Daniel v Kapty [2011] PGNC 96; N4361 (26 July 2011)

N4361

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS No 915 OF 2005 (JR)

BETWEEN:

BENNIE DANIEL
Plaintiff

AND:

WALTER KAPTY (Acting Managing Director National Housing Corporation)
First Defendant

AND:

NATIONAL HOUSING CORPORATION
Second Defendant

Waigani: Gavara Nanu J
2010: 7th July
2011: 26th July

ADMINISTRATIVE LAW – Termination of employment- Employer acting ultra vires – Reinstatement against good administration – Entitlements which were due to the plaintiff as at the first scheduled trial date which was vacated by consent of the parties to be paid to the plaintiff.

Cases cited

Ron Napitalai for and on behalf of the Board of Appeal Committee of PNG Ports Corporation Limited and Another –v- Casper Wallace (2010) SC1016

Counsels:

R. Uware, for the plaintiff.
V. Lovare, for the defendants

26 July, 2011

1. GAVARA-NANU J: The plaintiff seeks orders to quash the decisions by the defendants to suspend him from his employment with the second defendant as the Internal Auditor and Audit Team Leader on 5 May, 2005, without pay then to subsequently dismiss him from his employment on 12 July, 2005. The plaintiff also seeks orders to reinstate him to his substantive position and that all the entitlements due to him since his dismissal to be paid to him.

Background

3. The background facts appear in the affidavit sworn by the plaintiff on 27 September, 2005, these facts are not in dispute. From these facts, it is noted that the plaintiff was employed by the second defendant (the "NHC") on a contract as the Audit Team Leader, in-charge of the Audit Section in the NHC. The plaintiff was suspended in the afternoon of 5 May, 2005, over allegation that he committed serious disciplinary offences which were criminal in nature. The suspension was effected by the first defendant by a notice in which the first defendant informed the plaintiff that he was suspended from duty without pay in anticipation of charges to be laid against him. On 3 May, 2005, the National newspaper ran an article on allegations of bribery and corruption in the NHC. The next day on 4 May, 2005, the plaintiff received a memo from the first defendant asking him if he was responsible for the release of confidential information regarding bribery and corruption in the NHC to the media. On the morning of 5 May, 2005, the plaintiff denied any knowledge about the release of any confidential information on the NHC. In the afternoon of 5 May, 2005, the plaintiff was suspended without pay. The Notice of Suspension was prepared and issued by the first defendant.

4. On 19 May, 2005, the plaintiff was charged with 14 serious disciplinary offences under Clause 160 (1) (a) (b) (d) (h) (i) and (m) of NHC Determination No.1 of 1990 ("the Determination"). On or about 26 May, 2005, the plaintiff responded to the 14 charges denying all the charges. A disciplinary Committee was set up by the defendants to hear the charges against the plaintiff. On 12 July, 2005, the plaintiff was served with a notice of dismissal by the first defendant, the dismissal was in relation to 14 charges laid against him. In the notice of dismissal the first defendant told the plaintiff that he was dismissed because of his conviction for criminal offences relating to his official duties. The Notice of Dismissal read:

NHC

National Housing Corporation

NOTICE OF DISMISSAL UNDER CLAUSE 157, (1) OF THE NATIONAL HOUSING CORPORATION DETERMINATION NO. 1OF 1990 (AMENDED)

TO: MR. BENNIE DANIEL

C/- NATIONAL HOUSING CORPORATION

P.O. BOX 1550

BOROKO

NATIONAL CAPITAL DISTRICT

TAKE NOTICE that in accordance with clause 157, (1) of the NHC Determination No. 1 of 1990 (Amended), you having been convicted on the 5th day of May, 2005, of a criminal offence, which does relates to the duties of your office, you are hereby dismissed from the National Housing Corporation.

Dated this 12th day of July, 2005.

(Signed) 12/07/05

____________________ ____________________

WALTER KAPTY DATE

ACTING MANAGING DIRECTOR

DELIVERY OF DISMISSAL NOTICE

I hereby certify that I have served the above named officer with the notice indicated.

ROBERT SERT MANAGEMENT GUARD

_______________ _______________________

NAME DESIGATION

12/07/05 01:50PM

_______________ ________________________

DATE TIME

ACKNOWLEDGEMENT

I Mr. Bennie Daniel hereby confirm that I have been served the dismissal notice.

DATE: - 12/07/05 TIME: -- 01:50PM SIGN: (Signed)

5. The plaintiff was not told whether he was guilty of the 14 charges before he was dismissed. He was also not given an opportunity to be heard on the penalty before his dismissal from his employment.

6. The plaintiff appealed against his dismissal to the NHC Appeals Committee but the appeal was dismissed, the decision to dismiss the appeal was conveyed to the plaintiff in a letter dated 2 September, 2005, but no reasons were given by the Committee in that letter for dismissing the appeal. The letter read:-

NHC

National Housing Corporation

OFFICE OF THE MANAGING DIRECTOR

Phone: [phone] National Housing Corporation

Fax: [phone] P.O. Box 1550

BOROKO, N.C.D.

Papua New Guinea

2nd September, 2005

TO: MR. BENNIE DANIEL

C/- NATIONAL HOUSING CORPORATION

P.O. BOX 1550

BOROKO

NATIONAL CAPITAL DISTRICT

Dear, Mr Bennie Daniel

SUJECT: APPEAL DECISION AGAINST TERMINATION

As per your appeal against the decision of termination, an Appeals Committee was appointed to look into your case.

Further to the Committee's findings, the decision to terminate your services from National Housing Corporation is sustained.

As such, the Appeals Committee has upheld the decision of the Disciplinary Committees' decision of dismissal.

For your information.

Thank you.

Yours faithfully,

National Housing Corporation

___(Signed)_________ BK:___(Signed)_____

WALTER KAPTY

Acting Managing Director

7. On 15 July, 2005, the plaintiff wrote to the Public Services Commission to investigate his dismissal but no action was taken by the Public Services Commission. The plaintiff was not convicted of a criminal offence which purportedly was the reason for his dismissal.

8. In suspending the plaintiff and eventually dismissing him, the defendant relied entirely on a report compiled by two officers of the NHC namely Mr. Martin Tau, who was Organizational Planning and Training Officer and Bernard Pogoram, who was Human Resources Specialist, the report was dated 28 October, 2004. The report was titled: Human Resource File Report; it made four recommendations, first; immediate suspension of the plaintiff without pay, second; an external auditor to be engaged to conduct investigation into the alleged fraud activities by the plaintiff, third; the officer (the plaintiff) be charged and terminated from service and fourth; the matter be referred to the police fraud squad for further actioning.

9. In their defence to this application, the defendants raised three issues; first is whether the plaintiff has a cause of action and whether the first defendant's actions in suspending and dismissing the plaintiff from his employment can be reviewed, second; if the first defendant's actions could be reviewed, whether an order in the nature of certiorari can be granted and third; whether the plaintiff should be reinstated to his position.

10. In relation to the first issue, defendants argued that actions of the first defendant in suspending and dismissing the plaintiff from his employment cannot be reviewed because the NHC being a corporation its actions are not amenable to judicial review, thus there is no cause of action. They argued that NHC is not a public body created and regulated by public law, they relied on ss. 5 and 6 of the NHC Act 1990, which provide that NHC is a corporation.

11. The defendants submitted that NHC is no longer a mere Housing Commission, it is now a corporate body and is a private entity whose actions cannot be reviewed. It was argued that plaintiff's remedy is in damages for wrongful termination. The defendants rely on Ron Napitalai for and on behalf of the Board of Appeal Committee of PNG Ports Corporation Limited and Another –v- Casper Wallace, (8th February, 2010). In that case, the Supreme Court held that the PNG Port Corporation is not a public body therefore its actions cannot be reviewed.

12. In regard to the second issue raised by the defendants, I am of the firm opinion that the plaintiff has a cause of action and the actions of the first defendant can be reviewed because the NHC is a public body established as a government instrumentality, it is not a company incorporated under the Company's Act in that regard, the case of Ron Napitalai is distinguishable from this case. For the same reason I am of the firm opinion that an order in the nature of certiorari can be made. Thus the order made by the defendants for the suspension and dismissal of the plaintiff can be brought into this Court to be quashed.

13. The plaintiff claims that defendants had no power to dismiss him, first because the offences he allegedly committed were not serious and that he could only be dismissed under section 167 (1) of the Determination if he had a criminal conviction by a court for committing a serious offence. He said he was never convicted of a serious criminal offence by a court thus there was no basis for his dismissal. It was also argued that the first defendant as the Acting Managing Director had no authority to take disciplinary action against the plaintiff under Clause 154 (5) of the Determination. It was also submitted that the Determination has no provision for a Disciplinary Committee therefore the Disciplinary Committee which purportedly found him guilty of the 9 charges had acted without power. It was argued that the power to discipline was vested only in the Chief Executive Officer of the NHC under ss. 160 (2) and 161 of the Determination. The plaintiff argued that the Disciplinary Committee therefore acted illegally and without power when it found him guilty of the 9 charges.

14. Having considered the relevant clauses of the Determination, it is my firm view that the dismissal of the plaintiff was unlawful. I come to this view because I find that the plaintiff was not investigated and was not given an opportunity to be heard on the allegations made against him before being charged. Before any charges could be laid there ought to have been proper investigations done. There is no evidence that investigations were conducted on plaintiff's alleged fraudulent conduct. Here, the reports submitted by the Human Resources Department of the NHC were regarded as investigations into the conduct of the plaintiff when they were not. The first report which the Human Resources Department submitted was dated 28 October, 2004, that report was made well before the plaintiff was suspended on 3 May, 2005 and eventually dismissed on the 12 July, 2005. It is noted that the report recommended that an External Auditor be engaged to conduct investigations into the alleged fraudulent conduct by the plaintiff. That investigation was not done before the plaintiff was suspended and dismissed. The second report by the Human Resources Department of the NHC dated 28 June, 2005, is undated and the names of the people who prepared the report are not given. That report was prepared well after the plaintiff had responded to the 14 charges laid against him on 27 May, 2005. The charges were laid against the plaintiff on 19 May, 2005.

15. It is plain that the plaintiff was terminated without any investigation being done on his alleged fraudulent conduct. The Minutes of the Disciplinary Committee meeting does not indicate the date of the meeting however, the first introductory paragraph of the Minute seems to say that the meeting was held on 4 July, 2005, at 9.00am in the NHC conference room, that was when the Committee purportedly found the plaintiff guilty of 9 out of the 14 charges laid against him.

16. After the Disciplinary Committee found the plaintiff guilty of the 9 charges, the plaintiff appealed to the Appeals Committee of the NHC. The plaintiff in paragraph 11 of his affidavit says the Appeals Committee was made up of five officers who were all junior in rank to him. He says a number of those officers were implicated in his own report therefore they would have had conflict of interest.

17. The Appeal Committee was made up of Kay Toea, Emma Kokol, Ila Kulu, Dominic Kenga and Jack Lomai. This is not denied by the defendants particularly the first defendant. It is also noted that Emma Kokol was a member of the Disciplinary Committee which found the plaintiff guilty of 9 charges, this officer therefore had a conflict of interest and should not have sat on the Appeals Committee. This factor alone is enough to invalidate the decision of the Appeals Committee.

18. There are two other reasons why I find that the suspension and dismissal of the plaintiff was unlawful, first; the plaintiff is alleged to have been convicted of a criminal offence which was incorrect as the plaintiff was never convicted of a criminal offence, second; the charges were laid under wrong provision of the Determination, namely clause 160. This clause deals with disciplinary offences thus once charged under that clause the plaintiff should have been dealt with in accordance with the procedures laid out for dealing with disciplinary offences under that clause and it is to be noted that under that clause the decision to dismiss or not to dismiss the plaintiff was for the first defendant to make as the Chief Executive Officer of the NHC, not the Disciplinary Committee. There is no provision in the Determination which gives power to the Disciplinary Committee to dismiss, third; the plaintiff having been charged under clause 160 of the Determination, it was wrong for the defendants to deal with him under clause 157 which relates to criminal offences. The procedure under clause 157 would have applied had the plaintiff been charged with a serious criminal offence or had been convicted of a serious criminal offence by a court of law in which case, the appropriate process to deal with the plaintiff would have been the clauses dealing with criminal offences which are clauses 157 to 159.

19. For the foregoing reasons, I find that the suspension and termination of the plaintiff were unlawful. It follows that the suspension and the termination of the plaintiff are quashed.

20. The next question is whether the plaintiff should be reinstated to his substantive position.

21. Having considered the circumstances of the case and given that the plaintiff was terminated in July, 2005, which is over 5 years ago it is my opinion that the reinstatement would be contrary to the good administration of the NHC in that, if he was reinstated it would disrupt the good administration of the NHC. For that reason, I will not order reinstatement, however I will order that all of the plaintiff's entitlements and emoluments which were due to him from the date of his suspension without pay which is 5 May, 2005 to 19 June, 2006 which according to the endorsements on the Court file is the date when this matter was set down for substantive hearing be calculated and paid to him with interest at 4% per annum. I have determined that the plaintiff's entitlements and emoluments be calculated up to 19 June, 2006, because that was when the case was set down for trial. That trial date was vacated because there was no appearance by the plaintiff. In those circumstances, it would not be fair for the plaintiff to be paid his entitlements beyond 19 June, 2006. Had the plaintiff turned up on 19 June, 2006, the matter would have most likely been tried on that date. It is noted that on 6 June, 2006, when the matter was set down for hearing on 19 June, 2006, the plaintiff's lawyer was in Court, thus the trial date viz. 19 June, 2006 was set with his consent, yet neither the plaintiff nor his lawyer turned up in Court for hearing on 19 June, 2006.

22. On top of the entitlements and emoluments to be paid to the plaintiff the defendants will pay a sum of K2000.00 to the plaintiff for causing him unnecessary anxiety and emotional distress. The entitlements and emoluments are to be determined at the rate applicable as at 5 May, 2005 and are to be calculated to a lump sum with interest of 4% added to it. I will leave it to the parties to decide how the total sum of entitlements and emoluments should be paid to the plaintiff i.e whether in a lump sum in one payment or to be paid in installments over a period. If latter mode of payment is preferred then a schedule of payments as agreed to by the parties must be filed for Court's endorsement as part of Court's Order.

23. The Orders of the Court are as follows:-

1. The NHC is to pay the plaintiff's entitlements and emoluments which were due to him from the date of his suspension, viz. 5th May, 2005 to 19th June, 2006.
   
2. The NHC is also to pay K2,000.00 to the plaintiff for anxiety and emotional distress.
   
3. The entitlements and emoluments and the K2,000.00 awarded to the plaintiff for anxiety and emotional distress are to be paid with 4% interest per annum.
   
4. The parties will decide on how the sum total of entitlements and emoluments and K2,000.00 warded for anxiety and emotional distress should be paid to the plaintiff i.e whether in a lump sum in one payment or in installments.
   
5. If the entitlements and emoluments together with K2,000.00 for anxiety and emotional distress are to be paid in installment then the parties are to agree on a payment schedule which they must sign and which the plaintiff will file for Court's endorsement as part of Court's Order.
   

24. The defendants will pay the plaintiff's costs and incidentals to these proceedings.

25. Orders accordingly.

______________________________________________
Public Solicitor: Lawyer for Plaintiff/Applicant
Paraka Lawyers: Lawyer for Defendants