Hides Gas Development Co Ltd v Lemako [2017] PGNC 180; N6844 (16 August 2017)

N6844

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]
CIA NO. 82 OF 2015

BETWEEN:
HIDES GAS DEVELOPMENT COMPANY LIMITED
First Appellant

AND
THE MANAGER HIDES GAS LIMITED
Second Appellant

AND
TIMOTHY LEMAKO
Respondent

Tari: Ipang, J
2016: 28^th September
2017: 27^th April, 16^th August

LAW OF EMPLOYMENT – Termination of Contract without notice – Two Employment contracts signed – second contract signed after service – whether the Respondent is entitled to damages and damages is restricted to notice period.

Cases Cited:

Mathies v. Kimber Bay Shipping Agencies Ltd [2009] PGNC 257; N3832
(31 December, 2009)
Motor Vehicle Insurance Ltd v. Kol [2007] PGSC 38; SC902
(28 November, 2007)
Sukuramu v. New Britain Oil Ltd 2007 [2007] PGNC 21; N3124
(16 February, 2007)

Counsel:

M. T. Ipape, for the Appellants
A. Benny, for the Respondent

APPEAL

16^th August, 2017

1. IPANG, J: This is an appeal against whole of the decision of the Tari District Court dated 6^th July, 2014 whereby the said District Court ordered the Appellants to reinstate the Respondent in this current proceeding to his former position as soon as practicable and further ordered that the said Respondent be paid his unpaid wages and allowances and be backdated to the date of his unlawful termination.
   
2. The appellants being aggrieved by the District Court’s ex-parte orders of 6^th July, 2014 filed this appeal. The Notice of Appeal filed on the 3^rd of August, 2015 contained 14 grounds altogether which can be summarised as follows;
   
   1. Whether the appellants are entitled to and were accorded the principles of natural justice by being accorded the opportunity to be heard when conducting the ex parte hearing on the 6^th of July, 2014.
      
   2. Whether the District Court erred in ordering the Respondent’s reinstatement.
      
   3. Whether the District Court erred in ordering the Appellant to pay the Respondent his unpaid wages and allowance backdated to the date of his unlawful termination.
      
   4. Whether the Respondent was terminated in accordance with his contract of employment.
      

Brief Background

3. The appellants Hides Gas Development Company Ltd and the Manager – Hides Gas Development Company Ltd which will be referred to as “appellants” are predominantly a labour hire company recruiting and providing labour to the PNG LNG Project as and when requested by the project and its contractors.
   
4. The respondent executed a Contract of Employment with the First appellant on or about 2 March, 2013 for the position of Light Vehicle Driver with the contractor EHL Business Development Support, part of Exxon Mobil PNG Limited formerly known as Esso Highlands Ltd. This contract as claimed by the appellants came to an end on or about early March, 2014.
   
5. The second Contract of Employment or new contract with the First Appellant was executed on or about 15^th March, 2014 almost a year after the first Contract of Employment was executed.
   
6. The terms and conditions of these two (2) respective Contracts of Employment between the First Appellant and the Respondent were the same except the contractors were different. Under the point # 4 of the “Period and Location of Employment” clause of the second Contract of Employment, the Respondent was on “Probation for 3 months”. Under the Salary or Wage clause of the second Contract of Employment, the First Appellant engaged the Respondent “under terms, conditions and rate of pay nominated by the company and HGDC will only vary these conditions under instructions from the company”. The Respondent was to be paid as follows;
   
   1. Base Rate – K5.00 per hour
   2. Time and Half – K7.50 per hour
   3. Double Time – K10.00 per hour
      
7. The “Termination Clause” of the second Contract of Employment states that the Agreement would be terminated on the following but not limited to the following grounds;
   
   1. The Company or HGDC no longer requires your service;
   2. Breach or reported breach of applicable HGDC Policies or “Golden Rules”;
   3. Breach or repeated breach of Policies or Golden Rules of the Company;
   4. Non-compliance with overall project rules and regulations;
   5. Wilful disobedience of a lawful and reasonable direction;
   6. Employee commits misconducts by an act or omission or commission that is inconsistent with the due and faithful discharge of his duties;
   7. Is guilty of fraud or dishonesty;
   8. Is habitually neglectful of his duties;
   9. Is imprisoned for a period exceeding seven days;
   10. Is continually absent from his employment without leave or reasonable excuse;
   11. Is convicted of an offence or breach of the Employment Act 1979 or any other law relating to employment;
   12. Notice of payment in lieu of Notice, shall be provided in accordance with the Employment Act 1979.
   13. Payment in lieu of notice shall be calculated and paid in accordance with the Employment Act 1979.
       
8. The respondent continued to provide his service to the First Appellant under the second Contract of Employment until on or about 28^th April, 2014 Mathew Dyer, the Transport Manager of Nabors Drilling verbally notified the Respondent that there was an allegation against him for issuing threats against other company employees at the workplace. Respondent was therefore told to stay back home for two (2) days and report to the First Appellant’s office. The Respondent complied and stayed away for two (2) days.
   
9. After lapsed of the two (2) days the Respondent went to check with the First Appellant’s office and was told that he was terminated upon Mathew Dyer’s Termination Payroll advice on or about 28^th April, 2014.
   

District Court Proceedings

10. After finding out that he was terminated, the Respondent commenced proceedings in the District Court on the grounds of unlawful termination. He sued his former supervisor and two (2) others in Complaint No. 59 of 2014; Timothy Lemako v. Mathew Dyer, Gerry Portar and Doreen Aliawi. This proceeding was dismissed.
    
11. The Respondent then commenced another proceedings on the 20^th October, 2014 in DC No. 63 of 2014 Timothy Lemako v. Hides Gas Development Company Ltd. In this proceeding the Respondent claimed for reinstatement and for unpaid wages and allowances backdated to the date of his unlawful termination.
    
12. On the 4^th November, 2014 the Appellants filed their Notice of Intention to Defend and their Defence. On the same date, Mr. Ipape the in-house lawyer for the appellants made an oral application to remove the second appellant from the proceedings however, the application was refused. The Court directed the parties to file and serve further affidavits to be relied on. Appellants Defence was that the Respondent was terminated for a cause. The hearing was set for 14^th November, 2014.
    
13. The appellants complied by filing the Affidavit of Haddrick Sakopa on the 14^th November, 2014. The Respondent filed his Affidavit on the 11^th June, 2015 but have not served copies to the appellants (Refer pages 140-156 of the Appeal Book).
    
14. On the 12^th May, 2015 the Clerk of Court issued a letter advising that the matter will be mentioned on 20^th May, 2015 at 9:30AM (Refer page 71 of the Appeal Book). On the 25^th May, 2015 the matter was set for hearing on the 6^th July, 2015 by Magistrate Vincent Eralia. The notice of hearing on the 6^th July, 2015 was posted on the Tari District Court’s Notice Board. The Notice of hearing was not served on the appellants thus the appellants made no appearance (Refer to p.119 of the Appeal Book).
    
15. On the 6^th July, 2015 Magistrate Eralia heard the matter ex parte and made the following ruling and orders (Refer to pages 67-69 of the Appeal Book);
    
    1. “The Defendant Company (HGDC) is hereby ordered to reinstate the complainant to his former position as soon as that is practicable and furthermore order that he be paid his unpaid wages and allowances backdated to the date of his unlawful termination”.
       
16. Being aggrieved by the decision of the District Court, the Appellants filed an appeal before the National Court. The grounds of appeal is contained in the Notice of Appeal and can be summarised into the following issues;
    
    1. Whether Respondent was wrongfully terminated.
    2. Whether Respondent was still within his probation period when he was terminated.
    3. Whether the District Court erred in ordering the Respondent’s reinstatement.
    4. Whether District Court erred in ordering the appellants to pay the respondent his wages and allowances backdated to the date of unlawful termination.
    5. Whether the amount of damages is restricted to the notice period.
       
17. Let me address each of the issues raised:
    

Whether the Respondent was terminated within his probation period.

18. From the facts, it was revealed that the Respondent executed a contract of Employment (First Contract) with the First Appellant on or about 2^nd March, 2013 for the position of a Light Weight Driver with the Contractor EHL Business Development Support. On the 28^th April, 2015 the Respondent was terminated. Before he was terminated, he signed a second contract of employment with the First Appellant on the 15^th March, 2014 for the position of Light Vehicle Driver with Nabors/EHL Transport. He would have been employed with EHL Business Development Support for a little over a year before signing a new contract. The three (3) months’ probation commenced on the 15^th March, 2014 when the Respondent signed a new contract. The contract signed on the 2^nd March, 2013 cannot run through and be terminated on the 28^th April, 2015, as the Respondent signed a new contract on the 15^th March, 2014 formally ending the first contract he signed. The respondent was one (1) month 13 days into his new contract when he was terminated thus within the three (3) months’ probation period.
    

Whether the Respondent was wrongfully terminated

19. In Pama Anio v. Aho Baliko (2004) N2719 Kandakasi, J made this remark and I quote “the lawfulness or unlawfulness of termination of an employment contract is usually depends on the terms of the contract. When the contract is silent, the issue turns on the Employment Act, in all cases except where other specific legislation applies.”
    
20. Under the termination clause of the contract that the Respondent signed, it contained two (2) special notes;
    
    1. Notice or payment in lieu of notice, shall be provided with the Employment Act.
    2. Payment in lieu of notice shall be calculated and paid in accordance with the Employment Act 1979.
       
21. The termination clause of the contract as stated above is in line with section 34 of the Employment Act 1979. Section 34 provides;
    

“34. NOTICE OF TERMINATION

(1) This section does not apply to a written contract of service for the first two years of operation of the contract unless the parties to the contract agrees otherwise.

(2) Subject to this Act, a party to a contract of service may, at any time, give notice to the other party of his intention to terminate the contract.

(3) The length of notice of intention required to terminate a contract of service shall be the same for both parties and –

• (a) shall be as specified in the contract; or
• (b) shall be not less than the periods specified in Subsection
  

(4) 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.

(5) Notice of termination shall be given –

• (1) in the case of a contract of service referred to in Section 19 (a) – in writing; and
• (2) in the case of any other contract of service – either orally or in writing, and the day on which the notice is given shall be included in the period of notice.”
  

22. In the Supreme Court case of New Britain Oil Palm Ltd & Ors v.. Vitus Sukuramu (2008) SC 946 the court held that an employer has the right to terminate at any time, following the procedures set out in the contract or statute. If the employer fails to follow the procedure, the employee is entitled to receive what he would have received if the employer had followed the procedure.
    
23. This basically means that the Respondent would be entitled to receive what he would have received if he had been properly terminated with notice i.e. the appropriate amount of payment in lieu of notice.
    
24. In my view, the Respondent was not terminated in accordance with his terms of his contract of Employment and the Employment Act 1979. Under the Contract of Employment the Respondent signed, there was no length of notice so the Employment Act 1979 applies. The Respondent argued that s.34(3) (c) of this Act would apply where the length of notice shall not be less than two weeks’ notice if the employee has been employed for not less than a year and for less than five years. The Respondent relied on s.60 of the Employment Act 1979 especially s.60(1) (a) and I quote;
    

“CONTINUITY OF SERVICE

(1) The continuity of service of an employee shall not be affected by –

• (a) a transfer of a contract of employment from one employee to another under section 25;
  

25. The Respondent signed the first Contract of Employment on the 2^nd March, 2013 with EHL Business Development Support. He signed a second Contract of Employment with Nabors/EHL Transport on the 15^th March, 2014. On the 28^th April, 2015 he was terminated which means he was one (1) month, 13 days into his second contract when he was terminated. In my view, s.60 (1) (a) of the Employment Act 1979, would not apply to the Respondent as he was not on transfer to another employer. In my view, s.34(3) (b) of the Employment Act 1979, would apply for the Respondent where the notice period would require one week’s notice if the employee has been employed for not less than four weeks and not less than one year.
    

District Court Order of Reinstatement

26. The District Court committed an error in law when it ordered for the reinstatement of the Respondent to his substantiate position as reinstatement is not a right or a remedy readily available. In Ayleen Bure & Others v. Robert Kapo (2005) N2902, Robert Kapo was a PJV employee. On the field break in Port Moresby, he was stopped from boarding the return flight to Pogera as he was allegedly intoxicated at the check in. the incident was reported to his employer which sacked him the next day without giving him a right to be heard. He brought a wrongful dismissal action in the District Court and won an order for reinstatement and back payment. On appeal by his employer PJV to the National Court, Injia, DCJ (as he then was) held that the District Court had erred by ordering reinstatement.
    
27. The traditional rationale is that the Courts will not force parties in a “personal relationship” to continue in the relationship against the will of one of the parties. The other consideration in refusing to order specific performance are the loss of trust and confidence between the parties in cases of wrongful termination. Traditionally, the courts have been very reluctant to order reinstatement of employment contracts, particularly where the employer has dismissed an employee. However, this rule is not inflexible. In “special or exceptional” circumstances, a court may order specific performance of a contract for personal services: See Trancis v. Municipal Counselors of Kuala Lumpar [1963] 3A11.ER 633. The present case does not fall under “Special or Exceptional” circumstances.
    
28. In the final analysis, the Respondent was terminated without proper notice as required under the Employment Act 1979. As explained he is entitled to one week notice or pay in lieu of notice which is K425.00. The appeal is upheld in part and all other Ex parte orders of the District Court dated 6^th July, 2015 are quashed.
    

Order

1. Judgement is entered for the Respondent for the sum K425.00 being for one week notice or pay in lieu of notice plus interest at 8% per annum under the Judicial Proceedings (Interest on (Debit and Damages) Act 1952 and costs of the proceedings at District Court. Costs to be agreed if not to be taxed.
2. The rest of the Ex parte orders of the District Court dated 6^th July, 2015 are dismissed. The Respondent are to meet the Appellants costs of the proceedings before the National Court to be taxed if not agreed.

________________________________________________________________

In House Lawyer : Lawyers for the Appellant

R. Mai : Lawyers for the Respondent