duties. And I find that the second defendant’s action in terminating the employment of the complainant was not wrongful at all.

Issue No. 2: "Whether the complainant is entitled to his entitlement upon his dismissal".

The complainant claims K2,570.47 his final entitlement and his super fund contribution of K3,415.67. The counsel for the complainant submitted that where the employer dismissed the employee, the employee is entitled to recover damage, as held in the case of Robinson -v- National Airline Commission [1983] PNGLR, 476. In the usual case, there is no more than the wages payable during or in lieu of the period of notice required to terminate a contract of service.

And in relation to the super fund contributions, the counsel for the complainant submitted that the law applicable is the Section 38 of the National Superanuation Fund Act which states that:

"the amount standing to the credit of any member in the fund or any exempted employee in a provident fund shall not-

(a) in any way capable of being assigned or charged, and

(b) be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by the member in the fund or of any exempted employee in a provident fund".

The counsel submitted that the second defendant applied the complainant’s superfund contributions, the sum of K3,415.67, to itself and denied the complainant from receiving the said fund. Such action is in breach of the Section 38 of the National Superanuation Fund Act.

The counsel for the defendants submitted that the law in Papua New Guinea is clear that where an employee breaches his duties under employment by obtaining monies or enriching himself unjustly by virtue of his employment the employer is entitled to withhold those monies for the reasons that they were obtained solely through the employees employment. The counsel sighted the case of Salvation Army (PNG) Property Trust -v- Ivar Jorgensen and Rex Vagi (also known Vevao Pyama) N1644 of 1997, a decision by Woods J, who applied the reasoning by Lord Denning in the case of Reading -v- Attorney General [1951] I All Er 617 where he said:

"In my judgement it is a principle of law that if a servant takes advantage of his service and violates his duty of honesty and good faith to make a profit to himself, in a sense that the assets of which he has control, the facility which he enjoys, or the position which he occupies, are the real causes of is obtaining the money as distinct from merely affording the opportunity for getting it, that is to say, if they play the predominant part in obtaining the money, then he is accountable for it to the master.

It matters not the master has not cost any profit or suffered any damage nor does it matter that the master could not have done the act himself. If the servant has unjustly enriched himself by virtue of his service without the master’s sanction, the law says that he ought not to be allowed to keep the money, but it shall be taken from him and given to his master because it solely by reason of the position which he occupied as servant of his master".

I do agree with the submission by the defence counsel that where an employee has enriched himself through the position of his employment by the means of his dishonestly and or without good faith, the employer is entitled to withhold his employees entitlements.

The evidence established that the complainant made paperless withdrawals from the accounts of defendants two clients to a total o K8,200.00. The second defendant (employer) has to restitute the monies to the clients accounts thereby the employer made a loss. The employer has to restore the lost from withholding the employer’s entitlement because the employee then has that responsibility to refund the employer.

Where the employees entitlements exceeds the total of the monies that is to be withheld by the employers, then the balance of those entitlements must be paid to the employee. If however the entitlements are less than the monies to be withheld, then the employee leaves without the entitlements on his termination. In the present case total amount of monies the complainant obtained through his dishonesty conduct far exceeds the totals of his entitlement and his super fund. Given the circumstances as it is, this Court is of the decision that the complainant is not entitled to his entitlement including his super fund contributions.

Issue No.3 Whether the second defendant is entitled to recover the monies obtained by the complainant during and by virtue of his employment with the second defendant.

I have adequately considered this 3rd Issue when I discussed the second issue above. Where an employee enriched himself through his misconducts during the cause of his employment, the employer is entitled to recover those monies obtained by the employee. The monies can be recovered by withholding the employee’s final entitlement either wholly or the portion of it as the case may require it. The entitlements includes the employees final payouts and or his savings or investments such as superfunds, and so on. The answer to the 3rd Issue is "Yes" the second defendant is entitled to recover the monies.

Defendants Counter-Claim

The complainant on or about 27th June 2002 debited the accounts of two of the second defendant’s clients without instructions from those clients or authorization from the second defendant. The particulars of those two accounts are:

Account No	Account Name	Amounts Debited
201-6048761	Betty Audalo	K5,600.00
294-6311066	Waim Umba	K2,600.00

As a result of the complainant debiting these accounts, the second defendant the Bank of South Pacific has to repay its clients thereby incurring losses in the total sum of K8,200.00. These losses were incurred primarily resulting from the complainant’s misconduct in the conduct of his duties. The complainant did not dispute this counter claim. And I find that the complainant is liable for the losses suffered by the second defendant the Bank. These losses were caused solely by the negligence of the complainant in that he failed to follow the proper debit procedures and he failed to take proper instructions from either the clients or any authoritzation from the second defendant before debiting those accounts.

The Court thereby makes the following Orders:-

1. The whole of the complaint against the defendants is dismissed.

2. Judgement is entered in favour of the defendants against the complainant in terms of the defendant’s cross-claim, that is:-

(a) A set off against the claim for the sum of K5,986.14 from the sum of K8,200.00.

(b) The complainant to pay the defendant the remaining balance of the sum from the set off which is the sum of K2,213.86.

3. The complainant to pay the defendant’s costs.

Ordered accordingly.