Yarlett v New Guinea Motors Pty Ltd [1985] PGNC 35; [1985] PNGLR 14; N496 (1 February 1985)

N496

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

YARLETT

V

NEW GUINEA MOTORS PTY LTD

Waigani
McDermott J

5-7 November 1984
1 February 1985

MASTER AND SERVANT - Contract of employment - Action for wrongful dismissal - Defences - Alleged misconduct - Misconduct discovered subsequent to dismissal - Availability as defence - Relevance to facts and proven grounds.

CONTRACT - Implication of terms - Written contract - Terms implied as matter of fact - Test for - Contract of employment - No provision for repatriation on termination - Term implied.

MASTER AND SERVANT - Contract of employment - Implication of terms - Written contract - No provision for repatriation on termination - Term implied.

A written contract of employment between an employee (originally recruited in the United Kingdom by another employee) though providing for fares for leave in the first year in Australia and in the second year in the United Kingdom and containing a baggage and personal effects provision on termination "to place of normal domicile" made no provision for air fares for repatriation on termination. The employee having been dismissed sued to recover damages for wrongful dismissal in which action the employer alleged misconduct as a defence and at the trial sought in addition to rely on an additional ground of alleged misconduct occurring after the events leading to the termination of the contract.

Held

(1) Subsequent discovery of misconduct not known at the time of the termination of a contract of employment may constitute a defence to a claim for wrongful dismissal provided the misconduct alleged is relevant to the existence in fact of good grounds for dismissal.
Boston Deep Sea Fishing and Ice Co v Ansell [1888] UKLawRpCh 123; (1888) 39 Ch D 339 and Leonard (Cyril) & Co v Simo Securities [1972] 1 WLR 80; [1971] 3 All ER 1313, considered and applied.

(2) On the evidence there was no ground of misconduct established which would have enabled the employer to dismiss the employee and alleged misconduct subsequently discovered could not be availed of.

(3) A term may only be implied into a contract as a matter of fact, where it is reasonable and equitable; necessary to give business efficiency to the contract so that no term will be implied if the contract is effective without it; so obvious that "it goes without saying"; capable of clear expression; and not contradictory of any express term of the contract.
BP Refinery Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26; [1910] ArgusLawRp 71; 16 ALR 363 at 376, followed and applied.

(4) Taking into account the mandatory repatriation requirements of the Employment of Non Citizens Act 1978, the provisions within the contract for annual leave and fares to the United Kingdom and the baggage and personal effects provision, coupled with the employee’s original recruitment from the United Kingdom, a term should be implied into the contract for payment of air fares to the United Kingdom on termination.

Cases Cited

Amber Size and Chemical Co Ltd v Menzel [1913] UKLawRpCh 65; [1913] 2 Ch 239.
Aquip Pty Ltd (Receiver Appointed) v Galo Gastronuevo (Unreported, Barnett AJ, 27 December 1984).
BP Refinery Pty Ltd v Hastings Shire Council [1910] ArgusLawRp 71; (1977) 52 ALJR 20; 16 ALR 363.
Boston Deep Sea Fishing and Ice Co v Ansell [1888] UKLawRpCh 123; (1888) 39 Ch D 339.
Leonard (Cyril) and Co v Simo Securities [1972] 1 WLR 80; [1971] 3 All ER 1313.
"The Moorcock" [1889] UKLawRpPro 8; (1889) 14 PD 64.
Reigate v Union Manufacturing Co [1918] 1 KB 592.
Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206.

Action

These were proceedings for damages for wrongful dismissal under a contract of employment.

Counsel

S Sandow, for the plaintiff.
J Fuller, for the defendant.
Cur adv vult

1 February 1985

MCDERMOTT J: The plaintiff sues for wrongful dismissal. The action was defended although the cross action was abandoned. The defence to the action set out in par 5 of the defence alleges misconduct by the plaintiff as follows:

(1) The wilful disclosure to competitors of confidential information, obtained in course of and as a result of the employment.

(2) The selling to third parties company assets under value.

(3) The giving to competitors unauthorised access to company property.

(4) The wilful disclosure of customers to Norman Graff.

(5) Carelessness and inefficiency in allowing representatives of Paga Trading to see stock in a dirty and unfit state.

These last two particulars were allowed prior to the commencement of the trial as I considered they were in reality a further defining of the general allegations already in the defence and were not new. Only one witness was called by the defendant and his evidence went to stock value.

1. THE CONTRACT OF EMPLOYMENT

Originally the plaintiff was recruited in the United Kingdom to work for the Burns Philp organisation as a controller. At that time, the divisional manager was a David Robinson. After twelve months in that position, he left and commenced employment with Meridian Breckwoldt. It was whilst working there that he was approached by Robinson with an offer to work for the defendant company. Discussion ensued with Mr Clamp, the deputy chairman of the company and with Robinson. The plaintiff says remuneration and conditions were discussed together with his strong desire to be able to return home yearly. Subsequently, he signed a contract in the form of a letter which is in evidence and sets out the terms and conditions — fifteen conditions in all. The relevant one which concerns me in the other aspect of this case, damages, is the leave and airfare to which I shall return later. The company concedes that the written terms are the terms of the contract of employment.

It is agreed that the contract commenced in March 1982 (it is dated 5 March 1982). The plaintiff commenced work on 15 March 1982 in the position as stated in the agreement:

"Controller — Parts with total responsibility for profitable management of all our branch parts operations in PNG and our Warehouse Parts Department based in Port Moresby. You will report directly to the General Manager."

The plaintiff saw this as "total responsibility" for branch and headquarters spare parts of New Guinea Motors and its profitability. It involved "purchase from all sources, stocktaking, distribution and marketing".

On my analysis of the evidence, I have no doubt the plaintiff was qualified for and able to handle this position.

[His Honour then considered the evidence relative to the contract, its termination and the alleged misconduct and concluded:]

As I cannot find any of these grounds established enabling the company to dismiss the plaintiff, I cannot find that he was so dismissed by the defendant.

At the end of the plaintiffs re-examination, I refused leave to add a further and quite different allegation of misconduct — that of the plaintiff having company documents in his possession without permission. Whatever the rights and wrongs of this, the plaintiffs explanation indicates it was action taken after the events leading to the termination of the contract. The documents are set out in the plaintiffs list of documents filed in court.

As a last gasp, I have been referred to the following passage in Halsbury (4th ed 1976), vol 16 par 647:

"It is not normally a term of the contract of employment that the employer, dismissing an employee for good cause, should state the ground for the dismissal; and, provided good ground existed in fact, it is immaterial whether or not it was known to the employer at the time of the dismissal. Justification of dismissal can accordingly be shown by proof of facts ascertained subsequently to the dismissal, or on grounds differing from those alleged at the time."

Subsequent discovery of misdeeds not known at the time of the determination were held to be a defence against a claim for wrongful dismissal in Boston Deep Sea Fishing and Ice Co v Ansell [1888] UKLawRpCh 123; (1888) 39 Ch D 339 and which has long been the accepted view: see Cyril Leonard & Co v Simo Securities [1972] 1 WLR 80 at 85; [1971] 3 All ER 1313 at 1320-21. To be appropriate however, there must be relevance to the facts. Russell LJ puts the proposition nicely and it immediately asks the factual question:

"Apart from authority, I myself would take the view that, if the manager had before the alleged premature determination of the contract been guilty of conduct such as would deprive him of the right to insist on the contractual provision for notice to determine, it would be quite wrong, when that conduct is proved in an action for wrongful dismissal, that he should succeed in that action on the ground that the other party had not known enough about his misdeeds when he determined the contract."

I have already ruled against the further amendment of the defence to include a ground such as this. It is now sought to argue this defence on the bald statement of the accepted law alone. I repeat what I said in that ruling:

"I cannot divorce myself from the evidence so far, the pleadings and the cross examination in deciding to bring this issue into account now. The plaintiff was extensively cross-examined on documents in his possession as he told the defendant by discovery. The answers given viewed with what I was told already of the company tensions appear reasonable. It was not suggested these documents were put to improper use.... There is nothing before me at this stage to suggest reasons were given for dismissal except those of costing the company millions of kina and of being dishonest. From what is before me, I am not at all sure if the possession of the documents would be a good ground of dismissal."

It comes back to a question of fact. The alleged misdeed is something after the event, something less than a relevant unknown misdeed which could have been availed of to terminate the contract.

I have also been referred to Amber Size and Chemical Co Ltd v Menzel [1913] UKLawRpCh 65; [1913] 2 Ch 239. It does not appear relevant. There the defendant had left his employment with the plaintiff and went to another company. There was a real fear he would use acquired information for the benefit of his new employer. The case involved the application of the following statement of law to restrain the defendant per Astbury J at 244-245:

"The Court will restrain an ex-servant from publishing or divulging that which has been communicated to him in confidence or under a contract by him, express or implied, not to do so: Morison v Moat [1851] EngR 790; (1851) 9 Hare 241; 68 ER 492, and generally from making an improper use of information obtained in the course of confidential employment: Tuck & Sons v Priester [1887] UKLawRpKQB 162; (1887) 19 QBD 629, and, further, from using to his late master’s detriment information and knowledge surreptitiously obtained from him during his, the servant’s, employment: Robb v Green [1895] UKLawRpKQB 58; [1895] 2 QB 1; [1895] 2 QB 315."

There is no evidence of anything like this occurring in the present case.

The amount of damages in this case have been agreed subject to me finding an appropriate implied term in the contract for the payment of airfares to the United Kingdom on termination. Because of the recruitment circumstances, this matter was not specifically alluded to but the leave airfare provision is as follows:

"You will be entitled to five weeks annual leave a year after completing twelve months service with the company and this leave should be taken on the anniversary date of your joining the company unless management requests a deferment.

The company will provide return economy class airfares for yourself and your family to Sydney at the end of the first year, and return tourist class airfares to UK for yourself and your family at the end of the second year. The same scheme will apply alternatively every year."

The baggage and personal effects provision on termination is "to place of normal domicile". To comply with government requirements, the plaintiff was required to leave the country before commencing work with the defendant. He went to Brisbane. Should this be the destination for final airfare purposes? Or, should no provision be made at all? Apart from the facts mentioned, the Employment of Non-Citizens Act 1978 is also relevant as it deals directly with "place of engagement"; s 6(2)(a), and repatriation to such place, s 15(2). This issue could have been beyond doubt if the defendant had produced the application for the plaintiffs work permit as I would then know:

"... the place of engagement, being the town in a country outside Papua New Guinea to which country the non citizen who is the subject of the application has right of entry and residence and to which town the employer is liable, under the provisions of s 15, for the repatriation of the non citizen and his dependants on the termination of the employment of the non citizens; s 6.2(a)."

Since argument I have read an unpublished decision of Barnett AJ dated 27 December 1984, Aquip Pty Ltd (Receiver Appointed) v Galo Gastronuevo where the following obiter statement occurs:

"For such a non citizen to legally gain further employment with another employer, he must first obtain another work permit or he will be committing an offence and be liable for deportation. If he does legally obtain such further employment, the Act does not clearly establish any obligation on the new employer to pay repatriation expenses to the place of his original engagement. The term ‘place of engagement’ is defined by reference to s 15 which is expressed in terms appropriate for placing the obligation to repatriate upon the employer who ‘brought (the non citizen) to the place of employment’. The possible liability of a subsequent employer who employs the non-citizen within Papua New Guinea, possibly on a short term casual basis, has not been specifically addressed in the Act."

In that case his Honour held that liability for the repatriation of an employee’s dependant rests with the first employer and not with that dependant’s own subsequent employer. Whilst the Act does not provide me with the answer it becomes an important factor to be considered.

In BP Refinery Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 the Privy Council said at 26:

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

This encapsulates three well known passages from "The Moorcock" [1889] UKLawRpPro 8; (1889) 14 PD 64 at 68, Reigate v Union Manufacturing Co [1918] 1 KB 592 at 605 and Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 at 227. This statement coupled with the following passage in Cheshire and Fifoot Law of Contract (4th Aust ed) at 153 provides the solution:

"... the courts may, in any class of contract, imply a term in order to repair an intrinsic failure of expression. The document which the parties have prepared may leave no doubt as to the general ambit of their obligations; but they may have omitted, through inadvertence or clumsy draftsmanship, to cover an incidental contingency, and this omission, unless remedied, may negative their design. In such a case the judge may himself supply a further term, which will implement their presumed intention and, in a hallowed phrase, give ‘business efficacy’ to the contract."

Thus by looking at the mandatory repatriation requirements of the Act and at the provisions for holiday airfare to the United Kingdom and baggage to "place of normal domicile", coupled with the plaintiffs original recruitment from the United Kingdom, leads me to conclude that is the place of engagement and as a matter of law the destination for repatriation purposes.

I thus award damages on the basis of the inclusion of the repatriation fares, in all a sum of K7187.71; costs to follow the judgment.

Judgment accordingly

__________________

Lawyer for the plaintiff: Young & Williams.
Lawyer for the defendant: Gadens.