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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
WS 1087 of 1997
BETWEEN
LEO NUIA
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant
Waigani : Sevua, J
2000 : 3rd July & 29th August
DAMAGES – Claim for unlawful dismissal – Contract of Employment – Commander of Defence Force – Termination of Contract – Disciplinary procedures in contract not followed – Whether termination lawful.
Held:
Cases cited:
George Newham v. John Dresok & Ors, unnumbered & unreported Supreme Court Judgment, 18th December, 1996 (SCA 29 of 1996)
National Airline Commission v. Valerian Lysenko [1986] PNGLR 323
Bensen Gegeyo & Ors v. Minister for Lands [1987] PNGLR 331.
Counsel:
C. Coady for the Plaintiff
J. Sirigoi for the Defendent
SEVUA, J: The plaintiff’s claim in his writ of summons is for damages for unlawful dismissal. He was appointed Commander of the Papua New Guinea Defence Force with the rank of Brigadier General on 3rd July, 1997, effective from 3rd June 1997. He signed a contract of employment for a period of 3 years to 3rd June, 2000. On 14th October, 1998, he was terminated and his appointment as Commander revoked.
The plaintiffs evidence both oral and documentary is this: On 3rd July 1997, he was re-enlisted in the Papua New Guinea Defence Force; promoted from Colonel to Brigadier General, and appointed Commander of the Defence Force, with effect from 3rd June, 1997. That appointment was gazetted in National Gazette No. G.53 on Thursday 3rd July, 1997 (Exhibit "A").
Subsequently, the plaintiff signed a contract of employment (Exhibit "B") on 20th October 1997, but with retrospective effect to 3rd June 1997. The contract was signed by the then Governor General, Sir Wiwa Korowi, on behalf of the defendant on the same date. It is in several parts. The first part is entitled, "The Employment Agreement for The Commander of the Defence Force." The second part is, "The Terms and Conditions of Employment of the Commander of the Defence Force." The third part is, "Standard Terms and Conditions for the Employment of Heads of National Departments in the National Public Service (1993)". And the final part is a letter from the State Solicitor dated 1st July 1997, advising the plaintiff of the duration of the contract under clause 4, which stipulated a term of four years, whereas it should have been three years.
Clause 5 of the agreement provides the plaintiff’s annual salary at K40,073.00, or such amount as varied from time to time by the National Executive Council. Clause 7 of the Terms and Conditions of Employment of the Commander of the Defence Force provides that, the plaintiff is entitled to the sum of K350.00 per fortnight in housing allowance. Clause 8 of the same Terms and Conditions, provides for a service allowance of 8% of the base salary; domestic allowance of K3,000.00 per annum; telephone allowance of K 900.00 per annum, and entertainment allowance of K 2,400.00 per annum. Clause 3 of the Standard Terms and Conditions for the Employment of Heads of National Departments provide a gratuity of 25% of the base line salary of a Departmental Head. Clause 4.1 of the Standard Terms and Conditions, provides for six weeks annual leave. Clauses 4.3 and 4.4 provide for long service leave. Clause 6 provides for airfares, and Clause 8 provides for motor vehicle allowance of K15,000.00 per annum.
The plaintiff was terminated on 14th October 1998, following receipt of a letter by the then Prime Minister, Mr Bill Skate, dated the same day (Exhibit "C"). In that letter, Mr Skate referred to the deliberation of the National Executive Council and alluded to serious allegations against the plaintiff. He specifically referred to...."a number of serious allegations against your action and conduct as the Commander." It was the plaintiff’s undisputed evidence that he was surprised at his termination. He was humiliated, and felt cheated, because at no time during his command, was he told that his conduct as Commander was not as what was expected from the Government at that time. The then Prime Minister subsequently held a press conference in which he announced the termination of the plaintiff and the reappointment of Mr Singirok, which press conference was widely publicised. I think that was the basis for the plaintiff’s humiliation. The plaintiff’s termination, and the subsequent reappointment of Mr Singirok, was effected by a notice published in the National Gazette No. G118 on Wednesday, 14th October, 1998 (Exhibit "G").
The particulars of the plaintiff’s entitlements are contained in the contract of employment, which was tendered into evidence with the consent of the defendant. The defendant has not adduced any evidence, and all the documents tendered by the plaintiff in his examination in chief were with the consent of the defendant.
I accept the plaintiff’s evidence, both oral and documentary. I am satisfied that the facts are not in dispute.
The principal issue for this Court’s determination is whether the plaintiff’s termination was lawful. The question of damages will then follow if the plaintiff is found to have been unlawfully terminated. However, there is a collateral issue which was raised at the beginning of the trial, and that can be disposed of quite briefly and quickly.
The defendant has raised the issue of non-compliance with s.5 of the Claims By and Against the State Act, 1996. In paragraph 2 of its defence, the defendant did not admit that the plaintiff had given notice of his claim to the State in pursuance of s.5 of that Act. However, the plaintiff in the trial referred to the affidavit of one Leslie Sibona, sworn on 29th June 2000. Mr Sibona deposed to serving a notice on the defendant through the Solicitor General on 30th October, 1998 at 9.50am. No evidence to the contrary has been adduced by the defendant. I am therefore satisfied that a notice of claim dated 30th October, 1998 was served on the State through the Office of the Solicitor General. Accordingly, I find that service on the Solicitor General was effected in accordance with s.5 (1) (b) of the Claims By and Against the State Act, 1996, therefore service was lawfully effected.
Returning to the principal issue, I wish to refer to certain provisions of the contract of employment. Clause 17 of the Terms and Conditions for the Employment of Departmental Heads of National Departments in the National Public Service, which forms part of the plaintiff’s contract of employment, deals with termination of employment. It provides the grounds for which the Head of State may terminate contracts of Departmental Heads. Clause 18 deals with termination for cause, and that provision sets out the more serious offences which would give cause for termination.
There are disciplinary procedures contained in Clause 27. Sub-clause (1) provides:-
"Serious disciplinary matters pursuant to Section 18, hereunder, allegedly involving the Departmental Head shall be resolved through the following procedure:" (my emphasis)
Then sub-clause (1)(a) mandatorily requires the Minister to charge the Departmental Head, suspend him and invite a response prior to submitting a report to the National Executive Council. Sub-clause (1)(b) requires the Departmental Head to reply within 7 days. Sub-clause (1)(c) requires the Minister to submit the charge, the reply, any evidence relating to the case, and a recommendation to the National Executive Council. The National Executive Council is required to obtain a legal opinion, prior to deciding whether or not the contract should be terminated. Sub-clause (1)(d) provides that the National Executive Council’s decision is final, however, the Departmental Head could exercise his right to seek redress in Court.
I have alluded to this provision because, I am of the opinion that it is relevant to the issue of the plaintiff’s termination and, whether such termination was lawful. To my mind, and I think there can never be any doubt in any one’s mind, the procedures for disciplinary action established by this provision governs the termination of the plaintiff. I find as a matter of law that the plaintiff could only be terminated after the administrative procedures have been followed.
It will be seen from the letter of termination that the reason for terminating the plaintiff arose from serious allegations against him. I cite the body of the letter in full as I am of the view, that the defendant’s action in terminating the plaintiff was for disciplinary reasons, however, proper procedures were not complied with. Omitting the address, the letter reads:-
"Dear Brigadier General Nuia,
NOTICE OF TERMINATION AND REVOCATION AS
COMMANDER OF PNG DEFENCE FORCE
I refer to the above and regret to advise as Chairman of the National Executive Council, that Cabinet in its deliberate judgement (sic) at this morning’s meeting have (sic) decided in the best interest of Papua New Guinea to advice (sic) the Head of State to revoke and terminate your appointment as the Commander of PNG Defence Force.
Let me assure you that this decision was indeed a very painful one. The National Executive Council deliberated on this decision at length in Cabinet. The Cabinet after considering the current prevailing security issues and conditions, together with a number of serious allegations against your action and conduct as the Commander. Those factors were viewed by the Cabinet as having serious internal security threats and implication. Those issues are no doubt of serious security and national significance which warrant the decision for change.
Hence, the Cabinet have (sic) decided to recommend to the Head of State to revoke your appointment principally to preserve and maintain internal security credibility in the best interest of the Independent State of Papua New Guinea and the people.
Consequently, you will be decommissioned and all your entitlements will be processed and paid to you in accordance with your terms and conditions of employment with the State.
On behalf of the Government and the people of Papua New Guinea, I wish to sincerely and profoundly thank you and your family personally for your services.
Yours faithfully,
(signed)
BILL SKATE, CMG, MP"
The plaintiff was not charged with any serious disciplinary offence under Clause 18. I consider that the basis for the plaintiff’s termination was for disciplinary reasons. Paragraph 2 of the letter alluded to, is quite relevant to the point, and one can conclude, as I have, that the plaintiff was dismissed because a number of serious allegations had been made against him. But, what were those "very serious allegations?" If the defendant had evidence that the plaintiff’s performance was below the expectation of the Government or that his actions and conduct as Commander of the Defence Force were in breach of his employment contract, the plaintiff should have been charged under Clause 18, then terminated under Clause 17.1(d) or (g). It can be assumed that the defendant terminated the plaintiff under Clause 17.1(b) of the contract, however, I consider that the defendant could not camouflage its failure by purporting to use that provision as is obvious in paragraph 3 of the letter of termination.
Whilst I agree that Section 6(2)(b) of the Defence Act empowers the Head of State, acting on advice, to suspend or dismiss the Commander of the Defence Force, I consider that the terms and conditions of the plaintiff in this case, provides the basis in law for that power to be exercised. The power of dismissal is not a unlimited licence for the defendant to terminate the plaintiff as it did, without reasons and without following the procedures in the contract.
I would formulate the law in this area as this. Where the contract of employment of a Departmental Head provides for disciplinary procedures and termination, the Departmental Head can only be lawfully terminated in accordance with those terms and conditions. Such terms and conditions remove the disciplinary procedures from the public law arena unless disciplinary procedures in the Public Services Management Act and the General Orders are incorporated into the contract of employment of the Departmental Head.
In respect of the plaintiff, whilst the Head of State has power to dismiss him under s.6(2)(b) of the Defence Act, such a power can only be exercised lawfully, where the procedures for disciplinary actions in the plaintiff’s contract of employment have been followed. Those procedures were not followed therefore the plaintiff could not have been lawfully terminated pursuant to that section.
Here the defendant had specifically adverted to "a number of very serious allegations" against the plaintiff. I conclude that the principal reason for terminating the plaintiff was because of those serious allegations, however, to date, no one, including the plaintiff, knows what those serious allegations were. So then, was the plaintiff lawfully terminated? In my view, a lawful termination can only be one effected in pursuance of, and in accordance with, the provisions of the contract of employment. If the National Executive Council or the State or defendant, for that matter, failed to comply, the termination cannot be lawful. I cannot see how the defendant could say the plaintiff’s termination was lawful, when the procedures in the contract of employment, have not been complied with. Hence, I hold that where a contract of employment provides for disciplinary procedures, but the employer fails to follow such procedures and proceeds to terminate the employee, such termination is unlawful.
I consider that since very serious allegations had been made against the plaintiff by the National Executive Council, the defendant should have followed the disciplinary procedures in Clause 21 of the contract. The procedures therein are clear and precise therefore, the plaintiff should have been dealt with in accordance with that provision. I reiterate that, there is no doubt, in my view, that the plaintiff was terminated for disciplinary reasons. Paragraph 2 of the letter I have alluded to, clearly points to that conclusion, which I have reached. Mr Skate referred to "a number of serious allegations" against the actions and conduct of the Commander. There can never be any doubt that the plaintiff’s termination was for serious allegations. But what were those serious allegations? The plaintiff was never informed of such serious allegations, but was dismissed in violation of his contract of employment.
Accordingly, I find as facts that, the plaintiff was terminated for disciplinary reasons, but that no charges were laid against him and the procedures in his contract of employment were never followed. Penultimately, the plaintiff’s termination was unlawful, and I so find. I find that Clause 21 of the plaintiffs contract of employment was breached in that the plaintiff was not informed of the allegations against him, and no formal charge was laid, thus the procedures for termination were not followed. I find therefore that there was a breach of contract on the part of the defendant which entitles the plaintiff to damages.
I accept the plaintiff’s counsel’s submission that this case is similar to George Newham v. John Dresok, Ron Elias and Post & Telecommunication, (SCA 29 of 1996) unnumbered decision of the Supreme Court on 18th December, 1996. I find the principles of law stated by the Supreme Court in that judgment very useful, relevant and appropriate here.
I do not accept the defendant’s submissions, for the defendant cannot pick and choose one particular provision of the contract and apply it in conjunction with the Defence Act, but ignores the rest of the provisions of the contract of employment, in particular, the disciplinary procedures. In essence, what the defendant is saying is that, Section 6 of the Defence Act empowers the National Executive Council to dismiss the plaintiff, however, the defendant also has the right under Clause 17.1(b) of the contract to dismiss the plaintiff, therefore the defendant need not use Clause 21. I consider this to be quite an erroneous assumption, that is why I said earlier on that, the defendant cannot pick and choose Clause 17.1(b) of the contract, and elects to ignore Clauses 18 and 21 of the same contract.
In so far as termination for serious allegations of disciplinary nature is concerned, the law is as stated in National Airline Commission v. Valerian Lysenko [1986] PNGLR 323, a decision of the Supreme Court confirming the National Court’s decision. Where a plaintiff is dismissed for disciplinary reasons, there must be proof of such disciplinary offences or misconduct. In that case, the Supreme Court held, inter alia, that the plaintiff could only be dismissed for misconduct or other sufficient cause where there is proof thereof. In the present case, despite the fact that the termination of the plaintiff adversely affected his character and reputation as a professional military officer, he was never accorded natural justice.
Another National Court decision, Benson Gegeyo & Ors v. Minister for Lands [1987] PNGLR 331 supports the above principle, that is, where the termination of an employee for a reason that is likely to reflect adversely on the character and the reputation of that person, he must be given opportunity to be heard in his defence.
In George Newham’s case, the Supreme Court said at page 5 of its judgment,
"To say that PTC could arbitrarily terminate an employee for any reason without giving any reason at all, is to grant PTC an unlimited licence to terminate an employee for unlimited reasons without giving any reason. That goes against the principles arising from the Constitution and the case laws which have long been established by the Courts in this country, especially in the cases such as this, there had been serious allegations of disciplinary nature."
I am of the view that the plaintiff in the present case was terminated for no stated reason. The principles in the case I have adverted to are, in my view, relevant and applicable in the present case.
I find that the defendant, in terminating the plaintiff as Commander of the Defence Force, had breached Clauses 18 and 21 of the contract of employment. Such breach amounted to an unlawful dismissal of the plaintiff. Accordingly, the plaintiff is entitled to damages for the breach.
The plaintiff’s claims for damages have really not been disputed by the defendant. The various claims for entitlements in the plaintiff’s statement of claims are provided for in the contract of employment. In any event, as the defendant has not disputed these heads of damages, I find that the plaintiff is entitled to such damages. I would award him damages, but with some slight variation as there was an amendment at the trial in respect of paragraph 10 of the statement of claim.
I set out particulars of damages which have not been disputed and which I find the plaintiff is entitled to.
Particulars Amount
1. Loss of Salary – K 40,073.00 pa K 65,607.35
14/10/98 – 03/06/2000
Clause 5
2. Loss of Housing Allowance K 19,400.00
K 350.00 weekly
14/10/98 – 03/06/2000
Clause 7
3. Service Allowance – 8% of base salary K 5,248.60
Clause 8
4. Domestic Servant Allowance K 4,911.58
K 3,000.00 pa
14/10/98 – 03/06/00
Clause 8
5. Telephone Allowance K 1,473.50
K 900.00 pa
14/10/98 – 03/06/00
Clause 8
6. Entertainment Allowance K 3,929.27
K 2,400.00 pa
14/10/98 – 03/06/00
Clause 8
7. Motor Vehicle Allowance K 24,558.00
K 15,000.00 pa
14/10/98 – 03/06/00
Clause 8
8. Gratuity at 25% of base salary K 30,054.75
03/06/97 – 03/06/00
Clause 3
9. Annual leave – 6 weeks pa K 13,871.42
03/06/97 – 03/06/00
Clause 4.1
10. Long Service Leave K 1,976.20
pro-rata - 3 years contract
Clause 4.3 & 4.4
11. Airfares – Clause 6 K 7,155.00
Total K 178,185.67
I accept the plaintiff’s evidence that he was paid the sum of K69,974.24 sometime in June, 1999. His evidence does not give a specific date in June, however, we can reasonably assume the 30th June as the date he received that payment. That amount shall be deducted from his total claim. Mr Coady has submitted two sets of interest rates. From the date of issue of writ (03rd November, 1998) to 30th June 1999, the date of payment of the sum of K69,974.24 is 239 days. From 1st June 1999 to the expiry of contract on 3rd June 2000 is 339 days. Applying the rate of 8% to those periods, he submitted, interest would be K8,040.25 and K9,334.00 respectively for those paid. The total interest claimed therefore is K17,374.25. I accept those submissions in principle however, for reasons that will become apparent a little later, the actual amount claimed, and the interest over that period, it will slightly be different to Mr Coady’s submission, because I consider that damages for mental distress if allowed, would run from the date of the breach of contract as well.
I consider that the plaintiff is also entitled to damages for mental distress, as pleaded in paragraph 11 of his statement of claim. His evidence is that his termination and the subsequent reappointment of Mr Singirok received public prominence. Mr Skate convened a press conference in which he announced the termination of the plaintiff and the reappointment of Mr Singirok. The plaintiff said this was widely published. The plaintiff felt humiliated and cheated as he said, during the 16 months he had been Commander, he had started to bring back some stability into the Defence Force. Furthermore, under his command and leadership, the events in Bougainville took a different turn leading to the peace process. If he was performing below par, he was never cautioned or chastised. But moreso, he was not advised of the very serious allegations against him.
I have no doubt that the plaintiff had suffered mental distress. The former Chief Justice, the late Sir Buri Kidu, in Harding v. Teperoi Timbers Pty Ltd [1988] PNGLR 128, said at page 136:
"I consider that in employment contracts, there cannot be any doubt that it is the contemplation of the parties that if the employee is dismissed in breach of the contract, it is possible that the effects would be to cause him/her to suffer some degree of mental distress, frustration or upset. This is only a good common sense conclusion."
His Honour then awarded a nominal sum of K 1,000.00, and said, "I think it should be stated that the more serious and intense the degree of mental distress and frustration is, the higher the amount of damages that will be awarded."
In the present case, there is undisputed evidence that the plaintiff’s dismissal attracted wide publicity. I would think that the wide publicity would mean, the termination was reported in both the print media and television. I am of the view therefore that since the plaintiff’s termination received wide publicity, the nominal award is inappropriate. In fact that nominal sum was based or the equivalent of five hundred, sounds applicable in English cases which counsel referred to in that case.
It is uncommon for a breach of contract to be widely published, however, in the present case, I consider that it received quite large publicity, which in my view, means the degree of humiliation and distress would be much higher than in Harding. I am of the view therefore that, the plaintiff is entitled to a higher award than the usual nominal amount of K 1,000.00. The plaintiff’s counsel proposed the sum of K 3,000.00, however, I consider that since the plaintiff’s termination was widely publicised, and this has not been refuted by the defendant, he is entitled to a higher award than what his counsel has submitted. In the exercise of my discretion, I consider that the sum of K5,000.00 is not an excessive or unreasonable award. I therefore award that amount as damages for mental distress. The plaintiff’s total claim would therefore increase to K183,185.67 less payment already received.
As to interest, the Court has a discretion under s.1 of the Judicial Proceedings (Interests on Debts and Damages) Act, Ch.52, to order interest for the whole or part of the period between the date on which the cause of action arose and the date of judgment. I note in Harding’s case, the Court awarded interest from the date of the breach of contract to the date of judgment and thereafter, at the rate of 8% per annum. I would allow interest at the prescribed rate of 8% from 14th October 1998 to the date of judgment and thereafter based on that precedent.
In applying that precedent, the plaintiff is entitled to interest from the date of breach of contract, 14th October, 1998, to expiry of contract, 3rd June, 2000, which is 259 days. Calculated at the rate of 8% per annum, interest accruing over that period is K10,398.92. From 1st July 1999 to expiry of contract, 3rd June, 2000, is 339 days. Interest at 8% per annum accruing over that period is K8,634.66. From 4th June, 2000, to date of judgment is 86 days, thus interest at 8% for that period is K2,190.50. Total amount of interest therefore is K21,224.08
Summary of damages are therefore as follows:
1. Damages for breach : K 178, 185.67
2. Damages for mental distress : K 5, 000.00
K 183, 185.67
3. Interest at 8% from date of : K 10, 398.92
breach 14/10/98 to date of
payment (K69,974.24)
30/06/99 = 259 days
K 193,584.59
4. Less paid : K 69,974.24 : K 69,924.24
K 123, 610.35
5. Interest at 8% from 01/07/99 : K 8, 634.66
to 03/06/00 expiring of
contract = 339 days
K 132, 245.01
6. Interest at 8% from 03/06/00 : K 2, 190.50
to date of judgment = 86 days
Total : K 134, 435.51
Judgment is entered for the plaintiff in the sum of K 134, 435.51 with costs to be taxed, if not agreed upon. Post judgment interest will run at 8% per annum, until final settlement.
Finally, Mr Coady addressed the Court on the issue of tax assessment. I think the authorities are clear. The Court is not the Chief
Collector of Taxes, therefore it is not obliged to assess tax liability on judgment debts. It will therefore be unnecessary for this
Court to embark on tax assessment in this case. See Nahau Rooney v. Forest Industry Council, unreported, N914, 26th October, 1990.
______________________________________________________________
Lawyer for the Plaintiff : Henaos Lawyers
Lawyer for the Defendant : Thirlwall Aisi & Koiri
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