Moke v The State [2001] PGNC 54; N2141 (21 May 2001)

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PRACTICE & PROCEDURE – Public Servant – Arbitrary termination – Entitlements based on retrenchment rates appropriate – Ex-gratia payment a fair compensation.

DAMAGES – Plaintiff has the onus to prove every claim – No entitlement to future losses – Entitlements as allowed by the General Orders.

Harding –v- Teperoi Timbers [1988] PNGLR 128
Raphael Lumis –v- The State (Unreported) 2nd Dec 1992
Anton John Pinzger –v- Bougainville Copper Limited N418

GAVARA-NANU, J.: The Plaintiff was the Principal Mining Warden employed by the Department of Minerals & Energy, when he was suspended without pay on 18th August, 1995, after he was charged by the police with misappropriation of royalties for some land owners. Prior to his suspension, he was employed by the Department for about twenty years. Some time after his suspension, the Department of Minerals and Energy was restructured, resulting in all the positions in the Department becoming vacant, and, all the staff had to reapply for the positions in the Department. The Plaintiff’s old position was also affected so he applied for it, but was unsuccessful. The position was won by another officer. The same position became vacant again later and the Plaintiff reapplied for it, but was again unsuccessful. So he had no position in the Department after the restructure. At the time of his suspension, the Plaintiff was on Grade 12 Salary level at an annual salary of K16,644.00 or K638.11 gross, per fortnight.

The Plaintiff’s misappropriation case went through the Committal hearing in the District Court and the Plaintiff was committed to stand trial in the National Court. However, the Public Prosecutor subsequently filed a Nolle Prosequi so the Plaintiff was discharged from the charge.

When the Department refused to reinstate him, he commenced these proceedings on 26th August 1996, claiming damages for wrongful termination, malicious prosecution, mental distress and aggravated damages. When the Defendant failed to file its Defence, the Plaintiff obtained a Default Judgement. The Defendant later applied for the Default Judgement to be set aside, the Court however, only set aside liability in respect of malicious prosecution.

The case was tried in the National Court, on 2nd August 1999, before Sheehan J who directed the Defendant’s lawyer to have the Plaintiff’s entitlements calculated on retrenchment rates as at that date. The Department of Attorney General prepared the Plaintiff’s entitlements based on retrenchment rates and were sent to the Plaintiff’s lawyers, however, the Plaintiff did not respond to them. The case was tried before me on 17th April 2001, for assessment of damages, however, I was asked to first, rule whether the Plaintiff was entitled to have his entitlements calculated on retrenchment rates. The lawyer for the Defendant argued that the entitlements should be calculated on redundancy rates, but the lawyer for the Plaintiff argued that the entitlements should be calculated on retrenchment rates. After hearing counsels’ full submissions, I ruled that, the Plaintiff’s termination was arbitrary therefore, applying the principle stated in Pius Mark –v- The Western Highlands Provincial Government and The State N929, his entitlements be calculated on retrenchment rates.

The counsel then proceeded to make submissions. Both sides submitted that Pius Mark formulae should be adopted in calculating the Plaintiff’s entitlements. The lawyer for the Defendant further submitted that, in the alternative, I should adopt the formulae or rates used by the Department of Minerals and Energy, which had made its own calculations of the Plaintiff’s entitlements based on retrenchment rates. Those rates are standard rates used to calculate entitlements for the retrenched public servants.

In my view, having found that the Plaintiff is entitled to have his entitlements calculated on retrenchment rates as provided in the General Orders, the Plaintiff cannot claim any other benefits apart from those allowed in the General Orders for retrenchment, for instance, future losses. I note that the Plaintiff has quite correctly not claimed for future losses under his Heads of Claims.

In Pius Mark, Woods J awarded K17,044.00 which he described as ‘Payment for Future Loss’ but he also described that payment as an ex-gratia payment. His Honour said, "As from 10th May 1998, I must calculate a figure to compensate the Plaintiff for his arbitrary dismissal. As I have already indicated, it is not his full salary until Public Service retirement age. It is to be some sort of retrenchment figure which I have already noticed from another case before me, is called by the State an ex-gratia payment, apparently for the early retrenchment. The State has offered no assistance as to how the State calculates such ex-gratia payments on termination. I will calculate a retrenchment figure based on one third of his salary at May, 1998 capitalised for 9 years till he turns 55 years. This is an amount of K41.37 per week for 9 years capitalised @ 3% at a factor of 412 totals K17,044.00 (my underlining). The Plaintiff was 46 years of age in 1988. Earlier in the judgement, his Honour said, that the Plaintiff was not entitled to damages until the Public Service retiring age of 55, however, the Plaintiff could not be arbitrarily terminated and be given a mere two weeks’ salary in lieu of notice. His Honour said, "...But clearly the State must have some power to retrench. And of course it is common knowledge that the State has been doing that. Again, I have been given no guidelines on how retrenchment payments are calculated. ..... Once the Department of Western Highlands refused to reinstate him, he is entitled to be compensated for arbitrary termination on a similar principle to retrenchment". It is clear from these excerpts of his Honour’s judgement that the amount of K17,044.00 he awarded to the Plaintiff was an ex-gratia payment and not for future losses as such, and was for a fair compensation to the Plaintiff for his arbitrary termination.

In the instant case, this Court on 2nd August 1999 ordered that the Plaintiff’s entitlements to be calculated on retrenchment rates. I have made similar orders when the Defendant’s lawyer asked me to rule on the issue. The Defendant through the Department of Minerals and Energy has calculated the Plaintiff’s retrenchment benefits consistent with the relevant provisions of the General Orders. The rates and the formulae used are standard for all retrenched public servants, these include the ex-gratia payment which has been calculated at K23,994.92. The Plaintiff’s ex-gratia payment is up to the end of his appropriate notice of three months, which in my view is from 2nd August 1999 to 2nd November 1999.

The principles enunciated in Pius Mark were reiterated in my respectful view in Raphael Lumis –v- the State (Unreported 2nd December 1992) by Sheehan J. In that case, the Plaintiff was 26 years of age, when he was dismissed from his employment. He claimed damages for unlawful termination, these included claims for past loss of earnings, future loss of earnings and other future entitlements. The Plaintiff’s jobs expectancy was 29 years to reach the retiring age of 55. All of Plaintiff’s claims added up to K85,611.89. The case was tried for assessment of damages only. His Honour said at pages 2-3 of his judgement, .... "In this case, the dismissal had at least nominally been for cause, but the dismissal procedure was not followed. This had rendered the defendant liable in damages. But had the dismissal procedure been followed, there would be no right in the Plaintiff for any compensation. Nonetheless, it was contended that the damages due are only for unfair dismissal not for benefits to which the plaintiff had no contractual right. I am quite satisfied that counsel for the defendant has the right of it. The Plaintiff and any public servant appointed to the permanent establishment do not have any claim of life employment. Public Servants remain liable to termination for cause or for termination or retrenchment, upon due notice being accorded to them....

Again liability for damages in an action for wrongful dismissal does not imply damages or heads of damage, such as may be awarded in personal injury claims. The damages in an action for wrongful dismissal is the loss sustained in not being terminated in an appropriate manner. That is, if employed under a contract according to the contractual terms, or in the case of civil service for cause or upon reasonable notice.

In the absence of any contractual provision, or upon dismissal without opportunity to answer charges, the usual assessment is made on the normal wages of the Plaintiff over a reasonable period. That period may sometimes be determined as the normal stipulated pay period. If the employee is paid weekly or monthly, then that period and those wages may amount to the damages due. Nonetheless, a discretion remains with the Court to enable it to ensure fairness" (my underlining). His Honour went on to determine that six months loss of wages was the appropriate award for damages or the fair compensation to the Plaintiff. The Plaintiff was awarded K2,000.00.

This is not a personal injury claim, which can entitle the Plaintiff for future losses. He is only entitled to claim the unpaid salaries for the period in which he should have been paid together with all the other entitlements under the retrenchment formulae which includes an ex-gratia payment calculated to the end of the appropriate notice period. These have all been calculated and included in the calculations provided by the Department of Minerals and Energy. I will therefore adopt those calculations as guides in determining the actual amounts to be paid to the Plaintiff.

No witnesses were called by either party during trial, the counsel only made submissions. Let me at the outset emphasise that the Plaintiff has the onus to prove all his claims against the Defendant on the balance of probabilities, unless of course the claims are not disputed by the Defendant. See Anton Johan Pinzger –v- Bougainville Copper Limited N418 at page 8. Therefore if any of his claims are based on facts not admitted by the Defendant, then he has to prove them, or if the Defendant admits some of the facts upon which the claims are made then, I will make findings upon such agreed facts.

This claim is based on Grade 12 salary level under the Public Service General Order 6, with appropriate rates and formulae. No evidence was called on this. The Defendant through the Department of Minerals and Energy submitted its own calculations of entitlements for the Plaintiff, these were prepared following direction by Sheehan J on 2nd August 1999. I will use these rates and formulae as guides, and where there is conflict between the information provided by the Plaintiff and those by the Defendant, I will use those by the Defendant. This is because I find the Defendant’s rates and formulae authentic.

Because the Plaintiff’s suspension was arbitrary, I deem that he was terminated from his employment on 18th August 1995, that is the day when he was taken off the payroll. I will therefore use 18th August 1995, as the starting point in calculating his unpaid salaries, and the period will run from that date to 2nd August 1999, when Sheehan J directed the Defendant to calculate the Plaintiff’s retrenchment benefits.

18/8/96 – 31/12/95	9 fortnights @	K638.11 =	K 5,742.99	( 132 days)
01/01/96 – 31/12/96	26 fortnights @	K658.54 =	K17,122.04	( 365 days)
01/01/97 – 31/12/97	26 fortnights @	K705.32 =	K18,338.32	( 365 days)
01/01/98 – 31/12/98	26 fortnights @	K719.12 =	K18,697.12	( 365 days)
01/01/99 – 02/08/99	15.2 fortnights @	K719.12 =	K10,930.62	( 212 days)
		Total =	K70,831.09	(1439 days)

Therefore, gross unpaid salaries is K70,831.09, less 10% tax which is K7,083.11, the net is K63,747.98. I allow K63,747.98 for this claim. I allow 4% interest on this amount.

These are inbuilt into the salaries and as such are paid with the salaries. They are not paid separately. These allowances therefore form part of the unpaid salaries, which have already been determined. Therefore, I will not allow this claim.

The calculations submitted by the Defendant for the Gross unpaid salaries included the yearly CPI adjustments from 1995 to 1999. Although the Plaintiff has submitted CPI rates for these years, he has not proved to my satisfaction that CPI’s for 1995 to 1999 have not been paid to him. Therefore I will not allow this claim.

Both parties have provided figures for the airfares for the Plaintiff and his family to his home Province of Southern Highlands. Again the Plaintiff did not call evidence on this. The Defendant’s figures are apparently based on Air Niugini rates as at 4th August 1999, they are in my view authentic, I will therefore use the rates provided by the Defendant in determining this claim. The fares provided are for three adults, and 4 children. The Plaintiff has not produced any evidence on the number of his dependents against the number provided by the Defendant. The Defendant agrees that the Plaintiff took his last leave on 23rd December 1993. He was therefore due for leave at the end of 1995 and 1997 with return airfares from Port Moresby to Mendi then to Pangia. Then in 1999, he was entitled to repatriation. The Defendant has calculated the total one way airfares to the above destinations, at K1,564. I multiply this by two return trips and a single trip, this makes the total number of trips to five. Therefore, the total cost of airfares for these trips is K7,820.00 (K1,564.00 x5). I therefore allow K7,820.00 for this claim.

The Plaintiff claims damages for emotional distress and frustration. The case in point is Harding –v- Teperoi Timbers [1988] PNGLR 128. There, the damages awarded for this type of claim was K1,000.00. This case has been followed by a number of National Court decisions. I consider K1,000.00 reasonable in the circumstances of the case, I therefore allow K1,000.00 for this claim.

The Plaintiff having served more than five years in the Public Service is entitled to three months Notice under the Public Services Management Act. I deem that the three months is from 2nd August 1999 to 2nd November 1999. This is a taxable entitlement. I accept the calculations provided by the Defendant as correct. I therefore allow K4,271.57 after tax, for this claim.

The Plaintiff would have taken leave twice, one in 1995 and the other in 1997. I do not allow for 1999, because the two years service was not completed. This is a taxable entitlement, I therefore accept the calculations done by the Defendant, which is K2,427.03 for a single leave, the Plaintiff was entitled to two, I will therefore double this amount, which is K4,854.06. I allow this amount for this claim.

This is a taxable entitlement. I accept the calculations made by the Defendant which cover the relevant periods, the calculations are according to the standard rates for the retrenched public servants. I therefore allow the Defendants figure of K14,911.68 for this claim.

I also accept the calculations provided by the Defendant for this claim as it covers the relevant periods in accordance with the standard rates. It is also subject to tax. The Defendant’s calculation is K25,111.68 after tax, but that is for the period of notice ending 2nd August, 1999. I have held that the end of the period of notice is 2nd November 1999, which covered six (6) fortnights, this brings the number of fortnights from 38.8 as calculated by the Defendant to 44.8. So 44.8 x K719.12, brings the gross amount to K32,216.576, less 10%, which leaves the net amount of K28,994.92. I therefore allow K28,994.92 for this claim.

The freight charges for a single trip from Port Moresby to Mendi then to Pangia according to the calculations by the Defendant is K2,157.68 for the Plaintiff and his family. I said earlier that, the Plaintiff would have been entitled to two recreation leaves, then for the cost of the single trip when he was retrenched making the total of three (3) trips for this entitlement. This entitlement is not only due at the time of resignation or retrenchment, but it is also due on recreation leave. I therefore allow the above amount multiplied by the three trips, which the Plaintiff would have taken which is K6,473.04. I therefore allow the sum of K6,473.04 for this claim.

No evidence was called on this claim by the Plaintiff. The Defendant has on the other hand submitted figures, which it considers the Plaintiff is entitled to claim. I consider the figures submitted by the Defendant authentic. I therefore adopt them. The amount by the Defendant totals to K4,314.16. I accept this amount as the employer’s contributions to the POSF for the Plaintiff for the period in which the Plaintiff was entitled to claim them. I therefore allow the sum of K4,314.16 for this claim.

As to the other contributions, which are already with the POSF, the Plaintiff has to arrange with the POSF for their payment as they are paid separately by the POSF, it would be improper for me to order their payment because those contributions are now with the POSF, which is a separate entity from the State. Furthermore, POSF is not a party to these proceedings.

The Defendant to pay the Plaintiff’s costs.
_____________________________________________________________________
Lawyer for the Plaintiff: Maladina Lawyers
Lawyer for the Defendant: Solicitor General

National Court of Papua New Guinea

Moke v The State [2001] PGNC 54; N2141 (21 May 2001)