Pohon v Czuba [2016] PGNC 317; N6517 (11 November 2016)

N6517

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1354 OF 2015

ANDREW POHON
Plaintiff

V

FATHER JAN CZUBA
First Defendant

DIVINE WORD UNIVERSITY
Second Defendant

Madang: Cannings J

2016: 27 May, 10 August, 11 November

DAMAGES – breach of contract of employment – assessment of debt and damages following trial on liability – failure by employer to terminate contract in accordance with terms – claim for loss of remuneration and damages.

The plaintiff established liability in breach of contract against the second defendant, his former employer, due to its failure to terminate the contract of employment in accordance with its terms. The contract provided that the employer give six months notice in writing of its intention to terminate the contract; in fact, only 25 days notice was given. At this trial on assessment of debt and damages, the plaintiff claimed lost remuneration of K21,843.64 and general damages for anxiety, hardship and suffering of K350,000.00, a total of K371,843.64. The second defendant conceded, in principle, that it was liable for lost remuneration, but argued that nothing should be awarded for general damages.

Held:

(1) For lost remuneration, K11,919.70 was awarded, as it was an implied term of the contract of employment that the plaintiff would be entitled to six months worth of remuneration (K19,407.68) in lieu of notice, if six months was not given, and here only K7,487.98 was paid.

(2) The claim for general damages was, in principle, a proper claim, to be assessed separately from the claim for lost remuneration (which is properly regarded as a claim for debt, as distinct from damages). The amount sought by the plaintiff was, however, extravagant and unprecedented. Comparing the facts of this case with other cases in which similar awards had been made, the appropriate award was K5,000.00.

(3) The total award of debt (K11,919.70) and damages (K5,000.00) was K16,919.70. In addition, interest of K5,278.95 was awarded. The total judgment sum was K22,198.65. The parties were ordered to bear their own costs.

Cases cited

The following cases are cited in the judgment:

Bal Bar v Maima Kora (2008) N3290
Bruno Denfop v Jant Ltd (2015) N5869
Chemica Didiman v Bernard Tiau (2007) N5000
Christopher Kondai v Lon Sike & PIMS (2014) N5721
Divine Word University v George Podas (2015) SC1414
Frederick Mathies v Joel Korina (2009) N3832
George Podas v Divine Word University (2011) N4395
Harding v Teperoi Timbers Pty Ltd [1988] PNGLR 128
Jeffery Balakau v Sir Arnold Amet (2013) N5313
John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092
Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC837
Leeway East Enterprise Ltd v Daniel Danaben (2013) N4951
Livingston v Raywards Coal Co [1880] 5 App Cases 25
Monica Angogi v Fred Yadiwilo & Chemica Ltd (2014) N5605
Niugini Civil & Petroleum Ltd v West New Britain Development Corporation Ltd (2008) N3292
Porgera Joint Venture v Robin Kami (2010) SC1060
Samuel Roth v Samuel Waironak (2011) N4452
Timothy Con v Jant Ltd (2014) N5721
UPNG v Jerry Duwaino (2009) N3723
Vere Kilao v Bernard Tiau (2007) N5000

ASSESSMENT

This was a trial on assessment of debt and damages for breach of contract.

Counsel:

A Pohon, the Plaintiff, in Person
B W Meten, for the Defendants

11 November 2016

1. CANNINGS J: This has been a trial on assessment of debt and damages. The plaintiff, Andrew Pohon, established liability in breach of contract against his former employer, the second defendant, Divine Word University, due to its failure to terminate his contract of employment in accordance with its terms. Liability was not established against the first defendant, Father Czuba, the president of the University, and the case against him was dismissed.
   
2. The plaintiff was employed as Dean of Students under a three-year written contract of employment, commencing on 30 January 2012. He had been employed under a three-year contract with the University immediately before that. He was given a notice of termination on 22 November 2012 and ceased employment on 17 December 2012. An issue arose at the trial on liability as to whether he had resigned or had his employment terminated. The Court decided that this was a case of termination by the employer of the contract of employment.
   
3. The plaintiff claims lost remuneration of K21,843.64 and general damages, for anxiety, hardship and suffering, of K350,000.00, a total of K371,843.64. The University concedes, in principle, that it is liable for lost remuneration, but argues that nothing should be awarded for general damages.
   

1 LOST REMUNERATION

4. The plaintiff submits that he should be awarded six months worth of remuneration as a debt, as distinct from damages, as clause 16 of his contract of employment stated:

The University shall give six (6) months notice in writing of its intention to terminate employment.

5. The contract did not make any provision for payment of money in lieu of notice. However, it is reasonable, in these circumstances, to read into the contract an implied term that if the prescribed notice is not given, the employer will be liable to pay to the employee the amount of remuneration that would have been payable if the notice period had been complied with (Divine Word University v George Podas (2015) SC1414).
   
6. I have assessed the amount payable by first, identifying the plaintiff’s total yearly remuneration package (excluding un-quantified amounts for accommodation and school fee subsidies), which is prescribed by clause 9 of the contract as K38,815.36. That amount has been divided by two to arrive at a six-monthly amount of K19,407.68. From that amount is deducted the actual amount paid to the plaintiff as “finish pay” on 17 December 2012, K7,487.98, to arrive at the amount awarded = K11,919.70.
   

2 GENERAL DAMAGES

7. Mr Meten, for the defendants, submitted that nothing should be awarded to compensate the plaintiff for the stress, anxiety and hardship he claims to have suffered as a result of his wrongful dismissal. Mr Meten relies on the decision of the Supreme Court in Divine Word University v George Podas (2015) SC1414 (which overturned my decision in George Podas v Divine Word University (2011) N4395) to argue that in a wrongful dismissal action the limit of damages that can be awarded to the plaintiff is the amount that should have been paid to the plaintiff if the contract of employment had been lawfully terminated.
   
8. I reject that submission for a number of reasons.
   

First and foremost I am of the view, expressed in many cases, that there is no universal principle of law that a person who succeeds in establishing liability against his former employer for breach of a contract of employment is entitled to no more damages than the amount of salary that would have been payable to him under the contract. Each case and each contract must be determined on its merits (Vere Kilao v Bernard Tiau (2007) N5000, Bal Bar v Maima Kora (2008) N3290, Frederick Mathies v Joel Korina (2009) N3832, John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092).

Secondly, the facts in Podas must be distinguished from the facts in the present case. In Podas, the Supreme Court found error in my decision to award an amount of damages commensurate with the remuneration that would have been paid to the plaintiff for the balance of his contract period. No error was found in the assessment of damages for stress, anxiety and hardship.

Thirdly, I am not satisfied that there is Supreme Court authority that lays down the principle that Mr Meten is heralding. I do not consider that the majority decision of the Supreme Court in Porgera Joint Venture v Robin Kami (2010) SC1060 elevates the principle advanced by the defendants to a universal principle that applies to every case of wrongful dismissal.

Fourthly, the principle, to the extent that it exists, in my view, depends on the unjustified merging of two distinct remedies, debt and damages, to which a plaintiff who succeeds in establishing a cause of action in breach of contract, is entitled. The debt remedy is nothing other than the monetary amount due to the plaintiff in accordance with the contract. It does not include any component of compensation. The essence and purpose of the remedy of damages, by contrast, is to compensate the plaintiff: to put the innocent party in the same position, as far as possible, as he would have been in if the wrongdoer had not committed the wrongful act (Livingston v Raywards Coal Co [1880] 5 App Cases 25, Samuel Roth v Samuel Waironak (2011) N4452).

Fifthly, though it is common for courts, upon finding that a plaintiff has established a cause of action in breach of contract, to order that there will a trial on ‘assessment of damages’, the more correct wording of the order will often be that there should be a trial on ‘assessment of debt and damages’. It is important to maintain the distinction between the two remedies, debt and damages (Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC837, Niugini Civil & Petroleum Ltd v West New Britain Development Corporation Ltd (2008) N3292, Jeffery Balakau v Sir Arnold Amet (2013) N5313).

9. In the present case, the second component of the plaintiff’s claim is a claim for damages (as distinct from debt). As I have said in other cases losing one’s job is invariably a dramatic and often a traumatic event in a person’s life, especially in PNG where jobs are scarce and many people other than the employee’s immediate family are dependent on the income generated by the job (Chemica Didiman v Bernard Tiau (2007) N5000, UPNG v Jerry Duwaino (2009) N3723, Frederick Mathies v Joel Korina (2009) N3832). Affidavits by the plaintiff and his wife provide ample evidence of the hardship and stress endured by the plaintiff and his family as a result of the plaintiff’s sudden and unlawful termination and the clumsy way in which the University handled the process of termination. The plaintiff is entitled to damages to compensate him for the injury to his livelihood and emotions and those of his dependants caused by the wrongful dismissal (Harding v Teperoi Timbers Pty Ltd [1988] PNGLR 128).
   
10. I have considered the circumstances in which the plaintiff’s employment was terminated, and compared the facts of this case with other cases recently decided in which the plaintiffs, former employees, were awarded a similar component of general damages: Christopher Kondai v Lon Sike & PIMS (2014) N5721 = K3,000.00; Monica Angogi v Fred Yadiwilo & Chemica Ltd (2014) N5605 = K4,000.00; Timothy Con v Jant Ltd (2014) N5721 = K5,000.00, Bruno Denfop v Jant Ltd (2015) N5869 = K8,000.00. I award K5,000.00.
    

SUMMARY

11. The plaintiff is awarded K11,919.70 (debt) and K5,000.00 (damages), a total of K16,919.70.
    

INTEREST

12. Interest will be awarded at the rate of 8 per cent per annum on the total amount of debt and damages under Section 4(1) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015. Interest will be calculated in respect of the period from the date on which the cause of action accrued (the date of termination of the contract, 17 December 2012) to the date of this judgment, a period of 3.9 years, by applying the formula D x I x N = A, where: D is the amount of debt and damages assessed, I is the rate of interest per annum, N is the appropriate period in numbers of years and A is the amount of interest. Thus: K16,919.70 x 0.08 x 3.9 = K5,278.95.
    

COSTS

13. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. In this case there is no clear winner. The plaintiff has on the one hand succeeded in obtaining an award of debt and damages. On the other hand he succeeded in convincing the court that only 4.55% of his claim (K16,919.70 out of K371,843.64) had merit. The defendants succeeded in showing that the bulk of the claim was misconceived. In these circumstances the approach taken in Leeway East Enterprise Ltd v Daniel Danaben (2013) N4951 is the most appropriate: the parties will bear their own costs.
    

ORDER

(1) The second defendant shall pay to the plaintiff debt and damages of K16,919.70 plus interest of K5,278.95, being a total judgment sum of K22,198.65, within 30 days after the date of judgment.

(2) The parties will bear their own costs.

(3) Time for entry of the order is abridged to the date of settlement by the Registrar, which shall take place forthwith.

Judgment accordingly,
_______________________________________________

Meten Lawyers: Lawyers for the defendants