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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO: 411 of 1999
PETER AIGILO
Plaintiff
PRIME MINISTER, SIR MEKERE MORAUTA
AND MEMBERS OF HIS CABINET CONSTITUTING
THE NATIONAL EXECUTIVE COUNCIL
First Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant
JOHN WAKON
Third Defendant
Waigani: KANDAKASI J.
2001: 20th June
9th August
STATE SERVICES – Termination of Police Commissioner and Secretary of Department of Police appointed under the Constitution and under a written contract of employment – Termination not in accordance with contract and constitutional procedure for termination and without provision of reasons for – Termination not "in the best interest of Papua New Guinea" - Termination unlawful and harsh and oppressive – Plaintiff entitled to recover damages and entitlements for balance of contract period - Constitution s.193 (1)(e) and (3) and sch.1.10 (4) – Police Act 1998 s. 9
STATE LIABILITY- State only vicariously liable if its servants or agents including the National Executive Council acted "in the best interest of Papua New Guinea" – Persons not acting "in the best interest of Papua New Guinea" become personally liable as that amounts to a frolic and detour of their own - The onus to demonstrate acting "in the best interest of Papua New Guinea" is on person responsible for the conduct in question.
CONTRACT - Termination of employment contract not in accordance with contract – Breach of contract – Plaintiff entitled to damages and entitlements under the contract for balance of contractual term.
DAMAGES – Assessment of damages – Entitlements for balance of contractual term – Damages reasonably foreseeable namely damages for distress, frustration and humiliation and interest accruing on bank loan dependent on contract of employment.
EVIDENCE – Failure to object to evidence or call evidence in rebuttal and cross-examine amounts to acceptance of evidence and claim based on such evidence.
WORDS & PHRASES – "In the best interest of Papua New Guinea" – Means for the benefit of Papua new Guinea – Factors that may amount to considered and set out – Failure to act "in the best interest of Papua New Guinea" renders the person responsible to personal liability – State may be vicariously liable and where it pays it has right of automatic recovery against responsible person unless that person has already paid or is able to demonstrate acting "in the best interest of Papua New Guinea".
Papua New Guinea Cases Cited:
Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 285 at 294.
Tau Liu v. Aderson Agiru & Ors N1639 (a judgement delivered by Sheehan J on 21st October 1997).
Lima Dataona –v- Moses Makis & The State N1797 (Unreported and unnumbered judgment of 17th December 1998)
Leo Nuia v. The State N1986 (Unreported but numbered judgement delivered on 29th August 2000).
RG -v- MG [1984] PNGLR 413
WP -v- DP [1982] PNGLR 1
Bean -v- Bean [1980] PNGLR 307, Kapi, J. (as he then was) said at 320:
Pike Dambe v. Augustine Peri and The State [1993] PNGLR 4,
Bogil Guma v. The Sate & Ors N262
Dalin More v. The State & Ors N1736.
Kolta Development Pty Ltd & Great Happiness Seafood Pty Ltd v. PNG Defence Force and The State N1470
Rooney –v- Forests Industries Council [1990] PNGLR 407
Moses Luluaki -v- Madang Urban Local Level Government & Steven Amenasik (Unreported and Unnumbered Judgment of Justice Sawong
of 8th December 2000)
Jeff Tole –v- PNGBC (Unreported and Unnumbered Judgment of Justice Sevua of 14th March 2000)
Dia Kopio –v- Employment Authority of Enga Provincial Government & Enga Provincial and Local-level Governments (17th May 1999 Unreported Judgment) N1865.
Hodson v. The State [1985] PNGLR 303
Peter Na-al –v- Michael Debege N1958
Abel Tomba –v- The State SC518
Alex Latham v. Henry Peni and Kathleen Marie Latham v. Henry Peni N1463, Justice Doherty
Benny Balep v. The Commissioner of Police & The State (4/11/94) N1374. Sevua J.
Gulf Provincial Government –v- Baimuru Trading Pty Ltd (10/12/98) N1794.
Pomb Pullie Polye –v- Jimson Saku Pepaki & Anor (31/05/00) SC637.
Other Cases:
Rederiaktcebolaget "Amphitrite" v. The King [1921] 3KB 500
Commissioner of Crown Lands. Page [1960] 2 QB 274
Ansett Transport Industries (operations) Pty Ltd v. Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at 74 by Mason J
Manock v. South Australia (1979) 83 LSJS 64 at 74 (Lelling J) and Selway 1B
Northern Territory v. Skywest Pty Ltd [1987] NTSC 31; (1988) 48 NTR 20 at per Kearney J at p.47
New South Wales v. Bardolph (1934) 52 CLR 453 at 463 per Watt J.
Doyle v. Olby (Ironmongers) Ltd [1969] Q.B. 158
Counsel:
Mr. M. Murray & C. Makail for the Plaintiff
Mr. G. Garo with Mr. J. Palek (observing) for the Defendants
9th August 2001
REASONS FOR JUDGEMENT (NO. 2)
KANDAKASI J: The plaintiff is suing the defendants for damages for unlawful termination by the first defendant (NEC) of his employment contract with the second defendant (the State) as its Police Commissioner and Secretary of the Department of Police (the contract) and replace him with the third defendant. Initially, Mr. Aigilo filed for judicial review of the decision leading to his termination. But later, he chose to claim damages instead as the third defendant was already appointed to the position he previously occupied.
Parties Positions
The plaintiff claims his termination was unlawful because he was given no notice of an intention to terminate the contract and in any case he was not served with a termination letter or notice setting out the grounds for his termination. Also he claims that his termination was not in accordance with the usual procedure for the termination of public officers like himself under the Constitution and was in a manner that was harsh and oppressive. He therefore, claims he is entitled to a full pay out of the balance of his contract and other damages for breach of contract.
The defendants deny the plaintiff’s claim and claim that the contract was lawfully terminated "in the interest of Papua New Guinea". Hence, they claim that the plaintiff is not entitled to any damages. Further or in the alternative, they argue that, the plaintiff was paid all that he was entitled to on termination by a payment of K62, 496.86. They therefore argue that, there is nothing due and owing to the plaintiff.
The main issues for determination therefore are these:
Evidence
The Plaintiff’s evidence comprise of his own oral evidence and affidavits, exhibits "A", "B", "C" and "K" and a number of correspondence and minutes, exhibits "D", "E", "F", "G", "H" and "I". Also admitted into evidence for the plaintiff was his assessment of damages, exhibit "J". All of these evidence was admitted into evidence without any objection from the defendants. The only exception to that were objections to a number of paragraphs including paragraph 12 of the plaintiff’s affidavit sworn on 3rd of August 1999 on the basis of irrelevance, expression of opinions and statements of law. With the exception of paragraph 12, I overrule the objections.
Facts
From this evidence, the facts are quite straightforward. There is no dispute between the parties that, the plaintiff was appointed Commissioner of Police and Secretary of the Department of Police for a period four years commencing 8th October 1997 and ending 8th October 2001. He was appointed in due consultation with the Public Service Commission and in compliance of the procedures under the Constitution with a gazettal notice of 8th October 1997 as Police Commissioner by the Head of State, acting with, and in accordance with the advice of the NEC. A Standard Contract of Employment was prepared on the advice of the NEC for his signature. That Contract provided the terms and conditions of his employment. An unsigned copy of the contract of employment was admitted into evidence as annexure "F" to the affidavit of the plaintiff sworn on 3rd August 1999. The plaintiff says he signed a contract in those terms sometime in May 1998 but made retrospective to the date of his appointment, 8th October 1997. He says, he forwarded the signed contract to the Department of Personal Management (DPM) without retaining a copy. The DPM is not able to either confirm or deny the execution of the contract, as it is not able to locate a copy of it. Nevertheless, there is no issue on the terms of the contract as set out in the unsigned copy.
Following the change of government from the one led by Honourable Bill Skate to Honourable Sir Mekere Morauta, the plaintiff was called by the Prime Minister to his Parliamentary office and he met with the Prime Minister who was with Jammie Maxton Graham and some Minsters. The Prime Minister congratulated him for a job well done during the change over period, which was trouble free despite rumours of much trouble and bloodshed. The plaintiff says he was very pleased to receive the commendation and returned to his duties a very happy and satisfied man with hopes of continuing in his job.
About 6 days later, on or about 20th July 1999, the NEC revoked the plaintiff’s appointment as Police Commissioner and Secretary for the Department of Police as well as a member of the Police Force. That effectively terminated the contract of employment. Prior to that, also on 20th July 1999 at about 07.00 am when he turned up at the Police Headquarters for work, he found a police parade in front of the office complex. Upon inquiring, he found out that the parade was to welcome the third defendant as the new Police Commissioner. As he had no prior notice of either his removal or the appointment of a new Commissioner, he was most surprised and shocked. He managed however, to order the parade to break up and continued with normal duties. A little later, he received a telephone call from the Chief Ombudsman, Mr. Geno and was asked to go and discuss the matter with him.
The plaintiff then drove to the Ombudsman Commission’s offices and met with the Chief Ombudsman and Commissioner Hitolo. Whilst there, he was informed that he was alleged to have organized a mobile police squad to stop his removal as Police Commissioner. The plaintiff told them that, he respect the constitutional office he then held and told them that the allegations had no merits. Then he informed them that, he was not notified properly of his removal and until that was done, he remained the Police Commissioner.
Upon his return to his office, he received advice from the NEC that he was removed from his position and as a member of the police force. The plaintiff felt very down hearted and was in a state of shock. Later the same day, he was delivered a copy of a National Gazette No. G91 – 20th July 1999 (annexure "A" Aigilo’s affidavit sworn on 3/8/99) revoking his appointment as Police Commissioner and Secretary of the Police Department and appointing the third defendant in his place. No reason was stated for his removal either in the Gazette or in any other document or instrument or even a verbal advice. He had no choice but to pack his personal belongings and leave the office within less than 24 hours.
On 21st July 1999, the plaintiff was asked to return his official vehicle, side arm and mobile phone. This was contrary to the established practice of former departmental heads just being removed enjoying the privileges they had enjoyed for another three months. Also, contrary to established practice, he was not given the opportunity to do a proper hand-over take-over given the very nature of the institution, of the Police Force and bid farewell to his good serving officers.
After his termination the plaintiff was able to obtain what appears to be a submission to the NEC (annexure "B" to Aigilo’s affidavit of 3/8/99), on the basis of which he was terminated. The submission in relevant parts read:
"Revocation and Appointment of Police Commissioner
Facts and Considerations
The defendant’s objected to this evidence from being admitted on the basis of section 153 (2) of the Constitution. I overruled that objection because s. 153(2) speaks about procedures before the NEC and whether or not that having being followed and has nothing to do with the production in court a copy of a document put before the NEC.
The Plaintiff was not charged and or disciplined in respect of any of the allegations in the submission. He was also not given the opportunity to say something in his response before arriving at the decision to terminate him. There was no consultation between the NEC and bodies like the DPM or the Public Services Commission before terminating the plaintiff.
After his termination, the plaintiff made efforts to look for alternative employment to support himself and his family and to meet a housing loan he obtained on the basis of his employment contract for the purchase of a property he occupied. First, he found a job with Guard Dogs Security in Port Moresby as an instructor. He was paid K500.00 per fortnight which did not last long. But that was not enough to meet the obligations he had entered into on the basis of the contract. Secondly, he was just about to win a contract with the European Union for about 700 English pounds a week for a project on law and order but failed upon the Police Department’s recommendation against the use of an outsider like the plaintiff. Failing that, he set up a security company to absorb about 100 community police youths that were terminated upon the third defendant becoming the Police Commissioner and Secretary of the Department of Police. He received about K250.00 per fortnight from this venture, which was obviously not enough and did not last long.
Around November 1999 his mother-in-law passed away and he took the body to Lae for burial. Whilst in Lae, he sought and found employment with Guard Dogs Security there as instructor in February 2000. From this employment he was making K1200 fortnight. Unfortunately, he contracted malaria and returned to Port Moresby in December 2000. He became bedridden with medical advice and treatment for 6 months. The Affidavit of Dr. Lester Simulabai, sworn on 10th May 2001 supports the Plaintiff on this. That affidavit annexes a medical report dated 30th April 2001. The report reads:
"MR. PETER AIGILO was first seen in this surgery on Friday 2nd February 2001, complaining of generalised body swelling involving face, body and both legs for two (2) months. He said to have developed the above symptoms after suffering from severe attack of malaria in Law, Morobe Province. He was treated with anti-malaria drugs in Law, Morobe Province before coming and attending the above Private Medical Clinic. He also complained of:-
- Loss of Appetite
- Loss of Sleep
- Loss of Concentration; and
- Loss of Energy during this two (2) months period while sick
On Examination
General – He was found to have grossly swollen body involving face, arms,
abdomen genitalia and both legs and had weight 98 kilograms.
Head and Neck - Swollen Face
- Conjunctiva – Slightly Pale
- Eyes]
- Ears] Normal
CVS - Pulse 74/m – and heart sound normal.
BP – 140/84 – Normal.
R.S. - Chest Clinically Clear
ABDOMEN – Swollen; No Ascitic (Abnormal Fluid)
- Spleen, Liver – Normal.
Glands - Normal
Gentalia - Scrotum] Swollen
- Penis ] Swollen
Extremities - Both Legs with Pitting Oedema
Investigations 1. Chest X-Ray – Normal
2. Blood and Urine indicates – Severe Infections of both Kidneys.
Diagnosis "Acute Severe Nephrotic Syndrome"
Treatments:-
- No Protein
N.B: Mr. Peter Aigilo is still medically required for:-
(a) Regular Medical Reviews; and
(b) Weekly – Blood and Urine Tests
Although Mr. Peter Aigilo’s conditions has shown a great improvement he is still medically required to continue strict bed rest for more than two (2) months, and only when found to be medically fit (both physically and mentally) to resume duty.
Conclusion
It is medically obvious that the contributing factors in Mr Peter Aigilo’s present illness is due to:-
(a) Loss of job;
(b) Loss of Status; and
(c) Loss of Money.
This greatly has affected both physically and mentally, thus reducing his body’s ability to resist infections."
(Emphasis supplied)
The affidavit and the medical report were admitted into evidence with the consent of the defendants subject to weight. The defendants did not call any evidence in rebuttal. So the Court is left with the evidence produced for the plaintiff. In submissions, counsels for the defendants raised arguments questioning the qualifications and expertise of the doctor. Noting that the standard of proof is on the balance of probabilities and in the absences of any evidence to the contrary, I have no basis to accept those submissions. Accordingly I accept the evidence as it stands.
Given his medical conditions, the plaintiff was not able to generate any meaningful income and meet his loan or mortgage obligations over the property. His bank did take steps to exercise its mortgagee rights including a sale of the property by auction. To make matters worse for him, on 18th January 2001, the Plaintiff received a letter from Lae Guard Dog Security, advising him of being removed from the payroll. He now has no definite and good source of income to support himself and his family and meet his financial commitments.
I observed in Court that the plaintiff was in a very fragile condition, which was indicative of the serious medical conditions he was forced into by the sudden and unceremonious and harsh termination of his employment.
Although the defendants filed a number of affidavits, only one affidavit was admitted into evidence. That was the affidavit of Mr. Ravu Vagi deputy secretary of the DPM, sworn on 14th June 2001 as Exhibit "D1" for the Defendants. The deponent says the contract was terminated in accordance with clause 17 "in the best interest of Papua New Guinea" by the NEC. In cross-examination however, he was not sure what that phrase really means or entails. He said also in cross-examination that whether the termination was "in the best interest of Papua New Guinea" was something within the prerogative of the NEC and he did not have any idea as to what it entailed. He agreed to suggestions in cross-examination that it could be used as a cover for political reasons to appoint persons of the NEC or the Minister concern’s choice and not necessarily on merits and for the benefit of the State or the nation. This concept could be used to hire and fire officers like the plaintiff at the will of the government of the day. This witness was not able to refer to or produce any evidence of the NEC terminating the plaintiff "in the best interest of Papua New Guinea" and the factors taken into account before deciding to terminate the plaintiff.
Mr. Vagi also deposes to the plaintiff’s entitlement on termination being calculated in accordance with clause 12.1(a) of the contract. He says the final pay out figure was K62, 496.82, which was paid to and received by the plaintiff, well after his termination, was effected. He does not however, say that the plaintiff accepted that payment as a final pay out of all that he was entitled to under the contract and agreed not to sue the defendants for his full contractual entitlements for the balance of the term of his contract.
Whether the contract was legally terminated?
This issue can be answered having regard to the relevant provisions of the contract and the procedure prescribed by the Constitution. The contract of employment expressly provides for termination in clause or sections 17 and 18. Those provisions in relevant parts read:
"17. TERMINATION OF EMPLOYMENT
17.1 The grounds on which the Head of State may terminate the contract are:-
- (a) ...;
- (b) in the best interest of Papua New Guinea as determined by the National Executive Council;
- (c) ...;
- (d) for cause as determined by these Terms and Conditions, and Laws of Papua New Guinea;
- (e) ...;
- (f) ...;
- (g) for any breach of contract.
17.2 The employment under this contract may be terminated:-
- (a) by either the Head of State or the Commissioner each giving to the other at least three calendar months notice in writing; or
- (b) by the Head of State by giving to the Commissioner not less that three calendar months notice in writing and paying the Commissioner’s salary and other emoluments calculated up to the expiration of the three calendar months after the giving of such notice in which event the Contract will terminate on the date stipulated; or
- (c) the Head of Sate without allowing any period of notice or making any payment in lieu of notice should the Contract be terminated for cause as defined herein.
17.3 Upon termination of employment all accrued benefits calculated in accordance with the Terms and Conditions and subject to any penalties herein, shall become due and payable to the Commissioner.
17.4 If on resignation, the Commissioner has failed to give due notice in accordance with this Section, the State shall deduct from any accrued benefits payable to the Commissioner, a sum of money equivalent to a Single Line Base Salary which would have been paid to the Commissioner in respect of the notice period.
18. TERMINATION FOR CAUSE
In the event that the Commissioner:-
(a) commits a breach of the provisions of the Constitution, any Act, Regulation, Public Service Rule, or General Order, or this Contract;
(b) divulges without authority from the Minister/Secretary for the Department of Personnel Management, any information concerning public business, whether in relation to the Police Force/Department or otherwise;
(c) wilfully disobeys or disregards a lawful order of the National Executive Council;
(d) is negligent in the discharge of the duties specified by the Police Force Act, the Minister or the National Executive Council from time to time;
(e) is inefficient or incompetent from causes within the Commissioner’s own control;
(f) attends work with impaired capabilities and judgement following the consumption of alcohol or un-prescribed drugs;
(g) solicits or accepts a fee or gift in connection with the discharge of official duties;
(h) is guilty of any disgraceful or improper conduct in the discharge of official duties or otherwise;
(i) is continually absent from work without proper authority or good reasons; and
(j) is convicted of a criminal offence,
the Commissioner is guilty of a serious disciplinary offence and the Head of State acting on advise from the National Executive Council may immediately terminate the employment without notice provided that the Disciplinary Procedure under Section 27 has been implemented."
The plaintiff argues that he was entitled to notice under clause 17.2 (a) or (b) unless he was terminated for cause under clause 17.2(c) and not a sudden dismissal after just being congratulate 6 days earlier. In any case, he says having regard to the nature and importance of the office he was occupying, he was entitled to be given the reasons for his termination either before or at the time of his termination but was denied that. Only after the issue of the proceedings, the defendants claim in their defence that his termination was on the grounds of "in the best interest of Papua New Guinea". They did so without specifying the factors they took into account as forming the basis to conclude that "in the best interest of Papua New Guinea" his employment had to be terminated. He submits there was nothing to form the basis to conclude that "in the best interest of Papua New Guinea" his employment had to be terminated. In the circumstances, he argues that the termination was in breach of the contract and was therefore unlawful.
Mr. Garo for the defendants argues that, clause 17.1 and 17.2 are in the alternative. In so arguing he submits that, the contract could be terminated under any of those provisions. This he argues is the case when read together with the provisions of clause 12. Proceeding on that basis, he argues that, the defendants validly terminated the contract of employment pursuant to clause 17.1(b). I do not accept these arguments for the reasons immediately following.
In my view clause 17.1 expressly provides for the grounds on which the contract could be terminated. This accords well with the provisions of s.9 (5) of the Police Act 1998, which applies to the contract in this case by virtue of s. 9(1) of the Act and s. 63(2) of the Interpretation Act which provides "[t]he repeal of a statutory provision that validated or continued in force any act, matter or things does not affect the validation or continuance". If the contracted is to be terminated for cause (17.1(d)) then clause 18 provides as to what may constitute a cause for termination. Then clause 17.2 provides as to the way or manner in which the contract could be terminated and clause 12 provides as to what the plaintiff is entitled to receive upon termination, which provides in these terms:
"12. EX-GRATIA TERMINATION BENEFIT
12.1 In the event that the Head of State, acting on advice from the National Executive Council determines that the Commissioner’s services are to be terminated during the currency of the Contract pursuant to Clauses 17.1(a), (b) or (c), then the Commissioner shall be entitled to either:-
- (a) an Ex-Gratia Termination Benefit equivalent to the Base Salary only for the unexpired period of the Contract subject to a maximum period of three months, in addition to three months payment of Base Salary and Contract Gratuity, in lieu of notice; OR
- (b) the retrenchment benefit under the 1982 Public Service Redundancy Agreement.
whichever is the greater of these two payments.
12.2 The Commissioner shall suffer no loss of accrued benefits, payable in accordance with the Terms and Conditions, including Contract Gratuity, Long Service Leave, accrued Recreation Leave and benefits payable under any other law, in the event of termination hereunder.
12.3 Payments made to the Commissioner under this Section of the Contract shall constitute the maximum entitlement payable by the State to the Commissioner on termination of the contract, under all circumstances, pursuant to Section 17."
A closure look at the wording of this clause renders the interpretation given above more sensible.
If I accept the defendants’ submissions I would be re-writing the contract to provide in the terms argued. It is settled law that, a court can not re-write the terms of a contract in the disguise of interpreting it. Instead it must endeavour to uphold the agreement of the parties in a contract by reference to the words used in the contract: see Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 285 at 294. The wordings in clause 17.1, 17.2 and 12 are very clear. They leave no room for any argument. Clause 17.1 starts with the words "[t]he grounds on which the Head of State may terminate the contract are..." then lists the grounds. This has to be contrasted with the opening words in clause 17.2 in these terms "[t]he employment under this contract may be terminated ...". Also, a closer look at the wording in clause 17.2 does not provide any ground for termination as is done in clause 17.1. Instead this clause speak only about the way in which termination may be brought about. Further, the defendants submission makes no sense and if accepted would amount to very bad drafting in that there would be an additional clause on the grounds for termination after having already devoted a clause to that and fail to provide for the way in which termination could be brought about. It would also render the contract uncertain as to grounds and the manner in which the contract could be terminated.
With regard to clause 12, it clearly provides as to what the plaintiff is entitled to receive as a consequence of his termination under the grounds specified in clause 17.1(a), (b), or (c). It does not provide or give the defendants the right or the power to terminate without notice or payment in lieu of notice. In any case, it does not provide a ground for termination or the manner in which the contract could be terminated.
On the evidence, most of which were not questioned in cross-examination and are not disputed, I find that the plaintiff was terminated without any prior notice or warning. No letter or instrument of termination setting out the grounds for his termination was served on him. He was not even paid in lieu of notice on the date his termination was effected. The only way in which the plaintiff could be terminated without any prior notice or warning is in accordance with clause 17.2(c). Such a termination is possible only if the termination is for cause as set out in clause 18.
Clause 18 is in reality a disciplinary offences provision. It supplements s. 9(5) of the Police Act 1998. No notice is required if the Commissioner is terminated for cause. But it does not completely dispense with the need to give notice even for a termination for cause. This is because clause 18 ends with the words "provided that the Disciplinary Procedure under Section [clause] 27 has been implemented." Clause (section) 27 is the disciplinary process. The process was agreed to start with a charge against the plaintiff and allowing the plaintiff opportunity to reply to the charges before a final decision by the NEC. The NEC would then consider the charge(s) and the plaintiff’s reply with a legal advice from the Attorney General and make a final decision. In view of the disciplinary process provided for under clause 27, it was not necessary for the parties to agree to a further notice requirement for the NEC or the Head of State for a termination under clause 17.2(c).
The defendants say they terminated the contract "in the best interest of Papua New Guinea". They do not dispute that no prior notice of this was given to the plaintiff arguing that, the plaintiff is not entitled to the reasons for his termination. Therefore, they argue that the plaintiff was lawfully terminated.
The concept of "in the best interest of Papua New Guinea" is provided for in clause 17.1(b), which has its foundation in s. 9(5)(h) of the Police Act 1998. By virtue of s. 9(1) that Act, applies to the contract of employment in this case. The enumeration of what constitutes cause in clause 18 of the contract of employment does not include " in the best interest of Papua New Guinea". It follows therefore that, in order to lawfully terminate the plaintiff in terms of clause 17, the Head of State had to give three months notice in line with clause 17.2(a) or (b). Mr. Garo argues that, National Gazette No. G91, dated 20th July 1999, was notice to the plaintiff. That gazette in relevant parts omitting the formal parts reads:
"I, Silas Atopare, G.C.M.G., K.St., Governor-General ... hereby-
(a) revoke the appointment (sic) Peter Aigilo as Commissioner of Police and Departmental Head of the Department of Police; and
(b) appoint John Wakon to be the Commissioner of Police and the Departmental Head of the Departmental (sic) of Police.,
with effect on and from the date of publication of this instrument in the National Gazette.
Dated this 20th day of July 1999"
If this was intended to be notice of an intention to terminate the plaintiff, that intention could have been clearly expressed by the use of words like "notice is hereby given" or the like. Also given the constitutionally important office of the Commissioner of Police and Head of the Department of Police, the reasons for the termination could also have been stated or specified in the notice instrument. I can not find any of these in the gazettal. What is apparent however is that, this is the instrument actually terminating the plaintiff.
A notice in this case would have been given in the form of a letter from the Head of State to the Plaintiff advising him of his termination and the ground(s) of his termination. The evidence is that, no notice of the termination was ever given prior to, at the time of or after the termination. Also, no payment in lieu of notice was made at the time of the termination. This was a case of instant dismissal without reason and without prior notice or warning notwithstanding the importance of the office the plaintiff was occupying.
On these facts it is clear to me that the plaintiff was not terminated in the manner specified and provided for under clause 17.2 or in accordance with the provisions of s. 193(1)(e), (2) and (3) and schedule 1.10(4) of the Constitution. The question then is, were the defendants entitled to terminate the contract in the way they did?
As noted, clause 17.1(b) of the contract provides for the Head of State to terminate the Contract "in the best interest of Papua New Guinea as determined by the National Executive Council." The reason for this is the fact that the Commissioner of Police is appointed pursuant to s. 193(1)(e) and (2) of the Constitution and section 9 of the Police Act 1998. He is appointed on the advice of the NEC only after consultation with the Public Service Commission and any appropriate Permanent Parliamentary Committee given the importance of the office.
It is trite law that, the same appointment procedure must be followed to effect a revocation or termination, unless a provision of the Constitution or an Organic Law provides otherwise. A clear expression of that is in Schedule 1.10(4) of the Constitution. This has been applied in a number of cases. A recent application of that principle is represented by the case of Tau Liu v. Aderson Agiru & Ors N1639 (a judgement delivered by Sheehan J on 21st October 1997).
In this case, there is no provision in the Constitution or an Organic Law excluding the application of the above procedure to bring about the plaintiff’s termination. Consequently, the defendants were required to follow the same procedure that was used to appoint him to lawfully terminate him. That is to say, the Head of State acting on advice of the NEC could revoke the plaintiff’s appointment. But that has to be proceeded with by a consultation with the Public Service Commission and any Permanent Parliamentary Committee.
There is no evidence of the above procedure being followed, especially in relation to the need for consultation with the Public Service Commission. Indeed, the Assistant Secretary of the DPM who is in charge of the department under which the Public Service Commission falls, says the NEC terminated the plaintiff and he does not know what factors were taken into account before the decision to terminate was arrived at. If the Public Service Commission were consulted, no doubt he would know about these things. The NEC rushed to terminate the plaintiff only 6 days after congratulating him for a job well done. In so doing, the NEC failed to meet the notice requirements and meaningfully consult the Public Service Commission and give the plaintiff the opportunity to defend himself before his dismissal in accordance with the procedure agreed to and set out in clause 27 of the contract.
The Acting Secretary of the DPM claims the plaintiff was terminated "in the best interest of Papua New Guinea" by the NEC. He does not however, provide any evidence of how that was communicated to him or his department. He was not a part of the NEC that made the relevant decision. His claim is therefore only an assumption or hearsay and as such it is no evidence of the basis or reason for termination. It follows therefore, that the NEC had no reason to terminate the plaintiff.
Nevertheless, if indeed he was terminated "in the best interest of Papua New Guinea", then what His Honour Woods J said in Lima Dataona –v- Moses Makis & The State N1797 (Unreported and unnumbered judgment of 17th December 1998) is relevant. Toward the end of his judgement in that case, His Honour said:
"Whilst there is a clause in the contract of employment which allows for termination ‘in the interest of the State’ and
the State relies on that clause for its action such must be read in the wider context of consultation with the relevant public bodies
and in particular with the Provincial Governor and Executive, such a clause does not give the NEC arbitrary power without appropriate
consultation. Such an exercise of arbitrary power can only lead to greater instability and chaos."
(Underling supplied)
In my view the present case is not different. Whilst clause 17 of the contract provides for termination "in the best interest of Papua New Guinea", it is not open to the NEC to arbitrarily terminate the Plaintiff. The NEC is obliged to consult the Public Service Commission and the relevant Permanent Parliamentary Committee and more importantly must in fact be satisfied that the termination is "in the best interest of Papua New Guinea".
The phrase "in the best interest of Papua New Guinea" is used in s. 9(5)(h) of the Police Act 1998. There is no definition of that phrase in the Act itself or else where. In practice that phrase has been abused more than its a proper consideration and application. An example of that is the case of Leo Nuia v. The State N1986 (Unreported but numbered judgement delivered on 29th August 2000). The plaintiff in that case was then the Commander of the Defence Force but was terminated in breach of his contract of employment with the State and without granting him the opportunity to be heard on some serious allegations following the disciplinary process provided for in the contract. The letter communicating the decision to terminate him read in relevant parts:
"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.
... 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."
(Emphasis mine)
The Court in that case commenting on the power to terminate said at pages 8 and 9 of the judgement:
"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.
...
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."
In other jurisdictions such as Australia, the counter part of the concept of "in the best interest of Papua New Guinea" is known as "executive necessity". The reception of that doctrine in Australia is traced to Rowlatt J in Rederiaktcebolaget "Amphitrite" v. The King [1921] 3KB 500, where a government contractual undertaking was broken because of the necessities of war. His honour held at p.503 that the Crown "cannot by contract hamper its freedom of actions in matters which concern the Welfare of the State". The doctrine has been accepted with no problem in clear cases of wartime necessities. See: Commissioner of Crown Lands v. Page [1960] 2QB 274.
However, this doctrine has been the subject of strong criticism. A good statement of that is in Ansett Transport Industries (Operations) Pty Ltd v. Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at 74 by Mason J in these terms:
"Public confidence in government dealing and contracts would be greatly disturbed if all contracts which affect public welfare or fetter future executive action were held not binding on government or on public authorities. And it would be detrimental to the public interest to deny the government or a public authority power to enter a valid contract merely because the contract affects the public welfare."
Despite such criticisms, the doctrine has been accepted and applied in Australia even by Mason J himself in the same case. In South Australia, the doctrine "in its wide form" has been abolished to enable it to have only a limited application: See Manock v. South Australia (1979) 83 LSJS 64 at 74 (Zelling J) and Selway B. The Constitution of South Australia (1997), Federation Press, 148 and 195.
The preponderance of authorities appear to favour a narrow and confined application of the doctrine. They restrict it to overriding public interest, such as the exigencies of war: See Northern Territory v. Skywest Pty Ltd [1987] NTSC 31; (1988) 48 NTR 20 at per Kearney J at p.47. It is also clear that the exact circumstances in which the doctrine can be successfully invoked are not always easy to specify. Nevertheless, it is save to say that the courts will be disinclined to accept an invocation of the doctrine unless a clear and convincing case is made out to justify the State walking away from a contract. Hence, it is not sufficient if the government is dissatisfied with the contractor, or that the government realizes that it made a commercial misjudgment in entering into a contract at the first place. It has been held for example that terminating a contract to avoid a threatened industrial action is not a good basis to invoke the doctrine: See Director of Posts and Telegraphs v. Abbott [1989] FCA 34; (1974) 22 FCR 157 at 167-168 per Bright J. It has even been suggest that the doctrine can not be invoked following a change in government: New South Wales v. Bardolph (1934) 52 CLR 453 at 463 per Evatt J.
It is common knowledge now that the use of the concept of "in the best interest of Papua New Guinea" or "in the best interest of the State" or "in the best interest of the nation" in our country as only benefited those using it and not the nation and her people. It has been used almost indiscriminately following a change in government. Important Constitutional office holders, Departmental Heads and heads of statutory corporations and other contracts have been readily changed to suit political and personal interests more then "in the best interest of Papua New Guinea". Millions of Kina have been paid out for breach of contract and that has significantly contributed to the bad financial position we as a nation is in today. In my view, this has been possible because of the absence of any definition given to the concept or the phrase under consideration.
I consider the time has now come to state clearly what factors are relevant and must exist in order to amount to "in the best interest of Papua New Guinea". No case as far as I am aware has considered this concept in any detail that might be of assistance. I look to the use of similar expressions in other cases to help determine the factors that could amount to "in the best interest of Papua New Guinea". The closest I can come to is in the area of custody of children where the expression "best interest of the child" is an important consideration. In respect of that concept, the law is settled that the paramount consideration is the "best interests of the children". In RG -v- MG [1984] PNGLR 413, the relevant matters for consideration were listed as:
(a) The claim of the mother and what is often referred to as her preferred role; WP -v- DP [1982] PNGLR 1;
(b) The relative circumstances in which it is intended to raise the child;
(c) The ability to provide for the child’s advancement in life;
(d) The age of the child; and
(e) Provision for the maintenance of existing relationship.
Earlier on in Bean -v- Bean [1980] PNGLR 307, Kapi, J. (as he then was) said at 320:
".......the welfare of the infant is usually referred to as the comfort, health, moral, intellectual and spiritual welfare of the child. These elements, in turn, are fundamentally dependent on the existence of security, stability, wise discipline and genuine affection in the home... In every custody application, when considering the welfare of the children, the court must have regard to all these matters."
From these, it is clear to me that "the best interest of the children" means all of the factors that affect them from their upbringing to education and intellectual development. The Courts have granted custodies of children to parties who came up with the best possible prospects to provide for the physical, mental, spiritual and social needs in a more positive way for children. This involves a weighing of two or more different proposals or positions. The side, which proposes more in benefits for a child in terms of his development as a person in all respects, has been invariably granted custody.
With these in mind, I am of the view that the concept of "in the best interest of Papua New Guinea" means "for the benefit of Papua New Guinea". Benefits to Papua New Guinea may be immediate or long term and may be tangible or intangible. Ultimately, however the benefits can be translated into Kina (money) terms because everything that is done involves a money factor, which may not necessarily be apparent immediately. Without limiting in any way the factors that may be taken into account to determine whether a proposed action or inaction is "in the best interest of Papua New Guinea" or the State, the following factors are relevant and must be met:
Whatever, factors the decision marker or the State takes into account, they must be guide by the general principle. The principle is that the step to be taken is indeed and in fact for the benefit of Papua New Guinea or the State to the exclusion of the personal interest of those who are making the decision or taking the step. The concept of "in the best interest of Papua New Guinea" can not be applied arbitrarily and as a matter of cause but only in very limited and carefully considered cases. If an exercise of this concept is say for misconduct in office and it affects the rights and interests of a person as in this case, real opportunity must be give to them to be heard first before taking any further step and reasons must be given for the action or decision. A failure to ensure that the step taken is "for the benefit or in the best interest of Papua New Guinea" renders the person responsible for the action or inaction personally liable for any damages or loss that may arise. The conduct of the decision-maker might amount to an unlawful interference of a legitimate contract between the State and its contracting party. The onus to show that the decision or action or inaction in question is "for the benefit or in the best interest of Papua New Guinea" therefore rests with the person making the decision, action or inaction.
This view accords well with the well know principles governing the doctrine of vicarious liability. There are numerous cases on this doctrine in Papua New Guinea, which need not be considered in any detail save only to refer to them. Examples of this line of cases include Pike Dambe v. Augustine Peri and The State [1993] PNGLR 4, Bogil Guma v. The State & Ors N262 and Dalin More v. The State & Ors N1736. These cases discuss the doctrine at some length including its reception in Papua New Guinea. Under this doctrine an employer or a principle can be found vicariously liable in some instances while in others an employer or a principal cannot be held liable.
It is an accepted principle that, an employer can not be made liable for the acts of his servant, if the servant acted outside the scope of his employment. In other words, if an employee goes on a frolic and detour of his own and causes damages to a third party, the employer will not be liable for the acts of the employee. This principle has also been already applied in a number of cases in our jurisdiction: see for example Kolta Development Pty Ltd & Great Happiness Seafood Pty Ltd v. PNG Defence Force and The State N1470 and Dalin More v. The State & Ors (supra).
In the context of the concept of "in the best interest of Papua New Guinea" it follows therefore that, where a servant, an agent or an arm or instrumentality of the State conducts in a way that is not for the benefit or in the interest of the State, it would amount to an act outside his scope of employment and would be out on a frolic and detour of his own. The State would not be liable in such a situation and a plaintiff may only have a cause of action against the person responsible for the damage, loss or injury.
In the present case, it is the first defendant’s action that has landed the parties in court. It terminated the plaintiff’s written contract for four years with the second defendant. No notice of intention to terminate under clause 17.2 of the contract was given. Similarly, no payment in lieu of notice was made at the time of the termination. Also, no reasons for the termination were given to the plaintiff any time, before, after or at the time of effecting the termination. Further, there was no consultation between the Public Service Commission and the NEC. Furthermore, serious allegations appear to have been raised against the plaintiff at the NEC level but no formal charge has been laid and proven against the plaintiff. Without any real evidence, the NEC appears to have taken the position that, the plaintiff was an Honourable Mr. Bill Skate’s man. That was despite congratulating him for a job well done during the government change over from Honourable Bill Skate to Honourable Sir Mekere Morauta just six days prior by Honourable Sir Mekere Morauta himself in the presence of some of his Ministers. At least in fairness, reasonable time should have been given to the plaintiff to demonstrate where his allegiance was, whether he was really an Honourable Bill Skate man or a true civil servant of the people of Papua New Guinea, collectively known as the State, regardless of who was in power. Still further, the action taken was illegal because it was not in accordance with the contract and was contrary to the procedure provided for under s. 193(1)(e), (2) and (3) by virtue of schedule 1.10(4) of the Constitution. Finally, there is no evidence of the factors the NEC took into account to arrive at its claim that, the termination was "in the best interest of Papua New Guinea". If this was indeed the reason, that reason should have been given to the plaintiff but was not. Instead, it is claimed after the event in defence of the plaintiff’s claim. The onus was thus on the defendants to prove that claim. Apart from the claim in Mr. Vagi’s affidavit at paragraph 2, there is no real evidence on this from the NEC. In the circumstances, I find that the plaintiff was not dismissed from office "in the best interest of Papua New Guinea" but for interests other than that of Papua New Guinea. The plaintiff was terminated unlawfully for the interest of the current government in the absence of any evidence to the contrary, which is not necessarily the interest of Papua New Guinea. That happened almost immediately after the change of government and effected in a manner that was harsh, oppressive and humiliating.
The consequence of the steps taken by the first defendant speak also against, the steps that were taken, being taken "for the benefit or in the best interest of Papua New Guinea". The first defendant terminated the plaintiff’s contract with the second defendant in breach of the contract. It has thus exposed the State to the damages that are now being claimed. A private law firm has been engaged in breach of the Attorney Generals Act 1989 going by my judgement in the preliminary ruling (for details on these see the preliminary judgement delivered on 3rd of August 2001). This means further expenses in legal costs which could have been avoided.
The NEC as an arm of the State is required, if not specifically by any written law by necessary implication to only take steps "for the benefit or in the best interest of Papua New Guinea". This is why there exist the Leadership Code and all the other laws aimed at preventing a use of the positions leaders, be it the Prime Minister and the other Ministers and public servants hold for their personal gain or for the benefit of a select few or a sector. In my view, the NEC is answerable to the State through Parliament and through the people. It follows therefore that, if the NEC or a civil servant conducts against the "benefit of or in the best interest of the State", they should bear the consequence in terms of damages and face prosecutions under the Leadership Code. In other words, those who are responsible for the decision, action or inaction in question become personally liable including prosecutions under the Leadership Code, unless they are able to prove that what they did or failed to do was in fact for the benefit or in the best interest of Papua New Guinea. The factors I have outlined above provide a guide as to what could and what could not amount to in the best interest or for the benefit of Papua New Guinea. If the offender is the NEC as in this cases, its liability is collective and several. That means the Prime Minister and each of the Ministers constituting the NEC responsible for the conduct in question is jointly and severally liable.
Where the State is found vicariously liable and if it satisfies the judgement it should have an automatic right of recovery against those responsible for the liability. There is therefore a potentiality of a possible case of conflict of interest between the State’s interest and that of the NEC if NEC is responsible for the conduct in question. Given this, I believed the demarcation between the office of the Solicitor General and the Attorney General important. I have covered that position in the preliminary ruling in this case delivered on 3rd of August 2001. I need not repeat what I said there save only to refer to it.
For these reasons I find that the NEC is liable both collectively as a collegiate body and the Prime Minister and his Ministers who constituted the NEC which made the decision to terminate the plaintiff both jointly and severally as constituting the NEC at the relevant time. On the basis of the principle of vicarious liability, I also find the State liable for the actions of the NEC and it is both jointly and severally liable to the plaintiff in damages. This I so find in the absence of any arguments to the contrary, which the State could have raised but compromised because of the position taken by the Attorney General. There is no evidence establishing the claim as against the third defendant. I therefore dismiss the claim against the third defendant.
The plaintiff shall be at liberty to enforce the judgement against the first and second defendants in the order he sees fit. On the basis of my finding that the decision to terminate the plaintiff’s contract was not for the benefit or not in the best interest of Papua New Guinea, I am of the view that, if the State satisfies the judgement, it should be at liberty to automatically and summarily recover from the first defendants the amount it pays to the plaintiff. Of course, if the first defendants satisfy the judgement, the State shall be excused from meeting the judgement and will not be at any liberty to recover from the first defendants. The same does not apply to the first defendants if they satisfy the judgement for the reasons already given.
Damages
This now leads me to the next main issue of, if the termination of the contract was unlawful, is the plaintiff entitled to a full pay out of the balance of his contractual term and damages or losses suffered as a consequence of the unlawful termination of his contract?
As noted earlier, the term of the contract was for four (4) years commencing 8th October 1997 and ending 8th October 2001. The Plaintiff rendered services to the State for one year nine months by the time he was unlawfully terminated. He therefore had two years and three months still remaining at the time of his unlawful termination. Since termination, the Plaintiff did take steps to mitigate his loss by seeking alternative employment with the Guard Dog Security Company and looking out for other prospects of employment. Unfortunately, he became ill and was bedridden which is attributed to his sudden and disgraceful termination without any good reason. He is now a very sick man and he can not fend for a living to be able to support himself and his family and meet financial obligations he entered into on the basis of his contract.
The plaintiff submits that it is trite law that the measure of damages is the amount he would have earned had it not been for the unlawful termination. Hence if a contract of employment is terminated before the agreed termination date, then he is entitled to recover the amounts or benefits he would have received for the balance of the contractual term and any other proven damages. Reference is then made to the decision of his Honour Justice Woods in Rooney –v- Forests Industries Council [1990] PNGLR 407 in support of this submission. He also referred to two very recent judgements. The first is Moses Luluaki -v- Madang Urban Local Level Government & Steven Amenasik (Unreported and Unnumbered Judgment of Justice Sawong of 8th December 2000) and the second one is Jeff Tole –v- PNGBC (Unreported and Unnumbered Judgment of Justice Sevua of 14th March 2000) which applied this principle. In all of these cases, the damages for the respective unlawfully dismissed employees were assessed and allowed on the balance of their respective written contracts.
Based on these authorities the plaintiff claims the following damages per a calculation document headed "Damages Calculation" (exhibit "J") which was admitted into evidence without any objection from the defendants.
(i) Salary K111, 807.67
(ii) Other Entitlement K462, 199.51
Sub Total K574, 007.18
The plaintiff is also claiming a sum of K147.27 per day from the date of the termination of his contract, 20th July 1999 to date of judgment. It is for interest on a principal housing loan outstanding of K176, 505.57 as at 4th December 2000 because of the termination. From the date of the termination to 4th December 2000 interest is calculated up to and claimed at K73, 929.54. A further sum of K29, 159.46 from 4th December 2000 to the date of trial, 20th June 2001, which is for a total of 198 days by K147.27 per day. He is also asking for the interest rate of K147.27 per day to continue until the judgment is satisfied.
Additionally, the plaintiff is claiming a sum of K20, 000.00 for damages for humiliation, distress, pain and suffering as a result of the harsh and sudden termination of the contract without any good reason. He is further claiming a sum of K1, 000.00 each in exemplary damages against the Attorney General and a number of DPM officers for their failure and or refusal to facilitate a prompt out of court settlement of his claim for damages.
The defendants argue that all that he was entitled to under the contract on termination was paid in full. They argue that is the case even if the court finds the contract was terminated unlawfully because the normal position subject to any specific contractual provision, is that an unlawfully terminated employee’s damages is assessed on the basis of the period of notice he is entitled to under the contract. In support of their position, reference is made to Dia Kopio –v- Employment Authority of Enga Provincial Government & Enga Provincial and Local-level Government (17th May 1999 Unreported Judgment) N1865. They then argue that, the plaintiff was aware that his contract could be terminated earlier than the agreed date of termination on three months notice or payment in lieu of notice. As such, he could not suffer any distress, humiliation pain and suffering as a result of his earlier termination and this damages are too remote as they could not reasonably be contemplated at the time of the termination. Reliance is placed on Dia Kopio’s (supra) case for that submission.
In relation to the housing loan and the interests accruing on it, the defendants argue that this damage is also too remote. They argued that the plaintiff was not entitled to enter into the loan agreement because he had reason to know that he could be terminated on three months notice anytime before the full term of the contract period was up. Finally in relation to the claim for exemplary damages, they argue that the persons against whom the claims are made are not parties to the proceedings. In any case, they argue that they were only employees of the State lawfully discharging their duties and responsibilities. Accordingly, they could not be held liable to the plaintiff.
As noted earlier, clause 17.2(a) and (b) provide for a notice period of three months for a termination of the contract. Then clause 12 provides for the payments to be made to the plaintiff if terminated for the grounds specified under 17.1 (a), (b) or (c). Herein is the provision that allows for payment in lieu of notice. I consider it important that, the wording of clause 12 should be closely examined again to see what it is actually saying. That clause reads:
"12. EX-GRATIA TERMINATION BENEFIT
12.1 In the event that the Head of State, acting on advice from the National Executive Council determines that the Commissioner’s services are to be terminated during the currency of the Contract pursuant to Clauses 17.1(a), (b) or (c), then the Commissioner shall be entitled to either:-
- (c) an Ex-Gratia Termination Benefit equivalent to the Base Salary only for the unexpired period of the Contract subject to a maximum period of three months, in addition to three months payment of Base Salary and Contract Gratuity, in lieu of notice; OR
- (d) the retrenchment benefit under the 1982 Public Service Redundancy Agreement.
whichever is the greater of these two payments.
12.2 The Commissioner shall suffer no loss of accrued benefits, payable in accordance with the Terms and Conditions, including Contract Gratuity, Long Service Leave, accrued Recreation Leave and benefits payable under any other law, in the event of termination hereunder.
12.3 Payments made to the Commissioner under this Section of the Contract shall constitute the maximum entitlement payable by the State to the Commissioner on termination of the contract, under all circumstances, pursuant to Section 17."
In my view, clauses 12.2 and 12.3 have to be read together with or in the context of clause 12.1. When that is done, these clause can be seen has following on from the position in clause 12.1. Going on that basis, I take these provisions to mean that, if the plaintiff is in fact terminated under any of the grounds under clause 17.1 (a), (b) or (c) then the damages he is entitled to receive on termination are to be calculated as provided for under clause 12.1. Once calculations are made under that provision and paid then by virtue of clause 12.2 the State becomes free from any other liability because the payments once made constitutes the maximum payments due to the plaintiff. This makes a lot of sense because if they were read on their own and out of that context, then those provisions would run contrary to the clause 17.3 which reads:
"Upon termination of employment all accrued benefits calculated in accordance with the Terms and Conditions and subject to any penalties herein, shall become due and payable to the Commissioner."
Clause 17.3 applies to terminations on grounds other than the grounds specified under clause 17.1 (a), (b) or (c). This also makes sense because if the plaintiff was terminated for cause under clause 17.1 (d) then the provisions of clause 17.2(c) would apply and he would be only entitled to the benefits accrued up to the date of his termination. Clause 12.1 would not apply. The same would go for a termination under clause 17.1 (e), (f) or (g). Giving a different meaning and effect to these provisions would render these provisions meaningless and in any event amount to a rewriting of the parties contract which is not the function of this Court.
The defendant’s allege that the contract was terminated "in the best interest of Papua New Guinea". I rejected that claim on the basis of lack of evidence and in any case, the way in which the contract was brought to an end was not "in the best interest of Papua New Guinea". I also found that the termination was not in line with the accepted appointment and termination procedure under the Constitution. Further, I found that the termination could not be brought under any of the provisions under the contract. Therefore, the termination was unlawful and outside the provisions of the contract. It follows therefore that, neither the provisions of the contract nor any general law would come to the assistance of the defendants as against the plaintiffs claim for the balance of his contractual entitlements and the damages for his loss and suffering. This is by reason of the unlawful termination and by reason of that conduct the defendants chose not to take advantage of the provisions of the contract by choosing to terminate the contract unlawfully outside the terms of the contract. I also found that even if the contract was lawfully terminated, the way in which it was done was very harsh and oppressive. I therefore find that the plaintiff is entitled to recover all that he is entitled to under the contract.
I first deal with the plaintiff’s salary. The plaintiff was initially on a salary of K42, 077.00. A subsequent Salaries Remuneration Commission determination increased that to K51, 000.00 by a decision date 14th April 1999, with effect from 24th of February 1999. A copy of that determined is part of exhibit "I". Based on that, the plaintiff is making a total claim of K111, 807.67 the break up of which is in exhibit "J" which were admitted into evidence with the consent of the defendants. The defendants did not take any issue on the calculations. The only issue that was taken was a general one which was that, the plaintiff was paid all that he was entitled to upon his termination in the sum of K62, 496.82. I accept the plaintiffs claim for loss salaries in the sum of K111, 807.67 for the balance of his contract of employment period and allow it.
The second head of damages I turn to is the lost of entitlements for housing, police service, domestic servant, utility, telephone, entertainment, motor vehicle and security allowances. They are all provided for in clauses 10 and 11 of the contract. They are also covered in the increase approved by the SRC in April 1999 with effect from the 24th of February 1999. The plaintiff has calculated his loss for these allowances on the basis of the approval and are set out in exhibit "J", over which the defendants also took no issue. They had to a total of K462, 199.51. I also accept that claim has proven and allow it.
The third head of damages is a claim for interests allowed to accrue on the plaintiffs housing loan at the rate of K147.27 per day from the date of termination, 20th July 1999 to 4th of December 2000 at K73, 929.54 on a principle outstanding of K176, 505.57. The plaintiff makes a further claim for interest on the loan account from 4th of December 2000 to 20th of June 2001, being the date of trial at K29, 159.46. The plaintiff claims that the interest continues to run until the payments due to him are made and he makes the required payments on his loan account. He claims judgement for all of these amounts with interest continuing up to the date of the payment. The plaintiff says these interests accrued because of the unlawful termination of his contract which made it impossible for him to make the agreed loan repayments.
As with the first two, the defendants do not take any real issue on this. These follows on from their argument that the plaintiff was paid all that he was entitled to following his termination. They also argue that, this damage is too remote in any case and as such, I should reject that part of the claim. Again this follows on from their argument that the plaintiff was under a constant reminder that he could be terminated on three months notice pursuant to clause 17.2 of the contract. They further argue that, the housing loan did not have their input or approval and as such they are not liable.
I reject the remoteness of damage argument because the loan and the interests were connected or dependent on the contract and as such they were not too remote. The defendants could have foreseen the consequences of their unlawful and early termination of the contract. It was a foreseeable event, in the event of early termination therefore the defendants are liable to pay for the interest accrued and forced upon the plaintiff by their unlawful actions. It is settled law that a damage could be too remote only if the damage in question could not reasonably be foreseen: see Doyle v. Olby (Ironmongers) Ltd [1969] Q.B. 158 at 167 per Lord Denning. Most employees secure loans for housing and other things based on their employment contract and every employer should be well aware of this.
Also, I reject the constant reminder argument because that renders the contract to a three months to three months contract and not for the expressly agreed period of four years. If I accepted that argument I would be effectively re-writing the parties contract which is not the function of this Court. Further it would render the contract uncertain when the clear intention of the parties is to be in the contract for a period of four years subject to the right of either parties to lawfully terminate the contract.
I now move to the plaintiffs claim for damages for distress, frustration and hardship. There is no dispute that this is a recognised head of damages in our jurisdiction since Hodson v. The State [1985] PNGLR 303. From a survey of the case law, award of damages for this head of damages range from K2, 000.00 to K15, 000.00. The recent decision of Peter Na-al –v- Michael Debege N1958 represents the higher awards of damages for this head of damages. In the other case of Jeff Tole –v- PNGBC (Unreported and Unnumbered Judgment of Justice Sevua of 14th March 2001) the Court awarded K12, 000.00. These awards were made having regard to the particular extent of the damage in each of the cases.
In the present case, the plaintiff was then the Police Commissioner, which is an important Constitutional office. The Police Force has a system of farewelling outgoing and welcoming incoming Commissioners. That is in addition to giving of proper and sufficient notice and providing reasons for termination if terminated earlier then agreed or expected. All of these culminate in a guard of honour. The plaintiff was not accorded that honour and respect. He was not given any notice of the first defendant’s intention to terminate him. He was not even provided with the reasons for his termination. He was terminated in the most disgraceful and humiliating manner. He learned of his termination when he turned up for work at the relevant time and found that he was replaced by the current Commissioner of Police and a guard of honour was being mounted to welcome the new Commissioner, without first farewelling him. This happened within a space of 6 days only after he was congratulated for a job well done by the Prime Minister and other Ministers. The plaintiff was no doubt shocked. But for his strong health he could have had a heart attack there and then. The available medical evidence of Dr. Lester Simulabai diagnosed the Plaintiff as suffering a medical condition described as "acute severed nephorotic syndrome" contributed to by the loss of job, loss of status, loss of money and the way in which he was terminated.
Based on his contract, the plaintiff entered into a loan and other financial commitments. The bank called up the loan and his children’s school fees were seriously affected. He tried to make ends meet by seeking alternative employment with little or no luck. Although he secured some temporary employment they did not last and did not replace the sudden loss he was made to face. This greatly impacted against his health and rendered him bad ridden. He is now as good as useless because of the way in which the defendants have treated him.
The defendants on the other hand question the medical evidence and argue that no such award should be made, as he has not suffered any damages. That submission ignores the fact that they consented to the admission into evidence of the plaintiff’s medical evidence and they did not call any evidence to rebut it. It also denies in effect the harsh and oppressive manner in which the plaintiff was terminated without the support of any evidence. That was sufficient in my view, to cause the plaintiff shock, humiliation, frustration and a possible nervous break down.
It is the duty of this Court to assess and award such damages the Court feels would nearly as possible compensate the plaintiff. The plaintiff is claiming a sum of K20, 000.00. The defendants on the other hand submit that the plaintiff has not suffered any distress or humiliation and frustration despite the evidence and submit that no damages should be awarded. I consider the distress, humiliation and frustration the plaintiff was forced into by the defendants and impacted upon the plaintiff’s health were comparatively worse than those suffered by the plaintiff’s in the earlier cases. I find the claim of K20, 000.00 neither unreasonable nor inordinately high. According, I accept the plaintiff’s claim and award that amount in damages for distress, humiliation and frustration.
Finally, in relation to the claim for exemplary damages, counsel for the plaintiff referred me to the Supreme Court decision in Abel Tomba –v- The State SC518. In that case, the Court held that, where servants and employees of the State act beyond or in breach of their duties not sanctioned by the State, the concerned individual officers or servants should he held personally liable for exemplary damages. This is to teach them a lesson not to do the same wrong again in future. That is in addition to any order for damages. He then points to the evidence in this case and argues that the evidence show that the officers of the State and in particular the DPM and the Attorney General refused to pay the Plaintiff the damages under the contract.
I do not accept this claim for three reasons. First, exemplary damages can only be in relation to the cause of action and not in respect of costs of the proceedings which one party may have unnecessarily forced against the other. The penalty for that is of course, an appropriate order for costs, such as, costs on a solicitor client basis to be borne by such a person. Secondly, the parties against which the damages are claimed are not named in the proceedings. It is settled law, so much so that, there is no need for the citation of any authority for the proposition that orders can only be made against persons who are named and are parties to the proceedings or where the law otherwise permits. Thirdly, the claim for exemplary damages is not pleaded and asked for in the prayer for relief. The plaintiff tried to overcome that deficiency by arguing that, it was covered in the prayer for "[a]ny further Orders that this Honourable court deems fit and proper". As exemplary damages are punitive in nature they ought to be specifically pleaded with sufficient particulars so that in fairness those implicated are given the opportunity to consider and make payments into court if they wished or prepare and present their defences in Court.
From the amounts awarded, the sum of K62, 496.82 already paid to the plaintiff shall be deducted. As the plaintiff did take steps to mitigate his loss or damages, there will be no other deduction.
Interest at 8% under the Judicial Proceedings (Interest on Debts and Damages Act chp.52 is claimed without any opposition from the defendants. I therefore, allow interest at that rate on the amounts allowed in damages from the date of the issue of the proceedings up to the dated of judgement. Then pursuant to s. 3 of the Act, further interest at 8% shall continue to run for so much of the judgement amount that remains outstanding.
The final matter to be determined is the question of costs. The plaintiff asks for costs on a solicitor client basis because he argues he was forced to come to court by the defendant’s unreasonable conduct. He points first to the unlawful, harsh and oppressive termination of his contract. He then points to the failure to settle the claim when suggested to do so by the Court through Sheehan J initially and later by myself. When I came to deal with this matter I did point out the risks of costs being ordered on a solicitor client basis against the party found to have acted unreasonably.
The defendants argued for costs to be ordered on a party/party basis. In so doing they point to instances in which the plaintiff has delayed in expediting this matter.
The law on whether or not to order costs on a solicitor client basis is clear. Regard must always be had to the nature of the case. In Alex Latham v. Henry Peni and Kathleen Marie Latham v. Henry Peni N1463, Justice Doherty (as she then was) ordered costs on a solicitor client basis by having regard to the nature of the case. That was a case in which, the defendant on board an aircraft subjected the plaintiffs to assault and abuse. Those acts were unprovoked and were the acts of a drunkard.
The position taken by a party in the proceedings would also dictate whether or not costs should be ordered on a solicitor client basis. Where for example a defendant takes a defence that has no basis on the facts or the law and merely takes a token position, he may be ordered to pay costs on a solicitor client basis. Indeed in a situation like that, my brother Justice Sheehan ordered the Defendant to pay costs on a solicitor client basis in the case of Benny Balep v. The Commissioner of Police & The State (4/11/94) N1374. Sevua J. also took a similarly approached in Gulf Provincial Government –v- Baimuru Trading Pty Ltd (10/12/98) N1794. He did that after having found the proceedings brought by the plaintiff vexatious and an abuse of process. He ordered the plaintiff to pay the defendant’s costs on a solicitor client basis.
The Supreme Court took a similar approach in Pomb Pullie Polye –v- Jimson Saku Pepaki & Anor (31/05/00) SC637. There the Supreme Court was satisfied that it was appropriate and just to compensate the respondents for the whole of the costs forced on them by the appellant’s actions. The proceedings were found as amounting to an abuse of process and hopeless in an event. The Court therefore, ordered the appellant to pay the respondents costs on a solicitor client basis.
What is apparent from the above line of cases is that, if an action is taken which has no merit or no basis in fact or law, the court may in the exercise of its discretion order costs to be paid on a solicitor client basis.
I have just found that the defendants through the first defendant unlawfully terminated the plaintiff’s contract in a manner that was harsh and oppressive. Now based on my above finding, I find that the defendants unreasonably refused or failed to settle the plaintiff’s claim when it had no good defence against the plaintiff’s claim and was in no position to produce any evidence in rebuttal of the plaintiff’s evidence in material respects of the case. They failed to give any serious consideration to the Courts suggestion that this matter be settled out of court. This was also in total defiance of the advice and recommendation to settle from the primary and principal legal counsel for the State Mr. Kawi. Here is a good example of the State’s interest as seen and represented by the Solicitor General going in direct conflict with that of the NEC which could have been avoided if the separation and independence of the Solicitor General was respected and accepted. In these circumstances it is only fair and appropriate and reasonable that the defendants be ordered to pay the plaintiffs costs on a solicitor client basis for their putting the plaintiff through the costs unnecessarily and unreasonably.
The conduct of the defendants through the office of the Attorney General causes me to consider who should actually bear the costs of the proceedings. I have formed the clear impression from the defendants’ counsel’s submissions that the position taken by the defendants was encouraged by their advice and conduct. Order 22 Rule 65 empowers this Court to order costs against a solicitor (lawyer) if the court is satisfied that the lawyer is responsible for the costs being improperly, unreasonably and unnecessarily incurred. Having regard to circumstances of this case, I consider it proper and fair that the plaintiffs costs should be borne by Paul Paraka Lawyers personally unless they are able to prove to the satisfaction of the this Court that the defendants conducted these proceedings in the way they have, contrary to the lawyer’s advice. If Paul Paraka Lawyers show the defendants put this matter to trial despite their advice, than the costs shall be borne by the first defendants. Such costs shall be agreed if not taxed.
In summary I find as follows:
(a). K111, 807.67 for lost salaries
(b). K462, 199.51 for other lost entitlements
(c). K 73, 929.54 for interest accrued on loan account from the
date of the termination to 4th December 2000
(c) K 29, 159 .46 for accrued interest on loan account from 4/12/00 to
20/06/01
(d) K 20, 000.00 for distress frustration and humiliation.
K 697, 096.18
There shall be judgement and orders accordingly. The time for entry of the orders is also abridged.
______________________________________________________________________
Lawyers for plaintiff: Murray & Associates Lawyers
Lawyers for the defendants: Paul Paraka Lawyers
Lawyers for the State: Solicitor General (observing)
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