Gawi v RD Tuna Canners Ltd [2013] PGNC 150; N5336 (22 August 2013)

N5336

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 765 OF 2010

COSMAS GAWI
Plaintiff

V

RD TUNA CANNERS LIMITED
Defendant

Madang: Cannings J

2013: 14 June, 9, 22 August

LAW OF EMPLOYMENT – wrongful dismissal – oral contract – whether contract lawfully terminated for cause; Employment Act, Section 36 (grounds for termination of contract) – whether employee paid proper amount of salary in lieu of notice; Employment Act, Section 35 (termination of contract without notice).

The defendant terminated the plaintiff's employment for cause, without notice or money in lieu of notice, on the ground of theft of company property. The plaintiff sued the defendant, claiming damages for wrongful dismissal, arguing that the defendant breached the contract of employment as his alleged theft of property was unproven and the defendant failed to act as soon as practicable and failed to pay him money in lieu of notice. The defendant denied liability, arguing that the proceedings should be summarily dismissed due to defects in the statement of claim and that the plaintiff had been lawfully terminated for cause, so there was no obligation to give notice or pay money in lieu of notice.

Held:

(1) The statement of claim sufficiently pleaded a cause of action in breach of contract.
(2) The plaintiff proved that he was employed under an oral contract of employment and that its terms were breached in that (a) none of the grounds of termination for cause prescribed by Section 36(1) of the Employment Act applied and (b) the defendant failed, by waiting for more than four months after the alleged theft, to terminate the contract "as soon as practicable after the happening of the event on which the termination is based" and (c) the defendant, being obliged to pay salary instead of notice (which, in this case, pursuant to Section 34(4)(d) of the Employment Act, was four weeks) failed to pay that amount.

(3) The plaintiff therefore established a cause of action in breach of contract.

Cases cited

The following cases are cited in the judgment:

John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092
Samoua v Aces Venture Ltd (2013) N5325

STATEMENT OF CLAIM

This was a trial on the question of liability.

Counsel

S Tanei, for the plaintiff
B W Meten, for the defendant

22 August, 2013

1. CANNINGS J: The plaintiff Cosmas Gawi is seeking damages for wrongful dismissal against the defendant, his former employer RD Tuna Canners Limited. The plaintiff commenced employment on 25 January 1999. He was a lead person in the general services division. His employment was terminated without notice on 2 February 2008 on the ground that he had on 14 October 2007 stolen a "603 can of fish". He was offered a cheque for his finish pay to the value of K35.86 but he failed to collect it.

2. The plaintiff argues that the defendant breached the contract of employment as his alleged theft of property was unproven and the defendant failed to act as soon as practicable and failed to pay him money in lieu of notice. The defendant denies liability, arguing that the proceedings should be summarily dismissed due to defects in the statement of claim and that the plaintiff was lawfully terminated for cause, so there was no obligation to give notice or pay him money in lieu of notice. A trial has been conducted on the issue of liability. There are three issues:

1. Should the proceedings be summarily dismissed?
   
2. Was there a contract of employment?
   
3. Did the defendant breach the contract?
   

1 SHOULD THE PROCEEDINGS BE SUMMARILY DISMISSED?

3. Mr Meten for the defendant submitted that the statement of claim is inadequate as, though it purports to plead a case of breach of contract, it fails to plead the existence of a contract, the terms of the contract or which terms were breached. The proceedings should be dismissed for being an abuse of process.

4. I agree with Mr Meten that the statement of claim is deficient in that the matters he refers to should have been expressly or more clearly pleaded. But I do not agree that this is an abuse of process or that the case should be dismissed.

5. The proceedings were commenced more than three years ago and have slowly progressed to trial. No motion to dismiss them has been filed by the defendant. In these circumstances a more liberal approach to interpretation of the pleadings is required. It would not be fair – unless the statement of claim was so bereft of clarity as to be meaningless – to uphold an application for dismissal on the strength of an oral application made without notice to the plaintiff at the trial (Samoua v Aces Venture Ltd (2013) N5325).

6. It is sufficiently clear that this is a claim for damages for wrongful dismissal or breach of contract. The existence of an oral contract of employment is tacitly pleaded, as is the manner in which it was allegedly breached. I refuse to dismiss the proceedings.

2 WAS THERE A CONTRACT OF EMPLOYMENT?

7. There was a contract of employment between the plaintiff (the employee) and the defendant (employer). It was an oral contract of service, as distinct from a written contract. More correctly the plaintiff was employed under a series of oral contracts, each of two weeks duration (the period by reference to which his wages were paid) in accordance with Sections 16 and 17 of the Employment Act Chapter 373, which state:

16. Period of oral contract.

Notwithstanding any agreement to the contrary, an oral contract of service shall be deemed to be for the period by reference to which wages are paid.

17. New oral contract on expiration of contract.

Each party to an oral contract of service that expires under Section 16 shall, immediately on the expiration of the contract, be deemed to have entered into a new oral contract of service for a further period of the same duration and subject to the same terms and conditions as the expired contract unless—

(a) notice to terminate the employment under Section 34 has previously been given and—

(i) the period of notice has expired; or

(ii) payment of wages instead of notice has been made; or

(b) the contract has been summarily terminated by either party for lawful cause.

3 DID THE DEFENDANT BREACH THE CONTRACT?

8. As this was an oral contract the defendant was entitled to terminate it without notice, and this could be done in two ways (John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092). First, under Section 36(1) (grounds for termination of contract) of the Employment Act, which is often called 'termination for cause' as it conveys the notion that the employee has done something wrong that warrants instant dismissal. Section 36(1) states:

An employer may terminate a contract of service without notice or payment instead of notice—

(a) where the employee—

(i) wilfully disobeys a lawful and reasonable order; or

(ii) misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties; or

(iii) is guilty of a fraud or dishonesty; or

(iv) is habitually neglectful of his duties; or

(v) is imprisoned for a period exceeding seven days; or

(vi) is continually absent from his employment without leave or reasonable excuse; or

(vii) is convicted of an offence or contravention of this Act or any other law relating to employment; or

(b) on any other ground on which he would be entitled to terminate the contract without notice at common law.

9. The second way that termination without notice could lawfully be effected was under Section 35(2) (termination of contract without notice) of the Employment Act, which states:

Where a party to a contract has given notice of intention to terminate under Section 34, either party may, without waiting for the expiry of that notice, terminate the contract by paying to the other party a sum equal to the amount of salary that would have accrued to the employee during the period of the notice.

10. Periods of notice are set out in Section 34(4) (notice of termination), which states:

Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than—

(a) one day's notice if the employee has been employed for less than four weeks; or

(b) one week's notice if the employee has been employed for not less than four weeks and for less than one year; or

(c) two weeks' notice if the employee has been employed for not less than one year and for less than five years; or

(d) four weeks' notice if the employee has been employed for five years or more.

11. The notice period varies according to the period for which the employee has been employed. Provided that an employer pays to the dismissed employee the amount of salary that would have accrued to the employee during the notice period, termination without notice will be lawful.

12. In the present case the defendant terminated the plaintiff's employment for cause – the theft of a can of fish – which can be regarded as termination under Section 36(1)(a)(iii) of the Employment Act: the employee was guilty of dishonesty. The question is whether the contract of service was validly terminated under this provision. I uphold the submissions of Mr Tanei for the plaintiff that the answer is no, for two reasons.

13. First, there is insufficient evidence that the plaintiff stole the can of fish. He has testified that he did not steal it. He states that there was an incident in which he was questioned by security personnel at the cannery about a can of fish in his possession but as he explained at the time, the can that he picked up was rubbish and he was in the process of putting it with other rubbish. The plaintiff's story is corroborated by an affidavit by Daniel Guria who states that he was the security manager at the time of the incident and that the plaintiff's termination was based on hearsay and was done to please the plant manager. The contrary evidence for the defendant consists of an affidavit by the Human Resources Manager Evellalita Andrin which is confined to an explanation of why the plaintiff's employment was terminated; it does not contain any direct evidence to contradict the plaintiff's version of events. The plaintiff has proven that the actual ground of termination did not fall within the grounds prescribed by Section 36(1) of the Employment Act as being circumstances in which an employer can terminate a contract of employment without notice or salary instead of notice.

14. Secondly the defendant waited too long after the alleged theft of the can of fish before terminating the contract. The notice of termination of employment given to the plaintiff on 2 February 2008 stated that he had committed theft of company property on Sunday 14 October 2007 at 1220 hours and after a thorough investigation found to have violated the Company Rules and Regulations, Article II, Section 1. Section 36(3) of the Employment Act is relevant in these circumstances. It states:

Termination of a contract of service under Subsection (1) or (2) shall be made as soon as practicable after the happening of the event on which the termination is based.

15. It took the defendant more than four months after the alleged theft to terminate the plaintiff's employment. This inordinate delay in dealing with such a simple matter as investigating the alleged theft of one can of fish fails to comply with the requirement to deal with such matters "as soon as practicable".

16. As the plaintiff's contract was not validly terminated for cause, the contract could only be validly terminated without notice by payment of money in lieu of notice under Sections 34(2), 34(4) and 35(2) of the Employment Act: he should have been paid under Section 35(2) "a sum equal to the amount of salary that would have accrued to the employee during the period of the notice". As he had been employed for more than five years he should have been paid a sum equal to four weeks of salary.

17. The defendant did not pay him anything in lieu of notice and its failure to do so constitutes a breach of contract as the provisions of the Employment Act are properly regarded as implied terms of the contract of employment.

CONCLUSION

18. The statement of claim adequately pleaded a cause of action in breach of contract. The plaintiff was employed under an oral contract of service, the terms of which included the provisions of the Employment Act dealing with termination of the contract by the employer. The plaintiff proved that his contract was not validly terminated for cause in which case the defendant could only validly terminate the contract by paying money in lieu of notice. It did not do so, thereby breaching the contract. The plaintiff has established a cause of action in breach of contract.

ORDER

(1) The defendant is liable in breach of contract to the plaintiff.

(2) The defendant shall pay the plaintiff's costs of the proceedings on a party-party basis which shall if not agreed be taxed.

Judgment accordingly.
___________________________________
Public Solicitor: Lawyer for the Plaintiff
Meten Lawyers: Lawyers for the Defendant