Cholai v Jant Ltd [2014] PGNC 10; N5506 (21 February 2014)

N5506

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS NO 178 OF 2013

THOMAS CHOLAI
First Plaintiff

UMAT KELL
Second Plaintiff

ELIZAH MARIBU
Third Plaintiff

LUKE ULAD
Fourth Plaintiff

V

JANT LIMITED
Defendant

AND

JANT LIMITED
Cross-Claimant

V

THOMAS CHOLAI
First Cross-Defendant

LUKE ULAD
Second Cross-Defendant

Madang: Cannings J
2013: 24 September, 22 November,
2014: 21 February

LAW OF EMPLOYMENT – written contract of service – extension of contract after expiry of period specified in contract: Employment Act, Section 22 (contract period)

LAW OF EMPLOYMENT – final entitlements of employee on termination of contract of employment – whether employer obliged to pay repatriation expenses: Employment Act, Section 40 (repatriation on expiry etc of contract)

The four plaintiffs are former employees of the defendant. They commenced proceedings, claiming damages against the defendant for breach of their contracts of employment. Each plaintiff claimed that the defendant breached his contract by forcing him to resign and under-paying his final entitlements, in particular by refusing to pay repatriation expenses and long service leave. The defendant denied liability and made a cross-claim against two of the plaintiffs for unpaid rent on company-provided accommodation.

Held:

(1) The first plaintiff was at the time of termination of his employment, 1 March 2010, employed under a one-year written contract of employment, entered into in 2007, which was under Section 22(2) of the Employment Act, upon expiry of the period specified in it, deemed to have been extended for an unspecified period. His claims that he was forced to resign and that he was under-paid his final entitlements were, with the exception of the claim for repatriation expenses, rejected, the Court being satisfied that there was insufficient evidence of forced resignation and that calculation of the figure of K8,872.79 was otherwise correct. However, he established a breach of contract by proving that defendant (a) failed to give two months notice of termination as required by the written contract; and (b) failed to pay repatriation expenses under Section 40(1) of the Employment Act.

(2) The second plaintiff was employed under an oral contact of service under Section 15(1) of the Employment Act until termination of the contract on 22 August 2011. His claims that he was forced to resign and that he was under-paid his final entitlements were, with the exception of the claim for repatriation expenses, rejected, the Court being satisfied that there was insufficient evidence of forced resignation and that calculation of the figure of K5,130.60 was otherwise correct. However, he established a breach of contract by proving that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act.

(3) The third plaintiff was at the time of termination of his employment, 28 June 2011, employed under a two-year written contract of employment, entered into in 2009. He claims that he was forced to resign and that he was under-paid his final entitlements were, with the exception of the claim for repatriation expenses, rejected, the Court being satisfied that he was given notice in writing in accordance with the contract of the defendant's intention upon expiry of the contract not to renew it and that calculation of the figure of K6,428.81 was otherwise correct. However, he established a breach of contract by proving that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act.

(4) The fourth plaintiff was at the time of termination of his employment, 1 March 2010, employed under a two-year written contract of employment, entered into in 2005, which was under Section 22(2) of the Employment Act, upon expiry of the period specified in it, deemed to have been extended for an unspecified period. His claims that he was forced to resign and that he was under-paid his final entitlements were, with the exception of the claim for repatriation expenses, rejected, the Court being satisfied that calculation of the figure of K8,643.50 was otherwise correct. However, he established a breach of contract by proving that the defendant (a) failed to give two months notice of termination as required by the written contract; and (b) failed to pay repatriation expenses under Section 40(1) of the Employment Act.

(5) The cross-claims against the first and fourth plaintiffs were wholly dismissed.

(6) It was declared that the defendant was in breach of each contract of employment in the manner determined and that the proceedings shall continue with a trial on assessment of damages.

Cases cited

The following cases are cited in the judgment:
Aquip Pty Ltd v Galo Gastronuevo [1987] PNGLR 491
Bruno Denfop v Wu-Jui Mario (2013) N5442
Jant Ltd v Umat Kell & Others (2013) N4953

STATEMENT OF CLAIM

These were proceedings in which four persons sought to establish liability in damages for breach of their contracts of employment.

Counsel

S Tanei, for the plaintiff
W Akuani, for the defendant

21st February, 2014

1. CANNINGS J: The four plaintiffs are former employees of the defendant, Jant Ltd. They ceased employment on various dates in the period from March 2010 to August 2011. They commenced proceedings in 2013, claiming damages against the defendant for breach of their respective contracts of employment. All plaintiffs claimed that the defendant breached the contract by forcing them to resign and under-paying their final entitlements, in particular by refusing to pay repatriation expenses and long service leave. The defendant denied liability, and made a cross-claim against two of the plaintiffs for unpaid rent on company-provided accommodation.

2. Each of the plaintiff's claims will be addressed in turn, the primary question in each case being whether the plaintiff has established a cause of action in breach of contract. After that, the defendant's cross-claim is determined.

THE FIRST PLAINTIFF, THOMAS CHOLAI

Plaintiff's claims

3. He states that he started work with the defendant in 1991 after graduating with a Bachelor of Science in Forestry at the University of Technology, Lae. He was recruited from his home, Mouklen village, Manus Province. When he started work he was employed under a contract of employment by the company. Prior to ceasing employment, he was employed under a written contract of employment as the Assistant Manager, Logging Section, dated 1 December 2007. In 2010 he was forced to resign by the defendant with the promise that he would be subcontracted to become a logging contractor to supply logs to the defendant. If he did not resign, he would be terminated. When he resigned, he had served the company for 19 years. The subcontract promised never materialised as he claims that his attempts to formalise the promise were ignored or refused by the company.

4. The plaintiff claims that as a result of the actions that the defendant has been taking, he and his family have suffered. His wife Mrs Hilan Cholai has given affidavit evidence supporting the claim that herself and their nine children have suffered as a result of the actions by the defendant company. The plaintiff states that he continues to live in the defendant's premises as he has not been paid his full entitlements. He believes that he was forced to leave his employment under false pretence by the defendant company. As a former contract employee, he was waiting for the defendant to fulfil its part of the contract and repatriate him and his family back to Manus. He states that instead of repatriating himself and his family back to Manus, the defendant paid him only K300.00 as transport allowance.

Defendant's response

5. The defendant agrees that the first plaintiff commenced work in 1991, however he resigned in May 2002 to contest the general election held that year. When he resigned, he was paid all his entitlements from 1991 to 2002, a period of 11 years. He was re-employed by the defendant on 2 December 2002. When he was re-employed his point of hire was Madang and not Manus. He was employed by the defendant for the next eight years.

6. In 2010, he was made redundant due to downsizing of Jant Limited. The defendant states that it paid the plaintiff K8,872.79 upon his redundancy. It owes the plaintiff nothing.

Determination

7. I find that the first plaintiff was at the time of termination of his employment, 1 March 2010, employed under a one-year written contract of employment, entered into on 1 December 2007. That contract was, under Section 22(2) of the Employment Act, upon expiry of the period specified in it (1 December 2008) deemed to have been extended for an unspecified period (Bruno Denfop v Wu-Jui Mario (2013) N5442). Section 22(2) states:

Where an employee under a contract of service made under Section 19(a) [written contract of employment] is permitted by an employer to continue his employment after the expiry of the period specified in the contract of service, the contract shall be deemed to be extended, on the same terms and conditions, for an unspecified period.

8. I am not satisfied that the first plaintiff was forced to resign. There is insufficient evidence to support that assertion. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, the calculation by the defendant of the figure of K8,872.79 was correct as it was in accordance with (actually it was greater than) the amount suggested by the Department of Labour and Employment.

9. However, the first plaintiff has established a cause of action in breach of contract, in two respects, by proving that the defendant:

(a) failed to give two months notice of termination as required by the clause 12 of the written contract of employment; and

(b) failed to pay repatriation expenses under Section 40(1) (repatriation on expiry, etc of contract) of the Employment Act, which states:

Subject to Section 43, where an employee has been brought to the place of employment by–

(a) the employer; or

(b) an employment agent or a worker-recruiter acting on behalf of the employer,

the employer shall pay the expenses of repatriating the employee to the place from which he was brought–

(c) on the expiry of the period of service specified in the contract of service; or

(d) on the termination of the contract–

(i) by agreement between the parties; or

(ii) by reason of the inability, refusal or neglect of the employer to comply with all or any of the provisions of the contract; or

(iii) by the employee under Section 36(2); or

(iv) by reason of the inability of the employee to comply with the provisions of the contract on account of illness or accident where the employee produces to the employer a certificate of a medical practitioner or other acceptable medical certificate certifying as to the inability of the employee to comply with the provisions of the contract.

10. I find that the "the place from which he was brought" is Mouklen village, Manus Province. I reject the defendant's argument that the relevant place is Madang town. Mouklen village, Manus Province remained the relevant place, even though there was a break in the period of employment when the plaintiff resigned in 2002 to contest the general election and later that year was re-engaged by the defendant.

THE SECOND PLAINTIFF, UMAT KELL

Plaintiff's claims

11. The second plaintiff states that he comes from Bagabag Island, Madang Province. He is married with nine children. He turned 60 years-of-age in 2013. He is illiterate. He started work with the defendant in 1975. He was Assistant Supervisor Chip Mill. He states that he was forced to resign and upon his resignation, the company did not pay him correctly for his 36 years of service. He took his long service leave in 2005.

12. He says that the company paid him only K5,130.60 finish pay. He claims that the actions of the defendant has caused hardships and suffering to himself and his family.

Response by the defendant

13. The defendant agrees that the second plaintiff started work in 1975, but points out that he resigned in 1986 and went home to look after his mother. He was re-employed on 8 May 1990. He took his long service leave in May 2005 and resumed work on 8 November 2005. He was paid all his entitlements upon taking long service leave in 2005. His new date of commencement was therefore 8 November 2005.

Determination

14. The second plaintiff was employed under an oral contact of service under Section 15(1) of the Employment Act until termination of the contract on 22 August 2011.

15. I am not satisfied that he was forced to resign. It appears that he voluntarily submitted a notice of retirement on 27 July 2011 indicating "health" as the reason for retiring.

16. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, calculation by the defendant of the figure of K5,130.60 was correct as it was in accordance with (actually it was greater than) the amount suggested by the Department of Labour and Employment.

17. However, the second plaintiff has established a breach of contract by proving that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act. I find that the "the place from which he was brought" is Bagabag Island, Madang Province.

THE THIRD PLAINTIFF, ELIZAH MARIBU

Plaintiff's claims

18. He comes from Siassi Island, Morobe Province. He is married to a woman from Madang and they have five children. He entered into a contract of employment with the defendant on 28 June 2008. The contract was for a period of two years. He was employed as Assistant Supervisor in the Chip Mill.

19. He states that he started work with the defendant in 1981. He believes that his contract of employment was prematurely terminated by the defendant. He did not resign or give notice of termination of the contract. The defendant paid him only K6,023.66 in final entitlements. He says this is not reflective of his 30 years of service with the company.

Defendant's response

20. The defendant agrees that the third plaintiff commenced employment in 1981 but points out that he was dismissed on 6 July 1987 before being re-employed on 26 October 1987. The plaintiff took his long service leave and all his entitlements were paid to him upon resumption of duty on 4 May 2002. His contract of employment was terminated following a notice of intention to terminate the contract with a notice period of two months.

Determination

21. I find that the third plaintiff was at the time of termination of his employment, 28 June 2011, employed under a two-year written contract of employment, entered into on 28 June 2009.

22. I am not satisfied that he was forced to resign. There is insufficient evidence to support that assertion. I am satisfied that he was given two months notice in writing in accordance with the contract of the defendant's intention upon expiry of the contract not to renew it.

23. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, the calculation by the defendant of the figure of K6,428.81 was correct as it was in accordance with (actually it was greater than) the amount suggested by the Department of Labour and Employment.

24. However, the third plaintiff has established a cause of action in breach of contract, in one respect, by proving that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act. I find that the "the place from which he was brought" is Siassi Island, Morobe Province.

THE FOURTH PLAINTIFF, LUKE ULAD

Plaintiff's claims

25. He is from the Gogol Valley, Madang Province, where the defendant operated for 39 years. He started work in 1983. He served the defendant as Assistant Supervisor Forest Operations. He took his long service leave in 1998. He states that he was employed under a contract of employment when he was terminated by the company. In 2010 he was forced to resign by the defendant with the promise that he would be subcontracted to become a logging contractor to supply logs to the defendant. If he did not resign, he would be terminated. The subcontract promised never eventuated or materialised as he claims that his and the first plaintiff's attempts to formalise the promise were ignored or refused by the company. The plaintiff claims that as a result of the actions that the defendant has been taking, he and his family have suffered.

Defendant's response

26. The defendant agrees that the fourth plaintiff commenced employment on 31 January 1983. He took his long service leave on 31 January 1998 for six months and was paid his entitlements. He resumed duty on 1 August 1998. The defendant says that is the relevant date for calculation of final entitlements.

Determination

27. I find that the fourth plaintiff was at the time of termination of his employment, 1 March 2010, employed under a one-year written contract of employment, entered into on 1 December 2007, which was under Section 22(2) of the Employment Act, upon expiry of the period specified in it (1 December 2008) deemed to have been extended for an unspecified period.

28. I am not satisfied that he was forced to resign. There is insufficient evidence to support that assertion. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, the calculation by the defendant of the figure of K8,872.79 was correct as it was in accordance with (actually it was greater than) the amount suggested by the Department of Labour and Employment.

29. However, the fourth plaintiff has established a cause of action in breach of contract, in two respects, by proving that the defendant:

(a) failed to give two months notice of termination as required by the clause 13 of the written contract of employment (I find that the "voluntary retirement form" signed by the plaintiff on 18 January 2010 is too vague to be given any legal effect); and

(b) failed to pay repatriation expenses under Section 40(1) (repatriation on expiry, etc of contract) of the Employment Act. I find that the "the place from which he was brought" is Gogol Valley, Madang Province.

THE CROSS-CLAIMS

30. The question of whether any of the plaintiffs is liable for unpaid rent is complicated by the circumstances in which the defendant appealed against a decision of the Madang District Court to refuse the defendant's application for eviction of the plaintiffs under the Summary Ejectment Act. That appal was successful (Jant Ltd v Umat Kell & Others (2013) N4953), but later, in the course of the present proceedings, this Court on 4 March 2013 restrained the defendant from evicting the plaintiffs pending full determination of the plaintiffs' claims.

31. provided accommodation and the terms on which this was provided are unclear. The cross-claims are wholly dismissed.

CONCLUSION

32. This has been a trial on liability and I have determined that each plaintiff has established a cause of action in breach of contract, the nature of the breach having been specified in each case. I have considered referring all remaining areas of dispute, including orders that would determine the proceedings and the costs of the proceedings, to mediation under Rule 5(2) of the ADR Rules. However, I consider that with appropriate directions being given to the parties, this case will reach a speedier resolution by having a trial on assessment of damages and unpaid entitlements.

33. As for damages, I note that the statement of claim pleads "special damages" and "general damages for pain, suffering and loss of amenities". There will need to be evidence and argument on these categories of damages.

34. As for unpaid entitlements, there would need to be evidence and argument on the following matters:

• Calculation, in respect of the first and fourth plaintiffs, of the salary due to them for the notice period in each of their contracts.
  
• Calculation, in respect of each plaintiff, of the difference, if any, between the amount of final entitlements declared in this judgment to be the correct amount and the amount actually paid to that plaintiff.
  
• Calculation, in respect of each plaintiff, of repatriation expenses, in accordance with Section 41 (expenses of repatriation) of the Employment Act, which states:
  

(1) Subject to Section 43 and to Subsection (2), the expenses of repatriation include—

(a) where the employer does not provide suitable transport—reasonable travelling expenses; and

(b) reasonable subsistence rations or expenses for rations for the duration of the journey; and

(c) reasonable subsistence rations or expenses for rations during the period (if any) between the termination of the contract and the commencement of the journey.

(2) The employer shall not be liable to provide subsistence rations or expenses for rations for any period during which repatriation of the employee is delayed due to the fault or choice of the employee.

35. My tentative view, subject to hearing argument and making a formal determination on the issue, is that repatriation expenses are, at the election of the employee, payable in cash or kind. I favour the approach taken by Barnett AJ in Aquip Pty Ltd v Galo Gastronuevo [1987] PNGLR 491 that if an employee elects to take his repatriation expenses in cash it is irrelevant whether he actually uses it for purposes of repatriation.

36. Of course, if the parties are able to reach agreement on the amount that each plaintiff is entitled to, a trial on assessment of damages and unpaid entitlements will be unnecessary. I would be pleased to be informed that a trial is unnecessary.

37. As for costs, I will make no order at this stage. This is something on which the parties might also be able to agree. Failing agreement, it can be the subject of argument at the next trial.

ORDER

(1) In respect of the first plaintiff:

• (a) calculation by the defendant of the figure of K8,872.79 as final entitlements is, subject to (b), correct; and
  
• (b) a cause of action in breach of contract has been established in that the defendant:
  
  • (i) failed to give two months notice of termination as required by the written contract; and
    
  • (ii) failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", Mouklen village, Manus Province.
    

(2) In respect of the second plaintiff:

(a) calculation by the defendant of the figure of K5,130.60 as final entitlements is, subject to (b), correct; and

(b) a cause of action in breach of contract has been established in that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", Bagabag Island, Madang Province.

(3) In respect of the third plaintiff:

(a) calculation by the defendant of the figure of K6,428.81 as final entitlements is, subject to (b), correct; and

(b) a cause of action in breach of contract has been established in that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", Siassi Island, Morobe Province.

(4) In respect of the fourth plaintiff:

(a) calculation by the defendant of the figure of K8,643.50 as final entitlements is, subject to (b), correct; and

(b) a cause of action in breach of contract has been established in that the defendant:

• (i) failed to give two months notice of termination as required by the written contract; and
  
• (ii) failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", Gogol Valley, Madang Province.
  

(5) The cross-claims against the first and fourth plaintiffs are wholly dismissed.

(6) For the avoidance of doubt the order of 4 March 2013 continues until further order of the Court.

(7) The proceedings shall continue, subject to any agreement by the parties to the contrary, to a trial on assessment of damages and unpaid entitlements, the assessment of such sums to be determined in accordance with the above declarations of liability.

(8) The question of costs is reserved for agreement or further argument.

Judgment accordingly.
___________________________________________
Public Solicitor: Lawyer for the Plaintiffs
William Akuani Lawyers: Lawyers for the Defendant