Piokole v Logona [2017] PGNC 79; N6713 (21 April 2017)

N6713

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 6 of 2016

BETWEEN
CLARK PIOKOLE
First Plaintiff

AND

PNG NATIONAL AIRLINE PILOTS UNION

Second Plaintiff

AND

AIRLINE PILOTS ASSOCIATION

Third Plaintiff

BETWEEN

REI LOGONA

First Defendant

AND

AIR NIUGINI LIMITED

Second Defendant

Waigani: Kandakasi, J.

2017: 1^st - 3^rd February, 21^stApril

CONTRACT LAW – Employment contract - Essential elements of a contract – Employer requiring employees to sign individual contracts to replace industry based agreements – Employer not meaningful involving the employees’ unions – No meaningful negotiation leading to clear offers and acceptances - No real and meaningful opportunity given to employees to seek legal advice before signing contracts - Effect of – Void and unenforceable contract.

EMPLOYMENT LAW – Employment under industry based agreement – Terms of – Agreement to continue to govern relationships between the parties until parties negotiate and mutually arrive at new agreement – Parties failing to do so – Employer producing individual employment contracts on terms less better than existing agreements – No input and free acceptance of the terms of the new contract by employees or their respective unions – Employees given no real and meaningful opportunity to seek legal advice and consider terms of contract before signing – Some employees refusing to sign new contracts while others signed under protest and pressure to avoid financial and other hardships – Effect of - New contract not legally binding and unenforceable – Existing contract continuing to run until all the parties enter into meaningful negotiations and mutually arrive at a new agreement.

INDUSTRIAL LAW – History and importance of trade union movements – An employee’s right to be a member of a union – Purpose of – Collective bargaining and collective agreement – Employers precluded from approaching employees who a members of a union individually and separately except only through their union - Correct way to legally depart from or terminate an industry based collective agreement – According to the terms of the existing agreements or by mutual agreement of the parties – Sections 47 and 48 (2) of the Constitution - Sections 63 of Industrial Organisations Act (Chp. 173) and Industrial Relations Act (Chp.174)

Papua New Guinea Cases cited:

Awesa v. PNG Power Limited (2016) N6359.
Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705.
Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441.
John Manau v. Telikom (PNG) Ltd (2008) N3268.
KK Kingston Ltd v. Moere (2002) N2235.
Martin Kenehe v. Allan Jogioba (2008) N4025.
NCDC v. Yama Security Services Pty Ltd (2003) SC707;
NCD Commission v. Yama Security Services (2005) SC835.
Rage Augerea v. The Bank South Pacific Ltd (2007) SC869
Rimbink Pato v. Ruben Kaiulo, Electoral Commissioner of Papua New Guinea and Miki Kaeko & Ors (2003) N2455.
Spirit Haus Ltd v. Robert Marshall (2004) N2630.
Tian Chen Limited v. The Tower Limited (N0.2) (2003) N2319.
Taru v. Pacific MMI Insurance Ltd (2016) N6305.

Overseas Cases Cited:

Aviation and Marine Engineers Association Inc v. Air New Zealand Ltd [2013] NZEmpC 172.
Hillas (W.N.) and Co. Ltd v. Arcos Ltd ([1932] UKHL 2; 1932) 38 Com. Cas 23.
Hines v. Anchor Motor Freight, Inc., [1976] USSC 29; 424 U.S. 554, 571 (1976).
Investors Compensation Scheme Ltd v. West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 (HR).
Mariner”; Andrey Kharitnov & Ors v. United Trust Co of New York [1997] FCA 909.
Smith v. Evening News Association [1962] USSC 177; 371 US 195 (1962).
Silver Fern Farms Ltd v. New Zealand Meatworks and Related Trade Unions Inc. [2010] NZSC 5; [2010] ERNZ 317.
Scammel & Nephew Ltd v. Ouston [1941] AC 25.
Silver Fern Farms Ltd v. New Zealand Meatworks and Related Trade Unions Inc. [2010] NZSC 5; [2010] ERNZ 317.
Textile Workers Union v. Lincoln Mills [1957] USSC 67; 353 U.S. 448 (1957).
United Group Railway Services Limited v. Rail Corporation New South Wales [2 United Steelworkers v. American Mfg. Co., 363 U.S. 564,570 (1960).
United Steelworkers v. Warrior & Gulf Navigation Co., [1960] USSC 109; 363 U.S. 574, 578 (1960).
United States Trust Co of New York v. Master & Crew of the Ship “Ionian 009] NSWCA 177.
Vector Gas Ltd v. Bay of Plenty Energy Ltd [2010] NZSC5.
Walford v. Miles [1992] 1 All ER 453.
York Air Conditioning and Refrigeration (Asia) Pty Ltd v. Commonwealth [1949] HCA 23; (1949) 80 CLR 11.Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 CLR 429.

Other Sources Cited:

Chitty on Contracts 24^th edition at pages 700-701.
9 Halsbury’s Laws, 4^th Edn, at para 297.
Fleming, The Law of Tort, 6^th Edn, page 659.
J. Galbraith, American Capitalism: The Concept of Countervailing Power 115 (1956)
R. Gorman, Basic Text on Labor Law 296 (1976).
Cox, The Duty to Bargain in Good Faith, 71 HARV. L. REV. 1401, 1407 (1958).
Dunau, Employee Participation in the Grievance Aspect of Collective Bargaining, 50 Colum. L. Z. Rev. 731, 735 (1950).
Wellington, The Constitution, The Labor Union, and “Governmental Action,” 70 YALE L.J. 345, 364 (1961).
Cox, The Duty of Fair Representation, 2 VILL. L. Rnv. 151, 152 (1957);
Givens, Federal Protection of Employee Rights Within Trade Unions, 29 FORDHAM L. REV. 259, 273 (1960).
Shulman, Reason, Contract, and Law in Labor Relations, 68 HARV. L. REV. 999, 1002-04 (1955).
Summers, Judicial Review of Labor Arbitration or Alice Through the Looking Glass, 2 BUFALO L. REV. 1, 24 (1952).

Counsel:

M.Murray,O. Dekasand D. Siminji, for the Plaintiffs
I.Molloy and F.Matiabe, for the Defendants

21^stApril, 2017

1. KANDAKASI J: Air Niugini Limited (the Airline), had two identical industry based agreements reached in 2012 (the 2012 Agreements) with the unions, the PNG National Airline Pilots Union (NAPU) and Airline Pilots Association (APA). Individual pilots who are members of the unions became parties to these agreements through each signing separate execution clauses with their own expiry dates. Before the agreements expired, the Airline sought and managed to have individual contracts which became known as 2015 Contracts signed by as late as 31^st December 2014 by some pilots without any prior negotiation and mutual agreement of parties and to the exclusion of the unions. Of the pilots who signed, some claim they did so under duress or force because they were not given any choice but to sign the Contracts to avoid financial and other hardships. Other pilots like the plaintiff, Clark Piokole (Piokole) refused to sign the 2015 Contracts. The Plaintiffs argue that, the2012 Agreements remains current upon a reading together of their execution clauses and the 2012 Agreements until they are replaced by agreements that are properly negotiated and mutually arrived at. On the other hand, the Airline argues, the 2015 Contracts were freely accepted by the pilots and these contracts validly replaced the 2012 Agreements upon the latter’s expiry.

The Relevant Issues

2. Per a statement of agreed and disputed facts and issues for trial, the parties agreed that the following are the relevant issues:

(1) Whether the 2012 Agreements between Air Niugini Ltd and NAPU and APA expired on 31^st December 2014 and as such was lawfully superseded by the individual 2015 Contracts?

(2) Whether the failure to sign the 2015 Contracts was an act of repudiation by the respective pilots?

(3) Whether the failure and or refusal by Air Niugini Ltd to employ the ‘Cadet Pilots’ by way of execution clauses under the 2012 Agreement for NAPU was discriminatory in employment practice.

3. At the trial, it became clearer that there are a number of other issues. These will be stated and dealt with as subsidiary issues to the first issue.

Expiration of 2012 Agreements and replacement by 2015 Contracts?

(i) What did the parties agree upon?

4. Turning firstly to the first main issue, I note there are two parts to the issue. The first is the question of, did the 2012 Agreements expiring on 31^st December 2014. The second concerns the question of did the 2015 Contracts properly and legally superseded the 2012 Agreements on their expiry.

5. Clause 2.1 of the 2012 Agreement with NAPU and clause 2.3.1 of the 2012 Agreement with APA (the termination and replacement clauses) are relevant. These provisions read respectively as follows:

[Clause 2.1 of 2012 Agreement with NAPU]

“Subject to the conditions in Appendix B, this agreement supersedes all previous agreements and awards and shall operate from the 1^st of January 2012 for a period of 3 years or until amended or superseded by mutual agreement of both parties. A new agreement should be negotiated in the six (6) months prior to the expiration of this agreement. Should this not occur before the expiration of this agreement, the provisions of this agreement will remain in force until such time as a new agreement is reached and the improvements contained in the new agreement, shall be mutually agreed by the employer and employee to be backdated.” (Underlining mine)

[Clause 2.3.1 of 2012 Agreement with APA]

“This Agreement supersedes all previous Agreements and shall be effective on the date of signing of the Execution Clause and operate until the 1^st day of January 2015 or until amended or superseded by mutual agreement of both parties. A new Agreement shall be negotiated in the six (6) months prior to the expiration of this Agreement, should this not occur before the expiration of this Agreement the provisions of this Agreement will remain in force until such time as a new Agreement is reached and the improvements contained in the new Agreement shall be backdated to the expiry of this Agreement.” (Underlining mine)

6. These provisions require proper interpretation or construction to resolve the issues presented. The principles governing interpretation of contractual provisions are trite and well settled in our jurisdiction. In Tian Chen Limited v. The Tower Limited (N0.2)^[1]I stated a“... classic statement on the construction of the terms of a contract is in Chitty on Contracts, 24^th edition at pages 700-701. Relevantly:

“The object of all construction of the terms of a written agreement is to discover there from the intention of the parties to the agreement...the cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand. That is to say, the meaning of the document or of a particular part of it is to be sought in the document itself: ‘One must consider the meaning of the words used, not what one may guess to be the intention of the parties.’”

7. I then discussed and followed the law as it developed from earlier English decisions as in the case of Hillas (W.N.) and Co. Ltd v. Arcos Ltd^[2] by their Lordships Tomlin, Warrington and Macmillan. I also had regard to the separate but similar decisions of Viscount Simon LC and Viscount Maugham in Scammel & Nephew Ltd v. Ouston.^[3]Further, I had regard to the Australian decisions in York Air Conditioning and Refrigeration (Asia) Pty Ltd v. Commonwealth^[4]and Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd^[5]by the Australian High Court.

8. After a careful consideration of the development of the law in the way noted above, I concluded in Tian Chen Limited v. The Tower Limited (supra) at pages 20 – 21 that:

“It is clear from these authorities that, it is the duty of the Court to uphold the agreement of the parties regardless of whatever difficulties there might be in the construction of their contract. In the exercise of that duty, the Courts must endeavour to uphold the agreement of the parties, particularly in commercial arrangements. This is because the Courts are not there to destroy the agreement of parties but to uphold them. This should readily be the case where the parties have not only agreed but have gone further into implementing their agreement resulting in expenses being incurred by either or both of the parties. In so doing, the Courts can and have ignored words or clause that are meaningless or superfluous (Nicolene v. Simmonds (1953) 1 QB 543) and supply terms or words as appear reasonable and necessary in the circumstances to give effect to the parties agreement.”

9. The Supreme Court in Fly River Provincial Government v Pioneer Health Services Ltd,^[6] effectively endorsed this discussion and statement of the law and applied them to the case before it in favour of a contract despite being met with some uncertainties.

10. The Airline through its learned counsel refers to some of the authorities and the principles discussed above and argues that, the termination and replacement clause was only an agreement to agree and as such they are unenforceable. Reliance is also placed on the House of Lords decision in the case of Walford v Miles,^[7] which provides the reason why such contracts are not enforceable. The reason is simply that, such a provision “lacks the necessary certainty”. Reliance is also placed on other decisions including my decision in Awesa v PNG Power Limited^[8]and other overseas decisions like the one in United Group Railway Services Limited v. Rail Corporation New South Wales^[9]to say the agreement in terms of the provisions under consideration here are akin to an order for mediation which does nothing more than encourage parties to resolve their disputes through negotiations and agreements using the mediation process.

11. Further, the Airline argues the termination and replacement clause:

(1) Does not say the terms of the agreement will be extended. But is very similar to a lease agreement in which the parties agree that any holding over beyond the expiration of the agreed term will be on the same terms until new terms are agreed upon but with no right to remain beyond the agreed term;^[10]

(2) Does not impose any obligation on the Airline to employ a particular pilot, or any obligation on the pilots to remain in its employment, beyond the expiration date for the 2012 Agreements;^[11]

(3) The plaintiffs have only been able to show disagreement on the extent and nature of the negotiations but have not alleged any particular breach; and

(4) The arguments around the provision in question are academic because the 2012 Agreements were lawfully terminated on their agreed termination dates.

12. There are two parts to understanding the termination and replacement clauses. The first part is to ascertain what the parties provided for by reference to the words the parties employed in these provisions. The second part concerns the parties complying with or giving effect to what they agreed to. Turning to the first part first, the relevant parts of the parties’ agreement is set out in paragraph 5 above. A careful and close reading of these provisions clearly reveal that the words employed by the parties are so plain and very clear so much so that they leave no room for any art of interpretation to apply. These provisions clearly provide that, the 2012 Agreements:

(1) supersede all previous Agreements;

(2) are effective on the date of the signing of the Execution Clauses (for the NAPU Agreement);

(3) commence from 1^st January 2012 until 1^st January 2015or as amended or superseded by mutual agreement of both parties;

(4) shall be replaced by new agreements negotiated within six (6) months prior to their expiry;

(5) will continue to operate until the parties arrive at new replacement agreements or contracts by their mutual agreement; and

(6) will be improved upon with the improved terms being incorporated into the new Agreements and back dated to the date of the expiry of 2012 Agreements.

13. As far as I can see, if there is any uncertainty, it is between items (2) and (3) and more so in the phrase “or until amended or superseded by” when read against item 2. The Airline’s position is that the use of the first “or” word in item 3 empowers it to enter into individual contracts with each of the pilots prior to the expiry of the 2012 Agreements. The First Defendant, Rei Logona (Logona) who is part of the Airline’s management as its human resources general manager emphasized this in the witness box when he took the stand. Further, the Airline argues that once the 2012 Agreements expired,the pilots could only be retained or continued to be employed in accordance with the terms of the 2015 Contracts, which the Airline was entitled to enter into with willing pilots.

14. I am not persuaded by the Airline’s arguments. In my view, the provisions under consideration clearly provide for the matters I set out above in paragraph 12 and more and beyond what a holding over provision in a lease agreement does. These provisions do more than simply provide for the parties to negotiate and or otherwise enter into a new agreement on the expiry of the 2012 Agreements. They do that and additionally say that the 2012 Agreements will expire on the last day of December 2014, whilst at the same time provide for execution clause which in practice had expiry dates beyond 31^stDecember 2014 as in the case of Piokole and some of the other pilots’ respective execution clauses. This seem to accord well with the parties further agreement with the use of the word “or” to enable the parties to agree to have the expiry date amended or the Agreements to be “superseded by mutual agreement of both parties”. The parties also agreed that the replacement agreements or the agreements to supersede the 2012 Agreements had to be negotiated and agreed upon or arrived at by their mutual agreement within six (6) months prior to their expiry date of 31^st December 2014. Most importantly, the parties additionally agreed that, if they fail to reach a replacement or superseding agreement by their “mutual agreement”, “the provisions of this Agreement remain in force until such time as a new Agreement is reached.”These provisions clearly address the terms and conditions on which the parties where to continue in the relationship pending a replacement or superseding agreement arrived at by the “mutual agreement of both parties”. Contrary to the Airline’s argument, explicit in the phrase “the provisions of this Agreement will remain in force” is a clear agreement of the parties that the terms of the 2012 Agreement would be extended and continue to apply until new agreements superseding the 2012 Agreements were arrived at by the “mutual agreement of both parties”. For the Airline to say there was no agreement to extend the terms of the 2012 Agreements is really asking for an indulgence in what can colloquially be expressed as “splitting hairs”. If it was as is argued for by the Airline, it renders the parties agreement useless and or otherwise allow for a rewrite of their agreement to say only the expiry date is extended but not the terms of the Agreement. Rewriting an agreement of the parties is not the role of the Court. The Court’s duty is to uphold the free agreement of parties, regardless of however poorly drafted the agreement might be. Here the parties clearly agreed that unless they mutually arrive at new agreements to replace the 2012 Agreements, those agreements were to “remain in force until such time as a new Agreement is reached.” The parties even agreed by the use of the phrase, “improvements contained in the new Agreement shall be backdated to the expiry of this Agreement” that the new Agreements will contain improved terms and conditions compared to the 2012 Agreements which would be backdated to the date of the expiry of the 2012 Agreements.

15. Proceeding on the basis of the above, the answer to the first part of the first main issue is, yes, the 2012 Agreements were to expire on 31^st December 2014. But as noted, part of the termination and replacement clause also provide that the Agreements “shall be effective on the date of signing of the Execution Clause” for the NAPU Agreement. During the trial, the Plaintiffs placed some emphasis on the execution clause signed by each of the pilots who a members of the two unions. Samples of such clause are annexures “A” respectively to the affidavits of Captain Lopa, exhibit “P8” and Captain Daniels, exhibit “P9” and the second annexure “D” to Piokole’s affidavit, exhibit “P10”. Captain Lopa’s execution clause speaks of the contract commencing on 08/01/2013 and completing on 07/01/2016, while Captain Daniels speaks of the contract commencing on 16/08/2014 and completing on 15/08/2017. Piokole executed an earlier execution clause that expired on 31/08/14 and was extended by annexure “D” to his affidavit which speaks of its commencement date as 01/09/2014 and completing on 31/08/2017. From annexure “D” to Piokole’s affidavit, it is obvious that the Airline decided to employ Piokole and other pilots beyond 31^st December 2014, on the same terms and conditions as the 2012 Agreements. Reading the execution clause alone would appear odd but when the termination and replacement clauses are read as a whole, the execution clauses are within the terms of the Agreement for the parties to amend the 2012 Agreements. This is apparent from the words employed by the Airline in that annexure. The annexure is a memorandum from the Airline under the hand of Logona dated 27^th February 2014 to Piokole. The relevant part of that memorandum is the fifth paragraph which is in the following terms:

“All other terms and conditions of employment are as set out in the National Non Cadet Pilots Agreement 2012.”

16. Clearly by its own conduct the Airline was happy to extend the application of the terms of the 2012 Agreements well past 31^st December 2014 and the pilots accepted that when each of them executed their respective execution clauses which had expiry dates past 31^st December 2014. It is also clear by the evidence before the Court that the Airline by its conduct incorporated execution clauses into the NAPU Agreement. It is therefore fair to infer that, both the Airline and the pilots by their conduct agreed to extend the operation of the 2012 Agreements to each of the dates stated in each of the pilots’ respective execution clauses. All of these were in turn based on the 2012 Agreements and in particular, the termination and replacement clauses. Items 2 and 3 of my restatement at paragraph 12and discussed in paragraph 14above of what the parties agreed to in the termination and replacement clause now makes sense. Ultimately, the answer to the first part of the question in the first issue is this. The parties agreed that the 2012 Agreements would expire on 31^st December 2014, but, that was subject to a termination or completion date specified in the respective pilots’ execution clauses executed by the Airline and each of the pilots. Applying this for instances to Captains Piokole, Lopa and Daniels’ case, their agreed respective contracts’ expiry dates are 07^th January 2016, 15^th August 2017 and 31^st August 2017. Each of the other affected pilots’ execution clauses would have to be examined to ascertain their respective expiry dates. In any case, all of the execution clauses are based on the 2012 Agreements which have the overriding condition that, they will continue to apply until the parties by mutual agreement arrive at a replacement or superseding agreement. What this means in my humble view is this. Even though the agreed expiry date of 31^st December 2014 and other dates beyond that per the various execution clauses with the pilots and the Airline may have come and gone, the parties by their own agreement and conduct agreed to the 2012 Agreements continuing to run until they can replace them by their mutual agreement.

17. This now leaves me to deal with the second part of the first main issue. The relevant question here is, was the 2012 Agreement lawfully superseded by the individual 2015 Contracts? An answer to that question is dependent on the following two questions:

(1) Did the parties make any provision in their agreement as to what will become of their contractual relationship after the expiry of the 2012 Agreement?

(2) If the answer to (1) is yes, did the parties comply with the terms of their agreement and therefore lawfully arrived at the 2015 Contracts?

18. The answer to the first question is an obvious “yes”. The relevant provisions are the termination and replacement clauses of the respective Agreements. The foregoing discussions clearly reveal and indicate what the parties provided for and their effect. This leaves only the question of whether the parties fully complied with the terms of their agreement, yet to be determined. I turn to that question now.

(ii) Did the parties lawfully arrived at the 2015 Contracts?

19. As already noted, the parties agreed to either amend the expiry date or have the Agreements superseded by mutual agreement and failing or pending such an agreement, the 2012 Agreements were to continue to operate. Obviously, and as noted already again, by this, the parties agreed to extend the expiry date until they arrived at a new agreement superseding the 2012 Agreement by their “mutual agreement”. The relevant negotiations for the new superseding agreement were to commence six months prior to the expiry date, being 31^st December 2014. The question then becomes, did the parties enter into such negotiations within the agreed period and arrived at the 2015 Contracts by mutual agreement?

20. The evidence from the Plaintiffs are clear. Captain Paul Andrews’ the first witness for the Plaintiffs’ evidence is relevant here. He has been with the Airline for 20 years and is a captain on the Airline’s Fokker 100 fleet of aircrafts. He speaks of attempts made by the parties to negotiate a new agreement to replace the 2012 Agreements. This process commenced with the representatives of APA and NAPU and the Airline meeting on 29^th July 2014 to sort out timetables for negotiations to commence and conclude. On 30^th July 2014, APA provided names of the negotiating team for APA which the Airline acknowledged. Various other dates were either suggested or schedule from 9^th August 2014 to 29^th October 2014 for the negotiations but no negotiations took place. They were all either, deferred or cancelled on the Airlines account. The only exceptions to that were meetings on 9^thand 30^th August and 21^st September 2014, at which the Airline informed APA and NAPU representatives of its decision to reduce expatriate pilots and otherwise bring about major changes in the light of the economic downturn it was facing. On 29^th October 2014, the Airline presented the individual 2015 Contracts and effectively told the pilots to sign the contracts by 1^st December 2014 or fail to sign and they will be considered no longer wanting to continue employment with the Airline. Most of the pilots did not sign by that date. As the end of December 2014 drew nearer, the Airline tried to get as many of the pilots to sign the contracts by or before 31^st December 2014, to the exclusion of the unions. Toward that end, the Airline came up with two classes of contracts, Scale “A” for pilots signing by 31^st December 2014 and Scale “B” for those signing after 31^st December 2014. Comparing the two scales, Scale “A” had terms better then Scale “B” contracts. Captain Andrews signed the individual 2015 Contract on 31^st December 2014 to get on the Scale “A” contract and to avoid losing his job which could have meant a lot of serious adverse consequences in terms of difficulty in his mortgage payments and other hardships.

21. It is this witnesses’ suggestion and indeed it is the submissions of the Plaintiffs that, there were no meaningful negotiations at which the terms of the 2015 Contract were proposed by the Airline and the Plaintiffs considered them on their merits, followed by meaningful discussions resulting eventually in a mutual agreement of the parties, which is now embodied in the 2015 Contracts. The Plaintiffs’ other witnesses, Piokole and Captain Joseph Kumasi, who is the vice president of NAPU, gave evidence similar to that of Andrews especially in respect of that witness’ suggestion of no meaningful negotiations and mutual agreement being arrived at and that being embodied in the 2015 Contracts. The other witnesses for the plaintiffs’ evidence added the following:

(1) a large number of pilots resigned even after their signing the 2015 Contracts as the terms were poor;

(2) the terms of the contract were not explained to them and they were not given the opportunity to seek legal advice before signing;

(3) Captain Kumasi meet with the chief executive officer of the Airline Mr. Foo in Singapore on 15^th December 2014,which was not a contract negotiation but was for the Airline’s wish to see the Captain sign the 2015 Contract. That the witness eventually did under what he described as “duress” and confirmed that by letter dated 29^th December 2014;^[12]

(4) In the past, the Airline had always negotiated through APA and NAPU represented by their respective presidents, secretaries and treasurers. The negotiations would result in contracts between the Airline and its pilots on terms mutually discussed and agreed upon. Further, in the past, pilots involved in the negotiations would be rostered off from duties to give them time to attend to the negotiations, and arrive at agreements by mutual agreement. This was not done for the 2015 Contracts;

(5) If there were any meaningful negotiations between the Airline and the pilots through their unions or directly, they could have understood the Airline’s position. The pilots would have thus freely agreed to forego some of their entitlements to keep the Airline running so they can have their employments.

(6) Piokole did not sign the 2015 Contract. His reason was, the 2012 Agreements was still current. That was so in the absence of any new agreement arrived at by the mutual agreement of the parties. That had to come about through meaningful and fair negotiations in the usual way on terms mutually agreed. At least, that was the past established practice and that is what the termination and replacement clauses required but not observed by the Airline. He was also of the view that, if he signed the contract that will be the end of the unions and bargaining for better terms and conditions of employment through being members of a union and the unions taking the lead in the negotiations and arrive at agreements for the benefit of its members. Many others also refused to sign the contracts.

(7) The 2012 Agreements had execution clauses a sample of which is annexure “A” to Captain Benjamin Lopa’s affidavit sworn and filed on 23^rd November 2015. This documentation is part of the 2012 Agreements but as it applies to individual pilots, which amongst others stipulates the period of employment. For Captain Lopa it commenced on 08^th January 2013 and was to expire on 7^th January 2016 and other pilots at different times for example Piokole’s commenced 01^st September 2014 and remains to expire on 31^st August 2017.

(8) Cadet pilots are treated differently under a cadetship administer by the Airline. Under the cadetship, the Airline meets all of a pilots training expenses including living allowances whist they undergo training at Coffs Habour, Sydney, Australia. Upon successful completion, they are engaged as trainee pilots until they are able to make it through and become captains. They are paid a salary and other entitlements after certain deductions on account of their training expenses and agreeing to benefit from the cadetship program until they complete a period of 10 years with the Airline. At the end of that period, the pilots under this scheme enter the open or direct entry process as pilots with the Airline. Despite by then being experienced pilots, their terms and conditions are comparatively lower than that of other pilots who come through the open or direct entry process. Because of this disparity some cadets including the witness Enoch Lopa took up the issue with the Airline directly which did not attract any response from the Airline. They therefore joined their union the NAPU for the union to help fight for better terms and conditions for them and more so to help do away with the disparity.

22. I find that Plaintiffs’ evidence establishes a prima facie case of there being no negotiations between the Airline and the pilots or their respective unions. That resulted in a failure to reach a mutual agreement in terms of the 2015 Contracts or at all to supersede the 2012 Agreements. Instead, the Airline unilaterally arrived at the 2015 Contracts and caused the pilots to sign at the threat of losing their jobs if they failed to so.

23. The law is that, once a plaintiff establishes a prima facie case against a defendant, the onus then shifts to a defendant to rebut the case against it. In Spirit Haus Ltd v. Robert Marshall,^[13] I referred to the relevant case authorities and spoke of the relevant principles and practice in these terms:

“These principles and the relevant authorities on it make it clear that, where both parties go into evidence, it is necessary to consider the plaintiff’s case first. Then only if the Court finds that the plaintiff has established a prima facie case, it should proceed to consider the opposing evidence to see if the defendant rebutted the case against him or her before final judgment.^[14]

24. Applying these principles to the case at hand, the relevant question is, what is the Airline’s evidence on the issues under consideration? The Airline called two witnesses, one of whom was Logona and the other was Captain Samiu Taufa. As already noted, Logona is part of the airlines management and did play a direct role on all that happened or failed to happen during the relevant periods leading up to the signing by some of the pilots the 2015 Contracts. Hence, the duty was on him to produce evidence confirming a number of matters. Firstly, that there were meaningful negotiation meetings in accordance with the terms of the termination and replacement clauses and the long established practice between the Airline and the pilots. Secondly, in the course of these negotiations, clear offers and counter offers were communicated to and from each of the parties. Thirdly, upon due and meaningful consideration of the matters in issue and as meaningfully discussed between them, they arrived at mutual agreements on each of the matters discussed. Fourthly, based on the mutual agreement of the parties they reduced their mutual agreement into writing in terms of the 2015 Contracts. Fifthly, the mutual agreements thus reached, meets the requirements of the termination and replacement clauses of the 2012 Agreements. Finally, the 2015 Contracts accordingly, replaced the 2012 Agreements and the individual contracts that were based on them. This the witness and hence the Airline failed to do. Confirmation of this is in neither the Airlines two witnesses, nor the Airline itself producing any evidence confirming the relevant dates, times and venues at which the contract negotiation meetings, if any, may have taken place, where such meetings were held with copies of their respective minutes of the meetings or such other records disclosing who attended for the Airline, who attended for the Plaintiffs and or the pilots, the kinds of matters discussed, agreement reach on each of the items discussed and resolved and how the terms of the 2015 Contracts were arrived at.

25. Additionally, there was a reference to a practice of the representatives of APA and NAPU pilots being “rostered off”duty by the Airline to enable them to participate in meetings that would lead to mutual agreements on matters in contention between the Airline and the pilots. The suggestion was that this was done. However, the Airline produced no evidence for example, of a copy of a roster clearly showing the representatives of the unions and therefore the pilots “rostered off” that matches a relevant negotiation meeting. What is instead clear not only from the evidence of Logona and Captain Taufa, but also from that of the Plaintiffs is that, no contract negotiation meeting took place at anytime. The evidence shows only two meetings took place at which the Airline presented its desire to reduce expatriate pilots without any meaningful follow up meeting with the pilots. There is no evidence of the parties clearly negotiating the terms of a contract that would replace the 2012 Agreements by “mutual agreement” as they agreed to do by their termination and replacement clauses. Rather, the Airline came up with the 2015 Contracts on its own and required Piokole and the other pilots who are members of the two plaintiff unions to sign or face being “deemed ... does not wish to continue employment with ANL”, which I take is the Airline. Some pilots for fear of being so deemed and to avoid financial and other hardships signed the 2015 Contracts, even on the 11^th hour on 31^st December 2014. Senior pilots like Captain Kumasi signed effectively under protest. That is evident by his letter of 29^th December 2014 which states words to the effect, I am signing the 2015 Contract under “duress”. Others like Captain Piokole refused to sign being convinced that, the 2012 Agreement was current until a new replacement agreement was arrived at “by the mutual agreement of both parties” through negotiations that involved the unions.

26. On the evidence before me or lack thereof, I have no difficulty in finding that the Airline failed to rebut the prima facie case established against it. Also, I am able to find that, the parties did not enter into any meaningful negotiations within six months prior to 31^st December 2014. This resulted in no new agreement being arrived at by the mutual agreement of the parties to supersede the 2012 Agreements. That was contrary to what they committed to do in their 2012 Agreements. The Airline had both the power and the means to ensure meaningful meetings did take place resulting in a mutual agreement to replace the 2012 Agreements within the terms of the termination and replacement clauses. The evidence shows, there were only a few half-hearted attempts by the Airline toward having the negotiation meetings which it failed to ensure they did take place and through such meetings the parties reach mutual agreement. Instead, the Airline either cancelled or deferred the meetings each time.

27. Further, since the Airline is arguing for the 2015 Contracts as a legally binding and enforceable agreement, it was necessary for the Airline to produce evidence clearly bringing out an existence or a meeting of the essential elements of a binding contract. In Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc,^[15] I listed the essential elements of a legally binding and enforceable contract in the following terms:

“What then are the essential elements of a valid contract? A quick perusal of the relevant authorities,^[16] reaffirms and brings out clearly the following as the essential elements of a legally binding and enforceable contract:

(1) a clear offer and acceptance;

(2) an intention to create a legally binding contract;

(3) passage of valuable consideration each way; and

(4) Each of the parties has the legal capacity to negotiate and enter into a contract.”

28. There is no evidence and the Airline’s submissions does not clearly demonstrate how:

(1) and what exactly were the terms and conditions offered to the pilots, including how and when they were communicated and when and how the pilots unequivocally accepted them;

(2) the terms of the 2015 Contracts were intended to be legally binding and enforceable in light of the provisions of the 2012 Agreement being still operational in the absence of any mutual agreement arrived at to supersede them;

(3) and what kind of valuable consideration passed onto the pilots from the Airline in exchange for their services especially when clearly the terms of the 2015 Contract were lower than those enjoyed by the pilots under the 2012 Agreements; and

(4) each of the pilots had the legal capacity and power to negotiate outside or to the exclusion of their respective unions who have the legal power and right to represent the pilots as they have done in the past which resulted in properly and meaningful negotiated and mutually arrived at agreements like the 2012 Agreements.

29. The evidence before the Court clearly show that the Airline unilaterally arrived at the 2015 Contracts. It then presented those contracts to the pilots and gave them only one of two options to exercise. Either to sign the Contracts and continue their employment with it or be “deemed ... does not wish to continue employment with” it. There is no evidence of the Airline taking time to explain the terms of the 2015 Contracts, especially when it decided to effectively go behind the backs of the unions and deal directly with the pilots. It is an undisputed fact between the parties that, the pilots are busy persons due mainly to their tight schedules or rosters as pilots. As such they normally have no or limited time to do other things. In the past, the pilots were assisted by their unions to do all the negotiations, understandings and eventually deliver agreements acceptable to both the pilots and the Airline. For reasons only know to the Airline this time, it chose to go behind the unions’ backs, failed to explain how it could do that and this time the pilots had to deal with the Airline directly and not through their respective unions. Given these, it was necessary for the Airline to ensure that the pilots were indeed given ample and good opportunity to consider the terms of the 2015 Contracts, seek legal advice and if the terms were acceptable to them, sign them. Most of the pilots who signed the 2015 Contracts did so under protest as did Captain Kumasi or to avoid losing their jobs and hence bring financial and other hardships to themselves and their families as did Captain Paul Andrews. This was contrary to even the terms of the termination and replacement clauses of the 2012 Agreements. Again these terms required contract negotiations to commence six months and reach a mutually arrived at agreement to replace the existing ones before their expiry. Clearly, for the pilots who signed, it was not a case of freely accepting the terms of the 2015 Contracts because they wanted to after freely negotiating and the parties reach mutual agreement. Instead, they were forced by their wish not to lose their jobs to accept the 2015 Contract produced by the Airline unilaterally. If the pilots had a choice, they would not have signed the 2015 Contracts. For amongst other things, the terms were far less attractive than the ones they had been enjoying under the 2012 Agreements. This alone required a proper sitting down with the pilots and explaining to them why the reduction was necessary, allow for their response and input before arriving at contract that was agreed to by all of the parties. This failure to ensure the pilots understood what was happening and the terms of the contract and freely accept its terms led to some pilots leaving the Airline even after having signed the 2015 Contracts.

30. The Plaintiffs refer to my decision in Taru v. Pacific MMI Insurance Ltd^[17]and KK Kingston Ltd v. Moere^[18]and argue that the pilots who signed did so under duress or intimidation. In the second case, I had pointed out that a contract that does not recognize the prevailing laws in the court from the Constitution to relevant Acts of Parliament and is secured by “fraud, duress, threat or force or such like, that could amount to an illegal and unenforceable contract.” In the first case, I considered the definition of the term “duress”. There I accepted the definition provided by 9 Halsbury’s Laws, 4^th Edn, at para 297 and Fleming, The Law of Tort, 6^th Edn, page 659. I accepted the term duress to mean “compulsion under which a person acts through fear of personal suffering or confinement, actual or threatened” and the word “intimidation” to mean a situation in which “a person is coerced by unlawful threats into doing or abstaining from doing something that he would otherwise have every right not to do.”The Airline argues that, the pilots were free to accept or reject the 2015 Contracts. They chose to accept the 2015 Contracts and had them signed. Hence, there is a legally bidding and enforceable contract.

31. Given these facts and arguments, I now need to answer the second question that arises out of the first main issue. That question is as already noted, did the parties lawfully arrive at the 2015 Contract? The main parties to the 2012 Agreement were the two unions, APA and NAPU and the Airline. The pilots who are the members of the two unions became parties and hence beneficiaries to those agreements through the signing of their respective execution clauses. Those agreements were arrived at through collective bargaining or negotiation and eventually by mutual agreements through the two unions. As noted earlier, the 2012 Agreements clearly provided as to how and when the agreements would come to an end and be replaced by a new mutual agreement to govern the parties’ relationships. The Airline did not follow the process it agreed and committed to per the 2012 Agreements to have those agreements replaced by the 2015 Contracts.

32. Historically, terms and conditions of employment were very much dictated by an acceptance of the concept of master and servant relationship. This meant that, earlier on the law favoured employers more than employees. Overtime, the law had developed to a point where it became recognized and accepted that employees have the right to form workers’ unions and be part of a union or an industrial organisation to collectively fight for and secure better terms and conditions of employment. At the highest in PNG, are ss.47 and 48 (2) of the PNG Constitution. These provisions amongst others grant the necessary power and freedom to form and be part of industrial organisations for all persons. Section 48 (2) in particular provides for “reasonable action or provision [being made] for the encouragement of persons to join industrial organizations or for requiring membership of an industrial organization for any purpose.” Following the Constitutional dictate, two identical provisions, 63 (1) in both the Industrial Organizations Act (Chp.173) and the Industrial Relations Act (Chp. 174) (two industrial legislation), make it an offence for an employer to, refuse to engage a person as an employee, or dismiss, or injure or alter an employee’s position to the employee’s prejudice on account of the person or employee being an officer, or a delegate or member of an industrial organization. The same provisions also make it an offence if an employee is dealt with in any of the ways described but on account of an employee appearing as a witness, or has given evidence in proceedings issued under the Act, or an employee absenting from work without leave to carry out duties or exercising his or her rights as an officer or delegate of an industrial organization. Subsection (2) of the same provision in the Industrial Organizations Act makes it an offence for an employer to take any of the actions already mentioned if the intention is “to dissuade or prevent the person or the employee from becoming ... an officer, delegate or member” of an industrial organisation. Subsections 5 and 4 respectively of the same provisions provide for penalties against an employer on successful prosecution under either of these two provisions. One of the penalties is to “direct the employee to be reinstated in his old position or in a similar position” in the case of a dismissal of an employee for any of the reasons mentioned. These legislative provisions appropriately empower employees to form, be members and officers of trade unions to fight for better terms and conditions of employment and generally fight for better treatment of employees by employers. These they do through what is known as collective bargaining resulting in collective agreements or enterprise agreements.

33. My search for cases on collective bargaining in our jurisdiction produced two cases. The first is the case of Martin Kenehe v. Allan Jogioba,^[19] which was a consolidation of seven separate proceedings. They arose out of a strike action taken by the Papua New Guinea Teachers Association without fully complying with the process for appropriate industrial action. The Papua New Guinea Teaching Service Commission (TSC) responded with suspensions, demotions or dismissals. The TSC took these actions pursuant to s. 95 of the Teaching Services Act 1988. This provision outlaws strike action and empowers the TSC to suspend and eventually dismiss striking teachers. The plaintiffs sought to argue that, s. 95 is inconsistent with the rights of teachers given by s 47 of the Constitution and also by International Labour Organizations’ International Conventions on Freedom of Association and Rights to Organize Convention 1948 and Right to Organize and Collective Bargaining Convention 1949. They also argued that, completely outlawing strike action by teachers is “harsh and oppressive and cannot be reasonably justified in a democratic society having proper regard for the rights and dignity of mankind”. Further, they sought to argue that, taking strike action was a form of collective bargaining.

34 The Court per His Honour Injia DCJ (as he then was) was of the view that, it lacked the necessary “jurisdiction to determine the validity, Constitutional or otherwise, of any statutory provision.” At the same time, the Court noted that, it had the “jurisdiction to refer a constitutional question for determination by the Supreme Court under s 18 of the Constitution but” it refrained from doing so as it was “not invited by the plaintiffs to exercise that power.” In dismissing the Plaintiffs’ claims, it also dismissed their argument that taking strike action was a form of collective bargaining as an improper ground for judicial review.

35. This case is relevant only to the extent that it notes there exists the provisions of our Constitution and the International Labour Organizations’ International Conventions on Freedom of Association and Rights to Organize Convention 1948 and Right to Organize and Collective Bargaining Convention 1949. Other than that, the case is not relevant for the case before this Court.

36. The second case is the decision of her Honour, late Davani J in John Manau v. Telikom (PNG) Ltd.^[20] In that case, the defendant retrenched the plaintiff after several years of employing him. The Plaintiff relied on an enterprise agreement signed by the plaintiff’s union, the employer and the Department of Industrial Relations. This he claimed was his contract of employment, which the defendant breached thereby entitling him to damages. Her Honour dismissed these claims and reasoned that:

“The undisputed evidence is that the Enterprise Agreement is a collective agreement made by a trade union on one side and the employers association on the other. The agreement has created a joint negotiating body ... to settle terms and conditions of employment. This procedure of collective bargaining is governed by practice, not strict law. These agreements are not intended to create legal relations.”

37. With respect, this statement of the law is inaccurate. Collective bargaining and agreements are well recognized and accepted internationally. It is recognized that unions as a collective bargaining unit, seek to provide a form of equivalence of economic and organizational power between labour and management.^[21]It is also accepted that, when individual employees become members of a union, they surrender their right to negotiate directly with the employer and instead empower their union to represent them in all matters affecting them as employees as against the employer. The ability to represent their members is the centre of union power and relevance.^[22] Hence, employers have a legal obligation to deal with the relevant employee union and not directly with an employee. Further by providing institutional framework for employer and employee relations, unions provide stability in industrial relations.^[23] As long as collective agreements have the necessary ingredients for legally enforceable contracts, they can be enforced. Enforcement can be sought by the unions who are parties to such agreements or an individual member in certain circumstances such as in a case where a union is unable to take the appropriate steps for the benefit of a member who is a beneficiary of a collective agreement. The case of United States Trust Co of New York v. Master & Crew of the Ship “Ionian Mariner”; Andrey Kharitnov & Ors v. United Trust Co of New York^[24]is an example of a case on point in Australia regarding the enforceability of collective agreements. In that case, the master, engineers and crew of a vessel “Ionian Mariner” which was sold by auction sale on orders of the Court sued for their unpaid wages provided for under two collective agreements. At the same time, some of them had special agreements that stated specific amounts in wages. All parties and the Court both at the trial and appellate levels, took no issue on the enforceability of the collective agreements. The issues were around which of the two collective agreements applied to each of the master, engineers and crew and what could be made of the special agreements. Eventually the Courts at both levels arrived at decisions giving effect to the relevant and applicable collective agreements as well as the special agreements. Endorsing the primary judge’s view, Black CJ with whom the other two members of the Court agreed said:

“In my view, the Collective Agreement and the Special Agreement operated together in such a way that obligations enforceable against the employer did continue beyond 14 December 1994... The Collective Agreement and the Special Agreement operated together so as to require a shipowner, when a member of the crew of one of the relevant vessels was being engaged, to engage that person (or to ensure that the person was engaged) on the terms of the Greek Collective Agreement relating to wages and other specified matters. Articles 1(a) and (b) of the Special Agreement and Articles 1, 9 and 10 of the Collective Agreement do, I think, make this clear. I do not consider it necessary to work out the precise inter-relationship between the two agreements, it being sufficient for present purposes that the overall intention of both was to govern the terms upon which members of the crew of the Ionian Mariner were to be engaged during the currency of the agreements.”

38. The position of the law and the Courts concerning the enforcement of collective agreements is the same in New Zealand, the U.S. and elsewhere. In the U.S., some of the earliest cases on point include the decision in Textile Workers Union v. Lincoln Mills,^[25] initially allowing for unions to take enforcement proceedings and later extended in Smith v. Evening News Association^[26] for individual employees to take such actions. Near to PNG in addition to Australia, is the position in New Zealand as represented by the decision in Aviation and Marine Engineers Association Inc v. Air New Zealand Limited.^[27] There, Air New Zealand, tried to unilaterally bring about some changes to its aircraft engineering operations which were likely to affect terms and conditions set out in a collective agreement with the pliots. The Court held that the airline was obliged to bring about the change in consultation and with the agreement of the unions. That decision came about after interpreting the relevant provisions of the collective agreements that were before the Court. The Court adopted and applied principles of interpretation enunciated by the New Zealand Supreme Court in Vector Gas Ltd v. Bay of Plenty Energy Ltd^[28]and in particular the decision in Silver Fern Farms Ltd v. New Zealand Meatworks and Related Trade Unions Inc.,^[29]which in turn follows a string of House of Lords decisions as in the case of Investors Compensation Scheme Ltd v. West Bromwich Building Society.^[30]These principles are similar to those adopted and applied in PNG as discussed and applied in the earlier part of this judgment generally in contract cases.

39. In the case before me, the Airline did not go through the union, with whom it negotiated and arrived at the 2012 Agreements. Instead, it by passed the unions and went directly to its members and caused some of them to sign the 2015 Contracts it unilaterally produced. When the pilots remained members of their respective unions, they were without capacity to negotiate directly and hence sign directly with the Airline. The Airline was under a duty to go through the unions which it failed to do and in so failing, proceed to deal with persons whose power and capacity to negotiate and sign the 2015 Contract no longer remained with them but their unions. The airline clearly proceeded to deal with the pilots individually as it did as if the unions did not exist and the 2012 Agreement was not the product of collective bargaining through the unions for and on behalf of the pilots. In so doing, it only selectively applied the provisions of the termination and replacement clause and ignored the whole of it and its import on what it could lawfully do under that clause.

40. The present case is similar to the Aviation and Marine Engineers Association Inc v. Air New Zealand Limited (supra) case. Here, the Airline did what Air New Zealand did without consulting and getting the approval of the relevant unions and proceeded to take actions that seriously affected the pilots. As noted, organised labour and collective bargaining and collective agreement and the ability of the Courts to uphold such agreements is now recognized worldwide from the UN declarations and conventions to superior court decisions from the U.S. Supreme Court to PNG’s nearest neighbours, Australia and New Zealand to the relevant provisions of the PNG Constitution and the two industrial legislation. The Airline’s conduct in this case runs contrary not only to the termination and replacement clause of the 2012 Agreements but, also contrary to the spirit and intent of the relevant provisions of the Constitution and the whole of the two industrial legislation and the clear legal position worldwide. Some of the affected pilots like Piokole viewed what the Airline was doing as a step taken to undermine and end the pilots’ right to form and have a union which are necessary to meet the might and power of corporations like the Airline and speak for powerless individuals like the pilots standing alone. In light of the foregoing discussions and the evidence or the lack thereof from the Airline, I find Piokole was right in holding that view. The kind of conduct and behaviour the Airline displayed here is a kind of conduct and behaviour that is not conducive for better industrial relations and the economy of the country. It should be discouraged and appropriately dealt with to avoid any repeats by other employers. In view of that, the Airline should not be permitted to benefit from such conduct or behaviour.

41. Additionally, there is the Fairness of transactions Act 1993. Although not pleaded and not argued for, it is important to note it exists when transactions that might attract the Acts application are being or sought to be entered into. As its name suggests, this Act is aimed at ensuring there is fairness in all transactions. Section 1 of the Act clearly spells out its purpose in the following terms:

“The purposes of this Act are to—

(a) ensure the overall fairness of any transaction which—

(i) is entered into between parties in circumstances where one party is for reasons of economic or other advantage predominant and the other is not able to exercise a free choice; or

(ii) for one reason or another, without attaching any evil design or bad faith, appears to be manifestly unfair or not to be genuinely mutual; and

(b) allow for the re-opening and review of any transaction irrespective of fault and validity, enforceability or effect of any agreement; and

(c) ensure the fair distribution and adjustment of rights, benefits, duties, advantages and disadvantages arising out of a transaction.”

42 The Act has been considered and applied in a number of National and Supreme Court cases. What the Supreme Court said in Rage Augerea v. The Bank South Pacific Ltd,^[31] would be sufficient here. There, the Court said:

“Fairness and equality in all negotiations leading to any agreement has now become a concern of Parliament and it has enacted the Fairness of Transactions Act 1993. That Act has been considered with some detail in one case and was considered and applied in another case. The first case to do that was in the case of Negiso Investments Limited v. PNGBC Limited... and the second was in the case of Dr. Florian Gubon Trading as Gubon Lawyers v. Pacific Mobile Communication Limited....The Act allows for a review of agreements or contracts that are considered unfair. As was observed in the second case, the Act did not introduce something that was new. It merely reinstated and reaffirmed the position at common law which has already been adopted and applied by the courts in our jurisdictions as in the case of Kora Gene v. Motor Vehicles Insurance (PNG) Trust.... Appling those principles the Courts have already struck down agreements that were considered unfair because of inequality in the bargaining powers of the parties.”

43. Assuming that the Airline was entitled to deal directly with the pilots notwithstanding the foregoing discussions, at the least the Airline should have proceeded in a manner that was fair. The principle of fairness pre-existed the Fairness of Transactions Act, our country’s independence and goes back to the time of the concept of the rule of law becoming central for the democratic world. Fairness in this instance, required the Airline giving the pilots ample opportunity to consider the terms of the 2015 Contracts, seek legal advice, consult their respective unions and get their endorsement and allow for some room for negotiation and the reaching of agreements that the pilots could live with. Evidence, before the Court demonstrates that the pilots who signed the 2015 Contract did so under pressure. The pressure came from the risk of losing their employments and facing financial difficulties as well as the Airline failing to accord the pilots the kind of opportunities just mentioned.

44. Under the 2012 Agreements, the pilots enjoyed better terms and conditions of employment with the Airline. These were substantially reduced by the 2015 Contracts. The evidence also demonstrates that if given the opportunity to discuss or negotiate with the Airline the pilots would have agreed to some reduction in their terms and conditions of employment to enable the Airline to survive and operate profitably to give them continued employment. If the Airline went through the unions as it was obliged to do, the pilots may not have been put under the kind of pressure they were under as their union would have fought for their interest and help cushion the pressure and most importantly help produce an outcome the pilots could live with. But the Airline, for reasons only known to it, it failed to accord the pilots the kind of opportunities mentioned. That was despite the Airline being in a position to create and accord such opportunities to the pilots.

45. As already noted, there is no evidence of the Airline entering into any meaningful negotiations and discussions with the pilots or their respective unions. There is no evidence of offers and counter offers being communicated to and from the individual pilots and the Airline. There is also no evidence from the Airline around how the terms of the 2015 Contracts were arrived at and eventually freely accepted by the pilots and signed off. This was necessarily required especially when the Airline went behind the unions’ backs and in the light of the 2012 Agreements being personalized to each pilot and the Airline through the execution of the respective execution clauses but all under the umbrella or the protection of the collective bargaining process which produced the collective 2012 Agreements. It is clear to me that the parties did not arrive at the 2015 Contract by their mutual agreement within the meaning of the termination and replacement clause of the 2012 Agreements. Not only that, the 2015 Contracts were arrived at in breach of the spirit and intent of having trade unions as supported by the various international conventions and consistent international case law as briefly referred to above. These legal principles effectively became part of PNG law through the Constitution and the two relevant industrial legislation.

46. A final matter I turn to in these considerations is the Airline’s argument that the 2012 Agreements were not registered under the industrial relations legislation and hence failed to become awards for enforcement purposes. With respect, Counsel for the Airline did not point to any particular provision in any of the legislation that requires registration of a collective agreement arrived at by the free negotiations of the parties and not necessarily one triggered by an “industrial dispute” as defined by the Industrial Organisations Act. Also, counsel did not elaborate on this argument. Hence, the Court has been left without any assistance from counsel.

47. I am not aware of any requirement that all collective agreements must be registered as a condition precedent to performance and or enforcement of the terms of such an agreement. A quick reading of the two industrial legislation make it clear that, all requirements for registration of agreements concerns industrial disputes and agreements arrived at under these legislation. This is evident by no specific provision being made to address the requirement to register all collective or individual employment contracts arrived at between employers and employees when they enter into an employer and employee relationship or during the currency and or renewal of such a relationship. If these were to be the case, all employment contracts of whatever shape and form would fail for a failure to register them and we would have a serious industrial problem on hand to deal with. The good news is that, the law does not require any registration as suggested. Instead, all employment contracts have been readily enforced by the Courts. The brief discussion in the foregoing on the enforcement of collective agreements confirms that position at law. Having regard to these few comments, I am not persuaded by the Airline’s argument by reason of which it must fail.

48. In the ultimate end, having due regard to the matters discussed and views expressed above, I am unable to accept the Airline’s argument that the 2015 Contracts are legally valid and enforceable. Instead, I accept the Plaintiffs argument that the 2015 Contracts are void and unenforceable.

49. Having determined the first issue in this way, I will now turn to a consideration of the second of the three issues presented for the Court’s consideration and determine. The issue is whether the failure to sign the 2015 Contracts was an act of repudiation by the respective pilots?

Whether the failure to sign the 2015 Contracts was an act of repudiation by the respective pilots?

50. The parties having agreed to this being an issue for this Court to consider and determine, they however, with respect, failed to assist with appropriate submissions as to how the issue has arisen. The parties are bound by their representation through their agreed statement of facts and issues for trial^[32]filed on 21^st October 2016, document number 73 on the Court file which the parties admitted into evidence by their consent. Despite agreeing to this particular issue being an issue in this case, the Airline submits the description “act of repudiation is apt.” It then goes onto argue that, it was free to come up with the 2015 Contracts and the pilots were just as free to accept or reject them for their ongoing employment. Consequently, it is submitted that, the failure to reach a mutual agreement did not amount to repudiation but a failure to agree. The submission for the Plaintiffs launches into an argument that “the failure to sign the individual Airline Pilots Contract2015 was not an act of repudiation by the respective pilots...”.

51. Working as best as I could from these submissions, I think the issue here concerns the repudiation of the 2012 Agreements in order to make sense of the issue. For repudiation of something concerns that which already exists. In the case of contracts, it can only mean an already existing contract between the contracting parties as opposed to a contract that is yet to come into existence. Thus, the issue could be rephrased to read “whether the failure by Piokole and other pilots to sign the 2015 Contracts amounted to a repudiation of the 2012 Agreement.

52. Usually, well considered and arrived at agreements often contain provisions on when a contract would be considered repudiated. If there was such a provision in the present case, the duty was on the parties to draw that to the Court’s attention. Neither of the parties drew the Court’s attention to any such provision in their 2012 Agreements. The Airline moved away from the 2012 Agreement unilaterally as discussed and found under the first issue. Hence, the issue of repudiation by the pilot’s failure to sign the 2015 Contract does not arise at all. As far as the concerned pilots are concerned and the decision I have arrived at in respect of the first issue, the 2012 Agreement is current and has not been lawfully terminated or repudiated. In the circumstances, I find this issue is misconceived. Accordingly, I dismiss this issue as unnecessarily raised.

Discrimination against Cadet Pilots

53. This leaves me to deal with the third issue. The issue is whether the failure and or refusal by the Airline to employ the ‘Cadet Pilots’ by way of execution clauses under the 2012 Agreement for NAPU was discriminatory in employment practice. This issue arises out of a concern around the Airline’s practice of placing cadet pilots on terms and conditions lower than other pilots. To understand this issue and properly resolve it, it is necessary to understand the kinds of pilots the Airline employs. It is also necessary to remind myself of the fact that, there is bound to be some form of discrimination amongst employees by employers. This is necessary to appropriately recognize and reward employees for such things as more experience, knowledge and talent, or being long time faithful and dedicated employees or having exceptional skills and competence that is much sought after. Whist the general concept of equal pay and terms and conditions for the same kind of work must apply, it must also be accepted that the reality is that the kind of differences noted will exist which necessarily may require employers to treat each employee differently. The kinds of differences exist will often be reflected in the terms and conditions of employment for each employee. Certainly, this does not and cannot form the basis for anyone to claim discrimination and succeed. A claim of discrimination will only be successful upon making out a case that all things considered equal in terms of what is required for the kind of work under consideration, there is nonetheless a practice of offering better terms and conditions of employment merely because say for an example, an employee is an expatriate or comes from a particular province, region or country or even as a special kind of relationship with those who are possessed with the power to determine each employee’s terms and conditions.

54. In the present case, the evidence reveals two main classes or categories of pilots the Airline employs. First, are well experienced pilots who are recruited on what is described as open entry contracts. The second is a class or category of pilots who are recruited as trainee pilots for a period of time under the Airline’s cadet scheme. The issue is around this category of pilots when viewed against the former in terms of their respective terms and conditions of employment.

55. There is no issue that, under its cadet pilots’ scheme, the Airline sends successful applicants for the scheme to Coffs’ Harbour, Sydney, Australia to undergo training to become pilots. The trainees enter into an agreement with the Airline. Under the agreement the trainees agree to render services to the Airline for up to 10 years upon successful completion of their formal training. In return, the Airline meets all the costs of the training inclusive of living and other allowances. Upon successful completion of the training of the pilots, the Airline also enables the freshly trained pilots to gain practical training and experience for which purpose they are recruited as trainee pilots starting with smaller aircrafts like the Dash 8s. Upon satisfactory completion of certain required hours of air time flying and other requirements, the trainee pilots get promoted to first officers. Then when they meet further requirements including hours of flying, they become qualified and experienced pilots upon which they get promoted to captains. During the trainee pilot period and until they become captains, the pilots are paid salaries with other perks and privileges. Until recently, during this period, certain amounts of deductions take place which gets accumulated and if the pilots remain with the Airline up to a required period, the total amounts deducted and accumulated gets reimbursed to the pilots. This is now no longer a part of the cadet scheme. The Plaintiffs initial arguments were around the whole cadet scheme but upon further exchange between learned counsel for the Plaintiffs and the Court, the argument got zeroed down only to the time when the trainee pilots become fully experienced and qualified up to captain levels.

56. As I put to counsel for the Plaintiff’s during the course of his submissions, it is a well-accepted practice for employers who sponsor their employees for further or appropriate training for the employees to repay the investment the employers make with an employee or a prospective employee. This is usually done through what is described or called “bonding”. Such a system provides for the employees or prospective employees to undergo appropriate or further training with a view to the employee or prospective employee returning to his or her employer and working for them. Inherent in such a scheme is the risk of an employee or a prospective employee leaving the employer for better opportunities without repaying what the employer may have spent on them. The system of bonding seem to strike the necessary balance between an employer’s interest to gain from its investment in an employee or a prospective employee and the and such person to get an employment that allows for work and remuneration that commensurate with his or her training and experience. No Court should be invited and indeed a Court should be extremely slow to declaring such an arrangement discriminatory or illegal without more. An employee who wishes to escape from such an arrangement or wishes to succeed in a claim of discrimination needs to provide clear and convincing evidence that the arrangement is illegal and or discriminatory. This can be done by producing evidence of the:

(a) total costs of producing a person of the employee concern’s training and experience; and

(b) kind of recovery measure put in place far exceeding a reasonable estimated of the total investment and gain the employer could have made out of such investment in the employee; and

(c) employer applying double standard not because of difference in training, experience, competence and skill areas but matters divorced from anything necessarily and strictly required for the kind of work under consideration.

57 In the present case, the Plaintiffs failed to produce any evidence of the kind outlined above. The only evidence if any is in respect of captains who come through the cadetship being paid less than those recruited through the open contract category. There can be no doubt that after having obtaining their trainings and working as trainees to first officers and eventually becoming captains, the pilots could be considered well experienced and qualified persons who may have given more years of service. There would be discrimination if they are paid less compared to the open contract pilots only by reason of that fact. I hasten to add however, that, allowance has to be made as of necessity to differentiate between pilots of more experience who have good performance records compared to those who have just being promoted to captains. In this regard, again there can be no ready finding of discrimination without a careful consideration of the reasons why some pilots are employed on better terms and conditions than others.

58. The Plaintiffs in the present case have not produced any evidence going into this aspects and any particular case of discrimination between pilots of the same kind of training, experience and competence. In the circumstances, I am not persuaded that the Plaintiffs made a case of the cadet pilots being discriminated against. Accordingly, I dismiss this part of the Plaintiffs claim.

In Summary

59. In summary I have found the:

(a) 2012 Agreement between Air Niugini Ltd and the Plaintiffs and all other pilots who are members of APA and NAPU is still current and operational until the parties can by mutual agreement replace it with a new agreement;

(b) 2015 Contracts were unilaterally arrived at by Air Niugini Ltd in breach of the termination and replacement clauses of the 2012 Agreements and the spirit and intention of having organized labour, collective bargaining and collective agreements by reason of which the 2015 Contracts did not supersede the 2012 Agreements;

(b) issue of act of repudiation by the pilots by failing to execute the 2015 Contracts do not arise and is thus a misconception by reason of which it is dismissed;

(c) claim of discrimination against cadet pilots have not been made out and is therefore also dismissed.

Appropriate relief

60. Having so found, the next issue to turn to is the question of what is an appropriate relief for the plaintiffs. Before coming to a decision on that point, I consider it important that the parties should be given an opportunity to consider the Court’s foregoing decision and let them have the opportunity to consider their options and resolve the issue of appropriate remedy or remedies. This should include the question of costs inclusive of relevant rate at which it should be ordered or paid and by whom. This I consider is important in the light of the fact that some of the pilots are still in the employ of the Airline and others like Piokole remain committed to serving their Airline with their contracts of employment based on their respective execution clauses pursuant to the 2012 Agreements which are still current. Of course, if the parties fail to resolve the issue, the Court will give its decision on the appropriate remedy.

Orders

61. Accordingly, the Court makes the following orders:

1. The parties are required to consider the foregoing decisions and the reasons for those decisions and resolve the issue of what should be an appropriate remedy or remedies for the Plaintiffs.
2. The parties shall also resolve the question of who should pay the costs and at what rate.
3. The matter is fixed to return to the Court on 3^rd May 2017 at 9:30 for the Court to endorse any agreement of the parties on the matters specified in terms 1 and 2 of these orders or failing any such agreement, make the appropriate decision and issue the appropriate orders finalizing these proceedings.
4. The time for an entry of the orders is abridged to take place forthwith upon the Court signing these orders.

_________________________________________________________
Murray & Associates Lawyers : Lawyers for the Plaintiffs
Kuman Lawyers: Lawyers for the Defendants

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^[1](2003) N2319 at page 18.
^[2](1932) 38 Com. Cas 23.
^[3][1941] AC 25.
^[4](1949) 80 CLR 11.
^[5](1968) 118 CLR 429.
^[6](2003) SC705
^[7][1992] 1 All ER 453.
^[8](2016) N6359.
^[9][2009] NSWCA 177.
^[10] Paragraph 23 of the Airlines submissions.
^[11] Paragraph 23 of the Airlines submissions.
^[12]The said letter is annexed as annexure “A” to his affidavit.
^[13](2004) N2630.
^[14] See also, Rimbink Pato v. Ruben Kaiulo, Electoral Commissioner of Papua New Guinea and Miki Kaeko & Ors (2003) N2455.

^[15](2013) N5441.
^[16] Which included, NCDC v. Yama Security Services Pty Ltd (2003) SC707; NCD Commission v. Yama Security Services (2005) SC835.
^[17](2016) N6305.
^[18](2002) N2235.
^[19](2008) N4025 (per Injia DCJ as he then was).
^[20](2008) N3268.
^[21]J. Galbraith, American Capitalism: The Concept of Countervailing Power 115 (1956). See generally R. Gorman,Basic Text on Labor Law296 (1976); Cox, The Duty to Bargain in Good Faith, 71 HARV. L. REv. 1401, 1407 (1958); Dunau, Employee Participation in the Grievance Aspect of Collective Bargaining, 50 Colum. L. Z. Rev. 731, 735 (1950); Wellington, The Constitution, The Labor Union, and "GovernmentalAction," 70 YALE L.J. 345, 364 (1961).
^[22]United Steelworkers v. American Mfg. Co., 363 U.S. 564,570 (1960); Hines v. Anchor Motor Freight, Inc., [1976] USSC 29; 424 U.S. 554, 571 (1976). Cox, The Duty of Fair Representation, 2 VILL. L. Rnv. 151, 152 (1957); Givens, Federal Protection of Employee Rights Within Trade Unions, 29 FORDHAM L. REV. 259, 273 (1960); Shulman, Reason, Contract, and Law in Labor Relations, 68 HARV. L. REV. 999, 1002-04 (1955); Summers, Judicial Review of Labor Arbitration orAlice Through the Looking Glass, 2 BUFALO L. REV. 1, 24 (1952). 15.
^[23]United Steelworkers v. Warrior & Gulf Navigation Co.[1960] USSC 109; , 363 U.S. 574, 578 (1960).
^[24] [1997] FCA 909, per Back CJ, Lockhart and Burchett JJ.
^[25] [1957] USSC 67; 353 U.S. 448 (1957).
^[26][1962] USSC 177; 371 US 195 (1962).
^[27][2013] NZEmpC 172.
^[28][2010] NZSC5.
^[29][2010] ERNZ 317.
^[30][1998] 1 WLR 896 (HR).
^[31](2007) SC869.
^[32] See Belden Namah v. Hon Rimbink Pato & Ors (2016) SC 1497, where the court held a failure to take issues with a statement of the relevant fact when required meant a non-cooperating parties is bound a statement of agreed and facts produced by other parties.