Ambo v Woodford [2016] PGNC 66; N6254 (13 April 2016)

N6254

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 900 OF 2011

BETWEEN

GEORGE AMBO
Plaintiff

AND

NEIL WOODFORD
MANAGER – TRANSPORT AND LOGISTICS MOUNTAIN FUEL FREIGHTERS LIMITED
First Defendant

AND

MOUNTAIN FUEL FREIGHTERS LIMITED
Second Defendant

AND

MOROBE CUSTOMS AND CARTAGE LIMITED
Third Defendant

Lae: Sawong J.
2015: 3rd & 8th December
2016: 13th April

EMPLOYMENT LAW – Written Contract of Employment- Transfer of employee from one employer to another employer with a group of companies-Employee did not consent to transfer –

EMPLOYMENT LAW – Employment Act S25(1) – Written Contract of employment – Transfer of employee – No consent by employee – breach of S.25(1) Employment Act, Ch. – Employer liable

EMPLOYMENT LAW – Breach of Contract of employment – employee's services terminated by a company not party to contract of employment – company liable.

EMPLOYMENT LAW – Damage from wrongful dismiss – award of general damage for pain, suffering, embarrassment assessed at K5,000; No award for exemplary damages – special damages – being loss of salary and other benefits – award – Interest & costs.

Case Cited:
PNG Banking Corporation vs. Bara Amevo and Bari & Others N1726.
Harding vs. Teporari Timbers Pty Ltd [1988] PNGLR 128

Counsels:
K. Kevere, for the Plaintiff
S. Kesno, for the Defendants

RULING

13th April, 2016

1. SAWONG, J. This is a claim by the plaintiff against the defendants alleging unlawful termination from his employment contract by the first defendant for and on behalf of the second defendant and third defendant. The plaintiff was employed under a contract of employment by the third defendant. At the relevant material time the first defendant was employed as its Manager by the second defendant. Whilst in the midst of the contract of employment, the first defendant causes the plaintiff to be transferred to the second defendant. The plaintiff did not accept the transfer and which eventually led to his termination.
2. In his statement of claim the plaintiff claims:
   1. General damages
   2. Special damages of Three Hundred and forty one thousand (K341,064.00)
   100. The exemplary damages of K60,000.00
   4. Costs
   5. Interests
3. The defendant's filed an amended defense on the 27th of September 2013 basically denying any breach of the contract and justifying the termination on poor performance and absenteeism from work. The pleadings book contains, inter alia, the statement of agreed and disputed facts and legal issues.

Evidence for the Plaintiff

4. The plaintiff gave brief sworn evidence and also tendered into evidence his three affidavits which were formally admitted into evidence. These were:
   
   1. The affidavit of George Ambo sworn on 17th December 2014 (Exhibit P1)
      

Affidavit of George Ambo sworn 18th December 2014 (Exhibit P2)

2. Affidavit of George Ambo sworn on 2nd November 2015 (Exhibit P3).
   

He was cross-examined briefly on his evidence.

Evidence for the Defendant

5. The defendant's evidence consisted of the sworn evidence of Mr Maso Mangape and his affidavit sworn and filed on the 16th of October 2015 which was accepted into evidence and marked as Exhibit D1.

Agreed Facts

6. The parties agreed and I accept the following facts:
   1. The plaintiff was employed by the third defendant as its Deputy Assistant Manager Transport Operations under a written contract of employment. The plaintiff was performing his obligations with the third defendant pursuant to the contract of employment. In March 2006 due to the restructure of the operations of the group of companies the management decided to transfer the plaintiff from his employment with the third defendant to the second defendant on the same terms and conditions. The plaintiff relocated from the third defendant's operations in Lae and went to eleven (11) mile to work with the second defendant's operations under the same terms and conditions. The plaintiff did not sign a new contract of employment to work with the first defendant and attach to the second defendant.
      
   2. Sometime after his re-location and transfer to the second defendant's operations the plaintiff's performance and attendance at work dropped. He was counseled, given warnings to improve his performance and attendance however all these failed.
      
   100. On 23rd of November 2015, the plaintiff's services were finally terminated on the grounds of poor performance and continuous absence from work without leave and reasonable excuses. His services were terminated by the second defendant. Upon termination he was paid his final entitlements of K2, 033.87.
        

Disputed facts

7. There are a number of disputed facts. The first is whether the plaintiff agreed to be transferred from his position with the third defendant to be with the second defendant. The first defendant has no power or authority to transfer the plaintiff from the third defendant to the second defendant and that the said transfer was a demotion to a lower position with the second defendant.

Issues

8. The parties have identified a number of issues for determination. These are:
   
   1. Whether the provisions of section 25(1) of the Employment Act applied to the contract of employment between the plaintiff and the defendants and if it did, did the defendants breached those provisions?
      
   2. Whether the defendants have the power to transfer the plaintiff from his employment with the third defendant to the second defendant.
      
   100. Whether the contract of employment with the third defendant was in force when the plaintiff was transferred from the third defendant to the second defendant.
        
   4. Whether the transfer of the plaintiff from the third defendant to the second defendant amounted to a breach of the contract.
      
   5. Finally, whether the plaintiff's termination from the second defendant was unlawful.
      

I propose to consider all these issues together.

9. Counsels for both parties have filed written submissions addressing these issues. I have read and considered the submissions and the evidence that have been filed on behalf of each party.

Law

10. It is trite law that, with certain exceptions, a contract cannot (as a general rule), confer rights or impose obligations arising under it on any person except the parties to it. PNG Banking Corporation vs Bara Amevo and Bari & Others N1726.
11. As to principles on transfer of employment, the common law position can be found in Chitty on Contracts, 27th edition, volume 2 at paragraphs 37-119:

"A contract for personnel service cannot be assigned by one party without the consent of the other. Thus where two companies are amalgamated under an order of the Court, the employers rights under a contract of employment cannot be assigned to the new company without the consent of the employee...where there is a defector transfer of a contract of employment from one employer to another, it may be possible to protect the statutory rights of the employee, such as its rights under the redundancy payment legislation, either by holding the former employer to be estoped from denying the continuance of the original contract of employment with him, or by holding the new employer to be estoped from denying the formation of a new contract of employment with him. Where the identity of the employer is changed in such circumstances that statutory continuity of employment is preserved, the employer is not required to issue a complete new set of statutory particulars of terms of employment unless there is some change in the terms, the change in the identity of the employer can be those circumstances be notified by way of amendment of the existing particulars as if it were simply itself a change of terms. This should not, however be seen as overriding the requirements of the employees consent to the change of employer."

12. The common law position has found statutory basis in S.25 (1) of the Employmet ch.373 (the Athe Act). It reads:

"Transfer of contract
i. Subject to subsection (2), a written contract of service may be transferred but no rights arising under any written contract of service shall be transferred from one employer to another employer unless the employee who is bound by the contract consents to the transfer and the particulars of the consent are endorsed on the contract.
ii. A transfer of an attested contract is void unless the transfer has been approved by a labour officer.
iii. Before approving a transfer under Subsection (2), the labour officer shall satisfy himself that-

1. The employee has freely consented to the transfer; and
   
2. The employee's consent is not due to misinterpretation or mistake; and
   
3. The employer has submitted to the labour officer a notice of variation in the prescribed form.
   

iv. Where an employer dies, any contract of service, in relation to which he is the employer that, at the time of his death, has not been terminated or has not expired shall be deemed to have been transferred to his legal personal representative.

13. Without analyzing this provision in great detail, in my opinion, upon a plain reading of S.25 (1), an employee who is under a written contract of employment may be transferred from one employer to another employer, with his consent. Put it simply, where an employee is employed under a written contract with another employer he cannot be transferred to another employer without his consent. Moreover the particulars of the consent must be endorsed on the contract of employment.
14. Mr Kevere in his submissions submits that the transfer of the plaintiff from the third defendant to the second defendant was in breach of S.25 (1) of the Act and therefore the transfer was unlawful and in breach of the plaintiffs contract of employment.
15. Mr Kesno submits that the defendants did not breach the provisions of the Employment Act and that the plaintiff by his conduct understood and accepted his transfer. I have also considered and taken into account the rest of his submissions on the aspect of transfer as set out in his written submissions.

Liability

8. I accept the submissions of Mr Kevere on this aspect. The evidence from the parties and there is no dispute, that the plaintiff was employed under a written contract of employment by and with the third defendant. That contract of employment has been tendered into evidence. The terms of the contract does not state any provision for transfer of employment. The contract is silent on this aspect. It is clear from all the evidence that the plaintiff did not consent to be transferred to work or be employed with the second defendant. In fact he had protested and gave notice to the second defendant protesting about his transfer. The second defendant has not produce any evidence that the transfer was by mutual agreement between the plaintiff, the second and third defendants. I therefore find as a fact that the plaintiff did not consent to the transfer of his employment with the third defendant to the second defendant.
   
9. I therefore conclude that the defendants jointly and severally breached the provisions of s.25 (1) of the Act.
   
10. Further it is clear that the termination of the plaintiff's services was done by the second defendant. The second defendant unlawfully terminated the plaintiff's services as it was not a party to the employment contract between the plaintiff and the third defendant.
    
11. In my view, the second and third defendants breached the contract of employment of the plaintiff. I find the defendants jointly and severally liable and would enter judgment for the plaintiff against them.
    

Damages

12. As to damages, Mr Kesno made no submissions. Mr Kevere made a general submission on damages that should follow.
    
13. In his amended statement of claim the plaintiff claimed the following:
    
    1. Loss of future economic earnings K176,328.00
    2. Loss of salary for eight (8) years K124,800.00
    100. Loss of employment benefits for eight (8) years
         1. Housing benefit of K2,600.00 – K20,800.00
         2. Loss of Nasfund contribution K1,092.00 per annum – K8,736.00
         3. Loss of long service leave K300.00 per annum – K2,400.00
            
14. It is trite law, that the plaintiff must prove his damages. However it is also trite that even if there is little evidence, the Court can do the best it can on the evidence properly before it and award damages if there is some evidence on which the Court can act upon. As to this aspect, the evidence relating to special damages is contained in the Contract of Employment.
    
15. The contract of employment which, is in evidence, contains the amounts that were to be paid to the plaintiff. This is set out in clause 7 of the contract of employment. It reads:
    

"7 Salary

Your earning of salary shall be paid fortnightly and be made up of a package including the following benefits:

Base salary K15, 600.00 per annum

Housing K 2,600.00 per year

NPF K 1,092.00

Long Service Leave K 300.00

Medical _________

Total Package K19, 592.00 per year

16. The period of employment was open ended. This is set out in clause 6 of the contract of employment which reads:
    

"6 start date

Your start date for ____ with the company is January 27th 2004

Finish date:

Open – your initial employment shall be for a probationary period of 3 months after which time your performance will be assessed and, if satisfactory, full time employment may be offered."

His services were terminated on the 25th of November 2005.

17. As to termination of the contract, clause 11 of the employment contract sets out the terms of the notice to be given. It reads:
    
    • "11. Terminational of Contract
    • Either party may terminate this contract by giving four weeks notice or by MCC without notice on payment of four weeks salary. In the event of a serious breach of the company's policies or operating practices the company may terminate the employment without any payment in lieu of notice. Employment can also be terminated at the company's discretion upon the receipt of a third disciplinary notice"
      
18. In so far as the period of notice is concern in my view, this provision does not apply because the contract of employment of the plaintiff was not terminated under this clause by MCC. His employment was terminated by the second defendant who was not a party to the contract of employment. In the circumstances clause 11 is of no aid to the defendants.
    
19. The plaintiff says in his affidavit evidence that after being dismissed he was not able to secure any employment until 2012. There is no contrary evidence from the defendants. Counsel for the defendants did not cross-examine the plaintiff on this aspect.
    
20. For the purposes of calculating damages that should be awarded to him, I have taken into account the following factors. On 26th May 2005 the first defendant verbally advised the plaintiff of the transfer to the second defendant. This transfer as I have found was unlawful. On 20th June 2005 the plaintiff took up his position with the second defendant. He was not happy with the transfer and this is evidenced by his letter to the first defendant on the 4th of August 2005. That letter shows that the plaintiff protested the transfer and he was not happy nor did he consent to the transfer. On 23rd November 2005 the plaintiff's services were terminated. Accordingly, I have come to the conclusion that the breach occurred on the 20th of June 2005 as that was when the plaintiff took up his position with the second defendant. However I would assess his damages from 23rd November 2005 as that was date on which he was dismissed. As I have indicated he mitigated his losses when he took up employment in 2012. Thus in the absence of any other evidence, I infer and find that the plaintiff was not employed for a period of over six (6) and half years commencing from 24th November 2005 ending on the 31st of December 2011. I would award or assess his special damages on that basis.
    

General damages

21. Under this head of damages the plaintiff seeks compensation for distress, loss and embarrassment he suffered as a result of the breach of the contract. Neither Mr Kesno nor Mr Kevere in their written submissions addressed this issue. Whilst the parties have not address this issue in their submissions, never the less there is evidence from the plaintiff in relation to the feeling of embarrassment and humiliation. This are set out in his affidavit evidence. I bear in mind the principles set out in Harding vs Teporari Timbers Pty Ltd [1988] PNGLR 128 in relation to this head of damages. The evidence from the plaintiff is that he was frustrated and distressed and upset about being transferred. He says that he was upset and distressed and this reflected in his poor performances, ultimately leading to his services being terminated. There has been no contrary evidence against this aspect. Accordingly, I would award the plaintiff K5, 000.00 for disappointment, distress, and frustration suffered by the breach of his contract of service.
    

Special damages

22. I award the special damages as follows:
    
    1. Loss of Salary
       1. One month salary for the period 1/12 - 31/12/2005

K950.00 per fortnight x 2 K 1,900.00

2. For the period 1st/01/06 to 31st/12/2011

a period of six (6) years K93,600.00

2. Housing allowance K15,600.00

100. NPF contribution K 6,552.00

4. Long Service Leave K 1,800.00

Sub Total K119, 452.00

Less Amount Paid K 2,033.87

Total K117, 418.13

Exemplary damages are awarded to punish defendants for their wrongful conduct. Whilst it is clear that in this case that the defendants had acted wrongfully nevertheless, in my view there is no evidence that the defendants acted with any recklessness, malice or deceit. Therefore I would not award any amount for exemplary damages.

Interest

23. As for interest I bear in mind the principles set out by the Supreme Court in National Capital District v Robert Dademo (2013) SC1260. The Supreme Court in that case held that the award of interest is discretionary and the Court should have regard to all relevant considerations including the following:
    
    1. Whether the judgment sum for damages is of a kind which should attract interest.
    2. Whether interest should be awarded for the whole or a part of the period calculated from the time cause of action arose and the date of judgment.
    100. Whether interest should be awarded for the whole amount or part thereof.
    4. Gross or undue delay in the prompt disposition of the case attributed to either of the parties.
    5. The appropriate interest rate for the type of damages awarded and of the interest of justice and fairness.
       

In this case I have taken into account the following consideration in calculating the award of interest.

1. First, a plaintiff is obligated to mitigate his loss as early as possible. There is no evidence from him as whether he sought jobs soon after his services were terminated. He has offered no or very little evidence of what he did to secure employment between the time he was dismissed in November 2005 till 2012.
   
2. Secondly, he was dismissed in November 2005. He waited until August 2011, a period of nearly six years before he filed the proceedings.
   

100. Thirdly, there has been a long delay in the prosecution of his claim. Since the proceedings were filed in 2011, it has taken almost four and half (41/2) years to prosecute his claim.
     

Accordingly, I award interest at the rate of 4% from 23rd November 2005 to the end of 2011, as he was employed in 2012.

Conclusion

24. In conclusion, I find that the three defendants are liable for breach of contract of employment of the plaintiff. In particular the second and third defendants are jointly and severally liable to the plaintiff. I would therefore enter judgment for the plaintiff against the first, second and the third defendants, jointly and severally.
    
25. I would award the plaintiff the following:
    1. General damages for distress, anxiety etc.. K 5,000.00
    2. Special damages K117,418.13
    3. Interest K 29,899.76

Grand Total of K153, 317.89

26. The defendants shall pay the plaintiff's taxed costs.
    
27. I make the following Orders:
    
    1. That judgment is entered for the Plaintiff against the defendants jointly and severally in the Total sum of K153,317.89, inclusive of interest, and
       
    2. The defendants shall jointly and severally pay the plaintiff's taxed costs.
       

_____________________________________________________
Public Solicitor Lawyers: Lawyer for the Plaintiff
Warner Shand Lawyers: Lawyer for the Defendant: