Bromley v Finance Pacific Ltd [2001] PGNC 89; N2097 (16 May 2001)

N2097

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1578 of 2000

KENNETH WINSTON BROMLEY
-Plaintiff-

V

FINANCE PACIFIC LIMITED
- Defendant-

WAIGANI: KANDAKASI, J.
2001: 14, 16 MAY

MASTER AND SERVANT – Employment Agreement – Unlawful termination of – Measure of damages balance of contract period less failure to mitigate loss - Exemplary damages claimed but not proven – No ward for.

PRACTICE & PROCEDURE – Conduct of proceedings by corporation has to be through a solicitor – Lawyer on record for a corporation ceasing – Failure to appoint new lawyer and provide address for service – Defendant failing to attend trial and contest claim despite having notice of hearing – Such failure does not amount to admission of the claim – Court must hear and determine matter – Court may have regard to matters pleaded and on file and the evidence produced in court before judgement.

Cases Cited:
Motor Vehicle Insurance (PNG) Trust –v- James Pupune [1993] PNGLR 370
Abel Kopen –v- The State [1998-89] PNGLR 659
Rooney –v- Forest Industries Council of PNG & Anor [1990] PNGLR 407
Anton John Pinzger –v- Bougainville Copper Ltd [1985] PNGLR 160

Counsel:
G. Shepherd for the Plaintiff
No Appearance for the Defendant

16th May 2001

KANDAKASI, J.: The Plaintiff is claiming K2, 474, 986.08 plus other damages including, exemplary damages for an unlawful termination of a written contract of employment with the Defendant ("the contract") on the 13th of November 2000. The contract was for a period of four years commencing the 25th of August 1999. The Defendant denies the claim and pleads in the alternative that, the termination was justified because the Plaintiff misconducted and was unable to perform his duties with due diligence and competence. In his reply the Plaintiff denies those allegations.

Issues

Two main issues with some related issues are presented for determination. That is in addition to some preliminary issues, which have to be determined first. The main issues are, (1) was the contract unlawfully terminated and (2) if so, what are the plaintiff’s damages. The preliminary issues concern mainly the Defendant’s failure to attend at the hearing and before that, file and serve a Notice of Change of Lawyers and Address for Service after determining its lawyers on the record.

Preliminary issues

After the close of pleadings and interrogatories the parties appeared before his Honour, Justice Sevua and had this matter listed for hearing on the 14 and 15th of this month. The Defendant was notified of the hearing dates. Mr. Hartshorn of Blake Dawson Waldron ("BDW") who appeared on my direction confirmed that in court. I directed Mr. Hartshorn’s appearance because there was nothing on file to show whether the Defendant was aware of the hearing date and in what circumstances his lawyers ceased to act. Mr. Hartshorn informed that the defendant determined his firm’s services after they had appeared at the call over and obtained the hearing dates and they had informed the Defendant of the hearing dates. He also informed that, his firm filed the notice of ceasing to act under Order 2 r. 38 of the National Court Rules 1983 ("the Rules"). I suggested that in future parties should specify in their notice of ceasing to act the rule or rules under which such a notice is being filed to avoid unnecessary confusions. Mr. Hartshorn was then excused from the hearing of the matter as his firm was no longer the lawyers for the Defendant and as such he had no interest in the matter.

Order 7 r. 1(3) of the Rules provide that a corporation can not file a Notice of Intention to Defendant and take any other step in any proceedings except through a solicitor. Initially, the Defendant complied with that requirement. However, when it terminated the services of BDW, it was obliged to file and serve a notice of change of lawyers and its address for service in line with the provisions of O. 6 r. 7 of the Rules but it failed to do that. This conduct was consistent with the plaintiff’s lawyers informing the Court that the Defendant was not contesting the case.

What then should be the consequence against the Defendant, which has filed a defence and has otherwise, complied with all the other requirements of the Rules up to the point of listing the matter for hearing?

Order 10 r. 12 of the Rules provides that, the Court could do any of three things. It could (1) order that the trial be not held unless the matter is again listed for hearing and or (2), adjourn the trial and or (3), proceed with the hearing. Given what Mr. Hartshorn told the Court and the Defendant deciding not to contest the claim against it, I ordered the trial to proceed in the absence of the Defendant in the present case. Before arriving at that decision, I also noted that, the Defendant had ample time and opportunity to instruct a new lawyer if it wished, but it did not do that.

Noting that the particular wording in order 10 r. 12(1)(b) says, "proceed with the trial" I decided to conduct a trial and then make a ruling on the claim. I could not proceed to judgement either summarily or in default of the Defendant’s non-appearance because if I did that, it could not come within the meaning of the term trial. The term "trial" as used in the rule in my view, means to "test" or "examine" (see Oxford Advanced Learners Dictionary of Current English) the plaintiff’s or the defendant’s case, as the case may be. That involves the hearing and or receipt of the relevant evidence to form the basis to determine whether or not to uphold a claim. I was also of the view that, the Defendant’s failure to turn up at the trial did not amount to an admission of the claim against it. That is why O.10 r.12 (1) is worded in the way it is. The Plaintiff has to establish his claim in the normal way, minus any cross-examination of the Plaintiff’s evidence because of the absences of the Defendant.

The Defendants’ claim of the Plaintiff being terminated because of misconduct and incompetence or inability to perform stand without the support of any evidence. I therefore, dismiss the Defendant’s claims. This now leaves me to assess the Plaintiff’s claim on the basis of the evidence before me.

Facts

A copy of the contract is in evidence, which is dated 25th August 1999. The contract is for a term of four years from the 25th of August 1999 to 24 August 2003 (clauses 2 and 3) with a remuneration package peg to the Australian Dollar (clauses 5, 6, 18, 24, 25, 26, 27 and 28) as follows:

The parties agreed to the Defendant having the right to terminate the contract summarily for a number of specified misconducts, such as theft of the Defendant’s funds or property, deliberate and wilful disobedience to reasonable and lawful instructions. The Defendant could also terminate the contract at any time for unsatisfactory performance of the Plaintiff’s duties. Further, the parties agreed that the Defendant could terminate the contract at anytime for reasons other then unsatisfactory performance of duties and any misconduct or without cause. In the event of a termination under the last provision, it was also agreed that, the Plaintiff should receive full pay out of the unexpired duration of the contract or a maximum of 4 years whichever is less: see clauses 8 and 9 of the contract.

The letter effecting the Plaintiffs termination of the 13th of November 2000 by Mr. Rimbink Pato, reads in its body as follows:

I have been directed by the Governor of the Bank of Papua New Guinea to give you Notice of the termination of your contract of Employment effective immediately.

You are to be paid three months salary in lieu of notice.

Prior to that, there were a number of attempts made by the Defendant with a decision to terminate taken against the Plaintiff on the 4th of February 2000, for a number of reasons. One such reason was a failure to meet immigration and labour requirements, which were the primary responsibility of the Defendant to facilitate any way. Indeed, the Defendant interfered in the legal process to meet those requirements. That resulted in a successful court action by the Plaintiff, under WS 1417 of 1999, against the Defendant. At one stage the Defendant did not pay the Plaintiff his salaries and other entitlements due under the contract. Again that necessitated a court action, WS 692 of 2000, under which the Court ordered the Defendant with its consent to pay a sum of K41, 995.40 on the 5th of August 2000.

The purported reason for termination, which is stated in the termination letter of the 13th of November 2000, has no foundation in the contract. At best, it is a case of interference of the performance of a contract by a third party if indeed there was a direction from the Governor of the Bank of Papua New Guinea. Non of the matters the Defendant pleads in its Defence were ever raised with the Plaintiff before the formal Defence, let alone the reasons for termination. I have already found that, there is no evidence establishing any of the matters raised in the Defendant’s Defence. Instead, the evidence before me clearly discloses a case of termination of the contract based on a reason not provided for in the contract or one permitted by law. I therefore, find that the termination was unlawful and as such the Defendant is liable in damages to the Plaintiff. This then leads to the next issue of the Plaintiff’s damages.

Second Issue: Damages

Clauses 8 (b) and 9 of the contract are relevant. As already alluded to, this provisions provided that, if the Plaintiff is terminated by the Defendant for reasons other than unsatisfactory performance of his duties or any misconduct within the terms of the contract, the Plaintiff is entitled to a full pay out for the unexpired duration of the contract.

Mr. Mayberry in his first affidavit of the 21st of November 2000 has calculated the Plaintiff’s loss or damages up to K1, 397, 341.25 and that is the amount pleaded in the Plaintiff’s original statement of claim endorsed to both the original and the first amended Writ of Summons. Those figures were subsequently changed to K2, 474, 986.08. That is evident from the second affidavit of Mr. Mayberry affidavit sworn and filed on the 11th of May 2001. The explanation given for the difference is that the earlier figures were calculated after tax, which has now being changed to show the Plaintiff’s loss before tax. On the basis the new calculations the Statement of Claim was further amended to make a claim up to K2, 474, 986.08. There is no contest on any of these aspects by the Defendant.

I am satisfied that the Plaintiff has made out his claim of K2, 474, 986.08. However, this is subject to a disallowance of the amounts claimed for one student airfare in the sum of K13, 950.00, airfares for a son and wife in the sum of K27, 900.00 and education in the sum of K74, 738.12. There is no evidence of these alleged benefits being actually derived by the Plaintiff, which have now been lost due to the unlawful termination. After allowing for those disallowances, which add to K116, 588.12. I will deduct a further on third from the balance of K2, 358, 397.96 on account of the Plaintiff’s failure to mitigate his loss.

The obligation to mitigate one’s loss is well settled in our jurisdiction. Where a party fails to do so, he stands the risk of having his damages reduce by his failure. That has been made clear in a number of cases. An example of that is the Supreme Court decision in Motor Vehicle Insurance (PNG) Trust –v- James Pupune [1993] PNGLR 370 at 380. In that case, the Supreme Court upheld an appeal against a failure of trial judge to deduct part of the plaintiff’s damages for his failure to undergo a corrective surgery, which could have minimised his disabilities and therefore damages. The Supreme Court decided to reduce the damages by one third of the damages.

In Abel Kopen –v- The State [1998-89] PNGLR 659 at 660, His Honour, Justice Woods in a claim for damages done to a motor vehicle stated the position in these terms:

"The plaintiff is suppose to mitigate his damages and in this case this would include taking appropriate steps to get the repairs done effectively and without any unreasonable delay. Instead, however, the defendant left everything to his finance company, which, it would appear, was grossly careless, even negligent, in looking after the interests for its client. However, why should the defendant pay for the consequences of the careless or negligent financial arrangement of the plaintiff. The defendants are entitled to assume the plaintiff will take the appropriate steps to repair his vehicle and the defendant cannot be liable for the consequent failure of the plaintiff to act reasonable."

In Rooney –v- Forest Industries Council of PNG & Anor [1990] PNGLR 407 the Court awarded damages of up to K148, 617.13 for the unexpired duration of her contract of employment, which was unlawfully terminated. Before she got to that award, she produced evidence of having made attempts to secure other alternative employment without success.

In the present case, there is no evidence of the plaintiff having taken steps to mitigate his loss. It is therefore appropriate that his damages should be reduced by one third. One third of the amount of damages I have found to have been established amounts to K786, 132.65. That is the amount I deduct for the Plaintiff’s failure to mitigate his loss leaving a final figure of K1, 572, 265.31 before tax. I find that is the Plaintiff’s damages and I order and award that amount in damages.

Exemplary Damage

In the plaintiff’s prayer for relief, he is also claiming exemplary damages. Exemplary damages are usually awarded to serve as a punishment and a deterrent to others where the court considers it appropriate. The onus is always on the claimant to show the need to award such damages. In this case, the Plaintiff has neither demonstrated the need nor has he made any submission justifying the award of such damages. I am therefore, not prepared to award any damages under that heading and I dismiss this part of the claim.

Interest

The Plaintiff is also claiming interest pursuant to the Judicial Proceeding (Interest on Debts and Damages) Act. The main reason for awarding interest is to compensate the Plaintiff for being kept out of his money from the date when the losses occurred. Anton John Pinzger –v- Bougainville Copper Ltd [1985] PNGLR 160, fixed the appropriate rate for calculation of interests at 4% for special damages including the loss of wages, in the context of a personal injuries claim. Such interests are allowable up to the date of judgement from the date of loss.

In the present case, the plaintiff was terminated on the 13th of November 2000. Since than a period of 6 months has passed. That is about 24 weeks or 12 fortnights. Counsel for the Plaintiff did not assist the Court in any way on the issue of interest. But I note that, whether or not to award interest is within the discretion of the Court. The onus is on a party claiming interest to demonstrate the need for interest to be awarded at what rate and for how much. In this case, as I have already mentioned, I am left with no assistance from the Plaintiff. Doing the best I can in the circumstances, I will award interest at 4% for damages representing loss of wages from the date of termination to the date of judgement which accounts for about 6 months or say 183 days. The Plaintiff’s annual salary and entitlements adds to K466, 808.00 or K1278.92 per day (on the PNG kina rate). Given that, I will multiply the daily rate of K1, 278. 92 by the days lost up to the date of judgement of 183 days. That produces a sum of K9, 361.73. I award that amount in interest to the Plaintiff.

In the end result, I order judgement for the plaintiff in the sum of K1, 572, 265.31 in damages and K9, 361.73 in interest with costs to follow the event. That is to say, the Defendant shall pay the Plaintiff’s costs.
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Lawyer for the Plaintiff: Maladinas Lawyers
Lawyer for the Defendant: Nobody