N11250

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO. 448 OF 2023

BETWEEN:
PHILIP KAPIANG
Plaintiff

AND
MICHAEL KRETSCHMANN
First Defendant

AND
ERIK STEINHOFER
Second Defendant

AND
MOROBE CONSOLIDATED GOLDFIELDS LIMITED
Third Defendant

LAE: DOWA J
4 MARCH, 4, 22 APRIL 2025

EMPLOYMENT LAW -termination of employment contract-terms of employment including disciplinary policies are in the contract of employment- principles applicable in termination of contract of employment discussed-where the contract of employment is terminated for cause that is the end of that contractual relationship-where termination is unlawful, the Plaintiff will receive as damages the amount which he or  she would have been entitled to receive if he or she had been lawfully terminated- plaintiff has already been paid his entitlements including leave pay – plaintiff’s  claims for defamation, stress  and breach of his constitutional rights not available – plaintiff’s claim was dismissed

Cases cited
Malai-v-PNG Teachers Association [1992] PNGLR 568
Ruhuwamo v PNG Ports Corporation (2019) N8021
The Central Bank of PNG v Tugiau (2009) SC1013
Apolonia Steven v Ram KC (2016) N6577
Ruhuwamo v PNG Ports Corporation (2019) N8021
 Saki v Kangleon (2019) N7860
 Tawa v Mainland Holdings Limited (2020) N8727
 Tjandranegara v Bsp Financial Group (2021) N9353 
 Porawi v Agarwal (2023) N10118

Counsel
T. Topo for the plaintiff
C. Joseph for the defendants

DECISION 

1.	DOWA J: This is a decision on both issues of liability and damages. The Plaintiff seeks damages against the Defendants for unlawful termination of employment.

BACKGROUND FACTS

3.	 The Plaintiff was employed under a written contract of employment by the third Defendant as Mill Processing Superintendent at Hidden Valley Mine. He commenced employment on 3rd August 2020 until his termination on 28th September 2022. He was suspended from duties on 22nd September 2022 on allegations of workplace harassment. He was eventually terminated from his contract of employment on 28th September 2022.

4.	 The Plaintiff alleges the termination was in breach of his contract of employment and was wrongful, and the actions of the Defendants were in violation of his constitutional rights under section 37, 41, and 59 of the Constitution.

5.	The Defendants deny the allegations, pleading that there was cause for termination and that the employer has the right to hire and fire an employee at will and deny any breach of the Plaintiff’s Constitutional rights.

ISSUES

6.	The main issue for consideration is whether the Plaintiff’s termination of employment was wrongful.

THE PLAINTIFF’S EVIDENCE

7.	The Plaintiff gave evidence both orally and by way of affidavits. In respect of the affidavits, the Plaintiff relies on the following:

a)	Affidavit of Philip Kapiang sworn 25th August and filed 7th September 2023-Exhibit P1. 
b)	Affidavit of Maika Tokai sworn 11th and filed 18th July 2024-Exhibit P2 
c)	Affidavit of George Tipi sworn 11th and filed 18th July 2024-Exhibit P3.

8.	This is the summary of the Plaintiffs evidence. On 21st September 2022, the Plaintiff conducted a daily staff meeting at the SAG Mill Crib Room, at Hidden Valley Mine. Joel Isaleo was an attendee who sat next to the Plaintiff. After the meeting, it was alleged that the Plaintiff harassed Joel Isaleo which resulted in the Plaintiff’s suspension and eventual termination. The allegation was that the Plaintiff assaulted Joel Isaleo by hitting him twice at his back and told him to go outside and whilst at the door, the Plaintiff reinforced his assertions announcing to everyone that Joel was sick and should be let out of the room. 

9.	The Plaintiff, supported by his witnesses, denied the allegations. The Plaintiff gave evidence that on the day of the incident Joel Isaleo was seated on his right. Joel was sneezing several times, and he noticed he had watery eyes and a runny nose. The Plaintiff said he gently touched Joel’s shoulder and politely requested him to leave the meeting room and go outside and seek medical treatment at the Medical Centre. Joel nodded and left the room willingly. The Plaintiff said Joel is his friend and denied hitting Joel or treating him with contempt, amounting to any form of harassment.   The Plaintiff’s evidence was supported by his witnesses, Maika Tokai and   George Tipi. 

10.	The Plaintiff said late that evening, he was called to report at the HR office by the first Defendant on allegations of workplace harassment by Joel Isaleo. On arrival he was asked to respond to the allegations, and he answered truthfully, although he was not given any copy of the complaint and witness statements. In that meeting he was told because he touched Joel Isaleo, it amounted to harassment. Next day, 22nd September 2022, he was served a suspension Notice, followed by the termination letter dated 28th September 2022. He appealed the termination decision but did not receive a response. Thereafter, the Plaintiff sought assistance through the Department of Labour and Industrial Relations which resulted in a further investigation, but the termination decision was not set aside. 

11.	 The Plaintiff said that the act of a friendly touch giving rise to the allegation was not serious.   Some of the Defendants employees including the first Defendant ill-fatedly fabricated and blew the complaint out of proportion to amount to a serious misconduct. He said he was not charged with a serious disciplinary offence under his contract of employment. The misconduct charges based on breaches under the Harmony Code of Conduct and other disciplinary policies referred to in the letter of termination were not provided for in his contract of employment and thus not applicable and binding on him. The Plaintiff therefore alleges that the actions of the Defendants were a breach of his rights under Sections 37, 41 and 59 of the Constitution. 

THE DEFENDANTS’ EVIDENCE

12.	The Defendants also rely on oral evidence as well as the following affidavits: 

a.	Affidavit of   Michael Kretschmann Sworn 24th and filed 25th June 2024-Exhibit P1
b.	Affidavit of Joel Isaleo sworn 28th and filed 29th August 2024-Exhibit P2
c.	Affidavit of Joe Kikako sworn and filed on 27th August 2024-Exhibit D4
d.	Affidavit of Haro Hayward sworn 28th and filed 29th August-Exhibit D6

13.	This is the summary of the Defendants’ evidence. The witnesses Joel Isaleo, Joe Kikato and Haro Hayward gave identical evidence. They were in the meeting room on 21st September 2022. The Plaintiff was seated between Joel Isaleo and Joe Kikako. Joel said his throat was itchy and he cleared the same. At that instant, the Plaintiff hit him twice and told him to leave the room. He stood up, moved to the door, stood by the door and while he kept standing, the Plaintiff spoke in a loud voice, announcing that Joel was sick, and he directed the other employees to open the door and let him out. Mr. Isaleo left the room embarrassed and in tears. He said he was not sick and, with the help of other employees, referred the matter to the Company HR Department. His evidence was supported by Joe Kikako and Haro Hayward.

14.	The first Defendant’s evidence is that the Plaintiff was suspended from duty pursuant to Clause 12.5 of the Plaintiff’s contract of employment following allegations of workplace harassment of Joel Isaleo, a contractor employee, at the weekly production meeting held on the afternoon of 21st September 2022 at the Processing Crib Hut at Hidden Valley Mine. After investigations into the incident, the Plaintiff’s employment was terminated on 28th September 2022. The Plaintiff was terminated pursuant to clause 12.2 of the Contract of Employment. The reasons for the termination were spelt out in the letter of termination which included breaches of the Harmony Code of Conduct, clause 3.1.3 for harassment or bullying and Harmony Disciplinary Guidelines for verbal abuse, assault or fighting.

15.	After the termination of employment, the Plaintiff lodged a complaint with the Department of Labour and Industrial Relations which issued a letter to enter negotiation for settlement on 20th October 2022. As a result of the letter from the Department of Labour and Industrial Relations, the Defendant company conducted further investigation and established that there was no evidence of fabrication or collusion by the complainant Joel Isaleo, and other witnesses to justify that the Plaintiff was dismissed wrongly as suggested by the Plaintiff and the Labour Department. The Defendant has since responded to the letter by DLIR and have not heard further from the Department. The Plaintiff was dismissed for cause, and his entitlements have been paid in full.

SUBMISSIONS OF COUNSEL

16.	Mr. Topo, counsel of the Plaintiff, submitted that the Plaintiff was unlawfully terminated because: 

1) he was dismissed for disciplinary conduct or offence not prescribed in his contract of employment.
2) there was no proof of harassment and the allegation was fabricated and
3) The Plaintiff was not charged and not given the opportunity to respond to the allegations which amounted to a breach of his Constitutional rights. 

17.	Mr. Joseph, counsel for the Defendants, submitted that the Plaintiff’s claim be dismissed because:

1.)	The termination was lawful. The Plaintiff was terminated for breach of clause 12.2 of the contract of employment for harassment at workplace, a serious misconduct and disciplinary offence under Harmony Code of Conduct and other disciplinary policies and guidelines. 
2.)	The employer has the right to hire and fire at will, with or without good reasons.
3.)	The allegations of breach of Constitutional rights do not arise as the employment contract does not provide for the right to be heard before termination.
4.)	Even if termination is unlawful, there is no further claim as the Plaintiff’s entitlements under the contract have been paid.

THE LAW 

18.	The underlying law on termination of employment is discussed and settled in the cases; Malai v PNG Teachers Association (1992) PNGLR 568. The Central Bank of PNG v Tugiau (2009) SC1013, Apolonia Steven v Ram KC (2016) N6577, Ruhuwamo v PNG Ports Corporation (2019) N8021, Saki v Kangleon (2019) N7860, Tawa v Mainland Holdings Limited (2020) N8727 Tjandranegara v Bsp Financial Group (2021) N9353 and Porawi v Agarwal (2023) N10118.

19.	The principles emanating from the various judgments of the above cases are:

i.	An employer has the right to hire and fire his employees at will, with or without reason.

ii.	If the termination is done in breach of the terms of the contract of employment, an employee will receive as damages the amount which he or she would have been entitled to receive if he or she had been lawfully terminated.

iii.	An employee has no right to be heard before termination unless his or her contract of employment says so.

iv.	The allegations of breach of constitutional rights do not arise in private employment relationships unless the employment contract expressly provides for the enforcement of such rights.

v.	Compensatory damages for defamation, anxiety and stress following unlawful termination shall not be awarded unless such claims are specifically pleaded with particularity and proved with appropriate evidence. (The Central Bank of PNG v Gabriel Tugia)

vi.	Where there is ambiguity in a written contract of employment, the provisions of the Employment Act apply.

  20.	In Ruhuwamo v PNG Ports Corporation (2019) N8021, Thompson J states the law at paragraphs 17-19 of her judgment:
“17. 	It is well settled by a long line of case authorities in PNG, that an employer has the right to hire and fire his employees and does not have to give reasons for his decision. If this is done in breach of the terms of a contract, the measure of damages is what the employee would have received for his salary and other entitlements if the contract had been lawfully terminated. (see Jimmy Malai v PNG Teachers Association (1992) PNGLR 568, Paddy Fagon v Negiso Distributors Pty Ltd (1999) N1900, New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC946, and Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) PGSC 11.
18. 	This is consistent with the provisions of the Employment Act. Under S 34, a contract of employment may be terminated at any time, with the length of notice being either as specified in the contract, or dependent on the length of the employment. If an employee has been employed for over five years, the length of notice shall be not less than four weeks. Under S 35, the termination may be by notice, or by payment in lieu of notice.
19. 	Under S 36, the employer may terminate without notice or payment in lieu, if the employee, inter alia, wilfully disobeys a lawful and reasonable order or misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties.”

21.	In Porawi v Agarwal(supra), in recognition of free will in employer and employee relations, the Court said this at paragraph 17 of the judgment:

“17.	The Employment Act sets the minimum standards, terms, and conditions of employment. It safeguards against abusive behavior and from forced labour. The Act promotes fair and free employment relationship between employer and employee. This is understandable. An employee should not be forced to serve an ungrateful master under oppressive working conditions against his will. The master, likewise, is under no obligation to keep in continuous employment a defiant and disloyal servant no matter how experienced or qualified or skillful he or she may be. The only obligation they have is keeping their end of the bargain on the terms they have agreed.  Where there is ambiguity or silence or unresolved matter arising out of the relationship, the Employment Act applies, which provides useful guide for resolving the matters in dispute.”

CONSIDERATION

22.	The Plaintiff was employed by the third Defendant under a written contract of employment commencing 3rd August 2020. The concluding part of Clause 12.2 of the Contract provides that the third Defendant may terminate the employment immediately without notice in the event of any serious misconduct by the Plaintiff. The letter of termination dated 28th September 2022 shows the Plaintiff’s contract of employment was terminated under Clause 12.2 for serious misconduct. It was alleged that the Plaintiff was guilty of harassment at workplace, a serious misconduct, contrary to Clause 3.1.3 of the Harmony Code of Conduct (Harassment or Bullying) and other Disciplinary Policies and Guidelines of the third Defendant.

Proof of Harassment

23.	The Plaintiff submitted that his termination of employment was unlawful. The Plaintiff, supported by his witnesses, gave evidence that there was no harassment at the workplace as alleged by the Defendants. Their evidence was countered by the Defendants’ own witnesses who remain firm that the Plaintiff did harass Joel Isaleo during their weekly production meeting at the Mill Processing Crib on the afternoon of 21st September 2022.

24.	The onus is on the Plaintiff to prove that he was wrongfully accused. The Plaintiff’s evidence was challenged by the Defendants.  Where evidence is intensely disputed, common sense and logic will apply. I have considered the evidence of the parties, and I am not satisfied with the Plaintiff’s assertion that it was a gentle tap on the back. A polite request to leave the room would not have resulted in the prompt action taken by Joel Isaleo and other employees reporting the incident to the HR department that afternoon. There is no evidence of ill will or motive on the part of Joel Isaleo in conjuring up a false allegation against the Plaintiff who is said to be his friend. In the circumstances, I find it is more probable than not that the Plaintiff did harass the complainant as alleged.

The conduct of Harassment not a term of Employment Contract

25.	Following receipt of the complaint of harassment, the Defendants took immediate action by calling on the Plaintiff to respond to the allegation a few hours later. After the Plaintiff responded to the allegation, he was suspended from duties the next day and eventually terminated a week later.

26.	The Plaintiff submits that harassment was not prescribed as serious misconduct under the terms of his contract of employment and thus he was terminated for a disciplinary charge or conduct that was not part of his contract. 

27.	 The contention is misconceived. Clauses 4.2, 4.3 and 10 of the Plaintiff’s contract of employment expressly provide that the Code of Ethics Guidelines and the Defendants’ Codes of Practice and Site Policies and Procedures form part of the terms of the Plaintiff’s employment contract. These documents were available, and the Plaintiff could access them either at request or through the Company’s Integrated Business Information System (IBIS). The Plaintiff was terminated for breach of contract under clause 12.2 of the contract of employment for committing serious misconduct contrary to the Defendant company’s Code of Conduct and other Disciplinary Guidelines, Policies and Procedures as stated in the letter of termination. Clause 3.1.3 of Harmony Code of Conduct provides that Harassment or Bullying is an intolerable conduct, and such conduct can lead to summary dismissal under Clause 12 of the Harmony Discipline Guideline. It is clear the Defendants acted within the terms of the contract of employment in terminating the Plaintiff. 

Not Heard Before Termination

28.	 The Plaintiff’ alleges that he was not given an opportunity to respond to the allegations before termination. The evidence shows the Plaintiff was called to respond to the allegations on the same afternoon. It is not clear whether he was given or shown any formal complaint and witness statements. What is clear though is that he was informed of the allegations, and he did respond to them verbally. He was then served suspension notice the next day. The Plaintiff wanted to respond to the allegations, but the termination came too soon within six days, and he was not able to respond. He appealed against the decision, but no response was forthcoming, resulting in him seeking assistance from the Department of Labour and Industrial Relations.

29.	I note the Defendants’ submission that the Defendant company is under no obligation to hear from the Plaintiff before terminating his contract of employment. The law on this issue is settled. An employee in a private sector has no right to be heard before termination unless his or her contract of employment expressly provides otherwise.

30.	In Steven v Ram (supra), Cannings J said this at page 25 of his judgment:

“25. .....the underlying law has, as I explained in Podas v Divine Word University (2011) N4395, reverted to the common law position: the fire-at-will principle has been reinstated. An employer can hire and fire at will, with or without good reasons and without giving a right to be heard. These are the general principles, which can be displaced by the terms of a contract of employment (eg Ayleen Bure v Robert Kapo (2005) N2902). Put simply an employee has no right to be heard before being sacked unless his or her contract of employment says so. In the present case nothing in the plaintiff’s contract gave her a right to be heard. She was not given a right to be heard. That is inconsequential. She argues that the reasons given for sacking her have no substance. That is also inconsequential. She was able to be sacked for good reasons or bad reasons or no reasons. That is the law, as declared by the Supreme Court, that I am obliged to apply.”
(underlining mine)

31.	In the present case, the contract for employment does not provide for and gives any right to the Plaintiff to be heard before termination. On the contrary, Clause 12.2 provides for summary dismissal without notice for serious misconduct. The fact that he was not given the chance to be heard before termination is inconsequential.

Breach of Constitutional rights

32.	The final allegation relates to breaches of the Constitutional rights. The Plaintiff alleges that his Constitutional rights under Sections 37 (Protection of the Law), Section 41(Proscribed Acts) and 59 (Principles of Natural Justice) of the Constitution were violated when he was not given the reasons for termination and not given any opportunity to respond to the allegations before termination and thus the actions of the Defendants were harsh and oppressive and a breach of natural justice. 

33.	In response, the Defendants submitted that the conduct of the Defendants did not impinge upon any constitutional rights of the Plaintiff but acted within the terms of the contract and employment law.

34.	The Plaintiff’ was employed under a written contract of employment. The primary rights and basic obligations of the parties basically arise out of the employment agreement and the Employment Act and not the Constitution. The Defendant’s decision relates to the Plaintiff’s employment which is his primary right and the Court has dealt with the issues raised in this proceeding. Generally, it is a misconception to attribute breaches of the employment agreement to those violations of basic human rights under the Constitution. More specifically, the Plaintiff is not charged with a criminal offence to be accorded with the protection under section 37 of the Constitution. Section 41 of the Constitution does not create a primary right for the Plaintiff to be enforced under Section 57 of the Constitution. Section 59 of the Constitution does not apply as the terms of the contract of employment do not provide for a right to be heard before termination, and Clause 12.2 explicitly excludes such obligation. 

35.	In Porawi v Agarwal (supra) I expressed similar sentiments in my judgment:
“20.	The allegation of breaches of human rights under the Constitution are misconceived. The Employment Act governs the relationship between the 	employer and employee. All actions and decisions made are in the context of that relationship. For an employer’s business to flourish and provide for the continuous and prolonged employment of an employee, it would require trust, accountability, loyal service, and unreserved obedience from its employees. Conversely, hardworking employees should be appropriately rewarded. Any questionable conduct is likely to be met with unfavorable response which can only lead to dire consequences and hardship. Such undesirable consequences are not necessarily caused by any infringement of human rights guaranteed under the Constitution….”

36.	The factual issues raised by the Plaintiff are adequately dealt with in the judgement.  I do not find the actions of the Defendants impinging upon any Constitutional rights of the Plaintiff.

Conclusion

37.	In the present case, I have reached a conclusion that the Plaintiff was terminated for cause. There was a complaint about workplace harassment. The Defendants, following an investigation, reached the conclusion that the Plaintiff breached the terms of his contract of employment, warranting a termination of his employment. Although the Plaintiff attempted to show in this proceeding that there was no harassment, and that he was terminated without cause, the evidence was not convincing enough. On the contrary, the Court is satisfied that the Defendants acted within their rights to terminate the employment contract. I find nothing illegal or unlawful in the decision made by the Defendants. 

Measure of Damages in case of unlawful termination

38.	  If I am wrong in my conclusions and that the termination is unlawful, even in that case, the Plaintiff shall only be liable for damages and the measure of damages is what the employee would have received for his salary and other entitlements if the contract had been lawfully terminated. Again, the law is settled by the Supreme Court in Jimmy Malai v PNG Teachers Association (supra) and The Central Bank of PNG v Tugiau (supra) and numerous other cases in this jurisdiction.

39.	In The Central Bank of PNG v Tugiau(supra), the Supreme Court held that:

“21. When one comes to deal with an unlawfully terminated or dismissed employee's damages, the measure of damages is usually by reference to the period of notice for termination, for terminations prior to the agreed end of the contract. This follows on from the clear position at law that a contract can be terminated lawfully only in two ways prior to the agreed end of the contract. First is for cause or good reason in which case, no damages or compensation is payable. The second is on reasonable notice or pay in lieu of notice. That is why nearly all contracts of employment have provisions on termination in these terms”.  

40.	The evidence shows that the Plaintiff has been paid his entitlements, and the Plaintiff concedes that. He is therefore not entitled to any damages in terms of lost salaries and entitlements.

Other heads of Damages

41.	 Although the Plaintiff makes no claim for salaries and entitlements under the contract, the Plaintiff is, however, claiming damages for wrongful termination, loss of job, for breach of constitutional rights, defamation, distress, frustration and psychological stress. 

42.	 In my view the Plaintiff is not entitled to the ancillary damages claimed for the following reasons: 

i.	The termination of employment was not unlawful and thus no consequential relief can be granted.
ii.	The Plaintiff has been paid his salaries and entitlements under the contract of employment and nothing outstanding.
iii.	To consider these additional claims for damages would defeat the traditional and established principle of law that the employer is at liberty to hire and fire which this Court is reluctant to depart from.
iv.	Even where consideration is given for appropriate cases, there are no specific and clear pleadings for these claims.
v.	For the same reasons given in paragraphs 32 to 36 of the judgment. 

Result

43.	The result is the Plaintiff has not proven his claim for unlawful termination of employment and shall be dismissed. 

Costs

44.	On costs, the Court has a discretion. Generally, a successful party would be entitled to costs. The Defendant has successfully defended the matter and therefore would be entitled to costs.

ORDERS

45.      The Court orders that:

a)	The Plaintiff’s proceeding is dismissed.
b)	The Plaintiff shall pay the Defendants’ costs to be taxed, if not agreed.
c)	Time be abridged.

Lawyers for the plaintiff: Supersonixs & Alu Lawyers		
Lawyers for the defendant: Ashurst PNG Lawyers