Abai and 765 Others v Independent State of Papua New Guinea [1995] PGNC 53; N1402 (20 December 1995)

Unreported National Court Decisions

N1402

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 819 OF 1994
BETWEEN:
TOLOM ABAI AND 765 OTHERS - Plaintiff
And:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA - Defendant

Waigani

Sheehan J
20 December 1995

PNG DEFENCE FORCE - Retrenchment - claim for benefits and entitlements - claim for Ex Gratia payment.

Counsel:

Ms E Dirua for the Plaintiffs

Mrs F Wali for the Defendant

JUDGMENT

20 December 1995

SHEEHAN J: Preliminary.

The 766 Plaintiffs are former soldiers of the PNG Defence Force. In these proceedings they assert that there were terminated under a scheme of retrenchment and are now claiming for benefits that are due under their conditions of services as provided by the Defence Force Act ch 74 and the Defence Force Retirement Benefits Act ch 76. They also claim in respect of an ex gratia payments and further compensation for retrenchment awarded to them by direction of the National Executive Council. The Plaintiffs say that the State has failed to pay these and they ask for declarations as to their entitlements as follows:

“(c) A declaration that the Plaintiffs named in Schedule 1 attached to this Writ of Summons are entitled to:

1. Money Owing in Lieu of Recreational Leave Entitlements.

2. Money Owing in Lieu of Furlough Leave Entitlements.

3. Money Owing from the Decision of NEC No 14/91 paragraph 2 authorising Exgratia Payment calculated in accordance with Wagambi and Kupo v Lokingup and Others OS No 58 of 1989 of 7 December, 1990 and the Memorandum of Agreement dated 1 November, 1989 between the Public Service Commission - Public Employees Association paragraph 17 to pay retrenched servicemen an Ex-gratia Payment.

4. Money Owing in the nature of Repatriation Expenses.

5. Money Owing as a result of other Out of Pocket Expenses, as particularised in respect of each Plaintiff in Schedule 4 attached to this Writ of Summons.

6. Money Owing in the nature of Loss of Pay due to premature discharge from the Defence Force.

7. Money Owing from the decision of the NEC No 54/91 paragraph 2 to improve the level of benefit payable by an addition of a Hardship Allowance.

8. Money Owing from the decision of Brown J in Wagambi and Kupo v Lokingup and Others OS No 58 of 1989 of 7 December 1990 and the Memorandum of Agreement dated 1 November 1989 between the Public Service Commission - Public Employees Association paragraph 17, NEC decision No 14/93 paragraph 3, NEC decision No 54/91 paragraph 1 to pay One and a Half Times the Members contributions to the Defence Force Retirement Benefit Fund.”

These are set out more specifically in the individual statements of claim found in the Third Schedule to the Plaintiffs’ claim.

The State has opposed these claims as follows:

(a) The 334 Plaintiffs named in Schedule 1 annexed hereto have compromised their claims having all been paid in this identical claim under previous Court proceedings, including OS No 58 of 1988 and OS No 58 of 1989 and their claims are therefore re judicata.

(b) The 267 Plaintiffs named in Schedule 2 annexed hereto have claimed in the previous proceedings namely OS No 58 of 1988 and OS No 58 of 1989, but not having been retrenched, were excluded from payment thus, their claims are also res judicata.

(c) The 165 Plaintiffs named in Schedule 3 annexed hereto have no cause of action as their claims are time barred having been discharged between 10 November, 1982 and 14 October 1988.

It was said in the July Ruling in this matter that the basis of a multiple claim such as this, is the underlying presumption that all the Plaintiffs have essentially the same status and cause of action. That is, that each Plaintiff is a retrenched soldior who has not been paid entitlements due to him. Therefore the Court in hearing the claim of one can readily decide the claims of all. But in fact that has turned out not to be the case at all. Although the Plaintiffs’ claims in general terms are similar, they are not the same. A decision for one will not necessarily be right for another or any particular group.

During submissions prior to the July Ruling, Counsel for the Plaintiffs told the Court that:

“The purpose of the Plaintiffs in bringing this action in the form of the third schedule was to set out the substance of their claims in a clear manner, to allow the claim to be checked, verified, and adjudicated by an impartial tribunal. Each Plaintiff simply want an impartial tribunal to look at their claims and indicate whether or not each of the Plaintiffs has been properly according to law.”

Therefore to avoid the situation where individual claims might be lost in a general decision, the Court, with the close cooperation of Counsel for the Plaintiff and Counsel for the Defence - and their assistants - has looked at each claim one by one.

Having considered the evidence and the submissions of Counsel the Court now proceeds with this judgment which deals with the substance of claims and the law effecting them. A separate, individual, one page summary of judgment will also issue for each Plaintiff. This has been made possible because the 3rd schedule of the Statement of Claim has been transcribed into the Court Records. A copy of each claim annotated with the judgment for each Plaintiff can therefore be printed off.

DECISION

The Plaintiffs claims are made up of two parts. The first of these is the claim for normal termination entitlements prescribed by law. These are the usual entitlements set out in the Manual of Personnel Administration for the Defence Force. A soldier has a lawful right to these and if they are not paid then that soldier has a claim - a cause of action that can be enforced in a Court of law.

The other part of the Plaintiffs claims is for ex gratia payments made by the State in their favour over and above the usual termination entitlements. An ex gratia payment literally means a payment made as a matter of grace or favour. A payment made without any acknowledgement of liability. The ex gratia payments in this case therefore can be described as voluntary grants to be made to eligible retrenched ex serviceman without any legal obligation admitted on the part of the State. In declaring such ex gratia payments therefore the State did not grant rights enforceable in the same way that the statutory termination entitlements can be pursued. It is however open to ex-servicemen to seek declaration that they are eligible for such payments in the terms stipulated by the State.

In fact, the State has conceded the obligation to meet such payments. This is recorded in the judgment of Mr Justice Brown in Jack Wagambi & Ors v Brigadier General Lokinap OS 58 of 1989 where he says:

“Counsel for the State concedes that if I was to categorise those found entitled to share in retrenchment benefits for the relevant period, a third group of ex-members would most probably arise. This group will comprise those ex-members who have been discharged during the relevant period, who are not amongst those who have comprised their claim already and received benefits, or who are the named plaintiffs listed in (these proceedings).

It has been agreed that to bring some certainty to the resolution of the entitlement I should categorise those ex-members who should benefit rather than name and identify each individual. To name and identify each would naturally follow categorisation, for the Defence Force records relating to discharge could be perused and that third group identified. But on judgement today, those not named in (these proceedings) will need to claim seperately. The State Solicitor concedes however that such a third group, capable of distinct identification should be included in entitlement calculations when the State come to assess its total liability.” (emphasis added)

The State has not disputed that Defence Force personnel as of right can claim statutory entitlements on termination of service. Likewise it is not disputed that a Government policy of retrenchment was embarked on from 1983 and thereafter a series of ex gratia payments awarded for those retrenched.

Those eligible for such benefits have been already determined by the judgement of Mr Justice Brown in the National Court in OS 58 of 1989 already referred to. By the order of the Court in that decision the ex-servicemen eligible are those:

“who were discharged from the Defence Force during the period 10 November 1982 to 7 April 1989 for reasons assigned in their certificate of discharge other than those reasons listed in Serials 2, 5, 6 and 7 of Annex “A” to ch 58 of Manual of Personnel Administration.”

The Serials that result in exclusion are also summarised in the order as being:

“2 Having reached retiring age;

5. Having given false information;

6. Having been convicted of an offence which will render him unfit for services with the Defence Force;

7. Being medically unfit for service.”

The verdict in favour of the successful Plaintiffs was:

“Judgement for such Plaintiffs in the amount of an ex gratia sum to be calculated in accordance with clause 12 (2) (a) and (b) of the Public Service Agreement dated 10 November 1982 together with such other sums as may be due and owning but unpaid arising out of the Plaintiffs terms and conditions of employment on discharge from the Defence Force.”

The judgement also made rulings as to retrenched officers. The Learned Judge said of these:

“So far as officers are concerned, I would exclude from benefits, officers, who have been terminated from further service for the reasons set out in para. 2.1, 3.3 and 3.4. of ch 42.

Those reasons are:

2.1. Attaining age for compulsory retirement;

3.1. For disciplinary reasons;

3.4. For medical reasons.”

The Plaintiffs all assert eligibiilty in the terms set out. They say they were terminated within the time frame of 10 November 1992 to 7 April 1989 and their Defence Force files show that they were terminated for reasons other than set out in Serials 2, 5, 6, and 7.

With some 20 exceptions, the records examined do show that the termination of service of the Plaintiffs in this action fall within the relevant period of retrenchment. The State however, in defending this claim says that notwithstanding eligibility from retrenchment within the period, some of the Plaintiffs have already been successful in earlier proceedings for the same entitlements now sought, and more importantly have been paid. In legal terms their claim is res judicata - already decided. Some of the Plaintiffs have already compromised their claims, that is, they have accepted a payment in full settlement of all their entitlements. Again the State says some are not eligible because despite the notation on their file of reasons for termination being other than those proscribed by Mr Justice Brown, the facts disclosed on their files show that they were in fact terminated for reasons arising in those Serials.

The State says that the remainder of the Plaintiff are simply out of time. Because after termination they failed to make any claim in Court within the 6 year period the law allows to make a claim, they have left their claims too late and in law are presumed to have abandoned them. As was said this Courts ruling of 21 July:

“if it is true that one group of Plaintiffs had already has their claims heard and decided, or agreed to settle, they could not come to Court again. Likewise if they had left their claims till outside the six year period in which any claims has to be made in a Court, those effected would also fail. Proof of these assertions by the State would mean those Plaintiffs in any of these categories would be struck out of this proceedings...”

RES JUDICATA/COMPROMISE OF ACTION

It is simple law that a claim that has been tried in a Court of Law and a decision lawfully made on it cannot be tried again in respect of the same matters.

The legal term for this is Res Judicata which means “the matter is decided”. That is, a final judgment by a competent Court on the merits of a claim has been made and is conclusive - final - as to the rights of the parties and those claiming through them. Such a decision is a bar to any new action involving the same claim or cause of action. A compromise of action or settlement of a claim creates a similar bar to further proceedings.

The defence asserts that 334 of the Plaintiffs have had the very claims they now pursue, already decided in their favour in decisions in OS 58 of 1988 and OS 58 of 1989 this Court, and they have been paid. Further, acknowledgement of payment in full settlement of claims in respect of the retrenchment has been evidenced by either copies of the relevant lawyers trust account receipts, or the comprehensive acknowledgement of settlement produced from of the Defence Force records.

In submissions before the July ruling in this matter, Counsel for the Plaintiffs acknowledged that as has been pleaded in their Statements of Claim, those 334 Plaintiffs have received payment from the State and each Statement indicates the amount so paid.

But Counsel went on to say that those payments were part payments only. He also submitted that Mr Justice Brown had not given judgment in relation to service entitlements. In fact the learned trial Judge granted liberty to Plaintiffs to apply for further orders in respect of these.

As for the releases signed by the Plaintiffs, it was submitted that the Plaintiffs were not bound to answer to these since State had not pleaded as part of its defence the fact that releases had been executed.

Counsel said that some of the documents amounted no more than lawyers trust account receipts others had been signed before Defence Force lawyers under duress or in situations which made them unenforceable. Other were signed with the release altered to show that payment was only accepted on part payment basis.

The decision in OS 58/89. That decision does rule on service entitlements. On 7 June 1991 an enlargement of the 7 December 1990 decision was handed down by Mr Justice Brown following a Supreme Court Ruling on “figures which were unilaterally prepared by the Plaintiffs and erroneously entered by the Registrar...”

This supplementary decision also took into account the “additional moneys which the State (was) prepared to pay as a result of recommendation of the Acting Deputy Prime Minister” and which are also sought in these proceedings. It commences:

“This Court entered a verdict for particular Plaintiffs on 7 December last. Those Plaintiffs were included in two lists of names comprised in a document which I shall refer to as exhibit “G”. That exhibit had some 120 handwritten names followed by a typed list of names. For reasons given in December I have disregarded (the) 120 for they have compromised their supposed claims by negotiation and have been paid already. There are others too who have also been paid and they are not amongst the eligible Plaintiffs...”

The decision then dealt with the meaning of the term in the judgment:

“due and owing but unpaid, arising out of the Plaintiffs terms and conditions of employment on discharge.”

Mr Justice Brown stated:

“The remaining query of the ex-serviceman relates to that phrase. There has been a suggestion that they have not received all their ‘entitlement’ on discharge. They say they have not received money in lieu of notice. There is no such service entitlement, for servicemen are in receipt of pay to date of discharge. Discharge is effected at the moment of expiration of term of engagement, or for any of the other reasons prescribed by the Manual of Personnel Administration. I made plain in December that ex-servicemen are governed by the Defence Act, not Public Service Regulations so that apart from the ex gratia payment provision, the Agreement (with the State) has no bearing on their entitlement.

Bearing in mind the time that has elapsed since discharges, I am satisfied the servicemen have received their entitlements under the appropriate regulations set out in the Manual of Personnel Administration. In other words they have been paid their accrued furlough entitlements removal expenses etc...”

The first point to be noted is that the decision of Mr Justice Brown in OS 58/89 has not been appealed. There is no Plaintiff claiming that the Schedule in the decision is inaccurate or that each file was not fully examined. It remains an unchallenged decision of the National Court. Therefore the State and indeed all the Plaintiffs relying as they do on that decision are bound by its terms. In this action too, while not bound to that decision this Court nevertheless can not overturn it. In fact I am wholly satisfied that its decisions should be followed and implemented.

The decision could hardly be clearer. Final judgment was then entered for the Plaintiffs in that action in the specific sums set against their names. The award in favour of each servicemen in the Schedule is described under a column headed a “Total Retrenchment Payment made in addition to termination Benefits under Defence Act”.

I am satisfied that for those Plaintiffs successful and paid under that decision, that is the end of the matter. Their claim has been examined and a final award made in their favour.

The supplementary order granting liberty to apply is simply a statement that application could be made for further orders to make the judgment effective. It was never a notice to parties that if they were not satisfied with the judgement they could re-apply to try the issues over again. The issues are Res Judicata and those parties cannot claim again.

Now that judgment alone is sufficient to prevent any further claim for the same benefits. But those Plaintiffs were paid and on the receipt of payment some signed acknowledgements that the moneys received satisfied all their claims.

Tolam Abai the first named Plaintiff in these proceedings was one. He was one of the successful Plaintiffs before Mr Justice Brown. On payment of the sum awarded to him he signed the following release:

“I Tolam Abai hereby agree that the amount of K18, 736.24 receipt of which is hereby acknowledged (together with termination benefits paid to me by virtue of the Defence Act Personnel Administration Regulations at the time of termination) is in full settlement of all claims made by me against the State in respect of my retrenchment from the Papua New Guinea Defence Force and contains recompense in full for all hardship and inconvenience experienced by me as a result of the payment of the aforesaid amount.”

That acknowledgement and receipt was duly signed without amendment by Mr Abai on 15 July 1991 and acknowledgement in the same terms were also signed by the other Plaintiffs and duly witnessed. Copies were thereafter forwarded to the State Solicitors officer, Defence records, Department of Personnel Management, the Department of Finance and Planning. In other words these settlements were entered into all relevant State records. A copy was retained by the ex serviceman concerned.

Despite that judgment in his favour and his acknowledgement of full settlement in July 1991 Mr Abai has also received a further K14,419.10 for the same benefits in 1993. The comment on his statement of claim that he has not received this second payment is not accurate. The money has been paid by the State to his lawyer and the moneys therefore remain under Mr Abai’s direction. At least fifteen (15) others have also been double paid and in their cases, in excess of their own claimed entitlements. These still seek a balance for interest. They too signed unaltered the unequivocal releases referred to above. Two or three others though paid out but once have nonetheless has been paid out more than has been now claimed as entitlements.

Some releases were altered or crossed out by Plaintiffs when signing or accepting payment. That has not changed their position. Whether they considered the sum allotted to them sufficient or whether they wished to treat it as part payment only, had no effect on what that payment was at all. It was payment under a judgment of the National Court allocating to each of them their full entitlements. If any of the individual ex-servicemen did not accept that judgement or that allocation to him, his only course was to appeal the judgment, or at the very least seek further relief under the same proceedings. If he did not appeal he is bound by the judgment whether he signed the release or not, whether he altered it or not. And of course there was no appeal.

The same applies to those who, it was submitted, signed the releases under duress, or without independent legal advise at least as to the amount of their benefits. There has been no plea of duress, no complaint made by those Plaintiffs and no appeal or taking of proceedings to set aside what they claim was improper. They are therefore bound by the Court decision in their favour and their acceptance of payment out.

Those Plaintiffs whose acknowledgement is their solicitors trust account receipt just as clearly demonstrated that they have accepted judgment in their favour. A judgment of some K2,500,000 was paid to their lawyers by the State in full settlement of those Plaintiffs claims. Receipt of payment after deduction of legal fees is final evidence that their claims have been satisfied. In the result the claims of those 334 Plaintiffs (Schedule 1 of the Defence) for whom it has been conceded payment has been made by the State and who have in fact pleaded that payment, must fail.

RETRENCHMENT ELIGIBILITY/TIME BARS

There remains 432 Plaintiffs (Schedules 2 and 3 of the Defence). The State says these comprise 267 who were unsuccessful claimants under OS 58 of 1988 and OS 58 of 1989 because though they were terminated in the retrenchment period, they were terminated under Serials 2, 5, 6 and 7 of Annex A of the Manual of Personnel Administration. As unsuccessful claimants they are no less bound by the Court decisions as those who were successful. The remaining 165 it is said whether otherwise eligible or not have failed to claim within 6 years of termination and are therefore time barred.

ELIGIBILITY

Taking the question of eligibility first, this Court looks to the criteria established by Mr Justice Brown cited above. After setting Serials 2, 5, 6, and 7 for exclusion from retrenchment benefits Mr Justice Brown went on to say:

“I see no good reason to differentiate further, since other Serials all have as a factor, a discretion to re-engage... Again where a member has requested his own discharge we are still left with the knowledge in the Force of the Ministerial directives... The regulations as embanked in the Manual did not provide for redundancy so that reasons provided by the various Serials were used. To attempt an objective determination in each individual case, of the effect of the Ministerial directive in the discharge authorities subjective decision making process, is to engage in a faneiful exercise.

Those Plaintiffs, and others, who were discharged within that period 10 November 1982 to 7 April 1989 apart from those members discharged for reasons in Serials 2, 5, 6, and 7 have satisfied me on the balance of probabilities that the Ministerial Directive was a material consideration of discharge authorities when exercising powers afforded them under the Manual.”

Thus the Court held that all ex-servicesmen terminated within the period are eligible if their certificates of discharge do not disclose a Serial 2, 5, 6 or 7 as a reason for discharge. That is, what does the certificate of discharge say. For what Serial was the servicemen discharged?

On examination of these Plaintiffs files it was found that some thirty eight(38) Plaintiffs were either terminated outside of the retrenchment period or their certificate of discharge showed the reason was a Serial 2, 5, 6 or 7 or the officer equivalent. The rest however were discharged under Serials that render them eligible for retrenchment benefits.

The error that has lead to these Plaintiffs bringing proceedings was that following the Court ruling, the State officers in listing personnel eligible for payment, had gone beyond the certificates of discharge and found that the files disclosed reasons for discharge other than the eligible Serials actually recorded in the certificate of discharge.

This was not open to them. The Court had already considered that issue and determined that if the servicemen certificate of discharge did not show 2, 5, 6 or 7 Serial of discharge, (or officer equivalent) there need be no further enquiry made. He was eligible for retrenchment benefits. Accordingly those Plaintiffs named in Schedule 2 of the Defence whose certificates of discharge do not show a Serial 2, 5, 6 or 7 (or 2.1, 3.1, or 3.4 for officers) are eligible for retrenchment benefits. The decision of the Courts did render their claims for retrenchment benefits res judicata, but res judicata in their favour. It was the incorrect application of the judgment that has till now excluded them from payment of those benefits. By the same decision of the Court however, these Plaintiffs entitlements remain res judicata on defence Force termination Benefits since the Court in OS 58 of 1989 determined those had been paid in full.

LIMITATION OF ACTION/TIME BARS

These time bars are the time limits the law places on claims being brought to Court. In the case of service contracts the time limit is six (6) years. After that lapse of time any claim is by law deemed to be abandoned. The State has raised this defence in respect of claims for retrenchment benefits by the 165 Defendants listed in Schedule 3 of the Defence, on the basis that these having been discharged more than 6 years before 15 October 1988 when this claim was commenced in Court, are now out of time.

The short answer is, that in respect of the retrenchment benefits they are not out of time. In the first place as was stated above, ex gratia payments are not entitlements of right giving rise to a cause of action leading to enforcement in a Court of Law. Because only enforceable rights of action are governed by statutes of limitation, unenforceable rights cannot be time barred. They remain promises of grace or favour at the discretion of the party making the grant. Unless those to whom the grant has been promised have through reliance on the grants changed their legal position. That has not happened here. But even if they were the subject of time bars, these ex gratia payments were promised within such a limit.

In any case the State has acknowledged before Mr Justice Brown that it consider itself bound to honour its promises to claimants determined eligible by the Court.

But the timebar does prevent claims for the normal Defence Force termination entitlements not claimed within 6 years of termination. They are considered to have been paid in full or any claim in respect of them to have been abandoned by this lapse of time. Thus all those Plaintiffs whose termination date was 6 years prior to the commencement of these proceedings can no longer claim in respect of those benefits. That part of their claim is dismissed.

Examination of the files has shown that the majority of those in the 3rd schedule of the Defence are time barred in respect of the statutory Defence Force termination entitlements.

A small number of Plaintiffs in the 3rd Schedule of the Defence have been discharged inside the 6 years preceding this claim. They are eligible to claim for Defence Force entitlements unpaid on termination and are as well entitled to declarations of eligibility in respect of the ex gratia retrenchment benefits.

There remains the claim of interest. It is in the discretion of Courts to award interest on judgments given in respect of rights of action duly proved. There can be no right to interest on ex gratia payments and I find it entirely inappropriate to make such an award in respect of these in this case.

Nor do I award interest speculatively for that small number of Plaintiffs who may yet prove outstanding termination entitlements. None of the other ex-servicemen have been granted interest and it is not appropriate that only a few should so benefit. In any case the whole nature of an ex gratia payment is a grant to offset loss through delay in payment of lawful entitlements, just as interest does.

In summary then, of the 766 Plaintiffs, the claims of the 334 who have already been awarded judgment and have acknowledged payment are dismissed.

The remaining 432 Plaintiffs excepting those whose individual judgments so state, are declared eligible for the ex gratia retrenchment benefits. Their claims to termination entitlements under Defence Force Regulations however are dismissed unless they were terminated subsequent to 14 October 1988 when these proceedings commenced.

Again the individual judgments which issue with this judgment will so specify.

The exact amount due to each successful Plaintiff has yet to be finalised. Because previous attempts at calculations by the parties have been unsuccessful and indeed lead to Supreme Court appeal, the order of this Court will be that if there is no agreement between the parties on the figures within 14 days of this judgment the calculations shall be referred to the Department of Personnel Management which Departments calculation shall be.

Lawyer for the Plaintiffs: Howard & Dirua Lawyers

Lawyer for the Defendant: Solicitor General